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Haverty Furniture(HVT) - 2023 Q1 - Quarterly Report
2023-05-05 16:56
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission file number: 1-14445 HAVERTY FURNITURE COMPANIES, INC. (Exact name of registrant as specified in its charter) (State or other jurisdicti ...
Haverty Furniture(HVT) - 2022 Q4 - Annual Report
2023-03-08 16:51
Part I [Business](index=5&type=section&id=Item%201.%20Business) Havertys is a specialty retailer of residential furniture and accessories operating over 120 stores - Havertys operates **over 120 stores** in 16 states, primarily in the Southern and Midwest regions, and does not franchise its stores[26](index=26&type=chunk) - The company targets well-educated women in middle to upper-middle-income households, offering a wide range of styles from traditional to contemporary[27](index=27&type=chunk)[28](index=28&type=chunk) - The in-home design service is a significant driver of sales, accounting for approximately **24.7% of business in 2022**, with an average sales ticket double that of in-store sales[31](index=31&type=chunk) - Total online sales were approximately **3.8% of total sales in 2022**, making the website the company's highest-performing 'store'[35](index=35&type=chunk) - The company's supply chain relies heavily on imports, with the top ten suppliers accounting for **41.3% of product purchases in 2022**[37](index=37&type=chunk) - As of December 31, 2022, Havertys employed 2,831 people, with the majority in retail store operations (1,599) and warehouse/delivery (990)[45](index=45&type=chunk) [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from competition, supply chain reliance on foreign suppliers, and IT vulnerabilities - The home furnishings retail market is highly fragmented and competitive, with threats from internet-only retailers, specialty stores, and national chains[59](index=59&type=chunk) - Approximately **77% of the company's furniture purchases in 2022 were from foreign sources**, exposing it to risks from tariffs, exchange rates, and political instability[64](index=64&type=chunk) - The business relies on three large distribution centers, making it operationally vulnerable if one is damaged or experiences significant interruption[73](index=73&type=chunk) - The company is extensively dependent on IT systems for daily operations, making it susceptible to disruptions from cyber-attacks and security breaches[74](index=74&type=chunk)[76](index=76&type=chunk) - The business is sensitive to general economic conditions affecting consumer spending on discretionary items, such as inflation, recession fears, and interest rates[83](index=83&type=chunk) [Unresolved Staff Comments](index=15&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments - None[89](index=89&type=chunk) [Properties](index=15&type=section&id=Item%202.%20Properties) The company operates 122 stores across 16 states, owning 40 locations and leasing the remaining 82 Store Count by State (Top 3) | State | Number of Stores | | :--- | :--- | | Florida | 30 | | Texas | 22 | | Georgia | 16 | - At year-end 2022, the company **owned 40 retail locations** and leased the other 82[90](index=90&type=chunk) - The company leases most of its distribution facilities, with the largest being an **808,000 square foot center** in Braselton, Georgia[91](index=91&type=chunk) [Legal Proceedings](index=16&type=section&id=Item%203.%20Legal%20Proceedings) Management believes no pending legal cases will have a material adverse effect on the company's financials - The company reports no pending legal proceedings that are expected to have a material adverse effect on its financials[93](index=93&type=chunk) [Mine Safety Disclosures](index=16&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[94](index=94&type=chunk) [Information about our Executive Officers](index=17&type=section&id=Information%20about%20our%20Executive%20Officers) This section details the company's executive officers, their positions, and business experience - Clarence H Smith serves as Chairman of the Board and Chief Executive Officer[97](index=97&type=chunk) - Richard B Hare is the Executive Vice President and Chief Financial Officer[97](index=97&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=18&type=section&id=Item%205.%20Market%20for%20the%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on the NYSE, it pays regular dividends, and repurchased $30 million in shares in 2022 - The company's Common Stock (HVT) and Class A Common Stock (HVTA) are traded on the New York Stock Exchange (NYSE)[99](index=99&type=chunk) - Havertys has paid a cash dividend every year since 1935 and intends to continue paying quarterly dividends, subject to Board approval[103](index=103&type=chunk) - During 2022, the company spent **$30.0 million to repurchase 1.1 million shares** of Common Stock, with **$20.0 million remaining** under the authorization[105](index=105&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Record 2022 sales of $1.047 billion were driven by backlog fulfillment, though net income slightly declined [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Record 2022 net sales were offset by higher SG&A expenses, resulting in slightly lower net income Key Financial Performance (2022 vs 2021) | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,047.2M | $1,012.8M | +3.4% | | Gross Profit | $604.2M | $574.6M | +5.2% | | Gross Profit % | 57.7% | 56.7% | +100 bps | | SG&A Expenses | $486.3M | $456.3M | +6.6% | | SG&A as % of Sales | 46.4% | 45.1% | +130 bps | | Net Income | $89.4M | $90.8M | -1.6% | | Diluted EPS | $5.24 | $4.90 | +6.9% | Quarterly Net Sales and Comp-Store Sales Growth (%) vs Prior Year | Period | 2022 Net Sales % Increase | 2022 Comp-Store % Increase | | :--- | :--- | :--- | | Q1 | 1.0% | 0.2% | | Q2 | 1.3% | 1.1% | | Q3 | 5.4% | 6.3% | | Q4 | 5.5% | 5.7% | | Year | 3.4% | 3.4% | - The **100 basis point increase in gross profit margin** for 2022 was primarily due to merchandise price increases and disciplined discounting[129](index=129&type=chunk) - SG&A expenses as a percentage of sales increased to **46.4% in 2022 from 45.1% in 2021**, driven by higher selling, warehouse, and administrative costs[136](index=136&type=chunk) - For 2023, the company expects annual gross profit margins between **58.0% and 58.5%** and variable SG&A costs between **19.5% and 19.7%** of sales[131](index=131&type=chunk)[139](index=139&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a strong liquidity position with $123.1 million in cash and no debt at year-end 2022 - As of December 31, 2022, the company had **$123.1 million in cash and cash equivalents** and **no outstanding long-term