Decorator Industries Reports First Quarter Results
PEMBROKE PINES, Fla., May 10, 2007 -- Decorator Industries, Inc. (AMEX:DII) today announced its operating results for the first quarter ended March 31, 2007.
Decorator, a leading supplier of interior furnishings for recreational vehicles ("RV"), manufactured housing ("MH") and the hospitality industry, today reported a net loss of $0.09 million, or $0.03 per diluted share for the first quarter ended March 31, 2007, compared to net income of $0.55 million, or $0.18 per diluted share in the same quarter one year ago.
Mr. Bassett, Chairman, stated:
"The downturn in two of our markets negatively impacted sales and income in the first quarter of 2007. Net sales for the first quarter decreased 16% to $12.2 million compared to $14.7 million for the first quarter of 2006. The decline in net sales is partially due to the absence of $1.1 million of FEMA, hurricane-related business, which we reported in last year's first quarter. Excluding the FEMA business, our total sales declined 10%. Sales to RV customers were $7.4 million, a decrease of 19% from $9.1 million in last year's first quarter. Excluding the impact of the aforementioned FEMA business, year over year decline in sales to RV customers was 8%. Compared to last year's first quarter, sales to MH customers declined 32% to $1.9 million from $2.8 million; hospitality sales increased 8% to $2.9 million from $2.7 million.
"The RV industry reported that total RV wholesale shipments declined 16% in the first quarter of 2007 from last year's first quarter. Towable RV shipments, primarily travel trailers, declined by 18% while motor home shipments decreased about 1% from the first quarter of 2006. The MH industry reported that wholesale shipments for this year's first quarter decreased by 37% from a year ago. Sales to our RV and MH customers are affected by the conditions of each of these markets and more directly by our programs with specific customers. The hospitality market has shown continued strength.
"Near term conditions for the RV and MH markets remain challenging. Rising fuel prices and higher interest rates have impacted retail sales of RVs, causing dealers to adjust inventories, resulting in reduced orders for manufacturers. The MH market continues to experience weak retail purchases largely due to the constrained availability of consumer credit. Spring and summer are the prime selling seasons for both the RV and MH markets; hopefully we will see an improvement in consumer demand.
"Operating income declined from $0.86 million or 5.9% of net sales in the first quarter of 2006 to a loss of $0.14 million or 1.2% of net sales in the first quarter of 2007. Although factory overhead and selling, general and administrative expenses were somewhat lower than last year, these costs increased by more than 3% as a percentage of sales, representing almost half of the decline in our operating profit. The balance of the decline is attributable to product mix and higher costs, especially labor costs at the lower production levels we have experienced.
"Despite the challenges of our markets, we will continue to seek to improve our market penetration, capacity utilization and operating efficiencies. We will also explore strategic and accretive acquisition opportunities. Our history of growth through market diversification, geographic expansion and acquisition provides ample evidence of our ability to act both opportunistically and with strategic vision."
Decorator Industries, Inc., founded in 1953, designs, manufactures and sells interior furnishing products, principally draperies, curtains, shades, blinds, valance boards, bedspreads, comforters, pillows, cushions and trailer tents. Decorator is a leading supplier of such products to the manufactured housing and recreational vehicle markets and is a growing supplier to the lodging industry.
(DIIG)
THE UNAUDITED FIGURES ARE AS FOLLOWS:
STATEMENT OF INCOME
FOR QUARTERS ENDED:
March 31, April 1,
2007 2006
NET SALES $12,247,417 $14,662,315
COST OF PRODUCTS SOLD 10,317,008 11,704,497
GROSS PROFIT 1,930,409 2,957,818
SELLING AND
ADMINISTRATIVE EXPENSES 2,072,278 2,097,304
OPERATING INCOME (LOSS) (141,869) 860,514
OTHER INCOME (EXPENSE)
Interest, Investment and
Other Income 23,201 31,212
Interest Expense (23,261) (18,766)
EARNINGS (LOSS) BEFORE
INCOME TAXES (141,929) 872,960
PROVISION FOR INCOME TAXES (50,000) 325,000
NET INCOME (LOSS) $(91,929) $547,960
EARNINGS (LOSS) PER SHARE:
BASIC $(0.03) $0.19
DILUTED $(0.03) $0.18
WEIGHTED-AVERAGE NUMBER
OF SHARES OUTSTANDING
BASIC 3,001,228 2,950,508
DILUTED 3,001,228 3,002,687
CONDENSED BALANCE SHEET
March 31, December 30,
2007 2006
CASH AND EQUIVALENTS $19,491 $11,379
ACCOUNTS RECEIVABLE 4,474,108 3,725,167
INVENTORIES 5,545,967 5,651,252
OTHER CURRENT ASSETS 1,090,586 984,145
TOTAL CURRENT ASSETS 11,130,152 10,371,943
NET PROPERTY AND
EQUIPMENT 9,541,958 9,703,167
OTHER ASSETS 4,810,588 4,923,461
TOTAL ASSETS $25,482,698 $24,998,571
TOTAL CURRENT
LIABILITIES $5,656,832 $4,989,585
LONG-TERM DEBT 1,716,277 1,741,444
DEFERRED TAXES 834,000 839,000
STOCKHOLDERS' EQUITY 17,275,589 17,428,542
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $25,482,698 $24,998,571