Havertys Reports Operating Results for First Quarter 2022
05/02/2022 - 04:11 PM
ATLANTA, May 02, 2022 (GLOBE NEWSWIRE) -- HAVERTYS (NYSE: HVT and HVT.A), today reported its operating results for the first quarter ended March 31, 2022.
First quarter 2022 versus first quarter 2021:
Consolidated sales increased 1.0% to $238.9 million . Comparable store sales increased 0.2% . Gross profit margin of 59.0% versus 57.1% and above expectations due to merchandise mix and pricing. Diluted earnings per common share (“EPS”) of $1.11 versus $1.04. Clarence H. Smith, chairman and CEO, said, “We are pleased to report the results of another strong quarter. Our merchandising team has responded to cost increases by judiciously adjusting retail pricing. Sales generated by our free in-home design service are improving as COVID-19 concerns abate and were 23.5% of deliveries this quarter compared to 21.0% in the first quarter of last year. COVID-19 does remain a factor in our supply chain, and ongoing delays in case goods have impacted sales in this category.
"During the early part of the quarter our delivered and written business was good compared to the historic results in 2021. We experienced a return to increased consumer interest around traditional shopping holiday events and had a record Presidents' Day. However, we encountered significant declines in in-store traffic and written business in March. We believe discretionary consumer spending has been adversely impacted by rising inflation, including fuel costs, market volatility, and geopolitical concerns.
Key Results (amounts in millions, except per share amounts)
Results of Operations Q1 2022 Q1 2021 Sales $ 238.9 $ 236.5 Gross Profit 141.0 135.0 Gross profit as a % of sales 59.0 % 57.1 % SGA Variable 44.4 40.7 Fixed 70.8 69.1 Total 115.2 109.8 SGA as a % of sales Variable 18.6 % 17.2 % Fixed 29.6 % 29.2 % Total 48.2 % 46.4 % Pre-tax income 25.7 25.4 Pre-tax income as a % of sales 10.8 % 10.7 % Net income $ 19.4 $ 19.4 Net income as a % of sales 8.1 % 8.2 % Diluted earnings per share (“EPS”) $ 1.11 $ 1.04
Other Financial and Operations Data Q1 2022 Q1 2021 EBITDA (in millions)( 1 ) $ 29.9 $ 29.3 Sales per square foot $ 222 $ 222 Average ticket $ 3,066 $ 2,685
Liquidity Measures Free Cash Flow Q1 2022 Q1 2021 Cash Returns to Shareholders Q1 2022 Q1 2021 Operating cash flow $ 20.6 $ 19.6 Share repurchases $ 12.5 $ — Dividends 4.3 4.0 Capital expenditures 7.1 4.7 Free cash flow $ 13.5 $ 14.9 Cash returns to shareholders $ 16.8 $ 4.0
(1) See the reconciliation of the non-GAAP metrics at the end of the release.
First Quarter ended March 31, 2022 Compared to Same Period of 2021
Total sales up 1.0% , comp-store sales up 0.2% for the quarter. Total written sales for the first three months of 2022 were down 8.8% compared to the same period of 2021 and written comp-store sales were down 9.6% . Gross profit margins increased 190 basis points to 59.0% in 2022 from 57.1% for the same period of 2021 due to pricing merchandise mix and discipline. SG&A expenses were 48.2% of sales versus 46.4% and increased $5.4 million . The primary drivers of this change are: increase of $1.8 million in selling expenses due to increased compensation and benefit costs. increase in distribution and delivery costs of $1.5 million due to demurrage fees and increases in compensation and fuel costs. Increase in occupancy costs of $0.6 million primarily resulting from the timing of repairs and maintenance. Balance Sheet and Cash Flow
Generated $20.6 million in cash from operating activities from solid earnings performance and funding of a $7.8 million increase in inventories and a $4.7 million increase in payables and other operating assets and liabilities. Cash and cash equivalents at March 31, 2022 are $169.1 million . Purchased 438,499 shares of common stock for $12.5 million and paid $4.3 million in quarterly cash dividends. No funded debt. Expectations and Other
We expect gross profit margins for 2022 will be between 57.7% to 58.0% , an increase from our previous estimate. Gross profit margins fluctuate quarter to quarter in relation to our promotional cadence. Our estimated gross profit margins are based on anticipated 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 2022 are expected to be in the $295.0 t o $298.0 million . Variable SG&A expenses for the full year of 2022 are anticipated to be in the 18.0% to 18.2% range in 2022, an increase from our previous estimate based on increases in selling and delivery costs. Our effective tax rate for 2022 is expected to be 25% excluding the impact from the vesting of stock-based awards, potential tax credits, and any new tax legislation. Planned capital expenditures are approximately $37.0 million in 2022. We expect to increase retail square footage by 1% , opening four stores and closing two. Capital expenditures are also planned for the conversion of our home delivery center in Virginia to a regional distribution facility, and as part of our enhanced online presence, additional spend on information technology. We have $12.5 million remaining for purchases of common stock under a current authorization. HAVERTY FURNITURE COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data – Unaudited)
