La-Z-Boy Incorporated (NYSE:LZB) today reported its operating
results for the fiscal 2018 second quarter ended October 28,
2017.
- Consolidated sales increased 4.4% to $393.2 million versus
$376.6 million in last year’s second quarter;
- Same-store written sales for the La-Z-Boy Furniture Galleries®
network increased 1.9%;
- Cash flow from operations was $31.7 million;
- The company returned $24.5 million to shareholders through
dividends and share purchases; and
- Earnings per diluted share for the quarter increased 11.9% to
$0.47.
Sales for the fiscal 2018 second quarter were
$393.2 million, up 4.4% compared with the prior year’s second
quarter. Operating margin was 8.7% in the second quarter of
fiscal 2017, down slightly from 9.0% in the second quarter of
fiscal 2017. The company reported net income attributable to
La-Z-Boy Incorporated of $22.9 million, or $0.47 per diluted share,
which included a $0.03 per share benefit for a discrete tax item,
versus $20.8 million, or $0.42 per diluted share, in last year’s
second quarter.
Sales in the company’s upholstery segment
increased 3.0% to $304.8 million and the operating margin declined
to 11.0% from 12.9% in last year’s second quarter. In the
casegoods segment, sales increased 8.4% to $28.1 million and the
operating margin increased to 11.8% from 11.0%. Sales in the retail
segment increased 8.7% to $116.7 million for the second quarter and
the segment’s operating margin increased to 3.3% from 2.8% in the
prior-year period. On the core base of 130 stores included in
last year’s second quarter, delivered sales declined 1.3% versus
the prior year.
Kurt L. Darrow, Chairman, President and Chief
Executive Officer of La-Z-Boy, said, “We are pleased with our
performance, particularly given the multiple external factors that
influenced the quarter, including the hurricanes, northern
California wildfires and raw material pricing pressure, and are
encouraged by the prospects for our business. The La-Z-Boy
Furniture Galleries® store network posted its third consecutive
quarterly written same-store sales increase. This bodes well
as we move into the back half of our fiscal year which is a
seasonally stronger sales period and where we will be able to
maximize our supply chain efficiencies with additional
volume. For the quarter, the hurricanes and fires had a
negative effect on our sales of approximately 1%, which equated to
about a $0.01 per diluted share reduction in earnings. With
respect to our operating margin, our cost reduction efforts and the
timing of our price increases did not enable us to stay ahead of
inflationary pressures we experienced for our three core raw
material components of steel, poly and lumber. We have
passed these costs through with an across-the-board price increase
that will go into effect in December, and expect it to offset the
raw material price pressure by the beginning of the calendar
year.”
Darrow added, “Our casegoods business continues
to post markedly improved performance, driven by an enhanced
product line that features on-trend collections at compelling price
points. This, combined with a 95% in-stock position on
our best sellers and quick shipping, has enabled us to expand our
floor space with many key retailers. In our retail segment,
we opened two new La-Z-Boy Furniture Galleries® stores during the
quarter as part of our 4-4-5 store build out strategy, including
the network’s 350th store in Rockford, Illinois. For the
quarter, the retail segment’s operating margin improved, resulting
from an increase in the average ticket that was driven primarily by
increased design services and custom orders.”
Darrow continued, “Our team remains focused on
driving organic growth through our independent dealers, the
La-Z-Boy Furniture Galleries® store network, and on-line
sales. We continue to make investments in the upholstery
segment, with four capital projects underway to bring excellent
products and services to market and provide consumers with the
quality furniture, excellent shopping experience and the
speed-to-market advantage they expect from La-Z-Boy. With
innovation at our core and expected to be a key driving force of
our continued growth, earlier this month we launched a
comprehensive and integrated North American marketing campaign to
support our new duo™ product line. At the same time, we are
excited to be in the midst of launching a multi-faceted e-commerce
strategy to capture an additional group of consumers. With
these initiatives, our world-class global supply chain will play a
key role in garnering a competitive advantage for us to improve our
profitability and continue to provide returns to shareholders.”
FISCAL 2018 PROJECTED* STORE ACTIVITY
|
Total FY17 |
New |
Closed |
Acquired |
Total FY18 |
Remodel |
Relocation |
Company-owned |
143 |
7 |
(3) |
1 |
148 |
- |
- |
Dealer-owned |
204 |
6 |
(3) |
(1) |
206 |
7 |
5 |
Total |
347 |
13 |
(6) |
- |
354 |
7 |
5 |
*Projects anticipated to be completed.
