Stanley 4Q income spurts 12.2%
By Furniture Today Staff -- Furniture Today, February 1, 2004
STANLEYTOWN, Va. — STANLEYTOWN, Va. — Stanley Furniture's sales jumped 14.9% in the fourth quarter and earnings rose 12.2%, capping a strong year for the case goods and occasional manufacturer and importer.
It was the seventh consecutive quarter of sales growth for the company, which also reported gains of 8.8% in sales and 20.5% in earnings for the year compared with 2002. The 2002 results included $2.2 million in after-tax restructuring and related charges.
"Business conditions continued to improve in the fourth quarter," said Jeff Scheffer, president and CEO. "However, we believe our sales growth continues to come primarily from market share gains."
Most of those gains appear to have come at the expense of higher-end lines as Stanley has used offshore sourcing to improve its products' styling and features without raising prices, company executives said. The average price for a comparable product actually declined slightly last year, as unit sales rose 10% while sales in dollars rose about 9%.
Sales came to $72.7 million for the quarter and $260.6 million for the year.
The company's use of imported components and finished products rose during the year to a run rate of about 26% in the last quarter. For all of 2003, sourced goods accounted for 20% of sales. That should level off at 30% this year, Scheffer said.
Stanley is forecasting sales gains in the range of 7% to 11% for the current quarter and 6% to 10% for the full year. At that rate, the increased offshore sourcing would fill most of the added demand.
Should sales rise faster, the company can ramp up U.S. production if necessary. Its domestic capacity use is at about 75% — "lower than we'd like it to be," said Scheffer, but prudent as a hedge to meet higher demand.
He said the extra U.S. capacity also would allow Stanley to shift some production stateside if the U.S. government imposes duties on Chinese wood bedroom furniture, which may happen this year.
Reflecting the company's improved results, Stanley's board last week doubled the company's quarterly cash dividend to 10 cents per share. Last year, the company used its cash flow to pay dividends of $1.3 million, repurchase $14.8 million in company stock, and reduce debt by $6.9 million.
The company is forecasting earnings of 58 to 63 cents per share in the first quarter, compared with 52 cents a year ago, and $2.50 to $2.70 per share for the full year, up from $2.34 in 2003.
| Stanley Furniture | |||
|---|---|---|---|
| Earnings per share are fully diluted. | |||
| Quarter ended 12/31 | 2003 | 2002 | Change |
| (a) Based on average shares outstanding of 6.3 million in the 2003 quarter, 6.7 million in the 2002 quarter, 6.5 million in the 2003 year and 6.8 million in the 2002 year. (b) Includes a $3.5 million pretax charge for restructuring and other charges. | |||
| Sales | $72,707,000 | $63,305,000 | 14.9% |
| Operating income | 7,471,000 | 6,815,000 | 9.6% |
| Net income | 4,432,000 | 3,950,000 | 12.2% |
| Earnings per share (a) | 0.70 | 0.59 | 18.6% |
| Year ended 12/31 | 2003 | 2002 | Change |
| Sales | $260,641,000 | $239,485,000 | 8.8% |
| Operating income | 26,216,000 | 25,909,000 | 1.2% |
| Net income | 15,150,000 | (b)12,571,000 | 20.5% |
| Earnings per share (a) | 2.34 | 1.85 | 26.5% |
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