LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF INCOME
|
| Quarter Ended |
| ||||
(Unaudited, amounts in thousands, except per share data) |
| 7/27/19 |
| 7/28/18 |
| ||
Sales |
| $ | 413,633 |
| $ | 384,695 |
|
Cost of sales |
| 245,921 |
| 236,173 |
| ||
Gross profit |
| 167,712 |
| 148,522 |
| ||
Selling, general and administrative expense |
| 144,290 |
| 125,362 |
| ||
Operating income |
| 23,422 |
| 23,160 |
| ||
Interest expense |
| (318 | ) | (104 | ) | ||
Interest income |
| 727 |
| 602 |
| ||
Other income (expense), net |
| (760 | ) | 892 |
| ||
Income before income taxes |
| 23,071 |
| 24,550 |
| ||
Income tax expense |
| 5,083 |
| 5,599 |
| ||
Net income |
| 17,988 |
| 18,951 |
| ||
Net (income) loss attributable to noncontrolling interests |
| 81 |
| (648 | ) | ||
Net income attributable to La-Z-Boy Incorporated |
| $ | 18,069 |
| $ | 18,303 |
|
|
|
|
|
|
| ||
Basic weighted average common shares |
| 46,820 |
| 46,716 |
| ||
Basic net income attributable to La-Z-Boy Incorporated per share |
| $ | 0.39 |
| $ | 0.39 |
|
|
|
|
|
|
| ||
Diluted weighted average common shares |
| 47,125 |
| 47,161 |
| ||
Diluted net income attributable to La-Z-Boy Incorporated per share |
| $ | 0.38 |
| $ | 0.39 |
|
LA-Z-BOY INCORPORATED
CONSOLIDATED BALANCE SHEET
(Unaudited, amounts in thousands, except par value) |
| 7/27/19 |
| 4/27/19 |
| ||
Current assets |
|
|
|
|
| ||
Cash and equivalents |
| $ | 111,622 |
| $ | 129,819 |
|
Restricted cash |
| 1,970 |
| 1,968 |
| ||
Receivables, net of allowance of $2,177 at 7/27/19 and $2,180 at 4/27/19 |
| 134,379 |
| 143,288 |
| ||
Inventories, net |
| 197,701 |
| 196,899 |
| ||
Other current assets |
| 85,631 |
| 69,144 |
| ||
Total current assets |
| 531,303 |
| 541,118 |
| ||
Property, plant and equipment, net |
| 204,789 |
| 200,523 |
| ||
Goodwill |
| 184,675 |
| 185,867 |
| ||
Other intangible assets, net |
| 29,595 |
| 29,907 |
| ||
Deferred income taxes — long-term |
| 21,906 |
| 20,670 |
| ||
Right of use lease asset |
| 312,433 |
| — |
| ||
Other long-term assets, net |
| 77,449 |
| 81,705 |
| ||
Total assets |
| $ | 1,362,150 |
| $ | 1,059,790 |
|
|
|
|
|
|
| ||
Current liabilities |
|
|
|
|
| ||
Current portion of long-term debt |
| $ | — |
| $ | 180 |
|
Accounts payable |
| 62,935 |
| 65,365 |
| ||
Lease liability, short-term |
| 64,158 |
| — |
| ||
Accrued expenses and other current liabilities |
| 168,757 |
| 173,091 |
| ||
Total current liabilities |
| 295,850 |
| 238,636 |
| ||
Long-term debt |
| — |
| 19 |
| ||
Lease liability, long-term |
| 262,264 |
| — |
| ||
Other long-term liabilities |
| 105,898 |
| 124,159 |
| ||
|
|
|
|
|
| ||
Shareholders’ equity |
|
|
|
|
| ||
Preferred shares — 5,000 authorized; none issued |
| — |
| — |
| ||
Common shares, $1 par value — 150,000 authorized; 46,690 outstanding at 7/27/19 and 46,955 outstanding at 4/27/19 |
| 46,690 |
| 46,955 |
| ||
Capital in excess of par value |
| 311,207 |
| 313,168 |
| ||
Retained earnings |
| 329,096 |
| 325,847 |
| ||
Accumulated other comprehensive loss |
| (3,728 | ) | (3,462 | ) | ||
Total La-Z-Boy Incorporated shareholders’ equity |
| 683,265 |
| 682,508 |
| ||
Noncontrolling interests |
| 14,873 |
| 14,468 |
| ||
Total equity |
| 698,138 |
| 696,976 |
| ||
Total liabilities and equity |
| $ | 1,362,150 |
| $ | 1,059,790 |
|
LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
|
| Quarter Ended |
| ||||
(Unaudited, amounts in thousands) |
| 7/27/19 |
| 7/28/18 |
| ||
Cash flows from operating activities |
|
|
|
|
| ||
Net income |
| $ | 17,988 |
| $ | 18,951 |
|
