HAVERTYS (NYSE: HVT and HVT.A), today reported strong operating
results for the fourth quarter and year ended December 31, 2020.
Fourth quarter 2020 versus fourth quarter
2019:
- Diluted earnings per common share (“EPS”) of $1.37 versus $0.31
and Adjusted EPS of $1.37 versus $0.40.
- Adjusted EPS in 2019 excludes $0.09 for an impairment charge on
a store location.
- Consolidated sales increased 12.9% to $241.3 million.
Comparable store sales increased 13.7%.
FY 2020 versus FY 2019:
- EPS of $3.12 versus $1.08 and Adjusted EPS of $1.88 versus
$1.17.
- Adjusted EPS in 2020 excludes $1.24 for gain on a
sale-leaseback transaction.
- Consolidated sales decreased 6.7% to $748.3 million as
operations were paused from mid-March through early May. Comparable
store sales for the year rose 5.0%.
Clarence H. Smith, chairman, president and CEO, said, “Consumer
“nesting” continues to drive record demand for home furnishings.
Our store and internet traffic is rising as we leverage the
combined potential of high touch service and online capabilities.
Sales across all furniture categories have been strong and mattress
sales were up slightly in the fourth quarter as some supply
rebounded. Merchandise availability remains a key issue as
manufacturers are hampered by ongoing coronavirus concerns, raw
material shortages, and shipping capacity. Our supply chain and
sales teams, supported by a strong IT infrastructure, are working
to communicate with customers and manage delivery expectations.
Havertys’ distribution and delivery teams, who literally do the
heavy lifting, have responded to the challenge of volatile
warehouse flows and increased home deliveries, while following our
masking and other safety protocols.
“I am proud of the hard work and dedication of all our team
members during an extraordinary year. During 2020 we returned $70
million to our shareholders: $14 million in quarterly dividends,
$36 million in special dividends, and repurchased almost $20
million in common stock. We ended 2020 with a very strong debt free
balance sheet.
“We are blessed to be a part of the economy focused on the home.
The new standards and operating procedures put into place this year
will serve us well going forward. We are committed to maintaining
our position as a trusted leader in the marketplace, investing in
top-line growth and improving returns. Our business remains strong
in these early weeks of the new year. We celebrate the rollout of
the vaccines and look forward to the future when we can work and
greet our customers with unmasked enthusiasm.”
Key Results(amounts in millions, except per
share amounts)
|
|
Q4 2020 |
|
Q4 2019 |
|
FY 2020 |
|
FY 2019 |
|
Sales |
|
$ |
241.3 |
|
$ |
213.8 |
|
$ |
748.3 |
|
$ |
802.3 |
|
Gross Profit |
|
|
137.6 |
|
|
115.8 |
|
|
419.0 |
|
|
434.5 |
|
Gross profit as a % of
sales |
|
|
57.0 |
% |
|
54.2 |
% |
|
56.0 |
% |
|
54.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SGA |
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable |
|
$ |
41.6 |
|
$ |
39.0 |
|
$ |
135.3 |
|
$ |
147.5 |
|
Fixed |
|
|
65.4 |
|
|
69.6 |
|
|
242.0 |
|
|
260.0 |
|
Total |
|
$ |
107.0 |
|
$ |
108.6 |
|
$ |
377.3 |
|
$ |
407.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
(“EPS”) |
|
$ |
1.37 |
|
$ |
0.31 |
|
$ |
3.12 |
|
$ |
1.08 |
|
Adjusted EPS |
|
$ |
1.37 |
|
$ |
0.40 |
|
$ |
1.88 |
|
$ |
1.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(see the reconciliation of the non-GAAP metrics at the end of
the release)
Fourth Quarter ended December 31, 2020 Compared to Same Period
of 2019
- Total written sales were up 16.7% and written comparable store
sales rose 17.5%.
- Gross profit margins increased 280 basis points to 57.0% in
2020 from 54.2% for the same period of 2019 due to pricing
discipline and smaller charges for our LIFO reserve.
- SG&A expenses fell to 44.3% of sales from 50.8% and
decreased $1.6 million. The primary drivers of this change are:•
reduction in advertising spend of $2.4 million in 2020.• reduction
in occupancy costs of $4.6 million in 2020, due to rent abatements,
additional rent, and lower depreciation for warehouses in
sale-leaseback, and $2.4 million impairment charge in 2019.•
increase of $4.8 million in commissions and incentive
compensation.
