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La-Z-Boy Reports Fiscal 2020 Fourth-Quarter and Year-End Results

Results Impacted by COVID-19

MONROE, Mich., June 23, 2020 (GLOBE NEWSWIRE) -- La-Z-Boy Incorporated (LZB), a global leader in residential furniture, today reported its operating results for the fiscal 2020 fourth quarter and full year ended April 25, 2020.

Fiscal 2020 full year versus Fiscal 2019 full year:

• Consolidated sales decreased 2.4% to $1.70 billion, reflecting ten months of strength and two months of dramatic temporary impact from the COVID-19 pandemic
• Consolidated operating margin:

  • GAAP: 7.0% versus 7.4%

  • Non-GAAP*: 8.2% versus 7.8%
    • Upholstery: 10.8% versus 10.1%
    • Retail: 8.2% versus 6.9%

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

  • GAAP: $1.66 versus $1.44

  • Non-GAAP*: $2.16 versus $2.14

• Cash generated from operating activities increased 9.0% to $164.2 million
• The company returned $68.4 million to shareholders through share purchases and dividends
• Cash, cash equivalents, and restricted cash were $263.5 million at year end, including $75.0 million in cash proactively drawn on the company's credit facility, and the company held $28.6 million in investments to enhance returns on cash, up from $131.8 million in cash, cash equivalents and restricted cash, and $31.5 million in investments to enhance returns on cash at the end of fiscal 2019

Fiscal 2020 fourth quarter versus Fiscal 2019 fourth quarter:

• Consolidated sales decreased 19.1% to $367.3 million, reflecting two months of dramatic temporary impact from the COVID-19 pandemic
• Consolidated operating margin:

  • GAAP: 3.7% versus 8.2%

  • Non-GAAP*: 9.3% versus 8.6%
    • Upholstery: 11.8% versus 11.6%
    • Retail: 10.8% versus 8.5%

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

  • GAAP: $0.05 versus $0.03

  • Non-GAAP*: $0.49 versus $0.64

• Cash generated from operating activities was $44.5 million
• The company returned $14.5 million to shareholders through share purchases and dividends

Kurt L. Darrow, Chairman, President and Chief Executive Officer of La-Z-Boy, said, "La-Z-Boy delivered strong performance for 10 months of fiscal 2020 through February. The iconic La-Z-Boy brand, excellent Retail performance, great product introductions and supply chain strength translated to solid sales and earnings growth for those 10 months. Our fourth quarter started with a 20.4% increase in written same-store sales for the entire La-Z-Boy Furniture Galleries® network in February, and we experienced other examples of strength across our vast network of distribution. However, the trajectory of sales and earnings growth for the last two months of the year were significantly impacted by COVID-19 and mandated retail closures across North America. With the health, safety and well-being of our employees, customers and the communities in which we operate of paramount importance, we responded to the pandemic swiftly, with a decisive Action Plan announced March 29, 2020. The majority of retailers, including our company-owned La-Z-Boy Furniture Galleries® stores, closed for at least the last four weeks of our quarter, and most closures extended into the first quarter of fiscal 2021. We temporarily closed the majority of our manufacturing operations, and managed all other expenses, including temporarily furloughing 70% of our workforce and dramatically reducing all other cash expenditures to preserve liquidity."

Darrow added, "As we have moved through this uncertain period and look to the future, we have remained agile and continued to make tough choices to align and strengthen our business with the new operating environment. We are pleased to have called back some 6,000 furloughed workers, who have eagerly returned or will return to work by July 1st. However, we also made the decision to permanently close our Newton, Mississippi manufacturing facility and reduce our global workforce by approximately 10%. We deeply regret the impact of our actions on affected employees, but these moves are in the best long-term interest of the company."

