HVT,HVT.A - Earnings call transcript Q2 2021 | Haverty Furniture Companies, Inc.

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Operator

Good day and welcome to the HVT's Second Quarter 2021 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Richard Hare, Chief Financial Officer. Please go ahead.

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

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

Clarence Smith

Thank our you results stores, pretax We're the profits. XXXX margins controls and board expense a $XXX pricing quarter record very with gross and quarter XX.X% conference done sales at across from and the for call. teams joining with the our merchandising second million. we combined the in pleased disciplines operating solid job with achieved We've second good

and double-digit Our existing importance ongoing objectives spring our with the that margins. believe of term and operating the footprint home increased COVID longer was trend. distribution that are is of last to jumpstarted We grow market impact share a maintain

expect an levels puts do the in combined strong for is positioning already to us with position our and that day future. homeownership rush at the and and for a for near Texas, the desire quarters, the be Southeast priority strong The for a elevated While impacted future. believe Florida, and ideal don't we we recent the in home experienced industry we that trend sustainable the

eastern believe product record home-related caused be XXXX. are The problems to the and and over growth expansions XX% We're of our our to investing our shipping network and additional to support capacity challenges a shippers regions. plan more working we serve for We just teams have Georgia, distribution our our in until our flow will completed potential distribution and growth. to distribution improves. which Our backlog. supply, We'll to $X Braselton, production merchandising, product increase mothership, with working billion experiencing delays evaluate to We're which center reduce inventories factories the to orders racking the in spring in capacity. furniture over as fill major that industries better bring storage are our adds

in opening current store key markets store earlier positioning Austin, focus opening reach The share Beach our store a Florida. Pflugerville, markets, Rock deep in markets our the target and best fast-growing third Central our areas of customer reviewing fastest-growing the which the existing a Myrtle will Round were Our and Examples our infrastructure. marketing on a building leverage is in locations the new and opening and of Villages potential in dive in in of market core homeowners. to We're this year, this with tomorrow in

raise announce fill-in clearly openings. our to the we locations service, new and the XXXX bar very We Happiness which of to expect separates excited about believe We several and competitors rollout furniture, We're the campaign, more quality, from Furnish Haverty's marketing on for design. continues the

on focused to be significant our state-of-the-art better reach to and to door, havertys.com. continue customers. in and investments We We've IT committed our to systems front appeal

and create will collection content The with an our experience. customer for services and investment presentation ongoing contracted We help have bring enhance us that We've personalization better provide website to ease-of-use. and a foundation reporting. and lay will Adobe of major and improve foundation using applications easier the faster, our for a AI-driven better and analytics functionality, reworking new on automation, unmatched

now call President. will website the have over Our to goal experience. to Burdette, best-in-class I Steve the turn is

Steven Burdette

determination has and all store, was to performance excited their a the I'm under delivery, increase want second demand very service, Container the commitment, from for Clarence. retail. of to the congratulate due with efforts, second network continued This results headwinds. passion, I personally capacity teams quarter. chain distribution, warehouses office with to and home the whom you, of supply with to been be home our Thank the Our able increase pressure all flow products continues even our in across quarter of into over the

continue issue to of softening container this on year, with demand. $XX,XXX varying between container. prices $XX,XXX expect spot Also, and to for in a if even to We continue there's the be remainder the a an market prices increase the

is time than been have the more We these to one to water rates. so XX% on no that increased XX% at balance able at medics our shipping

continues As contracts some our I for which the X, market May significantly stated last to spot of Foam be rates. vendors. issue finalized domestic on our quarter, an are below we

production but has their increased the second not However, still XXX%. during quarter, at

to in import closures recent the not are back the Our expected are any increased remain vendors due issues. open have spread closures if customers on impact are having of weeks. variant an X/X. Vietnam The our not beginning of the up projected week at They two the to the Delta foam expected to

if issues the in port there lead-times. along and weeks, customers we port seeing feature impact are with our LA and and then who are continued already at closures be yards. However, Vietnam Also, an the to congestion customer six prolonged may bought rail four to China

our chain teams closely very supply vendors. are monitoring Our with the situation and merchandising

pool to last days. over XX is approximately from Our two weeks last average weeks year, times six with approximately pool eight the stretching now age than the larger

have our business. to to weeks softening Our XX special order weeks, vendor, order depending the lead-times XX in on some increased special causing

available. and concern warehouses, jobs have is the network in Our Over to states continues have our stopped the Staffing The both the distribution, markets week the product in are delivery. not a our our be that looking most one a there extra we people work operate warehouses. within delivered customer's number for distribution home are to monies XX% fill enough of delivering delivery, unemployment in but we of once to record still quarter. service home home

that team efforts their during optimistic I see the during to this quarter. improved the quarter. Again, second remain want all we entire we invite for third will thank -- the However, Haverty

