SEC Form 10-Q filed by La-Z-Boy Incorporated

11/19/24 4:21:23 PM ET

$LZB

Home Furnishings

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 26, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

COMMISSION FILE NUMBER 1-9656

LA-Z-BOY INCORPORATED

(Exact name of registrant as specified in its charter)


Michigan						38-0751137
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

One La-Z-Boy Drive,

Monroe,

Michigan

48162-5138

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code (734) 242-1444

None

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1.00 Par Value

LZB

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


Class						Outstanding at November 12, 2024
Common Stock, $1.00 Par Value						41,480,995

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LA-Z-BOY INCORPORATED

FORM 10-Q SECOND QUARTER OF FISCAL 2025

TABLE OF CONTENTS


		Page Number
PART I Financial Information (Unaudited)		3
Item 1.	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	8
	Note 1. Basis of Presentation	8
	Note 2. Acquisitions	8
	Note 3. Cash and Restricted Cash	9
	Note 4. Inventories	10
	Note 5. Goodwill and Other Intangible Assets	10
	Note 6. Investments	11
	Note 7. Product Warranties	11
	Note 8. Stock-Based Compensation	12
	Note 9. Accumulated Other Comprehensive Loss	13
	Note 10. Revenue Recognition	15
	Note 11. Segment Information	16
	Note 12. Income Taxes	18
	Note 13. Earnings per Share	19
	Note 14. Fair Value Measurements	19

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	Cautionary Note Regarding Forward-Looking Statements	21
	Introduction	21
	Results of Operations	24
	Liquidity and Capital Resources	27
	Critical Accounting Policies	29
	Recent Accounting Pronouncements	29

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30

PART II Other Information		31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 5.	Other Information	31
Item 6.	Exhibits	31

Signature Page		32

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PART I - FINANCIAL INFORMATION (UNAUDITED)

ITEM 1. FINANCIAL STATEMENTS

LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF INCOME


	Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands, except per share data)	10/26/2024		10/28/2023		10/26/2024		10/28/2023
Sales	$	521,027	$	511,435	$	1,016,559	$	993,086
Cost of sales	290,379		288,830		572,568		564,753
Gross profit	230,648		222,605		443,991		428,333
Selling, general and administrative expense	191,876		188,993		372,849		360,195
Operating income	38,772		33,612		71,142		68,138
Interest expense	(99)		(101)		(309)		(223)
Interest income	3,730		4,042		8,154		7,098


Other income (expense), net	(1,879)		104		(2,497)		660
Income before income taxes	40,524		37,657		76,490		75,673
Income tax expense	10,671		9,963		19,833		20,053
Net income	29,853		27,694		56,657		55,620
Net (income) attributable to noncontrolling interests	184		(495)		(461)		(942)
Net income attributable to La-Z-Boy Incorporated	$	30,037	$	27,199	$	56,196	$	54,678

Basic weighted average common shares	41,708		43,008		41,880		43,123
Basic net income attributable to La-Z-Boy Incorporated per share	$	0.72	$	0.63	$	1.34	$	1.27

Diluted weighted average common shares	42,154		43,401		42,316		43,479
Diluted net income attributable to La-Z-Boy Incorporated per share	$	0.71	$	0.63	$	1.33	$	1.26

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


	Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	10/26/2024		10/28/2023		10/26/2024		10/28/2023
Net income	$	29,853	$	27,694	$	56,657	$	55,620
Other comprehensive income (loss)
Currency translation adjustment	1,612		(3,615)		3,145		(2,568)

Net unrealized gain (loss) on marketable securities, net of tax	(17)		(87)		96		133
Net pension amortization, net of tax	16		24		31		47
Total other comprehensive income (loss)	1,611		(3,678)		3,272		(2,388)
Total comprehensive income before noncontrolling interests	31,464		24,016		59,929		53,232
Comprehensive (income) attributable to noncontrolling interests	(504)		(11)		(1,475)		(418)
Comprehensive income attributable to La-Z-Boy Incorporated	$	30,960	$	24,005	$	58,454	$	52,814

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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LA-Z-BOY INCORPORATED

CONSOLIDATED BALANCE SHEET


(Unaudited, amounts in thousands, except par value)	10/26/2024		4/27/2024
Current assets
Cash and equivalents	$	303,062	$	341,098

Receivables, net of allowance of $5,586 at 10/26/2024 and $5,076 at 4/27/2024	128,518		139,213
Inventories, net	289,209		263,237
Other current assets	98,372		93,260
Total current assets	819,161		836,808
Property, plant and equipment, net	314,387		298,224
Goodwill	221,950		214,453
Other intangible assets, net	49,345		47,251
Deferred income taxes – long-term	8,388		10,283
Right of use lease assets	453,434		446,466
Other long-term assets, net	61,530		59,957
Total assets	$	1,928,195	$	1,913,442

Current liabilities
Accounts payable	$	107,545	$	96,486


Lease liabilities, short-term	78,627		77,027
Accrued expenses and other current liabilities	248,718		263,768
Total current liabilities	434,890		437,281

Lease liabilities, long-term	411,414		404,724
Other long-term liabilities	61,609		58,077
Shareholders' equity
Preferred shares – 5,000 authorized; none issued	—		—
Common shares, $1.00 par value – 150,000 authorized; 41,647 outstanding at 10/26/2024 and 42,440 outstanding at 4/27/2024	41,647		42,440
Capital in excess of par value	377,258		368,485
Retained earnings	594,632		598,009
Accumulated other comprehensive loss	(3,612)		(5,870)
Total La-Z-Boy Incorporated shareholders' equity	1,009,925		1,003,064
Noncontrolling interests	10,357		10,296
Total equity	1,020,282		1,013,360
Total liabilities and equity	$	1,928,195	$	1,913,442

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF CASH FLOWS


	Six Months Ended
(Unaudited, amounts in thousands)	10/26/2024		10/28/2023
Cash flows from operating activities
Net income	$	56,657	$	55,620
Adjustments to reconcile net income to cash provided by operating activities
Loss on disposal and impairment of assets	40		559

Gain on sale of investments	(113)		(1,136)
Provision for doubtful accounts	477		44
Depreciation and amortization	23,644		25,092
Amortization of right-of-use lease assets	41,817		37,285
Lease impairment/(settlement)	—		(1,175)
Equity-based compensation expense	9,047		7,337
Change in deferred taxes	2,377		(340)



Change in receivables	10,000		(9,843)
Change in inventories	(22,625)		9,757
Change in other assets	(9,626)		(1,361)
Change in payables	12,380		(4,040)
Change in lease liabilities	(42,721)		(38,121)
Change in other liabilities	(13,101)		(22,802)
Net cash provided by operating activities	68,253		56,876

Cash flows from investing activities
Proceeds from disposals of assets	176		4,037

Capital expenditures	(32,769)		(26,501)
Purchases of investments	(5,317)		(17,485)
Proceeds from sales of investments	10,225		21,956
Acquisitions	(17,841)		(7,311)
Net cash used for investing activities	(45,526)		(25,304)

Cash flows from financing activities

Payments on finance lease liabilities	(291)		(206)

Holdback payments for acquisitions	—		(5,000)
Stock issued for stock and employee benefit plans, net of shares withheld for taxes	9,887		(1,859)
Repurchases of common stock	(53,144)		(20,014)
Dividends paid to shareholders	(16,731)		(15,632)
Dividends paid to minority interest joint venture partners (1)	(1,414)		(1,172)
Net cash used for financing activities	(61,693)		(43,883)

Effect of exchange rate changes on cash and equivalents	930		(900)
Change in cash, cash equivalents and restricted cash	(38,036)		(13,211)
Cash, cash equivalents and restricted cash at beginning of period	341,098		346,678
Cash, cash equivalents and restricted cash at end of period	$	303,062	$	333,467

Supplemental disclosure of non-cash investing activities
Capital expenditures included in payables	$	4,420	$	3,079

(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.

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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LA-Z-BOY INCORPORATED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


(Unaudited, amounts in thousands, except per share data)	Common Shares		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-Controlling Interests		Total
At April 27, 2024	$	42,440	$	368,485	$	598,009	$	(5,870)	$	10,296	$	1,013,360
Net income	—		—		26,159		—		645		26,804
Other comprehensive income	—		—		—		1,335		326		1,661
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	508		10,086		(2,720)		—		—		7,874
Repurchases of 933 shares of common stock	(933)		(10,325)		(22,658)		—		—		(33,916)
Stock option and restricted stock expense	—		3,175		—		—		—		3,175
Dividends declared and paid ($0.20/share)	—		—		(8,371)		—		—		(8,371)
Dividends declared not paid ($0.20/share)	—		—		(111)		—		—		(111)
At July 27, 2024	$	42,015	$	371,421	$	590,308	$	(4,535)	$	11,267	$	1,010,476
Net income (loss)	—		—		30,037		—		(184)		29,853
Other comprehensive income	—		—		—		923		688		1,611
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	99		1,920		(6)		—		—		2,013
Repurchases of 467 shares of common stock	(467)		(1,955)		(17,222)		—		—		(19,644)
Stock option and restricted stock expense	—		5,872		—		—		—		5,872


Dividends declared and paid ($0.20/share) (1)	—		—		(8,360)		—		(1,414)		(9,774)
Dividends declared not paid ($0.20/share)	—		—		(125)		—		—		(125)
At October 26, 2024	$	41,647	$	377,258	$	594,632	$	(3,612)	$	10,357	$	1,020,282

(1)Non-controlling interests include dividends paid to joint venture minority partners resulting from the repatriation of dividends from our foreign earnings that we no longer consider permanently reinvested.


