Earnings Per Share Increase 51% on 15% Sales Gain
STANLEYTOWN, Va., July 12 /PRNewswire-FirstCall/ -- Stanley Furniture
Company, Inc. (Nasdaq: STLY) today reported increased sales and earnings for
the second quarter of 2004. Both sales and earnings exceeded management's
guidance for the quarter issued in mid-April.
Net sales of $70.7 million increased 15.2% from the second quarter of
2003, marking the ninth consecutive quarter of sales growth over the
comparable prior year quarter. Earnings per share grew 50.9% to $.80 compared
to $.53 in the second quarter of last year.
For the first half of 2004, net sales of $140.9 million increased 14.9%
over the comparable prior year period. Year-to-date earnings per share grew
43.8% to $1.51 compared to $1.05 in the first half of 2003.
Second quarter 2004 operating income rose to $8.7 million, or 12.3% of net
sales. Operating income for the first half of 2004 increased to $16.5
million, or 11.7% of net sales, from $12.3 million, or 10.0% of net sales, in
the comparable prior year period. Higher sales, increased production levels
at the Company's domestic facilities, although at a slower growth rate than
sales due to the growth of sourced items, and savings from sourcing
initiatives drove the improvement.
Approximately 27% of sales came from sourced items in the first half of
2004. Management expects sales from sourced items to level off around 30% of
sales for total year 2004.
Cash flow in the first half of 2004 was used to reduce debt $4.3 million,
pay cash dividends of $1.2 million and increase the Company's cash on hand by
$1.4 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 $18.4 million and cash on hand was $3.9 million at June
26, 2004.
Business Outlook
"We are pleased to report our ninth consecutive quarter of year-over-year
sales growth," commented Jeffrey R. Scheffer, president and chief executive
officer. "Our sales have grown at approximately 15% over the prior year
period in each of the last three quarters. It appears that improved economic
conditions are finally producing positive industry growth. However, we
believe a large portion of our sales growth continues to come from market
share gains. The strong first half performance combined with good momentum as
we enter the second half of the year has caused us to again raise our sales
and earnings guidance for 2004 as outlined below. We anticipate gross profit
and operating income margins to contract in the third quarter compared to the
second quarter due to inflation in raw materials, wages, employee benefits and
energy costs, and tariffs imposed on wooden bedroom furniture imported from
China. However, we believe these cost increases will be offset with modest
pricing actions and continued gains in operating efficiencies by the fourth
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 recent market share gains provide encouraging evidence that our
customers are responding favorably and that we are executing the strategy
well," Scheffer concluded.
Management offers the following guidance for total year 2004:
* Net sales are expected to be in the range of $284 million to $291
million, an increase of 9% to 12% over the prior year.
* Operating income is expected to be in the range of $32.5 million to
$34.1 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 $2.95 to $3.10
compared to $2.34 for 2003.
Management offers the following guidance for the quarter ending September
25, 2004:
* Net sales are expected to be in the range of $71.5 million to $74.0
million, an increase of 10% to 13% over the third quarter of 2003.
* Operating income is expected to be in the range of $7.1 million to $7.6
million.
* Earnings per share are expected to be in the range of $.70 to $.75
compared to $.59 in the year-ago quarter.
All earnings per share are on a diluted basis.
Celebrating its 80th Anniversary in 2004, 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 Tuesday morning, July 13, 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
(877) 407-8029. A replay will be available through July 20, 2004. The dial-
in-number for the replay is (877) 660-6853, the account reference number is
6721 and the conference number is 109785.
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 pursuing 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, changes
in the preliminary duties imposed on wooden bedroom furniture imported from
China, 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. 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.
TABLES FOLLOW
STANLEY FURNITURE COMPANY, INC.
Consolidated Operating Results
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 26, June 28, June 26, June 28,
2004 2003 2004 2003
Net sales $70,721 $61,409 $140,943 $122,707
Cost of sales 52,475 46,844 105,476 93,520
Gross profit 18,246 14,565 35,467 29,187
Selling, general and
administrative
expenses 9,539 8,400 18,956 16,913
Operating income 8,707 6,165 16,511 12,274
Other income, net (42) (47) (95) (89)
Interest expense 577 660 1,203 1,371
Income before
income taxes 8,172 5,552 15,403 10,992
Income taxes 2,961 2,016 5,585 3,990
Net income $5,211 $3,536 $9,818 $7,002
Diluted earnings
per share $0.80 $0.53 $1.51 $1.05
Weighted average
number of shares 6,515 6,628 6,485 6,652
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Balance Sheets
(in thousands)
(unaudited)
June 26, June 28, Dec 31,
2004 2003 2003
Assets
Current assets:
Cash $3,922 $7,479 $2,509
Accounts receivable, net 34,723 31,559 30,120
Inventories 68,440 55,563 54,638
Prepaid expenses and
other current assets 1,426 1,051 2,855
Deferred income taxes 2,927 3,196 2,855
Total current assets 111,438 98,848 92,977
Property, plant, and
equipment, net 52,574 57,083 55,154
Goodwill 9,072 9,072 9,072
Other assets 6,565 8,103 7,000
Total assets $179,649 $173,106 $164,203
Liabilities and
Stockholders' Equity
Current liabilities:
Current maturities of
long-term debt $4,157 $6,914 $7,014
Accounts payable 16,829 14,306 10,595
Accrued expenses 15,332 12,762 10,913
Total current
liabilities 36,318 33,982 28,522
Long-term debt 14,257 18,414 15,686
Deferred income taxes 11,063 12,874 12,560
Other long-term liabilities 5,909 4,497 4,877
Stockholders' equity 112,102 103,339 102,558
Total liabilities
and stockholders'
equity $179,649 $173,106 $164,203
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
June 26, June 28,
2004 2003
Cash flows from operating
activities:
Cash received from customers $136,610 $118,895
Cash paid to suppliers and
employees (125,246) (106,210)
Interest paid (715) (1,754)
Income taxes paid, net (4,067) (5,552)
Net cash provided by
operating activities 6,582 5,379
Cash flows from investing
activities:
Capital expenditures (200) (360)
Other, net (88) (19)
Net cash used by investing
activities (288) (379)
Cash flows from financing
activities:
Repayment of senior notes (4,286) (4,286)
Purchase and retirement of
common stock - (2,709)
Dividends paid (1,246) (652)
Proceeds from insurance policy
loans - 888
Proceeds from exercise of
stock options 651 11
Net cash used by financing
activities (4,881) (6,748)
Net increase (decrease) in cash 1,413 (1,748)
Cash at beginning of period 2,509 9,227
Cash at end of period $3,922 $7,479
Reconciliation of net income to
net cash provided by operating
activities:
Net income $9,818 $7,002
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,830 2,897
Deferred income taxes (1,569) (530)
Changes in working capital (6,020) (3,506)
Other assets 491 (427)
Other long-term liabilities 1,032 (57)
Net cash provided by operating
activities $6,582 $5,379
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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