HVT - Earnings call transcript Q2 2019 | Haverty Furniture Companies, Inc.

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Operator

Good day, and welcome to Havertys' Second Quarter 2019 Financial Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Chief Financial Officer, Richard B. Hare.

Please go ahead, sir.

Richard Hare

operator. you, Thank

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

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

Clarence Smith

our Good call. quarter conference morning. joining Thank you second for

down X.X%. Second with comparative quarter sales sales decreased store X.X%, store written comparative

the were are from happy we improvement the we pleased first see not quarter. the with decrease, to While

equal QX last share to year. earnings per of $X.XX were

worked While of three quarter, Vietnam. of set significant the have movement issues flow the motion we reaction we've the resolved production to in transition China suppliers through mostly several in with the several Vietnam in tariff implemented to from and product our have product in to XX% List

our production there that the some this will throughout And gaps issues competition. still as I tariff our China than cycle. major we of in better movement, are while team any challenges has mitigated the flow believe see effectively or well

press We've negotiated that our in we which of but additional tariffs, strategically, is best most some all Chinese margin we in with projected the that margin of products, of impact. suppliers see believe selling Because of our the some reflected and release. will our some impacted prices negative increased gross

and confidence new our our customers' grow investing to her market customers will gain the help systems improve with and to and technology in that message reach share. heavily us target We're experience

members. of all enhanced tablets sales based team increasing devices of the and for faster is technology; invested XD cloud CapEx in latest our An percentage our platforms, mobile

IT order investment growth our heavier the that customer years. to expect The continue our Design is H in the of product next related trend I and to in directly ticket sales. significant average growth

X.X% second to average last over is The sale quarter $X,XXX. up year

is Our product more and presentations. our fashion and and team merchandise style focused on

suppliers, continues Working serve times and more outlined we've when comfortable lead at grow. product. H to are help with waiting the weeks program, for figure right that target this the and better to her the well to our in versus custom started shortened special-order with several customer a sales few Design closely XX% months feel we we markets,

a customers the grow and customers' provide our timely quality, providing product to their not We're that average custom dedicated reality. marketplace. make continuing sales and the sale and to service-level, affordability delivery has help to product our quality of home level been professionalism are in We a desired vision available but the to

third sales written following the trend the first to we're July time months, period. of for For quarter, sales many strong Fourth pleased see a a in positive

written the backlog the time first sales our are in and this up year. for high-single Our undelivered digits

up low-single digits. are the deliveries Quarter-to-date, in

bit was more promotions, believe marketing a our our aggressive that clear we and the For message with were holiday events, customer. our for I

returning in We're XXXX. month we next store Chesterfield market significant the location returning very be since a area. Commons the market in St. excited left to with to We're the St. Louis to Louis

young in Our when XXXX with founder, moved the J.J. opened store family. his he Haverty, there St. Louis

major thrilled that teams again to footprint. our serve market Our distribution are in

I-XX. in area store in new a Georgia, our visible open Baton September; highly of improved site, with fast relocation November will and a Atlanta Newnan, Rouge southwest in We a store on branch growing significantly

footage. slight a to increase end in square expect selling We with XXXX

our solid our our looking We're third We're quarter. existing store base. year, encouraged to several within distribution will which complement XX-state at by locations the next footprint start

improved the teams product, second fashion-oriented our half. better store our set solid H top are and our in-stock Design a combined that enhanced rated for position, optimistic with sales presentation, We're

back call the Richard. turn now over to I'll

Richard Hare

decrease Clarence, our $XXX.X quarter. store X.X% In prior-year you, X.X% were and quarter, the Thank good morning. down over comparable the XXXX, sales of were quarter and for a million, second the sales

gross Our higher XX to and to XX% during decreased margin costs freight profit mix merchandising, and and basis pricing due quarter. slightly points product the

million. of in lower million and and we decreased second general driven recorded $X sales quarter the due slightly to $XXX,XXX of delivery loss volumes. the quarter. expenses by $XXX,XXX reduced prior largely year Selling, We administrative in costs other $XX.X to income This and selling recorded XXXX, a of was over

