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Havertys Reports Earnings for Second Quarter 2016

ATLANTA, Aug. 01, 2016 (GLOBE NEWSWIRE) -- HAVERTYS (NYSE:HVT) (NYSE:HVT.A) reports earnings per share of $0.24 for the second quarter ended June 30, 2016 compared to $0.21 for the same period of 2015. The earnings per share for the six months ended June 30, 2016 is $0.45 compared to $0.48 for the same period in 2015.

Clarence H. Smith, chairman, president and chief executive officer, said, “We are pleased with our solid sales increases in the second quarter following the soft results in the first quarter and encouraged by third quarter results to date. Our second quarter earnings are up compared to the prior year even with higher fixed costs, primarily from our new locations still in their market share development stage. We are also experiencing higher personnel investments for health benefits costs and wages.

We are focused on reducing costs and improving operations, measured store growth and returns to shareholders. We recently completed the expansion of our Florida Distribution Center in Lakeland which will allow us to more efficiently service its markets while reducing handling and inbound freight costs. Our College Station, Texas store will open later this month and a Charlottesville, Virginia location in early October, both new markets for Havertys. We are also closing an older location in Florida where customers can be served by newer stores. During the first half of the year, we generated $10.6 million in operating cash flow and returned $25.7 million to shareholders via dividend and share repurchases.

The macro environment for new and existing home sales remains positive but slower economic growth and shocks from political and world events remain a concern. We believe our position and plans will garner market share gains, improve profitability and returns to shareholders.”

Financial Highlights

Second Quarter 2016 Compared to Second Quarter 2015

  • As previously announced, net sales increased 3.8% to $194.8 million. Comparable store sales rose 3.8%.
  • Written total and comparable store sales both rose 6.0%. Havertys’ stores are closed for Easter and the positive impact on the second quarter written sales from the holiday occurring in March this year versus April last year is estimated at 1.5%.
  • Average written ticket was up 2.2% and custom upholstery written business rose 7.1%.
  • Gross profit margins increased 10 basis points to 53.5%.
  • SG&A costs as a percent of sales were 49.6% in 2016 and 49.4% in 2015. Total SG&A dollars increased $4.0 million due to increases in administrative costs of $2.1 million largely due to health benefits costs, selling expense of $1.2 million, occupancy costs of $0.7 million and a decrease in advertising expense of $0.3 million.
  • Other income includes a $1.9 million gain from the insurance recovery for inventory and the minimum liquidated value of the building destroyed by a storm at our Lubbock, Texas location. Additional gains for the building’s full replacement cost will be recognized in future quarters.
  • We repurchased 1,149,042 shares of common stock for $21.0 million.

Six Months ended June 30, 2016 Compared to Same Period of 2015

  • Net sales were up 2.7% to $389.3 million. Comparable store sales were up 2.3%.
  • Average ticket rose 1.7% and custom upholstery orders increased 5.5%.
  • Gross profit margins were up 10 basis points to 53.6% compared to 53.5%.
  • SG&A costs as a percent of sales increased to 49.6% compared to 48.8%. Total SG&A dollars increased $8.0 million as a result of rising administrative expenses of $2.7 million mostly due to health benefits costs, increases in selling expenses of $2.0 million, occupancy costs of $1.5 million, warehouse and delivery expenses of $0.9 million, and $0.9 million for advertising because of higher spending in the first quarter.

Expectations and Other

  • Total delivered sales for the third quarter to date of 2016 are up approximately 3.8% over the same period last year and comparable store sales are up 3.9%. Total written sales for the third quarter to date of 2016 are up approximately 3.8% over the same period last year and written comparable store sales are up 3.6%.
  • Our previous guidance on gross profit margins for the full year 2016 is unchanged at 53.5%.
  • We expect our fixed and discretionary type expenses for the full year of 2016 will be $252 million, the high end of our previous estimated range due to increased group medical costs. The $252.0 million compares to $240.9 million for the same expenses in 2015. The estimated variable type costs within SG&A for the full year of 2016 remains at 17.9%, the same as 2015.
  • We expect to increase selling square footage approximately 1.4% in 2016. Total capital expenditures are estimated to be approximately $32.0 million in 2016.

