La-Z-Boy Incorporated (NYSE: LZB), a global leader in residential
furniture, today reported its operating results for the fiscal 2020
fourth quarter and full year ended April 25, 2020.
Fiscal 2020 full year versus Fiscal 2019
full year:
• Consolidated sales decreased 2.4% to $1.70
billion, reflecting ten months of strength and two months of
dramatic temporary impact from the COVID-19
pandemic• Consolidated operating margin:
- GAAP: 7.0% versus 7.4%
- Non-GAAP*: 8.2% versus 7.8%• Upholstery: 10.8% versus
10.1%• Retail: 8.2% versus 6.9%
• Net income attributable to La-Z-Boy
Incorporated per diluted share (“EPS”):
- GAAP: $1.66 versus $1.44
- Non-GAAP*: $2.16 versus $2.14
• Cash generated from operating activities
increased 9.0% to $164.2 million• The company returned $68.4
million to shareholders through share purchases and
dividends• Cash, cash equivalents, and restricted cash were
$263.5 million at year end, including $75.0 million in
cash proactively drawn on the company's credit facility, and the
company held $28.6 million in investments to enhance returns on
cash, up from $131.8 million in cash, cash equivalents and
restricted cash, and $31.5 million in investments to enhance
returns on cash at the end of fiscal 2019
Fiscal 2020 fourth quarter versus Fiscal
2019 fourth quarter:
• Consolidated sales decreased 19.1% to
$367.3 million, reflecting two months of dramatic temporary impact
from the COVID-19 pandemic• Consolidated operating margin:
- GAAP: 3.7% versus 8.2%
- Non-GAAP*: 9.3% versus 8.6%• Upholstery: 11.8% versus
11.6%• Retail: 10.8% versus 8.5%
• Net income attributable to La-Z-Boy Incorporated per
diluted share (“EPS”):
- GAAP: $0.05 versus $0.03
- Non-GAAP*: $0.49 versus $0.64
• Cash generated from operating activities was $44.5
million• The company returned $14.5 million to shareholders
through share purchases and dividends
Kurt L. Darrow, Chairman, President and Chief
Executive Officer of La-Z-Boy, said, "La-Z-Boy delivered strong
performance for 10 months of fiscal 2020 through February.
The iconic La-Z-Boy brand, excellent Retail performance, great
product introductions and supply chain strength translated to solid
sales and earnings growth for those 10 months. Our fourth
quarter started with a 20.4% increase in written same-store sales
for the entire La-Z-Boy Furniture Galleries® network in February,
and we experienced other examples of strength across our vast
network of distribution. However, the trajectory of sales and
earnings growth for the last two months of the year were
significantly impacted by COVID-19 and mandated retail closures
across North America. With the health, safety and well-being
of our employees, customers and the communities in which we operate
of paramount importance, we responded to the pandemic swiftly, with
a decisive Action Plan announced March 29, 2020. The majority of
retailers, including our company-owned La-Z-Boy Furniture
Galleries® stores, closed for at least the last four weeks of our
quarter, and most closures extended into the first quarter of
fiscal 2021. We temporarily closed the majority of our
manufacturing operations, and managed all other expenses, including
temporarily furloughing 70% of our workforce and dramatically
reducing all other cash expenditures to preserve liquidity."
Darrow added, "As we have moved through this
uncertain period and look to the future, we have remained
agile and continued to make tough choices to align and strengthen
our business with the new operating environment. We are
pleased to have called back some 6,000 furloughed workers, who have
eagerly returned or will return to work by July 1st. However,
we also made the decision to permanently close our Newton,
Mississippi manufacturing facility and reduce our global workforce
by approximately 10%. We deeply regret the impact of our
actions on affected employees, but these moves are in the best
long-term interest of the company."
Darrow concluded, "Moving forward, furniture
retailers and La-Z-Boy Furniture Galleries® stores have reopened
and we are seeing strong early demand. Our manufacturing facilities
have ramped from zero production at the end of April and are moving
toward 80% of prior-year production as we head into July. While
time will tell how these trends continue to evolve, with the
inherent strengths of the La-Z-Boy brand and our broad base of
retail customers, I have every confidence we will emerge with
strength and have the potential for market share gains as the
demand environment improves. I am proud of our company's
performance for the year, including our quick response to the
pandemic and the aggressive ramp up we have achieved since
re-starting operations. With a philosophy of fiscal
conservatism, we entered the pandemic period with a solid cash
position, managed through the early stages of the crisis well, and
still generated $164.2 million in cash from operations and returned
$68.4 million to shareholders through dividends and share
purchases."
Consolidated sales in the fourth quarter of
fiscal 2020 decreased 19.1% to $367.3 million, due to the impact of
COVID-19 on the last two months of the quarter. Consolidated GAAP
operating margin decreased to 3.7% versus 8.2% in the prior-year
quarter. Non-GAAP operating margin was 9.3% in the
current-year quarter versus 8.6% in last year’s fourth quarter,
reflecting increases in the Upholstery and Retail segments offset
by a decline in the Casegoods segment. GAAP and Non-GAAP results
for the fourth quarter include a 440 basis point benefit related to
a rebate of previously paid China tariffs, partially offset by
higher bad debt expense. The fiscal 2019 fourth-quarter GAAP and
Non-GAAP results include a 40 basis point charge related to changes
in employee benefit policies.
For the entire La-Z-Boy Furniture Galleries®
network, after nine months of written same-store sales up 6.4%,
written same-store sales for the La-Z-Boy Furniture Galleries®
network decreased 35.0% in the fourth quarter as a result of the
COVID-19 pandemic and related store closures.