quarter, sale income interest year's the closed location. we second in a We In loss recorded XXXX. of of $XXX,XXX net a from a last recorded quarter

net quarter in new lease second accounting recorded $XXX,XXX resulting the a XXXX. prior of quarter interest year last This of a in variance the $XXX,XXX adoption the of we over is year, first expense period. We in of result the of the adopted variance of standard

of $XXX,XXX same quarter versus decreased $X.X in last X.X in quarter million taxes XXXX the income year. before Income to the second million

tax an Our the resulted was XX.X%. during million expense in which tax of quarter effective rate XXXX, of $X.X second

state year with tax associated of in taxes the XX.X%. was and rate tax rate difference primary In tax income stock expense a expense the The vested rate statutory in tax the and awards. prior period, $X.X additional resulting is due effective million, to

$X.XX or compared per for stock, year. first common quarter the on share income quarter last net per diluted comparable XXXX $X.XX the $X,XXX,XXX to in our of share income or Net was of $X,XXX,XXX

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

a we As reminder, no debt. funded have

the our flow. was quarter. of some at during Looking uses cash CapEx $X million of

this million program. current second We in and in representing We of under during paid of year, equates our common $X.X have shares quarterly dividends, $XX.X buyback quarter also which $X.X million common per million X,XXX,XXX authorization purchased share. $X.XX regular we stock, to the remaining

last obligations sheet balance we disclosed first January XXXX, along requires qualitative capitalize lease with new quarter, additional accounting their disclosures. previously that on standard on adopted a and their quantitative companies to As lease

regarding our standard in notes details implementation QX earnings statements our release. included Further the XXXX are with in financial the press the of

In for addition, future forward-looking statements of indicating certain refer list additional will several to release out financial our earnings our few, release I expectations please but a our highlight press additional commentary. metrics.

the year the XXXX. XX.X%. range In discretionary expect be XXXX, be margin for $XXX approximately and $XXX our expenses SG&A profit type are gross million within expected for in full to to we Fixed million to

are of be costs SG&A to for expected percentage Variable XXXX as XX% a sales.

opening previously mentioned. XXXX for locations $XX Clarence which includes the CapEx three million, is planned Our

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

expected for today's XX%, and make the your to local remaining is in federal Our financial up tax results. state This participation completes difference. Thank second-quarter taxes the be and call. on you our rate commentary

Operator, we call open would now up like for the questions. to

Operator

Thank go [Operator sir. with you Lebiedzinski come ahead your Instructions] Anthony Sidoti The Company. will question Please from question. with & first

Anthony Lebiedzinski

good you morning thank taking and Yes, for the question.

bit want the start So just to Clarence, solid little I quarter. get the color as to third more to a

event as mentioned Fourth doing You of well. also July

for obviously, industry half month. So of the struggled first has the the

demand? pick -- maybe just sales perhaps us share share to you I Or here? can So do pent-up details something as improved with driving more can had up some just you know Is think why the touched it, far? so it you else this on you but we've

Clarence Smith

Well, coordination I our in the think media we had event. for better

in we've I better was done The television. structured clearer better. think. a digital, we than message the it had mail release think We I the direct of combination and the past,

We were to see very it. pleased

trend. As you know, of clearly, kind that we haven't had

through month, of range and I the -- where we are the now. gave So

I we're think better So have than stock in been. we

quarter the the questions. tariff a had some issue to stock quarter and due We the second in of first

clear jumped are don't just is but certainly that, answer to think deliver I a positioning. to little to it. We a a better little have to why it see we're it’s I able like pleasing happy see. better. It real

Anthony Lebiedzinski

Sure.