debt**[142](index=142&type=chunk)[143](index=143&type=chunk) Cash Flow Summary (in millions) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash from operating activities | $51.0 | $97.2 | | Net cash used in investing activities | ($28.3) | ($34.0) | | Net cash used in financing activities | ($65.6) | ($97.1) | - Net cash from operating activities decreased to $51.0 million in 2022, largely due to a **$50.9 million reduction in customer deposits** as the company worked through its order backlog[149](index=149&type=chunk) Capital Expenditures (in thousands) | Category | Proposed 2023 | 2022 Actual | | :--- | :--- | :--- | | New or replacement stores | $9,700 | $7,700 | | Remodels/expansions | $2,900 | $4,400 | | Distribution | $5,800 | $6,900 | | Information technology | $2,500 | $2,800 | | **Total** | **$27,600** | **$28,400** | - The company plans to open five new stores in 2023 and close two, resulting in a net selling space increase of approximately **2.2%**[157](index=157&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate fluctuation, which is not considered material - The company's main market risk is interest rate fluctuation on its cash and cash equivalents[165](index=165&type=chunk) - Management does not believe a **100 basis point change in interest rates** would have a material effect on operating results or financial condition[165](index=165&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and the independent auditor concluded that the company's controls and procedures were effective - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the reporting period[168](index=168&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of December 31, 2022[169](index=169&type=chunk) - The independent auditor, Grant Thornton LLP, provided an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting[170](index=170&type=chunk)[174](index=174&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Compensation, and Security Ownership](index=31&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%2014) Information on governance, compensation, and ownership is incorporated by reference from the 2023 Proxy Statement - Information regarding Directors, Executive Officers, and Corporate Governance (Item 10) is **incorporated by reference** from the 2023 Proxy Statement[183](index=183&type=chunk) - Details on Executive Compensation (Item 11) are **incorporated by reference** from the 'Compensation Discussion and Analysis' section of the 2023 Proxy Statement[184](index=184&type=chunk) - Information on Security Ownership (Item 12) and Certain Relationships and Related Transactions (Item 13) is **incorporated by reference** from the 2023 Proxy Statement[185](index=185&type=chunk)[187](index=187&type=chunk) - Information on Principal Accounting Fees and Services (Item 14) is **incorporated by reference** from the 'Audit Matters' section of the 2023 Proxy Statement[189](index=189&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=32&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the 10-K report - This section provides a list of all documents filed with the report, including financial statements, schedules, and exhibits[191](index=191&type=chunk)[192](index=192&type=chunk) Financial Statements and Supplementary Data [Consolidated Balance Sheets](index=37&type=section&id=Consolidated%20Balance%20Sheets) Total assets and liabilities decreased in 2022, driven by lower cash and customer deposits respectively Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$649,049** | **$686,290** | | Cash and cash equivalents | $123,126 | $166,146 | | Inventories | $118,333 | $112,031 | | **Total Liabilities** | **$359,650** | **$430,320** | | Customer deposits | $47,969 | $98,897 | | Total lease liabilities | $221,287 | $230,352 | | **Total Stockholders' Equity** | **$289,399** | **$255,970** | [Consolidated Statements of Comprehensive Income](index=38&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Net sales and gross profit increased in 2022, but higher SG&A led to a slight decline in net income Income Statement Highlights (in thousands) | Account | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net Sales | $1,047,215 | $1,012,799 | $748,252 | | Gross Profit | $604,225 | $574,625 | $418,994 | | SG&A | $486,298 | $456,267 | $377,288 | | Net Income | $89,358 | $90,803 | $59,148 | | Diluted EPS (Common) | $5.24 | $4.90 | $3.12 | [Consolidated Statements of Cash Flows](index=40&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased significantly in 2022 due to a reduction in customer deposits Cash Flow Summary (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $51,015 | $97,242 | | Net cash (used in) provided by investing activities | $(28,325) | $(34,002) | | Net cash used in financing activities | $(65,622) | $(97,149) | | (Decrease) increase in Cash | $(42,932) | $(33,909) | [Note 2: Revenues and Segment Reporting](index=45&type=section&id=Note%202%2C%20Revenues%20and%20Segment%20Reporting) The company operates as a single segment, with upholstery and case goods as the top product categories Net Sales by Product Category (% of Net Sales) | Category | 2022 | 2021 | | :--- | :--- | :--- | | Upholstery | 42.5% | 42.8% | | Case Goods | 35.5% | 34.8% | | Mattresses | 8.1% | 8.9% | | Accessories and Other | 13.8% | 13.5% | - Customer deposits on undelivered merchandise totaled **$47.97 million** at the end of 2022, down from **$98.90 million** at the end of 2021[254](index=254&type=chunk) [Note 8: Leases](index=49&type=section&id=Note%208%2C%20Leases) The company holds $221.3 million in operating lease liabilities with a weighted-average term of 7.6 years Operating Lease Liabilities (in thousands) | Liability Type | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Current lease liabilities | $34,442 | $33,581 | | Non-current lease liabilities | $186,845 | $196,771 | | **Total operating lease liabilities** | **$221,287** | **$230,352** | - The weighted-average remaining lease term was **7.6 years** and the weighted-average discount rate was **5.52%** as of year-end 2022[276](index=276&type=chunk) - In May 2020, a sale and leaseback transaction of three facilities generated a gain of **$31.6 million**[273](index=273&type=chunk)
Haverty Furniture(HVT) - 2022 Q4 - Earnings Call Transcript
2023-02-22 18:54
