UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934

Date of Report:  August 10, 2020
(Date of earliest event reported: August 7, 2020)
______________


HAVERTY FURNITURE COMPANIES, INC.
(Exact name of registrant as specified in its charter)
______________

Maryland
  
1-14445
  
58-0281900
  
(State or other jurisdiction of incorporation)
  
(Commission File Number)
  
(I.R.S. Employer
Identification No.)
  
           
780 Johnson Ferry Road, Suite 800,
Atlanta, Georgia 30342
(Address of principal executive offices) ( Zip Code)
  
Registrant’s telephone number, including area code: (404) 443-2900
  

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
  
Trading Symbol(s)
  
Name of each exchange on which registered
Common Stock
  
HVT
  
NYSE
Class A Common Stock
  
HVTA
  
NYSE

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐

Item 2.02 Results of Operations and Financial Condition

On August 10, 2020, Havertys issued a press release regarding its results of operations for the quarter ended June 30, 2020, declaration of third quarter dividend, and the reinstatement of its stock repurchase program. A copy of the press release is furnished as Exhibit 99.1. The attached Exhibit 99.1 is not filed but is furnished to comply with Regulation FD. The information disclosed in this Item 2.02 Current Report on Form 8-K is not considered to be “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 and is not subject to the liabilities of that section.

Item 7.01 Regulation FD Disclosure 
 
Following consideration of the company’s liquidity and performance since reopening its stores in May 2020, the board voted on August 7, 2020 that the following actions be taken:

•
effective for the third quarter dividend, restore the rates to the amounts declared for the first quarter, prior to the store closures in March 2020, of $0.20 per share on the common stock and $0.19 per share on the Class A common stock;

•
reinstate the company’s share repurchase program; and

•
restore the cash compensation payable to non-employee directors under the Company’s director compensation program to the amounts previously approved by the board on February 26, 2020.
 

Item 9.01 Financial Statements and Exhibits

(d)  Exhibits.  The following exhibit is furnished as part of this Report:


99.1 Press Release dated August 10, 2020 issued by Registrant.



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

   
HAVERTY FURNITURE COMPANIES, INC.
 
August 10, 2020
 
By:
 
   
Jenny Hill Parker
Senior Vice President, Finance and
Corporate Secretary


EXHIBIT 99.1


Havertys Reports Earnings for Second Quarter 2020, Third Quarter Cash Dividend and Resumption of Stock Repurchase Program

Atlanta, Georgia, August 10, 2020 – HAVERTYS (NYSE: HVT and HVT.A) reported today its operating results for the 2020 second quarter ended June 30, 2020.

Financial Highlights

Quarter ended June 30, 2020 Compared to Same Period of 2019

•
EPS of $0.72 per share in 2020 compared to $0.29 in 2019.
•
Adjusted EPS of ($0.52) in 2020 excludes $1.24 for gain on sale-leaseback.
•
As previously reported, sales were $110.0 million for 2020 compared with $191.9 million for 2019.

Clarence H. Smith, chairman, president and CEO, said, “The second quarter was like no other in our country’s or Havertys’ history, but optimism for our future and the opportunities for growth endure. We reopened our stores in May with team members ready to serve customers eager to refresh their homes. Our written business for the last two months of the quarter was up 13.9% and written comparable store business was up 17.5% compared to the same periods in 2019. Our customers want their homes to reflect their style and be a comfortable, happy place. Our wide merchandise selection, custom options, and free design service assists them in that endeavor.

We are analyzing our personnel needs and are currently challenged to accelerate staffing and increase our delivery capacity. Many of our vendor partners are also facing workforce issues as they restart their operations and seek to meet product demand. Our inventory position in certain products could be stressed during the coming months as availability lags demand.

