Attached files
| file | filename |
|---|---|
| 8-K - HAVERTY FURNITURE COMPANIES INC | hvt8k10302014.htm |
EXHIBIT 99.1
Havertys Reports Earnings for Third Quarter 2014
Atlanta, Georgia, October 29, 2014 – HAVERTYS (NYSE: HVT and HVT.A) reports earnings per share for the third quarter ended September 30, 2014 of $0.34 compared to $0.42 for the same period of 2013. The earnings per share for the nine months ended September 30, 2014 is $0.82 compared to $0.99 for the same period of 2013. The year to date earnings for 2013 included an out-of-period adjustment recorded in the first quarter which favorably impacted gross profit by $0.8 million or $0.02 per share after tax.
Clarence Smith, chairman, president and CEO, said "Our execution of store repositioning and expansion began to accelerate in the second half of this year. Three store relocations and three new stores have opened or are slated to open by the end of 2014. This includes the new urban scaled store, Havertys Style Studio, which opened this past week in Atlanta, Georgia. As previously announced, we are also working on opening four new stores in the first half of 2015, three in new markets. Our store portfolio does an excellent job of conveying our brand, and by the end of next year over 95% of our locations will either have been opened since 2010 or undergone our "Bright Inspirations" refresh program.
We are placing great new Havertys branded merchandise in our stores. These latest collections are varied in styles including classic looks, transitional and contemporary designs, and industrial chic. Our custom upholstery program continues to be a favorite with our customers growing 14% in written business over the past nine months against last year's 16% increase. Our point-of-sale custom order upholstery configurator has aided in driving this business and in the fourth quarter this important tool will be on our website for our customers' use.
We are pleased to see an increased pace in the shipments from our vendors of both new products and current best sellers. The fresh merchandise and better flow of inventory should normalize our case good sales and is enabling us to more timely complete deliveries. The fourth quarter has historically been our strongest sales period and we believe that this year's quarter should be no different."
Financial Highlights
|
·
|
As previously announced, net sales increased 3.0% to $198.5 million. Comparable store sales were up 3.5%.
|
|
·
|
Total written sales were up 4.4% and written comparable store sales were up 4.6%.
|
|
·
|
Case goods sales were off approximately 2% and the custom order portion of upholstery written sales increased 19.4%.
|
|
·
|
Gross profit margins decreased 40 basis points to 53.5% from 53.9% as a percent of sales primarily because the LIFO reserve increased $0.2 million in 2014 versus a $0.4 million decrease in 2013. Also impacting gross profit margins was clearance sales in preparation to close four stores and three local warehouses in the second half of 2014.
|
NEWS RELEASE – OCTOBER 29, 2014 Page 2
|
·
|
Selling, general and administrative costs as a percent of sales increased 130 basis points to 47.1% from 45.8%. The variable type costs were approximately 17.5% of sales, or 40 basis points higher than our previous estimates, due to increased delivery expenses and sales commissions. The fixed and discretionary expenses of $58.8 million were $2.1 million above last year and approximately $1.0 million lower than the metric previously provided mostly due to advertising spending and occupancy expense being lower than planned.
|
|
·
|
A special dividend of $1.00 per share was paid to our common stockholders and $0.95 to our Class A common stockholders.
|
Nine Months ended September 30, 2014 Compared to Same Period of 2013
|
·
|
Net sales increased 1.0% to $555.4 million. Comparable store sales were up 1.9%. Average written ticket increased 2.7%.
|
|
·
|
Gross profit margins, excluding the impact of the first quarter adjustment in 2013 noted above, increased 10 basis points to 53.7% from 53.6% as a percent of sales.
|
|
·
|
Selling, general and administrative costs as a percent of sales increased 130 basis points to 48.2% from 46.9%. The variable type costs were approximately 17.5% of sales, 20 basis points higher than planned due to increased delivery expense and sales commissions. The fixed and discretionary expenses were approximately $170.5 million, $4.2 million above last year and $1.0 million less than anticipated as third quarter advertising spending and occupancy expenses were lower than previously planned.
|
|
·
|
We opened one new store, relocated another, closed one location, and expanded one showroom during the first nine months of 2014. Our retail store count was 119 at September 30, 2014 and 2013.
|
Expectations and Other
|
·
|
Total written sales for the fourth quarter to date of 2014 are up approximately 4.0% over the same period last year and written comparable store sales are up approximately 3.5%. Total delivered sales for the fourth quarter to date of 2014 are up approximately 9.5% over the same period last year.
|
|
·
|
We expect that gross profit margins for the last quarter of 2014 will be approximately 53.6%, a change in our previous expectations of 53.8%, due to higher than normal clearance sale activity from store and local warehouse closings and an estimated increase in the LIFO reserve.
|
|
·
|
Fixed and discretionary type expenses within SG&A for the fourth quarter are expected to be approximately $61 to $62 million versus $57.5 million last year. For the year the estimate for these costs remains $232 to $233 million versus the $224 million for the costs in 2013 with the increases due to new stores, and higher advertising and personnel expenses. The variable type costs within SG&A for the full year of 2014 are anticipated to be approximately 17.4% as a percent of sales, with such expenses for the fourth quarter expected to be approximately 17.2%.
