Exhibit 99.1
| REPORTS EARNINGS FOR 2007 |
ATLANTA, GEORGIA, FEBRUARY 21, 2008 – HAVERTY FURNITURE COMPANIES, INC. (NYSE: HVT and HVT.A) today reported earnings for the fourth quarter and the year ended December 31, 2007. Earnings for the fourth quarter were $1.6 million, or $0.07 per diluted share, compared with $3.2 million, or $0.14 per diluted share in the fourth quarter of 2006. Earnings for the year ended December 31, 2007 were $1.8 million, or $0.08 per diluted share, compared with $16.0 million, or $0.70 per diluted share for 2006.
As previously reported, sales for the fourth quarter were $205.8 million, or 4.7% less than the sales in the corresponding quarter in 2006. Sales for the year ended December 31, 2007 decreased 8.7% to $784.6 million from $859.1 million in 2006. Comparable-store sales in 2007 decreased 7.7% for the fourth quarter and decreased 10.6% for the year.
Clarence H. Smith, president and chief executive officer, said, “Early last month we announced that our fourth quarter sales declined once again in an increasingly difficult macro environment. We face a continued challenge to review all aspects of our business operations and have made good progress in several areas.
“Our better control of inventory is reflected in improved gross margins as we had lower close out and mark-down activity during the quarter. Gross margins were also positively impacted by less volume of internally financed no-interest credit promotions. We expect to continue showing modest improvement in gross profit margin in 2008.
“Cost controls in all areas resulted in a reduction of our SG&A expenses by $1.2 million in the fourth quarter and $13.4 million for 2007 versus the comparable prior periods. Significant improvement was made in our advertising costs due to much closer analysis of individual markets and the effectiveness of the media placement. We believe that the enhanced print and television ad quality and stronger placement are beginning to have a real payoff. Advertising expense to sales was reduced by 46 basis points in the fourth quarter versus last year’s same period and our surveys indicate we are strengthening our brand with increasing consumer top of mind awareness in our markets.
“Good reductions were shown in delivery and administrative expenses for both the quarter and year. Occupancy costs have risen as four new stores were opened during the year and two were relocated to better sites. Expenses for third party credit promotions have grown as we outsourced a larger portion of financed sales and used more appealing and costly credit offerings.
“Our inventories were very well controlled at $102.5 million, down $22.3 million from the beginning of the year. This is $8.7 million higher than the end of the third quarter when we were at a lower level than optimal for providing prompt service in fulfilling customer demand. We are temporarily building inventories in the first quarter due to many of our suppliers’ factories in Asia closing for two weeks or more around the Chinese New Year.
“Accounts receivable reductions provided another $11 million in cash flow for the year while total cash provided by operating activities was $39.1 million. These funds allowed us to pay down $23.0 million of debt for the year and repurchase $12.4 million of our stock at an average price of $9.32 per share. That equates to 1,329,000 shares, 5.9% of the total outstanding at the start of the year.
“We are rolling out the second phase of our new havertys.com next month which will provide on-line sales transactions and other enhancements. The continued main focus of havertys.com is to drive customers to our stores with more knowledge about us and our merchandise and with a stronger inclination to buy,” Smith concluded.
Havertys is a full-service home furnishings retailer with 124 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 Friday, February 22, 2008 at 10:00 a.m. Eastern Time to review the fourth quarter and year end. Listen-only access to the call is available via the web at www.havertys.com (About Us) and at www.streetevents.com (Individual Investor Center), both live and for a limited time, on a replay basis.
more. . . . .