(Unaudited, amounts in thousands, except per share data)	Common Shares		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-Controlling Interests		Total
At April 29, 2023	$	43,318	$	358,891	$	545,155	$	(5,528)	$	10,261	$	952,097
Net income	—		—		27,479		—		447		27,926
Other comprehensive income (loss)	—		—		—		1,330		(40)		1,290
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	149		(221)		(1,906)		—		—		(1,978)
Repurchases of 357 shares of common stock	(357)		(4,512)		(5,138)		—		—		(10,007)
Stock option and restricted stock expense	—		2,526		—		—		—		2,526
Dividends declared and paid ($0.1815/share)	—		—		(7,852)		—		—		(7,852)
Dividends declared not paid ($0.1815/share)	—		—		(72)		—		—		(72)
At July 29, 2023	$	43,110	$	356,684	$	557,666	$	(4,198)	$	10,668	$	963,930
Net income	—		—		27,199		—		495		27,694
Other comprehensive loss	—		—		—		(3,194)		(484)		(3,678)
Stock issued for stock and employee benefit plans, net of cancellations and withholding tax	91		32		(4)		—		—		119
Repurchases of 326 shares of common stock	(326)		(118)		(9,561)		—		—		(10,005)
Stock option and restricted stock expense	—		4,811		—		—		—		4,811

Dividends declared and paid ($0.1815/share) (1)	—		—		(7,780)		—		(1,172)		(8,952)
Dividends declared not paid ($0.1815/share)	—		—		(129)		—		—		(129)
At October 28, 2023	$	42,875	$	361,409	$	567,391	$	(7,392)	$	9,507	$	973,790

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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LA-Z-BOY INCORPORATED

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 27, 2024 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 2024 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 26, 2025.

Accounting Pronouncements Adopted in Fiscal 2025

The following table summarizes Accounting Standards Updates ("ASUs"), which were adopted in fiscal 2025, but did not have a material impact on our accounting policies or our consolidated financial statements and related disclosures.

ASU

Description

Adoption Date

ASU 2023-07

Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

Fiscal 2025

ASU 2023-05

Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement

Fiscal 2025

ASU 2023-02

Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

Fiscal 2025

Accounting Pronouncements not yet Adopted

The following table summarizes additional accounting pronouncements which we have not yet adopted, but we believe will not have a material impact on our accounting policies or our consolidated financial statements and related disclosures.

ASU

Description

Adoption Date

ASU 2023-09

Income Taxes (Topic 740): Improvements to Income Tax Disclosures

Fiscal 2026

ASU 2024-03

Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses

Fiscal 2028

Note 2: Acquisitions

None of the below acquisitions were significant to our consolidated financial statements, and, therefore, pro-forma financial information is not presented. All of our provisional purchase accounting estimates for the acquisitions completed in fiscal 2025 are based on the information and data available to us as of the time of the issuance of these financial statements, and in accordance with Accounting Standard Codification Topic 805-10-25-15, are subject to change within the first 12 months following the acquisition as we gain additional data.

Each of the following Retail acquisitions completed in fiscal 2025 and 2024 reflect a core component of our strategic priorities, which is to grow our company-owned retail business and leverage our integrated retail model (where we earn a combined profit on both the wholesale and retail sales) in suitable geographic markets, alongside the existing La-Z-Boy Furniture Galleries® network.

Prior to each Retail acquisition completed in fiscal 2025 and 2024, we licensed to the counterparty the exclusive right to own and operate the La-Z-Boy Furniture Galleries® stores (and to use the associated trademarks and trade name) in each of their respective markets, and we reacquired these rights when we consummated the transaction. These required rights are indefinite-lived because our retailer agreements are perpetual agreements that have no specific expiration date and no renewal options. The effective settlement date of these arrangements resulted in no settlement gain or loss as the contractual terms were at market. For federal income tax purposes, we amortize and deduct these indefinite-lived intangible assets and goodwill, if any, over 15 years.

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Melbourne and Cocoa, Florida Acquisition

On September 10, 2024, we completed our acquisition of the Melbourne and Cocoa, Florida business that operates two independently owned La-Z-Boy Furniture Galleries® stores and one distribution center for $11.4 million, inclusive of and subject to further customary adjustments. The acquisition also included the purchase of buildings and land for both stores and the distribution center. We paid total cash of $10.0 million during the second quarter of fiscal 2025 and the remaining consideration included forgiveness of accounts receivable and payments based on working capital adjustments. As part of the acquisition, we recorded an indefinite-lived intangible asset of $0.9 million related to the reacquired rights described above. We also recognized $1.7 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired store and future benefits of these synergies.

Davenport, Iowa Acquisition

On July 22, 2024, we completed our acquisition of the Davenport, Iowa business that operates one independently owned La-Z-Boy Furniture Galleries® store for $7.4 million, inclusive of and subject to further customary adjustments. We paid total cash of $6.9 million during the first and second quarters of fiscal 2025 and the remaining consideration included forgiveness of accounts receivable and payments based on working capital adjustments. As part of the acquisition, we recorded an indefinite-lived intangible asset of $1.7 million related to the reacquired rights described above. We also recognized $5.1 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired store and future benefits of these synergies.

Prior Year Acquisitions

Lafayette, Louisiana Acquisition

On October 23, 2023, we completed our acquisition of the Lafayette, Louisiana business that operates one independently owned La-Z-Boy Furniture Galleries® store and one distribution center for $2.8 million, inclusive of customary adjustments. We paid total cash of $2.6 million during the second and third quarters of fiscal 2024 and the remaining consideration included forgiveness of accounts receivable and payments based on working capital adjustments. As part of the acquisition, we recorded an indefinite-lived intangible asset of $0.7 million related to the reacquired rights described above. We also recognized $2.1 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired store and future benefits of these synergies.

Colorado Springs, Colorado Acquisition

On July 17, 2023, we completed our acquisition of the Colorado Springs, Colorado business that operates two independently owned La-Z-Boy Furniture Galleries® stores and one distribution center for $6.0 million, inclusive of customary adjustments. We paid total cash of $5.6 million during the first and second quarters of fiscal 2024 and the remaining consideration included forgiveness of accounts receivable and payments based on working capital adjustments. As part of the acquisition, we recorded an indefinite-lived intangible asset of $2.1 million related to the reacquired rights described above. We also recognized $2.2 million of goodwill in our Retail segment related primarily to synergies we expect from the integration of the acquired stores and future benefits of these synergies.

Note 3: Cash and Restricted Cash

At October 28, 2023, we had restricted cash on deposit with a bank as collateral for certain letters of credit that matured within 12 months. During fiscal 2024, we renewed these letters of credit and as of April 27, 2024, we were no longer required to hold restricted cash as collateral. All of our letters of credit have maturity dates within the next 12 months, and we expect to renew some of these letters of credit when they mature.


(Unaudited, amounts in thousands)	10/26/2024		10/28/2023
Cash and cash equivalents	$	303,062	$	329,632
Restricted cash	—		3,835
Total cash, cash equivalents and restricted cash	$	303,062	$	333,467

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Note 4: Inventories

A summary of inventories is as follows:


(Unaudited, amounts in thousands)	10/26/2024		4/27/2024
Raw materials	$	143,188	$	125,932
Work in process	19,729		19,443
Finished goods	169,869		161,439
FIFO inventories	332,786		306,814
Excess of FIFO over LIFO	(43,577)		(43,577)
Total inventories	$	289,209	$	263,237

Note 5: Goodwill and Other Intangible Assets

We have goodwill on our consolidated balance sheet as follows:

Reportable Segment/Unit

Reporting Unit

Related Acquisition

Wholesale Segment

United Kingdom

Wholesale business in the United Kingdom and Ireland

Wholesale Segment

United Kingdom

La-Z-Boy United Kingdom Manufacturing (Furnico)

Retail Segment

Retail

La-Z-Boy Furniture Galleries® stores

Corporate and Other

Joybird

The following table summarizes changes in the carrying amount of our goodwill by reportable segment:


(Unaudited, amounts in thousands)	Wholesale Segment		Retail Segment		Corporate and Other		Total Goodwill
Balance at April 27, 2024 (1)	$	20,085	$	138,922	$	55,446	$	214,453
Acquisitions	—		6,801		—		6,801
Translation adjustment	752		(56)		—		696
Balance at October 26, 2024 (1)	$	20,837	$	145,667	$	55,446	$	221,950

(1)Includes $26.9 million of accumulated impairment losses in Corporate and Other.

