Second Quarter and First Half Sales Increase 16 Percent
STANLEYTOWN, Va., July 18 /PRNewswire-FirstCall/ -- Stanley Furniture
Company, Inc. (Nasdaq: STLY) today reported record sales and earnings for the
second quarter of 2005. Both sales and earnings slightly exceeded the high
end of management's previous guidance provided in late April 2005.
Net sales of $83.6 million increased 15.8% and earnings per share grew
10.0% to $.44 from an exceptionally strong second quarter of last year. This
marks the thirteenth consecutive quarter of sales growth over the comparable
prior year quarter and the seventh consecutive quarter of double digit sales
gains over the comparable prior year quarter.
For the first half of 2005, net sales of $166.6 million increased 15.9%
over the comparable prior year period. Year-to-date earnings per share grew
14.5% to $.87 compared to $.76 in the first half of 2004.
Second quarter operating income rose to $9.4 million, or 11.2% of net
sales. Operating income for the first half of 2005 increased to $18.8
million, or 11.3% of net sales, from $16.5 million, or 11.5% of net sales, in
the year-ago first half. Operating margins have remained consistently strong,
ranging from 11.1% to 11.3% of net sales, in each of the last four quarters.
Higher raw material costs, compensation costs, energy costs, freight costs,
increased warehouse expense and tariffs imposed on wooden bedroom furniture
imported from China are negatively impacting operating income. Higher sales,
increased production levels and operating efficiencies are helping to offset
these higher costs.
Working capital, excluding cash and current maturities of long-term debt,
decreased $2.1 million during the first half of 2005 to $83.1 million from
$85.2 million at year end, primarily due to lower inventory levels. Strong
cash flow in the first half of 2005 was used to purchase $10.0 million of the
Company's common stock, reduce debt $2.8 million, pay cash dividends of $1.6
million and increase the Company's cash on hand $6.0 million. Approximately
$10.2 million remains authorized by the Company's Board of Directors to
repurchase shares of the Company's common stock. At July 2, 2005, the Company
was in a net cash position with total debt outstanding of $12.9 million and
cash on hand of $13.6 million.
Business Outlook
"We are pleased to report another quarter of significant progress,"
commented Jeffrey R. Scheffer, chairman, president and chief executive
officer. For the most recent four quarters our sales have increased 15.7%
from the previous four quarter period. Blending efficient domestic
manufacturing in our highly focused facilities with strategic outsourcing of
certain component parts and finished goods has allowed us to improve the
styling and value of our products. Combining this with our culture and
reputation for high quality and fast delivery differentiates us from our
competition. We enter the second half with considerable momentum and have
raised our earnings guidance for 2005."
Management offers the following guidance for total year 2005.
* Net sales are expected to be in the range of $334 million to $340
million, an increase of 9% to 11% over the prior year.
* Operating income is expected to be in the range of $38.1 million to
$39.7 million.
* The Company's effective tax rate is expected to be in the range of
35.3% to 35.7% in 2005.
* Earnings per share are expected to be in the range of $1.78 to $1.85
compared to $1.59 for 2004.
Management offers the following guidance for the quarter ending October 1,
2005.
* Net sales are expected to be in the range of $82.5 million to $85.5
million, an increase of 5% to 9% over the third quarter of 2004.
* Operating income is expected to be in the range of $9.3 million to
$10.0 million.
* Earnings per share are expected to be in the range of $.44 to $.47
compared to record earnings of $.40 per share in the year-ago quarter.
Other Information
All earnings per share amounts are on a diluted basis and adjusted for the
two-for-one stock split distributed on June 6, 2005.
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, N.C. 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 19, at 9:00
Eastern Time. The dial-in-number is (877) 407-8029. The call will also be
web cast and archived on the Company's web site at
http://www.stanleyfurniture.com. The dial-in-number for the replay (available
through July 26, 2005) is (877) 660-6853, the account reference number is 275
and the conference number is 160100.
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 executing its blended strategy of combining 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. 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
July 2, June 26, July 2, June 26,
2005 2004 2005 2004
Net sales $83,635 $72,223 $166,585 $143,743
Cost of sales 63,003 53,977 125,488 108,276
Gross profit 20,632 18,246 41,097 35,467
Selling, general
and administrative
expenses 11,239 9,539 22,290 18,956
Operating income 9,393 8,707 18,807 16,511
Other income, net 54 42 119 95
Interest Income 102 10 154 16
Interest expense 545 587 1,115 1,219
Income before
income taxes 9,004 8,172 17,965 15,403
Income taxes 3,177 2,961 6,378 5,585
Net income $ 5,827 $ 5,211 $ 11,587 $ 9,818
Diluted earnings
per share $ 0.44 $ 0.40 $ 0.87 $ 0.76
Weighted average
number of shares 13,255 13,031 13,316 12,970
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Balance Sheets
(in thousands)
(unaudited)
July 2, June 26, Dec 31,
2005 2004 2004
Assets
Current assets:
Cash $ 13,586 $ 3,922 $ 7,632
Accounts receivable, net 39,132 34,723 36,036
Inventories 72,283 68,440 73,658
Prepaid expenses and
other current assets 1,745 1,426 1,585
Deferred income taxes 2,404 2,927 2,414
Total current assets 129,150 111,438 121,325
Property, plant, and
equipment, net 51,290 52,574 51,342
Goodwill 9,072 9,072 9,072
Other assets 6,560 6,565 7,149
Total assets $196,072 $179,649 $188,888
Liabilities and Stockholders'
Equity
Current liabilities:
Current maturities of
long-term debt $ 2,857 $ 4,157 $ 4,257
Accounts payable 19,549 16,829 16,056
Accrued expenses 12,936 15,332 12,445
Total current liabilities 35,342 36,318 32,758
Long-term debt 10,000 14,257 11,428
Deferred income taxes 10,218 11,063 10,742
Other long-term liabilities 6,619 5,909 6,695
Stockholders' equity 133,893 112,102 127,265
Total liabilities and
stockholders' equity $196,072 $179,649 $188,888
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
July 2, June 26,
2005 2004
Cash flows from operating
activities:
Cash received from customers $ 163,434 $ 139,410
Cash paid to suppliers and
employees (138,696) (128,046)
Interest paid, net (1,519) (715)
Income taxes paid, net (6,350) (4,067)
Net cash provided by operating
activities 16,869 6,582
Cash flows from investing
activities:
Capital expenditures (2,721) (200)
Purchase of other assets (33) (88)
Net cash used by investing
activities (2,754) (288)
Cash flows from financing
activities:
Repayment of senior notes (2,828) (4,286)
Purchase and retirement of
common stock (9,993) -
Dividends paid (1,560) (1,246)
Proceeds from insurance policy
loans 1,110 -
Proceeds from exercise of stock
options 5,110 651
Net cash used by financing
activities (8,161) (4,881)
Net increase in cash 5,954 1,413
Cash at beginning of period 7,632 2,509
Cash at end of period $ 13,586 $ 3,922
Reconciliation of net income to
net cash provided by operating
activities:
Net income $ 11,587 $ 9,818
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 2,815 2,830
Deferred income taxes (514) (1,569)
Changes in working capital 3,424 (6,020)
Other assets (367) 491
Other long-term liabilities (76) 1,032
Net cash provided by operating
activities $ 16,869 $ 6,582
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, Vice President -
Controller and Treasurer, +1-276-627-2446,
awimmer@stanleyfurniture.com, both of Stanley Furniture Company,
Inc.
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