Record Fourth Quarter Sales; Company Doubles Quarterly Cash Dividend
STANLEYTOWN, Va., Jan. 28 /PRNewswire-FirstCall/ -- Stanley Furniture
Company, Inc. (Nasdaq: STLY) today reported higher sales and earnings for the
fourth quarter and year ended December 31, 2003. The Company also announced
today that its Board of Directors doubled the amount of its quarterly cash
dividend to stockholders.
Net sales of $72.7 million increased 14.9% from the fourth quarter of last
year setting a new sales record from any previous quarter in the Company's
history. This was also the seventh consecutive quarter of sales growth over
the comparable prior year quarter. Earnings per share grew 18.6% to $.70
compared to $.59 in the fourth quarter of 2002.
Sales and operating income slightly exceeded the high end of management's
previous guidance for the quarter. Earnings per share exceeded the guidance
range due to the higher operating income and a lower effective tax rate.
Net sales of $260.6 million for total year 2003 increased 8.8% from the
prior year. Earnings per share improved 26.5% to $2.34 in 2003 compared to
$1.85 in 2002. Earnings in 2002 included restructuring and related charges of
$.34 per share.
Operating income for 2003 improved to $26.2 million, or 10.1% of net
sales, from $22.4 million, or 9.3% of net sales, for the prior year. Prior
year operating income included restructuring and related charges of $3.5
million. In 2003 increased sales, savings from the Company's offshore
sourcing initiatives and downsizing of domestic operations offset the
transition and start up costs from increased global sourcing including lower
production levels at the Company's domestic factories, increases in certain
marketing and product development costs and other inflationary costs.
Cash on hand combined with strong cash flow from operations for 2003 were
used to repurchase $14.8 million of the Company's common stock, reduce debt
$6.9 million and pay cash dividends of $1.3 million. Approximately $10.2
million remains authorized by the Company's Board of Directors to repurchase
shares of the Company's common stock. Total debt outstanding was $22.7
million and cash on hand was $2.5 million at December 31, 2003.
Increase in Cash Dividend
The Company announced today that its Board of Directors approved a 100%
increase in its quarterly dividend to ten cents per share payable on March 1,
2004, to shareholders of record on February 13, 2004. "Doubling the amount of
the cash dividend further demonstrates the Board's confidence in the Company's
strategy, growth opportunities and financial strength," noted Albert L.
Prillaman, chairman.
Business Outlook
"We are pleased to report our seventh consecutive quarter of year-over-
year sales growth," commented Jeffrey R. Scheffer, president and chief
executive officer. "Business conditions continued to improve in the fourth
quarter; however, we believe our sales growth continues to come primarily from
market share gains. We enter 2004 with significant sales momentum as
evidenced by the 15% increase in fourth quarter sales compared to the year-ago
quarter.
Our focus is to create exciting designs, produce high-quality product and
provide excellent service," Scheffer continued. "Best product is determined
by both design and price. Blending efficient domestic manufacturing in highly
focused facilities with intelligent outsourcing of certain component parts and
finished goods allows us to offer a compelling value proposition. This
combination gives Stanley a competitive advantage by offering higher value and
well-styled product, without sacrificing our culture of high quality and fast
delivery. Our market share gains in the past year provide encouraging
evidence that our customers are responding favorably and that we are executing
the strategy well.
Approximately 20% of 2003 sales came from sourced items, which we
anticipate will level off at approximately 30% of sales in 2004. Transition
costs from increased global sourcing and its associated effect on domestic
capacity utilization negatively impacted 2003 operating margins. Going
forward, operating margins may be tempered by capacity utilization rates which
are not expected to increase in direct proportion to sales growth. We remain
confident in our blended operating strategy and view this as an investment in
the Company's future growth," Scheffer concluded.
Management offers the following guidance for total year 2004:
* Net sales are expected to be in the range of $276 million to $287
million, an increase of 6% to 10% over the prior year.
* Operating income is expected to be in the range of $27.6 million to
$29.6 million.
* The Company's effective tax rate is expected to be in the range of
36.0% to 36.5% for 2004 compared to 36.0% in 2003.
* Earnings per share are expected to be in the range of $2.50 to $2.70
compared to $2.34 for 2003.
Management offers the following guidance for the quarter ending March 27,
2004:
* Net sales are expected to be in the range of $65.6 million to $68.0
million, an increase of 7% to 11% over the first quarter of 2003.
* Operating income is expected to be in the range of $6.6 million to
$7.1 million.
* Earnings per share are expected to be in the range of $.58 to $.63
compared to $.52 in the year-ago quarter.
All earnings per share amounts are on a diluted basis.
Established in 1924, Stanley Furniture Company, Inc. is a leading
manufacturer of wood furniture targeted at the upper-medium price range of the
residential market. Manufacturing facilities are located in Stanleytown and
Martinsville, VA and Robbinsville and Lexington, NC. Its common stock is
traded on the Nasdaq stock market under the symbol STLY.
Conference Call Details
The Company will host a conference call Thursday morning, January 29, at
10:00 a.m. Eastern Time. The call will also be web cast live and archived on
the Company's web site at http://www.stanleyfurniture.com. The dial-in-number is
(706) 679-8542. A replay will be available through February 5, 2004. The
dial-in-number for the replay is (706) 645-9291 with an access code of
5078031.
Forward-Looking Statements
Certain statements made in this release are not based on historical facts,
but are forward-looking statements. These statements can be identified by the
use of forward-looking terminology such as "believes," "estimates," "expects,"
"may," "will," "should," or "anticipates" or the negative thereof or other
variations thereon or comparable terminology, or by discussions of strategy.
