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Havertys Reports Earnings for Fourth Quarter and Full Year 2013

Atlanta, Georgia, February 24, 2014 – HAVERTYS (NYSE: HVT and HVT.A) reports earnings per share for the fourth quarter ended December 31, 2013 of $0.42 compared to $0.30 for the same period of 2012. The earnings per share for the full year 2013 were $1.41 compared to $0.67 for 2012.

Clarence Smith, chairman, president and CEO, said “2013 was a continuation of the turnaround that we truly began in 2011. Many aspects of our business have been fine tuned to enhance our customer’s perception of Havertys and her purchasing experience. We have improved our stores and highlighted our fashion identity in our advertising and merchandise. The “on trend” customer’s response has been favorable.

Our comp-store sales for the year increased 11.0% over 2012 driven by an increase in average ticket of 7.8%. We continued to expand gross profit margins as we focused on higher price point products and pricing discipline. Our expenses were well controlled and our 2013 net income was double that of 2012. We have certainly been aided by the improving economy and recovery in housing but believe our strategies have compounded their effect.”

Financial Highlights

Fourth Quarter 2013 Compared to Fourth Quarter 2012

Net sales increased 7.6% to $196.2 million. Comparable store sales were up 9.5%. Total written business was up 6.3% and average ticket rose 5.7%.
Gross profit margins increased 120 basis points to 54.0% as a percent of sales. This includes a year-over-year benefit of $0.5 million, or 30 basis points, from changes in the LIFO reserve.
Selling, general and administrative costs as a percent of sales declined 110 basis points to 46.1% from 47.2%.
Pre-tax earnings of $15.8 million increased 250 basis points to 8.0% from 5.5% as a percent of sales.
Our retail store count at December 31, 2013 was 119 versus 122 at the end of 2012.

Twelve Months ended December 31, 2013 Compared to Same Period of 2012

Net sales increased 11.3% to $746.1 million. Comparable store sales were up 11.0% and average ticket rose 7.8%.
Gross profit was $401.5 million, or 53.8% of net sales, which includes a year-over-year benefit of $1.1 million from changes in the LIFO reserve and $0.8 million from an out-of-period adjustment recorded in the first quarter. Excluding the impact of the out-of-period adjustment, gross profit was 53.7%, up 120 basis points compared to 52.5% in 2012.
Selling, general and administrative costs declined 240 basis points as a percent of sales to 46.7% from 49.1%.
Pre-tax earnings of $52.5 million increased 350 basis points to 7.0% from 3.5% as a percent of sales.

NEWS RELEASE - FEBRUARY 24, 2014

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Expectations and Other

Comparable store written business for the first quarter to date of 2014 is up approximately 3.6% over the same period last year. Total written business quarter to date is up 2.0% over the 14% increase for the same period last year.
We plan to continue to highlight our fashionable quality merchandise in 2014 and use promotional pricing judiciously. We expect our annual gross profit margins for 2014 will be 53.8%, up slightly from the adjusted 53.7% level achieved in 2013.
SG&A expenses in 2014 should be leveraged with continuing sales growth. We do expect some increases in our period costs due to inflation, expansion, staffing, technology improvements and advertising spend. Fixed and discretionary type expenses within SG&A costs for 2014 are expected to be $232 to $234 million, up approximately 4.1% to 5.0% over those same costs in 2013. These expenses are expected to be incurred at a slightly higher rate in the second half of the year in connection with our expansion activity. Variable SG&A expenses should be in the 17.0% to 17.2% range as a percent of sales for 2014 and other non-SG&A costs, net of credit revenues, are expected to be $1.3 million.
Our effective tax rate for 2014 is expected to be in the 38.5% to 38.8% range.
Planned Capital expenditures for 2014 are $35.0 million. We have scheduled to open six new locations in existing markets and complete one major expansion during the year. Three of the new stores are relocations and we plan to close two additional stores at the end of their lease term. These changes will increase selling square footage approximately 1.8% and our store count to 120 assuming the store changes occur as planned.

NEWS RELEASE - FEBRUARY 24, 2014

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HAVERTY FURNITURE COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data – Unaudited)

	Three Months Ended December 31,						Year Ended December 31,
	2013			2012			2013			2012

Net sales	$	196,164		$	182,307		$	746,090		$	670,073
Cost of goods sold		90,164			86,036			344,594			318,038
Gross profit		106,000			96,271			401,496			352,035
Credit service charges		79			77			320			293
Gross profit and other revenue		106,079			96,348			401,816			352,328

Expenses:
Selling, general and administrative		90,454			86,098			348,599			328,826
Interest, net		270			150			1,107			624
Provision for doubtful accounts		24			65			120			165
Other income, net		(452	)		(58	)		(497	)		(803	)
Total expenses		90,296			86,255			349,329			328,812

