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Published: 2022-11-02 13:15:14 ET
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EX-99.1 2 hvtex99.htm EXHIBIT 99.1: PRESS RELEASE DATED NOVEMBER 1, 2022
EXHIBIT 99.1





Havertys Reports Operating Results for Third Quarter 2022

Atlanta, Georgia, November 1, 2022 – HAVERTYS (NYSE: HVT and HVT.A), today reported its operating results for the third quarter ended September 30, 2022.

Third quarter 2022 versus third quarter 2021:

•
Diluted earnings per common share (“EPS”) of $1.46 versus $1.31.
•
Consolidated sales increased 5.4% to $274.5 million. Comparable store sales increased 6.3%.
•
Gross profit margin of 57.1% versus 56.8%.

Clarence H. Smith, chairman and CEO, said, “Our strong earnings were the result of increased sales and gross margin improvement. We made progress in delivering customer backorders as we received a near record number of containers from vendors. We had a strong Labor Day as customers returned to more traditional shopping patterns with softer traffic outside these peak periods. Written business compared to last year's record pace was down 7.2% but up 15.8% compared to the pre-pandemic third quarter of 2019. Our sales associates and design consultants are providing excellent service to each customer and this quarter's average ticket was up 8.2% over last year.

"The last quarter of 2022 will be challenging as consumers face continued inflation, rising interest rates, market volatility, and geopolitical concerns. We are well positioned to service our growing customer base, and will continue to use our financial strength to invest in growth initiatives to drive the business in 2023 and beyond."





NEWS RELEASE – November 1, 2022 Page 2

Key Results
(amounts in millions, except per share amounts)

Results of Operations
                        
   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2022
    
2021
    
2022
    
2021
  
Sales
  
$
274.5
    
$
260.4
    
$
766.7
    
$
746.9
  
Gross Profit
    
156.7
      
148.0
      
444.3
      
424.5
  
Gross profit as a % of sales
    
57.1
%
    
56.8
%
    
58.0
%
    
56.8
%
                                 
SGA
                                
Variable
    
50.2
      
43.7
      
140.5
      
126.4
  
Fixed
    
74.3
      
72.4
      
217.3
      
211.9
  
Total
    
124.5
      
116.1
      
357.8
      
338.3
  
SGA as a % of sales
                                
Variable
    
18.3
%
    
16.8
%
    
18.3
%
    
16.9
%
Fixed
    
27.1
%
    
27.8
%
    
28.3
%
    
28.4
%
Total
    
45.4
%
    
44.6
%
    
46.6
%
    
45.3
%
                                 
Pre-tax income
    
32.6
      
31.9
      
87.0
      
86.4
  
Pre-tax income as a % of sales
    
11.9
%
    
12.3
%
    
11.3
%
    
11.6
%
Net income
    
24.6
      
24.2
      
65.6
      
66.5
  
Net income as a % of sales
    
8.9
%
    
9.3
%
    
8.6
%
    
8.9
%
                                 
Diluted earnings per share (“EPS”)
  
$
1.46
    
$
1.31
    
$
3.83
    
$
3.55
  

Other Financial and Operations Data
            
             
   
Nine Months Ended
September 30,
  
   
2022
    
2021
  
EBITDA (in millions)(1)
  
$
99.0
    
$
98.4
  
Sales per square foot
  
$
236
    
$
229
  
Average ticket
  
$
3,213
    
$
2,970
  

Liquidity Measures
                          
                           
   
Nine Months Ended
September 30,
      
Nine Months Ended
September 30,
  
Free Cash Flow
  
2022
    
2021
  
Cash Returns to Shareholders
  
2022
    
2021
  
Operating cash flow
  
$
38.2
    
$
89.0
  
Share repurchases
  
$
30.0
    
$
19.5
  
                 
Dividends
    
13.4
      
13.0
  
Capital expenditures
    
(22.1
)
    
(28.1
)
Cash returns to shareholders
  
$
43.4
    
$
32.5
  
Free cash flow
  
$
16.1
    
$
60.9
                    
                                   
Cash at period end
  
$
144.0
    
$
232.4
                    

(1)
See the reconciliation of the non-GAAP metrics at the end of the release.





