HVT - Earnings call transcript Q3 2019 | Haverty Furniture Companies, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to Haverty's Third Quarter 2019 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.

Rich 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 in obligation which in or made, or speak such to implied publicly only revise. we as which the update they from date undertake those made SEC. to Factors detailed reports company's in results economic competitive differ the that could cause conditions and the filed include actual and uncertainties with other

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

Clarence Smith

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

Our sales were slightly down from last year.

were have pleased However, sales we to up X.X%. written positive

timing with Our X.X% level our while decreased be the and an driven custom Labor closing to X.X%. performance. sales Atlantic coastal double-digit is comparative three solid the stores digits growth in quarters' particularly continue down Florida increasing the a up Day the and was is This of upholstery. sales percentage, and improvement average impact over last ticket, unfortunate. Traffic by single store from week Hurricane low threatening Dorian The

and landfall week to for We important to our almost unknown, due weeks. were largest threat selling year, most the Florida Day Labor the impacted sales event season. constant but the from leading into Southeast is of of fall two Virginia

weather While for the sales delivered we'll we disruption point like our to written and reports, did third don't give out impact that this quarter.

we'll We due the affected the markets fourth to Beach experienced being preparations. from Labor storm our days. from Palm damage days in stores much due X, ground to Norfolk, that three the the no XX market three the us Dorian Category storm. to XX West Due affected a necessary business the storm to stores to passed catch of Over it We one five Day before quarter. weekend, forcing storm to to close to our believe up the each

the with The to The factors. hiring out to move more categories new XX% than and and disruptions to best-selling to stop or workers to redesign training sales other of we more of factories had factory suppliers our backlog impacted related key China impacted the up of Vietnam, expected. several We We've primarily XX% the Chinese important undelivered built developed the products expected. tariff. production working Several tariff we production to factories. in and adapt to disruptions relocating due a products us infrastructure chose factories less to due products ground, in countries have related different and to the than coming

closely margins. We and pricing margins merchandising were burden Our have increasing aggressive did and impact first points, from products drop of our reasons which been We related behind sourcing us to disruption that pressure and of the its basis the working gross in decline of a had teams expect our or deliveries and due tariff XXX will quarter. be in-stock with different most by points year-end on have several our early suppliers several this promotions in quarter the the of this were China dropped with in some the with categories, more to an primary impact. for out gross close along combined tariffs, the XX% to freight pressure the and due our the charges, in past tariff, to

our that position forward. gross we're margins improve to much better feel We going in

work to our with order weeks ship rapidly had. suppliers taste. in rather of We merchandise have programs Vietnamese new those new better important the We furniture arriving U.S., months. Chinese the we team feels with next and the developing in ever quicker factories best weeks of customers' months. special partnered than to and products added all We've to and we lineup have quality have strongest a great react deal that We're to of our growing and our lines

dedicated inventory We the Atlanta in these at our managing our we operating aggressively because the handling over the working by and these reduced costs going reduce by two outlet we be product the to are year. largest this handle category have cost better forward. last stores In improved identified by and and effectiveness, reduce of years, in half forward, process centers our We've of going less we've markdowns with through closing and been of clearance goods. off-price closeouts end the and that management we'll discontinued feel the discontinued to of to several running products able

Web our on believe service. the Haverty's designed critical customer final Every team is our and and Our we from each journey understand, CapEx All to IT site, committed toward and investments with teams weighted finest contact delivery the plans for our Haverty's our to additional in because year heavily in-store the controlling brand. experience serve are building customer. better to are reach systems XXXX customer entire operating is engagement providing customer a presentations, and this the target to member

We're opened St. a pleased with in Atlanta. into Georgia, and new We'll our late of relocation in third Baton after years quarter, store reentry quarter. stores our a the we the a Newnan, market fast-growing have two Rouge XX of that store this Louis southwest

year. We end year expect stores, the last one with XXX to over

furniture build our distribution the stores higher For markets, and existing to store in share. new XXXX, business on fashion, add grow we're locations expect profitable we we We're have market in our footprint. positioned our and to quality focusing and with a pleased few

over turn it back Rich. I'm going to to

Rich Hare

morning. you, Clarence, good and Thank

sales third the a quarter. $XXX.X prior-year decrease of In quarter were over the million, XXXX, X.X%

