Feb 24, 2016 7:31 PM
Three Months Ended | Year Ended | |||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||
Earnings (loss) per diluted share | $ | 0.41 | $ | (0.45 | ) | $ | 1.22 | $ | 0.37 | |||||||||
Non-cash pension settlement expense | — | 0.90 | — | 0.90 | ||||||||||||||
Adjusted earnings per diluted share | $ | 0.41 | $ | 0.46 | $ | 1.22 | $ | 1.28 | ||||||||||
Due to rounding amounts may not add to the totals. |
The Company previously reported that during the fourth quarter of 2014 it completed the termination of its defined benefit pension plan. The details of that event are provided at the end of this release.
We are separating Havertys from the promotional furniture stores and reaching the more discriminating on-trend customer. This has required significant investments to improve our in-store and e-commerce experience. Our store management and sales associates have participated in an extensive revamping of the coaching and skills learning process. We have also increased the number of in-home design staff by 30% in 2015. The investments in stores and people are generating higher average tickets aided by increased custom upholstery sales. In 2015 our average ticket rose 4.7% and custom upholstery sales were up 11.8%. We do need to generate greater sales growth and we are fine-tuning our marketing and promotional strategies. We have recently introduced a new creative television campaign and are evaluating targeted price advertising on select items to increase traffic during traditional sales events.
Our 2016 capital expenditures will improve operating efficiencies through both expansion of our
Financial Highlights
Fourth Quarter 2015 Compared to Fourth Quarter 2014
Twelve Months ended
Expectations and Other
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME |
(In thousands, except per share data – Unaudited) |
Three Months Ended | Year Ended | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net sales | $ | 215,886 | $ | 212,999 | $ | 804,870 | $ | 768,409 | ||||||||
Cost of goods sold | 99,681 | 98,843 | 374,094 | 356,043 | ||||||||||||
Gross profit | 116,205 | 114,156 | 430,776 | 412,366 | ||||||||||||
Credit service charges | 73 | 75 | 286 | 298 | ||||||||||||
Gross profit and other revenue | 116,278 | 114,231 | 431,062 | 412,664 | ||||||||||||
Expenses: | ||||||||||||||||
Selling, general and administrative | 101,034 | 97,139 | 384,801 | 364,654 | ||||||||||||
Pension settlement expense | — | 21,623 | — | 21,623 | ||||||||||||
Provision for doubtful accounts | 147 | 54 | 314 | 257 | ||||||||||||
Other income, net | (671 | ) | 8 | (1,617 | ) | (178 | ) | |||||||||
Total expenses | 100,510 | 118,824 | 383,498 | 386,356 | ||||||||||||
Income (loss) before interest and income taxes | 15,768 | (4,593 | ) | 47,564 | 26,308 | |||||||||||
Interest expense, net | 675 | 385 | 2,289 | 1,051 | ||||||||||||
Income (loss) before income taxes | 15,093 | (4,978 | ) | 45,275 | 25,257 | |||||||||||
Income tax expense | 5,912 | 5,214 | 17,486 | 16,668 | ||||||||||||
Net income | $ | 9,181 | $ | (10,192 | ) | $ | 27,789 | $ | 8,589 | |||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Defined benefit pension plan adjustments: | ||||||||||||||||
Settlement of pension plan | $ | — | $ | 13,641 | $ | — | $ | 13,641 | ||||||||
Other | 55 | (641 | ) | 230 | (397 | ) | ||||||||||
Total comprehensive income | $ | 55 | $ | 13,000 | $ | 230 | $ | 13,244 | ||||||||
Comprehensive income | $ | 9,236 | $ | 2,808 | $ | 28,019 | $ | 21,833 | ||||||||
Basic earnings (loss) per share: | ||||||||||||||||
Common Stock | $ | 0.42 | $ | (0.45 | ) | $ | 1.24 | $ | 0.38 | |||||||
Class A Common Stock | $ | 0.40 | $ | (0.43 | ) | $ | 1.18 | $ | 0.33 | |||||||
Diluted earnings (loss) per share: | ||||||||||||||||
Common Stock | $ | 0.41 | $ | (0.45 | ) | $ | 1.22 | $ | 0.37 | |||||||
