UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ~~September 30, 2021~~March 31, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___

Commission file number: 1-14445

HAVERTY FURNITURE COMPANIES, INC.

(Exact name of registrant as specified in its charter)

Maryland		58-0281900
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
780 Johnson Ferry Road, Suite 800 Atlanta, Georgia		30342
(Address of principal executive offices)		(Zip Code)
(404) 443-2900
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	HVT	NYSE
Class A Common Stock	HVTA	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐☒		Accelerated filer	☒☐		Non-accelerated filer	☐
Smaller reporting company	☐		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

The numbers of shares outstanding of the registrant’s two classes of $1 par value common stock as of October 28, 2021, were: Common Stock – ~~16,532,392~~15,419,859; Class A Common Stock – ~~1,287,142~~1,283,260.

HAVERTY FURNITURE COMPANIES, INC.

INDEX

		Page No.

PART I.	FINANCIAL INFORMATION

	Item 1. Financial Statements

	Condensed Consolidated Balance Sheets – ~~September 30, 2021~~March 31, 2022 (unaudited) and December 31, ~~2020~~2021	1

	Condensed Consolidated Statements of Comprehensive Income – Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (unaudited)	2

	Condensed Consolidated Statements of Cash Flows – ~~Nine~~Three Months Ended ~~September 30, 2021~~March 31, 2022 and 2020 (unaudited)	3

	Notes to Condensed Consolidated Financial Statements (unaudited)	4

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1211

	Item 3. Quantitative and Qualitative Disclosures about Market Risk	1714

	Item 4. Controls and Procedures	1714

PART II.	OTHER INFORMATION

	Item 1. Legal Proceedings	1815

	Item 1A. Risk Factors	1815

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	1815

	Item 6. Exhibits	1916

INDEX

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HAVERTY FURNITURE COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)	September 30, 2021			December 31, 2020			March 31, 2022			December 31, 2021
	(Unaudited)						(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	225,674		$	200,058		$	162,340		$	166,146
Restricted cash and cash equivalents		6,716			6,713			6,715			6,716
Inventories		118,961			89,908			119,857			112,031
Prepaid expenses		13,729			9,580			10,633			12,418
Other current assets		13,441			9,985			13,585			11,746
Total current assets		378,521			316,244			313,130			309,057

Property and equipment, net		124,795			108,366			128,721			126,099
Right-of-use lease assets		229,975			228,749			221,083			222,356
Deferred income taxes		18,120			15,814			18,252			16,375
Other assets		12,349			11,199			12,699			12,403
Total assets	$	763,760		$	680,372		$	693,885		$	686,290
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	34,663		$	31,429		$	32,415		$	31,235
Customer deposits		120,149			86,183			98,528			98,897
Accrued liabilities		56,880			52,963			48,876			46,664
Current lease liabilities		34,108			33,466			33,923			33,581
Total current liabilities		245,800			204,041			213,742			210,377
Noncurrent lease liabilities		203,935			200,200			197,265			196,771
Other liabilities		22,484			23,164			22,478			23,172
Total liabilities		472,219			427,405			433,485			430,320

Stockholders’ equity
Capital Stock, par value $1 per share
Preferred Stock, Authorized – 1,000 shares; Issued: NaN		0			0			0			0
Common Stock, Authorized – 50,000 shares; Issued: 2021 – 29,906; 2020 – 29,600		29,906			29,600
Convertible Class A Common Stock, Authorized – 15,000 shares; Issued: 2021 – 1,810; 2020 – 1,996		1,810			1,996
Common Stock, Authorized – 50,000 shares; Issued: 2022 – 29,924; 2021 – 29,907								29,924			29,907
Convertible Class A Common Stock, Authorized – 15,000 shares; Issued: 2022 – 1,809; 2021 – 1,809								1,809			1,809
Additional paid-in capital		100,816			96,850			104,345			102,572
Retained earnings		358,113			304,626			358,084			342,983
Accumulated other comprehensive loss		(2,412	)		(2,560	)		(2,253	)		(2,293	)
Less treasury stock at cost – Common Stock (2021 – 13,374; and 2020 – 12,862 shares) and Convertible Class A Common Stock (2021 and 2020 – 522 shares)		(196,692	)		(177,545	)
Less treasury stock at cost – Common Stock (2022 – 14,507 and 2021 – 14,069 shares) and Convertible Class A Common Stock (2022 and 2021 – 522 shares)								(231,509	)		(219,008	)
Total stockholders’ equity		291,541			252,967			260,400			255,970
Total liabilities and stockholders’ equity	$	763,760		$	680,372		$	693,885		$	686,290

See notes to these condensed consolidated financial statements.

INDEX

HAVERTY FURNITURE COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended March 31,
(In thousands, except per share data - unaudited)	2021		2020			2021			2020			2022		2021

Net sales	$	260,378	$	217,513		$	746,858		$	506,913		$	238,946	$	236,491
Cost of goods sold		112,375		95,336			322,320			225,537			97,985		101,457
Gross profit		148,003		122,177			424,538			281,376			140,961		135,034

Expenses:
Selling, general and administrative		116,156		100,097			338,315			270,281			115,154		109,762
Other expense (income), net		2		(2,401	)		(40	)		(34,298	)		161		(36	)
Total expenses		116,158		97,696			338,275			235,983			115,315		109,726

Income before interest and income taxes		31,845		24,481			86,263			45,393			25,646		25,308
Interest income, net		58		51			173			64			74		56

Income before income taxes		31,903		24,532			86,436			45,457			25,720		25,364
Income tax expense		7,670		6,271			19,939			11,737			6,359		5,958
Net income	$	24,233	$	18,261		$	66,497		$	33,720		$	19,361	$	19,406

Other comprehensive income
Adjustments related to retirement plans; net of tax expense of $16 and $48 in 2021 and $10 and $30 in 2020	$	50	$	30		$	148		$	90
Adjustments related to retirement plans; net of tax expense of $14 in 2022 and $16 in 2021												$	40	$	49

Comprehensive income	$	24,283	$	18,291		$	66,645		$	33,810		$	19,401	$	19,455

Basic earnings per share:
Common Stock	$	1.35	$	0.98		$	3.67		$	1.80		$	1.14	$	1.07
Class A Common Stock	$	1.28	$	0.94		$	3.45		$	1.71		$	1.08	$	1.00

Diluted earnings per share:
Common Stock	$	1.31	$	0.97		$	3.55		$	1.77		$	1.11	$	1.04
Class A Common Stock	$	1.25	$	0.93		$	3.38		$	1.70		$	1.05	$	0.98

Cash dividends per share:
Common Stock	$	0.25	$	0.20		$	0.72		$	0.55		$	0.25	$	0.22
Class A Common Stock	$	0.23	$	0.19		$	0.65		$	0.52		$	0.23	$	0.20

See notes to these condensed consolidated financial statements.

