EXHIBIT 99.1
N E W S R E L E A S E
SUBJECT: | HAVERTY FURNITURE | |
| REPORTS RESULTS FOR SECOND QUARTER 2006 |
ATLANTA GEORGIA, AUGUST 2, 2006– HAVERTY FURNITURE COMPANIES, INC. (NYSE: HVT and HVT.A) today reported earnings for the second quarter ended June 30, 2006. Net income for the second quarter was $3.6 million or $0.16 per diluted share of Common Stock, as compared to the second quarter 2005 net income of $1.3 million or $0.06 per diluted share of Common Stock.
For the six months ended June 30, 2006, net income was $8.7 million or $0.38 per diluted share of Common Stock versus net income of $4.5 million or $0.20 per diluted share of Common Stock for the same period in 2005.
Net sales for the second quarter of 2006 were $211.0 million, an increase of 9.7% over sales of $192.4 million for the corresponding quarter in 2005. As previously reported, comparable-store sales increased 7.8% for the quarter.
Clarence H. Smith, president and chief executive officer, said, “Results for the second quarter reflect our sales increases for May and June and the improved gross profit margins we are achieving with the growth of our proprietary Havertys Collections® branded products. The flow of imported merchandise is better managed this year through our recently expanded main distribution center. This has helped us increase sales by improving our in-stock position and fulfill orders in a shorter time frame. Our top line also benefited from higher average sales tickets generated from selected sales events and longer free-interest, no down payment credit promotions.
“Total SG&A expenses were up 8 basis points as a percent of net sales compared to the second quarter last year. With the increased sales we leveraged expenses in the advertising, warehouse, occupancy and administrative areas. Our customers have primarily selected the credit promotions we offer through a third-party finance company. We pay an up-front discount on these transactions that is included in selling expenses. Due to the popularity of the programs and higher discount, this cost increased by 114 basis points as a percent of net sales for the quarter compared to last year’s quarter. We also had higher local delivery expense in the current quarter which combined with greater credit costs led to the small overall SG&A increase.
“The provision for doubtful accounts and interest expense were each 21 basis points of sales lower in the second quarter this year, due partly to a greater use of our in-house credit promotions in last year’s quarter.
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NEWS RELEASE – August 2, 2006
HAVERTY FURNITURE COMPANIES, INC. | Page 2 |
“Our efforts continue to be focused on building consumer awareness of the Havertys Collections® merchandise and strengthening our connection with our target customers. We are also intent on becoming more efficient in running our business so that costs can be further contained and leveraged as we grow. We look forward to demonstrating progress on these fronts in the remainder of 2006.”
Havertys is a full-service home furnishings retailer with 119 showrooms in 17 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 at www.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.
The company will sponsor a conference call Thursday, August 3, 2006 at 10:00 a.m. Eastern Daylight Time to review the second quarter. Listen-only access to the call is available via the web at havertys.com (For Investors) and at streetevents.com (Individual Investor Center), both live and for a limited time, on a replay basis.
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NEWS RELEASE – August 2, 2006
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES | Page 3 |
| | Condensed Consolidated Statements of Income (Amounts in thousands except per share data – Unaudited) |
| | |
| | Quarter Ended
June 30, | | Six Months Ended
June 30, | |
| | 2006 | | 2005 | | 2006 | | 2005 | |
| | | | | | | | | | | | | |
Net sales | | $ | 211,034 | | $ | 192,394 | | $ | 420,122 | | $ | 400,027 | |
Cost of goods sold | | | 107,143 | | | 100,848 | | | 211,457 | | | 209,799 | |
Gross profit | | | 103,891 | | | 91,546 | | | 208,665 | | | 190,228 | |
Credit service charges | | | 692 | | | 875 | | | 1,454 | | | 1,865 | |
Gross profit and
other revenue | | | 104,583 | | | 92,421 | | | 210,119 | | | 192,093 | |
| | | | | | | | | | | | | |
Expenses: | | | | | | | | | | | | | |
Selling, general and
administrative | | | 98,574 | | | 89,711 | | | 197,124 | | | 183,673 | |
Interest, net | | | 96 | | | 397 | | | 62 | | | 1,298 | |
Provision for doubtful
accounts | | | 82 | | | 311 | | | 116 | | | 517 | |
Other (income) expense,
net | | | (19 | ) | | 20 | | | (1,237 | ) | | (439 | ) |
Total expenses | | | 98,733 | | | 90,439 | | | 196,065 | | | 185,049 | |
| | | | | | | | | | | | | |
Income before income taxes | | | 5,850 | | | 1,982 | | | 14,054 | | | 7,044 | |
Income taxes | | | 2,259 | | | 673 | | | 5,360 | | | 2,561 | |
Net income | | $ | 3,591 | | $ | 1,309 | | $ | 8,694 | | $ | 4,483 | |
| | | | | | | | | | | | | |
Basic earnings per share: | | | | | | | | | | | | | |
Common Stock | | $ | 0.16 | | $ | 0.06 | | $ | 0.39 | | $ | 0.20 | |
Class A Common Stock | | $ | 0.15 | | $ | 0.05 | | $ | 0.37 | | $ | 0.19 | |
Diluted earnings per share: | | | | | | | | | | | | | |
Common Stock | | $ | 0.16 | | $ | 0.06 | | $ | 0.38 | | $ | 0.20 | |
Class A Common Stock | | $ | 0.15 | | $ | 0.05 | | $ | 0.37 | | $ | 0.19 | |
| | | | | | | | | | | | | |
Weighted average shares –
basic: | | | | | | | | | | | | | |
Common Stock | | | 18,308 | | | 18,431 | | | 18,236 | | | 18,403 | |
Class A Common Stock | | | 4,256 | | | 4,311 | | | 4,271 | | | 4,314 | |
Weighted average shares –
assuming dilution1: | | | | | | | | | | | | | |
Common Stock | | | 22,751 | | | 22,913 | | | 22,686 | | | 22,956 | |
Class A Common Stock | | | 4,256 | | | 4,311 | | | 4,271 | | | 4,314 | |
| | | | | | | | | | | | | |
Cash dividends per
common share: | | | | | | | | | | | | | |
Common Stock | | $ | 0.0675 | | $ | 0.0625 | | $ | 0.135 | | $ | 0.125 | |
Class A Common Stock | | $ | 0.0625 | | $ | 0.0575 | | $ | 0.125 | | $ | 0.115 | |
1See additional details at the end of this release.
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NEWS RELEASE – August 2, 2006
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES | Page 4 |
Condensed Consolidated Balance Sheets (Amounts in thousands – Unaudited) |
|
| | June 30,
2006 | | December 31,
2005 | | June 30,
2005 |
| | | | | | |
Assets | | | | | | | | | | |
Cash and cash equivalents | | $ | 7,495 | | $ | 11,121 | | $ | 10,266 | |
Accounts receivable, net of allowance | | | 64,671 | | | 80,716 | | | 86,754 | |
Inventories, at LIFO cost | | | 118,698 | | | 107,631 | | | 110,359 | |
Other current assets | | | 22,930 | | | 21,703 | | | 16,663 | |
Total Current Assets | | | 213,794 | | | 221,171 | | | 224,042 | |
| | | | | | | | | | |
Accounts receivable, long-term | | | 9,113 | | | 10,394 | | | 9,220 | |
Property and equipment, net | | | 218,162 | | | 217,391 | | | 210,322 | |
Other assets | | | 11,967 | | | 14,096 | | | 11,700 | |
| | $ | 453,036 | | $ | 463,052 | | $ | 455,284 | |
| | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | |
Notes payable to banks | | $ | 4,950 | | $ | 4,300 | | $ | 11,350 | |
Accounts payable and accrued liabilities | | | 99,640 | | | 113,363 | | | 97,962 | |
Current portion of long-term debt and
capital lease obligations | | | 12,639 | | | 13,139 | | | 12,816 | |
Total Current Liabilities | | | 117,229 | | | 130,802 | | | 122,128 | |
| | | | | | | | | | |
Long-term debt and
capital lease obligations | | | 24,965 | | | 31,022 | | | 37,982 | |
Other liabilities | | | 23,433 | | | 21,958 | | | 19,663 | |
Stockholders’ Equity | | | 287,409 | | | 279,270 | | | 275,511 | |
| | | | | | | | | | |
| | $ | 453,036 | | $ | 463,052 | | $ | 455,284 | |
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NEWS RELEASE – August 2, 2006
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES | Page 5 |
Condensed Consolidated Statements of Cash Flows (Amounts in thousands – Unaudited) | |