For the quarter, sales in the company’s
Upholstery segment decreased 21.7% to $253.3 million and GAAP
operating margin increased to 11.8% from 11.5% in last year’s
fourth quarter. Non-GAAP operating margin increased to 11.8%
versus 11.6%. Operating margin increased primarily as a
result of a one-time rebate of previously paid tariffs, mostly
offset by higher bad debt expense, including a write-off for the
Art Van bankruptcy and a provision for potential credit losses in
the COVID-19 environment. Also, during the quarter, SG&A
spending was lower due to the company's COVID-19 Action Plan, but
higher as a percent of sales due to the decline in sales related to
the pandemic. In the Casegoods segment, sales decreased 19.7% to
$21.4 million and operating margin was 1.9% compared with 9.1% in
the prior-year period, primarily reflecting the impact of
COVID-19.
Sales in the Retail segment decreased 8.0% to
$139.7 million in the fourth quarter of fiscal 2020. GAAP
operating margin for the Retail segment improved to 10.7% from 8.4%
in last year’s fourth quarter. Non-GAAP operating margin
increased to 10.8% in the current-year quarter from 8.5% in last
year’s fourth quarter. Operating margin improvement was driven
primarily by prior-period written sales delivered in the current
quarter, and lower operating expenses related to the company's
COVID-19 Action Plan, including compensation and advertising, due
to closed stores. After a strong February start, on the core base
of 152 company-owned stores in last year’s fourth quarter,
delivered same-store sales declined 10.0% with the majority of
stores closed for the last four weeks of the quarter, and many
remaining closed into the first quarter of fiscal 2021.
Fiscal 2020 fourth-quarter sales for Joybird
(reported in the Corporate & Other segment) decreased 29.6% to
$15.4 million. Joybird posted a larger GAAP loss versus the
prior-year quarter, primarily due to a $26.9 million non-cash
pre-tax goodwill impairment charge, partially offset by the
reversal of the Joybird contingent consideration liability valued
at $7.9 million. La-Z-Boy continues to make improvements
across the Joybird business model with the objective to balance
investments in growth with bottom-line performance. However,
the negative impact of COVID-19 tempered financial projections and
the company concluded the fair value of future earn-out payments is
zero and the carrying value of goodwill was partially
impaired. As Joybird continues to hone its business model, it
is expected to deliver value to the La-Z-Boy enterprise over the
long term.
GAAP diluted EPS was $0.05 for the fiscal 2020
fourth quarter versus $0.03 in the prior-year quarter. Non-GAAP*
diluted EPS was $0.49 versus $0.64 in last year’s fourth
quarter.
Balance Sheet and Cash Flow
For the fourth quarter, the company generated
$44.5 million in cash from operating activities. La-Z-Boy
ended the quarter with $263.5 million in cash, cash equivalents,
and restricted cash, including $75 million in cash proactively
drawn on the company's credit facility to enhance liquidity in
response to COVID-19, and $28.6 million in investments to enhance
returns on cash compared with $131.8 million in cash, cash
equivalents and restricted cash, and $31.5 million in investments
to enhance returns on cash at the end of fiscal 2019. During the
period, the company invested $10.6 million in the business through
capital expenditures. The company paid $6.5 million in dividends
and spent $8.0 million purchasing 0.3 million shares of stock in
the open market under its existing authorized share purchase
program during the fourth quarter. For the full fiscal 2020
year, the company paid $25.1 million in dividends and spent $43.4
million purchasing 1.4 million shares, leaving 4.5 million shares
of purchase availability in the program.
*Non-GAAP amounts for the fiscal 2020
year exclude:
- a non-cash pre-tax,
non-tax-deductible goodwill impairment charge of $26.9 million, or
$0.58 per diluted share
- a non-cash pre-tax charge of $6.0
million, or $0.09 per diluted share, related to an impairment for
one investment
- a pre-tax purchase accounting net
benefit related to acquisitions completed in prior periods totaling
$1.4 million, or $0.07 per diluted share, with a $2.1 million
benefit included in operating income and $0.7 million expense
included in interest expense
- pre-tax net benefit of $4.4
million, or $0.07 per diluted share, related to the company's
supply chain optimization initiative, including the closure and
sale of the company's Redlands, California upholstery manufacturing
facility and relocation of its Newton, Mississippi leather
cut-and-sew operations
- pre-tax benefit of $1.9 million, or
$0.03 per diluted share, related to the 2019 termination of the
company's defined benefit pension plan
*Non-GAAP amounts for the full fiscal
2019 year exclude:
- a non-cash pre-tax charge of $32.7
million, or $0.58 per diluted share, related to the termination of
the company's defined benefit pension plan
- pre-tax purchase accounting charges
totaling $7.5 million, or $0.12 per diluted share, with $6.9
million included in operating income and $0.6 million included in
interest expense
*Non-GAAP amounts for the fourth quarter
of fiscal 2020 exclude:
- a non-cash pre-tax, non-tax-deductible goodwill impairment
charge of $26.9 million, or $0.58 per diluted share
- a pre-tax purchase accounting net benefit related to
acquisitions completed in prior periods totaling $5.9 million, or
$0.14 per diluted share, with a $6.1 million benefit included in
operating income and $0.2 million expense included in interest
expense
- pre-tax benefit of $0.1 million, or $0.00 per diluted share,
related to the company’s supply chain optimization initiative
*Non-GAAP amounts for the fourth quarter
of fiscal 2019 exclude:
- a non-cash pre-tax charge of $32.7
million, or $0.58 per diluted share, related to the termination of
the company's defined benefit pension plan
- pre-tax purchase accounting charges
of $2.0 million, or $0.03 per diluted share, with $1.8 million
included in operating income and $0.2 million included in interest
expense
Please refer to the accompanying “Reconciliation
of GAAP to Non-GAAP Financial Measures” for detailed information on
calculating Non-GAAP measures used in this press release and a
reconciliation to the applicable GAAP measure.
Conference Call
La-Z-Boy will hold a conference call with the
investment community on Wednesday, June 24, 2020, at 8:30 a.m.
eastern time. The toll-free dial-in number is 844.602.0380;
international callers may use 862.298.0970.
