HOFT - Earnings call transcript Q3 2018 | Hooker Furnishings Corporation

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Operator

Greetings, ladies and gentlemen, and welcome to the Hooker Furniture Quarterly Investor Conference Call Reporting its Operating Results for the Fiscal 2018 Third Quarter and First Nine Months. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Paul Huckfeldt, Senior Vice President, Finance and Chief Financial Officer for Hooker Furniture Corporation. ahead. go Please

Paul Huckfeldt

on Good to Crystal. fiscal welcome our which to third appreciate We Thank participation your our afternoon, sales call today. ended months, nine review and the XX, and quarterly XXXX. quarter certainly you, first and October earnings XXXX for

of George our Michael Corporation today and and are CEO; Chief our Hooker Home Officer and Operating our Operating Chairman Toms, me Chief President of of Meridian Brands. President Delgatti, segment; Joining and Officer Paul Revington, Legacy Hooker Furniture

During consolidated today, Any announcing of subject contained our cause is materially update and morning, events circumstances to quarter call fiscal per after our statements factors as today’s to for million, A diluted we our differ statements million or of may or ended quarter $X.XX $X.X fiscal expectation filings revise reported sales only speaks could which to discussion undertake obligation This in reflect XXXX we third XXXX. forward-looking make statements our are our and net XX, or that forward-looking uncertainties. to management’s net share forward-looking actual today press results call. October risks results. income release and XX-week of $XXX.X from SEC no of and any we

$XXX First share. diluted and nine million, net net to results $X.XX per million which months were income converts was $XX.X

the ago, segment. primarily were a a our our an Casegoods in consolidated sales Meridian, offset double-digit These compared to net a increased sales due decrease quarter, segment. in gains increase the year average X% Upholstery sales For and for slight in by sales Hooker nearly above segment, largest Home partially increase to

$X.XX all increased due fiscal segments sales share per For other as $X.XX XXXX, per double share of increased to with showing per Earnings Meridian to and Home net months digit from earnings the and in $X.XX to flat increases XX%, Upholstery, first modest increased primarily for nine sales the share increases year first prior $X.XX quarter, compared months. in to nine per diluted to share well. the

third Now our on Paul Toms will results. comment quarter

Paul Toms

pleased of to Thank producer units afternoon, and end of quarter, you, Paul, the the enabled the in acquisition-related and We the backlogs North growth good our strong the in sales trends improved the Valdese, second nearly noted we reporting consolidated our at quarter, sales all during third Consolidated us one that everyone. completed upholstery We order of during achieve we business cost September X% quarter. segment. X XX increase Furniture operating experienced and well, XXth. on but of purchase despite Shenandoah approximately as as income domestic Carolina-based $XXX,XXX were

Our an by and expect components sales a sales in higher traditional also final sales in sales acquisition be the reported benefited solid going XX% of We to the growth Upholstery revenues them quarter our inclusion the forward. gain acquisition of and to the the Shenandoah increase of Furniture, segment were from driven the approximate which complete the contributor at excited by three quarter. million Home the of earnings, month and which X% shipments both $X recent of from Shenandoah a had segment segment The increase. Upholstery was Meridian, XX% and reported

or operating While There slight a domestic higher upholstery higher and margin quarter. income $X.X in costs materials we operating upholstery. intangibles acquisition-related allowances ocean raw due in some casegoods domestically benefited from of returns the million, their and in freight our to by and in their in business by was XX.X% the profitability Casegoods erosion shipments and Hooker amortization impacting at produced the inflation improved in in earnings Consolidated contribution October, tempered month. was

George on President, time, this steps of Officer, our these who of to both the Meridian I mitigate taking At are call for segment. the factors. Chief on Home will comment our results impact Revington, would Operating to We like

George Revington

net to Home were you, sales up X%, compared Meridian’s last Paul. and in year Thank XX% the year-to-date. quarter

of management, profit year-to-date. from our and pattern XX.X% A up a XX% backlog expense quarter. and in down of by of shift the operating the sales year-over-year brought quarter the ongoing volume was As result the the XX% extra our end orders

So, challenging. our may fourth comparison be quarter to the shipments last year’s

our fourth as some growth, year-to-date. as dramatic mass were However, large customers hospitality a the channels Christmas. XX% experiencing our channels run have Sales customers, standouts, as Sales and traditional ecommerce, quarter sales growth remain the wildcard in totaling traditional up sales were year-to-year; respectively robust, had several XX% growing are well, year-to-date. and our of ecommerce we strong to to our the XX%, XX% emerging of XX%, channels to HMI growing with is

first which Our market, focus Home this just continues our products well Accentrics year. received in newest growing far With to focus will next on of shipped and growing be major division at lines emerging this product were its so of division, fastest October be year. channels, this has XX% launched very division QX of

good Samuel divisions begin collections other Lawrence in and January shipping had PRI all Pulaski, will the very markets that XXXX. February addition, with new and In launching

