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| 8-K - HAVERTY FURNITURE COMPANIES INC | hvt8k11112.htm |
Exhibit 99.1
Havertys Reports Results for Third Quarter 2012
ATLANTA, GEORGIA, October 31, 2012 -- HAVERTY FURNITURE COMPANIES, INC. (NYSE: HVT and HVT.A) reports third quarter 2012 operating results of earnings per share of $0.15 compared to $0.01 for the same period of 2011. The earnings per share for the nine months ended September 30, 2012 is $0.36 compared to a loss of ($0.07) for the same period of 2011.
Clarence H. Smith, chairman, president and chief executive officer, said, “We are pleased with our earnings results and effective leverage of sales growth. The housing recovery is showing some signs of staying power and we will benefit as it rebounds. We are well positioned in excellent markets and continue to strengthen our engagement with the middle to upper-middle income customer.”
Financial Highlights
Third Quarter 2012 Compared to Third Quarter 2011
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Net sales increased 11.1% to $172.7 million. Comparable store sales were up 10.0%.
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Gross profit margins increased 70 basis points to 52.5% from 51.8% as a percent of sales, slightly ahead of expectations for the quarter.
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Selling, general and administrative costs as a percent of sales decreased by 250 basis points. The increase in dollars of $4.6 million primarily resulted from variable selling costs such as commissions and third party credit costs which rose with the $17.3 million sales increase. Non-management and incentive compensation were also higher.
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A quarterly dividend, reinstated during the second quarter of 2012, of approximately $0.9 million was paid to stockholders.
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Nine Months ended September 30, 2012 Compared to Same Period of 2011
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Net sales increased 7.8% to $487.8 million. Comparable store sales were up 7.1%.
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Gross profit margins increased 100 basis points to 52.4% from 51.4% as a percent of sales.
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Selling, general and administrative costs as a percent of sales decreased by 200 basis points. The increase in dollars of $8.4 million was largely due to variable selling costs such as commissions and third party credit costs that stemmed from the $35.2 million increase in sales, as well as increased compensation.
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Expectations and Other
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Gross profit margins for the fourth quarter of 2012 are expected to be similar to the third quarter rate of 52.5%.
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NEWS RELEASE – OCTOBER 31, 2012 Page 2
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Selling, general and administrative costs for the fourth quarter of 2012 are estimated to be higher than in the third quarter in dollars but lower as a percent of sales. Fixed and discretionary type expenses are expected to increase approximately $0.5 million from the third quarter level to $55.0 million and variable costs are estimated to be 17.8% of total sales.
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Selling square footage is estimated to increase 2.5% in 2012 based on: the opening of a new store in Baltimore, MD in the second quarter, entering the Midland, TX market early in the third quarter, opening a new location in the Dallas market in Allen, TX, and replacing a store in the Atlanta market with a new store in McDonough, GA in the fourth quarter. Selling square footage in 2013 is expected to be flat or slightly down.
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Cash flow from operations for the nine months ended September 30, 2012 was $48.3 million.
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Cash at the end of the third quarter of 2012 totaled $75.0 million. There is no funded debt and the $50.0 million credit facility was not used.
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Capital expenditures are expected to be approximately $25.0 million for 2012 and $20.0 million for 2013 as store upgrades continue.
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For the fourth quarter to date our written business has trended up by 16.7% in total and approximately 14.5% on a comparable store basis. This compares to October last year when our total written business was down approximately 1.7%. The increase for the full fourth quarter delivered sales will likely be three to five percentage points less than the written sales growth as is typical during an acceleration trend.
