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

Nachrichtenquelle: globenewswire
23.06.2020, 22:15  |  140   |   |   

Results Impacted by COVID-19

MONROE, Mich., June 23, 2020 (GLOBE NEWSWIRE) -- La-Z-Boy Incorporated (NYSE: 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
             

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