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» Furniture Brands International CEO Discusses Q2 2011 Results - Earnings Call Transcript
Please refer to our SEC filings including our Form 10-Qs and Form 10-Ks for a discussion of the major risks and uncertainties that may affect our business. The forward-looking statements made today are as of the date of this call and we do not undertake any obligation to update our forward-looking statements. If you do not have a copy of today’s press release, you may obtain one along with copies of prior press releases and past SEC filings by link through to the Investor Relations page of our website furniturebrands.com.I now hand it over to Vance to discuss our financial results. Vance Johnston Thanks Rick and good morning everyone. As reported in this morning’s press release, total sales were 265.5 million for the second quarter, a decrease of 10.4% from the same period last year. Gross profit for the second quarter of 2012 was 64 million and gross margin was 24.1% as compared to 73.4 million in gross profit and 24.8% gross margin in the same quarter of last year. The year-over-year change in gross margin was primarily due to additional clearance of older inventory and product that has been replaced, decreased retail margin and lower plat utilization, partially offset by lower cost resulting from prior cost reduction activity. SG&A expenses totaled 69.8 million for the second quarter compared to 79.3 million in the second quarter of 2011. The decrease in second quarter SG&A was primarily due to lower expenses resulting from prior cost reduction activities. As our cost reduction efforts have taken route, we expect SG&A for the remaining quarters of 2012 to track towards the lower end or below our previously communicated 73 to 77 million guidance range. Our operating loss of 5.8 million was essentially flat to year ago period as the lower sales volumes were offset by our cost savings efforts. Net loss for the quarter was 6.8 million or $0.12 on a per share basis as compared to a net loss of 6.6 million or $0.12 per share in the second quarter of 2011.
On the retail side of our business, sales from the 44 Thomasville stores that we have operated for more than 15 months were down 7.4% from the second quarter of 2011 following an 8% same-store sales increase in the second quarter of 2011.We ended the quarter with 48 company-owned Thomasville stores, our Thomasville retail operating loss for open stores improved to 4.3 million from the 4.7 million loss reported in the second quarter of 2011 driven by lower SG&A cost. Moving on to our balance sheet. We generated 3.7 million of free cash flow in the second quarter. This was primarily driven by continued improvements in working capital management and disciplined capital spending. Capital expenditures for the quarter came in at 2 million for a year-to-date capital spend of 3 million. We remained disciplined on the capital allocation front and expect CapEx as well as depreciation to come in at the low end or below our prior guidance ranges. Just as a reminder these ranges were 16 to 18 million for CapEx and 22 to 24 million for D&A in 2012. We continue to manage our resources diligently as we strive to maintain high service levels for our customers balanced by disciplined management of working capital. We contributed 2.9 million for our pension plan in the second quarter of 2012 or 5.5 million contribution year-to-date. As you know, with the recent passing of [Mac 21] and the resulting interest rate stabilization changes, Congress delivered pension relief in 2012. We expect the impact will be favorable relative to our prior expectations for cash contributions for pension plan over the next three years and we are currently in the process of determining exactly what the impact will be. Read the rest of this transcript for free on seekingalpha.com