Stanley Furniture Announces Second Quarter 2017 Earnings
July 25 2017 - 3:28PM
Company continues to improve results
Stanley Furniture Company, Inc. (Nasdaq:STLY) reports sales and
operating results for the second quarter ended July 1, 2017.
Second quarter 2017 financial results compared to first
quarter 2017:
- Net sales were $11.6 million compared to $11.2 million, an
increase of 3.8%.
- Gross profit margins were 23.5% compared to 20.0%.
- Selling, general and administrative expenses were $2.7 million,
or 23.6% of net sales, compared to $2.7 million, or 23.7% of net
sales.
- Net income was $14,000 compared to a net loss of $416,000.
- Ended the quarter with $5.2 million in cash, including $631,000
in restricted cash.
Second quarter 2017 financial results compared to prior
year second quarter:
- Net sales were $11.6 million compared to $12.1 million, down
3.6%.
- Gross profit margins were 23.5% compared to 17.1%.
- Selling, general and administrative expenses were $2.7 million,
or 23.6% of net sales, compared to $3.5 million, or 29.1% of net
sales.
- Net income was $14,000 compared to a net loss of $1.4
million.
Year-to-date second quarter 2017 financial results
compared to year-to-date prior year second quarter:
- Net sales were $22.8 million compared to $23.7 million, down
3.9%.
- Gross profit margins were 21.8% compared to 19.4%.
- Selling, general and administrative expenses were $5.4 million,
or 23.7% of net sales, compared to $6.8 million, or 28.7% of net
sales.
- Net loss was $402,000 compared to a net loss of $2.9
million.
Sales Overview:Second quarter sales increased
3.8% over first quarter, yet were down 3.6% over prior year quarter
and down 3.9% through the first half of 2017. The second quarter
was the second consecutive quarter of growth for the company, but
revenues continue to remain below target due to sourcing
issues.
As an indication that past sourcing issues are beginning to be
alleviated, inventories increased sequentially by $770,000 due to
production that is in transit but not yet received in the company’s
domestic warehouse where it can then service order backlog.
“We continue to see the signs of an inflection point in the
recovery of our business with another quarter of sequential
improvements in sales, gross profits and income,” stated Glenn
Prillaman, President and Chief Executive
Officer. Operating
Results:Gross margins improved both sequentially and over
prior year due to abnormally high discounting in both the first
quarter of this year and the second quarter of last year.
Improved margins in the second quarter also resulted from higher
sales allowing for the absorption of fixed overhead.
Selling, general and administrative costs for the period decreased
to historical lows despite $65,000 in the second quarter and
$93,000 year to date in legal and professional fees associated
mostly with the strategic review process with Stephens
Inc. The engagement of Stephens Inc. expired in June 2017.
While the Board and management are focused on implementing the
company’s business plan, the Board remains committed to maximizing
long term value for the company’s stockholders and will continue to
evaluate strategic alternatives. Net income for the second
quarter was $14,000 versus a sequential loss of $416,000 and a
prior year second quarter loss of $1.4 million. Lower discounting
and cost reductions were the major factors towards improved
results. “The business is now essentially breakeven despite
missing desired sales growth,” said Prillaman. “We remain debt
free. We have sufficient cash to serve customers through
inventory investments, which should result in continued sequential
revenue growth.” Balance
Sheet: The company remains debt free. Cash at the end of
the period, including $631,000 of restricted cash, was $5.2
million, up $288,000 from year end. Working capital decreased
$794,000 as inventories decreased $2.0 million since year end,
partially offset by an increase in accounts receivables of $1.1
million. Payables were flat with previous year end, yet increased
$1.8 million sequentially due to an abnormally high amount of
production shipping late in the quarter from overseas vendors which
had been overdue for several periods.
Outlook: “Newer, more marketable product
introductions developed throughout the past two years but not
previously seen by the retail consumer began to sell late in the
quarter,” concluded Prillaman. “We and our wholesale customers are
pleased with initial results, and we expect to slowly grow revenues
and demonstrate slight profitability over the remainder of 2017
as inventory availability improves.”
About the CompanyEstablished in 1924, Stanley
Furniture Company, Inc. is a leading design, marketing and overseas
sourcing resource in the upscale segment of the wood residential
market. The company offers a diversified product line supported by
an overseas sourcing model and markets its brands through the
wholesale trade’s network of brick-and-mortar furniture retailers,
online retailers and interior designers worldwide, as well as
through direct sales to the consumer online. The company’s common
stock is traded on the NASDAQ stock market under the symbol
STLY.