NEWS RELEASE – November 1, 2022 Page 3


Third Quarter ended September 30, 2022 Compared to Same Period of 2021
•
Total sales up 5.4%, comp-store sales up 6.3% for the quarter. Total written sales were down 7.2% and written comp-store sales declined 6.9% for the quarter.
•
Gross profit margins increased 30 basis points to 57.1% in 2022 from 56.8% in 2021 due to pricing discipline and merchandise mix.
•
SG&A expenses were 45.4% of sales versus 44.6% and increased $8.4 million. The primary drivers of this change are:
◦
increase of $4.9 million in selling expenses due to increased compensation and benefits costs and third-party credit costs.
◦
increase in advertising and marketing costs of $1.1 million.
◦
increase in administrative costs of $1.5 million primarily resulting from increased compensation costs.
◦
increase in warehouse and delivery costs of $2.2 million due to increased fuel and compensation costs partially offset by $1.8 million lower demurrage fees resulting in a net increase of $0.4 million.

Balance Sheet and Cash Flow
•
Cash and cash equivalents at September 30, 2022 are $144.0 million.
•
Generated $38.2 million in cash from operating activities primarily from solid earnings performance, offset by funding of a $25.3 million increase in inventories and a $7.3 million increase in other operating assets and liabilities.
•
Purchased approximately 1.1 million shares of common stock for $30.0 million and paid $13.4 million in quarterly cash dividends during the nine months ended September 30, 2022.
•
The Company has no funded debt.

Expectations and Other
•
We expect gross profit margins for 2022 will be between 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 its impact on our LIFO reserve.
•
Fixed and discretionary expenses within SG&A for the full year of 2022 are expected to be in the $290.0 to $293.0 million range, a reduction in our previous guidance related to general and administrative costs. Variable SG&A expenses for the full year of 2022 are anticipated to be in the 18.2% to 18.4% range in 2022.
•
Our effective tax rate for 2022 is expected to be 25% excluding the impact from the vesting of stock-based awards, potential tax credits, and any new tax legislation.
•
Planned capital expenditures are approximately $30.0 million in 2022. We expect retail square footage will be relatively flat as we plan to open three stores and close two. As part of our enhanced online presence, we are making investments in information technology. This current capital expenditures estimate reflects a deferral of the conversion of our home delivery center in Virginia to a regional distribution facility due to availability and pricing of building materials.








NEWS RELEASE – November 1, 2022 Page 4


HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
(In thousands, except per share data - unaudited)
  
2022
    
2021
    
2022
    
2021
  
                         
Net sales
  
$
274,495
    
$
260,378
    
$
766,658
    
$
746,858
  
Cost of goods sold
    
117,775
      
112,375
      
322,368
      
322,320
  
Gross profit
    
156,720
      
148,003
      
444,290
      
424,538
  
                                 
Expenses:
                                
Selling, general and administrative
    
124,534
      
116,156
      
357,816
      
338,315
  
Other expense (income), net
    
58
      
2
      
176
      
(40
)
Total expenses
    
124,592
      
116,158
      
357,992
      
338,275
  
                                 
Income before interest and income taxes
    
32,128
      
31,845
      
86,298
      
86,263
  
Interest income, net
    
481
      
58
      
699
      
173
  
                                 
Income before income taxes
    
32,609
      
31,903
      
86,997
      
86,436
  
Income tax expense
    
8,058
      
7,670
      
21,377
      
19,939
  
Net income
  
$
24,551
    
$
24,233
    
$
65,620
    
$
66,497
  
                                 
Other comprehensive income
                                
Adjustments related to retirement plans; net of tax expense of $14 and $41 in 2022 and $16 and $48 in 2021
  
$
41
    
$
50
    
$
122
    
$
148
  
                                 
Comprehensive income
  
$
24,592
    
$
24,283
    
$
65,742
    
$
66,645
  
                                 
Basic earnings per share:
                                
Common Stock
  
$
1.51
    
$
1.35
    
$
3.96
    
$
3.67
  
Class A Common Stock
  
$
1.43
    
$
1.28
    
$
3.75
    
$
3.45
  
                                 
Diluted earnings per share:
                                
