Havertys Reports Earnings for Fourth Quarter and Full Year 2013
Atlanta, Georgia, February 24, 2014 – HAVERTYS (NYSE: HVT and HVT.A) reports earnings per share for the fourth quarter ended December 31, 2013 of $0.42 compared to $0.30 for the same period of 2012. The earnings per share for the full year 2013 were $1.41 compared to $0.67 for 2012.
Clarence Smith, chairman, president and CEO, said “2013 was a continuation of the turnaround that we truly began in 2011. Many aspects of our business have been fine tuned to enhance our customer’s perception of Havertys and her purchasing experience. We have improved our stores and highlighted our fashion identity in our advertising and merchandise. The “on trend” customer’s response has been favorable.
Our comp-store sales for the year increased 11.0% over 2012 driven by an increase in average ticket of 7.8%. We continued to expand gross profit margins as we focused on higher price point products and pricing discipline. Our expenses were well controlled and our 2013 net income was double that of 2012. We have certainly been aided by the improving economy and recovery in housing but believe our strategies have compounded their effect.”
Financial Highlights
Fourth Quarter 2013 Compared to Fourth Quarter 2012
Net sales increased 7.6% to $196.2 million. Comparable store sales were up 9.5%. Total written business was up 6.3% and average ticket rose 5.7%.
Gross profit margins increased 120 basis points to 54.0% as a percent of sales. This includes a year-over-year benefit of $0.5 million, or 30 basis points, from changes in the LIFO reserve.
Selling, general and administrative costs as a percent of sales declined 110 basis points to 46.1% from 47.2%.
Pre-tax earnings of $15.8 million increased 250 basis points to 8.0% from 5.5% as a percent of sales.
Our retail store count at December 31, 2013 was 119 versus 122 at the end of 2012.
Twelve Months ended December 31, 2013 Compared to Same Period of 2012
Net sales increased 11.3% to $746.1 million. Comparable store sales were up 11.0% and average ticket rose 7.8%.
Gross profit was $401.5 million, or 53.8% of net sales, which includes a year-over-year benefit of $1.1 million from changes in the LIFO reserve and $0.8 million from an out-of-period adjustment recorded in the first quarter. Excluding the impact of the out-of-period adjustment, gross profit was 53.7%, up 120 basis points compared to 52.5% in 2012.
Selling, general and administrative costs declined 240 basis points as a percent of sales to 46.7% from 49.1%.
Pre-tax earnings of $52.5 million increased 350 basis points to 7.0% from 3.5% as a percent of sales.
NEWS RELEASE - FEBRUARY 24, 2014
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Expectations and Other
Comparable store written business for the first quarter to date of 2014 is up approximately 3.6% over the same period last year. Total written business quarter to date is up 2.0% over the 14% increase for the same period last year.
We plan to continue to highlight our fashionable quality merchandise in 2014 and use promotional pricing judiciously. We expect our annual gross profit margins for 2014 will be 53.8%, up slightly from the adjusted 53.7% level achieved in 2013.
SG&A expenses in 2014 should be leveraged with continuing sales growth. We do expect some increases in our period costs due to inflation, expansion, staffing, technology improvements and advertising spend. Fixed and discretionary type expenses within SG&A costs for 2014 are expected to be $232 to $234 million, up approximately 4.1% to 5.0% over those same costs in 2013. These expenses are expected to be incurred at a slightly higher rate in the second half of the year in connection with our expansion activity. Variable SG&A expenses should be in the 17.0% to 17.2% range as a percent of sales for 2014 and other non-SG&A costs, net of credit revenues, are expected to be $1.3 million.
Our effective tax rate for 2014 is expected to be in the 38.5% to 38.8% range.
Planned Capital expenditures for 2014 are $35.0 million. We have scheduled to open six new locations in existing markets and complete one major expansion during the year. Three of the new stores are relocations and we plan to close two additional stores at the end of their lease term. These changes will increase selling square footage approximately 1.8% and our store count to 120 assuming the store changes occur as planned.
