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Published: 2022-08-03 11:20:02 ET
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EX-99.1 2 hvtex99.htm EXHIBIT 99.1 EXHIBIT 99.1



Havertys Reports Operating Results for Second Quarter 2022


Atlanta, Georgia, August 2, 2022 – HAVERTYS (NYSE: HVT and HVT.A), today reported its operating results for the second quarter ended June 30, 2022.


Second quarter 2022 versus second quarter 2021:

•
Diluted earnings per common share (“EPS”) of $1.27 versus $1.21.
•
Consolidated sales increased 1.3% to $253.2 million. Comparable store sales increased 1.1%. Total written sales declined 13.3%
•
Gross profit margin of 57.9% versus 56.6% and above expectations due to pricing discipline and merchandise mix.

Clarence H. Smith, chairman and CEO, said, “Our strong earnings were driven by solid gross margin improvement and attention to operating costs. These results are particularly gratifying as we are comparing to last year’s record setting growth. Supply chains issues are subsiding, and we are restoring our operating inventory levels and reducing our backlog of orders. Consumers continue to return to their historical shopping patterns of concentrating spending around traditional holiday events. We have had declines in in-store traffic and outside these peak periods and our written business was down 13.3% for the quarter compared to last year. We believe consumers are still investing in their home as our written business for the second quarter was up 23.2% over the “normal” pre-pandemic second quarter of 2019.  
The second half of this year could be challenging as consumer discretionary spending is impacted by rising inflation, market volatility, and geopolitical concerns. During Havertys’ 137 years, its competitive and financial strengths have provided the means to grow from adversity.”  


NEWS RELEASE – August 2, 2022 Page 2


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


Results of Operations 
            
   
Three Months Ended June 30
    
Six Months Ended June 30
  
 
  
2022
    
2021
    
2022
    
2021
  
Sales
  
$
253.2
    
$
250.0
    
$
492.2
    
$
486.5
  
Gross Profit
    
146.6
      
141.5
      
287.6
      
276.5
  
Gross profit as a % of sales
    
57.9
%
    
56.6
%
    
58.4
%
    
56.8
%
                                 
SGA
                                
Variable
    
45.9
      
42.0
      
90.4
      
82.7
  
Fixed
    
72.2
      
70.4
      
142.9
      
139.5
  
Total
    
118.1
      
112.4
      
233.3
      
222.2
  
SGA as a % of sales
                                
Variable
    
18.2
%
    
16.8
%
    
18.4
%
    
17.0
%
Fixed
    
28.5
%
    
28.2
%
    
29.0
%
    
28.7
%
Total
    
46.7
%
    
45.0
%
    
47.4
%
    
45.7
%
Pre-tax income
  
$
28.7
    
$
29.2
    
$
54.4
    
$
54.5
  
Pre-tax income as a % of sales
    
11.3
%
    
11.7
%
    
11.1
%
    
11.2
%
Net income
  
$
21.7
    
$
22.9
    
$
41.1
    
$
42.3
  
Net income as a % of sales
    
8.6
%
    
9.2
%
    
8.4
%
    
8.7
%
Diluted earnings per share (“EPS”)
  
$
1.27
    
$
1.21
    
$
2.37
    
$
2.25
  


Other Financial and Operations Data
      
   
Six Months Ended June 30,
  
   
2022
    
2021
  
EBITDA (in millions)(1)
  
$
62.8
    
$
62.4
  
Sales per square foot
  
$
232
    
$
229
  
Average ticket
  
$
3,122
    
$
2,785
  


Liquidity Measures
              
   
Six Months Ended June 30,
      
Six Months Ended June 30,
  
Free Cash Flow
  
2022
    
2021
  
Cash Returns to Shareholders
  
2022
    
2021
  
Operating cash flow
  
$
26.3
    
$
57.6
  
Share Repurchases
  
$
25.0
    
$
—
  
                 
Dividends
    
8.8
      
8.5
  
Capital expenditures
    
(13.5
)
    
(10.9
)
Cash returns to shareholders
  
$
33.8
    
$
8.5
  
Free cash flow
  
$
12.8
    
$
46.7
                    
Cash at period end
  
$
150.2
    
$
242.1
                    
   
(1)
See the reconciliation of the non-GAAP metrics at the end of the release.

NEWS RELEASE – August 2, 2022 Page 3


Second Quarter ended June 30, 2022 Compared to Same Period of 2021

•
Total sales up 1.3%, comp-store sales up 1.1% for the quarter. Total written sales were down 13.3% for the quarter.
•
Gross profit margins increased 130 basis points to 57.9% in 2022 from 56.6% in 2021 due to pricing discipline and merchandise mix.
•
SG&A expenses were 46.7% of sales versus 45.0% and increased $5.7 million. The primary drivers of this change are:
o
increase of $2.3 million in selling expenses due to increased compensation and benefits costs and third-party credit costs.
o
increase in distribution and delivery costs of $2.6 million due to increases in compensation and benefits costs and fuel costs.
o
Increase in occupancy costs of $0.6 million primarily resulting from the timing of repairs and maintenance and depreciation expense.

