- Earnings call transcript Q3 2022

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Operator

Good day, ladies and gentlemen, and welcome to the Haverty's Q3 Earnings Call. All lines have been placed on a listen-only mode and the floor will be opened for questions and comments following the presentation. [Operator Instructions] At this time it is 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 to quarter morning. Thank sales and you for third $X.XX. the share call. joining performance pleased our very per $XXX.X million third earnings We're quarter of conference report of

and Carriers our going company's operating profit The of quarter eight the fourth third in quarter has quarters in the XXXX. sales history. highest history sales over to the quarters past was the back highest produced the all-time

record strong and to average to teams XXXX closing with ticket in we traffic profitable double-digit impacted to slowdown XXXX continue While share our a increasing compared income ticket which a we higher stronger written and the is Store pre-COVID, states up across a the to of producing sales customer our seen is sale were closing be more orders, average in helping Compared XXXX, over like XX% higher and in has and QX to but units regions. We're are sales, fastest design written QX have our focus customer seeing build sale up rate country. XX.X%. appealing our which growing lower position profits. a store the to Average traffic, higher with orders our particularly market compared $X,XXX, margins rate.

see Difficulty] a historically normal to more Difficulty]. week return weekend [Technical sales middle patterns sales with events holiday to and We [Technical sales continue

importance point year of especially was the model. emphasized. have partnerships Our furniture from the relationships merchandising recently returned This hot teams and

solid dramatically with our [Technical past was We category, and stock of orders evident the partnerships with delays scrambling long history are imports. than for in need are these every suppliers in now more without especially struggling Difficulty]. Suppliers months. Haverty's emphasized

over is our solid sellers and heavy of back provide in were quarter, bedroom Havertys room help Our values will months continue the sales were we years in major will higher a many and the ahead. third which strength best strong fourth relationship in dining the and keep because In stock orders, filling quarter.

of later new historic our expect to year percentage We into this to new of class the We've about quickly holding in moving floors unfilled by due of the extensive first on very see to success a excited several coming to large sales merchandise years great return the quarter the fashions had next top with back two almost XXXX. prioritizing collection of We're to backlog. products after sellers months. new

to by teams' now and believe earn in design over turn customers' written sales. in performance. with value, of are strongly new orders and have route. by challenges slowing lower because better that traffic the lower President. We management home our these selling of commitment our helping We We're true with larger Burdette, pleased we do some with Steve high into Our months come very serving the to customization. and We're sales in a I'll already our encouraged call customers store and of will vision share fashion, their inflation our collections housing record designers ahead.

Steve Burdette

morning. you, and Thank Clarence, good

and of Labor QX to north was powered Day nice improve performance written just to over end our the of of continue Fort momentum by basis, landfall September, Our quarter members. was record results Ian's the a for record our hurt business the by comparable were fantastic. Hurricane our our very on Central in team of from southwest the members the Thanks was a the efforts third to in outstanding weekend. see for closed At communities It three with felt nominal was small our Carolinas. to our throughout stores were impacting Approximately business fortunate We impacted The and team devastating only well deliveries were damage directly North Myers. locations. quarter. number XX% written days impact Florida to as Florida the for of as and

QX. business XXXX The It should from in that closings missed closings is with for feel lost XXXX areas. shifted be highly impacted back we due in the the to come the delivery in written However, the QX. will business to upside

with closer has lead pre-pandemic production returned our Our supply times. lead improve to continues network pre-pandemic vendors inching to to of while four six vendors' to import times our domestic chain and closer weeks

However, seeing delays longer with in Savannah the Long rail shipping and out we are port disruptions continued times Beach. of

operations encouraged normal to are Savannah We the the should that by November. return port of end

but healthy, with Our to last XX consistent our XX.X% decrease in remaining inventories average age does are weeks. while QX remains our over at continue backlogs year

are our rates as both contracted continuing as from a our rates with new spot well experience XXXX. We May reduction in market the to freight on

Our in special QX sales our order upholstered QX. business XX% from has XX.X% of total moving made to in tremendous improvements

our XX% and sales moved back sales. order teams' special of our has due of to upholstered lead goal been the times confidence as Our continued restored to in design improvement we

over by QX. encouraged business it our of XX% continuing business as We to grew be written to our are for design

as the more $X is just Staffing to design upside delivery better for customer barriers We and capabilities. these our communicating our distribution our use exposing areas consumers there research to of in marketing benefits finished at We'll by service well efforts tremendous centers, design believe qualitative understand to and our goals better expected business. centers building home billion quantitative is needed as have and to insights plus triggers focus on proprietary the to our consumers. business. We our serve design service conducting awareness

