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Published: 2023-08-01 16:26:59 ET
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EX-99.1 2 hvtex99.htm 99.1 PRESS RELEASE DATED AUGUST 1, 2023 ISSUED BY REGISTRANT
EXHIBIT 99.1


Havertys Reports Operating Results for Second Quarter 2023

Atlanta, Georgia, August 1, 2023 – HAVERTYS (NYSE: HVT and HVT.A), today reported its operating results for the second quarter ended June 30, 2023.

Second quarter 2023 versus second quarter 2022:

•
Diluted earnings per common share (“EPS”) of $0.70 versus $1.27.
•
Consolidated sales decreased 18.5% to $206.3 million. Comparable-store sales decreased 19.1%.
•
Gross profit margin increased to 60.5% from 57.9%.

Clarence H. Smith, chairman and CEO said, “The impact of inflation and rising interest rates have caused some consumers to pull back on discretionary home related spending. Our second quarter sales reflected this challenge, particularly early in the quarter. The second quarter’s average ticket was an all-time high aided by our free in-home design service involvement in 28.6% of sales. Gross profit margin also reached a historic high as freight and product costs declined. Operationally, we are identifying processes for improvement and cost reductions to further improve our efficiency and performance.

We were pleased to secure four excellent locations from the Bed Bath & Beyond bankruptcy. These stores will allow us to reach more consumers in the Memphis, TN and Destin, FL markets, southeast Florida near Miami, and St. Petersburg in the Tampa Bay Area which is one of the hottest markets in the country. We expect these locations will open as Havertys stores in the first half of 2024. The sites are within our current footprint enabling us to further leverage our investment in a best-in-class distribution network.

We are carefully watching the economic green shoots in the housing market as we enter the second half of the year. Our financial strength and experienced teams position us to capitalize on the opportunities ahead."








NEWS RELEASE – August 1, 2023
Page 2



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

Results of Operations
                        
   
Three Months Ended June 30,
    
Six Months Ended June 30,
  
   
2023
    
2022
    
2023
    
2022
  
Sales
  
$
206.3
    
$
253.2
    
$
431.0
    
$
492.2
  
Gross Profit
    
124.9
      
146.6
      
257.7
      
287.6
  
Gross profit as a % of sales
    
60.5
%
    
57.9
%
    
59.8
%
    
58.4
%
                                 
SGA
                                
Variable
    
41.0
      
45.9
      
85.9
      
90.4
  
Fixed
    
69.0
      
72.2
      
142.5
      
142.9
  
Total
    
110.0
      
118.1
      
228.4
      
233.3
  
SGA as a % of sales
                                
Variable
    
19.9
%
    
18.2
%
    
19.9
%
    
18.4
%
Fixed
    
33.4
%
    
28.5
%
    
33.1
%
    
29.0
%
Total
    
53.3
%
    
46.7
%
    
53.0
%
    
47.4
%
                                 
Pre-tax income
    
15.8
      
28.7
      
31.3
      
54.4
  
Pre-tax income as a % of sales
    
7.7
%
    
11.3
%
    
7.3
%
    
11.1
%
Net income
    
11.8
      
21.7
      
24.2
      
41.1
  
Net income as a % of sales
    
5.7
%
    
8.6
%
    
5.6
%
    
8.4
%
                                 
Diluted earnings per share (“EPS”)
  
$
0.70
    
$
1.27
    
$
1.44
    
$
2.37
  


Other Financial and Operations Data
            
   
Six Months Ended June 30,
  
   
2023
    
2022
  
EBITDA (in millions)(1)
  
$
38.3
    
$
62.8
  
Sales per square foot
  
$
189
    
$
232
  
Average ticket
  
$
3,250
    
$
3,122
  


Liquidity Measures
                          
   
Six Months Ended June 30,
      
Six Months Ended June 30,
  
Free Cash Flow
  
2023
    
2022
  
Cash Returns to Shareholders
  
2023
    
2022
  
Operating cash flow
  
$
40.1
    
$
26.3
  
Share repurchases
  
$
—
    
$
25.0
  
                 
Dividends
    
9.4
      
8.8
  
Capital expenditures
    
(40.5
)
    
(13.5
)
Cash returns to shareholders
  
$
9.4
    
$
33.8
  
Free cash flow
  
$
(0.4
)
  
$
12.8
                    
                                   
Cash at period end
  
$
116.1
    
$
150.2
                    
(1)
See the reconciliation of the non-GAAP metrics at the end of the release.

