Stanley Furniture Announces Operating Results - Prillaman To Retire

Furniture World Magazine

Stanley Furniture Company, Inc. reported higher sales and earnings for the fourth quarter and year ended December 31, 2004. Both sales and earnings slightly exceeded the high end of management's previous guidance provided in mid-October 2004. The Company also announced that its Board of Directors approved a 20% increase in its quarterly cash dividend to stockholders. Net sales of $83.3 million increased 12.4% and earnings per share grew 22.9% to $.86 from the fourth quarter of last year setting a new sales and earnings record from any previous quarter in the Company's history. This marks the eleventh consecutive quarter of sales growth over the comparable prior year quarter and the fifth consecutive quarter of double digit sales gains over the comparable prior year quarter. Net sales of $305.8 million for total year 2004 increased 15.3% from the prior year. Earnings per share improved 35.5% to $3.17 in 2004 compared to $2.34 in 2003. Operating income for 2004 improved to $34.7 million, or 11.3% of net sales, from $26.2 million, or 9.9% of net sales, for the prior year. Higher sales, increased production levels at the Company's domestic facilities, although at a slower growth rate than sales due to the expansion of sourced items, and savings from sourcing initiatives drove the improvement. These improvements were partially offset by inflation in raw materials, compensation costs, energy costs, higher selling expenses, tariffs imposed on wooden bedroom furniture imported from China, and costs of complying with the Sarbanes-Oxley Act. Strong cash flow from operations for 2004 was used to reduce debt $7.0 million, pay cash dividends of $2.5 million, and increase cash on hand by $5.1 million. Approximately $10.2 million remains authorized by the Company's Board of Directors to repurchase shares of the Company's common stock. Total debt outstanding was $15.7 million and cash on hand was $7.6 million at December 31, 2004. Increase in Cash Dividend: The Company announced today that its Board of Directors approved a 20% increase in its quarterly dividend to $.12 per share payable on March 7, 2005, to shareholders of record on February 18, 2005. "Increasing the amount of the cash dividend further demonstrates the Board's confidence in the Company's strategy, growth opportunities and financial strength," noted Albert L. Prillaman, chairman. Business Outlook: "We are pleased to report another year of significant progress," commented Jeffrey R. Scheffer, president and chief executive officer. "While industry sales trends improved in 2004, we believe market share gains are driving most of our sales growth. Blending efficient domestic manufacturing in our highly focused facilities with intelligent outsourcing of certain component parts and finished goods has allowed us to improve the styling and value of our products. Combining this with our culture and reputation for high quality and fast delivery differentiates us from our competition. We enter 2005 with considerable momentum and anticipate another good year." Management offers the following guidance for total year 2005. -Net sales are expected to be in the range of $321 million to $331 million, an increase of 5% to 8% over the prior year. -Operating income is expected to be in the range of $37.8 million to $38.8 million. -The Company's effective tax rate is expected to be in the range of 35.5% to 36.0% in 2005. -Earnings per share are expected to be in the range of $3.45 to $3.55 compared to $3.17 for 2004. Management offers the following guidance for the quarter ending April 2, 2005. -Net sales are expected to be in the range of $79.0 million to $81.5 million, an increase of 10% to 14% over the first quarter of 2004. -Operating income is expected to be in the range of $8.6 million to $9.1 million. -Earnings per share are expected to be in the range of $.78 to $.83 compared to $.71 in the year-ago quarter. Management Succession Plans: The Company also announced that Albert L. Prillaman plans to retire from active management in April 2005, as the conclusion of the management succession plan that began in 2001. At such time it is anticipated that Jeffrey R. Scheffer will be elected Chairman of the Board in addition to his current role as President and Chief Executive Officer. Mr. Prillaman plans to continue as a director and to stay involved with the Company by serving as lead director and liaison with the board on oversight matters and key strategic initiatives. Other Information: All earnings per share amounts are on a diluted basis. Shipping revenues have historically been netted against related expenses in cost of sales. The Company has reclassified these revenues to net sales resulting in no impact on earnings. 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 and Lexington, N.C. Its common stock is traded on the Nasdaq stock market under the symbol STLY.