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06/15/21

La-Z-Boy Reports Fiscal 2021 Fourth-Quarter and Full-Year Results

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Record Fourth-Quarter Sales and Profit Strong Written Order Trends Drive Record Backlog

MONROE, Mich., June 15, 2021 (GLOBE NEWSWIRE) -- La-Z-Boy Incorporated (NYSE: LZB), a global leader in residential furniture, today reported strong operating results for the fiscal 2021 fourth quarter and full year ended April 24, 2021.

Fiscal 2021 fourth quarter versus Fiscal 2020 fourth quarter:

  • Consolidated sales increased 41% to $519.5 million
  • Written same-store sales for the entire La-Z-Boy Furniture Galleries® network doubled, increasing 100%
  • Consolidated operating margin:
    • GAAP: 9.6% versus 3.7%
    • Non-GAAP(1): 10.0% versus 9.3%
      • Wholesale(2): 10.2% versus 11.1%
      • Retail: 12.2% versus 10.8%
  • Net income attributable to La-Z-Boy Incorporated per diluted share (“EPS”):
    • GAAP: $0.81 versus $0.05
    • Non-GAAP(1): $0.87 versus $0.49
  • The company returned $50 million to shareholders through share repurchases and dividends

Fiscal 2021 full year versus Fiscal 2020 full year:

  • Consolidated sales increased 1.8% to $1.7 billion
  • Written same-store sales for the entire La-Z-Boy Furniture Galleries® network increased 31%
  • Consolidated operating margin:
    • GAAP: 7.9% versus 7.0%
    • Non-GAAP(1): 9.0% versus 8.2%
      • Wholesale(2): 10.6% versus 10.6%
      • Retail: 7.7% versus 8.2%
      • Joybird became profitable
  • Net income attributable to La-Z-Boy Incorporated per diluted share (“EPS”):
    • GAAP: $2.30 versus $1.66
    • Non-GAAP(1): $2.62 versus $2.16
  • Cash generated from operating activities of $310 million versus $164 million in the prior year
  • Cash(3) at fiscal year end increased to $395 million versus $264 million in the prior year
  • The company returned $61 million to shareholders through share repurchases and dividends

Melinda D. Whittington, President and Chief Executive Officer of La-Z-Boy, said, "In an extremely difficult year marked by the pandemic, related macroeconomic uncertainty and supply chain disruption, we delivered strong results. Our start to the fiscal year in May 2020 came as the world was still in the early stages of its COVID-19 response. We had just restarted our plants after a month-long shutdown and retailers were slowly beginning to reopen. Progressing strongly from that starting point, for the fiscal 2021 full year, we delivered consolidated non-GAAP(1) operating margin of 9%, generated $310 million in cash from operations, and returned $61 million to shareholders through share repurchases and dividends. Additionally, we strengthened our business by significantly expanding production capacity, enhanced our retail platform, including the acquisition of the Seattle-based La-Z-Boy Furniture Galleries® stores, and turned Joybird profitable. All business units are experiencing record demand, demonstrating the strength of our brands in the marketplace combined with fantastic execution from all retail and sales teams. I thank every employee across the La-Z-Boy enterprise for their agility, hard work and dedication, all of which contributed to our excellent performance while in the midst of historic challenges.

"For the fiscal 2021 fourth quarter, record sales led to all-time record profits driven by increased production capacity, excellent performance by our company-owned La-Z-Boy Furniture Galleries® stores, and continued growth and profitability at Joybird. And, fiscal 2022 is off to a great start with continued robust written order rates and a record backlog, setting us up well for a strong year of shipments ahead."

Consolidated sales in the fourth quarter of fiscal 2021 increased 41.4% to $519.5 million versus the fiscal 2020 fourth quarter, which was impacted by COVID-19-related plant and retail closures. Consolidated GAAP operating margin increased to 9.6% versus 3.7% in the prior-year fourth quarter. Consolidated non-GAAP(1) operating margin improved to 10.0% versus 9.3% in last year’s fourth quarter, reflecting strong performance across all business units.

For the entire La-Z-Boy Furniture Galleries® network, written same-store sales doubled, increasing 100%, for the fiscal 2021 fourth quarter compared with the fiscal 2020 fourth quarter. Compared with the pre-pandemic fiscal 2019 fourth quarter, written same-store sales for the La-Z-Boy Furniture Galleries® network increased 29%.