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

coupled due basis product as slightly and had during mix XXX gross promotions, we XX.X% points costs with and to the quarter. freight aggressive more Our higher decreased pricing profit to merchandise margin

generated In addition, a product higher increased costs reserve. and tariffs LIFO

increase healthcare largely costs during Selling, $XXX.X third period. general the quarter. was to income over and Other de increased $XXX,XXX expenses administrative increased million. This the by driven prior-year was minimis

quarter of had of expense. been some used as the slightly we of that total However, the property net year quarter, interest resulted in which $XXX,XXX disposal recorded site, in $XXX,XXX the prior a a over on loss income quarter We of drop in a third the recorded of XXXX, variance quarter adopted a the new the of expense third the in adoption recorded the we of XXXX. $XXX,XXX first lease We is This in of the over of XXXX. period. standard accounting result $XXX,XXX prior-year of of net in resulting interest variance

Income before income to third million in taxes the XXXX million $X.X quarter $XX.X year. quarter decreased last the $X versus million same of in

and in $X.X the an Our state tax income taxes the quarter primary prior in million the due the tax during expense $X.X resulted tax was which is the the vested of rate of period, tax in of tax effective XX.X%. difference awards. which to rate million, XX.X%. a The statutory associated rate XXXX, was and resulted with tax year In impact effective rate third expense stock

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

turning remains of our sheet. million of the our our no Now At the cash as with same. quarter million, quarter, was years now inventories equivalents The facility revolving September are extended aspects maturity and a and million terms of company prior $XX the $XX.X And untapped. on some was quarter did get over will relief our to of XXXX. ended September $X.X and credit year's balance down over The million mechanical of of the slight third were revolving million reminder, mature the and and which date down credit $X.X end $XX.X of some basically the million has debt. $XX XXXX, out fourth certain covenants. We cash balance third five In XXXX. and the funded the agreement. extended conditions in we enhancements amended We of quarter

Form third which in will the be filed exhibits additional XXXX For refer XX-Q, please quarter information, to contained our tomorrow.

of XXXX. for cash third were uses some capital flow, our at $X.X expenditures Looking of the quarter of million

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

with adopted lease qualitative details our previously included included standard our statements the with quantitative new the standard notes financial X, the on their that accounting last press along implementation requires As disclosures. lease on release. Further are quarter, and to companies regarding sheet in additional disclosed this we of QX earnings capitalize balance obligations their and January XXXX

list earnings several forward-looking our our of addition, certain out release including expectations additional metrics. In future statements, financial

profit are XX.X% but year percentage margin refer are within in discretionary to $XXX Variable expected a SG&A SG&A to expected range be XXXX. I for type million million Fixed a of we sales. gross full $XXX to the as will to and please be commentary. costs XXXX for XXXX, for In to our expenses continue additional the approximately highlight our expect XX.X%. for be to few, release press

which for planned XXXX the three includes opening million, Our of expenditures locations. capital $XX.X is

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

Our the on financial taxes to rate third between quarter X%, remaining our commentary and up state is local federal make and be This tax difference. expected completes results. the

call. your would the we open now, appreciate We today's participation Operator, to up call in questions. like for

Operator

James. first from Our Griffin question with Raymond instructions] Bobby will [Operator come

Alessandra Jimenez

Griffin. Good for on Jimenez taking you morning. Bobby question. Alessandra Thank is for This my

a we a is First, Can exposure your production into China of I to little the issue. dive sense wanted now? what flow get

Clarence Smith

from, million -- well, or Richard, somewhere it's almost that's that think right? We so. $XXX million down is around $XX it's from down

Rich Hare

XX% from to our increase of -- coming seen down And down corresponding Vietnam exposure. about a raw gone materials you've about China little We've a our XX%. Yes. XX% under from in

Alessandra Jimenez

what that we Okay. number then to? do get could think And you down

Clarence Smith

product now a significant who Well, a move We do the flux important we're or There's lot move product I that about think still don't we suppliers don't Chinese exactly. think the can will know from. the number we in of buying have tariff.

know from will down. but be reduced don't I where it much how is, it So,

Alessandra Jimenez

the the Okay. view gross in quarter? of margin impacts moving into quantify takes then And you puts how decline can you the And and margin fourth a those quarter? forward from gross perspective,

Clarence Smith

I'd points. basis Yes. declined say, we've XXX

last related, more quarter, our this and about then aggressive as of For our increased LIFO, remains freight. and quarter. promotions quarter particular during the either prices tariff product the it mentioned was a third the or year, But same, our two-thirds guidance we was

Alessandra Jimenez

SG&A give fixed model? our and Okay. for And the then the quarter for lastly, breakout can you us variable of

Rich Hare

$XX,XXX,XXX net Variable Sure. XX.X%, the and XX.X% fixed or was was of sales. quarter and for or discretionary $XX,XXX,XXX

Alessandra Jimenez

of best the luck And you. Thank fourth on quarter. Okay.

