BSET - Bassett Furniture (BSET) - Post COVID Recovery Continues
2Q21 Results. Revenue of $124.1 million jumped 94% y-o-y and was up 15% compared to the non-COVID impacted 2Q19. Wholesale sales rose 129.7%, while Retail sales increased 29.3% and Logistics segment revenue was up 7.0%. Bassett reported net income of $6.0M, or $0.60 per share, compared to a net loss of $20.4 million, or $2.04 per share, last year, which included impairment charges and litigation expenses. We had forecast revenue of $116 million and EPS of $0.35.Strong Orders = Elevated Backlog. Wholesale orders of $96 million rose 172% versus 2Q20 and were up 51% over 2Q19. Basset saw strong demand in its Bassett Design Center Network, up 212% and 87%, respectively compared to 2020 and 2019. Basset Club Level was up 328% versus 2019. And Bassett's outdoor offerings were up 112% and 124%, respectively, over 2020 and 2019. Backlog in the quarter increased $19 million and at quarter's end was $87.7 million, up from $17.3 million at the end of 2Q20. With strong Memorial Day weekend sales, we expect the backlog increased further.Updated Projections. While backlog remains elevated and orders are strong, the entire industry is facing some headwinds from cost inflation to parts availability to shipping to logistics. How quickly these are resolved will play an important role in second half results. Even with the new factory opened in June, we are forecasting 3Q21 revenue to be essentially flat with the 2Q at $124 million, although above our prior $117 million. We expect modest margin contraction due to the above but EPS is estimated at $0.48 compared to our previous $0.46, driven by the higher revenue level.Maintaining Outperform and $32 Price Target. We are maintaining our Outperform rating and our $32.00 12-month price target. At our $32 price target, the shares would trade at 15.1x our fiscal 2021 EPS estimate, 0.5x sales on an EV/estimated 2021 revenues basis, and 5.7x on an EV/estimated 2021 EBITDA basis. The peer group currently trades at an average 18.8x consensus 2021 EPS, 1.7x on a EV/consensus 2021 revenue, and 11.5x on a EV/consensus 2021 EBITDA. Read More >>