Haverty Furniture(HVT_A) - 2025 Q2 - Quarterly Results

Executive Summary Havertys Furniture achieved its first year-over-year sales growth since Q4 2022, showing strong gross margins and improved operational trends Second Quarter 2025 Highlights Havertys Furniture reported its first year-over-year sales growth since Q4 2022, alongside strong gross margins and improved operational trends, despite a challenging market. Diluted EPS decreased, while consolidated sales increased slightly | Metric | Q2 2025 | Q2 2024 | Change | Chunk | | :-------------------------------- | :------ | :------ | :----- | :---- | | Diluted EPS | $0.16 | $0.27 | -40.7% | 3 | | Consolidated Sales | $181.0 million | $178.6 million | +1.3% | 3 | | Comparable Store Sales | -2.3% | N/A | N/A | 3 | | Gross Profit Margin | 60.8% | 60.4% | +0.4 percentage points | 3 | - Achieved year-over-year sales growth for the first time since Q4 2022, driven by new marketing and promotional strategies[2] - Experienced positive traffic trends and improved conversion rates[2] CEO Commentary President and CEO Steven G. Burdette highlighted the company's return to year-over-year sales growth in Q2 2025, attributing it to effective marketing, team dedication, and historical experience, despite ongoing challenges in the housing market and consumer confidence - CEO noted positive sales and operational trends, including strong gross margins, positive traffic, and improved conversion rates[2] - Acknowledged a challenging environment with a soft housing market, low consumer confidence, and tariff uncertainty[2] - Improved sales results are a reflection of new marketing and promotional strategies and the team's dedication[2] Financial Performance Overview Q2 2025 showed slight sales growth and improved gross margins, but increased SG&A expenses impacted net income for both the quarter and six-month period Second Quarter 2025 Results of Operations For the second quarter of 2025, consolidated sales increased by 1.3% to $181.0 million, while comparable store sales decreased by 2.3%. Gross profit margin improved to 60.8%, but SG&A expenses as a percentage of sales increased, leading to a decline in pre-tax and net income compared to the prior year | Metric | Q2 2025 | Q2 2024 | Change | Chunk | | :-------------------------------- | :------ | :------ | :----- | :---- | | Sales | $181.0 million | $178.6 million | +1.3% | 8 | | Gross Profit | $110.1 million | $108.0 million | +1.9% | 8 | | Gross Profit as % of Sales | 60.8% | 60.4% | +0.4 percentage points | 8 | | Total SG&A | $107.3 million | $103.1 million | +4.1% | 8 | | Total SG&A as % of Sales | 59.3% | 57.7% | +1.6 percentage points | 8 | | Pre-tax Income | $4.3 million | $6.5 million | -33.8% | 8 | | Net Income | $2.7 million | $4.4 million | -38.6% | 8 | | Diluted EPS | $0.16 | $0.27 | -40.7% | 8 | - Total written business increased 0.4%, while comparable store written business decreased 2.1%[7] - SG&A expenses increased by $4.2 million, primarily due to higher administrative expenses ($3.4 million), occupancy costs ($1.5 million), and advertising costs ($1.1 million), partially offset by lower warehouse and delivery costs ($1.1 million)[7] Six Months Ended June 30, 2025 Results of Operations For the first six months of 2025, total sales remained flat at $362.6 million compared to the prior year. Gross profit increased slightly, but higher SG&A expenses led to flat pre-tax income and a modest decrease in net income and diluted EPS | Metric | H1 2025 | H1 2024 | Change | Chunk | | :-------------------------------- | :------ | :------ | :----- | :---- | | Sales | $362.6 million | $362.6 million | 0.0% | 8 | | Gross Profit | $221.2 million | $219.0 million | +1.0% | 8 | | Gross Profit as % of Sales | 61.0% | 60.4% | +0.6 percentage points | 8 | | Total SG&A | $214.5 million | $212.5 million | +0.9% | 8 | | Total SG&A as % of Sales | 59.2% | 58.6% | +0.6 percentage points | 8 | | Pre-tax Income | $9.6 million | $9.6 million | 0.0% | 8 | | Net Income | $6.5 million | $6.8 million | -4.4% | 8 | | Diluted EPS | $0.39 | $0.41 | -4.9% | 8 | Financial Statements Financial statements reflect slight Q2 2025 sales growth but decreased net income, flat six-month sales, and reduced cash flow primarily from inventory increases Condensed Consolidated Statements of Income The condensed consolidated statements of income show a slight increase in net sales for Q2 2025 but a decrease in net income due to higher selling, general, and administrative