We have intangible assets on our consolidated balance sheet as follows:

Reportable Segment

Intangible Asset

Useful Life

Wholesale Segment

Customer relationships from our acquisition of the wholesale business in the United Kingdom and Ireland

Amortizable over 15 year useful life

Wholesale Segment

American Drew® trade name

Indefinite-lived

Retail Segment

Reacquired rights to own and operate La-Z-Boy Furniture Galleries® stores

Indefinite-lived

Corporate and Other

Joybird® trade name

Amortizable over eight-year useful life

The following summarizes changes in our intangible assets:


(Unaudited, amounts in thousands)	Indefinite- Lived Trade Names		Finite-Lived Trade Name		Indefinite- Lived Reacquired Rights		Other Intangible Assets		Total Intangible Assets
Balance at April 27, 2024	$	1,155	$	1,796	$	42,640	$	1,660	$	47,251
Acquisitions	—		—		2,585		—		2,585
Amortization	—		(399)		—		(112)		(511)
Translation adjustment	—		—		(42)		62		20
Balance at October 26, 2024	$	1,155	$	1,397	$	45,183	$	1,610	$	49,345

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We test indefinite-lived intangibles and goodwill for impairment on an annual basis in the fourth quarter of each fiscal year, and more frequently if events or changes in circumstances indicate that an asset might be impaired. We test amortizable intangible assets for impairment if events or changes in circumstances indicate that the assets might be impaired.

Note 6: Investments

We have current and long-term investments intended to enhance returns on our cash as well as to fund future obligations of our non-qualified defined benefit retirement plan, our executive deferred compensation plan, and our performance compensation retirement plan.

Our short-term investments are included in other current assets and our long-term investments are included in other long-term assets on our consolidated balance sheet.

The following summarizes our investments:


(Unaudited, amounts in thousands)	10/26/2024		4/27/2024
Short-term investments:
Marketable securities	$	1,031	$	5,553
Held-to-maturity investments	1,384		1,259
Total short-term investments	2,415		6,812
Long-term investments:
Marketable securities	12,780		12,690


Total investments	$	15,195	$	19,502

Investments to enhance returns on cash	$	2,379	$	6,754
Investments to fund compensation/retirement plans	12,816		12,748

Total investments	$	15,195	$	19,502

The following is a summary of the unrealized gains, unrealized losses, and fair value by investment type:


	10/26/2024						4/27/2024
(Unaudited, amounts in thousands)	Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Equity securities	$	837	$	—	$	3,892	$	476	$	—	$	3,728
Fixed income	129		(58)		7,445		15		(72)		12,015
Other	393		(16)		3,858		707		(14)		3,759
Total securities	$	1,359	$	(74)	$	15,195	$	1,198	$	(86)	$	19,502

The following table summarizes sales of marketable securities:


	Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	10/26/2024		10/28/2023		10/26/2024		10/28/2023
Proceeds from sales	$	2,346	$	8,064	$	10,225	$	20,468
Gross realized gains	318		1,715		433		1,876
Gross realized losses	—		(272)		(35)		(740)

The following is a summary of the fair value of fixed income marketable securities, classified as available-for-sale securities, by contractual maturity:


(Unaudited, amounts in thousands)	10/26/2024
Within one year	$	994



Securities not due at a single maturity date	6,451
Total	$	7,445

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Note 7: Product Warranties

We accrue an estimated liability for product warranties when we recognize revenue on the sale of warrantied products. We estimate future warranty claims on product sales based on sales volume and our historical claims experience and periodically adjust the provision to reflect changes in actual experience. We incorporate repair costs into our liability estimates, including materials, labor and overhead amounts necessary to perform repairs, and any costs associated with delivering repaired product to our customers. Over 90% of our warranty liability relates to our Wholesale reportable segment, as we generally warrant our products against defects for one to three years on fabric and leather, from one to five years on cushions and padding, and provide a limited lifetime warranty on certain mechanisms and frames, unless otherwise noted in the warranty. Additionally, our Wholesale segment warranties cover labor costs relating to our parts for one year. We provide a limited lifetime warranty against defects on a majority of the Joybird products, which are a part of our Corporate and Other results. For all our manufacturer warranties, the warranty period begins when the consumer receives our product. We use considerable judgment in making our estimates, and we record differences between our actual and estimated costs when the differences are known.

A reconciliation of the changes in our product warranty liability is as follows:


	Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	10/26/2024		10/28/2023 (1)		10/26/2024 (2)		10/28/2023 (1)
Balance as of the beginning of the period	$	29,478	$	30,794	$	28,909	$	30,984

Accruals during the period	8,416		9,038		17,316		17,684
Settlements during the period	(8,342)		(8,705)		(16,673)		(17,541)
Balance as of the end of the period	$	29,552	$	31,127	$	29,552	$	31,127

(1)Accruals and settlements for fiscal 2024 have been revised. The adjustments were offsetting and had no impact on the liability balance at the end of each reporting period in fiscal 2024 or the amount recognized in the consolidated statement of income for fiscal 2024

(2)$22.0 million and $22.4 million is recorded in accrued expenses and other current liabilities as of October 26, 2024, and April 27, 2024, respectively, while the remainder is included in other long-term liabilities..

We recorded accruals during the periods presented in the table above, primarily to reflect charges that relate to warranties issued during the respective periods.

Note 8: Stock-Based Compensation

The table below summarizes the total stock-based compensation expense we recognized for all outstanding grants in our consolidated statement of income:


	Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	10/26/2024		10/28/2023		10/26/2024		10/28/2023
Equity-based awards expense	$	5,872	$	4,811	$	9,047	$	7,337
Liability-based awards expense (1)	(57)		(35)		104		53
Total stock-based compensation expense	$	5,815	$	4,776	$	9,151	$	7,390

(1)Includes stock appreciation rights, deferred stock units issued to Directors, restricted stock units, and performance-based units. Compensation expense for these awards is based on the market price of our common stock on the grant date and is remeasured each reporting period based on the market value of our common shares on the last day of the reported period.

Restricted Stock. During the first six months of fiscal 2025, we granted 241,334 shares of restricted stock units to employees and we also have restricted stock awards outstanding from previous grants. We issue restricted stock at no cost to the employees and account for restricted stock awards as equity-based awards because when they vest, they will be settled in common shares. We recognize compensation expense for restricted stock over the vesting period equal to the fair value on the date our Compensation and Talent Oversight Committee of our board of directors approved the awards. Restricted stock awards vest at 25% per year, beginning one year from the grant date for a term of four years, with continued vesting upon retirement with respect to the fiscal 2023, fiscal 2024 and fiscal 2025 grants. We accelerate the expense for restricted stock granted to retirement-eligible employees over the vesting period, with expense recognized from the grant date through their retirement eligibility date or over the ten months following the grant date, whichever period is longer. We have elected to recognize forfeitures as an adjustment to compensation expense in the same period as the forfeitures occur. The weighted-average fair value of the restricted stock that was awarded in the first six months of fiscal 2025 was $38.05 per share, the market value of our common shares on the date of grant.

Restricted Stock Units Issued to Directors. During the second quarter of fiscal 2025, we granted 30,348 restricted stock units to our non-employee directors. Restricted stock units granted to our non-employee directors are offered at no cost to the directors

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and restricted stock units granted following August 2022 vest on the earlier of the date a director ceases to be a member of the board (for any reason other than the termination of service for cause) or the-one year anniversary of the grant date. We account for these restricted stock units as equity-based awards because when they vest, they will be settled in shares of our common stock. We measure and recognize compensation expense for these awards based on the market price of our common shares on the date of grant. The weighted-average fair value of the restricted stock units granted to our non-employee directors in the second quarter of fiscal 2025 was $40.04 per share.

Performance Shares. During the first quarter of fiscal 2025, we granted 163,888 performance-based shares, and we also have performance-based share awards outstanding from previous grants. Payouts of these grants depend on our financial performance (50%) and a market-based condition based on the total return our shareholders receive on their investment in our stock relative to returns earned through investments in other public companies (50%). The performance share opportunity ranges from 50% of the employee’s target award if minimum performance requirements are met to a maximum of 200% of the target award based on the attainment of certain financial and shareholder-return goals over a specific performance period, which is generally three fiscal years.

We account for performance-based shares as equity-based awards because when they vest, they will be settled in common shares. In the event of an employee's termination during the vesting period, the potential right to earn shares under this program is generally forfeited and we have elected to recognize forfeitures as an adjustment to compensation expense in the same period in which the forfeitures occur. For shares that vest based on our results relative to the performance goals, we expense as compensation cost the fair value of the shares as of the day we granted the awards recognized over the performance period, taking into account the probability that we will satisfy the performance goals. The fair value of each share of the awards we granted in fiscal 2025 that vest based on attaining performance goals was $35.59, the market value of our common shares on the date we granted the awards less the dividends we expect to pay before the shares vest. For shares that vest based on market conditions, we use a Monte Carlo valuation model to estimate each share’s fair value as of the date of grant. The Monte Carlo valuation model uses multiple simulations to evaluate our probability of achieving various stock price levels to determine our expected performance ranking relative to our peer group. For shares that vest based on market conditions, we expense compensation cost over the vesting period regardless of whether the market condition is ultimately satisfied. Based on the Monte Carlo model, the fair value as of the grant date of the fiscal 2025 grant of shares that vest based on market conditions was $54.67.

Stock Options. We did not grant stock options to employees during the first six months of fiscal 2025, but we have stock options outstanding from grants from prior years. We account for stock options as equity-based awards because when they are exercised, they will be settled in common shares. We recognize compensation expense for stock options over the vesting period equal to the fair value on the date our Compensation and Talent Oversight Committee of our board of directors approved the awards. The vesting period for our stock options ranges from one to four years, with accelerated vesting upon retirement. The vesting date for retirement-eligible employees is the later of the date they meet the criteria for retirement or ten months after the grant date. We accelerate the expense for options granted to retirement eligible employees over the vesting period, with expense recognized from the grant date through their retirement eligibility date or over the ten months following the grant date, whichever period is longer. We have elected to recognize forfeitures as an adjustment to compensation expense in the same period as the forfeitures occur. Granted options outstanding under the former long-term equity award plan remain in effect and have a term of 10 years. We estimated the fair value of the employee stock options granted in prior years at their respective grant date using the Black-Scholes option-pricing model, which requires management to make certain assumptions.

