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TMCNet:  Chromcraft Revington, Inc. Reports Third Quarter and First Nine Month Results

[November 13, 2012]

Chromcraft Revington, Inc. Reports Third Quarter and First Nine Month Results

WEST LAFAYETTE, Ind. --(Business Wire)--

Chromcraft Revington, Inc. (NYSE MKT: CRC) today reported its results for the third quarter of 2012. Sales for the third quarter of 2012 were $13,673,000 or 3.4% higher than the same period last year, extending the positive increases over the prior year quarter that began in the fourth quarter of 2011. Sales for the nine months ended September 29, 2012 were $41,729,000 or 5.6% higher than the first nine months of 2011. Our net loss was $717,000 and $3,437,000 for the three and nine month periods ended September 29, 2012, respectively, or 31.2% and 16.2% lower, respectively, than the same periods in 2011.

The reduced net loss of $0.7 million in the third quarter of 2012 compared to a net loss of $1.0 million in the third quarter of 2011 was primarily due to an income tax benefit of $0.2 million resulting from the final allocation of the purchase price of Executive Office Concepts, Inc. ("EOC") acquired in March 2012, and to a lesser extent, an increase in gross margin resulting from higher sales. The reduced net loss for the first nine months of 2012 compared to the prior year period is primarily due to the gross margin contributed by EOC products, lower import sourcing expense and the income tax benefit from the final allocation of the EOC purchase price.

The increase in sales for the third quarter of 2012 as compared to the prior year period was primarily due to increased shipments of commercial furniture, in particular office suites and waiting area furniture resulting from our acquisition of EOC. Residential shipments for the third quarter of 2012 were comparable to the third quarter of 2011, resulting from an increase in sales of home entertainment furniture offset by lower sales of dining room furniture. Residential furniture sales were lower in the third quarter of 2012 compared to the second quarter of 2012, primarily due to lower sales of dining room furniture. We continue to face the challenges resulting from weak consumer demand for residential furniture in our product categories and price segment, which we believe is consistent with industry trends, the continuing economic difficulties which reflect the ongoing labor market struggles and reduced consumer access to credit. These factors led to a slight decrease in residential orders in the third quarter of 2012 compared to the second quarter of 2012. Commercial product orders increased in the third quarter of 2012 resulting in our highest quarterly orders since the third quarter of 2011.

Cash used in operating activities in the first nine months of 2012 was $1.1 million as compared to $2.6 million used in the prior year period. The improved cash flow was primarily due to an increase in cash from net working capital and a lower operating loss. The Company had net borrowings on its revolving credit facility of $1.5 million in the first nine months of 2012 which was primarily used to fund the $1.1 million used for operating activities, the purchase of EOC and the payment of fees related to our new revolving credit facility with Gibraltar Business Capital, LLC and the termination of our credit facility with First Business Capital. Outstanding borrowings on the revolving credit facility at September 29, 2012 were approximately $2.4 million.

Commenting on these results, Ronald H. Butler, Chairman and Chief Executive Officer, said, "Despite the continuing low consumer confidence in the economy and the very difficult retail operating environment, we increased sales in the third quarter of 2012 as compared to the prior year period, largely due to increased sales of our commercial furniture products to the health care industry, primarily through our purchase of EOC. The ongoing difficult operating environment in the residential furniture market will continue to be challenging into the first quarter of 2013. We believe the recent signs of marginal improvement in the housing market are tempered by the uncertainty over the outcome of the upcoming federal "fiscal cliff" at the end of 2012 and its impact on consumer spending.

"Our acquisition of California-based EOC, with its commercial product lines, especially an extensive health care line, complement our current product line of seating, tables, and waiting area furniture. In addition, the three year contract we were awarded late in 2011 with the Premier healthcare alliance is expected to boost our sales in this product line. The health care sector continues to grow significantly and we believe this alliance continues to position the commercial line of our Chromcraft division favorably for the future."

Chromcraft Revington® businesses design, manufacture and import residential and commercial furniture marketed primarily in the U.S. The Company wholesales its residential furniture products under Chromcraft®, Cochrane®, Peters-Revington®, Southern Living®, and CR Kids & Beyond® primary brands. It sells commercial furniture under the Chromcraft® and Executive Office Concepts brands. The Company sources furniture from overseas suppliers, with domestic contract specialty facilities, and operates a U.S. manufacturing facility for its commercial furniture and motion based casual dining furniture in Mississippi and a manufacturing facility for office suites and other commercial furniture lines in California.

Certain information and statements contained in this news release are forward-looking statements. These forward-looking statements can be generally identified as such because they include future tense or dates, are not historical or current facts, or include words such as "believe," "may," "expect," "intend," "plan," "anticipate," or words of similar import. Forward-looking statements express management's current expectations or forecasts of future events or outcomes, but are not guarantees of performance or outcomes and are subject to certain risks and uncertainties that could cause actual results or outcomes to differ materially from those in such statements.

