Bassett Announces Fiscal Second Quarter Results
July 01 2021 - 9:00AM
Bassett Furniture Industries, Inc. (Nasdaq: BSET) announced today
its results of operations for its second quarter ended May 29,
2021.
Fiscal 2021 Second Quarter Highlights (Dollars
in millions)
|
Sales |
|
Operating Income (Loss) |
|
2nd Qtr |
|
Dollar |
% |
|
2nd Qtr |
% of |
|
2nd Qtr |
% of |
|
2021 |
2020 |
|
Change |
Change |
2021 |
Sales |
|
2020 |
Sales |
Consolidated (1) |
$ |
124.1 |
$ |
63.8 |
|
$ |
60.3 |
94.4 |
% |
|
$ |
8.4 |
6.8 |
% |
|
$ |
(31.2 |
) |
-48.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale |
$ |
76.0 |
$ |
33.1 |
|
$ |
42.9 |
129.7 |
% |
|
$ |
5.4 |
7.0 |
% |
|
$ |
(7.4 |
) |
-22.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
$ |
62.5 |
$ |
33.2 |
|
$ |
29.3 |
88.4 |
% |
|
$ |
1.7 |
2.6 |
% |
|
$ |
(9.2 |
) |
-27.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Logistical Services |
$ |
22.2 |
$ |
15.3 |
|
$ |
7.0 |
45.8 |
% |
|
$ |
1.3 |
5.8 |
% |
|
$ |
(1.8 |
) |
-12.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Our consolidated results include certain intercompany
eliminations. See Table 4, “Segment Information” below for an
illustration |
of the effects of these intercompany
eliminations on our consolidated sales and operating income
(loss). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated revenue of $124.1 million for our
second quarter represented a 94% increase as compared to the
pandemic impacted quarter in 2020 and 15% as compared to 2019.
Similarly, strong wholesale orders of $96.0 million for the period
increased by 172% versus 2020 and by 51% compared to the
pre-pandemic 2019 second quarter. As we battle an extremely tight
labor market and continued supply chain disruptions, we strive to
chip away at our huge order backlog that grew by another $19
million over the three months. Adding to the complexity is the
inflationary raw material spiral that we have confronted this year,
leading to our unprecedented action of levying three general price
increases since our fiscal year began in December. Amidst this
unsettled environment, we were pleased to record an $8.4 million
operating profit compared to last year’s loss. EPS advanced to
$0.60 per share for the quarter against the COVID-19 affected loss
of ($2.04) in 2020.
Again, our obvious focus is centered on the
reduction of our backlog and returning to a semblance of normalcy
in our service levels as soon as possible. Although our
cancellation rate has not spiked significantly to date, it is a
natural concern. At the recent High Point Furniture Market, we were
actually thanked several times for our ability to deliver goods
more quickly than the apparent current industry standard, which
underscores just how compromised lead times actually are today.
Aside from working massive amounts of overtime, the early June
opening of our new upholstery production facility in Newton, NC
will provide some immediate relief to a portion of the situation.
With the polyurethane foam shortage largely behind us, our current
raw material bottlenecks lie in the thousands of yards of
decorative fabrics that our suppliers owe us. Our production
managers have done a great job in shuffling our daily schedules to
produce what they can based on the materials that they actually
possess. Notwithstanding all the complications of the post-pandemic
economy, our wholesale team produced a 7.0% operating margin for
the period as our wood, upholstery, and outdoor divisions turned in
performances significantly better than 2020 and 2019.
Another aspect of the current disorder is the
state of the industry’s logistics model. The strong business that
has characterized the past 13 months has overwhelmed the furniture
trucking segment. There is currently a dearth of warehouse space,
warehouse labor, and over the road trailers to handle shipping
backlogs. Consequently, even after the goods have been
manufactured, there are accompanying lags in logistics service that
could represent several weeks of further delay. Exacerbating this
state of affairs is the global shortage of shipping containers that
continues to plague our sector. Our Zenith Logistics team has
performed at a high level in dealing with the cumulative effect of
these daily challenges by generating $1.3 million of operating
profit for the quarter despite spiraling warehousing labor costs
and procuring over 400 trailers on short term leases to combat the
equipment shortage. Longer term we are motivated by prospects of
our recent regional warehouse model that is showing great promise.
Over the past six months we have experimented with keeping some of
our best sellers closer to the U.S. population centers for quicker
delivery. When we have been able to have these goods in inventory,
we have seen significant upticks in rates of sale, which bodes well
for our plan to expand this model as product availability becomes
normalized.
