Oct 29, 2014 4:47 PM
Atlanta, Georgia ,October 29, 2014 - HAVERTYS (NYSE: HVT and HVT.A) reports earnings per share for the third quarter endedSeptember 30, 2014 of$0.34 compared to$0.42 for the same period of 2013. The earnings per share for the nine months endedSeptember 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 inAtlanta, 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 Third Quarter 2014 Compared to Third Quarter 2013 * 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. * 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 endedSeptember 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 atSeptember 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 inAtlanta, Georgia . We also closed ourFlorence, 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.HAVERTY FURNITURE COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data - Unaudited) Three Months Ended Nine Months Ended September 30, 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 $ 0.15HAVERTY FURNITURE COMPANIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands - Unaudited) September December 30, 31, September 30, 2014 2013 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 ------------- ------------ ----------------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 --------- --------- 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 theSEC . Conference Call Information The company invites interested parties to listen to the live audiocast of the conference call onThursday, 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 approximately1:00 p.m. EDT throughThursday, November 6, 2014 . The number to access the telephone playback is 1-888-203-1112 (access code: 6172199). Contact:Haverty Furniture Companies, Inc. 404-443-2900Dennis L. Fink EVP & CFOJenny Hill Parker SVP, Finance, Secretary and Treasurer SOURCE: Havertys This announcement is distributed by GlobeNewswire on behalf of GlobeNewswire clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source:Haverty Furniture Company via GlobeNewswire [HUG#1866967]