The call will be webcast live, with
corresponding slides, and archived on the Internet. It will
be available at https://lazboy.gcs-web.com/. A telephone replay
will be available for a week following the call. This replay will
be accessible to callers from the U.S. and Canada at 877.481.4010
and to international callers at 919.882.2331. Enter Replay
Passcode: 35012. The webcast replay will be available for one
year.
Cautionary Note Regarding
Forward-Looking Statements
This news release contains “forward-looking”
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements can be identified by
the fact that they do not relate strictly to historical or current
facts. Generally, forward-looking statements include information
concerning expectations, projections or trends relating to our
results of operations, financial results, financial condition,
strategic initiatives and plans, expenses, dividends, share
repurchases, liquidity, use of cash and cash requirements,
borrowing capacity, investments, future economic performance,
business, and industry and the effect of the novel coronavirus
(“COVID-19”) pandemic on our business operations and financial
results.
The forward-looking statements in this press
release are based on certain assumptions and currently available
information and are subject to various risks and uncertainties,
many of which are unforeseeable and beyond our control. Additional
risks and uncertainties that we do not presently know about or that
we currently consider to be immaterial may also affect our business
operations and financial results. Our actual future results and
trends may differ materially depending on a variety of factors,
including, but not limited to, the risks and uncertainties
discussed in our fiscal 2020 Annual Report on Form 10-K and other
factors identified in our reports filed with the Securities and
Exchange Commission. We are including this cautionary note to make
applicable and take advantage of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 for
forward-looking statements. We undertake no obligation to update or
revise any forward-looking statements, whether as a result of new
information future events or for any other reason.
Additional Information
This news release is just one part of La-Z-Boy’s
financial disclosures and should be read in conjunction with other
information filed with the Securities and Exchange Commission,
which is available at:
https://lazboy.gcs-web.com/financial-information/sec-filings.
Investors and others wishing to be notified of future La-Z-Boy news
releases, SEC filings and quarterly investor conference calls may
sign up at: https://lazboy.gcs-web.com/.
Background Information
La-Z-Boy Incorporated is one of the world’s
leading residential furniture producers, marketing furniture for
every room of the home. The Upholstery segment companies are
England and La-Z-Boy. The Casegoods segment consists of three
brands: American Drew®, Hammary®, and Kincaid®. The
company-owned Retail segment includes 154 of the 354 La-Z-Boy
Furniture Galleries® stores. Joybird is an e-commerce
retailer and manufacturer of upholstered furniture.
The corporation’s branded distribution network
is dedicated to selling La-Z-Boy Incorporated products and brands,
and includes 354 stand-alone La-Z-Boy Furniture Galleries® stores
and 555 independent Comfort Studio® locations, in addition to
in-store gallery programs for the company’s Kincaid and England
operating units. Additional information is available at
http://www.la-z-boy.com/.
Non-GAAP Financial Measures
In addition to the financial measures prepared
in accordance with accounting principles generally accepted in the
United States ("GAAP"), this press release also includes Non-GAAP
financial measures. Management uses these Non-GAAP financial
measures when assessing our ongoing performance. This press release
contains references to Non-GAAP operating income, Non-GAAP
operating margin, Non-GAAP income before income taxes, Non-GAAP net
income attributable to La-Z-Boy Incorporated and Non-GAAP net
income attributable to La-Z-Boy Incorporated per diluted share,
each of which exclude goodwill impairment charges, purchase
accounting charges, charges for our supply chain optimization
initiative, an impairment charge for one investment and impacts
from terminating the company's defined benefit pension plan. The
purchase accounting charges may include the amortization of
intangible assets, incremental expense upon the sale of inventory
acquired at fair value, amortization of employee retention
agreements, fair value adjustments of future cash payments recorded
as interest expense, and adjustments to the fair value of
contingent consideration. The charges for our supply chain
optimization initiative may include severance costs, accelerated
depreciation expense, costs to relocate equipment and inventory, as
well as other costs related to the closure, relocation and sale of
certain manufacturing operations. These Non-GAAP financial measures
are not meant to be considered superior to or a substitute for
La-Z-Boy Incorporated’s results of operations prepared in
accordance with GAAP and may not be comparable to similarly titled
measures reported by other companies. Reconciliations of such
Non-GAAP financial measures to the most directly comparable GAAP
financial measures are set forth in the accompanying tables.
Management believes that presenting certain
Non-GAAP financial measures will help investors understand the
long-term profitability trends of our business and compare our
profitability to prior and future periods and to our peers.
Management excludes goodwill impairment charges and purchase
accounting charges because the amount and timing of such charges
are significantly impacted by the timing, size, number and nature
of the acquisitions consummated and the success with which we
operate the businesses acquired. While the company has a history of
acquisition activity, it does not acquire businesses on a
predictable cycle, and the impact of goodwill impairment charges
and purchase accounting charges is unique to each acquisition and
can vary significantly from acquisition to acquisition. Similarly,
the charges related to the company’s supply chain optimization
initiative are dependent on the timing, size, number and nature of
the operations being moved or closed, and the charges may not be
incurred on a predictable cycle. Management also excludes impacts
from the termination of the company’s defined benefit pension plan
and an impairment charge for one investment when assessing the
company’s operating and financial performance due to the one-time
nature of the transactions. Management believes that exclusion
of these items facilitates more consistent comparisons of the
company’s operating results over time. Where applicable, the
accompanying “Reconciliation of GAAP to Non-GAAP Financial
Measures” tables present the excluded items net of tax calculated
using the effective tax rate from operations for the period in
which the adjustment is presented, except for the non-cash pension
termination charge, which had a specific tax impact due to the
one-time nature of the transaction, the non-tax deductible goodwill
impairment charge and the adjustment to the fair value of
contingent consideration.
