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Havertys Reports Earnings for Second Quarter 2016

/EIN News/ -- ATLANTA, Aug. 01, 2016 (GLOBE NEWSWIRE) -- HAVERTYS (NYSE:HVT) (NYSE:HVT.A) reports earnings per share of $0.24 for the second quarter ended June 30, 2016 compared to $0.21 for the same period of 2015.  The earnings per share for the six months ended June 30, 2016 is $0.45 compared to $0.48 for the same period in 2015.

Clarence H. Smith, chairman, president and chief executive officer, said, “We are pleased with our solid sales increases in the second quarter following the soft results in the first quarter and encouraged by third quarter results to date. Our second quarter earnings are up compared to the prior year even with higher fixed costs, primarily from our new locations still in their market share development stage.  We are also experiencing higher personnel investments for health benefits costs and wages.

We are focused on reducing costs and improving operations, measured store growth and returns to shareholders.  We recently completed the expansion of our Florida Distribution Center in Lakeland which will allow us to more efficiently service its markets while reducing handling and inbound freight costs. Our College Station, Texas store will open later this month and a Charlottesville, Virginia location in early October, both new markets for Havertys.  We are also closing an older location in Florida where customers can be served by newer stores.  During the first half of the year, we generated $10.6 million in operating cash flow and returned $25.7 million to shareholders via dividend and share repurchases.

The macro environment for new and existing home sales remains positive but slower economic growth and shocks from political and world events remain a concern.  We believe our position and plans will garner market share gains, improve profitability and returns to shareholders.”

Financial Highlights

Second Quarter 2016 Compared to Second Quarter 2015

  • As previously announced, net sales increased 3.8% to $194.8 million.  Comparable store sales rose 3.8%.
  • Written total and comparable store sales both rose 6.0%.  Havertys’ stores are closed for Easter and the positive impact on the second quarter written sales from the holiday occurring in March this year versus April last year is estimated at 1.5%.
  • Average written ticket was up 2.2% and custom upholstery written business rose 7.1%. 
  • Gross profit margins increased 10 basis points to 53.5%.
  • SG&A costs as a percent of sales were 49.6% in 2016 and 49.4% in 2015. Total SG&A dollars increased $4.0 million due to increases in administrative costs of $2.1 million largely due to health benefits costs, selling expense of $1.2 million, occupancy costs of $0.7 million and a decrease in advertising expense of $0.3 million.
  • Other income includes a $1.9 million gain from the insurance recovery for inventory and the minimum liquidated value of the building destroyed by a storm at our Lubbock, Texas location.  Additional gains for the building’s full replacement cost will be recognized in future quarters.
  • We repurchased 1,149,042 shares of common stock for $21.0 million.

Six Months ended June 30, 2016 Compared to Same Period of 2015

  • Net sales were up 2.7% to $389.3 million. Comparable store sales were up 2.3%.
  • Average ticket rose 1.7% and custom upholstery orders increased 5.5%.
  • Gross profit margins were up 10 basis points to 53.6% compared to 53.5%.
  • SG&A costs as a percent of sales increased to 49.6% compared to 48.8%.  Total SG&A dollars increased $8.0 million as a result of rising administrative expenses of $2.7 million mostly due to health benefits costs, increases in selling expenses of $2.0 million, occupancy costs of $1.5 million, warehouse and delivery expenses of $0.9 million, and $0.9 million for advertising because of higher spending in the first quarter.

Expectations and Other

  • Total delivered sales for the third quarter to date of 2016 are up approximately 3.8% over the same period last year and comparable store sales are up 3.9%. Total written sales for the third quarter to date of 2016 are up approximately 3.8% over the same period last year and written comparable store sales are up 3.6%.
  • Our previous guidance on gross profit margins for the full year 2016 is unchanged at 53.5%.
  • We expect our fixed and discretionary type expenses for the full year of 2016 will be $252 million, the high end of our previous estimated range due to increased group medical costs.  The $252.0 million compares to $240.9 million for the same expenses in 2015.  The estimated variable type costs within SG&A for the full year of 2016 remains at 17.9%, the same as 2015.
  • We expect to increase selling square footage approximately 1.4% in 2016. Total capital expenditures are estimated to be approximately $32.0 million in 2016.
   
HAVERTY FURNITURE COMPANIES, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
(In Thousands, except per share data – Unaudited)  
   
    Three Months Ended
June 30,
  Six Months Ended
June 30,
 
    2016   2015   2016   2015  
                           
Net sales   $ 194,774   $ 187,732   $ 389,285   $ 379,063  
Cost of goods sold     90,614     87,550     180,706     176,234  
Gross profit     104,160     100,182     208,579     202,829  
Credit service charges     54     69     119     142  
Gross profit and other revenue     104,214     100,251     208,698     202,971  
                           
Expenses:                          
Selling, general and administrative     96,711     92,744     193,064     185,048  
Provision for doubtful accounts     111     61     215     84  
Other income, net     (1,911 )   (921 )   (2,093 )   (947 )
Total expenses     94,911     91,884     191,186     184,185  
                           
Income before interest and income taxes     9,303     8,367     17,512     18,786  
Interest expense, net     541     528     1,163     1,019  
                             
