Stanley Furniture Company Inc. has a market cap of $74.6 million; its shares were traded at around $5.2 with and P/S ratio of 0.5.
Highlight of Business Operations:
Net sales decreased $1.1 million, or 4.0%, in the current quarter compared to the previous quarter and decreased $10.0 million, or 27.3%, compared to the prior year quarter. The decrease in sales from the previous quarter was due primarily to lower unit volume as our order backlog grew $2.2 million during the first quarter of 2011. We expect our order backlog to narrow as the flow of our product improves over the next few quarters. The decrease in sales from the comparable prior year quarter was due primarily to lower unit volume, resulting from what we believe to be a loss of market share and continued weakness in demand for our price segment of residential wood furniture. We believe the loss of market share resulted from the transition caused by the major restructuring of our business. Partially offsetting the unit decline in the current quarter compared to the prior year quarter was higher average selling prices for our Young America products, implemented June 2010.Gross profit for the current quarter of 2011 improved by $7.7 million compared to the previous quarter and improved $4.7 million from the comparable prior year quarter of 2010. Included in cost of goods sold in the current quarter is restructuring and related expense of $768,000 compared to $4.9 million in the previous quarter and $24,000 in the comparable prior year quarter of 2010. The remaining margin improvement for both comparisons resulted primarily from the transition of our Stanley Furniture product line to a fully offshore sourcing model eliminating a majority of our fixed costs at this domestic facility. Also contributing to the improved margins was improved operating efficiencies in the manufacturing of our Young America products. Increased selling prices in the second half of 2010 on our Young America products also contributed to the improved margins for the current quarter in comparison to the comparable prior year quarter of 2010.
Sources of liquidity include cash on hand and cash generated from operations. We expect cash on hand to be adequate for ongoing expenditures and capital spending for 2011 in the event we do not generate cash from operations. Working capital, excluding cash, decreased during the current quarter to $26.5 million from $27.2 million at December 31, 2010. The decrease was primarily due to lower inventories, partially offset by higher accounts receivable. Subsequent to quarter end, we received a $3.1 million tax refund.
Net cash provided by investing activities was $1.0 million in the current quarter compared to cash used by investing activities of $148,000 in the comparable prior year quarter. Sale of assets provided cash of $1.5 million in the first quarter of 2011 and we invested $409,000 for normal capital expenditures. Capital expenditures in 2011 are anticipated to be in the range of $1.5 million to $2.0 million.
We recorded income of $1.6 million, $9.3 million, and $11.5 million in 2010, 2009, and 2008, respectively, from CDSOA payments and other related payments, net of legal expenses. These payments came from the case involving Wooden Bedroom Furniture imported from China. The CDSOA provides for distribution of monies collected by U.S. Customs and Border Protection (CBP) for imports covered by antidumping duty orders entering the United States through September 30, 2007 to qualified affected domestic producers. Antidumping duties for merchandise entering the U.S. after September 30, 2007 remain with the U.S. Treasury.
According to CBP, as of October 1, 2010, approximately $13 million in duties had been secured by cash deposits and bonds on unliquidated entries of wooden bedroom furniture that are subject to the CDSOA, and this amount is potentially available for distribution under the CDSOA to eligible domestic manufacturers in connection with the case involving wooden bedroom furniture imported from China. The amount ultimately distributed will be impacted by the annual administrative review process, which can retroactively increase or decrease the actual duties owed on entries secured by cash deposits and bonds, and by appeals concerning the results of the annual administrative reviews. Assuming our percentage allocation in future years is the same as it was for the 2010 distribution (approximately 30% of the funds distributed) and the $13 million collected by the government as of October 1, 2010 does not change as a result of the annual administrative review process or otherwise, we could receive approximately $1 million to $4 million in CDSOA funds in addition to the funds held back and withheld pending the final resolution of the court cases discussed above.
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