O'Sullivan sales tumble 15.7% in fiscal third qtr.
By Furniture Today Staff -- Furniture Today, May 23, 2004
LAMAR, Mo. — LAMAR, Mo. — O'Sullivan Inds. Holdings, parent of flat-pack producer O'Sullivan Furniture, said sales for its third fiscal quarter ended March 31 were off 15.7% from a year ago to $73.2 million.
The net loss for the quarter, including preferred dividends and accretion on preferred stock, grew to $8.5 million from $1.1 million in the comparable 2003 quarter. Preferred stock charges were $3.2 million in the 2004 quarter and $3.7 million in 2003.
Excluding preferred stock charges, O'Sullivan's net loss in the 2004 quarter was $5.3 million, compared with net income of $2.7 million in 2003.
Despite an 11.9% drop in the cost of goods sold in the quarter, gross margin was off 27%. Selling, general and administrative expenses were down 1%.
O'Sullivan said the lower gross profit margin stemmed primarily from lower sales and production levels; increasing raw material prices, including particle board; changes in customer and product sales mix; and increased promotional activities.
For the nine months ended March 31, O'Sullivan reported a sales decline of 11.6% from a year earlier, to $209.9 million.
The nine-month net loss, including preferred stock charges, was $27.2 million, compared with $4.5 million a year ago. The stock charges were $9.2 million in 2004 and $10.7 million in 2003.
Excluding the impact of the preferred stock charges, O'Sullivan's nine-month net loss was $18 million, versus a profit of $6.2 million for the year-earlier period.
O'Sullivan said its earnings before interest, taxes, depreciation and amortization — which also excludes preferred stock dividends — were $6.4 million for the 2004 quarter, $12.4 million for the 2003 quarter, $16.9 million for the 2004 nine months and $35 million for the 2003 nine months.
Calculated as a percentage of sales, EBITA was 8.7% in the 2004 quarter compared with 14.2% in the 2003 quarter and 8% for the first nine months of 2004, measured against 14.7% for the same period in 2003.
"Today, the major challenge for O'Sullivan Furniture is reversing our top- and bottom-line results with current and new product and category initiatives," said Richard Davidson, who just announced his resignation as O'Sullivan president and CEO (see story on page 1).
"During the recent High Point furniture market, our new product lines that focus on incremental opportunities in kitchen furniture, bedroom furniture, closet organization and flat-screen television furniture were well received. These categories represent new opportunities for growth and diversity for O'Sullivan Furniture."
Looking forward, Davidson said O'Sullivan expects fourth-quarter revenues in a range of $55 million to $60 million, with operating income of about $1.7 million to $2.2 million.
| O'Sullivan Inds. | |||
|---|---|---|---|
| All figures in parentheses are loses or declines. | |||
| Quarter ended 3/31 | 2004 | 2003 | Change |
| Sales | $73,239,000 | $86,866,000 | (15.7%) |
| Operating income | 3,299,000 | 9,190,000 | (64.1%) |
| Net income | (a)(8,548,000) | (b)(1,063,000) | — |
| 9 months ended 3/31 | 2004 | 2003 | Change |
| Sales | $209,937,000 | $237,534,000 | (11.6%) |
| Operating income | 10,123,000 | 25,213,000 | (59.9%) |
| Net income | (a)(27,245,000) | (b)(4,522,000) | — |
| (a) After dividends and accretion on preferred stock of $3.2 million in the 2004 quarter and $9.2 million in the 2004 nine months. The 2004 nine months also includes a $250,000 pretax casualty loss. (b) After dividends and accretion on preferred stock of $3.7 million in the 2003 quarter and $10.7 million in the 2003 nine months; both periods include a $540,000 pretax restructuring charge. |
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