Balance Sheet and Cash Flow
During the quarter, the company generated $31.7
million in cash from operating activities. La-Z-Boy ended the
quarter with $122.3 million in cash and cash equivalents, $35.3
million in investments to enhance returns on cash, and $2.4 million
in restricted cash. During the quarter, the company had $7.2
million in capital expenditures, paid $5.3 million in dividends,
and spent $19.2 million purchasing 0.7 million shares of stock in
the open market under its existing authorized share purchase
program, leaving 7.6 million shares of purchase availability in the
program.
Dividend
Subsequent to quarter end, the board of
directors increased the company’s regular quarterly dividend to
shareholders by 9% to $0.12 per share. The dividend will be
paid on December 20, 2017, to shareholders of record as of December
11, 2017.
Conference Call
La-Z-Boy will hold a conference call with the
investment community on Thursday, November 30, 2017, at 8:30 a.m.
eastern time. The toll-free dial-in number is 877.407.0778;
international callers may use 201.689.8565.
The call will be webcast live, with
corresponding slides, and archived on the Internet. It will
be available at https://lazboy.gcs-web.com/. A telephone replay
will be available for a week following the call. This replay will
be accessible to callers from the U.S. and Canada at 877.481.4010
and to international callers at 919.882.2331. Enter Conference ID
#10437.
Forward-looking Information
This news release contains, and oral statements
made from time to time by representatives of La‑Z‑Boy may contain,
“forward-looking statements.” With respect to all forward-looking
statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
Actual results could differ materially from
those we anticipate or project due to a number of factors,
including: (a) changes in consumer confidence and demographics; (b)
the possibility of a recession; (c) changes in the real estate and
credit markets and their effects on our customers, consumers and
suppliers; (d) international political unrest, terrorism or war;
(e) volatility in energy and other commodities prices; (f) the
impact of logistics on imports and exports; (g) tax rate, interest
rate, and currency exchange rate changes; (h) operating factors,
such as supply, labor or distribution disruptions (e.g. port
strikes); (i) changes in legislation, including the tax code, or
changes in the domestic or international regulatory
environment (including new or increased duties); (j) adoption
of new accounting principles; (k) fires, severe weather or other
natural events such as hurricanes, earthquakes, flooding, tornadoes
and tsunamis; (l) our ability to procure or transport fabric rolls,
leather hides or cut-and-sewn fabric and leather sets domestically
or abroad; (m) information technology conversions or system
failures and our ability to recover from a system failure; (n)
effects of our brand awareness and marketing programs; (o) the
discovery of defects in our products resulting in delays in
manufacturing, recall campaigns, reputational damage, or increased
warranty costs; (p) litigation arising out of alleged defects in
our products; (q) unusual or significant litigation; (r) our
ability to locate new La-Z-Boy Furniture Galleries® stores (or
store owners) and negotiate favorable lease terms for new or
existing locations; (s) the ability to increase volume through our
e-commerce initiatives; (t) the impact of potential goodwill or
intangible asset impairments; and (u) those matters discussed in
Item 1A of our fiscal 2017 Annual Report on Form 10-K and other
factors identified from time to time in our reports filed with the
Securities and Exchange Commission. We undertake no obligation to
update or revise any forward-looking statements, whether to reflect
new information or new developments or for any other reason.
Additional Information
This news release is just one part of La-Z-Boy’s
financial disclosures and should be read in conjunction with other
information filed with the Securities and Exchange Commission,
which is available at:
https://lazboy.gcs-web.com/financial-information/sec-filings.
Investors and others wishing to be notified of future La-Z-Boy news
releases, SEC filings and quarterly investor conference calls may
sign up at: https://lazboy.gcs-web.com/.
Background Information
La-Z-Boy Incorporated is one of the world’s
leading residential furniture producers, marketing furniture for
every room of the home. The La-Z-Boy upholstery segment companies
are England and La-Z-Boy. The casegoods segment consists of three
brands: American Drew, Hammary, and Kincaid. The company-owned
retail segment includes 147 of the 350 La-Z-Boy Furniture
Galleries® stores.
