Exhibit 99.1
FOR IMMEDIATE RELEASE: | CONTACT: | DOUGLAS I. PAYNE |
January 30, 2006 | Executive Vice President - | |
Finance and Administration | ||
(276) 627-2157 | ||
e-mail:dpayne@stanleyfurniture.com | ||
ANITA W. WIMMER | ||
Vice President - Controller and | ||
Treasurer | ||
(276) 627-2446 | ||
e-mail:awimmer@stanleyfurniture.com |
STANLEY FURNITURE COMPANY ANNOUNCES
RECORD SALES AND EARNINGS FOR 2005
2005 Earnings per share increase 11.3% on 9.1% sales gain
STANLEYTOWN, VA, /PRNewswire/ -- Stanley Furniture Company, Inc. (Nasdaq-NNM:STLY) today reported record sales and earnings for 2005. Sales were at the low end and earnings exceeded management’s previous guidance range provided in mid October 2005.
Net sales of $333.6 million rose 9.1% over the prior year. Earnings per share grew 11.3% to $1.77 in 2005 from $1.59 in 2004.
Fourth quarter sales of $81.4 million decreased 2.2% from record fourth quarter sales in 2004. However, earnings per share grew 7.0% to $.46 compared to $.43 in the fourth quarter of 2004.
Operating income for 2005 improved to $37.4 million, or 11.2% of net sales, from $34.7 million, or 11.3% of net sales, for the prior year. The favorable impact of higher sales in 2005 was mitigated by higher raw material costs, compensation costs, energy costs, freight costs, increased warehouse expense and tariffs imposed on wooden bedroom furniture imported from China.
Strong cash flow from operations for 2005 was used to purchase $23.0 million of the Company’s common stock (including $13.0 million in the fourth quarter), pay cash dividends of $3.1 million, repay $4.3 million of debt, and increase cash on hand $4.9 million. Working capital, excluding cash and current maturities of long-term debt, decreased $3.7 million in 2005 primarily due to lower inventories. Approximately $17.2 million is currently authorized by the Company’s Board of Directors to repurchase shares of the Company’s common stock. At December 31, 2005, the Company was in a net cash position with total debt outstanding of $11.4 million and cash on hand of $12.6 million.
Business Outlook
“We are pleased to report a record year of sales and earnings”, commented Jeffrey R. Scheffer, President and Chief Executive Officer. “While industry sales trends were positive in 2005, we believe the consistent execution of our strategy has resulted in market share gains that drove most of our sales growth. Fourth quarter sales declined 2.2% ending a string of fourteen consecutive quarters of year over year sales growth, punctuating an industry slow down that began during the third quarter. As a result, we enter 2006 cautiously, mindful of an uncertain demand environment yet confident in our ability to continue to gain market share and anticipate another good year.”
Management offers the following guidance for total year 2006.
· | Net sales are expected to be in the range of $340 million to $350 million, an increase of 2% to 5% over the prior year. |
· | Operating income is expected to be in the range of $37.3 million to $38.3 million. |
· | The Company’s effective tax rate is expected to be in the range of 35.0% to 35.3% in 2006. |
· | Earnings per share are expected to be in the range of $1.84 to $1.90 compared to $1.77 for 2005. |
Management offers the following guidance for the quarter ending April 1, 2006.
· | Net sales are expected to be in the range of $81 million to $84 million, ranging from a decrease of 2% to an increase of 1% over the first quarter of 2005. |
· | Operating income is expected to be in the range of $8.7 million to $9.3 million. |
· | Earnings per share are expected to be in the range of $.43 to $.46 compared to $.43 in the year-ago quarter. |
Other Information
All earnings per share amounts are on a diluted basis and adjusted for the two-for-one stock split distributed on June 6, 2005.
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.
Conference Call Details
The Company will host a conference call Tuesday morning, January 31, 2006 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 Company’s web site at www.stanleyfurniture.com. The dial-in-number for the replay (available through February 7, 2006) is (877) 660-6853, the account reference number is 275 and the conference number is 187607.
Forward-Looking Statements
Certain statements made in this report 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 competition in the furniture industry including competition from lower-cost foreign manufacturers, 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 China or countries from which we source products, international trade policies of the United States and countries from which we source products, manufacturing realignment, the inability to raise prices in response to inflation and increasing costs, the cyclical nature of the furniture industry, the inability to obtain sufficient quantities of quality raw materials in a timely manner, failure to anticipate or respond to changes in consumer tastes and fashions in a timely manner, business failures or loss of large customers, environmental compliance costs, and extended business interruption at manufacturing facilities.