Adjustments to reconcile net income to cash provided by (used for) operating activities |
|
|
|
|
| ||
Gain on disposal of assets |
| (536 | ) | — |
| ||
Change in deferred taxes |
| (677 | ) | (183 | ) | ||
Provision for doubtful accounts |
| 116 |
| 279 |
| ||
Depreciation and amortization |
| 7,298 |
| 7,541 |
| ||
Equity-based compensation expense |
| 1,675 |
| 2,040 |
| ||
Change in receivables |
| 8,535 |
| 14,236 |
| ||
Change in inventories |
| (527 | ) | (11,092 | ) | ||
Change in other assets |
| 7,305 |
| 463 |
| ||
Change in payables |
| (1,391 | ) | 2,491 |
| ||
Change in other liabilities |
| (20,446 | ) | (2,572 | ) | ||
Net cash provided by operating activities |
| 19,340 |
| 32,154 |
| ||
|
|
|
|
|
| ||
Cash flows from investing activities |
|
|
|
|
| ||
Proceeds from disposals of assets |
| 22 |
| 61 |
| ||
Proceeds from insurance |
| 642 |
| 58 |
| ||
Capital expenditures |
| (12,299 | ) | (15,873 | ) | ||
Purchases of investments |
| (5,288 | ) | (4,190 | ) | ||
Proceeds from sales of investments |
| 4,060 |
| 4,762 |
| ||
Acquisitions, net of cash acquired |
| (5,438 | ) | — |
| ||
Net cash used for investing activities |
| (18,301 | ) | (15,182 | ) | ||
|
|
|
|
|
| ||
Cash flows from financing activities |
|
|
|
|
| ||
Payments on debt and finance lease liabilities |
| (47 | ) | (59 | ) | ||
Stock issued for stock and employee benefit plans, net of shares withheld for taxes |
| (1,417 | ) | (2,009 | ) | ||
Purchases of common stock |
| (12,313 | ) | (7,944 | ) | ||
Dividends paid |
| (6,112 | ) | (5,625 | ) | ||
Net cash used for financing activities |
| (19,889 | ) | (15,637 | ) | ||
|
|
|
|
|
| ||
Effect of exchange rate changes on cash and equivalents |
| 655 |
| (1,601 | ) | ||
Change in cash, cash equivalents and restricted cash |
| (18,195 | ) | (266 | ) | ||
Cash, cash equivalents and restricted cash at beginning of Period |
| 131,787 |
| 136,871 |
| ||
Cash, cash equivalents and restricted cash at end of period |
| $ | 113,592 |
| $ | 136,605 |
|
|
|
|
|
|
| ||
Supplemental disclosure of non-cash investing activities |
|
|
|
|
| ||
Capital expenditures included in payables |
| $ | 2,416 |
| $ | 4,122 |
|
LA-Z-BOY INCORPORATED
SEGMENT INFORMATION
|
| Quarter Ended |
| ||||
(Unaudited, amounts in thousands) |
| 7/27/19 |
| 7/28/18 |
| ||
Sales |
|
|
|
|
| ||
Upholstery segment: |
|
|
|
|
| ||
Sales to external customers |
| $ | 230,767 |
| $ | 240,054 |
|
Intersegment sales |
| 62,649 |
| 53,344 |
| ||
Upholstery segment sales |
| 293,416 |
| 293,398 |
| ||
|
|
|
|
|
| ||
Casegoods segment: |
|
|
|
|
| ||
Sales to external customers |
| 22,006 |
| 24,403 |
| ||
Intersegment sales |
| 5,129 |
| 3,983 |
| ||
Casegoods segment sales |
| 27,135 |
| 28,386 |
| ||
|
|
|
|
|
| ||
Retail segment sales |
| 142,996 |
| 119,228 |
| ||
|
|
|
|
|
| ||
Corporate and Other: |
|
|
|
|
| ||
Sales to external customers |
| 17,864 |
| 1,010 |
| ||
Intersegment sales |
| 2,688 |
| 2,855 |
| ||
Corporate and Other sales |
| 20,552 |
| 3,865 |
| ||
|
|
|
|
|
| ||
Eliminations |
| (70,466 | ) | (60,182 | ) | ||
Consolidated sales |
| $ | 413,633 |
| $ | 384,695 |
|
|
|
|
|
|
| ||
Operating Income (Loss) |
|
|
|
|
| ||
Upholstery segment |
| $ | 26,267 |
| $ | 23,884 |
|
Casegoods segment |
| 2,597 |
| 3,080 |
| ||
Retail segment |
| 8,477 |
| 4,458 |
| ||
Corporate and Other |
| (13,919 | ) | (8,262 | ) | ||
Consolidated operating income |
| 23,422 |
| 23,160 |
|
LA-Z-BOY INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
|
| Quarter Ended |
| ||||
(Amounts in thousands, except per share data) |
| 7/27/2019 |
| 7/28/2018 |
| ||
GAAP gross profit |