|
|
·
|
Our new urban format store, Havertys Style Studio, opened in mid-October in Atlanta, Georgia. We also closed our Florence, Kentucky store in October and plan to open two store relocations and a new store during the fourth quarter. The store count at the end of 2014 is expected to be 120. Weighted average retail square footage is estimated to increase 0.4% during the fourth quarter. Planned capital expenditures are estimated to be $34 million.
|
|
·
|
We expect to increase selling square footage approximately 2.6% in 2015 based on increasing our store count by a net three locations. Total capital expenditures are estimated to be in the $30 to $33 million range in 2015 depending on the timing of spending for new locations.
|
NEWS RELEASE – OCTOBER 29, 2014 Page 3
|
HAVERTY FURNITURE COMPANIES, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
|
(In thousands, except per share data – Unaudited)
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
|||||||||||||
|
Net sales
|
$
|
198,541
|
$
|
192,722
|
$
|
555,411
|
$
|
549,926
|
||||||||
|
Cost of goods sold
|
92,338
|
88,845
|
257,201
|
254,430
|
||||||||||||
|
Gross profit
|
106,203
|
103,877
|
298,210
|
295,496
|
||||||||||||
|
Credit service charges
|
72
|
78
|
223
|
240
|
||||||||||||
|
Gross profit and other revenue
|
106,275
|
103,955
|
298,433
|
295,736
|
||||||||||||
|
|
||||||||||||||||
|
Expenses:
|
||||||||||||||||
|
Selling, general and administrative
|
93,575
|
88,286
|
267,515
|
258,145
|
||||||||||||
|
Interest, net
|
175
|
282
|
666
|
837
|
||||||||||||
|
Provision for doubtful accounts
|
69
|
51
|
203
|
96
|
||||||||||||
|
Other (income) expense, net
|
(12
|
)
|
(52
|
)
|
(186
|
)
|
(46
|
)
|
||||||||
|
|
93,807
|
88,567
|
268,198
|
259,032
|
||||||||||||
|
|
||||||||||||||||
|
Income before income taxes
|
12,468
|
15,388
|
30,235
|
36,704
|
||||||||||||
|
Income tax expense
|
4,644
|
5,894
|
11,454
|
14,120
|
||||||||||||
|
Net income
|
$
|
7,824
|
$
|
9,494
|
$
|
18,781
|
$
|
22,584
|
||||||||
|
|
||||||||||||||||
|
Basic earnings per share:
|
||||||||||||||||
|
Common Stock
|
$
|
0.35
|
$
|
0.42
|
$
|
0.84
|
$
|
1.01
|
||||||||
|
Class A Common Stock
|
$
|
0.33
|
$
|
0.40
|
$
|
0.75
|
$
|
0.96
|
||||||||
|
|
||||||||||||||||
|
Diluted earnings per share:
|
||||||||||||||||
|
Common Stock
|
$
|
0.34
|
$
|
0.42
|
$
|
0.82
|
$
|
0.99
|
||||||||
|
Class A Common Stock
|
$
|
0.33
|
$
|
0.40
|
$
|
0.76
|
$
|
0.95
|
||||||||
|
|
||||||||||||||||
|
Basic weighted average shares outstanding:
|
||||||||||||||||
|
Common Stock
|
20,535
|
20,047
|
20,383
|
19,786
|
||||||||||||
|
Class A Common Stock
|
2,151
|
2,455
|
2,223
|
2,606
|
||||||||||||
|
|
||||||||||||||||
|
Diluted weighted average shares outstanding:
|
||||||||||||||||
|
Common Stock
|
22,939
|
22,855
|
22,936
|
22,783
|
||||||||||||
|
Class A Common Stock
|
2,151
|
2,455
|
2,223
|
2,606
|
||||||||||||
|
|
||||||||||||||||
|
Cash dividends per share:
|
||||||||||||||||
|
Common Stock
|
$
|
1.080
|
$
|
0.080
|
$
|
1.240
|
$
|
0.16
|
||||||||
|
Class A Common Stock
|
$
|
1.025
|
$
|
0.075
|
$
|
1.175
|
$
|
0.15
|
||||||||
NEWS RELEASE – OCTOBER 29, 2014 Page 4
|
HAVERTY FURNITURE COMPANIES, INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(In thousands - Unaudited)
|
|
|
September 30,
2014
|
December 31,
2013
|
September 30,
2013
|
|||||||||
|
|
(Unaudited)
|
(Unaudited)
|
||||||||||
|
ASSETS
|
||||||||||||
|
Current assets
|
||||||||||||
|
Cash and cash equivalents
|
$
|
78,659
|
$
|
83,185
|
$
|
72,078
|
||||||
|
Restricted cash and cash equivalents
|
8,017
|
7,016
|
7,016
|
|||||||||
|
Accounts receivable
|
6,647
|
8,172
|
8,102
|
|||||||||
|
Inventories
|
94,822
|
91,483
|
91,600
|
|||||||||
|
Prepaid expenses
|
7,265
|
6,494
|
7,298
|
|||||||||
|
Other current assets
|
4,292
|
4,349
|
4,052
|
|||||||||
|
Total current assets
|
199,702
|
200,699
|
190,146