Three Months Ended March 31, 2022 2021 Net sales $ 238,946 $ 236,491 Cost of goods sold 97,985 101,457 Gross profit 140,961 135,034 Expenses: Selling, general and administrative 115,154 109,762 Other expense (income), net 161 (36 ) Total expenses 115,315 109,726 Income before interest and income taxes 25,646 25,308 Interest income, net 74 56 Income before income taxes 25,720 25,364 Income tax expense 6,359 5,958 Net income $ 19,361 $ 19,406 Other comprehensive income Adjustments related to retirement plans; net of tax expense of $14 in 2022 and $16 in 2021 $ 40 $ 49 Comprehensive income $ 19,401 $ 19,455 Basic earnings per share: Common Stock $ 1.14 $ 1.07 Class A Common Stock $ 1.08 $ 1.00 Diluted earnings per share: Common Stock $ 1.11 $ 1.04 Class A Common Stock $ 1.05 $ 0.98 Cash dividends per share: Common Stock $ 0.25 $ 0.22 Class A Common Stock $ 0.23 $ 0.20
HAVERTY FURNITURE COMPANIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands - Unaudited)
March 31, 2022 December 31, 2021 March 31, 2021 ASSETS Current assets Cash and cash equivalents $ 162,340 $ 166,146 $ 210,124 Restricted cash and cash equivalents 6,715 6,716 6,715 Inventories 119,857 112,031 103,569 Prepaid expenses 10,633 12,418 12,335 Other current assets 13,585 11,746 9,957 Total current assets 313,130 309,057 342,700 Property and equipment, net 128,721 126,099 108,836 Right-of-use lease assets 221,083 222,356 228,089 Deferred income taxes 18,252 16,375 16,713 Other assets 12,699 12,403 11,934 Total assets $ 693,885 $ 686,290 $ 708,272 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 32,415 $ 31,235 $ 25,031 Customer deposits 98,528 98,897 104,728 Accrued liabilities 48,876 46,664 51,409 Current lease liabilities 33,923 33,581 33,760 Total current liabilities 213,742 210,377 214,928 Noncurrent lease liabilities 197,265 196,771 199,344 Other liabilities 22,478 23,172 23,686 Total liabilities 433,485 430,320 437,958 Stockholders’ equity 260,400 255,970 270,314 Total liabilities and stockholders’ equity $ 693,885 $ 686,290 $ 708,272
HAVERTY FURNITURE COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands – Unaudited)
Three Months Ended March 31, 2022 2021 Cash Flows from Operating Activities: Net income $ 19,361 $ 19,406 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,272 3,992 Share-based compensation expense 2,307 2,679 Other (1,877 ) (915 ) Changes in operating assets and liabilities: Inventories (7,826 ) (13,661 ) Customer deposits (369 ) 18,545 Other assets and liabilities 1,120 (2,777 ) Accounts payable and accrued liabilities 3,590 (7,668 ) Net cash provided by operating activities 20,578 19,601 Cash Flows from Investing Activities: Capital expenditures (7,107 ) (4,745 ) Net cash used in investing activities (7,107 ) (4,745 ) Cash Flows from Financing Activities: Proceeds from borrowings under revolving credit facilities — — Payments of borrowings under revolving credit facilities — — Net change in borrowings under revolving credit facilities — — Dividends paid (4,260 ) (3,987 ) Common stock repurchased (12,501 ) — Other (517 ) (801 ) Net cash used in financing activities (17,278 ) (4,788 ) (Decrease) increase in cash, cash equivalents and restricted cash equivalents during the period (3,807 ) 10,068 Cash, cash equivalents and restricted cash equivalents at beginning of period 172,862 206,771 Cash, cash equivalents and restricted cash equivalents at end of period $ 169,055 $ 216,839
GAAP to Non-GAAP Reconciliation
Reconciliation of GAAP measures to EBITDA
(in thousands) Q1 2022 Q1 2021 Income before income taxes, as reported $ 25,720 $ 25,364 Interest (income), net (74 ) (56 ) Depreciation 4,272 3,992 EBITDA $ 29,918 $ 29,300
Comparable Store Sales
Cost of Goods Sold and SG&A Expense
Conference Call Information 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 13, 2022. The number to access the telephone playback is 1-888-203-1112 (access code: 3248316).
About Havertys
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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 expectations for retail and operating margins, selling square footage and capital expenditures for 2022, our liquidity position to continue to fund our growth plans, and our efforts and initiatives to execute our strategic plan.
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.
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SOURCE: Havertys
