Bassett Furniture Industries Q3 2024 Update

TL;DR

Bassett Furniture's Q3 2024 results are in. Check the 10-Q for the deets.

AI Summary

Bassett Furniture Industries Inc. reported its third quarter results for the period ending August 31, 2024. The company's financial performance for this quarter is detailed in the 10-Q filing. Specific financial figures and operational highlights are provided within the document.

Why It Matters

This filing provides investors with the latest financial performance data for Bassett Furniture Industries, crucial for understanding the company's current health and future prospects.

Risk Assessment

Risk Level: low — This is a routine quarterly filing providing financial updates, not indicating immediate or significant new risks.

Key Numbers

• Q3 2024 — Quarterly Period (Reporting period for the 10-Q filing.)
• 11-30 — Fiscal Year End (Indicates the end of the company's fiscal year.)

Key Players & Entities

• BASSETT FURNITURE INDUSTRIES INC (company) — Filer
• 20240831 (date) — Period of Report
• 20241010 (date) — Filing Date
• VA (location) — State of Incorporation
• 24055 (postal_code) — Business Zip Code

FAQ

Key Financial Figures

• $5.00 — ange on which registered Common Stock ($5.00 par value) BSET NASDAQ Indicate b
• $500 — $ 500 $ 6,069 (1) Consists of a $500 reserve established against the retail
• $2,237 — y is currently limited to an additional $2,237. 11 of 37 PART I-FINANCIAL INFORMATIO

Filing Documents

• bset20240831d_10q.htm (10-Q) — 1795KB
• ex_730074.htm (EX-31.A) — 13KB
• ex_730075.htm (EX-31.B) — 13KB
• ex_730076.htm (EX-32.A) — 5KB
• ex_730077.htm (EX-32.B) — 5KB
• 0001437749-24-031014.txt ( ) — 7412KB
• bset-20240831.xsd (EX-101.SCH) — 55KB
• bset-20240831_def.xml (EX-101.DEF) — 345KB
• bset-20240831_lab.xml (EX-101.LAB) — 280KB
• bset-20240831_pre.xml (EX-101.PRE) — 375KB
• bset-20240831_cal.xml (EX-101.CAL) — 51KB
• bset20240831d_10q_htm.xml (XML) — 1454KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION 1. Condensed Consolidated Financial Statements as of August 31, 2024 (unaudited) and November 25, 2023 and for the three and nine months ended August 31, 2024 (unaudited) and August 26, 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 21 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 34 4.

Controls and Procedures

Controls and Procedures 34

- OTHER INFORMATION

PART II - OTHER INFORMATION 1.

Legal Proceedings

Legal Proceedings 35 1A.

Risk Factors

Risk Factors 35 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities 35 3. Defaults Upon Senior Securities 35 5. Other Information 35 6. Exhibits 36 2 of 37

- 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 AUGUST 31, 2024 AND AUGUST 26, 2023 – UNAUDITED (In thousands except per share data) Quarter Ended Nine Months Ended August 31, 2024 August 26, 2023 August 31, 2024 August 26, 2023 Net sales of furniture and accessories $ 75,619 $ 87,217 $ 245,583 $ 295,434 Cost of furniture and accessories sold 35,526 42,173 113,863 140,360 Gross profit 40,093 45,044 131,720 155,074 Selling, general and administrative expenses 45,210 48,848 142,141 154,709 Loss on contract abandonment 1,240 - 1,240 - Asset impairment charges - - 5,515 - Gain on revaluation of contingent consideration - - - 1,013 Income (loss) from operations ( 6,357 ) ( 3,804 ) ( 17,176 ) 1,378 Interest income 692 923 2,075 1,644 Other loss, net ( 109 ) ( 309 ) ( 489 ) ( 1,381 ) Income (loss) before income taxes ( 5,774 ) ( 3,190 ) ( 15,590 ) 1,641 Income tax expense (benefit) ( 1,269 ) ( 599 ) ( 2,691 ) 711 Net income (loss) $ ( 4,505 ) $ ( 2,591 ) $ ( 12,899 ) $ 930 Basic earnings (loss) per share $ ( 0.52 ) $ ( 0.30 ) $ ( 1.48 ) $ 0.11 Diluted earnings (loss) per share $ ( 0.52 ) $ ( 0.30 ) $ ( 1.48 ) $ 0.11 Regular dividends per share $ 0.20 $ 0.18 $ 0.54 $ 0.50 The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements. 3 of 37

