HVT - Earnings call transcript Q4 2018 | Haverty Furniture Companies, Inc.

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Operator

Good day, and welcome to Havertys' Fourth Quarter and Year End 2018 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Richard Hare. Please go ahead, sir.

Richard Hare

Thank you, operator.

we'll uncertainties. statements, call to are conference and risks this make which forward-looking subject During may materially of results no statements, are Actual differ and obligation which in or made or speak such to implied publicly only revise. we as which the update they from date undertake those made Securities to Factors detailed reports company's in results economic and Commission. competitive differ, the Exchange that could cause conditions and the filed include actual and uncertainties with other

an you on Clarence business. Smith, will and President, commentary our Our and provide give results CEO Chairman, now update about our

Clarence Smith

quarter you full quarter Good joining with of morning. Thank for of were conference our comparable fourth XXXX The fourth sales decline X.X%. and call. store X.X% year sales

and third Following later quarter, The the help average which traffic the positive decrease, of up year not momentum we full-year with sales a a comparative year. fourth with annual in X.X% five overall with X.X%. XXXX. in have ended early was increased down did year we closing sales, solid rate store quarter the $X,XXX, We not X.X% did closings X.X% from finished the a X.X% to ticket the we in gain fall-off comp sales saw with in however, store the

Distribution our was expansion of XXXX For Center. Western network with by a EPS we closing produced year our year the distribution and on lower a stores the strengthening XXXX, record. and reduced finalizing focused because store of record XXXX weaker the of rate tax shares the right-sizing sales, previous of outstanding, performing $X.XX locations comp our beating

in Florida, three service with two for in allows service to centers the faster. by us distribution reductions square X,XXX by our and two closer our Coppell, professional our bringing costs our in inventory the reduced delivery years product and Florida, to Texas at expansions, and bring main selection Havertys teammates. facility The Lakeland, We've transfers, grow years and and Georgia, Over to which in customer footprint to we more and customers completed approximately we're because transfer expect one-third fast XXX,XXX foot products speeded The professional feet product we three in of square our Braselton, reduced inter-company two trucks now two completed the regions. we state-of-the-art in regional strengthen terms Texas, improve allow major expansions of of Center and XXX,XXX delivery serve us now past feet regional XXX,XXX distribution Braselton. Distribution our XX-state days, to see handling in regional Eastern

Following the one five three. store closings markets one weaker Georgia, stores, South in store net of a in includes in relocation. performance stores two with XXX expect new and Newnan, increase XXXX, of Atlanta, the we new XXXX This

The growth. merchandise This average customizing professional effective. decorators of sale customer-centered engaging focus X drive team the store our in our and lead times customer Hdesign of improvement average to experiences rate. continues helps every demonstrates helping designers closing in has of in ticket and critical program the Our vision helping stores of their XXX have Hdesign has over This increased bring vision of period. XX that still on impact customers our demonstrates us consecutive performance quarters home our the was upholstery order the Special overall sale the executing life. of that to over importance every comparative been average and our prior

Our whether interact to our seamless Havertys process improved and with the and store. customers provides for experience a is or transact in smoother omni-channel online significantly

styles has lighter received. finishes, hitting merchandise more we now introductions floors, the several well region higher which been more These are will specific attracting. to quality collections appear and feel oriented that customer impressive the contemporary fashion We have we very feature

teams, to and quality our continue both domestically Asia. in strengthen control We

particularly Havertys we is separates that different factor significant relocate factories a countries to and to is quality. constant is team important assure from as product competition QC Our quality in the

better in merchandise are with and our wants reach to it presented. how and more she customer marketing. her in a We're what best to understand detail our deep wants about dive she We analyzing, developing

mix our We better serve adjusting product to are and our customer. marketing target

working are staffing teams focus closely to tools directed our and our digital We We've our out maximizing and store the proper with incentives there for growth. for sales on store managers to better. more serve customer sales leadership implemented

separate our anywhere, and whether to now increase We store every the presentations the highly XXXX. values over that goals. opportunity comparable our will feel or motivated store. product in for well best back us source store achieving to We're back are turn positioned grow sales, in home advantage call are We furnishings which XXXX taking Hare. operating move to and profit the online Havertys as to the services of Richard and I'll to

