GlobeNewswire Inc | Jul 1, 2021 09:00AM EDT

July 01, 2021

BASSETT, Va., July 01, 2021 (GLOBE NEWSWIRE) -- Bassett Furniture Industries, Inc. (Nasdaq: BSET) announced today its results of operations for its second quarter ended May 29, 2021.

Fiscal 2021 Second Quarter Highlights(Dollars in millions)

Sales Operating Income (Loss) 2nd Qtr Dollar % 2nd % of 2nd Qtr % of Qtr 2021 2020 Change Change 2021 Sales 2020 SalesConsolidated $ 124.1 $ 63.8 $ 60.3 94.4 % $ 8.4 6.8 % $ (31.2 ) -48.9 %^(1) Wholesale $ 76.0 $ 33.1 $ 42.9 129.7 % $ 5.4 7.0 % $ (7.4 ) -22.3 % Retail $ 62.5 $ 33.2 $ 29.3 88.4 % $ 1.7 2.6 % $ (9.2 ) -27.6 % Logistical $ 22.2 $ 15.3 $ 7.0 45.8 % $ 1.3 5.8 % $ (1.8 ) -12.1 %Services (1) Our consolidated results include certain intercompany eliminations. SeeTable 4, ?Segment Information? below for an illustration of the effects of these intercompany eliminations on our consolidated sales and operating income (loss).

Consolidated revenue of $124.1 million for our second quarter represented a 94% increase as compared to the pandemic impacted quarter in 2020 and 15% as compared to 2019. Similarly, strong wholesale orders of $96.0 million for the period increased by 172% versus 2020 and by 51% compared to the pre-pandemic 2019 second quarter. As we battle an extremely tight labor market and continued supply chain disruptions, we strive to chip away at our huge order backlog that grew by another $19 million over the three months. Adding to the complexity is the inflationary raw material spiral that we have confronted this year, leading to our unprecedented action of levying three general price increases since our fiscal year began in December. Amidst this unsettled environment, we were pleased to record an $8.4 million operating profit compared to last years loss. EPS advanced to $0.60 per share for the quarter against the COVID-19 affected loss of ($2.04) in 2020.

Again, our obvious focus is centered on the reduction of our backlog and returning to a semblance of normalcy in our service levels as soon as possible. Although our cancellation rate has not spiked significantly to date, it is a natural concern. At the recent High Point Furniture Market, we were actually thanked several times for our ability to deliver goods more quickly than the apparent current industry standard, which underscores just how compromised lead times actually are today. Aside from working massive amounts of overtime, the early June opening of our new upholstery production facility in Newton, NC will provide some immediate relief to a portion of the situation. With the polyurethane foam shortage largely behind us, our current raw material bottlenecks lie in the thousands of yards of decorative fabrics that our suppliers owe us. Our production managers have done a great job in shuffling our daily schedules to produce what they can based on the materials that they actually possess. Notwithstanding all the complications of the post-pandemic economy, our wholesale team produced a 7.0% operating margin for the period as our wood, upholstery, and outdoor divisions turned in performances significantly better than 2020 and 2019.

Another aspect of the current disorder is the state of the industrys logistics model. The strong business that has characterized the past 13 months has overwhelmed the furniture trucking segment. There is currently a dearth of warehouse space, warehouse labor, and over the road trailers to handle shipping backlogs. Consequently, even after the goods have been manufactured, there are accompanying lags in logistics service that could represent several weeks of further delay. Exacerbating this state of affairs is the global shortage of shipping containers that continues to plague our sector. Our Zenith Logistics team has performed at a high level in dealing with the cumulative effect of these daily challenges by generating $1.3 million of operating profit for the quarter despite spiraling warehousing labor costs and procuring over 400 trailers on short term leases to combat the equipment shortage. Longer term we are motivated by prospects of our recent regional warehouse model that is showing great promise. Over the past six months we have experimented with keeping some of our best sellers closer to the U.S. population centers for quicker delivery. When we have been able to have these goods in inventory, we have seen significant upticks in rates of sale, which bodes well for our plan to expand this model as product availability becomes normalized.

As mentioned, wholesale orders increased dramatically during the quarter with all channels showing growth. Leading the way was our Bassett Design Center (BDC) network, part of our open market wholesale business, with increases of 212% and 87%, respectively, compared to 2020 and 2019. Another big part of the overall open market increase was the continuing rise of the Bassett Club Level program, which grew by 328% versus 2019. Dedicated Bassett-branded distribution in the form of the Bassett Home Furnishings network and BDCs represented 67% of wholesale sales for the period. Once again, our corporate retail division was not able to deliver goods to the home at the rate that they were sold in the stores. Our digital outreach strategies continued to bear fruit as visitors to our website grew by 51% in the quarter. Store traffic, which has declined for the past few years, has held steady since business returned after the stores reopened last May. Still, our corporate retail turned in a profit of $1.6 million while continuing to add to its already large order backlog. Finally, we are excited by the combined results of the Lane Venture and Bassett Outdoor sales strategies as they combined for a 122% increase to 2020 and 124% to 2019. Much of the new business came from our Alabama metal facility that we purchased in 2019.

