Bassett Furniture Industries Files Q2 2024 10-Q

TL;DR

Bassett Furniture (BSET) filed its Q2 2024 10-Q. Financials are in.

AI Summary

Bassett Furniture Industries Inc. reported its Q2 2024 results for the period ending June 1, 2024. The company's fiscal year ends on November 30th. Key financial data and changes in accumulated other comprehensive income were filed.

Why It Matters

This filing provides investors with the latest financial performance and position of Bassett Furniture Industries, Inc. for the second quarter of 2024.

Risk Assessment

Risk Level: low — This is a routine quarterly financial filing with no immediate red flags.

Key Numbers

• Q2 2024 — Quarterly Period (Reporting period for the 10-Q filing.)
• June 1, 2024 — End of Reporting Period (Specific date the financial information covers.)

Key Players & Entities

• BASSETT FURNITURE INDUSTRIES INC (company) — Filer
• 20240601 (date) — Period of Report
• 20240711 (date) — Filing Date
• 1130 (date) — Fiscal Year End

FAQ

Key Financial Figures

• $5.00 — ange on which registered Common Stock ($5.00 par value) BSET NASDAQ Indicate b
• $500 — $ 500 $ 7,371 (1) Consists of a $500 reserve established against the retail

Filing Documents

• bset20240525_10q.htm (10-Q) — 1766KB
• ex_695614.htm (EX-10) — 909KB
• ex_695624.htm (EX-31.A) — 13KB
• ex_695623.htm (EX-31.B) — 13KB
• ex_695622.htm (EX-32.A) — 6KB
• ex_695621.htm (EX-32.B) — 6KB
• 0001437749-24-022523.txt ( ) — 8382KB
• bset-20240601.xsd (EX-101.SCH) — 54KB
• bset-20240601_def.xml (EX-101.DEF) — 345KB
• bset-20240601_lab.xml (EX-101.LAB) — 280KB
• bset-20240601_pre.xml (EX-101.PRE) — 374KB
• bset-20240601_cal.xml (EX-101.CAL) — 51KB
• bset20240525_10q_htm.xml (XML) — 1445KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION 1. Condensed Consolidated Financial Statements as of June 1, 2024 (unaudited) and November 25, 2023 and for the three and six months ended June 1, 2024 (unaudited) and May 27, 2023 (unaudited) Condensed Consolidated Statements of Operations 3 Condensed Consolidated Statements of Comprehensive Income (Loss) 4 Condensed Consolidated Balance Sheets 5 Condensed Consolidated Statements of Cash Flows 6 Notes to Condensed Consolidated Financial Statements 7 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 20 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 32 4.

Controls and Procedures

Controls and Procedures 32

- OTHER INFORMATION

PART II - OTHER INFORMATION 1.

Legal Proceedings

Legal Proceedings 33 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities 33 3. Defaults Upon Senior Securities 33 5. Other Information 33 6. Exhibits 33 2 of 35

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE PERIODS ENDED JUNE 1, 2024 AND MAY 27, 2023 – UNAUDITED (In thousands except per share data) Quarter Ended Six Months Ended June 1, 2024 May 27, 2023 June 1, 2024 May 27, 2023 Net sales of furniture and accessories $ 83,410 $ 100,519 $ 169,964 $ 208,217 Cost of furniture and accessories sold 39,650 47,686 78,337 98,187 Gross profit 43,760 52,833 91,627 110,030 Selling, general and administrative expenses 46,707 51,366 96,931 105,861 Asset impairment charges 5,515 - 5,515 - Gain on revaluation of contingent consideration - 1,013 - 1,013 Income (loss) from operations ( 8,462 ) 2,480 ( 10,819 ) 5,182 Interest income 627 569 1,383 721 Other loss, net ( 276 ) ( 505 ) ( 380 ) ( 1,072 ) Income (loss) before income taxes ( 8,111 ) 2,544 ( 9,816 ) 4,831 Income tax expense (benefit) ( 910 ) 468 ( 1,422 ) 1,310 Net income (loss) $ ( 7,201 ) $ 2,076 $ ( 8,394 ) $ 3,521 Basic earnings (loss) per share $ ( 0.82 ) $ 0.24 $ ( 0.96 ) $ 0.40 Diluted earnings (loss) per share $ ( 0.82 ) $ 0.24 $ ( 0.96 ) $ 0.40 Regular dividends per share $ 0.18 $ 0.16 $ 0.34 $ 0.32 The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements. 3 of 35