Given the sustained pace of our business since reopening and our liquidity position, the board approved important shareholder actions related to dividends and the stock repurchase program. The per share dividend for the third quarter was increased 25%, restoring it to the first quarter’s amount, and the resumption of the stock repurchase program was approved. The board will continue to evaluate returning value to stockholders given the ongoing uncertainty caused by COVID-19.
  
The opening of our new store in the Dallas/Ft. Worth, TX market is on schedule for late August and as previously planned, we closed a store in that market in July. We have also set a new opening date in the first quarter of 2021 for entering the Myrtle Beach, SC market. Our expected capital expenditures for 2020 are $9.2 million as we invest in stores and technology.

The commitment of our team members and strong balance sheet give us the flexibility to shift our focus and resources to meet changing circumstances, benefit from new opportunities, and capitalize on our competitive advantages.

NEWS RELEASE – August 10, 2020
Page 2
Financial Summary

Quarter ended June 30, 2020 Compared to Same Period of 2019

•
Stores were closed March 19 and 103 stores reopened on May 1 and the remaining 17 by June 20. Deliveries were halted on March 21 and restarted on May 5 with less capacity.
•
Gross profit margins increased 20 basis points to 54.2% from 54.0%.
•
SG&A expenses reflect the closure of our stores in April and the measures taken as part of our business continuity plan.
•
Reduction in salaries and wages of $9.9 million associated with 3,033 furloughed team members for the month of April 2020.
•
Severance costs of $1.7 million for approximately 35% reduction in workforce effective April 30, 2020.
•
Reduction in advertising spend of $3.5 million in 2020.
•
As previously reported, completed a sale-leaseback transaction of three warehouse facilities in May. This transaction generated $69.5 million in net proceeds and a gain of $31.6 million.
•
Repayment of $43.8 million of borrowings under credit facility. No amounts outstanding at June 30, 2020.
•
Reinstatement of salaries, 401(k) benefits, and vendor terms.
•
We are not providing guidance on our gross margin and SG&A expense expectations  for the remainder of 2020 at this time given the uncertainty caused by the pandemic. 

Dividends and Stock Repurchase Program
The company also reported today that, on August 7, 2020, its board of directors declared a cash dividend to be paid on the outstanding shares of the company's two classes of common stock at a rate of $0.20 per share on the common stock and $0.19 per share on the Class A common stock. This restores the rates to the amounts declared prior to the store closures. The dividend is payable on Wednesday, September 9, 2020, to stockholders of record at the close of business on Monday, August 24, 2020. Havertys has paid a cash dividend in each year since 1935.
The board also approved resumption of the company’s stock repurchase program which was halted in March. The balance of the current authorization for repurchases is approximately $29.7 million. Shares may be repurchased, at the company’s discretion, from time-to-time in the open market or in privately negotiated transactions.



NEWS RELEASE – August 10, 2020
Page 3



HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data – Unaudited)

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2020
    
2019
    
2020
    
2019
  
                         
Net sales
  
$
109,968
    
$
191,893
    
$
289,400
    
$
379,134
  
Cost of goods sold
    
50,322
      
88,336
      
130,201
      
172,494
  
Gross profit
    
59,646
      
103,557
      
159,199
      
206,640
  
Credit service charges
    
19
      
19
      
38
      
41
  
Gross profit and other revenue
    
59,665
      
103,576
      
159,237
      
206,681
  
 
                                
Expenses:
                                
Selling, general and administrative
    
72,649
      
95,784
      
170,184
      
194,663
  
Provision for doubtful accounts
    
3
      
20
      
36
      
23
  
Other (income) expense, net
    
(31,812
)
    
(126
)
    
(31,895
)
    
(280
)
            Total expenses
    
40,840
      
95,678
      
138,325
      
194,406
  
 
                                
Income before interest and income taxes
    
18,825
      
7,898
      
20,912
      
12,275
  
Interest (income) expense, net
    
200
      
(339
)
    
(13
)
    
(688
)
                                 
