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La-Z-Boy Reports Fiscal 2021 First-Quarter Results NYSE:LZB

MONROE, Mich., Aug. 18, 2020 (GLOBE NEWSWIRE) — La-Z-Boy Incorporated (NYSE: LZB), a global leader in residential furniture, today reported its operating results for the fiscal 2021 first quarter ended July 25, 2020.

Fiscal 2021 first quarter versus Fiscal 2020 first quarter:

•  Consolidated sales decreased 31.0% to $285.5 million, reflecting ongoing COVID-19 impact
•  Written same-store sales for the entire La-Z-Boy Furniture Galleries® network increased 14.8%
•  Consolidated operating margin:

GAAP: 1.5% versus 5.7%Non-GAAP(1): 3.1% versus 6.3%
•  Wholesale(2): 9.4% versus 9.5%
•  Retail: (6.8)% versus 6.0%

•  Net income attributable to La-Z-Boy Incorporated per diluted share (“EPS”):

GAAP:  $0.10 versus $0.38Non-GAAP(1): $0.18 versus $0.42

•  Cash generated from operating activities was $106.3 million
•  Cash(3) was $336.7 million at quarter end

Kurt L. Darrow, Chairman, President and Chief Executive Officer of La-Z-Boy, said, “Our first quarter began in May with most of our customers still closed due to COVID-19. However, as retailers re-opened, written orders rapidly accelerated in June and July, with consumers spending a higher percentage of discretionary dollars on home furnishings. During the quarter, we re-opened all operations across our retail, distribution and manufacturing businesses. Our team demonstrated great resilience and we are thankful for everyone’s hard work, safety consciousness, and dedication to the company.”

Darrow added, “After temporary shutdowns for most of April, our plants have increased production weekly to meet demand, and are operating at about 90% of prior-year levels. Strong demand, coupled with ramping up manufacturing, has resulted in a significant increase in product backlog, extended lead times between order and delivery, and slower-than-normal delivered sales for the first quarter.”

Darrow concluded, “We are cautiously optimistic as we head into the fall, based on current demand trends, but recognize the pandemic is still upon us and much uncertainty exists on a variety of fronts. We remain agile in managing the business day to day, focusing on service to customers while maintaining financial conservatism. We are proud to have delivered strong cash results in this challenging first quarter, with $106 million in cash from operations and a strong balance sheet which enables us to navigate this uncertain time.”

Consolidated sales in the first quarter of fiscal 2021 decreased 31.0% to $285.5 million, due to the impact of COVID-19. Consolidated GAAP operating margin was 1.5% versus 5.7% in the prior-year quarter.  Non-GAAP(1) operating margin was 3.1% versus 6.3% in last year’s first quarter, due to the impact of closures and start up.

For the entire La-Z-Boy Furniture Galleries® network, written same-store sales increased 14.8% for the fiscal 2021 first quarter.  An initial decline in May of 13%, due to pandemic-related store closures, was more than offset by increases of 30% in June and 32% in July.

For the quarter, sales in the company’s Wholesale(2) segment, which now includes the former Upholstery and Casegoods segments, decreased 30% to $223.6 million, primarily the result of lower unit volume due to COVID-19-related retail closures and extended lead times to delivery as production continued to increase each month. Written orders were up 2.4% for the quarter, after a decline of 38% in May and an increase of 29% in both June and July. Non-GAAP(1) operating margin for the Wholesale(2) segment was 9.4% versus 9.5%. The negative impact of the many COVID-19 challenges to profitability were mostly offset by aggressive temporary cost-control measures implemented across the organization.

Retail segment sales decreased 36.3% to $91.1 million in the first quarter of fiscal 2021, primarily the result of temporary store closures in the fourth quarter and into the fiscal 2021 first quarter, and delays in product deliveries from manufacturing shut-downs. Written same-store sales for the company-owned La-Z-Boy Furniture Galleries® stores increased 11.1% in the first quarter, even with the majority of stores closed in May and some still closed in June. On a decline in traffic, conversion and average ticket improved, driven by increased units and higher design sales. Non-GAAP(1) operating margin for the Retail segment was a loss of (6.8%) versus income of 6.0% in last year’s first quarter, as a result of fixed costs during the temporary decline in volume.