We gracious, our was High at reflects on-trend accommodate and launch engaging Home to have more of and expanded, the attitude. the showroom and redesign October refreshed needed XX,XXX market. Accentrics square-foot Point reorganized the The

showroom forge that process. strong the customers, a helping product provides and personal forward the relationships supports to new selling with fashion our stylish, view addition environment In

and These are customers. developing re-identified of our in focus resources mega categories to do services. fastest the marketing continue that list customers customers. parcel the on proprietary and small require product with organization’s that fashion upholstery, most business fastest products growing have the and To we including can that we and on products growing accents, items end, the We to largest

High with current In in We significantly have us customers call grow addition call At who an we turn including of President XX brands, year Point to accounts. I of Legacy and the Delgatti, results. now have XX Mike these the into mega over target Casegoods that XXXX XXXX. and best Market of mega performance the our the opportunity we to on comment this ones on to accounts, Upholstery additional the will Hooker will calendar time, feel accounts, are list segments the

Michael Delgatti

and gains George, by afternoon, this everyone. quarter, both highlighted sales of and in double-digit Upholstery gratifying robust good income. was performance the The segment Thanks, operating

from For of sales. the month quarter, addition on sales strength of for sales double-digit of million Hooker high-single-digit the gains and Moore. October in and were further Sam at up the Upholstery XX% Bradington-Young The in revenues boosted Shenandoah $X gains

As to performance, and competitiveness. market Paul about financial position make contribution will Shenandoah mentioned, our we’re excited the

going at were to or above profit in businesses. upholstery which produced and our will margins quarter underrepresented. channel that particularly forward at revenue of Shenandoah previously winning we of We expect future believe We growing, add in channel national as the $XX around retailers the serves, relates regional domestically million lifestyle that upholstery, it of per existing Shenandoah in

Hooker of results and quicker for the profitability strength operating single the year essentially digits quality due improvements income Orders sales driven the On at the sales are Hooker better position segment a the prior Upholstery, of the almost in by had Shenandoah’s impacted the resolved to the the XX% a and negatively decrease segment. delivery has up quarter The which quarter the by in-stock Hooker the flat shipments and to addition backlogs increase, increased times Casegoods slight in was the in October. down quarter was for for are Upholstery imported during issue and that up in mid date. shipments are for XX% line. slightly Upholstery year vendor

backlog the and positive are is orders incoming However, up XX%.

increased shipments the With backlog year and increased we the expect in fourth quarter. up nearly X% orders to to date,

the position to were in as not we emphasize Point at order the in placed a and result we major the who were home. to two imported line back-to-back normally September hurricanes reps orders adjusted we the High Florida would recent October products Texas, most a of strategy in to including until for new because due Turning successful introductions stay a products poorly number have sales to American a We after Point of premarket and attended this, of October market. to High forced inventory April the large premarket sales Market, a of Boheme Because have our retailers bit Life. directed in

response we our market to incentives At upholstery offered category goods scale In at and post we at good in upholstery success for Bradington-Young, had materials had Upholstery newly had Hooker in addition, represents promotional points motion several collection years. of and smaller called, line best Miramar Sam market. at introduced Casegoods leather price and with offerings, retailers expanded Moore Hooker better our recliners very style in mix a contemporary, market Hooker. and that products, new In the we motion fast-growing luxury a with a line

new most of and a later will As placing first Chinese until instructions a Year, quarter the ship than of orders the we year. next not New our result later normal of the

more Huckfeldt provide our Paul results. ask to details I’ll Now, about

Paul Huckfeldt

Thanks, Mike.

that’s reported increased As was sales now over Meridian’s quarter. Home higher average and furniture, upholstery quality prices mostly the we And and import about about volume Consolidated up prior this up X% from year. unit issues prices due business to mix. X%, also of also also about last nearly earlier, XX% were Upholstery the volume was about volume increased quarter. selling quarter. flat sales down X% in fully the unit added in average recovered selling year volume Upholstery declined Unit for to essentially X% was Shenandoah due product about ASP the X%.

