Earnings Per Share Increase 10.0% on 8.6% Sales Gain
STANLEYTOWN, Va., Oct. 17 /PRNewswire-FirstCall/ -- Stanley Furniture
Company, Inc. (Nasdaq: STLY) today reported record sales and earnings for the
third quarter of 2005. Sales and earnings were within management's previous
guidance range provided in mid July 2005.
Net sales of $85.6 million increased 8.6% from the third quarter of 2004,
marking the fourteenth consecutive quarter of sales growth over the comparable
prior year quarter. Earnings per share grew 10.0% to $.44 compared to $.40 in
the third quarter of last year.
For the first nine months of 2005, net sales of $252.2 million rose 13.3%
over the comparable prior year period. Year-to-date earnings per share grew
12.9% to $1.31 from $1.16 in the comparable 2004 period.
Third quarter operating income rose to $9.4 million, or 11.0% of net
sales. Operating income for the first nine months of 2005 increased to $28.2
million, or 11.2% of net sales, from $25.3 million, or 11.4% of net sales, in
the comparable year-ago period. Operating margins have remained consistently
strong, ranging from 11.0% 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. For the first nine months of 2005, higher sales and increased
production levels are helping to offset these higher costs. Operational
inefficiencies and lower production levels in the third quarter of 2005
compared to the year ago period also negatively impacted operating margins.
While the operating efficiencies are expected to improve, lower production
levels are anticipated in the fourth quarter of 2005 versus the comparable
prior year period.
Working capital, excluding cash and current maturities of long-term debt,
decreased $1.9 million during the first nine months of 2005 to $83.3 million
from $85.2 million at year end. Total inventories of $72.8 million have
decreased approximately $0.9 million since December 31, 2004. Strong cash
flow in the first nine months of 2005 was used to purchase $10.0 million of
the Company's common stock, reduce debt $2.8 million, pay cash dividends of
$2.3 million and increase the Company's cash on hand $11.7 million.
Approximately $20.2 million is currently authorized by the Company's Board of
Directors to repurchase shares of the Company's common stock. At October 1,
2005, the Company was in a net cash position with total debt outstanding of
$12.9 million and cash on hand of $19.3 million.
Business Outlook
"We are pleased to report another quarter of significant market share
gains and strong operating margins," commented Jeffrey R. Scheffer, chairman,
president and chief executive officer. "For the most recent four quarters our
sales have increased 13.1% from the previous four quarter period. We believe
the consistent execution of our strategy has resulted in market share gains
that continue to drive most of our sales growth. We believe industry sales
growth slowed during the third quarter and is in an uncertain period due to a
sharp decline in consumer confidence levels. Near term we are focusing on
keeping our inventories at appropriate levels while remaining hopeful that
this will prove to be a short term disruption in demand. Accordingly, we have
lowered our fourth quarter 2005 sales and earnings guidance as detailed
below," concluded Scheffer.
Management offers the following guidance:
* Fourth quarter 2005 net sales are expected to be in the range of $81.5
million to $84.5 million, ranging from a decrease of 2.1% to an increase
of 1.5% over the fourth quarter of 2004. For total year 2005, net sales
are expected to be in the range of $334 million to $337 million, an
increase of 9% to 10% over the prior year.
* Operating income is expected to be in the range of $8.4 million to $8.9
million for the fourth quarter of 2005, or $36.6 million to $37.1
million for total year 2005.
* The Company's effective tax rate is expected to be in the range of 35.1%
to 35.5% for 2005.
* Fourth quarter 2005 earnings per share are expected to be in the range
of $.39 to $.42 compared to $.43 per share in the year-ago quarter. For
total year 2005, earnings per share are expected to be in the range of
$1.70 to $1.73 compared to $1.59 for 2004.
Management is currently in the process of planning and budgeting for 2006
and will provide guidance for 2006 at a later time.
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, October 18, 2005
at 9:00 a.m. 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 25, 2005) is (877) 660-6853, the account reference number is
275 and the conference number is 171581.
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.
STANLEY FURNITURE COMPANY, INC.
Consolidated Operating Results
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
Oct 1, Sept 25, Oct 1, Sept 25,
2005 2004 2005 2004
Net sales $85,615 $78,803 $252,200 $222,546
Cost of sales 65,131 59,389 190,619 167,665
Gross profit 20,484 19,414 61,581 54,881
Selling, general
and administrative
expenses 11,106 10,636 33,396 29,592
Operating income 9,378 8,778 28,185 25,289
Other income, net 71 50 190 145
Interest Income 96 4 250 21
Interest expense 548 588 1,663 1,808
Income before
income taxes 8,997 8,244 26,962 23,647
Income taxes 3,195 2,959 9,573 8,544
Net income $5,802 $5,285 $17,389 $15,103
Diluted earnings
per share $0.44 $0.40 $1.31 $1.16
Weighted average
number of shares 13,198 13,100 13,294 13,019
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Balance Sheets
(in thousands)
(unaudited)
Oct 1, Sept 25, Dec 31,
2005 2004 2004
Assets
Current assets:
Cash $19,313 $2,171 $7,632
Accounts receivable, net 41,098 40,178 36,036
Inventories 72,776 72,365 73,658
Prepaid expenses and
other current assets 1,007 2,109 1,585
Deferred income taxes 2,521 2,930 2,414
Total current assets 136,715 119,753 121,325
Property, plant, and
equipment, net 50,970 51,394 51,342
Goodwill 9,072 9,072 9,072
Other assets 7,726 6,425 7,149
Total assets $204,483 $186,644 $188,888
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of
long-term debt $2,857 $4,257 $4,257
Accounts payable 18,963 17,552 16,056
Accrued expenses 15,108 16,870 12,445
Total current liabilities 36,928 38,679 32,758
Long-term debt 10,000 12,857 11,428
Deferred income taxes 10,325 10,813 10,742
Other long-term liabilities 6,580 5,890 6,695
Stockholders' equity 140,650 118,405 127,265
Total liabilities and
stockholders' equity $204,483 $186,644 $188,888
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
Oct 1, Sept 25,
2005 2004
Cash flows from operating activities:
Cash received from customers $247,093 $212,934
Cash paid to suppliers and employees (214,001) (198,687)
Interest paid, net (1,431) (1,791)
Income taxes paid, net (8,447) (7,748)
Net cash provided by
operating activities 23,214 4,708
Cash flows from investing activities:
Capital expenditures (3,791) (402)
Other, net (33) (119)
Net cash used by investing activities (3,824) (521)
Cash flows from financing activities:
Repayment of senior notes (2,828) (5,586)
Purchase and retirement of common stock (9,996) -
Dividends paid (2,330) (1,876)
Proceeds from insurance policy loans 1,110 993
Proceeds from exercise of stock options 6,335 1,944
Net cash used by financing activities (7,709) (4,525)
Net increase (decrease) in cash 11,681 (338)
Cash at beginning of period 7,632 2,509
Cash at end of period $19,313 $2,171
Reconciliation of net income to net cash
provided by operating activities:
Net income $17,389 $15,103
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 4,228 4,230
Deferred income taxes (524) (1,822)
Changes in working capital 2,292 (13,611)
Other assets (56) (205)
Other long-term liabilities (115) 1,013
Net cash provided by
operating activities $23,214 $4,708
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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