Fiscal 2021 first-quarter sales for Joybird (reported in the Corporate & Other segment) decreased 21.7% to $13.4 million. Written sales increased 38.2%, with deliveries expected later in the second quarter and into the third quarter as Joybird’s Tijuana-based plant re-opened later than the company’s U.S.-based plants. Joybird reduced its operating loss for the quarter on a year-over-year basis and sequentially as the company balances investments in sales growth with bottom-line performance.

GAAP diluted EPS was $0.10 for the fiscal 2021 first quarter versus $0.38 in the prior-year quarter. Non-GAAP(1) diluted EPS was $0.18 versus $0.42 in last year’s first quarter.

Balance Sheet and Cash Flow

For the first quarter, the company generated $106.3 million in cash from operating activities, including a $61 million increase in customer deposits from written orders for the company’s Retail segment and Joybird.  La-Z-Boy ended the quarter with $336.7 million in cash(3), including $50 million in cash proactively drawn on the company’s credit facility to enhance liquidity in response to COVID-19, compared with $113.6 million in cash(3) at the end of the fiscal 2020 first quarter. In addition, the company holds $16.5 million in investments to enhance returns on cash versus $32.9 million in last year’s first quarter. During the period, the company invested $9.8 million in the business through capital expenditures and paid back $25 million of the original $75 million drawn against its credit line.

(1)Non-GAAP amounts for the first quarter of fiscal 2021 exclude:

a pre-tax charge of $3.5 million, or $0.06 per diluted share, related to the company’s business realignment, announced in June 2020, which included a 10% reduction in the company’s global workforce and the closure of its Newton, Mississippi upholstery manufacturing facilitypre-tax purchase accounting charges related to acquisitions completed in prior periods totaling $1.2 million, or $0.02 per diluted share, with $1.0 million included in operating income and $0.2 million expense included in interest expense

(1)Non-GAAP amounts for the first quarter of fiscal 2020 exclude:

pre-tax purchase accounting charges of $1.5 million, or $0.02 per diluted share, with $1.3 million included in operating income and $0.2 million included in interest expensea pre-tax charge of $1.5 million, or $0.02 per diluted share, related to the company’s supply chain optimization initiative

Please refer to the accompanying “Reconciliation of GAAP to Non-GAAP Financial Measures” for detailed information on calculating the Non-GAAP measures used in this press release and a reconciliation to the most directly comparable GAAP measure.

(2)Wholesale segment: Effective in the first quarter of fiscal 2021, in order to better align with the manner in which we view and manage the business, coupled with economic and customer channel similarities, the company revised its reportable operating segments by aggregating the former Upholstery segment with the former Casegoods segment to form the newly combined Wholesale segment. The change in reportable operating segments reflects how the company evaluates financial information used to make operating decisions. Prior-period results disclosed in this earnings release with respect to the Wholesale segment have been revised to reflect these changes.

(3)Cash includes cash, cash equivalents and restricted cash.

Dividend

On August 18, 2020, the Board of Directors elected to reinstate a regular quarterly dividend to shareholders of $0.07 per share, 50% of the dividend amount paid quarterly prior to the company’s suspension of dividends as part of its COVID-19 Action Plan.  The dividend will be paid on September 15, 2020, to shareholders of record as of September 3, 2020.

Conference Call

La-Z-Boy will hold a conference call with the investment community on Wednesday, August 19, 2020, at 8:30 a.m. eastern time. The toll-free dial-in number is 844.602.0380; international callers may use 862.298.0970.

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 Replay Passcode: 36268. The webcast replay will be available for one year.

Cautionary Note Regarding Forward-Looking Statements

This news release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Generally, forward-looking statements include information concerning expectations, projections or trends relating to our results of operations, financial results, financial condition, strategic initiatives and plans, expenses, dividends, share repurchases, liquidity, use of cash and cash requirements, borrowing capacity, investments, future economic performance, business, and industry and the effect of the novel coronavirus (“COVID-19”) pandemic on our business operations and financial results.