– 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 AUGUST 31, 2024 AND AUGUST 26, 2023 – UNAUDITED (In thousands) Quarter Ended Nine Months Ended August 31, 2024 August 26, 2023 August 31, 2024 August 26, 2023 Net income (loss) $ ( 4,505 ) $ ( 2,591 ) $ ( 12,899 ) $ 930 Other comprehensive income (loss): Foreign currency translation adjustments ( 32 ) 42 ( 266 ) ( 237 ) Income taxes related to foreign currency translation adjustments 8 ( 11 ) 68 63 Amortization associated with Long Term Cash Awards (LTCA) 16 31 46 98 Income taxes related to LTCA ( 4 ) ( 8 ) ( 12 ) ( 28 ) Amortization associated with supplemental executive retirement defined benefit plan (SERP) ( 5 ) - ( 16 ) - Income taxes related to SERP 1 - 4 - Other comprehensive income (loss), net of tax ( 16 ) 54 ( 176 ) ( 104 ) Total comprehensive income (loss) $ ( 4,521 ) $ ( 2,537 ) $ ( 13,075 ) $ 826 The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements. 4 of 37

– FINANCIAL INFORMATION – CONTINUED

PART I – FINANCIAL INFORMATION – CONTINUED

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AUGUST 31, 2024 AND NOVEMBER 25, 2023 (In thousands) (Unaudited) August 31, 2024 November 25, 2023 Assets Current assets Cash and cash equivalents $ 38,329 $ 52,407 Short-term investments 17,834 17,775 Accounts receivable, net 12,974 13,736 Inventories 56,138 62,982 Recoverable income taxes 2,846 2,574 Other current assets 9,421 8,480 Total current assets 137,542 157,954 Property and equipment, net 78,564 83,981 Deferred income taxes 7,410 4,645 Goodwill and other intangible assets 14,199 16,067 Right of use assets under operating leases 90,274 100,888 Other 7,873 6,889 Total long-term assets 119,756 128,489 Total assets $ 335,862 $ 370,424 Liabilities and Stockholders ' Equity Current liabilities Accounts payable $ 14,232 $ 16,338 Accrued compensation and benefits 6,595 8,934 Customer deposits 23,700 22,788 Current portion operating lease obligations 18,504 18,827 Other current liabilites and accrued expenses 10,086 11,003 Total current liabilities 73,117 77,890 Long-term liabilities Post employment benefit obligations 10,885 10,207 Long-term portion of operating lease obligations 85,310 97,357 Other long-term liabilities 1,514 1,529 Total long-term liabilities 97,709 109,093 Stockholders ' equity Common stock 43,674 43,842 Retained earnings 121,387 139,354 Additional paid-in capital - 93 Accumulated other comprehensive income (loss) ( 25 ) 152 Total stockholders' equity 165,036 183,441 Total liabilities and stockholders ' equity $ 335,862 $ 370,424 The accompanying notes to condensed consolidated financial statements are an integral part of the condensed consolidated financial statements. 5 of 37