Richard Hare

XXXX morning. you, and million, Thank fourth $XXX Clarence, were sales good the quarter quarter. decrease In over the of prior year X.X% a

for quarter. X.X% the store comparable were Our down sales

last volumes, occupancy taxes of cost. with quarter well to in million. expense the selling $XXX,XXX recorded reported In Kansas Merchandise margin Income location. costs fourth million. points fourth cash a versus year as a and mix which $XX.X largely million XXXX, of well interest down increase of quarter. insurance in XXXX driven XX.X%. as quarter result last due year. and the and associated claim quarter the Net in Selling, Our the was fourth profit $X.X decreased was This equivalents. before as reduced income of same proceeds million basis the to fourth pricing $XX.X We amount quarter XX in million associated the fraction on $XX,XXX to in to the This primarily quarter of increased gross is with $XXX,XXX to was by our prior our Irma flood Wichita, decrease income decreased reduced we XX.X% $XXX.X Hurricane interest cash as increased to expenses gross general profit year's lower margin. other $X.X of contributed sales administrative income

an XX.X%, which and Act Jobs significantly period resulted for million federal of the the of rate the $X.X tax XX% prior-year from effective effective the expense fourth reduced and $X.X company's in quarter the became included rate in Our tax of during fourth expense was tax XXXX, Tax XXXX, and to enactment quarter tax Cut million of XX%. the which in

tax net $X.X our of of income on XXXX we calendar in per last which year. fourth rate share $XX.X million, stock, Net quarter million $X.XX the or the $X.X an year, the expense diluted diluted recorded compared quarter was for XX%. per comparable resulted During effective $X.XX of tax to income XXXX share million common or of in

decreased the enactment of earnings for a Tax as of $X.XX of Our XXXX fourth share Cut the result share in and diluted per Jobs the Act per and quarter year XXXX.

million, quarter $XX to of quarter revolving the over which remains period the Now sheet. our the We inventories million balance and last XXXX. and was million and down cash year end our up third untapped. of the ended credit fourth quarter, $X.X facility million cash over $X.X of turning with same were At billion $XXX.X our $XX.X the equivalents

a we funded on our sheet. no As have debt balance reminder,

Looking at flow. cash some million the of the $XX.X uses were for Capital of year. expenditures

Class of $X.XX regular holders total the of XX, company its stock A We common ended representing in and year share common million quarterly million $XX.X of a December $XX dividends the stock. paid cash quarter. dividends the per XXXX, to paid common For each

per Directors $XX.X dividend the our of Board shares. November. We share $X additional to during an authorized a $X.X million stock as an our additional We also million common approximating cash XXX,XXX special of out of in common purchased paid quarter, shareholders

to remaining $XX.X or common million XXXX, payments our XXXX stock During under our shareholders our we and and shares and we XXX,XXX $XX.X have program. regular purchased million total, special during stock returned In buyback through $XX.X of current authorization. million dividend we

statements, year future refer margin of I Our to expect approximately a $XXX will gross highlight the metrics. XX.X% few expected as be release, full with but we for sales. commentary. financial XX.X% earnings type our annual In including XXXX out are million flat range of a SG&A additional our list $XXX for to several profit please release for to costs XXXX. in press be the XXXX, Variable discretionary million to expectations additional and gross our for expenses profit margin. percent Fixed to XXXX's are expected forward-looking be SG&A within

$XX relocation locations. are market the markets, XXXX which Two one new one in for CapEx approximately in Atlanta an four million, is market. existing planned Our includes and opening is is

excluding We expect be impact from our compensation XX% vesting overall any the to awards. of stock based effective tax in rate XXXX

local Our and federal tax and rate the is expected to taxes make be difference. remaining XX% state up

in imported used XX% the recently accessories components As U.S. furniture into The increase from of tariffs March is currently of U.S. China. XXXX. the and previously in disclosed, XX% to and manufacturing on enacted may tariff furniture, has the

March, and in material quarter impact you on on fourth we This our a the customers. business. minimize We participation our has vendors to with its financial open the now, and tariff our questions. continue company increased to up results. call. would that tariff can on work will our without the Operator, to manage today's If our XX% believe Thank impact to continue to for the in we for level partners we call like completes your commentary

Operator

Thank [Operator you Instructions].