Income before income taxes     8,762     7,839     16,349     17,767  
Income tax expense     3,388     3,006     6,306     6,815  
Net income   $ 5,374   $ 4,833   $ 10,043   $ 10,952  
                           
                           
Basic earnings per share:                          
Common Stock   $ 0.25   $ 0.21   $ 0.46   $ 0.49  
Class A Common Stock   $ 0.24   $ 0.20   $ 0.44   $ 0.46  
                           
Diluted earnings per share:                          
Common Stock   $ 0.24   $ 0.21   $ 0.45   $ 0.48  
Class A Common Stock   $ 0.23   $ 0.20   $ 0.43   $ 0.46  
                           
Basic weighted average shares outstanding:                          
Common Stock     19,645     20,600     19,883     20,585  
Class A Common Stock     2,027     2,079     2,029     2,080  
                           
Diluted weighted average shares outstanding:                          
Common Stock     21,989     22,955     22,243     22,967  
Class A Common Stock     2,027     2,079     2,029     2,080  
                           
Cash dividends per share:                          
Common Stock   $ 0.100   $ 0.080   $ 0.200   $ 0.160  
Class A Common Stock   $ 0.095   $ 0.075   $ 0.190   $ 0.150  


   
HAVERTY FURNITURE COMPANIES, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In Thousands - Unaudited)  
   
    June 30,
2016
  December 31,
2015
  June 30,
2015
 
    (Unaudited)         (Unaudited)  
ASSETS                
Current assets                    
  Cash and cash equivalents    $ 48,525    $ 70,659    $ 66,701  
  Investments     1,250     12,725     6,500  
  Restricted cash and cash equivalents     8,017     8,005     8,002  
  Accounts receivable     4,572     5,948     6,107  
  Inventories     109,942     108,896     112,345  
  Prepaid expenses     15,912     6,137     9,434  
  Other current assets     5,601     6,341     6,761  
    Total current assets     193,819     218,711     215,850  
                     
Accounts receivable, long-term     511     655     678  
Property and equipment     238,014     229,283     231,486  
Deferred income taxes     18,423     17,245     17,897  
Other assets     6,184     5,357     7,082  
    Total assets    $ 456,951    $ 471,251    $ 472,993  
                     
LIABILITIES AND STOCKHOLDERS’ EQUITY                    
Current liabilities                    
  Accounts payable    $ 25,375    $ 27,815    $ 23,769  
  Customer deposits     27,809     21,036     30,038  
  Accrued liabilities     34,531     42,060     34,504  
  Deferred income taxes             5,689  
  Current portion of lease obligations     3,341     3,051     2,928  
    Total current liabilities     91,056     93,962     96,928  
                     
Lease obligations, less current portion     52,179     50,074     50,712  
Other liabilities     25,776     25,476     26,129  
    Total liabilities     169,011     169,512     173,769  
                     
Stockholders’ equity     287,940     301,739     299,224  
    Total liabilities and stockholders’ equity    $ 456,951    $ 471,251    $ 472,993  


HAVERTY FURNITURE COMPANIES, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In Thousands – Unaudited)  
   
    Six Months Ended
June 30,
 
    2016   2015  
CASH FLOWS FROM OPERATING ACTIVITIES:              
  Net income   $ 10,043   $ 10,952  
  Adjustments to reconcile net income to net
 cash provided by operating activities:
             
    Depreciation and amortization     13,992     12,503  
    Share-based compensation expense     2,163     2,160  
    Gain on insurance recovery     (1,914 )    
    Proceeds from insurance recovery for destroyed inventory     1,041      
    Provision for doubtful accounts     215     84  
    Other     (747 )   621  
  Changes in operating assets and liabilities:              
    Accounts receivable     1,305     1,008  
    Inventories     (1,046 )   (5,206 )
    Customer deposits     6,773     6,351  
    Other assets and liabilities     (10,927 )   (3,022 )
    Accounts payable and accrued liabilities     (10,269 )   (7,350 )
      Net cash provided by operating activities     10,629     18,101  
               
CASH FLOWS FROM INVESTING ACTIVITIES:              
  Capital expenditures     (18,523 )   (14,521 )
  Maturities of investments     11,500     2,250  
  Proceeds from insurance recovery for destroyed property     2,297      
  Other     1     33  
      Net cash used in investing activities     (4,725 )   (12,238 )
               
CASH FLOWS FROM FINANCING ACTIVITIES:              
  Construction allowance receipts         3,286  
  Payments on lease obligations     (1,505 )   (1,226 )
  Taxes on vested restricted shares     (883 )   (1,152 )
  Dividends paid     (4,368 )   (3,609 )
  Common stock purchased     (21,282 )   (1,942 )
      Net cash used in financing activities     (28,038 )   (4,643 )
(Decrease) increase in cash and cash equivalents during the period     (22,134 )   1,220  
Cash and cash equivalents at beginning of period     70,659     65,481  
Cash and cash equivalents at end of period   $ 48,525   $ 66,701  
               

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, August 2, 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, August 9, 2016. The number to access the telephone playback is 1(888)‑203-1112 (replay passcode8276743).


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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