by Company achieves over $1 billion in revenues for second year in a row
ATLANTA — Havertys reported that it achieved record-breaking fourth-quarter sales and for the second year in a row has achieved annual sales over $1 billion for the year ended Dec. 31, 2022.
Sales for the quarter totaled $280.6 million, up 5.5% from the $265.9 million reported for the same period in 2021.
Net income for the quarter was $23.7 million, or $1.42 per share, compared to $24.3 million or $1.35 per share for the same period in 2021. It had a 57% gross profit margin for the quarter compared to 56.4% the same period last year. The company attributed the increase in gross margin to “pricing discipline and merchandise mix.”
For the full year, sales totaled $1.05 billion, up 3.4% from the $1.013 billion reported for 2021. Net income totaled $89.4 million, or $5.24 per share, compared to $90.8 million, or $4.90 per share in 2021.
For the full year it had a 57.7% gross profit margin compared to 56.7% in 2021.
Clarence H. Smith, chairman and chief executive officer, said that the company was pleased with the quarterly and annual results.
“Our fourth-quarter gross profit margins remained strong and for the year reached a new high of 57.7%,” he said. “Inflation and rising interest rates impacted our operating costs for wages and benefits and third-party financing. Our pre-tax income of $32.5 million was the 11th consecutive quarter we have achieved our goal of double-digit operating income as a percentage of sales.”
“In 2022, we returned $63.9 million of capital to our shareholders,” he added. “We purchased $30.0 million in common shares, paid quarterly dividends of $17.8 million, and in December paid a special cash dividend of $16.1 million. We have paid an annual cash dividend since 1935 and increased our quarterly cash dividend payouts each year since 2008.”
He said that looking ahead, the industry faces an uncertain consumer spending environment and also noted the impacts on new home sales due to rising interest rates.
Still, the company has an aggressive plan moving forward, including planned capital expenditures of $28 million in 2023. As part of its plan, it will open five new stores and close one during 2023, for a net 2.2% increase in retail square footage.
“Despite these headwinds, we remain cautiously optimistic that our store expansion plan supported by our improved online presence, high-quality merchandise and helpful service will drive market-share gains,” Smith said. “We are planning for profitable long-term growth and have the financial strength, systems and importantly the people to achieve our goals and deliver investor value.”
Other highlights of the earnings report were as follows:
+ Cash and cash equivalents as of Dec. 31, 2022, were $129.9 million and the company has no funded debt.
+ The company generated $51 million in cash from operating activities during the year, primarily from solid earnings performance, offset by changes in working capital, namely a $50.1 million reduction in consumer deposits.
+ The company expects gross profit margins between 58% and 58.5% in 2023.
+ Fixed and discretionary expenses within SG&A for the full year of 2023 are anticipated in the $292 million to $295 million range. Variable SG&A expenses for the full year are expected to be in the 19.5% to 19.7% range.
+ The company’s effective tax rate in 2022 was 27%, which it said was driven by higher state tax expense and the impact of favorable adjustments in the prior-year quarter for tax credits. It anticipates its effective tax rate for 2023 to be 25%, excluding the impact from the vesting of stock-based awards, potential tax credits and any new tax legislation.
