Havertys Reports Earnings for Third Quarter 2015

ATLANTA, Oct. 28, 2015 (GLOBE NEWSWIRE) — HAVERTY (NYSE:HVT) (NYSE:HVT.A) reports earnings per share of $0.34 for the third quarter of 2015 which are the same earnings per share results as the comparable period in 2014.  The earnings per share for the nine months ended September 30, 2015 is $0.81 compared to $0.82 for the same period of 2014. 

Clarence H. Smith, chairman, president and chief executive officer, said, “We are looking forward to a strong finish to 2015 with the seasonally strongest sales events of the year about to begin.  Our efforts in building the average sales ticket are resulting in solid increases and we see potential for continued growth.  The revival of dining room and bedroom furniture sales and the  increasing popularity of custom upholstery signals a consumer expressing their personal style with more economic confidence.  Havertys is well positioned to serve today’s on trend customer beginning with upgraded stores, an improved website, knowledgeable sales associates, free in-home design consultations and excellent customer service.  We remain committed to improving our business, maintaining strong cash flow, and returning profits to our shareholders.”

Financial Highlights

Third Quarter 2015 Compared to Third Quarter 2014

  • As previously announced, net sales increased 5.7% to $209.9 million.  Comparable store sales were up 3.0%.
  • Total written sales increased 5.2% and written comparable store sales rose 2.3%.
  • Average written ticket was up 6.9% and sales of custom upholstery increased 10.4%.
  • Gross profit margins were 53.2% versus 53.5%  as a percent of sales as efforts continued to reduce closeout inventory items.
  • SG&A costs as a percent of sales was down slightly to 47.0%  compared to 47.1%. We have the overhead in place for four additional stores versus last year and have increased our in-home design staff. Total SG&A dollars increased $5.1 million largely due to increases in selling costs of $2.0 million, occupancy expense of $1.4 million, and administrative costs of $1.4 million.
  • Interest expense increased $0.4 million in 2015 as we had additional financing lease obligations for new stores recorded on our balance sheet.
  •  We purchased 524,464 shares of our common stock during the quarter at an average price of $23.00.

Nine Months ended September 30, 2015 Compared to Same Period of 2014

  • Net sales increased 6.0% to $589.0 million.  Comparable store sales were up 3.8%.
  • Average written ticket was up 5.0% and sales of custom upholstery increased 11.0%.
  • Gross profit margins were 53.4% versus 53.7% as a percent of sales due to higher inventory closeouts.
  • SG&A costs as a percent of sales was unchanged at 48.2%.  We have the overhead in place for four additional stores versus last year and have increased our in-home design staff. Total SG&A dollars increased $16.3 million largely due to increases in selling costs of $7.4 million, occupancy expense of $3.6 million, and administrative costs of $3.6 million.
  • Interest expense rose $0.9 million as we had additional financing lease obligations for new stores recorded on our balance sheet.
  • Other income includes $0.8 million from the settlement of credit card antitrust litigation.
  • We purchased 617,021 shares of our common stock at an average price of $22.69.
  • We opened two stores in the new markets of Rogers, Arkansas and Waco, Texas and strengthened our position in Southeast Florida with new stores in Coconut Creek and Ft. Lauderdale during the first nine months of 2015. Our store count was 123 at September 30, 2015 versus 119 at September 30, 2014.