Any forward-looking statement speaks only as of the date of this filing, 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) | |||||||||||||
(unaudited) | |||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||
Dec 31, | Dec 31, | Dec 31, | Dec 31, | ||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||
Net sales | $ | 81,446 | $ | 83,269 | $ | 333,646 | $ | 305,815 | |||||
Cost of sales | 61,318 | 62,509 | 251,937 | 230,174 | |||||||||
Gross profit | 20,128 | 20,760 | 81,709 | 75,641 | |||||||||
Selling, general and administrative expenses | 10,871 | 11,361 | 44,267 | 40,953 | |||||||||
Operating income | 9,257 | 9,399 | 37,442 | 34,688 | |||||||||
Other income, net | 98 | 43 | 288 | 188 | |||||||||
Interest Income | 109 | 21 | 358 | 43 | |||||||||
Interest expense | 521 | 577 | 2,183 | 2,386 | |||||||||
Income before income taxes | 8,943 | 8,886 | 35,905 | 32,533 | |||||||||
Income taxes | 3,101 | 3,200 | 12,674 | 11,744 | |||||||||
Net income | $ | 5,842 | $ | 5,686 | $ | 23,231 | $ | 20,789 | |||||
Diluted earnings per share | $ | 0.46 | $ | 0.43 | $ | 1.77 | $ | 1.59 | |||||
Weighted average number of shares | 12,806 | 13,284 | 13,154 | 13,099 |
STANLEY FURNITURE COMPANY, INC. | |||||||
Consolidated Condensed Balance Sheets | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
Dec 31, | Dec 31, | ||||||
2005 | 2004 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash | $ | 12,556 | $ | 7,632 | |||
Accounts receivable, net | 36,957 | 36,036 | |||||
Inventories | 69,961 | 73,658 | |||||
Prepaid expenses and other current assets | 1,435 | 1,585 | |||||
Deferred income taxes | 2,462 | 2,414 | |||||
Total current assets | 123,371 | 121,325 | |||||
Property, plant, and equipment, net | 50,744 | 51,342 | |||||
Goodwill | 9,072 | 9,072 | |||||
Other assets | 7,301 | 7,149 | |||||
Total assets | $ | 190,488 | $ | 188,888 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Current maturities of long-term debt | $ | 2,857 | $ | 4,257 | |||
Accounts payable | 16,405 | 16,056 | |||||
Accrued expenses | 12,909 | 12,445 | |||||
Total current liabilities | 32,171 | 32,758 | |||||
Long-term debt | 8,571 | 11,428 | |||||
Deferred income taxes | 10,164 | 10,742 | |||||
Other long-term liabilities | 6,833 | 6,695 | |||||
Stockholders' equity | 132,749 | 127,265 | |||||
Total liabilities and stockholders' equity | $ | 190,488 | $ | 188,888 |
STANLEY FURNITURE COMPANY, INC. | |||||||
Consolidated Condensed Statements of Cash Flows | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
Twelve Months Ended | |||||||
Dec 31, | Dec 31, | ||||||
2005 | 2004 | ||||||
Cash flows from operating activities: | |||||||
Cash received from customers | $ | 333,233 | $ | 300,429 | |||
Cash paid to suppliers and employees | (287,559 | ) | (278,509 | ) | |||
Interest paid, net | (1,792 | ) | (2,387 | ) | |||
Income taxes paid, net | (11,080 | ) | (9,061 | ) | |||
Net cash provided by operating activities | 32,802 | 10,472 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (4,986 | ) | (1,718 | ) | |||
Other, net | (33 | ) | (135 | ) | |||
Net cash used by investing activities | (5,019 | ) | (1,853 | ) | |||
Cash flows from financing activities: | |||||||
Repayment of senior notes | (4,257 | ) | (7,015 | ) | |||
Purchase and retirement of common stock | (22,993 | ) | - | ||||
Dividends paid | (3,081 | ) | (2,517 | ) | |||
Proceeds from insurance policy loans | 1,110 | 993 | |||||
Proceeds from exercise of stock options | 6,362 | 5,043 | |||||
Net cash used by financing activities | (22,859 | ) | (3,496 | ) | |||
Net increase in cash | 4,924 | 5,123 | |||||
Cash at beginning of period | 7,632 | 2,509 | |||||
Cash at end of period | $ | 12,556 | $ | 7,632 | |||
Reconciliation of net income to | |||||||
net cash provided by operating activities: | |||||||
Net income | $ | 23,231 | $ | 20,789 | |||
Adjustments to reconcile net income | |||||||
to net cash provided by operating activities: | |||||||
Depreciation and amortization | 5,670 | 5,622 | |||||
Deferred income taxes | (609 | ) | (1,327 | ) | |||
Changes in working capital | 4,168 | (16,357 | ) | ||||
Other assets | 248 | 66 | |||||
Other long-term liabilities | 94 | 1,679 | |||||
Net cash provided by operating activities | $ | 32,802 | $ | 10,472 |