Darrow concluded, "Moving forward, furniture retailers and La-Z-Boy Furniture Galleries® stores have reopened and we are seeing strong early demand. Our manufacturing facilities have ramped from zero production at the end of April and are moving toward 80% of prior-year production as we head into July. While time will tell how these trends continue to evolve, with the inherent strengths of the La-Z-Boy brand and our broad base of retail customers, I have every confidence we will emerge with strength and have the potential for market share gains as the demand environment improves. I am proud of our company's performance for the year, including our quick response to the pandemic and the aggressive ramp up we have achieved since re-starting operations. With a philosophy of fiscal conservatism, we entered the pandemic period with a solid cash position, managed through the early stages of the crisis well, and still generated $164.2 million in cash from operations and returned $68.4 million to shareholders through dividends and share purchases."

Consolidated sales in the fourth quarter of fiscal 2020 decreased 19.1% to $367.3 million, due to the impact of COVID-19 on the last two months of the quarter. Consolidated GAAP operating margin decreased to 3.7% versus 8.2% in the prior-year quarter. Non-GAAP operating margin was 9.3% in the current-year quarter versus 8.6% in last year’s fourth quarter, reflecting increases in the Upholstery and Retail segments offset by a decline in the Casegoods segment. GAAP and Non-GAAP results for the fourth quarter include a 440 basis point benefit related to a rebate of previously paid China tariffs, partially offset by higher bad debt expense. The fiscal 2019 fourth-quarter GAAP and Non-GAAP results include a 40 basis point charge related to changes in employee benefit policies.

For the entire La-Z-Boy Furniture Galleries® network, after nine months of written same-store sales up 6.4%, written same-store sales for the La-Z-Boy Furniture Galleries® network decreased 35.0% in the fourth quarter as a result of the COVID-19 pandemic and related store closures.

For the quarter, sales in the company’s Upholstery segment decreased 21.7% to $253.3 million and GAAP operating margin increased to 11.8% from 11.5% in last year’s fourth quarter. Non-GAAP operating margin increased to 11.8% versus 11.6%. Operating margin increased primarily as a result of a one-time rebate of previously paid tariffs, mostly offset by higher bad debt expense, including a write-off for the Art Van bankruptcy and a provision for potential credit losses in the COVID-19 environment. Also, during the quarter, SG&A spending was lower due to the company's COVID-19 Action Plan, but higher as a percent of sales due to the decline in sales related to the pandemic. In the Casegoods segment, sales decreased 19.7% to $21.4 million and operating margin was 1.9% compared with 9.1% in the prior-year period, primarily reflecting the impact of COVID-19.

Sales in the Retail segment decreased 8.0% to $139.7 million in the fourth quarter of fiscal 2020. GAAP operating margin for the Retail segment improved to 10.7% from 8.4% in last year’s fourth quarter. Non-GAAP operating margin increased to 10.8% in the current-year quarter from 8.5% in last year’s fourth quarter. Operating margin improvement was driven primarily by prior-period written sales delivered in the current quarter, and lower operating expenses related to the company's COVID-19 Action Plan, including compensation and advertising, due to closed stores. After a strong February start, on the core base of 152 company-owned stores in last year’s fourth quarter, delivered same-store sales declined 10.0% with the majority of stores closed for the last four weeks of the quarter, and many remaining closed into the first quarter of fiscal 2021.

Fiscal 2020 fourth-quarter sales for Joybird (reported in the Corporate & Other segment) decreased 29.6% to $15.4 million. Joybird posted a larger GAAP loss versus the prior-year quarter, primarily due to a $26.9 million non-cash pre-tax goodwill impairment charge, partially offset by the reversal of the Joybird contingent consideration liability valued at $7.9 million. La-Z-Boy continues to make improvements across the Joybird business model with the objective to balance investments in growth with bottom-line performance. However, the negative impact of COVID-19 tempered financial projections and the company concluded the fair value of future earn-out payments is zero and the carrying value of goodwill was partially impaired. As Joybird continues to hone its business model, it is expected to deliver value to the La-Z-Boy enterprise over the long term.

GAAP diluted EPS was $0.05 for the fiscal 2020 fourth quarter versus $0.03 in the prior-year quarter. Non-GAAP* diluted EPS was $0.49 versus $0.64 in last year’s fourth quarter.

