| REPORTS RESULTS FOR SECOND QUARTER 2008 |
ATLANTA, GEORGIA, AUGUST 4, 2008 -- HAVERTY FURNITURE COMPANIES, INC. (NYSE: HVT and HVT.A) today reported a loss for the second quarter ended June 30, 2008. The net loss for the second quarter of 2008 was $2.3 million or $0.11 per diluted share of Common Stock, as compared to the second quarter 2007 net loss of $1.4 million or $0.06 per diluted share of Common Stock.
For the six months ended June 30, 2008, the net loss was $1.3 million or $0.06 per diluted share of Common Stock versus a net loss of $0.5 million or $0.02 per diluted share of Common Stock for the same period in 2007.
As previously reported, net sales for the second quarter of 2008 were $168.4 million, a decrease of 10.0% compared to sales of $187.1 million for the corresponding quarter in 2007. Comparable-store sales decreased 12.7% for the quarter.
Clarence H. Smith, president and chief executive officer, said, “The current economic conditions, which have had a brutal impact on the residential furniture industry, show few signs of abating in the near term. Our focus is on cost containment and maintaining our strong balance sheet while enhancing our competitive positions in the markets we serve. Gross margins for the second quarter reflect our continuing commitment to closely managing our inventories and the decision to shift more of the greater than one year customers’ financing to our third party provider. These strategies were the primary contributors to the gross margin improvement from 48.6% in the prior year’s second quarter to 51.2% this year.
“Our SG&A expenses are lower in most areas as we have adjusted much of our store and delivery operations to the current business levels. These reductions were partly offset by increases in delivery fuel costs and third-party credit expense in the second quarter as compared to last year’s quarter. We are currently analyzing additional reductions in our SG&A fixed costs given the severity and protracted nature of this business cycle.
“Inventories are at a level appropriate for the current sales environment and are well balanced. Accounts receivable balances have continued to decline as we reduced our offering in 2008 of in-house financing greater than one year. We will be making the final scheduled debt payments on two unsecured term notes and obligations associated with four retail stores and a distribution center over the next ten months so these amounts are now included in our current liabilities.
“As we look for the best deployment of our capital, we have significantly curtailed our store growth. Our current capital expenditure plans related to stores of $7.0 million are for projects that were initiated in prior periods and normal store maintenance. Planned capital expenditures during 2008 for distribution and information technology are $5.7 million.
NEWS RELEASE – August 4, 2008 | |
HAVERTY FURNITURE COMPANIES, INC | Page 2 |
“After today’s July sales release, we will no longer be reporting monthly sales results. We will continue to release total sales and comparable store sales for each quarter as soon as practical.
“The economic conditions in which we operate are very difficult. We believe that our financial strength will allow us to adapt to this challenging environment and opportunities that are ahead of us,” 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 web site 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 Tuesday, August 5 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 www.havertys.com (About Us, Investor Information) and at www.streetevents.com (Individual Investor Center), both live and for a limited time, on a replay basis.
