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ATLANTA, Feb. 19, 2019 (GLOBE NEWSWIRE) -- HAVERTYS (NYSE: HVT and HVT.A) reports earnings for the quarter ended December 31, 2018 of $0.45 per share compared to $0.13 per share for the same period of 2017. The earnings per share for the full year 2018 were $1.42 compared to $0.98 per share for 2017.
Clarence H. Smith, chairman, president and CEO, said, “Our results reflect the impact of our efforts to more closely align gross profit margins with the quality of our Havertys branded merchandise and gains from operational efficiencies against the backdrop of difficult sales conditions.
“The fourth quarter was a challenge for our teams dealing with the tariffs placed on goods from China. We have addressed the disruption to product selection, sourcing, vendor pricing, supply chain and merchandise availability. We expect to continue to manage and work through the effect of the current 10% tariff without material impact to our business. Should the slated increase to 25% in March occur, we believe we can handle this change as well as any other company in our industry.
“We closed five locations during 2018, improving our comparable store sales results and future operating costs. In addition to strict analysis of our store base, SG&A costs are under rigorous scrutiny to ensure that we remain profitable and competitive. We made investments in our people during 2018 as we increased minimum hourly wages, made additional contributions to employees’ 401(k) savings accounts, expanded our sick leave policy and wellness program, and absorbed additional costs related to employee health care benefits.
“The current retail environment highlights the imperative of connecting and meeting the needs of the consumer. We are making continued investments in our online presence and website capabilities, and our brick-and-mortar portfolio has never been in better shape. Coupled with our sales consultants and in-home designers, we provide an exceptional start to finish shopping experience followed by first-class delivery service. Our entire team is committed to achieving profitable sales growth, efficient operations, and satisfying our customers.”
Financial Highlights
Fourth Quarter 2018 Compared to Fourth Quarter 2017
Twelve Months ended December 31, 2018 Compared to Same Period of 2017
Expectations and Other
HAVERTY FURNITURE COMPANIES, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
(In thousands, except per share data – Unaudited) |
Three Months Ended
December 31, |
Year Ended
December 31, |
|||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||
Net Sales | $ | 208,968 | $ | 214,962 | $ | 817,733 | $ | 819,866 | ||||||
Cost of goods sold | 94,502 | 98,769 | 371,191 | 374,943 | ||||||||||
Gross Profit | 114,466 | 116,193 | 446,542 | 444,923 | ||||||||||
Credit service charges | 23 | 35 | 103 | 161 | ||||||||||
Gross profit and other revenue | 114,489 | 116,228 | 446,645 | 445,084 | ||||||||||
Expenses: | ||||||||||||||
Selling, general and administrative | 101,914 | 103,573 | 404,856 | 402,884 | ||||||||||
Provision for doubtful accounts | 10 | 43 | 68 | 224 | ||||||||||
Other income, net | (12 | ) | (1,927 | ) | (110 | ) | (3,358 | ) | ||||||
Total expenses | 101,912 | 101,689 | 404,814 | 399,750 | ||||||||||
Income before interest and income taxes | 12,577 | 14,539 | 41,831 | 45,334 | ||||||||||
Interest expense, net | 239 | 469 | 1,423 | 2,111 | ||||||||||
Income before income taxes | 12,338 | 14,070 | 40,408 | 43,223 | ||||||||||
Income tax expense (1) | 2,909 | 11,149 | 10,101 | 22,148 | ||||||||||
Net income (1) | $ | 9,429 | $ | 2,921 | $ | 30,307 | $ | 21,075 | ||||||
Diluted earnings per share: | ||||||||||||||
Common Stock (1) | $ | 0.45 | $ | 0.13 | $ | 1.42 | $ | 0.98 | ||||||
Class A Common Stock | $ | 0.44 | $ | 0.13 | $ | 1.39 | $ | 0.94 | ||||||
Diluted weighted average shares outstanding: | ||||||||||||||
Common Stock | 20,957 | 21,647 | 21,295 | 21,599 | ||||||||||
Class A Common Stock | 1,761 | 1,790 | 1,765 | 1,801 | ||||||||||
Cash dividends per share: | ||||||||||||||
Common Stock | $ | 1.18 | $ | 0.1500 | $ | 1.72 | $ | 0.5400 | ||||||
Class A Common Stock | $ | 1.12 | $ | 0.1425 | $ | 1.63 | $ | 0.5100 | ||||||
(1) In December 2017, the 2017 Tax Cuts and Job Act was enacted and significantly impacted U.S. tax law. As a result of this legislation, our fourth quarter and full year 2017 income tax expense increased $5.9 million, which impacted net income and earnings per share. Our diluted earnings per common share decreased $0.27 for both the fourth quarter and full year 2017.