As mentioned, wholesale orders increased
dramatically during the quarter with all channels showing growth.
Leading the way was our Bassett Design Center (BDC) network, part
of our open market wholesale business, with increases of 212% and
87%, respectively, compared to 2020 and 2019. Another big part of
the overall open market increase was the continuing rise of the
Bassett Club Level program, which grew by 328% versus 2019.
Dedicated Bassett-branded distribution in the form of the Bassett
Home Furnishings network and BDC’s represented 67% of wholesale
sales for the period. Once again, our corporate retail division was
not able to deliver goods to the home at the rate that they were
sold in the stores. Our digital outreach strategies continued to
bear fruit as visitors to our website grew by 51% in the quarter.
Store traffic, which has declined for the past few years, has held
steady since business returned after the stores reopened last May.
Still, our corporate retail turned in a profit of $1.6 million
while continuing to add to its already large order backlog.
Finally, we are excited by the combined results of the Lane Venture
and Bassett Outdoor sales strategies as they combined for a 122%
increase to 2020 and 124% to 2019. Much of the new business came
from our Alabama metal facility that we purchased in 2019.
Summing it all up for the quarter, we wrote more
wholesale business than we had in many years, back to when we
operated a much larger domestic manufacturing footprint in the
pre-globalization days. While retiring $2.4 million of stock and
paying our quarterly dividend, we ended May with $63.5 million of
cash and short-term investments and no debt. There are many cost
pressures and raw material lead times remain long. But we have a
very large backlog and our most recent big sales event around
Memorial Day was very strong. Taking all of those positives and
negatives into account, we remain encouraged concerning our
prospects for the remainder of 2021.
Robert H. Spilman, Jr., Chairman and CEO
About Bassett Furniture Industries, Inc. Bassett
Furniture Industries, Inc. (NASDAQ:BSET), is a leading manufacturer
and marketer of high quality home furnishings. With 97 company- and
licensee-owned stores at the time of this release, Bassett has
leveraged its strong brand name in furniture into a network of
corporate and licensed stores that focus on providing consumers
with a friendly environment for buying furniture and accessories.
Bassett’s retail strategy includes stylish, custom-built furniture
that features the latest on-trend furniture styles, free in-home
design visits, and coordinated decorating accessories. Bassett also
has a traditional wholesale business with more than 700 accounts on
the open market, across the United States and internationally and a
logistics business specializing in home furnishings. For more
information, visit the Company’s website at bassettfurniture.com.
(BSET-E)
Certain of the statements in this
release, particularly those preceded by, followed by or including
the words “believes,” “plans,” “expects,” “anticipates,” “intends,”
“should,” “estimates,” or similar expressions, or those relating to
or anticipating financial results or changes in operations for
periods beyond the end of the second fiscal quarter of 2021,
constitute “forward looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended. For those
statements, Bassett claims the protection of the safe harbor for
forward looking statements contained in the Private Securities
Litigation Reform Act of 1995. In many cases, Bassett cannot
predict what factors would cause actual results to differ
materially from those indicated in the forward looking statements.
Expectations included in the forward-looking statements are based
on preliminary information as well as certain assumptions which
management believes to be reasonable at this time. The following
important factors affect Bassett and could cause actual results to
differ materially from those indicated in the forward looking
statements: the effects of national and global economic or other
conditions (including, without limitation, the effects on revenue,
supply and demand resulting from the duration and extent of the
COVID-19 pandemic) and future events on the retail demand for home
furnishings and the ability of Bassett’s customers and consumers to
obtain credit; the success of marketing, logistics, retail and
other initiatives; and the economic, competitive, governmental and
other factors identified in Bassett’s filings with the Securities
and Exchange Commission. Any forward-looking statement that Bassett
makes speaks only as of the date of such statement, and Bassett
undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
Comparisons of results for current and any prior periods are not
intended to express any future trends or indication of future
performance, unless expressed as such, and should only be viewed as
historical data.
