Summary of Haverty Furniture Companies Conference Call Company Overview - **Company Name**: Haverty Furniture Companies, Inc. (NYSE: HVT) - **Established**: 140 years ago - **Store Count**: 129 stores across 17 states, primarily in Florida, Texas, and Georgia [4][5] - **Target Customer**: Female, aged 35-55, married, college-educated, with household income above $150,000 [4] Business Strategy and Operations - **Distribution Centers**: Operates seven distribution centers located in Dallas, Texas; Braselton, Georgia; and Lakeland, Florida, with four cross-docks in various states [4] - **Store Growth**: Aims to open five stores annually but will only open three this year, resulting in a net of 129 stores by year-end [5] - **Product Mix**: Positioned in the upper middle segment, competing with brands like Crate & Barrel and Pottery Barn [6] - **Design Services**: Design services account for about one-third of business volume, with an average ticket of $3,400, and $7,600 for design services specifically, growing at 5% [6] Marketing and Customer Engagement - **Media Strategy**: Utilizes broadcast, OTT, and digital platforms, including Instagram and Pinterest, to reach customers [10][11] - **Website Revamp**: Launched a new website in late 2022, which took time to stabilize, but has since seen double-digit organic growth [12][13] - **Regret-Free Guarantee**: Implemented to enhance customer confidence, with no increase in exchange rates or markdowns reported [15][16] Financial Performance - **Credit Program**: Approximately one-third of sales are made through credit, primarily via Synchrony, with high approval ratings [22] - **Capital Allocation**: Planned capital allocation for the year is around $24 million, focusing on new stores and infrastructure [55] - **Dividends**: The company has paid dividends since 1935, with ongoing discussions about special dividends and buybacks [55] Market Conditions and Challenges - **Housing Market**: Currently at a 30-40 year low, impacting store performance; however, the company remains optimistic about future growth [30][31] - **E-commerce Goals**: Aims for e-commerce to reach 10% of total business, currently in low single digits [32][34] - **Tariffs Impact**: Tariffs primarily affect bedroom and dining room categories, with ongoing adjustments to sourcing strategies [36][37] Operational Efficiency - **Staffing Changes**: Reduced headcount from 3,500 pre-pandemic to below 2,400, while maintaining operational efficiency [50][51] - **AI Utilization**: Exploring AI for marketing and operational efficiencies, aiming to grow without increasing headcount [53] Future Outlook - **Growth Strategy**: Focus on expanding in Florida and Texas, with plans for new stores in metropolitan areas and contiguous states [26][29] - **Long-term Goals**: Aiming to return to $1 billion in sales, emphasizing commitment to customer service and operational excellence [57] Key Takeaways - Haverty Furniture Companies is strategically positioned in the furniture market with a focus on design and customer service - The company is navigating current market challenges while planning for future growth and operational efficiency - Strong financial management and a commitment to shareholder returns through dividends and potential buybacks are evident This summary encapsulates the key points discussed during the conference call, highlighting the company's strategic direction, market positioning, and operational insights.

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, and cash flow statements, along with detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time **Condensed Consolidated Balance Sheets (In thousands):** | Item | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | **Assets** | | | | | | Cash and cash equivalents | $107,357 | $120,034 | $(12,677) | -10.6% | | Inventories | $93,270 | $83,419 | $9,851 | 11.8% | | Total current assets | $236,148 | $238,896 | $(2,748) | -1.1% | | Total assets | $642,672 | $648,747 | $(6,075) | -0.9% | | **Liabilities** | | | | | | Total current liabilities | $130,514 | $131,565 | $(1,051) | -0.8% | | Total liabilities | $337,801 | $341,186 | $(3,385) | -1.0% | | **Stockholders' Equity** | | | | | | Total stockholders' equity | $304,871 | $307,561 | $(2,690) | -0.9% | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the company's revenues, expenses, and net income over specific periods **Condensed Consolidated Statements of Comprehensive Income (In thousands, except per share data):** | Item | 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 | | Income before interest and income taxes | $2,834 | $4,986 | $6,873 | $6,626 | | Net income | $2,689 | $4,438 | $6,467 | $6,831 | | Basic earnings per share (Common Stock) | $0.17 | $0.27 | $0.40 | $0.42 | | Diluted earnings per share (Common Stock) | $0.16 | $0.27 | $0.39 | $0.41 | | Cash dividends per share (Common Stock) | $0.32 | $0.32 | $0.64 | $0.62 | - Net sales for the three months ended June 30, 2025, increased by **$2.4 million (1.3%)** compared to the same period in 2024, reaching **$181.0 million**. However, net sales for the six months ended June 30, 2025, were comparable to the prior year period[7](index=7&type=chunk) - Net income decreased for both the three-month period (from **$4.4 million to $2.7 million**) and the six-month period (from **$6.8 million to $6.5 million**) year-over-year[7](index=7&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the cash inflows and outflows from operating, investing, and financing activities **Condensed Consolidated Statements of Cash Flows (In thousands):** | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash provided by operating activities | $13,377 | $17,542 | $(4,165) | | Net cash used in investing activities | $(11,683) | $(15,900) | $4,217 | | Net cash used in financing activities | $(14,237) | $(13,352) | $(885) | | Decrease in cash, cash equivalents, and restricted cash equivalents | $(12,543) | $(11,710) | $(833) | | Cash, cash equivalents, and restricted cash equivalents at end of period | $113,771 | $116,067 | $(2,296) | - Net cash provided by operating activities decreased by **$4.2 million** in the first six months of 2025, primarily due to changes in working capital, including increased inventories and reduced customer deposits[65](index=65&type=chunk) - Cash used in investing activities decreased by **$4.2 million**, driven by lower capital expenditures[66](index=66&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note A - Business and Basis of Presentation](index=7&type=section&id=Note%20A%20-%20Business%20and%20Basis%20of%20Presentation) This note describes the company's business operations and the accounting principles used in preparing the financial statements - Haverty Furniture Companies, Inc. operates as a retailer of residential furniture in the middle to upper-middle price ranges, exclusively under the **Havertys brand**[9](index=9&type=chunk) - The financial statements are unaudited and prepared in accordance with **Form 10-Q instructions and U.S. GAAP**, requiring management estimates and assumptions[9](index=9&type=chunk)[10](index=10&type=chunk) [Note B – Stockholders' Equity](index=8&type=section&id=Note%20B%20%E2%80%93%20Stockholders%27%20Equity) This note details changes in the company's equity accounts, including net income, dividends, and stock transactions **Changes in Stockholders' Equity (Six Months Ended June 30, 2025, in thousands):** | Item | Common Stock | Class A Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total | | :-------------------------------- | :----------- | :------------------- | :------------------------- | :---------------- | :----------------------------------- | :------------- | :------ | | Balances at Dec 31, 2024 | $30,419 | $1,793 | $117,257 | $418,960 | $(869) | $(259,999) | $307,561 | | Net income | — | — | — | $6,467 | — | — | $6,467 | | Dividends declared (Common Stock) | — | — | — | $(9,606) | — | — | $(9,606) | | Dividends declared (Class A Common Stock) | — | — | — | $(747) | — | — | $(747) | | Acquisition of treasury stock | — | — | — | — | — | $(2,000) | $(2,000) | | Balances at Jun 30, 2025 | $30,633 | $1,732 | $120,074 | $415,074 | $(869) | $(261,773) | $304,871 | - Common Stock dividends declared were **$0.64 per share** for the six months ended June 30, 2025, and Class A Common Stock dividends were **$0.60 per share**[13](index=13&type=chunk) - The company repurchased **$2.0 million** of common stock during the first six months of 2025, with no repurchases in the comparable 2024 period[13](index=13&type=chunk)[67](index=67&type=chunk) [Note C – Interim LIFO Calculations](index=10&type=section&id=Note%20C%20%E2%80%93%20Interim%20LIFO%20Calculations) This note explains the interim valuation method for inventories using the LIFO method and its inherent estimates - Inventories are valued using the **last-in, first-out (LIFO) method** with an annual LIFO index[15](index=15&type=chunk) - Interim LIFO calculations rely on management's estimates of year-end inventory and inflation/deflation rates, making them subject to change based on final year-end valuation[15](index=15&type=chunk) [Note D – Fair Value of Financial Instruments](index=11&type=section&id=Note%20D%20%E2%80%93%20Fair%20Value%20of%20Financial%20Instruments) This note discusses the fair value measurements for various financial instruments, primarily short-term assets and liabilities - Fair values of cash, restricted cash, accounts payable, and customer deposits approximate their carrying values due to their **short-term nature**[16](index=16&type=chunk) - Assets for self-directed, non-qualified deferred compensation plans are valued using **Level 1 quoted market prices**[16](index=16&type=chunk) [Note E – Credit Agreement](index=11&type=section&id=Note%20E%20%E2%80%93%20Credit%20Agreement) This note outlines the terms of the company's revolving credit facility, including its availability and maturity - The company has an **$80.0 million revolving credit facility**, secured primarily by inventory, maturing on **October 24, 2027**[17](index=17&type=chunk)[61](index=61&type=chunk) - As of June 30, 2025, there were **no outstanding borrowings**, and the net availability under the credit agreement was **$80.0 million**[18](index=18&type=chunk)[61](index=61&type=chunk) [Note F – Revenues and Segment Reporting](index=11&type=section&id=Note%20F%20%E2%80%93%20Revenues%20and%20Segment%20Reporting) This note details revenue recognition policies, customer deposits, and the company's single reportable segment structure - Revenue from merchandise sales and related service fees is recognized upon **delivery to the customer**, net of expected returns and sales tax[19](index=19&type=chunk) - Customer deposits were **$39.4 million** at June 30, 2025, a decrease from **$40.7 million** at December 31, 2024[19](index=19&type=chunk) **Net Sales Disaggregated by Product Category (In thousands):** | Product Category | Three Months Ended June 30, 2025 (Net Sales) | Three Months Ended June 30, 2024 (Net Sales) | Six Months Ended June 30, 2025 (Net Sales) | Six Months Ended June 30, 2024 (Net Sales) | | :----------------------- | :------------------------------------------- | :------------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Case