Haverty Furniture Companies Inc 10-Q for FY2020 Q1

Haverty Furniture Companies Inc (HVT)

10-Q 2020-05-21 For: 2020-03-31

Added on April 06, 2026

About this 10-Q

Haverty Furniture Companies Inc filed this 10-Q on May 21, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $179.43M; down 4.2% from $187.24M a year earlier
Net income: $1.82M; down 49.8% from net income of $3.62M a year earlier

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

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

Large accelerated filer	◻		Accelerated filer	⌧		Non-accelerated filer	◻
Smaller reporting company	◻		Emerging growth company	◻

		Page No.

PART I.	FINANCIAL INFORMATION

	Item 1. Financial Statements

	Condensed Consolidated Balance Sheets – March 31, 2020 (unaudited) and December 31, 2019	1

	Condensed Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2020 and 2019 (unaudited)	2

	Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2020 and 2019 (unaudited)	3

	Notes to Condensed Consolidated Financial Statements (unaudited)	4

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

	Item 3. Quantitative and Qualitative Disclosures about Market Risk	17

	Item 4. Controls and Procedures	17


PART II.	OTHER INFORMATION

	Item 1. Legal Proceedings	18

	Item 1A. Risk Factors	18

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	19

	Item 6. Exhibits	19

	March 31, 2020			December 31, 2019
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	84,570		$	75,739
Restricted cash and cash equivalents		6,699			6,663
Accounts receivable, net		1,374			1,527
Inventories		110,547			104,817
Prepaid expenses		9,989			7,652
Other current assets		7,004			8,125
Total current assets		220,183			204,523
Accounts receivable, long-term, net		167			195
Property and equipment, net		153,215			156,534
Right-of-use lease assets		180,058			175,474
Deferred income taxes		12,067			13,198
Other assets		9,189			10,148
Total assets	$	574,879		$	560,072
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	16,819		$	27,830
Customer deposits		26,174			30,121
Accrued liabilities		29,759			39,654
Current lease liabilities		30,201			29,411
Notes payable to bank		43,800			—
Total current liabilities		146,753			127,016
Noncurrent lease liabilities		153,824			149,594
Other liabilities		21,855			22,959
Total liabilities		322,432			299,569

Stockholders’ equity
Capital Stock, par value $1 per share
Preferred Stock, Authorized – 1,000 shares; Issued: None
Common Stock, Authorized – 50,000 shares; Issued: 2020- 29,458; 2019 – 29,431		29,458			29,431
Convertible Class A Common Stock, Authorized – 15,000 shares; Issued: 2020 – 2,054; 2019 – 2,054		2,054			2,054
Additional paid-in capital		93,835			93,208
Retained earnings		294,068			295,999
Accumulated other comprehensive loss		(2,056	)		(2,087	)
Less treasury stock at cost – Common Stock (2020 – 12,269; 2019 – 11,850 shares) and Convertible Class A Common Stock (2020 and 2019 – 522 shares)		(164,912	)		(158,102	)
Total stockholders’ equity		252,447			260,503
Total liabilities and stockholders’ equity	$	574,879		$	560,072

	Three Months Ended March 31,
(In thousands, except per share data - unaudited)	2020			2019

Net sales	$	179,432		$	187,242
Cost of goods sold		79,879			84,159
Gross profit		99,553			103,083
Credit service charges		19			22
Gross profit and other revenue		99,572			103,105

Expenses:
Selling, general and administrative		97,535			98,879
Provision for doubtful accounts		34			4
Other (income) expense, net		(83	)		(154	)
Total expenses		97,486			98,729

Income before interest and income taxes		2,086			4,376
Interest income, net		214			349

Income before income taxes		2,300			4,725
Income tax expense		481			1,104
Net income	$	1,819		$	3,621

Other comprehensive income
Adjustments related to retirement plans; net of tax expense of $10 in 2020 and $3 in 2019	$	31		$	9

Comprehensive income	$	1,850		$	3,630

Basic earnings per share:
Common Stock	$	0.10		$	0.18
Class A Common Stock	$	0.09		$	0.17

Diluted earnings per share:
Common Stock	$	0.09		$	0.17
Class A Common Stock	$	0.09		$	0.17

Cash dividends per share:
Common Stock	$	0.20		$	0.18
Class A Common Stock	$	0.19		$	0.17

