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Form 10-Q HAVERTY FURNITURE COMPAN For: Jun 30

August 5, 2022 1:32 PM EDT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___
Commission file number: 1-14445
hvt-20220630_g1.jpg
HAVERTY FURNITURE COMPANIES, INC.
(Exact name of registrant as specified in its charter)

Maryland58-0281900
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
780 Johnson Ferry Road, Suite 800
Atlanta, Georgia
30342
(Address of principal executive offices)(Zip Code)
(404) 443-2900
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockHVTNYSE
Class A Common StockHVTANYSE
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated fileroNon-accelerated filero
Smaller reporting companyoEmerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x
The numbers of shares outstanding of the registrant’s two classes of $1 par value common stock as of August 1, 2022, were: Common Stock 15,051,761; Class A Common Stock – 1,283,260.



HAVERTY FURNITURE COMPANIES, INC.
INDEX
Page No.
June 30, 2022 (unaudited) and December 31, 2021
Three and Six Months Ended June 30, 2022 and 2021 (unaudited)
Six Months Ended June 30, 2022 and 2021 (unaudited)


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)June 30,
2022
December 31,
2021
(Unaudited)
Assets
Current assets
Cash and cash equivalents$143,454 $166,146 
Restricted cash and cash equivalents6,722 6,716 
Inventories134,053 112,031 
Prepaid expenses10,523 12,418 
Other current assets14,653 11,746 
Total current assets309,405 309,057 
Property and equipment, net131,230 126,099 
Right-of-use lease assets222,702 222,356 
Deferred income taxes18,769 16,375 
Other assets12,190 12,403 
Total assets$694,296 $686,290 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$35,093 $31,235 
Customer deposits90,762 98,897 
Accrued liabilities48,122 46,664 
Current lease liabilities34,539 33,581 
Total current liabilities208,516 210,377 
Noncurrent lease liabilities198,338 196,771 
Other liabilities20,716 23,172 
Total liabilities427,570 430,320 
Stockholders’ equity
Capital Stock, par value $1 per share
Preferred Stock, Authorized – 1,000 shares; Issued: None
Common Stock, Authorized – 50,000 shares; Issued: 2022 – 30,006; 2021 – 29,907
30,006 29,907 
Convertible Class A Common Stock, Authorized – 15,000 shares; Issued: 2022 – 1,806; 2021 – 1,809
1,806 1,809 
Additional paid-in capital105,674 102,572 
Retained earnings375,234 342,983 
Accumulated other comprehensive loss(2,212)(2,293)
Less treasury stock at cost – Common Stock (2022 – 14,954 and 2021 – 14,069 shares) and Convertible Class A Common Stock (2022 and 2021 – 522 shares)
(243,782)(219,008)
Total stockholders’ equity266,726 255,970 
Total liabilities and stockholders’ equity$694,296 $686,290 
See notes to these condensed consolidated financial statements.
1

HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except per share data - unaudited)Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Net sales$253,216 $249,989 $492,162 $486,480 
Cost of goods sold106,608 108,488 204,593 209,945 
Gross profit146,608 141,501 287,569 276,535 
Expenses:
Selling, general and administrative118,129 112,397 233,283 222,159 
Other expense (income), net(45)(6)115 (43)
Total expenses118,084 112,391 233,398 222,116 
Income before interest and income taxes28,524 29,110 54,171 54,419 
Interest income, net144 59 218 114 
Income before income taxes28,668 29,169 54,389 54,533 
Income tax expense6,960 6,311 13,319 12,269 
Net income$21,708 $22,858 $41,070 $42,264 
Other comprehensive income
Adjustments related to retirement plans; net of tax expense of $13 and $27 in 2022 and $16 and $32 in 2021
$41 $49 $81 $98 
Comprehensive income$21,749 $22,907 $41,151 $42,362 
Basic earnings per share:
Common Stock$1.31 $1.25 $2.45 $2.32 
Class A Common Stock$1.25 $1.18 $2.33 $2.18 
Diluted earnings per share:
Common Stock$1.27 $1.21 $2.37 $2.25 
Class A Common Stock$1.22 $1.16 $2.27 $2.13 
Cash dividends per share:
Common Stock$0.28 $0.25 $0.53 $0.47 
Class A Common Stock$0.26 $0.23 $0.49 $0.43 
See notes to these condensed consolidated financial statements.
2

HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands - unaudited)Six Months Ended
June 30,
20222021
Cash Flows from Operating Activities:
Net income$41,070 $42,264 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization8,664 7,932 
Share-based compensation expense4,196 4,656 
Other(1,444)157 
Changes in operating assets and liabilities:
Inventories(22,022)(25,148)
Customer deposits(8,135)29,896 
Other assets and liabilities(966)(1,841)
Accounts payable and accrued liabilities4,942 (277)
Net cash provided by operating activities26,305 57,639 
Cash Flows from Investing Activities:
Capital expenditures(13,548)(10,939)
Proceeds from sale of land, property and equipment52 33 
Net cash used in investing activities(13,496)(10,906)
Cash Flows from Financing Activities:
Dividends paid(8,819)(8,550)
Common stock repurchased(25,001) 
Other(1,675)(2,894)
Net cash used in financing activities(35,495)(11,444)
(Decrease) increase in cash, cash equivalents and restricted cash equivalents during the period(22,686)35,289 
Cash, cash equivalents and restricted cash equivalents at beginning of period172,862 206,771 
Cash, cash equivalents and restricted cash equivalents at end of period$150,176 $242,060 
See notes to these condensed consolidated financial statements.
3

HAVERTY FURNITURE COMPANIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE A - Business and Basis of Presentation
Haverty Furniture Companies, Inc. (“Havertys,” “the Company,” “we,” “our,” or “us”) is a retailer of a broad line of residential furniture in the middle to upper-middle price ranges. We operate all of our stores using the Havertys brand and do not franchise our concept. We operate within a single reportable segment. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes required by United States of America generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The Company believes that the disclosures made are adequate to make the information not misleading. The financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. We believe all adjustments, normal and recurring in nature, considered necessary for a fair presentation have been included. We suggest that these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in our latest Annual Report on Form 10-K.
The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from those estimates.
The Company is subject to various claims and legal proceedings covering a wide range of matters, including with respect to product liability and personal injury claims, that arise in the ordinary course of its business activities. We currently have no pending claims or legal proceedings that we believe would be reasonably likely to have a material adverse effect on our financial condition, results of operations or cash flows. However, there can be no assurance that either future litigation or an unfavorable outcome in existing claims will not have a material impact on our business, reputation, financial position, cash flows or results of operations.
Note B – COVID-19
The novel coronavirus disease (“COVID-19”) pandemic and its contributory effects on the economy continue to impact our business and results of operations. During the six months ended June 30, 2022, we experienced, among other things, rising product prices, volatile transportation costs, and supply chain disruptions. Furthermore, discretionary consumer spending has been adversely impacted by rising inflation, including fuel costs, and interest rates. Many of these factors impacted our business in the second quarter of 2022. The extent and duration of any future impact resulting from the COVID-19 pandemic is not fully known, and we may experience additional significant COVID-19 related disruptions in the future as a result.
4

