Stanley Furniture Doesn't See Things "Turning Up Any Time Soon"

Stanley Furniture (STLY) reported second quarter of 2008 earnings Tuesday and held a conference call to discuss the results. The company missed estimates on earnings, and reduced guidance for the third quarter of 2008 and full year 2008.

STLY plans to consolidate its North Carolina manufacturing operations from two facilities to one, eliminate two executive positions and offer a voluntary early retirement incentive for some salaried employees.

Financial Highlights

Revenue - $ 59.1 million
EPS – ($0.01)
Cash - $33.8 million
Long term debt - $27.8 million

Updated Guidance

“The revised guidance we provided in last evening’s release… reflects business conditions continuing at current levels and not taking another leg down.”

Full year 2008 loss of ($0.25) – ($0.46) including a restructuring charge of $0.32 - $0.43.

Full year 2008 revenues of $230 - $237 million.

Management Comments

“Business conditions remain extremely difficult. The perfect storm of historically low levels of housing activity, consumer confidence and personal disposal income has us still searching for a bottom in this current cycle. And frankly, we don’t see much out there that would suggest business turning up any time soon.”

Q & A

What does the business look like (long term) in terms of its gross margin potential, SG&A, operating margin potential and returns on capital?

“We think historical gross margins (25-27%) are certainly possible. We would see SG&A in that 13%, 14% going forward.”

Long term - the variability of cost versus the fixed nature of it historically?

“I think it’s safe to say that the actions that we’ve taken today already and those we announced last week will certainly reduce our fixed cost structure and will, when the ultimate rebound does occur, allow more of that to drop through to the bottom line.”

What about the amount of receivables write-downs?

“So far through the first half of the year they’ve been well within our normal write offs and expense level.”

Are there any geographical areas or items that are stronger than others?

“California remains very difficult as does Arizona and Las Vegas and Florida. Those are probably the hardest hit areas at this point and when we talk about our sense that the recovery will be a bit slower, that is due in part to those very large markets probably not recovering at the same time the rest of the country does, whenever that happens.”

Read our previous post on STLY.

Comments

[QUESTIONABLE:]

Bernanke told the Senate and House that there is no single shot in the arm repair.... He was wrong. As I watched him he stumbled through carefully watching what he said.... he knows which Government Officials have been involved in this with many on the committees he was addressing, the Fed has been investigating.... but he is only human and is choosing his battles wisely and fearful to tell the American Citizens the truth because even his boss is involved... wait a minute I thought we were his boss - that's what Government Officials Forget... First of all the birth of NAFTA coincided with this emerging Futures Market under Wendy Graham when she was the head of the CFTC..(the ONLY ENRON EXCUTIVE NEVER QUESTIONED, NEVER CHARGED AND WHOSE HUSBAND IS CHIEF ADVISOR TO MCcAIN.. China loved this, they starting buying up properies in Central America to build private ports, agreed to take over operations of the Panama Canal, and boom, now 95% of all products made in China come across our border tax/tariff/duty free..... If a true accounting were taken, it would be determined that the amount they owe the US would be equal to our debt with them.... The one shot answer to this is FREEZE the Futures/Commodities Markets.... under emineint domain take possession of all market shares there of oil, auctin it off, and then tell the holders, welcome to capitalism... this would put all of this future yet to be pumped, artificailly inflated demand, oil back into circulation..... boom, the US Dollar would rebound past the Euro which would be stuck at the mercy of the London Futures/Commondities Market...... Then send Port Authority to our Borders and inspect every Load.... "Made In China" gets refused, Chinese Products get backed up at the border, and we tell CHina, oops, "WE OWE YOU, YOU OWE ME, LET BECOME A HAPPY FAMILY," (Barney sing song) and say lets call it even and from now on, if you wan to use the borders instead of the ports start paying!

2008 Jul 17 09:41 AM