Table 1 |
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES |
Condensed Consolidated Statements of Operations - unaudited |
(In thousands, except for per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Six Months Ended |
|
May 29, 2021 |
|
May 30, 2020 |
|
May 29, 2021 |
|
May 30, 2020 |
|
|
Percent of |
|
|
Percent of |
|
|
Percent of |
|
|
Percent of |
|
Amount |
Net Sales |
|
Amount |
Net Sales |
|
Amount |
Net Sales |
|
Amount |
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
Sales revenue: |
|
|
|
|
|
|
|
|
|
|
|
Furniture and accessories |
$ |
109,997 |
|
|
|
$ |
53,000 |
|
|
|
$ |
211,652 |
|
|
|
$ |
151,942 |
|
|
Logistical services |
|
14,062 |
|
|
|
|
10,801 |
|
|
|
|
26,080 |
|
|
|
|
23,979 |
|
|
Total sales revenue |
|
124,059 |
|
100.0 |
% |
|
|
63,801 |
|
100.0 |
% |
|
|
237,732 |
|
100.0 |
% |
|
|
175,921 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of furniture and accessories sold |
|
52,911 |
|
42.6 |
% |
|
|
29,452 |
|
46.2 |
% |
|
|
101,163 |
|
42.6 |
% |
|
|
74,722 |
|
42.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
50,001 |
|
40.3 |
% |
|
|
37,730 |
|
59.1 |
% |
|
|
97,843 |
|
41.2 |
% |
|
|
90,027 |
|
51.2 |
% |
Cost of logistical services |
|
12,768 |
|
10.3 |
% |
|
|
12,643 |
|
19.8 |
% |
|
|
24,326 |
|
10.2 |
% |
|
|
24,986 |
|
14.2 |
% |
Asset impairment charges |
|
- |
|
0.0 |
% |
|
|
12,184 |
|
19.1 |
% |
|
|
- |
|
0.0 |
% |
|
|
12,184 |
|
6.9 |
% |
Goodwill impairment charge |
|
- |
|
0.0 |
% |
|
|
1,971 |
|
3.1 |
% |
|
|
- |
|
0.0 |
% |
|
|
1,971 |
|
1.1 |
% |
Litigation expense |
|
- |
|
0.0 |
% |
|
|
1,050 |
|
1.6 |
% |
|
|
- |
|
0.0 |
% |
|
|
1,050 |
|
0.6 |
% |
Income (loss) from operations |
|
8,379 |
|
6.8 |
% |
|
|
(31,229 |
) |
-48.9 |
% |
|
|
14,400 |
|
6.1 |
% |
|
|
(29,019 |
) |
-16.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Other loss, net |
|
(332 |
) |
-0.3 |
% |
|
|
(765 |
) |
-1.2 |
% |
|
|
(669 |
) |
-0.3 |
% |
|
|
(1,127 |
) |
-0.6 |
% |
Income (loss) before income taxes |
|
8,047 |
|
6.5 |
% |
|
|
(31,994 |
) |
-50.1 |
% |
|
|
13,731 |
|
5.8 |
% |
|
|
(30,146 |
) |
-17.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision (benefit) |
|
2,073 |
|
1.7 |
% |
|
|
(11,642 |
) |
-18.2 |
% |
|
|
3,746 |
|
1.6 |
% |
|
|
(11,004 |
) |
-6.3 |
% |
Net income (loss) |
$ |
5,974 |
|
4.8 |
% |
|
$ |
(20,352 |
) |
-31.9 |
% |
|
$ |
9,985 |
|
4.2 |
% |
|
$ |
(19,142 |
) |
-10.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
$ |
0.60 |
|
|
|
$ |
(2.04 |
) |
|
|
$ |
1.01 |
|
|
|
$ |
(1.92 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share |
$ |
0.60 |
|
|
|
$ |
(2.04 |
) |
|
|
$ |
1.01 |
|
|
|
$ |
(1.92 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25.76 |
% |
|
|
|
|
|
|
|
|
|
|
Table 2 |
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES |
Condensed Consolidated Balance Sheets |
(In thousands) |
|
|
(Unaudited) |
|
|
Assets |
|
May 29, 2021 |
|
November 28, 2020 |
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
45,776 |
|
|
$ |
45,799 |
|
Short-term investments |
|
|
17,715 |
|
|
|
17,715 |
|
Accounts receivable, net |
|
|
25,882 |
|
|
|
22,340 |
|
Inventories, net |
|
|
67,301 |
|
|
|
54,886 |
|
Recoverable income taxes |
|
|
7,789 |
|
|
|
9,666 |
|
Other current assets |