– FINANCIAL INFORMATION – CONTINUED

PART I – FINANCIAL INFORMATION – CONTINUED

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE PERIODS ENDED JUNE 1, 2024 AND MAY 27, 2023 – UNAUDITED (In thousands) Quarter Ended Six Months Ended June 1, 2024 May 27, 2023 June 1, 2024 May 27, 2023 Net income (loss) $ ( 7,201 ) $ 2,076 $ ( 8,394 ) $ 3,521 Other comprehensive income (loss): Foreign currency translation adjustments ( 9 ) ( 93 ) ( 234 ) ( 279 ) Income taxes related to foreign currency translation adjustments 2 24 60 74 Amortization associated with Long Term Cash Awards (LTCA) 15 31 30 63 Income taxes related to LTCA ( 4 ) ( 8 ) ( 8 ) ( 16 ) Amortization associated with supplemental executive retirement defined benefit plan (SERP) ( 5 ) - ( 11 ) - Income taxes related to SERP 2 - 3 - Other comprehensive income (loss), net of tax 1 ( 46 ) ( 160 ) ( 158 ) Total comprehensive income (loss) $ ( 7,200 ) $ 2,030 $ ( 8,554 ) $ 3,363 The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements. 4 of 35

– FINANCIAL INFORMATION – CONTINUED

PART I – FINANCIAL INFORMATION – CONTINUED

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS JUNE 1, 2024 AND NOVEMBER 25, 2023 (In thousands) (Unaudited) June 1, 2024 November 25, 2023 Assets Current assets Cash and cash equivalents $ 42,646 $ 52,407 Short-term investments 17,814 17,775 Accounts receivable, net 13,495 13,736 Inventories 56,875 62,982 Recoverable income taxes 2,896 2,574 Other current assets 9,377 8,480 Total current assets 143,103 157,954 Property and equipment, net 79,802 83,981 Deferred income taxes 6,085 4,645 Goodwill and other intangible assets 14,213 16,067 Right of use assets under operating leases 94,748 100,888 Other 7,313 6,889 Total long-term assets 122,359 128,489 Total assets $ 345,264 $ 370,424 Liabilities and Stockholders ' Equity Current liabilities Accounts payable $ 12,188 $ 16,338 Accrued compensation and benefits 8,424 8,934 Customer deposits 23,021 22,788 Current portion operating lease obligations 18,293 18,827 Other current liabilites and accrued expenses 9,056 11,003 Total current liabilities 70,982 77,890 Long-term liabilities Post employment benefit obligations 10,758 10,207 Long-term portion of operating lease obligations 90,646 97,357 Other long-term liabilities 1,218 1,529 Total long-term liabilities 102,622 109,093 Stockholders ' equity Common stock 43,808 43,842 Retained earnings 127,807 139,354 Additional paid-in capital 52 93 Accumulated other comprehensive income (loss) ( 7 ) 152 Total stockholders' equity 171,660 183,441 Total liabilities and stockholders ' equity $ 345,264 $ 370,424 The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements. 5 of 35