For the fiscal 2021 fourth quarter, delivered sales in the company’s Wholesale(2) segment increased 40% to $384.0 million compared with the prior-year fourth quarter, which was impacted by COVID-19. Non-GAAP(1) operating margin for the Wholesale(2) segment was a healthy 10.2% versus 11.1% for the prior-year period, reflecting disciplined cost management on advertising which helped offset higher raw material and freight costs and expenses to expand production capacity to service record backlog. Last year's fourth quarter benefited from a one-time rebate of previously paid tariffs partially offset by higher bad debt expense.

Retail segment delivered sales increased 39% to $193.5 million in the fourth quarter of fiscal 2021 compared with the prior-year fourth quarter. Written same-store sales for the company-owned La-Z-Boy Furniture Galleries® stores more than doubled, increasing 114% in the quarter, reflecting positive trends across all sales metrics, including traffic, conversion and average ticket, versus last year's fourth quarter which included store closures during the last four weeks of the period. Non-GAAP(1) operating margin for the Retail segment was 12.2% in the fiscal 2021 fourth quarter versus 10.8% in last year’s fourth quarter, primarily driven by fixed-cost leverage on higher delivered sales volume.

Within Corporate & Other, Joybird sales more than doubled compared with the prior-year quarter, increasing 144% to $37.7 million. Written sales increased 125% compared with the prior-year quarter, reflecting ongoing strong order trends and the strength of the brand in the online marketplace. For the third consecutive quarter, Joybird posted strong gross margins, delivered profitable growth and increased conversion rates while increasing its marketing spend to drive customer acquisition.

GAAP diluted EPS was $0.81 for the fiscal 2021 fourth quarter versus $0.05 in the prior-year quarter. Non-GAAP(1) diluted EPS was $0.87 versus $0.49 in last year’s fourth quarter.

Balance Sheet and Cash Flow

For fiscal 2021, the company generated $310 million in cash from operating activities, reflecting strong profit performance and a $140 million increase in customer deposits from written orders for the company's Retail segment and Joybird. La-Z-Boy ended the period with $395 million in cash(3) and no debt, compared with $264 million in cash(3) and $75 million in short-term borrowings at the end of fiscal 2020. The company holds $32 million in investments to enhance returns on cash versus $29 million at the end of fiscal 2020. In fiscal 2021 the company spent $8 million related to acquisitions, invested $38 million in the business through capital expenditures, paid $17 million in dividends and spent $44 million repurchasing approximately 1.1 million shares of stock in the open market under its existing authorized share repurchase program, leaving 3.4 million shares available for repurchase under the program as of April 24, 2021.

Business Outlook

Demand trends remain strong across the business with backlog at record levels. The company anticipates ongoing incremental increases in manufacturing capacity throughout fiscal 2022 that will enable higher delivered sales, but expects ongoing global supply chain disruptions and headwinds related to raw materials and freight costs will cause some volatility in results. In the short term, the company expects a temporary negative impact to profit margins versus very strong fourth-quarter results due to dramatic raw material price increases which will only be offset by previously announced pricing actions as the company works through its backlog in the back half of the year.

Incoming order rates and backlog will mitigate the usual seasonal slowdown associated with the first quarter. However, as usual, capacity in the first quarter is limited to 12 weeks of production/shipments to enable a shutdown week in July for maintenance for most of the company’s plants, compared with 13 weeks in the second and fourth quarters.

Whittington said, "As we look ahead, our prudent financial culture and strong cash position provide opportunities for investment in our next chapter of growth. For the immediate term, we are focused on continuing to increase capacity and deliver units while making investments in technology solutions across the company, our stores, and updating and expanding our plants, all to enhance the consumer experience, drive future growth and emerge stronger in a post-pandemic environment."

(1)Non-GAAP amounts for the full fiscal 2021 year exclude:

  • purchase accounting charges related to acquisitions totaling $16.7 million pre-tax, or $0.33 per diluted share, primarily due to a write-up of the Joybird contingent consideration liability based on forecasted future performance, with $16.0 million included in operating income and $0.7 million included in interest expense;
  • a charge of $3.8 million pre-tax, or $0.07 per diluted share, related to the company's business realignment initiative announced in June 2020; and
  • income of $5.2 million pre-tax, or $0.08 per diluted share, related to the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") recorded in other income related to the impact of employee retention credits.