NOTE C – Stockholders’ Equity
The following outlines the changes in each caption of stockholders’ equity for the current and comparative periods and the dividends per share for each class of shares.
For the three months ended June 30, 2022:
(in thousands)Common StockClass A
Common Stock
Additional
Paid-In Capital
Retained
Earnings
Accumulated Other
Comprehensive Loss
Treasury
Stock
Total
Balances at March 31, 2022$29,924 $1,809 $104,345 $358,084 $(2,253)$(231,509)$260,400 
Net income21,708 21,708 
Dividends declared:
Common Stock, $0.28 per share
(4,225)(4,225)
Class A Common Stock, $0.26 per share
(333)(333)
Class A conversion3 (3) 
Acquisition of treasury stock(12,500)(12,500)
Restricted stock issuances79 (1,244)(1,165)
Amortization of restricted stock1,889 1,889 
Directors' Compensation Plan684 227 911 
Other comprehensive income41 41 
Balances at June 30, 2022$30,006 $1,806 $105,674 $375,234 $(2,212)$(243,782)$266,726 
For the six months ended June 30, 2022:
(in thousands)Common StockClass A
Common Stock
Additional
Paid-In Capital
Retained
Earnings
 Accumulated Other
Comprehensive Loss
Treasury
Stock
Total
Balances at December 31, 2021$29,907 $1,809 $102,572 $342,983 $(2,293)$(219,008)$255,970 
Net income41,070 41,070 
Dividends declared:
Common Stock, $0.53 per share
(8,189)(8,189)
Class A Common Stock, $0.49 per share
(630)(630)
Class A conversion3 (3) 
Acquisition of treasury stock(25,001)(25,001)
Restricted stock issuances96 (1,778)(1,682)
Amortization of restricted stock4,196 4,196 
Directors' Compensation Plan684 227 911 
Other comprehensive income81 81 
Balances at June 30, 2022$30,006 $1,806 $105,674 $375,234 $(2,212)$(243,782)$266,726 
5

For the three months ended June 30, 2021:
(in thousands)Common StockClass A
Common Stock
Additional
Paid-In Capital
Retained
Earnings
Accumulated Other
Comprehensive Loss
Treasury
Stock
Total
Balances at March 31, 2021$29,789 $1,842 $98,694 $320,045 $(2,511)$(177,545)$270,314 
Net income22,858 22,858 
Dividends declared:
Common Stock, $0.25 per share
(4,261)(4,261)
Class A Common Stock, $0.23 per share
(301)(301)
Class A conversion29 (29) 
Acquisition of treasury stock 
Restricted stock issuances85 (2,179)(2,094)
Amortization of restricted stock1,977 1,977 
Directors' Compensation Plan524 346 870 
Other comprehensive income49 49 
Balances at June 30, 2021$29,903 $1,813 $99,016 $338,341 $(2,462)$(177,199)$289,412 
For the six months ended June 30, 2021:
(in thousands)Common StockClass A
Common Stock
Additional
Paid-In Capital
Retained
Earnings
 Accumulated Other
Comprehensive Loss
Treasury
Stock
Total
Balances at December 31, 2020$29,600 $1,996 $96,850 $304,626 $(2,560)$(177,545)$252,967 
Net income42,264 42,264 
Dividends declared:
Common Stock, $0.47 per share
(7,978)(7,978)
Class A Common Stock, $0.43 per share
(571)(571)
Class A conversion183 (183) 
Restricted stock issuances120 (3,014)(2,894)
Amortization of restricted stock4,656 4,656 
Directors' Compensation Plan524 346 870 
Other comprehensive income98 98 
Balances at June 30, 2021$29,903 $1,813 $99,016 $338,341 $(2,462)$(177,199)$289,412 

