ATLANTA, GA / ACCESSWIRE / November 1, 2022 / HAVERTYS (NYSE:HVT and HVT.A), today reported its operating results for the third quarter ended September 30, 2022.

Third quarter 2022 versus third quarter 2021:

• Diluted earnings per common share ("EPS") of $1.46 versus $1.31.
• Consolidated sales increased 5.4% to $274.5 million. Comparable store sales increased 6.3%.
• Gross profit margin of 57.1% versus 56.8%.

Clarence H. Smith, chairman and CEO, said, "Our strong earnings were the result of increased sales and gross margin improvement. We made progress in delivering customer backorders as we received a near record number of containers from vendors. We had a strong Labor Day as customers returned to more traditional shopping patterns with softer traffic outside these peak periods. Written business compared to last year's record pace was down 7.2% but up 15.8% compared to the pre-pandemic third quarter of 2019. Our sales associates and design consultants are providing excellent service to each customer and this quarter's average ticket was up 8.2% over last year.

"The last quarter of 2022 will be challenging as consumers face continued inflation, rising interest rates, market volatility, and geopolitical concerns. We are well positioned to service our growing customer base, and will continue to use our financial strength to invest in growth initiatives to drive the business in 2023 and beyond."

Key Results
(amounts in millions, except per share amounts)

Results of Operations

Other Financial and Operations Data

Liquidity Measures

1. See the reconciliation of the non-GAAP metrics at the end of the release.

Third Quarter ended September 30, 2022 Compared to Same Period of 2021

• Total sales up 5.4%, comp-store sales up 6.3% for the quarter. Total written sales were down 7.2% and written comp-store sales declined 6.9% for the quarter.
• Gross profit margins increased 30 basis points to 57.1% in 2022 from 56.8% in 2021 due to pricing discipline and merchandise mix.
• SG&A expenses were 45.4% of sales versus 44.6% and increased $8.4 million. The primary drivers of this change are:
  • increase of $4.9 million in selling expenses due to increased compensation and benefits costs and third-party credit costs.
  • increase in advertising and marketing costs of $1.1 million.
  • increase in administrative costs of $1.5 million primarily resulting from increased compensation costs.
  • increase in warehouse and delivery costs of $2.2 million due to increased fuel and compensation costs partially offset by $1.8 million lower demurrage fees resulting in a net increase of $0.4 million.

Balance Sheet and Cash Flow

• Cash and cash equivalents at September 30, 2022 are $144.0 million.
• Generated $38.2 million in cash from operating activities primarily from solid earnings performance, offset by funding of a $25.3 million increase in inventories and a $7.3 million increase in other operating assets and liabilities.
• Purchased approximately 1.1 million shares of common stock for $30.0 million and paid $13.4 million in quarterly cash dividends during the nine months ended September 30, 2022.
• The Company has no funded debt.

Expectations and Other

• We expect gross profit margins for 2022 will be between 57.7% to 58.0%. Gross profit margins fluctuate quarter to quarter in relation to our promotional cadence. Our estimated gross profit margins are based on anticipated changes in product and freight costs and its impact on our LIFO reserve.
• Fixed and discretionary expenses within SG&A for the full year of 2022 are expected to be in the $290.0 to $293.0 million range, a reduction in our previous guidance related to general and administrative costs. Variable SG&A expenses for the full year of 2022 are anticipated to be in the 18.2% to 18.4% range in 2022.
• Our effective tax rate for 2022 is expected to be 25% excluding the impact from the vesting of stock-based awards, potential tax credits, and any new tax legislation.
• Planned capital expenditures are approximately $30.0 million in 2022. We expect retail square footage will be relatively flat as we plan to open three stores and close two. As part of our enhanced online presence, we are making investments in information technology. This current capital expenditures estimate reflects a deferral of the conversion of our home delivery center in Virginia to a regional distribution facility due to availability and pricing of building materials.

HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

GAAP to Non-GAAP Reconciliation
We report our financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). We supplement the reporting of our financial information under GAAP with certain non-GAAP financial information. The non-GAAP information presented provides additional useful information but should not be considered in isolation or as substitutes for the related GAAP measures. We believe that EBITDA is a meaningful measure to share with investors.

Reconciliation of GAAP measures to EBITDA

Comparable Store Sales 
Comparable-store or "comp-store" sales is a measure which indicates the performance of our existing stores and website by comparing the sales growth for stores and online for a particular month over the corresponding month in the prior year. Stores are considered non-comparable if they were not open during the corresponding month or if the selling square footage has been changed significantly.

Cost of Goods Sold and SG&A Expense 
We include substantially all our occupancy and home delivery costs in SG&A expense as well as a portion of our warehousing expenses.  Accordingly, our gross profit may not be comparable to those entities that include these costs in cost of goods sold. 

We classify our SG&A expenses as either variable or fixed and discretionary.  Our variable expenses are comprised of selling and delivery costs.  Selling expenses are primarily compensation and related benefits for our commission-based sales associates, the discount we pay for third party financing of customer sales and transaction fees for credit card usage.  We do not outsource delivery, so these costs include personnel, fuel, and other expenses related to this function.  Fixed and discretionary expenses are comprised of rent, depreciation and amortization and other occupancy costs for stores, warehouses and offices, and all advertising and administrative costs. 

Conference Call Information
The company invites interested parties to listen to the live webcast of the conference call on November 2, 2022 at 10:00 a.m. ET at its website, ir.havertys.com. If you cannot listen live, a replay will be available on the day of the conference call at the website at approximately 1:00 p.m. ET.

About Havertys
Havertys (NYSE:HVT and HVT.A), established in 1885, is a full-service home furnishings retailer with 121 showrooms in 16 states in the Southern and Midwestern regions providing its customers with a wide selection of quality merchandise in middle to upper-middle price ranges. Additional information is available on the Company's website havertys.com. 

Safe Harbor 
This press release contains, and the conference call may contain forward-looking statements subject to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. These forward-looking statements are subject to risks and uncertainties and change based on various important factors, many of which are beyond our control.

All statements in the future tense and all statements accompanied by words such as "expect," "likely," "outlook," "forecast," "preliminary," "would," "could," "should," "position," "will," "project," "intend," "plan," "on track," "anticipate," "to come," "may," "possible," "assume," and variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, our expectations for retail and operating margins, selling square footage and capital expenditures for 2022, our liquidity position to continue to fund our growth plans, and our efforts and initiatives to execute our strategic plan.

We caution that our forward-looking statements involve risks and uncertainties, and while we believe that our expectations for the future are reasonable in view of currently available information you are cautioned not to place undue reliance on our forward-looking statements, and they should not be relied upon as a prediction of actual results. Factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements include, but are not limited to: the extent and duration of the disruption to our business operations caused by the COVID-19 pandemic; disruptions in our suppliers' operations; potential problems with inventory availability and the potential result of the volatility or higher cost of product and international freight due to the high demand of products and low supply for an unpredictable period of time; disruptions in our third-party producers' operations in foreign countries; changes in national and international legislation or government regulations or policies, including changes to import tariffs and the unpredictability of such changes; failure of vendors to meet our quality control standards or to react to changes in legislative or regulatory frameworks; disruptions in our distribution centers; changes in general economic conditions, including unemployment, inflation (including the impact of tariffs); labor shortages and the Company's ability to successfully attract and retain employees in the current labor market; uncertain credit markets and other macroeconomic conditions; competitive product, service and pricing pressures; failure or weakness in our disclosure controls and procedures and internal controls over financial reporting; disruptions caused by a failure or breach of the Company's information systems and information technology infrastructure, as well as other risks and uncertainties discussed in the Company's Annual Report on Form 10-K for 2021 and from time to time in the Company's subsequent filings with the SEC.

Forward-looking statements describe our expectations only as of the date they are made, and the Company undertakes no duty to update its forward-looking statements except as required by law. You are advised, however, to review any further disclosures we make on related subjects in our subsequent Forms 10-K, 10-Q, 8-K, and other reports filed with the SEC. 

Contact:
Havertys 404-443-2900
Jenny Hill Parker
SVP, Finance, and Corporate Secretary

SOURCE: Havertys