HAVERTYS (NYSE: HVT and HVT.A), today reported strong operating
results for the first quarter ended March 31, 2021.
First quarter 2021 versus first quarter
2020:
- Diluted earnings per common share (“EPS”) of $1.04 versus
$0.09.
- Stores closed March 19, 2020 and deliveries halted March 21,
2020 in response to the COVID-19 pandemic.
- Consolidated sales increased 31.8% to $236.5 million.
Comparable store sales increased 11.5%.
Clarence H. Smith, chairman and CEO, said, “We are pleased to
see our teams’ hard work translate to continued sales and earnings
growth. The high pace of demand for home furnishings, which started
during the second quarter of 2020, has not slowed. Our first
quarter written business this year was up 10.8% over the fourth
quarter of 2020. We are addressing our staffing needs and engaging
with key vendors to navigate the various supply chain challenges to
reduce our backlog and update future delivery estimates. We also
have worked with vendors on price increases, impacting our retail
prices and product mix. Our gross profit margins remain strong
despite the product and freight cost increases as customers see the
value in the quality products and dedicated customer service we
offer.
“Our operating margins are benefitting from enhanced leveraging
of fixed costs and outstanding productivity from our distribution
and sales teams. Strategic initiatives expanded or implemented
during the height of the pandemic such as chat,
buy-online-pickup-in-store, and online shopping tools were
successful as we pivoted to new ways to serve our customers. We are
committing resources to improve all these customer experiences
during 2021.
“The current high level of demand is likely to be impacted as
discretionary consumer spending shifts away from its current
concentration on “nesting.” We do see positive trends in home sales
and the current interest rate and economic outlook are encouraging
indicators for our business.
“As we mark the anniversary of the beginning of the COVID-19
pandemic, we are pained by the personal and economic devastation it
wrought but heartened by the compassion, resiliency, and ingenuity
that it generated. The accelerating roll-out of the vaccine is a
hopeful sign that a return to our normal patterns of living is just
ahead.”
Key Results(amounts in millions, except per
share amounts)
|
Q1 2021 |
|
% of Net Sales |
|
Q1 2020 |
|
% of Net Sales |
Sales |
$ |
236.5 |
|
|
|
$ |
179.4 |
|
|
Gross Profit |
$ |
135.0 |
|
57.1 |
% |
|
$ |
99.6 |
|
55.5 |
% |
|
|
|
|
|
|
|
|
|
|
SG&A |
|
|
|
|
|
|
|
|
|
Variable |
$ |
40.7 |
|
17.2 |
% |
|
$ |
35.3 |
|
19.7 |
% |
Fixed |
$ |
69.1 |
|
29.2 |
% |
|
$ |
62.2 |
|
34.7 |
% |
Total SG&A |
$ |
109.8 |
|
46.4 |
% |
|
$ |
97.5 |
|
54.4 |
% |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
(“EPS”) |
$ |
1.04 |
|
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter ended March 31, 2021 Compared to Same Period of
2020
- Stores closed March 19, 2020 and deliveries halted on March 21,
2020 due to COVID-19.
- Total sales up 31.8%, comp-store sales up 11.5% for the
quarter. Total written sales for the first two months of 2021 were
up 24.9% compared to the same period of 2020.
- Gross profit margins increased 160 basis points to 57.1% in
2021 from 55.5% for the same period of 2020 due to pricing
discipline partially offset by a larger charge for our LIFO
reserve.
- SG&A expenses fell to 46.4% of sales from 54.4% and
increased $12.2 million. The primary drivers of this change are:
- increase of $3.7 million in selling expenses due to sales
growth
- increase of $4.9 million in incentive compensation due to
performance and prior year amount at lowest level due to store
closures and outlook for 2020
- increase in delivery costs of $1.4 million due to sales
growth.
Balance Sheet and Cash Flow
- Generated $19.6 million in cash from operating activities from
solid earnings performance, an $18.5 million increase in customer
deposits from written orders, and funding of a $13.7 million
increase in inventories and a $10.4 million reduction in payables
and other operating assets and liabilities.
- Cash and cash equivalents at March 31, 2021 are $210.1
million.
- Paid $4.0 million in quarterly cash dividends.
- No funded debt.