Financial Data and Key Metrics Changes - The company reported record fourth quarter and full year performance, achieving net sales of $1.05 billion in 2022, a 3.4% increase from 2021, with earnings per share of $5.24, up 6.9% year-over-year [3][9] - In Q4 2022, net sales were $280.6 million, a 5.5% increase over the prior quarter, with comparable store sales up 5.8% year-over-year [9] - Gross profit margins increased by 60 basis points to 57% from 56.4% due to better pricing discipline and merchandising [9] Business Line Data and Key Metrics Changes - Written business for the quarter was down 6.2% compared to Q4 2021 but was up compared to 2019, with store traffic also tracking lower [3][5] - The breakdown of annual sales showed case goods at 35.5%, upholstery at 42.5%, mattresses at 8.1%, and accessories at 13.8% [13] - Special order business improved, with 23.1% of total upholstery sales coming from special orders in Q4 [26] Market Data and Key Metrics Changes - Customer deposits decreased by 51% year-over-year and 40% from Q3 2022, indicating a significant drop in backlog [10] - The company’s inventory at the end of Q4 was $118.3 million, up $6.3 million from the previous year but down $90 million from Q3 2022 [10] Company Strategy and Development Direction - The growth strategy focuses on adding stores in high-growth real estate markets, with plans to open three more stores in 2023 [4][24] - Capital expenditures for 2023 are planned at $28 million, with significant investments in stores, distribution, and IT enhancements [11][30] - The company aims to maintain a goal of opening five stores per year for the next three years [24] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2023, citing challenges from inflation and slowing housing sales but also highlighting improvements in supply chain operations [5][27] - The company expects gross profit margins for 2023 to be between 58% and 58.5%, impacted by product and freight costs [30] Other Important Information - The company has no funded debt and ended Q4 with $123.1 million in cash and cash equivalents [10] - During 2022, the company returned approximately $64 million to shareholders through share repurchases and dividends [30] Q&A Session Summary Question: Can you provide a breakdown of delivered sales growth from upholstery versus case goods and mattresses? - The annual sales breakdown showed case goods at 35.5%, upholstery at 42.5%, mattresses at 8.1%, and accessories at 13.8% [13] Question: What are the trends in customer deposits and backlog? - Customer deposits dropped significantly, correlating with a 40% decrease in backlog in Q4 [18] Question: What are the expectations for share repurchases and capital deployment in 2023? - The company has not made any share repurchases in Q4 but evaluates opportunities quarterly with the board [41][57]
Havertys Furniture (HVT) Presents at 25th Annual ICR Conference
2023-01-27 23:12
HAVERTYS This presentation may contain forward-looking statements. These statements are based upon current expectations and assumptions that are subject to risks and uncertainties. Havertys' actual results and financial condition may differ, possibly materially, from what is indicated in those forward-looking statements. 1 2 2 S T O R E S Store base is the right size in the right locations. $2799 $6,800 $$ Net sales YTD Q3 '22 increased $19.8 million or 2.7%. Strong earnings were driven by solid gross margi ...
Haverty Furniture(HVT) - 2022 Q3 - Quarterly Report
2022-11-04 16:00
[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%2E%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201%2E%20Financial%20Statements) Presents unaudited condensed consolidated financial statements, including balance sheets, income, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and stockholders' equity slightly increased, while total liabilities decreased from December 31, 2021, to September 30, 2022 Condensed Consolidated Balance Sheets (in thousands) | Item | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $137,226 | $166,146 | | Inventories | $137,315 | $112,031 | | Total current assets | $310,087 | $309,057 | | Total assets | $692,946 | $686,290 | | Customer deposits | $79,746 | $98,897 | | Total current liabilities | $192,746 | $210,377 | | Total liabilities | $409,337 | $430,320 | | Total stockholders' equity | $283,609 | $255,970 | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Net sales and net income modestly increased for the three months, while nine-month net sales increased and net income slightly decreased, with improved EPS Condensed Consolidated Statements of Comprehensive Income (in thousands, except per share data) | Item | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $274,495 | $260,378 | $766,658 | $746,858 | | Gross profit | $156,720 | $148,003 | $444,290 | $424,538 | | Net income | $24,551 | $24,233 | $65,620 | $66,497 | | Basic earnings per share: Common Stock | $1.51 | $1.35 | $3.96 | $3.67 | | Diluted earnings per share: Common Stock | $1.46 | $1.31 | $3.83 | $3.55 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly decreased, while cash used in investing decreased and financing increased for the nine months ended September 30, 2022 Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (Nine Months Ended Sep 30) | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $38,200 | $88,998 | | Net cash used in investing activities | $(22,043) | $(27,982) | | Net cash used in financing activities | $(45,040) | $(35,397) | | (Decrease) increase in cash, cash equivalents and restricted cash equivalents | $(28,883) | $25,619 | | Cash, cash equivalents and restricted cash equivalents at end of period | $143,979 | $232,390 | - Net cash provided by operating activities decreased by **$50.8 million**, primarily driven by changes associated with customer deposits[60](index=60&type=chunk) - Net cash used in financing activities increased by **$9.6 million**, primarily due to increased share repurchases in 2022[61](index=61&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed disclosures on business operations, accounting policies, financial instruments, and other significant financial matters [NOTE A - Business and Basis of Presentation](index=6&type=section&id=NOTE%20A%20-%20Business%20and%20Basis%20of%20Presentation) Describes Havertys' operations as a single-segment residential furniture retailer, the basis of interim financial statements, and the absence of material legal claims - Havertys operates as a retailer of residential furniture in the middle to upper-middle price ranges, exclusively under the Havertys brand within a **single reportable segment**[12](index=12&type=chunk) - The company's unaudited condensed consolidated financial statements are prepared in accordance with Form 10-Q instructions and U.S. GAAP, involving management estimates and assumptions[12](index=12&type=chunk)[13](index=13&type=chunk) - Currently, there are no pending claims or legal proceedings reasonably likely to have a material adverse effect on the company's financial condition, results of operations, or cash flows[14](index=14&type=chunk) [Note B – COVID-19 and Economic