LA-Z-BOY
INCORPORATEDCONSOLIDATED STATEMENT OF
INCOME
|
|
Quarter Ended |
|
Year Ended |
(Unaudited, amounts in thousands, except per share
data) |
|
4/25/20 |
|
4/27/19 |
|
4/25/20 |
|
4/27/19 |
Sales |
|
$ |
367,281 |
|
|
$ |
453,791 |
|
|
$ |
1,703,982 |
|
|
$ |
1,745,401 |
|
Cost of sales |
|
195,575 |
|
|
264,018 |
|
|
982,537 |
|
|
1,042,831 |
|
Gross profit |
|
171,706 |
|
|
189,773 |
|
|
721,445 |
|
|
702,570 |
|
Selling, general and administrative expense |
|
131,418 |
|
|
152,602 |
|
|
575,821 |
|
|
572,896 |
|
Goodwill impairment |
|
26,862 |
|
|
— |
|
|
26,862 |
|
|
— |
|
Operating income |
|
13,426 |
|
|
37,171 |
|
|
118,762 |
|
|
129,674 |
|
Interest expense |
|
(400 |
) |
|
(399 |
) |
|
(1,291 |
) |
|
(1,542 |
) |
Interest income |
|
692 |
|
|
569 |
|
|
2,785 |
|
|
2,103 |
|
Pension termination refund
(charge) |
|
— |
|
|
(32,671 |
) |
|
1,900 |
|
|
(32,671 |
) |
Other income (expense),
net |
|
307 |
|
|
(191 |
) |
|
(6,983 |
) |
|
(2,237 |
) |
Income before income taxes |
|
14,025 |
|
|
4,479 |
|
|
115,173 |
|
|
95,327 |
|
Income tax expense |
|
10,649 |
|
|
2,812 |
|
|
36,189 |
|
|
25,186 |
|
Net income |
|
3,376 |
|
|
1,667 |
|
|
78,984 |
|
|
70,141 |
|
Net income attributable to
noncontrolling interests |
|
(1,081 |
) |
|
(139 |
) |
|
(1,515 |
) |
|
(1,567 |
) |
Net income attributable to La-Z-Boy Incorporated |
|
$ |
2,295 |
|
|
$ |
1,528 |
|
|
$ |
77,469 |
|
|
$ |
68,574 |
|
|
|
|
|
|
|
|
|
|
Basic weighted average common
shares |
|
45,962 |
|
|
46,889 |
|
|
46,399 |
|
|
46,828 |
|
Basic net income attributable
to La-Z-Boy Incorporated per share |
|
$ |
0.05 |
|
|
$ |
0.03 |
|
|
$ |
1.67 |
|
|
$ |
1.46 |
|
|
|
|
|
|
|
|
|
|
Diluted weighted average
common shares |
|
46,157 |
|
|
47,369 |
|
|
46,736 |
|
|
47,333 |
|
Diluted net income
attributable to La-Z-Boy Incorporated per share |
|
$ |
0.05 |
|
|
$ |
0.03 |
|
|
$ |
1.66 |
|
|
$ |
1.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LA-Z-BOY
INCORPORATEDCONSOLIDATED BALANCE
SHEET
(Unaudited, amounts in thousands, except par
value) |
|
4/25/20 |
|
4/27/19 |
Current assets |
|
|
|
|
Cash and equivalents |
|
$ |
261,553 |
|
|
$ |
129,819 |
|
Restricted cash |
|
1,975 |
|
|
1,968 |
|
Receivables, net of allowance of $7,541 at 4/25/20 and $2,180 at
4/27/19 |
|
99,351 |
|
|
143,288 |
|
Inventories, net |
|
181,643 |
|
|
196,899 |
|
Other current assets |
|
81,804 |
|
|
69,144 |
|
Total current assets |
|
626,326 |
|
|
541,118 |
|
Property, plant and equipment,
net |
|
214,767 |
|
|
200,523 |
|
Goodwill |
|
161,017 |
|
|
185,867 |
|
Other intangible assets,
net |
|
28,653 |
|
|
29,907 |
|
Deferred income taxes –
long-term |
|
20,839 |
|
|
20,670 |
|
Right of use lease asset |
|
318,647 |
|
|
— |
|
Other long-term assets,
net |
|
64,640 |
|
|
81,705 |
|
Total assets |
|
$ |
1,434,889 |
|
|
$ |
1,059,790 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Short-term borrowings |
|
$ |
75,000 |
|
|
$ |
— |
|
Current portion of long-term debt |
|
— |
|
|
180 |
|
Accounts payable |
|
55,511 |
|
|
65,365 |
|
Lease liability, short-term |
|
64,376 |
|
|
— |
|
Accrued expenses and other current liabilities |
|
155,282 |
|
|
173,091 |
|
Total current liabilities |
|
350,169 |
|
|
238,636 |
|
Long-term debt |
|
— |
|
|
19 |
|
Lease liability,
long-term |
|
270,162 |
|
|
— |
|
Other long-term
liabilities |
|
98,252 |
|
|
124,159 |
|
Shareholders' equity |
|
|
|
|
Preferred shares – 5,000 authorized; none issued |
|
— |
|
|
— |
|
Common shares, $1 par value – 150,000 authorized; 45,857
outstanding at 4/25/20 and 46,955 outstanding at 4/27/19 |
|
45,857 |
|
|
46,955 |
|
Capital in excess of par value |
|
318,215 |
|
|
313,168 |
|
Retained earnings |
|
343,633 |
|
|
325,847 |
|
Accumulated other comprehensive loss |
|
(6,952 |
) |
|
(3,462 |
) |
Total La-Z-Boy Incorporated shareholders' equity |
|
700,753 |
|
|
682,508 |
|
Noncontrolling interests |
|
15,553 |
|
|
14,468 |
|
Total equity |