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NEWS RELEASE – OCTOBER 31, 2012 Page 3
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HAVERTY FURNITURE COMPANIES, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(In Thousands, except per share data – Unaudited)
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
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2012
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2011
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2012
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2011
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Net sales
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$ | 172,677 | $ | 155,379 | $ | 487,766 | $ | 452,644 | ||||||||
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Cost of goods sold
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82,004 | 74,941 | 232,002 | 219,849 | ||||||||||||
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Gross profit
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90,673 | 80,438 | 255,764 | 232,795 | ||||||||||||
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Credit service charges
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69 | 109 | 216 | 362 | ||||||||||||
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Gross profit and other revenue
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90,742 | 80,547 | 255,980 | 233,157 | ||||||||||||
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Expenses:
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Selling, general and administrative
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85,082 | 80,445 | 242,728 | 234,282 | ||||||||||||
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Interest, net
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154 | 177 | 473 | 576 | ||||||||||||
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Provision for doubtful accounts
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30 | 23 | 101 | 124 | ||||||||||||
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Other (income) expense, net
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(160 | ) | (185 | ) | (745 | ) | (368 | ) | ||||||||
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85,106 | 80,460 | 242,557 | 234,614 | ||||||||||||
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Income (loss) before income taxes
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5,636 | 87 | 13,423 | (1,457 | ) | |||||||||||
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Income tax expense (benefit)
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2,322 | (31 | ) | 5,291 | 37 | |||||||||||
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Net income (loss)
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$ | 3,314 | $ | 118 | $ | 8,132 | $ | (1,494 | ) | |||||||
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Basic earnings (loss) per share:
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Common Stock
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$ | 0.15 | $ | 0.01 | $ | 0.37 | $ | (0.07 | ) | |||||||
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Class A Common Stock
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$ | 0.14 | $ | 0.01 | $ | 0.35 | $ | (0.07 | ) | |||||||
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Diluted earnings (loss) per share:
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Common Stock
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$ | 0.15 | $ | 0.01 | $ | 0.36 | $ | (0.07 | ) | |||||||
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Class A Common Stock
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$ | 0.14 | $ | 0.01 | $ | 0.35 | $ | (0.07 | ) | |||||||
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Basic weighted average shares outstanding:
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Common Stock
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19,163 | 18,666 | 19,018 | 18,600 | ||||||||||||
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Class A Common Stock
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2,887 | 3,283 | 2,986 | 3,309 | ||||||||||||
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Diluted weighted average shares outstanding:
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Common Stock
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22,371 | 22,162 | 22,319 | 18,600 | ||||||||||||
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Class A Common Stock
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2,887 | 3,283 | 2,986 | 3,309 | ||||||||||||
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Cash dividend per common share:
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Common Stock
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$ | 0.0400 | $ | — | $ | 0.0800 | $ | — | ||||||||
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Class A Common Stock
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$ | 0.0375 | $ | — | $ | 0.0750 | $ | — | ||||||||
NEWS RELEASE – OCTOBER 31, 2012 Page 4
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HAVERTY FURNITURE COMPANIES, INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(In Thousands - Unaudited)
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September 30,
2012
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December 31,
2011
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September 30,
2011
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(Unaudited)
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(Unaudited)
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ASSETS
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Current assets
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Cash and cash equivalents
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$ | 75,026 | $ | 49,585 | $ | 66,485 | ||||||
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Restricted cash and cash equivalents
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7,011 | 6,813 | 6,812 | |||||||||
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Accounts receivable
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9,564 | 11,451 | 11,082 | |||||||||
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Inventories
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84,530 | 93,713 | 81,637 | |||||||||
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Prepaid expenses
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9,762 | 11,195 | 9,210 | |||||||||
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Other current assets
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5,509 | 4,918 | 3,718 | |||||||||
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Total current assets
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191,402 | 177,675 | 178,944 | |||||||||
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Accounts receivable, long-term
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529 | 449 | 478 | |||||||||
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Property and equipment
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187,033 | 179,333 | 176,448 | |||||||||
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Deferred income taxes
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23,526 | 22,681 | 11,672 | |||||||||
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Other assets
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3,908 | 4,962 | 5,239 | |||||||||
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Total assets
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$ | 406,398 | $ | 385,100 | $ | 372,781 | ||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities
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Accounts payable
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$ | 18,490 | $ | 18,233 | $ | 17,707 | ||||||
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Customer deposits
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21,676 | 14,572 | 19,921 | |||||||||
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Accrued liabilities
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39,107 | 32,171 | 30,351 | |||||||||
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Deferred income taxes
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6,996 | 6,635 | 6,976 | |||||||||
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Current portion of lease obligations
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819 | 762 | 550 | |||||||||
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Total current liabilities
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87,088 | 72,373 | 75,505 | |||||||||
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Lease obligations, less current portion
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12,447 | 12,284 | 8,158 | |||||||||
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Other liabilities
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34,442 | 37,774 | 34,693 | |||||||||
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Commitments
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— | — | — | |||||||||
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Total liabilities
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133,977 | 122,431 | 118,356 | |||||||||
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Stockholders’ equity
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272,421 | 262,669 | 254,425 | |||||||||
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Total liabilities and stockholders’ equity
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$ | 406,398 | $ | 385,100 | $ | 372,781 | ||||||
