STANLEYTOWN, VA - Stanley Furniture Company, Inc. (nasdaq-ngs:STLY) today reported sales and operating results for the second quarter of 2012.

Second quarter 2012 highlights:

-- Net sales were $24.4 million, a 10.8% decrease compared to the second quarter of 2011 and an 8.8% decrease on a sequential quarter basis.

-- Gross margin improved to 14.5% of net sales compared to 12.3% in the second quarter of 2011, after excluding restructuring items.

-- Selling, general and administrative expenses were $4.5 million (18.4% of net sales) compared to $4.7 million (17.3%) in the second quarter of 2011.

-- The company continued the consolidation of its Virginia warehousing operations and recorded a $474,000 restructuring charge.

-- Net of restructuring items, operating loss for the second quarter was $932,000 compared to a loss of $1.4 million in second quarter of 2011.

-- The company reported net income of $36.9 million in the second quarter after recording $39.4 million of income, net of expenses, from Continued Dumping and Subsidy Offset Act (CDSOA) proceeds.

-- As of June 30, 2012, the company's financial position reflected $47.4 million in cash, restricted cash and short-term investments.

-- Subsequent to quarter end, the Board authorized a $5.0 million share repurchase program.

Year to date 2012 highlights:

-- Net sales were $51.2 million compared to $54.0 million in the first half of 2011.

-- Gross margin improved to 14.0% of net sales compared to 10.8% in the first six months of 2011, excluding restructuring charges in both years.

-- Selling, general and administrative expenses improved to 17.7% of net sales compared to 18.3% in 2011.

-- Net of restructuring charges, operating loss for the first half of 2012 narrowed significantly to $1.9 million when compared to a loss of $4.1 million in the first half of 2011.

-- Capital expenditures and investment in new systems totaled $3.9 million in the first half of 2012.

Overview

"We are very pleased with the ability we have demonstrated to manage our cost structure and reduce our operating losses on lower sales volume", commented Glenn Prillaman, President and Chief Executive Officer. "We continue to gain momentum with our Stanley brand. While net sales of this product line decreased sequentially as a result of our promotions during the first quarter, they held steady compared to the prior year quarter, our strongest of 2011. According to our retailers, the value of our Stanley product offerings has noticeably increased since this time last year. Our partnerships with overseas vendors continue to strengthen our service position, a key factor that has hindered sales growth to date. Our plan for the Stanley line is working as profits continue to grow."

"Our Young America brand remains in transition until later this year when we expect new enhancements to all existing products to be completed and the marketing support for those products will be in place at retail. New product designs should be on retail floors before the end of the year. We believe that the completion of these efforts paired with continual operational improvements will result in a product of significantly greater value in the marketplace boosting sales. In the meantime, we recognize we are sacrificing immediate sales in order to position the Young America brand and its supporting retailers to compete with price-driven, imported product in the long term," Prillaman commented.

Balance Sheet

Cash, restricted cash and short-term investments at quarter-end were $47.4 million, up from $17.3 million at December 31, 2011. CDSOA proceeds of $39.9 million were received in the second quarter for funds that were previously withheld under the antidumping duty order for wooden bedroom furniture imported from China. Capital investments associated with modernizing our manufacturing facility in Robbinsville, North Carolina were $2.6 million in the first half of 2012. Additionally, the company has spent $1.3 million in 2012 toward new systems. Inventory levels associated with our Stanley line decreased during the second quarter and are down from year-end.

Stock Repurchase Program

The company announced today that its Board of Directors has approved a new authorization for the company to acquire up to $5.0 million of its common stock. These repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise, at prices that the company deems appropriate. Commenting on this announcement, Prillaman said, "As you know, we received a substantial amount of cash from CDSOA proceeds in the second quarter. As a result, the Board is carefully considering the best uses of these funds to enhance shareholder value and has authorized a share repurchase program. This demonstrates management's and the Board's continued confidence in our strategy and prospects for future growth and earnings."

Outlook

The company is projecting a slight increase in net sales from the prior year third quarter and expects a further reduction in operating losses. "We have several encouraging trends in our business. Retailers who have received the initial shipments of our newly-enhanced Young America products have given us very positive feedback. This news reinforces our belief that our long-term plan for the Young America brand positions us well to return to growth. In addition, our Stanley product introduction from High Point's Spring Market was well-received and is already on its way from overseas to retail floors," Prillaman concluded.

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.

Conference Call Details

The company will host a conference call Wednesday morning, July 18, 2012 at 9:00 a.m. Eastern Time. The dial-in-number is (877) 407-8029. The call will also be web cast and archived on the company's web site at www.stanleyfurniture.com . The dial-in-number for the replay (available through August 18, 2012) is (877) 660-6853, the account reference number is 275 and the conference number is 395624.