NEWS RELEASE - FEBRUARY 24, 2014
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| 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, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | | | | | | | | | | | | |
| Net sales | | $ | 196,164 | | | $ | 182,307 | | | $ | 746,090 | | | $ | 670,073 | |
| Cost of goods sold | | | 90,164 | | | | 86,036 | | | | 344,594 | | | | 318,038 | |
| Gross profit | | | 106,000 | | | | 96,271 | | | | 401,496 | | | | 352,035 | |
| Credit service charges | | | 79 | | | | 77 | | | | 320 | | | | 293 | |
| Gross profit and other revenue | | | 106,079 | | | | 96,348 | | | | 401,816 | | | | 352,328 | |
| | | | | | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | | | | | |
| Selling, general and administrative | | | 90,454 | | | | 86,098 | | | | 348,599 | | | | 328,826 | |
| Interest, net | | | 270 | | | | 150 | | | | 1,107 | | | | 624 | |
| Provision for doubtful accounts | | | 24 | | | | 65 | | | | 120 | | | | 165 | |
| Other income, net | | | (452 | ) | | | (58 | ) | | | (497 | ) | | | (803 | ) |
| Total expenses | | | 90,296 | | | | 86,255 | | | | 349,329 | | | | 328,812 | |
| | | | | | | | | | | | | | | | | |
| Income before income taxes | | | 15,783 | | | | 10,093 | | | | 52,487 | | | | 23,516 | |
| Income tax expense (benefit) | | | 6,102 | | | | 3,314 | | | | 20,222 | | | | 8,605 | |
| Net income | | $ | 9,681 | | | $ | 6,779 | | | $ | 32,265 | | | $ | 14,911 | |
| | | | | | | | | | | | | | | | | |
| Basic earnings per share: | | | | | | | | | | | | | | | | |
| Common Stock | | $ | 0.43 | | | $ | 0.31 | | | $ | 1.45 | | | $ | 0.69 | |
| Class A Common Stock | | $ | 0.41 | | | $ | 0.28 | | | $ | 1.37 | | | $ | 0.58 | |
| | | | | | | | | | | | | | | | | |
| Diluted earnings per share: | | | | | | | | | | | | | | | | |
| Common Stock | | $ | 0.42 | | | $ | 0.30 | | | $ | 1.41 | | | $ | 0.67 | |
| Class A Common Stock | | $ | 0.41 | | | $ | 0.29 | | | $ | 1.35 | | | $ | 0.59 | |
| | | | | | | | | | | | | | | | | |
| Basic weighted average shares outstanding: | | | | | | | | | | | | | | | | |
| Common Stock | | | 20,097 | | | | 19,330 | | | | 19,865 | | | | 19,096 | |
| Class A Common Stock | | | 2,417 | | | | 2,815 | | | | 2,558 | | | | 2,943 | |
| | | | | | | | | | | | | | | | | |
| Diluted weighted average shares outstanding: | | | | | | | | | | | | | | | | |
| Common Stock | | | 22,901 | | | | 22,566 | | | | 22,815 | | | | 22,382 | |
| Class A Common Stock | | | 2,417 | | | | 2,815 | | | | 2,558 | | | | 2,943 | |
| | | | | | | | | | | | | | | | | |
| Cash dividends per share: | | | | | | | | | | | | | | | | |
| Common Stock | | $ | 0.080 | | | $ | 1.0400 | | | $ | 0.240 | | | $ | 1.1200 | |
| Class A Common Stock | | $ | 0.075 | | | $ | 0.9875 | | | $ | 0.225 | | | $ | 1.0625 | |
NEWS RELEASE - FEBRUARY 24, 2014
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| HAVERTY FURNITURE COMPANIES, INC. |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (In thousands - Unaudited) |
| | | December 31, | |
| | | 2013 | | | 2012 | |
| ASSETS | | | | | | |
| Current assets | | | | | | |
| Cash and cash equivalents | | $ | 83,185 | | | $ | 53,550 | |
| Restricted cash and cash equivalents | | | 7,016 | | | | 7,013 | |
| Accounts receivable | | | 8,172 | | | | 9,710 | |
| Inventories | | | 91,483 | | | | 96,902 | |
| Prepaid expenses | | | 6,494 | | | | 9,532 | |
| Other current assets | | | 4,349 | | | | 3,187 | |
| Total current assets | | | 200,699 | | | | 179,894 | |
| | | | | | | | | |
| Accounts receivable, long-term | | | 832 | | | | 814 | |
| Property and equipment | | | 189,242 | | | | 193,085 | |
| Deferred income taxes | | | 13,253 | | | | 24,366 | |
| Other assets | | | 13,829 | | | | 3,937 | |
| Total assets | | $ | 417,855 | | | $ | 402,096 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| Current liabilities | | | | | | | | |