| $ | 167,712 |
| $ | 148,522 |
|
Add back: Purchase accounting charges — incremental expense upon the sale of inventory acquired at fair value |
| 117 |
| 42 |
| ||
Add back: Supply chain optimization initiative |
| 1,508 |
| — |
| ||
Non-GAAP gross profit |
| $ | 169,337 |
| $ | 148,564 |
|
|
|
|
|
|
| ||
GAAP SG&A |
| $ | 144,290 |
| $ | 125,362 |
|
Less: Purchase accounting charges — amortization of intangible assets and retention agreements |
| (1,192 | ) | (104 | ) | ||
Non-GAAP SG&A |
| $ | 143,098 |
| $ | 125,258 |
|
|
|
|
|
|
| ||
GAAP operating income |
| $ | 23,422 |
| $ | 23,160 |
|
Add back: Purchase accounting charges |
| 1,309 |
| 146 |
| ||
Add back: Supply chain optimization initiative |
| 1,508 |
| — |
| ||
Non-GAAP operating income |
| $ | 26,239 |
| $ | 23,306 |
|
|
|
|
|
|
| ||
GAAP income before income taxes |
| $ | 23,071 |
| $ | 24,550 |
|
Add back: Purchase accounting charges recorded as part of gross profit, SG&A, and interest expense |
| 1,502 |
| 146 |
| ||
Add back: Supply chain optimization initiative |
| 1,508 |
| — |
| ||
Non-GAAP income before income taxes |
| $ | 26,081 |
| $ | 24,696 |
|
|
|
|
|
|
| ||
GAAP net income attributable to La-Z-Boy Incorporated |
| $ | 18,069 |
| $ | 18,303 |
|
Add back: Purchase accounting charges recorded as part of gross profit, SG&A, and interest expense |
| 1,502 |
| 146 |
| ||
Less: Tax effect of purchase accounting |
| (330 | ) | (33 | ) | ||
Add back: Supply chain optimization initiative |
| 1,508 |
| — |
| ||
Less: Tax effect of supply chain optimization Initiative |
| (332 | ) | — |
| ||
Non-GAAP net income attributable to La-Z-Boy Incorporated |
| $ | 20,417 |
| $ | 18,416 |
|
|
|
|
|
|
| ||
GAAP net income attributable to La-Z-Boy Incorporated per diluted share |
| $ | 0.38 |
| $ | 0.39 |
|
Add back: Purchase accounting charges, net of tax, per share |
| 0.02 |
| — |
| ||
Add back: Supply chain optimization initiative, net of tax, per share |
| 0.02 |
| — |
| ||
Non-GAAP net income attributable to La-Z- Boy Incorporated per diluted share |
| $ | 0.42 |
| $ | 0.39 |
|
LA-Z-BOY INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
SEGMENT INFORMATION
|
| Quarter Ended |
| ||||||||
(Amounts in thousands) |
| 7/27/2019 |
| % of sales |
| 7/28/2018 |
| % of sales |
| ||
GAAP operating income (loss) |
|
|
|
|
|
|
|
|
| ||
Upholstery segment |
| $ | 26,267 |
| 9.0 | % | $ | 23,884 |
| 8.1 | % |
Casegoods segment |
| 2,597 |
| 9.6 | % | 3,080 |
| 10.9 | % | ||
Retail segment |
| 8,477 |
| 5.9 | % | 4,458 |
| 3.7 | % | ||
Corporate and Other |
| (13,919 | ) | N/M |
| (8,262 | ) | N/M |
| ||
GAAP Consolidated operating income |
| $ | 23,422 |
| 5.7 | % | 23,160 |
| 6.0 | % | |
|
|
|
|
|
|
|
|
|
| ||
Purchase accounting and supply chain optimization initiative affecting operating income |
|
|
|
|
|
|
|
|
| ||
Upholstery segment |
| $ | 1,563 |
|
|
| $ | 104 |
|
|
|
Casegoods segment |
| — |
|
|
| — |
|
|
| ||
Retail segment |
| 117 |
|
|
| 42 |
|
|
| ||
Corporate and Other |
| 1,137 |
|
|
| — |
|
|
| ||
Consolidated Non-GAAP charges affecting operating income |
| $ | 2,817 |
|
|
| $ | 146 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Non-GAAP operating income (loss) |
|
|
|
|
|
|
|
|
| ||
Upholstery segment |
| $ | 27,830 |
| 9.5 | % | $ | 23,988 |
| 8.2 | % |
Casegoods segment |
| 2,597 |
| 9.6 | % | 3,080 |
| 10.9 | % | ||
Retail segment |
| 8,594 |
| 6.0 | % | 4,500 |
| 3.8 | % | ||
Corporate and Other |
| (12,782 | ) | N/M |
| (8,262 | ) | N/M |
| ||
Non-GAAP Consolidated operating income |
| $ | 26,239 |
| 6.3 | % | $ | 23,306 |
| 6.1 | % |
N/M — Not Meaningful