Stanley Furniture Announces Improved First Quarter 2017 Results
April 18 2017 - 4:26PM
Stanley Furniture Company, Inc. (Nasdaq:STLY) today reports sales
and operating results for the first quarter ended April 1,
2017.
First quarter 2017 financial results compared to fourth
quarter 2016:
- Net sales were $11.2 million compared to $9.8 million, an
increase of 14.2%.
- Gross profit margins were 20.0% compared to 20.1%.
- Selling, general and administrative expenses were $2.7 million,
or 23.7% of net sales, compared to $3.4 million, or 34.2% of net
sales.
- Operating loss was $421,000 compared to an operating loss of
$1.4 million.
- Net loss was $416,000 compared to a net loss of $301,000,
including $1.1 million of CDSOA proceeds in the previous
quarter.
- Ended the quarter with $3.6 million in cash and $663,000 in
restricted cash.
First quarter 2017 financial results compared to prior
year first quarter:
- Net sales were $11.2 million compared to $11.7 million, down
4.2%.
- Gross profit margins were 20.0% compared to 21.7%.
- Selling, general and administrative expenses were $2.7 million,
or 23.7% of net sales, compared to $3.3 million, or 28.3% of net
sales.
- Operating loss was $421,000 compared to an operating loss of
$770,000.
- Net loss was $416,000 compared to a net loss of $1.5
million.
Sales Overview:Sales were down 4% over prior
year quarter as the majority of the company’s order backlog
serviced one year ago was not tied to the overseas supply issues
discussed in previous releases. When comparing on a sequential
basis with the fourth quarter of 2016, however, first quarter sales
increased over 14% and inventories decreased by $2.8 million. “We
are beginning to see the signs of an inflection point in the
trajectories of several key performance indicators in our
business,” stated Glenn Prillaman, President and Chief Executive
officer. “We are very pleased to see our customers’ confidence
demonstrated by increasing order rates despite our inability to
properly service long-awaited order backlog for newer, more
marketable product introductions developed throughout the previous
year. This speaks to the confidence customers maintain in our
brands, the dedication of our sales force and management team, as
well as customer expectations regarding the salability of newer
products set to begin hitting retail floors late in the second
quarter,” continued Prillaman.
Operating Results:Gross margins decreased
slightly both sequentially and over prior year due to abnormally
high promotion costs tied to late backlog fulfillment carried over
from production delays in the latter half of last year.
Selling, general and administrative costs for the period
decreased to historical lows despite $75,000 in legal and
professional fees associated mostly with the company’s work on an
agreement with Hale Partnership and the strategic review process
with Stephens Inc. Due to management’s commitment to lower
the company’s break-even level and realign responsibilities, a
significant amount of these reductions are sustainable at twice
current revenue levels.
Operating loss for the first quarter was significantly reduced
to $421 thousand versus prior year’s first quarter loss of $770
thousand and a sequential loss of $1.4 million. Higher discounting
related to shipments delayed from the latter half of 2016 was
offset by cost reductions and sequentially higher sales.
“Although more patience is required from our shareholders and
customers to see our plans fully executed to recover from last
year’s sourcing issues, we remain confident that the second quarter
will begin to demonstrate slight profitability,” said
Prillaman.
Balance Sheet:The company remains debt free.
Cash at the end of the period, including restricted cash, was $4.3
million, down $613 thousand from year end. Cash used to support
operations was less than $200 thousand, as the company used $450
thousand for an annual payment to participants of its Deferred
Compensation Plan.
Working Capital remained relatively flat as inventories
decreased $2.8 million since year end, offset by a decrease in
accounts payable of $1.7 million and an increase of $1.1 million in
accounts receivable.
Outlook:“Order rates increased 4% sequentially
and 8% over prior year quarter. We had a successful Spring
Pre-Market last month in High Point. We expect this month’s April
Market to build off of that customer sentiment demonstrating the
opportunity we have before us to grow revenues over the coming
periods,” concluded Prillaman. “Our customers are excited about the
latter half of 2017, as they recognize a mostly positive
macroeconomic environment for consumer purchases of upscale
furniture, and they anticipate retail success with the renewed
competitive value of our product lines. As we remedy sourcing
issues overseas, we expect an increasing number of revenue growth
opportunities to come. Plans to further expand our product
assortments are underway, and we look forward to leveraging the
efficiencies we have gained in our business into a profitable, cash
generative year of growth.”
