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Havertys Reports Earnings for Third Quarter 2015

Oct 28, 2015 6:02 PM

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

Source: Haverty Furniture Companies, Inc.