Feb 20, 2018 4:56 PM
We believe the beneficial effects of the Tax Act will begin to be realized by individuals and companies during the next few months. The reduction in corporate tax rates will mean our estimated effective tax rate for 2018 will be 25% compared to 38%. We will be using some of these tax savings to increase Havertys’ match of employee contributions to our 401(k) Plan, enhance employees’ medical flexible reimbursement accounts, and increase starting hourly wages.
We ended the year with a strong cash position which allows us flexibility in our capital deployment. The data from recently completed research on our customer is being reviewed and guiding marketing and merchandising plans in key markets. Our teams feel a renewed sense of accountability and energy as we work to drive sales, increase margins, improve execution, and satisfy our customers.”
Financial Highlights
Fourth Quarter 2017 Compared to Fourth Quarter 2016
Twelve Months ended
Expectations and Other
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
(In thousands, except per share data – Unaudited) | ||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Net sales | $ | 214,962 | $ | 220,595 | $ | 819,866 | $ | 821,571 | ||||||||||
Cost of goods sold | 98,769 | 99,575 | 374,943 | 378,234 | ||||||||||||||
Gross profit | 116,193 | 121,020 | 444,923 | 443,337 | ||||||||||||||
Credit service charges | 35 | 56 | 161 | 229 | ||||||||||||||
Gross profit and other revenue | 116,228 | 121,076 | 445,084 | 443.566 | ||||||||||||||
Expenses: | ||||||||||||||||||
Selling, general and administrative | 103,573 | 104,427 | 402,884 | 399,236 | ||||||||||||||
Provision for doubtful accounts | 43 | 97 | 224 | 383 | ||||||||||||||
Other income, net | (1,927 | ) | (1,308 | ) | (3,358 | ) | (4,107 | ) | ||||||||||
Total expenses | 101,689 | 103,216 | 399,750 | 395,512 | ||||||||||||||
Income before interest and income taxes | 14,539 | 17,860 | 45,334 | 48,054 | ||||||||||||||
Interest expense, net | 469 | 513 | 2,111 | 2,233 | ||||||||||||||
Income before income taxes | 14,070 | 17,347 | 43,223 | 45,821 | ||||||||||||||
Income tax expense (1) | 11,149 | 6,400 | 22,148 | 17,465 | ||||||||||||||
Net income (1) | $ | 2,921 | $ | 10,947 | $ | 21,075 | $ | 28,356 | ||||||||||
Diluted earnings per share: | ||||||||||||||||||
Common Stock (1) | $ | 0.13 | $ | 0.51 | $ | 0.98 | $ | 1.30 | ||||||||||
Class A Common Stock | $ | 0.13 | $ | 0.51 | $ | 0.94 | $ | 1.27 | ||||||||||
Diluted weighted average shares outstanding: | ||||||||||||||||||
Common Stock | 21,647 | 21,476 | 21,599 | 21,847 | ||||||||||||||
Class A Common Stock | 1,790 | 1,977 | 1,801 | 2,014 | ||||||||||||||
Cash dividends per share: | ||||||||||||||||||
Common Stock | $ | 0.1500 | $ | 1.1200 | $ | 0.5400 | $ | 1.4400 | ||||||||||
Class A Common Stock | $ | 0.1425 | $ | 1.0625 | $ | 0.5100 | $ | 1.3650 | ||||||||||
(1) In
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In thousands - Unaudited) | |||||||||
2017 | 2016 | ||||||||
ASSETS | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 79,491 | $ | 63,481 | |||||
Restricted cash and cash equivalents | 8,115 | 8,034 | |||||||
Accounts receivable | 2,408 | 4,244 | |||||||
Inventories | 103,437 | 102,020 | |||||||
Prepaid expenses | 11,314 | 8,836 | |||||||
Other current assets | 5,922 | 7,500 | |||||||
Total current assets | 210,687 | 194,115 | |||||||
Accounts receivable, long-term | 254 | 462 | |||||||
Property and equipment | 229,215 | 233,667 | |||||||
Deferred income tax | 12,375 | 18,376 | |||||||
Other assets | 8,798 | 7,885 | |||||||
Total assets | $ | 461,329 | $ | 454,505 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Current liabilities | |||||||||
Accounts payable | $ | 20,501 | $ | 25,662 | |||||
Customer deposits | 27,813 | 24,923 | |||||||
Accrued liabilities | 37,582 | 41,904 | |||||||
Current portion of lease obligations | 3,788 | 3,461 | |||||||
Total current liabilities | 89,684 | 95,950 | |||||||
Lease obligations, less current portion | 50,803 | 52,013 | |||||||
Other liabilities | 26,700 | 24,671 | |||||||
Total liabilities | 167,187 | 172,634 | |||||||
Stockholders’ equity | 294,142 | 281,871 | |||||||
Total liabilities and stockholders’ equity | $ | 461,329 | $ | 454,505 | |||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
(In thousands – Unaudited) | ||||||||||
Year Ended | ||||||||||
2017 | 2016 | |||||||||
Cash Flows from Operating Activities: | ||||||||||