Common Stock
  
$
1.46
    
$
1.31
    
$
3.83
    
$
3.55
  
Class A Common Stock
  
$
1.40
    
$
1.25
    
$
3.66
    
$
3.38
  
                                 
Cash dividends per share:
                                
Common Stock
  
$
0.28
    
$
0.25
    
$
0.81
    
$
0.72
  
Class A Common Stock
  
$
0.26
    
$
0.23
    
$
0.75
    
$
0.65
  





NEWS RELEASE – November 1, 2022 Page 5
HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)
  
September 30,
2022
    
December 31,
2021
    
September 30,
2021
  
   
(Unaudited)
          
(Unaudited)
  
Assets
                  
Current assets
                  
Cash and cash equivalents
  
$
137,226
    
$
166,146
    
$
225,674
  
Restricted cash and cash equivalents
    
6,753
      
6,716
      
6,716
  
Inventories
    
137,315
      
112,031
      
118,961
  
Prepaid expenses
    
11,992
      
12,418
      
13,729
  
Other current assets
    
16,801
      
11,746
      
13,441
  
Total current assets
    
310,087
      
309,057
      
378,521
  
Property and equipment, net
    
135,300
      
126,099
      
124,795
  
Right-of-use lease assets
    
217,848
      
222,356
      
229,975
  
Deferred income taxes
    
17,834
      
16,375
      
18,120
  
Other assets
    
11,877
      
12,403
      
12,349
  
Total assets
  
$
692,946
    
$
686,290
    
$
763,760
  
Liabilities and Stockholders’ Equity
                        
Current liabilities
                        
Accounts payable
  
$
24,932
    
$
31,235
    
$
34,663
  
Customer deposits
    
79,746
      
98,897
      
120,149
  
Accrued liabilities
    
53,366
      
46,664
      
56,880
  
Current lease liabilities
    
34,702
      
33,581
      
34,108
  
Total current liabilities
    
192,746
      
210,377
      
245,800
  
Noncurrent lease liabilities
    
196,799
      
196,771
      
203,935
  
Other liabilities
    
19,792
      
23,172
      
22,484
  
Total liabilities
    
409,337
      
430,320
      
472,219
  
                         
Stockholders’ equity
    
283,609
      
255,970
      
291,541
  
Total liabilities and stockholders’ equity
  
$
692,946
    
$
686,290
    
$
763,760
  





NEWS RELEASE – November 1, 2022 Page 6

HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands - unaudited)
  
Nine Months Ended
September 30,
  
   
2022
    
2021
  
Cash Flows from Operating Activities:
            
Net income
  
$
65,620
    
$
66,497
  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
    
12,744
      
12,099
  
Share-based compensation expense
    
6,032
      
6,456
  
Other
    
(450
)
    
(1,558
)
Changes in operating assets and liabilities:
                
Inventories
    
(25,284
)
    
(29,053
)
Customer deposits
    
(19,151
)
    
33,966
  
Other assets and liabilities
    
(7,318
)
    
(6,088
)
Accounts payable and accrued liabilities
    
6,007
      
6,679
  
Net cash provided by operating activities
    
38,200
      
88,998
  
                 
Cash Flows from Investing Activities:
                
Capital expenditures
    
(22,109
)
    
(28,060
)
Proceeds from sale of land, property and equipment
    
66
      
78
  
Net cash used in investing activities
    
(22,043
)
    
(27,982
)
                 
Cash Flows from Financing Activities:
                
Dividends paid
    
(13,366
)
    
(13,010
)
Common stock repurchased
    
(29,998
)
    
(19,493
)
Other
    
(1,676
)
    
(2,894
)
Net cash used in financing activities
    
(45,040
)
    
(35,397
)
                 
(Decrease) increase in cash, cash equivalents and restricted cash equivalents during the period
    
(28,883
)
    
25,619
  
Cash, cash equivalents and restricted cash equivalents at beginning of period
    
172,862
      
206,771
  
Cash, cash equivalents and restricted cash equivalents at end of period
  
$
143,979
    
$
232,390
  





NEWS RELEASE – November 1, 2022 Page 7

GAAP to Non-GAAP Reconciliation
We report our financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). We supplement the reporting of our financial information under GAAP with certain non-GAAP financial information. The non-GAAP information presented provides additional useful information but should not be considered in isolation or as substitutes for the related GAAP measures. We believe that EBITDA is a meaningful measure to share with investors. 