The corporation’s branded distribution network
is dedicated to selling La-Z-Boy Incorporated products and brands,
and includes 350 stand-alone La-Z-Boy Furniture Galleries® stores
and 547 independent Comfort Studio® locations, in addition to
in-store gallery programs for the company’s Kincaid and England
operating units. Additional information is available at
http://www.la-z-boy.com/.
|
LA-Z-BOY INCORPORATED |
CONSOLIDATED STATEMENT OF
INCOME |
|
|
|
Quarter Ended |
|
|
(Unaudited, amounts in thousands, except per share
data) |
|
10/28/17 |
|
10/29/16 |
|
|
Sales |
|
$393,205 |
|
$376,579 |
|
|
Cost of sales |
|
|
238,253 |
|
|
227,195 |
|
|
Gross
profit |
|
|
154,952 |
|
|
149,384 |
|
|
Selling, general and
administrative expense |
|
|
120,683 |
|
|
115,526 |
|
|
Operating
income |
|
|
34,269 |
|
|
33,858 |
|
|
Interest expense |
|
|
160 |
|
|
117 |
|
|
Interest income |
|
|
376 |
|
|
234 |
|
|
Other income (expense),
net |
|
|
(926 |
) |
|
(969 |
) |
|
Income
before income taxes |
|
|
33,559 |
|
|
33,006 |
|
|
Income tax expense |
|
|
10,353 |
|
|
11,901 |
|
|
Net
income |
|
|
23,206 |
|
|
21,105 |
|
|
Net income attributable
to noncontrolling interests |
|
|
(310 |
) |
|
(272 |
) |
|
Net
income attributable to La-Z-Boy Incorporated |
|
$22,896 |
|
$20,833 |
|
|
|
|
|
|
|
|
|
Basic weighted average
common shares |
|
|
47,964 |
|
|
49,153 |
|
|
Basic net income
attributable to La-Z-Boy Incorporated per share |
|
$0.47 |
|
$0.42 |
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares |
|
|
48,297 |
|
|
49,511 |
|
|
Diluted net income
attributable to La-Z-Boy Incorporated per share |
|
$0.47 |
|
$0.42 |
|
|
|
|
|
|
|
|
|
Dividends declared per
share |
|
$0.11 |
|
$0.10 |
|
|
LA-Z-BOY INCORPORATED |
CONSOLIDATED STATEMENT OF
INCOME |
|
|
|
Six Months Ended |
|
|
(Unaudited, amounts in thousands, except per share
data) |
|
10/28/17 |
|
10/29/16 |
|
|
Sales |
|
$750,284 |
|
$717,362 |
|
|
Cost of sales |
|
|
456,229 |
|
|
433,757 |
|
|
Gross
profit |
|
|
294,055 |
|
|
283,605 |
|
|
Selling, general and
administrative expense |
|
|
243,488 |
|
|
227,289 |
|
|
Operating
income |
|
|
50,567 |
|
|
56,316 |
|
|
Interest expense |
|
|
317 |
|
|
232 |
|
|
Interest income |
|
|
719 |
|
|
438 |
|
|
Gain on conversion of
investment |
|
|
2,204 |
|
|
— |
|
|
Other income (expense),
net |
|
|
(1,381 |
) |
|
(1,731 |
) |
|
Income
before income taxes |
|
|
51,792 |
|
|
54,791 |
|
|
Income tax expense |
|
|
16,842 |
|
|
19,678 |
|
|
Net
income |
|
|
34,950 |
|
|
35,113 |
|
|
Net income attributable
to noncontrolling interests |
|
|
(403 |
) |
|
(474 |
) |
|
Net
income attributable to La-Z-Boy Incorporated |
|
$34,547 |
|
$34,639 |
|
|
|
|
|
|
|
|
|
Basic weighted average
common shares |
|
|
48,160 |
|
|
49,129 |
|
|
Basic net income
attributable to La-Z-Boy Incorporated per share |
|
$0.71 |
|
$0.70 |
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares |
|
|
48,537 |
|
|
49,554 |
|
|
Diluted net income
attributable to La-Z-Boy Incorporated per share |
|
$0.71 |
|
$0.70 |
|
|
|
|
|
|
|
|
|
Dividends declared per
share |
|
$0.22 |
|
$0.20 |
|
|
LA-Z-BOY INCORPORATED |
CONSOLIDATED BALANCE
SHEET |
|
(Unaudited,
amounts in thousands, except par value) |
|
10/28/17 |
|
4/29/17 |
|