| Accounts payable | | $ | 21,810 | | | $ | 28,178 | |
| Customer deposits | | | 19,008 | | | | 20,963 | |
| Accrued liabilities | | | 36,338 | | | | 33,272 | |
| Deferred income taxes | | | - | | | | 6,595 | |
| Current portion of lease obligations | | | 959 | | | | 881 | |
| Total current liabilities | | | 78,115 | | | | 89,889 | |
| | | | | | | | | |
| Lease obligations, less current portion | | | 16,196 | | | | 18,473 | |
| Other liabilities | | | 25,280 | | | | 34,306 | |
| Total liabilities | | | 119,591 | | | | 142,668 | |
| | | | | | | | | |
| Stockholders’ equity | | | 298,264 | | | | 259,428 | |
| Total liabilities and stockholders’ equity | | $ | 417,855 | | | $ | 402,096 | |
NEWS RELEASE - FEBRUARY 24, 2014
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| HAVERTY FURNITURE COMPANIES, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (In thousands – Unaudited) |
| | | Year Ended December 31, | |
| | | 2013 | | | 2012 | |
| Cash Flows from Operating Activities: | | | | | | |
| Net income | | $ | 32,265 | | | $ | 14,911 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 21,450 | | | | 19,415 | |
| Stock-based compensation expense | | | 3,323 | | | | 2,553 | |
| Tax benefit from stock-based plans | | | (1,754 | ) | | | (289 | ) |
| Deferred income taxes | | | (652 | ) | | | (2,209 | ) |
| Provision for doubtful accounts | | | 120 | | | | 165 | |
| Other | | | 459 | | | | 614 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Accounts receivable | | | 1,400 | | | | 1,210 | |
| Inventories | | | 5,419 | | | | (3,458 | ) |
| Customer deposits | | | (1,955 | ) | | | 6,391 | |
| Other assets and liabilities | | | (2,638 | ) | | | 1,819 | |
| Accounts payable and accrued liabilities | | | (1,548 | ) | | | 11,046 | |
| Net cash provided by operating activities | | | 55,889 | | | | 52,168 | |
| | | | | | | | | |
| Cash Flows from Investing Activities: | | | | | | | | |
| Capital expenditures | | | (20,202 | ) | | | (25,014 | ) |
| Restricted cash and cash equivalents | | | (3 | ) | | | (200 | ) |
| Other investing activities | | | 85 | | | | 448 | |
| Net cash used in investing activities | | | (20,120 | ) | | | (24,766 | ) |
| | | | | | | | | |
| Cash Flows from Financing Activities: | | | | | | | | |
| Payments on lease obligations | | | (867 | ) | | | (766 | ) |
| Proceeds from exercise of stock options | | | 872 | | | | 2,457 | |
| Tax benefit from stock-based plans | | | 1,754 | | | | 289 | |
| Dividend paid | | | (5,353 | ) | | | (24,684 | ) |
| Other financing activities | | | (2,540 | ) | | | (733 | ) |
| Net cash used in financing activities | | | (6,134 | ) | | | (23,437 | ) |
| Increase in cash and cash equivalents | | | 29,635 | | | | 3,965 | |
| Cash and cash equivalents at beginning of year | | | 53,550 | | | | 49,585 | |
| Cash and cash equivalents at end of year | | $ | 83,185 | | | $ | 53,550 | |
NEWS RELEASE - FEBRUARY 24, 2014
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About Havertys
Havertys (NYSE: HVT and HVT.A), established in 1885, is a full-service home furnishings retailer with 119 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 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.
Conference Call Information
The company invites interested parties to listen to the live audiocast of the conference call on Tuesday, February 25, 2014 at its website, www.havertys.com under the investor relations section. If you can not listen live, a replay will be available on the day of the conference call at the website or via telephone at approximately 12:00 p.m. EDT through Tuesday, March 4, 2014. The number to access the telephone playback is 1-800-406-7325 (access code: 4670299#).
Contact:
Havertys 404-443-2900
Dennis L. Fink
EVP & CFO
Jenny Hill Parker
SVP, finance, secretary and treasurer
SOURCE: Havertys