Expectations and Other

  • Total delivered sales for the fourth quarter to date of 2015 are up approximately 4.2% over the same period last year and comparable store sales are up 1.9%. Total written sales for the fourth quarter to date of 2015 are up approximately 3.7% over the same period last year and written comparable store sales are up approximately 0.6%.
  • We had very good sales growth last year with delivered comparable store sales for the full fourth quarter of 2014 up 8.3% and written comparable store sales up 5.9%.
  • We expect that gross profit margins for the full year 2015 will be approximately 53.4%, a change from our previous expectation of 53.3%.
  • Our estimate for fixed and discretionary type SG&A expenses for 2015 remains $240 to $241 million versus the $233 million for these same costs in 2014. The variable type costs within SG&A for the full year of 2015 are now expected to be 17.8% percent of sales, a change from our previous estimate of 17.7%.
  • We closed a store in Memphis, Tennessee in October that had reached the end of its lease term.
  • We expect to increase selling square footage approximately 3.0% in 2015 based on increasing our store count by a net three locations. Total capital expenditures are estimated to be in the $32 to $33 million range in 2015 depending on the timing of spending for new projects.
 
HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(In thousands, except per share data – Unaudited)
 
    Three Months Ended September 30,   Nine Months Ended September 30,  
    2015   2014   2015   2014  
                           
Net Sales    $ 209,921    $ 198,541    $ 588,984    $ 555,411  
Cost of goods sold     98,179     92,338     274,413     257,201  
Gross Profit     111,742     106,203     314,571     298,210  
Credit service charges     71     72     213     223  
Gross profit and other revenue     111,813     106,275     314,784     298,433  
                           
Expenses:                          
Selling, general and administrative     98,720     93,575     283,767     267,515  
Provision for doubtful accounts     83     69     167     203  
Other income, net     2     (12 )   (945 )   (186 )
Total expenses      98,805     93,632     282,989     267,532  
                           
Income before income and income taxes     13,008     12,643     31,795     30,901  
Interest expense, net     594     175     1,614     666  
                           
Income before income taxes     12,414     12,468     30,181     30,235  
Income tax expense     4,759     4,644     11,574     11,454  
Net income    $ 7,655    $ 7,824    $ 18,607    $ 18,781  
                           
Other comprehensive income                          
Adjustments related to retirement                          
plans; net of tax expense of $36                          
and $109 in 2015 and $50 and                           
$150 in 2014    $ 59    $ 82    $ 175    $ 244  
                           
Comprehensive income    $ 7,714    $ 7,906    $ 18,782    $ 19,025  
                           
Basic earnings per share:                          
Common Stock    $ 0.34    $ 0.35    $ 0.83     0.84  
Class A Common Stock    $ 0.32    $ 0.33    $ 0.78     0.75  
                           
Diluted earnings per share:                          
Common Stock    $ 0.34    $ 0.34    $ 0.81     0.82  
Class A Common Stock    $ 0.32    $ 0.33    $ 0.78     0.76  
                           
Basic weighted average shares outstanding:                          
Common Stock     20,448     20,535     20,538     20,383  
Class A Common Stock     2,061     2,151     2,074     2,223  
                           
Diluted weighted average shares outstanding:                          
Common Stock     22,791     22,939     22,907     22,936  
Class A Common Stock     2,061     2,151     2,074     2,223  
                           
Cash dividends per share:                          
Common Stock    $ 0.100    $ 1.080    $ 0.260     1.240  
Class A Common Stock    $ 0.095    $ 1.025    $ 0.245     1.175  
                           

 
HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands – Unaudited)
 
    September 30,
 2015
  December 31,
2014
  September 30,
 2014
 
    (Unaudited)       (Unaudited)  
                     
ASSETS                    
Current assets                    
Cash and cash equivalents    $ 73,287   $ 65,481    $ 78,659  
Investments     6,750     7,250      
Restricted cash and cash equivalents     8,003     8,017     8,017  
Accounts receivable     6,113     7,146     6,647  
Inventories     105,165     107,139     94,822  
Prepaid expenses     6,991     6,418     7,265  
Other current assets     7,459     8,010     4,292  
Total current assets     213,768     209,461     199,702  
                     
Accounts receivable, long-term     714     731     692  
Property and equipment     231,699     225,162     213,254  
Deferred income taxes     19,964     17,610     13,197  
Other assets     6,336     8,023     15,623  
Total assets    $ 472,481   $ 460,987    $ 442,468  
                     