Class A Common Stock | $ | 0.39 | $ | (0.43 | ) | $ | 1.17 | $ | 0.33 | |||||||
Basic weighted average shares outstanding: | ||||||||||||||||
Common Stock | 20,109 | 20,551 | 20,430 | 20,426 | ||||||||||||
Class A Common Stock | 2,045 | 2,129 | 2,067 | 2,199 | ||||||||||||
Diluted weighted average shares outstanding: | ||||||||||||||||
Common Stock | 22,473 | 20,551 | 22,798 | 22,940 | ||||||||||||
Class A Common Stock | 2,045 | 2,129 | 2,067 | 2,199 | ||||||||||||
Cash dividends per share: | ||||||||||||||||
Common Stock | $ | 0.100 | $ | 0.080 | $ | 0.36 | $ | 1.32 | ||||||||
Class A Common Stock | $ | 0.095 | $ | 0.075 | $ | 0.34 | $ | 1.25 | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In thousands - Unaudited) |
2015 | 2014 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 70,659 | $ | 65,481 | ||||
Investments | 12,725 | 7,250 | ||||||
Restricted cash and cash equivalents | 8,005 | 8,017 | ||||||
Accounts receivable | 5,948 | 7,146 | ||||||
Inventories | 108,896 | 107,139 | ||||||
Prepaid expenses | 6,137 | 6,418 | ||||||
Other current assets | 6,341 | 8,010 | ||||||
Total current assets | 218,711 | 209,461 | ||||||
Accounts receivable, long-term | 655 | 731 | ||||||
Property and equipment | 229,283 | 225,162 | ||||||
Deferred income tax | 17,245 | 17,610 | ||||||
Other assets | 5,357 | 8,023 | ||||||
Total assets | $ | 471,251 | $ | 460,987 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 27,815 | $ | 24,152 | ||||
Customer deposits | 21,036 | 23,687 | ||||||
Accrued liabilities | 42,060 | 39,960 | ||||||
Deferred income tax | — | 5,689 | ||||||
Current portion of lease obligations | 3,051 | 2,387 | ||||||
Total current liabilities | 93,962 | 95,875 | ||||||
Lease obligations, less current portion | 50,074 | 46,678 | ||||||
Other liabilities | 25,476 | 26,351 | ||||||
Total liabilities | 169,512 | 168,904 | ||||||
Stockholders’ equity | 301,739 | 292,083 | ||||||
Total liabilities and stockholders’ equity | $ | 471,251 | $ | 460,987 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In thousands – Unaudited) |
Year Ended | ||||||||||
2015 | 2014 | |||||||||
Cash Flows from Operating Activities: | ||||||||||
Net income | $ | 27,789 | $ | 8,589 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 25,756 | 22,613 | ||||||||
Stock-based compensation expense | 4,033 | 3,319 | ||||||||
Excess tax benefit from stock-based plans | (397 | ) | (896 | ) | ||||||
Deferred income taxes | (3,019 | ) | 4,800 | |||||||
Provision for doubtful accounts | 314 | 257 | ||||||||
Pension settlement expense | — | 21,623 | ||||||||
Other | (160 | ) | 641 | |||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | 960 | 870 | ||||||||
Inventories | (2,305 | ) | (15,656 | ) | ||||||
Customer deposits | (2,650 | ) | 4,679 | |||||||
Other assets and liabilities | (590 | ) | (2,023 | ) | ||||||
Accounts payable and accrued liabilities | 2,501 | 6,638 | ||||||||
Net cash provided by operating activities | 52,232 | 55,454 | ||||||||
Cash Flows from Investing Activities: | ||||||||||
Capital expenditures | (27,143 | ) | (30,882 | ) | ||||||
Maturities of certificates of deposit | 7,250 | — | ||||||||
Purchase of commercial paper and certificates of deposit | (9,975 | ) | (10,000 | ) | ||||||
Restricted cash and cash equivalents | 12 | (1,001 | ) | |||||||
Other investing activities | 1,501 | 511 | ||||||||
Net cash used in investing activities | (28,355 | ) | (41,372 | ) | ||||||
Cash Flows from Financing Activities: | ||||||||||
Construction allowance receipts | 6,701 | 1,050 | ||||||||
Payments on lease obligations | (2,534 | ) | (1,088 | ) | ||||||
Excess tax benefit from stock-based plans | 397 | 896 | ||||||||
Dividend paid | (8,060 | ) | (29,780 | ) | ||||||
Common stock repurchased and retired | (14,002 | ) | (804 | ) | ||||||
Taxes on vested restricted shares | (1,201 | ) | (2,060 | ) | ||||||
