La-Z-Boy(LZB) - 2023 Q2 - Quarterly Report

PART I Financial Information This section provides the company's unaudited consolidated financial statements and management's discussion and analysis for the period Financial Statements La-Z-Boy Incorporated's unaudited consolidated financial statements for the quarter ended October 29, 2022, detail performance and position Consolidated Statement of Income For the second quarter of fiscal 2023, sales increased to $611.3 million from $575.9 million year-over-year, driving net income attributable to La-Z-Boy up to $46.1 million from $39.5 million Consolidated Statement of Income Highlights (Amounts in thousands, except per share data) | Metric | Q2 FY2023 (ended 10/29/2022) | Q2 FY2022 (ended 10/23/2021) | Six Months FY2023 (ended 10/29/2022) | Six Months FY2022 (ended 10/23/2021) | | :--- | :--- | :--- | :--- | :--- | | Sales | $611,332 | $575,889 | $1,215,423 | $1,100,672 | | Gross Profit | $260,736 | $223,295 | $502,196 | $425,377 | | Operating Income | $61,883 | $54,113 | $114,526 | $88,484 | | Net Income Attributable to La-Z-Boy | $46,077 | $39,516 | $84,565 | $64,082 | | Diluted EPS | $1.07 | $0.89 | $1.96 | $1.43 | Consolidated Balance Sheet As of October 29, 2022, total assets were $1.86 billion, a decrease from $1.93 billion at April 30, 2022, with total equity increasing to $883.8 million from $819.6 million Consolidated Balance Sheet Summary (Amounts in thousands) | Account | October 29, 2022 | April 30, 2022 | | :--- | :--- | :--- | | Current Assets | | | | Cash and equivalents | $204,626 | $245,589 | | Inventories, net | $342,728 | $303,191 | | Total current assets | $857,313 | $951,776 | | Total Assets | $1,857,540 | $1,932,089 | | Current Liabilities | | | | Total current liabilities | $550,722 | $675,689 | | Total Liabilities | $973,754 | $1,112,467 | | Total Equity | $883,786 | $819,622 | Consolidated Statement of Cash Flows For the six months ended October 29, 2022, net cash provided by operating activities increased to $31.0 million, while investing and financing activities used $44.1 million and $25.9 million respectively Six Months Ended Cash Flow Summary (Amounts in thousands) | Cash Flow Activity | 10/29/2022 | 10/23/2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $30,954 | $15,434 | | Net cash used for investing activities | $(44,138) | $(32,472) | | Net cash used for financing activities | $(25,937) | $(80,728) | | Change in cash, cash equivalents and restricted cash | $(40,962) | $(98,096) | Notes to Consolidated Financial Statements This section provides detailed disclosures supporting the consolidated financial statements, covering basis of presentation, acquisitions, segment information, and revenue recognition - In fiscal 2023, the company completed acquisitions of independently owned La-Z-Boy Furniture Galleries stores in Spokane, WA for $4.7 million and Denver, CO for $10.1 million to grow its company-owned retail business[32][35] Revenue by Product Category (Six Months Ended, in thousands) | Product Category | FY2023 (ended 10/29/22) | FY2022 (ended 10/23/21) | | :--- | :--- | :--- | | Motion Upholstery Furniture | $750,058 | $674,048 | | Stationary Upholstery Furniture | $416,968 | $374,232 | | Delivery | $130,624 | $100,347 | | Other | $171,939 | $146,878 | Segment Sales and Operating Income (Six Months Ended, in thousands) | Segment | Sales FY2023 | Operating Income FY2023 | Sales FY2022 | Operating Income FY2022 | | :--- | :--- | :--- | :--- | :--- | | Wholesale | $888,049 | $64,618 | $832,591 | $61,459 | | Retail | $488,173 | $79,652 | $374,267 | $44,400 | | Corporate and Other | $92,367 | $(29,744) | $88,647 | $(17,375) | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 FY2023 financial results, noting a 6.2% sales increase, improved operating margin, strong Retail segment growth, and liquidity Results of Operations Consolidated sales for Q2 FY2023 rose 6.2% to $611.3 million, with the Retail segment's sales growing 31.0% and the Wholesale segment's sales increasing 1.6% Consolidated Performance (Q2 FY2023 vs Q2 FY2022) | Metric | Q2 FY2023 | Q2 FY2022 | % Change | | :--- | :--- | :--- | :--- | | Sales | $611,332 K | $575,889 K | 6.2% | | Operating Income | $61,883 K | $54,113 K | 14.4% | | Operating Margin | 10.1% | 9.4% | +70 bps | Segment Performance (Q2 FY2023 vs Q2 FY2022) | Segment | Sales | % Change | Operating Income | Operating Margin | | :--- | :--- | :--- | :--- | :--- | | Wholesale | $446.2 M | 1.6% | $38.5 M | 8.6% (-120 bps) | | Retail | $252.2 M | 31.0% | $41.5 M | 16.5% (+400 bps) | | Corporate & Other | $43.6 M | (3.1)% | $(18.1) M | N/A | - Retail segment delivered same-store sales increased 25% in Q2, but written same-store sales decreased 10% compared to the prior year, indicating softer consumer demand[107] - Joybird sales decreased 5% in Q2 to $38.2 million, and written sales were down 27%, reflecting slowing online traffic and demand challenges in the e-commerce home furnishings industry[112] Liquidity and Capital Resources The company maintained a strong liquidity position with $207.9 million in cash, cash equivalents, and restricted cash, providing $31.0 million in cash from operating activities - Cash, cash equivalents, and restricted cash stood at $207.9 million at the end of the quarter, down from $248.9 million at the start of the fiscal year[119] - Capital expenditures for the first six months were $40.4 million, with a full-year forecast of $75 million to $80 million, primarily for retail store improvements and manufacturing facility upgrades[122] - In the first six months of fiscal 2023, the company used $5.0 million to repurchase 0.2 million shares and paid $14.2 million in dividends[128] Quantitative and Qualitative Disclosures About Market Risk The company states that there were no material changes to the information regarding market risk from what was disclosed in its Annual Report on Form 10-K - There were no material changes to market risk disclosures during the first six months of fiscal 2023[129] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of the end of the period - The CEO and CFO concluded that disclosure controls and procedures are effective[130] - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[131] PART II Other Information This section covers other required disclosures, including risk factors, equity security sales, and exhibits Risk Factors The company reports that there have been no material changes to its risk factors during the first six months of fiscal 2023 from those disclosed in its Annual Report on Form 10-K - There have been no material changes to the company's risk factors during the first six months of fiscal 2023[133] Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any shares under its publicly announced plan during the second quarter of fiscal 2023, with 7.3 million shares remaining available for repurchase - No shares were repurchased under the authorized plan during the second quarter of fiscal 2023[134] - As of October 29, 2022, 7.3 million shares remained available for repurchase under the existing board authorization, which has no expiration date[134][136] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents