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Havertys Reports Earnings for First Quarter 2016

/EIN News/ -- ATLANTA, May 02, 2016 (GLOBE NEWSWIRE) -- HAVERTYS (NYSE:HVT) (HVT.A) reports earnings per share for the first quarter ended March 31, 2016 was $0.21 compared to $0.27 for the same period of 2015.

Clarence H. Smith, chairman, president and CEO, said, “Our earnings results reflect the previously announced modest sales increase. Our expansion and remodeling strategy has yielded nine new locations and two significantly remodeled and expanded stores over the past 21 months. The sales results for these locations, including those in new markets, combined with the overall slower growth in some of our existing markets has not yet allowed us to outpace the additional fixed costs. We are pleased that our mobile friendly website has seen strong increases in traffic and sales. We will continue to use our website to stimulate interest in Havertys via email marketing, search engine campaigns, display ads, and social media. Operationally, we are nearing the completion of the migration to a new supply chain import network system, expansion of our Florida distribution infrastructure, and conversion to more collaborative cloud based systems for our management teams. 

With the continued uncertain economic and political climate, we are pleased that our top line growth has improved thus far in the seasonally weaker second quarter. We are in a strong financial position and remain committed to increasing shareholder value.”

Financial Highlights

First Quarter 2016 Compared to First Quarter 2015

  • As previously reported, total net sales increased 1.7% to $194.5 million. Comparable store sales increased 0.9% over the same period last year.
  • Total written sales were down 1.3% and written comparable store sales decreased 2.2%. Havertys’ stores are closed for Easter and the negative impact from the holiday occurring in March this year versus April last year is estimated at 1.4%.
  • Average written ticket was up 1.1% and sales of custom order upholstery grew 4.0%.
  • Gross profit margins of 53.7% were flat and slightly better than our estimates.
  • SG&A costs as a percent of sales were 49.5% in 2016 and 48.2% in 2015. Total SG&A dollars increased $4.1 million due to increases in advertising of $1.2 million, selling costs of $0.8 million, occupancy expense of $0.8 million, and administrative costs of $0.6 million.
  • Investments of $3.1 million were made in new computer equipment and the related multi-year maintenance agreements increased prepaid expenses $3.0 million.
  • In March we amended our credit facility to increase commitments from $50.0 million to $60.0 million, lower the unused fees, reduce the rate on borrowings, and extend the maturity date to March 2021 from September 2016. We have not borrowed under our revolving credit facility since its origination in 2008. 
  • We purchased 11,497 shares of our common stock during the quarter at an average price of $20.49.

Expectations and Other

  • Total delivered sales for the second quarter to date of 2016 are up approximately 4.7% over the same period last year and comparable store sales are up 4.5%.
  • Total written sales for the second quarter to date of 2016 are up approximately 8.8% and written comparable store sales are up 8.9%. Havertys’ stores are closed for Easter and the positive impact from the holiday occurring in March this year versus April last year is estimated at 4.8%.
  • Our previous guidance on gross profit margins for the full year 2016 remains unchanged at 53.5% as we expect a negative impact from closeout inventory.
  • Our estimate for fixed and discretionary type expenses for 2016 remains $251 million versus the $240.9 million for these same costs in 2015. The variable type costs within SG&A for the full year of 2016 are anticipated to be approximately 17.9% percent of sales.
  • In April we opened a temporary location in Lubbock, Texas to serve that market while we rebuild our store that was destroyed at the end of December. 
  • We expect to increase selling square footage approximately 1.4% in 2016. Total capital expenditures are estimated to be in the $33 million range in 2016 depending on the timing of spending for new projects.

HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, except per share data – Unaudited)


  Three Months Ended
March 31,
    2016     2015  
             
Net sales  $ 194,511    $ 191,331  
Cost of goods sold   90,092     88,684  
Gross profit   104,419     102,647  
Credit service charges   65     72  
 Gross profit and other revenue   104,484     102,719  
             
Expenses:            
Selling, general and administrative   96,353     92,303  
Provision for doubtful accounts   104     23  
Other income, net   (182 )   (27 )
Total expenses   96,275     92,299  
             
Income before interest and income taxes   8,209     10,420  
Interest expense, net   622     492  
             
Income before income taxes   7,587     9,928  
Income tax expense   2,918     3,809  
Net income  $ 4,669    $ 6,119  
             
Other comprehensive income            
Adjustments related to retirement plans; net of tax expense of $11 and $31  $ 19    $ 50  
             