expenses. For the six months, net sales were flat, and net income saw a minor decline | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $181,025 | $178,636 | $362,592 | $362,633 | | Gross profit | $110,102 | $107,984 | $221,185 | $219,003 | | Selling, general and administrative | $107,333 | $103,099 | $214,535 | $212,455 | | Income before income taxes | $4,326 | $6,453 | $9,619 | $9,648 | | Net income | $2,689 | $4,438 | $6,467 | $6,831 | | Diluted EPS (Common Stock) | $0.16 | $0.27 | $0.39 | $0.41 | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets were $642.7 million, slightly down from December 31, 2024. Cash and cash equivalents decreased, while inventories increased. Total liabilities also saw a minor decrease, with stockholders' equity remaining relatively stable | (In thousands) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :----------------------------------- | :------------ | :---------------- | :------------ | | Total assets | $642,672 | $648,747 | $642,105 | | Cash and cash equivalents | $107,357 | $120,034 | $109,942 | | Inventories | $93,270 | $83,419 | $92,401 | | Total current assets | $236,148 | $238,896 | $240,410 | | Total liabilities | $337,801 | $341,186 | $335,007 | | Stockholders' equity | $304,871 | $307,561 | $307,098 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities decreased to $13.4 million from $17.5 million in the prior year, primarily due to an increase in inventories and a decrease in customer deposits. The company invested $11.7 million in capital expenditures and used $14.2 million in financing activities, including dividends and share repurchases | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | | Net cash provided by operating activities | $13,377 | $17,542 | | Net cash used in investing activities | $(11,683) | $(15,900) | | Net cash used in financing activities | $(14,237) | $(13,352) | | Decrease in cash, cash equivalents, and restricted cash equivalents | $(12,543) | $(11,710) | | Cash, cash equivalents, and restricted cash equivalents at end of period | $113,771 | $116,067 | - Operating cash flow was impacted by a $9.9 million increase in inventories and a $1.4 million decrease in customer deposits[7] - Purchased approximately 94,000 shares of common stock for $2.0 million and paid $10.4 million in quarterly cash dividends[7] Key Financial and Operational Metrics Key metrics for H1 2025 indicate increased EBITDA and free cash flow, supported by a strong liquidity position with substantial cash and no outstanding debt Other Financial and Operations Data For the six months ended June 30, 2025, EBITDA increased to $18.7 million. Sales per square foot slightly decreased, while the average ticket value saw a modest increase | Metric | H1 2025 | H1 2024 | Change | Chunk | | :---------------- | :------ | :------ | :----- | :---- | | EBITDA (in millions) | $18.7 | $16.8 | +11.3% | 9 | | Sales per square foot | $161 | $166 | -3.0% | 9 | | Average ticket | $3,350 | $3,332 | +0.5% | 9 | - Design consultants accounted for 33.4% of written business in 2025, down from 36.0% in 2024[7] Liquidity Measures Free cash flow for the six months ended June 30, 2025, was $1.7 million, a slight increase from the prior year. The company maintained a strong liquidity position with $113.8 million in cash and no outstanding debt, alongside $80.0 million in credit availability | Metric | H1 2025 | H1 2024 | Change | Chunk | | :-------------------------- | :------ | :------ | :----- | :---- | | Operating cash flow | $13.4 million | $17.5 million | -23.5% | 10 | | Capital expenditures | $(11.7 million) | $(16.0 million) | +26.9% | 10 | | Free cash flow | $1.7 million | $1.5 million | +13.3% | 10 | | Cash at period end | $113.8 million | $116.1 million | -2.0% | 10 | | Share repurchases | $2.0 million | $0 | N/A | 10 | | Dividends | $10.4 million | $10.1 million | +3.0% | 10 | - No debt outstanding at June 30, 2025, with $80.0 million in credit availability[7] Outlook and Guidance Havertys Furniture's 2025 guidance remains largely consistent with prior expectations, including gross profit margins between 60.0% to 60.5% and fixed/discretionary SG&A expenses in the $291.0 to $293.0 million range. Variable SG&A is anticipated to decrease, and planned capital expenditures are approximately $24.0 million - 2025 guidance includes currently effective tariffs but excludes effects of additional proposed tariffs[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), while variable SG&A expenses are anticipated to be 18.5% to 18.8% (a decrease from prior guidance due to lower warehouse and delivery costs)[7] - Effective tax rate for 2025 is expected to be 26.5%, excluding discrete items and new tax legislation[7] - Planned capital expenditures for 2025 are approximately $24.0 million, with retail square footage expected to remain consistent with 2024[7] Non-GAAP Financial Measures and Definitions This section clarifies non-GAAP measures including EBITDA, comparable store sales, and the classification of cost of goods sold and SG&A expenses GAAP to Non-GAAP Reconciliation (EBITDA) The company provides EBITDA as a non-GAAP financial measure, believing it offers additional useful information for investors. EBITDA for the six months ended June 30, 2025, was $18.7 million, an increase from $16.8 million in the prior year - EBITDA is presented as a meaningful non-GAAP measure to supplement GAAP financial reporting[14] | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | | Income before income taxes | $9,619 | $9,648 | | Interest income, net | $(2,746) | $(3,022) | | Depreciation and amortization | $11,831 | $10,147 | | EBITDA | $18,704 | $16,773 | Comparable Store Sales Definition 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. Stores are excluded if they were not open during the corresponding month or if selling square footage changed significantly - Comparable-store sales indicate the performance of existing stores and the website[16] - Stores are considered non-comparable if not open during the corresponding month or if selling square footage changed significantly[16] Cost of Goods Sold and SG&A Expense Classification Havertys includes most occupancy and home delivery costs, along with a portion of warehousing expenses, in SG&A, which may differ from other entities' classifications. SG&A expenses are further categorized into variable (selling and delivery costs) and fixed/discretionary (rent, depreciation, advertising, administrative costs) - Substantially all occupancy and home delivery costs, plus a portion of warehousing expenses, are included in SG&A expense[17] - SG&A expenses are classified as variable (selling and delivery costs) or fixed and discretionary (rent, depreciation, advertising, administrative costs)[18] - Variable selling expenses primarily include compensation for commission-based sales associates, third-party financing discounts, and credit card transaction fees[18] Corporate Information This section outlines Havertys Furniture's corporate profile, Q2 2025 conference call details, and a safe harbor statement concerning forward-looking information About Havertys Furniture Haverty Furniture Companies, Inc., established in 1885, is a full-service home furnishings retailer operating 129 showrooms across 17 states in the Southern and Midwestern regions, offering a wide selection of quality merchandise in middle to upper-middle price ranges - Established in 1885, Havertys is a full-service home furnishings retailer[20] - Operates 129 showrooms in 17 states across the Southern and Midwestern regions[20] - Provides a wide selection of quality merchandise in middle to upper-middle price ranges[20] Conference Call Information Havertys Furniture hosted a live webcast of its conference call on July 31, 2025, at 10:00 a.m. ET, with a replay available on its investor relations website - Live webcast of the conference call was held on July 31, 2025, at 10:00 a.m. ET[19] - A replay was made available on the company's investor relations website (ir.havertys.com) at approximately 1:00 p.m. ET on the same day[19] Safe Harbor Statement This press release and the conference call contain forward-looking statements subject to safe harbor provisions, which involve risks and uncertainties that could cause actual results to differ materially from expectations. Investors are cautioned not to place undue reliance on these statements and to review subsequent SEC filings for further disclosures - The report contains forward-looking statements subject to safe harbor provisions of the Securities Act of 1933 and 1934[21] - Forward-looking statements involve risks and uncertainties, and actual results may differ materially due to various factors, including competition, consumer preferences, supply chain risks, economic conditions, and regulatory changes[23] - The company undertakes no duty to update forward-looking statements except as required by law, advising investors to review subsequent SEC filings[24]