Forward-Looking Statements Certain statements
made in this news 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 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, disruptions
in foreign 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 countries from which we source products,
international trade policies of the United States and countries
from which we source products, the inability to raise prices in
response to inflation and increasing costs, lower sales due to
worsening of current economic conditions, the cyclical nature of
the furniture industry, business failures or loss of large
customers, failure to anticipate or respond to changes in consumer
tastes, fashions and perceived value in a timely manner,
competition in the furniture industry, environmental, health, and
safety compliance costs, failure or interruption of our
information technology infrastructure. Any forward-looking
statement speaks only as of the date of this news release and we
undertake 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 shown on a diluted basis.
|
|
STANLEY FURNITURE COMPANY, INC. |
Consolidated Operating Results |
(in thousands, except per share data) |
(unaudited) |
|
|
|
Three Months Ended |
|
July 1, |
|
April 1, |
|
December 31, |
|
|
2017 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
Net sales |
$ |
11,615 |
|
|
$ |
11,190 |
|
|
$ |
9,802 |
|
|
|
|
|
|
|
Cost of sales |
|
8,883 |
|
|
|
8,953 |
|
|
|
7,826 |
|
|
|
|
|
|
|
Gross
profit |
|
2,732 |
|
|
|
2,237 |
|
|
|
1,976 |
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
2,738 |
|
|
|
2,658 |
|
|
|
3,356 |
|
|
|
|
|
|
|
Operating
loss |
|
(6 |
) |
|
|
(421 |
) |
|
|
(1,380 |
) |
|
|
|
|
|
|
CDSOA proceeds |
|
- |
|
|
|
- |
|
|
|
1,103 |
|
Other income, net |
|
18 |
|
|
|
4 |
|
|
|
10 |
|
Interest income |
|
- |
|
|
|
- |
|
|
|
2 |
|
Income
(loss) from continuing operations before income taxes |
|
12 |
|
|
|
(417 |
) |
|
|
(265 |
) |
Income tax (benefit)
expense |
|
(2 |
) |
|
|
(1 |
) |
|
|
36 |
|
|
|
|
|
|
|
Net
income (loss) |
$ |
14 |
|
|
$ |
(416 |
) |
|
$ |
(301 |
) |
|
|
|
|
|
|
Diluted loss per
share |
$ |
- |
|
|
$ |
(.03 |
) |
|
$ |
(.02 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average number of shares outstanding |
|
14,203 |
|
|
|
14,187 |
|
|
|
14,117 |
|
|
|
|
|
|
|
|
STANLEY FURNITURE COMPANY, INC. |
Consolidated Operating Results |
(in thousands, except per share data) |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
July 1, |
|
July 2, |
|
July 1, |
|
July 2, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
11,615 |
|
|
$ |
12,053 |
|
|
$ |
22,805 |
|
|
$ |
23,736 |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
8,883 |
|
|
|
9,991 |
|
|
|
17,836 |
|
|
|
19,133 |
|
|
|
|
|
|
|
|
|
Gross
profit |
|
2,732 |
|
|
|
2,062 |
|
|
|
4,969 |
|
|
|
4,603 |
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
2,738 |
|
|
|
3,508 |
|
|
|
5,396 |
|
|
|
6,819 |
|
|
|
|
|
|
|
|
|
Operating
loss |
|
(6 |
) |
|
|
(1,446 |
) |
|
|
(427 |
) |
|
|
(2,216 |
) |
|
|
|
|
|
|
|
|
Other income, net |
|
18 |
|
|
|
6 |
|
|
|
22 |
|
|
|
11 |
|
Interest expense,
net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
109 |
|
Income (loss)
from continuing operations before income taxes |
|
12 |
|
|
|
(1,440 |
) |
|
|
(405 |
) |
|
|
(2,314 |
) |
Income tax (benefit)
expense |
|
(2 |
) |
|
|
(48 |
) |
|
|
(3 |
) |
|
|
563 |
|
|
|
|
|
|
|
|
|
Net
income (loss) |
$ |
14 |
|
|
$ |
(1,392 |
) |
|
$ |
(402 |
) |
|
$ |