Expectations and Other
- We expect gross profit margins for 2021 will be between 56.5%
to 57.0%. Gross profit margins fluctuate quarter to quarter in
relation to our promotional cadence. Our estimated gross profit
margins are based on changes in product and freight costs and its
impact on our LIFO reserve.
- Fixed and discretionary expenses within SG&A for the full
year of 2021 are expected to be in the $265.0 to $268.0 million
range, a slight increase over our previous 2021 estimate due to
rising benefit costs. Variable SG&A expenses for the full year
of 2021 are anticipated to be in the 17.5% to 17.8%, a slight
increase from our most recent quarters’ levels based on potential
increases in selling and delivery costs.
- Our effective tax rate for 2021 is expected to be 24.0%
excluding the impact from the vesting of stock-based awards and
potential new tax legislation.
- Planned capital expenditures for 2021 are approximately $23.0
million which include amounts for a store which opened in February
in Myrtle Beach, S.C., a new market for Havertys, and also opening
in 2021 a new store in The Villages, Fla., and another location in
an existing market. We will close one store in 2021 and retail
square footage is expected to increase approximately 1% versus
2020.
HAVERTY FURNITURE COMPANIES,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (In thousands, except per share data –
Unaudited)
|
Three Months Ended March 31, |
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
Net sales |
$ |
236,491 |
|
$ |
179,432 |
|
Cost of goods sold |
|
101,457 |
|
|
79,879 |
|
Gross profit |
|
135,034 |
|
|
99,553 |
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
Selling, general and administrative |
|
109,762 |
|
|
97,535 |
|
Other (income) expense, net |
|
(36 |
) |
|
(68 |
) |
Total expenses |
|
109,726 |
|
|
97,467 |
|
|
|
|
|
|
|
|
Income before interest and income taxes |
|
25,308 |
|
|
2,086 |
|
Interest income, net |
|
56 |
|
|
214 |
|
|
|
|
|
|
|
|
Income before income taxes |
|
25,364 |
|
|
2,300 |
|
Income tax expense |
|
5,958 |
|
|
481 |
|
Net income |
$ |
19,406 |
|
$ |
1,819 |
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
Adjustments related to retirement plans; net of tax expense of $10
in 2020 and $3 in 2019 |
$ |
49 |
|
$ |
31 |
|
|
|
|
|
|
|
|
Comprehensive income |
$ |
19,455 |
|
$ |
1,850 |
|
|
|
|
|
|
|
|
Basic earnings per share: |
|
|
|
|
|
|
Common Stock |
$ |
1.07 |
|
$ |
0.10 |
|
Class A Common Stock |
$ |
1.00 |
|
$ |
0.09 |
|
|
|
|
|
|
|
|
Diluted earnings per share: |
|
|
|
|
|
|
Common Stock |
$ |
1.04 |
|
$ |
0.09 |
|
Class A Common Stock |
$ |
0.98 |
|
$ |
0.09 |
|
|
|
|
|
|
|
|
Cash dividends per share: |
|
|
|
|
|
|
Common Stock |
$ |
0.22 |
|
$ |
0.20 |
|
Class A Common Stock |
$ |
0.20 |
|
$ |
0.19 |
|
|
|
|
|
|
|
|
HAVERTY FURNITURE COMPANIES,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands - Unaudited)
|
|
March 31,2021 |
|
December 31,2020 |
|
March 31,2020 |
|
|
|
(Unaudited) |
|
|
|
(unaudited) |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
210,124 |
|
$ |
200,058 |
|
$ |
84,570 |
|
Restricted cash and cash equivalents |
|
|
6,715 |
|
|
6,713 |
|
|
6,699 |
|
Inventories |
|
|
103,569 |
|
|
89,908 |
|
|
110,547 |
|
Prepaid expenses |
|
|
12,335 |
|
|
9,580 |
|
|
9,989 |
|
Other current assets |
|
|
9,957 |
|
|
9,985 |
|
|
8,378 |
|
Total current assets |
|
|
342,700 |
|
|
316,244 |
|
|
220,183 |
|
Property and equipment,
net |
|
|
108,836 |
|
|
108,366 |
|
|
153,215 |
|