Summing it all up for the quarter, we wrote more wholesale business than we had in many years, back to when we operated a much larger domestic manufacturing footprint in the pre-globalization days. While retiring $2.4 million of stock and paying our quarterly dividend, we ended May with $63.5 million of cash and short-term investments and no debt. There are many cost pressures and raw material lead times remain long. But we have a very large backlog and our most recent big sales event around Memorial Day was very strong. Taking all of those positives and negatives into account, we remain encouraged concerning our prospects for the remainder of 2021.

Robert H. Spilman, Jr., Chairman and CEO

About Bassett Furniture Industries, Inc. Bassett Furniture Industries, Inc. (NASDAQ:BSET), is a leading manufacturer and marketer of high quality home furnishings. With 97 company- and licensee-owned stores at the time of this release, Bassett has leveraged its strong brand name in furniture into a network of corporate and licensed stores that focus on providing consumers with a friendly environment for buying furniture and accessories. Bassetts retail strategy includes stylish, custom-built furniture that features the latest on-trend furniture styles, free in-home design visits, and coordinated decorating accessories. Bassett also has a traditional wholesale business with more than 700 accounts on the open market, across the United States and internationally and a logistics business specializing in home furnishings. For more information, visit the Companys website at bassettfurniture.com. (BSET-E)

Certain of the statements in this release, particularly those preceded by, followed by or including the words believes, plans, expects, anticipates, intends, should, estimates, or similar expressions, or those relating to or anticipating financial results or changes in operations for periods beyond the end of the second fiscal quarter of 2021, constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended. For those statements, Bassett claims the protection of the safe harbor for forward looking statements contained in the Private Securities Litigation Reform Act of 1995. In many cases, Bassett cannot predict what factors would cause actual results to differ materially from those indicated in the forward looking statements. Expectations included in the forward-looking statements are based on preliminary information as well as certain assumptions which management believes to be reasonable at this time. The following important factors affect Bassett and could cause actual results to differ materially from those indicated in the forward looking statements: the effects of national and global economic or other conditions (including, without limitation, the effects on revenue, supply and demand resulting from the duration and extent of the COVID-19 pandemic) and future events on the retail demand for home furnishings and the ability of Bassetts customers and consumers to obtain credit; the success of marketing, logistics, retail and other initiatives; and the economic, competitive, governmental and other factors identified in Bassetts filings with the Securities and Exchange Commission. Any forward-looking statement that Bassett makes speaks only as of the date of such statement, and Bassett undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Comparisons of results for current and any prior periods are not intended to express any future trends or indication of future performance, unless expressed as such, and should only be viewed as historical data.

Table 1BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIESCondensed Consolidated Statements of Operations - unaudited(In thousands, except for per share data) Quarter Ended Six Months Ended May 29, 2021 May 30, 2020 May 29, 2021 May 30, 2020 Percent Percent Percent Percent of of of of Amount Net Amount Net Amount Net Amount Net Sales Sales Sales Sales Sales revenue: Furniture $ 109,997 $ 53,000 $ 211,652 $ 151,942 and accessoriesLogistical 14,062 10,801 26,080 23,979 servicesTotal 124,059 100.0 % 63,801 100.0 % 237,732 100.0 % 175,921 100.0 %sales revenue Cost offurniture and 52,911 42.6 % 29,452 46.2 % 101,163 42.6 % 74,722 42.5 %accessoriessold Selling,general and 50,001 40.3 % 37,730 59.1 % 97,843 41.2 % 90,027 51.2 %administrativeexpensesCost oflogistical 12,768 10.3 % 12,643 19.8 % 24,326 10.2 % 24,986 14.2 %servicesAssetimpairment - 0.0 % 12,184 19.1 % - 0.0 % 12,184 6.9 %chargesGoodwillimpairment - 0.0 % 1,971 3.1 % - 0.0 % 1,971 1.1 %chargeLitigation - 0.0 % 1,050 1.6 % - 0.0 % 1,050 0.6 %expenseIncome(loss) from 8,379 6.8 % (31,229 ) -48.9 % 14,400 6.1 % (29,019 ) -16.5 %operations Other loss, net (332 ) -0.3 % (765 ) -1.2 % (669 ) -0.3 % (1,127 ) -0.6 %Income (loss)before income 8,047 6.5 % (31,994 ) -50.1 % 13,731 5.8 % (30,146 ) -17.1 %taxes Income taxprovision 2,073 1.7 % (11,642 ) -18.2 % 3,746 1.6 % (11,004 ) -6.3 %(benefit)Net income $ 5,974 4.8 % $ (20,352 ) -31.9 % $ 9,985 4.2 % $ (19,142 ) -10.9 %(loss) Basic earnings(loss) per $ 0.60 $ (2.04 ) $ 1.01 $ (1.92 ) share Dilutedearnings (loss) $ 0.60 $ (2.04 ) $ 1.01 $ (1.92 ) per share 25.76 %

