Stanley Furniture Announces Second Quarter 2017 Earnings
Furniture World News Desk on
7/25/2017
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.”
More about Stanley Furniture 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 online. The company’s common stock is traded on the NASDAQ stock market under the symbol STLY.