HAVERTY FURNITURE COMPANIES INC - Quarter Report: 2024 June (Form 10-Q)

Dividends paid()()Taxes on vested restricted shares()()Net cash used in financing activities()()Decrease in cash, cash equivalents and restricted cash equivalents during the period()()Cash, cash equivalents and restricted cash equivalents at beginning of period Cash, cash equivalents and restricted cash equivalents at end of period$ $

See notes to these condensed consolidated financial statements.

INDEX

HAVERTY FURNITURE COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE A -

The Company is subject to various claims and legal proceedings covering a wide range of matters, including with respect to product liability and personal injury claims, that arise in the ordinary course of its business activities. We currently have no pending claims or legal proceedings that we believe would be reasonably likely to have a material adverse effect on our financial condition, results of operations or cash flows. However, there can be no assurance that either future litigation or an unfavorable outcome in existing claims will not have a material impact on our business, reputation, financial position, cash flows or results of operations.

INDEX

NOTE B –

$ $ $ $()$()$ Net income Dividends declared:

Common Stock, $ per share

()()

Class A Common Stock, $ per share

()()Restricted stock issuances ()()Amortization of restricted stock Directors' Compensation Plan Balances at June 30, 2024$ $ $ $ $()$()$

For the six months ended June 30, 2024:

(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, 2023

()

Net income

Dividends declared:

Common Stock, $ per share

()

Class A Common Stock, $ per share

()

Class A conversion

()

Restricted stock issuances

()

Amortization of restricted stock

Directors' Compensation Plan

Balances at June 30, 2024

()

INDEX

$ $ $ $()$()$ Net income Dividends declared:

Common Stock, $ per share

()()

Class A Common Stock, $ per share

()()Restricted stock issuances ()()Amortization of restricted stock Directors' Compensation Plan

Balances at June 30, 2023

$ $ $ $ $()$()$

For the six months ended June 30, 2023:

(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, 2022

()

Net income

Dividends declared:

Common Stock, $ per share

()

Class A Common Stock, $ per share

()

Restricted stock issuances

()

Amortization of restricted stock

Directors' Compensation Plan

Balances at June 30, 2023

()

NOTE C –

INDEX

NOTE D –

NOTE E –

million revolving credit facility (the “Credit Agreement”) secured primarily by our inventory and maturing on . Availability fluctuates based on a borrowing base calculation reduced by outstanding letters of credit.

At June 30, 2024 and December 31, 2023, there were outstanding borrowings under the Credit Agreement. The borrowing base was $ million at June 30, 2024 and there were no outstanding letters of credit and, accordingly, net availability was $ million.

NOTE F –

million and $ million at June 30, 2024 and December 31, 2023, respectively. Of the customer deposit liabilities at December 31, 2023, approximately $ million have not been recognized through net sales in the six months ended June 30, 2024. %$ %$ %$ %Dining Room Furniture Occasional Upholstery Mattresses Accessories and Other (1) $ %$ %$ %$ %


(1)			Includes delivery charges and product protection.

NOTE G –

year to years, some of which include options to extend the leases for up to years. We determine if an arrangement is or contains a lease at lease inception. Our leases do not have any residual value guarantees or any restrictions or covenants imposed by lessors. We have lease agreements for real estate with lease and non-lease components, which are accounted for separately.

INDEX

leases for additional retail locations which had not yet commenced.

Lease expense is charged to selling, general and administrative expenses.

$ $ $ Variable lease cost Total lease expense$ $ $ $

$ Right-of-use assets obtained in exchange for lease obligations:Operating leases$ $

NOTE H –

% and %, respectively. The primary difference in the effective rate and the statutory rate was due to nondeductible items and state income taxes.

INDEX

NOTE I –

$ $ Granted/Issued

Awards vested or rights exercised(1)

() () Forfeited() Additional units earned due to performance () Outstanding at June 30, 2024 $ $ Restricted units expected to vest $ $


(1)			Includes shares repurchased from employees for employee’s tax liability.

