Despite facing a second-quarter net loss of $12.1 million, Quaker Fabric President and CEO Larry Liebenow told shareholders on a recent conference call, “we’re determined to restore the company to profitability.”
Liebenow said the Fall River-based upholstery manufacturer’s results included $9.1 million in after-tax restructuring and asset impairment charges, $8.3 million of which were non-cash, leaving the company with a $3 million net loss without extraordinary items.
Those numbers compare with a $10.3 million loss a year earlier that included asset impairment and restructuring charges of $9.4 million and a tax credit of $1.2 million, and left the company with a $2.1 million loss without extraordinary items.
The company has now reported losses for nine consecutive quarters.
Sales were down 37.7 percent from the second quarter of 2005, to $42.9 million. Shares in Quaker Fabric (Nasdaq: QFAB) were trading at about $1.50 last week. They have dropped as low as $1.30 in the last year; in June 2002, they’d reached a five-year high of $15.49.
Asked whether it would be better to liquidate the company and disperse it to shareholders, Liebenow said “No, we are well along in the restructuring of the company.”
“We absolutely believe in our ability to move this company forward and make it profitable,” he said during the conference call, but he could not offer a time frame.
He said the company’s 1,300 employees, down from 1,600 in December, are “working hard every day” to make that happen. The company has been selling equipment and in the past two months, has sold two of its six manufacturing facilities – in Fall River and Somerset, Mass. – in order to cut costs.
Whether Quaker will lay off more workers “depends on demand of our product in the U.S.,” said Paul Kelly, vice president of finance and chief financial officer. “We are rolling out a lot of new products in markets where there is little competition from Asia. … It depends on how those play out.”
Liebenow said the company has experienced a 66-percent increase in its contract upholstery fabric market over the same quarter last year, and in May, it imported its first upholstery products from an offshore manufacturing facility in China.
Sales continue to be the biggest challenge, he said, and competition from imported fabric rolls remains intense.
Even so, Kelly said, “we do believe that we are getting close to a more stable situation.”
