Sales Increase 6.3%
STANLEYTOWN, Va., Oct. 13 /PRNewswire-FirstCall/ -- Stanley Furniture
Company, Inc. (Nasdaq: STLY) today reported sales and earnings for the third
quarter of 2003. Sales and operating income were at the high end of
management's previous guidance for the quarter. Earnings per share exceeded
the guidance range due to the accretion from share repurchases in the third
quarter.
Net sales of $65.2 million increased 6.3% from the third quarter of last
year, marking the sixth consecutive quarter of sales growth over the
comparable prior year quarter. Earnings per share of $.59 for the third
quarter of 2003 compared to $.62 in the year ago quarter. The third quarter
of last year included income from the reversal of a prior restructuring
related charge of $.02 per share.
For the first nine months of 2003, net sales of $187.9 million increased
6.7% over the comparable prior year period. Year-to-date earnings per share
improved to $1.65 compared to $1.26 in the nine-month period of 2002.
Earnings for the first nine months of last year included restructuring and
related charges of $.34 per share.
Operating income decreased to $6.5 million, or 9.9% of net sales, in the
third quarter of 2003 compared to $7.2 million, or 11.7% of net sales, in the
third quarter of 2002. The third quarter 2003 operating margin of 9.9% of net
sales approximated the operating margin in both the first and second quarter
of 2003. For the nine-month period of 2003 operating income increased to
$18.7 million, or 10.0% of net sales, from $15.5 million, or 8.8% of net
sales, a year ago. Before restructuring and related charges of $3.5 million,
operating income was $19.1 million, or 10.8% of net sales, for the first nine
months of 2002. 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 have been mostly offset with savings from the Company's
offshore sourcing initiatives and downsizing of domestic operations.
Cash on hand combined with strong cash flow from operations in the first
nine months of 2003 was used to purchase $14.8 million of the Company's common
stock (including $12.1 million to purchase 450,000 shares of the Company's
common stock in the third quarter of 2003), reduce debt $5.5 million, and pay
cash dividends of $952,000. Total debt outstanding was $24.8 million and cash
on hand was $1.4 million at September 27, 2003.
"We are pleased to report our sixth consecutive quarter of year-over-year
sales growth," said Albert L. Prillaman, chairman. "While the overall tone of
business appears to have modestly improved since the summer months, we believe
this sales growth is due to market share gains, which we expect to continue.
We enter the final quarter of 2003 with significant sales momentum as
evidenced by a 20% increase in third quarter 2003 orders compared to the year
ago quarter," Prillaman concluded.
"While our Young America(R) youth bedroom business continues to perform
well, most of our sales growth this year is fueled from Stanley Collections
which provides residential wood furniture for every room in the home including
dining room, bedroom, home entertainment, home office and accent tables,"
commented Jeffrey R. Scheffer, president and chief executive officer. "We
believe the growth in our Collections business this year results from market
share gains and is evidence that our blended strategy is working. This
strategy encompasses a blend of our efficient domestic manufacturing
capabilities in focused factories with intelligent outsourcing of certain
component parts and finished goods. 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. The start up costs from our sourcing initiatives combined with
the operational challenges of transitioning to this blended strategy has
negatively impacted our operating margins this year and will continue to do so
near-term. However, we believe this approach will create a long-term
competitive advantage providing continued sales growth and operating margin
improvement going forward," Scheffer concluded.
Management offers the following guidance:
* Net sales is expected to be in the range of $68 million to $71
million for the fourth quarter of 2003, an increase of 7% to 12%
over the prior year quarter. For total year 2003, net sales is
expected to be in the range of $256 million to $259 million,
representing an increase of 7% to 8% over 2002.
* Operating income is expected to be in the range of $6.8 million to
$7.4 million for the fourth quarter of 2003, or $25.6 million to
$26.2 million for total year 2003.
* Earnings per share is expected to be in the range of $.62 to $.68
for the fourth quarter of 2003 compared to $.59 in the year-ago
quarter. For total year 2003, earnings per share is expected to be
in the range of $2.27 to $2.33 compared to $1.85 for 2002. Earnings
per share for 2002 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 is currently in the process of planning and budgeting for 2004
and will provide guidance for 2004 at a later time.