Operator

you. Thank

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

Brad Thomas

morning, morning, was Clarence. I business, strong the custom Good spot focus guess, on was Richard. comps I the and bright written a hoping in the I Good a real to those was? I much a you what think orders thought And wanted Hi. of hurricane it little a little piece written the context, bit could for to and you sense do have maybe you could any give we how us orders. headwind

Clarence Smith

one? that do you on want give Richard, to any guess

Rich Hare

It's me question. great a to hard written it's during let the business quarter. quantify, some our you give background Brad, on but just

So in starting in bit in July, about business digits. in the And basically X%. we it we a about more. same, the had mid-single back. written was then, gave It August September, was strong down really up little August, And

that up of really issues for business. the kind of basically about written other Overall, August created kind we're we the that see And quarter. strong with prepared remarks, up September were Day, can as his in there, have gave you Clarence X.X% our among We So XX%. a Labor sales that. things, undelivered and backlog mentioned of up

Brad Thomas

my was XX%. from outside, the see customer to it be follow-up. looks That's deposits we great. the going I like up that's mean, can about That

which fourth the some sort you in quantifying of in work to in deliver sales any lift get, quarter, you as about to you that can either help might a think strong about what percentage us or degree dollars terms we of think backlog? As

Clarence Smith

of And see type kind the good feel plays we Obviously, up out. Well, it we we'll with any just of sales typically how have into quarter XX%. about kind guidance. backlog going avoid our to

Brad Thomas

you're do from position like directionally, a the operations in that? down good get just But fourth your to a benefit an work from you. standpoint Got quarter and you to to that backlog in feel sales

Clarence Smith

a that's to mean, still that backlog We water. play quarter. to down the to how Yeah, determined the there the expect end advantage of because flux. on by to we to of able are going but stuff the lot it's How hope I about be mean, still much I take of out. in it, is significantly be we certainly is come do. unknowns

Brad Thomas

tariffs. think just the to you that you And like what in starting Do get to said have big you about all there its point the going to more from feel a think sticky you might little are relationships this this we I that as bit point? a with will insight that bit can faced then a mean, Clarence, guess, way, disruptions year more industry set up through work that picture, the where way supplier I where back have come this see be end that your another is maybe system normal? you is at

Clarence Smith

back Well, both the we because that's of quarter this first year. coming, the normal, by know a to what end we're quarter lot the goods expect that to expecting of we in do into and are get have we

will over. of just on lot carry There's Some a pressure factories. of it these

As and you go problems. fleshed time the and getting out. everybody a I the struggle. is know, still out trying out Vietnam has is been being at time, really to think to be on And getting There'll that product it worked same

the you exactly product that move start. factories brand-new much from out can't and You it get it want the expect into way to

a team year feel end lot that end quarter, of they and Again, do first morning. eliminated. feel it. about with better of We certainly, that this should met be the our we by the So

Brad Thomas

you for luck. details, Thank and Great. good much the so

Operator

Thank Our come instructions] you. Anthony with Lebiedzinski next [Operator Sidoti. one from the will

Anthony Lebiedzinski

morning, Thank you, fellas. and good

So thank questions. the for taking you

dial third-party thinking that? do more promotional Just that? promotions, of about maybe strategy well? and better the the same? be kind wondering the to get overall about you kind to how Will credit wanted of guys some you about Or you are just looking as thinking of How are clarity your perhaps up

Clarence Smith

us business. getting aggressive more expensive Day that think to We don't to see third than were quarter, some is in back primarily the try Labor pretty follow-up I promote that. as I aggressive And after around gain and credit. it to the

promotional doing forward. don't We We'll be it. more will going focused. see be more little doing it a we'll I that be

to I think more including well planned, think tighter this be forward and effective going quarter. it's I going

Anthony Lebiedzinski

H are you it. far penetration will your do now? of then And go think as you And that to? program, as ultimately where your Got where Design

Clarence Smith

I go It's will see still It's increasing. it in think to it percentage rapidly. up the going don't and I continue mid-XX up.

it probably think see would the high we'd I leveling objective into the off. be XX% and where

Anthony Lebiedzinski

Got it.

any lastly, Okay. as you as of new wondering you next and the timing do few of anticipate opening store also, And guys a year far closings that year? talked stores kind about next

Clarence Smith

those that couple a They're two they until not net don't some next are stores time. three. we'll year, think I of finalized, are process. in and several, Leases or takes and we announce

in year be when will it So, probably the half second late anyway. in online those come the

Operator

there Thank you. no are at showing [Operator I the questions instructions] queue further time. in am this

Clarence Smith

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

Operator

and Thank you, ladies today's gentlemen, teleconference. this concludes

You now disconnect. may

Haverty Furniture Companies (HVT) 4 Nov 192019 Q3 Earnings call transcript