Forward-Looking Statements

Certain statements made in this news release are not based on historical facts, but are forward-looking statements. These statements can be identified by the use of forward-looking terminology such as "believes," "estimates," "expects," "may," "will," "should," or "anticipates," or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. These statements reflect our reasonable judgment with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include our success in profitably producing Young America products in our domestic manufacturing facility, disruptions in foreign sourcing including those arising from supply or distribution disruptions or those arising from changes in political, economic and social conditions, as well as laws and regulations, in countries from which we source products, international trade policies of the United States and countries from which we source products, lower sales due to worsening of current economic conditions, the cyclical nature of the furniture industry, business failures or loss of large customers, the inability to raise prices in response to inflation and increasing costs, failure to anticipate or respond to changes in consumer tastes and fashions in a timely manner, competition in the furniture industry including competition from lower-cost foreign manufacturers, the inability to obtain sufficient quantities of quality raw materials in a timely manner, environmental, health, and safety compliance costs, failure or interruption of our information technology infrastructure, limited use of operating loss carry forwards due to ownership change extended business interruption at our manufacturing facility and the possibility that U.S. Customs and Border Protection may seek return of all or a portion of the CDSOA proceeds received in the second quarter of 2012. Any forward looking statement speaks only as of the date of this news release and we undertake no obligation to update or revise any forward looking statements, whether as a result of new developments or otherwise.

        
                                           STANLEY FURNITURE COMPANY, INC.
                                           Consolidated Operating Results
                                        (in thousands, except per share data)
                                                     (unaudited)
                                                          Three Months Ended           Six Months Ended
                                                      --------------------------- ---------------------------
                                                        June 30,       July 2,      June 30,       July 2,
                                                          2012          2011          2012          2011
                                                      ------------- ------------- ------------- -------------
        Net sales                                      $ 24,428      $ 27,393      $ 51,209      $ 53,964
        Cost of sales                                    21,350        23,760        44,534        48,646
                                                         ------        ------        ------        ------
            Gross profit                                  3,078         3,633         6,675         5,318
        Selling, general and administrative expenses      4,484         4,748         9,065         9,869
                                                         ------        ------        ------        ------
          Operating loss                                 (1,406)      (1,115)      (2,390)      (4,551)
        CDSOA income, net                                39,361         1,117        39,361         1,117
        Other income, net                                    20            21            41            50
        Interest income                                      19             3            25             3
        Interest expense                                    518           586         1,120         1,124
                                                         ------        ------        ------        ------
         Income (loss) before income taxes               37,476          (560)      35,917        (4,505)
        Income tax expense                                  616            35           620            19
                                                         ------        ------        ------        ------
          Net income (loss)                            $ 36,860      $   (595)    $ 35,297      $ (4,524)
                                                      == ======     == ====== ==  == ======     == ====== ==
        Diluted earnings(loss) per share               $   2.54      $   (.04)    $   2.44      $   (.32)
                                                      == ======     == ====== ==  == ======     == ====== ==
        Weighted average number of shares                14,493        14,345        14,444        14,345
                                                         ======        ======        ======        ======
        


        
                                                         STANLEY FURNITURE COMPANY, INC.
                                                            Supplemental Information
                                              Reconciliation of GAAP to Non-GAAP Operating Results
                                                                               Three Months Ended                Six Months Ended
                                                                            June 30,         July 2,         June 30,         July 2,
                                                                              2012            2011             2012            2011
                                                                        ---------------- --------------- ---------------- ---------------
        Reconciliation of gross profit as reported to gross profit
        adjusted:
          Gross profit as reported                                        $   3,078        $  3,633        $   6,675        $  5,318
          Plus restructuring charge (credit)                                    474            (277)            474             491
                                                                            -------          ------ ---      -------          ------
            Gross profit as adjusted                                      $   3,552        $  3,356        $   7,149        $  5,809
                                                                        === =======      === ======      === =======      === ======
        Percentage of net sales:
          Gross profit % as reported                                           12.6 %          13.3 %           13.0 %           9.9 %
          Plus restructuring charge (credit)                                    1.9 %          (1.0 %)           1.0 %            .9 %
                                                                            ------- ---      ------ ---      ------- ---      ------ ---
            Gross profit % as adjusted                                         14.5 %          12.3 %           14.0 %          10.8 %
                                                                            ======= ===      ====== ===      ======= ===      ====== ===
        Reconciliation of operating loss as reported to operating loss
        adjusted:
          Operating loss as reported                                      $  (1,406)      $ (1,115)      $  (2,390)      $ (4,551)
          Plus restructuring charge (credit)                                    474            (277)            474             491
                                                                            -------          ------ ---      -------          ------
            Operating loss as adjusted                                    $    (932)      $ (1,392)      $  (1,916)      $ (4,060)
                                                                        === ======= ===  === ====== ===  === ======= ===  === ====== ===
        Reconciliation of net income (loss) as reported to net loss
        adjusted:
          Net income (loss) as reported                                   $  36,860        $   (595)      $  35,297        $ (4,524)
          Less income from CDSOA                                            (38,761)        (1,117)        (38,761)        (1,117)
          Plus restructuring charge (credit)                                    474            (277)            474             491
                                                                            -------          ------ ---      -------          ------
            Net loss as adjusted                                          $  (1,427)      $ (1,989)      $  (2,990)      $ (5,150)
                                                                        === ======= ===  === ====== ===  === ======= ===  === ====== ===
        Reconciliation of net income (loss) as reported to net loss
        adjusted:
          Diluted EPS as reported                                         $    2.54        $   (.04)      $    2.44        $   (.32)
          Less income from CDSOA                                              (2.67)          (.08)          (2.68)          (.08)
          Plus restructuring charge (credit)                                    .03            (.02)            .03             .03
                                                                            -------          ------ ---      -------          ------
            Diluted EPS as adjusted                                       $    (.10)      $   (.14)      $    (.21)      $   (.37)
                                                                        === ======= ===  === ====== ===  === ======= ===  === ====== ===
        


