Sales Increase 11%
STANLEYTOWN, Va., July 14 /PRNewswire-FirstCall/ -- Stanley Furniture
Company, Inc. (Nasdaq: STLY) today reported improved sales and earnings for
the second quarter of 2003. Both sales and earnings modestly exceeded
management's previous guidance for the quarter.
Net sales of $61.4 million increased 11.1% from the second quarter of last
year. This marks the fifth consecutive quarter of sales growth over the
comparable prior year period. Earnings per share improved to $.53 for the
second quarter of 2003 from $.37 in the prior year quarter. The second
quarter of last year included restructuring and related charges of $.08 per
share from closing a factory to realign the Company's manufacturing
facilities.
For the first half of 2003, net sales of $122.7 million increased 6.8%
over the prior year. First half earnings per share improved to $1.05 compared
to $.64 in the six-month period of 2002. Earnings for the first half of last
year included restructuring and related charges of $.35 per share.
Operating income increased to $6.2 million, or 10.0% of net sales, in the
second quarter of 2003 from $4.7 million, or 8.6% of net sales, in the second
quarter of 2002. The second quarter 2003 operating margin of 10.0% of net
sales approximates the operating margin for both the first quarter of 2003 and
the prior year quarter, after excluding restructuring and related charges of
$852,000 in the second quarter of 2002. As anticipated for the first half of
2003, savings from the Company's offshore sourcing initiatives and downsizing
of domestic operations have been offset with transition costs from increased
sourcing including lower production levels at the Company's domestic
facilities, increases in certain marketing and product development costs, and
other inflationary costs.
Cash flow in the first half of 2003 was used to reduce debt $4.3 million,
purchase $2.7 million of the Company's common stock and pay cash dividends of
$652,000. Approximately $12.2 million remains authorized by the Company's
Board of Directors to repurchase shares of the Company's common stock. Total
debt outstanding was $25.3 million and cash on hand was $7.5 million at June
28, 2003.
"We are gratified by the favorable response to our blended strategy as
evidenced by the fifth consecutive quarter of year-over-year sales growth
despite continued difficult business conditions in the wood segment of the
furniture industry," said Albert L. Prillaman, chairman. "We believe this
sales growth is due to market share gains. We expect these market share gains
to continue and believe we are well positioned for an eventual upturn in
demand for residential wood furniture," Prillaman continued.
"We continue to implement our strategy of blending efficient domestic
manufacturing capabilities in focused facilities with intelligent outsourcing
of certain component parts and finished goods," commented Jeffrey R. Scheffer,
president and chief executive officer. "This combination allows us to offer
higher value, well-styled product without sacrificing our culture of high
quality and quick delivery."
"As previously noted, approximately 20% of 2003 sales will come from
sourced items. As expected, transition expense of pursuing our blended
strategy will continue into the second half of 2003. Consequently, our
earnings guidance for 2003 remains unchanged," Scheffer concluded.
Management offers the following guidance for total year 2003:
* Net sales is expected to be in the range of $247 million to $255
million, an increase of 3% to 6% over 2002.
* Operating income is expected to be in the range of $25.5 million to
$26.5 million.
* Earnings per share is expected to be in the range of $2.20 to $2.30
compared to $1.85 for 2002. Prior year earnings per share included
restructuring and related charges of $.34.
* The Company's effective tax rate is expected to increase to 36.3% in
2003 from 35.5% in 2002 due to higher state taxes.
Management offers the following guidance for the quarter ending September
27, 2003:
* Net sales is expected to be in the range of $62 million to $65 million,
an increase of 1% to 6% over the prior year quarter.
* Operating income is expected to be in the range of $6.1 million to $6.6
million.
* Earnings per share is expected to be in the range of $.52 to $.57
compared to $.62 in the year-ago quarter. Earnings per share for the
third quarter of 2002 included a restructuring credit of $.02.
Conference Call Details
The Company will host a conference call Tuesday morning, July 15, 2003 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 July 22, 2003. The dial-
in-number for the replay is (706) 645-9291 with an access code of 1554718.
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, the cyclical nature of the furniture
industry, fluctuations in the price for lumber which is the most significant
raw material used by the Company, credit exposure to customers in the current
economic climate, 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.