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

  • a non-cash, non-tax deductible goodwill impairment charge of $26.9 million pre-tax, or $0.58 per diluted share;
  • a non-cash charge of $6.0 million pre-tax, or $0.09 per share, related to an impairment for one investment;
  • a purchase accounting net benefit of $1.4 million pre-tax, 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
  • a net benefit of $4.4 million pre-tax, 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; and
  • a benefit of $1.9 million pre-tax, or $0.03 per diluted share, related to the 2019 termination of the company's defined benefit pension plan.

Non-GAAP amounts for the fourth quarter of fiscal 2021 exclude:

  • purchase accounting charges related to acquisitions totaling $2.0 million pre-tax, plus related tax adjustments, or $0.06 per diluted share, primarily due to a write-up of the Joybird contingent consideration liability based on forecasted performance, with $1.9 million included in operating income and $0.1 million included in interest expense.

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

  • a non-cash, non-tax deductible goodwill impairment charge of $26.9 million pre-tax, or $0.58 per diluted share;
  • a purchase accounting net benefit of $5.9 million pre-tax, or $0.14 per diluted share, with a $6.1 million benefit included in operating income and $0.2 million included in interest expense; and
  • a benefit of $0.1 million pre-tax, or $0.00 per diluted share, related to the company's supply chain optimization initiative, including the closure of the company's Redlands, California upholstery manufacturing facility.

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.

Conference Call

La-Z-Boy will hold a conference call with the investment community on Wednesday, June 16, 2021, 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: 41347. 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 2021 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 England, La-Z-Boy, American Drew®, Hammary®, and Kincaid®. The company-owned Retail segment includes 159 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 561 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, goodwill impairment charges, business realignment charges, purchase accounting charges, charges for our supply chain optimization initiative, an impairment charge for one investment, benefits from the CARES Act, and refunds related to terminating the company's defined benefit pension plan. 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. The benefits from the CARES Act include the impact of employee retention credits. 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, 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 also excludes an impairment charge for one investment, benefits from the CARES Act and refunds related to the termination of the company's defined benefit pension plan when assessing the company's operating and financial performance due to the one-time nature of these 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-tax deductible goodwill impairment charge and the adjustment to the fair value of contingent consideration which reflects the associated GAAP tax impact in the period presented.

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


LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF INCOME

    Quarter Ended   Year Ended
(Unaudited, amounts in thousands, except per share data)   4/24/2021   4/25/2020   4/24/2021   4/25/2020
Sales   $ 519,470     $ 367,281     $ 1,734,244     $ 1,703,982  
Cost of sales   297,380     195,575     993,984     982,537  
Gross profit   222,090     171,706     740,260     721,445  
Selling, general and administrative expense   172,032     131,418     603,524     575,821  
Goodwill impairment   —     26,862     —     26,862  
Operating income   50,058     13,426     136,736     118,762  
Interest expense   (287 )   (400 )   (1,390 )   (1,291 )
Interest income   199     692     1,101     2,785  
Pension termination refund   —     —     —     1,900  
Other income (expense), net   1,471     307     9,466     (6,983 )
Income before income taxes   51,441     14,025     145,913     115,173  
Income tax expense   13,484     10,649     38,384     36,189  
Net income   37,957     3,376     107,529     78,984  
Net income attributable to noncontrolling interests   (461 )   (1,081 )   (1,068 )   (1,515 )
Net income attributable to La-Z-Boy Incorporated   $ 37,496     $ 2,295     $ 106,461     $ 77,469  
                 
Basic weighted average common shares   45,739     45,962     45,983     46,399  
Basic net income attributable to La-Z-Boy Incorporated per share   $ 0.82     $ 0.05     $ 2.31     $ 1.67  
                 
Diluted weighted average common shares   46,316     46,157     46,367     46,736  
Diluted net income attributable to La-Z-Boy Incorporated per share   $ 0.81     $ 0.05     $ 2.30     $ 1.66  

LA-Z-BOY INCORPORATED
CONSOLIDATED BALANCE SHEET

(Unaudited, amounts in thousands, except par value)   4/24/2021   4/25/2020
Current assets        
Cash and equivalents   $ 391,213     $ 261,553  
Restricted cash   3,490     1,975  
Receivables, net of allowance of $4,011 at 4/24/2021 and $7,541 at 4/25/2020   139,341     99,351  
Inventories, net   226,137     181,643  
Other current assets   165,979     81,804  
Total current assets   926,160     626,326  
Property, plant and equipment, net   219,194     214,767  
Goodwill   175,814     161,017  
Other intangible assets, net   30,431     28,653  
Deferred income taxes – long-term   11,915     20,839  
Right of use lease assets   343,800     318,647  
Other long-term assets, net   79,008     64,640  
Total assets   $ 1,786,322     $ 1,434,889  
         