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Note 9: Accumulated Other Comprehensive Income (Loss)

Activity in accumulated other comprehensive income (loss) for the quarters ended October 26, 2024, and October 28, 2023, is as follows:


(Unaudited, amounts in thousands)	Translation adjustment		Unrealized gain (loss) on marketable securities		Net pension amortization and net actuarial loss		Accumulated other comprehensive income (loss)
Balance at July 27, 2024	$	(2,597)	$	359	$	(2,297)	$	(4,535)
Changes before reclassifications	924		(21)		—		903


Amounts reclassified to net income	—		(2)		21		19
Tax effect	—		6		(5)		1
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	924		(17)		16		923
Balance at October 26, 2024	$	(1,673)	$	342	$	(2,281)	$	(3,612)

Balance at July 29, 2023	$	(1,565)	$	75	$	(2,708)	$	(4,198)
Changes before reclassifications	(3,131)		(139)		—		(3,270)


Amounts reclassified to net income	—		24		31		55
Tax effect	—		28		(7)		21
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	(3,131)		(87)		24		(3,194)
Balance at October 28, 2023	$	(4,696)	$	(12)	$	(2,684)	$	(7,392)

Activity in accumulated other comprehensive income (loss) for the six months ended October 26, 2024, and October 28, 2023, is as follows:


(Unaudited, amounts in thousands)	Translation adjustment		Unrealized gain (loss) on marketable securities		Net pension amortization and net actuarial loss		Accumulated other comprehensive income (loss)
Balance at April 27, 2024	$	(3,804)	$	246	$	(2,312)	$	(5,870)
Changes before reclassifications	2,131		129		—		2,260


Amounts reclassified to net income	—		(2)		41		39
Tax effect	—		(31)		(10)		(41)
Other comprehensive income attributable to La-Z-Boy Incorporated	2,131		96		31		2,258
Balance at October 26, 2024	$	(1,673)	$	342	$	(2,281)	$	(3,612)

Balance at April 29, 2023	$	(2,652)	$	(145)	$	(2,731)	$	(5,528)
Changes before reclassifications	(2,044)		(154)		—		(2,198)


Amounts reclassified to net income	—		331		62		393
Tax effect	—		(44)		(15)		(59)
Other comprehensive income (loss) attributable to La-Z-Boy Incorporated	(2,044)		133		47		(1,864)
Balance at October 28, 2023	$	(4,696)	$	(12)	$	(2,684)	$	(7,392)

We reclassified both the unrealized gain (loss) on marketable securities and the net pension amortization from accumulated other comprehensive loss to net income through other income (expense), net.

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The components of noncontrolling interest were as follows:


	Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	10/26/2024		10/28/2023		10/26/2024		10/28/2023
Balance as of the beginning of the period	$	11,267	$	10,668	$	10,296	$	10,261
Net income (loss)	(184)		495		461		942
Other comprehensive income (loss)	688		(484)		1,014		(524)
Dividends distributed to joint venture minority partners	(1,414)		(1,172)		(1,414)		(1,172)
Balance as of the end of the period	$	10,357	$	9,507	$	10,357	$	9,507

Note 10: Revenue Recognition

Our revenue is primarily derived from product sales. We report product sales net of discounts and recognize them when control (rights and obligations associated with the product) passes to the customer. For sales to furniture retailers or distributors, control typically transfers when we ship the product. In cases where we sell directly to the end consumer, control of the product is generally transferred upon delivery.

For shipping and handling activities, we have elected to apply the accounting policy election permitted in ASC 606-10-25-18B, which allows an entity to account for shipping and handling activities as fulfillment activities (rather than as a promised good or service) when the activities are performed even if those activities are performed after the control of the good has been transferred. We expense shipping and handling costs at the time we recognize revenue in accordance with this election.

For sales tax, we have elected to apply the accounting policy election permitted in ASC 606-10-32-2A, which allows an entity to exclude from the measurement of the transaction price all taxes imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes). This allows us to present revenue net of these certain types of taxes.

We have elected the practical expedient permitted in ASC 606-10-32-18, which allows an entity to recognize the promised amount of consideration without adjusting for the effects of a significant financing component if the contract has a duration of one year or less. As our contracts typically are less than one year in length and do not have significant financing components, we have not adjusted consideration.

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The following table presents our revenue disaggregated by product category and by segment or unit:


	Quarter Ended October 26, 2024								Quarter Ended October 28, 2023
(Unaudited, amounts in thousands)	Wholesale		Retail		Corporate and Other		Total		Wholesale		Retail		Corporate and Other		Total
Upholstered Furniture	$	287,105	$	179,772	$	32,387	$	499,264	$	287,016	$	172,989	$	26,101	$	486,106
Casegoods Furniture	19,962		12,503		2,401		34,866		18,970		12,942		2,582		34,494
Delivery	40,306		8,093		2,208		50,607		43,655		7,987		1,755		53,397
Other (1)	16,524		21,196		5,091		42,811		15,326		20,391		5,794		41,511
Total	$	363,897	$	221,564	$	42,087	$	627,548	$	364,967	$	214,309	$	36,232	$	615,508

Eliminations							(106,521)								(104,073)
Consolidated Net Sales							$	521,027							$	511,435

	Six Months Ended October 26, 2024								Six Months Ended October 28, 2023
(Unaudited, amounts in thousands)	Wholesale		Retail		Corporate and Other		Total		Wholesale		Retail		Corporate and Other		Total
Upholstered Furniture	$	568,285	$	346,647	$	60,263	$	975,195	$	547,389	$	343,703	$	54,791	$	945,883
Casegoods Furniture	36,050		23,878		5,520		65,448		38,223		24,775		5,492		68,490
Delivery	78,819		15,475		4,276		98,570		83,698		15,558		3,657		102,913
Other (1)	31,643		37,934		10,736		80,313		29,132		38,516		12,353		80,001
Total	$	714,797	$	423,934	$	80,795	$	1,219,526	$	698,442	$	422,552	$	76,293	$	1,197,287

Eliminations							(202,967)								(204,201)
Consolidated Net Sales							$	1,016,559							$	993,086

(1)Primarily includes revenue for advertising, royalties, parts, accessories, after-treatment products, surcharges, rebates and other sales incentives.

Upholstered Furniture - Includes revenue for upholstered furniture, such as recliners, sofas, loveseats, chairs, sectionals, modulars, and ottomans. This revenue includes sales to La-Z-Boy Furniture Galleries® stores (including company-owned stores), operators of La-Z-Boy Comfort Studio® locations, England Custom Comfort Center locations, other major dealers, independent retailers, and the end consumer.

Casegoods Furniture - Includes revenue for casegoods furniture typically found in a bedroom, such as beds, chests, dressers, nightstands and benches; furniture typically found in the dining room, such as dining tables, storage units, and stools; and furniture typically found throughout the home, such as cocktail tables, chairsides, sofa tables, end tables, and entertainment centers. This revenue includes sales to La-Z-Boy Furniture Galleries® stores (including company-owned stores), independent retailers, and the end consumer.

Contract Assets and Liabilities. We receive customer deposits from end consumers before we recognize revenue and in some cases, we have the unconditional right to collect the remaining portion of the order price before we fulfill our performance obligation, resulting in a contract asset and a corresponding deferred revenue liability. In our consolidated balance sheet, customer deposits and deferred revenue (collectively, the "contract liabilities") are reported in accrued expenses and other current liabilities while contract assets are reported as other current assets.

The following table presents our contract assets and liabilities:


(Unaudited, amounts in thousands)	10/26/2024		4/27/2024
Contract assets	$	34,672	$	35,518

Customer deposits	$	85,918	$	88,798
Deferred revenue	34,672		35,518
Total contract liabilities (1)	$	120,590	$	124,316

(1)During the six months ended October 26, 2024, we recognized revenue of $115.6 million related to our contract liability balance at April 27, 2024.

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Note 11: Segment Information

Our reportable operating segments include the Wholesale segment and the Retail segment.

Wholesale Segment. Our Wholesale segment consists primarily of four operating segments: La-Z-Boy, our largest operating segment, our England subsidiary, our casegoods operating segment that sells furniture under three brands (American Drew®, Hammary®, and Kincaid®), and our international operating segment, which includes our international La-Z-Boy wholesale and manufacturing businesses. We aggregate these operating segments into one reportable segment because they are economically similar and meet the other aggregation criteria for determining reportable segments. Our Wholesale segment manufactures and imports upholstered furniture, such as recliners and motion furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans and sleeper sofas, and imports casegoods (wood) furniture, such as bedroom sets, dining room sets, entertainment centers and occasional pieces. The Wholesale segment sells directly to La-Z-Boy Furniture Galleries® stores, operators of La-Z-Boy Comfort Studio® locations, England Custom Comfort Center locations, major dealers, and a wide cross-section of other independent retailers.