– 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 AUGUST 31, 2024 AND AUGUST 26, 2023 – UNAUDITED (In thousands) Nine Months Ended August 31, 2024 August 26, 2023 Operating activities: Net income (loss) $ ( 12,899 ) $ 930 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 7,613 7,502 Asset impairment charges 5,515 - Gain on revaluation of contingent consideration - ( 1,013 ) Inventory valuation charges 4,954 3,814 Deferred income taxes ( 2,765 ) 473 Other, net 937 1,781 Changes in operating assets and liabilities: Accounts receivable 762 2,499 Inventories 1,890 14,797 Other current assets ( 1,213 ) ( 289 ) Right of use assets under operating leases 13,029 13,668 Customer deposits 912 ( 12,337 ) Accounts payable and other liabilities ( 5,364 ) ( 6,586 ) Obligations under operating leases ( 15,694 ) ( 14,990 ) Net cash provided by (used in) operating activities ( 2,323 ) 10,249 Investing activities: Purchases of property and equipment ( 4,720 ) ( 14,657 ) Proceeds from the disposal of discontinued operations, net - 1,000 Other ( 909 ) ( 1,664 ) Net cash used in investing activities ( 5,629 ) ( 15,321 ) Financing activities: Cash dividends ( 4,909 ) ( 4,406 ) Other issuance of common stock 275 275 Repurchases of common stock ( 1,127 ) ( 4,056 ) Taxes paid related to net share settlement of equity awards ( 161 ) ( 109 ) Repayments of finance lease obligations ( 210 ) ( 208 ) Net cash used in financing activities ( 6,132 ) ( 8,504 ) Effect of exchange rate changes on cash and cash equivalents 6 ( 37 ) Change in cash and cash equivalents ( 14,078 ) ( 13,613 ) Cash and cash equivalents - beginning

-FINANCIAL INFORMATION-CONTINUED

PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 31, 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 40 weeks of operati

-FINANCIAL INFORMATION-CONTINUED

PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 31, 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 $ 17,834 and $ 17,775 at August 31, 2024 and November 25, 2023, respectively, consisted of CDs. At August 31, 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 five months and the weighted average yield of the CDs was approximately 4.69 %. 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 August 31, 2024 and November 25, 2023 approximates their fair value. 4. Accounts Receivable Accounts receivable consists of the following: August 31, 2024 November 25, 2023 Gross accounts receivable $ 14,026 $ 14,271 Allowance for doubtful accounts ( 1,052 ) ( 535 ) Accounts receivable, net $ 12,974 $ 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 characte

-FINANCIAL INFORMATION-CONTINUED

PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 31, 2024 (Dollars in thousands except share and per share data) Activity in the allowance for credit losses for the nine months ended August 31, 2024 was as follows: Balance at November 25, 2023 $ 535 Additions charged to expense 595 Write-offs against allowance ( 78 ) Balance at August 31, 2024 $ 1,052 We believe that the carrying value of our net accounts receivable approximates fair value. The inputs into these fair value estimates reflect our market assumptions and are not observable. Consequently, the inputs are considered to be Level 3 as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurements and Disclosures . 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: August 31, 2024 November 25, 2023 Wholesale finished goods $ 24,188 $ 27,521 Work in process 453 637 Raw materials and supplies 16,223 18,655 Retail merchandise 33,285 33,090 Total inventories on first-in, first-out method 74,149 79,903 LIFO adjustment ( 11,942 ) ( 11,738 ) Reserve for excess and obsolete inventory ( 6,069 ) ( 5,183 ) $ 56,138 $ 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 volum