Current liabilities        
Accounts payable   $ 94,152     $ 55,511  
Short-term borrowings   —     75,000  
Lease liabilities, current   67,614     64,376  
Accrued expenses and other current liabilities   449,904     155,282  
Total current liabilities   611,670     350,169  
Lease liabilities, long-term   295,023     270,162  
Other long-term liabilities   97,483     98,252  
Shareholders' equity        
Preferred shares – 5,000 authorized; none issued   —     —  
Common shares, $1 par value – 150,000 authorized; 45,361 outstanding at 4/24/2021 and 45,857 outstanding at 4/25/2020   45,361     45,857  
Capital in excess of par value   330,648     318,215  
Retained earnings   399,010     343,633  
Accumulated other comprehensive loss   (1,521 )   (6,952 )
Total La-Z-Boy Incorporated shareholders' equity   773,498     700,753  
Noncontrolling interests   8,648     15,553  
Total equity   782,146     716,306  
Total liabilities and equity   $ 1,786,322     $ 1,434,889  

LA-Z-BOY INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS

    Year Ended
(Unaudited, amounts in thousands)   4/24/2021   4/25/2020
Cash flows from operating activities        
Net income   $ 107,529     $ 78,984  
Adjustments to reconcile net income to cash provided by operating activities        
Gain on disposal of assets   (37 )   (10,068 )
Gain on sale of investments   (954 )   (693 )
Provision for doubtful accounts   (3,169 )   13,383  
Depreciation and amortization   33,021     31,192  
Equity-based compensation expense   12,671     8,371  
Goodwill impairment   —     26,862  
Pension termination refund   —     (1,900 )
Change in deferred taxes   8,790     719  
Change in receivables   (38,288 )   29,686  
Change in inventories   (40,727 )   14,900  
Change in right-of use lease asset   65,571     67,673  
Change in other assets   2,926     7,039  
Change in payables   37,068     (9,913 )
Change in lease liabilities   (65,881 )   (66,238 )
Change in other liabilities   191,397     (25,755 )
Net cash provided by operating activities   309,917     164,242  
         
Cash flows from investing activities        
Proceeds from disposals of assets   2,770     11,273  
Proceeds from insurance   —     1,080  
Capital expenditures   (37,960 )   (46,035 )
Purchases of investments   (39,584 )   (37,477 )
Proceeds from sales of investments   36,071     37,244  
Acquisitions   (2,000 )   —  
Net cash used for investing activities   (40,703 )   (33,915 )
         
Cash flows from financing activities        
Net proceeds from credit facility   —     75,000  
Payments on debt and finance lease liabilities   (75,050 )   (161 )
Holdback payments for acquisition purchases   (5,783 )   (6,850 )
Stock issued for stock and employee benefit plans, net of shares withheld for taxes   9,030     3,029  
Purchases of common stock   (44,202 )   (43,369 )
Dividends paid to shareholders   (16,542 )   (25,091 )
Dividends paid to minority interest joint venture partners (1)   (8,507 )   —  
Net cash (used for) provided by financing activities   (141,054 )   2,558  
Effect of exchange rate changes on cash and equivalents   3,015     (1,144 )
Change in cash, cash equivalents and restricted cash   131,175     131,741  
Cash, cash equivalents and restricted cash at beginning of period   263,528     131,787  
Cash, cash equivalents and restricted cash at end of period   $ 394,703     $ 263,528  
         
Supplemental disclosure of non-cash investing activities        
Capital expenditures included in payables   $ 4,638     $ 3,528  

(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   Year Ended
(Unaudited, amounts in thousands)   4/24/2021   4/25/2020   4/24/2021   4/25/2020
Sales                
Wholesale segment:                
Sales to external customers   $ 286,119     $ 211,218     $ 1,006,377     $ 1,026,630  
Intersegment sales   97,882     63,469     294,921     283,664  
Wholesale segment sales   384,001     274,687     1,301,298     1,310,294  
                 
