HAVERTY FURNITURE COMPANIES INC

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note A -Business and Basis of Presentation

Haverty Furniture Companies, Inc. (“Havertys,” “the Company,” “we,” “our,” or “us”) is a specialty retailer of residential furniture and accessories in the middle to upper-middle price ranges. We operate all of our stores using the Havertys brand and do not franchise our concept. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes required by United States of America generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. We believe all adjustments, normal and recurring in nature, considered necessary for a fair presentation have been included. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in our latest Annual Report on Form 10-K.

The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from those estimates.

Note B –Stockholders’ Equity

The following outlines the changes in each caption of stockholders’ equity for the current and comparative period and the dividends per share for each class of shares.

For the three months ended September 30, 2026:

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For the nine months ended September 30, 2026:

For the three months ended September 30, 2025:

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For the nine months ended September 30, 2025:

Note C –Interim LIFO Calculations

Inventories are measured using the last-in, first-out (LIFO) method of valuation using an annual LIFO index. Accordingly, interim LIFO calculations must necessarily be based on management’s estimates of the components of the calculation including year-end inventory levels and the expected rate of inflation or deflation for the year. Since these estimates may be affected by factors beyond management’s control, interim results are subject to change based upon the final year-end LIFO inventory valuation.

Note D –Fair Value of Financial Instruments

The fair values of our cash and cash equivalents, restricted cash and cash equivalents, accounts payable and customer deposits approximate their carrying values due to their short-term nature. The assets related to our self-directed, non-qualified deferred compensation plans for certain executives and employees are valued using quoted market prices multiplied by the number of shares held, a Level 1 valuation technique.

Note E –Credit Agreement

Effective June 29, 2026, the revolving credit facility (the "Credit Agreement") was amended to, among other things, increase the borrowing capacity to $100.0 million and extend the maturity date to June 29, 2031. Availability fluctuates based on a borrowing base calculation reduced by outstanding letters of credit.

At September 30, 2026 and December 31, 2025, there wereno outstanding borrowings under the Credit Agreement. The borrowing base was $174.0 million at September 30, 2026, and there wereno outstanding letters of credit. Accordingly, the net availability was $100.0 million.

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Note F –Segment Reporting

We operate within a single reportable segment. We use a market area approach for both financial and

operational decision making. Each of these market areas is considered individual operating segments. The

individual operating segments all have similar economic characteristics. The retail stores within the market

areas are similar in size and carry substantially identical products selected for the same target customer. We

also use the same distribution methods chain-wide.

Our chief operating decision maker (CODM) is our President and Chief Executive Officer. Segment information is prepared on the same basis as our CODM manages our operating segments and evaluates results. The measure used by our CODM to assess performance and make operating decisions is income before income taxes as reported on our condensed consolidated statements of comprehensive income. Asset information is provided to the CODM on a consolidated basis.

The following table presents significant segment expenses and other segment items regularly reviewed by our CODM:

(a) Depreciation and amortization expense included in selling, general and administrative expense totaled $6.1 million and $6.0 million for the three months ended September 30, 2026 and 2025, respectively, and $18.4 million and $17.8 million for the nine months ended September 30, 2026 and 2025.

(b) Other segment items include gains (losses) on asset disposals and miscellaneous income (expense).

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Note G –Revenues

We recognize revenue from merchandise sales and related service fees, net of expected returns and sales tax, at the time the merchandise is delivered to the customer. We record customer deposits when payments are received in advance of the delivery of merchandise. Such deposits totaled $46.2 million and $35.5 million at September 30, 2026 and December 31, 2025, respectively. Of the customer deposit liabilities at December 31, 2025, approximately $0.4 million have not been recognized through net sales in the nine months ended September 30, 2026.

The following table presents our revenues disaggregated by each major product category and service (amounts and percentages may not always add due to rounding):

Note H –Leases

We have operating leases for retail stores, offices, warehouses, and certain equipment. Our leases have remaining lease terms of 1 year to 14 years, some of which include options to extend the leases for up to 20 years. We determine if an arrangement is or contains a lease at lease inception. Our leases do not have any residual value guarantees. We have lease agreements for real estate with lease and non-lease components, which are accounted for separately.

Certain of our lease agreements for retail stores include variable lease payments, generally based on sales volume. The variable portions of payments are not included in the initial measurement of the right-of-use asset or lease liability due to uncertainty of the payment amount and are recorded as lease expense in the period incurred.

