Craftmade International Announces Net Sales and Earnings Results for Its Fiscal 2010 Second Quarter
COPPELL, Texas, Feb. 16 /PRNewswire-FirstCall/ -- Craftmade International, Inc. (OTCQX: CRFT) today reported the following results for its fiscal 2010 second quarter ended December 31, 2009.
Second Quarter 2010 Consolidated Results
Net income for the second quarter increased by $563,000 to $18,000, as compared to a net loss of $545,000 for the second quarter of 2009. On a fully diluted basis, net income per share increased by $0.10 to less than $0.01 for the 2010 second quarter, compared to a net loss of $0.10 in the year-ago quarter. Weighted average diluted shares outstanding remained at 5,705,000 and did not change on a quarter-over-quarter basis.
Net sales for the quarter were $35,492,000 as compared to $37,262,000 reported in the same quarterly period last year, a decrease of $1,770,000, or 5%. The decrease was due to the reduced sales in both Specialty and Mass segments, as a result of the extreme decline in the housing market and dramatic overall economic downturn experienced in the last year.
"The extremely weak housing market continues to adversely impact our operations as it has over the last three years. Our breakeven results for the quarter primarily resulted from the significant cost reductions we implemented over the past several months in addition to the synergies we created from the Woodard acquisition," commented J. Marcus Scrudder, Craftmade's Chief Executive Officer. "Although we cannot predict when the housing market will recover, it appears that housing market conditions have begun to stabilize. We continue to remain cautiously optimistic, however, as uncertain economic conditions still exist."
Gross Profit; Selling, General and Administrative ("SG&A") Expense and Interest Expense
Gross profit of the Company as a percentage of net sales was 19.4% for the quarter ended December 31, 2009, compared to 20.7% for the prior year quarter. This change was primarily due to a decrease in margins in the Specialty segment, which was partially offset by increased margins in Mass, driven by margin improvements in lighting.
Total SG&A expenses of the Company decreased $1,644,000 to $5,989,000, or 16.9%, of net sales for the quarter ended December 31, 2009, compared to $7,633,000, or 20.5%, of net sales for the same period last year. This 22% decrease in expenses was due to significant cost cutting efforts across all categories, including savings in salaries and wages and contract labor related to headcount reductions, as well as lower advertising spending and reductions in travel. Management expects to see continued significant savings in SG&A expenses versus last year, due to the continuing impact of the extensive cost cutting efforts noted above, as well as the impact of moving the Company's stock listing from NASDAQ to OTCQX and deregistering with the Securities and Exchange Commission.
Net interest expense decreased $43,000 to $374,000 for the quarter ended December 31, 2009, compared to $417,000 for the quarter ended December 31, 2008. This decrease was primarily due to lower average debt balances than carried during the same period last year, partially offset by higher average borrowing rates.
Net income attributable to noncontrolling interest increased $42,000 to $234,000 for the six months ended December 31, 2009, from $192,000 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.
Second Quarter 2010 Segment Results
Net sales from the Specialty segment were $14,933,000 for the quarter ended December 31, 2009, compared to $15,958,000 for the quarter ended December 31, 2008, a decrease of $1,025,000, or 6%.
Sales of fans, lighting-related products and outdoor furniture to the Specialty channel continue to be affected by the extremely weak overall housing market, a difficult credit environment and reduced consumer spending.
Net sales of the Mass segment were $20,559,000 for the quarter ended December 31, 2009, compared to $21,304,000 for the quarter ended December 31, 2008, a decrease of $745,000, or 4%. The reduction in sales versus the prior year is primarily due to lower sales in the lighting and accessory segments, while outdoor furniture sales saw a slight increase versus the year-ago quarter.
"We've worked hard to strengthen our financial position, heading into calendar 2010 to meet the continuing challenges of the housing market and to emerge on the other side of this recession as a stronger, leaner, and more efficient company," stated Mr. Scrudder. "Despite the depressed economic environment, we've continued to do an outstanding job of delivering quality products and services to our customers, while reducing overhead costs. We thank our employees for their tremendous efforts and our stockholders and customers for their continued support during these challenging times."