NEWS RELEASE – August 1, 2023
Page 3

Second Quarter ended June 30, 2023 Compared to Same Period of 2022
•
Total sales down 18.5%, comp-store sales down 19.1% for the quarter. Total written sales were down 14.7% and written comp-store sales declined 15.2% for the quarter.
•
Gross profit margins increased to 60.5% in 2023 from 57.9% in 2022.  In 2023, the change in the LIFO reserve generated a positive impact on gross profit of $3.4 million compared to a negative impact of $2.5 million in 2022.
•
SG&A expenses were 53.3% of sales versus 46.7% and decreased $8.1 million. The primary drivers of this change are:
◦
decrease of $3.0 million in selling expenses due to lower commissioned-based compensation expense offset partially by increased third-party credit costs.
◦
decrease of $1.4 million in occupancy costs driven by decreased rent expenses primarily from a $1.8 million lease incentive payment.
◦
decrease in warehouse and delivery costs of $1.9 million primarily from lower compensation and fuel costs, demurrage fees, and a reduction in usage of temporary labor.
◦
decrease of $1.1 million in advertising expenses driven by lower television advertising costs.

Balance Sheet and Cash Flow
•
Cash, cash equivalents, and restricted cash equivalents at June 30, 2023 are $116.1 million.
•
Generated $40.1 million in cash from operating activities primarily from solid earnings performance and changes in working capital including $10.1 million in vendor repayments and accrued liabilities, and an increase in other assets and liabilities of $11.6 million.
•
Invested $40.5 million in capital expenditures including $28.2 million for the purchase of our Florida distribution center from our landlord in May.
•
Paid $9.4 million in quarterly cash dividends during the six months ended June 30, 2023.
•
No debt outstanding at June 30, 2023 and credit availability of $80.0 million.

Expectations and Other
•
We expect gross profit margins for 2023 will be between 59.5% to 60.0%. 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 2023 are expected to be in the $286.0 to $289.0 million range, a reduction in our previous guidance related to advertising and warehouse and delivery costs. Variable SG&A expenses for the full year of 2023 are anticipated to be in the 19.5% to 19.7% range.
•
Our effective tax rate for 2023 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 for the full year of 2023 are approximately $57.0 million.
•
We expect retail square footage will increase approximately 1.6% in 2023 over 2022 as we open four stores and close one during the year.


NEWS RELEASE – August 1, 2023
Page 4

HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)


  
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
(In thousands, except per share data)
  
2023
    
2022
    
2023
    
2022
  
                         
Net sales
  
$
206,289
    
$
253,216
    
$
431,042
    
$
492,162
  
Cost of goods sold
    
81,394
      
106,608
      
173,363
      
204,593
  
Gross profit
    
124,895
      
146,608
      
257,679
      
287,569
  
                                 
Expenses:
                                
Selling, general and administrative
    
110,016
      
118,129
      
228,377
      
233,283
  
Other (income) expense, net
    
14
      
(45
)
    
9
      
115
  
Total expenses
    
110,030
      
118,084
      
228,386
      
233,398
  
                                 
Income before interest and income taxes
    
14,865
      
28,524
      
29,293
      
54,171
  
Interest income, net
    
973
      
144
      
1,983
      
218
  
                                 
Income before income taxes
    
15,838
      
28,668
      
31,276
      
54,389
  
Income tax expense
    
4,046
      
6,960
      
7,112
      
13,319
  
Net income
  
$
11,792
    
$
21,708
    
$
24,164
    
$
41,070
  
                                 
Basic earnings per share:
                                
Common Stock
  
$
0.73
    
$
1.31
    
$
1.49
    
$
2.45
  
Class A Common Stock
  
$
0.68
    
$
1.25
    
$
1.41
    
$
2.33
  
                                 
Diluted earnings per share:
                                
Common Stock
  
$
0.70
    
$
1.27
    
$
1.44
    
$
2.37
  
Class A Common Stock
  
$
0.67
    
$
1.22
    
$
1.38
    
$
2.27
  
                                 
Cash dividends per share:
                                