Balance Sheet and Cash Flow

For the fourth quarter, the company generated $44.5 million in cash from operating activities. La-Z-Boy ended the quarter with $263.5 million in cash, cash equivalents, and restricted cash, including $75 million in cash proactively drawn on the company's credit facility to enhance liquidity in response to COVID-19, and $28.6 million in investments to enhance returns on cash compared with $131.8 million in cash, cash equivalents and restricted cash, and $31.5 million in investments to enhance returns on cash at the end of fiscal 2019. During the period, the company invested $10.6 million in the business through capital expenditures. The company paid $6.5 million in dividends and spent $8.0 million purchasing 0.3 million shares of stock in the open market under its existing authorized share purchase program during the fourth quarter. For the full fiscal 2020 year, the company paid $25.1 million in dividends and spent $43.4 million purchasing 1.4 million shares, leaving 4.5 million shares of purchase availability in the program.

*Non-GAAP amounts for the fiscal 2020 year exclude:

  • a non-cash pre-tax, non-tax-deductible goodwill impairment charge of $26.9 million, or $0.58 per diluted share

  • a non-cash pre-tax charge of $6.0 million, or $0.09 per diluted share, related to an impairment for one investment

  • a pre-tax purchase accounting net benefit related to acquisitions completed in prior periods totaling $1.4 million, or $0.07 per diluted share, with a $2.1 million benefit included in operating income and $0.7 million expense included in interest expense

  • pre-tax net benefit of $4.4 million, or $0.07 per diluted share, related to the company's supply chain optimization initiative, including the closure and sale of the company's Redlands, California upholstery manufacturing facility and relocation of its Newton, Mississippi leather cut-and-sew operations

  • pre-tax benefit of $1.9 million, or $0.03 per diluted share, related to the 2019 termination of the company's defined benefit pension plan

*Non-GAAP amounts for the full fiscal 2019 year exclude:

  • a non-cash pre-tax charge of $32.7 million, or $0.58 per diluted share, related to the termination of the company's defined benefit pension plan

  • pre-tax purchase accounting charges totaling $7.5 million, or $0.12 per diluted share, with $6.9 million included in operating income and $0.6 million included in interest expense

*Non-GAAP amounts for the fourth quarter of fiscal 2020 exclude:

  • a non-cash pre-tax, non-tax-deductible goodwill impairment charge of $26.9 million, or $0.58 per diluted share

  • a pre-tax purchase accounting net benefit related to acquisitions completed in prior periods totaling $5.9 million, or $0.14 per diluted share, with a $6.1 million benefit included in operating income and $0.2 million expense included in interest expense

  • pre-tax benefit of $0.1 million, or $0.00 per diluted share, related to the company’s supply chain optimization initiative

*Non-GAAP amounts for the fourth quarter of fiscal 2019 exclude:

  • a non-cash pre-tax charge of $32.7 million, or $0.58 per diluted share, related to the termination of the company's defined benefit pension plan

  • pre-tax purchase accounting charges of $2.0 million, or $0.03 per diluted share, with $1.8 million included in operating income and $0.2 million included in interest expense

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

Conference Call

La-Z-Boy will hold a conference call with the investment community on Wednesday, June 24, 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: 35012. 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. 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. 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 Upholstery segment companies are England and La-Z-Boy. The Casegoods segment consists of three brands: American Drew®, Hammary®, and Kincaid®. The company-owned Retail segment includes 154 of the 354 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 354 stand-alone La-Z-Boy Furniture Galleries® stores and 555 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, each of which exclude goodwill impairment charges, purchase accounting charges, charges for our supply chain optimization initiative, an impairment charge for one investment and impacts from terminating the company's defined benefit pension 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 goodwill impairment charges and 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, 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 also excludes impacts from the termination of the company’s defined benefit pension plan and an impairment charge for one investment when assessing the company’s operating and financial performance due to the one-time nature of the transactions. 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, except for the non-cash pension termination charge, which had a specific tax impact due to the one-time nature of the transaction, the non-tax deductible goodwill impairment charge and the adjustment to the fair value of contingent consideration.

LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF INCOME

Quarter Ended

Year Ended

(Unaudited, amounts in thousands, except per share data)

4/25/20

4/27/19

4/25/20

4/27/19

Sales

$

367,281

$

453,791

$

1,703,982

$

1,745,401

Cost of sales

195,575

264,018

982,537

1,042,831

Gross profit

171,706

189,773

721,445

702,570

Selling, general and administrative expense

131,418

152,602

575,821

572,896

Goodwill impairment

26,862

26,862

Operating income

13,426

37,171

118,762

129,674

Interest expense

(400

)

(399

)

(1,291

)

(1,542

)

Interest income

692

569

2,785

2,103

Pension termination refund (charge)

(32,671

)

1,900

(32,671

)

Other income (expense), net

307

(191

)

(6,983

)

(2,237

)

Income before income taxes

14,025

4,479

115,173

95,327

Income tax expense

10,649

2,812

36,189

25,186

Net income

3,376

1,667

78,984

70,141

Net income attributable to noncontrolling interests

(1,081

)

(139

)

(1,515

)

(1,567

)

Net income attributable to La-Z-Boy Incorporated

$

2,295

$

1,528

$

77,469

$

68,574

Basic weighted average common shares

45,962

46,889

46,399

46,828

Basic net income attributable to La-Z-Boy Incorporated per share

$

0.05

$

0.03

$

1.67

$

1.46

Diluted weighted average common shares

46,157

47,369

46,736

47,333

Diluted net income attributable to La-Z-Boy Incorporated per share

$

0.05

$

0.03

$

1.66

$

1.44

LA-Z-BOY INCORPORATED
CONSOLIDATED BALANCE SHEET

(Unaudited, amounts in thousands, except par value)

4/25/20

4/27/19

Current assets

Cash and equivalents

$

261,553

$

129,819

Restricted cash

1,975

1,968

Receivables, net of allowance of $7,541 at 4/25/20 and $2,180 at 4/27/19

99,351

143,288

Inventories, net

181,643

196,899

Other current assets

81,804

69,144

Total current assets

626,326

541,118

Property, plant and equipment, net

214,767

200,523

Goodwill

161,017

185,867

Other intangible assets, net

28,653

29,907

Deferred income taxes – long-term

20,839

20,670

Right of use lease asset

318,647

Other long-term assets, net

64,640

81,705

Total assets

$

1,434,889

$

1,059,790

Current liabilities

Short-term borrowings

$

75,000

$

Current portion of long-term debt

180

Accounts payable

55,511

65,365

Lease liability, short-term

64,376

Accrued expenses and other current liabilities

155,282

173,091

Total current liabilities

350,169

238,636

Long-term debt

19

Lease liability, long-term

270,162

Other long-term liabilities

98,252

124,159

Shareholders' equity

Preferred shares – 5,000 authorized; none issued

Common shares, $1 par value – 150,000 authorized; 45,857 outstanding at 4/25/20 and 46,955 outstanding at 4/27/19

45,857

46,955

Capital in excess of par value

318,215

313,168

Retained earnings

343,633

325,847

Accumulated other comprehensive loss

(6,952

)

(3,462

)

Total La-Z-Boy Incorporated shareholders' equity

700,753

682,508

Noncontrolling interests

15,553

14,468

Total equity

716,306

696,976

Total liabilities and equity

$

1,434,889

$

1,059,790

LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS

Year Ended

(Unaudited, amounts in thousands)

4/25/20

4/27/19

Cash flows from operating activities

Net income

$

78,984

$

70,141

Adjustments to reconcile net income to cash provided by operating activities

Gain on disposal of assets

(10,068

)

(325

)

Gain on sale of investments

(693

)

(656

)

Change in deferred taxes

719

(1,668

)

Provision for doubtful accounts

13,383

502

Depreciation and amortization

31,192

31,147

Equity-based compensation expense

8,371

10,981

Change in right-of use lease asset

67,673

Goodwill impairment

26,862

Pension termination (refund)/charge

(1,900

)