nearly volume the the X.X%, months, Home For selling consolidated unit in mix. first average increased lower-priced products while to generally mostly our the increases products XX% nine due Meridian in decreased price

increased to gross due profit million, For sales. quarter, the $X.X mostly higher

increased product the net first profit the We compared Amortization due year from Upholstery improve Meridian year. allowances margin Spending segment, cost as the and flat In and margins the the in also to some bonus primarily due fully increased the slightly gross began gross fixed reduction segments for $X.X Meridian operating and months higher higher acquisition-related net from the a gross year-to-date as gross year segment in showing professional sales. short-term million Casegoods largest quarter XXXX, Home to $XXX,XXX related and to $X.X efficiency intangibles which administrative improvement offset acquisition-related this was increase we $X net because fiscal in which Meridian. was was prior with Consolidated home in slight earlier essentially customer declined of as at segment. year-to-date. million efforts saw a current basis-point as the current dollar expense due absorption to last costs in months, higher year. intangibles in percent decline attributable Improved freight the year. reported higher increased margin of profit XXX returns as well sales, increased, to reporting to dollars, in with and consolidated well nine and selling in increased all salaries Year-to-date, but to of expenses Consolidated expense. partly fees, absolute Home the lower of The amortized was year. nine also year amortization we acquisition a last in prior million, mix costs

for $XX net XXXX fiscal million For or year-to-date of to income fiscal compared these first the reasons, sales was $XX the X.X% sales in or months. of net operating million XXXX nine X.X%

strong, and use the of sheet despite furniture of at debt and to remained businesses balance Our year last acquire the Home cash of end Shenandoah Meridian the September.

provide end at and which quarter. cash service equivalents as we the million $XX working stood of to of available quarter-end, capital of $XX of debt, and to million had acquisition-related cash the over our As required

access facility increased value share, an of have per million we million a of also announced $XX.X additional company-owned gives dividend yield. dividend, increasing morning, about cash This surrender financial increase of an represents credit also us insurance, our $X.XX to $XX about which We which life to flexibility. X.X% XX%, on and revolving

I’ll Paul back his turn for Now, Toms discussion the to outlook.

Paul Toms

Thanks, Paul.

divisions. across had shipments October results retail Market In The Point partially month order back, hit across all good retail quarter most that October, mixed for Furniture the segments. trends in Florida third of hurricanes to due and and along and all Texas. bounced the was September, all significantly that weakened The High incoming segments with

and New in orders year reduced Home negatively the to the a quarter in HMI first fall for segment to sales shipments due the for The of Year, compared fourth segment have and the Upholstery market impact quarter, normal confidence. macroeconomic expect trends believe is and for we and the from than later shipment order should a of overall next the record However, Casegoods Chinese impact impact backlog quarter. a but comparisons environment on Hooker year. quarter We fourth ago the favorable sales the the could to strong, housing especially upcoming Meridian consumer at

New reflects home the purchases underlying pace strength with last that U.S. economy. month a were monthly the at a in of decade, X.X% their fastest increase

have and and a economic At sales operator, environment, increased the of XX-year monthly confidence formal and expect the consecutive solid earnings, Additionally, we ends strategies you. to we I Thank marking to seasonally part place in of time, the consecutive high. remains month this for both are increased According a in annual home Department, our rate fifth This contributor November the a sales October we to turn call the to the third Furniture Shenandoah consumer adjusted over gain. the questions. with working, discussion. going forward. believe will new our XXX,XXX, Commerce back at Along Crystal, to for be

Operator

first [Operator Sidoti Anthony question from Company. Instructions] comes from Our Lebiedzinski &

open. line Your is

Anthony Lebiedzinski

questions. the taking for you Thank afternoon. Good Yes.

as you know, net-net, I a be the how hurricane of because the able for to So, mean, you the say hurricanes? see to October to estimate would was revenue first, But, just September the came tough, of have back some quarter I sort impacted impact. was bit. wanted much if of

George Revington

This is George.

majority XX of I I’ve XX a got XX large full think result high of think Southeast number. was to and the in customers you But, severely of a our through times. and concentration business, as Meridian of more almost business of XXX-day of that the container not that a vast it, them have with this. am represent Texas, impacted our business I on operate lead XX% them sure if really Home in

their in can’t the So, become as of makes pause the And goods stop they’ve over-inventoried, them sudden got become a they as of result when a it orders hurricane, have they they coming. that over-inventoried. really flow

their reduce So, their to first is orders. action

We retail the the our quarter, level. the see time, the significantly. third the to sales affected at are same November planned sales now. orders offsetting are what in And And are retail see now that. that are there can At level. we So fairly orders planned events in the at can

One is of proportion the hours. of all have changed compared prior high has is our at is year. because business ecommerce, ship in backlog while virtually because in And XX also we a no them the backlog down, XX ecommerce we such becoming to backlog to

So, can I recovered, have say, way order answer the has significant to question. be would was flow in best but the I would it that the

