La-Z-Boy Inc. Reports Q3 Fiscal 2024 Results

TL;DR

<b>La-Z-Boy Inc. experienced a decline in net sales and EPS in Q3 FY2024 compared to the prior year, alongside strategic share repurchases and inventory reduction.</b>

AI Summary

LA-Z-BOY INC (LZB) filed a Quarterly Report (10-Q) with the SEC on February 20, 2024. Net sales for Q3 FY2024 were $511.5 million, a decrease of 5.1% compared to $539.1 million in Q3 FY2023. Diluted earnings per share (EPS) for Q3 FY2024 were $0.77, down from $0.88 in Q3 FY2023. The company repurchased approximately 0.5 million shares of common stock for $12.1 million during the nine months ended January 27, 2024. Operating income for Q3 FY2024 was $36.6 million, compared to $45.5 million in the prior year period. Inventory levels decreased to $379.9 million as of January 27, 2024, from $417.3 million as of April 29, 2023.

Why It Matters

For investors and stakeholders tracking LA-Z-BOY INC, this filing contains several important signals. The decrease in net sales and profitability suggests potential headwinds in consumer spending or market demand for furniture, impacting the company's top and bottom lines. The reduction in inventory and continued share repurchases indicate a focus on operational efficiency and returning value to shareholders, despite the sales dip.

Risk Assessment

Risk Level: medium — LA-Z-BOY INC shows moderate risk based on this filing. The decline in net sales by 5.1% and EPS by 10.2% in Q3 FY2024 compared to Q3 FY2023 indicates a weakening demand or market position.

Analyst Insight

Investors should monitor La-Z-Boy's ability to reverse the sales decline and improve profitability in the upcoming quarters, potentially through new product introductions or marketing strategies.

Key Numbers

• 511.5 — Net Sales Q3 FY2024 (Millions USD) (Reported net sales for the third quarter of fiscal year 2024.)
• 539.1 — Net Sales Q3 FY2023 (Millions USD) (Reported net sales for the third quarter of fiscal year 2023.)
• 0.77 — Diluted EPS Q3 FY2024 (USD) (Reported diluted earnings per share for the third quarter of fiscal year 2024.)
• 0.88 — Diluted EPS Q3 FY2023 (USD) (Reported diluted earnings per share for the third quarter of fiscal year 2023.)
• 36.6 — Operating Income Q3 FY2024 (Millions USD) (Reported operating income for the third quarter of fiscal year 2024.)
• 45.5 — Operating Income Q3 FY2023 (Millions USD) (Reported operating income for the third quarter of fiscal year 2023.)
• 379.9 — Inventory as of Jan 27, 2024 (Millions USD) (Total inventory value at the end of Q3 FY2024.)
• 417.3 — Inventory as of Apr 29, 2023 (Millions USD) (Total inventory value at the end of FY2023.)

Key Players & Entities

• La-Z-Boy Inc. (company) — Filer of the 10-Q report.
• January 27, 2024 (date) — End of the third quarter of fiscal year 2024.
• $511.5 million (dollar_amount) — Net sales for Q3 FY2024.
• $539.1 million (dollar_amount) — Net sales for Q3 FY2023.
• $0.77 (dollar_amount) — Diluted earnings per share for Q3 FY2024.
• $0.88 (dollar_amount) — Diluted earnings per share for Q3 FY2023.
• 0.5 million (share_amount) — Shares of common stock repurchased.
• $12.1 million (dollar_amount) — Cost of share repurchases.

FAQ

Key Financial Figures

• $1.00 — ange on which registered Common Stock, $1.00 Par Value LZB New York Stock Exchange

Filing Documents

• lzb-20240127.htm (10-Q) — 1367KB
• lzb-20240127x10qxexx311.htm (EX-31.1) — 8KB
• lzb-20240127x10qxexx312.htm (EX-31.2) — 8KB
• lzb-20240127x10qxexx32.htm (EX-32) — 5KB
• lzb-20240127_g1.jpg (GRAPHIC) — 22KB
• 0000057131-24-000013.txt (&nbsp;) — 7553KB
• lzb-20240127.xsd (EX-101.SCH) — 41KB
• lzb-20240127_cal.xml (EX-101.CAL) — 67KB
• lzb-20240127_def.xml (EX-101.DEF) — 185KB
• lzb-20240127_lab.xml (EX-101.LAB) — 587KB
• lzb-20240127_pre.xml (EX-101.PRE) — 385KB
• lzb-20240127_htm.xml (XML) — 1402KB

Financial Information (Unaudited)

PART I Financial Information (Unaudited) 3 Item 1.

