SUBJECT: | HAVERTY FURNITURE |
| REPORTS RESULTS FOR FIRST QUARTER 2007 |
ATLANTA, GEORGIA, MAY 2, 2007 -- HAVERTY FURNITURE COMPANIES, INC. (NYSE: HVT and HVT.A) today reported earnings for the first quarter ended March 31, 2007. Net income for the first quarter of 2007 decreased to $0.8 million or $0.04 per diluted common share, compared to the first quarter 2006 net income of $5.1 million or $0.23 per diluted common share.
As previously reported, net sales for the first quarter of 2007 were $191.1 million, or 8.6% less than the sales in the corresponding quarter in 2006. On a comparable-store basis, sales decreased 10.4% for the quarter.
Clarence H. Smith, president and chief executive officer, said, “Our earnings for the quarter were significantly impacted by the lower sales volumes and negative comparable-store sales. We have chosen not to be overly aggressive with pricing promotions and our gross profit percentage declined very modestly. SG&A costs for the quarter were $3.4 million lower than the same quarter last year and $8.5 million lower on a consecutive quarter basis. We continue to look for ways to improve efficiencies and scale our operations to the current sales environment.
“We have been carefully managing our inventory and have decreased the total on hand by $5.0 million from year-end levels in response to the slower business conditions. The housing sector, which is tied to our industry, has been in a severe slump. It is difficult to predict when there will be sustained improvement in the sales of retail home furnishings. Our financial leverage is low, at 16% of our capital structure, which puts us in a good position to weather this storm until there is a positive change in the economic climate.
“We have a new store opening this month in Huntsville, Alabama, a new market for us and an area expected to continue its economic growth. The opportunities for store locations are likely to rise sharply as weak retailers are unable to withstand a prolonged decline in business.”
Havertys is a full-service home furnishings retailer with 121 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, May 3, 2007 at 10:00 a.m. Eastern Daylight Time to review the first quarter. Listen-only access to the call is available via the web at www.havertys.com (For Investors) and at www.streetevents.com (Individual Investor Center), both live and for a limited time, on a replay basis.
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NEWS RELEASE – May 2, 2007 | |
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES | Page 2 |
Condensed Consolidated Statements of Income
(Amounts in thousands except per share data)
(Unaudited)
| | Three Months Ended March 31 | |
| | 2007 | | 2006 | |
| | | | | | | |
Net sales | | $ | 191,073 | | $ | 209,088 | |
Cost of goods sold | | | 95,642 | | | 104,314 | |
Gross Profit | | | 95,431 | | | 104,774 | |
Credit service charges | | | 655 | | | 762 | |
Gross profit and other revenue | | | 96,086 | | | 105,536 | |
| | | | | | | |
Expenses: | | | | | | | |
Selling, general and administrative | | | 95,127 | | | 98,550 | |
Interest, net | | | (59 | ) | | (34 | ) |
Provision for doubtful accounts | | | 145 | | | 34 | |
Other (income) expense, net | | | (480 | ) | | (1,218 | ) |
Total expenses | | | 94,733 | | | 97,332 | |
| | | | | | | |
Income before income taxes | | | 1,353 | | | 8,204 | |
Income taxes | | | 522 | | | 3,101 | |
Net income | | $ | 831 | | $ | 5,103 | |
| | | | | | | |
| | | | | | | |
Basic earnings per share: | | | | | | | |
Common Stock | | $ | 0.04 | | $ | 0.23 | |
Class A Common Stock | | $ | 0.03 | | $ | 0.22 | |
| | | | | | | |
Diluted earnings per share: | | | | | | | |
Common Stock | | $ | 0.04 | | $ | 0.23 | |
Cass A Common Stock | | $ | 0.03 | | $ | 0.22 | |
| | | | | | | |
Weighted average shares – basic: | | | | | | | |
Common Stock | | | 18,486 | | | 18,163 | |
Class A Common Stock | | | 4,197 | | | 4,286 | |
| | | | | | | |
Weighted average shares – assuming dilution:1 | | | | | | | |
Common Stock | | | 22,977 | | | 22,620 | |
Class A Common Stock | | | 4,197 | | | 4,286 | |
| | | | | | | |
Cash dividends per common share: | | | | | | | |
Common Stock | | $ | 0.0675 | | $ | 0.0675 | |
Class A Common Stock | | $ | 0.0625 | | $ | 0.0625 | |
1See additional details at the end of this release.
