Furniture Brands International announced its financial results for the third quarter ended September 30, 2009.
Net sales from continuing operations for the 2009 third quarter were $293.7 million, compared with $412.8 million in the third quarter of 2008, a decline of 28.9% from the 2008 quarter. On a sequential basis, net sales increased 1.9% from the second quarter of 2009. Results from continuing operations were a loss of $0.48 per diluted share in the 2009 quarter compared to a loss of $0.86 per diluted share for the third quarter of 2008.
"Furniture Brands' actions during this unprecedented economic downturn have enabled the company to improve its balance sheet and gross margin while creating the opportunity for significant earnings leverage that will enhance financial results as industry fundamentals stabilize and improve," said Ralph P. Scozzafava, Chairman of the Board and Chief Executive Officer. "Our balance sheet continues to improve with a solid cash position, and we've reduced our debt by nearly $200 million from the third quarter of 2007. Through continued cost discipline, gross margin for the most recent quarter improved to 23.1%, reflecting more efficient manufacturing operations, workforce reductions, and the impact of continuing to consolidate our supply chain organization. We are not satisfied with this gross margin level, and we are focused on driving further improvements through the benefits of consumer tested products, shared services, further consolidation of our supply chain, and Lean manufacturing," Mr. Scozzafava said.
Key elements of our supply chain initiatives include centralized purchasing of raw materials and supplies, accelerated implementation of Lean manufacturing practices, improved sales and operations planning, better management of third-party manufacturing through FBN Asia, outsourcing of domestic freight carriers for several brands, and consolidation of distribution centers.
Gross margin for the 2009 third quarter was 23.1% compared to 16.3% in the same quarter of 2008. Selling, general, and administrative costs for the 2009 third quarter totaled $89.2 million, which is a significant decrease from the $129.2 million in SG&A costs reported in the 2008 quarter. Results for both quarters include numerous selected items that are detailed in a table attached to this press release.
At September 30, 2009, the company reported cash and cash equivalents of $76.5 million and long-term debt of $102 million resulting in net debt of $25.5 million. This net debt position compares favorably to net debt of $51.7 million at June 30, 2009 (reported cash of $77.3 million and debt of $129 million) and $83.4 million at December 31, 2008 (reported cash of $106.6 million and debt of $190 million). During the quarter, the company generated $26.3 million in cash flow, exclusive of changes in debt balances and the impact of tax refunds. The company continues to expect to generate positive cash flow for the year 2009, exclusive of changes in debt balances and without the impact of tax refunds.
"While we have chosen to exit unprofitable sales agreements, every manager in our organization realizes that driving revenue through value-added relationships holds the key to the company's long-term profitability," Mr. Scozzafava said. "Many of the revenue-enhancing initiatives the company has implemented in the past 18 months have been hindered by the severe decline in consumer spending. These programs are building traction and in a more stable marketplace will help produce the operating leverage that has always been a key focus of our strategic plan," Mr. Scozzafava said.
Upcoming Investor Event
A conference call will be held to discuss third quarter results at 7:30 a.m. (Central Time) on November 5, 2009. The call can be accessed in Upcoming Investor Events on the company's website at furniturebrands.com under "Investor Info". Access to the call and the release will be archived for one year.
About Furniture Brands
Furniture Brands International (NYSE:FBN - News) is a global operating company that is one of the nation's leading designers, manufacturers, and retailers of home furnishings. It markets through a wide range of retail channels, from mass merchant stores to single-brand and independent dealers to specialized interior designers. Furniture Brands serves its customers through some of the best known and most respected brands in the furniture industry, including Broyhill, Lane, Thomasville, Drexel Heritage, Henredon, Pearson, Hickory Chair, Laneventure, and Maitland-Smith.