INDEX

HAVERTY FURNITURE COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands - unaudited)	Nine Months Ended September 30,						Three Months Ended March 31,
	2021			2020			2022			2021
Cash Flows from Operating Activities:
Net income	$	66,497		$	33,720		$	19,361		$	19,406
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		12,099			13,959			4,272			3,992
Share-based compensation expense		6,456			3,362			2,307			2,679
Gain from sale of land, property and equipment		(74	)		(34,202	)
Other		(1,484	)		1,259			(1,877	)		(915	)
Changes in operating assets and liabilities:
Inventories		(29,053	)		13,873			(7,826	)		(13,661	)
Customer deposits		33,966			58,287			(369	)		18,545
Operating lease assets and liabilities, net		3,151			1,156
Other assets and liabilities		(9,239	)		(4,997	)		1,120			(2,777	)
Accounts payable and accrued liabilities		6,679			13,404			3,590			(7,668	)
Net cash provided by operating activities		88,998			99,821			20,578			19,601

Cash Flows from Investing Activities:
Capital expenditures		(28,060	)		(7,205	)		(7,107	)		(4,745	)
Proceeds from sale of land, property and equipment		78			74,399
Net cash (used in) provided by investing activities		(27,982	)		67,194
Net cash used in investing activities								(7,107	)		(4,745	)

Cash Flows from Financing Activities:
Proceeds from borrowings under revolving credit facility		0			43,800			0			0
Payments of borrowings under revolving credit facility		0			(43,800	)		0			0
Net change in borrowings under revolving credit facility		0			0			0			0

Dividends paid		(13,010	)		(10,271	)		(4,260	)		(3,987	)
Common stock repurchased		(19,493	)		(19,708	)		(12,501	)		0
Other		(2,894	)		(876	)		(517	)		(801	)
Net cash used in financing activities		(35,397	)		(30,855	)		(17,278	)		(4,788	)

Increase in cash, cash equivalents and restricted cash equivalents during the period		25,619			136,160
(Decrease) increase in cash, cash equivalents and restricted cash equivalents during the period								(3,807	)		10,068
Cash, cash equivalents and restricted cash equivalents at beginning of period		206,771			82,402			172,862			206,771
Cash, cash equivalents and restricted cash equivalents at end of period	$	232,390		$	218,562		$	169,055		$	216,839

See notes to these condensed consolidated financial statements.

INDEX

HAVERTY FURNITURE COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE A –- Business and Basis of Presentation

Haverty Furniture Companies, Inc. (“Havertys,” “the Company,” “we,” “our,” or “us”) is a retailer of a broad line of residential furniture in the middle to upper-middle price ranges. We operate all of our stores using the Havertys brand and do not franchise our concept. We operate within a single reportable segment. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes required by United States of America generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The Company believes that the disclosures made are adequate to make the information not misleading. The financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. We believe all adjustments, normal and recurring in nature, considered necessary for a fair presentation have been included. We suggest that these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in our latest Annual Report on Form 10-K.

The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from those estimates.

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 ~~that any liability that may ultimately result from the resolution of these matters will not~~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.

Note B – COVID-19

~~In December 2019, a~~The novel ~~strain of~~ coronavirus ~~subsequently named COVID-19, emerged from China and spread worldwide. The World Health Organization declared COVID-19 a~~disease (“COVID-19”) pandemic and ~~a national health emergency was declared by~~its contributory effects on the ~~United States beginning on~~economy continue to impact our business and results of operations. During the three months ended March ~~1, 2020. In response, many states~~31, 2022, we experienced, among other things, rising product prices, volatile transportation costs, and local governments began a series of restrictions on public gatherings, retail store closures, stay at home orders and advisories and quarantining of people who may have been exposed to the virus. In an effort to mitigate the spread of COVID-19 and protect our team members, customers, and communities, Havertys closed all of its stores and halted deliveries in mid-March 2020, with the expectation at that time of reopening stores on April 2, 2020. Our stores remained closed during April and we reopened 103 locations on May 1, 2020 and the remaining 17 stores were reopened by June 20, 2020. We restarted our delivery operations on May 5, 2020.

The pandemic continues to disrupt several segments of the economy. Although we and many other businesses are open, some businesses and industries have only recently reopened or are operating on a reduced scale. Our businesssupply chain disruptions. Furthermore, discretionary consumer spending has been ~~very strong since reopening. Consumers not negatively~~adversely impacted ~~financially are spending more money on furniture~~by rising inflation, including fuel costs, and ~~accessories as they spend more time at home. However, many manufacturers are struggling to meet~~interest rates. All of these factors, impacted our business in the ~~increased consumer demand,~~first quarter of 2022. The extent and duration of any future impact resulting in product shortages and delays in a number of merchandise categories. In addition to experiencing supply chain disruptions and delays we have encountered difficulties in increasing our distribution and delivery capacity due to staffing shortages.

~~The~~from the COVID-19 pandemic is ~~complex~~not fully known, and ~~continues to evolve with sporadic resurgences, new shutdowns and~~we may experience additional significant COVID-19 related disruptions ~~of vendor operations, new virus variants, and~~in the ~~vaccine rollout. At this point, we cannot reasonably estimate the duration and extent of the pandemic’s influence on consumers, the “nesting” economy, and our business.~~ future as a resultAccordingly, our estimates and assumptions could change in subsequent interim reports, and it is reasonably possible that such changes could be significant (although the potential effects cannot be estimated at this time).