Net income | $ | 21,075 | $ | 28,356 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 30,516 | 29,045 | ||||||||
Gain on insurance recovery | (2,848 | ) | (3,338 | ) | ||||||
Proceeds from insurance recovery received for business interruption and destroyed inventory | 2,867 | 2,599 | ||||||||
Stock-based compensation expense | 3,818 | 3,872 | ||||||||
Excess tax benefit from stock-based plans | - | (80 | ) | |||||||
Deferred income taxes | 5,559 | (1,120 | ) | |||||||
Provision for doubtful accounts | 224 | 383 | ||||||||
Other | 82 | (400 | ) | |||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | 1,818 | 1,514 | ||||||||
Inventories | (2,112 | ) | 6,876 | |||||||
Customer deposits | 2,890 | 3,887 | ||||||||
Other assets and liabilities | (930 | ) | (9,508 | ) | ||||||
Accounts payable and accrued liabilities | (10,502 | ) | (2,032 | ) | ||||||
Net cash provided by operating activities | 52,457 | 60,054 | ||||||||
Cash Flows from Investing Activities: | ||||||||||
Capital expenditures | (24,465 | ) | (29,838 | ) | ||||||
Maturities of investments | - | 12,725 | ||||||||
Proceeds from insurance for destroyed property and equipment | 1,987 | 3,011 | ||||||||
Other investing activities | 870 | 915 | ||||||||
Net cash used in investing activities | (21,608 | ) | (13,187 | ) | ||||||
Cash Flows from Financing Activities: | ||||||||||
Construction allowance receipts | 1,590 | 1,574 | ||||||||
Payments on lease obligations | (3,482 | ) | (3,125 | ) | ||||||
Excess tax benefit from stock-based plans | - | 80 | ||||||||
Dividend paid | (11,392 | ) | (30,409 | ) | ||||||
Common stock repurchased and retired | - | (21,282 | ) | |||||||
Taxes on vested restricted shares | (1,555 | ) | (883 | ) | ||||||
Net cash used in financing activities | (14,839 | ) | (54,045 | ) | ||||||
Increase (decrease) in cash and cash equivalents | 16,010 | (7,178 | ) | |||||||
Cash and cash equivalents at beginning of year | 63,481 | 70,659 | ||||||||
Cash and cash equivalents at end of year | $ | 79,491 | $ | 63,481 | ||||||
2017 Tax Cuts and Jobs Act
On
In
We re-measured our deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 25%. However, we are still analyzing certain aspects of the Tax Act and refining our calculations, which could potentially affect the measurement of some of these balances or potentially give rise to new deferred tax amounts. At
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, and all advertising and administrative costs.
Conference Call Information
The company invites interested parties to listen to the live audiocast of the conference call on
About Havertys
Havertys (NYSE:HVT) (NYSE:HVT.A), established in 1885, is a full-service home furnishings retailer with 124 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.
Safe Harbor
This press release includes statements that constitute forward-looking statement within the meaning of the federal securities laws. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which are not historical in nature. We intend for all forward-looking statements contained herein or on our website, and all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, to be covered by the safe harbor provisions for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Forward-looking statements may relate to, for example, future operations, financial condition, economic performance (including gross profit margins and expenses), capital expenditures, and demand for our products. The Company cautions that its forward-looking statements involve risks and uncertainties, and while we believe that our expectations for the future are reasonable in view of currently available information, you are cautioned not to place undue reliance on our forward-looking statements. Actual results or events may differ materially from those indicated as a result of various important factors. Such factors may include, among other things, the state of the economy; state of the residential construction and housing markets; the consumer spending environment for big ticket items; effects of competition; management of relationships with our suppliers and vendors and disruptions in their operations; new regulations or taxation plans, as well as other risks and uncertainties discussed in the Company's Annual Report on Form 10-K and from time to time in the Company's filings with the
Contact:
Havertys 404-443-2900
EVP & CFO
SVP, Finance, Secretary and Treasurer
SOURCE: Havertys
Source: