Haverty Furniture(HVT) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The company's Q1 2025 financial statements reflect a 57.9% increase in net income to $3.8 million despite a slight sales decrease, alongside improved operating cash flow Condensed Consolidated Balance Sheets As of March 31, 2025, total assets slightly decreased to $642.7 million, with a reduction in cash and a marginal decrease in stockholders' equity Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $642,690 | $648,747 | | Cash and cash equivalents | $111,941 | $120,034 | | Inventories | $88,704 | $83,419 | | Total Liabilities | $337,329 | $341,186 | | Total Stockholders' Equity | $305,361 | $307,561 | Condensed Consolidated Statements of Comprehensive Income Q1 2025 net sales slightly decreased by 1.3% to $181.6 million, but net income significantly increased by 57.9% to $3.8 million Q1 2025 vs. Q1 2024 Income Statement (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $181,567 | $183,997 | -1.3% | | Gross Profit | $111,083 | $111,019 | +0.1% | | Income Before Income Taxes | $5,293 | $3,195 | +65.7% | | Net Income | $3,778 | $2,393 | +57.9% | | Diluted EPS (Common) | $0.23 | $0.14 | +64.3% | - Cash dividends per share for Common Stock increased to $0.32 in Q1 2025 from $0.30 in Q1 2024[10] Condensed Consolidated Statements of Cash Flows Q1 2025 net cash from operating activities increased to $6.2 million, while cash used in financing activities rose due to $2.0 million in stock repurchases Q1 2025 vs. Q1 2024 Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 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 | ($8,026) | ($9,914) | - The company repurchased $2.0 million of common stock in Q1 2025, whereas no repurchases were made in Q1 2024[11] Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, single reportable segment operations, 44.8% of sales from upholstery, and an $80.0 million revolving credit facility with no outstanding borrowings Revenue by Product Category - Q1 2025 vs Q1 2024 (in thousands) | Category | Q1 2025 Net Sales | % of Sales | Q1 2024 Net Sales | % of Sales | | :--- | :--- | :--- | :--- | :--- | | Case Goods | $58,052 | 32.0% | $59,085 | 32.1% | | Upholstery | $81,415 | 44.8% | $82,935 | 45.1% | | Mattresses | $15,804 | 8.7% | $16,600 | 9.0% | | Accessories and Other | $26,296 | 14.5% | $25,377 | 13.8% | - The company operates as a single reportable segment, with financial and operational decisions made on a market area approach[23] - As of March 31, 2025, the company had full availability of $80.0 million under its revolving credit facility, with no outstanding borrowings[20][55] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 1.3% Q1 2025 net sales decline to macroeconomic factors, while gross profit margin improved to 61.2% and SG&A expenses decreased by 2.0% Net Sales Q1 2025 net sales decreased by 1.3% to $181.6 million, with comparable-store sales down 4.8% due to macroeconomic factors, though in-home design services showed positive trends Q1 Sales Performance | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Sales | $181.6M (-1.3%) | $184.0M (-18.1%) | | Comp-Store Sales Change | -4.8% | -18.5% | - Written business for Q1 2025 was down 2.6% compared to Q1 2024, with written comp-store sales down 6.3%[47] - In-home design consultants drove 33.2% of total written sales in Q1 2025, up from 32.4% in Q1 2024, with the average ticket increasing from $6,782 to $7,422[48] Gross Profit Gross profit margin for Q1 2025 improved by 90 basis points to 61.2%, driven by favorable product selection and merchandising mix - Gross profit margin increased to 61.2% in Q1 2025 from 60.3% in Q1 2024, a 90 basis point improvement[49] Selling, General and Administrative Expenses Q1 2025 SG&A expenses decreased by $2.2 million (2.0%) to $107.2 million, improving to 59.0% of sales due to lower variable costs SG&A Expense Breakdown (in thousands) | Expense Type | Q1 2025 | % of Sales | Q1 2024 | % of Sales | | :--- | :--- | :--- | :--- | :--- | | Variable | $33,647 | 18.5% | $36,986 | 20.1% | | Fixed and discretionary | $73,555 | 40.5% | $72,370 | 39.3% | | Total SG&A | $107,202 | 59.0% | $109,356 | 59.4% | Liquidity and Capital Resources The company maintains strong liquidity with $111.9 million in cash and full availability of its $80.0 million credit facility, with operating cash flow improving to $6.2 million - At March 31, 2025, the company had $111.9 million in cash and cash equivalents and $6.3 million in restricted cash[54] - Net cash provided by operating activities increased to $6.2 million in Q1 2025 from $3.1 million in Q1 2024[59] - Cash used in financing activities increased by $1.4 million YoY, primarily due to $2.0 million in common stock repurchases in Q1 2025[61] Store Plans and Capital Expenditures The company is managing its store portfolio with planned openings and closures, while re-evaluating 2025 store plans and capital expenditures due to potential tariff impacts 2025 Store Activity Plan | Location or Market | Planned Quarter | Activity | | :--- | :--- | :--- | | Houston, TX | Q1-25 | Open | | Daytona, FL | Q2-25 | Relocation | | Atlanta, GA | Q2-25 | Closure | | Waco, TX | Q3-25 | Closure | | Houston, TX | Q3-25 | Open | - The company is re-evaluating its store plans and capital expenditures for 2025 to minimize the impact of increased tariffs[62] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company reports no material changes to its market risk exposure since the end of fiscal year 2024 - There has been no material change in the company's market risk exposure since December 31, 2024[64] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of the end of the reporting period[65] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[66] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports no pending legal proceedings expected to have a material adverse effect on its financial condition or operations - The company is subject to various claims in the ordinary course of business but currently has no pending legal proceedings expected to have a material adverse effect[40][68] Item 1A. Risk Factors No material changes have occurred from the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes from the risk factors described in the company's Form 10-K have occurred[69] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities In Q1 2025, the company repurchased 93,741 common shares for approximately $2.0 million, with $6.1 million remaining under the repurchase program Q1 2025 Share Repurchase Activity | Period | Total Shares Purchased | Average Price Paid Per Share | Approx. Value Remaining for Repurchase | | :--- | :--- | :--- | :--- | | Jan 2025 | 0 | $— | $8,121,000 | | Feb 2025 | 0 | $— | $8,121,000 | | Mar 2025 | 93,741 | $21.34 | $6,121,000 | Item 5. Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement in Q1 2025[72] Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and financial statements in inline XBRL format - Key exhibits filed include CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1) and financial data in inline XBRL format (Exhibit 101)[74]