| |
| | Six Months Ended June 30, | |
| | 2006 | | 2005 | |
| | | | | | | |
Operating Activities | | | | | | | |
Net income | | $ | 8,694 | | $ | 4,483 | |
Adjustments to reconcile net income to net cash
provided by operating activities: | | | | | | | |
Depreciation and amortization | | | 10,528 | | | 10,524 | |
Provision for doubtful accounts | | | 116 | | | 517 | |
Deferred income taxes | | | 536 | | | 130 | |
(Gain) loss on sale of property and equipment | | | (1,184 | ) | | 32 | |
Other | | | 519 | | | 700 | |
Changes in operating assets and liabilities | | | (5,533 | ) | | (16,053 | ) |
| | | | | | | |
Net cash provided by operating activities | | | 13,676 | | | 333 | |
| | | | | | | |
Investing Activities | | | | | | | |
Capital expenditures | | | (13,204 | ) | | (15,937 | ) |
Proceeds from sale of auction rate securities | | | — | | | 5,000 | |
Proceeds from sale of property and equipment | | | 2,898 | | | 96 | |
Other investing activities | | | 273 | | | 1,209 | |
Net cash used in investing activities | | | (10,033 | ) | | (9,632 | ) |
| | | | | | | |
Financing Activities | | | | | | | |
Proceeds from borrowings under revolving credit facilities | | | 503,395 | | | 334,350 | |
Payments of borrowings under revolving credit facilities | | | (502,745 | ) | | (323,000 | ) |
Net increase in borrowings under revolving credit facilities | | | 650 | | | 11,350 | |
Payments on long-term debt and capital lease obligations | | | (6,557 | ) | | (13,700 | ) |
Proceeds from exercise of stock options | | | 1,540 | | | 576 | |
Dividends paid | | | (2,998 | ) | | (2,798 | ) |
Other | | | 96 | | | — | |
Net cash used in financing activities | | | (7,269 | ) | | (4,572 | ) |
| | | | | | | |
Decrease in cash and cash equivalents | | | (3,626 | ) | | (13,871 | ) |
| | | | | | | |
Cash and cash equivalents at beginning of the period | | | 11,121 | | | 24,137 | |
| | | | | | | |
Cash and cash equivalents at end of period | | $ | 7,495 | | $ | 10,266 | |
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NEWS RELEASE – August 2, 2006
| HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES | Page 6 |
Reclassifications
Certain reclassifications have been made to the prior period financial statements to conform to the current period presentation.
Prior to December 31, 2005, cash on hand in depository bank accounts and checks outstanding for disbursing bank accounts were both classified as cash and cash equivalents in the balance sheets and statements of cash flows. At December 31, 2005 and all prior periods, checks outstanding for disbursing bank accounts have been reclassified to accounts payable. For balance sheet and statement of cash flow purposes, the amount of checks outstanding for disbursing bank accounts reclassified from cash and cash equivalents to accounts payable totaled approximately 9.4 million at June 30, 2005.
Earnings per Share
The following details how the number of shares in calculating the diluted earnings per share for Common Stock are derived under SFAS 128 and EITF 03-06 (shares in thousands):
| | Quarter Ended
June 30 | | Six Months Ended
June 30 | |
| | 2006 | | 2005 | | 2006 | | 2005 | |
| | | | | | | | | |
Common Stock: | | | | | | | | | |
Weighted-average shares outstanding | | 18,308 | | 18,431 | | 18,236 | | 18,403 | |
Assumed conversion of
Class A Common Shares | | 4,256 | | 4,311 | | 4,271 | | 4,314 | |
Dilutive options and stock awards | | 187 | | 171 | | 179 | | 239 | |
Total weighted-average
diluted common shares | | 22,751 | | 22,913 | | 22,686 | | 22,956 | |
The amount of earnings used in calculating diluted earnings per share of Common Stock is equal to net income since the Class A shares are assumed to be converted.
Diluted earnings per share of Class A Common Stock includes the effect of dilutive common stock options and awards which reduces the amount of undistributed earnings allocated to the Class A Common Stock.
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Contact: Dennis L. Fink, EVP & CFO or
Jenny Hill Parker, VP, Secretary & Treasurer
404-443-2900