Goods | $57,561 | $58,408 | $115,613 | $117,493 | | Upholstery | $80,884 | $78,273 | $162,300 | $161,208 | | Mattresses | $16,525 | $16,640 | $32,329 | $33,240 | | Accessories and Other | $26,055 | $25,315 | $52,350 | $50,692 | | **Total Net Sales** | **$181,025** | **$178,636** | **$362,592** | **$362,633** | - The company operates within a **single reportable segment**, with an executive committee serving as the chief operating decision maker (CODM) and assessing performance based on income before income taxes[21](index=21&type=chunk)[22](index=22&type=chunk) [Note G – Leases](index=12&type=section&id=Note%20G%20%E2%80%93%20Leases) This note describes the company's operating lease arrangements, including terms, payments, and related expenses - The company holds operating leases for various real estate and equipment, with remaining terms of **1 to 15 years** and options to extend up to **20 years**[25](index=25&type=chunk) - Variable lease payments, typically based on sales volume or asset usage, are not included in the initial measurement of right-of-use assets or lease liabilities and are expensed when incurred[26](index=26&type=chunk)[27](index=27&type=chunk) **Lease Expense (In thousands):** | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $12,550 | $12,092 | $24,884 | $24,338 | | Variable lease cost | $1,311 | $1,388 | $2,613 | $2,762 | | **Total lease expense** | **$13,861** | **$13,480** | **$27,497** | **$27,100** | [Note H – Income Taxes](index=13&type=section&id=Note%20H%20%E2%80%93%20Income%20Taxes) This note explains the effective tax rate, its drivers, and the expected impact of recent tax legislation - The effective tax rate for the six months ended June 30, 2025, was **32.8%**, an increase from **29.2%** in the prior year, mainly due to nondeductible items and tax expense from vested stock awards[29](index=29&type=chunk) - The **One Big Beautiful Bill Act (OBBBA)**, enacted on July 4, 2025, is not expected to have a material impact on the consolidated financial statements[30](index=30&type=chunk) [Note I – Stock-Based Compensation Plans](index=14&type=section&id=Note%20I%20%E2%80%93%20Stock-Based%20Compensation%20Plans) This note summarizes activity for service-based and performance-based restricted stock awards and related compensation costs **Stock Award Activity (Six Months Ended June 30, 2025):** | Item | Service-Based Restricted Stock Awards (Shares or Units) | Performance-Based Restricted Stock Awards (Shares or Units) | | :-------------------------------- | :---------------------------------------------------- | :------------------------------------------------------ | | Outstanding at December 31, 2024 | 250,575 | 276,098 | | Granted/Issued | 213,750 | 153,948 | | Awards vested or rights exercised | (151,938) | (91,804) | | Forfeited | (10,102) | (4,577) | | Adjustment of units based on performance | — | (65,364) | | Outstanding at June 30, 2025 | 302,285 | 268,301 | - The total fair value of service-based restricted stock awards that vested was approximately **$2.9 million**, and performance-based awards was approximately **$2.1 million**, for the six months ended June 30, 2025[32](index=32&type=chunk)[33](index=33&type=chunk) - Total compensation cost related to unvested equity awards was approximately **$9.8 million** as of June 30, 2025, to be recognized over a weighted-average period of **two years**[34](index=34&type=chunk) [Note J – Earnings Per Share](index=15&type=section&id=Note%20J%20%E2%80%93%20Earnings%20Per%20Share) This note details the calculation of earnings per share using the two-class method, considering different stock classes - Earnings per share are reported using the **two-class method**, assuming 100% of earnings are distributed as dividends based on contractual rights[36](index=36&type=chunk) - Common Stock has a preferential dividend rate of at least **105%** of the dividend paid on Class A Common Stock. Class A Common Stock holders have greater voting rights and can convert to Common Stock on a one-for-one basis[37](index=37&type=chunk) **Earnings Per Share (Common Stock):** | EPS Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS (Common Stock) | $0.17 | $0.27 | $0.40 | $0.42 | | Diluted EPS (Common Stock) | $0.16 | $0.27 | $0.39 | $0.41 | | Basic EPS (Class A Common Stock) | $0.15 | $0.25 | $0.37 | $0.39 | | Diluted EPS (Class A Common Stock) | $0.15 | $0.25 | $0.37 | $0.39 | [Note K – Contingencies](index=16&type=section&id=Note%20K%20%E2%80%93%20Contingencies) This note addresses the company's involvement in legal proceedings and their potential financial impact - The company is involved in various claims and legal proceedings arising in the **ordinary course of business**[39](index=39&type=chunk) - No pending claims or legal proceedings are currently believed to be reasonably likely to have a **material adverse effect** on the company's financial condition, results of operations, or cash flows[39](index=39&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, liquidity, and capital resources [Forward-Looking Statements and Risk Factors](index=17&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This subsection outlines the nature of forward-looking statements and lists various risks that could affect future results - Statements about future estimates, expectations, beliefs, intentions, projections, or strategies are considered **forward-looking statements**, subject to inherent uncertainties and risks[41](index=41&type=chunk)[42](index=42&type=chunk) - - Competition from national, regional, and local retailers[44](index=44&type=chunk) - Ability to anticipate changes in consumer preferences and implement growth strategies[44](index=44&type=chunk) - Risks in the supply chain, including cost volatility of raw materials, dependence on third-party producers, and transportation[44](index=44&type=chunk) - Impact of labor disruptions, shortages, and ability to attract/retain key employees[44](index=44&type=chunk) - Vulnerability of information technology infrastructure to cyber-attacks[44](index=44&type=chunk) - Changes in general domestic and international economic conditions (inflation, interest rates, recessions)[44](index=44&type=chunk) - Pending or unforeseen litigation[44](index=44&type=chunk) [Impact of tariffs imposed by the U.S government](index=18&type=section&id=Impact%20of%20tariffs%20imposed%20by%20the%20U.S%20government) This subsection discusses the new U.S. tariffs on imported goods and the company's assessment of their impact - New U.S. tariff rates, ranging from **10% to 41%**, will be imposed on imports from over **67 countries**, effective **August 7, 2025**[47](index=47&type=chunk) - Tariffs for Chinese goods remain at **55%** and are part of ongoing discussions. Canada faces increased tariffs on certain non-compliant goods[47](index=47&type=chunk) - The company is actively monitoring developments and evaluating mitigation strategies to assess the impact on its supply chain and cost structure[47](index=47&type=chunk) [Net Sales](index=18&type=section&id=Net%20Sales) This subsection analyzes the company's net sales performance, including total and comparable-store sales, for recent periods **Net Sales and Comp-Store Sales Performance (In millions):** | Period | Net Sales (Total) 2025 | Net Sales (Total) 2024 | Comp-Store Sales 2025 | Comp-Store Sales 2024 | | :----- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | Q1 | $181.6 | $184.0 | (4.8)% | (18.5)% | | Q2 | $181.0 | $178.6 | (2.3)% | (13.6)% | | YTD Q2 | $362.6 | $362.6 | (3.5)% | (16.2)% | - Net sales for Q2 2025 increased by **$2.4 million (1.3%)** compared to Q2 2024, while comp-store sales decreased by **$4.0 million (2.3%)**[49](index=49&type=chunk) - For the first six months of 2025, net sales were comparable to 2024, but comp-store sales decreased by **$12.8 million (3.5%)**[50](index=50&type=chunk) - Design consultants contributed **33.4%** of total written sales in Q2 2025 (down from 36.0% in Q2 2024), with a higher average written ticket of **$7,631** (up from $7,260)[51](index=51&type=chunk) [Gross Profit](index=19&type=section&id=Gross%20Profit) This subsection examines the company's gross profit and margin, highlighting factors influencing changes - Gross profit margin for Q2 2025 was **60.8%**, up **40 basis points** from 60.4% in Q2 2024[53](index=53&type=chunk) - For the first six months of 2025, gross profit margin was **61.0%**, up **60 basis points** from 60.4% in the same period of 2024[53](index=53&type=chunk) - The increase in gross profit margin is primarily attributed to **product selection, merchandise pricing, and mix**[53](index=53&type=chunk) [Selling, General and Administrative Expenses](index=19&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) This subsection details the trends and components of SG&A expenses and their impact on profitability - SG&A expenses as a percentage of sales increased to **59.3%** for Q2 2025 (up from 57.7% in Q2 2024) and **59.2%** for the first six months of 2025 (up from 58.6% in 2024)[55](index=55&type=chunk)[56](index=56&type=chunk) - - Q2 2025 SG&A increased by **$4.2 million (4.1%)**, driven by administrative (**$3.4 million**), occupancy (**$1.5 million**), and advertising (**$1.1 million**) costs, partially offset by decreased warehouse and delivery costs (**$1.1 million**)[55](index=55&type=chunk) - First six months of 2025 SG&A increased by **$2.1 million (1.0%)**, driven by administrative (**$4.5 million**) and occupancy (**$3.1 million**) costs, offset by decreased warehouse and delivery (**$2.8 million**) and selling expenses (**$2.7 million**)[56](index=56&type=chunk) **SG&A Expenses by Classification (In thousands):** | Classification | Three Months Ended June 30, 2025 | % of Net Sales 2025 | Three Months Ended June 30, 2024 | % of Net Sales 2024 | Six Months Ended June 30, 2025 | % of Net Sales 2025 | Six Months Ended June 30, 2024 | % of Net Sales 2024 | | :----------------------- | :------------------------------- | :------------------ | :------------------------------- | :------------------ | :----------------------------- | :------------------ | :----------------------------- | :------------------ | | Variable | $33,353 | 18.4% | $34,746 | 19.4% | $67,000 | 18.5% | $71,732 | 19.8% | | Fixed and discretionary | $73,980 | 40.9% | $68,353 | 38.3% | $147,535 | 40.7% | $140,723 | 38.8% | | **Total SG&A** | **$107,333** | **59.3%** | **$103,099** | **57.7%** | **$214,535** | **59.2%** | **$212,455** | **58.6%** | [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) This subsection assesses the company's cash position, credit facilities, and ability to meet financial obligations - As of June 30, 2025, the company had **$107.4 million** in cash and cash equivalents and **$6.4 million** in restricted cash equivalents[60](index=60&type=chunk) - The company believes its current cash, operating cash flow, credit agreement, and access to debt markets are sufficient for operating requirements, capital expenditures, dividends, and lease obligations[60](index=60&type=chunk) - Net cash provided by operating activities decreased by **$4.2 million** to **$13.4 million** in the first six months of 2025, primarily due to increased inventories and reduced customer deposits[65](index=65&type=chunk) - Cash used in investing activities decreased by **$4.2 million** due to lower capital expenditures, and cash used in financing activities increased by **$0.9 million** due to **$2.0 million** in common stock repurchases[66](index=66&type=chunk)[67](index=67&type=chunk) [Store Plans and Capital Expenditures](index=21&type=section&id=Store%20Plans%20and%20Capital%20Expenditures) This subsection outlines the company's plans for new store openings, relocations, closures, and related capital spending **Store Plans (Actual or Planned Opening Quarter):** | Location or Market | Opening Quarter | Category | | :----------------- | :-------------- | :--------- | | Houston, TX | Q1-25 | Open | | Daytona, FL | Q2-25 | Relocation | | Atlanta, GA | Q2-25 | Closure | | Waco, TX | Q3-25 | Closure | | Houston, TX | Q4-25 | Open | | St. Louis, MO | Q1-26 | Open | | Nashville, TN | Q2-26 | Open | | Houston, TX | Q3-26 | Open | | Houston, TX | Q4-26 | Open | - The company anticipates ending 2025 with a total of **129 stores**, assuming new store openings proceed as planned[68](index=68&type=chunk) [Critical Accounting Estimates](index=21&type=section&id=Critical%20Accounting%20Estimates) This subsection discusses accounting estimates requiring significant judgment and their potential impact on financial reporting - Critical accounting estimates require significant, subjective, or complex judgments, often involving inherently uncertain matters[69](index=69&type=chunk) - Management concluded that no accounting estimates were deemed critical for the periods presented, and there have been no significant changes since the **2024 Annual Report on Form 10-K**[69](index=69&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section refers to the annual report for market risk disclosures, confirming no material changes since the last fiscal year-end - The company's exposure to market risk has not materially changed since **December 31, 2024**[70](index=70&type=chunk) - Detailed disclosures about market risk are available in **'Item 7A. Quantitative and Qualitative Disclosures About Market Risk'** of the company's Form 10-K[70](index=70&type=chunk) [Item 4. Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and the absence of material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of **June 30, 2025**[71](index=71&type=chunk) - No changes in the company's internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[72](index=72&type=chunk) [PART II. OTHER INFORMATION](index=22&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal matters and equity transactions [Item 1. Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) This section cross-references legal proceedings information to the relevant note in the financial statements - Information regarding legal proceedings is provided in **Note K - Contingencies** of the Notes to the Condensed Consolidated Financial Statements[74](index=74&type=chunk) [Item 1A. Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the annual report for a discussion of material risk factors, confirming no material changes - There have been no material changes from the risk factors described in the company's **Form 10-K**[75](index=75&type=chunk) - A discussion of known material risk factors is available in **'Item 1A. Risk Factors'** of the company's Form 10-K[75](index=75&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section details the company's stock repurchase program and recent repurchase activity - The Board of Directors has authorized a stock repurchase program for Common Stock and Class A Common Stock, with **no expiration date**[76](index=76&type=chunk) - No repurchases of common stock occurred during the **second quarter of 2025**[77](index=77&type=chunk) - As of June 30, 2025, approximately **$6.1 million** remained authorized for repurchase under the program[77](index=77&type=chunk) [Item 5. Other Information](index=22&type=section&id=Item%205.%20Other%20Information) This section confirms that no directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements - No directors or officers adopted, modified, or terminated a **'Rule 10b5-1 trading arrangement'** or **'non-Rule 10b5-1 trading arrangement'** during the three months ended June 30, 2025[78](index=78&type=chunk) [Item 6. Exhibits](index=23&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with or incorporated by reference into the report, including certifications and agreements - - Exhibit 3.1: Articles of Amendment and Restatement of the Charter[80](index=80&type=chunk) - Exhibit 3.2: By-laws of Haverty Furniture Companies, Inc.[80](index=80&type=chunk) - Exhibit 10.1: Amendment and Waiver to the Amended and Restated Credit Agreement[80](index=80&type=chunk) - Exhibit 31.1: Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d‑14(a)[80](index=80&type=chunk) - Exhibit 31.2: Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d‑14(a)[80](index=80&type=chunk) - Exhibit 32.1: Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350[80](index=80&type=chunk) - Exhibit 101: Inline XBRL financial statements[80](index=80&type=chunk) - Exhibit 104: Cover Page Interactive Data File[80](index=80&type=chunk)

PART I. FINANCIAL INFORMATION This section details the company's unaudited financial statements and management's analysis of financial condition [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income, cash flows, and detailed accounting notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the condensed consolidated balance sheets, detailing assets, liabilities, and equity for the specified periods **Condensed Consolidated Balance Sheets (In thousands):** | Item | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | **Assets** | | | | | | Cash and cash equivalents | $107,357 | $120,034 | $(12,677) | -10.6% | | Inventories | $93,270 | $83,419 | $9,851 | 11.8% | | Total current assets | $236,148 | $238,896 | $(2,748) | -1.1% | | Total assets | $642,672 | $648,747 | $(6,075) | -0.9% | | **Liabilities** | | | | | | Total current liabilities | $130,514 | $131,565 | $(1,051) | -0.8% | | Total liabilities | $337,801 | $341,186 | $(3,385) | -1.0% | | **Stockholders' Equity** | | | | | | Total stockholders' equity | $304,871 | $307,561 | $(2,690) | -0.9% | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the condensed consolidated statements of comprehensive income, detailing net sales, gross profit, and net income **Condensed Consolidated Statements of Comprehensive Income (In thousands, except per share data):** | Item | 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 | | Income before interest and income taxes | $2,834 | $4,986 | $6,873 | $6,626 | | Net income | $2,689 | $4,438 | $6,467 | $6,831 | | Basic earnings per share (Common Stock) | $0.17 | $0.27 | $0.40 | $0.42 | | Diluted earnings per share (Common Stock) | $0.16 | $0.27 | $0.39 | $0.41 | | Cash dividends per share (Common Stock) | $0.32 | $0.32 | $0.64 | $0.62 | - **Net sales** for the three months ended June 30, 2025, **increased** by **$2.4 million (1.3%)** compared to the same period in 2024, reaching **$181.0 million**. However, **net sales** for the six months ended June 30, 2025, were **comparable** to the prior year period[7](index=7&type=chunk) - **Net income decreased** for both the three-month period (from **$4.4 million** to **$2.7 million**) and the six-month period (from **$6.8 million** to **$6.5 million**) year-over-year[7](index=7&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the condensed consolidated statements of cash flows, detailing operating, investing, and financing activities **Condensed Consolidated Statements of Cash Flows (In thousands):** | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash provided by operating activities | $13,377 | $17,542 | $(4,165) | | Net cash used in investing activities | $(11,683) | $(15,900) | $4,217 | | Net cash used in financing activities | $(14,237) | $(13,352) | $(885) | | Decrease in cash, cash equivalents, and restricted cash equivalents | $(12,543) | $(11,710) | $(833) | | Cash, cash equivalents, and restricted cash equivalents at end of period | $113,771 | $116,067 | $(2,296) | - **Net cash provided by operating activities decreased** by **$4.2 million** in the first six months of 2025, primarily due to changes in working capital, including **increased inventories** and reduced customer deposits[65](index=65&type=chunk) - **Cash used in investing activities decreased** by **$4.2 million**, driven by lower **capital expenditures**[66](index=66&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes explaining the company's accounting policies, equity changes, revenue recognition, and other financial instrument details [Note A - Business and Basis of Presentation](index=7&type=section&id=Note%20A%20-%20Business%20and%20Basis%20of%20Presentation) Havertys is a residential furniture retailer; financial statements are unaudited and prepared under U.S. GAAP - Haverty Furniture Companies, Inc. operates as a retailer of residential furniture in the middle to upper-middle price ranges, exclusively under the Havertys brand[9](index=9&type=chunk) - The financial statements are unaudited and prepared in accordance with Form 10-Q instructions and U.S. GAAP, requiring management estimates and assumptions[9](index=9&type=chunk)[10](index=10&type=chunk) [Note B – Stockholders' Equity](index=8&type=section&id=Note%20B%20%E2%80%93%20Stockholders%27%20Equity) This note details changes in stockholders' equity, including net income, dividends, restricted stock, and treasury stock transactions **Changes in Stockholders' Equity (Six Months Ended June 30, 2025, in thousands):** | Item | Common Stock | Class A Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total | | :-------------------------------- | :----------- | :------------------- | :------------------------- | :---------------- | :----------------------------------- | :------------- | :------ | | Balances at Dec 31, 2024 | $30,419 | $1,793 | $117,257 | $418,960 | $(869) | $(259,999) | $307,561 | | Net income | — | — | — | $6,467 | — | — | $6,467 | | Dividends declared (Common Stock) | — | — | — | $(9,606) | — | — | $(9,606) | | Dividends declared (Class A Common Stock) | — | — | — | $(747) | — | — | $(747) | | Acquisition of treasury stock | — | — | — | — | — | $(2,000) | $(2,000) | | Balances at Jun 30, 2025 | $30,633 | $1,732 | $120,074 | $415,074 | $(869) | $(261,773) | $304,871 | - **Common Stock dividends declared** were **$0.64 per share** for the six months ended June 30, 2025, and **Class A Common Stock dividends** were **$0.60 per share**[13](index=13&type=chunk) - The company **repurchased $2.0 million** of **common stock** during the first six months of 2025, with no repurchases in the comparable 2024 period[13](index=13&type=chunk)[67](index=67&type=chunk) [Note C – Interim LIFO Calculations](index=10&type=section&id=Note%20C%20%E2%80%93%20Interim%20LIFO%20Calculations) Inventories are valued using the LIFO method, with interim calculations based on management estimates subject to change - **Inventories** are valued using the last-in, first-out (LIFO) method with an annual LIFO index[15](index=15&type=chunk) - Interim LIFO calculations rely on management's estimates of year-end inventory and inflation/deflation rates, making them subject to change based on final year-end valuation[15](index=15&type=chunk) [Note D – Fair Value of Financial Instruments](index=11&type=section&id=Note%20D%20%E2%80%93%20Fair%20Value%20of%20Financial%20Instruments) Fair values of short-term financial instruments approximate carrying values; deferred compensation assets use Level 1 market prices - Fair values of **cash**, restricted cash, accounts payable, and customer deposits approximate their carrying values due to their short-term nature[16](index=16&type=chunk) - Assets for self-directed, non-qualified deferred compensation plans are valued using Level 1 quoted market prices[16](index=16&type=chunk) [Note E – Credit Agreement](index=11&type=section&id=Note%20E%20%E2%80%93%20Credit%20Agreement) The company maintains an **$80.0 million** revolving credit facility with no outstanding borrowings as of June 30, 2025 - The company has an **$80.0 million revolving credit facility**, secured primarily by inventory, maturing on October 24, 2027[17](index=17&type=chunk)[61](index=61&type=chunk) - As of June 30, 2025, there were no **outstanding borrowings**, and the **net availability** under the **credit agreement** was **$80.0 million**[18](index=18&type=chunk)[61](index=61&type=chunk) [Note F – Revenues and Segment Reporting](index=11&type=section&id=Note%20F%20%E2%80%93%20Revenues%20and%20Segment%20Reporting) Revenue from merchandise sales is recognized upon delivery; the company operates as a single reportable segment - **Revenue** from merchandise sales and related service fees is recognized upon delivery to the customer, net of expected returns and sales tax[19](index=19&type=chunk) - Customer deposits were **$39.4 million** at June 30, 2025, a decrease from **$40.7 million** at December 31, 2024[19](index=19&type=chunk) **Net Sales Disaggregated by Product Category (In thousands):** | Product Category | Three Months Ended June 30, 2025 (Net Sales) | Three Months Ended June 30, 2024 (Net Sales) | Six Months Ended June 30, 2025 (Net Sales) | Six Months Ended June 30, 2024 (Net Sales) | | :----------------------- | :------------------------------------------- | :------------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Case Goods | $57,561 | $58,408 | $115,613 | $117,493 | | Upholstery | $80,884 | $78,273 | $162,300 | $161,208 | | Mattresses | $16,525 | $16,640 | $32,329 | $33,240 | | Accessories and Other | $26,055 | $25,315 | $52,350 | $50,692 | | **Total Net Sales** | **$181,025** | **$178,636** | **$362,592** | **$362,633** | - The company operates within a single reportable segment, with an executive committee serving as the chief operating decision maker (CODM) and assessing performance based on income before income taxes[21](index=21&type=chunk)[22](index=22&type=chunk) [Note G – Leases](index=12&type=section&id=Note%20G%20%E2%80%93%20Leases) The company has operating leases for real estate and equipment, with variable payments expensed as incurred - The company holds operating leases for various real estate and equipment, with remaining terms of **1** to **15 years** and options to extend up to **20 years**[25](index=25&type=chunk) - Variable lease payments, typically based on sales volume or asset usage, are not included in the initial measurement of right-of-use assets or lease liabilities and are expensed when incurred[26](index=26&type=chunk)[27](index=27&type=chunk) **Lease Expense (In thousands):** | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $12,550 | $12,092 | $24,884 | $24,338 | | Variable lease cost | $1,311 | $1,388 | $2,613 | $2,762 | | **Total lease expense** | **$13,861** | **$13,480** | **$27,497** | **$27,100** | [Note H – Income Taxes](index=13&type=section&id=Note%20H%20%E2%80%93%20Income%20Taxes) The effective tax rate increased to **32.8%** for the six months ended June 30, 2025, with no material impact from new legislation - The **effective tax rate** for the six months ended June 30, 2025, was **32.8%**, an **increase** from **29.2%** in the prior year, mainly due to nondeductible items and tax expense from vested stock awards[29](index=29&type=chunk) - The One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, is not expected to have a **material** impact on the consolidated financial statements[30](index=30&type=chunk) [Note I – Stock-Based Compensation Plans](index=14&type=section&id=Note%20I%20%E2%80%93%20Stock-Based%20Compensation%20Plans) This note summarizes activity for service-based and performance-based restricted stock awards and related compensation costs **Stock Award Activity (Six Months Ended June 30, 2025):** | Item | Service-Based Restricted Stock Awards (Shares or Units) | Performance-Based Restricted Stock Awards (Shares or Units) | | :-------------------------------- | :---------------------------------------------------- | :------------------------------------------------------ | | Outstanding at December 31, 2024 | 250,575 | 276,098 | | Granted/Issued | 213,750 | 153,948 | | Awards vested or rights exercised | (151,938) | (91,804) | | Forfeited | (10,102) | (4,577) | | Adjustment of units based on performance | — | (65,364) | | Outstanding at June 30, 2025 | 302,285 | 268,301 | - The total fair value of service-based restricted stock awards that vested was approximately **$2.9 million**, and performance-based awards was approximately **$2.1 million**, for the six months ended June 30, 2025[32](index=32&type=chunk)[33](index=33&type=chunk) - Total **compensation cost** related to unvested equity awards was approximately **$9.8 million** as of June 30, 2025, to be recognized over a weighted-average period of **two years**[34](index=34&type=chunk) [Note J – Earnings Per Share](index=15&type=section&id=Note%20J%20%E2%80%93%20Earnings%20Per%20Share) Earnings per share are reported using the two-class method, reflecting preferential dividends and differing voting rights - **Earnings per share** are reported using the two-class method, assuming **100%** of earnings are distributed as dividends based on contractual rights[36](index=36&type=chunk) - **Common Stock** has a preferential dividend rate of at least **105%** of the dividend paid on **Class A Common Stock**. **Class A Common Stock** holders have greater voting rights and can convert to **Common Stock** on a one-for-one basis[37](index=37&type=chunk) **Earnings Per Share (Common Stock):** | EPS Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS (Common Stock) | $0.17 | $0.27 | $0.40 | $0.42 | | Diluted EPS (Common Stock) | $0.16 | $0.27 | $0.39 | $0.41 | | Basic EPS (Class A Common Stock) | $0.15 | $0.25 | $0.37 | $0.39 | | Diluted EPS (Class A Common Stock) | $0.15 | $0.25 | $0.37 | $0.39 | [Note K – Contingencies](index=16&type=section&id=Note%20K%20%E2%80%93%20Contingencies) The company is subject to various legal proceedings, none of which are expected to have a material adverse effect - The company is involved in various claims and legal proceedings arising in the ordinary course of business[39](index=39&type=chunk) - No pending claims or legal proceedings are currently believed to be reasonably likely to have a **material** adverse effect on the company's financial condition, results of operations, or cash flows[39](index=39&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, liquidity, and capital resources [Forward-Looking Statements and Risk Factors](index=17&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This subsection outlines forward-looking statements and lists risks that could cause actual results to differ materially from expectations - Statements about future estimates, expectations, beliefs, intentions, projections, or strategies are considered forward-looking statements, subject to inherent uncertainties and risks[41](index=41&type=chunk)[42](index=42&type=chunk) - Competition from national, regional, and local retailers[44](index=44&type=chunk) - Ability to anticipate changes in consumer preferences and implement growth strategies[44](index=44&type=chunk) - Risks in the supply chain, including cost volatility of raw materials, dependence on third-party producers, and transportation[44](index=44&type=chunk) - Impact of labor disruptions, shortages, and ability to attract/retain key employees[44](index=44&type=chunk) - Vulnerability of information technology infrastructure to cyber-attacks[44](index=44&type=chunk) - Changes in general domestic and international economic conditions (inflation, interest rates, recessions)[44](index=44&type=chunk) - Pending or unforeseen litigation[44](index=44&type=chunk) [Impact of tariffs imposed by the U.S government](index=18&type=section&id=Impact%20of%20tariffs%20imposed%20by%20the%20U.S%20government) New U.S. tariffs on imported goods are effective August 7, 2025; the company is assessing their impact on supply chain and costs - New U.S. **tariff rates**, ranging from **10%** to **41%**, will be imposed on imports from over **67** countries, **effective** August 7, 2025[47](index=47&type=chunk) - **Tariffs** for Chinese goods remain at **55%** and are part of ongoing discussions. Canada faces **increased tariffs** on certain non-compliant goods[47](index=47&type=chunk) - The company is actively monitoring developments and evaluating mitigation strategies to assess the impact on its supply chain and cost structure[47](index=47&type=chunk) [Net Sales](index=18&type=section&id=Net%20Sales) Net sales for Q2 2025 increased by **1.3%** year-over-year, despite a challenging demand environment, while comp-store sales decreased **Net Sales and Comp-Store Sales Performance (In millions):** | Period | Net Sales (Total) 2025 | Net Sales (Total) 2024 | Comp-Store Sales 2025 | Comp-Store Sales 2024 | | :----- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | Q1 | $181.6 | $184.0 | (4.8)% | (18.5)% | | Q2 | $181.0 | $178.6 | (2.3)% | (13.6)% | | YTD Q2 | $362.6 | $362.6 | (3.5)% | (16.2)% | - **Net sales** for Q2 2025 **increased** by **$2.4 million (1.3%)** compared to Q2 2024, while **comp-store sales decreased** by **$4.0 million (2.3%)**[49](index=49&type=chunk) - For the first six months of 2025, **net sales** were **comparable** to 2024, but **comp-store sales decreased** by **$12.8 million (3.5%)**[50](index=50&type=chunk) - **Design consultants** contributed **33.4%** of total written sales in Q2 2025 (down from **36.0%** in Q2 2024), with a higher **average written ticket** of **$7,631** (up from **$7,260**)[51](index=51&type=chunk) [Gross Profit](index=19&type=section&id=Gross%20Profit) Gross profit margin improved for both the second quarter and first six months of 2025, driven by product selection and pricing - **Gross profit margin** for Q2 2025 was **60.8%**, **up 40 basis points** from **60.4%** in Q2 2024[53](index=53&type=chunk) - For the first six months of 2025, **gross profit margin** was **61.0%**, **up 60 basis points** from **60.4%** in the same period of 2024[53](index=53&type=chunk) - The **increase** in **gross profit margin** is primarily attributed to product selection, merchandise pricing, and mix[53](index=53&type=chunk) [Selling, General and Administrative Expenses](index=19&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) SG&A expenses as a percentage of sales increased due to higher administrative, occupancy, and