Retail Segment. Our Retail segment consists of one operating segment comprised of our 193 company-owned La-Z-Boy Furniture Galleries® stores. The Retail segment sells primarily upholstered furniture, in addition to some casegoods and other home furnishings accessories, to end consumers through these stores.

Corporate and Other. Corporate and Other includes the shared costs for corporate functions, including human resources, information technology, finance and legal, in addition to revenue generated through royalty agreements with companies licensed to use the La-Z-Boy® brand name on various products. We consider our corporate functions to be other business activities and have aggregated them with our other insignificant operating segments, including our global trading company in Hong Kong and Joybird, an e-commerce retailer that manufactures upholstered furniture, such as sofas, loveseats, chairs, ottomans, sleeper sofas and beds, and also imports casegoods (wood) furniture, such as occasional tables and other accessories. Joybird sells to the end consumer primarily online through its website, www.joybird.com, and through small-format stores in key urban markets. None of the operating segments included in Corporate and Other meet the requirements of reportable segments.

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The following table presents sales and operating income (loss) by segment:


	Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands)	10/26/2024		10/28/2023		10/26/2024		10/28/2023
Sales
Wholesale segment:
Sales to external customers	$	258,983	$	263,738	$	515,003	$	499,989
Intersegment sales	104,914		101,229		199,794		198,453
Wholesale segment sales	363,897		364,967		714,797		698,442

Retail segment sales	221,564		214,309		423,934		422,552

Corporate and Other:
Sales to external customers	40,480		33,388		77,622		70,545
Intersegment sales	1,607		2,844		3,173		5,748
Corporate and Other sales	42,087		36,232		80,795		76,293

Eliminations	(106,521)		(104,073)		(202,967)		(204,201)
Consolidated sales	$	521,027	$	511,435	$	1,016,559	$	993,086

Operating Income (Loss)
Wholesale segment	$	24,529	$	21,450	$	48,528	$	44,953
Retail segment	27,897		27,935		48,546		57,199
Corporate and Other	(13,654)		(15,773)		(25,932)		(34,014)
Consolidated operating income	38,772		33,612		71,142		68,138
Interest expense	(99)		(101)		(309)		(223)
Interest income	3,730		4,042		8,154		7,098
Other income (expense), net	(1,879)		104		(2,497)		660
Income before income taxes	$	40,524	$	37,657	$	76,490	$	75,673

Note 12: Income Taxes

Our effective tax rate was 26.3% and 25.9% for the second quarter and six months ended October 26, 2024, respectively, compared with 26.5% for both the second quarter and six months ended October 28, 2023. Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes.

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Note 13: Earnings per Share

The following is a reconciliation of the numerators and denominators we used in our computations of basic and diluted earnings per share:


	Quarter Ended				Six Months Ended
(Unaudited, amounts in thousands, except per share data)	10/26/2024		10/28/2023		10/26/2024		10/28/2023
Numerator (basic and diluted):


Net income available to common Shareholders	$	30,037	$	27,199	$	56,196	$	54,678

Denominator:
Basic weighted average common shares outstanding	41,708		43,008		41,880		43,123
Contingent common shares	270		296		261		289
Stock option dilution	176		97		175		67
Diluted weighted average common shares outstanding	42,154		43,401		42,316		43,479

Earnings per Share:
Basic	$	0.72	$	0.63	$	1.34	$	1.27
Diluted (1)	$	0.71	$	0.63	$	1.33	$	1.26

(1)Diluted earnings per share was computed using the treasury stock method.

The values for contingent common shares set forth above reflect the dilutive effect of common shares that we would have issued to employees under the terms of performance-based share awards if the relevant performance period for the award had been the reporting period.

We exclude the effect of options from our diluted share calculation when the weighted average exercise price of the options is higher than the average market price, since including the options' effect would be anti-dilutive. For the second quarter and six months ended October 26, 2024, we did not exclude any outstanding options from the diluted share calculation. For the second quarter and six months ended October 28, 2023, we excluded options to purchase 0.5 million and 0.7 million shares, respectively, from the diluted share calculation.

Note 14: Fair Value Measurements

Accounting standards require that we put financial assets and liabilities into one of three categories based on the inputs we use to value them:

•Level 1 — Financial assets and liabilities, the values of which are based on unadjusted quoted market prices for identical assets and liabilities in an active market that we have the ability to access.

•Level 2 — Financial assets and liabilities, the values of which are based on quoted prices in markets that are not active or on model inputs that are observable for substantially the full term of the asset or liability.

•Level 3 — Financial assets and liabilities, the values of which are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

Accounting standards require that in making fair value measurements, we use observable market data when available. When inputs used to measure fair value fall within different levels of the hierarchy, we categorize the fair value measurement as being in the lowest level that is significant to the measurement. We recognize transfers between levels of the fair value hierarchy at the end of the reporting period in which they occur.

In addition to assets and liabilities that we record at fair value on a recurring basis, we are required to record assets and liabilities at fair value on a non-recurring basis. We measure non-financial assets such as other intangible assets, goodwill, and other long-lived assets at fair value when there is an indicator of impairment, and we record them at fair value only when we recognize an impairment loss.

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The following table presents the fair value hierarchy for those assets and liabilities we measured at fair value on a recurring basis at October 26, 2024 and April 27, 2024. There were no transfers into or out of Level 1, Level 2, or Level 3 for any of the periods presented.


At October 26, 2024
	Fair Value Measurements
(Unaudited, amounts in thousands)	Level 1		Level 2		Level 3		NAV(1)		Total
Assets
Marketable securities	$	—	$	3,468	$	—	$	10,343	$	13,811
Held-to-maturity investments	1,384		—		—		—		1,384

Total assets	$	1,384	$	3,468	$	—	$	10,343	$	15,195


At April 27, 2024
	Fair Value Measurements
(Unaudited, amounts in thousands)	Level 1		Level 2		Level 3		NAV(1)		Total
Assets
Marketable securities	$	—	$	7,996	$	—	$	10,247	$	18,243
Held-to-maturity investments	1,259		—		—		—		1,259

Total assets	$	1,259	$	7,996	$	—	$	10,247	$	19,502

(1)Certain marketable securities investments are measured at fair value using net asset value per share under the practical expedient methodology.

At October 26, 2024 and April 27, 2024, we held marketable securities intended to enhance returns on our cash and to fund future obligations of certain retirement plans.

The fair value measurements for our Level 1 and Level 2 securities are based on quoted prices in active markets, as well as through broker quotes and independent valuation providers, multiplied by the number of shares owned exclusive of any transaction costs.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We have prepared this Management’s Discussion and Analysis as an aid to understanding our financial results. It should be read in conjunction with the accompanying Consolidated Financial Statements and related Notes to Consolidated Financial Statements. After a cautionary note regarding forward-looking statements, we begin with an introduction to our key businesses and then provide discussions of our results of operations, liquidity and capital resources, and critical accounting policies.

Cautionary Note Regarding Forward-Looking Statements

La-Z-Boy Incorporated and its subsidiaries (individually and collectively, "we," "our," "us," "La-Z-Boy" or the "Company") make "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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, and our business and industry.

Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements may include words such as "aim," "anticipates," "believes," "continues," "estimates," "expects," "feels," "forecasts," "hopes," "intends," "plans," "projects," "likely," "seeks," "short-term," "non-recurring," "one-time," "outlook," "target," "unusual," or words of similar meaning, or future or conditional verbs, such as "will," "should," "could," or "may." A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. You should not place undue reliance on forward-looking statements, which speak to our views only as of the date of this report. These forward-looking statements are all based on currently available operating, financial, and competitive 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 performance.

Our actual future results and trends may differ materially from those we anticipate depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed in our Annual Report for the fiscal year ended April 27, 2024, under Item 1A, "Risk Factors" and Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and in our other filings with the Securities and Exchange Commission ("SEC"). Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results. Any or all of the forward-looking statements contained in our Annual Report for the fiscal year ended April 27, 2024 or any other public statement made by us, including by our management, may turn out to be incorrect. 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.

Introduction

Our Business

We are the leading global producer of reclining chairs and one of the largest manufacturer/distributors of residential furniture in the United States. The La-Z-Boy Furniture Galleries® stores retail network is the third largest retailer of single-branded furniture in the United States. We manufacture, market, import, export, distribute and retail upholstery furniture products under the La-Z-Boy®, England, Kincaid®, and Joybird® tradenames. In addition, we import, distribute and retail accessories and casegoods (wood) furniture products under the Kincaid®, American Drew®, Hammary®, and Joybird® tradenames.

As of October 26, 2024, our supply chain operations included the following:

•Five major manufacturing locations and 16 distribution centers in the United States and three facilities in Mexico to support our speed-to-market and customization strategy

•A logistics company that distributes a portion of our products in the United States

•An upholstery manufacturing business in the United Kingdom and a wholesale sales office that is responsible for distribution of our product in the United Kingdom and Ireland

•A global trading company in Hong Kong which helps us manage our Asian supply chain by establishing and maintaining relationships with our Asian suppliers, as well as identifying efficiencies and savings opportunities

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During the second quarter of fiscal 2024, we announced actions intended to drive efficiencies and optimize our manufacturing capacity in our global supply chain operations. As part of this initiative, we made the decision to shift upholstery production from our Ramos, Mexico operations to our other upholstery plants and relocate our cut and sew operations back to Ramos, Mexico, resulting in the permanent closure of our leased cut and sew facility in Parras, Mexico. As a result of these actions, charges were recorded within the Wholesale segment in the second quarter of fiscal 2024, totaling $3.6 million in cost of sales for severance-related expenses, and $3.0 million in SG&A expense for the accelerated depreciation of fixed assets.