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NEWS RELEASE – May 2, 2007 | |
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES | Page 3 |
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
| | March 31, 2007 | | December 31, 2006 | | March 31, 2006 | |
Assets | | | | | | | |
Cash and cash equivalents | | $ | 7,984 | | $ | 12,139 | | $ | 7,823 | |
Accounts receivable, net of allowance | | | 64,736 | | | 63,996 | | | 71,031 | |
Inventories, at LIFO cost | | | 119,795 | | | 124,764 | | | 120,364 | |
Other current assets | | | 17,426 | | | 18,410 | | | 19,966 | |
Total Current Assets | | | 209,941 | | | 219,309 | | | 219,184 | |
| | | | | | | | | | |
Accounts receivable, long-term | | | 14,105 | | | 14,974 | | | 8,514 | |
Property and equipment, net | | | 219,225 | | | 221,245 | | | 218,373 | |
Other assets | | | 13,425 | | | 14,226 | | | 13,454 | |
| | $ | 456,696 | | $ | 469,754 | | $ | 459,525 | |
| | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | |
Notes payable to banks | | $ | 10,550 | | $ | 12,600 | | $ | 10,000 | |
Accounts payable and accrued liabilities | | | 79,738 | | | 99,500 | | | 97,959 | |
Current portion of long-term debt and lease obligations | | | 10,366 | | | 10,334 | | | 13,139 | |
Total Current Liabilities | | | 100,654 | | | 122,434 | | | 121,098 | |
| | | | | | | | | | |
Long-term debt and lease obligations, less current portion | | | 36,618 | | | 27,515 | | | 29,522 | |
Other liabilities | | | 26,688 | | | 27,882 | | | 24,899 | |
Stockholders’ equity | | | 292,736 | | | 291,923 | | | 284,006 | |
| | $ | 456,696 | | $ | 469,754 | | $ | 459,525 | |
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NEWS RELEASE – May 2, 2007 | |
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES | Page 4 |
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
| | Quarter Ended March 31, | |
| | 2007 | | 2006 | |
Operating Activities: | | | | | | | |
Net income | | $ | 831 | | $ | 5,103 | |
Adjustments to reconcile net income to net cash
provided by operating activities: | | | | | | | |
Depreciation and amortization | | | 5,646 | | | 5,278 | |
Provision for doubtful accounts | | | 145 | | | (34 | ) |
Deferred income taxes | | | (64 | ) | | 73 | |
(Gain) loss on sale of property and equipment | | | (208 | ) | | (1,253 | ) |
Other | | | 379 | | | 355 | |
Changes in operating assets and liabilities | | | (13,949 | ) | | (10,956 | ) |
Net cash used in operating activities | | | (7,220 | ) | | (1,434 | ) |
| | | | | | | |
Investing Activities: | | | | | | | |
Capital expenditures | | | (2,453 | ) | | (7,323 | ) |
Proceeds from sale of property and equipment | | | 877 | | | 2,112 | |
Other investing activities | | | 45 | | | 124 | |
Net cash used in investing activities | | | (1,531 | ) | | (5,087 | ) |
| | | | | | | |
Financing Activities: | | | | | | | |
Proceeds from borrowings under revolving credit facilities | | | 302,425 | | | 317,365 | |
Payments of borrowings under revolving credit facilities | | | (294,475 | ) | | (311,665 | ) |
Net increase in borrowings under revolving
credit facilities | | | 7,950 | | | 5,700 | |
Payments on long-term debt and lease obligations | | | (2,068 | ) | | (1,500 | ) |
Proceeds from exercise of stock options | | | 224 | | | 516 | |
Dividends paid | | | (1,510 | ) | | (1,493 | ) |
Net cash provided by financing activities | | | 4,596 | | | 3,223 | |
| | | | | | | |
Decrease in cash and cash equivalents | | | (4,155 | ) | | (3,298 | ) |
| | | | | | | |
Cash and cash equivalents at beginning of period | | | 12,139 | | | 11,121 | |
| | | | | | | |
Cash and cash equivalents at end of period | | $ | 7,984 | | $ | 7,823 | |
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NEWS RELEASE – May 2, 2007 | |
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES | Page 5 |
Reclassifications
Certain reclassifications have been made to the prior period financial statements to conform to the current period presentation.
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 03-6 (shares in thousands):
| | Quarter Ended
March 31 | |
| | 2007 | | 2006 | |
| | | | | |
Common Stock: | | | | | |
Weighted-average shares outstanding | | 18,486 | | 18,163 | |
Assumed conversion of Class A Common shares | | 4,197 | | 4,286 | |
Dilutive options and awards | | 294 | | 171 | |
Total weighted-average diluted common shares | | 22,977 | | 22,620 | |
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 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