The forward-looking statements in this press release are based on certain assumptions and currently available information and are subject to various risks and uncertainties, many of which are unforeseeable and beyond our control, such as the continuing and developing impact of, and uncertainty caused by, the COVID-19 pandemic. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations and financial results. Our actual future results and trends may differ materially depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed in our fiscal 2020 Annual Report on Form 10-K and other factors identified in our reports filed with the Securities and Exchange Commission. Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events 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 Wholesale segment includes the company’s upholstery companies, England and La-Z-Boy, and the company’s casegoods companies, American Drew®, Hammary®, and Kincaid®. The company-owned Retail segment includes 155 of the 355 La-Z-Boy Furniture Galleries® stores.  Joybird is an e-commerce retailer and manufacturer of upholstered furniture.

The corporation’s branded distribution network is dedicated to selling La-Z-Boy Incorporated products and brands, and includes 355 stand-alone La-Z-Boy Furniture Galleries® stores and 558 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/.

Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), this press release also includes Non-GAAP financial measures. Management uses these Non-GAAP financial measures when assessing our ongoing performance. This press release contains references to Non-GAAP operating income, Non-GAAP operating margin, Non-GAAP income before income taxes, Non-GAAP net income attributable to La-Z-Boy Incorporated and Non-GAAP net income attributable to La-Z-Boy Incorporated per diluted share, which may exclude, as applicable, business realignment charges, purchase accounting charges, and charges for our supply chain optimization initiative. The business realignment charges include severance costs, asset impairment costs, and costs to relocate equipment and inventory related to organizational changes we undertook as a result of our COVID-19 Action Plan. The purchase accounting charges may include the amortization of intangible assets, incremental expense upon the sale of inventory acquired at fair value, amortization of employee retention agreements, fair value adjustments of future cash payments recorded as interest expense, and adjustments to the fair value of contingent consideration. The charges for our supply chain optimization initiative may include severance costs, accelerated depreciation expense, costs to relocate equipment and inventory, as well as other costs related to the closure, relocation and sale of certain manufacturing operations. These Non-GAAP financial measures are not meant to be considered superior to or a substitute for La-Z-Boy Incorporated’s results of operations prepared in accordance with GAAP and may not be comparable to similarly titled measures reported by other companies. Reconciliations of such Non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in the accompanying tables.

Management believes that presenting certain Non-GAAP financial measures will help investors understand the long-term profitability trends of our business and compare our profitability to prior and future periods and to our peers. Management excludes purchase accounting charges because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions consummated and the success with which we operate the businesses acquired. While the company has a history of acquisition activity, it does not acquire businesses on a predictable cycle, and the impact of goodwill impairment charges and purchase accounting charges is unique to each acquisition and can vary significantly from acquisition to acquisition. Similarly, business realignment charges and the charges related to the company’s supply chain optimization initiative are dependent on the timing, size, number and nature of the operations being moved or closed, and the charges may not be incurred on a predictable cycle. Management believes that exclusion of these items facilitates more consistent comparisons of the company’s operating results over time. Where applicable, the accompanying “Reconciliation of GAAP to Non-GAAP Financial Measures” tables present the excluded items net of tax calculated using the effective tax rate from operations for the period in which the adjustment is presented.

LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF INCOME

  Quarter Ended(Unaudited, amounts in thousands, except per share data) 7/25/20 7/27/19Sales $285,458  $413,633 Cost of sales 169,095  245,921 Gross profit 116,363  167,712 Selling, general and administrative expense 112,038  144,290 Operating income 4,325  23,422 Interest expense (459) (318)Interest income 494  727 Other income (expense), net 1,474  (760)Income before income taxes 5,834  23,071 Income tax expense 1,155  5,083 Net income 4,679  17,988 Net loss attributable to noncontrolling interests 119  81 Net income attributable to La-Z-Boy Incorporated $4,798  $18,069      Basic weighted average common shares 45,909  46,820 Basic net income attributable to La-Z-Boy Incorporated per share $0.10  $0.39      Diluted weighted average common shares 45,965  47,125 Diluted net income attributable to La-Z-Boy Incorporated per share $0.10  $0.38 