Conference Call Details
The Company will host a conference call Tuesday morning, October 14, 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 October 21, 2003. The
dial-in-number for the replay is (706) 645-9291 with an access code of
3056556.
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 Nine Months Ended
Sept 27, Sept 28, Sept 27, Sept 28,
2003 2002 2003 2002
Net sales $65,227 $61,338 $187,934 $176,180
Cost of sales 49,586 46,386 143,106 133,287
Restructuring and
related charges (1) (209) 3,548
Gross profit 15,641 15,161 44,828 39,345
Selling, general and
administrative
expenses 9,170 7,990 26,083 23,799
Operating income 6,471 7,171 18,745 15,546
Other income, net (61) (13) (150) (167)
Interest expense 698 767 2,069 2,347
Income before
income taxes 5,834 6,417 16,826 13,366
Income taxes 2,118 2,278 6,108 4,745
Net income $3,716 $4,139 $10,718 $8,621
Diluted earnings
per share $0.59 $0.62 $1.65 $1.26
Weighted average
number of shares 6,318 6,681 6,502 6,822
Operating income:
Before restructuring
and related
charges $6,471 $6,962 $18,745 $19,094
Restructuring and
related charges (1) (209) 3,548
Reported operating
income $6,471 $7,171 $18,745 $15,546
Net income:
Before restructuring
and related
charges $3,716 $4,004 $10,718 $10,909
Restructuring and
related charges (1) (135) 2,288
Reported net
income $3,716 $4,139 $10,718 $8,621
(1) 2002 amounts represent net restructuring and related charges (credit)
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)
Sept 27, Sept 28, Dec 31,
2003 2002 2002
Assets
Current assets:
Cash $1,406 $8,598 $9,227
Accounts receivable, net 33,714 31,753 27,832
Inventories 54,395 55,595 54,158
Prepaid expenses and
other current assets 774 1,035 1,311
Deferred income taxes 3,379 3,153 2,876
Total current assets 93,668 100,134 95,404
Property, plant, and
equipment, net 55,945 60,522 59,539
Goodwill 9,072 9,072 9,072
Other assets 7,565 5,540 8,470
Total assets $166,250 $175,268 $172,485
Liabilities and
Stockholders' Equity
Current liabilities:
Current maturities of
long-term debt $7,014 $6,914 $6,914
Accounts payable 15,214 17,818 13,386
Accrued expenses 14,452 16,191 12,160
Total current liabilities 36,680 40,923 32,460
Long-term debt 17,818 24,129 22,700
Deferred income taxes 12,592 11,251 13,084
Other long-term liabilities 4,483 4,419 4,554
Stockholders' equity 94,677 94,546 99,687
Total liabilities and
stockholders' equity $166,250 $175,268 $172,485
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
Sept 27, Sept 28,
2003 2002
Cash flows from operating activities:
Cash received from customers $ 181,942 $ 167,824
Cash paid to suppliers and employees (159,628) (150,676)
Interest paid (2,078) (2,367)
Income taxes paid, net (7,786) (1,142)
Net cash provided by operating activities 12,450 13,639
Cash flows from investing activities:
Capital expenditures (630) (605)
Other, net (19) 696
Net cash (used) provided by
investing activities (649) 91
Cash flows from financing activities:
Repayment of senior notes (5,486) (5,410)
Purchase and retirement of common stock (14,787) (3,066)
Dividends paid (952)
Proceeds from (repayment of)
revolving credit facility, net 704 (600)
Proceeds from insurance policy loans 888 795
Proceeds from exercise of stock options 11 1,194
Net cash used by financing activities (19,622) (7,087)
Net (decrease) increase in cash (7,821) 6,643
Cash at beginning of period 9,227 1,955
Cash at end of period $1,406 $8,598
Reconciliation of net income to
net cash provided by operating activities:
Net income $10,718 $8,621
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 4,345 4,477
Restructuring charge 1,755
Deferred income taxes (995)
Loss on disposal of assets 4 31
Changes in working capital (1,367) (828)
Other assets (184) (167)
Other long-term liabilities (71) (250)
Net cash provided by operating activities $12,450 $13,639
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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