32,671

Pension plan contributions

(7,000

)

Change in receivables

29,686

7,195

Change in inventories

14,900

3,135

Change in other assets

7,039

(7,737

)

Change in payables

(9,913

)

(2,388

)

Change in lease liabilities

(66,238

)

Change in other liabilities

(25,755

)

14,747

Net cash provided by operating activities

164,242

150,745

Cash flows from investing activities

Proceeds from disposals of assets

11,273

1,941

Proceeds from insurance

1,080

184

Capital expenditures

(46,035

)

(48,433

)

Purchases of investments

(37,477

)

(20,698

)

Proceeds from sales of investments

37,244

20,944

Acquisitions, net of cash acquired

(6,850

)

(76,505

)

Net cash used for investing activities

(40,765

)

(122,567

)

Cash flows from financing activities

Net proceeds from credit facility

75,000

Payments on debt and finance lease liabilities

(161

)

(223

)

Stock issued for stock and employee benefit plans, net of shares withheld for taxes

3,029

13,901

Purchases of common stock

(43,369

)

(22,957

)

Dividends paid

(25,091

)

(23,508

)

Net cash provided by (used for) financing activities

9,408

(32,787

)

Effect of exchange rate changes on cash and equivalents

(1,144

)

(475

)

Change in cash, cash equivalents and restricted cash

131,741

(5,084

)

Cash, cash equivalents and restricted cash at beginning of period

131,787

136,871

Cash, cash equivalents and restricted cash at end of period

$

263,528

$

131,787

Supplemental disclosure of non-cash investing activities

Capital expenditures included in payables

$

3,528

$

3,250

LA-Z-BOY INCORPORATED
SEGMENT INFORMATION

Quarter Ended

Year Ended

(Unaudited, amounts in thousands)

4/25/20

4/27/19

4/25/20

4/27/19

Sales

Upholstery segment:

Sales to external customers

$

194,377

$

257,388

$

941,228

$

1,016,957

Intersegment sales

58,915

65,915

263,031

251,285

Upholstery segment sales

253,292

323,303

1,204,259

1,268,242

Casegoods segment:

Sales to external customers

16,841

21,903

85,402

95,677

Intersegment sales

4,554

4,742

20,633

18,796

Casegoods segment sales

21,395

26,645

106,035

114,473

Retail segment sales

139,660

151,870

598,554

570,201

Corporate and Other:

Sales to external customers

16,403

22,630

78,798

62,566

Intersegment sales

2,157

2,290

10,294

11,446

Corporate and Other sales

18,560

24,920

89,092

74,012

Eliminations

(65,626

)

(72,947

)

(293,958

)

(281,527

)

Consolidated sales

$

367,281

$

453,791

$

1,703,982

$

1,745,401

Operating Income (Loss)

Upholstery segment

$

29,832

$

37,304

$

134,691

$

127,906

Casegoods segment

413

2,416

7,749

12,589

Retail segment

14,984

12,743

48,256

37,922

Corporate and Other

(31,803

)

(15,292

)

(71,934

)

(48,743

)

Consolidated operating income

$

13,426

$

37,171

$

118,762

$

129,674

LA-Z-BOY INCORPORATED
UNAUDITED QUARTERLY FINANCIAL DATA

Fiscal 2020

Fiscal Quarter Ended

(13 weeks)

(13 weeks)

(13 weeks)

(13 weeks)

(Amounts in thousands, except per share data)

7/27/2019

10/26/2019

1/25/2020

4/25/2020

Sales

$

413,633

$

447,212

$

475,856

$

367,281

Cost of sales

245,921

264,823

276,218

195,575

Gross profit

167,712

182,389

199,638

171,706

Selling, general and administrative expense

144,290

152,788

147,325

131,418

Goodwill impairment

26,862

Operating income

23,422

29,601

52,313

13,426

Interest expense

(318

)

(308

)

(265

)

(400

)

Interest income

727

522

844

692

Pension termination refund

1,900

Other income (expense), net

(760

)

(532

)

(5,998

)