|
716,306 |
|
|
696,976 |
|
Total liabilities and equity |
|
$ |
1,434,889 |
|
|
$ |
1,059,790 |
|
|
|
|
|
|
|
|
|
|
LA-Z-BOY
INCORPORATEDCONSOLIDATED STATEMENT OF CASH
FLOWS
|
|
Year Ended |
(Unaudited, amounts in
thousands) |
|
4/25/20 |
|
4/27/19 |
Cash flows from operating activities |
|
|
|
|
Net income |
|
$ |
78,984 |
|
|
$ |
70,141 |
|
Adjustments to reconcile net income to cash provided by operating
activities |
|
|
|
|
Gain on disposal of assets |
|
(10,068 |
) |
|
(325 |
) |
Gain on sale of investments |
|
(693 |
) |
|
(656 |
) |
Change in deferred taxes |
|
719 |
|
|
(1,668 |
) |
Provision for doubtful accounts |
|
13,383 |
|
|
502 |
|
Depreciation and amortization |
|
31,192 |
|
|
31,147 |
|
Equity-based compensation expense |
|
8,371 |
|
|
10,981 |
|
Change in right-of use lease asset |
|
67,673 |
|
|
— |
|
Goodwill impairment |
|
26,862 |
|
|
— |
|
Pension termination (refund)/charge |
|
(1,900 |
) |
|
32,671 |
|
Pension plan contributions |
|
— |
|
|
(7,000 |
) |
Change in receivables |
|
29,686 |
|
|
7,195 |
|
Change in inventories |
|
14,900 |
|
|
3,135 |
|
Change in other assets |
|
7,039 |
|
|
(7,737 |
) |
Change in payables |
|
(9,913 |
) |
|
(2,388 |
) |
Change in lease liabilities |
|
(66,238 |
) |
|
— |
|
Change in other liabilities |
|
(25,755 |
) |
|
14,747 |
|
Net cash provided by operating activities |
|
164,242 |
|
|
150,745 |
|
|
|
|
|
|
Cash flows from investing
activities |
|
|
|
|
Proceeds from disposals of assets |
|
11,273 |
|
|
1,941 |
|
Proceeds from insurance |
|
1,080 |
|
|
184 |
|
Capital expenditures |
|
(46,035 |
) |
|
(48,433 |
) |
Purchases of investments |
|
(37,477 |
) |
|
(20,698 |
) |
Proceeds from sales of investments |
|
37,244 |
|
|
20,944 |
|
Acquisitions, net of cash acquired |
|
(6,850 |
) |
|
(76,505 |
) |
Net cash used for investing activities |
|
(40,765 |
) |
|
(122,567 |
) |
|
|
|
|
|
Cash flows from financing
activities |
|
|
|
|
Net proceeds from credit facility |
|
75,000 |
|
|
— |
|
Payments on debt and finance lease liabilities |
|
(161 |
) |
|
(223 |
) |
Stock issued for stock and employee benefit plans, net of shares
withheld for taxes |
|
3,029 |
|
|
13,901 |
|
Purchases of common stock |
|
(43,369 |
) |
|
(22,957 |
) |
Dividends paid |
|
(25,091 |
) |
|
(23,508 |
) |
Net cash provided by (used for) financing activities |
|
9,408 |
|
|
(32,787 |
) |
|
|
|
|
|
Effect of exchange rate
changes on cash and equivalents |
|
(1,144 |
) |
|
(475 |
) |
Change in cash, cash
equivalents and restricted cash |
|
131,741 |
|
|
(5,084 |
) |
Cash, cash equivalents and
restricted cash at beginning of period |
|
131,787 |
|
|
136,871 |
|
Cash, cash equivalents and
restricted cash at end of period |
|
$ |
263,528 |
|
|
$ |
131,787 |
|
|
|
|
|
|
Supplemental disclosure of
non-cash investing activities |
|
|
|
|
Capital expenditures included in payables |
|
$ |
3,528 |
|
|
$ |
3,250 |
|
|
|
|
|
|
|
|
|
|
LA-Z-BOY
INCORPORATEDSEGMENT INFORMATION
|
|
Quarter Ended |
|
Year Ended |
(Unaudited, amounts in thousands) |
|
4/25/20 |
|
4/27/19 |
|
4/25/20 |
|
4/27/19 |
Sales |
|
|
|
|
|
|
|
|
Upholstery segment: |
|
|
|
|
|
|
|
|
Sales to external customers |
|
$ |
194,377 |
|
|
$ |
257,388 |
|
|
$ |
941,228 |
|
|
$ |
1,016,957 |
|
Intersegment sales |
|
58,915 |
|
|
65,915 |
|
|
263,031 |
|
|
251,285 |
|
Upholstery segment sales |
|
253,292 |
|
|
323,303 |
|
|
1,204,259 |
|
|
1,268,242 |
|
|
|
|
|
|
|
|
|
|
Casegoods segment: |
|
|
|
|
|
|
|
|
Sales to external customers |
|
16,841 |
|
|
21,903 |
|
|
85,402 |
|
|
95,677 |
|
Intersegment sales |
|
4,554 |
|
|
4,742 |
|
|
20,633 |
|
|
18,796 |
|
Casegoods segment sales |
|
21,395 |
|
|
26,645 |
|
|
106,035 |
|
|
114,473 |
|
|
|
|
|
|
|
|
|
|
Retail segment sales |
|
139,660 |
|
|
151,870 |
|
|
598,554 |
|
|
570,201 |
|
|
|
|
|
|
|
|
|
|
Corporate and Other: |
|
|
|
|
|
|
|
|
Sales to external customers |
|
16,403 |
|
|
22,630 |
|
|
78,798 |
|
|
62,566 |
|
