MARTINSVILLE, VA - Hooker Furniture (Nasdaq:HOFT) today reported consolidated net sales of $244.4 million and net income of $12.6 million, or $1.16 per diluted share, for its fifty-two week fiscal year ended February 1, 2015.

Sales increased by $16.1 million, or 7% for fiscal 2015 compared to the prior year. Annual net income increased 58.7%, or $4.7 million. Earnings per share increased to $1.16 per diluted share compared to $0.74 for last year. The increase in net income was driven by operating profitability improvements in all segments.

For the fiscal 2015 fourth quarter, consolidated net sales increased 12.7% to $64.9 million, compared to $57.6 million for last year's fourth quarter. Consolidated net income for the fiscal 2015 fourth quarter increased $2.3 million to $4.3 million, or $0.40 per diluted share due to higher net sales in all segments, decreased discounting in the casegoods segment and lower upholstery manufacturing costs.

After reporting the highest quarterly net sales in six years for the third quarter, "Momentum continued to build, resulting in an outstanding fourth quarter that surpassed expectations and made for a great year," said Paul B. Toms Jr., chairman and chief executive officer.

On the strength of the double-digit sales increase in the fourth quarter, the Company "improved profitability in all segments in addition to making progress on multiple operational and strategic fronts during the year," Toms said.

Consolidated operating profitability increased by $6.5 million or 52.4% in fiscal 2015, over the prior year primarily due to a casegoods segment operating profitability improvement of $5.1 million and upholstery segment operating profitability increase of nearly one million dollars.

Gross profit increased in the fiscal 2015 annual period, in both absolute terms and as a percentage of net sales, due to increased net sales in all operating segments, lower discounting in the casegoods segment and reduced manufacturing costs in the upholstery segment.

The casegoods segment led the way, in sales and profitability, with shipments up $10 million for the year. "The increase was driven by a stronger, broader product assortment, 60% plus growth in container direct sales, 40% plus growth in international businesses and lower discounting," Toms said. "We gained traction in the 'better' price points of our "good-better-best" assortment through greater merchandising focus and the opening of a Vietnam distribution center to service a mixed container program."

Toms credited better finished goods forecasting and inventory management for significantly lower discounting throughout the year. "Efforts over the past two years to improve sales and operations planning processes paid off with the right mix of best-selling product in stock to ship on a timely basis throughout the year," he said.

While sales in the upholstery segment increased at a somewhat lower rate than casegoods, Sam Moore Furniture and Bradington-Young reported single-digit revenue gains, as Sam Moore significantly improved service, reducing delivery times to 4 to 6 weeks during the second half of the year.

In addition, "Our two new strategic initiatives, Homeware and H Contract, contributed about $5 million of sales for the year, and H Contract reported a small operating profit," Toms said.

"While our increase in profitability was driven by casegoods, improved performance at Sam Moore, continued profitability gains at Bradington-Young and a small operating profit at H Contract all played a significant role as well," Toms said. "The profitability performance for the year says a lot about the leverage in our business model."

Cash, Debt and Inventory

The Company finished the 2015 fiscal year with $38.7 million in cash and cash equivalents and no long-term debt. Additionally, $13.5 million was available on its $15.0 million revolving credit facility, net of $1.5 million reserved for standby letters of credit. Consolidated inventories stood at $45.0 million, down $4 million from the fiscal 2014 year end.

Business Outlook

"Our business was hitting on all cylinders across all product lines, types of retailers and geographic regions in the fourth quarter," said Toms. "However, business slowed somewhat in the first two months of our fiscal first quarter, which is typical.

"We have experienced increased ocean freight rates since late July and expect some margin deterioration in our first quarter results. However, we expect to mitigate these increases by our second fiscal quarter," Toms continued. "Overall economic conditions are favorable to the furniture industry, with new and existing home sales the strongest in recent years. Housing affordability remains good and significant improvements in the unemployment rate and job growth are positive indicators. We are optimistic that housing and furniture retailing will continue to strengthen, and believe we are well positioned with a fresh and salable product line across all brands and the right inventory to service our customers throughout the country," Toms concluded.

 

Table I
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
         
  Thirteen Thirteen Fifty-two Fifty-two
  Weeks Ended Weeks Ended Weeks Ended Weeks Ended
  February 1, February 2, February 1, February 2,
  2015 2014 2015 2014
         
Net sales  $ 64,903  $ 57,572  $ 244,350  $ 228,293
         
Cost of sales  47,401  43,618  181,550  173,568
         
Gross profit  17,502  13,954  62,800  54,725
         
Selling and administrative expenses  10,994  10,480  43,752  42,222
         
Operating income   6,508  3,474  19,048  12,503
         
Other income, (expense), net  167  10  350  (35)
         
Income before income taxes  6,675  3,484  19,398  12,468
         
Income tax expense  2,376  1,485  6,819  4,539
         
Net income   $ 4,299  $ 1,999  $ 12,579  $ 7,929
         
Earnings per share:        
Basic   $ 0.40  $ 0.19  $ 1.17  $ 0.74
Diluted  $ 0.40  $ 0.19  $ 1.16  $ 0.74
         