We also participate in two consolidated joint ventures in Thailand that support our international businesses: one that operates a manufacturing facility and another that operates a wholesale sales office. Additionally, we have contracts with several suppliers in Asia to produce products that support our pure import model for casegoods.

We sell our products through multiple channels: to furniture retailers or distributors in the United States, Canada, and approximately 50 other countries, including the United Kingdom, China, Australia, South Korea and New Zealand, directly to consumers through retail stores that we own and operate, and through our websites, www.la-z-boy.com and www.joybird.com.

•The centerpiece of our retail distribution strategy is our network of 358 La-Z-Boy Furniture Galleries® stores and 537 La-Z-Boy Comfort Studio® locations, each dedicated to marketing our La-Z-Boy branded products. We consider this dedicated space to be “proprietary.”

◦La-Z-Boy Furniture Galleries® stores help consumers furnish their homes by combining the style, comfort, and quality of La-Z-Boy furniture with our available design services. We own 193 of the La-Z-Boy Furniture Galleries® stores, while the remainder are independently owned and operated.

◦La-Z-Boy Comfort Studio® locations are defined spaces within larger independent retailers that are dedicated to displaying and selling La-Z-Boy branded products. All 537 La-Z-Boy Comfort Studio® locations are independently owned and operated.

◦In total, we have approximately 7.6 million square feet of proprietary floor space dedicated to selling La-Z-Boy branded products in the United States and Canada.

◦We also have approximately 2.8 million square feet of floor space outside of the United States and Canada dedicated to selling La-Z-Boy branded products.

•Our other brands, England, American Drew, Hammary, and Kincaid enjoy distribution through many of the same outlets, with slightly over half of Hammary’s sales originating through the La-Z-Boy Furniture Galleries® store network.

◦Kincaid and England have their own dedicated proprietary in-store programs with 650 outlets and approximately 1.9 million square feet of proprietary floor space.

•In total, our proprietary floor space includes approximately 12.4 million square feet worldwide.

•Joybird sells product primarily online and has 12 small-format stores in key urban markets.

Century Vision Strategy

Our goal is to deliver value to our shareholders over the long term by executing our Century Vision, our strategic plan for growth to our centennial year in 2027, in which we aim to grow sales and market share and strengthen our operating margins. The foundation of our strategic plan is to drive disproportionate growth of our two consumer brands, La-Z-Boy and Joybird, by delivering the transformational power of comfort with a consumer-first approach. We plan to drive growth in the following ways:

Expanding the La-Z-Boy brand reach

•Leveraging our connection to comfort and reinvigorating our brand with a consumer focus and expanded omni-channel presence. Our strategic initiatives to leverage and reinvigorate our iconic La-Z-Boy brand center on a renewed focus on leveraging the compelling La-Z-Boy comfort message, accelerating our omni-channel offering, and identifying additional consumer-base growth opportunities. We leverage our consumer insights to develop and deliver on-trend upholstered furniture, particularly in the motion and reclining categories. We launched our new brand campaign and marketing platform in fiscal 2024, Long Live the Lazy, with compelling, consumer-inspired messaging designed to increase recognition and consideration of the brand. We expect this new messaging will enhance the appeal of our brand with a broader consumer base. Further, our goal is to connect with consumers along their purchase

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journey through multiple means, whether online or in person. We are driving change throughout our digital platforms to improve the user experience, with a specific focus on the ease with which customers browse through our broad product assortment, customize products to their liking, find stores to make a purchase, or purchase at www.la-z-boy.com.

•Growing our La-Z-Boy Furniture Galleries® store network. We expect our strategic initiatives in this area to generate growth in our Retail segment through an increased company-owned store count and in our Wholesale segment as our proprietary distribution network expands. We are not only focused on growing the number of locations, but also on upgrading existing store locations to our new concept designs. We are prioritizing growth of our company-owned Retail business by opportunistically acquiring existing La-Z-Boy Furniture Galleries® stores and opening new La-Z-Boy Furniture Galleries® stores where we see opportunity for growth, or where we believe we have opportunities for further market penetration.

•Expanding the reach of our wholesale distribution channels. Consumers experience the La-Z-Boy brand in many channels including the La-Z-Boy Furniture Galleries® store network and in the La-Z-Boy Comfort Studio® locations, our store-within-a-store format. While consumers increasingly interact with the brand digitally, our consumers demonstrate an affinity for visiting our stores to shop, allowing us to frequently deliver the flagship La-Z-Boy Furniture Galleries® store, or La-Z-Boy Comfort Studio®, experience and provide design services. In addition to our branded distribution channels, approximately 2,200 other dealers sell La-Z-Boy products, which include some of the best-known names in the industry, providing us the benefit of multi-channel distribution. We believe there is significant growth potential for our consumer brands through these retail channels.

Profitably growing the Joybird brand

•Profitably growing the Joybird brand with a digital-first consumer experience. During fiscal 2019, we purchased Joybird, a leading e-commerce retailer and manufacturer of upholstered furniture with a direct-to-consumer model. We believe that Joybird is a brand with significant potential and our strategic initiatives in this area focus on fueling profitable growth through an increase in digital marketing spend to drive awareness and customer acquisition, ongoing investments in technology, an expansion of product assortment, and providing additional small-format stores in key urban markets to enhance our consumers' omni-channel experience.

Enhancing our enterprise capabilities

•Enhancing our enterprise capabilities to support the growth of our consumer brands and enable potential acquisitions for growth. Key to successful growth is ensuring we have the capabilities to support that growth, including an agile supply chain, modern technology for consumers and employees, and by delivering a human-centered employee experience. Through our Century Vision strategic plan, we have several initiatives focused on enhancing these capabilities with a consumer-first focus.

Reportable Segments

Our reportable operating segments include the Retail segment and the Wholesale segment.

•Retail Segment. Our Retail segment consists of one operating segment comprised of our 193 company-owned La-Z-Boy Furniture Galleries® stores. The Retail segment sells primarily upholstered furniture, in addition to some casegoods and other home furnishings accessories, to end consumers through these stores.

•Wholesale Segment. Our Wholesale segment consists primarily of four operating segments: La-Z-Boy, our largest operating segment, our England subsidiary, our casegoods operating segment that sells furniture under three brands (American Drew®, Hammary®, and Kincaid®), and our international operating segment, which includes our international La-Z-Boy wholesale and manufacturing businesses. We aggregate these operating segments into one reportable segment because they are economically similar and meet the other aggregation criteria for determining reportable segments. Our Wholesale segment manufactures and imports upholstered furniture, such as recliners and motion furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans and sleeper sofas, and imports casegoods (wood) furniture, such as bedroom sets, dining room sets, entertainment centers and occasional pieces. The Wholesale segment sells directly to La-Z-Boy Furniture Galleries® stores, operators of La-Z-Boy Comfort Studio® locations, England Custom Comfort Center locations, major dealers, and a wide cross-section of other independent retailers.

•Corporate and Other. Corporate and Other includes the shared costs for corporate functions, including human resources, information technology, finance and legal, in addition to revenue generated through royalty agreements with

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companies licensed to use the La-Z-Boy® brand name on various products. We consider our corporate functions to be other business activities and have aggregated them with our other insignificant operating segments, including our global trading company in Hong Kong and Joybird, an e-commerce retailer that manufactures upholstered furniture, such as sofas, loveseats, chairs, ottomans, sleeper sofas and beds, and also imports casegoods (wood) furniture, such as occasional tables and other accessories. Joybird sells to the end consumer primarily online through its website, www.joybird.com, and through small-format stores in key urban markets. None of the operating segments included in Corporate and Other meet the requirements of reportable segments.

Results of Operations

Fiscal 2025 Second Quarter Compared with Fiscal 2024 Second Quarter

La-Z-Boy Incorporated


	Quarter Ended					Six Months Ended
(Unaudited, amounts in thousands, except percentages)	10/26/2024		10/28/2023		% Change	10/26/2024		10/28/2023		% Change
Sales	$	521,027	$	511,435	1.9%	$	1,016,559	$	993,086	2.4	%
Operating income	38,772		33,612		15.4%	71,142		68,138		4.4	%
Operating margin	7.4%		6.6%			7.0%		6.9%

Sales

Consolidated sales increased $9.6 million, or 2%, and $23.5 million, or 2%, in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago. The increase during the second quarter was primarily driven by incremental sales resulting from our Retail acquisitions and higher delivered volume in our Joybird business. The first six months of fiscal 2025 further benefited from higher delivered volume to external customers, including the addition of new major wholesale dealers, within our Wholesale segment.

Operating Margin

Operating margin, which is calculated as operating income as a percentage of sales, increased 80 basis points and 10 basis points in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

•Gross margin, which is calculated as gross profit as a percentage of sales, increased 70 basis points and 60 basis points in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

◦Changes in our consolidated mix led to a 60 basis point increase in gross margin in the second quarter of fiscal 2025 compared with the same period a year ago, driven by growth of our Retail segment, which has a higher gross margin than our Wholesale segment.