- The effective tax rate in 2020 benefited from the recognition
of $1.5 million of certain jobs creation state tax credits.
Expectations and Other
- We expect gross profit margins for 2021 will be between 55.3%
to 55.8%. 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 are expected
to be in the $261.0 to $263.0 million range, a slight increase over
the 2019 $260.0 million level. Variable SG&A expenses were
$18.1% as a percent of sales in 2020 and are anticipated to be in
the 18.2% to 18.4% range based on potential increases in selling
and delivery costs.
- 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 are approximately $23.0 million
which include amounts for a store in Myrtle Beach, S.C., a new
market for Havertys, a new store in The Villages, Fla., and another
location in an existing market. We will close one store in 2021 and
retail square footage is expected to increase approximately 1%
versus 2020.
HAVERTY FURNITURE COMPANIES,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
INCOME(in thousands, except per share data –
Unaudited)
|
|
Three Months EndedDecember
31, |
|
Year Ended December 31, |
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
241,339 |
|
$ |
213,837 |
|
$ |
748,252 |
|
$ |
802,291 |
|
Cost of goods sold |
|
|
103,720 |
|
|
98,007 |
|
|
329,258 |
|
|
367,803 |
|
Gross profit |
|
|
137,619 |
|
|
115,830 |
|
|
418,994 |
|
|
434,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
107,007 |
|
|
108,632 |
|
|
377,288 |
|
|
407,456 |
|
Other income, net |
|
|
(601 |
) |
|
(87 |
) |
|
(34,899 |
) |
|
(405 |
) |
Total expenses |
|
|
106,406 |
|
|
108,545 |
|
|
342,389 |
|
|
407,051 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before interest and
income taxes |
|
|
31,213 |
|
|
7,285 |
|
|
76,605 |
|
|
27,437 |
|
Interest (income) expense,
net |
|
|
(61 |
) |
|
(307 |
) |
|
(126 |
) |
|
(1,287 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
31,274 |
|
|
7,592 |
|
|
76,731 |
|
|
28,724 |
|
Income tax expense |
|
|
5,846 |
|
|
1,492 |
|
|
17,583 |
|
|
6,859 |
|
Net income |
|
$ |
25,428 |
|
$ |
6,100 |
|
$ |
59,148 |
|
$ |
21,865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
1.37 |
|
$ |
0.31 |
|
$ |
3.12 |
|
$ |
1.08 |
|
Class A Common Stock |
|
$ |
1.35 |
|
$ |
0.30 |
|
$ |
3.04 |
|
$ |
1.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
18,618 |
|
|
19,719 |
|
|
18,932 |
|
|
20,261 |
|
Class A Common Stock |
|
|
1,499 |
|
|
1,535 |
|
|
1,522 |
|
|
1,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
2.22 |
|
$ |
0.20 |
|
$ |
2.77 |
|
$ |
0.76 |
|
Class A Common Stock |
|
$ |
2.10 |
|
$ |
0.19 |
|
$ |
2.62 |
|
$ |
0.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HAVERTY FURNITURE COMPANIES,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands - Unaudited)
|
|
December 31,2020 |
|
December 31,2019 |
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
200,058 |
|
$ |
75,739 |
Restricted cash and cash equivalents |
|
|
6,713 |
|
|
6,663 |
Inventories |
|
|
89,908 |
|
|
104,817 |
Prepaid expenses |
|
|
9,580 |
|
|
7,652 |
Other current assets |
|
|
9,985 |
|
|
9,652 |
Total current assets |
|
|
316,244 |
|
|
204,523 |
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
108,366 |
|
|
156,534 |
Right of-use lease assets |
|
|
228,749 |
|
|
175,474 |
Deferred income taxes |
|
|
15,814 |
|
|
13,198 |
Other assets |
|
|
11,199 |
|
|
10,343 |
Total assets |
|
$ |
680,372 |
|
$ |
560,072 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
31,429 |
|
$ |
27,830 |
Customer deposits |
|
|
86,183 |
|
|
30,121 |
Accrued liabilities |
|
|
52,963 |
|
|
39,654 |
Current lease liabilities |
|
|
33,466 |
|
|
29,411 |
Total current liabilities |
|
|
204,041 |
|
|
127,016 |
|
|
|
|
|
|
|
Noncurrent lease
liabilities |
|
|
200,200 |
|
|
149,594 |
Other liabilities |
|
|
23,164 |
|
|
22,959 |
Total liabilities |
|
|
427,405 |
|
|
299,569 |
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
252,967 |
|
|
260,503 |
Total liabilities and stockholders’ equity |
|
$ |
680,372 |
|
$ |
