Stanley Furniture Announces Record Sales and Earnings for 1999; Fourth Quarter Earnings Per Share Increases 48% on 13% Sales Gain

Furniture World Magazine

Stanley Furniture Company, Inc. (Nasdaq: STLY) reported record sales and earnings for 1999. Net sales of $264.7 million in 1999 increased 7.0% over last year. The comparable sales increase was 9.1% for 1999, after excluding prior year upholstery sales, which were phased out in the third quarter of 1998. Net income rose to $19.2 million or $2.47 per diluted share, compared to $14.5 million or $1.82 per diluted share in 1998. This represents a 36% increase in earnings per diluted share. Fourth quarter 1999 net sales of $72.4 million increased 13.1% over the prior year quarter as new capacity from the expansion of existing facilities became fully operational. Net income increased to $5.7 million from $3.9 million in the year ago quarter. Diluted earnings per share increased 48.0% to $.74 from $.50 in the prior year quarter, marking the eighteenth consecutive quarter for record earnings. Operating income as a percent of net sales improved to 13.0% for 1999, up from 11.3% in 1998. The increase came from continued improvement in operating efficiencies, the phase out of upholstered products which generated a pretax operating loss of about $1 million in 1998, and lower selling, general and administrative cost as a percent of net sales. In August 1999, the Company's Board of Directors increased the authorization to repurchase shares of its common stock from $10 million to $20 million. Since October 1998, the Company has utilized $10.3 million to purchase 541,750 shares of its common stock at an average price of $18.94 per share. Capital expenditures of approximately $26 million in 1999 were primarily for capacity expansion projects. Approximately $10 million was used to increase the output of existing facilities, providing $30-35 million in annualized sales capacity. This enabled sales to increase 13% in the fourth quarter of 1999. Also during 1999, approximately $15 million was used to purchase and equip a new facility dedicated to the production of home office furniture. This facility will begin production in the first quarter of 2000 and should generate $50-60 million in annualized sales capacity when in full production in two to three years. Cash flow for 1999 was very positive due to strong earnings and working capital management. This enabled the Company to fund its expansion projects and stock repurchase program, and repay $5.1 million of debt. "We continue to experience strong demand for our products with orders up over 10% for 1999," commented Albert L. Prillaman, president and chief executive officer of Stanley Furniture Company. "We are excited about the new capacity which will allow us to address the high growth potential in our Young America™ bedroom and home office product categories. We believe this will allow us to continue to outpace industry sales growth." Established in 1924, Stanley Furniture Company, Inc. is a leading manufacturer of wood furniture targeted at the upper-medium price range of the residential market. Manufacturing facilities are located in Stanleytown and Martinsville, VA, and Robbinsville, Lexington, and West End, NC. Its common stock is traded on the Nasdaq stock market under the symbol STLY. Visit Stanley Furniture on the World Wide Web at http://www.stanleyfurniture.com.