INDEX

~~HAVERTY FURNITURE COMPANIES, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Unaudited)~~

NOTE C – Stockholders’ Equity

The following outlines the changes in each caption of stockholders’ equity for the current and comparative periods and the dividends per share for each class of shares.

For the three months ended ~~September 30, 2021:~~March 31, 2022:

(in thousands)	Common Stock		Class A Common Stock			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total			Common Stock		Class A Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balances at June 30, 2021	$	29,903	$	1,813		$	99,016	$	338,341		$	(2,462	)	$	(177,199	)	$	289,412
Balances at December 31, 2021																				$	29,907	$	1,809	$	102,572		$	342,983		$	(2,293	)	$	(219,008	)	$	255,970
Net income									24,233									24,233										19,361									19,361
Dividends declared:
Common Stock, $0.25 per share									(4,164	)								(4,164	)									(3,964	)								(3,964	)
Class A Common Stock, $0.23 per share									(297	)								(297	)									(296	)								(296	)
Class A conversion		3		(3	)													0
Acquisition of treasury stock															(19,493	)		(19,493	)															(12,501	)		(12,501	)
Restricted stock issuances																					17				(534	)											(517	)
Amortization of restricted stock							1,800											1,800							2,307												2,307
Other comprehensive income												50						50													40						40
Balances at September 30, 2021	$	29,906	$	1,810		$	100,816	$	358,113		$	(2,412	)	$	(196,692	)	$	291,541
Balances at March 31, 2022																				$	29,924	$	1,809	$	104,345		$	358,084		$	(2,253	)	$	(231,509	)	$	260,400

For the ~~nine~~three months ended ~~September 30,~~March 31, 2021:

(in thousands)	Common Stock		Class A Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total			Common Stock		Class A Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balances at December 31, 2020	$	29,600	$	1,996		$	96,850		$	304,626		$	(2,560	)	$	(177,545	)	$	252,967		$	29,600	$	1,996		$	96,850		$	304,626		$	(2,560	)	$	(177,545	)	$	252,967
Net income										66,497									66,497											19,406									19,406
Dividends declared:
Common Stock, $0.72 per share										(12,142	)								(12,142	)
Class A Common Stock, $0.65 per share										(868	)								(868	)
Common Stock, $0.22 per share																														(3,717	)								(3,717	)
Class A Common Stock, $0.20 per share																														(270	)								(270	)
Class A conversion		186		(186	)														0			154		(154	)														0
Acquisition of treasury stock																(19,493	)		(19,493	)
Restricted stock issuances		120					(3,014	)											(2,894	)		35					(835	)											(800	)
Amortization of restricted stock							6,456												6,456								2,679												2,679
Directors’ Compensation Plan							524									346			870
Other comprehensive income													148						148														49						49
Balances at September 30, 2021	$	29,906	$	1,810		$	100,816		$	358,113		$	(2,412	)	$	(196,692	)	$	291,541
Balances at March 31, 2021																					$	29,789	$	1,842		$	98,694		$	320,045		$	(2,511	)	$	(177,545	)	$	270,314

INDEX

~~HAVERTY FURNITURE COMPANIES, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Unaudited)~~

~~For the three months ended September 30, 2020:~~

(in thousands) Common Stock
Class A
Common Stock

Additional
Paid-In Capital

Retained
Earnings

Accumulated Other
Comprehensive Loss

Treasury
Stock
Total
Balances at June 30, 2020 $ 29,538 $ 2,054 $ 94,581 $ 304,900 $ (2,027 ) $ (164,668 ) $ 264,378
Net income 18,261 18,261
Dividends declared:
Common Stock, $0.20 per share (3,423 ) (3,423 )
Class A Common Stock, $0.19 per share (290 ) (290 )
Class A conversion 17 (17 ) 0
Acquisition of treasury stock (12,899 ) (12,899 )
Amortization of restricted stock 1,325 1,325
Directors’ Compensation Plan (5 ) (5 )
Other comprehensive income 30 30
Balances at September 30, 2020 $ 29,555 $ 2,037 $ 95,901 $ 319,448 $ (1,997 ) $ (177,567 ) $ 267,377

~~For the nine months ended September 30, 2020:~~

(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, 2019 $ 29,431 $ 2,054 $ 93,208 $ 295,999 $ (2,087 ) $ (158,102 ) $ 260,503
Net income 33,720 33,720
Dividends declared:
Common Stock, $0.55 per share (9,475 ) (9,475 )
Class A Common Stock, $0.52 per share (796 ) (796 )
Class A conversion 17
(17 ) 0

Acquisition of treasury stock (19,708 ) (19,708 )
Restricted stock issuances
107
(983 ) (876 )
Amortization of restricted stock 3,362 3,362
Directors’ Compensation Plan 314 243 557
Other comprehensive income 90 90
Balances at September 30, 2020 $ 29,555 $ 2,037 $ 95,901 $ 319,448 $ (1,997 ) $ (177,567 ) $ 267,377

~~INDEX~~

~~HAVERTY FURNITURE COMPANIES, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Unaudited)~~

NOTE D – Interim LIFO Calculations

We calculate the LIFO index annually. Accordingly, interim LIFO calculations must necessarily be based on management’s estimates of inventory levels and inflation rates. Since these estimates may be affected by factors beyond management’s control, interim results are subject to change based upon the final year-end LIFO inventory valuations.

NOTE E – Fair Value of Financial Instruments

The fair values of our cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable and customer deposits approximate their carrying values due to their short-term nature. The assets related to our self-directed, non-qualified deferred compensation plans for certain executives and employees are valued using quoted market prices multiplied by the number of shares held, a Level 1 valuation technique. ~~The assets related to our deferred compensation plans totaled approximately $9.2~~ ~~million at September 30, 2021 and $7.9~~ ~~million at December 31, 2020 and are included in other assets.~~ ~~Amounts for the related liabilities are included in other liabilities and totaled approximately $9.2 million at~~ ~~September 30, 2021 and $8.1 million at December 31, 2020~~.