|
|||||||||
|
|
||||||||||||
|
Accounts receivable, long-term
|
692
|
832
|
845
|
|||||||||
|
Property and equipment
|
213,254
|
189,242
|
191,491
|
|||||||||
|
Deferred income taxes
|
13,197
|
13,253
|
23,823
|
|||||||||
|
Other assets
|
15,623
|
13,829
|
4,243
|
|||||||||
|
Total assets
|
$
|
442,468
|
$
|
417,855
|
$
|
410,548
|
||||||
|
|
||||||||||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||||||
|
Current liabilities
|
||||||||||||
|
Accounts payable
|
$
|
23,984
|
$
|
21,810
|
$
|
20,281
|
||||||
|
Customer deposits
|
28,821
|
19,008
|
23,045
|
|||||||||
|
Accrued liabilities
|
36,964
|
36,338
|
35,312
|
|||||||||
|
Deferred income taxes
|
-
|
-
|
6,601
|
|||||||||
|
Current portion of lease obligations
|
1,820
|
959
|
928
|
|||||||||
|
Total current liabilities
|
91,589
|
78,115
|
86,167
|
|||||||||
|
|
||||||||||||
|
Lease obligations, less current portion
|
34,792
|
16,196
|
16,451
|
|||||||||
|
Other liabilities
|
26,059
|
25,280
|
27,006
|
|||||||||
|
Total liabilities
|
152,440
|
119,591
|
129,624
|
|||||||||
|
|
||||||||||||
|
Stockholders' equity
|
290,028
|
298,264
|
280,924
|
|||||||||
|
Total liabilities and stockholders' equity
|
$
|
442,468
|
$
|
417,855
|
$
|
410,548
|
||||||
NEWS RELEASE – OCTOBER 29, 2014 Page 5
|
HAVERTY FURNITURE COMPANIES, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(In thousands – Unaudited)
|
|
Nine Months Ended
September 30,
|
||||||||
|
2014
|
2013
|
|||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net income
|
$
|
18,781
|
$
|
22,584
|
||||
|
Adjustments to reconcile net income to net
cash provided by operating activities:
|
||||||||
|
Depreciation and amortization
|
16,632
|
15,811
|
||||||
|
Share-based compensation expense
|
2,530
|
2,682
|
||||||
|
Provision for doubtful accounts
|
203
|
96
|
||||||
|
Other
|
549
|
394
|
||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Accounts receivable
|
1,462
|
1,481
|
||||||
|
Inventories
|
(3,339
|
)
|
5,302
|
|||||
|
Customer deposits
|
9,813
|
2,082
|
||||||
|
Other assets and liabilities
|
(379
|
)
|
(3,538
|
)
|
||||
|
Accounts payable and accrued liabilities
|
2,800
|
(5,857
|
)
|
|||||
|
Net cash provided by operating activities
|
49,052
|
41,037
|
||||||
|
|
||||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Capital expenditures
|
(22,049
|
)
|
(16,720
|
)
|
||||
|
Restricted cash and cash equivalents
|
(1,001
|
)
|
-
|
|||||
|
Other
|
407
|
7
|
||||||
|
Net cash used in investing activities
|
(22,643
|
)
|
(16,713
|
)
|
||||
|
|
||||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Payments on lease obligations
|
(729
|
)
|
(643
|
)
|
||||
|
Dividends paid
|
(27,976
|
)
|
(3,564
|
)
|
||||
|
Proceeds from exercise of stock options
|
-
|
872
|
||||||
|
Taxes on vested restricted shares
|
(2,060
|
)
|
(2,461
|
)
|
||||
|
Other
|
(170
|
)
|
-
|
|||||
|
Net cash used in financing activities
|
(30,935
|
)
|
(5,796
|
)
|
||||
|
(Decrease) Increase in cash and cash equivalents during the period
|
(4,526
|
)
|
18,528
|
|||||
|
Cash and cash equivalents at beginning of period
|
83,185
|
53,550
|
||||||
|
Cash and cash equivalents at end of period
|
$
|
78,659
|
$
|
72,078
|
||||
NEWS RELEASE – OCTOBER 29, 2014 Page 6
About Havertys
Havertys (NYSE: HVT and HVT.A), established in 1885, is a full-service home furnishings retailer with 119 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 at www.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 detailed 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 30, 2014 at its website, www.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. EDT through Thursday, November 6, 2014. The number to access the telephone playback is 1-888-203-1112 (access code: 6172199).
Contact:
Haverty Furniture Companies, Inc. 404-443-2900
Dennis L. Fink
EVP & CFO
Jenny Hill Parker
SVP, Finance, Secretary and Treasurer
SOURCE: Havertys