Richard. Now, I'll over the turn call to

Richard Hare

Thank and the XXX.X% delivered Steve good over prior million, increase quarter you, In the second sales of $XXX were quarter. XXXX, morning.

you If month the June pandemic retail in to operations XXXX, by due closed April recall, Xst, stores the and the were May XXXX in of stores our on reopened XXX XXth. reopened remaining

over up full for month sales year Our includes XXXX second up period. store written in XX.X% of Comparable prior sales only for periods. both period. prior year quarter over a were the were the XX.X% open This were that stores the

from product to activity due sales an freight mix, These increased increased and in our we Our as to and merchandising, partially activity. administrative $XX.X better reserve gross XX.X% by XX.X% to or due expenses costs. offset to profit and general, continue promotional XX.X% margin less increased primarily XXX Selling, pricing, the LIFO points quarter. increased during $XXX.X million to were see increase basis improvements and million,

points from However, as a percentage of X,XXX sales, to these over XX% costs XX.X%. basis declined

which the of three in at financial three quarter million, gain model income in distribution quarters, demonstrated XXXX. $XX.X the second sales XXXX leverage the sales our As operating substantial of leaseback has the was past Other transaction on in included facilities levels. the

proceeds income million. increased million. gross the Income the to $XX.X million taxes approximately $XX.X from before recall you sale If was $XX

the resulted statutory Our difference primary of state during and and benefit taxes XX.X%. to stock effective due tax tax million Net from income which in compared period share $X.X comparable per $X.XX second is expense awards. The effective our the in $X.XX vested to of an common in $XX.X stock for income on of rate year. the rate was $XX.X XXXX or rate of tax quarter was the second net diluted the million quarter or share the last XXXX million per income

in our the of second loss. adjusted earnings on our of distribution Excluding the per year quarter in XXXX, was the at assets gain sale last $X.XX share

December million was $XX.X balance million end deposits $XXX.X cash, quarter, sheet, Now, XXst billion second of ended quarter, equivalents. the of which was of the inventories $XXX $XXX.X $XX of turning at up XXXX the At up We December and which versus and versus of the second million, customer the second with million, $XX.X $XX.X from XXXX. XXst, from the our million our XXXX. up up the cash to quarter million were quarter our end were QX balance balance the

end funded our We sheet on no quarter balance debt second the of the of at have XXXX.

Looking this at million not quarter, $XX.X XXXX. flow, were buyback half under capital and common $XX.X uses and we cash authorization any purchase current expenditures first some regular remaining for the XXXX did half of have million the million In program $X.X dividends our buyback shares during second we for of first we of our of paid program. of in the

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

by XX.X% for product margins gross XX.X%. LIFO current gross margins to We be and be our anticipate expect impacted costs estimates profit reserve. and our our freight changes in We of to XXXX will

estimate, and Our variable XX.X%, This range. increase XXXX million the is XX.X% to for for be guidance. previous our an SG&A in expected of fixed decrease million to XXXX rising range expenses $XXX costs. and due costs are in to are warehouse The a $XXX to expected benefit compensation type primarily slight type to our over discretionary be SG&A over the previous within

In million. XXXX million the stores, new that increased remodels, our key expansions year, gives is to third expected the years. CapEx Anticipated this Our for which our be are expanded we and buying $XX upcoming in $XX.X leased as warehouse in technology more distribution distribution be information planned and replacement the planned is investments a network. our growth will last in million. quarter Investments this in million This our back and Owning asset largest year. for approximately our back CapEx in distribution $X.X for The from $XX.X Virginia evaluate account us we increase future XXXX be are network our to has asset $XX sold or million. may flexibility expect plans. of we

is awards on tax to vesting call. operator legislation. projection the ask like up This the now, effective impact the tax for Our your excludes results. second the quarter from financial in and open potential I'd participation appreciate any stock to anticipated XXXX our We be And expected XX%. new to This today's commentary in completes questions. call rate of

Operator

Lebiedzinski Sidoti. first Thank Anthony Instructions] question from you. comes Our with [Operator

Anthony Lebiedzinski

questions. the taking for you thank and morning Good

buying, are in merchandise you being here you that talk the but are you're than if in as you talked to if stock positive seeing fact are be being up about quarter, which just Can know as see. about I good demand as touched is other what more on that'd maybe are third quarter, changes people customized, to could people buying sort to as the sales So, or any what in you other what the the still you just differences far like -- talk the -- buying? mattress people helpful? also about of seeing

Clarence Smith

think of on that less we've we're the bit case little is a having over than we improve other a because delays categories. customization months, goods Upholstery, -- I the our the seen more little while business some up of just last up product.