NEWS RELEASE – OCTOBER 31, 2012 Page 5
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HAVERTY FURNITURE COMPANIES, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(In Thousands – Unaudited)
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Nine Months Ended
September 30,
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2012
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2011
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Cash Flows from Operating Activities:
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Net income (loss)
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$ | 8,132 | $ | (1,494 | ) | |||
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Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
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Depreciation and amortization
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14,334 | 13,542 | ||||||
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Share-based compensation expense
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1,944 | 1,569 | ||||||
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Provision for doubtful accounts
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101 | 124 | ||||||
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Other
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534 | 116 | ||||||
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Changes in operating assets and liabilities:
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Accounts receivable
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1,706 | 2,682 | ||||||
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Inventories
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8,914 | 10,301 | ||||||
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Customer deposits
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7,104 | 6,336 | ||||||
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Other assets and liabilities
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(1,647 | ) | (1,679 | ) | ||||
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Accounts payable and accrued liabilities
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7,193 | (1,387 | ) | |||||
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Net cash provided by operating activities
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48,315 | 30,110 | ||||||
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Cash Flows from Investing Activities:
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Capital expenditures
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(20,166 | ) | (14,480 | ) | ||||
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Restricted cash and cash equivalents
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(198 | ) | (6,812 | ) | ||||
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Other
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442 | 155 | ||||||
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Net cash used in investing activities
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(19,922 | ) | (21,137 | ) | ||||
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Cash Flows from Financing Activities:
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Payments on lease obligations
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(553 | ) | (391 | ) | ||||
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Dividends paid
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(1,750 | ) | — | |||||
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Treasury stock acquired
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(218 | ) | — | |||||
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Proceeds from exercise of stock options
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84 | 270 | ||||||
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Other financing activities
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(515 | ) | (412 | ) | ||||
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Net cash used in financing activities
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(2,952 | ) | (533 | ) | ||||
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Increase in cash and cash equivalents during the period
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25,441 | 8,440 | ||||||
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Cash and cash equivalents at beginning of period
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49,585 | 58,045 | ||||||
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Cash and cash equivalents at end of period
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$ | 75,026 | $ | 66,485 | ||||
NEWS RELEASE – OCTOBER 31, 2012 Page 6
We report our earnings per share using the two-class method. The income or loss per share for each class of common stock is calculated assuming 100% of our earnings or losses are distributed as dividends to each class of common stock based on their contractual rights.
The Common Stock of the Company has a preferential dividend rate of at least 105% of the dividend paid on the Class A Common Stock. The Class A Common Stock, which has ten votes per share as opposed to one vote per share for the Common Stock (on all matters other than the election of directors), may be converted at any time on a one-for-one basis into Common Stock at the option of the holder of the Class A Common Stock.
The following is a reconciliation of the earnings (loss) and number of shares used in calculating the diluted earnings (loss) per share for Common Stock and Class A Common Stock (in thousands):
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
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2012
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2011
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2012
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2011
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Numerator:
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Common:
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Distributed earnings
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$ | 766 | $ | — | $ | 1,528 | $ | — | ||||||||
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Undistributed earnings (loss)
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2,134 | 101 | 5,552 | (1,277 | ) | |||||||||||
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Basic
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2,900 | 101 | 7,080 | (1,277 | ) | |||||||||||
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Class A Common earnings (loss)
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414 | 17 | 1,052 | — | ||||||||||||
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Diluted
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$ | 3,314 | 118 | $ | 8,132 | (1,277 | ) | |||||||||
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Class A Common:
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Distributed earnings
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$ | 108 | $ | — | $ | 222 | $ | — | ||||||||
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Undistributed earnings (loss)
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306 | 17 | 830 | (217 | ) | |||||||||||
| $ | 414 | $ | 17 | $ | 1,052 | $ | (217 | ) | ||||||||
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Denominator:
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Common:
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Weighted average shares outstanding - basic
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19,163 | 18,666 | 19,018 | 18,600 | ||||||||||||
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Assumed conversion of Class A Common Stock
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2,887 | 2,383 | 2,986 | — | ||||||||||||
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Dilutive options, awards and common stock equivalents
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321 | 213 | 315 | — | ||||||||||||
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Total weighted-average diluted Common Stock
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22,371 | 22,162 | 22,319 | 18,600 | ||||||||||||
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Class A Common:
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Weighted average shares outstanding
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2,887 | 3,283 | 2,986 | 3,309 | ||||||||||||
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Antidilutive shares excluded from the denominator due to options’ exercise prices being greater than the average market price
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291 | 788 | 292 | 797 | ||||||||||||
NEWS RELEASE – OCTOBER 31, 2012 Page 7
Also excluded from the denominator for the nine months ended September 30, 2011, because of the net loss for that period, is the assumed conversion of the Class A Common Stock and approximately 226,000 shares for dilutive options, awards and common stock equivalents.
About Havertys
Havertys, established in 1885, is a full-service home furnishings retailer with 121 showrooms in 17 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 the SEC.
Conference Call Information
The company will sponsor a conference call Thursday, November 1, 2012 at 10:00 a.m. Eastern Daylight Time to review its results. Listen-only access to the call is available via the web at www.havertys.com (For Investors) and at www.streetevents.com (Individual Investor Center), both live and for a limited time, on a replay basis.
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.