Common Stock
  
$
0.30
    
$
0.28
    
$
0.58
    
$
0.53
  
Class A Common Stock
  
$
0.28
    
$
0.26
    
$
0.54
    
$
0.49
  



NEWS RELEASE – August 1, 2023
Page 5


HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In thousands)
  
June 30,
2023
    
December 31,
2022
    
June 30,
2022
  
                   
Assets
                  
Current assets
                  
Cash and cash equivalents
  
$
109,143
    
$
123,126
    
$
143,454
  
Restricted cash and cash equivalents
    
6,959
      
6,804
      
6,722
  
Inventories
    
114,722
      
118,333
      
134,053
  
Prepaid expenses
    
11,734
      
9,707
      
10,523
  
Other current assets
    
14,914
      
18,283
      
14,653
  
Total current assets
    
257,472
      
276,253
      
309,405
  
Property and equipment, net
    
169,091
      
137,475
      
131,230
  
Right-of-use lease assets
    
199,698
      
207,390
      
222,702
  
Deferred income taxes
    
16,829
      
15,501
      
18,769
  
Other assets
    
13,100
      
12,430
      
12,190
  
Total assets
  
$
656,190
    
$
649,049
    
$
694,296
  
Liabilities and Stockholders’ Equity
                        
Current liabilities
                        
Accounts payable
  
$
20,289
    
$
23,345
    
$
35,093
  
Customer deposits
    
45,589
      
47,969
      
90,762
  
Accrued liabilities
    
41,798
      
48,676
      
48,122
  
Current lease liabilities
    
36,799
      
34,442
      
34,539
  
Total current liabilities
    
144,475
      
154,432
      
208,516
  
Noncurrent lease liabilities
    
178,835
      
186,845
      
198,338
  
Other liabilities
    
27,297
      
18,373
      
20,716
  
Total liabilities
    
350,607
      
359,650
      
427,570
  
                         
Stockholders’ equity
    
305,583
      
289,399
      
266,726
  
Total liabilities and stockholders’ equity
  
$
656,190
    
$
649,049
    
$
694,296
  










NEWS RELEASE – August 1, 2023
Page 6


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

(In thousands)
  
Six Months Ended
June 30,
  
   
2023
    
2022
  
Cash Flows from Operating Activities:
            
Net income
  
$
24,164
    
$
41,070
  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
    
9,017
      
8,664
  
Share-based compensation expense
    
4,439
      
4,196
  
Other
    
(256
)
    
(1,444
)
Changes in operating assets and liabilities:
                
Inventories
    
3,611
      
(22,022
)
Customer deposits
    
(2,380
)
    
(8,135
)
Other assets and liabilities
    
11,637
      
(966
)
Accounts payable and accrued liabilities
    
(10,104
)
    
4,942
  
Net cash provided by operating activities
    
40,128
      
26,305
  
                 
Cash Flows from Investing Activities:
                
Capital expenditures
    
(40,482
)
    
(13,548
)
Proceeds from sale of land, property and equipment
    
23
      
52
  
Net cash used in investing activities
    
(40,459
)
    
(13,496
)
                 
Cash Flows from Financing Activities:
                
Dividends paid
    
(9,414
)
    
(8,819
)
Common stock repurchased
    
—
      
(25,001
)
Taxes on vested restricted shares
    
(4,083
)
    
(1,675
)
Net cash used in financing activities
    
(13,497
)
    
(35,495
)
                 
Decrease in cash, cash equivalents and restricted cash equivalents during the period
    
(13,828
)
    
(22,686
)
Cash, cash equivalents and restricted cash equivalents at beginning of period
    
129,930
      
172,862
  
Cash, cash equivalents and restricted cash equivalents at end of period
  
$
116,102
    
$
150,176
  

NEWS RELEASE – August 1, 2023
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)
  
2023
    
2022
  
Income before income taxes, as reported
  
$
31,276
    
$
54,389
  
Interest income, net
    
(1,983
)
    
(218
)
Depreciation
    
9,017
      
8,664
  
EBITDA
  
$
38,310
    
$
62,835
  

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 August 2, 2023 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 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 RELEASE – August 1, 2023
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 2023, 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: disruptions in our suppliers' operations; 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 2022 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