LA-Z-BOY INCORPORATED
CONSOLIDATED BALANCE SHEET

(Unaudited, amounts in thousands, except par value) 7/25/20 4/25/20Current assets    Cash and equivalents $334,204  $261,553 Restricted cash 2,476  1,975 Receivables, net of allowance of $5,983 at 7/25/20 and $7,541 at 4/25/20 97,374  99,351 Inventories, net 180,401  181,643 Other current assets 89,497  81,804 Total current assets 703,952  626,326 Property, plant and equipment, net 212,933  214,767 Goodwill 161,597  161,017 Other intangible assets, net 28,614  28,653 Deferred income taxes – long-term 20,060  20,839 Right of use lease asset 310,133  318,647 Other long-term assets, net 66,458  64,640 Total assets $1,503,747  $1,434,889      Current liabilities    Accounts payable 61,917  55,511 Short-term borrowings $50,000  $75,000 Lease liability, current 64,399  64,376 Accrued expenses and other current liabilities 248,230  155,282 Total current liabilities 424,546  350,169 Lease liability, long-term 262,225  270,162 Other long-term liabilities 101,977  98,252 Shareholders’ equity    Preferred shares – 5,000 authorized; none issued —  — Common shares, $1.00 par value – 150,000 authorized; 45,989 outstanding at 7/25/20 and 45,857 outstanding at 4/25/20 45,989  45,857 Capital in excess of par value 320,067  318,215 Retained earnings 346,750  343,633 Accumulated other comprehensive loss (5,232) (6,952)Total La-Z-Boy Incorporated shareholders’ equity 707,574  700,753 Noncontrolling interests 7,425  15,553 Total equity 714,999  716,306 Total liabilities and equity $1,503,747  $1,434,889 

LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS

  Quarter Ended(Unaudited, amounts in thousands) 7/25/20 7/27/19Cash flows from operating activities    Net income $4,679  $17,988 Adjustments to reconcile net income to cash provided by operating activities    (Gain)/loss on disposal of assets 14  (536)Gain on sale of investments (108) (4)Change in deferred taxes 785  (677)Provision for doubtful accounts (1,575) 116 Depreciation and amortization 8,119  7,298 Equity-based compensation expense 2,047  1,675 Change in receivables 3,745  8,535 Change in inventories 1,686  (527)Change in right-of use lease asset 16,469  16,101 Change in other assets 4,031  (8,792)Change in payables 8,864  (1,391)Change in lease liabilities (15,857) (16,418)Change in other liabilities 73,401  (4,028)Net cash provided by operating activities 106,300  19,340      Cash flows from investing activities    Proceeds from disposals of assets 10  22 Proceeds from insurance —  642 Capital expenditures (9,810) (12,299)Purchases of investments (3,623) (5,288)Proceeds from sales of investments 14,671  4,060 Acquisitions, net of cash acquired (437) (5,438)Net cash provided by (used for) investing activities 811  (18,301)     Cash flows from financing activities    Payments on debt and finance lease liabilities (25,013) (47)Stock issued for stock and employee benefit plans, net of shares withheld for taxes (1,749) (1,417)Purchases of common stock —  (12,313)Dividends paid to shareholders —  (6,112)Dividends paid to minority interest joint venture partners (1) (8,507) — Net cash used for financing activities (35,269) (19,889)          Effect of exchange rate changes on cash and equivalents 1,310  655 Change in cash, cash equivalents and restricted cash 73,152  (18,195)Cash, cash equivalents and restricted cash at beginning of period 263,528  131,787 Cash, cash equivalents and restricted cash at end of period $336,680  $113,592      Supplemental disclosure of non-cash investing activities    Capital expenditures included in payables $881  $2,416 

(1)     Includes dividends paid to joint venture minority partners resulting from the repatriation of dividends from our foreign earnings that we no longer consider permanently reinvested.