560,072 |
|
|
|
|
|
|
|
HAVERTY FURNITURE COMPANIES,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(in thousands – Unaudited)
|
|
Year Ended December 31, |
|
|
|
2020 |
|
2019 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net income |
|
$ |
59,148 |
|
$ |
21,865 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
18,207 |
|
|
20,596 |
|
Net loss on asset impairment |
|
|
— |
|
|
2,415 |
|
Stock-based compensation |
|
|
4,375 |
|
|
3,435 |
|
Deferred income taxes |
|
|
(2,458 |
) |
|
(2,691 |
) |
Net gain on sale of land, property, and equipment |
|
|
(34,746 |
) |
|
(13 |
) |
Other |
|
|
595 |
|
|
719 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Inventories |
|
|
14,909 |
|
|
1,023 |
|
Customer deposits |
|
|
56,062 |
|
|
5,656 |
|
Other assets and liabilities |
|
|
(2,511 |
) |
|
1,833 |
|
Accounts payable and accrued liabilities |
|
|
16,610 |
|
|
8,581 |
|
Net cash provided by operating activities |
|
|
130,191 |
|
|
63,419 |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
Capital expenditures |
|
|
(10,927 |
) |
|
(16,841 |
) |
Proceeds from sale of property and equipment |
|
|
76,285 |
|
|
2,270 |
|
Net cash provided by (used in) investing activities |
|
|
65,358 |
|
|
(14,571 |
) |
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
Proceeds from borrowing under revolving credit facility |
|
|
43,800 |
|
|
— |
|
Payments of borrowings under revolving credit facility |
|
|
(43,800 |
) |
|
— |
|
Net change in borrowings under revolving credit facility |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
Dividends paid |
|
|
(50,521 |
) |
|
(15,056 |
) |
Common stock repurchased |
|
|
(19,708 |
) |
|
(29,757 |
) |
Taxes on vested restricted shares |
|
|
(951 |
) |
|
(1,442 |
) |
Net cash used in financing activities |
|
|
(71,180 |
) |
|
(46,255 |
) |
Increase in cash, cash
equivalents and restricted cash equivalents during the
period |
|
|
124,369 |
|
|
2,593 |
|
Cash, cash equivalents and
restricted cash equivalents at beginning of year |
|
|
82,402 |
|
|
79,809 |
|
Cash, cash equivalents and
restricted cash equivalents at end of year |
|
$ |
206,771 |
|
$ |
82,402 |
|
|
|
|
|
|
|
|
|
Comparable Store
Sales Comparable-store or
“comp-store” sales is a measure which indicates the performance of
our existing stores and website by comparing the sales growth for
stores and online for a particular month over the corresponding
month in the prior year. Stores are considered non-comparable if
they were not open during the corresponding month or if the selling
square footage has been changed significantly. Large clearance
sales events from warehouses or temporary locations are also
excluded from comparable store sales.
Cost of Goods Sold
and SG&A Expense We include
substantially all our occupancy and home delivery costs
in SG&A expense as well as a portion of our
warehousing expenses. Accordingly, our gross profit may not be
comparable to those entities that include these costs in cost of
goods sold. We classify
our SG&A expenses as either variable or fixed and
discretionary. Our variable expenses are comprised of selling and
delivery costs. Selling expenses are primarily compensation and
related benefits for our commission-based sales
associates, the discount we pay for third party financing of
customer sales and transaction fees for credit card usage. We do
not outsource delivery, so these costs include personnel,
fuel, and other expenses related to this function. Fixed and
discretionary expenses are comprised of rent, depreciation and
amortization and other occupancy costs for stores, warehouses and
offices, and all advertising and administrative costs.
Adjusted EPS Adjusted diluted earnings per
share (“Adjusted EPS”) is considered a non-GAAP financial measure
under the rules because it excludes certain amounts which are
included when diluted earnings per share (“EPS”) are calculated in
accordance with U.S. GAAP (EPS), the most directly comparable
financial measure calculated in accordance with U.S. GAAP.