LIABILITIES AND STOCKHOLDERS’ EQUITY                    
Current liabilities                    
Accounts payable    $ 25,486   $ 24,152    $ 23,984  
Customer deposits     30,265     23,687     28,821  
Accrued liabilities     37,759     39,960     36,964  
Deferred income taxes     5,701     5,689      
Current portion of lease obligations     3,007     2,387     1,820  
Total current liabilities     102,218     95,875     91,589  
                     
Lease obligations, less current portion     50,909     46,678     34,792  
Other liabilities     25,741     26,351     26,059  
Total liabilities     178,868     168,904     152,440  
                     
Stockholders’ equity     293,613     292,083     290,028  
Total liabilities and stockholders’ equity    $ 472,481   $ 460,987    $ 442,468  

               
HAVERTY FURNITURE COMPANIES, INC.              
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS              
(In thousands – Unaudited)              
               
  Nine Months Ended
September 30,
      2015     2014  
               
CASH FLOWS FROM OPERATING ACTIVITIES:              
Net income   $ 18,607   $ 18,781  
Adjustments to reconcile net income to net              
cash provided by operating activities:              
Depreciation and amortization     18,967     16,632  
Share-based compensation expense     3,142     2,530  
Provision for doubtful accounts     167     203  
Other     618     549  
Changes in operating assets and liabilities:              
Accounts receivable     883     1,462  
Inventories     1,974     (3,339 )
Customer deposits     6,578     9,813  
Other assets and liabilities     (1,078 )   (379 )
Accounts payable and accrued liabilities     (4,027 )   2,800  
Net cash provided by operating activities     45,831     49,052  
               
CASH FLOWS FROM INVESTING ACTIVITIES:              
Capital expenditures     (22,523 )   (22,049 )
Maturities of certificates of deposit     2,500      
Restricted cash and cash equivalents     14     (1,001 )
Other     21     407  
Net cash used in investing activities     (19,988 )   (22,643 )
               
CASH FLOWS FROM FINANCING ACTIVITIES:              
Construction allowance receipts     4,773      
Payments on lease obligations     (1,801 )   (729 )
Taxes on vested restricted shares     (1,152 )   (2,060 )
Dividends paid     (5,855 )   (27,976 )
Common stock purchased     (14,002 )    
Other         (170 )
Net cash used in financing activities     (18,037 )   (30,935 )
               
Increase (decrease)  in cash and cash equivalents during the period     7,806     (4,526 )
               
Cash and cash equivalents at beginning of period     65,481     83,185  
               
Cash and cash equivalent at end of period   $ 73,287   $ 78,659  

About Havertys

Havertys (NYSE:HVT) (NYSE:HVT.A), established in 1885, is a full-service home furnishing retailer with 122 showrooms in 16 states in the Southern and Midwestern regions providing its customers with a wide selection of quality merchandise in middle to upper middle price ranges.  Additional information is available on the company’s website, havertys.com.

News releases include forward-looking statements, which are subject to risks and uncertainties.  Factors that might cause actual results to differ materially from future results expressed or implied by such forward-looking statements include, but are not limited to, general economic conditions, the consumer spending environment for large ticket items, competition in the retail furniture industry and other uncertainties detail from time to time in the company’s reports filed with the SEC.

Conference Call Information

The company invites interested parties to listen to the live audiocast of the conference call on Thursday, October 29, 2015 at its website, havertys.com under the investor relations section.  If you can not listen live, a replay will be available on the day of the conference call at the website or via telephone at approximately 1:00 p.m. ET through Thursday, November 5, 2015.  The number to access the telephone playback is 1-888-203-1112 (access code:  5872514).

 

CONTACT: Contact:
Haverty Furniture Companies, Inc. (404) 443-2900
Dennis L. Fink
EVP & CFO
Jenny Hill Parker
SVP, Finance, Secretary and Treasurer