– FINANCIAL INFORMATION – CONTINUED

PART I – FINANCIAL INFORMATION – CONTINUED

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE PERIODS ENDED JUNE 1, 2024 AND MAY 27, 2023 – UNAUDITED (In thousands) Six Months Ended June 1, 2024 May 27, 2023 Operating activities: Net income (loss) $ ( 8,394 ) $ 3,521 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 5,291 4,909 Asset impairment charges 5,515 - Gain on revaluation of contingent consideration - ( 1,013 ) Inventory valuation charges 3,879 2,475 Deferred income taxes ( 1,440 ) 392 Other, net 689 1,388 Changes in operating assets and liabilities: Accounts receivable 241 3,005 Inventories 2,228 12,670 Other current assets ( 1,217 ) 953 Right of use assets under operating leases 8,707 9,105 Customer deposits 233 ( 12,022 ) Accounts payable and other liabilities ( 6,930 ) ( 8,715 ) Obligations under operating leases ( 10,721 ) ( 10,255 ) Net cash provided by (used in) operating activities ( 1,919 ) 6,413 Investing activities: Purchases of property and equipment ( 3,683 ) ( 7,405 ) Proceeds from the disposal of discontinued operations, net - 1,000 Other ( 383 ) ( 637 ) Net cash used in investing activities ( 4,066 ) ( 7,042 ) Financing activities: Cash dividends ( 3,153 ) ( 2,832 ) Other issuance of common stock 179 177 Repurchases of common stock ( 489 ) ( 3,450 ) Taxes paid related to net share settlement of equity awards ( 161 ) ( 109 ) Repayments of finance lease obligations ( 153 ) ( 137 ) Net cash used in financing activities ( 3,777 ) ( 6,351 ) Effect of exchange rate changes on cash and cash equivalents 1 ( 42 ) Change in cash and cash equivalents ( 9,761 ) ( 7,022 ) Cash and cash equivalents - beginning of period 52,407 61,625

-FINANCIAL INFORMATION-CONTINUED

PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED JUNE 1, 2024 (Dollars in thousands except share and per share data) 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States ("GAAP") for complete financial statements. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. References to "ASC" included hereinafter refer to the Accounting Standards Codification established by the Financial Accounting Standards Board ("FASB") as the source of authoritative GAAP. The condensed consolidated financial statements include the accounts of Bassett Furniture Industries, Incorporated ("Bassett", "we", "our", or the "Company") and our wholly-owned subsidiaries of which we have a controlling interest. In accordance with ASC Topic 810, we have evaluated our licensees and certain other entities to determine whether they are variable interest entities ("VIEs") of which we are the primary beneficiary and thus would require consolidation in our financial statements. To date we have concluded that none of our licensees represent VIEs. Revenue from the sale of furniture and accessories is reported in the accompanying condensed consolidated statements of operations net of estimates for returns and allowances. Our fiscal year, which ends on the last Saturday of November, periodically results in a 53-week year instead of the normal 52 weeks. The current fiscal year ending November 30, 2024 is a 53-week year, with the additional week being included in our first fiscal quarter. Accordingly, the information presented below includes 27 weeks of operations

-FINANCIAL INFORMATION-CONTINUED

PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED JUNE 1, 2024 (Dollars in thousands except share and per share data) 3. Financial Instruments and Investments Financial Instruments Our financial instruments include cash and cash equivalents, short-term investments in certificates of deposit (CDs), accounts receivable, and accounts payable. Because of their short maturities, the carrying amounts of cash and cash equivalents, short-term investments in CDs, accounts receivable, and accounts payable approximate fair value. Investments Our short-term investments of $ 17,814 and $ 17,775 at June 1, 2024 and November 25, 2023, respectively, consisted of CDs. At June 1, 2024, the CDs had original terms averaging seven months, bearing interest at rates ranging from 0.7 % to 5.4 % and the weighted average remaining time to maturity was approximately three months and the weighted average yield of the CDs was approximately 4.97 %. Each CD is placed with a federally insured financial institution and all deposits are within federal deposit insurance limits. Due to the nature of these investments and their relatively short maturities, the carrying amount of the short-term investments at June 1, 2024 and November 25, 2023 approximates their fair value. 4. Accounts Receivable Accounts receivable consists of the following: June 1, 2024 November 25, 2023 Gross accounts receivable $ 14,617 $ 14,271 Allowance for doubtful accounts ( 1,122 ) ( 535 ) Accounts receivable, net $ 13,495 $ 13,736 We maintain an allowance for credit losses for estimated losses resulting from the inability of our customers to make required payments. The allowance for credit losses is based on a review of specifically identified accounts in addition to an overall aging analysis which is applied to accounts pooled on the basis of similar risk characteristics. Judgm

