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Published: 2024-02-21 18:30:23 ET
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EX-99.1 2 hvtex99.htm
EXHIBIT 99.1




Havertys Reports Operating Results for Fourth Quarter 2023

ATLANTA, GA / ACCESSWIRE / February 21, 2024 / HAVERTYS (NYSE: HVT) and (NYSE: HVT.A), today reported its operating results for the fourth quarter ended December 31, 2023.

Fourth quarter 2023 versus fourth quarter 2022:

•
Diluted earnings per common share (“EPS”) of $0.90 versus $1.42.
•
Consolidated sales decreased 24.9% to $210.7 million. Comparable store sales decreased 25.5%.
•
Gross profit margin of 62.4% versus 57.0%.
•
Pre-tax income of $18.5 million versus $32.5 million.


FY 2023 versus FY 2022:

•
Diluted earnings per common share (“EPS”) of $3.36 versus $5.24.
•
Consolidated sales decreased 17.7% to $862.1 million. Comparable store sales decreased 18.4%.
•
Gross profit margin of 60.7% versus 57.7%.
•
Pre-tax income of $72.7 million versus $119.5 million.

Clarence H. Smith, chairman and CEO, said, "We delivered solid fourth quarter results of strong gross profit margins and expense control within a difficult environment for retail home furnishing sales. Higher interest rates and record low housing sales and inflation combined with prior years’ outsized sales results have generated challenging headwinds. Our strong balance sheet is enabling us to execute our strategic store growth plans and invest in our business.

“In 2023, we returned $42.1 million of capital to our shareholders. We purchased $6.9 million in common shares, paid quarterly dividends of $19.1 million, and in December paid a special cash dividend of $16.1 million. We have paid an annual cash dividend since 1935 and increased our quarterly cash dividend payouts each year since 2008.

"Our team members remain focused on our business objectives and dedicated to delivering excellent service to our customers. The Havertys legacy of quality furniture and service is foundational for our "Regret-Free Guarantee" now featured in our marketing."




NEWS RELEASE – February 21, 2024
Page 2


Key Results
(amounts in millions, except per share amounts)
Results of Operations
                        
     
Q4 2023
      
Q4 2022
    
FY 2023
    
FY 2022
  
Sales
  
$
210.7
    
$
280.6
    
$
862.1
    
$
1,047.2
  
Gross Profit
    
131.4
      
159.9
      
523.1
      
604.2
  
Gross profit as a % of sales
    
62.4
%
    
57.0
%
    
60.7
%
    
57.7
%
                                 
SGA
                                
Variable
    
42.3
      
53.1
      
170.5
      
193.7
  
Fixed
    
72.4
      
75.4
      
285.3
      
292.6
  
Total
    
114.7
      
128.5
      
455.8
      
486.3
  
SGA as a % of sales
                                
Variable
    
20.0
%
    
18.9
%
    
19.8
%
    
18.5
%
Fixed
    
34.4
%
    
26.9
%
    
33.1
%
    
27.9
%
Total
    
54.4
%
    
45.8
%
    
52.9
%
    
46.4
%
                                 
Pre-tax income
    
18.5
      
32.5
      
72.7
      
119.5
  
Pre-tax income as a % of sales
    
8.8
%
    
11.6
%
    
8.4
%
    
11.4
%
Net income
    
15.0
      
23.7
      
56.3
      
89.4
  
Net income as a % of sales
    
7.1
%
    
8.5
%
    
6.5
%
    
8.5
%
                                 
Diluted earnings per share (“EPS”)
  
$
0.90
    
$
1.42
    
$
3.36
    
$
5.24
  

         
Other Financial and Operations Data
FY 2023
  
FY 2022
  
EBITDA (in millions)(1)
  
$
85.8
    
$
134.8
  
Sales per square foot
  
$
197
    
$
241
  
Average ticket
  
$
3,278
    
$
3,171
  

Liquidity Measures
                  
                   
Free Cash Flow
FY 2023
  
FY 2022
  
Cash Returns to Shareholders
FY 2023
  
FY 2022
  
Operating cash flow
  
$
97.2
    
$
51.0
  
Share repurchases
  
$
6.9
    
$
30.0
  
                 
Dividends
    
19.1
      
17.8
  
Capital expenditures
    
(53.1
)
    