(In thousands - unaudited)	Three Months Ended March 31,
	2020			2019
Cash Flows from Operating Activities:
Net income	$	1,819		$	3,621
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		5,124			5,105
Share-based compensation expense		972			1,061
Other		1,241			(485	)
Changes in operating assets and liabilities:
Inventories		(5,731	)		(3,539	)
Customer deposits		(3,947	)		4,972
Other assets and liabilities		(826	)		(1,224	)
Accounts payable and accrued liabilities		(20,231	)		(4,093	)
Net cash (used in) provided by operating activities		(21,579	)		5,418

Cash Flows from Investing Activities:
Capital expenditures		(2,480	)		(3,764	)
Proceeds from sale of land, property and equipment		4			2,255
Net cash used in investing activities		(2,476	)		(1,509	)

Cash Flows from Financing Activities:
Proceeds from borrowings under revolving credit facility		43,800			—
Payments of borrowings under revolving credit facility		—			—
Net change in borrowings under revolving credit facility		43,800			—

Dividends paid		(3,750	)		(3,685	)
Common stock repurchased		(6,810	)		—
Other		(318	)		(533	)
Net cash provided by (used in) financing activities		32,922			(4,218	)

Increase (decrease) in cash, cash equivalents and restricted cash equivalents during the period		8,867			(309	)
Cash, cash equivalents and restricted cash equivalents at beginning of period		82,402			79,809
Cash, cash equivalents and restricted cash equivalents at end of period	$	91,269		$	79,500

(in thousands)	Common Stock		Class A Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balances at December 31, 2019	$	29,431	$	2,054	$	93,208		$	295,999		$	(2,087	)	$	(158,102	)	$	260,503
Net income									1,819									1,819
Dividends declared:
Common Stock, $0.20 per share									(3,459	)								(3,459	)
Class A Common Stock, $0.19 per share									(291	)								(291	)
Acquisition of treasury stock															(6,810	)		(6,810	)
Restricted stock issuances		27				(345	)											(318	)
Amortization of restricted stock						972												972
Other comprehensive income												31						31
Balances at March 31, 2020	$	29,458	$	2,054	$	93,835		$	294,068			(2,056	)		(164,912	)	$	252,447

	Three Months Ended March 31,
	2020					2019
(In thousands)	Net Sales		% of Net Sales			Net Sales		% of Net Sales
Merchandise:
Case Goods
Bedroom Furniture	$	27,639		15.4	%	$	30,520		16.3	%
Dining Room Furniture		18,219		10.2			19,597		10.5
Occasional		16,248		9.1			16,377		8.7
		62,106		34.6			66,494		35.5
Upholstery		73,629		41.0			73,031		39.0
Mattresses		18,821		10.5			21,258		11.4
Accessories and Other ⁽¹⁾		24,876		13.9			26,459		14.1
	$	179,432		100.0	%	$	187,242		100.0	%

	Service-Based Restricted Stock Awards				Performance-Based Restricted Stock Awards					Stock-Settled Appreciation Rights
	Shares or Units		Weighted-Average Award Price		Shares or Units			Weighted-Average Award Price		Rights			Weighted-Average Award Price
Outstanding at December 31, 2019		234,810	$	20.93		214,809		$	21.38		7,500		$	18.14
Granted/Issued		145,375		20.42		120,727			20.42		—
Awards vested or rights exercised⁽¹⁾		—		—		(44,875	)		22.12		(7,500	)	$	18.14
Forfeited		—		—		(76,493	)		20.29		—			—
Outstanding at March 31, 2020		380,185	$	20.73		214,168		$	21.08		—			—
Awards expected to vest		—		—		91,791		$	21.93		—			—

Seven months ended December 31, 2020	$	2,557
Year ended December 31, 2021		4,434
Year ended December 31, 2022		4,523
Year ended December 31, 2023		4,613
Year ended December 31, 2024		4,706
Subsequent to 2024		54,967
Total future minimum lease payments	$	75,800

Location	Opening Quarter Actual or Planned	Category
Atlanta	Q-1-20	Closure
Dallas, TX	Q-3-20	Closure
Dallas/Ft. Worth, TX	Q-4-20	Open

	(a) Total Number of Shares Purchased		(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs
January 1 – January 31		—		—		—	$	6,523,000
February 1 – February 29		145,841	$	16.71		145,841	$	34,085,000
March 1 – March 31		273,270		16.00		273,270	$	29,713,000
Total		419,111				419,111

Exhibit Number		Description of Exhibit (Commission File No. 1-14445)
3.1		Articles of Amendment and Restatement of the Charter of Haverty Furniture Companies, Inc. effective May 26, 2006 (Exhibit 3.1 to our Second Quarter 2006 Form 10-Q).
3.2		By-laws of Haverty Furniture Companies, Inc. as amended and restated effective May 8, 2018 (Exhibit 3.1 to our Current Report on form 8-K dated May 10, 2018).
10.1		Amended and Restated Credit Agreement by and among Haverty Furniture Companies, Inc. and Havertys Credit Services, Inc., as the Borrowers, SunTrust Bank, as the Issuing Bank and Administrative Agent and SunTrust Robinson Humphrey, Inc. as Lead Arranger, dated September 1, 2011 (Exhibit 10.1 to our 2011 Third Quarter Form 10-Q). First Amendment to Amended and Restated Credit Agreement, dated March 31, 2016 (Exhibit 10.1 to our 2016 First Quarter Form 10‑Q): Second Amendment to Amended and Restated Credit Agreement by and among Haverty Furniture Companies, Inc. and Havertys Credit Services, Inc., as the Borrowers, and SunTrust Bank, as the Issuing Bank and Administrative Agent (Exhibit 10.1 to our 2019 Third Quarter Form 10-Q). Third Amendment to Amended and Restated Credit Agreement by and among Haverty Furniture Companies, Inc. and Havertys Credit Services, Inc., as Borrowers, and Truist Bank (successor by merger to SunTrust Bank) as the Issuing Bank and Administrative Agent (Exhibit 10.1 to our Current Report on Form 8-K dated May 20, 2020).
10.2		Purchase Agreement, dated as of May 18, 2020 between Haverty Furniture Companies, Inc. (“Seller”), and HF Coppel TX Landlord, LLC, HF Lakeland FL Landlord, LLC and HF Colonial Heights VA Landlord, LLC (each a “Buyer” and collectively, the “Buyers”) (Exhibit 10.2 to our Current Report on Form 8-K dated May 20, 2020).
10.3		Lease Agreement dated May 18, 2020 between Haverty Furniture Companies, Inc. as Tenant and HF Coppel TX Landlord, LLC as Landlord (Exhibit 10.3 to our Current Report on Form 8-K dated May 20, 2020).
10.4		Lease Agreement dated May 18, 2020 between Haverty Furniture Companies, Inc. as Tenant and HF Lakeland FL Landlord, LLC as Landlord (Exhibit 10.4 to our Current Report on Form 8-K dated May 20, 2020).
10.5		Lease Agreement dated May 18, 2020 between Haverty Furniture Companies, Inc. as Tenant and HF Colonial Heights VA Landlord, LLC as Landlord (Exhibit 10.5 to our Current Report on Form 8-K dated May 20, 2020).
*31.1		Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as amended.
*31.2		Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as amended.
*32.1		Certification pursuant to 18 U.S.C. Section 1350.
*101		The following financial information from Haverty Furniture Companies, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at March 31, 2020 and December 31, 2019, (ii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019, (iii) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019; and (iv) the Notes to Condensed Consolidated Financial Statements.

			HAVERTY FURNITURE COMPANIES, INC. (Registrant)


Date:	May 21, 2020	By:	/s/ Clarence H. Smith
			Clarence H. Smith
			Chairman of the Board, President and Chief Executive Officer
			(principal executive officer)


		By:	/s/ Richard B. Hare
			Richard B. Hare
			Executive Vice President and Chief Financial Officer (principal financial and accounting officer)

	2020										2019
	Net Sales								Comp-Store Sales		Net Sales								Comp-Store Sales
Period	Total Dollars		% Change			$ Change			% Change	$ Change	Total Dollars		% Change			$ Change			% Change			$ Change
Q1	$	179.4		(4.2	)%	$	(7.8	)	NM	NM	$	187.2		(6.1	)%	$	(12.2	)		(4.7	)%	$	(9.2	)

Date: May 21, 2020		/s/ Clarence H. Smith
		Clarence H. Smith Chairman of the Board, President and Chief Executive Officer

Date: May 21, 2020		/s/ Richard B. Hare
		Richard B. Hare Executive Vice President and Chief Financial Officer

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.