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 income from CDSOA proceeds and 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.

        
                                    STANLEY FURNITURE COMPANY, INC.
                                 Consolidated Condensed Balance Sheets
                                            (in thousands)
                                                                  June 30,       December 31,
                                                                    2012             2011
                                                                -------------   --------------
        Assets
        Current assets:
             Cash and equivalents                                  $  25,841         $ 15,700
             Restricted cash                                           1,587            1,587
             Short-term investments                                   20,000
             Accounts receivable, net                                 10,428           10,252
             Inventories                                              29,541           31,084
             Prepaid expenses and other current assets                 3,519            3,380
             Deferred income taxes                                       528              519
                                                                     -------           ------
                  Total current assets                                91,444           62,522
        Property, plant and equipment, net                            19,969           17,590
        Other assets                                                   3,066              496
                                                                     -------           ------
                  Total assets                                     $ 114,479         $ 80,608
                                                                ==== =======    ====== ======
        Liabilities and Stockholders' Equity
        Current liabilities:
             Accounts payable                                      $   7,189         $  9,963
             Accrued expenses                                          7,053            6,493
                                                                     -------           ------
                  Total current liabilities                           14,242           16,456
        Deferred income taxes                                            528              519
        Other long-term liabilities                                    7,059            6,593
        Stockholders' equity                                          92,650           57,040
                                                                     -------           ------
                  Total liabilities and stockholders' equity       $ 114,479         $ 80,608
                                                                ==== =======    ====== ======
        


        
                                        STANLEY FURNITURE COMPANY, INC.
                                Consolidated Condensed Statements of Cash Flows
                                                (in thousands)
                                                                            Six Months Ended
                                                                   -----------------------------------
                                                                       June 30,           July 02,
                                                                         2012               2011
                                                                   ----------------   ----------------
        Cash flows from operating activities:
           Cash received from customers                              $  50,995          $  51,226
           Cash paid to suppliers and employees                        (56,080)          (57,335)
                                                                        39,856              1,117
           Cash from Continued Dumping and Subsidy Offset Act
           Interest paid                                                (2,265)           (2,111)
           Income taxes (paid) received, net                              (728)            3,022
                                                                       ------- ---        -------
              Net cash provided (used) by operating activities          31,778             (4,081)
                                                                       -------            ------- ---
        Cash flows from investing activities:
           Purchase of short-term investments                          (20,000)
           Capital expenditures                                         (2,635)             (834)
           Purchase of other assets                                     (1,266)              (38)
           Proceeds from sale of assets                                     47              1,472
                                                                       -------            -------
              Net cash provided (used) by investing activities         (23,854)              600
                                                                       ------- ---        -------
        Cash flows from financing activities:
           Proceeds from insurance policy loans                          2,283              2,003
           Capital lease payments                                          (66)              (55)
                                                                       ------- ---        ------- ---
              Net cash provided by financing activities                  2,217              1,948
                                                                       -------            -------
        Net increase (decrease) in cash and equivalents                 10,141             (1,533)
        Cash and equivalents at beginning of period                     15,700             25,532
                                                                       -------            -------
              Cash and equivalents at end of period                  $  25,841          $  23,999
                                                                   === =======        === =======
        Reconciliation of net income (loss) to net cash used by
        operating activities:
           Net income (loss)                                         $  35,297          $  (4,524)
              Depreciation and amortization                                884                817
              Stock-based compensation                                     388                193
              Changes in working capital                                (4,153)              562
              Other assets                                              (1,170)           (1,038)
              Other long-term liabilities                                  532                (91)
                                                                       -------            ------- ---
        Net cash provided (used) by operating activities             $  31,778          $  (4,081)
                                                                   === =======        === ======= ===
        


SOURCE: Stanley Furniture Company, Inc.

        
        
        


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