advertising costs - **SG&A expenses** as a percentage of sales were **59.3%** for Q2 2025 (up from **57.7%** in Q2 2024) and **59.2%** for the first six months of 2025 (up from **58.6%** in 2024)[55](index=55&type=chunk)[56](index=56&type=chunk) - Q2 2025 **SG&A increased** by **$4.2 million (4.1%)**, driven by **administrative** (**$3.4M**), **occupancy** (**$1.5M**), and **advertising** (**$1.1M**) costs, partially offset by **decreased warehouse and delivery costs** (**$1.1M**)[55](index=55&type=chunk)[56](index=56&type=chunk) - First six months of 2025 **SG&A increased** by **$2.1 million (1.0%)**, driven by **administrative** (**$4.5M**) and **occupancy** (**$3.1M**) costs, offset by **decreased warehouse and delivery** (**$2.8M**) and **selling expenses** (**$2.7M**)[55](index=55&type=chunk)[56](index=56&type=chunk) **SG&A Expenses by Classification (In thousands):** | Classification | Three Months Ended June 30, 2025 | % of Net Sales 2025 | Three Months Ended June 30, 2024 | % of Net Sales 2024 | Six Months Ended June 30, 2025 | % of Net Sales 2025 | Six Months Ended June 30, 2024 | % of Net Sales 2024 | | :----------------------- | :------------------------------- | :------------------ | :------------------------------- | :------------------ | :----------------------------- | :------------------ | :----------------------------- | :------------------ | | Variable | $33,353 | 18.4% | $34,746 | 19.4% | $67,000 | 18.5% | $71,732 | 19.8% | | Fixed and discretionary | $73,980 | 40.9% | $68,353 | 38.3% | $147,535 | 40.7% | $140,723 | 38.8% | | **Total SG&A** | **$107,333** | **59.3%** | **$103,099** | **57.7%** | **$214,535** | **59.2%** | **$212,455** | **58.6%** | [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with cash and a credit facility, despite decreased operating cash flows and increased stock repurchases - As of June 30, 2025, the company had **$107.4 million** in **cash and cash equivalents** and **$6.4 million** in restricted cash equivalents[60](index=60&type=chunk) - The company believes its current cash, operating cash flow, credit agreement, and access to debt markets are sufficient for operating requirements, **capital expenditures**, dividends, and lease obligations[60](index=60&type=chunk) - **Net cash provided by operating activities decreased** by **$4.2 million** to **$13.4 million** in the first six months of 2025, primarily due to **increased inventories** and reduced customer deposits[65](index=65&type=chunk) - **Cash used in investing activities decreased** by **$4.2 million** due to lower **capital expenditures**, and **cash used in financing activities increased** by **$0.9 million** due to **$2.0 million** in **common stock repurchases**[66](index=66&type=chunk)[67](index=67&type=chunk) [Store Plans and Capital Expenditures](index=21&type=section&id=Store%20Plans%20and%20Capital%20Expenditures) The company plans new store openings and relocations, expecting **129** stores by the end of 2025 **Store Plans (Actual or Planned Opening Quarter):** | Location or Market | Opening Quarter | Category | | :----------------- | :-------------- | :--------- | | Houston, TX | Q1-25 | Open | | Daytona, FL | Q2-25 | Relocation | | Atlanta, GA | Q2-25 | Closure | | Waco, TX | Q3-25 | Closure | | Houston, TX | Q4-25 | Open | | St. Louis, MO | Q1-26 | Open | | Nashville, TN | Q2-26 | Open | | Houston, TX | Q3-26 | Open | | Houston, TX | Q4-26 | Open | - The company anticipates ending 2025 with a total of **129** stores, assuming new store openings proceed as planned[68](index=68&type=chunk) [Critical Accounting Estimates](index=21&type=section&id=Critical%20Accounting%20Estimates) Management concluded no accounting estimates were critical for the periods presented, with no significant changes since the last annual report - **Critical accounting estimates** require significant, subjective, or complex judgments, often involving inherently uncertain matters[69](index=69&type=chunk) - Management concluded that no **accounting estimates** were deemed **critical** for the periods presented, and there have been no significant changes since the 2024 Annual Report on Form 10-K[69](index=69&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's exposure to market risk has not materially changed since December 31, 2024, as detailed in its Form 10-K - The company's exposure to market risk has not **materially changed** since December 31, 2024[70](index=70&type=chunk) - Detailed disclosures about market risk are available in 'Item 7A. Quantitative and Qualitative Disclosures About Market Risk' of the company's Form 10-K[70](index=70&type=chunk) [Item 4. Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's **disclosure controls and procedures** were **effective** as of June 30, 2025[71](index=71&type=chunk) - No changes in the company's **internal control over financial reporting** occurred during the fiscal quarter ended June 30, 2025, that have **materially affected**, or are reasonably likely to **materially affect**, **internal control over financial reporting**[72](index=72&type=chunk) PART II. OTHER INFORMATION This section provides additional information, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is cross-referenced to Note K - Contingencies within the financial statements - Information regarding legal proceedings is provided in Note K - Contingencies of the Notes to the Condensed Consolidated Financial Statements[74](index=74&type=chunk) [Item 1A. Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) The company refers to its Form 10-K for risk factors, confirming no material changes from those previously described - There have been no **material changes** from the risk factors described in the company's Form 10-K[75](index=75&type=chunk) - A discussion of known **material risk factors** is available in 'Item 1A. Risk Factors' of the company's Form 10-K[75](index=75&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The Board authorized a stock repurchase program; no repurchases occurred in Q2 2025, with **$6.1 million** remaining authorized - The Board of Directors has authorized a **stock repurchase program** for **Common Stock** and **Class A Common Stock**, with no expiration date[76](index=76&type=chunk) - No repurchases of **common stock** occurred during the second quarter of 2025[77](index=77&type=chunk) - As of June 30, 2025, approximately **$6.1 million** remained **authorized for repurchase** under the program[77](index=77&type=chunk) [Item 5. Other Information](index=22&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025 - No directors or officers adopted, modified, or terminated a '**Rule 10b5-1 trading arrangement**' or '**non-Rule 10b5-1 trading arrangement**' during the three months ended June 30, 2025[78](index=78&type=chunk) [Item 6. Exhibits](index=23&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with or incorporated by reference into the report, including charter, by-laws, and certifications - Exhibit 3.1: Articles of Amendment and Restatement of the Charter[80](index=80&type=chunk) - Exhibit 3.2: By-laws of Haverty Furniture Companies, Inc[80](index=80&type=chunk) - Exhibit 10.1: Amendment and Waiver to the Amended and Restated Credit Agreement[80](index=80&type=chunk) - Exhibit 31.1: Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d‑14(a)[80](index=80&type=chunk) - Exhibit 31.2: Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d‑14(a)[80](index=80&type=chunk) - Exhibit 32.1: Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350[80](index=80&type=chunk) - Exhibit 101: Inline XBRL financial statements[80](index=80&type=chunk) - Exhibit 104: Cover Page Interactive Data File[80](index=80&type=chunk)

Financial Data and Key Metrics Changes - Company reported Q2 2025 sales of $181 million, a 1.3% increase year-over-year, with comparable store sales down 2.3% [3][18] - Gross margin improved to 60.8% from 60.4%, reflecting product selection and merchandising mix [18] - Pre-tax profits decreased to $4.3 million, with an operating margin of 2.4%, down from $6.5 million and 3.6% in Q2 2024 [3][18] - Earnings per share (EPS) for the quarter was $0.16, compared to $0.27 in the same quarter last year [3][18] Business Line Data and Key Metrics Changes - Total written sales increased by 0.4%, while design and special order business saw a mid-single-digit decline due to tariff impacts [4][9] - Average ticket size decreased slightly to just under $3,400, while designer average ticket grew approximately 5% to over $7,600 [4][9] - Upholstery and bedroom categories outperformed with low to mid-single-digit positive sales, while dining room and decor categories experienced high single-digit declines [9] Market Data and Key Metrics Changes - Traffic remained positive in the mid-single digits compared to the same period last year, with a notable increase during the Memorial Day event [4][6] - Organic traffic increased by 15.6% following the implementation of Adobe's Edge delivery service [7] - Web sales grew by 8.4% for the quarter, attributed to improved digital marketing strategies [7] Company Strategy and Development Direction - Company aims to return to positive same-store sales and is focused on enhancing customer experience through new point of purchase and tagging programs [10][12] - Plans to open five new stores annually, with two new stores in Houston and one relocation in Daytona Beach planned for 2025 [12][14] - Company is actively managing supply chain challenges and tariff uncertainties while maintaining gross margin guidance [11][15] Management's Comments on Operating Environment and Future Outlook - Management noted a struggling housing market with high interest rates and inflation concerns but highlighted consumer resilience [4][15] - Confidence in maintaining gross margin guidance despite potential tariff impacts, with proactive vendor communication [11][22] - Management expressed optimism about gradual improvement in sales trends and plans to invest more in marketing strategies [37][48] Other Important Information - Selling, general, and administrative expenses increased by 4.1% to $107.3 million, representing 59.3% of sales [19] - Company has no funded debt and ended the quarter with $107.4 million in cash and cash equivalents [20][21] - Anticipated capital expenditures for 2025 remain at $24 million, focusing on new store openings and IT investments [23] Q&A Session Summary Question: Can you speak to the cadence of your written sales throughout the quarter and any notable regional differences? - Written business was down around 2% in April, up almost 1% in May, and up around 2.5% in June, with no significant regional differences noted [26] Question: Can you quantify the impact of suspending special orders from China on same-store business? - Management acknowledged the impact on design business but could not quantify the exact effect [27][28] Question: Have you taken any pricing actions regarding tariffs, and what are your expectations? - Pricing adjustments were made in May, and management is prepared to adjust pricing based on final tariff outcomes [29][30] Question: What marketing strategies do you believe will be most impactful in driving same-store sales? - New pricing strategy and successful marketing campaigns, including extended promotions, are expected to drive traffic and conversion rates [35][36] Question: How do you view the promotional environment across the industry? - Management feels confident in their promotional strategies and plans to increase marketing investments while maintaining brand integrity [40][42] Question: What is the outlook for store openings and the real estate environment? - Store openings have been pushed to 2026, but management remains optimistic about finding suitable locations and maintaining reasonable rents [49][51]