-FINANCIAL INFORMATION-CONTINUED

PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED JUNE 1, 2024 (Dollars in thousands except share and per share data) 5. Inventories Domestic furniture inventories are valued at the lower of cost, which is determined using the last-in, first-out (LIFO) method, or market. Imported inventories and those applicable to our Lane Venture and Bassett Outdoor lines are valued at the lower of cost, which is determined using the first-in, first-out (FIFO) method, or net realizable value. Inventories were comprised of the following: June 1, 2024 November 25, 2023 Wholesale finished goods $ 25,062 $ 27,521 Work in process 613 637 Raw materials and supplies 17,266 18,655 Retail merchandise 33,062 33,090 Total inventories on first-in, first-out method 76,003 79,903 LIFO adjustment ( 11,757 ) ( 11,738 ) Reserve for excess and obsolete inventory ( 7,371 ) ( 5,183 ) $ 56,875 $ 62,982 We estimate an inventory reserve for excess quantities and obsolete items based on specific identification and historical write-offs, taking into account future demand, market conditions and the respective valuations at LIFO. The need for these reserves is primarily driven by the normal product life cycle. As products mature and sales volumes decline, we rationalize our product offerings to respond to consumer tastes and keep our product lines fresh. If actual demand or market conditions in the future are less favorable than those estimated, additional inventory write-downs may be required. In determining reserves, we calculate separate reserves on our wholesale and retail inventories. Our wholesale inventories tend to carry the majority of the reserves for excess quantities and obsolete inventory due to the nature of our distribution model. These wholesale reserves primarily represent design and/or style obsolescence. Typically, produc

-FINANCIAL INFORMATION-CONTINUED

PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED JUNE 1, 2024 (Dollars in thousands except share and per share data) 6. Goodwill and Other Intangible Assets Goodwill and other intangible assets consisted of the following: June 1, 2024 Gross Carrying Amount Accumulated Amortization Intangible Assets, Net Intangibles subject to amortization Customer relationships $ 512 $ ( 365 ) $ 147 Intangibles not subject to amortization: Trade names 6,849 Goodwill 7,217 Total goodwill and other intangible assets $ 14,213 November 25, 2023 Gross Carrying Amount Accumulated Amortization Intangible Assets, Net Intangibles subject to amortization Customer relationships $ 512 $ ( 337 ) $ 175 Intangibles not subject to amortization: Trade names 8,675 Goodwill 7,217 Total goodwill and other intangible assets $ 16,067 See Note 9 regarding the impairment of the trade name intangible asset for Noa Home. There were no changes in the carrying amounts of goodwill during the six months ended June 1, 2024. The carrying amounts of goodwill by reportable segment, including accumulated impairment losses, at both June 1, 2024 and November 25, 2023 were as follows: Original Accumulated Recorded Impairment Carrying Value Losses Amount Wholesale $ 9,188 $ ( 1,971 ) $ 7,217 Retail 1,926 ( 1,926 ) - Corporate and other 5,409 ( 5,409 ) - Total goodwill $ 16,523 $ ( 9,306 ) $ 7,217 Amortization expense associated with intangible assets during the three and six months ended June 1, 2024 and May 27, 2023 was as follows: Quarter Ended Six Months Ended June 1, 2024 May 27, 2023 June 1, 2024 May 27, 2023 Intangible asset amortization expense $ 14 $ 14 $ 28 $ 28 10 of 35