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

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

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

Richard Hare

the were the over were In X.X% XXXX, Comparable prior over net sales year or a period. quarter increase X.X% third store Steve. the up million of quarter. prior $XXX.X Thanks, sales

gross profit XX.X% and pricing X.X% general to Our to discipline million. expenses XX.X% Selling, million from increased to and XX $XXX.X better increased due or basis administrative merchandise $X.X points mix. margin

sales percentage year these approximated of XX.X% sales a prior As XX.X% of the quarter. the costs up from in

during income As million. to distribution quarter. before $XX.X see continued increased we expected, year to increased expenses and transportation selling, the Income quarter $XXX,XXX prior over taxes the

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

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

funded replaced million. the our the $XX increased the extended the October to Subsequent and no the million of have quarter, We the amended of facility the rate $XX from rate end end balance third benchmark. rate commitments LIBOR credit We on loan with to commitment XXXX. term and revolving of the XXXX the SOFR we've as the debt interest of sheet revolving we to quarter of at our

dividends some months of for cash year. this during and $XX.X nine $XX.X were million Looking paid months the of of of uses the at nine first CapEx we flow, of first XXXX, the million regular

During we of purchased $X million XXX,XXX the shares, third common shares. quarter, that's approximately

shares, we At nine $XX have million existing of approximately the X,XXX,XXX our first amounted in of have approximately of third end purchased quarter million to program. $XX the During XXXX, of which XXXX, of buyback months common we the authorization shares.

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

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

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

to expected for remodels be $XX.X is in million. million, $XX anticipated CapEx our approximately or to expansions network are $X.X $X.X distribution technology planned expected in XXXX are and replacement and million investments be our information million, account investments Our for approximately stores, new

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

Operator

comes for you. with state Instructions] open Sidoti. from Thank your The Please Our floor Anthony question. first now questions. question is [Operator

Anthony Lebiedzinski

taking Good Yes. thank morning the and for question. you gentlemen

us are patterns you've around we've seen comments Thank you what the seasonal your to let's the would quarter? like a to additional others return furniture buying rest heard helpful. in be as as the traffic as So Labor color around, versus that the as a Can are Day as sense with some from give Just far what consistent far difference say, of you. holidays.

Steve Burdette

is Yes, Anthony. Steve. This

as weekend pretty certainly than the but over for quarter far year, stayed the consistent still July better our previous over down the probably we traffic Our traffic Day Labor itself. through but better see was as what patterns it September, was itself trend did

Anthony Lebiedzinski

it. Got

And them year too terms a a Okay. we've then quite mean, just change a lot I from the that of inventory, Thanks in much track, ago. for retailers of that. have

to So, the there about a that seems thinking lot there level. of at just out be retail inventory the fact

next we year, if your how margins? think about should gross So persists this into

Clarence Smith

Anthony. able our are I think margins gross to to going be hold,

as in feel in inventory now We dramatically out in anytime to We're categories, heavy that we now filling this down. of also they those bedroom that. we're so had margins category percentage product our because see and in the that the Our to orders. was those down sold, is in near are we're up be categories brought have our overall pointed I don't in there going gross comments, but stock sales and about my been already rooms, of is And dining back growing good up. Most future. bring those pressure in

groups have Our in that much outs are stock the We and in are has position only inventory a oversold increased. pretty few an transit.

So that we glut. we a have don't see

about good feel think balance end I and the have do work what we can year. the by we the through of

Anthony Lebiedzinski

And is inventory. a – my was industry retailers a was and mean comment the – itself glut to say that's that more It guys of – about this much of Right. not not did I a lot of too inventory. comment saying have have you

Clarence Smith

we're Understand, too. hearing that's what

Anthony Lebiedzinski

Yes.

Clarence Smith

have hurdles... We

Anthony Lebiedzinski

it. Right, got okay. Got it,

that. Thanks as how thinking for expansion store of to for looking those? of Okay, as next just and into And that open which and should as the far we stores rest markets year identified think kind thanks. you've year, then your number the of then you're about base that about

Clarence Smith

next have a goal do a stores of year Well, do for we we five – year.

that's build getting the have I to we be stores, for there're because open getting with the going of going challenge. facilities product recognize supply not to a a And for We chain issues, but inventory, as to opportunities be but out. us, challenge. see struggled just still stores

we're to very second able there that necessary. to if some I be we're think positions footprint every to move be good going looking aggressively for our at going in into. are market And stores existing

and XX,XXX square We're store where and past. markets but with new is have even our looking there smaller a we us to we feet is that have smaller in to done for the going XX than sizes grow footprint at XX,XXX be a foot. cases, average size to in XX,XXX in square think in many we opportunities some little that bit Some are range the the the XX,XXX

a So challenge a goal we opportunities. do stores find think of a there year. those five are locations. In markets it's We to have some

Anthony Lebiedzinski

it. Got

last Okay. sense. That makes And here. question

decline levers traffic? you're what given So sales, to main to using the demand boost the and written traffic that try are in

Steve Burdette

want this and we be going are – going We We've credit but as We're consumers, that but any I credit. using still – value this on we have we real more still promotions key what and still is been. we're those, Anthony, plan. we're we're our driver more not a than to at our frequently Yes, make run run trigger pull to promotion be consistent our mean looking to those that to going sure aggressive and be doing. point our with to we're offering not and was we're year the that's to we'll looking

credit result rates, interest Our and also into of our plan as be that still but that costs will the are in a the up increase XXXX. going

Anthony Lebiedzinski

Got it.

best very Okay. and much of Well, thank you luck.

Clarence Smith

Thank you.

Steve Burdette

Thanks, Anthony.

Operator

Okay.

next Advisory Group. with Our Fernandez Please Chelsea your Cristina comes from question state question.

Cristina Fernandez

and on good a congratulations couple I questions. Yes, – morning had good a in a quarter. of

the follow is first traffic The one up about trends. sort a Anthony's of to question

related As as the quarter wanted see overall as being Labor driving anything that And release, weekend specific challenging. year more comment there if was Day any a next or or industry, the periods are on trends macro around press at seeing. the was are significant the we to quarter sales? that are to last look I there two, that and a furnisher of that to you

Steve Burdette

is to those after the and and challenging macro the are on we'll and move not in this concerns that. anticipation our we about And we after are a have and more obviously then it's obviously anything as there. quarter, tell and fourth said, more Cristina, big. this we return being would that seasonality, seen else promotions, you into Thanksgiving the talk quarter Christmas big I So, Day fourth Veterans we more holidays Year's New level, see, as for Steve. that And the the that quarter, keys area drivers

to through closings traffic that Hurricane in impact we had our the obviously something September of numbers with of Ian tremendous the were traffic, stores And look through impacted a as on well.

where with we're feel we going comfortable it. So

in which Columbus November got Day, feel You month is passed, you've the a already and key obviously and quarter. have has the we holidays, then other

Cristina Fernandez

the greater that I a more deposit angle, mean in inventories able see have deliver does position? then inventory better backlog if different side you. to reduction quarter two would on inventory customer we'll or at last the look in have that being you Thank higher, the And to able you perhaps the being just given better, a than imply I – that be

Richard Hare

Richard. is this Cristina, Yes,

as You provide we to this able expect that the see we're shipments customers. levels down with backlog to our – have, we the come that inventory to

the down sometime – backlog see to and I would that more – return should anticipate So you seeing levels year. not come next in normalized

see, And you prior as come you've quarters, would in so thus deposit seen the the to expect also number customer down accordingly.

Cristina Fernandez

decrease on Then small savings? and was driving what's discretionary those that the on the fixed for SG&A, side, there the the outlook can on to But year. comment a you

Richard Hare

forecast it's Yes, million two we and $X brought I think, the basically maybe million $X or buckets. down

better claims our The – and is self-insured much our we're first and healthcare anticipated. on our largest healthcare are trending than the we

a we our below that's have So that. piece secondarily, what big been slightly And had of media buys projected.

of the the two. the those but So significant are group big being insurance two things, more

Cristina Fernandez

of of any had, year? I end one last the that's if update the the the then still launch, planned on And before website Thanks. the timing

Clarence Smith

for We to the We still around know work have year. of planned have the holiday end the it it season. we

there on may And that, but live is the end timing year. to some it It's the be still issues go planned a of by major… so

Cristina Fernandez

and best you Thank of…

Clarence Smith

challenge, involved operates. expect expected more A a It and in efficient. be for of a year. emphasis than by the to end we a huge go way site lot more but been us to and going the live that It's do the has major change we

Cristina Fernandez

and you best of quarter. luck Thank this

Clarence Smith

you. Thank

Richard Hare

Thank you, Cristina.

Operator

for back I'll over question. final turn you, our Richard, closing remarks. was to that it And

Richard Hare

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

Operator

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

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

Haverty Furniture Companies (HVT) 2 Nov 222022 Q3 Earnings call transcript