Stanley 4Q sales drop 13.3%, profits off 23.7%
Heath E. Combs -- Furniture Today, February 4, 2007
Stanleytown, Va. — Stanley Furniture's fourth-quarter sales were down 13.3% to $70.6 million and earnings were off 23.7% to $4.5 million, or 40 cents per share, compared with a record comparable 2005 quarter, the case goods manufacturer and importer reported.
For the year, sales of $307.5 million were down 7.8% from 2005. Earnings fell 27.8% to $16.8 million, or $1.41 per share.
"The industrywide slowdown that began in late 2005 worsened during 2006 and does not appear to be over," said President and CEO Jeff Scheffer.
Operating income for 2006 was $22.7 million, or 7.4% of sales, compared with $37.4 million, or 11.2% of sales, the previous year, the company said.
It said lower margins resulted from lower sales, decreased production levels and higher raw materials, compensation and energy costs, and bad debt expense.
"As a result of improving processes and reducing lead times, production levels decreased more sharply than the sales decline and accentuated the margin decline due to the under-absorption of factory overhead costs," Stanley said.
The company recorded income of $4.4 million before taxes in the latest quarter stemming from antidumping duties paid by importers of Chinese wood bedroom furniture.
Stanley also said it is borrowing $25 million in a private note placement, to be used for general corporate purposes, including the repurchasing of company stock.
"While we are disappointed with lower sales and earnings, I am confident we are a stronger, more efficient company today than we were a year ago," Scheffer said. "Near term, we will continue to focus on controlling costs and inventories, and improving our product offerings. Longer term, we remain focused on reducing costs, eliminating waste and improving productivity, quality and service through our continuous improvement efforts applying lean business principles."
For 2006, the company is projecting sales of $300 million to $315 million and earnings per share of $1 to $1.15 per share, excluding a charge to earnings of 35 to 38 cents per share for termination of a pension plan.
For the current quarter, Stanley is looking for sales of $70 million to $74 million, down from record first-quarter sales of $83.5 million in 2005. Earnings per share are expected to be 12 to 16 cents, down from 43 cents a year ago.
The company also said its board has approved a 25% increase in its quarterly stock dividend to 10 cents per share, payable March 5 to shareholders of record on Feb. 16.
| Stanley Furniture | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 12/31 | 2006 | 2005 | Change |
| a. Includes pretax income of $4,419,000 in the 2006 fourth quarter and year as the company's share of antidumping duties collected by the U.S. government on wood bedroom furniture imported from China. |
|||
| Sales | $70,636,000 | $81,446,000 | (13.3%) |
| Operating income | 2,840,000 | 9,257,000 | (69.3%) |
| Net income (a) | 4,456,000 | 5,842,000 | (23.7%) |
| Earnings per share | 0.40 | 0.46 | (13.0%) |
| Year ended 12/31 | 2006 | 2005 | Change |
| Sales | $307,547,000 | $333,646,000 | (7.8%) |
| Operating income | 22,729,000 | 37,442,000 | (39.3%) |
| Net income (a) | 16,781,000 | 23,231,000 | (27.8%) |
| Earnings per share | 1.41 | 1.77 | (20.3%) |
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Stanley 4Q sales down 13.3%, profits off 13%
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