Reconciliation of GAAP measures to EBITDA
   
Nine Months Ended
September 30,
  
(in thousands)
  
2022
    
2021
  
Income before income taxes, as reported
  
$
86,997
    
$
86,436
  
Interest income, net
    
(699
)
    
(173
)
Depreciation
    
12,744
      
12,099
  
EBITDA
  
$
99,042
    
$
98,362
  

Comparable Store Sales  
Comparable-store or “comp-store” sales is a measure which indicates the performance of our existing stores and website by comparing the sales growth for stores 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 or if the selling square footage has been changed significantly.
 
Cost of Goods Sold and SG&A Expense  
We include substantially all our occupancy and home delivery costs in SG&A expense as well as 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.  
  
We classify our SG&A expenses as either variable or fixed and discretionary.  Our variable expenses are comprised of selling and delivery costs.  Selling expenses are primarily compensation and related benefits for our commission-based sales associates, the discount we pay for third party financing of customer sales and transaction fees for credit card usage.  We do not outsource delivery, so these costs include personnel, fuel, and other expenses related to this function.  Fixed and discretionary expenses are comprised of rent, depreciation and amortization and other occupancy costs for stores, warehouses and offices, and all advertising and administrative costs.  

Conference Call Information
The company invites interested parties to listen to the live webcast of the conference call on November 2, 2022 at 10:00 a.m. ET at its website, ir.havertys.com. If you cannot listen live, a replay will be available on the day of the conference call at the website at approximately 1:00 p.m. ET.

About Havertys  
Havertys (NYSE: HVT and HVT.A), established in 1885, is a full-service home furnishings retailer with 121 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 RELEASE – November 1, 2022 Page 8

Safe Harbor  
This press release contains, and the conference call may contain forward-looking statements subject to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. These forward-looking statements are subject to risks and uncertainties and change based on various important factors, many of which are beyond our control.  
 
All statements in the future tense and all statements accompanied by words such as “expect,” “likely,” “outlook,” “forecast,” “preliminary,” “would,” “could,” “should,” “position,” “will,” “project,” “intend,” “plan,” “on track,” “anticipate,” “to come,” “may,” “possible,” “assume,” and variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, our expectations for retail and operating margins, selling square footage and capital expenditures for 2022, our liquidity position to continue to fund our growth plans, and our efforts and initiatives to execute our strategic plan.
  
We caution that our forward-looking statements involve risks and uncertainties, and while we believe that our expectations for the future are reasonable in view of currently available information you are cautioned not to place undue reliance on our forward-looking statements, and they should not be relied upon as a prediction of actual results. Factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements include, but are not limited to: the extent and duration of the disruption to our business operations caused by the COVID-19 pandemic; disruptions in our suppliers' operations; potential problems with inventory availability and the potential result of the volatility or higher cost of product and international freight due to the high demand of products and low supply for an unpredictable period of time; disruptions in our third-party producers’ operations in foreign countries; changes in national and international legislation or government regulations or policies, including changes to import tariffs and the unpredictability of such changes; failure of vendors to meet our quality control standards or to react to changes in legislative or regulatory frameworks; disruptions in our distribution centers; changes in general economic conditions, including unemployment, inflation (including the impact of tariffs); labor shortages and the Company's ability to successfully attract and retain employees in the current labor market; uncertain credit markets and other macroeconomic conditions; competitive product, service and pricing pressures; failure or weakness in our disclosure controls and procedures and internal controls over financial reporting; disruptions caused by a failure or breach of the Company's information systems and information technology infrastructure, as well as other risks and uncertainties discussed in the Company's Annual Report on Form 10-K for 2021 and from time to time in the Company's subsequent filings with the SEC. 
 
Forward-looking statements describe our expectations only as of the date they are made, and the Company undertakes no duty to update its forward-looking statements except as required by law. You are advised, however, to review any further disclosures we make on related subjects in our subsequent Forms 10-K, 10-Q, 8-K, and other reports filed with the SEC.  

Contact: 
Havertys 404-443-2900 
Jenny Hill Parker 
SVP, Finance, and Corporate Secretary 
 
SOURCE:  Havertys