Income before income taxes
    
18,625
      
8,237
      
20,925
      
12,963
  
Income tax expense
    
4,985
      
2,191
      
5,466
      
3,295
  
Net income
  
$
13,640
    
$
6,046
    
$
15,459
      
9,668
  
                                 
Diluted earnings per share:
                                
Common Stock
  
$
0.72
    
$
0.29
    
$
0.81
    
$
0.47
  
Class A Common Stock
  
$
0.69
    
$
0.27
    
$
0.78
    
$
0.44
  
 
                                
Diluted weighted average shares outstanding:
                                
Common Stock
    
18,985
      
20,542
      
19,126
      
20,723
  
Class A Common Stock
    
1,532
      
1,621
      
1,532
      
1,689
  
                                 
Cash dividends per share:
                                
Common Stock
  
$
0.15
    
$
0.18
    
$
0.35
    
$
0.36
  
Class A Common Stock
  
$
0.14
    
$
0.17
    
$
0.33
    
$
0.34
  
NEWS RELEASE – August 10, 2020
Page 4

HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands - Unaudited)

 
  
June 30,
2020
    
December 31,
2019
    
June 30,
2019
  
    
  
(Unaudited)
          
(Unaudited)
  
ASSETS
                  
Current assets
                  
Cash and cash equivalents
  
$
151,055
    
$
75,739
    
$
56,094
  
Restricted cash and cash equivalents
    
6,709
      
6,663
      
6,591
  
Accounts receivable, net
    
1,141
      
1,527
      
1,578
  
Inventories
    
104,840
      
104,817
      
109,213
  
Prepaid expenses
    
10,302
      
7,652
      
9,876
  
Other current assets
    
8,960
      
8,125
      
10,489
  
Total current assets
    
283,007
      
204,523
      
193,841
  
 
                        
Accounts receivable, long-term, net
    
128
      
195
      
221
  
Property and equipment, net
    
112,253
      
156,534
      
157,551
  
Right of-use lease assets
    
234,046
      
175,474
      
187,178
  
Deferred income taxes
    
11,640
      
13,198
      
12,175
  
Other assets
    
10,035
      
10,148
      
9,810
  
Total assets
  
$
651,109
    
$
560,072
    
$
560,776
  
 
                        
LIABILITIES AND STOCKHOLDERS’ EQUITY
                        
Current liabilities
                        
Accounts payable
  
$
22,803
    
$
27,830
    
$
20,910
  
Customer deposits
    
57,538
      
30,121
      
29,098
  
Accrued liabilities
    
45,733
      
39,654
      
33,318
  
Current lease liabilities
    
31,289
      
29,411
      
28,768
  
Total current liabilities
    
157,363
      
127,016
      
112,094
  
 
                        
Noncurrent lease liabilities
    
206,918
      
149,594
      
158,782
  
Other liabilities
    
22,450
      
22,959
      
22,640
  
Total liabilities
    
386,731
      
299,569
      
293,516
  
 
                        
Stockholders’ equity
    
264,378
      
260,503
      
267,260
  
Total liabilities and stockholders’ equity
  
$
651,109
    
$
560,072
    
$
560,776
  




NEWS RELEASE – August 10, 2020
Page 5

HAVERTY FURNITURE COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands – Unaudited)

   
Six Months Ended
June 30,
  
   
2020
    
2019
  
CASH FLOWS FROM OPERATING ACTIVITIES:
            
Net income
  
$
15,459
    
$
9,668
  
Adjustments to reconcile net income to net
  cash provided by operating activities:
                
Depreciation and amortization
    
9,791
      
10,276
  
Share-based compensation expense
    
2,037
      
1,951
  
Gain from sale of land, property and equipment
    
(31,607
)
    
(4
)
Other
    
2,223
      
(1,282
)
Changes in operating assets and liabilities:
                
Inventories
    
(23
)
    