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.
STANLEY FURNITURE COMPANY, INC.
Consolidated Operating Results
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 28, June 29, June 28, June 29,
2003 2002 2003 2002
Net sales $61,409 $55,268 $122,707 $114,842
Cost of sales 46,844 41,795 93,520 86,901
Restructuring and related
charges (1) 852 3,757
Gross profit 14,565 12,621 29,187 24,184
Selling, general and
administrative expenses 8,400 7,892 16,913 15,809
Operating income 6,165 4,729 12,274 8,375
Other income, net (47) (72) (89) (154)
Interest expense 660 746 1,371 1,580
Income before income taxes 5,552 4,055 10,992 6,949
Income taxes 2,016 1,440 3,990 2,467
Net income $ 3,536 $ 2,615 $ 7,002 $ 4,482
Diluted earnings per share $ 0.53 $ 0.37 $ 1.05 $ 0.64
Weighted average number
of shares 6,628 6,998 6,652 6,950
Operating income:
Before restructuring and
related charges $ 6,165 $ 5,581 $ 12,274 $ 12,132
Restructuring and related
charges (1) 852 3,757
Reported operating income $ 6,165 $ 4,729 $ 12,274 $ 8,375
Net income:
Before restructuring and
related charges $ 3,536 $ 3,164 $ 7,002 $ 6,905
Restructuring and related
charges (1) 549 2,423
Reported net income $ 3,536 $ 2,615 $ 7,002 $ 4,482
(1) 2002 amounts represent 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)
June 28, June 29, Dec. 31,
2003 2002 2002
Assets
Current assets:
Cash $ 7,479 $ 10,066 $ 9,227
Accounts receivable, net 31,559 26,122 27,832
Inventories 55,563 53,650 54,158
Prepaid expenses and other
current assets 1,051 1,510 1,311
Deferred income taxes 3,196 3,153 2,876
Total current assets 98,848 94,501 95,404
Property, plant, and equipment, net 57,083 61,732 59,539
Goodwill 9,072 9,072 9,072
Other assets 8,103 5,738 8,470
Total Assests $173,106 $171,043 $172,485
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of
long-term debt $ 6,914 $ 6,839 $ 6,914
Accounts payable 14,306 17,594 13,386
Accrued expenses 12,762 12,086 12,160
Total current liabilities 33,982 36,519 32,460
Long-term debt 18,414 25,329 22,700
Deferred income taxes 12,874 11,251 13,084
Other long-term liabilities 4,497 4,506 4,554
Stockholders' equity 103,339 93,438 99,687
Total liabilities and
stockholders' equity $173,106 $171,043 $172,485
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
June 28, June 29,
2003 2002
Cash flows from operating activities:
Cash received from customers $118,895 $112,264
Cash paid to suppliers and employees (106,210) (98,860)
Interest paid (1,754) (1,872)
Income taxes paid, net (5,552) (780)
Net cash provided by operating activities 5,379 10,752
Cash flows from investing activities:
Capital expenditures (360) (406)
Other, net (19) 696
Net cash used by investing activities (379) 290
Cash flows from financing activities:
Repayment of senior notes (4,286) (4,286)
Purchase and retirement of common stock (2,709)
Dividends paid (652)
Repayment of revolving credit facility, net (600)
Proceeds from insurance policy loans 888 795
Proceeds from exercise of stock options 1,160
Other, net 11
Net cash used by financing activities (6,748) (2,931)
Net increase in cash (1,748) 8,111
Cash at beginning of period 9,227 1,955
Cash at end of period $ 7,479 $ 10,066
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 7,002 $ 4,482
Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation and amortization 2,897 3,013
Restructuring Charge 1,755
Deferred income taxes (530)
Loss on disposal of assets 5 31
Changes in working capital (3,511) 2,013
Other assets (427) (380)
Other long-term liabilities (57) (162)
Net cash provided by operating activities $ 5,379 $ 10,752
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 V.P.-Finance and
Administration, +1-276-627-2157, or dpayne@stanleyfurniture.com,
or Anita W. Wimmer, Treasurer, +1-276-627-2446, or
awimmer@stanleyfurniture.com, both of Stanley Furniture Company,
Inc.
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