◦During the second quarter of fiscal 2024, we recognized $3.6 million of severance-related charges as part of our global supply chain optimization initiative, resulting in a comparative gross margin increase of 70 basis points and 40 basis points in second quarter and first six months of fiscal 2025, respectively.

◦Demand and macroeconomic challenges in our casegoods import business negatively impacted gross margin during the second quarter and first six months of fiscal 2025, compared with the same periods a year ago.

◦Lower input costs, led by reduced commodity prices and improved sourcing, drove an increase in gross margin during the first six months of fiscal 2025, compared with the same period a year ago. The second quarter of fiscal 2024 experienced favorable duty expense, more than offsetting the benefit of lower commodity costs in the second quarter of fiscal 2025, resulting in a comparative decrease in gross margin.

•SG&A expenses as a percentage of sales decreased 10 basis points and increased 50 basis points in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

◦Changes in our consolidated mix led to a 60 basis point increase in SG&A expense as a percentage of sales in the second quarter of fiscal 2025 compared with the same period a year ago, driven by growth of our Retail segment, which has a higher SG&A expense as a percentage of sales than our Wholesale segment.

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deprecation related to long-lived assets at our Ramos, Mexico facility. Together, these items resulted in a comparative 60 basis point and 20 basis point decrease in SG&A expense as a percentage of sales in the second quarter and first six months of fiscal 2025, respectively.

◦Reduced marketing expense relative to the prior year, in which we launched our Long Live the Lazy campaign, drove a decrease in SG&A expense as a percentage of sales in the second quarter and first six months of fiscal 2025.

◦SG&A expense as a percentage of sales increased in the second quarter of fiscal 2025 compared with the same period a year ago, due to fixed cost deleverage on lower sales in our international wholesale business due to a significant temporary customer disruption.

◦The remaining increase in SG&A expense as a percentage of sales in the first six months of fiscal 2025 was primarily due to increased selling expenses and fixed costs resulting from acquisitions of independently owned La-Z-Boy Furniture Galleries® and retail store expansion, both to support our long-term strategy of growing our Retail segment.

We discuss each segment’s results in the following section.

Retail Segment


	Quarter Ended					Six Months Ended
(Unaudited, amounts in thousands, except percentages)	10/26/2024		10/28/2023		% Change	10/26/2024		10/28/2023		% Change
Sales	$	221,564	$	214,309	3.4%	$	423,934	$	422,552	0.3	%
Operating income	27,897		27,935		(0.1)%	48,546		57,199		(15.1)	%
Operating margin	12.6%		13.0%			11.5%		13.5%

Sales

The Retail segment’s sales increased $7.3 million, or 3%, and $1.4 million, or 0.3%, in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago. The increase in sales was primarily due to $12.0 million and $22.5 million of incremental sales during the second quarter and first six months of fiscal 2025, respectively, from our retail store acquisitions that occurred in fiscal 2024 and fiscal 2025, partially offset by a decline in delivered same-store sales.

Written same-store sales were down 1% and 2% in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago, primarily due to softer industry-wide demand as a result of a challenging macroeconomic environment. Same-store sales include the sales of all currently active stores that have been open and company-owned for each comparable period.

Operating Margin

The Retail segment's operating margin decreased 40 basis points and 200 basis points in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

•Gross margin increased 60 basis points and 40 basis points in the second quarter and first six months of 2025, respectively, compared with the same periods a year ago, primarily due to a favorable shift in product mix towards higher priced products.

•SG&A expenses as a percentage of sales increased 100 basis points and 240 basis points in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago, primarily due to increased selling expenses and fixed costs resulting from our acquisitions of independently owned La-Z-Boy Furniture Galleries® and retail store expansion, both to support our long-term strategy of growing our Retail segment.

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Wholesale Segment


	Quarter Ended					Six Months Ended
(Unaudited, amounts in thousands, except percentages)	10/26/2024		10/28/2023		% Change	10/26/2024		10/28/2023		% Change
Sales to external customers	$	258,983	$	263,738		$	515,003	$	499,989
Intersegment sales	104,914		101,229			199,794		198,453
Total Sales	363,897		364,967		(0.3)%	714,797		698,442		2.3	%
Operating income	24,529		21,450		14.4%	48,528		44,953		8.0	%
Operating margin	6.7%		5.9%			6.8%		6.4%

Sales

The Wholesale segment’s sales decreased $1.1 million, or 0.3%, and increased $16.4 million, or 2%, in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago. Over the same periods, intercompany sales from our Wholesale segment to our Retail segment increased 4% and 1%, respectively. Compared with the same periods a year ago, sales volume increased during the first six months of fiscal 2025, reflecting higher delivered volume to external customers, but declined during the second quarter of fiscal 2025, mainly due to a significant temporary customer disruption in our international wholesale business. Additionally, both the second quarter and first six months of fiscal 2025 benefited from a favorable shift in product mix toward higher price products.

Operating Margin

The Wholesale segment's operating margin increased 80 basis points and 40 basis points in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago

•Gross margin decreased 20 basis points and was flat in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

◦Demand and macroeconomic challenges in our casegoods import business, drove a 70 basis point and 50 basis point decrease in gross margin during the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

◦Lower input costs, led by reduced commodity prices and improved sourcing drove a 60 basis point increase in gross margin during the first six months of fiscal 2025, compared with the same period a year ago. The second quarter of fiscal 2024 experienced favorable duty expense, more than offsetting the benefit of lower commodity costs in the second quarter of fiscal 2025, resulting in a comparative 50 basis point decrease in gross margin.

◦An unfavorable shift in channel mix towards external customers, which generally carry products with a lower gross margin than products sold to La-Z-Boy Furniture Galleries®, led to a 60 basis point decrease in gross margin during the first six months of fiscal 2025 compared with the same period a year ago.

◦During the second quarter of fiscal 2024, we recognized $3.6 million in severance-related charges as part of our global supply chain optimization initiative, resulting in comparative gross margin increase of 100 basis points and 50 basis points in second quarter and first six months of fiscal 2025, respectively.

•SG&A expense as a percentage of sales decreased 100 basis points and 40 basis points in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

◦As part of our global supply chain optimization initiative, during the first quarter of fiscal 2024 we recognized a $1.2 million gain related to the settlement of our Torreón, Mexico lease obligation on previously impaired long-lived assets and during the second quarter of fiscal 2024, we recognized $3.0 million in accelerated deprecation related to long-lived assets at our Ramos, Mexico facility. Together, these items resulted in a comparative 80 basis point and 30 basis point decrease in SG&A expense as a percentage of sales in the second quarter and first six months of fiscal 2025, respectively.

◦Reduced marketing expense relative to the prior year, in which we launched our Long Live the Lazy campaign, drove a 70 basis point and 60 basis point decrease in SG&A expense as a percentage of sales in the second quarter and first six months of fiscal 2025, respectively.

◦Partially offsetting the items above, SG&A expense as a percentage of sales increased 40 basis points and 30 basis points in the second quarter and first six months of fiscal 2025, respectively, from fixed cost deleverage on lower sales in our international wholesale business due to a significant temporary customer disruption.

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Corporate and Other


	Quarter Ended					Six Months Ended
(Unaudited, amounts in thousands, except percentages)	10/26/2024		10/28/2023		% Change	10/26/2024		10/28/2023		% Change
Sales	$	42,087	$	36,232	16.2%	$	80,795	$	76,293	5.9	%
Intercompany eliminations	(106,521)		(104,073)		(2.4)%	(202,967)		(204,201)		0.6	%
Operating loss	(13,654)		(15,773)		13.4%	(25,932)		(34,014)		23.8	%

Sales

Corporate and Other sales increased $5.9 million and $4.5 million in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago. The change in sales was primarily led by Joybird sales which increased $6.3 million to $38.7 million and $5.4 million to $73.2 million in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago, as higher delivered volume more than offset promotional activity. Written sales for Joybird increased 1% and 5% in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

Intercompany eliminations increased in the second quarter of fiscal 2025 compared with the same period a year ago due to higher sales from our Wholesale segment to our Retail segment, while intercompany eliminations decreased during the first six months of fiscal 2025 compared with the same period a year ago due to lower sales from our Wholesale segment to our Retail segment.

Operating Loss

Our Corporate and Other operating loss decreased $2.1 million and $8.1 million in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago, primarily due to improved Joybird operating margin resulting in breakeven profit, partially offset by lower intercompany operating profit from our global trading company in Hong Kong. The first six months of fiscal 2025 also benefited from favorable intercompany inventory profit elimination adjustments relative to the same period a year ago.

Non-Operating Income (Expense)

Interest Income

Interest income was $1.1 million higher in the first six months of 2025, compared with the same period a year ago, primarily driven by higher interest rates.

Other Income, (Expense), Net

Other income (expense), net was $1.9 million and $2.5 million of expense in the second quarter and first six months of 2025, respectively, primarily due to exchange rate losses related to our Thailand manufacturing and wholesale businesses.

Income Taxes

Our effective tax rate was 26.3% and 25.9% for the second quarter and first six months of 2025, respectively, compared with 26.5% for both the second quarter and first six months of fiscal 2024. Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes.

Liquidity and Capital Resources

Our sources of liquidity include cash and cash equivalents, short-term and long-term investments, cash from operations, and amounts available under our credit facility. We believe these sources remain adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, and fulfill other cash requirements for day-to-day operations and capital expenditures, including fiscal 2025 contractual obligations.