6


NOTE D – Interim LIFO Calculations
Inventories are measured using the last-in, first-out (LIFO) method of valuation using an annual LIFO index. Accordingly, interim LIFO calculations must necessarily be based on management’s estimates of inventory levels and inflation rates. Since these estimates may be affected by factors beyond management’s control, interim results are subject to change based upon the final year-end LIFO inventory valuations.
NOTE E – Fair Value of Financial Instruments
The fair values of our cash and cash equivalents, restricted cash and cash equivalents, accounts payable and customer deposits approximate their carrying values due to their short-term nature. The assets related to our self-directed, non-qualified deferred compensation plans for certain executives and employees are valued using quoted market prices multiplied by the number of shares held, a Level 1 valuation technique.
NOTE F – Credit Agreement
We have a $60.0 million revolving credit facility (the “Credit Agreement”) which matures on September 27, 2024 and is secured primarily by our inventory. Availability fluctuates based on a borrowing base calculation reduced by outstanding letters of credit.
At June 30, 2022 and December 31, 2021, there were no outstanding borrowings under the Credit Agreement. The borrowing base and net availability was $47.1 million at June 30, 2022.
Note G – Revenues
We recognize revenue from merchandise sales and related service fees, net of expected returns and sales tax, at the time the merchandise is delivered to the customer. We record customer deposits when payments are received in advance of the delivery of merchandise. Such deposits totaled $90.8 million and $98.9 million at June 30, 2022 and December 31, 2021, respectively. Of the customer deposit liabilities at December 31, 2021, approximately $4.0 million have not been recognized through net sales in the six months ended June 30, 2022.
The following table presents our revenues disaggregated by each major product category and service (dollars in thousands, amounts and percentages may not always add due to rounding):
(In thousands)Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Net Sales% of
Net Sales
Net Sales% of
Net Sales
Net Sales% of
Net Sales
Net Sales% of
Net Sales
Merchandise:
Case Goods
Bedroom Furniture$41,535 16.4 %$41,232 16.5 %$72,885 14.8 %$80,410 16.5 %
Dining Room Furniture25,156 9.9 28,320 11.3 51,178 10.4 55,919 11.5 
Occasional20,188 8.0 22,110 8.8 37,007 7.5 44,174 9.1 
86,879 34.3 91,662 36.7 161,070 32.7 180,503 37.1 
Upholstery109,641 43.3 100,841 40.3 220,825 44.9 196,467 40.4 
Mattresses22,010 8.7 24,159 9.7 41,743 8.5 44,640 9.2 
Accessories and Other (1)
34,686 13.7 33,327 13.3 68,525 13.9 64,870 13.3 
$253,216 100.0 %$249,989 100.0 %$492,162 100.0 %$486,480 100.0 %
(1)Includes delivery charges and product protection.
NOTE H – Leases
We have operating leases for retail stores, offices, warehouses, and certain equipment. Our leases have remaining lease terms of 1 year to 13 years, some of which include options to extend the leases for up to 20
7

years. We determine if an arrangement is or contains a lease at lease inception. Our leases do not have any residual value guarantees or any restrictions or covenants imposed by lessors. We have lease agreements for real estate with lease and non-lease components, which are accounted for separately.
Certain of our lease agreements for retail stores include variable lease payments, generally based on sales volume. The variable portion of payments are not included in the initial measurement of the right-of-use asset or lease liability due to uncertainty of the payment amount and are recorded as lease expense in the period incurred. Certain of our equipment lease agreements include variable lease costs, generally based on usage of the underlying asset (mileage, fuel, etc.). The variable portion of payments are not included in the initial measurement of the right-of-use asset or lease liability due to uncertainty of the payment amount and are recorded in the period incurred.
As of June 30, 2022, we had entered into one lease for an additional retail location which had not yet commenced.
Lease expense is charged to selling, general and administrative expenses. Components of lease expense were as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Operating lease cost$11,973 $11,873 $23,712 $23,700 
Variable lease cost1,783 1,609 3,478 3,117 
Total lease expense$13,756 $13,482 $27,190 $26,817 

Supplemental cash flow information related to leases is as follows (in thousands):
Six Months Ended June 30,
20222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$21,533 $22,876 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$15,763 $25,063 
NOTE I – Income Taxes
Our effective tax rate for the six months ended June 30, 2022 and 2021 was 24.5% and 22.5%, respectively. The primary difference in the effective rate and the statutory rate was due to state income taxes and the impact from vested stock awards.
8

