HVT - Earnings call transcript Q2 2022 | Haverty Furniture Companies, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Havertys Reports Operating Results for Second Quarter 2022 Conference Call. All lines have been placed on a listen-only mode. [Operator Instructions] At this time and it’s my pleasure to turn the floor over to your host Richard Hare, Chief Financial Officer. Sir, the floor is yours.

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 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

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

Clarence Smith

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

We’re earnings QX per record very over sales and a of $XXX $X.XX, X% million report pleased share to last performance a year. of

the second company’s history. The the performance was quarter fourth best in earnings

produced quarters, the sales has team going record straight quarter fourth seven to XXXX. of back Our

continue reached we in customer and than customer hit profitable slowdown markets that seen pre-COVID. backlog pays orders, impacted has $X in our base. billion in been XXXX. in the We annual target sales sensitive promotional that traffic, growing provide store more price fastest orders country which located believe written that in regions. our strong We’ve our very changed business is a model our to well but we’re the we share the positioned a We market We’ve with of feel build less since

count is and with store Our retail footage square XXXX. level

and to with up are with down written Traffic team double-digit higher is compared compared week we balanced XXXX. sales more units have our to $X,XXX flow we’ve a closing activity activity. of but XXXX. per and over over and weekend more the average producing closing outside year, sales pattern. marketing is by sales trends XX% weaker QX sales employee measured more because driving gross and a year, during we normal record with XX% new to more traffic grow promotional changed had the the at margin, more QX higher compared with events, traffic sales more holiday on This In because rate. But are rate a historically build the Recent volume quickly a stronger seen ticket, productivity our typical Last compared the ticket our consistent Average However, volume In returning sale down XXXX up profits. attracting XX.X% our second efforts, focused to deliver around the members XX%, able new sales fewer is XXXX. we’ve sales up higher are weekdays the been customers, XXXX. we’re we’ve and with seen tickets during volume. customers and quarter, to

than historically targeting attracted we’ve slightly media. We’re a younger digital social with and advertising customer more

contemporary continues performance emphasizing this sales. built and Upholstery coming order. be Our levels. more styles, at delivery special up align the strategy, in merchandising closer backup to also and are improving, order with times domestic XX% key We upholstery, inventories special of driver to efforts pre-COVID customization, over

Vietnam from in orders back We’re to dining have Recently, the biggest games room able from our finally delays. as after in bedroom goods, bedroom long sales fill complete containers in incoming leather and beginning and orders case to upholstery we’re with China. been

been best Day the have to inventory years. We we than many the in expect be in Labor for important events position

year. efforts [ph] Our team’s later relaunch top marketing, of merchandising, this the havertys.com and IT

customer. believe our good next are of that of year. pursuing our within actively a reach a in markets both that We very goal stores locations with We’re distribution year new store there a five number locations, adding target and footprint beginning existing

level store Indianapolis, to in stores Currently, with DC end the with be we and We in opening Washington additional year store expect fall. XXX an the market last will relocating year. a this

invest stores to state-of-the-art the the repositioning us chain. our balance efficiency in intelligence, and best markets our The business of technologies best-in-class website, upgrading managing sheet for in fastest major and latest the country. allows supply locations relaunch and Our the in growing in

able and our the growth maintain inventories to priority support position with back ongoing build also an suppliers. to industry’s We’re top

are team’s half the with dedicated XXXX. of We pleased for our performance first

We traffic orders with reduced challenges incoming to and high and closures. slowing have lower inflation related home

better the markets be serving ahead. by I’ll dedication the encouraged more now to able months in that larger we’ll back and We the to to team’s design of service, Steve values, Burdette. We’re earn our over believe home customer our furnishings with customization. and a quarters turn call great share

Steve Burdette

morning. and Clarence, Thank good you,

chain quarter and domestic our has supply it becoming times continuing This our helping backlog our inventory record more vendors. allowed import year-over-year us momentum is second to of to has reduce our our over outstanding increase in the This from vendors and production from lead inventories quarter, to XX.X% with QX. by in contributed increase Our gained orders. improve to consistent

still is healthy. backlog our While

our at weeks. stabilized have of the backlog age XX We

to will continue see dollars and our our backlog age shipments consistency and the due we over that are to in increase coming lead times. from expectations coming Our on the the vendors improve quarters drop of the in backlog our

our the East we However, for encouraging some of not dwell containers the several the potential labor An in inventories times a of use of with some seen Coast orders during to and talks in the port contracted congestion West container spot sales. our the from our able cargo in rates. experiencing retailers to imports times seeing market in from are year due the a receive port are as of of Coast drop some in longer rates increase to is, getting we in of bit a for gateways. shipping disruption softening due anticipation excess carriers their at some retailers second have many half reasons, on longer shifting reduction resulting to of One ready of

to quarter their at sales reduced new our sales. XX%. back around our our centers, and our restored time consistently first us the times getting a goals home distribution the pandemic lead business Our order delivery service expected way to long team’s special for for of will in vendor’s percentage since flat of total a remained of confidence has order as goal Getting is go meet abilities upholstered of started. to our X% areas, centers the XX% special within Staffing customer upholstered in

on Our and retention. focus teams for our training, is execution

We quarter are excited second our the of to for the first year. see results and half

to team Havertys for to appreciative dedication our and furnishing all are every our passion day. customers happiness We members all the

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

Richard Hare

sales over sales period. the and over Comparable increase a million, prior up morning. Steve, In second were good the you, were quarter X.X% $XXX.X year XXXX, year X.X% quarter. net store of Thank the prior

administrative prior increased profit gross to $XXX.X to $X.X the XX.X% up to discipline to points in costs or as X.X% due Our Selling, percentage XXX million expenses better approximated increased XX% pricing mix. margin a of these from basis XX.X% XX.X% year. merchandising million general and sales and from

As transportation million. expected, distribution selling, we taxes saw expenses increased $XXX,XXX quarter. to the during $XX.X and income Income decreased before

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

the and At our $X.X XXXX down no our at from balance, We down $XX of up million equivalents, of Now, second we quarter. ended the end the to last year’s sheet were versus were customer on second quarter cash $XXX.X the of XX, end million, were million the year, inventories end of balance $XX.X turning cash the the quarter million, December end our balance. million versus and second which quarter the $XXX.X up million our of deposits XXXX at have the sheet, the with funded quarter, the balance and quarter, which the of $XX.X debt and was from million of $XX balance.

cash dividends expenditures the year. of $XX.X half capital paid flow, of of of we at million during and of were for this the Looking XXXX $X.X million first the regular some our half first uses

purchased shares, shares approximated During which of XXX,XXX we $XX.X common the million of quarter, stock. second

half $XX XXX,XXX million approximated purchased which common we the shares. XXXX, shares, of During first

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

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

costs within of approximate to Our be variable $XXX in for type SG&A over are billion XX.X% XXXX prior to type to The the XXXX for are fixed XX.X%. range and $XXX be to billion the levels. in and expenses X% increase discretionary range expected SG&A expected

$X.X or anticipated our of information due to $X.X and expenditures delivery Our planned a are deferral conversion estimate the and for new facility for This our building $XX.X million replacement availability million expected capital now to stores, approximately to XXXX home regional remodel investments to materials. be Virginia million. expansions reflects network expected and technology pricing in are is of Investments of our be distribution in million. in center a account $XX distribution

commentary potential the this vesting effective in new to impact of legislation. open to in excludes questions be from concludes time. call any tax for expected quarter like my anticipated rate This Operator, results. on up the awards financial we second projection is XX%. XXXX Our the This tax any stock would at

Operator

floor we now from [Operator you. state Please Lebiedzinski questions. question Thank a Okay, is Instructions] Anthony from open The your for Sidoti. have question.

Anthony Lebiedzinski

you gentlemen. morning, And Good Yes. question. taking for then the thank

So, step taking back. a

the with and that far how productivity things attributed talked So your people closing you about one of as improved Clarence, is because more rates. as of now, on higher the less you to doing side, you’re

associates like main Or what’s So, as – team far anything your you have I you more as sales with you that. are what would feel reasons the you’re training your why now? productive be – you driven like better? do think, done you mean,

Clarence Smith

training and sales more in staff people, that. that more, our best who office. do are people customers able money. our are close people now because higher making the dealing the with think category who sales of retained And best we really better. selling more, biggest think number, in I They’re I to we’re have Well, our The had we’re clerical reduction in and was we our

had stores the [ph] manned and floors which has day, staff with whole We’ve cut us. for in to hit people longer sales actually a the fewer for store the instance. people, us our allowed think top thing the serving I not we’re XX% we’ve that They’re is when adding about back. better. to pushing back we performers that our since we’re adding I’m XX% the not to and count, just, we’re That’s the COVID main reduced our our hours, have period customer

