Bassett Furniture Industries Reports Third Quarter Results

October 13, 2024  by Karen Parrish in Business Strategy, Industry   

Q3 Consolidated Business Highlights: [FY 24 vs. FY 23, unless otherwise specified]

• Revenues decreased 13%, impacted by a cyber incident that suspended all financial systems and manufacturing for 7 days.
• Operating loss of $6.4 million, which included a $1.2 million loss on a logistical services contract the Company abandoned and various costs associated with the cyber incident.
• Gross margin of 53.0%, which included $0.6 million of manufacturing wages paid during the cyber shutdown. Excluding the wage charge, gross profit margin would have been 53.8% as compared to adjusted gross margin of 52.7% in 2023 (see Table 5).
• Diluted loss per share of $0.52 vs. a loss of $0.30 in 2023.
• Limited cash flow deficit for the quarter to $0.4 million despite challenging results and cyber disruption related costs.

“The third quarter is historically our slowest as we customarily shut down manufacturing for the week of July 4^th,” said Robert H. Spilman, Jr., Bassett chairman and CEO. “Although we had additional challenges this year, we delivered strong gross margins. In mid-July, we reported that we detected unauthorized activities in our IT systems, which resulted in us shutting down our IT systems and ceasing manufacturing for 7 days."

"The industry remained challenged by economic factors in the quarter, including a slow housing market that is forecasted to improve heading into 2025. With our strong balance sheet and our focus on right-sizing our expense structure, our goal is to drive better profitability.”

Update on Restructuring Plan
The Company made progress on the restructuring plan announced in July to lower its cost structure and to strengthen operations for topline growth. The comprehensive strategy builds on the strength of Bassett’s brand quality, design expertise and service, and focuses on driving revenue growth and profitability long-term. The five-point plan will be completed by the end of the fourth quarter.

“We are running a leaner operation, reducing expenses and investing in new products and services,” Spilman added. “Through our restructuring plan, we are on target to improve our bottom-line between $5.5 million and $6.5 million on an annual basis. We are committed to returning to profitability.”

Conference Call and Webcast
The Company will hold a conference call to discuss its quarterly results on October 10, 2024, at 9:00 am ET. A replay and transcript of the conference call will be available on demand on the investor relations site.