NOTE J – Stock Based Compensation Plans
As more fully discussed in Note 12 of the notes to the consolidated financial statements in our 2021 Annual Report on Form 10-K, we have awards outstanding for Common Stock under stock-based employee compensation plans.
The following table summarizes our award activity during the six months ended June 30, 2022:
Service-Based
Restricted Stock Awards
Performance-Based
Restricted Stock Awards
Shares or Units (#) Weighted-Average
Award Price ($)
Shares or Units (#) Weighted-Average
Award Price ($)
Outstanding at December 31, 2021219,082 $27.10 328,267 $23.96 
Granted/Issued153,681 28.86 103,104 28.86 
Awards vested or rights exercised(1)
(121,518)27.12 (34,940)20.28 
Forfeited(3,900)31.86   
Additional units earned due to performance  59,249 31.39 
Outstanding at June 30, 2022247,345 $28.11 455,680 $26.54 
Restricted units expected to vest247,345 $28.11 455,680 $26.54 
(1)Includes shares repurchased from employees for employee’s tax liability.
The total fair value of service-based restricted stock awards that vested during the six months ended June 30, 2022 was approximately $3.3 million. The aggregate intrinsic value of outstanding service-based restricted stock awards was approximately $5.7 million at June 30, 2022. The restrictions on the service-based awards generally lapse or vest annually, primarily over one-year and three-year periods.
The total fair value of performance-based restricted stock awards that vested during the six months ended June 30, 2022 was approximately $1.0 million. The aggregate intrinsic value of outstanding performance awards at June 30, 2022 expected to vest was approximately $10.6 million. The performance awards are based on one-year performance periods but cliff vest in approximately three years from grant date.
The compensation for all awards is charged to selling, general and administrative expense over the respective grants’ vesting periods, primarily on a straight-line basis. The amount charged was approximately $4.2 million and $4.7 million for the six months ended June 30, 2022 and 2021, respectively. Forfeitures are recognized as they occur. As of June 30, 2022, the total compensation cost related to unvested equity awards was approximately $9.9 million and is expected to be recognized over a weighted-average period of two years.

9

NOTE K – Earnings Per Share
We report our earnings per share using the two-class method. The income per share for each class of common stock is calculated assuming 100% of our earnings are distributed as dividends to each class of common stock based on the contractual rights of the classes.
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.
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Numerator:
Common:
Distributed earnings$4,225 $4,261 $8,189 $7,978 
Undistributed earnings15,884 17,042 29,893 31,295 
Basic20,109 21,303 38,082 39,273 
Class A Common earnings1,599 1,555 2,988 2,991 
Diluted$21,708 $22,858 $41,070 $42,264 
Class A Common:
Distributed earnings$333 $301 $630 $571 
Undistributed earnings1,266 1,254 2,358 2,420 
$1,599 $1,555 $2,988 $2,991 
Denominator:
Common:
Weighted average shares outstanding - basic15,327 16,997 15,516 16,895 
Assumed conversion of Class A Common Stock1,283 1,313 1,285 1,372 
Dilutive options, awards and common stock equivalents482 532 501 520 
Total weighted-average diluted Common Stock17,092 18,842 17,302 18,787 
Class A Common:
Weighted average shares outstanding1,283 1,313 1,285 1,372 
Basic earnings per share:
Common Stock$1.31 $1.25 $2.45 $2.32 
Class A Common Stock$1.25 $1.18 $2.33 $2.18 
Diluted earnings per share:
Common Stock$1.27 $1.21 $2.37 $2.25 
Class A Common Stock$1.22 $1.16 $2.27 $2.13 
10