Conditions](index=6&type=section&id=Note%20B%20%E2%80%93%20COVID-19%20and%20Economic%20Conditions) Discusses the ongoing impact of COVID-19 and economic conditions, including rising costs, supply chain disruptions, and adverse effects on consumer spending from inflation and interest rates - During the nine months ended September 30, 2022, the company experienced rising product prices, volatile transportation costs, rising labor costs and shortages, and supply chain disruptions[15](index=15&type=chunk) - Discretionary consumer spending has been adversely impacted by rising inflation, including fuel costs, and interest rates, with many of these factors affecting the business in Q3 2022[15](index=15&type=chunk) [NOTE C – Stockholders' Equity](index=7&type=section&id=NOTE%20C%20%E2%80%93%20Stockholders%27%20Equity) Details the increase in stockholders' equity from December 31, 2021, to September 30, 2022, influenced by net income, restricted stock, dividends, and treasury stock Changes in Stockholders' Equity (Nine Months Ended September 30, 2022, in thousands) | Item | Amount | | :--- | :--- | | Balances at December 31, 2021 | $255,970 | | Net income | $65,620 | | Dividends declared (Common Stock) | $(12,403) | | Dividends declared (Class A Common Stock) | $(963) | | Acquisition of treasury stock | $(29,998) | | Amortization of restricted stock | $6,032 | | Balances at September 30, 2022 | $283,609 | Dividends Declared Per Share (Three Months Ended September 30, 2022) | Stock Class | Dividend Per Share | | :--- | :--- | | Common Stock | $0.28 | | Class A Common Stock | $0.26 | [NOTE D – Interim LIFO Calculations](index=9&type=section&id=NOTE%20D%20%E2%80%93%20Interim%20LIFO%20Calculations) Explains the company's use of the LIFO method for inventory valuation, with interim calculations based on estimates and subject to year-end adjustments - Inventories are valued using the last-in, first-out (LIFO) method, with interim calculations relying on management's estimates of inventory levels and inflation rates[19](index=19&type=chunk) - Interim LIFO results are subject to change as they are based on estimates that may be affected by factors beyond management's control, pending final year-end valuations[19](index=19&type=chunk) [NOTE E – Fair Value of Financial Instruments](index=9&type=section&id=NOTE%20E%20%E2%80%93%20Fair%20Value%20of%20Financial%20Instruments) Discusses the fair value of financial instruments, noting short-term instruments approximate carrying values and non-qualified deferred compensation assets use Level 1 valuations - Fair values of cash, restricted cash, accounts payable, and customer deposits approximate their carrying values due to their short-term nature[20](index=20&type=chunk) - Assets for self-directed, non-qualified deferred compensation plans are valued using **Level 1 valuation techniques** (quoted market prices)[20](index=20&type=chunk) [NOTE F – Credit Agreement](index=9&type=section&id=NOTE%20F%20%E2%80%93%20Credit%20Agreement) Details the company's revolving credit facility, initially **$60.0 million** with no outstanding borrowings, and its October 2022 amendment to **$80.0 million** with an extended maturity - At September 30, 2022, the company had a **$60.0 million** revolving credit facility, secured primarily by inventory, with no outstanding borrowings and **$55.7 million** in net availability[21](index=21&type=chunk) - In October 2022, the Credit Agreement was amended to increase the revolving credit facility to **$80.0 million**, extend the maturity date to **October 24, 2027**, and replace LIBOR with SOFR as the interest rate benchmark[22](index=22&type=chunk) [Note G – Revenues](index=9&type=section&id=Note%20G%20%E2%80%93%20Revenues) Outlines revenue recognition policies for merchandise sales and service fees, details changes in customer deposits, and presents disaggregated revenue by product categories - Revenue from merchandise sales and related service fees is recognized net of expected returns and sales tax upon delivery to the customer[23](index=23&type=chunk) Customer Deposits (in thousands) | Date | Amount | | :--- | :--- | | September 30, 2022 | $79,746 | | December 31, 2021 | $98,897 | Net Sales by Product Category (Three Months Ended September 30, in thousands) | Category | 2022 Net Sales | 2022 % of Net Sales | 2021 Net Sales | 2021 % of Net Sales | | :--- | :--- | :--- | :--- | :--- | | Case Goods | $101,735 | 37.1% | $92,440 | 35.5% | | Upholstery | $112,682 | 41.1% | $109,375 | 42.0% | | Mattresses | $22,646 | 8.3% | $23,616 | 9.1% | | Accessories and Other | $37,432 | 13.6% | $34,947 | 13.4% | | **Total Net Sales** | **$274,495** | **100.0%** | **$260,378** | **100.0%** | [NOTE H – Leases](index=10&type=section&id=NOTE%20H%20%E2%80%93%20Leases) Describes the company's operating leases for various assets, outlining lease terms, and how operating and variable lease costs are recognized, excluding variable costs from initial ROU asset measurement - The company holds operating leases for retail stores, offices, warehouses, and equipment, with remaining lease terms of **1 to 13 years** and options to extend up to **20 years**[25](index=25&type=chunk) - Variable lease payments, based on sales volume or asset usage, are expensed as incurred and not included in the initial measurement of right-of-use assets or lease liabilities[26](index=26&type=chunk) Total Lease Expense (Three and Nine Months Ended September 30, in thousands) | Lease Type | 3 Months 2022 | 3 Months 2021 | 9 Months 2022 | 9 Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Operating lease cost | $11,517 | $11,440 | $35,230 | $35,140 | | Variable lease cost | $1,706 | $1,739 | $5,183 | $4,856 | | **Total lease expense** | **$13,223** | **$13,179** | **$40,413** | **$39,996** | [NOTE I – Income Taxes](index=10&type=section&id=NOTE%20I%20%E2%80%93%20Income%20Taxes) Details the company's effective tax rate for the nine months ended September 30, 2022, which increased to **24.6%** from **23.1%**, primarily due to state income taxes and vested stock awards Effective Tax Rate (Nine Months Ended September 30) | Period | Effective Tax Rate | | :--- | :--- | | 2022 | 24.6% | | 2021 | 23.1% | - The primary difference between the effective tax rate and the statutory rate was due to state income taxes and the impact from vested stock awards[28](index=28&type=chunk) [NOTE J – Stock Based Compensation Plans](index=11&type=section&id=NOTE%20J%20%E2%80%93%20Stock%20Based%20Compensation%20Plans) Outlines the company's service-based and performance-based restricted stock awards, detailing compensation cost charged to SG&A and remaining unvested compensation Stock Award Activity (Nine Months Ended September 30, 2022) | Activity | Service-Based