Management believes that Adjusted EPS is a meaningful measure to
share with investors because it best allows comparison of the
performance for the comparable period. In addition, Adjusted EPS
affords investors a view of what management considers Havertys’
earnings performance and the ability to make a more informed
assessment of such earnings performance.
We have calculated Adjusted EPS for the quarter and year ended
December 31, 2020 and 2019 by adjusting EPS for
a sale-leaseback transaction in the second quarter of 2020 and
an impairment charge in the fourth quarter of 2019.
|
Q4 2020 |
|
Q4 2019 |
|
FY 2020 |
|
FY 2019 |
|
Diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported EPS |
|
$ |
1.37 |
|
$ |
0.31 |
|
$ |
3.12 |
|
$ |
1.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash impairment charge: pre-tax |
|
|
— |
|
|
0.12 |
|
|
— |
|
|
0.12 |
|
Gain from sale-leaseback transaction: pre-tax |
|
|
— |
|
|
— |
|
|
(1.66 |
) |
|
— |
|
Tax impact (1) |
|
|
— |
|
|
(0.03 |
) |
|
0.42 |
|
|
(0.03 |
) |
Net adjustment |
|
|
— |
|
|
0.09 |
|
|
(1.24 |
) |
|
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS |
|
$ |
1.37 |
|
$ |
0.40 |
|
$ |
1.88 |
|
$ |
1.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Calculated based on nature of item and
rates applied.
Conference Call InformationThe company invites
interested parties to listen to the live audiocast of the
conference call on February 18, 2021 at 10:00 a.m. ET at its
website, 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 February 25, 2021. The number to access the
telephone playback is 1-888-203-1112 (access code: 4378900).
About Havertys Havertys (NYSE: HVT
and HVT.A), established in 1885, is a full-service home furnishings
retailer with 120 showrooms in 16 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
havertys.com.
Safe
Harbor This press release contains,
and the conference call may contain forward-looking
statements subject to the safe harbor provisions of
Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Act of 1934. These
forward-looking statements are subject to risks and uncertainties
and change based on various important factors, many of which are
beyond our control.
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. We
caution that our forward-looking statements involve risks and
uncertainties, and while we believe that our expectations for the
future are reasonable in view of currently available
information you are cautioned not to place undue reliance on
our forward-looking statements and they should not be relied
upon as a prediction of actual results. Factors that could cause
actual results to differ materially from those expressed or implied
in any forward-looking statements include, but are not limited to:
the extent and duration of the disruption to our business
operations caused by the health crisis associated with the COVID-19
pandemic, including the effects on the financial health of our
business partners and customers, on supply chains and our
suppliers, and on access to capital and liquidity provided by the
financial and capital markets; our ability to maintain compliance
with debt covenants and amend such credit facilities as necessary;
disruptions in our suppliers' operations, including from the impact
of COVID-19, including potential problems with inventory
availability and the potential result of the volatility or higher
cost of product and international freight due to the high demand of
products and low supply for an unpredictable period of time;
disruptions in our third-party producers’ operations in foreign
countries; changes in national and international legislation or
government regulations or policies, including changes to import
tariffs and the unpredictability of such changes; failure of
vendors to meet our quality control standards or to react to
changes in legislative or regulatory frameworks; disruptions in our
distribution centers; changes in general economic conditions,
including unemployment, inflation (including the impact of
tariffs); labor shortages and the Company's ability to successfully
attract and retain employees in the current labor market; uncertain
credit markets and other macroeconomic conditions; competitive
product, service and pricing pressures; failure or weakness in our
disclosure controls and procedures and internal controls over
financial reporting; disruptions caused by a failure or breach of
the Company's information systems and information technology
infrastructure, as well as other risks and uncertainties discussed
in the Company's Annual Report on Form 10-K for 2019 (all of which
risks may be amplified by the COVID-19 pandemic) and Quarterly
Report on Form 10-Q for the quarterly periods ended
March 31, 2020, June 30, 2020, and September 30, 2020
and from time to time in the Company's subsequent filings with
the SEC.
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.
Contact: Havertys 404-443-2900 Jenny
Hill Parker SVP, Finance, and Corporate Secretary
SOURCE: Havertys
Haverty Furniture Compan... (NYSE:HVT)
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Haverty Furniture Compan... (NYSE:HVT)
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