Record Fourth Quarter Sales For Stanley Furniture; Company Doubles Quarterly Cash Dividend

Furniture World Magazine

Stanley Furniture Company, Inc. reported higher sales and earnings for the fourth quarter and year ended December 31, 2003. The Company also announced today that its Board of Directors doubled the amount of its quarterly cash dividend to stockholders. Net sales of $72.7 million increased 14.9% from the fourth quarter of last year setting a new sales record from any previous quarter in the Company's history. This was also the seventh consecutive quarter of sales growth over the comparable prior year quarter. Earnings per share grew 18.6% to $.70 compared to $.59 in the fourth quarter of 2002. Sales and operating income slightly exceeded the high end of management's previous guidance for the quarter. Earnings per share exceeded the guidance range due to the higher operating income and a lower effective tax rate. Net sales of $260.6 million for total year 2003 increased 8.8% from the prior year. Earnings per share improved 26.5% to $2.34 in 2003 compared to $1.85 in 2002. Earnings in 2002 included restructuring and related charges of $.34 per share. Operating income for 2003 improved to $26.2 million, or 10.1% of net sales, from $22.4 million, or 9.3% of net sales, for the prior year. Prior year operating income included restructuring and related charges of $3.5 million. In 2003 increased sales, savings from the Company's offshore sourcing initiatives and downsizing of domestic operations offset the transition and start up costs from increased global sourcing including lower production levels at the Company's domestic factories, increases in certain marketing and product development costs and other inflationary costs. Cash on hand combined with strong cash flow from operations for 2003 were used to repurchase $14.8 million of the Company's common stock, reduce debt $6.9 million and pay cash dividends of $1.3 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 $22.7 million and cash on hand was $2.5 million at December 31, 2003. Increase in Cash Dividend: The Company announced that its Board of Directors approved a 100% increase in its quarterly dividend to ten cents per share payable on March 1, 2004, to shareholders of record on February 13, 2004. "Doubling 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 our seventh consecutive quarter of year-over-year sales growth," commented Jeffrey R. Scheffer, president and chief executive officer. "Business conditions continued to improve in the fourth quarter; however, we believe our sales growth continues to come primarily from market share gains. We enter 2004 with significant sales momentum as evidenced by the 15% increase in fourth quarter sales compared to the year-ago quarter. Our focus is to create exciting designs, produce high quality product and provide excellent service," Scheffer continued. "Best product is determined by both design and price. Blending efficient domestic manufacturing in highly focused facilities with intelligent outsourcing of certain component parts and finished goods allows us to offer a compelling value proposition. This combination gives Stanley a competitive advantage by offering higher value and well-styled product, without sacrificing our culture of high quality and fast delivery. Our market share gains in the past year provide encouraging evidence that our customers are responding favorably and that we are executing the strategy well. Approximately 20% of 2003 sales came from sourced items, which we anticipate will level off at approximately 30% of sales in 2004. Transition costs from increased global sourcing and its associated effect on domestic capacity utilization negatively impacted 2003 operating margins. Going forward, operating margins may be tempered by capacity utilization rates which are not expected to increase in direct proportion to sales growth. We remain confident in our blended operating strategy and view this as an investment in the Company's future growth," Scheffer concluded. 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, NC. Its common stock is traded on the Nasdaq stock market under the symbol STLY.