|
|
12,008 |
|
|
|
10,272 |
|
Total current assets |
|
|
176,471 |
|
|
|
160,678 |
|
|
|
|
|
|
Property and equipment, net |
|
|
92,581 |
|
|
|
90,917 |
|
|
|
|
|
|
Other long-term assets |
|
|
|
|
Deferred income taxes, net |
|
|
3,362 |
|
|
|
4,587 |
|
Goodwill and other intangible assets |
|
|
23,637 |
|
|
|
23,827 |
|
Right of use assets under operating leases |
|
|
116,357 |
|
|
|
116,903 |
|
Other |
|
|
6,071 |
|
|
|
5,637 |
|
Total long-term assets |
|
|
149,427 |
|
|
|
150,954 |
|
Total assets |
|
$ |
418,479 |
|
|
$ |
402,549 |
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
|
$ |
28,522 |
|
|
$ |
23,426 |
|
Accrued compensation and benefits |
|
|
14,124 |
|
|
|
16,964 |
|
Customer deposits |
|
|
47,911 |
|
|
|
39,762 |
|
Current portion of operating lease obligations |
|
|
27,358 |
|
|
|
27,078 |
|
Other current liabilities and accrued expenses |
|
|
12,534 |
|
|
|
11,141 |
|
Total current liabilities |
|
|
130,449 |
|
|
|
118,371 |
|
|
|
|
|
|
Long-term liabilities |
|
|
|
|
Post employment benefit obligations |
|
|
12,398 |
|
|
|
12,089 |
|
Long-term portion of operating lease
obligations |
|
|
109,832 |
|
|
|
111,972 |
|
Other long-term liabilities |
|
|
5,538 |
|
|
|
2,087 |
|
Total long-term liabilities |
|
|
127,768 |
|
|
|
126,148 |
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
Common stock |
|
|
49,262 |
|
|
|
49,714 |
|
Retained earnings |
|
|
112,325 |
|
|
|
109,710 |
|
Accumulated other comprehensive
loss |
|
|
(1,325 |
) |
|
|
(1,394 |
) |
Total stockholders' equity |
|
|
160,262 |
|
|
|
158,030 |
|
Total liabilities and stockholders’ equity |
|
$ |
418,479 |
|
|
$ |
402,549 |
|
|
|
|
|
|
Table 3 |
|
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES |
|
Consolidated Statements of Cash Flows - unaudited |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
May 29, 2021 |
|
May 30, 2020 |
|
Operating activities: |
|
|
|
|
|
Net income (loss) |
|
$ |
9,985 |
|
|
$ |
(19,142 |
) |
|
Adjustments to reconcile net income (loss) to net cash provided by
(used in) |
|
|
|
|
|
operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
|
6,893 |
|
|
|
7,239 |
|
|
Gain on lease modification |
|
|
- |
|
|
|
(152 |
) |
|
Asset impairment charges |
|
|
- |
|
|
|
12,184 |
|
|
Goodwill impairment charges |
|
|
- |
|
|
|
1,971 |
|
|
Inventory valuation charges |
|
|
1,100 |
|
|
|
2,936 |
|
|
Bad debt valuation charges (recoveries) |
|
|
(43 |
) |
|
|
1,074 |
|
|
Deferred income taxes |
|
|
1,201 |
|
|
|
(521 |
) |
|
Other, net |
|
|
255 |
|
|
|
673 |
|
|
Changes in operating assets and liabilities |
|
|
|
|
|
Accounts receivable |
|
|
(3,399 |
) |
|
|
2,483 |
|
|
Inventories |
|
|
(13,515 |
) |
|
|
883 |
|
|
Other current and long-term assets |
|
|
25 |
|
|
|
(9,091 |
) |
|
Right of use assets under operating leases |
|
|
12,558 |
|
|
|
14,810 |
|
|
Customer deposits |
|
|
8,149 |
|
|
|
(2,150 |
) |
|
Accounts payable and other liabilities |
|
|
2,775 |
|
|
|
(2,670 |
) |
|
Obligations under operating leases |
|
|
(13,934 |
) |
|
|
(16,274 |
) |
|
Net
cash provided by (used in) operating activities |
|
|
12,050 |
|
|
|
(5,747 |
) |
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
Purchases of property and equipment |
|
|
(3,483 |
) |
|
|
(1,791 |
) |