Current assets |
|
|
|
|
|
Cash and
equivalents |
|
$122,345 |
|
$141,860 |
|
Restricted cash |
|
|
2,352 |
|
|
8,999 |
|
Receivables, net of allowance of $2,656 at 10/28/17 and $2,563 at
4/29/17 |
|
|
145,167 |
|
|
150,846 |
|
Inventories, net |
|
|
180,050 |
|
|
175,114 |
|
Other
current assets |
|
|
46,201 |
|
|
40,603 |
|
Total
current assets |
|
|
496,115 |
|
|
517,422 |
|
Property, plant and
equipment, net |
|
|
171,510 |
|
|
169,132 |
|
Goodwill |
|
|
74,646 |
|
|
74,245 |
|
Other intangible
assets, net |
|
|
17,984 |
|
|
18,489 |
|
Deferred income taxes –
long-term |
|
|
40,097 |
|
|
40,131 |
|
Other long-term assets,
net |
|
|
81,191 |
|
|
69,436 |
|
Total
assets |
|
$881,543 |
|
$888,855 |
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Current
portion of long-term debt |
|
$238 |
|
$219 |
|
Accounts
payable |
|
|
53,426 |
|
|
51,282 |
|
Accrued
expenses and other current liabilities |
|
|
133,257 |
|
|
147,175 |
|
Total
current liabilities |
|
|
186,921 |
|
|
198,676 |
|
Long-term debt |
|
|
314 |
|
|
296 |
|
Other long-term
liabilities |
|
|
89,950 |
|
|
88,778 |
|
Contingencies and
commitments |
|
|
|
|
|
Shareholders’
equity |
|
|
|
|
|
Preferred
shares – 5,000 authorized; none issued |
|
|
— |
|
|
— |
|
Common
shares, $1 par value – 150,000 authorized; 47,540 outstanding
at 10/28/17 and 48,472 outstanding at 4/29/17 |
|
|
47,540 |
|
|
48,472 |
|
Capital
in excess of par value |
|
|
295,891 |
|
|
289,632 |
|
Retained
earnings |
|
|
279,344 |
|
|
284,698 |
|
Accumulated other comprehensive loss |
|
|
(30,511 |
) |
|
(32,883 |
) |
Total
La-Z-Boy Incorporated shareholders’ equity |
|
|
592,264 |
|
|
589,919 |
|
Noncontrolling
interests |
|
|
12,094 |
|
|
11,186 |
|
Total
equity |
|
|
604,358 |
|
|
601,105 |
|
Total
liabilities and equity |
|
$881,543 |
|
$888,855 |
|
|
|
|
|
|
|
|
|
LA-Z-BOY INCORPORATED |
|
CONSOLIDATED STATEMENT OF CASH
FLOWS |
|
|
|
|
|
Six Months Ended |
|
(Unaudited, amounts in thousands) |
|
10/28/17 |
|
10/29/16 |
|
Cash flows from operating activities |
|
|
|
|
|
Net
income |
|
$34,950 |
|
$35,113 |
|
Adjustments to reconcile net income to cash provided by
(used for) operating activities |
|
|
|
|
|
Gain on
disposal of assets |
|
|
(1,884 |
) |
|
(62 |
) |
Gain on
conversion of investment |
|
|
(2,204 |
) |
|
— |
|
Deferred
income tax expense |
|
|
(403 |
) |
|
1,089 |
|
Provision
for doubtful accounts |
|
|
74 |
|
|
(18 |
) |
Depreciation and amortization |
|
|
15,869 |
|
|
13,999 |
|
Equity-based compensation expense |
|
|
6,410 |
|
|
5,880 |
|
Pension
plan contributions |
|
|
(2,000 |
) |
|
(2,300 |
) |
Change in
receivables |
|
|
6,165 |
|
|
784 |
|
Change in
inventories |
|
|
(4,096 |
) |
|
(3,747 |
) |
Change in
other assets |
|
|
(7,935 |
) |
|
(1,806 |
) |
Change in
payables |
|
|
2,136 |
|
|
1,549 |
|
Change in
other liabilities |
|
|
4,142 |
|
|
3,622 |
|
Net cash
provided by operating activities |
|
|
51,224 |
|
|
54,103 |
|
|
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
|
Proceeds
from disposals of assets |
|
|
608 |
|
|
143 |
|
Proceeds
from property insurance |
|
|
1,485 |
|
|
— |
|
Capital
expenditures |
|
|
(16,372 |
) |
|
(10,226 |
) |
Purchases
of investments |
|
|
(18,507 |
) |
|
(17,814 |
) |
Proceeds