Right-of-use lease assets |
|
|
228,089 |
|
|
228,749 |
|
|
180,058 |
|
Deferred income taxes |
|
|
16,713 |
|
|
15,814 |
|
|
12,067 |
|
Other assets |
|
|
11,934 |
|
|
11,199 |
|
|
9,356 |
|
Total assets |
|
$ |
708,272 |
|
$ |
680,372 |
|
$ |
574,879 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
25,031 |
|
$ |
31,429 |
|
$ |
16,819 |
|
Customer deposits |
|
|
104,728 |
|
|
86,183 |
|
|
26,174 |
|
Accrued liabilities |
|
|
51,409 |
|
|
52,963 |
|
|
29,759 |
|
Current lease liabilities |
|
|
33,760 |
|
|
33,466 |
|
|
30,201 |
|
Notes payable to bank |
|
|
— |
|
|
— |
|
|
43,800 |
|
Total current liabilities |
|
|
214,928 |
|
|
204,041 |
|
|
146,753 |
|
Noncurrent lease
liabilities |
|
|
199,344 |
|
|
200,200 |
|
|
153,824 |
|
Other liabilities |
|
|
23,686 |
|
|
23,164 |
|
|
21,855 |
|
Total liabilities |
|
|
437,958 |
|
|
427,405 |
|
|
322,432 |
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
270,314 |
|
|
252,967 |
|
|
252,447 |
|
Total liabilities and stockholders’ equity |
|
$ |
708,272 |
|
$ |
680,372 |
|
$ |
574,879 |
|
|
|
|
|
|
|
|
|
|
|
|
HAVERTY FURNITURE COMPANIES,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands – Unaudited)
|
Three Months Ended March 31, |
|
|
2021 |
|
2020 |
|
|
(unaudited) |
|
(unaudited) |
|
Cash Flows from Operating Activities: |
|
|
|
|
|
|
Net income |
$ |
19,406 |
|
$ |
1,819 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
3,992 |
|
|
5,124 |
|
Share-based compensation expense |
|
2,679 |
|
|
972 |
|
Other |
|
(915 |
) |
|
1,241 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Inventories |
|
(13,661 |
) |
|
(5,731 |
) |
Customer deposits |
|
18,545 |
|
|
(3,947 |
) |
Other assets and liabilities |
|
(2,777 |
) |
|
(826 |
) |
Accounts payable and accrued liabilities |
|
(7,668 |
) |
|
(20,231 |
) |
Net cash provided by (used in) operating activities |
|
19,601 |
|
|
(21,579 |
) |
|
|
|
|
|
|
|
Cash Flows from Investing
Activities: |
|
|
|
|
|
|
Capital expenditures |
|
(4,745 |
) |
|
(2,480 |
) |
Proceeds from sale of property and equipment |
|
— |
|
|
4 |
|
Net cash used in investing activities |
|
(4,745 |
) |
|
(2,476 |
) |
|
|
|
|
|
|
|
Cash Flows from Financing
Activities: |
|
|
|
|
|
|
Proceeds from borrowings under revolving credit facilities |
|
— |
|
|
43,800 |
|
Payments of borrowings under revolving credit facilities |
|
— |
|
|
— |
|
Net change in borrowings under revolving credit facilities |
|
— |
|
|
43,800 |
|
|
|
|
|
|
|
|
Dividends paid |
|
(3,987 |
) |
|
(3,750 |
) |
Common stock repurchased |
|
— |
|
|
(6,810 |
) |
Other |
|
(801 |
) |
|
(318 |
) |
Net cash (used in) provided by financing activities |
|
(4,788 |
) |
|
32,922 |
|
Increase in cash, cash
equivalents and restricted cash equivalents during the period |
|
10,068 |
|
|
8,867 |
|
Cash, cash equivalents and
restricted cash equivalents at beginning of period |
|
206,771 |
|
|
82,402 |
|
Cash, cash equivalents and
restricted cash equivalents at end of period |
$ |
216,839 |
|
$ |
91,269 |
|
|
|
|
|
|
|
|
Comparable Store
Sales Comparable-store or
“comp-store” sales is a measure which indicates the performance of
our existing stores and website by comparing the sales growth for
stores and online for a particular month over the corresponding
month in the prior year. Stores are considered non-comparable if
they were not open during the corresponding month or if the selling
square footage has been changed significantly. Stores closed due to
COVID-19 were excluded from comp-store sales.
