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Haverty Furniture Companies, Inc., together with its subsidiaries, operates as a specialty retailer of residential furniture and accessories in the United States. The company offers its products primarily under the Havertys brand name, as well as provides bedding product lines under the Sealy, Serta, and Tempur-Pedic brand names. It also offers financing through an internal revolving charge credit plan, as well as a third-party finance company. The company primarily serves college educated women in middle to upper-middle income households. As of February 27, 2012, it operated 119 showrooms in 17 states. The company was founded in 1885 and is based in Atlanta, Georgia.
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Press Release $HVT Haverty Furniture Companies Inc.
ATLANTA, GEORGIA, February 25, 2013 -- HAVERTY FURNITURE COMPANIES, INC. (NYSE: HVT and HVT.A) reports fourth quarter and full year 2012 results. Pre-tax income for the fourth quarter of 2012 increased to $10.1 million versus $6.1 million for the same period of 2011. Pre-tax income for the full year of 2012 increased to $23.5 million compared to $4.6 million for 2011. The earnings per share for the fourth quarter of 2012 were $0.30 compared to $0.76 for the same period of 2011. The earnings per share for the full year 2012 were $0.67 compared to $0.70 for 2011. The results of both periods of 2011 included a favorable non- cash special item of $14.1 million, or $0.64 in per share earnings, for the release of almost all of the valuation allowance against the company's net deferred tax assets. As previously reported, net sales for the fourth quarter were 8.4% higher than in the same period of 2011 and 7.9% ahead for the full year 2012. Written sales for the fourth quarter of 2012 increased 12.7% over the same quarter of 2011. Clarence H. Smith, chairman, president and CEO, said, "We are very pleased with these results and look forward to the opportunities in 2013. The initiatives towards attracting the "on trend" customer are gaining traction. This customer wants to express herself and we convey this in our successful "discover something you" advertising campaign. To meet her desire for unique and personally styled products, we expanded and simplified our custom and special order upholstery programs which in 2012 were up almost 18% over 2011. Our store improvements and stylish accessories better showcase all of our merchandise and the appeal of our higher price point products resulted in a 7.8% increase in average ticket and improved gross profit margins for 2012 compared to 2011. "The higher sales volume enabled us to better leverage our fixed and discretionary costs. We will manage these and our variable costs closely to ensure profitable sales growth. Our positive cash flow enabled us to meet our working capital requirements, planned capital expenditures, and make a special $22.0 million cash dividend without drawing on our credit facility. "We will be adjusting our square footage during 2013, closing stores in certain markets and expanding showrooms in desirable locations. Our merchandising and customer centric focus distinguishes us in the marketplace and gives us an edge over our competitors. The improving housing and overall economic data bode well for Havertys as we are prepared operationally and financially to exploit shifts in demand." Financial Highlights Fourth Quarter 2012 Compared to Fourth Quarter 2011 * Net sales were up $14.0 million or 8.4% to $182.3 million and comparable store sales increased 6.0%. * Gross profit margins were 52.8% as a percent of sales compared to 52.3%, a 50 basis point improvement. * Selling, general and administrative costs increased $4.5 million and declined 1.3% as a percent of sales. * Pre-tax income for 2012 increased 66.5% to $10.1 million or 5.5% of sales versus $6.1 million or 3.6% of sales. * Income tax expense in 2012 included a decrease in our reserve for uncertain tax positions of $0.7 million, compared to a decrease in 2011 in the valuation allowance of $14.1 million. * Our retail store count at December 31, 2012 was 122 versus 119 at the end of 2011. Twelve Months ended December 31, 2012 Compared to Same Period of 2011 * Net sales increased $49.2 million and comparable store sales