Restricted Stock Awards () | Performance-Based Restricted Stock Awards () | | :--- | :--- | :--- | | Outstanding at Dec 31, 2021 | 219,082 | 328,267 | | Granted/Issued | 153,681 | 103,104 | | Awards vested or rights exercised | (122,080) | (34,940) | | Forfeited | (3,900) | — | | Additional units earned due to performance | — | 59,249 | | Outstanding at Sep 30, 2022 | 246,783 | 455,680 | - Total compensation cost related to unvested equity awards was approximately **$8.0 million** as of September 30, 2022, expected to be recognized over a weighted-average period of **two years**[32](index=32&type=chunk) Stock-Based Compensation Expense (Nine Months Ended September 30, in thousands) | Period | Amount | | :--- | :--- | | 2022 | $6,032 | | 2021 | $6,456 | [NOTE K – Earnings Per Share](index=12&type=section&id=NOTE%20K%20%E2%80%93%20Earnings%20Per%20Share) Explains the company's two-class method for earnings per share, detailing preferential dividend rates for Common Stock and voting/conversion rights of Class A Common Stock - Earnings per share are reported using the two-class method, assuming **100% of earnings are distributed as dividends** based on contractual rights[33](index=33&type=chunk) - Common Stock has a preferential dividend rate of at least **105%** of the dividend paid on Class A Common Stock[34](index=34&type=chunk) - Class A Common Stock carries **ten votes per share** and is convertible into Common Stock on a one-for-one basis at the holder's option[34](index=34&type=chunk) Basic and Diluted Earnings Per Share | EPS Type | Stock Class | 3 Months 2022 | 3 Months 2021 | 9 Months 2022 | 9 Months 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Basic EPS | Common Stock | $1.51 | $1.35 | $3.96 | $3.67 | | | Class A Common Stock | $1.43 | $1.28 | $3.75 | $3.45 | | Diluted EPS | Common Stock | $1.46 | $1.31 | $3.83 | $3.55 | | | Class A Common Stock | $1.40 | $1.25 | $3.66 | $3.38 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on financial performance, liquidity, and capital resources, highlighting trends in sales, gross profit, SG&A, economic impacts, and future outlook [Forward-Looking Statements](index=13&type=section&id=Forward-Looking%20Statements) Contains a standard disclaimer for forward-looking statements, noting potential material differences in actual results due to risks and uncertainties, with no obligation to update - Statements in this Form 10-Q that are not historical facts are considered 'forward-looking statements' and involve risks and uncertainties that could cause actual results to differ materially[37](index=37&type=chunk) - Known material risk factors are described in 'Item 1A. Risk Factors' of the company's Form 10-K and subsequent SEC reports[37](index=37&type=chunk) - The company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the report date, except as required by law[37](index=37&type=chunk) [Net Sales](index=13&type=section&id=Net%20Sales) Net sales and comparable-store sales increased in Q3 2022, despite declining in-store traffic and written business, with Q4 expected to be impacted by economic conditions Net Sales and Comp-Store Sales (Q1-Q3 2022 vs 2021, in millions) | Period | Net Sales 2022 | Net Sales % Change | Comp-Store Sales 2022 | Comp-Store Sales % Change | | :--- | :--- | :--- | :--- | :--- | | Q1 | $238.9 | 1.0% | $2.5 | 0.2% | | Q2 | $253.2 | 1.3% | $3.2 | 1.1% | | Q3 | $274.5 | 5.4% | $14.1 | 6.3% | | YTD Q3 | $766.7 | 2.7% | $19.8 | 2.6% | - Designer sales accounted for **25.2%** of total written business in Q3 2022, up from 24.7% for 2021[41](index=41&type=chunk) - In-store traffic and written business declined from March through September 2022, with Q3 2022 written business down **7.2%** compared to 2021, but up **15.8%** compared to pre-pandemic Q2 2019[42](index=42&type=chunk)[43](index=43&type=chunk) - The company expects Q4 2022 business to be affected by rising inflation, fuel costs, stock market volatility, higher interest rates, and recessionary concerns impacting discretionary consumer spending[43](index=43&type=chunk) [Gross Profit](index=14&type=section&id=Gross%20Profit) Gross profit margin for Q3 2022 increased by **30 basis points** to **57.1%**, driven by pricing discipline and merchandise mix, with annual margins projected between **57.7% and 58.0%** Gross Profit Margin (Q3 2022 vs 2021) | Period | Gross Profit Margin | Change (bps) | | :--- | :--- | :--- | | Q3 2022 | 57.1% | +30 | | Q3 2021 | 56.8% | | - The increase in gross profit margin is primarily attributed to pricing discipline and merchandise mix[44](index=44&type=chunk) - Annual gross profit margins for 2022 are expected to be **57.7% to 58.0%**, with fluctuations quarter-to-quarter based on promotional cadence and anticipated changes in product/freight costs impacting LIFO reserve[44](index=44&type=chunk) [Selling, General and Administrative Expenses](index=14&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) SG&A costs as a percentage of sales increased to **45.4%** in Q3 2022, driven by higher selling, advertising, administrative, and occupancy expenses, with full-year projections adjusted SG&A Expenses as % of Sales (Q3 2022 vs 2021) | Period | SG&A as % of Sales | | :--- | :--- | | Q3 2022 | 45.4% | | Q3 2021 | 44.6% | - SG&A dollars increased by **$8.4 million (7.2%)** in Q3 2022, driven by higher selling expenses (**$4.9M**), advertising/marketing (**$1.1M**), administrative costs (**$1.5M**), and occupancy expenses (**$0.5M**)[46](index=46&type=chunk) SG&A Expenses by Classification (Three Months Ended September 30, in thousands) | Classification | 2022 | 2022 % of Net Sales | 2021 | 2021 % of Net Sales | | :--- | :--- | :--- | :--- | :--- | | Variable | $50,228 | 18.3% | $43,708 | 16.8% | | Fixed and discretionary | $74,306 | 27.1% | $72,448 | 27.8% | | **Total** | **$124,534** | **45.4%** | **$116,156** | **44.6%** | - Full-year 2022 variable SG&A expenses are anticipated to be **18.2% to 18.4%** of sales, an increase from previous estimates, while fixed and discretionary expenses are expected to be **$293.0 to $295.0 million**, a decrease from previous guidance due to changes in marketing spend[50](index=50&type=chunk) [Liquidity and Capital Resources](index=14&type=section&id=Liquidity%20and%20Capital%20Resources) Details the company's cash and restricted cash position as of September 30, 2022, and management's belief that current resources and capital markets will sufficiently fund future operations and obligations Cash and Cash Equivalents (September 30, 2022, in millions) | Item | Amount | | :--- | :--- | | Cash and cash equivalents | $137.2 | | Restricted cash equivalents | $6.8 | - The company expects capital expenditures of approximately **$30.0 million** for