Net cash used in financing activities | (18,699 | ) | (31,786 | ) | ||||||
Increase (decrease) in cash and cash equivalents | 5,178 | (17,704 | ) | |||||||
Cash and cash equivalents at beginning of year | 65,481 | 83,185 | ||||||||
Cash and cash equivalents at end of year | $ | 70,659 | $ | 65,481 | ||||||
Pension Settlement
During the fourth quarter of 2014 as reported on our Form 10-K for the year ended
Non-GAAP Financial Measures and Definitions of Certain Financial Measures:
Reconciliations – EBIT, Adjusted Net Income and Adjusted Earnings per Diluted Share
We have included financial measures that are not prepared in accordance with GAAP. Any analysis of non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP. The non-GAAP measures are not intended to be substitutes for GAAP financial measures and should not be used as such. We use the non-GAAP measures “EBIT,” “adjusted net income” and “adjusted earnings per diluted share.” Management believes these non-GAAP financial measures provide our board of directors, investors, potential investors, securities analysts and others with useful information to evaluate the performance of the Company because it excludes the impact of the pension settlement expense and another specific item that management believes are not indicative of the ongoing operating results of the business. The Company and our board of directors use this information to evaluate the Company's performance relative to other periods. We believe that the most directly comparable GAAP measures to EBIT, adjusted net income and adjusted diluted earnings per share are “Income before interest and income taxes,” “Net income” and “Diluted earnings per share.” Set forth at the beginning of this press release is a reconciliation of adjusted diluted earnings per share to diluted earnings per share. EBIT is equal to Income before interest and income taxes and set forth below is a reconciliation of adjusted net income to Net income:
Three Months Ended | Twelve Months Ended | ||||||||||||
(in thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||
EBIT | $ | 15,768 | $ | (4,593 | ) | $ | 47,564 | $ | 26,308 | ||||
Pension settlement expenses | — | 21,623 | — | 21,623 | |||||||||
Adjusted EBIT | $ | 15,768 | $ | 17,030 | $ | 47,564 | $ | 47,931 | |||||
Adjusted EBIT as a percent of net sales | 7.3 | % | 8.0 | % | 5.9 | % | 6.2 | % | |||||
Adjusted EBIT | $ | 15,768 | $ | 17,030 | $ | 45,564 | $ | 47,931 | |||||
Interest expense, net | 675 | 385 | 2,289 | 1,050 | |||||||||
Adjusted income before income taxes | $ | 15,093 | $ | 16,645 | $ | 45,275 | $ | 46,881 | |||||
Net income (loss) | $ | 9,181 | $ | (10,192 | ) | $ | 27,789 | $ | 8,589 | ||||
Pension settlement expense, net of tax | — | 20,725 | — | 20,725 | |||||||||
Adjusted net income | $ | 9,181 | $ | 10,533 | $ | 27,789 | $ | 29,314 | |||||
SG&A Expense Classification
We classify our SG&A expenses as either variable or fixed and discretionary. Our variable expenses are comprised of selling and delivery costs. Selling expenses are primarily compensation and related benefits for our commission based sales associates, the discount we pay for third party financing of customer sales and transaction fees for credit card usage. We do not outsource delivery so these costs include personnel, fuel, and other expenses related to this function. Fixed and discretionary expenses are comprised of rent, depreciation and amortization and other occupancy costs for stores, warehouses and offices, as well as all advertising and administrative costs.
About Havertys
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
Conference Call Information
The company invites interested parties to listen to the live audiocast of the conference call on
Contact: Havertys 404-443-2900Source:Dennis L. Fink EVP & CFOJenny Hill Parker SVP, finance, secretary and treasurer