(28.4
)
Special Dividends
    
16.1
      
16.1
  
Free cash flow
  
$
44.1
    
$
22.6
  
Cash return to shareholders
  
$
42.1
    
$
63.9
  

(1)
See the reconciliation of the non-GAAP metrics at the end of the release.
NEWS RELEASE – February 21, 2024
Page 3

Fourth Quarter ended December 31, 2023 Compared to Same Period of 2022
•
Total sales down 24.9%, comp-store sales down 25.5% for the quarter. Total written sales were down 13.1% and written comp-store sales declined 14.0% for the quarter.
•
Gross profit margins increased 540 basis points to 62.4% in 2023 from 57.0% in 2022. In 2023, the change in the LIFO reserve generated a positive impact on gross profit of $2.8 million compared to a negative impact of $4.8 million.
•
SG&A expenses were 54.4% of sales versus 45.8% and decreased $13.8 million. The primary drivers of this change are:
▪
decrease of $7.7 million in selling expenses due to decreased compensation and third-party credit costs.
▪
decrease in warehouse, transportation, and delivery costs of $3.7 million  primarily from reduced headcount via attrition and less usage of temporary labor, and lower expenditures for fuel and demurrage fees.
▪
decrease of $3.2 million in advertising expenses due to reduced spending on television and interactive marketing.

Balance Sheet and Cash Flow

•
Cash and cash equivalents at December 31, 2023 are $127.8 million.
•
Generated $97.2 million in cash from operating activities primarily from solid earnings performance, and by changes in working capital, primarily a $24.4 million decrease in inventories and a $12.1 million reduction in customer deposits.
•
Purchased approximately 227,000 shares of common stock for $6.9 million and paid $19.1 million in quarterly cash dividends and $16.1 million in special cash dividends in 2023.
•
The Company has no funded debt.

Expectations and Other
•
We expect gross profit margins for 2024 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 for 2024 are based on anticipated product and freight costs and the marginal impact on our LIFO reserve as compared to the prior years.
•
Fixed and discretionary expenses within SG&A for the full year of 2024 are expected to be in the $295.0 to $297.0 million range. The increases over 2023 are primarily from costs associated with our store growth and inflation. Variable SG&A expenses for the full year of 2024 are anticipated to be in the 19.9% to 20.2% range. Variable expense increases over 2023 are primarily inflationary driven.
•
Our effective tax rate for 2024 is expected to be 26.5% excluding the impact of potential tax credits and any new tax legislation.
•
Planned capital expenditures are approximately $32.0 million in 2024. We expect retail square footage will increase 2.8% as we open five stores and close one.




NEWS RELEASE – February 21, 2024
Page 4

HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME


  
Three Months Ended
December 31,
    
Twelve Months Ended
December 31,
  
(In thousands, except per share data - unaudited)
  
2023
    
2022
    
2023
    
2022
  
                         
Net sales
  
$
210,744
    
$
280,557
    
$
862,133
    
$
1,047,215
  
Cost of goods sold
    
79,330
      
120,622
      
339,041
      
442,990
  
Gross profit
    
131,414
      
159,935
      
523,092
      
604,225
  
                                 
Expenses:
                                
Selling, general and administrative
    
114,706
      
128,482
      
455,812
      
486,298
  
Other (income) expense, net
    
13
      
(131
)
    
77
      
44
  
Total expenses
    
114,719
      
128,351
      
455,889
      
486,342
  
                                 
Income before interest and income taxes
    
16,695
      
31,584
      
67,203
      
117,883
  
Interest income, net
    
1,807
      
920
      
5,508
      
1,618
  
                                 
Income before income taxes
    
18,502
      
32,504
      
72,711
      
119,501
  
Income tax expense
    
3,501
      
8,766
      
16,392
      
30,143
  
Net income
  
$
15,001
    
$
23,738
    
$
56,319
    
$
89,358
  
                                 
Basic earnings per share:
                                
Common Stock
  
$
0.93
    
$
1.48
    
$
3.48
    
$
5.43
  
Class A Common Stock
  
$
0.88
    
$
1.40
    
$
3.29
    
$
5.17
  
                                 
Diluted earnings per share:
                                
Common Stock
  
$
0.90
    
$
1.42
    
$
3.36
    
$
5.24
  
Class A Common Stock
  
$
0.89
    
$
1.39
    
$
3.25
    
$
5.07
  
                                 
Cash dividends per share:
                                