307

Income before income taxes

23,071

31,183

46,894

14,025

Income tax expense

5,083

8,279

12,178

10,649

Net income

17,988

22,904

34,716

3,376

Net income attributable to noncontrolling interests

81

(311

)

(204

)

(1,081

)

Net income attributable to La-Z-Boy Incorporated

$

18,069

$

22,593

$

34,512

$

2,295

Diluted weighted average common shares

47,125

46,879

46,584

46,157

Diluted net income attributable to La-Z-Boy Incorporated per share

$

0.38

$

0.48

$

0.74

$

0.05

Fiscal 2019

Fiscal Quarter Ended

(13 weeks)

(13 weeks)

(13 weeks)

(13 weeks)

(Amounts in thousands, except per share data)

7/28/2018

10/27/2018

1/26/2019

4/27/2019

Sales

$

384,695

$

439,333

$

467,582

$

453,791

Cost of sales

236,173

264,928

277,712

264,018

Gross profit

148,522

174,405

189,870

189,773

Selling, general and administrative expense

125,362

145,905

149,027

152,602

Operating income

23,160

28,500

40,843

37,171

Interest expense

(104

)

(501

)

(538

)

(399

)

Interest income

602

392

540

569

Pension termination charge

(32,671

)

Other income (expense), net

892

(1,997

)

(941

)

(191

)

Income before income taxes

24,550

26,394

39,904

4,479

Income tax expense

5,599

6,045

10,730

2,812

Net income

18,951

20,349

29,174

1,667

Net income attributable to noncontrolling interests

(648

)

(337

)

(443

)

(139

)

Net income attributable to La-Z-Boy Incorporated

$

18,303

$

20,012

$

28,731

$

1,528

Diluted weighted average common shares

47,161

47,259

47,091

47,369

Diluted net income attributable to La-Z-Boy Incorporated per share

$

0.39

$

0.42

$

0.61

$

0.03

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

Quarter Ended

Year Ended

(Amounts in thousands, except per share data)

4/25/20

4/27/19

4/25/20

4/27/19

GAAP gross profit

$

171,706

$

189,773

$

721,445

$

702,570

Add back: Purchase accounting charges - incremental expense upon the sale of inventory acquired at fair value

138

175

541

3,086

Add back: Supply chain optimization initiative charges

95

5,386

Non-GAAP gross profit

$

171,939

$

189,948

$

727,372

$

705,656

GAAP SG&A

$

131,418

$

152,602

$

575,821

$

572,896

Less: Purchase accounting (charges) gains - adjustment to fair value of contingent consideration and amortization of intangible assets and retention agreements

6,240

(1,594

)

2,663

(3,831

)

Add back: Supply chain optimization initiative gain on sale

9,745

Non-GAAP SG&A

$

137,658

$

151,008

$

588,229

$

569,065

GAAP operating income

$

13,426

$

37,171

$

118,762

$

129,674

Add back: Purchase accounting charges (gains)

(6,102

)

1,769

(2,122

)

6,917

Less: Supply chain optimization initiative gain on sale and charges

95

(4,359

)

Add back: Goodwill impairment

26,862

26,862

Non-GAAP operating income

$

34,281

$

38,940

$

139,143

$

136,591

GAAP income before income taxes

$

14,025

$

4,479

$

115,173

$

95,327

Add back: Purchase accounting charges (gains) recorded as part of gross profit, SG&A, and interest expense

(5,933

)

1,959

(1,428

)

7,486

Less: Supply chain optimization initiative gain on sale and charges

95

(4,359

)

Add back: Goodwill impairment

26,862

26,862

Add back: Investment impairment

6,000

Less: Pension termination (refund) charge

32,671

(1,900

)

32,671

Non-GAAP income before income taxes

$

35,049

$

39,109

$

140,348

$

135,484

GAAP net income attributable to La-Z-Boy Incorporated

$

2,295

$

1,528

$

77,469

$

68,574

Add back: Purchase accounting charges (gains) recorded as part of gross profit, SG&A, and interest expense

(5,933

)

