ATLANTA, GEORGIA, July 31, 2013 -- HAVERTY FURNITURE COMPANIES, INC. (NYSE: HVT and HVT.A) reports earnings per share for the second quarter ended June 30, 2013 of $0.21 compared to $0.11 for the same period of 2012. The earnings per share for the six months ended June 30, 2013 is $0.58 compared to $0.22 for the same period of 2012. The year to date earnings for 2013 include 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 H. Smith, chairman, president and chief executive officer, said, "Our initiatives to improve the productivity of our stores and the efficiency of our operations continue delivering positive results. The execution of our merchandising and marketing strategies increased our average sales ticket and improved store traffic. Housing sales in our regions, a key driver of business, are growing. We believe our financial strength and positioning of the Havertys brand will allow us to outpace our competition as housing and employment improves.
Financial Highlights
Second Quarter 2013 Compared to Second Quarter 2012
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Net sales increased 12.9% to $171.1 million. Comparable store sales were up 11.2%. Total written business was up 16.7% and average ticket rose 7.7%.
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Gross profit margins increased 80 basis points to 53.4% from 52.6% as a percent of sales, slightly ahead of our expectations.
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Selling, general and administrative costs as a percent of sales decreased by 180 basis points to 48.6% from 50.4% as fixed and discretionary costs were leveraged. The increase in dollars of $6.8 million primarily resulted from variable selling costs such as commissions, delivery and credit costs which rose with the $19.6 million sales increase. Salaries, management and incentive compensation and advertising expense were also higher.
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We closed our Jackson, Mississippi and Roanoke, Virginia locations midway through the quarter. Our retail store count at June 30, 2013 was 119 versus 120 at June 30, 2012.
Six Months ended June 30, 2013 Compared to Same Period of 2012
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Net sales increased 13.4% to $357.2 million. Comparable store sales were up 11.3%. Average ticket increased 10.3%.
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Gross profit margins, excluding the impact of the first quarter adjustment noted above, increased 100 basis points to 53.4% from 52.4% as a percent of sales.
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Selling, general and administrative costs as a percent of sales decreased 240 basis points to 47.6% from 50.0% due to leveraging fixed and discretionary costs. The $12.2 million increase in dollars is primarily related to increases in: commissions, wages, incentive compensation, related payroll costs, and advertising.
Expectations and Other
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Total delivered sales for the third quarter to date of 2013 are up approximately 9.8% over the same period last year. Written business is up approximately 11.8%.
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We expect that gross profit margins for the second half of 2013 will be better than the 52.7% margin for the second half of 2012 but modestly below the first half adjusted rate of 53.4%.
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Fixed and discretionary type expenses within SG&A costs for the full year 2013 are expected to be at the high end of the $220 to $222 million range we discussed in our 2012 Form 10-K representing an increase of approximately 4.5% over the same costs for 2012. These expenses will generally increase 3% to 5% annually due to inflation, expansion, staffing, and decisions made on the level of advertising spend. The variable costs within SG&A for the full year 2013 are anticipated to be at the lower end of the range of 17.0% to 17.5% as a percent of sales.
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Selling square footage is estimated to decrease 2.0% in 2013 based on the three stores closed in the first half and the remodeling and expansion of stores currently in process.
| 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, | |
| | | 2013 | | 2012 | | 2013 | | 2012 | |
| | | | | | | | | | | | | | |
| Net sales | | $ | 171,114 | | $ | 151,519 | | $ | 357,204 | | $ | 315,088 | |