(3,373
)
Customer deposits
    
27,417
      
4,633
  
Operating lease assets and liabilities, net
    
629
      
2,863
  
Other assets and liabilities
    
(3,609
)
    
(5,431
)
Accounts payable and accrued liabilities
    
2,149
      
(4,481
)
Net cash provided by operating activities
    
24,466
      
14,840
  
 
                
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Capital expenditures
    
(4,331
)
    
(7,768
)
Proceeds from sale of property and equipment
    
69,468
      
2,260
  
Net cash provided by (used in) investing activities
    
65,137
      
(5,508
)
 
                
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Proceeds from borrowing under revolving credit facility
    
43,800
      
—
  
Payments of borrowings under revolving credit facility
    
(43,800
)
    
—
  
Net change in borrowings under revolving credit facility
    
—
      
—
  
                 
Dividends paid
    
(6,558
)
    
(7,285
)
Common stock repurchased
    
(6,810
)
    
(17,843
)
Other
    
(873
)
    
(1,328
)
Net cash used in financing activities
    
(14,241
)
    
(26,456
)
Increase (decrease) in cash, cash equivalents and restricted cash during the period
    
75,362
      
(17,124
)
Cash, cash equivalents and restricted cash at beginning of period
    
82,402
      
79,809
  
Cash, cash equivalents and restricted cash at end of period
  
$
157,764
    
$
62,685
  



NEWS RELEASE – August 10, 2020
Page 6


Adjusted EPS
Adjusted diluted earnings per share (“Adjusted EPS”) is considered a non-GAAP financial measure under the rules because it excludes certain amounts which are included when diluted earnings per share (“EPS”) are calculated in accordance with U.S. GAAP (EPS), the most directly comparable financial measure calculated in accordance with U.S. GAAP. Management believes that Adjusted EPS is a meaningful measure to share with investors because it best allows comparison of the performance for the comparable period. In addition, Adjusted EPS affords investors a view of what management considers Havertys’ earnings performance and the ability to make a more informed assessment of such earnings performance.

We have calculated Adjusted EPS for the three months ended June 30, 2020 by adjusting EPS for a sale-leaseback transaction. There were no such adjustments in the comparable period of 2019.

     
Q2 2020
  
Diluted earnings per share:
        
Reported EPS
  
$
0.72
  
         
Adjustments:
        
Gain from sale-leaseback transaction: pre-tax
    
1.66
  
Tax impact of gain(1)
    
(0.42
)
Net adjustment
    
1.24
  
         
Adjusted EPS
  
$
(0.52
)
(1)
Calculated based on nature of item and rates applied.


Conference Call Information
The company invites interested parties to listen to the live audiocast of the conference call on August 11, 2020 at 10:00 a.m. ET at its website, havertys.com under the investor relations section. If you cannot listen live, a replay will be available on the day of the conference call at the website or via telephone at approximately 1:00 p.m. ET through August 21, 2020. The number to access the telephone playback is 1-888-203-1112 (access code: 7729578).

About Havertys  
Havertys (NYSE: HVT and HVT.A), established in 1885, is a full-service home furnishings retailer with 119 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.


NEWS RELEASE – August 10, 2020
Page 7


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 expected ability to operate and protect our team members and customers during the COVID-19 pandemic, the execution and effect of our cost savings initiatives, the use of proceeds from our sale-leaseback transaction, our expectations for selling square footage and capital expenditures for 2020, our liquidity position to continue to operate during these highly uncertain times, and our efforts and initiatives to help us emerge from the pandemic well-positioned.
 
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 health crisis associated with the COVID-19 pandemic, including the effects on the financial health of our business partners and customers, on supply chains and our suppliers, and on access to capital and liquidity provided by the financial and capital markets; our ability to maintain compliance with debt covenants and amend such credit facilities as necessary; disruptions in our suppliers' operations, including from the impact of COVID-19, including 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 2019 (all of which risks may be amplified by the COVID-19 pandemic) and Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 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