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8-K - FORM 8-K - HG Holdings, Inc. | c23473e8vk.htm |
Exhibit 99.1
N E W S R E L E A S E
FOR IMMEDIATE RELEASE:
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Stanley Furniture Company, Inc. |
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October 19, 2011
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Investor Contact: Micah S. Goldstein (276) 627-2565 |
STANLEY FURNITURE ANNOUNCES
THIRD QUARTER 2011 OPERATING RESULTS
THIRD QUARTER 2011 OPERATING RESULTS
Gross Margin Improves for Third Consecutive Quarter
STANLEYTOWN, VA, October 19, 2011/Businesswire/ Stanley Furniture Company, Inc.
(Nasdaq-NGS:STLY) today reported sales and operating results for the third quarter of 2011.
The Company continued its trend of improved operating performance during the third quarter of 2011.
Net loss for the third quarter improved to $1.7 million from $2.0 million in the second quarter of
2011 (adjusted for CDSOA income and restructuring credit) on $26.1 million in net sales. We are
clearly operating in a difficult retail environment, said Glenn Prillaman, President and Chief
Executive Officer, but our efforts to continue improving operations independent of sales are
encouraging. We enter the fourth quarter with our strongest product offering and in the best
service position since our restructuring plan began at the end of 2010. This should result in
continued backlog reduction during the remainder of 2011, bolstering confidence with our customers.
Historically, when we have combined the best product with superior quality and service, we have
gained market share and generated positive cash flow. Predicting future growth, however, in this
economy is very difficult.
Gross margin increased to $3.8 million (14.7% of net sales) in the third quarter from $3.4 million
(12.3% of net sales) in the second quarter excluding restructuring credit. We made significant
progress on our path to become a profitable and efficient domestic manufacturer during the
quarter, said Micah Goldstein, Chief Operating and Financial Officer. The gross margin
improvement in the third quarter came primarily from improvements related to the modernization
efforts underway in our factory in Robbinsville, NC.
Cash at quarter-end was $19.5 million including restricted cash. Working capital, excluding cash
and restricted cash, increased to $24.3 million from $22.6 million at the end of the second
quarter, mostly driven by a $2.8 million increase in finished goods inventory. Capital
expenditures during the third quarter were $1.7 million as we began to invest in our Robbinsville
manufacturing facility. We believe the consistent narrowing of our operating losses along with the
short investment payback on the projects we are undertaking protects our balance sheet as we
strategically invest in our business. Goldstein commented.
The overseas sourcing efforts associated with our Stanley brand are paying dividends, and now we
accelerate our investments in the domestic operations which support our Young America brands
differentiation in the marketplace. This will take time, but we will emerge a stronger company with
improved product offerings addressing changing distribution channels, Prillaman concluded.
All earnings per share amounts are on a diluted basis.
Established in 1924, Stanley Furniture Company, Inc. is a leading designer and manufacturer of wood
furniture targeted at the premium price range of the residential market. Its common stock is
traded on the NASDAQ stock market under the symbol STLY.
Conference Call Details
The Company will host a conference call Thursday morning, October 20, 2011 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
Companys web site at www.stanleyfurniture.com. The dial-in-number for the replay (available
through October 28, 2011) is (877) 660-6853, the account reference number is 275 and the conference
number is 379411.
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 our success in profitably
producing Young America products in our domestic manufacturing facility, 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 countries
from which we source products, international trade policies of the United States and countries from
which we source products, lower sales due to worsening of current economic conditions, the
inability to raise prices in response to inflation and increasing costs, the cyclical nature of the
furniture industry, failure to anticipate or respond to changes in consumer tastes and fashions in
a timely manner, business failures or loss of large customers, competition in the furniture
industry including competition from lower-cost foreign manufacturers, our success in transitioning
our adult product line to offshore vendors, the inability to obtain sufficient quantities of
quality raw materials in a timely manner, environmental, health, and safety compliance costs, and
extended business interruption at our manufacturing facility. 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.
TABLES FOLLOW
STANLEY FURNITURE COMPANY, INC.