Intersegment sales |
|
2,157 |
|
|
2,290 |
|
|
10,294 |
|
|
11,446 |
|
Corporate and Other sales |
|
18,560 |
|
|
24,920 |
|
|
89,092 |
|
|
74,012 |
|
|
|
|
|
|
|
|
|
|
Eliminations |
|
(65,626 |
) |
|
(72,947 |
) |
|
(293,958 |
) |
|
(281,527 |
) |
Consolidated sales |
|
$ |
367,281 |
|
|
$ |
453,791 |
|
|
$ |
1,703,982 |
|
|
$ |
1,745,401 |
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss) |
|
|
|
|
|
|
|
|
Upholstery segment |
|
$ |
29,832 |
|
|
$ |
37,304 |
|
|
$ |
134,691 |
|
|
$ |
127,906 |
|
Casegoods segment |
|
413 |
|
|
2,416 |
|
|
7,749 |
|
|
12,589 |
|
Retail segment |
|
14,984 |
|
|
12,743 |
|
|
48,256 |
|
|
37,922 |
|
Corporate and Other |
|
(31,803 |
) |
|
(15,292 |
) |
|
(71,934 |
) |
|
(48,743 |
) |
Consolidated operating income |
|
$ |
13,426 |
|
|
$ |
37,171 |
|
|
$ |
118,762 |
|
|
$ |
129,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LA-Z-BOY
INCORPORATEDUNAUDITED QUARTERLY FINANCIAL
DATA
Fiscal 2020
Fiscal Quarter
Ended |
|
(13 weeks) |
|
(13 weeks) |
|
(13 weeks) |
|
(13 weeks) |
(Amounts in thousands, except per share data) |
|
7/27/2019 |
|
10/26/2019 |
|
1/25/2020 |
|
4/25/2020 |
Sales |
|
$ |
413,633 |
|
|
$ |
447,212 |
|
|
$ |
475,856 |
|
|
$ |
367,281 |
|
Cost of sales |
|
245,921 |
|
|
264,823 |
|
|
276,218 |
|
|
195,575 |
|
Gross profit |
|
167,712 |
|
|
182,389 |
|
|
199,638 |
|
|
171,706 |
|
Selling, general and
administrative expense |
|
144,290 |
|
|
152,788 |
|
|
147,325 |
|
|
131,418 |
|
Goodwill impairment |
|
— |
|
|
— |
|
|
— |
|
|
26,862 |
|
Operating income |
|
23,422 |
|
|
29,601 |
|
|
52,313 |
|
|
13,426 |
|
Interest expense |
|
(318 |
) |
|
(308 |
) |
|
(265 |
) |
|
(400 |
) |
Interest income |
|
727 |
|
|
522 |
|
|
844 |
|
|
692 |
|
Pension termination
refund |
|
— |
|
|
1,900 |
|
|
— |
|
|
— |
|
Other income (expense),
net |
|
(760 |
) |
|
(532 |
) |
|
(5,998 |
) |
|
307 |
|
Income before income taxes |
|
23,071 |
|
|
31,183 |
|
|
46,894 |
|
|
14,025 |
|
Income tax expense |
|
5,083 |
|
|
8,279 |
|
|
12,178 |
|
|
10,649 |
|
Net income |
|
17,988 |
|
|
22,904 |
|
|
34,716 |
|
|
3,376 |
|
Net income attributable to
noncontrolling interests |
|
81 |
|
|
(311 |
) |
|
(204 |
) |
|
(1,081 |
) |
Net income attributable to La-Z-Boy Incorporated |
|
$ |
18,069 |
|
|
$ |
22,593 |
|
|
$ |
34,512 |
|
|
$ |
2,295 |
|
Diluted weighted average
common shares |
|
47,125 |
|
|
46,879 |
|
|
46,584 |
|
|
46,157 |
|
Diluted net income
attributable to La-Z-Boy Incorporated per share |
|
$ |
0.38 |
|
|
$ |
0.48 |
|
|
$ |
0.74 |
|
|
$ |
0.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2019
Fiscal Quarter
Ended |
|
(13 weeks) |
|
(13 weeks) |
|
(13 weeks) |
|
(13 weeks) |
(Amounts in thousands, except per share data) |
|
7/28/2018 |
|
10/27/2018 |
|
1/26/2019 |
|
4/27/2019 |
Sales |
|
$ |
384,695 |
|
|
$ |
439,333 |
|
|
$ |
467,582 |
|
|
$ |
453,791 |
|
Cost of sales |
|
236,173 |
|
|
264,928 |
|
|
277,712 |
|
|
264,018 |
|
Gross profit |
|
148,522 |
|
|
174,405 |
|
|
189,870 |
|
|
189,773 |
|
Selling, general and
administrative expense |
|
125,362 |
|
|
145,905 |
|
|
149,027 |
|
|
152,602 |
|
Operating income |
|
23,160 |
|
|
28,500 |
|
|
40,843 |
|
|
37,171 |
|
Interest expense |
|
(104 |
) |
|
(501 |
) |
|
(538 |
) |
|
(399 |
) |
Interest income |
|
602 |
|
|
392 |
|
|
540 |
|
|
569 |
|
Pension termination
charge |
|
— |
|
|
— |
|
|
— |
|
|
(32,671 |
) |
Other income (expense),
net |
|
892 |
|
|
(1,997 |
) |
|
(941 |
) |
|
(191 |
) |
Income before income taxes |
|
24,550 |
|
|
26,394 |
|
|
39,904 |
|
|
4,479 |
|
Income tax expense |
|
5,599 |
|
|
6,045 |
|
|
10,730 |
|
|
2,812 |
|
Net income |
|
18,951 |
|
|
20,349 |
|
|
29,174 |
|
|
1,667 |
|
Net income attributable to
noncontrolling interests |
|
(648 |
) |
|
(337 |
) |
|
(443 |
) |
|
(139 |
) |
Net income attributable to La-Z-Boy Incorporated |
|
$ |
18,303 |
|
|
$ |
20,012 |
|
|
$ |
28,731 |
|
|
$ |
1,528 |
|
Diluted weighted average
common shares |
|
