STANLEYTOWN, Va., Oct. 16 /PRNewswire-FirstCall/ -- Stanley Furniture
Company, Inc. (Nasdaq: STLY) today reported sales and earnings for the
third quarter of 2006. Both sales and earnings were slightly below
management's updated guidance range provided in mid September 2006.
Third quarter sales and earnings were below the record levels from the
year-ago quarter. Net sales of $75.9 million declined 11.3% and earnings
per share of $.26 decreased 40.9% from the third quarter of last year.
For the first nine months of 2006, net sales of $236.9 million
decreased 6.1% from the comparable prior year period. Earnings per share
declined 22.9% to $1.01 compared to $1.31 for the first nine months of
2005.
Third quarter operating income was $5.0 million, or 6.5% of net sales,
compared to $9.4 million, or 11.0% of net sales, in the year ago quarter.
Year-to-date operating income declined to $19.9 million, or 8.4% of net
sales, from $28.2 million, or 11.2% of net sales in the comparable 2005
period. Lower margins resulted from lower sales, decreased production
levels, and higher raw material, compensation and energy costs. As a result
of improving processes and reducing lead times, production levels decreased
more sharply than the sales decline particularly in the second and third
quarters and led to lower margins due to the under absorption of factory
overhead costs.
Working capital, excluding cash and current maturities of long-term
debt, decreased $9.4 million during the nine month period ended September
30, 2006 to $72.1 million from $81.5 million at December 31, 2005. Total
inventories of $59.8 million have decreased $10.2 million, or 14.6%, and
$13.0 million, or 17.9%, since December 31, 2005 and the year-ago quarter,
respectively. Strong cash flow in the first nine months of 2006 along with
$7.2 million of cash on hand was used to purchase $28.3 million of the
Company's common stock, pay cash dividends of $2.9 million, and reduce debt
$1.4 million. The Company currently has $37.9 million authorized by the
Board of Directors to repurchase shares of its common stock. At September
30, 2006 total debt outstanding was $10.0 million and cash on hand amounted
to $5.4 million.
Business Outlook
"As previously noted, we believe wooden residential furniture sales are
in the midst of an industry wide slow down that is likely to persist for a
while," commented Jeffrey R. Scheffer, chairman, president and chief
executive officer. "Consequently, accurately projecting sales in this
environment is difficult because of the limited visibility due to our quick
order fulfillment times. While we are disappointed with the sales decline,
we believe it is a result of overall industry conditions. We are very
pleased with strong cash flow in the third quarter and year-to-date 2006
that has been accentuated by a significant inventory reduction driven by
the initial progress from our lean journey."
"Near term we will continue to focus on controlling costs and
inventories, and improving our product offerings. Longer term we remain
focused on reducing costs, eliminating waste, and improving productivity,
quality, and service through our continuous improvement efforts applying
lean business principles," concluded Scheffer.
Management offers the following guidance. This guidance excludes any
potential receipt of funds under the Continued Dumping and Subsidy Offset
Act involving tariffs collected by the U.S. government on wooden bedroom
furniture imported from China.
* Fourth quarter 2006 net sales are expected to be in the range of $ 69.0
million to $ 71.5 million, ranging from a decrease of 12 % to 15 % over
the fourth quarter of 2005. For total year 2006, net sales are expected
to be in the range of $ 305.9 million to $ 308.4 million, a decrease of
7.6 % to 8.3 % compared to 2005.
* Operating income is expected to be in the range of $ 2.7 million to $
3.2 million for the fourth quarter of 2006, or $ 22.6 million to $ 23.1
million for total year 2006.
* The Company's effective tax rate is expected to be 34.8% in 2006.
* Fourth quarter 2006 earnings per share are expected to be in the range
of $.13 to $.16 compared to $.46 per share in the year-ago quarter. For
total year 2006, earnings per share are expected to be in the range of
$1.15 to $1.18 compared to $1.77 for 2005.
Management is currently in the process of planning and budgeting for
2007 and will provide guidance for 2007 at a later time.
Other Information
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, 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, October 17, 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 October 23, 2006) is (877) 660-6853, the account
reference number is 275 and the conference number is 215411.