NEWS RELEASE – August 4, 2008 | |
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, | |
| | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | |
Net sales | $ | 168,412 | | $ | 187,104 | | $ | 353,665 | | $ | 378,177 | |
Cost of goods sold | | 82,158 | | | 96,197 | | | 170,975 | | | 191,839 | |
Gross profit | | 86,254 | | | 90,907 | | | 182,690 | | | 186,338 | |
| | | | | | | | | | | | |
Credit service charges | | 497 | | | 606 | | | 1,062 | | | 1,261 | |
Gross profit and other revenue | | 86,751 | | | 91,513 | | | 183,752 | | | 187,599 | |
| | | | | | | | | | | | |
Expenses: | | | | | | | | | | | | |
Selling, general and administrative | | 90,222 | | | 93,713 | | | 185,260 | | | 188,840 | |
Interest, net | | 206 | | | (94 | ) | | 75 | | | (152 | ) |
Provision for doubtful accounts | | 284 | | | 234 | | | 612 | | | 378 | |
Other (income) expense, net | | (77 | ) | | (171 | ) | | (119 | ) | | (651 | ) |
Total expenses | | 90,635 | | | 93,682 | | | 185,828 | | | 188,415 | |
| | | | | | | | | | | | |
Loss before income tax benefit | | (3,884 | ) | | (2,169 | ) | | (2,076 | ) | | (816 | ) |
| | | | | | | | | | | | |
Income tax benefit | | (1,575 | ) | | (818 | ) | | (799 | ) | | (296 | ) |
| | | | | | | | | | | | |
Net loss | $ | (2,309 | ) | $ | (1,351 | ) | $ | (1,277 | ) | $ | (520 | ) |
| | | | | | | | | | | | |
Basic and diluted loss per share: | | | | | | | | | | | | |
Common Stock | $ | (0.11 | ) | $ | (0.06 | ) | $ | (0.06 | ) | $ | (0.02 | ) |
Class A Common Stock | $ | (0.11 | ) | $ | (0.06 | ) | $ | (0.06 | ) | $ | (0.03 | ) |
| | | | | | | | | | | | |
Weighted average shares - basic: | | | | | | | | | | | | |
Common Stock | | 17,162 | | | 18,558 | | | 17,137 | | | 18,522 | |
Class A Common Stock | | 4,105 | | | 4,179 | | | 4,116 | | | 4,188 | |
Weighted average shares - assuming dilution1: | | | | | | | | | | | | |
Common Stock | | 21,267 | | | 22,737 | | | 21,253 | | | 22,710 | |
Class A Common Stock | | 4,105 | | | 4,179 | | | 4,116 | | | 4,188 | |
| | | | | | | | | | | | |
Cash dividends per common share: | | | | | | | | | | | | |
Common Stock | $ | 0.0675 | | $ | 0.0675 | | $ | 0.1350 | | $ | 0.1350 | |
Class A Common Stock | $ | 0.0625 | | $ | 0.0625 | | $ | 0.1250 | | $ | 0.1250 | |
1 See additional details at the end of this release.
more. . . .
NEWS RELEASE – August 4, 2008 | |
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES | Page 4 |
Condensed Consolidated Balance Sheets |
(Amounts in thousands) |
(Unaudited) |
|
| | | June 30, 2008 | | | December 31, 2007 | | | June 30, 2007 | |
| | | | | | | | | | |
Assets | | | | | | | | | | |
Cash and cash equivalents | | $ | 1,926 | | $ | 167 | | $ | 8,895 | |
Accounts receivable, net of allowance | | | 40,017 | | | 58,748 | | | 66,928 | |
Inventories, at LIFO cost | | | 104,873 | | | 102,452 | | | 103,203 | |
Other current assets | | | 19,814 | | | 17,569 | | | 24,727 | |
Total current assets | | | 166,630 | | | 178,936 | | | 203,753 | |
| | | | | | | | | | |
Accounts receivable, long-term | | | 3,185 | | | 8,003 | | | 13,123 | |
Property and equipment, net | | | 204,114 | | | 209,912 | | | 217,079 | |
Other assets | | | 25,054 | | | 25,086 | | | 13,361 | |
| | | | | | | | | | |
| | $ | 398,983 | | $ | 421,937 | | $ | 447,316 | |
| | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | |
Notes payable to banks | | $ | 5,400 | | $ | — | | $ | 12,200 | |
Accounts payable and accrued liabilities | | | 66,206 | | | 84,527 | | | 84,959 | |
| | | | | | | | | | |
Current portion of long-term debt
and lease obligations | | | 17,179 | | | 8,353 | | | 8,284 | |
Total current liabilities | | | 88,785 | | | 92,880 | | | 105,443 | |
| | | | | | | | | | |
Long-term debt and lease
obligations, less current portion | | | 7,346 | | | 20,331 | | | 24,525 | |
Other liabilities | | | 28,995 | | | 29,881 | | | 26,990 | |
Stockholders’ equity | | | 273,857 | | | 278,845 | | | 290,358 | |
| | | | | | | | | | |
| | $ | 398,983 | | $ | 421,937 | | $ | 447,316 | |
more. . . .
