# Haverty Furniture Companies Inc: Form 10-Q for the period ended Sep 30, 2024

- Company: [Haverty Furniture Companies Inc](/companies/hvt.md) (CIK 216085)
- Form: 10-Q
- Filed: 2024-11-04
- Accepted by EDGAR: Nov 4, 2024, 12:14 ET
- Period: 2024-09-30
- Accession: 0001628280-24-044893
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/216085/000162828024044893/hvt-20240930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/216085/000162828024044893/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $175.9m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $538.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-07-01 to 2024-09-30 | $70.0m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2024-01-01 to 2024-09-30 | $213.6m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-07-01 to 2024-09-30 | $105.9m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2024-01-01 to 2024-09-30 | $324.9m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-07-01 to 2024-09-30 | $100.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2024-01-01 to 2024-09-30 | $313.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | $1.9m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-09-30 | $4.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | $4.9m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | $11.8m | us-gaap:NetIncomeLoss |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | $42.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $24.3m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2024-01-01 to 2024-09-30 | $15.3m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2024-01-01 to 2024-09-30 | $0 | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-09-30 | $121.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $250.1m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $659.3m | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $137.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-09-30 | $351.5m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-09-30 | $307.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 15,089 characters.

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 the changes in our sales and comp-store sales for the periods indicated. (Amounts and percentages may not always add to totals due to rounding.)

| Period | 2024 Net Sales Total Dollars | % Change | $ Change | Comp-Store Sales % Change | $ Change | 2023 Net Sales Total Dollars | % Change | $ Change | Comp-Store Sales % 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) |
| Q3 | $175.9 | (20.2)% | $(44.4) | (20.5)% | $(44.9) | $220.3 | (19.7)% | $(54.1) | (20.7)% | $(56.5) |
| YTD Q3 | $538.5 | (17.3)% | $(112.8) | (17.7)% | $(114.0) | $651.4 | (15.0)% | $(115.2) | (15.8)% | $(120.5) |

Total sales for the third quarter of 2024 decreased $44.4 million, or 20.2%, compared to the same period in 2023. Our comp-store sales decreased 20.5% or $44.9 million, in the third quarter of 2024 compared to the same period in 2023.

Total sales for the nine months ended September 30, 2024, decreased $112.8 million, or 17.3%, compared to the same period in 2023. Our comp-store sales decreased 17.7%, or $114.0 million, in the first nine months of 2024 compared to the same period in 2023.

During the third quarter of 2024, we saw an increase in customers using our free in-home design service. Design consultants helped drive 34.5% of our total written sales for the third quarter of 2024, with an average written ticket of $7,312, up from 29.0% and an average written ticket of $6,937 for the same period in 2023. For the first nine months of 2024, our design consultants' written sales were 34.2% of our total written sales with an average written ticket of $7,194, up from 28.0% and an average written ticket of $6,800 for the same period of 2023.

Demand for home furnishings rose rapidly during the COVID years as consumers redecorated their homes and outfitted home offices, pulling forward sales. Furthermore, recent inflationary pressures and economic uncertainty have had negative effects on consumer discretionary spending. High interest rates have also exacerbated the small supply of homes available for sale and further weakened the housing market. These factors have negatively impacted demand for furniture and have adversely impacted our sales volumes in each quarter of 2024. Written business for the third quarter of 2024 compared to the third quarter of 2023 was down 15.3% and written comp-store sales were down 16.3%.

### Gross Profit

Gross profit margin for the third quarter of 2024 was 60.2%, down 60 basis points compared to the prior year period of 60.8%. For the third quarter of 2024, the change in the LIFO reserve generated an immaterial impact on gross profit compared to a positive impact of $2.3 million for the same period of 2023.

Gross profit margin for the nine months ended September 30, 2024 was 60.3% compared to 60.1% for the same period of 2023. The impact of the change in the LIFO reserve was immaterial for the nine months ended September 30, 2024 but generated a positive impact of $6.6 million for the same prior year period. Excluding the impact of LIFO, our gross profit margins were up in 2024 compared to 2023 due to product selection and merchandising mix.

We expect annual gross profit margins for 2024 will be 60.0% to 60.5%. Gross profit margins fluctuate quarter to quarter in relation to our promotional cadence.

Substantially all of our occupancy and home delivery costs are included in selling, general and administrative expenses (“SG&A”), as are 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.

### Selling, General and Administrative Expenses

Our SG&A costs as a percent of sales for the third quarter of 2024 were 57.4% versus 51.1% for the same period in 2023 largely as a result of decreased sales. SG&A dollars decreased $11.8 million, or 10.5%, for the third quarter of 2024 compared to the same prior year period. The change is driven by lower costs in selling expense of $6.2 million due to lower commission-based compensation and third-party creditor costs, lower warehouse and delivery costs of $3.6 million, and a decrease of $2.9 million in administrative expenses due to lower salaries and stock compensation costs. Occupancy costs were $1.8 million higher, primarily due to an increase in rent expense. Rent expense in the prior year quarter was reduced by $1.3 million for incentives to vacate a property before the end of its lease term.

Our SG&A costs as a percent of sales for the first nine months of 2024 were 58.2% versus 52.4% for the same period in 2023 largely as a result of decreased sales. SG&A dollars decreased $27.7 million, or 8.1%, for the first nine months of 2024 compared to the same prior year period. The change results primarily from lower costs in selling expense of $14.2 million, a decrease in warehouse and delivery costs of $10.4 million, a decrease in administrative costs of $4.8 million, a decrease in advertising and marketing costs of $2.9 million and an increase in occupancy costs of $4.5 million.

We classify our SG&A expenses as either variable or fixed and discretionary. Our variable expenses include the costs in the selling and delivery categories and certain warehouse and distribution expenses, as these amounts will generally move in tandem with our level of sales. The remaining categories and expenses for occupancy, advertising, and administrative costs are classified as fixed and discretionary because these costs do not fluctuate with sales.

The following table outlines our SG&A expenses by classification:

*(In thousands)*

|  | Three Months Ended September 30, 2024 $% of Net Sales |  | 2023 $% of Net Sales |  | Nine Months Ended September 30, 2024 $% of Net Sales |  | 2023 $% of Net Sales |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Variable | $33,201 | 18.9% | $42,344 | 19.2% | $104,933 | 19.5% | $128,208 | 19.7% |
| Fixed and discretionary | 67,739 | 38.5% | 70,385 | 31.9% | 208,462 | 38.7% | 212,898 | 32.7% |
|  | $100,940 | 57.4% | $112,729 | 51.1% | $313,395 | 58.2% | $341,106 | 52.4% |

The variable expenses in dollars were lower in the third quarter and for the first nine months of 2024 compared to the same periods in 2023, primarily due to decreases in commission expense and third-party credit costs.

Fixed and discretionary expenses decreased in the third quarter of 2024 primarily due to decreases in warehouse costs and administrative expenses. For the first nine months of 2024, fixed and discretionary expenses decreased due to lower warehouse, administrative, and advertising expenses offset by higher occupancy costs.

Our variable expenses within SG&A for the full year of 2024 are anticipated to be 19.6% to 19.9%, a 10 basis point decrease from our previous guidance primarily due to lower third-party credit costs. Fixed and discretionary expenses are expected to be approximately $279.0 to $281.0 million for the full year of 2024, a decrease of $3.0 million from our previous guidance driven by reductions in incentive compensation and professional fees offset by an increase in advertising expense.

### Liquidity and Capital Resources

### Cash and Cash Equivalents

At September 30, 2024, we had $121.2 million in cash and cash equivalents, and $6.2 million in restricted cash equivalents. We believe that our current cash position, cash flow generated from operations, funds available from our credit agreement, and access to the long-term debt capital markets should be sufficient for our operating requirements and enable us to fund our capital expenditures, dividend payments, and lease obligations through the next several years. In addition, we believe we have the ability to obtain alternative sources of financing, if needed.

### Long-Term Debt

In October 2022, we entered into the Fourth Amendment to our Amended and Restated Credit Agreement (as amended, the “Credit Agreement”) with Truist Bank. The Credit Agreement, which matures October 24, 2027, provides for a $80.0 million revolving credit facility. The borrowing base at September 30, 2024 was $121.7 million and the net availability was $80.0 million.

### Leases

We lease a portion of our real estate, including our stores, distribution centers, and store support space, pursuant to operating leases.

### Cash Flows Summary

*Operating Activities.* Cash flow generated from operations provides us with a significant source of liquidity. Our operating cash flows result primarily from cash received from our customers, offset by cash payments we make for products and services, employee compensation, operations, and occupancy costs.

Cash provided by or used in operating activities is also subject to changes in working capital. Working capital at any specific point in time is subject to many variables, including seasonality, inventory selection, the timing of cash receipts and payments, and vendor payment terms.

Net cash provided by operating activities was $42.0 million in the first nine months of 2024 compared to $79.4 million during the same period in 2023. This difference resulted primarily from a decrease in net income and changes in working capital. Working capital in 2024 was impacted by optimizing inventory levels to sales conditions, normalized delivery backlog and customer deposits, changes in operating lease assets and liabilities, and the timing of other payments and cash receipts.

*Investing Activities.* Cash used in investing activities decreased by $22.6 million in the first nine months of 2024 compared to the first nine months of 2023, due to lower capital expenditures.

*Financing Activities.* Cash used in financing activities decreased $3.0 million in the first nine months of 2024 compared to the first nine months of 2023 due to common stock repurchases. There were no repurchases in the first nine months of 2024 compared to $3.2 million in 2023.

### Store Plans and Capital Expenditures

| Location or Market | Opening Quarter Actual or Planned | Category |
| --- | --- | --- |
| Memphis, TN | Q-1-24 | Open |
| Pine Bluff, AR | Q-1-24 | Closure |
| Destin, FL | Q-2-24 | Open |
| Miami, FL | Q-3-24 | Open |
| Tampa, FL | Q-4-24 | Open |
| Greenwood, IN | Q-4-24 | Open |
| Houston, TX | Q-4-24 | Open |

Assuming the new stores open as planned, we will meet our expansion goal of five net new locations and end 2024 with 129 stores. 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.

## Market risk

As filed, 236 characters.

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.

## Controls and procedures

As filed, 1,659 characters.

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 September 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.

## Risk factors

As filed, 184 characters.

"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.

Filed Nov 4, 2024.
Source: SEC EDGAR, the filing index for accession 0001628280-24-044893. Last ingested by Listed: Oct 24, 2026, 14:56 ET. No prices; not investment advice.