LA-Z-BOY INCORPORATED
SEGMENT INFORMATION

  Quarter Ended(Unaudited, amounts in thousands) 7/25/20 7/27/19Sales    Wholesale segment:    Sales to external customers $179,755  $252,773 Intersegment sales 43,818  67,778 Wholesale segment sales 223,573  320,551      Retail segment sales 91,137  142,996      Corporate and Other:    Sales to external customers 14,566  17,864 Intersegment sales 2,175  2,688 Corporate and Other sales 16,741  20,552      Eliminations (45,993) (70,466)Consolidated sales $285,458  $413,633      Operating Income (Loss)    Wholesale segment $17,940  $28,864 Retail segment (6,627) 8,477 Corporate and Other (6,988) (13,919)Consolidated operating income $4,325  $23,422 

LA-Z-BOY INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

  Quarter Ended(Amounts in thousands, except per share data) 7/25/20 7/27/19GAAP gross profit $116,363  $167,712 Add back: Purchase accounting charges – incremental expense upon the sale of inventory acquired at fair value 297  117 Add back: Business realignment charges 1,070  —   Add back: Supply chain optimization initiative (50) 1,508 Non-GAAP gross profit $117,680  $169,337      GAAP SG&A $112,038  $144,290 Less: Purchase accounting charges – amortization of intangible assets and retention agreements (722) (1,192)Less: Business realignment charges (2,472) — Non-GAAP SG&A $108,844  $143,098      GAAP operating income $4,325  $23,422 Add back: Purchase accounting charges 1,019  1,309 Add back: Business realignment charges 3,542  — Add back: Supply chain optimization initiative (50) 1,508 Non-GAAP operating income $8,836  $26,239      GAAP income before income taxes $5,834  $23,071 Add back: Purchase accounting charges recorded as part of gross profit, SG&A, and interest expense 1,189  1,502 Add back: Business realignment charges 3,542  — Add back: Supply chain optimization initiative (50) 1,508 Non-GAAP income before income taxes $10,515  $26,081      GAAP net income attributable to La-Z-Boy Incorporated $4,798  $18,069 Add back: Purchase accounting charges recorded as part of gross profit, SG&A, and interest expense 1,189  1,502   Less: Tax effect of purchase accounting (235) (330)Add back: Business realignment charges 3,542  —   Less: Tax effect of business realignment charges (701) — Add back: Supply chain optimization initiative (50) 1,508 Less: Tax effect of supply chain optimization initiative 10  (332)Non-GAAP net income attributable to La-Z-Boy Incorporated $8,552  $20,417      GAAP net income attributable to La-Z-Boy Incorporated per diluted share $0.10  $0.38 Add back: Purchase accounting charges, net of tax, per share 0.02  0.02 Add back: Business realignment charges, net of tax, per share 0.06  — 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 $0.18  $0.42 

LA-Z-BOY INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
SEGMENT INFORMATION

  Quarter Ended(Amounts in thousands) 7/25/20 % of sales 7/27/19 % of salesGAAP operating income (loss)        Wholesale segment $17,940  8.0% $28,864  9.0%  Retail segment (6,627) (7.3)% 8,477  5.9%  Corporate and Other (6,988) N/M (13,919) N/MConsolidated GAAP operating income $4,325  1.5% $23,422  5.7%         Non-GAAP items affecting operating income        Wholesale segment $3,004    $1,563     Retail segment 465    117     Corporate and Other 1,042    1,137   Consolidated Non-GAAP items affecting operating income $4,511    $2,817            Non-GAAP operating income (loss)        Wholesale segment $20,944  9.4% $30,427  9.5%  Retail segment (6,162) (6.8)% 8,594  6.0%  Corporate and Other (5,946) N/M (12,782) N/MConsolidated Non-GAAP operating income $8,836  3.1% $26,239  6.3%         N/M – Not Meaningful        

 

 LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF INCOME     Quarter Ended(Unaudited, amounts in thousands, except per share data) 7/25/20 7/27/19Sales $285,458  $413,633 Cost of sales 169,095  245,921 Gross profit 116,363  167,712 Selling, general and administrative expense 112,038  144,290 Operating income 4,325  23,422 Interest expense (459) (318)Interest income 494  727 Other income (expense), net 1,474  (760)Income before income taxes 5,834  23,071 Income tax expense 1,155  5,083 Net income 4,679  17,988 Net loss attributable to noncontrolling interests 119  81 Net income attributable to La-Z-Boy Incorporated $4,798  $18,069      Basic weighted average common shares 45,909  46,820 Basic net income attributable to La-Z-Boy Incorporated per share $0.10  $0.39      Diluted weighted average common shares 45,965  47,125 Diluted net income attributable to La-Z-Boy Incorporated per share $0.10  $0.38            LA-Z-BOY INCORPORATED
CONSOLIDATED BALANCE SHEET     (Unaudited, amounts in thousands, except par value) 7/25/20 4/25/20Current assets    Cash and equivalents $334,204  $261,553 Restricted cash 2,476  1,975 Receivables, net of allowance of $5,983 at 7/25/20 and $7,541 at 4/25/20 97,374  99,351 Inventories, net 180,401  181,643 Other current assets 89,497  81,804 Total current assets 703,952  626,326 Property, plant and equipment, net 212,933  214,767 Goodwill 161,597  161,017 Other intangible assets, net 28,614  28,653 Deferred income taxes – long-term 20,060  20,839 Right of use lease asset 310,133  318,647 Other long-term assets, net 66,458  64,640 Total assets $1,503,747  $1,434,889      Current liabilities    Accounts payable 61,917  55,511 Short-term borrowings $50,000  $75,000 Lease liability, current 64,399  64,376 Accrued expenses and other current liabilities 248,230  155,282 Total current liabilities 424,546  350,169 Lease liability, long-term 262,225  270,162 Other long-term liabilities 101,977  98,252 Shareholders’ equity    Preferred shares – 5,000 authorized; none issued —  — Common shares, $1.00 par value – 150,000 authorized; 45,989 outstanding at 7/25/20 and 45,857 outstanding at 4/25/20 45,989  45,857 Capital in excess of par value 320,067  318,215 Retained earnings 346,750  343,633 Accumulated other comprehensive loss (5,232) (6,952)Total La-Z-Boy Incorporated shareholders’ equity 707,574  700,753 Noncontrolling interests 7,425  15,553 Total equity 714,999  716,306 Total liabilities and equity $1,503,747  $1,434,889            LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS     Quarter Ended(Unaudited, amounts in thousands) 7/25/20 7/27/19Cash flows from operating activities    Net income $4,679  $17,988 Adjustments to reconcile net income to cash provided by operating activities    (Gain)/loss on disposal of assets 14  (536)Gain on sale of investments (108) (4)Change in deferred taxes 785  (677)Provision for doubtful accounts (1,575) 116 Depreciation and amortization 8,119  7,298 Equity-based compensation expense 2,047  1,675 Change in receivables 3,745  8,535 Change in inventories 1,686  (527)Change in right-of use lease asset 16,469  16,101 Change in other assets 4,031  (8,792)Change in payables 8,864  (1,391)Change in lease liabilities (15,857) (16,418)Change in other liabilities 73,401  (4,028)Net cash provided by operating activities 106,300  19,340      Cash flows from investing activities    Proceeds from disposals of assets 10  22 Proceeds from insurance —  642 Capital expenditures (9,810) (12,299)Purchases of investments (3,623) (5,288)Proceeds from sales of investments 14,671  4,060 Acquisitions, net of cash acquired (437) (5,438)Net cash provided by (used for) investing activities 811  (18,301)     Cash flows from financing activities    Payments on debt and finance lease liabilities (25,013) (47)Stock issued for stock and employee benefit plans, net of shares withheld for taxes (1,749) (1,417)Purchases of common stock —  (12,313)Dividends paid to shareholders —  (6,112)Dividends paid to minority interest joint venture partners (1) (8,507) — Net cash used for financing activities (35,269) (19,889)          Effect of exchange rate changes on cash and equivalents 1,310  655 Change in cash, cash equivalents and restricted cash 73,152  (18,195)Cash, cash equivalents and restricted cash at beginning of period 263,528  131,787 Cash, cash equivalents and restricted cash at end of period $336,680  $113,592      Supplemental disclosure of non-cash investing activities    Capital expenditures included in payables $881  $2,416 

(1) Includes dividends paid to joint venture minority partners resulting from the repatriation of dividends from our foreign earnings that we no longer consider permanently reinvested.