| Cost of goods sold | | | 79,803 | | | 71,770 | | | 165,585 | | | 149,997 | |
| | Gross profit | | | 91,311 | | | 79,749 | | | 191,619 | | | 165,091 | |
| Credit service charges | | | 76 | | | 71 | | | 162 | | | 147 | |
| | Gross profit and other revenue | | | 91,387 | | | 79,820 | | | 191,781 | | | 165,238 | |
| | | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | | |
| | Selling, general and administrative | | | 83,197 | | | 76,409 | | | 169,859 | | | 157,646 | |
| | Interest, net | | | 277 | | | 158 | | | 555 | | | 319 | |
| | Provision for doubtful accounts | | | 32 | | | 5 | | | 45 | | | 71 | |
| | Other (income) expense, net | | | 15 | | | (518 | ) | | 6 | | | (585 | ) |
| | | | 83,521 | | | 76,054 | | | 170,465 | | | 157,451 | |
| | | | | | | | | | | | | | |
| Income before income taxes | | | 7,866 | | | 3,766 | | | 21,316 | | | 7,787 | |
| Income tax expense | | | 3,036 | | | 1,405 | | | 8,226 | | | 2,969 | |
| | Net income | | $ | 4,830 | | $ | 2,361 | | $ | 13,090 | | $ | 4,818 | |
| | | | | | | | | | | | | | |
| Basic earnings per share: | | | | | | | | | | | | | |
| | Common Stock | | $ | 0.22 | | $ | 0.11 | | $ | 0.59 | | $ | 0.22 | |
| | Class A Common Stock | | $ | 0.20 | | $ | 0.10 | | $ | 0.56 | | $ | 0.21 | |
| | | | | | | | | | | | | | |
| Diluted earnings per share: | | | | | | | | | | | | | |
| | Common Stock | | $ | 0.21 | | $ | 0.11 | | $ | 0.58 | | $ | 0.22 | |
| | Class A Common Stock | | $ | 0.20 | | $ | 0.10 | | $ | 0.55 | | $ | 0.21 | |
| | | | | | | | | | | | | | |
| Basic weighted average shares outstanding: | | | | | | | | | | | | | |
| | Common Stock | | | 19,807 | | | 19,023 | | | 19,654 | | | 18,944 | |
| | Class A Common Stock | | | 2,614 | | | 2,989 | | | 2,682 | | | 3,037 | |
| | | | | | | | | | | | | | |
| Diluted weighted average shares outstanding: | | | | | | | | | | | | | |
| | Common Stock | | | 22,791 | | | 22,313 | | | 22,754 | | | 22,292 | |
| | Class A Common Stock | | | 2,614 | | | 2,989 | | | 2,682 | | | 3,037 | |
| | | | | | | | | | | | | | | |
| Cash dividends per share: | | | | | | | | | | | | | |
| | Common Stock | | $ | 0.0400 | | $ | 0.0400 | | $ | 0.0800 | | $ | 0.0400 | |
| | Class A Common Stock | | $ | 0.0375 | | $ | 0.0375 | | $ | 0.0750 | | $ | 0.0375 | |
| HAVERTY FURNITURE COMPANIES, INC. |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (In Thousands - Unaudited) |
| | | June 30,
2013 | | December 31,
2012 | | June 30,
2012 | |
| | | (Unaudited) | | | | | (Unaudited) | |
| ASSETS | | | | | | | | |
| Current assets | | | | | | | | | | |
| | Cash and cash equivalents | | $ | 52,260 | | $ | 53,550 | | $ | 55,718 | |
| | Restricted cash and cash equivalents | | | 7,015 | | | 7,013 | | | 7,009 | |
| | Accounts receivable | | | 8,290 | | | 9,710 | | | 9,700 | |
| | Inventories | | | 97,738 | | | 96,902 | | | 93,343 | |
| | Prepaid expenses | | | 7,711 | | | 9,532 | | | 11,121 | |
| | Other current assets | | | 5,263 | | | 3,187 | | | 4,749 | |
| | | Total current assets | | | 178,277 | | | 179,894 | | | 181,640 | |
| | | | | | | | | | | |
| Accounts receivable, long-term | | | 825 | | | 814 | | | 314 | |
| Property and equipment | | | 191,917 | | | 193,085 | | | 183,829 | |
| Deferred income taxes | | | 24,002 | | | 24,366 | | | 22,572 | |
| Other assets | | | 4,116 | | | 3,937 | | | 3,830 | |
| | | Total assets | | $ | 399,137 | | $ | 402,096 | | $ | 392,185 | |
| | | | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | | | |
| Current liabilities | | | | | | | | | | |
| | Accounts payable | | $ | 20,370 | | $ | 28,178 | | $ | 16,236 | |
| | Customer deposits | | | 22,643 | | | 20,963 | | | 16,762 | |
| | Accrued liabilities | | | 30,009 | | | 33,272 | | | 35,371 | |
| | Deferred income taxes | | | 6,595 | | | 6,595 | | | 6,696 | |
| | Current portion of lease obligations | | | 929 | | | 881 | | | 793 | |
| | | Total current liabilities | | | 80,546 | | | 89,889 | | | 75,858 | |
| | | | | | | | | | | |
| Lease obligations, less current portion | | | 16,988 | | | 18,473 | | | 11,880 | |
| Other liabilities | | | 29,511 | | | 34,306 | | | 35,495 | |
| | | Total liabilities | | | 127,045 | | | 142,668 | | | 123,233 | |
| | | | | | | | | | | |
| Stockholders' equity | | | 272,092 | | | 259,428 | | | 268,952 | |
| | | Total liabilities and stockholders' equity | | $ | 399,137 | | $ | 402,096 | | $ | 392,185 | |
| HAVERTY FURNITURE COMPANIES, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (In Thousands - Unaudited) |