Common Stock
  
$
1.30
    
$
1.28
    
$
2.18
    
$
2.09
  
Class A Common Stock
  
$
1.23
    
$
1.21
    
$
2.05
    
$
1.96
  


NEWS RELEASE – February 21, 2024
Page 5
HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)
  
December 31,
2023
    
December 31,
2022
  
             
Assets
            
Current assets
            
Cash and cash equivalents
  
$
120,635
    
$
123,126
  
Restricted cash and cash equivalents
    
7,142
      
6,804
  
Inventories
    
93,956
      
118,333
  
Prepaid expenses
    
17,067
      
9,707
  
Other current assets
    
12,793
      
18,283
  
Total current assets
    
251,593
      
276,253
  
Property and equipment, net
    
171,588
      
137,475
  
Right-of-use lease assets
    
202,306
      
207,390
  
Deferred income taxes
    
15,641
      
15,501
  
Other assets
    
13,005
      
12,430
  
Total assets
  
$
654,133
    
$
649,049
  
Liabilities and Stockholders’ Equity
                
Current liabilities
                
Accounts payable
  
$
18,781
    
$
23,345
  
Customer deposits
    
35,837
      
47,969
  
Accrued liabilities
    
46,289
      
48,676
  
Current lease liabilities
    
37,357
      
34,442
  
Total current liabilities
    
138,264
      
154,432
  
Noncurrent lease liabilities
    
180,397
      
186,845
  
Other liabilities
    
27,106
      
18,373
  
Total liabilities
    
345,767
      
359,650
  
                 
Stockholders’ equity
    
308,366
      
289,399
  
Total liabilities and stockholders’ equity
  
$
654,133
    
$
649,049
  



NEWS RELEASE – February 21, 2024
Page 6

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

(In thousands - unaudited)
  
Twelve Months Ended December 31,
  
   
2023
    
2022
  
Cash Flows from Operating Activities:
            
Net income
  
$
56,319
    
$
89,358
  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
    
18,603
      
16,926
  
Stock-based compensation
    
8,010
      
7,195
  
Deferred income taxes
    
(1,171
)
    
584
  
Net gain on sale of land, property, and equipment
    
71
      
128
  
Other
    
1,160
      
960
  
Changes in operating assets and liabilities:
                
Inventories
    
24,378
      
(6,303
)
Customer deposits
    
(12,131
)
    
(50,928
)
Other assets and liabilities
    
8,641
      
(923
)
Accounts payable and accrued liabilities
    
(6,677
)
    
(5,982
)
Net cash provided by operating activities
    
97,203
      
51,015
  
                 
Cash Flows from Investing Activities:
                
Capital expenditures
    
(53,115
)
    
(28,411
)
Proceeds from sale of land, property and equipment
    
53
      
86
  
Net cash used in investing activities
    
(53,062
)
    
(28,325
)
                 
Cash Flows from Financing Activities:
                
Dividends paid
    
(35,240
)
    
(33,948
)
Common stock repurchased
    
(6,895
)
    
(29,998
)
Other
    
(4,159
)
    
(1,676
)
Net cash used in financing activities
    
(46,294
)
    
(65,622
)
                 
Decrease in cash, cash equivalents and restricted cash equivalents during the period
    
(2,153
)
    
(42,932
)
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
  
$
127,777
    
$
129,930
  



NEWS RELEASE – February 21, 2024
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
(in thousands)
  
FY 2023
    
FY 2022
  
Income before income taxes, as reported
  
$
72,711
    
$
119,501
  
Interest income, net
    
(5,508
)
    
(1,618
)
Depreciation
    
18,603
      
16,926
  
EBITDA
  
$
85,806
    
$
134,809
  

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 February 22, 2024 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 12:00 p.m. ET.

About Havertys  
Havertys (NYSE: HVT and HVT.A), established in 1885, is a full-service home furnishings retailer with 124 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 – February 21, 2024
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, the execution and effect of our initiatives, our expectations for selling square footage and capital expenditures for 2024, and our liquidity position to continue to fund our growth plans.
 
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 state of the economy; state of the residential construction and housing markets; the consumer spending environment for big ticket items; effects of competition; management of relationships with our associates, potential associates, suppliers and vendors; public health issues (including pandemics and quarantines, related shut-downs and other governmental orders, as well as subsequent re-openings); new regulations or taxation plans, as well as other risks and uncertainties discussed in our Annual Report on Form 10-K for 2022 and from time to time in our subsequent filings with the Securities and Exchange Commission (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