Craftmade International Announces Net Sales and Earnings Results For Its Fiscal 2010 Fourth Quarter and Year End

COPPELL, Texas, Sept. 20 /PRNewswire-FirstCall/ -- Craftmade International, Inc. (OTCQX: CRFT) today reported the following results for its fourth quarter and fiscal year ended June 30, 2010:

Fiscal Year 2010 Consolidated Results

Net income for the current fiscal year was $61,000, compared to a net loss of $1,088,000 for the 2009 fiscal year, an increase of $1,149,000. On a fully diluted basis, net income per share was $.01 for the 2010 fiscal year, compared to a net loss of $.19 for the 2009 fiscal year, an increase of $.20. Weighted average diluted shares outstanding for the current fiscal year were 5,729,000 versus 5,705,000 for the 2009 fiscal year.

Net sales for the fiscal year increased $4,228,000, or 2.8%, to $153,920,000, compared to $149,692,000 reported in the last fiscal year. This increase was primarily due to growth in the Mass segment, led by outdoor furniture sales.  The increase is partially offset by declines in the Specialty segment.  

"Although challenges still remain in the overall economy and housing market, we continue to see some signs of stabilization. We achieved profitability for fiscal 2010 and maintained favorable trends in our operating and pretax margins, as well as in our bottom line results, through the consistent execution of our long-term strategic plan for growth," said J. Marcus Scrudder, Craftmade's Chief Executive Officer.  

"We have made significant progress on right-sizing our business and have aggressively reduced our overhead structure.  Despite expenditures of approximately $870,000 related to an unsuccessful tender offer by a third party, our SG&A expenses decreased 14% from the prior year while supporting a modest increase in net sales.  We believe that our business is on the right track to sustained profitability, and expect to see continued progress when economic conditions improve."

Gross Profit; Selling, General and Administrative ("SG&A") Expense and Interest Expense

Gross profit of the Company as a percentage of net sales was 19.2% for fiscal year 2010 compared to 21.5% in fiscal year 2009, a decline of 2.3%. This was primarily due to an increase in the mix of the lower margin Mass furniture business as well as a decrease in margins in the Specialty segment and, partially offset by margin improvements in Mass lighting.

Total selling, general and administrative ("SG&A") expenses of the Company decreased $4,269,000 to $26,071,000 or 16.9% of net sales for the fiscal year ended June 30, 2010, compared to $30,340,000 or 20.3% of net sales for the same period last year. This decrease in expenses was accomplished despite the aforementioned expenditures of approximately $870,000 related to an unsolicited bid and unsolicited tender offer by a third party.  These incremental expenses were offset by savings due to significant cost cutting efforts across all categories. The Company expects to continue to see savings in SG&A expense in the coming fiscal year, due to the continuing impact of the extensive cost cutting efforts, as well as the impact of moving its listing from NASDAQ to OTCQX and deregistering from the SEC.

Net interest expense of the Company increased $317,000 to $1,755,000 for the fiscal year ended June 30, 2010, compared to $1,438,000 for the fiscal year ended June 30, 2009, due to higher average borrowing rates versus the prior year, and offset slightly by lower average balances.

Net income attributable to noncontrolling interest was $773,000 for the year ended June 30, 2010, up from $721,000 for the same period in the previous year. The increase in net income attributable to noncontrolling interest resulted from higher profits at Design Trends as a result of improved margins.

Fiscal 2010 Fourth Quarter Results

Net income for the quarter ended June 30, 2010 was $145,000, compared to a net loss of $279,000 for the quarter ended June 30, 2009, an increase of $424,000. On a fully diluted basis, net income per share was $.03 for the current quarter, compared to a net loss of $.05 for the 2009 fourth quarter, an increase of $.08.

Net sales for the quarter ended June 30, 2010 increased $11,030,000 or 36.4% to $41,295,000, compared to $30,265,000 in the prior year quarter. This increase was driven by strong results in both segments, with a 16.5% increase in Specialty sales and a 63.2% increase in Mass sales, versus the same quarter last year.

Gross profit as a percentage of net sales was 20.0%, compared to 24.6% for the same quarter last year, primarily due to sales mix driven by the significant growth in the lower-margin Mass business.

Total SG&A expenses as a percentage of net sales for the fourth quarter improved to 17.3% from 22.9%, compared to the year-ago quarter, despite increases in legal and administrative costs related to an unsuccessful tender offer by a third party.

Net interest expense of the Company increased $214,000 to $544,000 for the quarter ended June 30, 2010, compared to $330,000 for the quarter ended June 30, 2009. Net income attributable to noncontrolling interest was $124,000 for the quarter ended June 30, 2010, down from $278,000 for the same period in the previous year.

"We remain focused on improving our business and sustaining long-term profitability. We have made great strides in lowering our cost structure and expanding our product offerings through enhanced product development strategies.  During the past year, we have introduced the largest number of lighting and outdoor furniture products in the Company's history.  These efforts, as well as a focus on customer service, have resulted in our increasing market share," Mr. Scrudder said. 

"My sincere appreciation goes out to all Craftmade employees. Throughout these extremely difficult times, our employees' hard work, dedication and positive attitude have made all of the difference," concluded Mr. Scrudder.

Founded in 1985, Craftmade International, Inc. is engaged in the design, manufacturing, distribution and marketing of a broad range of home decor products, including proprietary ceiling fans, lighting products and outdoor furniture.  The Company distributes its premium products through a network of independent showrooms and mass retail customers through its headquarters and distribution facility in Coppell, Texas and manufacturing plant in Owosso, Michigan.  More information about Craftmade International, Inc. can be found at www.craftmade.com.

Various statements in this Press Release or incorporated by reference herein, in future filings with the SEC, in press releases, and in oral statements made by or with the approval of authorized personnel constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations and are indicated by words or phrases such as "may," "will," "should," "could," "might," "expects," "plans," "anticipates," "believes," "estimates," "projects," "predicts," "forecasts," "intends," "potential," "continue," and similar words or phrases and involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from the future results, performance or achievements expressed in or implied by such forward-looking statements.  These forward-looking statements include statements or predictions regarding among other items: revenues and profits; gross margin; customer concentration; customer buying patterns; sales and marketing expenses; general and administrative expenses; pricing and cost reduction activities; income tax provision and effective tax rate; realization of deferred tax assets; liquidity and sufficiency of existing cash, cash equivalents, and investments for near-term requirements; purchase commitments; product development and transitions; competition and competing technology; outcomes of pending or threatened litigation; and financial condition and results of operations as a result of recent accounting pronouncements.  These forward-looking statements are based largely on expectations and judgments and are subject to a number of risks and uncertainties, many of which are beyond our control.  Significant factors that cause our actual results to differ materially from our expectations are described in our Form 10-K under the heading of "Risk Factors."  We undertake no obligation to publicly update or revise these Risk Factors or any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE Craftmade International, Inc.