 LA-Z-BOY INCORPORATED
SEGMENT INFORMATION       Quarter Ended
(Unaudited, amounts in thousands) 7/25/20 7/27/19Sales    Wholesale segment:    Sales to external customers $179,755  $252,773 Intersegment sales 43,818  67,778 Wholesale segment sales 223,573  320,551      Retail segment sales 91,137  142,996      Corporate and Other:    Sales to external customers 14,566  17,864 Intersegment sales 2,175  2,688 Corporate and Other sales 16,741  20,552      Eliminations (45,993) (70,466)Consolidated sales $285,458  $413,633      Operating Income (Loss)    Wholesale segment $17,940  $28,864 Retail segment (6,627) 8,477 Corporate and Other (6,988) (13,919)Consolidated operating income $4,325  $23,422            LA-Z-BOY INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES           Quarter Ended(Amounts in thousands, except per share data) 7/25/20
 7/27/19
GAAP gross profit $116,363  $167,712 Add back: Purchase accounting charges – incremental expense upon the sale of inventory acquired at fair value 297  117 Add back: Business realignment charges 1,070  — Add back: Supply chain optimization initiative (50) 1,508 Non-GAAP gross profit $117,680  $169,337      GAAP SG&A $112,038  $144,290 Less: Purchase accounting charges – amortization of intangible assets and retention agreements (722) (1,192)Less: Business realignment charges (2,472) — Non-GAAP SG&A $108,844  $143,098      GAAP operating income $4,325  $23,422 Add back: Purchase accounting charges  1,019  1,309 Add back: Business realignment charges 3,542  — Add back: Supply chain optimization initiative (50) 1,508 Non-GAAP operating income $8,836  $26,239      GAAP income before income taxes $5,834  $23,071 Add back: Purchase accounting charges recorded as part of gross profit, SG&A, and interest expense 1,189  1,502 Add back: Business realignment charges 3,542  — Add back: Supply chain optimization initiative (50) 1,508 Non-GAAP income before income taxes $10,515  $26,081      GAAP net income attributable to La-Z-Boy Incorporated $4,798  $18,069 Add back: Purchase accounting charges recorded as part of gross profit, SG&A, and interest expense 1,189  1,502 Less: Tax effect of purchase accounting (235) (330)Add back: Business realignment charges 3,542  — Less: Tax effect of business realignment charges (701) — Add back: Supply chain optimization initiative (50) 1,508 Less: Tax effect of supply chain optimization initiative 10  (332)Non-GAAP net income attributable to La-Z-Boy Incorporated $8,552  $20,417      GAAP net income attributable to La-Z-Boy Incorporated per diluted share $0.10  $0.38 Add back: Purchase accounting charges, net of tax, per share 0.02  0.02 Add back: Business realignment charges, net of tax, per share 0.06  — 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 $0.18  $0.42            LA-Z-BOY INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
SEGMENT INFORMATION               Quarter Ended(Amounts in thousands)  7/25/20  % of sales  7/27/19  % of salesGAAP operating income (loss)        Wholesale segment $17,940  8.0% $28,864  9.0%  Retail segment (6,627) (7.3)% 8,477  5.9%  Corporate and Other (6,988) N/M (13,919) N/MConsolidated GAAP operating income $4,325  1.5% $23,422  5.7%         Non-GAAP items affecting operating income        Wholesale segment $3,004    $1,563     Retail segment 465    117     Corporate and Other 1,042    1,137   Consolidated Non-GAAP items affecting operating income $4,511    $2,817            Non-GAAP operating income (loss)        Wholesale segment $20,944  9.4% $30,427  9.5%  Retail segment (6,162) (6.8)% 8,594  6.0%  Corporate and Other (5,946) N/M (12,782) N/MConsolidated Non-GAAP operating income $8,836  3.1% $26,239  6.3%         N/M – Not Meaningful                 

Contact:    Kathy Liebmann      (734) 241-2438      kathy.liebmann@la-z-boy.com


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