47,161 |
|
|
47,259 |
|
|
47,091 |
|
|
47,369 |
|
Diluted net income
attributable to La-Z-Boy Incorporated per share |
|
$ |
0.39 |
|
|
$ |
0.42 |
|
|
$ |
0.61 |
|
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LA-Z-BOY
INCORPORATEDRECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES
|
|
Quarter Ended |
|
Year Ended |
(Amounts in thousands, except per share data) |
|
4/25/20 |
|
4/27/19 |
|
4/25/20 |
|
4/27/19 |
GAAP gross profit |
|
$ |
171,706 |
|
|
$ |
189,773 |
|
|
$ |
721,445 |
|
|
$ |
702,570 |
|
Add back: Purchase accounting charges - incremental expense upon
the sale of inventory acquired at fair value |
|
138 |
|
|
175 |
|
|
541 |
|
|
3,086 |
|
Add back: Supply chain optimization initiative charges |
|
95 |
|
|
— |
|
|
5,386 |
|
|
— |
|
Non-GAAP gross profit |
|
$ |
171,939 |
|
|
$ |
189,948 |
|
|
$ |
727,372 |
|
|
$ |
705,656 |
|
|
|
|
|
|
|
|
|
|
GAAP SG&A |
|
$ |
131,418 |
|
|
$ |
152,602 |
|
|
$ |
575,821 |
|
|
$ |
572,896 |
|
Less: Purchase accounting (charges) gains - adjustment to fair
value of contingent consideration and amortization of intangible
assets and retention agreements |
|
6,240 |
|
|
(1,594 |
) |
|
2,663 |
|
|
(3,831 |
) |
Add back: Supply chain optimization initiative gain on sale |
|
— |
|
|
— |
|
|
9,745 |
|
|
— |
|
Non-GAAP SG&A |
|
$ |
137,658 |
|
|
$ |
151,008 |
|
|
$ |
588,229 |
|
|
$ |
569,065 |
|
|
|
|
|
|
|
|
|
|
GAAP operating income |
|
$ |
13,426 |
|
|
$ |
37,171 |
|
|
$ |
118,762 |
|
|
$ |
129,674 |
|
Add back: Purchase accounting charges (gains) |
|
(6,102 |
) |
|
1,769 |
|
|
(2,122 |
) |
|
6,917 |
|
Less: Supply chain optimization initiative gain on sale and
charges |
|
95 |
|
|
— |
|
|
(4,359 |
) |
|
— |
|
Add back: Goodwill impairment |
|
26,862 |
|
|
— |
|
|
26,862 |
|
|
— |
|
Non-GAAP operating income |
|
$ |
34,281 |
|
|
$ |
38,940 |
|
|
$ |
139,143 |
|
|
$ |
136,591 |
|
|
|
|
|
|
|
|
|
|
GAAP income before income
taxes |
|
$ |
14,025 |
|
|
$ |
4,479 |
|
|
$ |
115,173 |
|
|
$ |
95,327 |
|
Add back: Purchase accounting charges (gains) recorded as part of
gross profit, SG&A, and interest expense |
|
(5,933 |
) |
|
1,959 |
|
|
(1,428 |
) |
|
7,486 |
|
Less: Supply chain optimization initiative gain on sale and
charges |
|
95 |
|
|
— |
|
|
(4,359 |
) |
|
— |
|
Add back: Goodwill impairment |
|
26,862 |
|
|
— |
|
|
26,862 |
|
|
— |
|
Add back: Investment impairment |
|
— |
|
|
— |
|
|
6,000 |
|
|
— |
|
Less: Pension termination (refund) charge |
|
— |
|
|
32,671 |
|
|
(1,900 |
) |
|
32,671 |
|
Non-GAAP income before income
taxes |
|
$ |
35,049 |
|
|
$ |
39,109 |
|
|
$ |
140,348 |
|
|
$ |
135,484 |
|
|
|
|
|
|
|
|
|
|
GAAP net income attributable
to La-Z-Boy Incorporated |
|
$ |
2,295 |
|
|
$ |
1,528 |
|
|
$ |
77,469 |
|
|
$ |
68,574 |
|
Add back: Purchase accounting charges (gains) recorded as part of
gross profit, SG&A, and interest expense |
|
(5,933 |
) |
|
1,959 |
|
|
(1,428 |
) |
|
7,486 |
|
Less: Tax effect of purchase accounting |
|
(635 |
) |
|
(335 |
) |
|
(1,746 |
) |
|
(1,356 |
) |
Less: Supply chain optimization initiative gain on sale and
charges |
|
95 |
|
|
— |
|
|
(4,359 |
) |
|
— |
|
Add back: Tax effect of supply chain optimization initiative gain
on sale and charges |
|
(30 |
) |
|
— |
|
|
1,176 |
|
|
— |
|
Add back: Goodwill impairment |
|
26,862 |
|
|
— |
|
|
26,862 |
|
|
— |
|
Add back: Investment impairment |
|
— |
|
|
— |
|
|
6,000 |
|
|
— |
|
Less: Tax effect of investment impairment |
|
— |
|
|
— |
|
|
(1,618 |
) |
|
— |
|
Less: Pension termination (refund) charge |
|
— |
|
|
32,671 |
|
|
(1,900 |
) |
|
32,671 |
|
Add back: Tax effect of pension termination (refund) charge |
|
— |
|
|
(5,580 |
) |
|
513 |
|
|
(5,919 |
) |
Non-GAAP net income
attributable to La-Z-Boy Incorporated |
|
$ |
22,654 |
|
|
$ |
30,243 |
|
|
$ |
100,969 |
|
|
$ |
101,456 |
|
|
|
|
|
|
|
|
|
|
GAAP net income attributable
to La-Z-Boy Incorporated per diluted share |
|
$ |
0.05 |
|
|
$ |
0.03 |