increased 6.8%. * Gross profit margins increased by 0.8% to 52.5% as a percent of sales due to shifts in our merchandising and successful new product introductions. * Selling, general and administrative costs increased $13.0 million and declined 1.8% as a percent of sales. * Pre-tax income for 2012 increased 410.9% to $23.5 million or 3.5% of sales versus $4.6 million or 0.7% of sales. * Income tax expense in 2012 included a decrease in our reserve for uncertain tax positions of $0.7 compared to a decrease in 2011 of $14.1 million in the valuation allowance. Expectations and Other * Both total written business and delivered sales for the first quarter to date of 2013 are up approximately 14% over the same period last year. Comparisons for the remainder of the quarter will be more difficult given last year's strong March, one less day in February this year, and Easter weekend, which is slow for furniture sales, falls in March this year versus April last year. * We plan to continue our merchandising approach in 2013 and use promotional pricing selectively during traditional holiday and other sales events. We expect that our annual gross profit margins for 2013 will be similar to or slightly ahead of the annual 2012 level. * SG&A expenses in 2013 should be leveraged with continuing sales growth since we have considerable additional capacity in our store and distribution infrastructure. We do expect some increases in our period costs due to additional advertising and personnel expense and believe our fixed/discretionary costs will be $220 to $222 million, up approximately 4.5% over those same costs in 2012. These costs are expected to be incurred evenly on a quarterly basis in 2013 versus prior years, in which the second quarter costs were lower. Variable SG&A expenses should continue to be in the 17.3% to 17.5% range as a percent of sales for 2013. * Our effective tax rate for 2013 is expected to be in the 38.5% to 38.8% range. * Planned capital expenditures for 2013 are $20.0 million. We expect to expand three of the stores undergoing major remodeling and complete another 18 of our Bright Inspirations store refreshes. Our plans also include closing three store locations during the first half of 2013, these and other changes should result in a 1.0% decrease in total retail square footage from 2012. HAVERTY FURNITURE COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, except per share data - Unaudited) Three Months Ended Year Ended December 31, December 31, --------------------------- --------------------------- 2012 2011 2012 2011 ------------- ------------- ------------- ------------- Net sales $ 182,307 $ 168,259 $ 670,073 $ 620,903 Cost of goods sold 86,036 80,338 318,038 300,187 ------------- ------------- ------------- ------------- Gross profit 96,271 87,921 352,035 320,716 Credit service charges 77 98 293 460 ------------- ------------- ------------- ------------- Gross profit and other revenue 96,348 88,019 352,328 321,176 ------------- ------------- ------------- ------------- Expenses: Selling, general and administrative 86,098 81,583 328,826 315,865 Interest, net 150 160 624 737 Provision for doubtful accounts 65 43 165 167 Other (income) expense, net (58 ) 172 (803 ) (196 ) ------------- ------------- ------------- ------------- 86,255 81,958 328,812 316,573 ------------- ------------- ------------- ------------- Income before income taxes 10,093 6,061 23,516 4,603 Income tax expense (benefit) 3,314 (10,897 ) 8,605 (10,860 ) ------------- ------------- ------------- ------------- Net income $ 6,779 $ 16,958 $ 14,911 $ 15,463 ------------- ------------- ------------- ------------- Basic earnings per share: Common Stock $ 0.31 $ 0.78 $ 0.69 $ 0.71 Class A Common Stock $ 0.28 $ 0.74 $ 0.58 $ 0.67 Diluted earnings per share: Common Stock $ 0.30 $ 0.76 $ 0.67 $ 0.70 Class A Common Stock $ 0.29 $ 0.73 $ 0.59 $ 0.67 Basic weighted average shares outstanding: Common Stock 19,330 18,731 19,096 18,633 Class A Common Stock 2,815 3,218 2,943 3,287 Diluted weighted average shares outstanding: Common Stock 22,566 22,218 22,382 22,153 Class A Common Stock 2,815 3,218 2,943 3,287 Cash dividend per common share: Common Stock $ 1.0400 $ 0.1200 $ 1.1200 $ 0.1200 Class A Common Stock $ 0.9875 $ 0.1125 $ 1.0625 $ 0.1125 HAVERTY FURNITURE COMPANIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands - Unaudited) December 31, ------------------------- 2012 2011 ------------ ------------ ASSETS Current assets Cash and cash equivalents $ 53,550 $ 49,585 Restricted cash and cash equivalents 7,013 6,813 Accounts receivable 9,710 11,451 Inventories 96,902 93,713 Prepaid expenses 9,532 11,195 Other current assets 3,187 4,918 ------------ ------------ Total current assets 179,894 177,675 Accounts receivable, long-term 814 449 Property and equipment 193,085 179,333 Deferred income taxes 24,366 22,681 Other assets 3,937 4,962 ------------ ------------ Total assets $ 402,096 $ 385,100 ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 28,178 $ 21,218 Customer deposits 20,963 14,572 Accrued liabilities 33,272 29,186 Deferred income taxes 6,595 6,635 Current portion of lease obligations 881 762 ------------ ------------ Total current liabilities 89,889 72,373 Lease obligations, less current portion 18,473 12,284 Other liabilities 34,306 37,774 ------------ ------------ Total liabilities 142,668 122,431 ------------ ------------ Stockholders' equity 259,428 262,669 ------------ ------------ Total liabilities and stockholders' equity $ 402,096 $ 385,100 ------------ ------------ HAVERTY FURNITURE COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands - Unaudited) Year Ended December 31, -------------------------- 2012 2011 ----------- ----------- Cash Flows from Operating Activities: Net income $ 14,911 $ 15,463 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 19,415 18,242 Deferred income taxes (2,209 ) (7,947 ) Share-based compensation expense 2,553 2,060 Provision for doubtful accounts 165 167 Net loss (gain) on sale of property and equipment (12 ) 94 Other 337 237 Changes in operating assets and liabilities: Accounts receivable 1,210 2,299 Inventories (3,458 ) (1,775 ) Customer deposits 6,391 987 Other assets and liabilities 1,818 (11,714 ) Accounts payable and accrued liabilities 11,047 959 --------- --------- Net cash provided by operating activities 52,168 19,072 --------- --------- Cash Flows from Investing Activities: Capital expenditures (25,014 ) (17,566 ) Restricted cash and cash equivalents (200 ) (6,813 ) Proceeds from sale of property and equipment 38 157 Other 410 - --------- --------- Net cash used in investing activities (24,766 ) (24,222 ) --------- --------- Cash Flows from Financing Activities: Payments on lease obligations (766 ) (588 ) Proceeds from exercise of stock options 2,457 285 Dividends paid (24,684 ) (2,609 ) Other financing activities (444 ) (398 ) --------- --------- Net cash used in financing activities (23,437 ) (3,310 ) --------- --------- Increase (decrease) in cash and cash equivalents during the year 3,965 (8,460 ) Cash and cash equivalents at beginning of year 49,585 58,045 --------- --------- Cash and cash equivalents at end of year $ 53,550 $ 49,585 --------- --------- The following table summarizes the impact of various items on our tax expense (in thousands): 2012 2011 ------------ ------------- Statutory rates applied to income before income taxes $ 8,231 $ 1,565 State income taxes, net of Federal tax benefit 769 143 Net non-deductible permanent differences 8 33 ------------ ------------- 9,008 1,741 ------------ ------------- Change in deferred tax asset valuation allowance (1,207 ) (14,121 ) Change in state credits 1,129 717 Change for net operating loss carrybacks, amended returns and related receivables 342 422 Change in deferred tax rate (125 ) 274 Change in reserve for uncertain tax positions (674 ) 42 Other 132 65 ------------ ------------- (403 ) (12,601 ) ------------ ------------- Income tax expense (benefit) $ 8,605 $ (10,860 ) ------------ ------------- About Havertys Havertys, established in 1885, 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. Conference Call Information The company will sponsor a conference call Tuesday, February 26, 2013 at 10:00 a.m. Eastern Standard Time to review its results. 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. Contact: Haverty Furniture Companies, Inc., 404-443-2900 Dennis L. Fink EVP & CFO Jenny Hill Parker SVP, Finance, Secretary and Treasurer SOURCE: Haverty Furniture Companies, Inc. This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Haverty Furniture Company via Thomson Reuters ONE [HUG#1680980]