NOTE F – Credit Agreement

On May 15, 2020 we entered into the Third Amendment to Amended and Restated Credit Agreement (as amended, the “Credit Agreement”) with a bank to permit certain sale-leaseback transactions as described in Note H. Our first borrowings under the facility, since its origination in 2008, were in March 2020.

~~The Credit Agreement is~~We have a $60.0 million revolving credit facility ~~secured by our inventory, accounts receivable, cash, and certain other personal property and~~(the “Credit Agreement”) which matures on September 27, ~~2024.~~2024 and is secured primarily by our inventory. Availability fluctuates based on a borrowing base calculation reduced by outstanding letters of credit. Amounts available to borrow are based on the lesser of the borrowing base or the $60.0 million-line amount. The credit facility contains covenants that, among other things, limit our ability to incur certain types of debt or liens, enter into mergers and consolidations or use proceeds of borrowing for other than permitted uses. The covenants also limit our ability to pay dividends if unused availability is less than $12.5 million.

~~We borrowed $43.8 million under the Credit Agreement in~~At March ~~2020~~31, 2022 and repaid the borrowings in June 2020. The interest rate on the outstanding balance was based on the three-month Euro dollar LIBOR rate plus 1.25% and on a weighted average basis was approximately 2.37%. Total interest paid under the Credit Agreement was $0.4 million for the nine months ended September 30, 2020.

~~The borrowing base was $15.7 million at September 30,~~December 31, 2021, there were 0 outstanding ~~letters of credit,~~borrowings under the Credit Agreement. The borrowing base and ~~the~~ net availability was ~~$15.7 million.~~$34.7 million at March 31, 2022.

INDEX

Note G – Revenues

We recognize revenue from merchandise sales and related service fees, net of expected returns and sales tax, at the time the merchandise is delivered to the customer. We record customer deposits when payments are received in advance of the delivery of merchandise, which totaled ~~$120.1~~$98.5 million and ~~$86.2~~$98.9 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Of the customer deposit liabilities at December 31, ~~2020,~~2021, approximately ~~$0.5~~$17.0 million has not been recognized through net sales in the ~~nine~~three months ended ~~September 30, 2021.~~

March 31, 2022.

~~INDEX~~

~~HAVERTY FURNITURE COMPANIES, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Unaudited)~~

The following table presents our revenues disaggregated by each major product category and service (dollars in thousands, amounts and percentages may not always add due to rounding):

	Three Months Ended September 30,										Nine Months Ended September 30,										Three Months Ended March 31,
	2021					2020					2021					2020					2022					2021
(In thousands)	Net Sales		% of Net Sales			Net Sales		% of Net Sales			Net Sales		% of Net Sales			Net Sales		% of Net Sales			Net Sales		% of Net Sales			Net Sales		% of Net Sales
Merchandise:
Case Goods
Bedroom Furniture	$	41,438		15.9	%	$	29,725		13.7	%	$	121,848		16.3	%	$	76,638		15.1	%	$	31,348		13.1	%	$	39,178		16.6	%
Dining Room Furniture		29,047		11.2			22,994		10.6			84,965		11.4			54,067		10.7			26,022		10.9			27,599		11.7
Occasional		21,955		8.4			19,220		8.8			66,128		8.8			46,665		9.2			16,818		7.0			22,064		9.3
		92,440		35.5			71,939		33.1			272,941		36.5			177,371		35.0			74,188		31.0			88,841		37.6
Upholstery		109,375		42.0			95,554		43.9			305,842		41.0			213,656		42.1			111,186		46.5			95,626		40.4
Mattresses		23,616		9.1			21,431		9.9			68,257		9.1			50,625		10.0			19,733		8.3			20,481		8.7
Accessories and Other ⁽¹⁾		34,948		13.4			28,590		13.1			99,818		13.4			65,261		12.9			33,839		14.2			31,543		13.3
	$	260,378		100.0	%	$	217,513		100.0	%	$	746,858		100.0	%	$	506,913		100.0	%	$	238,946		100.0	%	$	236,491		100.0	%

(1)	Includes delivery charges and product protection.

NOTE H – Leases

We have operating leases for retail stores, offices, warehouses, and certain equipment. Our leases have remaining lease terms of 1 year to 14 years, some of which include options to extend the leases for up to 20 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.

Certain of our lease agreements for retail stores include variable lease payments, generally based on sales volume. The variable portion of payments are not included in the initial measurement of the right-of-use asset or lease liability due to uncertainty of the payment amount and are recorded as lease expense in the period incurred. Certain of our equipment lease agreements include variable lease costs, generally based on usage of the underlying asset (mileage, fuel, etc.). The variable portion of payments are not included in the initial measurement of the right-of-use asset or lease liability due to uncertainty of the payment amount and are recorded in the period incurred.

As of ~~September 30, 2021,~~March 31, 2022, we had entered into 1 lease for an additional retail location which had not yet ~~commenced and was under construction.~~

commenced.

INDEX

~~HAVERTY FURNITURE COMPANIES, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Unaudited)~~

Lease expense is charged to selling, general and administrative expenses. Components of lease expense were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2021		2020		2021		2020		2022		2021
Operating lease cost	$	11,440	$	11,596	$	35,140	$	33,111	$	11,739	$	11,806
Variable lease cost		1,739		1,627		4,856		3,825		1,695		1,508
Total lease expense	$	13,179	$	13,223	$	39,996	$	36,936	$	13,434	$	13,314

In June 2021, we renewed the lease covering 10 retail locations. This increased our right-of-use assets approximately $17.6 million and lease liability $20.6 million, and we recorded $3.0 million in tenant incentives. In August 2021, we purchased a distribution center which was part of the sale and leaseback transaction which occurred in May 2020 and which is described below. We also purchased a retail location at the end of its lease term. These purchases decreased our right of use assets and lease liabilities approximately $5.3 million.

