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

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Reports Strong Written Trends and Reinstates a Dividend

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