The aggregate intrinsic value of outstanding service-based restricted stock awards was approximately $ million at June 30, 2024. The restrictions on the service-based awards generally lapse or vest annually, primarily over and periods.

The total fair value of performance-based restricted stock awards that vested during the six months ended June 30, 2024 was approximately $ million. The aggregate intrinsic value of outstanding performance awards at June 30, 2024 expected to vest was approximately $ million. The performance awards are based on performance periods but cliff vest in approximately from grant date.

The compensation for all awards is charged to selling, general and administrative expenses over the respective grants’ vesting periods, primarily on a straight-line basis. The amount charged was approximately $ and $ million for the six months ended June 30, 2024 and 2023, respectively. Forfeitures are recognized as they occur. As of June 30, 2024, the total compensation cost related to unvested equity awards was approximately $ million and is expected to be recognized over a weighted-average period of .

INDEX

NOTE J –

% of our earnings are distributed as dividends to each class of common stock based on the contractual rights of the classes.% of the dividend paid on the Class A Common Stock. Holders of the Class A Common Stock have greater voting rights which include voting as a separate class for the election of up to % of the total number of directors whereas holders of the Common Stock vote as a separate class for the election of at least % of the total number of directors. On all other matters subject to shareholder vote, holders of the Class A Common Stock have votes per share as opposed to holders of the Common Stock receiving vote per share. Class A Common Stock may be converted at any time on a -for-one basis into Common Stock at the option of the holder of the Class A Common Stock.


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Numerator:
Common:
Distributed earnings	$	$	$	$
Undistributed earnings	()		()
Basic
Class A Common earnings
Diluted	$	$	$	$

Class A Common:
Distributed earnings	$	$	$	$
Undistributed earnings	()		()
	$	$	$	$
Denominator:
Common:
Weighted average shares outstanding - basic
Assumed conversion of Class A Common Stock
Dilutive options, awards and common stock equivalents
Total weighted-average diluted Common Stock

Class A Common:
Weighted average shares outstanding

Basic earnings per share:
Common Stock	$	$	$	$
Class A Common Stock	$	$	$	$

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

INDEX

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

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes contained herein and with the audited consolidated financial statements, accompanying notes, related information and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023 (“Form 10-K”).

Forward-Looking Statements

Statements in this Quarterly Report on Form 10-Q (the "Form 10-Q") and the schedules hereto that are not purely historical facts or that necessarily depend on future events, including statements about our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on forward-looking statements. In addition, oral statements made by our directors, officers, and employees to the investor and analyst communities, media representatives and others, depending upon their nature, may also constitute forward-looking statements. All forward-looking statements are based upon currently available information and the Company's current assumptions, expectations, and projections about future events. Forward-looking statements are by nature inherently uncertain and involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. Known material risk factors applicable to us that could cause our actual results to differ from these forward-looking statements are described in "Item 1A. Risk Factors" of our Form 10-K and in the subsequent reports we file with the Securities and Exchange Commission. Consequently, all forward-looking statements in this report are qualified by the factors, risks and uncertainties contained therein. All forward‑looking statements speak only as of the date made, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this report except as required by law.

Net Sales

Our sales are generated by customer purchases of home furnishings. Revenue is recognized upon delivery to the customer. Comparable-store or “comp-store” sales is a measure which indicates the performance of our existing stores and website by comparing the growth in sales in store 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 in the prior year or if the selling square footage has been changed significantly. The method we use to compute comp-store sales may not be the same method used by other retailers. We record our sales when the merchandise is delivered to the customer. We also track “written sales” and “written comp-store sales,” which represent customer orders prior to delivery. As a retailer, comp-store sales and written comp-store sales are an indicator of relative customer spending and store performance. Comp-store sales, total written sales and written comp-store sales are intended only as supplemental information and none are substitutes for net sales presented in accordance with U.S. GAAP.

The following table outlines our sales and comp-store sales increases and decreases for the periods indicated. (Amounts and percentages may not always add to totals due to rounding.)


