STANLEYTOWN, Va. - Stanley Furniture Company, Inc. (Nasdaq-NGS:STLY) today reported sales and operating results for the first quarter of 2013.

Highlights from the first quarter of 2013 include:

• Net sales were $26.1 million, an 11.4% increase on a sequential quarter basis and a 2.7% decrease compared to the first quarter of 2012 (the strongest quarter of 2012).

• Gross margin was 13.0% of net sales compared to 9.3% in the sequential quarter and 13.4% in prior year same quarter.

• Selling, general and administrative expenses were essentially flat at $4.6 million (17.6% of net sales) compared to both the sequential quarter and prior year same period, net of a $260,000 restructuring expense during the first quarter of 2013.

• Operating loss, net of restructuring, was $1.2 million compared to a loss of $2.4 million in the sequential quarter and a loss of 1.0 million in the prior year same quarter.

• Purchased 78,988 shares of common stock at an average price of $4.47.

• As of March 30, 2013, the company’s financial position reflected $28.3 million in cash, restricted cash and short-term investments.

Overview

After a year of significant transition, net sales for the first quarter of 2013 grew 11.4% over the sequential quarter to $26.1 million. Operating loss, prior to one-time expenses for office and showroom consolidation, decreased significantly to $1.2 million from the sequential quarter as the expected improvements to gross margin were combined with higher sales.

Commenting on the results, Glenn Prillaman, President and Chief Executive Officer said, “We are pleased with the progress we made on our strategic initiatives during the first quarter. Our Young America brand, after three years of transition, recorded the first sequential increase in both orders and shipments since the fourth quarter of 2010. Our Young America backlog remains healthy and grew slightly during the quarter due to successful promotions and what we believe is our customers’ slow but steady return to confidence in the brand. Shipments of our Stanley Furniture brand significantly outpaced the previous three quarters and were down slightly compared to the prior year period, which was our strongest in 2012. Our improved service position allowed us to ship at a higher rate than incoming orders, which have been sluggish over the past few quarters. We have multiple growth initiatives underway, but we will not be able to continue growing unless our incoming order rate improves,” Prillaman continued. “During the second quarter, we will complete our corporate office and showroom consolidation and will introduce our brands in this new environment later this week at the Spring Furniture Market in High Point where the new face for our almost 90 year-old company begins taking shape for our customer,” said Prillaman.

Balance Sheet

“As we shared on our year end call, we expected to use cash in the first half of the year. Our accounts payable decrease was related to timing of imported product that arrived during the latter part of 2012. The increase in accounts receivable reflects the growth in sales, and the quality of the receivables remains unchanged. The timing of our capital spend is consistent with our office and showroom consolidation and the implementation of our new information systems,” commented Prillaman. Cash, restricted cash and short-term investments at quarter-end were $28.3 million, down from $37.7 million at December 31, 2012. Working capital, excluding cash, restricted cash and short-term investments, increased to $40.7 million from $34.6 million at year-end 2012.

Outlook

In closing, Prillaman remarked, “With our operational models stabilized, our primary focus is on driving top-line growth for both brands. Our initiatives are well-guided and numerous. After what we understand to have been a tough past couple months for retailers in our segment of the wood residential furniture industry, we remain optimistic that a continued housing recovery will translate into increased demand for our product offerings in the coming quarters,” concluded Prillaman.

About the Company

Established in 1924, Stanley Furniture Company, Inc. is a leading designer and manufacturer of wood furniture targeted at the premium segment of the residential market. The company offers two major product lines. Its Stanley Furniture brand represents its fashion-oriented adult furniture and competes through an overseas sourcing model in the upscale market through superior finish, styling and piece assortment. Its Young America brand is positioned as the leader in the infant and youth segment and differentiates through a domestic manufacturing model catering to parent preferences such as child safety, color, choice and quick delivery of customized special orders. The company’s common stock is traded on the NASDAQ stock market under the symbol STLY.

All earnings per share amounts are shown on a diluted basis.

Note:

We have included the above reconciliation of reported financial measures according to GAAP to non-GAAP financial measures because we believe that this reconciliation provides useful information that allows investors to compare operating results to those of other periods by excluding restructuring related charges. These measures should be considered in addition to results prepared in accordance with GAAP and should not be considered a substitute for or superior to GAAP results.

Source: Stanley Furniture Company, Inc.