Forward-Looking Statements
Certain statements made in this report 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 our 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 the cyclical nature of the furniture industry, competition in the
furniture industry including competition from lower-cost foreign
manufacturers, disruptions in offshore sourcing including those arising
from supply or distribution disruptions or those arising from changes in
political, economic and social conditions, as well as laws and regulations,
in China or countries from which we source products, international trade
policies of the United States and countries from which we source products,
manufacturing realignment, the inability to obtain sufficient quantities of
quality raw materials in a timely manner, business failures or loss of
large customers, the inability to raise prices in response to inflation and
increasing costs, failure to anticipate or respond to changes to consumer
tastes and fashions in a timely manner, environmental compliance costs and
extended business interruption at manufacturing facilities.
Any forward-looking statement speaks only as of the date of this press
release, and we undertake 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 Nine Months Ended
Sept 30, Oct 1, Sept 30, Oct 1,
2006 2005 2006 2005
Net sales $75,911 $85,615 $236,911 $252,200
Cost of sales 60,951 65,131 184,575 190,619
Gross profit 14,960 20,484 52,336 61,581
Selling, general and
administrative
expenses 9,996 11,106 32,447 33,396
Operating income 4,964 9,378 19,889 28,185
Other income, net 91 71 252 190
Interest income 76 96 332 250
Interest expense 537 548 1,570 1,663
Income before income
taxes 4,594 8,997 18,903 26,962
Income taxes 1,598 3,195 6,578 9,573
Net income $2,996 $5,802 $12,325 $17,389
Diluted earnings per
share $0.26 $0.44 $1.01 $1.31
Weighted average
number of shares 11,657 13,198 12,147 13,294
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Balance Sheets
(in thousands)
(unaudited)
Sept 30, Oct 1, Dec 31,
2006 2005 2005
Assets
Current assets:
Cash $5,400 $19,313 $12,556
Accounts receivable, net 38,271 41,098 36,957
Inventories 59,766 72,776 69,961
Prepaid expenses and other
current assets 1,759 1,007 1,435
Deferred income taxes 2,442 2,521 2,462
Total current assets 107,638 136,715 123,371
Property, plant and equipment, net 48,438 50,970 50,744
Goodwill 9,072 9,072 9,072
Other assets 6,362 7,726 7,301
Total assets $171,510 $204,483 $190,488
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term
debt $2,857 $2,857 $2,857
Accounts payable 18,227 18,963 16,405
Accrued expenses 11,923 15,108 12,909
Total current liabilities 33,007 36,928 32,171
Long-term debt 7,143 10,000 8,571
Deferred income taxes 9,386 10,325 10,164
Other long-term liabilities 6,559 6,580 6,833
Stockholders' equity 115,415 140,650 132,749
Total liabilities and
stockholders' equity $171,510 $204,483 $190,488
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
Sept 30, Oct 1,
2006 2005
Cash flows from operating activities:
Cash received from customers $234,933 $247,093
Cash paid to suppliers and employees (199,742) (214,001)
Interest paid, net (1,335) (1,431)
Income taxes paid, net (8,612) (8,447)
Net cash provided by operating activities 25,244 23,214
Cash flows from investing activities:
Capital expenditures (2,023) (3,791)
Other, net (17) (33)
Net cash used by investing activities (2,040) (3,824)
Cash flows from financing activities:
Repayment of senior notes (1,428) (2,828)
Purchase and retirement of common stock (28,282) (9,996)
Dividends paid (2,859) (2,330)
Proceeds from insurance policy loans 1,241 1,110
Tax benefit from exercise of stock options 255
Proceeds from exercise of stock options 713 6,335
Net cash used by financing activities (30,360) (7,709)
Net increase (decrease) in cash (7,156) 11,681
Cash at beginning of period 12,556 7,632
Cash at end of period $5,400 $19,313
Reconciliation of net income to
net cash provided by operating activities:
Net income $12,325 $17,389
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 4,368 4,228
Deferred income taxes (758) (524)
Stock-based compensation 268
Tax benefit from exercise of stock
options (255)
Loss on disposal of assets 23
Changes in working capital 9,812 2,292
Other assets (265) (56)
Other long-term liabilities (274) (115)
Net cash provided by operating activities $25,244 $23,214
SOURCE Stanley Furniture Company, Inc.
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Related links:
http://www.stanleyfurniture.com
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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