-FINANCIAL INFORMATION-CONTINUED

PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED JUNE 1, 2024 (Dollars in thousands except share and per share data) Estimated future amortization expense for intangible assets that exist at June 1, 2024 is as follows: Remainder of fiscal 2024 $ 28 Fiscal 2025 57 Fiscal 2026 57 Fiscal 2027 5 Fiscal 2028 - Fiscal 2029 - Total $ 147 7. Bank Credit Facility On May 15, 2024, we entered into the Eighth Amended and Restated Credit Agreement with our bank (the "Credit Facility"). This credit facility provides for a line of credit of up to $ 25,000 . At June 1, 2024, we had $ 6,013 outstanding under standby letters of credit against our line. The line bears interest at the One-Month Term Secured Overnight Financing Rate ("One-Month Term SOFR") plus 1.75 % and is secured by our accounts receivable and inventory. Our bank charges a fee of 0.25 % on the daily unused balance of the line, payable quarterly. Under the terms of the facility, Consolidated Minimum Tangible Net Worth (as defined in the Credit Facility) shall at no time be less than $ 120,000 . In addition, we must maintain the following financial covenants, measured quarterly on a rolling twelve-month basis and commencing as of the end of the first fiscal quarter after the first date that the used commitment (the sum of any outstanding advances plus standby letters of credit) equals or exceeds $ 8,250 : Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Facility) of not less than 1.2 times and Consolidated Lease Adjusted Leverage to EBITDAR Ratio (as defined in the Credit Facility) not to exceed 3.35 times. Since our used commitment was less than $ 8,250 at June 1, 2024, we were not required to test the Consolidated Fixed Charge Coverage Ratio or the Consolidated Lease Adjusted Leverage to EBITDAR Ratio. Had we been required to test those ratios, we would n

-FINANCIAL INFORMATION-CONTINUED

PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED JUNE 1, 2024 (Dollars in thousands except share and per share data) The combined pension liability for the Supplemental Plan and LTC Awards is recorded as follows in the condensed consolidated balance sheets: June 1, 2024 November 25, 2023 Accrued compensation and benefits $ 792 $ 792 Post employment benefit obligations 6,314 6,220 Total pension liability $ 7,106 $ 7,012 Components of net periodic pension costs for our defined benefit plans for the three and six months ended June 1, 2024 and May 27, 2023 are as follows: Quarter Ended Six Months Ended June 1, 2024 May 27, 2023 June 1, 2024 May 27, 2023 Service cost $ 3 $ 7 $ 7 $ 14 Interest cost 98 93 195 185 Amortization of prior service costs 25 31 51 63 Amortization of loss ( 16 ) - ( 32 ) - Net periodic pension cost $ 110 $ 131 $ 221 $ 262 The components of net periodic pension cost other than the service cost component, which is included in selling, general and administrative expenses, are included in other loss, net in our condensed consolidated statements of operations. Deferred Compensation Plans We have an unfunded deferred compensation plan that covers one current executive and certain former executives and provides for voluntary deferral of compensation. This plan has been frozen with no additional participants or deferrals permitted. Our liability under this plan was $ 1,656 and $ 1,655 as of June 1, 2024 and November 25, 2023, respectively. We also have an unfunded, nonqualified deferred compensation plan maintained for the benefit of certain highly compensated or management level employees which was established under the Management Savings Plan. Our liability under this plan, including both accrued Company contributions and participant salary de

-FINANCIAL INFORMATION-CONTINUED

PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED JUNE 1, 2024 (Dollars in thousands except share and per share data) 9. Other Gains and Losses Fiscal 2024 During the three and six months ended June 1, 2024, we recognized non-cash charges for asset impairments totaling $ 5,515 which consisted of the following: $ 2,887 in our retail segment which included $ 1,978 related to the impairment of leasehold improvements and $ 750 from the impairment of right-of-us

View Full Filing

View this 10-Q filing on SEC EDGAR