Group 1: Earnings Performance - Haverty Furniture reported quarterly earnings of $0.16 per share, exceeding the Zacks Consensus Estimate of $0.15 per share, but down from $0.27 per share a year ago, representing an earnings surprise of +6.67% [1] - The company posted revenues of $181.03 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.34%, compared to year-ago revenues of $178.6 million [2] - Over the last four quarters, Haverty Furniture has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - Haverty Furniture shares have declined approximately 5% since the beginning of the year, while the S&P 500 has gained 8.3% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $0.29 on revenues of $185.3 million, and for the current fiscal year, it is $1.15 on revenues of $740.85 million [7] Group 3: Industry Context - The Retail - Home Furnishings industry, to which Haverty Furniture belongs, is currently ranked in the top 37% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Haverty Furniture's stock performance [5] - Williams-Sonoma, another company in the same industry, is expected to report quarterly earnings of $1.78 per share, reflecting a year-over-year change of +2.3% [9]

[Havertys Furniture Q2 2025 Earnings Release](index=1&type=section&id=Havertys%20Furniture%20Q2%202025%20Earnings%20Release) [Operating Results Highlights](index=1&type=section&id=Operating%20Results%20Highlights) The company reports its first year-over-year sales growth since Q4 2022, though diluted EPS declined - The company achieved **year-over-year sales growth for the first time since Q4 2022**, alongside strong gross margins and positive traffic trends, despite a challenging economic environment[2](index=2&type=chunk) Q2 2025 vs. Q2 2024 Key Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Diluted EPS | $0.16 | $0.27 | | Consolidated Sales | $181.0M (+1.3%) | $178.6M | | Comparable Store Sales | -2.3% | N/A | | Gross Profit Margin | 60.8% | 60.4% | [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) A detailed analysis of sales, profitability, expenses, balance sheet, and cash flow for Q2 and H1 2025 is presented [Second Quarter 2025 vs. Second Quarter 2024](index=2&type=section&id=Second%20Quarter%202025%20vs.%20Second%20Quarter%202024) Q2 2025 saw a 1.3% sales increase and improved gross margin, but higher SG&A expenses impacted profitability Q2 2025 Sales Performance | Metric | Change | | :--- | :--- | | Total Sales | +1.3% | | Comp-Store Sales | -2.3% | | Total Written Business | +0.4% | | Comp-Store Written Business | -2.1% | - **Gross profit margins increased to 60.8%** in Q2 2025 from 60.4% in Q2 2024[7](index=7&type=chunk) - **SG&A expenses increased by $4.2 million**, driven by higher administrative, occupancy, and advertising costs[7](index=7&type=chunk) [Balance Sheet and Cash Flow](index=2&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) The company maintained a strong balance sheet with $113.8 million in cash and no debt as of June 30, 2025 - The company has a strong balance sheet with **$113.8 million in cash** and cash equivalents and no debt outstanding as of June 30, 2025[7](index=7&type=chunk) Cash Flow and Shareholder Returns (Six Months Ended June 30, 2025) | Item | Amount (in millions) | | :--- | :--- | | Cash from Operating Activities | $13.4 | | Capital Expenditures | ($11.7) | | **Free Cash Flow** | **$1.7** | | Dividends Paid | $10.4 | | Share Repurchases | $2.0 | | **Total Cash Returned to Shareholders** | **$12.4** | [2025 Outlook and Guidance](index=2&type=section&id=2025%20Outlook%20and%20Guidance) Full-year 2025 guidance is reaffirmed for gross margin and fixed SG&A, with a lowered outlook for variable SG&A - The company is monitoring tariff developments and the current guidance **excludes the effects of additional proposed tariffs**[7](index=7&type=chunk) Full Year 2025 Guidance | Metric | Guidance Range/Value | | :--- | :--- | | Gross Profit Margins | 60.0% to 60.5% (Unchanged) | | Fixed & Discretionary SG&A | $291.0M to $293.0M (Unchanged) | | Variable SG&A (% of sales) | 18.5% to 18.8% (Decreased) | | Effective Tax Rate | ~26.5% (Excluding discrete items) | | Capital Expenditures | ~$24.0M | [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) Unaudited condensed financial statements provide a quantitative view of the company's performance and position [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q2 2025 net income fell to $2.7 million from $4.4 million year-over-year due to higher SG&A expenses Q2 2025 Income Statement Highlights (in thousands) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net sales | $181,025 | $178,636 | | Gross profit | $110,102 | $107,984 | | SG&A | $107,333 | $103,099 | | Income before income taxes | $4,326 | $6,453 | | Net income | $2,689 | $4,438 | | Diluted EPS (Common) | $0.16 | $0.27 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets were $642.7 million as of June 30, 2025, with cash decreasing and inventories increasing Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $107,357 | $120,034 | | Inventories | $93,270 | $83,419 | | Total current assets | $236,148 | $238,896 | | Total assets | $642,672 | $648,747 | | Total current liabilities | $130,514 | $131,565 | | Total liabilities | $337,801 | $341,186 | | Stockholders' equity | $304,871 | $307,561 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased to $13.4 million for the first six months of 2025, driven by inventory changes Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months 2025 | Six Months 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) | | **Net decrease in cash** | **($12,543)** | **($11,710)** | | Cash at end of period | $113,771 | $116,067 | [Supplemental Information](index=8&type=section&id=Supplemental%20Information) Additional context includes non-GAAP reconciliations, metric definitions, and investor information [GAAP to Non-GAAP Reconciliation](index=8&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation) EBITDA for the first six months of 2025 increased to $18.7 million from $16.8 million in the prior year EBITDA Reconciliation (Six Months Ended June 30, in thousands) | Line Item | 2025 | 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** | [Definitions and Classifications](index=8&type=section&id=Definitions%20and%20Classifications) Key definitions for comp-store sales and classifications for gross profit and SG&A expenses are provided - **Comparable-store sales** indicate the performance of existing stores and the website by comparing sales growth over the corresponding month in the prior year[16](index=16&type=chunk) - The company's **gross profit may not be comparable to other retailers** because it includes most occupancy and home delivery costs within SG&A expense rather than Cost of Goods Sold[17](index=17&type=chunk) - SG&A expenses are classified as **variable** (selling, delivery) and **fixed/discretionary** (rent, advertising, administrative)[18](index=18&type=chunk) [Company and Investor Information](index=8&type=section&id=Company%20and%20Investor%20Information) Logistical and legal information for investors includes conference call details and a Safe Harbor statement - A conference call is scheduled for **July 31, 2025, at 10:00 a.m. ET**[19](index=19&type=chunk) - Havertys, established in 1885, is a full-service home furnishings retailer with **129 showrooms in 17 states**[20](index=20&type=chunk) - The release contains **forward-looking statements** subject to the safe harbor provisions, which involve risks and uncertainties[21](index=21&type=chunk)[24](index=24&type=chunk)

[Executive Summary](index=1&type=section&id=Executive%20Summary) 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](index=1&type=section&id=Second%20Quarter%202025%20Highlights) 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](index=2&type=chunk) - Experienced positive traffic trends and improved conversion rates[2](index=2&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) 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](index=2&type=chunk) - Acknowledged a challenging environment with a soft housing market, low consumer confidence, and tariff uncertainty[2](index=2&type=chunk) - Improved sales results are a reflection of new marketing and promotional strategies and the team's dedication[2](index=2&type=chunk) [Financial Performance Overview](index=2&type=section&id=Financial%20Performance%20Overview) 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](index=2&type=section&id=Second%20Quarter%202025%20Results%20of%20Operations) 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](index=7&type=chunk) - 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](index=7&type=chunk) [Six Months Ended June 30, 2025 Results of Operations](index=2&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20Results%20of%20Operations) 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](index=4&type=section&id=Financial%20Statements) 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](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) 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](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) 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](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) 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](index=7&type=chunk) - Purchased approximately **94,000** shares of common stock for **$2.0 million** and paid **$10.4 million** in quarterly cash dividends[7](index=7&type=chunk) [Key Financial and Operational Metrics](index=3&type=section&id=Key%20Financial%20and%20Operational%20Metrics) 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](index=3&type=section&id=Other%20Financial%20and%20Operations%20Data) 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](index=7&type=chunk) [Liquidity Measures](index=3&type=section&id=Liquidity%20Measures) 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](index=7&type=chunk) [Outlook and Guidance](index=2&type=section&id=Outlook%20and%20Guidance) 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](index=7&type=chunk) - Gross profit margins for **2025** are expected to be between **60.0%** to **60.5%**, unchanged from prior guidance[7](index=7&type=chunk) - 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](index=7&type=chunk) - Effective tax rate for **2025** is expected to be **26.5%**, excluding discrete items and new tax legislation[7](index=7&type=chunk) - Planned capital expenditures for **2025** are approximately **$24.0 million**, with retail square footage expected to remain consistent with **2024**[7](index=7&type=chunk) [Non-GAAP Financial Measures and Definitions](index=8&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Definitions) 