1,959

(1,428

)

7,486

Less: Tax effect of purchase accounting

(635

)

(335

)

(1,746

)

(1,356

)

Less: Supply chain optimization initiative gain on sale and charges

95

(4,359

)

Add back: Tax effect of supply chain optimization initiative gain on sale and charges

(30

)

1,176

Add back: Goodwill impairment

26,862

26,862

Add back: Investment impairment

6,000

Less: Tax effect of investment impairment

(1,618

)

Less: Pension termination (refund) charge

32,671

(1,900

)

32,671

Add back: Tax effect of pension termination (refund) charge

(5,580

)

513

(5,919

)

Non-GAAP net income attributable to La-Z-Boy Incorporated

$

22,654

$

30,243

$

100,969

$

101,456

GAAP net income attributable to La-Z-Boy Incorporated per diluted share

$

0.05

$

0.03

$

1.66

$

1.44

Add back: Purchase accounting charges (gains), net of tax, per share

(0.14

)

0.03

(0.07

)

0.12

Less: Supply chain optimization initiative gain on sale and charges, net of tax, per share

(0.07

)

Add back: Goodwill impairment, net of tax, per share

0.58

0.58

Add back: Investment impairment, net of tax, per share

0.09

Less: Pension termination (refund) charge, net of tax, per share

0.58

(0.03

)

0.58

Non-GAAP net income attributable to La-Z-Boy Incorporated per diluted share

$

0.49

$

0.64

$

2.16

$

2.14

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

Quarter Ended

(Amounts in thousands)

4/25/20

% of sales

4/27/19

% of sales

GAAP operating income (loss)

Upholstery segment

$

29,832

11.8

%

$

37,304

11.5

%

Casegoods segment

413

1.9

%

2,416

9.1

%

Retail segment

14,984

10.7

%

12,743

8.4

%

Corporate and Other

(31,803

)

N/M

(15,292

)

N/M

Consolidated GAAP operating income

$

13,426

3.7

%

$

37,171

8.2

%

Non-GAAP items affecting operating income

Upholstery segment

$

149

$

57

Casegoods segment

Retail segment

138

175

Corporate and Other

20,568

1,537

Consolidated Non-GAAP items affecting operating income

$

20,855

$

1,769

Non-GAAP operating income (loss)

Upholstery segment

$

29,981

11.8

%

$

37,361

11.6

%

Casegoods segment

413

1.9

%

2,416

9.1

%

Retail segment

15,122

10.8

%

12,918

8.5

%

Corporate and Other

(11,235

)

N/M

(13,755

)

N/M

Consolidated Non-GAAP operating income

$

34,281

9.3

%

$

38,940

8.6

%

N/M - Not Meaningful


Year Ended

(Amounts in thousands)

4/25/20

% of sales

4/27/19

% of sales

GAAP operating income (loss)

Upholstery segment

$

134,691

11.2

%

$

127,906

10.1

%

Casegoods segment

7,749

7.3

%

12,589

11.0

%

Retail segment

48,256

8.1

%

37,922

6.7

%

Corporate and Other

(71,934

)

N/M

(48,743

)

N/M

Consolidated GAAP operating income

$

118,762

7.0

%

$

129,674

7.4

%

Non-GAAP items affecting operating income

Upholstery segment

$

(4,139

)

$

20

Casegoods segment

Retail segment

541

1,683

Corporate and Other

23,979

5,214

Consolidated Non-GAAP items affecting operating income

$

20,381

$

6,917

Non-GAAP operating income (loss)

Upholstery segment

$

130,552

10.8

%

$

127,926

10.1

%

Casegoods segment

7,749

7.3

%

12,589

11.0

%

Retail segment

48,797

8.2

%

39,605

6.9

%

Corporate and Other

(47,955

)

N/M

(43,529

)

N/M

Consolidated Non-GAAP operating income

$

139,143

8.2

%

$

136,591

7.8

%

N/M - Not Meaningful


Contact:

Kathy Liebmann

(734) 241-2438

kathy.liebmann@la-z-boy.com