Among such risks and uncertainties that could cause actual results or outcomes to differ materially from those identified in the forward-looking statements are the impact of the current economic difficulties in the United States and elsewhere; import and domestic competition in the furniture industry; our ability to execute our business strategies; our ability to grow sales and reduce expenses to eliminate our operating losses; the recent slowdown in the U.S. office furniture market will continue; our ability to sell the right product mix; our inability to raise prices in response to increasing costs; continued credit availability under our current credit facility and our ability to fully utilize the credit facility; our ability to raise additional financing, if needed; our ability to anticipate or respond to changes in the tastes or needs of our end users in a timely manner; supply disruptions with products manufactured in China, Vietnam and other Asian countries; market interest rates; consumer confidence levels; cyclical nature of the furniture industry; consumer and business spending; changes in relationships with customers; customer acceptance of existing and new products; new home and existing home sales; financial viability of our customers and their ability to continue or increase product orders; loss of key management; other factors that generally affect business; and certain risks set forth in the Company's annual report on Form 10-K for the year ended December 31, 2011.

The Company does not undertake any obligation to update or revise publicly any forward-looking statements to reflect information, events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events or circumstances.




 
Condensed Consolidated Statements of Operations (unaudited)
Chromcraft Revington, Inc.
(In thousands, except per share data)
         
Three Months Ended Nine Months Ended
September 29, October 1, September 29, October 1,
2012 2011 2012 2011
 
Sales $ 13,673 $ 13,226 $ 41,729 $ 39,528
 
Cost of sales   11,023     10,709     33,772     32,818  
 
Gross margin 2,650 2,517 7,957 6,710
 
Selling, general and administrative expenses   3,484     3,491     11,132     10,598  
 
Operating loss (834 ) (974 ) (3,175 ) (3,888 )
 
Interest expense, net   (121 )   (68 )   (500 )   (212 )
 
Loss before income tax benefit (955 ) (1,042 ) (3,675 ) (4,100 )
 
Income tax benefit   238     -     238     -  
 
Net Loss $ (717 ) $ (1,042 ) $ (3,437 ) $ (4,100 )
 
Basic and diluted loss per share of common stock $ (.14 ) $ (.22 ) $ (.69 ) $ (.86 )
 
Shares used in computing basic and diluted loss per share 5,061 4,791 4,976 4,765
 
 
Condensed Consolidated Balance Sheets (unaudited)
Chromcraft Revington, Inc.
(In thousands)
         
September 29, December 31,
2012 2011
 
Assets
 
Accounts receivable, less allowance of $165 in 2012 and $150 in 2011 $ 7,522 $ 8,581
 
Inventories 15,108 14,194
 
Prepaid expenses and other   701   745
 
Current assets 23,331 23,520
 
Property, plant and equipment, net 6,444 6,483
 
Other assets   1,390   819
 
Total assets $ 31,165 $ 30,822
 
Liabilities and Stockholders' Equity
 
Revolving credit facility $ 2,425 $ 901
 
Current maturity of note payable 99 -
 
Accounts payable 6,040 3,955
 
Accrued liabilities   3,503   3,699
 
Current liabilities 12,067 8,555
 
Note payable, less current maturity 167 -
 
Deferred compensation 223 327
 
Other long-term liabilities   1,102   1,075
 
Total liabilities 13,559 9,957
 
Stockholders' equity   17,606   20,865
 
Total liabilities and stockholders' equity $ 31,165 $ 30,822
 
 
Condensed Consolidated Statements of Cash Flows (unaudited)
Chromcraft Revington, Inc.
(In thousands)
               
Nine Months Ended
September 29, October 1,
2012 2011
Operating Activities
Net loss $ (3,437 ) $ (4,100 )
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization expense 499 593
Non-cash share based and ESOP compensation expense 178 353
Deferred income tax benefit (238 ) -
Provision for doubtful accounts 36 23
Write-off of deferred financing costs 186 -
Amortization of deferred financing costs 40 38
Non-cash inventory write-downs 11 171
Non-cash accretion expense 27 26

Changes in operating assets and liabilities, net of effect of acquired business

Accounts receivable 1,204 759
Inventories (587 ) (440 )
Prepaid expenses and other 119 84
Accounts payable and accrued liabilities 1,212 144
Long-term liabilities and assets   (393 )   (224 )
Cash used in operating activities   (1,143 )   (2,573 )
 
Investing Activities
Capital expenditures (107 ) (25 )
Proceeds on disposal of assets 5 2
Acquisition of a business, net of cash acquired   (138 )   -  
Cash used in investing activities   (240 )   (23 )
 
Financing Activities
Debt issuance costs (117 ) -
Payments on EOC note (24 ) -
Net borrowings on revolving credit facility   1,524     -  
Cash provided by financing activities   1,383     -  
 
Change in cash - (2,596 )
 
Cash at beginning of the period   -     4,179  
 
Cash at end of the period $ -   $ 1,583  
 
Supplemental Disclosure of Non-Cash Investing Activities
 
Acquisition of a business:
Assets acquired and liabilities assumed:
Identifiable assets acquired and liabilities assumed, net $ 367
Goodwill   123  
490
 
Less: cash acquired (62 )
Less: note due to seller   (290 )
$ 138  


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