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes contained herein and with the audited consolidated financial statements, accompanying notes, related information and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2021 (“Form 10-K”).
Forward-Looking Statements
Statements in this Form 10-Q that are not historical facts, including statements about our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. Known material risk factors applicable to us that could cause our actual results to differ from these forward-looking statements are described in "Item 1A. Risk Factors" of our Form 10-K and in the subsequent reports we file with the SEC. All forward‑looking statements speak only as of the date made, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this report except as required by law.
Net Sales
Our sales are generated by customer purchases of home furnishings. Revenue is recognized upon delivery to the customer. Comparable-store or “comp-store” sales is a measure which indicates the performance of our existing stores and website by comparing the growth in sales in store and online for a particular month over the corresponding month in the prior year. Stores are considered non-comparable if they were not open during the corresponding month in the prior year or if the selling square footage has been changed significantly. Stores closed due to COVID-19 were excluded from comp-store sales. The method we use to compute comp-store sales may not be the same method used by other retailers. We record our sales when the merchandise is delivered to the customer. We also track “written sales” and “written comp-store sales” which represent customer orders prior to delivery. The disruptions to our supply chain have resulted in lower inventory in certain categories and for out-of-stock merchandise delivery times can be 8 to 12 weeks. As a retailer, comp-store sales and written comp-store sales are an indicator of relative customer spending and store performance. Comp-store sales, total written sales and written comp-store sales are intended only as supplemental information and none are substitutes for net sales presented in accordance with US GAAP.
The following table outlines our sales and comp-store sales increases and decreases for the periods indicated:
20222021
Net SalesComp-Store SalesNet SalesComp-Store Sales
PeriodTotal
 Dollars
%
 Change
$
Change
%
 Change
$
Change
Total
 Dollars
%
 Change
$
Change
%
 Change
$
Change
Q1$238.9 1.0 %$2.5 0.2 %$0.4 $236.5 31.8 %$57.1 11.5 %$15.4 
Q2$253.2 1.3 %$3.2 1.1 %$2.7 $250.0 127.3 %$140.0 46.9 %$48.8 
YTD Q2$492.1 1.2 %$5.7 0.7 %$3.2 $486.5 68.1 %$197.1 27.0 %$64.2 
Total sales for the second quarter of 2022 increased $3.2 million, or 1.3%, compared to 2021. Our comp-store sales increased 1.1%, or $2.7 million, in the second quarter of 2022 compared to 2021.
Our free in-home design service continues to grow as COVID-19 concerns abate, and designer sales were 24.8% of our total written business for the second quarter of 2022 compared to 24.6% for 2021. COVID-19 continues to impact our supply chain, and ongoing delays in our case goods inventory impacted our business. Sales in this category as a percent of our total sales were 34.3% in the second quarter of 2022 compared to 36.7% in 2021. We did begin to receive and restore case goods and other items to a more normal operating inventory level during the second quarter which allowed us to deliver customer orders.
The declines in in-store traffic and written business which began in March 2022 continued through June 2022. Written business for the second quarter of 2022 was down 13.3% compared to 2021. We continued to experience a return to increased consumer interest around traditional shopping events and had very strong business for the Fourth of July holiday. Our written business for the second quarter of 2022 compared to the
11

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
"normal" pre-pandemic second quarter of 2019 was up 23.2% as customers are still investing in their homes. In the second half of 2022, we expect that our business will continue to be affected as rising inflation, including fuel costs, stock market volatility, higher interest rates and concerns regarding a recession impact discretionary consumer spending.
Gross Profit
Gross profit for the second quarter of 2022 was 57.9%, up 130 basis points compared to the prior year period of 56.6%. The increase is primarily due to pricing discipline and merchandise pricing mix.
We expect annual gross profit margins for 2022 will be 57.7% to 58.0%. Gross profit margins fluctuate quarter to quarter in relation to our promotional cadence. Our estimated gross profit margins are based on anticipated changes in product and freight costs and their impact on our LIFO reserve.
Substantially all of our occupancy and home delivery costs are included in selling, general and administrative expenses (“SG&A”) as are a portion of our warehousing expenses. Accordingly, our gross profit may not be comparable to those entities that include these costs in cost of goods sold.
Selling, General and Administrative Expenses
Our SG&A costs as a percent of sales for the second quarter of 2022 were 46.7% versus 45.0% for 2021. SG&A dollars increased $5.7 million, or 5.1%, for the second quarter of 2022 compared to the same prior year period. The increase is driven by higher costs associated with selling expense of $2.3 million, distribution and delivery costs of $2.6 million, and occupancy expenses of $0.6 million.
We classify our SG&A expenses as either variable or fixed and discretionary. Our variable expenses include the costs in the selling and delivery categories and certain warehouse and distribution expenses as these amounts will generally move in tandem with our level of sales. The remaining categories and expenses for occupancy, advertising, and administrative costs are classified as fixed and discretionary because these costs do not fluctuate with sales.
The following table outlines our SG&A expenses by classification:
(In thousands)Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
$% of
Net Sales
$% of
Net Sales
$% of
Net Sales
$% of
Net Sales
Variable$45,955 18.2 %$41,958 16.8 %$90,339 18.4 %$82,665 17.0 %
Fixed and discretionary72,174 28.5 %70,439 28.2 %142,944 29.0 %139,494 28.7 %
$118,129 46.7 %$112,397 45.0 %$233,283 47.4 %$222,159 45.7 %
The variable expenses in dollars were higher in the second quarter of 2022 compared to 2021 due to the increase in compensation costs for selling and delivery personnel and rising fuel costs.
Fixed and discretionary expenses were impacted in the second quarter of 2022 primarily by increases in warehouse and other occupancy costs compared to the prior year quarter.
Our variable type expenses within SG&A for the full year of 2022 are anticipated to be 18.2% to 18.4%, an increase from our previous estimate based on increases in selling and delivery costs. Fixed and discretionary expenses are expected to be approximately $293.0 to $295.0 million for the full year of 2022, a decrease from our previous guidance based on changes in our marketing spend.
Liquidity and Capital Resources
Cash and Cash Equivalents at End of Year
At June 30, 2022, we had $143.5 million in cash and cash equivalents, and $6.7 million in restricted cash equivalents. We believe that our current cash position, cash flow generated from operations, funds available from our credit agreement, and access to the long-term debt capital markets should be sufficient for our
12

