Havertys Reports Earnings for First Quarter 2016
ATLANTA, May 02, 2016 (GLOBE NEWSWIRE) -- HAVERTYS (NYSE: HVT) (HVT.A) reports earnings per share for the first quarter ended March 31, 2016 was $0.21 compared to $0.27 for the same period of 2015.
Clarence H. Smith, chairman, president and CEO, said, “Our earnings results reflect the previously announced modest sales increase. Our expansion and remodeling strategy has yielded nine new locations and two significantly remodeled and expanded stores over the past 21 months. The sales results for these locations, including those in new markets, combined with the overall slower growth in some of our existing markets has not yet allowed us to outpace the additional fixed costs. We are pleased that our mobile friendly website has seen strong increases in traffic and sales. We will continue to use our website to stimulate interest in Havertys via email marketing, search engine campaigns, display ads, and social media. Operationally, we are nearing the completion of the migration to a new supply chain import network system, expansion of our Florida distribution infrastructure, and conversion to more collaborative cloud based systems for our management teams.
With the continued uncertain economic and political climate, we are pleased that our top line growth has improved thus far in the seasonally weaker second quarter. We are in a strong financial position and remain committed to increasing shareholder value.”
Financial Highlights
First Quarter 2016 Compared to First Quarter 2015
- As previously reported, total net sales increased 1.7% to $194.5 million. Comparable store sales increased 0.9% over the same period last year.
- Total written sales were down 1.3% and written comparable store sales decreased 2.2%. Havertys’ stores are closed for Easter and the negative impact from the holiday occurring in March this year versus April last year is estimated at 1.4%.
- Average written ticket was up 1.1% and sales of custom order upholstery grew 4.0%.
- Gross profit margins of 53.7% were flat and slightly better than our estimates.
- SG&A costs as a percent of sales were 49.5% in 2016 and 48.2% in 2015. Total SG&A dollars increased $4.1 million due to increases in advertising of $1.2 million, selling costs of $0.8 million, occupancy expense of $0.8 million, and administrative costs of $0.6 million.
- Investments of $3.1 million were made in new computer equipment and the related multi-year maintenance agreements increased prepaid expenses $3.0 million.
- In March we amended our credit facility to increase commitments from $50.0 million to $60.0 million, lower the unused fees, reduce the rate on borrowings, and extend the maturity date to March 2021 from September 2016. We have not borrowed under our revolving credit facility since its origination in 2008.
- We purchased 11,497 shares of our common stock during the quarter at an average price of $20.49.
Expectations and Other
- Total delivered sales for the second quarter to date of 2016 are up approximately 4.7% over the same period last year and comparable store sales are up 4.5%.
- Total written sales for the second quarter to date of 2016 are up approximately 8.8% and written comparable store sales are up 8.9%. Havertys’ stores are closed for Easter and the positive impact from the holiday occurring in March this year versus April last year is estimated at 4.8%.
- Our previous guidance on gross profit margins for the full year 2016 remains unchanged at 53.5% as we expect a negative impact from closeout inventory.
- Our estimate for fixed and discretionary type expenses for 2016 remains $251 million versus the $240.9 million for these same costs in 2015. The variable type costs within SG&A for the full year of 2016 are anticipated to be approximately 17.9% percent of sales.
- In April we opened a temporary location in Lubbock, Texas to serve that market while we rebuild our store that was destroyed at the end of December.
- We expect to increase selling square footage approximately 1.4% in 2016. Total capital expenditures are estimated to be in the $33 million range in 2016 depending on the timing of spending for new projects.
| HAVERTY FURNITURE COMPANIES, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
| (In Thousands, except per share data – Unaudited) |
| Three Months EndedMarch 31, | |||||||||
| 2016 | 2015 | ||||||||
| Net sales | $ | 194,511 | $ | 191,331 | |||||
| Cost of goods sold | 90,092 | 88,684 | |||||||
| Gross profit | 104,419 | 102,647 | |||||||
| Credit service charges | 65 | 72 | |||||||
| Gross profit and other revenue | 104,484 | 102,719 | |||||||
| Expenses: | |||||||||
| Selling, general and administrative | 96,353 | 92,303 | |||||||
| Provision for doubtful accounts | 104 | 23 | |||||||
| Other income, net | (182 | ) | (27 | ) | |||||
| Total expenses | 96,275 | 92,299 | |||||||
| Income before interest and income taxes | 8,209 | 10,420 | |||||||
| Interest expense, net | 622 | 492 | |||||||
| Income before income taxes | 7,587 | 9,928 | |||||||
| Income tax expense | 2,918 | 3,809 | |||||||
| Net income | $ | 4,669 | $ | 6,119 | |||||
| Other comprehensive income | |||||||||
| Adjustments related to retirement plans; net of tax expense of $11 and $31 | $ | 19 | $ | 50 | |||||
| Comprehensive income | $ | 4,688 | $ | 6,169 | |||||
| Basic earnings per share: | |||||||||
| Common Stock | $ | 0.21 | $ | 0.27 | |||||
| Class A Common Stock | $ | 0.20 | $ | 0.26 | |||||
| Diluted earnings per share: | |||||||||