Table 2BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIESCondensed Consolidated Balance Sheets(In thousands) (Unaudited) Assets May 29, November 28, 2021 2020Current assets Cash and cash equivalents $ 45,776 $ 45,799 Short-term investments 17,715 17,715 Accounts receivable, net 25,882 22,340 Inventories, net 67,301 54,886 Recoverable income taxes 7,789 9,666 Other current assets 12,008 10,272 Total current assets 176,471 160,678 Property and equipment, net 92,581 90,917 Other long-term assets Deferred income taxes, net 3,362 4,587 Goodwill and other intangible assets 23,637 23,827 Right of use assets under operating leases 116,357 116,903 Other 6,071 5,637 Total long-term assets 149,427 150,954 Total assets $ 418,479 $ 402,549 Liabilities and Stockholders? Equity Current liabilities Accounts payable $ 28,522 $ 23,426 Accrued compensation and benefits 14,124 16,964 Customer deposits 47,911 39,762 Current portion of operating lease obligations 27,358 27,078 Other current liabilities and accrued expenses 12,534 11,141 Total current liabilities 130,449 118,371 Long-term liabilities Post employment benefit obligations 12,398 12,089 Long-term portion of operating lease 109,832 111,972 obligationsOther long-term liabilities 5,538 2,087 Total long-term liabilities 127,768 126,148 Stockholders? equity Common stock 49,262 49,714 Retained earnings 112,325 109,710 Accumulated other comprehensive loss (1,325 ) (1,394 )Total stockholders' equity 160,262 158,030 Total liabilities and stockholders? equity $ 418,479 $ 402,549

Table 3 BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows - unaudited (In thousands) Six Months Ended May 29, 2021 May 30, 2020 Operating activities: Net income (loss) $ 9,985 $ (19,142 ) Adjustments to reconcile net income (loss) to net cash provided by (used in)operating activities: Depreciation and amortization 6,893 7,239 Gain on lease modification - (152 ) Asset impairment charges - 12,184 Goodwill impairment charges - 1,971 Inventory valuation charges 1,100 2,936 Bad debt valuation charges (recoveries) (43 ) 1,074 Deferred income taxes 1,201 (521 ) Other, net 255 673 Changes in operating assets and liabilitiesAccounts receivable (3,399 ) 2,483 Inventories (13,515 ) 883 Other current and long-term assets 25 (9,091 ) Right of use assets under operating leases 12,558 14,810 Customer deposits 8,149 (2,150 ) Accounts payable and other liabilities 2,775 (2,670 ) Obligations under operating leases (13,934 ) (16,274 ) Net cash provided by 12,050 (5,747 ) (used in) operating activities Investing activities: Purchases of property and equipment (3,483 ) (1,791 ) Proceeds from sale of property and 96 2,345 equipmentPurchase of investments - (241 ) Other (335 ) (211 ) Net cash provided by (3,722 ) 102 (used in) investing activities Financing activities: Cash dividends (4,954 ) (1,258 ) Proceeds from the exercise of stock 42 - optionsOther issuance of common stock 172 157 Repurchases of common stock (2,925 ) (1,241 ) Taxes paid related to net share settlement (219 ) (215 ) of equity awardsRepayments of finance lease obligations (467 ) (50 ) Net cash used in (8,351 ) (2,607 ) financing activitiesChange in cash and cash equivalents (23 ) (8,252 ) Cash and cash equivalents - beginning of 45,799 19,687 period Cash and cash equivalents - end of period $ 45,776 $ 11,435



Table 4BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIESSegment Information - unaudited(In thousands) Quarter Ended Six Months Ended May 29, 2021 May 30, 2020 May 29, 2021 May 30, 2020Sales Revenue Wholesalesales of $ 76,034 $ 33,128 $ 146,298 $ 98,145 furniture andaccessoriesLess: Salesto retail (28,520 ) (13,299 ) (57,524 ) (45,220 )segmentWholesalesales to 47,514 19,829 88,774 52,925 externalcustomersRetail salesof furniture 62,483 33,171 122,878 99,017 andaccessoriesConsolidated netsales of 109,997 53,000 211,652 151,942 furniture andaccessories Logisticalservices 22,244 15,259 42,325 36,574 revenueLess:Services to (8,182 ) (4,458 ) (16,245 ) (12,595 )wholesalesegmentLogisticalservices to 14,062 10,801 26,080 23,979 externalcustomersTotal sales $ 124,059 $ 63,801 $ 237,732 $ 175,921 revenue Operating Income (Loss)Wholesale $ 5,359 $ (7,381 ) $ 10,156 $ (4,668 )Retail 1,652 (9,170 ) 2,746 (10,419 )Logistical 1,294 (1,842 ) 1,753 (1,007 )servicesInter-company 74 2,369 (255 ) 2,280 eliminationAssetimpairment - (12,184 ) - (12,184 )chargesGoodwillimpairment - (1,971 ) - (1,971 )chargeLitigation - (1,050 ) - (1,050 )expenseConsolidated $ 8,379 $ (31,229 ) $ 14,400 $ (29,019 )

J. Michael DanielSenior Vice President andChief Financial Officer(276) 629-6614 Investorsmdaniel@bassettfurniture.com

Peter D. MorrisonVice President of Communications(276) 629-6450 Media