from sales of investments |
|
|
11,529 |
|
|
9,757 |
|
Acquisitions, net of cash acquired |
|
|
(15,879 |
) |
|
(15,997 |
) |
Net cash
used for investing activities |
|
|
(37,136 |
) |
|
(34,137 |
) |
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
Payments
on debt |
|
|
(131 |
) |
|
(156 |
) |
Stock
issued for stock and employee benefit plans, net of
shares withheld for taxes |
|
|
356 |
|
|
1,371 |
|
Excess
tax benefit on stock option exercises |
|
|
— |
|
|
1,826 |
|
Purchases
of common stock |
|
|
(30,692 |
) |
|
(19,766 |
) |
Dividends
paid |
|
|
(10,648 |
) |
|
(9,869 |
) |
Net cash
used for financing activities |
|
|
(41,115 |
) |
|
(26,594 |
) |
|
|
|
|
|
|
Effect of exchange rate
changes on cash and equivalents |
|
|
865 |
|
|
(149 |
) |
Change in cash, cash
equivalents and restricted cash |
|
|
(26,162 |
) |
|
(6,777 |
) |
Cash, cash equivalents
and restricted cash at beginning of |
|
|
|
|
|
|
|
period |
|
|
150,859 |
|
|
121,335 |
|
Cash, cash equivalents
and restricted cash at end of period |
|
$124,697 |
|
$114,558 |
|
|
|
|
|
|
|
Supplemental disclosure
of non-cash investing activities |
|
|
|
|
|
capital
expenditures included in payables |
|
$1,631 |
|
$681 |
|
LA-Z-BOY INCORPORATED |
|
SEGMENT
INFORMATION |
|
|
|
|
|
Quarter Ended |
|
Six Months Ended |
|
(Unaudited, amounts in
thousands) |
|
10/28/17 |
|
10/29/16 |
|
10/28/17 |
|
10/29/16 |
|
Sales |
|
|
|
|
|
|
|
|
|
Upholstery
segment: |
|
|
|
|
|
|
|
|
|
Sales to
external customers |
|
$251,741 |
|
$244,898 |
|
$476,555 |
|
$468,707 |
|
Intersegment sales |
|
|
53,020 |
|
|
50,891 |
|
|
102,613 |
|
|
94,498 |
|
Upholstery segment
sales |
|
|
304,761 |
|
|
295,789 |
|
|
579,168 |
|
|
563,205 |
|
|
|
|
|
|
|
|
|
|
|
Casegoods segment: |
|
|
|
|
|
|
|
|
|
Sales to
external customers |
|
|
23,915 |
|
|
23,567 |
|
|
44,934 |
|
|
44,152 |
|
Intersegment sales |
|
|
4,150 |
|
|
2,321 |
|
|
8,641 |
|
|
6,774 |
|
Casegoods segment
sales |
|
|
28,065 |
|
|
25,888 |
|
|
53,575 |
|
|
50,926 |
|
|
|
|
|
|
|
|
|
|
|
Retail segment
sales |
|
|
116,737 |
|
|
107,365 |
|
|
227,253 |
|
|
203,085 |
|
|
|
|
|
|
|
|
|
|
|
Corporate and
Other: |
|
|
|
|
|
|
|
|
|
Sales to
external customers |
|
|
812 |
|
|
749 |
|
|
1,542 |
|
|
1,418 |
|
Intersegment sales |
|
|
2,091 |
|
|
1,563 |
|
|
4,021 |
|
|
2,773 |
|
Corporate and Other
sales |
|
|
2,903 |
|
|
2,312 |
|
|
5,563 |
|
|
4,191 |
|
|
|
|
|
|
|
|
|
|
|
Eliminations |
|
|
(59,261 |
) |
|
(54,775 |
) |
|
(115,275 |
) |
|
(104,045 |
) |
Consolidated sales |
|
$393,205 |
|
$376,579 |
|
$750,284 |
|
$717,362 |
|
|
|
|
|
|
|
|
|
|
|
Operating
Income (Loss) |
|
|
|
|
|
|
|
|
|
Upholstery segment |
|
$33,424 |
|
$38,220 |
|
$56,723 |
|
$68,719 |
|
Casegoods segment |
|
|
3,302 |
|
|
2,847 |
|
|
6,041 |
|
|
4,994 |
|
Retail segment |
|
|
3,903 |
|
|
3,007 |
|
|
5,670 |
|
|
5,190 |
|
Corporate and
Other |
|
|
(6,360 |
) |
|
(10,216 |
) |
|
(17,867 |
) |
|
(22,587 |
) |
Consolidated operating income |
|
$34,269 |
|
$33,858 |
|
$50,567 |
|
$56,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact:
Kathy Liebmann
(734) 241-2438
kathy.liebmann@la-z-boy.com
La Z Boy (NYSE:LZB)
Historical Stock Chart
From Apr 2024 to May 2024
La Z Boy (NYSE:LZB)
Historical Stock Chart
From May 2023 to May 2024