HAVERTY FURNITURE COMPANIES, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In thousands - Unaudited) |
December 31, | ||||||||
2018 | 2017 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 71,537 | $ | 79,491 | ||||
Restricted cash equivalents | 8,272 | 8,115 | ||||||
Accounts receivable, net | 1,833 | 2,408 | ||||||
Inventories | 105,840 | 103,437 | ||||||
Prepaid expenses | 8,106 | 11,314 | ||||||
Other current assets | 6,262 | 5,922 | ||||||
Total current assets | 201,850 | 210,687 | ||||||
Accounts receivable, long-term, net | 226 | 254 | ||||||
Property and equipment, net | 216,852 | 229,215 | ||||||
Deferred income tax | 12,544 | 12,375 | ||||||
Other assets | 8,707 | 8,798 | ||||||
Total assets | $ | 440,179 | $ | 461,329 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 19,840 | $ | 20,501 | ||||
Customer deposits | 24,465 | 27,813 | ||||||
Accrued liabilities | 39,903 | 37,582 | ||||||
Current portion of lease obligations | 4,018 | 3,788 | ||||||
Total current liabilities | 88,226 | 89,684 | ||||||
Lease obligations, less current portion | 46,785 | 50,803 | ||||||
Other liabilities | 30,539 | 26,700 | ||||||
Total liabilities | 165,550 | 167,187 | ||||||
Stockholders’ equity | 274,629 | 294,142 | ||||||
Total liabilities and stockholders’ equity | $ | 440,179 | $ | 461,329 |
HAVERTY FURNITURE COMPANIES, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In thousands – Unaudited) |
Year Ended December 31, | |||||||||
2018 | 2017 | ||||||||
Cash Flows from Operating Activities: | |||||||||
Net income | $ | 30,307 | $ | 21,075 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||
Depreciation and amortization | 29,806 | 30,516 | |||||||
Gain on insurance recovery | (307 | ) | (2,848 | ) | |||||
Proceeds from insurance recovery received for business interruption and destroyed inventory |
266 | 2,867 | |||||||
Stock-based compensation expense | 4,358 | 3,818 | |||||||
Deferred income taxes | (439 | ) | 5,559 | ||||||
Provision for doubtful accounts | 68 | 224 | |||||||
Other | 863 | 82 | |||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | 535 | 1,820 | |||||||
Inventories | (2,403 | ) | (2,112 | ) | |||||
Customer deposits | (3,348 | ) | 2,890 | ||||||
Other assets and liabilities | 9,196 | (932 | ) | ||||||
Accounts payable and accrued liabilities | 1,490 | (10,502 | ) | ||||||
Net cash provided by operating activities | 70,392 | 52,457 | |||||||
Cash Flows from Investing Activities: | |||||||||
Capital expenditures | (21,473 | ) | (24,465 | ) | |||||
Proceeds from sale of property and equipment | 2,446 | 951 | |||||||
Proceeds from insurance for destroyed property and equipment | 55 | 1,987 | |||||||
Net cash used in investing activities | (18,972 | ) | (21,527 | ) | |||||
Cash Flows from Financing Activities: | |||||||||
Construction allowance receipts | - | 1,590 | |||||||
Payments on lease obligations | (3,788 | ) | (3,482 | ) | |||||
Excess tax benefit from stock-based plans | - | - | |||||||
Dividend paid | (35,464 | ) | (11,392 | ) | |||||
Common stock repurchased and retired | (18,732 | ) | - | ||||||
Taxes on vested restricted shares | (1,233 | ) | (1,555 | ) | |||||
Net cash used in financing activities | (59,217 | ) | (14,839 | ) | |||||
Increase (decrease) in cash, cash equivalents and restricted cash equivalents | (7,797 | ) | 16,091 | ||||||
Cash, cash equivalents and restricted cash equivalents at beginning of year | 87,606 | 71,515 | |||||||
Cash, cash equivalents and restricted cash equivalents at end of year | $ | 79,809 | $ | 87,606 |
SG&A Expense Classification
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 audiocast of the conference call on February 20 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 February 27. The number to access the telephone playback is 1-888-203-1112 (access code:6782950).
About Havertys
Havertys (NYSE: HVT and HVT.A), established in 1885, is a full-service home furnishings retailer with 120 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.
Safe Harbor
This press release includes statements that constitute forward-looking statements within the meaning of the federal securities laws. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which are not historical in nature. We intend for all forward-looking statements contained herein or on our website, and all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, to be covered by the safe harbor provisions for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Forward-looking statements may relate to, for example, future operations, financial condition, economic performance (including gross profit margins and expenses), capital expenditures, and demand for our products. The company cautions that its 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. The company assumes no obligation for updating such forward-looking statements. Actual results or events may differ materially from those indicated as a result of various important factors. Such factors may include, among other things, 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 suppliers and vendors and disruptions in their operations; the imposition of tariffs and the effect of retaliatory trade measures; new regulations or taxation plans, as well as other risks and uncertainties discussed in the company's Annual Report on Form 10-K and from time to time in the company's filings with the SEC.
Contact:
Havertys 404-443-2900
Richard B. Hare
EVP & CFO
Jenny Hill Parker
SVP, Finance, Secretary and Treasurer
SOURCE: Havertys