Supplemental cash flow information related to leases is as follows (in thousands):

	Nine Months Ended September 30,				Three Months Ended March 31,
	2021		2020		2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	35,428	$	25,099	$	9,629	$	13,093
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	24,213	$	83,550	$	8,382	$	4,125

S~~ale and Leaseback Transaction~~

On May 18, 2020, we completed a sale and leaseback transaction of 3 of our distribution facilities. The total purchase price for the 3 properties, excluding costs and taxes, was $70.0 million and the net book value was $37.9 million. We recorded a gain of $31.6 million in May 2020 which is included in other income.

~~The 3 properties were leased back to us under 15-year operating lease agreements with renewal options.~~

NOTE I – Income Taxes

Our effective tax rate for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 was 24.7% and ~~2020 was 23.1% and 25.8%~~23.5%, respectively. The primary difference in the effective rate and the statutory rate was due to state income taxes and the ~~tax~~ impact from vested stock awards.

INDEX

~~HAVERTY FURNITURE COMPANIES, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Unaudited)~~

NOTE J – Stock Based Compensation ~~Plan~~Plans

As more fully discussed in Note 12 of the notes to the consolidated financial statements in our ~~2020~~2021 Annual Report on Form 10-K, we have awards outstanding for Common Stock under stock-based employee compensation plans.

Our shareholders approved a new stock-based compensation plan, the 2021 Long-Term Incentive Plan (the “2021 LTIP Plan”) and the 1,500,000 shares reserved for issuance under the 2021 LTIP Plan were registered with the SEC in August 2021. The 2021 LTIP Plan is substantially the same as our 2014 Long-Term Incentive Plan (the “2014 LTIP Plan”). No new grants may be awarded under the 2014 LTIP Plan.

The following table summarizes our award activity during the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:

	Service-Based Restricted Stock Awards					Performance-Based Restricted Stock Awards					Service-Based Restricted Stock Awards					Performance-Based Restricted Stock Awards
	Shares or Units (#)			Weighted-Average Award Price ($)		Shares or Units (#)			Weighted-Average Award Price ($)		Shares or Units (#)			Weighted-Average Award Price ($)		Shares or Units (#)			Weighted-Average Award Price ($)
Outstanding at December 31, 2020		239,281			20.77		213,895			21.08
Outstanding at December 31, 2021												219,082		$	27.10		328,267		$	23.96
Granted/Issued		119,921			33.29		93,685			32.83		153,681			28.86		103,104			28.86
Awards vested or rights exercised⁽¹⁾		(130,323	)		21.28		(56,578	)		22.95		0			0		(34,940	)		20.28
Forfeited		(5,621	)		24.74		0			0		(2,050	)		33.01		0			0
Additional units earned due to performance		—			—		77,265			20.42		—			—		59,249			31.39
Outstanding at September 30, 2021		223,258			27.10		328,267			23.96
Outstanding at March 31, 2022												370,713		$	27.80		455,680		$	26.54
Restricted units expected to vest		223,258			27.10		387,512			25.36							455,680		$	26.54

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

~~The total fair value of service-based restricted stock awards that vested during the nine months ended September 30, 2021 was $6.1 million.~~ The aggregate intrinsic value of outstanding service-based restricted stock awards was ~~$7.5~~approximately $10.2 million at ~~September 30, 2021.~~March 31, 2022. The restrictions on the service-based awards generally lapse or vest annually, primarily over ~~four-year~~one-year and three-year periods.

The total fair value of performance-based restricted stock awards that vested during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$2.0~~approximately $1.0 million. The aggregate intrinsic value of outstanding performance awards at ~~September 30, 2021~~March 31, 2022 expected to vest was ~~$13.1~~approximately $12.5 million. The performance awards are based on one-year performance periods but cliff vest in approximately three years from grant date.

The compensation for all awards is charged to selling, general and administrative expense over the respective grants’ vesting periods, primarily on a straight-line basis. The amount charged was approximately ~~$6.5~~$2.3 million and $2.7 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and $3.4 million for the same period in 2020.~~respectively. Forfeitures are recognized as they occur. As of ~~September 30, 2021,~~March 31, 2022, the total compensation cost related to unvested equity awards was approximately ~~$8.6~~$11.8 million and is expected to be recognized over a weighted-average period of ~~two~~2.0 years.

109

INDEX

~~HAVERTY FURNITURE COMPANIES, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Unaudited)~~

NOTE K – Earnings Per Share

We report our earnings per share using the two-class method. The income per share for each class of common stock is calculated assuming 100% of our earnings are distributed as dividends to each class of common stock based on ~~their~~the contractual ~~rights.~~

rights of the classes.

The Common Stock of the Company has a preferential dividend rate of at least 105% of the dividend paid on the Class A Common Stock. The Class A Common Stock, which has 10 votes per share as opposed to 1 vote per share for the Common Stock (on all matters other than the election of directors), may be converted at any time on a one-for-one basis into Common Stock at the option of the holder of the Class A Common Stock.

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2021		2020		2021		2020		2022		2021
Numerator:
Common:
Distributed earnings	$	4,164	$	3,423	$	12,142	$	9,475	$	3,964	$	3,717
Undistributed earnings		18,424		13,408		49,713		21,624		14,008		14,262
Basic		22,588		16,831		61,855		31,099		17,972		17,979
Class A Common earnings		1,645		1,430		4,642		2,621		1,389		1,427
Diluted	$	24,233	$	18,261	$	66,497	$	33,720	$	19,361	$	19,406

Class A Common:
Distributed earnings	$	297	$	290	$	868	$	796	$	296	$	270
Undistributed earnings		1,348		1,140		3,774		1,825		1,093		1,157
	$	1,645	$	1,430	$	4,642	$	2,621	$	1,389	$	1,427
Denominator:
Common:
Weighted average shares outstanding - basic		16,794		17,098		16,862		17,267		15,706		16,793
Assumed conversion of Class A Common Stock		1,290		1,526		1,344		1,530		1,287		1,431
Dilutive options, awards and common stock equivalents		478		240		506		241		520		507

Total weighted-average diluted Common Stock		18,562		18,864		18,712		19,038		17,513		18,731

Class A Common:
Weighted average shares outstanding		1,290		1,526		1,344		1,530		1,287		1,431

Basic earnings per share:
Common Stock	$	1.35	$	0.98	$	3.67	$	1.80	$	1.14	$	1.07
Class A Common Stock	$	1.28	$	0.94	$	3.45	$	1.71	$	1.08	$	1.00

Diluted earnings per share:
Common Stock	$	1.31	$	0.97	$	3.55	$	1.77	$	1.11	$	1.04
Class A Common Stock	$	1.25	$	0.93	$	3.38	$	1.70	$	1.05	$	0.98

1110

~~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, ~~2020 (the “Form~~2021 (“Form 10-K”).