Our Lebiedzinski from come Sidoti first Anthony question will with Company. &

Anthony Lebiedzinski

any is the noticed that? -- you don't commentary trends that or quarter with start maybe if about I did in I in know which off not current previous not have the departure its your first, to you specific your intentional date So release the policy. from but can

Clarence Smith

for were managers pretty in before on inter-period long-term Sure. shifts, certainly volatility all Anthony, released these we're be and is to Clarence. We this we the calendar doing changing our that the and can industry. we've XXX here retailers what Havertys there sales. inter-quarter due line most success a years out to own, all the information when Anthony, this of with have seen lot of is after and

sales release released. So we're going earnings to our are when

Anthony Lebiedzinski

So had, perhaps Clarence, what five you the sales Can these reverse your closings you you same-store helped that of the on the store for that impact the fact quantify cannibalization? was year. also touched

Clarence Smith

up overlapped of were stores some in with with two Northwestern Dallas. back. performers. Alliance store in them our these couple of new of Several stores. years stores opened our But better That of Hill of We weaker some the significantly our overlapped Well.

kept best and to along just all the at and that planned and declined, So was business, in with and some planned. in a been of other product were stores mix planned for (ph) years and performers store overlapped was the us. that had and of appealing less company the decorator Colombia these we've and all area are as upgraded a The actually our two markets to smaller one weaker up. the stores and of markets we smaller our relocation -- some able that we've type productive pick few smaller Raleigh were more

that were so weaker us and these of comps. planned, our performers, in itself all So were helped and our they with

Anthony Lebiedzinski

couple a open store far new stores markets. And as in these of still area? mention did state as that will are you assume XX your then I in stores, new you Should base

Clarence Smith

it. footprint. will going within we're footprint. to are, within We've expensive very it's but and to outside to not this Yes. are markets these they grow We're adjacent And within we lot footprint. existing We that our now, a in -- in move know where this the invested be

Anthony Lebiedzinski

And to you sense China can in $XXX what Previously in XXXX,? of as XXXX worth was a us exposure give inventory lastly, China. million that your was to from about communicated your a you

for you your So think actively we to on dependence on give lessen sense should a basis, that? a the can you How are also XXXX go-forward China? about us and looking

Clarence Smith

to looks like can. a as know, to think could well get as It over moving maybe pointed moving in country, I $XX $XX putting of ones and the a we'll we $XXX million, rapidly would that's that doing about Vietnam, we're and lot doing have of we that's and lot as it. as million we're on a not we not we only out only Yes, industry the down you we're that XXXX. pressure to be that it million, earlier this

workers went because getting is an feel as the an some best China, our issue. -- up, tariff in away in the quarter terrific, disruptive comes So quality getting this is disruption the factories the best into And this We issue. getting Getting on would if back had of certainly in move. fourth the due to moving the there. is product quarter certainly product and We heck. and disruption some that from

can continue move that China away I but and XX%, it, product we would suppliers. of the we So will the a so if hope think tariff we'll goes out to it's handle

Anthony Lebiedzinski

in sales? far can a sourcing. that any And so just the as quantify disruption impact follow-up, actual way perhaps there the your on as QX Is you same-store

Clarence Smith

market the orders. going was pricing I all the price product, and how this because for right we a of even don't were struggling product number that. to getting it think hit placing we're we the to for before Part the and October have issue even market,

quarter, was certainly the disruption fourth Chinese getting product Year. in in there New So in before

Richard Hare

Richard, a our Let me add is this little that looking at there. to lumpiness Clarence. just Anthony, inventory levels,