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)](index=8&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation%20(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](index=14&type=chunk) | (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](index=8&type=section&id=Comparable%20Store%20Sales%20Definition) 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](index=16&type=chunk) - Stores are considered non-comparable if not open during the corresponding month or if selling square footage changed significantly[16](index=16&type=chunk) [Cost of Goods Sold and SG&A Expense Classification](index=8&type=section&id=Cost%20of%20Goods%20Sold%20and%20SG%26A%20Expense%20Classification) 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](index=17&type=chunk) - SG&A expenses are classified as variable (selling and delivery costs) or fixed and discretionary (rent, depreciation, advertising, administrative costs)[18](index=18&type=chunk) - Variable selling expenses primarily include compensation for commission-based sales associates, third-party financing discounts, and credit card transaction fees[18](index=18&type=chunk) [Corporate Information](index=8&type=section&id=Corporate%20Information) 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](index=8&type=section&id=About%20Havertys%20Furniture) 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](index=20&type=chunk) - Operates **129** showrooms in **17** states across the Southern and Midwestern regions[20](index=20&type=chunk) - Provides a wide selection of quality merchandise in middle to upper-middle price ranges[20](index=20&type=chunk) [Conference Call Information](index=8&type=section&id=Conference%20Call%20Information) 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](index=19&type=chunk) - 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](index=19&type=chunk) [Safe Harbor Statement](index=9&type=section&id=Safe%20Harbor%20Statement) 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](index=21&type=chunk) - 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](index=23&type=chunk) - The company undertakes no duty to update forward-looking statements except as required by law, advising investors to review subsequent SEC filings[24](index=24&type=chunk)

Core Viewpoint - Haverty Furniture Companies (HVT) is currently identified as a strong value stock, holding a Zacks Rank 2 (Buy) and an "A" grade in the Value category, indicating its potential for undervaluation in the market [4][8]. Valuation Metrics - HVT has a Forward P/E ratio of 10.98, significantly lower than the industry average of 20.76, with historical fluctuations between 9.18 and 23.87 over the past 12 months [4]. - The PEG ratio for HVT stands at 0.92, compared to the industry average of 2.34, indicating a favorable valuation relative to expected earnings growth [5]. - HVT's P/S ratio is 0.46, which is much lower than the industry average of 1.26, suggesting that the stock is undervalued based on sales performance [6]. - The P/CF ratio for HVT is 7.64, compared to the industry average of 13.84, reflecting a strong cash flow outlook and further supporting the undervaluation thesis [7]. Investment Outlook - The combination of HVT's strong earnings outlook and favorable valuation metrics positions it as one of the market's strongest value stocks, appealing to value investors [8].

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) 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](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) 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](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) 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](index=10&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) 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](index=11&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) 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](index=23&type=chunk) - As of March 31, 2025, the company had full availability of **$80.0 million** under its revolving credit facility, with no outstanding borrowings[20](index=20&type=chunk)[55](index=55&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) 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](index=17&type=section&id=Net%20Sales) 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](index=47&type=chunk) - 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](index=48&type=chunk) [Gross Profit](index=17&type=section&id=Gross%20Profit) 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](index=49&type=chunk) [Selling, General and Administrative Expenses](index=17&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) 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](index=18&type=section&id=Liquidity%20and%20Capital%20Resources) 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](index=54&type=chunk) - Net cash provided by operating activities increased to **$6.2 million** in Q1 2025 from **$3.1 million** in Q1 2024[59](index=59&type=chunk) - 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](index=61&type=chunk) [Store Plans and Capital Expenditures](index=19&type=section&id=Store%20Plans%20and%20Capital%20Expenditures) 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](index=62&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=19&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) 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](index=64&type=chunk) [Item 4. Controls and Procedures](index=19&type=section&id=Item%204.%20Controls%20and%20Procedures) 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](index=65&type=chunk) - 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](index=66&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=20&type=section&id=Item%201.%20Legal%20Proceedings) 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](index=40&type=chunk)[68](index=68&type=chunk) [Item 1A. Risk Factors](index=20&type=section&id=Item%201A.%20Risk%20Factors) 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](index=69&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=20&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) 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](index=20&type=section&id=Item%205.%20Other%20Information) 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](index=72&type=chunk) [Item 6. Exhibits](index=21&type=section&id=Item%206.%20Exhibits) 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](index=74&type=chunk)

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements and accompanying notes for the relevant periods [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | (In thousands) | March 31, 2025 | December 31, 2024 | | :--------------- | :------------- | :---------------- | | Total assets | $642,690 | $648,747 | | Total liabilities | $337,329 | $341,186 | | Total stockholders' equity | $305,361 | $307,561 | | Cash and cash equivalents | $111,941 | $120,034 | | Inventories | $88,704 | $83,419 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) | (In thousands, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net sales | $181,567 | $183,997 | | Gross profit | $111,083 | $111,019 | | Income before income taxes | $5,293 | $3,195 | | Net income | $3,778 | $2,393 | | Basic earnings per share: Common Stock | $0.24 | $0.15 | | Cash dividends per share: Common Stock | $0.32 | $0.30 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | (In thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 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) | | Common stock repurchased | $(2,000) | — | | Dividends paid | $(5,173) | $(4,845) | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note A - Business and Basis of Presentation](index=7&type=section&id=Note%20A%20-%20Business%20and%20Basis%20of%20Presentation) - Haverty Furniture Companies, Inc operates as a retailer of residential furniture in the middle to upper-middle price ranges, exclusively under the Havertys brand without franchising[12](index=12&type=chunk) - The unaudited condensed consolidated financial statements are prepared in accordance with Form 10-Q instructions and rely on management's estimates and assumptions, which may differ from actual results[12](index=12&type=chunk)[13](index=13&type=chunk) [Note B – Stockholders' Equity](index=8&type=section&id=Note%20B%20%E2%80%93%20Stockholders%27%20Equity) | (in thousands) | Balances at Dec 31, 2024 | Net income | Dividends declared (Common Stock) | Dividends declared (Class A Common Stock) | Acquisition of treasury stock | Balances at Mar 31, 2025 | | :------------- | :----------------------- | :--------- | :-------------------------------- | :---------------------------------------- | :---------------------------- | :----------------------- | | Total Stockholders' Equity | $307,561 | $3,778 | $(4,799) | $(374) | $(2,000) | $305,361 | [Note C – Interim LIFO Calculations](index=10&type=section&id=Note%20C%20%E2%80%93%20Interim%20LIFO%20Calculations) - Inventories are valued using the last-in, first-out (LIFO) method with an annual LIFO index[17](index=17&type=chunk) - Interim LIFO calculations are based on management's estimates of year-end inventory levels and expected inflation/deflation rates, making interim results subject to change based on the final year-end valuation[17](index=17&type=chunk) [Note D – Fair Value of Financial Instruments](index=10&type=section&id=Note%20D%20%E2%80%93%20Fair%20Value%20of%20Financial%20Instruments) - The fair values of cash, restricted cash, accounts payable, and customer deposits approximate their carrying values due to their short-term nature[18](index=18&type=chunk) - Assets related to self-directed, non-qualified deferred compensation plans are valued using **Level 1 quoted market prices**[18](index=18&type=chunk) [Note E – Credit Agreement](index=10&type=section&id=Note%20E%20%E2%80%93%20Credit%20Agreement) - The company has an **$80.0 million revolving credit facility**, secured primarily by inventory, maturing on October 24, 2027[19](index=19&type=chunk) - As of March 31, 2025, and December 31, 2024, there were **no outstanding borrowings** under the Credit Agreement, with a net availability of **$80.0 million** at March 31, 2025[20](index=20&type=chunk) [Note F – Revenues and Segment Reporting](index=10&type=section&id=Note%20F%20%E2%80%93%20Revenues%20and%20Segment%20Reporting) - Revenue from merchandise sales and related service fees is recognized upon delivery to the customer[21](index=21&type=chunk) - The company operates within a **single reportable segment**, with an executive committee serving as the chief operating decision maker (CODM) and evaluating performance based on income before income taxes[23](index=23&type=chunk)[24](index=24&type=chunk) | (In thousands) | Net Sales (2025) | % of Net Sales (2025) | Net Sales (2024) | % of Net Sales (2024) | | :------------- | :--------------- | :-------------------- | :--------------- | :-------------------- | | 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 % | | Total | $181,567 | 100.0 % | $183,997 | 100.0 % | [Note G – Leases](index=11&type=section&id=Note%20G%20%E2%80%93%20Leases) - The company holds operating leases for retail stores, offices, warehouses, and equipment, with remaining terms