So, is this we and planning there. add to certainly can maintain, something not back think we we’re

Anthony Lebiedzinski

it. that, Yes. then, for up that going now margin pre-COVID XX%. key is in thing other since around to XX% that Got has gross from Thanks XXXX roughly improved And Clarence. yes, the your certainly

So, quite meaningful there. a improvement

know improvement, lot of going So, margin ability this your uncertainty in talked I driving terms you of higher mix, forward out, sustain the inflation about we the about and gross Obviously, landscape macroeconomic pointed to think rates. interest quote, out, your improved pricing as gross should the a you margins? and discipline how there’s

broadly how should think the those? speaking, talk margins, just of kind if could about gross So you about we

Clarence Smith

can we increase plan our Well, and possibly gross we think margins. to maintain and

also and the the made very, have increases. able about any up gained – store in we’ve discipline. We we making our and to on that with merchants. with It’s happen increase changes We’ve it an We it’s been sure that on fastidious discipline, price only been floor not level, that. following we and do but the have if pricing

for willing I getting the we’re customers more the we’re and that price. developing think to pay credit product are

in So, maintain got ability. the increase we can frankly ahead. We’ve we and that pricing margins believe our that years

Anthony Lebiedzinski

it. Got

Okay.

So here. far And then looking that. the thanks just for quarter as, as at

So number gave sales, you quarter. the a you for written us

far June, Just was was? wondering, that written was there as Or throughout between trend the and consistent quarter? April it from as any month-to-month meaningful change

Richard Hare

in say decline, single-digit May, the but little in would June Anthony was in quarter June double-digit decline, May were April a Richard. and April written business, it’s and quarter, I would say, so was I declines less.

Anthony Lebiedzinski

Okay.

better. So is was June this

Okay.

here. XX us that, a on could hear if as exactly, are as color quantify don’t more backlog, give your I bit know to you I think the lead then good but that’s that to So far times down maybe and you And little guys weeks.

by be like, of great. us a you the would end year, where lead times So that’d estimate, and you backlog expect the kind the rough be, your could of if give

Steve Burdette

is stabilized the quarter. we we rest inventory is product continuing we product flow Yes, see said, that, for that Steve. year. on of the the that is we’ve We backlog, that age And our are this the flow Anthony, as Yes, increase the anticipating see of our for pool.

consistency, before their next able more to lead year exactly. with pre-COVID come improvement, getting getting are the in we the schedules. production down. specific. vendors continue in where times think the, see But still get Our I that us going we’re And back obviously I then were it’ll to that without and to every every we month we’re goes see by, quarter to think take

Anthony Lebiedzinski

Sure. Got it.

Okay. And Virginia, the is store of deferral? does temporary your terms conversion this growth impact delivery just of longer a in expectations in term? then, the deferred that center home Or

Steve Burdette

on felt hindrance like just our with be and a now It in going dollars prudent forward. what monies. has just can And we and growth it was just temporary cost no we right do our to due deferral and

Anthony Lebiedzinski

Got it.

just to additional That’s purchases? thoughts are share doing hear. Okay. what good And on wondering your lastly,

Richard Hare

mixture Well, board our back Anthony, dividends encourages, holder return to value buybacks of a – our to share shareholders. and share

we We beginning on have basis. you we a year, And the the exhausted know, at we second – year. that’s quarter-by-quarter completed we’ll of our evaluate we did would, we’ll, planned half something if the $XX quarter. during changes, current amount the of but the that certainly let And our in that it through going board limit, say the we million have, will first

Anthony Lebiedzinski

Got it.

a thanks of best lot Well, and Okay. luck.

Clarence Smith

Anthony. Thanks,

Richard Hare

Thanks, Anthony.

Operator

our was only that And question.

Clarence Smith

release the quarter to everyone’s our results. when We we forward in in you Well, third call. to we appreciate future, participation today’s look talking

Operator

This concludes thank for today’s We call. you. your you Thank conference participation.

this time may have disconnect at your great and lines You a day.

Haverty Furniture Companies (HVT) 3 Aug 222022 Q2 Earnings call transcript