Retail segment sales   193,535     139,660     612,906     598,554  
                 
Corporate and Other:                
Sales to external customers   39,816     16,403     114,961     78,798  
Intersegment sales   3,405     2,157     12,409     10,294  
Corporate and Other sales   43,221     18,560     127,370     89,092  
                 
Eliminations   (101,287 )   (65,626 )   (307,330 )   (293,958 )
Consolidated sales   $ 519,470     $ 367,281     $ 1,734,244     $ 1,703,982  
                 
Operating Income (Loss)                
Wholesale segment   $ 39,003     $ 30,245     $ 134,312     $ 142,440  
Retail segment   23,551     14,984     46,724     48,256  
Corporate and Other   (12,496 )   (31,803 )   (44,300 )   (71,934 )
Consolidated operating income   $ 50,058     $ 13,426     $ 136,736     $ 118,762  

LA-Z-BOY INCORPORATED
UNAUDITED QUARTERLY FINANCIAL DATA

Fiscal 2021

Fiscal Quarter Ended   (13 weeks)   (13 weeks)   (13 weeks)   (13 weeks)
(Amounts in thousands, except per share data)   7/25/2020   10/24/2020   1/23/2021   4/24/2021
Sales   $ 285,458     $ 459,120     $ 470,196     $ 519,470  
Cost of sales   169,095     258,565     268,944     297,380  
Gross profit   116,363     200,555     201,252     222,090  
Selling, general and administrative expense   112,038     152,616     166,838     172,032  
Operating income   4,325     47,939     34,414     50,058  
Interest expense   (459 )   (346 )   (298 )   (287 )
Interest income   494     123     285     199  
Other income (expense), net   1,474     (11 )   6,532     1,471  
Income before income taxes   5,834     47,705     40,933     51,441  
Income tax expense   1,155     12,401     11,344     13,484  
Net income   4,679     35,304     29,589     37,957  
Net income attributable to noncontrolling interests   119     (369 )   (357 )   (461 )
Net income attributable to La-Z-Boy Incorporated   $ 4,798     $ 34,935     $ 29,232     $ 37,496  
Diluted weighted average common shares   45,965     46,323     46,818     46,316  
Diluted net income attributable to La-Z-Boy Incorporated per share   $ 0.10     $ 0.75     $ 0.62     $ 0.81  

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 charge   —     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  

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

    Quarter Ended   Year Ended
(Amounts in thousands, except per share data)   4/24/2021   4/25/2020   4/24/2021   4/25/2020
GAAP gross profit   $ 222,090     $ 171,706     $ 740,260     $ 721,445  
Add back: Purchase accounting charges - incremental expense upon the sale of inventory acquired at fair value   —     138     429     541  
Add back: Business realignment charges   —     —     1,253     —  
Add back: Supply chain optimization initiative   —     95     —     5,386  
Non-GAAP gross profit   $ 222,090     $ 171,939     $ 741,942     $ 727,372  
                 
GAAP SG&A   $ 172,032     $ 131,418     $ 603,524     $ 575,821  
Less: Purchase accounting (charges) gains - adjustment to fair value of contingent consideration and amortization of intangible assets and retention agreements   (1,859 )   6,240     (15,595 )   2,663  
Less: Business realignment charges   —     —     (2,580 )   —  
Add back: Supply chain optimization initiative gain on sale   —     —     —     9,745  
Non-GAAP SG&A   $ 170,173     $ 137,658     $ 585,349     $ 588,229  
                 
GAAP operating income   $ 50,058     $ 13,426     $ 136,736     $ 118,762  
Add back: Purchase accounting charges   1,859     (6,102 )   16,024     (2,122 )
Add back: Business realignment charges   —     —     3,833     —  
Add back: Supply chain optimization initiative   —     95     —     (4,359 )
Add back: Goodwill impairment   —     26,862     —     26,862  
Non-GAAP operating income   $ 51,917     $ 34,281     $ 156,593     $ 139,143  
                 
GAAP income before income taxes   $ 51,441     $ 14,025     $ 145,913     $ 115,173  
Add back: Purchase accounting charges recorded as part of gross profit, SG&A, and interest expense   2,038     (5,933 )   16,694     (1,428 )
Add back: Business realignment charges   —     —     3,833     —  
Add back: Supply chain optimization initiative charges/(gain)   —     95     —     (4,359 )
Add back: Goodwill impairment   —     26,862     —     26,862  
Less: CARES Act benefit   —     —     (5,219 )   —  
Add back: Investment impairment   —     —     —     6,000  
Less: Pension termination refund   —     —     —     (1,900 )
Non-GAAP income before income taxes   $ 53,479     $ 35,049     $ 161,221     $ 140,348  
                 