NEWS RELEASE – February 21, 2008 | |
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES | Page 3 |
Condensed Consolidated Statements of Income (Amounts in thousands, except per share data) (Unaudited) |
| | | | Quarter Ended December 31, | | Year Ended December 31, | |
| | | | 2007 | | 2006 | | 2007 | | 2006 | |
| | | | | | | | | | | | | | | |
Net sales | | | | $ | 205,770 | | $ | 216,038 | | $ | 784,613 | | $ | 859,101 | |
Cost of goods sold | | | | | 101,882 | | | 107,596 | | | 394,863 | | | 432,946 | |
Gross profit | | | | | 103,888 | | | 108,442 | | | 389,750 | | | 426,155 | |
Credit service charge | | | | | 597 | | | 687 | | | 2,450 | | | 2,823 | |
Gross profit and other revenue | | | | | 104,485 | | | 109,129 | | | 392,200 | | | 428,978 | |
| | | | | | | | | | | | | | | |
Expenses: | | | | | | | | | | | | | | | |
Selling, general and administrative | | | | | 102,467 | | | 103,621 | | | 391,105 | | | 404,518 | |
Interest, net | | | | | (584 | ) | | (219 | ) | | (1,307 | ) | | (363 | ) |
Provision for doubtful accounts | | | | | 543 | | | 388 | | | 1,328 | | | 656 | |
Other (income) expense, net | | | | | (143 | ) | | (120 | ) | | (870 | ) | | (1,457 | ) |
Total expenses | | | | | 102,283 | | | 103,670 | | | 390,256 | | | 403,354 | |
| | | | | | | | | | | | | | | |
Income before income taxes | | | | | 2,202 | | | 5,459 | | | 1,944 | | | 25,624 | |
Income tax expense | | | | | 566 | | | 2,289 | | | 186 | | | 9,624 | |
Net income | | | | $ | 1,636 | | $ | 3,170 | | $ | 1,758 | | $ | 16,000 | |
| | | | | | | | | | | | | | | |
Basic earnings per share: | | | | | | | | | | | | | | | |
Common Stock | | | | $ | 0.08 | | $ | 0.14 | | $ | 0.08 | | $ | 0.72 | |
Class A Common Stock | | | | $ | 0.07 | | $ | 0.13 | | $ | 0.07 | | $ | 0.67 | |
Diluted earnings per share: | | | | | | | | | | | | | | | |
Common Stock | | | | $ | 0.07 | | $ | 0.14 | | $ | 0.08 | | $ | 0.70 | |
Class A Common Stock | | | | $ | 0.07 | | $ | 0.13 | | $ | 0.07 | | $ | 0.67 | |
| | | | | | | | | | | | | | | |
Weighted average shares – basic: | | | | | | | | | | | | | | | |
Common Stock | | | | | 17,702 | | | 18,460 | | | 18,300 | | | 18,336 | |
Class A Common Stock | | | | | 4,138 | | | 4,210 | | | 4,165 | | | 4,247 | |
Weighted average shares – assuming dilution(1): | | | | | | | | | | | | | | | |
Common Stock | | | | | 21,956 | | | 22,935 | | | 22,589 | | | 22,895 | |
Class A Common Stock | | | | | 4,138 | | | 4,210 | | | 4,165 | | | 4,247 | |
| | | | | | | | | | | | | | | |
Cash dividends per share: | | | | | | | | | | | | | | | |
Common Stock | | | | $ | 0.0675 | | $ | 0.0675 | | $ | 0.2700 | | $ | 0.2700 | |
Class A Common Stock | | | | $ | 0.0625 | | $ | 0.0625 | | $ | 0.2500 | | $ | 0.2500 | |
1See additional details at the end of this release.
more. . . . .
NEWS RELEASE – February 21, 2008 | |
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES | Page 4 |
Condensed Consolidated Balance Sheets (Amounts in thousands) (Unaudited) |
| | Year Ended December 31, |
| | 2007 | | 2006 |
Assets | | | | |
Cash and cash equivalents | | $ | 167 | | $ | 12,139 |
Accounts receivable, net of allowance | | | 58,748 | | | 63,996 |
Inventories, at LIFO cost | | | 102,452 | | | 124,764 |
Other current assets | | | 17,569 | | | 18,410 |
Total Current Assets | | | 178,936 | | | 219,309 |
| | | | | | |
Accounts receivable, long-term | | | 8,003 | | | 14,974 |
Property and equipment, net | | | 209,912 | | | 221,245 |
Other assets | | | 25,086 | | | 14,226 |
| | $ | 421,937 | | $ | 469,754 |
Liabilities and Stockholders’ Equity | | | | | | |
Notes payable to banks | | $ | — | | $ | 12,600 |
Accounts payable and accrued liabilities | | | 67,344 | | | 79,826 |
Customer deposits | | | 17,183 | | | 19,674 |
Current portion of long-term debt and lease obligations | | | 8,353 | | | 10,334 |
Total Current Liabilities | | | 92,880 | | | 122,434 |
| | | | | | |
Long-term debt and lease obligations, less current portion | | | 20,331 | | | 27,515 |
Other liabilities | | | 29,881 | | | 27,882 |
Stockholders’ equity1 | | | 278,845 | | | 291,923 |
| | $ | 421,937 | | $ | 469,754 |
1See additional details at the end of this release.
more. . . . .
