Haverty Furniture(HVT_A) - 2025 Q1 - Quarterly Results

First Quarter 2025 Operating Results Highlights Havertys reported solid Q1 2025 results, demonstrating improved gross margins and earnings amidst challenging market conditions CEO Commentary President and CEO Steven G. Burdette reported solid first-quarter results, highlighting improved gross margins, earnings, and expense control despite challenges like a weak housing market, adverse weather, low consumer confidence, and trade policy shifts. He emphasized the company's resilience, historical experience, and strong balance sheet in navigating economic changes - Havertys achieved solid Q1 results with improved gross margins, earnings, and expense control despite headwinds such as a weak housing market, atypical winter weather, low consumer confidence, and significant shifts in trade policy[2] - The company leverages its 140-year history of resilience and a solid balance sheet to manage the dynamic U.S. trade policy environment and deliver shareholder value[3] Q1 2025 Key Financial Highlights For the first quarter of 2025, Havertys reported an increase in diluted EPS and gross profit margin, despite a slight decrease in consolidated and comparable store sales compared to the prior year Q1 2025 vs Q1 2024 Key Financial Highlights | Metric | Q1 2025 | Q1 2024 | Change | | :----- | :------ | :------ | :----- | | Diluted EPS | $0.23 | $0.14 | +$0.09 | | Consolidated Sales | $181.6 million | $184.0 million | -1.3% | | Comparable Store Sales | -4.8% | N/A | -4.8% | | Gross Profit Margin | 61.2% | 60.3% | +0.9 pp | Detailed First Quarter 2025 Performance and Outlook This section details Havertys' Q1 2025 sales, profitability, financial position, cash flow, and provides the 2025 outlook Sales and Business Performance In Q1 2025, total sales decreased by 1.3% and comparable store sales by 4.8%. Written business also saw declines, while design consultants increased their contribution to written business - Total sales decreased 1.3% and comparable-store sales decreased 4.8% for the quarter[7] - Total written business was down 2.6%, and comparable-store written business declined 6.3% for the quarter[7] - Design consultants accounted for 33.2% of written business in 2025, up from 32.4% in 2024[7] Profitability and Expense Management Gross profit margins improved to 61.2% in Q1 2025. SG&A expenses decreased by $2.2 million, primarily due to lower selling, warehouse, and delivery costs, and reduced advertising, partially offset by increased occupancy and administrative expenses - Gross profit margins increased to 61.2% in 2025 from 60.3% in 2024[7] - SG&A expenses were 59.0% of sales versus 59.4% and decreased $2.2 million[7] Key Drivers of SG&A Expense Change (Q1 2025 vs Q1 2024) | Driver | Change (Millions USD) | | :----- | :-------------------- | | Selling expenses | -$2.0 | | Warehouse and delivery costs | -$1.7 | | Advertising costs | -$1.1 | | Occupancy costs | +$1.6 | | Administrative expenses | +$1.0 | Balance Sheet and Cash Flow Summary As of March 31, 2025, Havertys maintained a strong liquidity position with $118.3 million in cash and no outstanding debt. The company generated $6.2 million in cash from operating activities and invested $6.1 million in capital expenditures, while also returning capital to shareholders through share repurchases and dividends - Cash, cash equivalents, and restricted cash equivalents at March 31, 2025, totaled $118.3 million[7] - Generated $6.2 million in cash from operating activities, driven by earnings and working capital changes[7] - Invested $6.1 million in capital expenditures, purchased approximately 94,000 shares for $2.0 million, and paid $5.2 million in quarterly cash dividends[7] - No debt outstanding at March 31, 2025, with $80.0 million in credit availability[7] 2025 Outlook and Guidance Havertys' 2025 guidance remains largely unchanged for gross profit margins (60.0%-60.5%) and fixed/discretionary SG&A ($291.0-$293.0 million). Variable SG&A is anticipated to decrease to 18.6%-19.0% due to lower warehouse and delivery costs. Capital expenditures are reduced to $24.0 million due to tariff uncertainty, with retail square footage expected to increase by approximately 2.0% - 2025 guidance includes current tariffs but excludes proposed additional tariffs, with close monitoring of negotiations[7] - Gross profit margins for 2025 are expected to be between 60.0% to 60.5%, unchanged from prior guidance[7] - Fixed and discretionary SG&A expenses for 2025 are expected to be in the $291.0 to $293.0 million range, unchanged[7] - Variable SG&A expenses for 2025 are anticipated to be in the 18.6% to 19.0% range, a decrease from previous guidance due to lower warehouse and delivery costs and third-party credit expense[7] - Planned capital expenditures for 2025 are approximately $24.0 million, a $3 million decrease from prior guidance due to tariff uncertainty[7] - Retail square footage is expected to increase approximately 2.0% in 2025 over 2024[7] Summary Financial Data Tables This section provides summarized financial data tables for Q1 2025, including operational results, key metrics, and liquidity Results of Operations (Summary) This section provides a summary of Havertys' key operational results for the three months ended March 31, 2025, compared to the same period in 2024, highlighting sales, gross profit, SG&A, and net income Key Results of Operations (Three Months Ended March 31) | Metric | 2025 (Millions USD) | 2024 (Millions USD) | | :------------------------ | :------------------ | :------------------ | | Sales | $181.6 | $184.0 | | Gross Profit | $111.1 | $111.0 | | Gross profit as a % of sales | 61.2% | 60.3% | | SGA Total | $107.2 | $109.4 | | SGA as a % of sales | 59.0% | 59.4% | | Pre-tax income | $5.3 | $3.2 | | Net income | $3.8 | $2.4 | | Diluted EPS | $0.23 | $0.14 | Other Financial and Operations Data This section presents additional operational metrics for the three months ended March 31, 2025, including EBITDA, sales per square foot, and average ticket size Other Financial and Operations Data (Three Months Ended March 31) | Metric | 2025 | 2024 | | :---------------- | :--- | :--- | | EBITDA (in millions) | $9.9 | $6.6 | | Sales per square foot | $162 | $169 | | Average ticket | $3,314 | $3,195 | Liquidity Measures This section details Havertys' liquidity position and cash returns to shareholders for the three months ended March 31, 2025, including free cash flow, operating cash flow, capital expenditures, share repurchases, and dividends Liquidity Measures (Three Months Ended March 31) | Metric | 2025 (Millions USD) | 2024 (Millions USD) | | :------------------------ | :------------------ | :------------------ | | Operating cash flow | $6.2 | $3.1 | | Capital expenditures | ($6.1) | ($6.4) | | Free cash flow | $0.1 | ($3.3) | | Cash at period end | $118.3 | $117.9 | | Share repurchases | $2.0 | — | | Dividends | $5.2 | $4.8 | | Cash returns to shareholders | $7.2 | $4.8 | Condensed Consolidated Financial Statements This section presents Havertys' condensed consolidated statements of income, balance sheets, and cash flows Condensed Consolidated Statements of Income This statement provides a detailed breakdown of Havertys' revenues, costs, and profits for the three months ended March 31, 2025, compared to the same period in 2024, including net sales, gross profit, expenses, and net income per share Condensed Consolidated Statements of Income (Three Months Ended March 31, in thousands) | (In thousands, except per share data) | 2025 | 2024 | | :------------------------------------ | :--- | :--- | | Net sales | $181,567 | $183,997 | | Cost of goods sold | $70,484 | $72,978 | | Gross profit | $111,083 | $111,019 | | Selling, general and administrative | $107,202 | $109,356 | | Total expenses | $107,044 | $109,379 | | Income before interest and income taxes | $4,039 | $1,640 | | Income before income taxes | $5,293 | $3,195 | | Income tax expense | $1,515 | $802 | | Net income | $3,778 | $2,393 | | Diluted earnings per share: Common Stock | $0.23 | $0.14 | | Cash dividends per share: Common Stock | $0.32 | $0.30 | Condensed Consolidated Balance Sheets This statement presents Havertys' financial position as of March 31, 2025, December 31, 2024, and March 31, 2024, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (In thousands) | (In thousands) | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :-------------------------------- | :------------- | :---------------- | :------------- | | Assets | | | | | Cash and cash equivalents | $111,941 | $120,034 | $111,818 | | Inventories | $88,704 | $83,419 | $92,078 | | Total current assets | $232,739 | $238,896 | $240,999 | | Property and equipment, net | $182,002 | $182,622 | $173,128 | | Total assets | $642,690 | $648,747 | $640,529 | | Liabilities and Stockholders' Equity | | | | | Accounts payable | $16,850 | $14,914 | $16,980 | | Customer deposits | $42,760 | $40,733 | $40,912 | | Total current liabilities | $128,647 | $131,565 | $131,145 | | Total liabilities | $337,329 | $341,186 | $333,839 | | Stockholders' equity | $305,361 | $307,561 | $306,690 | | Total liabilities and stockholders' equity | $642,690 | $648,747 | $640,529 | Condensed Consolidated Statements of Cash Flows This statement outlines the cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2025, compared to the same period in 2024, showing the net change in cash and cash equivalents Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, in thousands) | (In thousands) | 2025 | 2024 | | :------------------------------------------ | :--- | :--- | | Net cash provided by operating activities | $6,154 | $3,135 | | Net cash used in investing activities | ($6,122) | ($6,351) | | Net cash used in financing activities | ($8,058) | ($6,698) | | Decrease in cash, cash equivalents, and restricted cash equivalents | ($8,026) | ($9,914) | | Cash, cash equivalents, and restricted cash equivalents at end of period | $118,288 | $117,863 | Notes and Non-GAAP Reconciliations This section provides a GAAP to non-GAAP reconciliation for EBITDA and defines key financial metrics GAAP to Non-GAAP Reconciliation (EBITDA) Havertys provides a reconciliation of GAAP measures to EBITDA, a non-GAAP financial measure, which the company believes offers additional useful information for investors - EBITDA is presented as a non-GAAP financial measure to provide additional useful information to investors, not as a substitute for GAAP measures[14] Reconciliation of GAAP measures to EBITDA (Three Months Ended March 31, in thousands) | (in thousands) | 2025 | 2024 | | :----------------------------- | :--- | :--- | | Income before income taxes | $5,293 | $3,195 | | Interest income, net | ($1,254) | ($1,555) | | Depreciation and amortization | $5,895 | $4,946 | | EBITDA | $9,934 | $6,586 | Key Financial Metric Definitions This section defines key financial metrics used in the report, including comparable store sales and the classification of Cost of Goods Sold and SG&A expenses, clarifying how these are reported by Havertys - Comparable-store sales measure the performance of existing stores and the website by comparing sales growth for a particular month over the corresponding month in the prior year, excluding stores not open or with significant square footage changes[16] - Havertys includes substantially all occupancy and home delivery costs, plus a portion of warehousing expenses, in SG&A expense, which may make its gross profit not comparable to entities that include these costs in cost of goods sold[17] - SG&A expenses are classified as variable (selling and delivery costs, primarily commission-based compensation, third-party financing discounts, credit card fees, personnel, fuel) or fixed and discretionary (rent, depreciation, amortization, other occupancy costs, advertising, administrative costs)[18] Corporate Information and Forward-Looking Statements This section covers Havertys' Q1 2025 conference call, company profile, and a safe harbor statement for forward-looking data Conference Call and Company Profile Havertys announced details for its Q1 2025 conference call and provided a brief overview of the company, established in 1885, as a full-service home furnishings retailer operating 130 showrooms across 17 states - A live webcast of the conference call for Q1 2025 results will be held on May 1, 2025, at 10:00 a.m. ET, with a replay available at ir.havertys.com[19] - Havertys, established in 1885, is a full-service home furnishings retailer with 130 showrooms in 17 Southern and Midwestern states, offering quality merchandise in middle to upper-middle price ranges[20] Safe Harbor Statement This section contains a safe harbor statement regarding forward-looking statements, cautioning that actual results may differ materially due to various risks and uncertainties, and the company undertakes no duty to update these statements except as required by law - The press release and conference call contain forward-looking statements subject to safe harbor provisions, which involve risks and uncertainties that could cause actual results to differ materially[21][23] - Readers are cautioned not to place undue reliance on forward-looking statements, which describe expectations only as of the date they are made, and the company undertakes no duty to update them except as required by law[23][24] - Factors that could cause actual results to differ include competition, consumer preferences, strategy implementation, brand maintenance, importing risks, raw material costs, supply chain issues, labor disruptions, economic conditions, and litigation[23]