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,
2016 2015 2016 2015
Net sales $194,774 $187,732 $389,285 $379,063
Cost of goods sold 90,614 87,550 180,706 176,234
Gross profit 104,160 100,182 208,579 202,829
Credit service charges 54 69 119 142
Gross profit and other revenue 104,214 100,251 208,698 202,971
Expenses:
Selling, general and administrative 96,711 92,744 193,064 185,048
Provision for doubtful accounts 111 61 215 84
Other income, net (1,911) (921) (2,093) (947)
Total expenses 94,911 91,884 191,186 184,185
Income before interest and income taxes 9,303 8,367 17,512 18,786
Interest expense, net 541 528 1,163 1,019
Income before income taxes 8,762 7,839 16,349 17,767
Income tax expense 3,388 3,006 6,306 6,815
Net income $5,374 $4,833 $10,043 $10,952
Basic earnings per share:
Common Stock $0.25 $0.21 $0.46 $0.49
Class A Common Stock $0.24 $0.20 $0.44 $0.46
Diluted earnings per share:
Common Stock $0.24 $0.21 $0.45 $0.48
Class A Common Stock $0.23 $0.20 $0.43 $0.46
Basic weighted average shares outstanding:
Common Stock 19,645 20,600 19,883 20,585
Class A Common Stock 2,027 2,079 2,029 2,080
Diluted weighted average shares outstanding:
Common Stock 21,989 22,955 22,243 22,967
Class A Common Stock 2,027 2,079 2,029 2,080
Cash dividends per share:
Common Stock $0.100 $0.080 $0.200 $0.160
Class A Common Stock $0.095 $0.075 $0.190 $0.150


HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands - Unaudited)
June 30,
2016
December 31,
2015
June 30,
2015
(Unaudited) (Unaudited)
ASSETS
Current assets
Cash and cash equivalents $48,525 $70,659 $66,701
Investments 1,250 12,725 6,500
Restricted cash and cash equivalents 8,017 8,005 8,002
Accounts receivable 4,572 5,948 6,107
Inventories 109,942 108,896 112,345
Prepaid expenses 15,912 6,137 9,434
Other current assets 5,601 6,341 6,761
Total current assets 193,819 218,711 215,850
Accounts receivable, long-term 511 655 678
Property and equipment 238,014 229,283 231,486
Deferred income taxes 18,423 17,245 17,897
Other assets 6,184 5,357 7,082
Total assets $456,951 $471,251 $472,993
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable $25,375 $27,815 $23,769
Customer deposits 27,809 21,036 30,038
Accrued liabilities 34,531 42,060 34,504
Deferred income taxes 5,689
Current portion of lease obligations 3,341 3,051 2,928
Total current liabilities 91,056 93,962 96,928
Lease obligations, less current portion 52,179 50,074 50,712
Other liabilities 25,776 25,476 26,129
Total liabilities 169,011 169,512 173,769
Stockholders’ equity 287,940 301,739 299,224
Total liabilities and stockholders’ equity $456,951 $471,251 $472,993


HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands – Unaudited)
Six Months Ended
June 30,
2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $10,043 $10,952
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 13,992 12,503
Share-based compensation expense 2,163 2,160
Gain on insurance recovery (1,914)
Proceeds from insurance recovery for destroyed inventory 1,041
Provision for doubtful accounts 215 84
Other (747) 621
Changes in operating assets and liabilities:
Accounts receivable 1,305 1,008
Inventories (1,046) (5,206)
Customer deposits 6,773 6,351
Other assets and liabilities (10,927) (3,022)
Accounts payable and accrued liabilities (10,269) (7,350)
Net cash provided by operating activities 10,629 18,101
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (18,523) (14,521)
Maturities of investments 11,500 2,250
Proceeds from insurance recovery for destroyed property 2,297
Other 1 33
Net cash used in investing activities (4,725) (12,238)
CASH FLOWS FROM FINANCING ACTIVITIES:
Construction allowance receipts 3,286
Payments on lease obligations (1,505) (1,226)
Taxes on vested restricted shares (883) (1,152)
Dividends paid (4,368) (3,609)
Common stock purchased (21,282) (1,942)
Net cash used in financing activities (28,038) (4,643)
(Decrease) increase in cash and cash equivalents during the period (22,134) 1,220
Cash and cash equivalents at beginning of period 70,659 65,481
Cash and cash equivalents at end of period $48,525 $66,701

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, August 2, 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, August 9, 2016. The number to access the telephone playback is 1(888)‑203-1112 (replay passcode: 8276743).


Contact: Haverty Furniture Companies, Inc., 404-443-2900 Dennis L. Fink EVP & CFO Jenny Hill Parker SVP, Finance, Secretary and Treasurer

Source:Haverty Furniture Companies, Inc.