|
|
$ |
1.66 |
|
|
$ |
1.44 |
|
Add back: Purchase accounting charges (gains), net of tax, per
share |
|
(0.14 |
) |
|
0.03 |
|
|
(0.07 |
) |
|
0.12 |
|
Less: Supply chain optimization initiative gain on sale and
charges, net of tax, per share |
|
— |
|
|
— |
|
|
(0.07 |
) |
|
— |
|
Add back: Goodwill impairment, net of tax, per share |
|
0.58 |
|
|
— |
|
|
0.58 |
|
|
— |
|
Add back: Investment impairment, net of tax, per share |
|
— |
|
|
— |
|
|
0.09 |
|
|
— |
|
Less: Pension termination (refund) charge, net of tax, per
share |
|
— |
|
|
0.58 |
|
|
(0.03 |
) |
|
0.58 |
|
Non-GAAP net income
attributable to La-Z-Boy Incorporated per diluted share |
|
$ |
0.49 |
|
|
$ |
0.64 |
|
|
$ |
2.16 |
|
|
$ |
2.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LA-Z-BOY
INCORPORATEDRECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURESSEGMENT INFORMATION
|
|
Quarter Ended |
(Amounts in thousands) |
|
4/25/20 |
|
% of sales |
|
4/27/19 |
|
% of sales |
GAAP operating income
(loss) |
|
|
|
|
|
|
|
|
Upholstery segment |
|
$ |
29,832 |
|
|
11.8 |
% |
|
$ |
37,304 |
|
|
11.5 |
% |
Casegoods segment |
|
413 |
|
|
1.9 |
% |
|
2,416 |
|
|
9.1 |
% |
Retail segment |
|
14,984 |
|
|
10.7 |
% |
|
12,743 |
|
|
8.4 |
% |
Corporate and Other |
|
(31,803 |
) |
|
N/M |
|
|
(15,292 |
) |
|
N/M |
|
Consolidated GAAP operating income |
|
$ |
13,426 |
|
|
3.7 |
% |
|
$ |
37,171 |
|
|
8.2 |
% |
|
|
|
|
|
|
|
|
|
Non-GAAP items affecting
operating income |
|
|
|
|
|
|
|
|
Upholstery segment |
|
$ |
149 |
|
|
|
|
$ |
57 |
|
|
|
Casegoods segment |
|
— |
|
|
|
|
— |
|
|
|
Retail segment |
|
138 |
|
|
|
|
175 |
|
|
|
Corporate and Other |
|
20,568 |
|
|
|
|
1,537 |
|
|
|
Consolidated Non-GAAP items affecting operating income |
|
$ |
20,855 |
|
|
|
|
$ |
1,769 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating income
(loss) |
|
|
|
|
|
|
|
|
Upholstery segment |
|
$ |
29,981 |
|
|
11.8 |
% |
|
$ |
37,361 |
|
|
11.6 |
% |
Casegoods segment |
|
413 |
|
|
1.9 |
% |
|
2,416 |
|
|
9.1 |
% |
Retail segment |
|
15,122 |
|
|
10.8 |
% |
|
12,918 |
|
|
8.5 |
% |
Corporate and Other |
|
(11,235 |
) |
|
N/M |
|
|
(13,755 |
) |
|
N/M |
|
Consolidated Non-GAAP operating income |
|
$ |
34,281 |
|
|
9.3 |
% |
|
$ |
38,940 |
|
|
8.6 |
% |
|
|
|
|
|
|
|
|
|
N/M - Not Meaningful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
(Amounts in thousands) |
|
4/25/20 |
|
% of sales |
|
4/27/19 |
|
% of sales |
GAAP operating income
(loss) |
|
|
|
|
|
|
|
|
Upholstery segment |
|
$ |
134,691 |
|
|
11.2 |
% |
|
$ |
127,906 |
|
|
10.1 |
% |
Casegoods segment |
|
7,749 |
|
|
7.3 |
% |
|
12,589 |
|
|
11.0 |
% |
Retail segment |
|
48,256 |
|
|
8.1 |
% |
|
37,922 |
|
|
6.7 |
% |
Corporate and Other |
|
(71,934 |
) |
|
N/M |
|
|
(48,743 |
) |
|
N/M |
|
Consolidated GAAP operating income |
|
$ |
118,762 |
|
|
7.0 |
% |
|
$ |
129,674 |
|
|
7.4 |
% |
|
|
|
|
|
|
|
|
|
Non-GAAP items affecting
operating income |
|
|
|
|
|
|
|
|
Upholstery segment |
|
$ |
(4,139 |
) |
|
|
|
$ |
20 |
|
|
|
Casegoods segment |
|
— |
|
|
|
|
— |
|
|
|
Retail segment |
|
541 |
|
|
|
|
1,683 |
|
|
|
Corporate and Other |
|
23,979 |
|
|
|
|
5,214 |
|
|
|
Consolidated Non-GAAP items affecting operating income |
|
$ |
20,381 |
|
|
|
|
$ |
6,917 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating income
(loss) |
|
|
|
|
|
|
|
|
Upholstery segment |
|
$ |
130,552 |
|
|
10.8 |
% |
|
$ |
127,926 |
|
|
10.1 |
% |
Casegoods segment |
|
7,749 |
|
|
7.3 |
% |
|
12,589 |
|
|
11.0 |
% |
Retail segment |
|
48,797 |
|
|
8.2 |
% |
|
39,605 |
|
|
6.9 |
% |
Corporate and Other |
|
(47,955 |
) |
|
N/M |
|
|
(43,529 |
) |
|
N/M |
|
Consolidated Non-GAAP operating income |
|
$ |
139,143 |
|
|
8.2 |
% |
|
$ |
136,591 |
|
|
7.8 |
% |
|
|
|
|
|
|
|
|
|
N/M - Not Meaningful |
|
|
|
|
|
|
|
|
Contact: |
|
Kathy Liebmann |
|
(734) 241-2438 |
|
kathy.liebmann@la-z-boy.com |
|
|
|
|
|
|
|
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