BSET - Bassett Furniture (BSET) - What Does the Sale of Zenith Portend? Reports 4Q21 Results

4Q21 Results. Revenue was $129.9 million, up 9.7% y-o-y and up 14.3% compared to the non-COVID impacted 4Q19. Backlog fell modestly sequentially to $90.1 million. Bassett reported net income of $5.0 million, or $0.52 per share, compared to net income of $6.5 million, or $0.65 per share, in the prior year. We had forecast revenue of $122 million and EPS of $0.54.Zenith Sale. Bassett announced a proposed sale of its logistics arm, Zenith Freight Lines to J.B. Hunt for $87 million, or an estimated $65 million after taxes. Bassett will work closely with J.B. Hunt to build out a nationwide network of regional fulfillment centers with a goal of delivering goods faster and at reduced cost.Uses. In addition to the normal potential capital allocation strategies, we believe the net capital received from Zenith will enable Bassett to pursue a number of business development ideas to help drive top line growth. Such ideas could include an expansion of its "Make, then sell" business to tap into the largest segment of the furniture market, updated and strategic expansion of the store network, further expansion of the Outdoor furniture line, and further adoption of e-commerce.Updated Projections. Challenging conditions remain which will impact margins in the near term. But overall industry conditions remain favorable. For the fiscal first quarter, we are projecting revenue of $110 million and EPS of $0.36. For the full year, we are estimating revenue of $450.5 million and EPS of $1.93. We have not included any Zenith contribution in our forecasts.Maintaining Outperform and $32 Price Target. In spite of the current challenges, we are maintaining our Outperform rating and our $32.00 12-month price target. The current constraints will be worked through and we believe BSET shares represent a favorable risk/reward proposition at the current price. Read More >>