| | | Six Months Ended
June 30, | |
| | | 2013 | | 2012 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | |
| | Net income | | $ | 13,090 | | $ | 4,818 | |
| | Adjustments to reconcile net income to net
cash provided by operating activities: | | | | | | | |
| | | Depreciation and amortization | | | 10,486 | | | 9,418 | |
| | | Share-based compensation expense | | | 2,038 | | | 1,321 | |
| | | Provision for doubtful accounts | | | 45 | | | 71 | |
| | | Other | | | 448 | | | 545 | |
| | Changes in operating assets and liabilities: | | | | | | | |
| | | Accounts receivable | | | 1,364 | | | 1,815 | |
| | | Inventories | | | (836 | ) | | 101 | |
| | | Customer deposits | | | 1,680 | | | 2,190 | |
| | | Other assets and liabilities | | | (4,267 | ) | | (954 | ) |
| | | Accounts payable and accrued liabilities | | | (11,071 | ) | | 1,203 | |
| | | | Net cash provided by operating activities | | | 12,977 | | | 20,528 | |
| | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | |
| | Capital expenditures | | | (10,225 | ) | | (12,821 | ) |
| | Other | | | 4 | | | 236 | |
| | | | Net cash used in investing activities | | | (10,221 | ) | | (12,585 | ) |
| | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | |
| | Payments on lease obligations | | | (437 | ) | | (373 | ) |
| | Dividends paid | | | (1,776 | ) | | (875 | ) |
| | Proceeds from exercise of stock options | | | 623 | | | - | |
| | Taxes on vested restricted shares | | | (2,456 | ) | | (515 | ) |
| | Other financing activities | | | - | | | (47 | ) |
| | | | Net cash used in financing activities | | | (4,046 | ) | | (1,810 | ) |
| (Decrease) increase in cash and cash equivalents during the period | | | (1,290 | ) | | 6,133 | |
| Cash and cash equivalents at beginning of period | | | 53,550 | | | 49,585 | |
| Cash and cash equivalents at end of period | | $ | 52,260 | | $ | 55,718 | |
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 and number of shares used in calculating the diluted earnings per share for Common Stock and Class A Common Stock (in thousands):
| | Three Months Ended
June 30, | | Six Months Ended
June 30, | |
| | 2013 | | 2012 | | 2013 | | 2012 | |
| Numerator: | | | | | | | | | | | | |
| Common: | | | | | | | | | | | | |
| | Distributed earnings | $ | 797 | | $ | 762 | | $ | 1,577 | | $ | 762 | |
| | Undistributed earnings | | 3,497 | | | 1,293 | | | 10,013 | | | 3,421 | |
| | | Basic | | 4,294 | | | 2,055 | | | 11,590 | | | 4,183 | |
| | Class A Common earnings | | 536 | | | 306 | | | 1,500 | | | 635 | |
| | | Diluted | $ | 4,830 | | | 2,361 | | $ | 13,090 | | | 4,818 | |
| | | | | | | | | | | | | | |
| | Class A Common: | | | | | | | | | | | | |
| | Distributed earnings | $ | 96 | | $ | 113 | | $ | 199 | | $ | 113 | |
| | Undistributed earnings | | 440 | | | 193 | | | 1,301 | | | 522 | |
| | | $ | 536 | | $ | 306 | | $ | 1,500 | | $ | 635 | |
| | | | | | | | | | | | | | |
| Denominator: | | | | | | | | | | | | |
| Common: | | | | | | | | | | | | |
| Weighted average shares outstanding - basic | | 19,807 | | | 19,023 | | | 19,654 | | | 18,944 | |
| Assumed conversion of Class A Common Stock | | 2,614 | | | 2,989 | | | 2,682 | | | 3,037 | |
| Dilutive options, awards and common stock equivalents | | 370 | | | 301 | | | 418 | | | 311 | |
| | | | | | | | | | | | | | |
| Total weighted-average diluted Common Stock | | 22,791 | | | 22,313 | | | 22,754 | | | 22,292 | |
| | | | | | | | | | | | | | |
| Class A Common: | | | | | | | | | | | | |
| Weighted average shares outstanding | | 2,614 | | | 2,989 | | | 2,682 | | | 3,037 | |
| | | | | | | | | | | | | |
Antidilutive shares excluded from the denominator due to
options' exercise prices being greater than the average
market price | | - | | | 292 | | | - | | | 292 | |
About Havertys
Havertys, 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 the SEC.
Conference Call Information
The company invites interested parties to listen to the live audiocast of the conference call at its website, www.havertys.com under the investor relations section. If you can not listen live, a replay will be available at the website or via telephone at approximately 12:00 p.m. EDT through Thursday, August 8, 2013. The number to access the telephone playback is 1-800-406-7325 (access code: 4632971#).
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.
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Source: Haverty Furniture Company via Thomson Reuters ONE
HUG#1720319