the full year of 2022[52](index=52&type=chunk) - Management believes current cash position, cash flow from operations, funds from the credit agreement, and access to long-term debt capital markets should be sufficient for operating requirements, capital expenditures, dividend payments, and lease obligations through the next several years[51](index=51&type=chunk)[52](index=52&type=chunk) [Long-Term Debt](index=15&type=section&id=Long-Term%20Debt) Details the company's revolving credit facility, initially **$60.0 million** with no outstanding amounts, and its October 2022 amendment to **$80.0 million** with an extended maturity - The company had a **$60.0 million** revolving credit facility, maturing September 27, 2024, with no outstanding amounts and **$55.7 million** availability at September 30, 2022[53](index=53&type=chunk) - In October 2022, the credit facility was amended to increase to **$80.0 million** and extend the maturity date to **October 24, 2027**[53](index=53&type=chunk) [Leases](index=15&type=section&id=Leases) The company utilizes operating leases to finance a portion of its real estate, including stores, distribution centers, and support spaces - Operating leases are used to fund a portion of the company's real estate, including stores, distribution centers, and store support space[54](index=54&type=chunk) [Share Repurchases](index=15&type=section&id=Share%20Repurchases) Details the Board's authorization of an additional **$25.0 million** for share repurchases, with **$5.0 million** in Q3 2022 repurchases, leaving **$20.0 million** remaining - In November 2021, the Board authorized **$25.0 million** for share repurchases, which was fully utilized by June 30, 2022, with **899,890 shares** purchased[55](index=55&type=chunk) - An additional **$25.0 million** was authorized in August 2022. During Q3 2022, **187,488 shares** were repurchased for approximately **$5.0 million**, with **$20.0 million** remaining under authorization as of September 30, 2022[56](index=56&type=chunk) - Future repurchases depend on factors such as cash balances, credit availability, financial performance, market price, and alternative investment opportunities[57](index=57&type=chunk) [Cash Flows Summary](index=15&type=section&id=Cash%20Flows%20Summary) Summarizes cash flow activities for the first nine months of 2022, noting a significant decrease in operating cash, a decrease in investing cash, and an increase in financing cash Net Cash Flows (Nine Months Ended September 30, in millions) | Activity | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Operating Activities | $38.2 | $89.0 | $(50.8) | | Investing Activities | $(22.0) | $(28.0) | $6.0 | | Financing Activities | $(45.0) | $(35.4) | $(9.6) | - The decrease in net cash provided by operating activities was primarily driven by changes associated with customer deposits[60](index=60&type=chunk) - The increase in cash used in financing activities was primarily due to increased share repurchases in 2022[61](index=61&type=chunk) [Store Plans and Capital Expenditures](index=16&type=section&id=Store%20Plans%20and%20Capital%20Expenditures) Outlines planned store openings, closures, and relocations for 2022-2023, with net selling space expected to remain flat and total capital expenditures estimated at **$30.0 million** Store Plans (2022-2023) | Location | Opening Quarter | Category | | :--- | :--- | :--- | | Austin, TX | Q1-22 | Open | | Atlanta, GA | Q2-22 | Closure | | Metro DC | Q4-22 | Open | | Indianapolis, IN | Q4-22 | Relocation | | Durham, NC | Q1-23 | Open | - Net selling space at the end of 2022 is expected to be relatively flat compared to 2021[63](index=63&type=chunk) - Total capital expenditures are estimated to be **$30.0 million** in 2022, depending on the timing of spending for new projects[63](index=63&type=chunk) [Critical Accounting Estimates](index=16&type=section&id=Critical%20Accounting%20Estimates) Defines critical accounting estimates as those requiring difficult judgments, noting management found none to be critical for the periods presented, with no significant changes - Critical accounting estimates are defined as those requiring difficult, subjective, or complex judgments due to inherently uncertain matters[64](index=64&type=chunk) - Management reviewed its accounting estimates and deemed none to be critical for the periods presented in the Form 10-K, with no significant changes since the last annual report[64](index=64&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=16&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Refers to the Form 10-K for detailed quantitative and qualitative disclosures about market risk, noting no material changes in exposure since December 31, 2021 - For quantitative and qualitative disclosures about market risk, the company refers to Item 7A of its Form 10-K[65](index=65&type=chunk) - The company's exposure to market risk has not changed materially since December 31, 2021[65](index=65&type=chunk) [Item 4. Controls and Procedures](index=16&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes in internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2022, providing reasonable assurance for timely and accurate financial reporting[66](index=66&type=chunk) - No material changes in internal control over financial reporting were identified during the quarter ended September 30, 2022[67](index=67&type=chunk) - The company continues to evaluate the impact of the shift to a rotating work-from-home and office environment on its internal control over financial reporting[67](index=67&type=chunk) [PART II. OTHER INFORMATION](index=17&type=section&id=PART%20II%2E%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=17&type=section&id=Item%201%2E%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note A of the financial statements, indicating no material pending claims - Information regarding legal proceedings is described under the subheading 'Business and Basis of Presentation' in Note A of the Notes to the Condensed Consolidated Financial Statements[69](index=69&type=chunk) [Item 1A. Risk Factors](index=17&type=section&id=Item%201A%2E%20Risk%20Factors) Refers to 'Item 1A. Risk Factors' in the Form 10-K for a discussion of material risk factors, noting no material changes from the annual report - The company refers to 'Item 1A. Risk Factors' in its Form 10-K for a discussion of known material risk factors[70](index=70&type=chunk) - There have been no material changes from the risk factors described in the company's Form 10-K[70](index=70&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=17&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the Board's authorization of an additional **$25.0 million** for share