-FINANCIAL INFORMATION-CONTINUED

PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 31, 2024 (Dollars in thousands except share and per share data) Activity in the reserves for excess quantities and obsolete inventory by segment are as follows: Wholesale Segment Retail Segment Corporate & Other (1) Total Balance at November 25, 2023 $ 4,145 $ 1,038 $ - $ 5,183 Additions charged to expense 3,930 524 500 4,954 Write-offs ( 3,700 ) ( 368 ) - ( 4,068 ) Balance at August 31, 2024 $ 4,375 $ 1,194 $ 500 $ 6,069 (1) Consists of a $500 reserve established against the retail inventory held by Noa Home due to our decision to cease operations by selling the remaining inventory in an orderly fashion over the next several months. Our estimates and assumptions have been reasonably accurate in the past. We have not made any significant changes to our methodology for determining inventory reserves in 2024 and do not anticipate that our methodology is likely to change in the future. 6. Goodwill and Other Intangible Assets Goodwill and other intangible assets consisted of the following: August 31, 2024 Gross Carrying Amount Accumulated Amortization Intangible Assets, Net Intangibles subject to amortization Customer relationships $ 512 $ ( 379 ) $ 133 Intangibles not subject to amortization: Trade names 6,849 Goodwill 7,217 Total goodwill and other intangible assets $ 14,199 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 ch

-FINANCIAL INFORMATION-CONTINUED

PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 31, 2024 (Dollars in thousands except share and per share data) The carrying amounts of goodwill by reportable segment, including accumulated impairment losses, at both August 31, 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 nine months ended August 31, 2024 and August 26, 2023 was as follows: Quarter Ended Nine Months Ended August 31, 2024 August 26, 2023 August 31, 2024 August 26, 2023 Intangible asset amortization expense $ 14 $ 14 $ 43 $ 43 Estimated future amortization expense for intangible assets that exist at August 31, 2024 is as follows: Remainder of fiscal 2024 $ 14 Fiscal 2025 57 Fiscal 2026 57 Fiscal 2027 5 Fiscal 2028 - Fiscal 2029 - Total $ 133 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 August 31, 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 Credit 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

-FINANCIAL INFORMATION-CONTINUED

PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 31, 2024 (Dollars in thousands except share and per share data) 8. Post Employment Benefit Obligations Defined Benefit Plans We have an unfunded Supplemental Retirement Income Plan (the "Supplemental Plan") that covers one current and certain former executives. The liability for the Supplemental Plan was $ 5,851 and $ 5,778 as of August 31, 2024 and November 25, 2023, respectively. We also have the Bassett Furniture Industries, Incorporated Management Savings Plan (the "Management Savings Plan") which was established in the second quarter of fiscal 2017. The Management Savings Plan is an unfunded, nonqualified deferred compensation plan maintained for the benefit of certain highly compensated or management level employees. As part of the Management Savings Plan, we have made Long Term Cash Awards ("LTC Awards") totaling $ 2,000 to five management employees in the amount of $ 400 each. We are accounting for the LTC Awards as a defined benefit pension plan. Currently, two of those employees have retired and are receiving benefits. The liability for the LTC Awards was $ 1,221 and $ 1,234 as of August 31, 2024 and November 25, 2023, respectively. The combined pension liability for the Supplemental Plan and LTC Awards is recorded as follows in the condensed consolidated balance sheets: August 31, 2024 November 25, 2023 Accrued compensation and benefits $ 792 $ 792 Post employment benefit obligations 6,280 6,220 Total pension liability $ 7,072 $ 7,012 Components of net periodic pension costs for our defined benefit plans for the three and nine months ended August 31, 2024 and August 26, 2023 are as follows: Quarter Ended Nine Months Ended August 31, 2024 August 26, 2023 August 31, 2024 August 26, 2023 Service cost $ 3 $ 7 $ 10 $ 20 Interest cost

-FINANCIAL INFORMATION-CONTINUED

PART I-FINANCIAL INFORMATION-CONTINUED BASSETT FURNITURE INDUSTRIES, INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-UNAUDITED AUGUST 31, 2024 (Dollars in thousands except share and per share data) Our combined liability for all deferred compensation arrangements, including Company contributions and participant deferrals under the Management Savings Plan, is recorded as follows in the condensed consolidated balance sheets: August 31, 2024 November 25, 2023 Accrued compensation and benefits $ 329 $ 329 Post employment benefit obligations 4,605 3,987 Total deferred compensation liability $ 4,934 $ 4,316 We recognized expense under our deferred compensation arrangements during the three and nine mo

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