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
operating requirements and to enable us to fund our capital expenditures, dividend payments, and lease obligations through the next several years. In addition, we believe we have the ability to obtain alternative sources of financing. We expect capital expenditures of approximately $32.0 million for the full year of 2022.
Long-Term Debt
In May 2020, we entered into the Third Amendment to our Amended and Restated Credit Agreement (as amended, the “Credit Agreement”) with a bank. The Credit Agreement, which matures September 27, 2024, provides for a $60.0 million revolving credit facility. Amounts available to borrow fluctuate and availability at June 30, 2022 was $47.1 million and we had no amounts outstanding.
Leases
We use operating leases to fund a portion of our real estate, including our stores, distribution centers, and store support space.
Share Repurchases
In November 2021, our Board of Directors authorized an additional $25.0 million for our share repurchase program. During the three months ended June 30, 2022 we purchased 461,391 shares of common stock for approximately $12.5 million. During the six months ended June 30, 2022 we purchased 899,890 shares of common stock for approximately $25.0 million. Substantially all funds under the current authorization have been used as of June 30, 2022.
Cash Flows Summary
Operating Activities. Cash flow generated from operations provides us with a significant source of liquidity. Our operating cash flows result primarily from cash received from our customers, offset by cash payments we make for products and services, employee compensation, operations, and occupancy costs.
Cash provided by or used in operating activities is also subject to changes in working capital. Working capital at any specific point in time is subject to many variables, including seasonality, inventory selection, the timing of cash receipts and payments, and vendor payment terms.
Net cash provided by operating activities was $26.3 million in the first six months of 2022 compared to $57.6 million during the same period in 2021. This difference was primarily driven by changes associated with customer deposits, accounts payable, and inventories.
Investing Activities. Cash used in investing activities increased by $2.6 million in the first six months of 2022 compared to the first six months of 2021, as the result of greater capital expenditures.
Financing Activities. Cash used in financing activities increased by $24.1 million in the first six months of 2022 compared to the first six months of 2021, primarily due to the $25.0 million of share repurchases in 2022.
Store Plans and Capital Expenditures
LocationOpening Quarter
Actual or Planned
Category
Austin, TXQ-1-22Open
Atlanta, GAQ-2-22Closure
Metro DCQ-3-22Open
Indianapoli, INQ-4-22Relocation
Allen, TXQ-4-22Closure
Durham, NCQ-1-23Open
Net selling space in 2022 is expected to be flat compared to 2021. Total capital expenditures are estimated to be $32.0 million in 2022 depending on the timing of spending for new projects.
13

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Critical Accounting Estimates
Critical accounting estimates are those that we believe are both significant and that require us to make difficult, subjective or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates, and we might obtain different estimates if we used different assumptions or conditions. We reviewed our accounting estimates, and none were deemed to be considered critical for the accounting periods presented in our Form 10-K. We had no significant changes in those accounting estimates since our last annual report.
Item 3.    Quantitative and Qualitative Disclosures about Market Risk
For quantitative and qualitative disclosures about market risk, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Form 10-K. Our exposure to market risk has not changed materially since December 31, 2021.
Item 4.    Controls and Procedures
As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, our management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report and provide reasonable assurance that information required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate, to allow timely decisions regarding disclosure.
There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a-15 that occurred during the Company’s fiscal quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. As a result of the COVID-19 pandemic, team members have shifted to a rotating work from home and office environment. We have reviewed our financial reporting process to provide reasonable assurance that we could report our financial results accurately and timely, and we will continue to evaluate the impact of any related changes to our internal control over financial reporting.
14