For Craftmade's full Quarterly Report for the period ended December 31, 2009, go to www.OTCQX.com, ticker symbol "CRFT", and select "Filings."
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 OTCQX, 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.
CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
December 31, December 31, December 31, December 31,
------------ ----------- ------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Net sales $35,492 $37,262 $56,540 $67,427
--------- ------- ------- ------- -------
Cost of goods
sold (28,606) (29,556) (43,838) (51,251)
------------- ------- ------- ------- -------
Gross profit 6,886 7,706 12,702 16,176
------------ ----- ----- ------ ------
Gross profit as
a percentage of
net sales 19.4% 20.7% 22.5% 24.0%
---------------- ---- ---- ---- ----
Selling, general
and
administrative
expenses (5,989) (7,633) (11,864) (15,530)
---------------- ------ ------ ------- -------
Depreciation and
amortization (254) (262) (517) (500)
---------------- ---- ---- ---- ----
Total operating
expenses (6,243) (7,895) (12,381) (16,030)
--------------- ------ ------ ------- -------
Income (loss)
from operations 643 (189) 321 146
---------------- --- ---- --- ---
Interest
expense, net (374) (417) (717) (776)
------------- ---- ---- ---- ----
Other income
(expense) - (4) - 1
------------ --- --- --- ---
Income (loss)
before income
taxes 269 (610) (396) (629)
-------------- --- ---- ---- ----
Income tax
(expense)
benefit (17) 257 271 308
---------- --- --- --- ---
Net income
(loss) 252 (353) (125) (321)
---------- --- ---- ---- ----
Less: Net income
attributable to
noncontrolling
interest (234) (192) (452) (353)
---------------- ---- ---- ---- ----
Net income (loss)
attributable to
Craftmade
International $18 $(545) $(577) $(674)
---------------- === ===== ===== =====
Weighted average
common shares
outstanding:
----------------
Basic 5,705 5,705 5,705 5,705
----- ----- ----- ----- -----
Diluted 5,705 5,705 5,705 5,705
------- ----- ----- ----- -----
Basic loss per
common share $0.00 $(0.10) $(0.10) $(0.12)
-------------- ===== ====== ====== ======
Diluted loss per
common share $0.00 $(0.10) $(0.10) $(0.12)
---------------- ===== ====== ====== ======
CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, June 30,
2009 2009
---- ----
ASSETS (Unaudited)
Current assets
Cash $131 $384
Accounts receivable, net 35,970 25,290
Inventories, net 20,519 20,563
Income taxes receivable 1,191 1,780
Deferred income taxes 1,342 1,367
Prepaid expenses and other current assets 2,544 2,443
----- -----
Total current assets 61,697 51,827
------ ------
Property and equipment, net 10,841 11,141
Goodwill 15,409 14,947
Other intangibles, net 1,003 1,097
Other assets 2,240 1,856
----- -----
Total non-current assets 29,493 29,041
------ ------
Total assets $91,190 $80,868
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Book overdrafts $- $8
Accounts payable 13,629 7,231
Other accrued expenses 1,814 2,422
Current portion of long-term obligations 834 542
--- ---
Total current liabilities 16,277 10,203
------ ------
Non-current liabilities
Long-term obligations 34,219 29,886
Deferred income taxes 1,127 1,122
----- -----
Total non-current liabilities 35,346 31,008
------ ------
Total liabilities 51,623 41,211
------ ------
Stockholders' equity
Craftmade International stockholders' equity:
Common stock, $0.01 par value,
15,000,000 shares authorized;
10,204,420 shares issued 102 102
Additional paid-in capital 22,370 22,335
Retained deficit 51,237 51,814
Less: treasury stock, 4,499,920
common shares at cost (38,126) (38,126)
------- -------
Total Craftmade International
stockholders' equity 35,583 36,125
------ ------
Noncontrolling interest 3,984 3,532
----- -----
Total equity 39,567 39,657
------ ------
Total liabilities and stockholders' equity $91,190 $80,868
======= =======
SOURCE Craftmade International, Inc.
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