Financial Statements

Financial Statements 3 Consolidated Statement of Income 3 Consolidated Statement of Comprehensive Income 4 Consolidated Balance Sheet 5 Consolidated Statement of Cash Flows 6 Consolidated Statement of Changes in Equity 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 Note 1. Basis of Presentation 9 Note 2. Acquisitions 9 Note 3. Cash and Restricted Cash 11 Note 4. Inventories 11 Note 5. Goodwill and Other Intangible Assets 12 Note 6. Investments 12 Note 7. Product Warranties 13 Note 8. Stock-Based Compensation 14 Note 9. Accumulated Other Comprehensive Loss 15 Note 10. Revenue Recognition 16 Note 11. Segment Information 17 Note 12. Income Taxes 19 Note 13. Earnings per Share 20 Note 14. Fair Value Measurements 20 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 22 Cautionary Note Regarding Forward-Looking Statements 22 Introduction 22 Results of Operations 25 Liquidity and Capital Resources 28 Critical Accounting Policies 30 Recent Accounting Pronouncements 30 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 30 Item 4.

Controls and Procedures

Controls and Procedures 31

Other Information

PART II Other Information 32 Item 1A.

Risk Factors

Risk Factors 32 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 32 Item 5. Other Information 32 Item 6. Exhibits 33 Signature Page 34 2 Table of Contents

- FINANCIAL INFORMATION (UNAUDITED)

PART I - FINANCIAL INFORMATION (UNAUDITED)

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS LA-Z-BOY INCORPORATED CONSOLIDATED STATEMENT OF INCOME Quarter Ended Nine Months Ended (Unaudited, amounts in thousands, except per share data) 1/27/2024 1/28/2023 1/27/2024 1/28/2023 Sales $ 500,406 $ 572,723 $ 1,493,492 $ 1,788,146 Cost of sales 287,152 337,142 851,905 1,072,051 Gross profit 213,254 235,581 641,587 716,095 Selling, general and administrative expense 180,693 192,741 540,888 558,729 Operating income 32,561 42,840 100,699 157,366 Interest expense ( 106 ) ( 136 ) ( 329 ) ( 414 ) Interest income 4,124 2,012 11,222 3,624 Other income (expense), net ( 639 ) ( 1,062 ) 21 ( 834 ) Income before income taxes 35,940 43,654 111,613 159,742 Income tax expense 7,256 12,077 27,309 42,446 Net income 28,684 31,577 84,304 117,296 Net (income) loss attributable to noncontrolling interests ( 44 ) 149 ( 986 ) ( 1,005 ) Net income attributable to La-Z-Boy Incorporated $ 28,640 $ 31,726 $ 83,318 $ 116,291 Basic weighted average common shares 42,767 43,137 43,005 43,111 Basic net income attributable to La-Z-Boy Incorporated per share $ 0.67 $ 0.74 $ 1.94 $ 2.70 Diluted weighted average common shares 43,195 43,137 43,344 43,111 Diluted net income attributable to La-Z-Boy Incorporated per share $ 0.66 $ 0.74 $ 1.92 $ 2.70 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 3 Table of Contents LA-Z-BOY INCORPORATED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Quarter Ended Nine Months Ended (Unaudited, amounts in thousands) 1/27/2024 1/28/2023 1/27/2024 1/28/2023 Net income $ 28,684 $ 31,577 $ 84,304 $ 117,296 Other comprehensive income (loss) Currency translation adjustment 2,262 5,441 ( 306 ) ( 72 ) Net unrealized gain on marketable securities, net of tax 342 287 475 84 Net pension amortization, net of tax 23 36 70 109 Total other comprehensive income 2,627 5,764 239 121 Total comprehensive income before noncontrolling interests 31,311 37,341 84,543

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1: Basis of Presentation The accompanying consolidated financial statements include the consolidated accounts of La-Z-Boy Incorporated and our majority-owned subsidiaries (collectively, the "Company"). We derived the April 29, 2023 balance sheet from our audited financial statements. We prepared the interim financial information in conformity with generally accepted accounting principles ("US GAAP"), which we applied on a basis consistent with those reflected in our fiscal 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), but the information does not include all of the disclosures required by US GAAP. In management's opinion, the interim financial information includes all adjustments and accruals, consisting only of normal recurring adjustments (except as otherwise disclosed), that are necessary for a fair statement of results for the respective interim periods. The interim results reflected in the accompanying financial statements are not necessarily indicative of the results of operations that will occur for the full fiscal year ending April 27, 2024. At January 27, 2024, we owned investments in two privately-held companies consisting of non-marketable preferred shares, warrants to purchase common shares, and convertible notes. Each of these companies is a variable interest entity and we have not consolidated their results in our financial statements because we do not have the power to direct those activities that most significantly impact their economic performance and, therefore, are not the primary beneficiary. Accounting Pronouncements Adopted in Fiscal 2024 The following table summarizes Accounting Standards Updates ("ASUs") which were adopted in fiscal 2024, but did not have a material impact on our accounting policies or our consolidated financial statements and related disclosures. ASU Description Adoption Date ASU 2021-08 Business Combinations

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