NEWS RELEASE – February 21, 2008 | |
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES | Page 5 |
Condensed Consolidated Statements of Cash Flows (Amounts in thousands) (Unaudited) |
| | Year ended December 31, | |
| | 2007 | | 2006 | |
Operating Activities | | | | | | | |
Net income | | $ | 1,758 | | $ | 16,000 | |
Adjustments to reconcile net income to net cash
provided by operating activities: | | | | | | | |
Depreciation and amortization | | | 22,416 | | | 21,663 | |
Provision for doubtful accounts | | | 1,328 | | | 656 | |
Deferred income taxes | | | (6,063) | | | (3,870) | |
(Gain) loss on sale of property and equipment | | | (221) | | | (1,162) | |
Other | | | 1,782 | | | 1,598 | |
Changes in operating assets and liabilities | | | | | | | |
Accounts receivable | | | 10,891 | | | 11,484 | |
Inventories | | | 22,312 | | | (17,133) | |
Customer deposits | | | (2,491) | | | (7,843) | |
Other assets and liabilities | | | 764 | | | 10,242 | |
Accounts payable and accrued liabilities | | | (13,367) | | | (3,623) | |
| | | | | | | |
Net cash provided by operating activities | | | 39,109 | | | 28,012 | |
| | | | | | | |
Investing Activities | | | | | | | |
Capital expenditures | | | (13,830) | | | (23,640) | |
Proceeds from sale of land, property and equipment | | | 3,523 | | | 3,659 | |
Other investing activities | | | 173 | | | 78 | |
Net cash used in investing activities | | | (10,134) | | | (19,903) | |
| | | | | | | |
Financing Activities | | | | | | | |
Proceeds from borrowings under revolving credit facilities | | | 378,775 | | | 814,780 | |
Payments of borrowings under revolving credit facilities | | | (391,375) | | | (806,480) | |
Net (decrease) increase in borrowings under revolving credit facilities | | | (12,600) | | | 8,300 | |
Payments on long-term debt and lease obligations | | | (10,367) | | | (11,871) | |
Treasury stock acquired | | | (12,385) | | | — | |
Proceeds from exercise of stock options | | | 346 | | | 2,095 | |
Dividends paid | | | (5,979) | | | (6,014) | |
Tax benefits related to share-based plans | | | 38 | | | 399 | |
Net cash used in financing activities | | | (40,947) | | | (7,091) | |
| | | | | | | |
(Decrease) increase in cash and cash equivalents | | | (11,972) | | | 1,018 | |
| | | | | | | |
Cash and cash equivalents at beginning of year | | | 12,139 | | | 11,121 | |
| | | | | | | |
Cash and cash equivalents at end of year | | $ | 167 | | $ | 12,139 | |
NEWS RELEASE – February 21, 2008 | |
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES | Page 6 |
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 December 31, | | Year Ended December 31, |
| | 2007 | | 2006 | | 2007 | | 2006 |
| | | | | | | | |
Common Stock: | | | | | | | | |
Weighted-average shares outstanding | | 17,702 | | 18,460 | | 18,300 | | 18,336 |
Assumed conversion of Class A Common shares | | 4,138 | | 4,210 | | 4,165 | | 4,247 |
Dilutive options and stock awards | | 116 | | 265 | | 124 | | 312 |
Total weighted-average diluted common shares | | 21,956 | | 22,935 | | 22,589 | | 22,895 |
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Contact for information:
Dennis L. Fink, EVP & CFO or
Jenny Hill Parker, VP, Secretary & Treasurer
404-443-2900