	2024										2023
	Net Sales						Comp-Store Sales				Net Sales						Comp-Store Sales
Period	Total Dollars		% Change		$ Change		% Change		$ Change		Total Dollars		% Change		$ Change		% Change		$ Change
Q1	$	184.0	(18.1)	%	$	(40.8)	(18.5)	%	$	(41.4)	$	224.8	(5.9)	%	$	(14.2)	(6.7)	%	$	(16.0)
Q2	$	178.6	(13.4)	%	$	(27.7)	(13.6)	%	$	(27.7)	$	206.3	(18.5)	%	$	(46.9)	(19.1)	%	$	(48.0)

Assuming the new stores open as planned, the above activity and other changes are expected to increase net selling space at the end of 2024 by approximately 3.4% over net selling space at the end of 2023.

Total capital expenditures for the full year of 2024 are estimated to be $33.0 million depending on the timing of spending for our capital projects.

Critical Accounting Estimates

Critical accounting estimates are those that we believe are both significant and that require us to make difficult, subjective or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates, and we might obtain different estimates if we used different assumptions or conditions. We reviewed our accounting estimates, and none were deemed to be considered critical for the accounting periods presented in our Form 10-K. We had no significant changes in those accounting estimates since our last annual report.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

For quantitative and qualitative disclosures about market risk, see "Item 7A. Quantitative and Qualitative Disclosures About Market Risk,” of our Form 10-K. Our exposure to market risk has not changed materially since December 31, 2023.

Item 4. Controls and Procedures

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, our management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report and provide reasonable assurance that information required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate, to allow timely decisions regarding disclosure.

There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a-15 that occurred during the Company’s fiscal quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. We have reviewed our financial reporting process to provide reasonable assurance that we could report our financial results accurately and timely, and we will continue to evaluate the impact of any related changes to our internal control over financial reporting.

INDEX

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding legal proceedings is described under the subheading “Business and Basis of Presentation” in Note A of the Notes to the Condensed Consolidated Financial Statements set forth in this Form 10-Q.

Item 1A. Risk Factors

"Item 1A. Risk Factors” in our Form 10-K includes a discussion of our known material risk factors. There have been no material changes from the risk factors described in our Form 10-K.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

The board of directors has authorized management, at its discretion, to purchase and retire limited amounts of our Common Stock and Class A Common Stock. A program was initially approved by the board on November 3, 1986. On August 5, 2022, the board authorized additional amounts under such stock repurchase program. The stock repurchase program has no expiration date but may be terminated by our board at any time.

There were no repurchases of Havertys’ common stock during the second quarter of 2024. As of June 30, 2024, the approximate dollar value of shares that may yet be purchased under the program was $13.1 million.

Item 5. Other Information

During the three months ended June 30, 2024, none of our directors or officers , modified or a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

INDEX

Item 6. Exhibits

(a)Exhibits

The exhibits listed below are filed with or incorporated by reference into this report (those filed with this report are denoted by an asterisk). Unless otherwise indicated, the exhibit number of documents incorporated by reference corresponds to the exhibit number in the referenced documents.


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 February 24, 2023 (Exhibit 3.2 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2022).
10.1						Independent Contractor Agreement, dated June 12, 202 4 (Exhibit 10.1 to our Current Report on Form 8-K filed on June 14, 2024).
*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 of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
101						The following financial statements from Haverty Furniture Companies, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, formatted in inline XBRL, include: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Statements of Cash Flows and (iv) the Notes to Condensed Consolidated Financial Statements.
104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

* Filed herewith.

** Furnished herewith.

INDEX

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, thereunto duly authorized.


		HAVERTY FURNITURE COMPANIES, INC. (Registrant)

Date: August 6, 2024	By:	/s/ Clarence H. Smith
		Clarence H. Smith Chairman of the Board 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)

HAVERTY FURNITURE COMPANIES INC - Quarter Report: 2024 June (Form 10-Q)

Similar companies