We had cash, cash equivalents and restricted cash of $303.1 million at October 26, 2024, compared with $341.1 million at April 27, 2024. In addition, we had investments to enhance our returns on cash of $2.4 million at October 26, 2024, compared with $6.8 million at April 27, 2024.

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The following table illustrates the main components of our cash flows:


	Six Months Ended
(Unaudited, amounts in thousands)	10/26/2024		10/28/2023
Cash Flows Provided By (Used For)
Net cash provided by operating activities	$	68,253	$	56,876
Net cash used for investing activities	(45,526)		(25,304)
Net cash used for financing activities	(61,693)		(43,883)
Exchange rate changes	930		(900)
Change in cash, cash equivalents and restricted cash	$	(38,036)	$	(13,211)

Operating Activities

During the first six months of fiscal 2025, net cash provided by operating activities was $68.3 million, an increase of $11.4 million compared with the same period a year ago. The year over year increase was primarily due to a smaller reduction in customer deposits along with a lower incentive compensation payout in fiscal 2025 relative to the prior year. Our cash provided by operating activities in fiscal 2025 was primarily attributable to net income, adjusted for non-cash items, partially offset by an increase in inventory balances.

Investing Activities

During the first six months of fiscal 2025, net cash used for investing activities was $45.5 million, an increase of $20.2 million compared with the same period a year ago, primarily due to cash used for acquisitions and increased capital expenditures. Cash used for investing activities in fiscal 2025 included the following:

•Cash used for capital expenditures in the period was $32.8 million compared with $26.5 million during the first six months of fiscal 2024, which was primarily related to La-Z-Boy Furniture Galleries® (new stores and remodels), manufacturing-related investments, and market showroom upgrades. We anticipate that spending on these items will continue in fiscal 2025 with full year fiscal 2025 capital expenditures expected to be in the range of $70 to $80 million. We have no material contractual commitments outstanding for future capital expenditures.

•Cash used for acquisitions was $17.8 million, primarily related to the acquisition of the Melbourne and Cocoa, Florida and Davenport, Iowa retail businesses.

•Proceeds from the sale of investments, net of investment purchases, were $4.9 million.

Financing Activities

On October 15, 2021, we entered into a five-year $200 million unsecured revolving credit facility (as amended, the “Credit Facility”). Borrowings under the Credit Facility may be used by the Company for general corporate purposes. We may increase the size of the facility, either in the form of additional revolving commitments or new term loans, subject to the discretion of each lender to participate in such an increase, up to an additional amount of $100 million. The Credit Facility will mature on October 15, 2026 and provides us the ability to extend the maturity date for two additional one-year periods, subject to the satisfaction of customary conditions. As of October 26, 2024, we have no borrowings outstanding under the Credit Facility.

The Credit Facility contains certain restrictive loan covenants, including, among others, financial covenants requiring a maximum consolidated net lease adjusted leverage ratio and a minimum consolidated fixed charge coverage ratio, as well as customary covenants limiting our ability to incur indebtedness, grant liens, make acquisitions, merge or consolidate, and dispose of certain assets. As of October 26, 2024, we were in compliance with our financial covenants under the Credit Facility. We believe our cash and cash equivalents, short-term investments, and cash from operations, in addition to our available Credit Facility, will provide adequate liquidity for our business operations over the next 12 months.

During the first six months of fiscal 2025, net cash used for financing activities was $61.7 million, an increase of $17.8 million compared with the same period a year ago, primarily due to higher share repurchases, partially offset by proceeds from exercised stock options. In addition, our cash used for financing activities in fiscal 2024 included holdback payments of $5.0 million for a prior period acquisition. Cash used for financing activities in fiscal 2025 included the following:

•Our board of directors has authorized the repurchase of company stock and we spent $53.1 million in the first six months of fiscal 2025 to repurchase 1.4 million shares. As of October 26, 2024, 4.3 million shares remained available for repurchase pursuant to this authorization. With the operating cash flows we anticipate generating in fiscal 2025, we

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expect to continue repurchasing Company stock subject to market conditions and other factors as deemed relevant by our board of directors.

•Cash paid to our shareholders in quarterly dividends was $16.7 million. Our board of directors has sole authority to determine if and when we will declare future dividends and on what terms. We expect the board to continue declaring regular quarterly cash dividends for the foreseeable future, but it may discontinue doing so at any time at the board's discretion.

•Proceeds from exercised stock options, net of stock issued and taxes withheld as part of our employee benefit plans, were $9.9 million.

Exchange Rate Changes

Due to changes in exchange rates, our cash, cash equivalents, and restricted cash increased by $0.9 million for the six months ended October 26, 2024. These changes impacted our cash balances held in Canada, Thailand, and the United Kingdom.

Other

During the second quarter of fiscal 2025, there were no material changes to the information about our contractual obligations and commitments disclosed in our Annual Report on Form 10-K for the fiscal year ended April 27, 2024. We do not expect our continuing compliance with existing federal, state and local statutes dealing with protection of the environment to have a material effect on our capital expenditures, earnings, competitive position or liquidity.

Critical Accounting Policies

We disclosed our critical accounting policies in our Annual Report on Form 10-K for the fiscal year ended April 27, 2024. There were no material changes to our critical accounting policies or estimates during the six months ended October 26, 2024.

Recent Accounting Pronouncements

See Note 1, Basis of Presentation, to the consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of recently adopted accounting standards and other new accounting standards.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the first six months of fiscal 2025, there were no material changes from the information contained in Item 7A of our Annual Report on Form 10-K for the fiscal year ended April 27, 2024.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that such disclosure controls and procedures are effective to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting. There were no changes in our internal controls over financial reporting that occurred during the second quarter of fiscal 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1A. RISK FACTORS

We disclosed our risk factors in our Annual Report on Form 10-K for the fiscal year ended April 27, 2024. There have been no material changes to our risk factors during the first six months of fiscal 2025.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Our board of directors has authorized the repurchase of Company stock. Repurchases under these programs will be made at management's discretion from time to time on the open market or in privately negotiated transactions and through Rule 10b5-1. We spent $19.5 million in the second quarter of fiscal 2025 to repurchase 0.5 million shares, pursuant to a Rule 10b5-1 plan and as discretionary purchases. As of October 26, 2024, 4.3 million shares remained available for repurchase pursuant to the board authorization. With the operating cash flows we anticipate generating in fiscal 2025, we expect to continue repurchasing Company stock, subject to market conditions and other factors as deemed relevant by our board of directors.

The following table summarizes our repurchases of Company stock during the quarter ended October 26, 2024 and includes shares purchased from employees to satisfy their withholding tax obligations upon vesting of restricted shares:


(Unaudited, amounts in thousands, except per share data)	Total number of shares repurchased (1)	Average price paid per share		Total number of shares repurchased as part of publicly announced plan (2)	Maximum number of shares that may yet be repurchased under the plan
Fiscal August (July 28 – August 31, 2024)	454	$	41.64	454	4,278
Fiscal September (September 1 – September 28, 2024)	13	$	43.77	13	4,265
Fiscal October (September 29 – October 26, 2024)	—	$	40.37	—	4,265
Total (Fiscal Second Quarter of 2025)	467			467	4,265

(1) In addition to the 466,734 shares we repurchased during the quarter as part of our publicly announced, board-authorized plan described above, this column includes 139 shares we repurchased from employees to satisfy their withholding tax obligations upon vesting of restricted and performance based shares.

(2) On October 28, 1987, our board of directors announced the authorization of the plan to repurchase Company stock. The plan originally authorized 1.0 million shares, and since October 1987, 33.5 million shares have been added to the plan for repurchase. The authorization has no expiration date.

ITEM 5. OTHER INFORMATION

Securities Trading Plans of Directors and Officers

During the quarter ended October 26, 2024, none of our directors or officers adopted or terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as each term is defined in Item 408(a) of Regulation S-K).

ITEM 6. EXHIBITS


Exhibit Number						Description
(31.1)						Certifications of Chief Executive Officer pursuant to Rule 13a-14(a)
(31.2)						Certifications of Chief Financial Officer pursuant to Rule 13a-14(a)
(32)						Certifications of Executive Officers pursuant to 18 U.S.C. Section 1350(b)
(101.INS)						Inline XBRL Instance Document
(101.SCH)						Inline XBRL Taxonomy Extension Schema Document
(101.CAL)						Inline XBRL Taxonomy Extension Calculation Linkbase Document
(101.LAB)						Inline XBRL Taxonomy Extension Label Linkbase Document
(101.PRE)						Inline XBRL Taxonomy Extension Presentation Linkbase Document
(101.DEF)						Inline XBRL Taxonomy Extension Definition Linkbase Document
(104)						The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended October 26, 2024, formatted in Inline XBRL (included in Exhibit 101)

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			LA-Z-BOY INCORPORATED
			(Registrant)


Date: November 19, 2024


			BY: /s/ Jennifer L. McCurry
			Jennifer L. McCurry Vice President, Corporate Controller and Chief Accounting Officer

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Date	Price Target	Rating	Analyst
8/21/2024	$43.00	Buy → Neutral	Sidoti
8/25/2022		Outperform → Mkt Perform	Raymond James
2/17/2022	$46.00 → $40.00	Outperform	Raymond James

SEC Form 10-Q filed by La-Z-Boy Incorporated

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