| Common Stock | $ | 0.21 | $ | 0.27 | |||||
| Class A Common Stock | $ | 0.20 | $ | 0.25 | |||||
| Basic weighted average shares outstanding: | |||||||||
| Common Stock | 20,021 | 20,569 | |||||||
| Class A Common Stock | 2,031 | 2,081 | |||||||
| Diluted weighted average shares outstanding: | |||||||||
| Common Stock | 22,496 | 22,977 | |||||||
| Class A Common Stock | 2,031 | 2,081 | |||||||
| Cash Dividends per share: | |||||||||
| Common Stock | $ | 0.100 | $ | 0.080 | |||||
| Class A Common Stock | $ | 0.095 | $ | 0.075 | |||||
| HAVERTY FURNITURE COMPANIES, INC. |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (In Thousands – Unaudited) |
| March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | $ | 53,733 | $ | 70,659 | $ | 74,146 | ||||||
| Investments | 12,740 | 12,725 | 6,250 | |||||||||
| Restricted cash and cash equivalents | 8,010 | 8,005 | 8,000 | |||||||||
| Accounts receivable | 4,857 | 5,948 | 6,393 | |||||||||
| Inventories | 110,200 | 108,896 | 107,348 | |||||||||
| Prepaid expenses | 10,411 | 6,137 | 7,271 | |||||||||
| Other current assets | 5,317 | 6,341 | 4,073 | |||||||||
| Total current assets | 205,268 | 218,711 | 213,481 | |||||||||
| Accounts receivable, long-term | 546 | 655 | 695 | |||||||||
| Property and equipment | 236,587 | 229,283 | 228,952 | |||||||||
| Deferred income taxes | 17,234 | 17,245 | 17,939 | |||||||||
| Other assets | 6,038 | 5,357 | 8,559 | |||||||||
| Total assets | $ | 465,673 | $ | 471,251 | $ | 469,626 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable | $ | 24,172 | $ | 27,815 | $ | 23,055 | ||||||
| Customer deposits | 23,782 | 21,036 | 29,583 | |||||||||
| Accrued liabilities | 30,541 | 42,060 | 35,632 | |||||||||
| Deferred income taxes | - | - | 5,689 | |||||||||
| Current portion of lease obligations | 3,239 | 3,051 | 2,788 | |||||||||
| Total current liabilities | 81,734 | 93,962 | 96,747 | |||||||||
| Lease obligations, less current portion | 53,038 | 50,074 | 48,861 | |||||||||
| Other liabilities | 25,864 | 25,476 | 26,557 | |||||||||
| Total liabilities | 160,636 | 169,512 | 172,165 | |||||||||
| Stockholders’ equity | 305,037 | 301,739 | 297,461 | |||||||||
| Total liabilities and stockholders’ equity | $ | 465,673 | $ | 471,251 | $ | 469,626 | ||||||
| HAVERTY FURNITURE COMPANIES, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (In Thousands – Unaudited) |
| Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| CASH FLOW FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | 4,669 | $ | 6,119 | ||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization | 6,792 | 6,098 | ||||||
| Share-based compensation expense | 1,050 | 1,113 | ||||||
| Provision for doubtful accounts | 104 | 23 | ||||||
| Other | (24 | ) | (6 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 1,096 | 766 | ||||||
| Inventories | (1,304 | ) | (209 | ) | ||||
| Customer deposits | 2,746 | 5,896 | ||||||
| Other assets and liabilities | (3,512 | ) | (451 | ) | ||||
| Accounts payable and accrued liabilities | (16,380 | ) | (5,785 | ) | ||||
| Net cash (used in) provided by operating activities | (4,763 | ) | 13,564 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Capital expenditures | (8,979 | ) | (6,711 | ) | ||||
| Maturities of certificates of deposit | - | 1,000 | ||||||
| Other | 4 | 23 | ||||||
| Net cash used in investing activities | (8,975 | ) | (5,688 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Payments on lease obligations | (748 | ) | (593 | ) | ||||
| Dividends paid | (2,205 | ) | (1,802 | ) | ||||
| Common stock purchased | (235 | ) | - | |||||
| Construction allowance receipts | - | 3,286 | ||||||
| Other | - | (102 | ) | |||||
| Net cash (used in) provided by financing activities | (3,188 | ) | 789 | |||||
| (Decrease) increase in cash and cash equivalents during the period | (16,926 | ) | 8,665 | |||||
| Cash and cash equivalents at beginning of period | 70,659 | 65,481 | ||||||
| Cash and cash equivalents at end of period | $ | 53,733 | $ | 74,146 | ||||
About Havertys
Havertys (NYSE: HVT) (NYSE:HVT.A), established in 1885, is a full-service home furnishings retailer with 122 showrooms in 16 states in the Southern and Midwestern regions providing its customers with a wide selection of quality merchandise in middle to upper-middle price ranges. Additional information is available on the company’s website havertys.com.
News releases include forward-looking statements, which are subject to risks and uncertainties. Factors that might cause actual results to differ materially from future results expressed or implied by such forward-looking statements include, but are not limited to, general economic conditions, the consumer spending environment for large ticket items, competition in the retail furniture industry and other uncertainties detailed from time to time in the company’s reports filed with the SEC.
Conference Call Information
The company invites interested parties to listen to the live audiocast of the conference call on Tuesday, May 3, 2016 at 10:00 a.m. ET at its website, havertys.com under the investor relations section. If you cannot listen live, a replay will be available on the day of the conference call at the website or via telephone at approximately 1:00 p.m. ET through Tuesday, May 10, 2016. The number to access the telephone playback is 1-888-203-1112 (access code: 2990845).
Contact: Haverty Furniture Companies, Inc., 404-443-2900 Dennis L. Fink EVP & CFO Jenny Hill Parker SVP, Finance, Secretary and TreasurerSource: Haverty Furniture Companies, Inc.