About the Company
Established 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 through a localized approach to ecommerce
fulfillment. 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 |
|
April 1, |
|
December 31, |
|
April 2, |
|
|
2017 |
|
|
|
2016 |
|
|
2016 |
|
|
|
|
|
|
|
Net sales |
$ |
11,190 |
|
|
$ |
9,802 |
|
|
$ |
11,683 |
|
|
|
|
|
|
|
Cost of sales |
|
8,953 |
|
|
|
7,826 |
|
|
|
9,142 |
|
|
|
|
|
|
|
Gross
profit |
|
2,237 |
|
|
|
1,976 |
|
|
|
2,541 |
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
2,658 |
|
|
|
3,356 |
|
|
|
3,311 |
|
|
|
|
|
|
|
Operating
loss |
|
(421 |
) |
|
|
(1,380 |
) |
|
|
(770 |
) |
|
|
|
|
|
|
CDSOA Proceeds |
|
- |
|
|
|
1,103 |
|
|
|
- |
|
Other income, net |
|
4 |
|
|
|
10 |
|
|
|
5 |
|
Interest (income)
expense |
|
- |
|
|
|
(2 |
) |
|
|
109 |
|
(Loss)
income from continuing operations before |
|
|
|
|
|
|
|
|
|
|
|
income taxes |
|
(417 |
) |
|
|
(265 |
) |
|
|
(874 |
) |
Income tax (benefit)
expense |
|
(1 |
) |
|
|
36 |
|
|
|
611 |
|
|
|
|
|
|
|
Net
loss |
$ |
(416 |
) |
|
$ |
(301 |
) |
|
$ |
(1,485 |
) |
|
|
|
|
|
|
Diluted loss per
share |
$ |
(.03 |
) |
|
$ |
(.02 |
) |
|
$ |
( .10 |
) |
|
|
|
|
|
|
Diluted weighted
average number of shares outstanding |
|
14,187 |
|
|
|
14,117 |
|
|
|
14,222 |
|
|
|
|
|
|
|
STANLEY FURNITURE COMPANY, INC. |
Supplemental Information |
Reconciliation of GAAP to Non-GAAP Operating
Results |
(in thousands, except per share data) |
(unaudited) |
|
|
Three Months Ended |
|
April 1, |
|
December 31, |
|
April 2, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2016 |
|
Reconciliation
of net loss as reported to net loss as adjusted: |
|
|
|
|
|
Net loss as
reported |
$ |
(416 |
) |
|
$ |
(301 |
) |
|
$ |
(1,485 |
) |
Less income from CDSOA,
net of tax |
|
- |
|
|
|
(1,103 |
) |
|
|
- |
|
Plus tax expense impact
from liquidation of corporate-owned life insurance policies |
|
- |
|
|
|
82 |
|
|
|
600 |
|
Net loss
as adjusted |
$ |
(416 |
) |
|
$ |
(1,322 |
) |
|
$ |
(885 |
) |
|
|
|
|
|
|
Reconciliation
of diluted (loss) income per share as reported to diluted (loss)
income per share as adjusted: |
|
|
|
|
|
Diluted loss per share
as reported |
$ |
(.03 |
) |
|
$ |
(.02 |
) |
|
$ |
(.10 |
) |
Less income from CDSOA,
net of tax |
|
- |
|
|
|
(.08 |
) |
|
|
- |
|
Plus tax expense impact
from liquidation of corporate-owned life insurance policies |
|
- |
|
|
|
.01 |
|
|
|
.04 |
|
Diluted
loss per share as adjusted |
$ |
(.03 |
) |
|
$ |
(.09 |
) |
|
$ |
(.06 |
) |
Note:We have included the above reconciliation
of reported financial measures according to GAAP to non-GAAP
financial measures because we believe that this reconciliation
provides useful information that allows investors to compare
operating results to those of other periods by excluding CDSOA
receipts (net of taxes) and the tax expense impact from the
liquidation of corporate-owned life insurance policies. These
measures should be considered in addition to results prepared in
accordance with GAAP and should not be considered a substitute for
or superior to GAAP results.