Balance Sheet and Cash Flow

•
Cash and cash equivalents at June 30, 2022 are $150.2 million.
•
Generated $26.3 million in cash from operating activities primarily from solid earnings performance, offset by funding of a $22.0 million increase in inventories and a $4.2 million increase in other operating assets and liabilities.
•
Purchased 899,890 shares of common stock for $25.0 million and paid $8.8 million in quarterly cash dividends during the six months ended June 30, 2022.
•
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 $293.0 to $295.0 million range. Variable SG&A expenses for the full year of 2022 are anticipated to be in the 18.2% to 18.4% range in 2022. These estimates of our SG&A costs reflect changes in our previous guidance for marketing spend and increases in selling and delivery costs.
•
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 $32.0 million in 2022. We expect retail square footage will be relatively flat as we plan to open three stores and close three in 2022. These capital expenditures also include one store expected to open in early 2023. 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 – August 2, 2022 Page 4

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,
  
   
2022
    
2021
    
2022
    
2021
  
                         
Net sales
  
$
253,216
    
$
249,989
    
$
492,162
    
$
486,480
  
Cost of goods sold
    
106,608
      
108,488
      
204,593
      
209,945
  
Gross profit
    
146,608
      
141,501
      
287,569
      
276,535
  
 
                                
Expenses:
                                
Selling, general and administrative
    
118,129
      
112,397
      
233,283
      
222,159
  
Other (income) expense, net
    
(45
)
    
(6
)
    
115
      
(43
)
            Total expenses
    
118,084
      
112,391
      
233,398
      
222,116
  
 
                                
Income before interest and income taxes
    
28,524
      
29,110
      
54,171
      
54,419
  
Interest income, net
    
144
      
59
      
218
      
114
  
                                 
Income before income taxes
    
28,668
      
29,169
      
54,389
      
54,533
  
Income tax expense
    
6,960
      
6,311
      
13,319
      
12,269
  
Net income
  
$
21,708
    
$
22,858
    
$
41,070
    
$
42,264
  
                                 
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
  
 
                                
Diluted weighted average shares outstanding:
                                
Common Stock
    
17,092
      
18,842
      
17,302
      
18,787
  
Class A Common Stock
    
1,283
      
1,313
      
1,285
      
1,372
  
                                 
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
  


NEWS RELEASE – August 2, 2022 Page 5


HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 

(In thousands)   
  
June 30,
2022
    
December 31,
2021
    
June 30,
2021
  
    
  
(Unaudited)
          
(unaudited)
  
Assets
                  
Current assets
                  
Cash and cash equivalents
  
$
143,454
    
$
166,146
    
$
235,344
  
Restricted cash and cash equivalents
    
6,722
      
6,716
      
6,716
  
Inventories
    
134,053
      
112,031
      
115,056
  
Prepaid expenses
    
10,523
      
12,418
      
11,438
  
Other current assets
    
14,653
      
11,746
      
12,035
  
Total current assets
    
309,405
      
309,057
      
380,589
  
Property and equipment, net
    
131,230
      
126,099
      
112,169
  
Right-of-use lease assets
    
222,702
      
222,356
      
239,142
  
Deferred income taxes
    
18,769
      
16,375
      
16,465
  
Other assets
    
12,190
      
12,403
      
12,776
  
Total assets
  
$
694,296
    
$
686,290
    
$
761,141
  
 
                        
Liabilities and Stockholders’ Equity
                        
Current liabilities
                        
Accounts payable
  
$
35,093
    
$
31,235
    
$
34,089
  
Customer deposits
    
90,762
      
98,897
      
116,078
  
Accrued liabilities
    
48,122
      
46,664
      
50,827
  
Current lease liabilities
    
34,539
      
33,581
      
33,836
  
Total current liabilities
    
208,516
      
210,377
      
234,830
  
Noncurrent lease liabilities
    
198,338
      
196,771
      
213,472
  
Other liabilities
    
20,716
      
23,172
      
23,427
  
Total liabilities
    
427,570
      
430,320
      
471,729
  
 
                        
Stockholders’ equity
    
266,726
      
255,970
      
289,412
  
Total liabilities and stockholders’ equity
  
$
694,296
    
$
686,290
    
$
761,141
  


NEWS RELEASE – August 2, 2022 Page 6


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

(In thousands – unaudited)
  
Six Months Ended June 30,
  
   
2022
    
2021
  
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 amortization
    
8,664
      
7,932
  
Share-based compensation expense
    
4,196
      
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 liabilities
    
4,942
      
(277
)
Net cash provided by operating activities
    
26,305
      
57,639
  
 
                
Cash Flows from Investing Activities:
                
Capital expenditures
    
(13,548
)
    
(10,939
)
Proceeds from sale of land, property and equipment
    
52
      
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 period
    
172,862
      
206,771
  

Cash, cash equivalents and restricted cash equivalents at end of period
  
$
150,176
    
$
242,060
  

NEWS RELEASE – August 2, 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
   
Six Months ended June 30,
  
(in thousands)
  
2022
    
2021
  
Income before income taxes, as reported
  
$
54,389
    
$
54,533
  
Interest (income), net
    
(218
)
    
(114
)
Depreciation
    
8,664
      
7,932
  
EBITDA
  
$
62,835
    
$
62,351
  

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. Stores closed due to COVID-19 were excluded from comp-store sales.
 
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 August 3, 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 – August 2, 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