Stanleytown, VA, October 12--Stanley Furniture Co. 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.
"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.
Management offers the following guidance:
* Net sales are expected to be in the range of $77.5 million to $80.0 million for the fourth quarter of 2004, an increase of 7% to 10% over the prior year quarter. For total year 2004, net sales are expected to be in the range of $295.6 million to $298.1 million, representing an increase of 13% to 14% over 2003.
* Operating income is expected to be in the range of $8.6 million to $9.2 million for the fourth quarter of 2004, or $33.9 million to $34.5 million for total year 2004.
* Earnings per share are expected to be in the range of $.78 to $.83 for the fourth quarter of 2004 compared to $.70 in the year ago quarter. For total year 2004, earnings per share are expected to be in the range of $3.10 to $3.15 compared to $2.34 for 2003.
* The Company's effective tax rate is expected to be 36.1% for 2004 compared to 36.0% in 2003.
Management is currently in the process of planning and budgeting for 2005 and will provide guidance for 2005 at a later time.
Earnings per share are on a diluted basis.