Consolidated Operating Results
(in thousands, except per share data)
Consolidated Operating Results
(in thousands, except per share data)
Three Months Ended | ||||||||||||||||
Oct. 1, | Jul. 2, | Apr. 2, | Dec. 31, | |||||||||||||
2011 | 2011 | 2011 | 2010 | |||||||||||||
Net sales |
$ | 26,051 | $ | 27,393 | $ | 26,571 | $ | 27,689 | ||||||||
Cost of sales |
22,227 | 23,760 | 24,886 | 33,711 | ||||||||||||
Gross profit (loss) |
3,824 | 3,633 | 1,685 | (6,022 | ) | |||||||||||
Selling, general and administrative expenses |
4,952 | 4,748 | 5,121 | 4,363 | ||||||||||||
Operating loss |
(1,128 | ) | (1,115 | ) | (3,436 | ) | (10,385 | ) | ||||||||
Income from Continued Dumping
and Subsidy Offset Act |
1,117 | 1,556 | ||||||||||||||
Other income, net |
25 | 21 | 29 | 6 | ||||||||||||
Interest income |
9 | 3 | ||||||||||||||
Interest expense |
623 | 586 | 538 | 707 | ||||||||||||
Loss before income taxes |
(1,717 | ) | (560 | ) | (3,945 | ) | (9,530 | ) | ||||||||
Income tax (benefit) expense |
(26 | ) | 35 | (16 | ) | (1,206 | ) | |||||||||
Net loss |
$ | (1,691 | ) | $ | (595 | ) | $ | (3,929 | ) | $ | (8,324 | ) | ||||
Diluted loss per share |
$ | (.12 | ) | $ | (.04 | ) | $ | (.27 | ) | $ | (.73 | ) | ||||
Weighted average number of shares |
14,345 | 14,345 | 14,345 | 11,345 | ||||||||||||
STANLEY FURNITURE COMPANY, INC.
Supplemental Information
Reconciliation of GAAP to Non-GAAP Operating Results
Supplemental Information
Reconciliation of GAAP to Non-GAAP Operating Results
Three Months Ended | ||||||||||||||||
Oct. 1, | Jul. 2, | Apr. 2, | Dec. 31, | |||||||||||||
2011 | 2011 | 2011 | 2010 | |||||||||||||
Reconciliation of gross margin as
reported to gross margin adjusted: |
||||||||||||||||
Gross margin as reported |
$ | 3,824 | $ | 3,633 | $ | 1,685 | $ | (6,022 | ) | |||||||
Plus accelerated depreciation |
2,403 | |||||||||||||||
Plus restructuring charge (credit) |
(277 | ) | 768 | 2,511 | ||||||||||||
Gross margin as adjusted |
$ | 3,824 | $ | 3,356 | $ | 2,453 | $ | (1,108 | ) | |||||||
Reconciliation of gross margin
as a percent
of sales as reported to gross
margin as a
percent of sales adjusted: |
||||||||||||||||
Gross margin percentage as reported |
14.7 | % | 13.3 | % | 6.3 | % | (21.8 | %) | ||||||||
Plus accelerated depreciation |
8.7 | % | ||||||||||||||
Plus restructuring charge (credit) |
(1.0 | %) | 2.9 | % | 9.1 | % | ||||||||||
Gross margin percentage as adjusted |
14.7 | % | 12.3 | % | 9.2 | % | (4.0 | %) | ||||||||
Reconciliation of operating
loss as
reported to operating loss
adjusted: |
||||||||||||||||
Operating loss as reported |
$ | (1,128 | ) | $ | (1,115 | ) | $ | (3,436 | ) | $ | (10,385 | ) | ||||
Plus accelerated depreciation |
2,403 | |||||||||||||||
Plus restructuring charge (credit) |
(277 | ) | 768 | 2,511 | ||||||||||||
Operating loss as adjusted |
$ | (1,128 | ) | $ | (1,392 | ) | $ | (2,668 | ) | $ | (5,471 | ) | ||||
Reconciliation of net loss
as reported
to net loss adjusted: |
||||||||||||||||
Net loss as reported |
$ | (1,691 | ) | $ | (595 | ) | $ | (3,929 | ) | $ | (8,324 | ) | ||||
Less income from CDSOA |
(1,117 | ) | (1,427 | ) | ||||||||||||
Plus accelerated depreciation |
2,099 | |||||||||||||||
Plus restructuring charge (credit) |
(277 | ) | 768 | 2,193 | ||||||||||||
Net loss as adjusted |
$ | (1,691 | ) | $ | (1,989 | ) | $ | (3,161 | ) | $ | (5,459 | ) | ||||
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 income from CDSOA proceeds, accelerated depreciation and restructuring related