to vendors some cases, in categories, So order. customization special had suspend on few a and few we've

seeing the is we're across categories. main thing all growth So,

the I get little and dining to think case and been goods, room. a have it in because bring stronger in we able bedroom were product

Anthony Lebiedzinski

it. Got

helpful. Okay, that's very

guys headwinds. improving your margins last with you over years job done so And nice some even few have a the gross

think So, gross for forward just we years? overall, in the future how margins potential going about should

Steven Burdette

that and remainder guidance on XX.X% XX.X% still going that out Steve. the is, with you, put would of guidance we don't we're provided year. provide feel has the this committed, to for I Anthony Richard what that Richard saw we forward, the the confident say certainly there, you

Anthony Lebiedzinski

far the as a though, obviously, cash, of got Okay, sheet. then as And have balance you usage guys it.

So, how be mean, as buybacks? the or cash, excess you you think should priorities or continue purchase to would I additional distribution for of or mean, about facilities we usages build cash perhaps -- to your dividends up stores your -- preferences or I flow?

Clarence Smith

stockholders out had discuss We meet meeting. cash. which Well, to the generating Yes, and is opportunity look center, may we've the points every review could our invest if It have that Anthony, return real back a meeting it in I Board we've dividends to don't we We and good Board historically. need distribution that we're a at of be look like we'll we at and to it to But which at we every we next and this week, deal a we got buybacks, do buy cash, think as done quarter. significant. look also plus.

Anthony Lebiedzinski

Got it.

Okay. and luck. Thanks of best

Clarence Smith

Thank you, Anthony.

Operator

our next Capital We'll question Thomas take with from Bradley KeyBanc Markets.

Andrew Efimoff

could written wanted in the I sales for Clarence, against about positive look for the rest or as for quarter-to-date third XQ written for to compare the written quarter, you us XXXX. morning the is and But August July? sales through growth comparison we to comparison growth comparison it remind by good This sales difficult tough see words, your Hi, talking September of Brad. other trends. last It and Steve, what year we In to sales the quarter? Andrew you as when does progress even encouraging easier growth written Richard. to looks start like on was the get more the

Richard Hare

Andrew, this is Richard. Yes,

I think -- are just and the first the on year for obviously get don't detail months, it's We on the of but appreciate both of QX generally of written challenging. that more question. all, delivery level and back typically QX speaking, into half

the third both we're about trends sales the So, pleased of we the quarter of month-to-date were those and very positive categories optimistic the for rest certainly year. report to in

Andrew Efimoff

noted moderation intensity to margins mix in in your patients few consumers a you led in the grow do a And shift you product Could next shift and this was among Understood. merchandise. months? there custom expect this commentary, that's talk shift away to in from that is about impacting pandemic how and over you

Clarence Smith

to it's that. margins. going don't see I don't I impact think

Steven Burdette

Steve. Yes. the vendors, the our delays lead-times this don't our I seen, have seen some see have and I extension early second back custom to -- from back part But moving that domestic with the we were, say is vendors up. delay in back levels see it we of the impact. of seeing in where where not in was because any I the orders. we already did -- don't the quarter, but it's July of I'm the bounced

definitely any of order. don't in the but margins, -- to because see reduction the I impact So the special

Andrew Efimoff

great. Okay,

Steven Burdette

through online up things -- third more fourth would quarter And we're and the get flowing as we get as quarter. optimistic back as vendors move that into pick we

Andrew Efimoff

about changes in with Great. of own costs And And you could these that talk expect the adjustments? changes eventually magnitude bit seeing? are a to you freight more and the you little do offset your product price

Steven Burdette

-- and aware We as teams that merchandising and chain We those we're immediately as that, soon along. as don't have our of that it already we -- addressing supply passing happens. are are addressing

have finding are those vendors. passed on So, out as -- are our been we them those from

Andrew Efimoff

as of of in changes the given have the COVID-XX, states, of seen a in you resurgences result Got this particularly it. southern some any And consumer resurgence? behavior

Clarence Smith

be anything recently. anything We Traffic balanced haven't haven't significant, we pretty anything. the but It regions. seen No, across seen is seen haven't could more to-date. come we to

Andrew Efimoff

it. Got

Okay.

me. I think that’s you. all for Thank

Richard Hare

you. Thank

Clarence Smith

Thank you, Andrew.

Operator

This concludes question-and-answer Richard closing Hare it will to I remarks. today's for session. turn back now

Richard Hare

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

Operator

your today's concludes this Thank participation. gentlemen, you and for Ladies call.

You lines. phone may now disconnect your

Haverty Furniture Companies (HVT) 28 Jul 212021 Q2 Earnings call transcript