PART II. OTHER INFORMATION
Item 1.    Legal Proceedings
Information regarding legal proceedings is described under the subheading “Business and Basis of Presentation” in Note A of the Notes to the Condensed Consolidated Financial Statements set forth in this Form 10-Q.
Item 1A.    Risk Factors
"Item 1A. Risk Factors” in our Form 10-K includes a discussion of our known material risk factors. There have been no material changes from the risk factors described in our Form 10-K.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
The board of directors has authorized management, at its discretion, to purchase and retire limited amounts of our Common Stock and Class A Common Stock. A program was initially approved by the board on November 3, 1986. On November 5, 2021, the board authorized an additional amount under such stock repurchase program. The stock repurchase program has no expiration date but may be terminated by our board at any time.
The following table presents information with respect to our repurchase of Havertys’ common stock during the second quarter of 2022:
(a)
Total Number of
 Shares Purchased
(b)
Average Price
 Paid Per Share
(c)
Total Number of
 Shares Purchased
 as Part of Publicly
 Announced Plans or
 Programs
(d)
Approximate Dollar
 Value of Shares That
May Yet be Purchased
 Under the Plans or
 Programs
April 1 - April 30— — — $12,504,000 
May 1 - May 31159,700 $27.47 159,700 $8,482,700 
June 1 - June 30301,691 $26.89 301,691 $4,700 
Total461,391 461,391 
15

Item 6.    Exhibits
(a)Exhibits
The exhibits listed below are filed with or incorporated by reference into this report (those filed with this report are denoted by an asterisk). Unless otherwise indicated, the exhibit number of documents incorporated by reference corresponds to the exhibit number in the referenced documents.
Exhibit NumberDescription of Exhibit (Commission File No. 1-14445)
Articles of Amendment and Restatement of the Charter of Haverty Furniture Companies, Inc. effective May 26, 2006 (Exhibit 3.1 to our Second Quarter 2006 Form 10-Q).
By-laws of Haverty Furniture Companies, Inc. as amended and restated effective May 8, 2018 (Exhibit 3.1 to our Current Report on Form 8-K dated May 10, 2018).
Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as amended.
Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as amended.
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
101The following financial statements from Haverty Furniture Companies, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in inline XBRL, include: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Statements of Cash Flows and (iv) the Notes to Condensed Consolidated Financial Statements.
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
*    Filed herewith.
**    Furnished herewith.
16

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
HAVERTY FURNITURE COMPANIES, INC.
(Registrant)
Date: August 5, 2022
By:/s/ Clarence H. Smith
Clarence H. Smith
Chairman of the Board
and Chief Executive Officer
(principal executive officer)
By:/s/ Richard B. Hare
Richard B. Hare
Executive Vice President and
Chief Financial Officer
(principal financial and accounting officer)


Exhibit 31.1
I, Clarence H. Smith, certify that:
1.I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2022 of Haverty Furniture Companies, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 5, 2022
/s/ Clarence H. Smith
Clarence H. Smith
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)


Exhibit 31.2
I, Richard B. Hare, certify that:
1.I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2022 of Haverty Furniture Companies, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 5, 2022
/s/ Richard B. Hare
Richard B. Hare
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)


Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Haverty Furniture Companies, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2022 (the “Report”), I, Clarence H. Smith, Chairman of the Board and Chief Executive Officer of the Company, and I, Richard B. Hare, Executive Vice President and Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 5, 2022
/s/ Clarence H. Smith
Clarence H. Smith
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
/s/ Richard B. Hare
Richard B. Hare
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
A signed original of this written statement required by Section 906 has been provided to Haverty Furniture Companies, Inc. and will be retained by Haverty Furniture Companies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.



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