GAAP net income attributable to La-Z-Boy Incorporated   $ 37,496     $ 2,295     $ 106,461     $ 77,469  
Add back: Purchase accounting charges recorded as part of gross profit, SG&A, and interest expense   2,038     (5,933 )   16,694     (1,428 )
Less: Tax effect of purchase accounting   837     (635 )   (642 )   (1,746 )
Add back: Business realignment charges   —     —     3,833     —  
Less: Tax effect of business realignment charges   —     —     (938 )   —  
Add back: Supply chain optimization initiative charges/(gain)   —     95     —     (4,359 )
Less: Tax effect of supply chain optimization initiative   —     (30 )   13     1,176  
Add back: Goodwill impairment   —     26,862     —     26,862  
Less: CARES Act benefit   —     —     (5,219 )   —  
Add back: Tax effect of CARES Act benefit   —     —     1,261     —  
Add back: Investment impairment   —     —     —     6,000  
Less: Tax effect of investment impairment   —     —     —     (1,618 )
Less: Pension termination refund   —     —     —     (1,900 )
Add back: Tax effect of pension termination refund   —     —     —     513  
Non-GAAP net income attributable to La-Z-Boy Incorporated   $ 40,371     $ 22,654     $ 121,463     $ 100,969  
                 
GAAP net income attributable to La-Z-Boy Incorporated per diluted share   $ 0.81     $ 0.05     $ 2.30     $ 1.66  
Add back: Purchase accounting charges, net of tax, per share   0.06     (0.14 )   0.33     (0.07 )
Add back: Business realignment charges, net of tax, per share   —     —     0.07     —  
Less: Supply chain optimization initiative, net of tax, per share   —     —     —     (0.07 )
Add back: Goodwill impairment, net of tax, per share   —     0.58     —     0.58  
Less: CARES Act benefit, net of tax, per share   —     —     (0.08 )   —  
Add back: Investment impairment, net of tax, per share   —     —     —     0.09  
Less: Pension termination refund, net of tax, per share   —     —     —     (0.03 )
Non-GAAP net income attributable to La-Z-Boy Incorporated per diluted share   $ 0.87     $ 0.49     $ 2.62     $ 2.16  

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

    Quarter Ended   Year Ended
(Amounts in thousands)   4/24/2021   % of sales   4/25/2020   % of sales   4/24/2021   % of sales   4/25/2020   % of sales
GAAP operating income (loss)                                
Wholesale segment   $ 39,003       10.2 %   $ 30,245       11.0 %   $ 134,312       10.3 %   $ 142,440       10.9 %
Retail segment   23,551       12.2 %   14,984       10.7 %   46,724       7.6 %   48,256       8.1 %
Corporate and Other   (12,496 )     N/M   (31,803 )     N/M   (44,300 )     N/M   (71,934 )     N/M
Consolidated GAAP operating income   $ 50,058       9.6 %   $ 13,426       3.7 %   $ 136,736       7.9 %   $ 118,762       7.0 %
                                 
Non-GAAP items affecting operating income                                
Wholesale segment   $ 60           $ 149           $ 3,346           $ (4,139 )      
Retail segment   —           138           612           541        
Corporate and Other   1,799           20,568           15,899           23,979        
Consolidated Non-GAAP items affecting operating income   $ 1,859           $ 20,855           $ 19,857           $ 20,381        
                                 
Non-GAAP operating income (loss)                                
Wholesale segment   $ 39,063       10.2 %   $ 30,394       11.1 %   $ 137,658       10.6 %   $ 138,301       10.6 %
Retail segment   23,551       12.2 %   15,122       10.8 %   47,336       7.7 %   48,797       8.2 %
Corporate and Other   (10,697 )     N/M   (11,235 )     N/M   (28,401 )     N/M   (47,955 )     N/M
Consolidated Non-GAAP operating income   $ 51,917       10.0 %   $ 34,281       9.3 %   $ 156,593       9.0 %   $ 139,143       8.2 %
                                 
N/M - Not Meaningful                                

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Source: La-Z-Boy Incorporated