Havertys Reports Third Quarter 2021 Results
10/28/2021 - 05:10 PM
ATLANTA, Oct. 28, 2021 (GLOBE NEWSWIRE) -- HAVERTYS (NYSE: HVT and HVT.A), today reported its operating results for the third quarter ended September 30, 2021.
Third quarter 2021 versus third quarter 2020:
Diluted earnings per common share (“EPS”) of $1.31 versus $0.97. Sales increased 19.7% to $260.4 million for 2021 compared to $217.5 million for 2020. Comparable store sales increased 17.7% . Sales for 2021 increased 24.4% compared to $209.3 million for 2019. Clarence H. Smith, chairman and CEO, said, “We are pleased to report another quarter of outstanding results of both top line growth and operating margin expansion. The fluctuations in product and freight costs, supply chain disruptions, and staffing in key areas has challenged our teams. This quarter's performance was hard earned and I'm proud of our people as they continue to exemplify our key values of dedication to serving the customer, integrity, and teamwork.
“Merchandise availability and costs remain a key issue across the industry. Our domestic vendors are beginning to return to normal production levels as flow of their raw materials improves. The factories in Vietnam which closed in July are beginning to reopen at varying levels of capacity. We had product in transit and awaiting shipment prior to the closures which will provide some relief but the shutdown will likely impact availability in the latter part of the fourth quarter and into the first quarter of 2022.
“Our ability to let customers shop on their terms, either in store or online, and our free in-home design services are a part of our success and helps set us apart from our competition. We believe the home will remain a high priority for people, and buoyed by the macro environment, our position in strong markets and strategies for growth will provide momentum into the future.”
Key Results (amounts in millions, except per share amounts)
Three months ended September 30, Nine months ended September 30, 2021 % of Net Sales 2020 % of Net Sales 2021 % of Net Sales 2020 % of Net Sales Sales $ 260.4 100.0 % $ 217.5 100.0 % $ 746.9 100.0 % $ 506.9 100.0 % Gross Profit $ 148.0 56.8 % $ 122.2 56.2 % $ 424.5 56.8 % $ 281.4 55.5 % SG&A Variable $ 43.7 16.8 % $ 37.7 17.3 % $ 126.4 16.9 % $ 93.7 18.5 % Fixed $ 72.4 27.8 % $ 62.4 28.7 % $ 211.9 28.4 % 176.6 34.8 % Total SG&A $ 116.1 44.6 % $ 100.1 46.0 % $ 338.3 45.3 % $ 270.3 53.3 % Pre-tax earnings (adjusted for gain on sale-leaseback*) $ 31.9 12.3 % $ 24.5 11.3 % $ 86.4 11.6 % $ 13.9* 2.7 % Adjusted EPS $ 1.31 $ 0.97 $ 3.55 $ 0.53*
Third Quarter ended September 30, 2021 Compared to Same Period of 2020
Total sales up 19.7% , comp-store sales up 17.7% for the quarter. Total written business was up 2.0% for the quarter. Gross profit margins increased 60 basis points to 56.8% in 2021 from 56.2% for the same period of 2020 due to pricing discipline partially offset by a larger charge for our LIFO reserve. SG&A expenses decreased to 44.6% of sales from 46.0% and SG&A dollars increased approximately $16.0 million . The primary drivers of this change are: Sales growth in 2021 and leveraging of expenses and the measures taken as part of our business continuity plan. Increase of $2.7 million in selling expenses due to sales growth. Increase of $1.7 million in advertising and marketing spend. Increase in delivery costs of $2.2 million due to sales growth. Increase in warehousing costs of $4.3 million due to higher salaries and demurrage fees. Balance Sheet and YTD Cash Flow
Cash and cash equivalents at September 30, 2021 are $232.4 million . Generated $89.0 million in cash from operating activities driven by a solid performance, a $34.0 million increase in customer deposits from written orders, offset by funding of a $29.1 million increase in inventories. Capital expenditures of $28.1 million which included purchase of leased Virginia home delivery center which was part of May 2020 sale leaseback. Paid $13.0 million in quarterly cash dividends. Repurchased $19.5 million of common stock. No funded debt. Expectations and Other
Our written business for the fourth quarter to date of 2021 is down approximately 3.5% versus the same period last year and up 20.9% over 2019. The written business for the third and fourth quarters of 2020 were up 22.8% and 16.7% , respectively, over 2019. Our delivered sales for the fourth quarter to date of 2021 are up approximately 17.5% versus the same period last year and up 41.5% over 2019. Delivered sales for the third and fourth quarters of 2020 were up 3.9% and 12.9% , respectively, over 2019. We expect gross profit margins for 2021 will be between 56.5% to 56.8% . 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 $278.0 t o $281.0 million range, an increase over our previous 2021 estimate due to rising warehouse, compensation, and benefit costs. Variable SG&A expenses for the full year of 2021 are anticipated to be in the 17.0% to 17.3% range. 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 $37.0 million which include amounts for a store which opened in February in Myrtle Beach, S.C., a new market for Havertys, the opening in August of a new store in The Villages, Fla., and the addition of a new store scheduled to open in January 2022 in Austin, TX. We closed one store in the third quarter of 2021 and retail square footage is expected to be flat versus 2020. Capital expenditures include amounts for the purchase in the third quarter of 2021 of a store and a home delivery center, previously under lease. We are also investing in new information technology in support of our website and operations. Our suppliers paused their manufacturing operations in Vietnam in July due to COVID-19. They began reopening in mid-October and are operating at various levels of capacity. These closures may impact our merchandise available for delivery in future quarters. HAVERTY FURNITURE COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data – Unaudited)