Weighted average shares outstanding:        
Basic 10,746 10,724 10,736 10,722
Diluted 10,776 10,758 10,771 10,752
         
Cash dividends declared per share  $ 0.10  $ 0.10  $ 0.40  $ 0.40
 
Table II
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
 
 
  13 Weeks Ended 13 Weeks Ended 52 Weeks Ended 52 Weeks Ended
  February 1, February 2, February 1, February 2,
  2015 2014 2015 2014
         
Net Income  $ 4,299  $ 1,999  $ 12,579  $ 7,929
Other comprehensive income (loss):        
Amortization of actuarial (loss) gain  (649)  (84)  (687)  (163)
Income tax effect on amortization of actuarial gains  233  31  254  59
Adjustments to net periodic benefit cost  (416)  (53)  (433)  (104)
         
Comprehensive Income  $ 3,883  $ 1,946  $ 12,146  $ 7,825
 
Table III
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, including share data)
 
As of February 1, February 2,
  2015 2014
Assets    
Current assets    
Cash and cash equivalents  $ 38,663  $ 23,882
Accounts receivable, less allowance for doubtful accounts of $1,329 and $1,243 on each date  32,245 29,393
Inventories 44,973 49,016
Prepaid expenses and other current assets 2,353 2,413
Deferred taxes 1,808 1,664
Income tax recoverable  --   682
Total current assets  120,042  107,050
Property, plant and equipment, net 22,824 23,752
Cash surrender value of life insurance policies 20,373 18,891
Deferred taxes 4,084 4,051
Intangible assets 1,382 1,382
Other assets  2,050  355
Total non-current assets  50,713  48,431
Total assets  $ 170,755  $ 155,481
     
Liabilities and Shareholders' Equity    
Current liabilities    
Trade accounts payable  $ 10,293  $ 7,077
Accrued salaries, wages and benefits 4,824 3,478
Accrued commissions 916 934
Other accrued expenses 2,180 759
Customer deposits 853 659
Total current liabilities 19,066 12,907
Deferred compensation 8,329 7,668
Income tax accrual 90 103
Other long-term liabilities 360  -- 
Total long-term liabilities 8,779  7,771
Total liabilities  27,845  20,678
     
Shareholders' equity    
Common stock, no par value, 20,000 shares authorized, 10,774 and 10,753 shares issued and outstanding on each date  17,852 17,585
Retained earnings  125,393 117,120
Accumulated other comprehensive income  (335)  98
Total shareholders' equity  142,910  134,803
Total liabilities and shareholders' equity  $ 170,755  $ 155,481
 
Table IV
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
For the 52 Week Periods Ended February 1, 2015 and February 2, 2014 and the 53 Week Period Ended February 3, 2013
       
  2015 2014 2013
Operating Activities:      
Net income  $ 12,579  $ 7,929  $ 8,626
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization  2,599  2,491  2,566
(Gain) loss on disposal of assets  (23)  (8)  32
Deferred income tax expense  (135)  340  20
Non-cash restricted stock and performance awards  123  338  465
Provision for doubtful accounts  928  456  61
Changes in assets and liabilities      
Trade accounts receivable  (3,780)  (1,576)  (2,526)
Income tax recoverable  682  (682)  -- 
Inventories  4,043  856  (15,736)
Gain on life insurance policies  (709)  (147)  (680)
Prepaid expenses and other current assets  (76)  30  172
Trade accounts payable  3,216  (4,499)  2,387
Accrued salaries, wages and benefits  1,347  162  (539)
Accrued income taxes  1,314  (751)  1,444
Accrued commissions  (18)  (62)  44
Customer deposits  194  659  -- 
Other accrued (income) expenses  109  (31)  251
Deferred compensation  317  88  80
Other long-term liabilities  58  103  -- 
Net cash provided by (used in) operating activities   22,768  5,696  (3,333)
       
Investing Activities:      
Purchases of property, plant and equipment  (2,994)  (3,471)  (4,061)
Proceeds received on notes receivable  31  36  37
Proceeds from sale of property and equipment  71  22  303
Purchase of intangible  --   (125)  -- 
Premiums paid on life insurance policies  (789)  (834)  (902)
Proceeds received on life insurance policies  --   517  -- 
Net cash used in investing activities   (3,681)  (3,855)  (4,623)
       
Financing Activities:      
Cash dividends paid  (4,306)  (4,301)  (5,386)
Purchase and retirement of common stock  --   --   (671)
Net cash used in financing activities   (4,306)  (4,301)  (6,057)
       
Net increase (decrease) in cash and cash equivalents  14,781  (2,460)  (14,013)
Cash and cash equivalents at the beginning of year  23,882  26,342  40,355
Cash and cash equivalents at the end of year  $ 38,663  $ 23,882  $ 26,342
       
Supplemental schedule of cash flow information:      
Income taxes paid, net  $ 4,696  $ 5,534  $ 2,901

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