Cost of Goods Sold
and SG&A Expense We include
substantially all our occupancy and home delivery costs
in SG&A expense as well as a portion of our
warehousing expenses. Accordingly, our gross profit may not be
comparable to those entities that include these costs in cost of
goods sold. We classify
our SG&A expenses as either variable or fixed and
discretionary. Our variable expenses are comprised of selling and
delivery costs. Selling expenses are primarily compensation and
related benefits for our commission-based sales
associates, the discount we pay for third party financing of
customer sales and transaction fees for credit card usage. We do
not outsource delivery, so these costs include personnel,
fuel, and other expenses related to this function. Fixed and
discretionary expenses are comprised of rent, depreciation and
amortization and other occupancy costs for stores, warehouses and
offices, and all advertising and administrative costs.
Conference Call InformationThe company invites
interested parties to listen to the live audiocast of the
conference call on April 28, 2021 at 10:00 a.m. ET at its website,
havertys.com under the investor relations section. If you cannot
listen live, a replay will be available on the day of the
conference call at the website or via telephone at approximately
1:00 p.m. ET through May 8, 2021. The number to access the
telephone playback is 1-888-203-1112 (access code: 2632821).
About Havertys Havertys (NYSE: HVT
and HVT.A), established in 1885, is a full-service home furnishings
retailer with 121 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
havertys.com.
Safe
Harbor This press release contains,
and the conference call may contain forward-looking
statements subject to the safe harbor provisions of
Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Act of 1934. These
forward-looking statements are subject to risks and uncertainties
and change based on various important factors, many of which are
beyond our control.
All statements in the future tense and all statements
accompanied by words such as “expect,” “likely,” “outlook,”
“forecast,” “preliminary,” “would,” “could,” “should,” “position,”
“will,” “project,” “intend,” “plan,” “on track,” “anticipate,” “to
come,” “may,” “possible,” “assume,” and variations of such words
and similar expressions are intended to identify such
forward-looking statements. These forward-looking statements
include, without limitation, our expected ability to operate and
protect our team members and customers during the COVID-19
pandemic, the execution and effect of our cost savings initiatives,
the use of proceeds from our sale-leaseback transaction, our
expectations for selling square footage and capital expenditures
for 2021, our liquidity position to continue to operate during
these highly uncertain times, and our efforts and initiatives to
help us emerge from the pandemic well-positioned. We
caution that our forward-looking statements involve risks and
uncertainties, and while we believe that our expectations for the
future are reasonable in view of currently available
information you are cautioned not to place undue reliance on
our forward-looking statements, and they should not be relied
upon as a prediction of actual results. Factors that could cause
actual results to differ materially from those expressed or implied
in any forward-looking statements include, but are not limited to:
the extent and duration of the disruption to our business
operations caused by the health crisis associated with the COVID-19
pandemic, including the effects on the financial health of our
business partners and customers, on supply chains and our
suppliers, and on access to capital and liquidity provided by the
financial and capital markets; our ability to maintain compliance
with debt covenants and amend such credit facilities as necessary;
disruptions in our suppliers' operations, including from the impact
of COVID-19, including potential problems with inventory
availability and the potential result of the volatility or higher
cost of product and international freight due to the high demand of
products and low supply for an unpredictable period of time;
disruptions in our third-party producers’ operations in foreign
countries; changes in national and international legislation or
government regulations or policies, including changes to import
tariffs and the unpredictability of such changes; failure of
vendors to meet our quality control standards or to react to
changes in legislative or regulatory frameworks; disruptions in our
distribution centers; changes in general economic conditions,
including unemployment, inflation (including the impact of
tariffs); labor shortages and the Company's ability to successfully
attract and retain employees in the current labor market; uncertain
credit markets and other macroeconomic conditions; competitive
product, service and pricing pressures; failure or weakness in our
disclosure controls and procedures and internal controls over
financial reporting; disruptions caused by a failure or breach of
the Company's information systems and information technology
infrastructure, as well as other risks and uncertainties discussed
in the Company's Annual Report on Form 10-K for 2020 (all of which
risks may be amplified by the COVID-19 pandemic) and from time
to time in the Company's subsequent filings with the SEC.
Forward-looking statements describe our
expectations only as of the date they are made, and the
Company undertakes no duty to update its forward-looking statements
except as required by law. You are advised, however, to review any
further disclosures we make on related subjects in our subsequent
Forms 10-K, 10-Q, 8-K, and other reports filed with the
SEC.
Contact: Havertys 404-443-2900 Jenny
Hill Parker SVP, Finance, and Corporate Secretary
SOURCE: Havertys
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