Forward-Looking Statements

Statements in this Form 10-Q that are not historical facts, including statements about our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be ~~“forward-looking statements”~~"forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements 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~~"Item 1A. Risk ~~Factors”~~Factors" of our Form 10-K and in the subsequent reports we file with the SEC. 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.

~~Impact of COVID-19 on Our Business~~

~~The COVID-19 pandemic has resulted in significant economic disruption and impacted our business. We closed our stores and ceased delivery operations in the second half of March 2020.~~ Affected team members were paid during this period and most corporate personnel transitioned to working remotely. On April 1, 2020, we extended our store closure for another 30 days and furloughed 3,033 team members or approximately 87% of our workforce. Given the dramatic shock to the economy caused by the pandemic and uncertainty of the ongoing impact, we made a permanent reduction in our workforce of approximately 1,200 team members effective April 30, 2020 and extended the furlough of approximately 730 team members until June 1, 2020. We reopened 103 of our stores on May 1, 2020 and the remaining 17 were opened by June 20, 2020 and deliveries restarted on May 5, 2020.

We took several steps to strengthen our financial position and maintain financial flexibility by reviewing operating expenses, evaluating merchandise purchases, reducing capital expenditures, temporarily borrowing $43.8 million on our credit facility (which was repaid within 96 days), and completing a $70.0 million sale-leaseback transaction in May 2020.

Our business has been very strong since reopening. Consumers not negatively impacted financially are spending more money on furniture and accessories as they spend more time at home. Demand is outpacing product availability in certain categories. Manufacturers are challenged to ensure safe work environments and have encountered some raw material shortages and transportation capacity issues, resulting in product shortages and delays in a number of product categories. We are continuing to assess our staffing needs and have encountered difficulties in increasing our distribution and delivery capacity due to labor shortages in some of our markets.

The COVID-19 pandemic is complex and continues to evolve with sporadic resurgences, new shutdowns and disruptions of vendor operations, new virus variants, and the vaccine rollout. At this point, we cannot reasonably estimate the duration of the pandemic’s influence on consumers, the “nesting” economy, and our business. 

~~INDEX~~

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

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. Stores closed due to COVID-19 were excluded from comp-store sales. 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. The ~~lag time between customers placing orders~~disruptions to our supply chain have resulted in lower inventory in certain categories and for out-of-stock merchandise delivery ~~has grown in 2021 due~~times can be 8 to ~~demand outpacing merchandise supply.~~12 weeks. 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 ~~not~~ substitutes for net sales presented in accordance with US GAAP.

~~The~~The following table outlines our sales and comp-store sales increases and decreases for the periods indicated:

2021 2020
Net Sales Comp-Store Sales Net Sales Comp-Store Sales
Period
Total Dollars
%
Change

$
Change

%
Change

$
Change
Total Dollars
%
Change

$
Change

%
Change

$
Change

Q1 $ 236.5 31.8 % $ 57.1 11.5 % $ 15.4 $ 179.4 (4.2 )% $ (7.8 ) 11.6 % $ 13.8
Q2 $ 250.0 127.3 % $ 140.0 46.9 % $ 48.8 $ 110.0 (42.7 )% $ (81.9 ) (15.2 )% $ (18.4 )
Q3 $ 260.4 19.7 % $ 42.9 17.7 % $ 38.4 $ 217.5 3.9 % $ 8.2 4.0 % $ 8.4
YTD Q3 $ 746.9 47.3 % $ 240.0 22.5 % $ 102.6 $ 506.9 (13.9 )% $ (81.5 ) 0.8 % $ 3.8

	2022												2021
	Net Sales							Comp-Store Sales					Net Sales							Comp-Store Sales
Period	Total Dollars		% Change			$ Change		% Change			$ Change		Total Dollars		% Change			$ Change		% Change			$ Change
Q1	$	238.9		1.0	%	$	2.5		0.2	%	$	0.4	$	236.5		31.8	%	$	57.1		11.5	%	$	15.4

Although we closed our stores and paused our operations mid-March of last year, our business has been strong since reopening in May 2020. Our stores are operating with a smaller staff and are open fewer hours. Our delivery capacity is improving but remains slightly behind our prior year pre‑pandemic level due to labor shortages and supply chain disruptions. Many manufacturers continue to be challenged by raw material shortages, transportation logistics, labor shortages, and lingering health and safety issues. Many of the manufacturers in Vietnam and Indonesia that produce our products paused their operations in July due to a resurgence of COVID‑19. Fortunately, most began reopening in mid-October and are operating at various levels of capacity. However, these shutdowns may impact our merchandise available for delivery in future quarters.

~~The above chart outlines our~~Total sales for the ~~quarters and year~~first quarter of 2022 increased $2.5 million, or 1.0%, compared to ~~date.~~2021. Our ~~stores were closed and we did not make any deliveries~~comp-store sales increased 0.2%, or $0.4 million, in ~~April 2020. Our written sales~~2022 compared to 2021. Written business for the ~~quarter ended September 30, 2021 were up 2.0%~~first three months of 2022 compared to the same period ~~in 2020 which~~of 2021 was ~~up 22.8% over 2019.~~

down 8.8% and written comp-store sales were down 9.6%.

