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Havertys Reports Improved Operating Results for Fourth Quarter and Full Year 2012


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2013-02-25 23:22:31 -

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]


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