|
Proceeds from sale of property and equipment |
|
|
96 |
|
|
|
2,345 |
|
|
Purchase of investments |
|
|
- |
|
|
|
(241 |
) |
|
Other |
|
|
(335 |
) |
|
|
(211 |
) |
|
Net
cash provided by (used in) investing activities |
|
|
(3,722 |
) |
|
|
102 |
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
Cash dividends |
|
|
(4,954 |
) |
|
|
(1,258 |
) |
|
Proceeds from the exercise of stock options |
|
|
42 |
|
|
|
- |
|
|
Other issuance of common stock |
|
|
172 |
|
|
|
157 |
|
|
Repurchases of common stock |
|
|
(2,925 |
) |
|
|
(1,241 |
) |
|
Taxes paid related to net share settlement of equity awards |
|
|
(219 |
) |
|
|
(215 |
) |
|
Repayments of finance lease obligations |
|
|
(467 |
) |
|
|
(50 |
) |
|
Net
cash used in financing activities |
|
|
(8,351 |
) |
|
|
(2,607 |
) |
|
Change in cash and cash equivalents |
|
|
(23 |
) |
|
|
(8,252 |
) |
|
Cash and cash equivalents - beginning of
period |
|
|
45,799 |
|
|
|
19,687 |
|
|
|
|
|
|
|
|
Cash and cash equivalents - end of period |
|
$ |
45,776 |
|
|
$ |
11,435 |
|
|
|
|
|
|
|
|
Table
4 |
BASSETT FURNITURE
INDUSTRIES, INC. AND SUBSIDIARIES |
Segment Information
- unaudited |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Six Months Ended |
|
|
May 29, 2021 |
|
May 30, 2020 |
|
May 29, 2021 |
|
May 30, 2020 |
Sales Revenue |
|
|
|
|
|
|
|
|
Wholesale
sales of furniture and accessories |
|
$ |
76,034 |
|
|
$ |
33,128 |
|
|
$ |
146,298 |
|
|
$ |
98,145 |
|
Less: Sales
to retail segment |
|
|
(28,520 |
) |
|
|
(13,299 |
) |
|
|
(57,524 |
) |
|
|
(45,220 |
) |
Wholesale sales to external customers |
|
|
47,514 |
|
|
|
19,829 |
|
|
|
88,774 |
|
|
|
52,925 |
|
Retail sales
of furniture and accessories |
|
|
62,483 |
|
|
|
33,171 |
|
|
|
122,878 |
|
|
|
99,017 |
|
Consolidated net sales of furniture and accessories |
|
109,997 |
|
|
|
53,000 |
|
|
|
211,652 |
|
|
|
151,942 |
|
|
|
|
|
|
|
|
|
|
Logistical
services revenue |
|
|
22,244 |
|
|
|
15,259 |
|
|
|
42,325 |
|
|
|
36,574 |
|
Less:
Services to wholesale segment |
|
|
(8,182 |
) |
|
|
(4,458 |
) |
|
|
(16,245 |
) |
|
|
(12,595 |
) |
Logistical services to external customers |
|
|
14,062 |
|
|
|
10,801 |
|
|
|
26,080 |
|
|
|
23,979 |
|
Total sales
revenue |
|
$ |
124,059 |
|
|
$ |
63,801 |
|
|
$ |
237,732 |
|
|
$ |
175,921 |
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
Wholesale |
|
$ |
5,359 |
|
|
$ |
(7,381 |
) |
|
$ |
10,156 |
|
|
$ |
(4,668 |
) |
Retail |
|
|
1,652 |
|
|
|
(9,170 |
) |
|
|
2,746 |
|
|
|
(10,419 |
) |
Logistical
services |
|
|
1,294 |
|
|
|
(1,842 |
) |
|
|
1,753 |
|
|
|
(1,007 |
) |
Inter-company elimination |
|
|
74 |
|
|
|
2,369 |
|
|
|
(255 |
) |
|
|
2,280 |
|
Asset
impairment charges |
|
|
- |
|
|
|
(12,184 |
) |
|
|
- |
|
|
|
(12,184 |
) |
Goodwill
impairment charge |
|
|
- |
|
|
|
(1,971 |
) |
|
|
- |
|
|
|
(1,971 |
) |
Litigation
expense |
|
|
- |
|
|
|
(1,050 |
) |
|
|
- |
|
|
|
(1,050 |
) |
Consolidated |
|
$ |
8,379 |
|
|
$ |
(31,229 |
) |
|
$ |
14,400 |
|
|
$ |
(29,019 |
) |
|
|
|
|
|
|
|
|
|
J. Michael DanielSenior Vice President
andChief Financial Officer(276) 629-6614
– Investorsmdaniel@bassettfurniture.com
Peter D. Morrison Vice
President of Communications(276) 629-6450 – Media
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