~~Ours~~Our free in-home design service continues to grow as COVID-19 concerns abate, and designer sales ~~by merchandise category are impacted by product availability. Long production lead times~~were 23% of our total written business for the first three months of 2022 compared to 21% for 2021. COVID-19 continues to impact our ~~custom upholstery orders, which were four to six weeks pre‑pandemic~~supply chain, and ~~are currently averaging 16 weeks, have negatively~~ongoing delays in our case goods inventory impacted our ~~business~~business. Sales in this ~~category. Consumers’ desire for faster fulfillment has overtaken their “pandemic patience” and are shifting~~category as a percent of our total sales were 31.0% in 2022 compared to ~~purchases of available merchandise. Custom upholstery orders were 28.0% of total written upholstery sales for the pre-pandemic first quarter of 2020 and a high of 29.8%~~37.6% in ~~the third quarter of 2020 but have steadily fallen to 20.0% in the third quarter of~~ 2021.

1311

INDEX

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

Our business was good during the early part of the quarter in both delivered and written business compared to the very strong results in 2021. We experienced a return to increased consumer interest around traditional shopping events and had record business for the Presidents’ Day holiday. However, we experienced significant declines in in-store traffic and written business in March. We believe consumers are being impacted by rising inflation, including fuel costs, stock market volatility, higher interest rates and concerns regarding geopolitical instability, including the war in Ukraine.

Gross Profit

Gross profit for the ~~third~~first quarter of ~~2021~~2022 was ~~56.8%~~59.0%, up 60190 basis points compared to the prior year period of ~~56.2%~~57.1%. The increase is primarily due to merchandise pricing and mix.

We ~~have judiciously adjusted~~expect annual gross profit margins for 2022 will be 57.7% to 58.0%. This is an increase over our ~~pricing in response to product price increases~~previous guidance and ~~higher inbound freight costs.~~lower than the first quarter’s results. Gross profit ~~for the first nine months of 2021 was 56.8%, up 130 basis points compared~~margins fluctuate quarter to ~~55.5% for the same period of 2020.~~quarter in relation to our promotional cadence. Our ~~focus on retail pricing and our sales mix have offset the negative impact to~~estimated gross profit ~~from increases~~margins are based on anticipated changes in product and freight costs and their impact on our LIFO reserve.

~~We estimate gross profit margins for the full year of 2021 will be 56.5% to 56.8%.~~

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~~first three months of ~~2021~~2022 were ~~44.6%~~48.2% versus ~~46.0%~~46.4% for ~~the same period in 2020. This change reflects the leveraging of costs on increased sales and the impact of the operational changes implemented in 2020 under our business continuity plan.~~2021. SG&A dollars increased ~~$16.1~~$5.4 million, or 4.9%, for the ~~third~~first quarter of ~~2021 and increased $68.0 million for the nine months ended September 30, 2021~~2022 compared to the same prior year ~~periods.~~

During April 2020, virtually all team members in our store and distribution operations were furloughed and warehouse and corporate office personnel were furloughed to a minimum level for necessary operations. We covered the health benefits premiums for those furloughed which totaled approximately $2.1 million. Salaries and wagesperiod. The increase is driven by higher costs associated with ~~the furloughed team members was approximately $9.9 million. We reduced our workforce by approximately 35% effective April 30, 2020~~selling expense of $1.8 million, distribution and ~~paid severance~~delivery costs of ~~approximately $1.7~~$1.5 million, and occupancy expenses of $0.6 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:

	Three Months Ended March 31,
	2022					2021
(In thousands)			% of Net Sales					% of Net Sales
Variable	$	44,384		18.6	%	$	40,707		17.2	%
Fixed and discretionary		70,770		29.6	%		69,055		29.2	%
	$	115,154		48.2	%	$	109,762		46.4	%

Three months ended September 30, Nine Months ended September 30,
2021 2020 2021 2020
(In thousands)
% of
Net Sales

% of
Net Sales
% of Net Sales % of Net Sales
Variable $ 43,708 16.8 % $ 37,678 17.3 % $ 126,374 16.9 % $ 93,685 18.5 %
Fixed and discretionary 72,448 27.8 62,419 28.7 211,941 28.4 176,596 34.8
$ 116,156 44.6 % $ 100,097 46.0 % $ 338,315 45.3 % $ 270,281 53.3 %

The variable expenses in dollars were higher in the ~~third~~first quarter ~~and first nine months~~ of ~~2021~~2022 compared to ~~the same periods in 2020~~2021 due to the increase in ~~sales.~~

compensation costs for selling and delivery personnel and rising fuel costs.

~~The variable~~Fixed and discretionary expenses ~~for~~were impacted in the ~~three months ended September 30, 2021 as a percent~~first quarter of ~~sales~~2022 primarily by increases in warehouse and other occupancy costs compared to the prior year period reflect additional leveraging of certain selling and delivery expenses. The variable expenses for the nine months ended September 30, 2020 include payment of severance costs and health benefits for furloughed team members.quarter.

1412

INDEX

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

Fixed and discretionary expenses were impacted in the third quarter of 2021 primarily by increases in general and administrative expense for compensation, benefits, and related payroll and labor costs of $3.8 million, warehouse expense of $2.8 million, and marketing spend of $1.7 million, compared to the same period of 2020.

Our variable type expenses within SG&A for the full year of ~~2021~~2022 are anticipated to be ~~17.0%~~18.0% to ~~17.3%.~~18.2%, an increase from our previous estimate based on increases in selling and delivery costs. Fixed and discretionary expenses are expected to be approximately ~~$278.0~~$295.0 to ~~$281.0~~$298.0 million for the full year of ~~2021.~~

2022.

Liquidity and Capital Resources

Cash and Cash Equivalents at End of Year

At ~~September 30, 2021,~~March 31, 2022, we had ~~$225.7~~$162.3 million in cash and cash equivalents, and $6.7 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 to 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. We expect capital expenditures of approximately $37.0 million for the full year of ~~2021.~~

2022.

Long-Term Debt

In May 2020, we entered into the Third Amendment to our Amended and Restated Credit Agreement (as amended, the “Credit Agreement”) with a bank. The Credit Agreement, which matures September 27, 2024, provides for a $60.0 million revolving credit facility. Amounts available to borrow fluctuate and availability at ~~September 30, 2021~~March 31, 2022 was ~~$15.7~~$34.7 million and we had no amounts outstanding.

