On July 16, Motley Fool Hidden Gems pick Stanley Furniture (NASDAQ:STLY) released second-quarter earnings for the period ended June 30.

  • Margins dipped in response to lower sales and production levels, coupled with higher raw material and compensation costs.

  • The net loss of $0.23 per share included a one-time charge of $6.6 million, resulting from the final termination of the company's defined-benefit pension plan.

  • A portion of the $25 million the company received from a private placement note was used to repurchase $11.3 million in shares, and to pay $2.1 million in dividends.

  • As a result of deteriorating business conditions in the industry, management lowered its sales and earnings guidance.

(Figures in thousands, except per-share data.)

Income Statement Highlights

Q2 2007

Q2 2006

Change

Sales

$67,722.0

$77,476.0

(12.6%)

Net Profit

($2,376.0)

$3,937.0

N/A

EPS

($0.23)

$0.32

N/A

Diluted Shares

10,483.0

12,264.0

(14.5%)

Get back to basics with the income statement.

Margin Checkup

Q2 2007

Q2 2006

Change*

Gross Margin

20.1%

22.7%

(2.6)

Operating Margin

(4.5%)

8.1%

(12.7)

Net Margin

(3.5%)

5.1%

(8.6)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q2 2007

Q2 2006

Change

Cash + ST Invest.

$18,542.0

$10,627.0

74.5%

Accounts Rec.

$31,024.0

$37,958.0

(18.3%)

Inventory

$62,873.0

$61,456.0

2.3%

Liabilities

Q2 2007

Q2 2006

Change

Accounts Payable

$18,461.0

$16,851.0

9.6%

Long-Term Debt

$29,286.0

$7,143.0

310%

The balance sheet reflects the company's health.

Cash Flow Highlights

YTD 2007

YTD 2006

Change

Cash From Ops.

$2,567.0

$16,175.0

(84.1%)

Capital Expenditures

$1,947.0

$749.0

159.9%

Free Cash Flow

$620.0

$15,426.0

(96%)

Free cash flow is a Fool's best friend.

Related Foolishness:

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