Okay.

more Vietnam from So obviously, it as moving the itself, whole as to far China. is industry

rushing is get everyone to into now Vietnam. So

to is to of infrastructure Now China. a clearly has the in catching up do -- lot relative Vietnam

Havertys' think competitors ensure you in overall position is do favorable and adequate a flow? that So sustainable inventory to versus

Clarence Smith

with a we've We've and good with I them. better do there, relationships suppliers key relationships we're in those think position. the had very got

they because have vis-a-vis think We're bills thing, They a company. public the know but on visibility that. they are. we're our know do dealing like the also right we They about we of time, here. with who I talking us what pay all we just

are because There we very vendors Vietnam. So infrastructure. challenges of be relationship have going in I think to with good the a the

of not out and to quicker. same get China, there's pressure more on lot It's as a it and them the of add lot a

better a feel our do And position with So our them met of I think most good yesterday, has we team it. we have returned. just and than about competition. I

Anthony Lebiedzinski

it. Got

particularly -- get thinking longer-term, location, lastly, a Wichita only want Ohio. in thoughts or your I just in base? single for And what your sense are Columbus, growth now a I'm how have St. about interested on example, you markets store or where Okay. Louis like you're to better store

to you if a how could -- better Just about locations? you're store just give like as sense thinking

Clarence Smith

I think and we'll do demand the grow stores the as need to we so. see

with believe Louis what we into are. for is customer our store significant St. we one exact location to and for going are the We who right

great think store, We we unless at location intent one have is begin we will look the another think we with. demand where another I that's are. We don't which our but not to one later, store will a do more Columbus. in look we had for

to see in stores that tell support efficiencies to several need add think business answer, We we out we the and to these do do kinds the start provide have per be to grow several markets, significant can but markets store grow sales profitable. We this but rolling square really the do got a to enough have within lot not going We you more. foot opportunities in one of footprint. we're to stores, that some

better back we're better We're do We doing in want we in stores to foot. a relocation and over $XXX to and that Baton range, $XXX-a-foot get closing locations, opening to like Rouge there. just continuing weaker the markets, the by are with about

big next I a years several in of So don't the I see growth. sustained growth number single-digit stores. a of see

Anthony Lebiedzinski

it. Got

Okay. much. best luck. And of Well, very thanks

Clarence Smith

Okay. Thank you.

Richard Hare

Thank you, Anthony.

Operator

The Capital ahead your with Thank Thomas go Brad Markets. question. KeyBanc you. [Operator with come Please instructions] question will from next

Brad Thomas

Richard. Clarence, good morning Hi, good morning

Richard Hare

Good morning.

Clarence Smith

morning, Good Brad.

Brad Thomas

with see gross Let's Maybe start here. could margin. we

be of can to we is what bit I and little XX takes margin you when changed? at the gross basis think I guess, for outlook talk about what's than guidance some of XQ. thought puts new lower you end the points gave a the Richard, and

Richard Hare

you Yes. And tariffs, with for at it's primarily Absolutely, XX projected the point decline two that. year, question. gross is categories the in two margin that Brad. tariffs. our it's look for When One Thanks basis things. within

certain drop going we We to XX% prices, the anticipated what that with impact margins, an well our LIFO we As had have China, as as on certainly move to well, as impact our the that. products that's rate will be. project higher and as think we to

decline the the of on with rates half renegotiations the relates some to freight. our on about second our there and saw things. those during freight So, had quarter, slight we carriers, piece, we increases And two our annual other then

So year. our the of between gross guidance to those rest for reduce needed margin categories, felt we we for the

Brad Thomas

Got about think year? helpful. any of level you maybe about the second how thinking or as you're half of the you. of degree is change in promotions level in promotion, That's And there

Richard Hare

be we'll last year. to be it's think I don't aggressive than significantly think more going aggressive. I

going I to be think coordinated. it's better

that do which in also, know. We free we and are for a others discount you pay rate, using promotion, as credit

So, reflected that be our would SG&A. in cost

what needs I is be to it needs that. is plan to make very just and better very our that promotional sure when job And message think promotional our to I when -- coordinated we'll a So, do aggressively be. it think clear, of

Brad Thomas

sales look respect impact issues, And the sense of reflect first we, point, And that? on through and on this Clarence, on of half maybe how Great. stocking XQ any you for quantify was with most same-store you? to year, what back are then, the at of the and better the some to as

Clarence Smith

I why of it know is if Anthony are that. that. getting I part our question of more sellers in me don't credit we're that for weren't we can now. I And are where best best asked really better things we think stock the on before. quantify think we a

a our I a little of which we're has reason that this. struggled better gaining believe than think the little with that some I is the whole And shape that probably there. in competition industry share we're

It I don't much have Brad. that, So a challenge. is more on

I better we're a think in little position.