Comprehensive income  $ 4,688    $ 6,169  
             
Basic earnings per share:            
Common Stock  $ 0.21    $ 0.27  
Class A Common Stock  $ 0.20    $ 0.26  
             
Diluted earnings per share:            
Common Stock  $ 0.21    $ 0.27  
Class A Common Stock  $ 0.20    $ 0.25  
             
Basic weighted average shares outstanding:            
Common Stock   20,021     20,569  
Class A Common Stock   2,031     2,081  
             
Diluted weighted average shares outstanding:            
Common Stock   22,496     22,977  
Class A Common Stock   2,031     2,081  
             
Cash Dividends per share:            
Common Stock  $ 0.100    $ 0.080  
Class A Common Stock  $ 0.095    $ 0.075  
               


HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands – Unaudited)


    March 31,
2016
  December 31,
2015
  March 31,
2015
 
    (Unaudited)         (Unaudited)  
ASSETS                
Current assets                    
Cash and cash equivalents    $ 53,733    $ 70,659    $ 74,146  
Investments     12,740     12,725     6,250  
Restricted cash and cash equivalents     8,010     8,005     8,000  
Accounts receivable     4,857     5,948     6,393  
Inventories     110,200     108,896     107,348  
Prepaid expenses     10,411     6,137     7,271  
Other current assets     5,317     6,341     4,073  
Total current assets     205,268     218,711     213,481  
                     
Accounts receivable, long-term     546     655     695  
Property and equipment     236,587     229,283     228,952  
Deferred income taxes     17,234     17,245     17,939  
Other assets     6,038     5,357     8,559  
Total assets    $ 465,673    $ 471,251    $ 469,626  
                     
LIABILITIES AND STOCKHOLDERS’ EQUITY                    
Current liabilities                    
Accounts payable    $ 24,172    $ 27,815    $ 23,055  
Customer deposits     23,782     21,036     29,583  
Accrued liabilities     30,541     42,060     35,632  
Deferred income taxes     -     -     5,689  
Current portion of lease obligations     3,239     3,051     2,788  
Total current liabilities     81,734     93,962     96,747  
                     
Lease obligations, less current portion     53,038     50,074     48,861  
Other liabilities     25,864     25,476     26,557  
Total liabilities     160,636     169,512     172,165  
                     
Stockholders’ equity     305,037     301,739     297,461  
Total liabilities and stockholders’ equity    $ 465,673    $ 471,251    $ 469,626  
                         


HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands – Unaudited)


  Three Months Ended
March 31,
 
  2016   2015  
             
CASH FLOW FROM OPERATING ACTIVITIES            
Net income  $ 4,669    $ 6,119  
Adjustments to reconcile net income to net cash (used in) provided by operating activities:            
Depreciation and amortization   6,792     6,098  
Share-based compensation expense   1,050     1,113  
Provision for doubtful accounts   104     23  
Other   (24 )   (6 )
Changes in operating assets and liabilities:            
Accounts receivable   1,096     766  
Inventories   (1,304 )   (209 )
Customer deposits   2,746     5,896  
Other assets and liabilities   (3,512 )   (451 )
Accounts payable and accrued liabilities   (16,380 )   (5,785 )
Net cash (used in) provided by operating activities   (4,763 )   13,564  
             
CASH FLOWS FROM INVESTING ACTIVITIES            
Capital expenditures   (8,979 )   (6,711 )
Maturities of certificates of deposit   -     1,000  
Other   4     23  
Net cash used in investing activities   (8,975 )   (5,688 )
             
CASH FLOWS FROM FINANCING ACTIVITIES            
Payments on lease obligations   (748 )   (593 )
Dividends paid   (2,205 )   (1,802 )
Common stock purchased   (235 )   -  
Construction allowance receipts   -     3,286  
Other   -     (102 )
Net cash (used in) provided by financing activities   (3,188 )   789  
             
(Decrease) increase in cash and cash equivalents during the period   (16,926 )   8,665  
Cash and cash equivalents at beginning of period   70,659     65,481  
             
Cash and cash equivalents at end of period  $ 53,733    $ 74,146  
             

About Havertys

Havertys (NYSE:HVT) (NYSE:HVT.A), established in 1885, is a full-service home furnishings 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 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 Tuesday, May 3, 2016 at 10:00 a.m. ET at its website, havertys.com under the investor relations section. If you cannot 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 Tuesday, May 10, 2016. The number to access the telephone playback is 1-888-203-1112 (access code:  2990845).

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

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