repurchases, with **187,488 shares** repurchased for **$5.0 million** in Q3 2022, leaving **$20.0 million** available - The board of directors authorized additional amounts for the stock repurchase program on November 5, 2021, and August 5, 2022, with no expiration date[71](index=71&type=chunk) Common Stock Repurchase Activity (Q3 2022) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares That May Yet Be Purchased | | :--- | :--- | :--- | :--- | | July 1 - July 31 | — | $— | $4,700 | | August 1 - August 31 | — | $— | $25,004,700 | | September 1 - September 30 | 187,488 | $26.65 | $20,007,700 | | **Total** | **187,488** | | | [Item 6. Exhibits](index=18&type=section&id=Item%206%2E%20Exhibits) Lists the exhibits filed with or incorporated by reference into the report, including the company's charter, by-laws, credit agreement amendments, and CEO/CFO certifications - The exhibits include the Articles of Amendment and Restatement of the Charter, By-laws, Fourth Amendment to Amended and Restated Credit Agreement, and certifications from the Chief Executive Officer and Chief Financial Officer[74](index=74&type=chunk) [SIGNATURES](index=19&type=section&id=SIGNATURES) The report is duly signed on behalf of Haverty Furniture Companies, Inc. by its Chairman and CEO, and Executive Vice President and CFO - The report is signed by Clarence H. Smith, Chairman of the Board and Chief Executive Officer, and Richard B. Hare, Executive Vice President and Chief Financial Officer, on November 4, 2022[77](index=77&type=chunk)
Haverty Furniture(HVT) - 2022 Q3 - Earnings Call Transcript
2022-11-02 17:27
Haverty Furniture Companies, Inc. (NYSE:HVT) Q3 2022 Earnings Conference Call November 2, 2022 10:00 AM ET Company Participants Richard Hare – Chief Financial Officer Clarence Smith – Chairman and Chief Executive Officer Steve Burdette – President Conference Call Participants Anthony Lebiedzinski – Sidoti Cristina Fernandez – Chelsea Advisory Group Operator Good day, ladies and gentlemen, and welcome to the Haverty's Q3 Earnings Call. All lines have been placed on a listen-only mode and the floor will be op ...
Haverty Furniture(HVT) - 2022 Q2 - Quarterly Report
2022-08-05 17:31
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission file number: 1-14445 HAVERTY FURNITURE COMPANIES, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or ...
Haverty Furniture(HVT) - 2022 Q2 - Earnings Call Transcript
2022-08-03 16:14
Haverty Furniture Companies, Inc. (NYSE:HVT) Q2 2022 Earnings Conference Call August 3, 2022 10:00 AM ET Company Participants Richard Hare – Chief Financial Officer Clarence Smith – Chairman and Chief Executive Officer Steve Burdette – President Conference Call Participants Anthony Lebiedzinski – Sidoti Operator Good day, ladies and gentlemen, and welcome to the Havertys Reports Operating Results for Second Quarter 2022 Conference Call. All lines have been placed on a listen-only mode. [Operator Instruction ...
Haverty Furniture(HVT) - 2022 Q1 - Quarterly Report
2022-05-06 16:19
PART I. FINANCIAL INFORMATION This section presents the company's unaudited financial statements, management's discussion, and disclosures on market risk and controls [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Haverty Furniture Companies, Inc., including balance sheets, income statements, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets increased slightly to **$693.9 million** from **$686.3 million** at year-end 2021, driven by a rise in inventories, while total liabilities also saw a minor increase to **$433.5 million**, and stockholders' equity grew to **$260.4 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$693,885** | **$686,290** | | Cash and cash equivalents | $162,340 | $166,146 | | Inventories | $119,857 | $112,031 | | **Total Liabilities** | **$433,485** | **$430,320** | | Customer deposits | $98,528 | $98,897 | | **Total Stockholders' Equity** | **$260,400** | **$255,970** | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) For the three months ended March 31, 2022, net sales saw a slight increase of **1.0%** year-over-year to **$238.9 million**, gross profit grew by **4.4%** to **$141.0 million**, while net income remained nearly flat at **$19.4 million**, and diluted EPS for Common Stock increased to **$1.11** from **$1.04** in the prior-year period Q1 Financial Performance (in thousands, except per share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Sales | $238,946 | $236,491 | | Gross Profit | $140,961 | $135,034 | | Net Income | $19,361 | $19,406 | | Diluted EPS (Common Stock) | $1.11 | $1.04 | | Cash Dividends per Share (Common Stock) | $0.25 | $0.22 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities was **$20.6 million** for the first three months of 2022, a slight increase from **$19.6 million** in the prior year, while cash used in investing activities increased due to higher capital expenditures, and financing activities used significantly more cash (**$17.3 million** vs. **$4.8 million**) primarily due to **$12.5 million** in common stock repurchases Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $20,578 | $19,601 | | Net cash used in investing activities | ($7,107) | ($4,745) | | Net cash used in financing activities | ($17,278) | ($4,788) | | **(Decrease) increase in cash** | **($3,807)** | **$10,068** | [Notes to Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's single-segment retail operations, the ongoing impact of COVID-19 on supply chains and costs, and disaggregated revenue by product category - The company operates as a retailer of residential furniture in the middle to upper-middle price ranges under the single brand 'Havertys' and does not franchise[10](index=10&type=chunk) - During Q1 2022, the business continued to be impacted by COVID-19 related effects, including rising product prices, volatile transportation costs, supply chain disruptions, and adverse impacts on consumer spending from inflation[13](index=13&type=chunk) Revenues by Product Category (in thousands) | Category | Q1 2022 Net Sales | % of Total | Q1 2021 Net Sales | % of Total | | :--- | :--- | :--- | :--- | :--- | | Case Goods | $74,188 | 31.0% | $88,841 | 37.6% | | Upholstery | $111,186 | 46.5% | $95,626 | 40.4% | | Mattresses | $19,733 | 8.3% | $20,481 | 8.7% | | Accessories and Other | $33,839 | 14.2% | $31,543 | 13.3% | | **Total** | **$238,946** | **100.0%** | **$236,491** | **100.0%** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2022 sales trends, including a decline in written comparable-store sales, improved gross profit margin, increased SG&A expenses, and the company's strong liquidity position [Net Sales](index=14&type=section&id=Net%20Sales) Total net sales for Q1 2022 increased by **1.0%** to **$238.9 million**, with comparable-store sales up **0.2%**, however, written business, an indicator of future deliveries, declined by **8.8%** (**9.6%** on a comp-store basis) compared to Q1 2021, with management noting a significant decline in traffic and written business in March due to macroeconomic pressures Q1 Sales Performance vs. Prior Year | Metric | Q1 2022 Change | | :--- | :--- | | Net Sales | +1.0% | | Comp-Store Sales | +0.2% | | Written Business | -8.8% | | Written Comp-Store Sales | -9.6% | - Supply chain delays impacted the case goods category, with its share of total sales decreasing from **37.6% in Q1 2021 to 31.0% in Q1 2022**[39](index=39&type=chunk) - Management attributes a significant decline in in-store traffic and written business in March to rising inflation, fuel costs, stock market volatility, higher interest rates, and geopolitical instability[40](index=40&type=chunk) [Gross Profit](index=15&type=section&id=Gross%20Profit) Gross profit margin for Q1 2022 increased by **190 basis points** to **59.0%** from **57.1%** in the prior year, primarily due to merchandise pricing and product mix, leading the company to raise its full-year 2022 gross profit margin guidance to a range of **57.7% to 58.0%** - Gross profit margin rose to **59.0% in Q1 2022**, an increase of **190 basis points** from 57.1% in Q1 2021[41](index=41&type=chunk) - Full-year 2022 gross profit margin is expected to be between **57.7% and 58.0%**, an increase over previous guidance but lower than Q1 results due to promotional cadence[42](index=42&type=chunk) [Selling, General and Administrative Expenses](index=15&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) SG&A expenses increased by **$5.4 million** (**4.9%**) in Q1 2022, representing **48.2%** of sales compared to **46.4%** in Q1 2021, driven by higher selling, distribution, delivery, and occupancy costs, with variable expenses growing as a percentage of sales due to higher compensation and fuel costs SG&A Expense Breakdown (in thousands) | Expense Type | Q1 2022 | % of Sales | Q1 2021 | % of Sales | | :--- | :--- | :--- | :--- | :--- | | Variable | $44,384 | 18.6% | $40,707 | 17.2% | | Fixed and discretionary | $70,770 | 29.6% | $69,055 | 29.2% | | **Total SG&A** | **$115,154** | **48.2%** | **$109,762** | **46.4%** | - The company anticipates full-year 2022 variable SG&A expenses to be **18.0% to 18.2% of sales**, and fixed/discretionary expenses to be between **$295.0 million and $298.0 million**[48](index=48&type=chunk) [Liquidity and Capital Resources](index=16&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a strong liquidity position with **$162.3 million** in cash and cash equivalents as of March 31, 2022, has a **$60.0 million** revolving credit facility with no outstanding borrowings and **$34.7 million** available, repurchased **$12.5 million** of its common stock during the quarter, with **$12.5 million** remaining under authorization, and projects full-year 2022 capital expenditures of approximately **$37.0 million** - As of March 31, 2022, the company had **$162.3 million in cash and cash equivalents** and no outstanding borrowings under its credit facility[49](index=49&type=chunk) - The company repurchased **438,499 shares of common stock** for approximately **$12.5 million** during Q1 2022[52](index=52&type=chunk) - Capital expenditures for the full year of 2022 are expected to be approximately **$37.0 million**[49](index=49&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=17&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company reports no material changes in its market risk exposure since December 31, 2021, referring to its Annual Report on Form 10-K for details - There have been no material changes in the company's exposure to market risk since December 31, 2021[59](index=59&type=chunk) [Item 4. Controls and Procedures](index=17&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting - Based on an evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[60](index=60&type=chunk) - No changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the company's internal controls were identified during the quarter[61](index=61&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and a list of exhibits [Item 1. Legal Proceedings](index=18&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it has no pending claims or legal proceedings that are reasonably likely to have a material adverse effect on its financial condition, results of operations, or cash flows - The company states it has no pending legal proceedings that would be reasonably likely to have a material adverse effect on its financial condition or results of operations[12](index=12&type=chunk)[63](index=63&type=chunk) [Item 1A. Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes from the risk factors previously described in the company's Annual Report on Form 10-K - No material changes have occurred in the risk factors described in the company's Form 10-K[64](index=64&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=18&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first quarter of 2022, the company repurchased **438,499 shares** of its common stock for approximately **$12.5 million**, with approximately **$12.5 million** remaining available for future purchases under the board-authorized stock repurchase program as of March 31, 2022 Common Stock Repurchases in Q1 2022 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | January 2022 | — | — | | February 2022 | 180,000 | $27.47 | | March 2022 | 258,499 | $29.23 | | **Total Q1** | **438,499** | **N/A** | - As of March 31, 2022, the remaining authorized amount for the stock repurchase program was approximately **$12.5 million**[65](index=65&type=chunk)[66](index=66&type=chunk) [Item 6. Exhibits](index=19&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with or incorporated by reference into the Form 10-Q report, including charter documents, bylaws, compensation agreements, and CEO/CFO certifications - The report includes a list of exhibits filed, such as CEO and CFO certifications (**31.1, 31.2, 32.1**) and financial data formatted in inline XBRL (**101**)[68](index=68&type=chunk)
Haverty Furniture(HVT) - 2022 Q1 - Earnings Call Transcript
2022-05-03 16:52
Haverty Furniture Companies, Inc. (NYSE:HVT) Q1 2022 Earnings Conference Call May 3, 2022 10:00 AM ET Company Participants Richard Hare – Chief Financial Officer Steven Burdette – President Conference Call Participants Anthony Lebiedzinski – Sidoti & Company Operator Good day, and welcome to the Haverty Furniture First Quarter Results 2022 Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Richard Hare, Chief Financial Officer. Please go ahead, s ...