Certain of our equipment lease agreements include variable lease costs, generally based on usage of the underlying asset (mileage, fuel, etc.). The variable portions of payments are not included in the initial measurement of the right-of-use asset or lease liability due to uncertainty of the payment amount and are recorded in the period incurred.

As of September 30, 2026, the Company hadnot entered into any leases for additional retail locations that had not yet commenced.

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Lease expense is charged to selling, general and administrative expenses. Components of lease expense were as follows (in thousands):

Supplemental cash flow information related to leases is as follows (in thousands):

Note I –Income Taxes

Our effective tax rate for the nine months ended September 30, 2026 and 2025 was 27.5% and 30.2%, respectively. The primary differences in the effective rate and the statutory rate were state income taxes, nondeductible items and additional tax expense related to vested stock awards.

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Note J –Stock-Based Compensation Plans

As more fully discussed in Note 13 of the notes to the consolidated financial statements in our 2025 Annual Report on Form 10-K, we have awards outstanding for Common Stock under stock-based employee compensation plans.

The following table summarizes our award activity during the nine months ended September 30, 2026:

The total fair value of service-based restricted stock awards that vested during the nine months ended September 30, 2026 was approximately $3.8 million. The aggregate intrinsic value of outstanding service-based restricted stock awards was approximately $9.2 million at September 30, 2026. The restrictions on the service-based awards generally lapse or vest annually, primarily overone-year andthree-year periods.

The total fair value of performance-based restricted stock awards that vested during the nine months ended September 30, 2026 was approximately $1.7 million. The aggregate intrinsic value of outstanding performance awards at September 30, 2026 expected to vest was approximately $11.6 million. The performance awards are based onone-year performance periods but cliff vest in approximately three years from grant date.

The compensation for all awards is charged to selling, general and administrative expenses over the respective grants’ vesting periods, primarily on a straight-line basis. The amount charged was approximately $7.8 million and $5.6 million for the nine months ended September 30, 2026 and 2025, respectively. The year-over-year increase is primarily driven by accelerated stock-based compensation expense for certain award recipients who became retirement-eligible during the third quarter of 2026. Forfeitures are recognized as they occur. As of September 30, 2026, the total compensation cost related to unvested equity awards was approximately $9.6 million and is expected to be recognized over a weighted-average period oftwo years.

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Note K –Earnings Per Share

We report our earnings per share using the two-class method. The income per share for each class of common stock is calculated assuming 100% of our earnings are distributed as dividends to each class of common stock based on the contractual rights of the classes.

The Common Stock of the Company has a preferential dividend rate of at least 105% of the dividend paid on the Class A Common Stock. Holders of the Class A Common Stock have greater voting rights which include voting as a separate class for the election of up to 75% of the total number of directors whereas holders of the Common Stock vote as a separate class for the election of at least 25% of the total number of directors. On all other matters subject to shareholder vote, holders of the Class A Common Stock haveten votes per share as opposed to holders of the Common Stock receivingone vote per share. Class A Common Stock may be converted at any time on aone-for-one basis into Common Stock at the option of the holder of the Class A Common Stock.

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Note L –Commitments and Contingencies

During the third quarter of 2026, we entered into non-cancellable agreements totaling approximately $9.9 million (exclusive of applicable sales taxes) to purchase IT infrastructure, including enterprise storage and server systems, related software licenses, five-year support services, and cloud-managed network equipment to convert our retail locations to a software-defined wide area network. Equipment delivery is scheduled for October 2026 and January 2027, with payment due in the first quarter of 2027. As of September 30, 2026, no amounts related to these commitments have been recognized in the condensed consolidated balance sheet.

The Company is subject to various claims and legal proceedings covering a wide range of matters, including with respect to product liability and personal injury claims that arise in the ordinary course of its business activities. We currently have no pending claims or legal proceedings that we believe would be reasonably likely to have a material adverse effect on our financial condition, results of operations or cash flows. However, there can be no assurance that either future litigation or an unfavorable outcome in existing claims will not have a material impact on our business, reputation, financial position, cash flows or results of operations.

Note M –Subsequent events

On October 1, 2026, the Company completed the sale of its owned retail store location in its Atlanta, Georgia market, for net proceeds of approximately $2.6 million. The carrying value of the property at the time of sale was $0.5 million, resulting in a gain on disposition of $2.1 million, which will be recognized in the fourth quarter. The Company intends to relocate the store to a new location, which is expected to open in the fourth quarter of 2026.