Income before income taxes		15,783			10,093			52,487			23,516
Income tax expense (benefit)		6,102			3,314			20,222			8,605
Net income	$	9,681		$	6,779		$	32,265		$	14,911

Basic earnings per share:
Common Stock	$	0.43		$	0.31		$	1.45		$	0.69
Class A Common Stock	$	0.41		$	0.28		$	1.37		$	0.58

Diluted earnings per share:
Common Stock	$	0.42		$	0.30		$	1.41		$	0.67
Class A Common Stock	$	0.41		$	0.29		$	1.35		$	0.59

Basic weighted average shares outstanding:
Common Stock		20,097			19,330			19,865			19,096
Class A Common Stock		2,417			2,815			2,558			2,943

Diluted weighted average shares outstanding:
Common Stock		22,901			22,566			22,815			22,382
Class A Common Stock		2,417			2,815			2,558			2,943

Cash dividends per share:
Common Stock	$	0.080		$	1.0400		$	0.240		$	1.1200
Class A Common Stock	$	0.075		$	0.9875		$	0.225		$	1.0625

NEWS RELEASE - FEBRUARY 24, 2014

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HAVERTY FURNITURE COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands - Unaudited)

	December 31,
	2013		2012
ASSETS
Current assets
Cash and cash equivalents	$	83,185	$	53,550
Restricted cash and cash equivalents		7,016		7,013
Accounts receivable		8,172		9,710
Inventories		91,483		96,902
Prepaid expenses		6,494		9,532
Other current assets		4,349		3,187
Total current assets		200,699		179,894

Accounts receivable, long-term		832		814
Property and equipment		189,242		193,085
Deferred income taxes		13,253		24,366
Other assets		13,829		3,937
Total assets	$	417,855	$	402,096

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	21,810	$	28,178
Customer deposits		19,008		20,963
Accrued liabilities		36,338		33,272
Deferred income taxes		-		6,595
Current portion of lease obligations		959		881
Total current liabilities		78,115		89,889

Lease obligations, less current portion		16,196		18,473
Other liabilities		25,280		34,306
Total liabilities		119,591		142,668

Stockholders’ equity		298,264		259,428
Total liabilities and stockholders’ equity	$	417,855	$	402,096

NEWS RELEASE - FEBRUARY 24, 2014

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HAVERTY FURNITURE COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands – Unaudited)

	Year Ended December 31,
	2013			2012
Cash Flows from Operating Activities:
Net income	$	32,265		$	14,911
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		21,450			19,415
Stock-based compensation expense		3,323			2,553
Tax benefit from stock-based plans		(1,754	)		(289	)
Deferred income taxes		(652	)		(2,209	)
Provision for doubtful accounts		120			165
Other		459			614
Changes in operating assets and liabilities:
Accounts receivable		1,400			1,210
Inventories		5,419			(3,458	)
Customer deposits		(1,955	)		6,391
Other assets and liabilities		(2,638	)		1,819
Accounts payable and accrued liabilities		(1,548	)		11,046
Net cash provided by operating activities		55,889			52,168

Cash Flows from Investing Activities:
Capital expenditures		(20,202	)		(25,014	)
Restricted cash and cash equivalents		(3	)		(200	)
Other investing activities		85			448
Net cash used in investing activities		(20,120	)		(24,766	)

Cash Flows from Financing Activities:
Payments on lease obligations		(867	)		(766	)
Proceeds from exercise of stock options		872			2,457
Tax benefit from stock-based plans		1,754			289
Dividend paid		(5,353	)		(24,684	)
Other financing activities		(2,540	)		(733	)
Net cash used in financing activities		(6,134	)		(23,437	)
Increase in cash and cash equivalents		29,635			3,965
Cash and cash equivalents at beginning of year		53,550			49,585
Cash and cash equivalents at end of year	$	83,185		$	53,550

NEWS RELEASE - FEBRUARY 24, 2014

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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 at www.havertys.com.

News releases include forward-looking statements, which are subject to risks and uncertainties. Factors that might cause actual results to differ materially from future results expressed or implied by such forward-looking statements include, but are not limited to, general economic conditions, the consumer spending environment for large ticket items, competition in the retail furniture industry and other uncertainties detailed from time to time in the company’s reports filed with the SEC.

Conference Call Information

The company invites interested parties to listen to the live audiocast of the conference call on Tuesday, February 25, 2014 at its website, www.havertys.com under the investor relations section. If you can not listen live, a replay will be available on the day of the conference call at the website or via telephone at approximately 12:00 p.m. EDT through Tuesday, March 4, 2014. The number to access the telephone playback is 1-800-406-7325 (access code: 4670299#).

Contact:

Havertys 404-443-2900

Dennis L. Fink

EVP & CFO

Jenny Hill Parker

SVP, finance, secretary and treasurer

SOURCE: Havertys