NEWS RELEASE – August 4, 2008 | |
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES | Page 5 |
Condensed Consolidated Statements of Cash Flows |
(Amounts in thousands) |
(Unaudited) |
| Six Months Ended June 30, |
| | 2008 | | 2007 | |
Operating Activities | | | | | | |
Net loss | $ | (1,277 | ) | $ | (520 | ) |
Adjustments to reconcile net loss to net cash
provided by operating activities: | | | | | | |
Depreciation and amortization | | 10,853 | | | 11,340 | |
Provision for doubtful accounts | | 612 | | | 378 | |
Gain on sale of property and equipment | | — | | | (218 | ) |
Other | | 690 | | | 1,252 | |
| | | | | | |
Changes in operating assets and liabilities | | (1,039 | ) | | (887 | ) |
| | | | | | |
Net cash provided by operating activities | | 9,839 | | | 11,345 | |
| | | | | | |
Investing Activities | | | | | | |
Capital expenditures | | (5,171 | ) | | (5,932 | ) |
Proceeds from sale of property and equipment | | 203 | | | 886 | |
Other investing activities | | 282 | | | 158 | |
| | | | | | |
Net cash used in investing activities | | (4,686 | ) | | (4,888 | ) |
| | | | | | |
Financing Activities | | | | | | |
Proceeds from borrowings under revolving credit facilities | | 127,765 | | | 350,775 | |
Payments of borrowings under revolving credit facilities | | (122,365 | ) | | (351,175 | ) |
| | | | | | |
Net (decrease) increase in borrowings under
revolving credit facilities | | 5,400 | | | (400 | ) |
Payments on long-term debt and lease obligations | | (4,159 | ) | | (6,241 | ) |
Treasury stock acquired | | (1,806 | ) | | (353 | ) |
Proceeds from exercise of stock options | | — | | | 319 | |
Dividends paid | | (2,829 | ) | | (3,026 | ) |
| | | | | | |
Net cash used in financing activities | | (3,394 | ) | | (9,701 | ) |
| | | | | | |
Increase (decrease) in cash and cash equivalents | | 1,759 | | | (3,244 | ) |
| | | | | | |
Cash and cash equivalents at beginning of period | | 167 | | | 12,139 | |
| | | | | | |
Cash and cash equivalents at end of period | $ | 1,926 | | $ | 8,895 | |
NEWS RELEASE – August 4, 2008 | |
HAVERTY FURNITURE COMPANIES, INC. and SUBSIDIARIES | Page 6 |
Earnings per Share
The following details how the number of shares in calculating the diluted loss per share for Common Stock are derived under SFAS 128 and EITF 03-6 (shares in thousands):
| | | | Quarter Ended | | | | Six Months Ended | |
| | | | June 30 | | | | June 30 | |
| | | | 2008 | | | | 2007 | | | | 2008 | | | | 2007 | |
Common Stock | | | | | | | | | | | | | | | | | |
Weighted-average shares outstanding | | | | 17,162 | | | | 18,558 | | | | 17,137 | | | | 18,522 | |
| | | | | | | | | | | | | | | | | |
Assumed conversion of Class A Common shares | | | | 4,105 | | | | 4,179 | | | | 4,116 | | | | 4,188 | |
| | | | | | | | | | | | | | | | | |
Total weighted-average diluted common shares | | | | 21,267 | | | | 22,737 | | | | 21,253 | | | | 22,710 | |
| | | | | | | | | | | | | | | | | |
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Contact for information:
Dennis L. Fink, EVP & CFO or
Jenny Hill Parker, VP, Secretary & Treasurer
404-443-2900