These statements reflect the Company's reasonable judgment with respect to
future events and are subject to risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements. Such risks and uncertainties include competition in the furniture
industry including competition from lower-cost foreign manufacturers, the
Company's success in implementing its blended strategy of expanded offshore
sourcing and domestic manufacturing, disruptions in offshore sourcing
including those arising from supply or distribution disruptions or changes in
political or economic conditions affecting the countries from which the
Company obtains offshore sourcing, international trade policies of the United
States and countries from which the Company obtains offshore sourcing, the
cyclical nature of the furniture industry, fluctuations in the price for
lumber which is the most significant raw material used by the Company,
fluctuations in foreign freight cost, credit exposure to customers, capital
costs and general economic conditions. Future dividend payments will depend
upon the financial condition, capital requirements and earnings of the
Company, as well as other factors that the Board of Directors may deem
relevant. Any forward-looking statement speaks only as of the date of this
press release, and the Company undertakes no obligation to update or revise
any forward-looking statements, whether as a result of new developments or
otherwise.
STANLEY FURNITURE COMPANY, INC.
Consolidated Operating Results
(in thousands, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2003 2002 2003 2002
Net sales $72,707 $63,305 $260,641 $239,485
Cost of sales 55,682 47,618 198,788 180,905
Restructuring and
related charges (1) 3,548
Gross profit 17,025 15,687 61,853 55,032
Selling, general and
administrative
expenses 9,554 8,872 35,637 32,671
Operating income 7,471 6,815 26,216 22,361
Other income, net (53) (52) (203) (219)
Interest expense 679 743 2,748 3,090
Income before
income taxes 6,845 6,124 23,671 19,490
Income taxes 2,413 2,174 8,521 6,919
Net income $4,432 $3,950 $15,150 $12,571
Diluted earnings
per share $0.70 $0.59 $2.34 $1.85
Weighted average
number of shares 6,322 6,661 6,462 6,782
Operating income:
Before restructuring
and related charges $7,471 $6,815 $26,216 $25,909
Restructuring and
related charges (1) 3,548
Reported
operating
income $7,471 $6,815 $26,216 $22,361
Net income:
Before restructuring
and related charges $4,432 $3,950 $15,150 $14,859
Restructuring and
related charges (1) 2,288
Reported
net income $4,432 $3,950 $15,150 $12,571
(1) 2002 amounts represent net restructuring and related charges for
realignment of the Company's manufacturing facilities. Management
believes that providing financial measures before restructuring and
related charges provides useful information on underlying business
trends and operations in order to allow investors to more easily
compare and evaluate the Company's financial performance relative to
prior periods and industry comparables.
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Balance Sheets
(in thousands)
(unaudited)
Dec 31, Dec 31,
2003 2002
Assets
Current assets:
Cash $2,509 $9,227
Accounts receivable, net 30,120 27,832
Inventories 54,638 54,158
Prepaid expenses and other current assets 2,855 1,311
Deferred income taxes 2,855 2,876
Total current assets 92,977 95,404
Property, plant, and equipment, net 55,154 59,539
Goodwill 9,072 9,072
Other assets 7,000 8,470
Total assets $164,203 $172,485
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $7,014 $6,914
Accounts payable 10,595 13,386
Accrued expenses 10,913 12,160
Total current liabilities 28,522 32,460
Long-term debt 15,686 22,700
Deferred income taxes 12,560 13,084
Other long-term liabilities 4,877 4,554
Stockholders' equity 102,558 99,687
Total liabilities and
stockholders' equity $164,203 $172,485
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)
Twelve Months Ended
Dec 31, Dec 31,
2003 2002
Cash flows from operating activities:
Cash received from customers $258,589 $235,017
Cash paid to suppliers and employees (231,712) (213,794)
Interest paid (2,793) (3,155)
Income taxes paid (9,740) (1,949)
Net cash provided by
operating activities 14,344 16,119
Cash flows from investing activities:
Capital expenditures (1,243) (1,037)
Other (104) 695
Net cash (used) provided
by investing activities (1,347) (342)
Cash flows from financing activities:
Repayment of senior notes (6,914) (6,839)
Purchase and retirement of common stock (14,788) (3,066)
Dividends paid (1,261)
Repayment of revolving credit facility (600)
Proceeds from insurance policy loans 888 795
Proceeds from exercise of stock options 2,360 1,205
Net cash used by financing activities (19,715) (8,505)
Net (decrease) increase in cash (6,718) 7,272
Cash at beginning of period 9,227 1,955
Cash at end of period $2,509 $9,227
Reconciliation of net income to
net cash provided by operating activities:
Net income $15,150 $12,571
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 5,783 5,938
Restructuring Charge 1,755
Deferred income taxes (463) 2,110
Loss on disposal of assets 2 34
Changes in working capital (6,403) (6,214)
Other assets 57 40
Other long-term liabilities 218 (115)
Net cash provided by operating activities $14,344 $16,119
SOURCE Stanley Furniture Company, Inc.
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Related links:
http://www.stanleyfurniture.com
Company News On-Call:
http://www.prnewswire.com/comp/117677.html
CONTACT:
Douglas I. Payne, Executive Vice President -
Finance and Administration, +1-276-627-2157,
dpayne@stanleyfurniture.com, or Anita W. Wimmer, Treasurer,
+1-276-627-2446, awimmer@stanleyfurniture.com, both of Stanley
Furniture Company, Inc.
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