charges. 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)
Consolidated Condensed Balance Sheets
(in thousands)
Oct. 1, | Jul. 2, | Dec. 31, | ||||||||||
2011 | 2011 | 2010 | ||||||||||
Assets |
||||||||||||
Current assets: |
||||||||||||
Cash |
$ | 17,933 | $ | 23,999 | $ | 25,532 | ||||||
Restricted cash |
1,587 | |||||||||||
Accounts receivable, net |
11,951 | 12,529 | 9,888 | |||||||||
Inventories |
26,354 | 23,927 | 25,695 | |||||||||
Prepaid expenses and other current assets |
3,737 | 4,027 | 5,883 | |||||||||
Income tax receivable |
525 | 916 | 3,952 | |||||||||
Deferred income taxes |
845 | 789 | 1,021 | |||||||||
Total current assets |
62,932 | 66,187 | 71,971 | |||||||||
Property, plant and equipment, net |
18,303 | 16,976 | 15,980 | |||||||||
Other assets |
1,085 | 1,689 | 445 | |||||||||
Total assets |
$ | 82,320 | $ | 84,852 | $ | 88,396 | ||||||
Liabilities and Stockholders Equity |
||||||||||||
Current liabilities: |
||||||||||||
Accounts payable |
$ | 7,476 | $ | 7,606 | $ | 9,116 | ||||||
Accrued expenses |
11,597 | 12,028 | 10,086 | |||||||||
Total current liabilities |
19,073 | 19,634 | 19,202 | |||||||||
Deferred income taxes |
845 | 789 | 1,021 | |||||||||
Other long-term liabilities |
6,638 | 7,073 | 6,378 | |||||||||
Stockholders equity |
55,764 | 57,356 | 61,795 | |||||||||
Total liabilities and stockholders equity |
$ | 82,320 | $ | 84,852 | $ | 88,396 | ||||||
STANLEY FURNITURE COMPANY, INC.
Consolidated Condensed Statements of Cash Flows
(in thousands)
Consolidated Condensed Statements of Cash Flows
(in thousands)
Nine Months Ended | ||||||||
Oct. 1, | Oct. 2, | |||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Cash received from customers |
$ | 77, 805 | $ | 108,151 | ||||
Cash paid to suppliers and employees |
(86,695 | ) | (125,495 | ) | ||||
Cash from Continued Dumping and Subsidy
Offset Act |
1,117 | |||||||
Interest paid |
(2,103 | ) | (3,046 | ) | ||||
Income taxes received, net |
3,077 | 6,429 | ||||||
Net cash used by operating activities |
(6,799 | ) | (13,961 | ) | ||||
Cash flows from investing activities: |
||||||||
Restricted cash increase |
(1,587 | ) | ||||||
Capital expenditures |
(2,562 | ) | (1,203 | ) | ||||
Purchase of other assets |
(38 | ) | (28 | ) | ||||
Proceeds from sale of assets |
1,472 | 1,147 | ||||||
Net cash provided by investing activities |
(2,715 | ) | (84 | ) | ||||
Cash flows from financing activities: |
||||||||
Repayment of senior notes |
(12,857 | ) | ||||||
Proceeds from exercise of stock options |
119 | |||||||
Proceeds from insurance policy loans |
2,003 | 1,845 | ||||||
Capital lease payments |
(88 | ) | ||||||
Net cash provided (used) by financing activities |
1,915 | (10,893 | ) | |||||
Net decrease in cash |
(7,599 | ) | (24,938 | ) | ||||
Cash at beginning of period |
25,532 | 41,827 | ||||||
Cash at end of period |
$ | 17,933 | $ | 16,889 | ||||
Reconciliation of net loss to
net cash used by operating activities: |
||||||||
Net loss |
$ | (6,215 | ) | $ | (35,466 | ) | ||
Goodwill impairment |
9,072 | |||||||
Depreciation and amortization |
1,233 | 6,815 | ||||||
Deferred income taxes |
1,410 | |||||||
Stock-based compensation |
342 | 549 | ||||||
Other |
30 | |||||||
Changes in working capital |
(1,219 | ) | 3,885 | |||||
Other assets |
(448 | ) | (424 | ) | ||||
Other long-term liabilities |
(492 | ) | 168 | |||||
Net cash used by operating activities |
$ | (6,799 | ) | $ | (13,961 | ) | ||