Anthony Lebiedzinski

Yes. thanks information. it. Okay, that got for

looking topic third sales Home we the overall So that quarter, of up so X%. are and -- while were on in your the just segment Meridian, so at

You were release highlighted in sales the the press XX%. that up to customers your e-commerce

at for put wondering, if so Just performance look customer different different Can base sense in sub-segments -- different if speak. you a give us your and of them customers? for you you sales could buckets, these your to

George Revington

offset listed ones segments. think gains the we think certain in that I well. were did So, Those I

business account Our small down was slightly.

this it inside and Our the good quarter. timing down have fall business was issue East, a international our fall but business didn’t the kind a in primarily rollout we’ll where club third Far there into of of was

Anthony Lebiedzinski

Okay.

some shifts? there are So, timing

George Revington

part on There of yes. timing it, is shift a it

Anthony Lebiedzinski

like say mean you do club you business, what when club [ph] Tesco And by or business? mean you

George Revington

series -- have time. We have shift specific, in saying And which short at class, very are periodically. customers a not of of we we some of we periods will group a of them shift that we a

make a So a can weeks really big couple difference. of

Anthony Lebiedzinski

Got it.

switching over to then, the And Casegoods. Okay.

small until be of impact mentioned that realized full market So, next early year. the you introductions won’t

to Year? the Chinese primarily really So, of is due this the New timing

Paul Toms

of I Year of until the it’s later. Chinese doesn’t February. is due around to think, Anthony, couple things. It a start middle New

fall the for quarter shipped last products longer time year because shut important so, existing XXXX will that impact vendors they Year, down try out out fiscal new New new more most of two current the of will typically us will produce products weeks get of just before shipping the us Chinese first And products and with probably year. to than fiscal they the additional month take into before new And rather on a products quarter in the this to is down. just about and to that product shut work

impact. bigger So, that’s probably the

early much really hurricanes. see were cycles. premarket. as the during customers, washed products. XX didn’t we then, in last order ordered or -- is large blowing premarket the East up customers second we in We dealing typically And impacts the less was market new of Texas primarily much Coast we pretty year. not was out driven customers because having premarket year there feedback as There we September The than the from the same that impact they a was few time as this to Florida new needed have was product by so the period to also had come where And and with storm this

told saw the premarket. fifth of canceled; to of we’d at lots maybe home. see we And So, the customers traffic we that normal a rest stay

So, we the to trigger since shipped to able we them products. pull we be early. going harder order we weren’t didn’t would get have that to early, on the feedback it’s And new like before

Anthony Lebiedzinski

Thanks perspective. you switching there. Okay, in a performance Upholstery? the And say performance solid are What got it. that for to obviously Upholstery, the main putting factors very strong would in over driving

Michael Delgatti

a stronger traction continues quality much their in Upholstery. Sam today which has the they year and issue several months, gained last area much have in extremely better it’s months. inventory position ago. program been a fast-growing then, business. luxury to to do their business Moore’s their position reflected sales. the a of customers service over Bradington-Young, their is in well, had Hooker motion And through have Certainly, the They stronger one of last inventory drivers several are managed was a They position and in way in a

encouraging orders sales. both So, and terms we of are there, seeing in signs really

Anthony Lebiedzinski

revenue you there the was we expenses. Furniture, far as which Shenandoah appreciate as impact. the some calling out just Obviously, And impact as guys as lastly, far

one is you So, that issue? expect any costs additional XQ? a quarter acquisition-related Do in

Paul Toms

the costs we that. do to The we’re a talking some be auditors acquisition thousand stuff tops, of hundred acquisition-related less obviously will with and is have -- in additional nominal. than maybe hundreds follow-up -- specialists. couple But the There fairly valuation

have the asset. -- the that of an will faster amortization We will year, out -- of which the we’ll call intangible as amortization this backlog

separately, So, forward be but higher this be you’ll it year it going see will will too. than that

Anthony Lebiedzinski

Do that? you for have estimate an

Paul Toms

-- to going fourth be another It’s in quarter. XXX,XXX the

Operator

lines. phone to remarks. closing Thank from you. like no would to the And showing am for I Paul over conference our any Toms now questions further I back turn

Paul Toms

joining appreciate and of good We is feel in plenty yet about everybody joining forward today. Thank quarter Bye. us back today. right. pretty again All We the to go for quarter getting you full year results and months, We over look fourth the to four about there you improve. to us with together opportunity April.

Operator

Ladies This does Everyone, you wonderful a participating you and all today’s in gentlemen, conference. conclude program thank day. the for disconnect. and may have

Hooker Furnishings (HOFT) 7 Dec 172018 Q3 Earnings call transcript