Brad Thomas

so great. answer all for my That's in second half. good the you Thank questions. much my And luck

Richard Hare

Brad. you, Thank

Clarence Smith

Brad. Thanks,

Operator

go Please will with ahead from question Raymond with The Griffin come Instructions] next Bobby [Operator your James. question.

Bobby Griffin

Good morning taking for everybody, and my thanks questions.

Clarence Smith

Bobby. Hey,

Bobby Griffin

of on can now maybe get has bit products your and off of update all, about -- what the in exposure we little and progress shifting China how an of some First Vietnam? talk your a some is more the been to

Clarence Smith

When XXs. still We we are going our XXX about we made from all and drive this I the they're new some is think continue sellers if importing -- million in not can, to China, but were are best that we to where China. want in started, The move. of now to

going So be I now where the to we into here. that's issue, and estimates baked think baked an are but it's we into have

give. with vendors It's They're others. matter just could a more than could. tariffs how sharing we these best with negotiated us, they we the So much of these some

not -- don't think I it's going away. So,

certain in categories, China to important. is They're going in best still leather. particularly be the

and us. that's area an for So important

to flow and and got Vietnam have they the back the from in support with we've product does. when something China live out it's think of figure I end that infrastructure the also don't So,

Bobby Griffin

best-selling Have any helpful. you then those seen those some I price for at unit Okay. all because in of increases on of been you've consumers? change for through items that some higher the That's items are assume And referenced, on volume tariffs. the you passing strategically pricing of because the items

Clarence Smith

We do recovers is they're overall just anyway. because value we've started to initially. what see better And it

Bobby Griffin

And does that year are helpful. does XX%? in for How what if on Okay. side? gross for then, the Very four for list the list at we anything about guidance four? And margin assume positioned come that

Clarence Smith

in goods coming of our China XX% cost from We've the already now. got

Bobby Griffin

For everything? Okay.

of little just flipped this kind better? though message is pretty throughout Okay, very it itself. as got helpful. I back A then Or marketing second on here circle your just the of Your And point the -- a to that's sudden in July. XQ? something guess a inflection quarter in-stocks you in and quarter got big all build see better? Did

Clarence Smith

I hate to call it a flip, Bobby.

it. the I mattresses, July important. think and see to more pleased fact the doing and We're It see was events a better And product, goods. the us. to more event. better that's certainly for directly the for credit important related We're are category in we're we're good-quality been merchandise. more industry, are are that's been getting We that And selling job Fourth you'll board. with selling good the of Holidays across that for a better this

be little which fact the that's that we're we a go the it's better recognized the in might to offering credit to already So and where I levels, ticket, for average think the we're service we're point up last getting that up. was quarter, And offering design the continuing service.

have getting for good So we little credit I really think we're answer I what other better a don't a do. than

Richard Hare

a in up that was better it July. Clarence Yes. said I better promotional availability, as I came and game message the earlier, And I'd at, big think, look -- way product marketing We -- we with changer got of a event. Couple on our that just a for promotions. communication

Bobby Griffin

to you of for guess that, give Okay. It's the to happier can making. for I Richard, the great the variable guys point. models SG&A are inflection portion happy Really product's our quarter? for of you see see helpful. That's fixed the us the breakout very and lastly,

Richard Hare

Sure.

the quarter, was That For XX.X%. And variable discretionary XX.X%. was the XX,XXX,XXX and fixed for was XX,XXX,XXX.

Bobby Griffin

back Best of of year. the right. appreciate it. I luck the going half All into really

Richard Hare

Bobby. you, Thank

Operator

questions this at further no I'm showing time, sir.

Richard Hare

you look thank for forward you call, in to results. when participation we release we the quarter your third today's we with Well, future talking our in and

Operator

Thank ladies and event. gentlemen. today’s This you concludes

disconnect now line. your You may

Haverty Furniture Companies (HVT) 3 Aug 192019 Q2 Earnings call transcript