|
STANLEY FURNITURE COMPANY, INC. |
Consolidated Condensed Balance
Sheets |
(in thousands) |
(unaudited) |
|
|
April 1, |
|
December 31, |
|
|
2017 |
|
|
2016 |
|
|
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
equivalents |
$ |
3,599 |
|
$ |
4,212 |
Restricted
cash |
|
663 |
|
|
663 |
Accounts
receivable, net |
|
4,585 |
|
|
3,492 |
Inventories |
|
20,160 |
|
|
22,951 |
Prepaid expenses
and other current assets |
|
579 |
|
|
729 |
|
|
|
|
Total current assets |
|
29,586 |
|
|
32,047 |
|
|
|
|
Property, plant and
equipment, net |
|
1,561 |
|
|
1,606 |
Other assets |
|
2,796 |
|
|
2,868 |
|
|
|
|
Total assets |
$ |
33,943 |
|
$ |
36,521 |
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
3,936 |
|
$ |
5,674 |
Accrued
expenses |
|
2,507 |
|
|
2,723 |
|
|
|
|
Total current liabilities |
|
6,443 |
|
|
8,397 |
|
|
|
|
Other long-term
liabilities |
|
7,896 |
|
|
8,142 |
|
|
|
|
Stockholders'
equity |
|
19,604 |
|
|
19,982 |
|
|
|
|
Total liabilities and stockholders' equity |
$ |
33,943 |
|
$ |
36,521 |
|
STANLEY FURNITURE COMPANY, INC. |
Consolidated Condensed Statements of Cash
Flows |
(in thousands) |
(unaudited) |
|
|
|
|
|
Three Months Ended |
|
April 1, |
|
April 2, |
|
|
2017 |
|
|
|
2016 |
|
Cash flows from
operating activities: |
|
|
|
Cash
received from customers |
$ |
10,197 |
|
|
$ |
12,261 |
|
Cash paid
to suppliers and employees |
|
(10,810 |
) |
|
|
(14,259 |
) |
Interest
paid, net |
|
- |
|
|
|
(199 |
) |
Net cash
used by operating activities |
|
(613 |
) |
|
|
(2,197 |
) |
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Proceeds
from surrender of corporate-owned life insurance policies |
|
- |
|
|
|
28,139 |
|
Purchase
of other assets |
|
- |
|
|
|
(14 |
) |
Net cash
provided by investing activities |
|
- |
|
|
|
28,125 |
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Payment
of insurance policy loans |
|
- |
|
|
|
(5,495 |
) |
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 |
|
- |
|
|
|
(6,521 |
) |
|
|
|
|
Cash flows from
discontinued operations: |
|
|
|
Net cash
used by discontinued operations |
|
- |
|
|
|
(4 |
) |
|
|
|
|
Net (decrease) increase
in cash and equivalents |
|
(613 |
) |
|
|
19,403 |
|
Cash and equivalents at
beginning of period |
|
4,212 |
|
|
|
6,497 |
|
|
|
|
|
Cash and
equivalents at end of period |
$ |
3,599 |
|
|
$ |
25,900 |
|
|
|
|
|
Reconciliation
of net loss to net cash used by operating activities: |
|
|
|
Net loss |
$ |
(416 |
) |
|
$ |
(1,485 |
) |
|
|
|
|
Depreciation and
amortization |
|
117 |
|
|
|
116 |
|
Stock-based
compensation |
|
13 |
|
|
|
130 |
|
Changes in assets and
liabilities |
|
(327 |
) |
|
|
(958 |
) |
Net cash used
by operating activities |
$ |
(613 |
) |
|
$ |
(2,197 |
) |
|
|
|
|
|
|
|
|
Stanley Furniture Company, Inc.
Investor Contact: Anita W. Wimmer
(336) 884-7698
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