(2,877 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss)
per share |
$ |
- |
|
|
$ |
(.10 |
) |
|
$ |
(.03 |
) |
|
$ |
(.20 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average number of shares |
|
14,203 |
|
|
|
14,083 |
|
|
|
14,196 |
|
|
|
14,164 |
|
|
|
|
|
|
|
|
|
|
STANLEY FURNITURE COMPANY, INC. |
Consolidated Condensed Balance
Sheets |
(in thousands) |
(unaudited) |
|
|
July 1, |
|
December 31, |
|
|
2017 |
|
|
2016 |
|
|
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
equivalents |
$ |
4,532 |
|
$ |
4,212 |
Restricted cash |
|
631 |
|
|
663 |
Accounts receivable, net |
|
4,561 |
|
|
3,492 |
Finished Goods Inventory, net |
|
20,930 |
|
|
22,951 |
Prepaid expenses and other current assets
|
|
851 |
|
|
729 |
|
|
|
|
Total current assets |
|
31,505 |
|
|
32,047 |
|
|
|
|
Property, plant and
equipment, net |
|
1,521 |
|
|
1,606 |
Other assets |
|
2,740 |
|
|
2,868 |
|
|
|
|
Total assets |
$ |
35,766 |
|
$ |
36,521 |
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
5,687 |
|
$ |
5,674 |
Accrued
expenses |
|
2,962 |
|
|
2,723 |
|
|
|
|
Total current liabilities |
|
8,649 |
|
|
8,397 |
|
|
|
|
Other long-term
liabilities |
|
7,419 |
|
|
8,142 |
|
|
|
|
Stockholders'
equity |
|
19,698 |
|
|
19,982 |
|
|
|
|
Total liabilities and stockholders' equity |
$ |
35,766 |
|
$ |
36,521 |
|
|
STANLEY FURNITURE COMPANY, INC. |
Consolidated Condensed Statements of Cash
Flows |
(in thousands) |
(unaudited) |
|
|
|
|
|
Six Months
Ended |
|
July 1, |
|
July 2, |
|
|
2017 |
|
|
|
2016 |
|
Cash flows from
operating activities: |
|
|
|
Cash
received from customers |
$ |
21,801 |
|
|
$ |
25,087 |
|
Cash paid
to suppliers and employees |
|
(21,453 |
) |
|
|
(26,028 |
) |
Income
taxes paid, net |
|
- |
|
|
|
(262 |
) |
Interest
paid, net |
|
(26 |
) |
|
|
(199 |
) |
Net cash
provided (used) by operating activities |
|
322 |
|
|
|
(1,402 |
) |
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Decrease
in restricted cash |
|
32 |
|
|
|
- |
|
Proceeds
from surrender of corporate-owned life insurance policies |
|
- |
|
|
|
28,139 |
|
Purchase
of other assets |
|
(10 |
) |
|
|
- |
|
Other,
net |
|
25 |
|
|
|
(14 |
) |
Net cash
provided by investing activities |
|
47 |
|
|
|
28,125 |
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Payment
of insurance policy loans |
|
- |
|
|
|
(5,495 |
) |
Payment
of dividends |
|
(49 |
) |
|
|
- |
|
Purchase
and retirement of common stock |
|
- |
|
|
|
(1,012 |
) |
Stock
purchase and retirement for tax withholdings on vesting of
restricted awards |
|
- |
|
|
|
(14 |
) |
Net cash
used by financing activities |
|
(49 |
) |
|
|
(6,521 |
) |
|
|
|
|
Cash flows from
discontinued operations: |
|
|
|
Net cash
used by discontinued operations |
|
- |
|
|
|
(7 |
) |
|
|
|
|
Net increase in cash
and equivalents |
|
320 |
|
|
|
20,195 |
|
Cash and equivalents at
beginning of period |
|
4,212 |
|
|
|
6,497 |
|
|
|
|
|
Cash and
equivalents at end of period |
$ |
4,532 |
|
|
$ |
26,692 |
|
|
|
|
|
Reconciliation
of net loss to net cash provided (used) by operating
activities: |
|
|
|
Net loss |
$ |
(402 |
) |
|
$ |
(2,877 |
) |
|
|
|
|
Depreciation and
amortization |
|
229 |
|
|
|
234 |
|
Stock-based
compensation |
|
(66 |
) |
|
|
117 |
|
Changes in assets and
liabilities |
|
561 |
|
|
|
1,124 |
|
Net cash
provided (used) by operating activities |
$ |
322 |
|
|
$ |
(1,402 |
) |
|
Stanley Furniture Company, Inc.
Investor Contact: Anita W. Wimmer
(336) 884-7698
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