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