of **1 to 12 years** and options to extend up to 20 years[27](index=27&type=chunk) - Variable lease payments, based on sales volume or asset usage, are not included in the initial measurement of lease liabilities and are recorded as lease expense in the period incurred[28](index=28&type=chunk)[29](index=29&type=chunk) | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------- | :-------------------------------- | :-------------------------------- | | Operating lease cost | $12,334 | $12,244 | | Variable lease cost | $1,302 | $1,374 | | Total lease expense | $13,636 | $13,618 | [Note H – Income Taxes](index=12&type=section&id=Note%20H%20%E2%80%93%20Income%20Taxes) - The effective tax rate for the three months ended March 31, 2025, was **28.6%**, an increase from **25.1%** in the prior year, primarily due to nondeductible items and state income taxes[31](index=31&type=chunk) [Note I – Stock-Based Compensation Plans](index=13&type=section&id=Note%20I%20%E2%80%93%20Stock-Based%20Compensation%20Plans) - Total compensation cost related to unvested equity awards was approximately **$11.9 million** as of March 31, 2025, expected to be recognized over a weighted-average period of two years[35](index=35&type=chunk) - Compensation charged to selling, general and administrative expenses was approximately **$2.1 million for Q1 2025**, down from **$2.6 million for Q1 2024**[35](index=35&type=chunk) - The total fair value of performance-based restricted stock awards that vested during Q1 2025 was approximately **$2.1 million**[34](index=34&type=chunk) [Note J – Earnings Per Share](index=14&type=section&id=Note%20J%20%E2%80%93%20Earnings%20Per%20Share) - The company reports earnings per share using the **two-class method**, reflecting Common Stock's preferential dividend rate and Class A Common Stock's greater voting rights[37](index=37&type=chunk)[38](index=38&type=chunk) | Earnings Per Share | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------- | :-------------------------------- | :-------------------------------- | | Basic EPS: Common Stock | $0.24 | $0.15 | | Diluted EPS: Common Stock | $0.23 | $0.14 | [Note K – Contingencies](index=15&type=section&id=Note%20K%20%E2%80%93%20Contingencies) - The company is subject to various claims and legal proceedings in the ordinary course of business, but currently has **no pending claims reasonably likely to have a material adverse effect** on its financial condition, results of operations, or cash flows[40](index=40&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, operational trends, liquidity, and capital resources for the first quarter of 2025 [Forward-Looking Statements](index=16&type=section&id=Forward-Looking%20Statements) - Statements in the report that are not purely historical facts or depend on future events are considered forward-looking statements, subject to risks and uncertainties[42](index=42&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, as actual results could differ materially due to factors like competition, consumer preferences, supply chain issues, and economic conditions[42](index=42&type=chunk) [Impact of tariffs imposed by the U.S government](index=16&type=section&id=Impact%20of%20tariffs%20imposed%20by%20the%20U.S%20government) - The U.S government imposed additional tariffs on imported goods starting in Q1 2025, with a **90-day pause** for most trading partners (excluding China) implemented in April 2025[44](index=44&type=chunk) - The company is actively monitoring negotiations and evaluating the impact of these tariffs to minimize their effect on its business[44](index=44&type=chunk) [Net Sales](index=17&type=section&id=Net%20Sales) - Net sales decreased by **$2.4 million (1.3%)** and comparable-store sales decreased by **$8.8 million (4.8%)** in Q1 2025 compared to Q1 2024, attributed to a weak housing market, inflationary pressures, cautious consumer spending, and atypical winter weather[47](index=47&type=chunk) - Design consultants drove **33.2% of total written sales** in Q1 2025, with an average written ticket of **$7,422**, an increase from 32.4% and $6,782 in Q1 2024[48](index=48&type=chunk) | Period | Net Sales Total $ (2025) | % Change (2025) | Comp-Store Sales % Change (2025) | Net Sales Total $ (2024) | % Change (2024) | Comp-Store Sales % Change (2024) | | :----- | :----------------------- | :-------------- | :------------------------------- | :----------------------- | :-------------- | :------------------------------- | | Q1 | $181.6 | (1.3)% | (4.8)% | $184.0 | (18.1)% | (18.5)% | [Gross Profit](index=17&type=section&id=Gross%20Profit) - Gross profit margin for Q1 2025 increased by **90 basis points to 61.2%** compared to 60.3% in the prior year, primarily due to product selection and merchandising mix[49](index=49&type=chunk) [Selling, General and Administrative Expenses](index=17&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) - SG&A costs as a percentage of sales decreased to **59.0% in Q1 2025** from 59.4% in Q1 2024, with total SG&A dollars decreasing by **$2.2 million (2.0%)**[50](index=50&type=chunk) - The decrease in SG&A dollars was driven by lower selling expense ($2.0 million), warehouse and delivery costs ($1.7 million), and advertising and marketing costs ($1.1 million), partially offset by higher occupancy costs ($1.6 million) and administrative expenses ($1.0 million)[50](index=50&type=chunk) | (In thousands) | 2025 $ | % of Net Sales (2025) | 2024 $ | % of Net Sales (2024) | | :------------- | :----- | :-------------------- | :----- | :-------------------- | | Variable | $33,647 | 18.5 % | $36,986 | 20.1 % | | Fixed and discretionary | $73,555 | 40.5 % | $72,370 | 39.3 % | | Total | $107,202 | 59.0 % | $109,356 | 59.4 % | [Liquidity and Capital Resources](index=18&type=section&id=Liquidity%20and%20Capital%20Resources) - The company believes its current cash position, cash flow from operations, available credit, and access to debt capital markets are sufficient for operating requirements, capital expenditures, dividend payments, and lease obligations for the next several years[54](index=54&type=chunk) [Cash and Cash Equivalents](index=18&type=section&id=Cash%20and%20Cash%20Equivalents) - As of March 31, 2025, the company had **$111.9 million in cash and cash equivalents** and $6.3 million in restricted cash equivalents[54](index=54&type=chunk) [Long-Term Debt](index=18&type=section&id=Long-Term%20Debt) - The company maintains an **$80.0 million revolving credit facility**, maturing October 24, 2027, with **no outstanding borrowings** and $80.0 million net availability as of March 31, 2025[55](index=55&type=chunk) [Leases](index=18&type=section&id=Leases) - The company leases a portion of its real estate, including stores, distribution centers, and store support space, through operating leases[56](index=56&type=chunk) [Cash Flows Summary](index=18&type=section&id=Cash%20Flows%20Summary) - Net cash provided by operating activities increased to **$6.2 million in Q1 2025** from $3.1 million in Q1 2024, driven by higher net income and changes in working capital, including increased inventories[59](index=59&type=chunk) - Cash used in investing activities decreased by **$0.2 million** in Q1 2025 due to lower capital expenditures[60](index=60&type=chunk) - Cash used in financing activities increased by **$1.4 million** in Q1 2025, primarily due to **$2.0 million in common stock repurchases** (compared to none in Q1 2024)[61](index=61&type=chunk) [Store Plans and Capital Expenditures](index=19&type=section&id=Store%20Plans%20and%20Capital%20Expenditures) - The company is reevaluating its store plans and capital expenditures for 2025 to minimize the impact of increased tariffs[62](index=62&type=chunk) - Assuming new stores open as planned, the company expects to end 2025 with **129 stores**, including planned openings in Houston (Q1, Q3 2025) and a relocation in Daytona (Q2 2025), alongside closures in Atlanta (Q2 2025) and Waco (Q3 2025)[62](index=62&type=chunk) [Critical Accounting Estimates](index=19&type=section&id=Critical%20Accounting%20Estimates) - Critical accounting estimates involve significant, subjective, or complex judgments due to inherent uncertainties, but **no significant changes were identified** since the last annual report[63](index=63&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=19&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section confirms no material changes in market risk exposure since the year-end 2024 report - The company's exposure to market risk has **not materially changed** since December 31, 2024[64](index=64&type=chunk) [Item 4. Controls and Procedures](index=19&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirms the effectiveness of disclosure controls and procedures as of March 31, 2025, with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective as of March 31, 2025**[65](index=65&type=chunk) - **No material changes** in the company's internal control over financial reporting were identified during the fiscal quarter ended March 31, 2025[66](index=66&type=chunk) [PART II. OTHER INFORMATION](index=20&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=20&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the financial statement notes for information on legal proceedings, with no material adverse effects anticipated - Information regarding legal proceedings is described in Note A of the Notes to the Condensed Consolidated Financial Statements[68](index=68&type=chunk) [Item 1A. Risk Factors](index=20&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been **no material changes** from the risk factors described in the company's 2024 Annual Report on Form 10-K[69](index=69&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=20&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company details its Q1 2025 common stock repurchases and the remaining authorization under its buyback program - The board of directors has authorized a stock repurchase program with **no expiration date**[70](index=70&type=chunk) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares That May Yet be Purchased | | :----- | :------------------------------- | :--------------------------- | :----------------------------------------------------------- | | March 1 - March 31 | 93,741 | $21.34 | $6,121,000 | | Total | 93,741 | | | [Item 5. Other Information](index=20&type=section&id=Item%205.%20Other%20Information) This section confirms no directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during Q1 2025 - **No directors or officers** adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended March 31, 2025[72](index=72&type=chunk) [Item 6. Exhibits](index=21&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including CEO/CFO certifications and XBRL-formatted financial statements - Exhibits include certifications of the Chief Executive Officer and Chief Financial Officer (31.1, 31.2, 32.1) and financial statements formatted in inline XBRL (101)[74](index=74&type=chunk) [SIGNATURES](index=22&type=section&id=SIGNATURES) - The report was signed on May 2, 2025, by Steven G Burdette, President, Chief Executive Officer, and Director, and Richard B Hare, Executive Vice President, Chief Financial Officer, and Corporate Secretary[80](index=80&type=chunk)