Three Months Ended September 30 , Nine Months Ended September 30 , 2021 2020 2021 2020 Net sales $ 260,378 $ 217,513 $ 746,858 $ 506,913 Cost of goods sold 112,375 95,336 322,320 225,537 Gross profit 148,003 122,177 424,538 281,376 Expenses: Selling, general and administrative 116,156 100,097 338,315 270,281 Other expense (income), net 2 (2,401 ) (40 ) (34,298 ) Total expenses 116,158 97,696 338,275 235,983 Income before interest and income taxes 31,845 24,481 86,263 45,393 Interest income, net 58 51 173 64 Income before income taxes 31,903 24,532 86,436 45,457 Income tax expense 7,670 6,271 19,939 11,737 Net income $ 24,233 $ 18,261 $ 66,497 $ 33,720 Diluted earnings per share: Common Stock $ 1.31 $ 0.97 $ 3.55 $ 1.77 Class A Common Stock $ 1.25 $ 0.93 $ 3.38 $ 1.70 Diluted weighted average shares outstanding: Common Stock 18,562 18,864 18,712 19,038 Class A Common Stock 1,290 1,526 1,344 1,530 Cash dividends per share: Common Stock $ 0.25 $ 0.20 $ 0.72 $ 0.55 Class A Common Stock $ 0.23 $ 0.19 $ 0.65 $ 0.52
HAVERTY FURNITURE COMPANIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands– Unaudited)
September 30, 2021 December 31, 2020 September 30, 2020 ASSETS Current assets Cash and cash equivalents $ 225,674 $ 200,058 $ 211,849 Restricted cash and cash equivalents 6,716 6,713 6,713 Inventories 118,961 89,908 90,943 Prepaid expenses 13,729 9,580 9,996 Other current assets 13,441 9,985 11,475 Total current assets 378,521 316,244 330,976 Property and equipment, net 124,795 108,366 109,663 Right-of-use lease assets 229,975 228,749 235,778 Deferred income taxes 18,120 15,814 12,523 Other assets 12,349 11,199 10,485 Total assets $ 763,760 $ 680,372 $ 699,425 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 34,663 $ 31,429 $ 27,110 Customer deposits 120,149 86,183 88,408 Accrued liabilities 56,880 52,963 53,866 Current lease liabilities 34,108 33,466 32,685 Total current liabilities 245,800 204,041 202,069 Noncurrent lease liabilities 203,935 200,200 207,780 Other liabilities 22,484 23,164 22,199 Total liabilities 472,219 427,405 432,048 Stockholders’ equity 291,541 252,967 267,377 Total liabilities and stockholders’ equity $ 763,760 $ 680,372 $ 699,425
HAVERTY FURNITURE COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands– Unaudited)
Nine Months Ended September 30, 2021 2020 Cash Flows from Operating Activities: Net income $ 66,497 $ 33,720 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 12,099 13,959 Share-based compensation expense 6,456 3,362 Gain from sale of land, property and equipment (74 ) (34,202 ) Other (1,484 ) 1,259 Changes in operating assets and liabilities: Inventories (29,053 ) 13,873 Customer deposits 33,966 58,287 Operating lease assets and liabilities, net 3,151 1,156 Other assets and liabilities (9,239 ) (4,997 ) Accounts payable and accrued liabilities 6,679 13,404 Net cash provided by operating activities 88,998 99,821 Cash Flows from Investing Activities: Capital expenditures (28,060 ) (7,205 ) Proceeds from sale of property and equipment 78 74,399 Net cash (used in) provided by investing activities (27,982 ) 67,194 Cash Flows from Financing Activities: Proceeds from borrowings under revolving credit facilities — 43,800 Payments of borrowings under revolving credit facilities — (43,800 ) Net change in borrowings under revolving credit facilities — — Dividends paid (13,010 ) (10,271 ) Common stock repurchased (19,493 ) (19,708 ) Other (2,894 ) (876 ) Net cash used in financing activities (35,397 ) (30,855 ) Increase in cash, cash equivalents and restricted cash equivalents during the period 25,619 136,160 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 $ 232,390 $ 218,562
Adjusted EPS and Pre-tax earnings as adjusted
We have calculated Adjusted EPS for the nine months ended September 30, 2020 by adjusting EPS for a sale-leaseback transaction. There were no such adjustments in the comparable period of 2021.
YTD September 30, 2020 Diluted earnings per share: Reported EPS $ 1.77 Adjustments: Gain from sale-leaseback transaction: pre-tax (1.66 ) Tax impact of gain(1) 0.42 Net adjustment (1.24 ) Adjusted EPS $ 0.53
(1) Calculated based on nature of item and rates applied.
YTD September 30, 2020 Pre-tax earnings: (Dollars in millions) Income before income taxes, as reported $ 45.5 Adjustments: Gain from sale-leaseback transaction (31.6 ) Pre-tax earnings, as adjusted $ 13.9
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 November 8, 2021. The number to access the telephone playback is 1-888-203-1112 (access code: 7628032).
About Havertys
Safe Harbor
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.
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
