La-Z-Boy Reports Fiscal 2021 First-Quarter Results

Reports Strong Written Trends and Reinstates a Dividend

Monroe, Michigan, UNITED STATES


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 $0.38
  • Non-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 facility
  • pre-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 expense
  • a 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 7/27/19
Sales $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 4/25/20
Current 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 7/27/19
Cash 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 7/27/19
Sales    
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 sales
GAAP 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/M
Consolidated 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/M
Consolidated 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 7/27/19
Sales $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 4/25/20
Current 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 7/27/19
Cash 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 7/27/19
Sales    
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 sales
GAAP 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/M
Consolidated 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/M
Consolidated 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