Leases

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

Share Repurchases

In ~~August~~November 2021, our Board of Directors authorized an additional $25.0 million for our share repurchase program. During the three months ended ~~September 30, 2021~~March 31, 2022 we purchased ~~537,196~~438,499 shares of common stock for approximately ~~$19.5 million under previous and current authorizations.~~$12.5 million. There is approximately ~~$22.3~~$12.5 million at ~~September 30, 2021~~March 31, 2022 that may yet be used for purchases under the current authorization.

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 ~~approximately $89.0~~$20.6 million in the first ~~nine~~three months of 2022 compared to $19.6 million during the same period in 2021. This difference was primarily driven by changes associated with customer deposits, accounts payable, and inventories.

Investing Activities. Cash used in investing activities increased by $2.4 million in the first three months of 2022 compared to the first three months of 2021, ~~driven~~as the result of greater capital expenditures.

Financing Activities.Cash used in financing activities increased by $12.5 million in the first three months of 2022 compared to the first three months of 2021, primarily ~~by net income~~due to the $12.5 million of ~~$66.5 million and non-cash adjustments of $17.0 million, consisting of depreciation and amortization and stock-based compensation, and by changes~~share repurchases in ~~working capital inflows. The primary working capital inflows were from customer deposits of approximately $34.0 million partially offset by outflows for inventory of $29.1 million.~~2022.

1513

INDEX

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

Net cash provided by operating activities in the first nine months of 2020 was $99.8 million driven primarily by changes in working capital. For calculation of cash provided by operating activities the gain from sale of land, property, and equipment of $34.2 million is excluded, partially offsetting net income of $33.7 million and non‑cash adjustments of $18.6 million. The primary working capital inflows were from increases in customer deposits of $58.3 million and accounts payable and accrued liabilities of $13.4 million and a decrease in inventories of $13.9 million.

~~Investing Activities.~~ Cash used in investing activities was approximately $28.0 million in the first nine months of 2021 compared to cash provided by investing activities of $67.2 million during the first nine months of 2020. The difference primarily is from $74.4 million of proceeds from sale of land, property, and equipment in 2020.

~~Financing Activities.Cash used in financing activities of $35.4 million in the first nine months of 2021 primarily reflected $19.5 million of share repurchases and $13.0 million of cash dividends paid.~~

~~Cash used in financing activities of $30.9 million in the first nine months of 2020 primarily reflected $19.7 million of share repurchases and $10.3 million of cash dividends paid.~~

Store Plans and Capital Expenditures

Location	Opening Quarter Actual or Planned	Category
~~Myrtle Beach, SC~~Austin, TX	~~Q-1-21~~	~~Open – New market~~
~~The Villages, FL~~	~~Q-3-21~~Q-2-22	Open
~~Dallas, TX~~Indianapolis, IN	~~Q-3-21~~Q-3-22	Relocation
Metro DC	Q-3-22	Open
Atlanta, GA	Q-3-22	Closure
~~Austin, TX~~TBA	~~Q-1-22~~Q-4-22	Open

Net selling space in ~~2021~~2022 is expected to be ~~flat~~slightly up compared to ~~2020.~~

~~We purchased our Virginia home delivery center which was part of our May 2020 sale leaseback and acquired a retail location at the end of its lease term during the third quarter of~~ 2021. ~~Our capital expenditures also include amounts for information technology for operations and website enhancements.~~ Total capital expenditures are estimated to be ~~approximately~~ $37.0 million in ~~2021~~2022 depending on the timing of spending for new 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.

~~INDEX~~

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, ~~2020.~~2021.

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 toand 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, 2021~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. As a result of the COVID-19 pandemic, ~~some~~ team members have shifted to a rotating work from home and office environment. 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.

1714

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 and Use of Proceeds

The board of directors has authorized management, at its discretion, to purchase and retire limited amounts of our ~~common stock~~Common Stock and Class A ~~common stock.~~Common Stock. A program was initially approved by the board on November 3, 1986. On ~~August 6,~~November 5, 2021, the board ~~approved~~authorized an additional amount under such stock repurchase ~~amount of $25.0 million to bring the total available share repurchase authorization at such time to approximately $33.1 million.~~program. The stock repurchase program has no expiration date but may be terminated by our board at any time. The balance of the current authorization for purchases was approximately ~~$22.3~~$12.5 million at ~~September 30, 2021~~March 31, 2022.

The following table presents information with respect to our repurchase of Havertys’ common stock during the ~~third~~first quarter of ~~2021:~~

2022:

	(a) Total Number of Shares Purchased		(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs
January 1 – January 31		—		—		—	$	25,006,000
February 1 – February 28		180,000	$	27.47		180,000	$	20,061,000
March 1 – March 31		258,499	$	29.23		258,499	$	12,504,000
Total		438,499				438,499

(a)
Total Number of
Shares Purchased

(b)
Average Price
Paid Per Share

(c)
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or
Programs

(d)
Approximate Dollar
Value of Shares That
May Yet be Purchased
Under the Plans or
Programs

July 1 – July 31 44,579 $ 36.17 44,579 $ 15,202,200
August 1 – August 31 412,617 $ 36.60 412,617 $ 25,100,700
September 1 – September 30 80,000 $ 34.74 80,000 $ 22,321,200
Total 537,196 537,196

1815

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 May 8, 2018 (Exhibit 3.1 to our Current Report on ~~form~~Form 8-K dated May 10, 2018).
*10.1		~~2021 Long-Term Incentive Plan, effective as~~Form of ~~May 10, 2021.~~Restricted Stock Unit Award Agreement (Exhibit 10.1 to our Current Report on Form 8-K dated February 1, 2022).
10.2		Form of Performance Contingent Restricted Stock Unit (EBITDA) Agreement (Exhibit 10.2 to our Current Report on Form 8-K dated February 1, 2022.
10.3		Form of Performance Contingent Restricted Stock Unit (Sales) Agreement (Exhibit 10.2 to our Current Report on Form 8-K dated February 1, 2022).
*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 ~~September 30, 2021,~~March 31, 2022, 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~~

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:	~~November 2, 2021~~ May 6, 2022	By:	/s/ Clarence H. Smith
			Clarence H. Smith
			Chairman of the Board ~~and~~ 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)