So of the down bit little you things. was our quarter tariff, advance pre-ordered pre-ordered inventory and over in some up some, a went saw last we've we've

Some of came come that has stuff and of some to in. stuff in that continued

continue our million So levels the minus inventory to quarter you might or $X see over next plus fluctuate so. or

Operator

Thank you.

question Our come with Markets. will next Brad KeyBanc from Thomas Capital

Brad Thomas

guess XQ I the how things I look be mean, having you you're first at feeling Obviously, a and sales cadence how up don't give on from wanted to perspective. seemed helpful? the you in guidance, about that thinking but usual guys knowing here just just with you any you as color put official check of to are about same-store of slow a pretty XXXX, and a would XQ. as ended. out business, bit XQ year things, kind strong in I it

Clarence Smith

pretty feel received. to We're new it's I sales well product really But update. I of Well, we're good. really positioned. lot I and well not a the give like think a being going

out I getting of of about. the -- feel because disruption a Some But product talked good. deliveries right getting just fashion, we pretty and in is now a challenges just the timely the our in

something that you -- think to I here. Richard, comment want on

Richard Hare

going with that for same we're headwind, confident for flat improvement, on we've at just kind going just -- to past flat. to but to Well. we're more of we're Obviously There the to with felt the we years, predicted say wanted feel next we at be gross tariff level In we saying like saying headwind, be margins, the margin year. our to they're guidance now. the go needed we

Clarence Smith

pretty your So to good position. we feel question, our about answer

Brad Thomas

margin. years expanding merchandise about a on on the on and I to credit do you the besides the company's how gross putting you're guess, of just think the over margin, comment getting Richard, mean follow-up gross that job margin? Well about great gross done last puts three the I floor. takes for tariffs, some

Richard Hare

several I last in been helpful over think seen the we've years. has markdowns, reduction which Yes, a

over with on probably have I little little little in for so year. speak think the some Clarence here, job little that. is that a last the company demand and terms bit to The at area was of was this pace been seen tariff year, merchandising here a that of disruptive the We've fluctuation in of bit like to the bit got doesn't doing has freight that in and lot of but point appear this can We've a look-forward it a a more great of getting rate bit be previous the pressure freight on a new again of we'll that, ships year. that. a increases but see

to be little that seems seeing but We're product a well. seeing So doing markdowns. transportation bit less we inflation, new are

a So on margin outlook the all good in pretty side. all its

Clarence Smith

get is there, sourcing middle-man more and that credit opportunities product Brad and will we growth exclusive help maintain which for there, of opportunity success there. that we're can us. some some with real us eliminating us And for the more give direct that a and is I'm margin what doing for seeing encouraging little

Brad Thomas

plan the can openings here, think we store And cadence the then that what's degree? by store growth and to share you if of as about quarter,

Richard Hare

in this open the the quarter. fourth the in maybe stores in the new in growth of but Most mostly year early projecting fourth fourth one these the quarter, in to we're late

Brad Thomas

would you growth year. base in of then And at still get half the store have in smaller least XQ? we the the So slightly first

Richard Hare

Yes.

Brad Thomas

have, the Richard, some the we course as about we we year. just that XXXX? the XXXX think with any of to you'd versus the about of color And expenses in you want us over have differences fixed of as share then think timing any might expenditures

Richard Hare

it the in prior the in it guidance Not the costs, than with in of follow. terms as in G&A should lumpiness but new year be Other terms the locations of the fourth of should the out trends. significant. We've press year consistent of release quarter, some some for next laid

Operator

in you Thank Instructions]. I'm time. no questions are at queue further the showing, there this [Operator

Richard Hare

to We release call. future you you. when forward We appreciate look first Well. Thank in everyone's today's our talking near quarter results. in we participation the to

Operator

this Thank today's you. Ladies and teleconference. gentlemen concludes

disconnect. now may You

Haverty Furniture Companies (HVT) 20 Feb 192018 Q4 Earnings call transcript