Stanley Furniture Announces Higher Sales and Earnings for the Third Quarter of 2004

Furniture World Magazine

Stanley Furniture Company, Inc. reported increased sales and earnings for the third quarter of 2004. Both sales and earnings exceeded management's guidance for the quarter issued in mid-July. Net sales of $77.2 million increased 18.3% from the third quarter of 2003, marking the tenth consecutive quarter of sales growth over the comparable prior year quarter. Earnings per share grew 37.3% to $.81 compared to $.59 in the third quarter of last year. For the first nine months of 2004, net sales of $218.1 million increased 16.1% over the comparable prior year period. Year-to-date earnings per share grew 40.6% to $2.32 compared to $1.65 in the comparable 2003 period. Operating income for the third quarter rose to $8.8 million, or 11.4% of net sales, compared to $6.5 million, or 9.9% of net sales, for the comparable 2003 third quarter. For the nine months ending September 25, 2004, operating income increased to $25.3 million, or 11.6% of net sales, from $18.7 million, or 10.0% of net sales for the comparable 2003 period. Higher sales, increased production levels at the Company's domestic facilities, although at a slower growth rate than sales due to the growth of sourced items, and savings from sourcing initiatives drove the improvement. These improvements were offset by inflation in raw materials, wages, employee benefits and energy costs, and tariffs imposed on wooden bedroom furniture imported from China. Approximately 27% of sales came from sourced items during the first nine months of 2004. Management expects sales from sourced items to level off around 30% of sales in the fourth quarter. Cash flow in the first nine months of 2004 and available cash was used to reduce debt $5.6 million and pay cash dividends of $1.9 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 $17.1 million and cash on hand was $2.2 million at September 25, 2004. Business Outlook: "We are pleased to report our tenth consecutive quarter of year-over-year sales growth," commented Jeffrey R. Scheffer, president and chief executive officer. "For the past twelve months our sales have increased almost $40 million, or 16%, compared to the prior twelve months. While industry sales trends have improved this year, we believe market share gains are driving most of our sales growth. The strong third quarter performance has caused us to again raise our sales and earnings guidance for 2004 as outlined below," Scheffer concluded. Celebrating its 80th Anniversary in 2004, 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.