June 04, 2008
(Year end at June 30)
Summery
Furniture manufacturer sales around 400m a year. 3/8 for residential, 2/8 for commercial, 1/8 for RV( Recreational Vehicle).
Facts:
1. Recent price $11.50. Share outstanding 6.58m. Market cap: 76m.
2. Book value $17.5. Current Asset- Total liabilities = 135.4 - 59.7 = 75.7m. Very close to net net working capital.
3. Paying $0.52 annual dividend for many years already.
4. Average 5 years earning around $1.07 with no deficit.
5. Recently insiders sold some around $12 to $13. No buying.
Conclusion:
A quite mature company with little or no growth. Target buying price $1.07x9 = $9.63.
11/27/2008
Q1 2009 data
Recent price $6.80. Far less than book value. More than a net net working capital situation.
1. Layoffed 15% of workers (250). Closed two factories, one is RV seats, another one is residential.
Q1 2009 data
Recent price $6.80. Far less than book value. More than a net net working capital situation.
1. Layoffed 15% of workers (250). Closed two factories, one is RV seats, another one is residential.
2. $1.35m charge for layoff and close factories. Estimate total $2.0m to $2.5 charge for Q1&Q2 2009. Save $3.5-$4.0m per year.
4. Current Ratio bigger than 3:1.
5. Total debt $22.5m. Reduce debt by $3.5m this quarter.
6. Sales down around 10% compare to same quarter last year.
7. Earning 0.35m compare to 2.2m same quarter last year.
Mar. 05, 2009
Q2 2009 data
Recent price $5.8.
1. Charged $0.5m for restructure. Totally $1.8m was charged during Q1&Q2 2009. Less than previous estimation.
2. SG&A was $15.4m compare to $18.8m same quarter last year.
3. Inventory around $84m.
4. Current Ratio bigger than 3:1.
5. Total debt around $15.5m, continue to down.
6. Sales down by 20% compare to last year.
7. Earning $0.3m compare to $1.9m same quarter last year.
Some data on allowance of bad debt data(in millions):
Year added deducted balance total receivable percent
09Q2 $2.17 $37.8 5.7%
09Q1 $2.20 $41.0 5.4%
2008 $1.05 ($1.03) $2.11 $43.8 4.8%
2007 $0 ($0.73) $2.09 $56.3 3.7%
2006 $0.85 ($1.09) $2.82 $51.2 5.5%
2005 $1.14 ($0.90) $3.06 $48.4 6.3%
2004 $0.88 ($0.17) $2.82 $48.2 5.9%
2003 $0.46 ($0.89) $2.11 $29.6 7.1%
2002 $1.58 ($0.99) $2.54 $31.4 8.1%
2001 $4.18 ($4.48) $1.95 $28.3 6.9%
2000 $0.19 ($0.44) $2.25 $32.0 7.0%
From above, obviously at year 2000 and 2007. They reserved too little and that helped to boost they income a little bit (around 20c/share). At year 2001 there are charge of 4.48m which is really big. Can't found the reason for it from there reports.
For current year. I think the reserve in 2008 is fairly enough. Based on the average data. There are no more than 1m will be charged off. So it should no be a big issue.
Mar. 31, 2009
Check list:
Based on Q2 2009 data.1. Major business
Furniture manufacturer sales around 400m a year. 3/8 for residential, 2/8 for commercial, 1/8 for RV( Recreational Vehicle).
2.Price/Book ratio.
Recent Price $5.15. Book value $16.6. Share outstanding 6.58m
3.Current ratio. Debt/Current Asset ratio. Inventory level.
Current Assets $130m. Current liability $36.8m. Total liability $56.9m. Net net working capital. Debt $15.5m. Inventory $84m. Around sales of one quarter.
4.P/E ratio.Deficit check.Revenue/price ratio.
Average 5 years earning around $1.07 with no deficit. Revenue above $400m in recent 5 years. Revenue/price ratio around 7.5:1.
5.Dividend.
Paying $0.52 annual dividend for many years. Cut dividend to $0.20 since Q2 2009.
6.Free Cash flow
For last 6 quarters, free cash flow is around $18m. That's enable them to reduce debt from $28m to $15.5m. and paid $5.1m of dividend.
7.Grows related.
No grows in past 5 years. Sales down from 2007 to 2008. However, management seems very actively deducing cost to maintain profitable.
8.Management compensation.
2008 compensation cost for top 5 officers are around $2.2m compare to $2.3m in 2007.
9.Industry comparison.
IKEA: Private company. $28.8b revenue for 2008.
Leggett & Platt: $4b revenue for 2008. Seems doing OK. but book value is very low and P/E ratio is over 15.
La-Z-Boy: $1.5b revenue for 2008 and doing pretty bad since 2006.
Hooker Furniture: $300m-$350m revenue for last several years. More imports for overseas and have much higher margin. Need separate analysis.
10.Buy back, insider holding and trading info.
Since Nov. 2008 to now, there are some insiders bought and sold in none open market around $7.00. Sold number is more than bought number.
Currently there is no buy back and unlikely to issue buy back in the near future.
Insider Holding 16%. Inst ownership: 36%
At end of 2008, laid off 15% of workers (250). Closed two factories, one is RV seats, another one is residential.
