Hooker Furnishings Corporation

Ladies and gentlemen, and welcome to the Hooker Furniture Quarterly Investor Conference Call, reporting its operating results for the 2021 third quarter. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. To ask a question during the session, you will need to press star one on your telephone. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paul Huckfeldt, Vice President, Finance and Chief Financial Officer for Hooker Furniture Corporation.

Thank you, Joelle. Good morning, and welcome to our quarterly conference call to review financial results for the fiscal 2021 third quarter, which began August 3, 2020, and ended November 1, 2020. We certainly appreciate your participation this morning. Paul Toms, our Chairman and CEO, Jeremy Hoff, President of our Hooker Legacy Brands, and Lee Boone, President of our Home Meridian Division, are joining us today. For the question and answer portion of the call, our Chief Administrative Officer, Ann Smith, will also be available to take questions. During our call, we may make forward-looking statements which are subject to risks and uncertainties. A discussion of factors that could cause our actual results to differ materially from management's expectations is contained in our press release and SEC filing announcing our fiscal 2021 third quarter results. Any forward-looking statement speaks only as of today, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after today's call. This morning, we reported consolidated net sales of $149.7 million and net income of $10 million, or $0.84 per diluted share, for our fiscal 2021 third quarter ended November 1, 2020. Compared to last year's third quarter, our net sales decreased 8.5 million or 5.4%, while net income increased $6.2 million or 157%. Earnings per diluted share increased over 150% from 33 cents a year ago. For the fiscal 2021 first nine months, consolidated net sales were $384.8 million, down 61 million or 13.7% compared to the last year period. We reported a net loss of $19 million, or $1.61 per diluted share, compared to $0.85 earnings per diluted share in the prior first nine months. The year-to-date net loss was driven by a $34 million, or $2.88 per share, non-cash intangible asset impairment charge we recorded in Q1. The COVID-19 pandemic had a material impact on our financial performance, market valuations, and other factors in the 2021 first quarter, which triggered the need to perform an intangible asset valuation analysis as of the end of Q1. As a result of this analysis, we wrote down goodwill and certain trade names in our HMI segment and goodwill in our Shenandoah Furniture Division of the domestic upholstery segments. Also, on December 2nd, the company was pleased to announce that our board of directors declared a quarterly cash dividend of 18 cents per share, representing a 12.5% increase over the previous quarterly dividend and the fifth consecutive annual dividend increase. The dividend is payable on December 31st to shareholders of record as of December 16th. Now I'll turn the call over to Paul Toms, who will comment on our fiscal third quarter results.

Thank you, Paul, and good morning, everyone. We were encouraged on many fronts by our third quarter financial performance and pleased that the business rebound that began in mid-May continues to gain traction. Consolidated incoming orders were up 33.8% during the quarter, and our consolidated backlog is now up 87.5% compared to a year ago. While overall we had a small consolidated sales dip driven by ongoing disruptions in the supply chain from the COVID-19 pandemic, two of our four operating segments achieved sales increases compared to the prior year. Sequentially, we're growing weekly sales and reported a $19 million or 15% consolidated revenue increase in the third quarter compared to the second quarter. We believe that furniture continues to be an advantage sector in the economy, benefiting from a renewed focus on the home, a strong housing market, and less discretionary spending competition from travel, dining out, and entertainment. In order to service the robust demand for our products, we are adding employees at most locations. Supply chain bottlenecks in this environment of surging demand are the greatest business challenge we face presently. Limitations on supply include scarcity of some raw materials and components, limited availability of shipping containers and ocean vessel space, production delays from some import suppliers, and the process of getting our domestic upholstery production ramped back up after the factories were temporarily closed during the economic shutdown earlier this year. In addition, we've had to work around some COVID-related employee absences, all while keeping employee safety a top priority. Regarding the pandemic-related challenges, we are addressing and working through the supply chain disruptions and making slow but steady progress. Our overseas vendors are increasing capacity and production each month, and all three of our domestic upholstery divisions were operating at current full capacity. At the end of the third quarter, we're in the process of expanding capacity with additional personnel hires at each location. In addition to the brisk incoming orders and weekly sales growth we're experiencing, our operating and net income profitability performance during the quarter was strong. Consolidated operating income increased by $8 million, or 161%, as compared to the prior year third quarter. The Hooker branded segment reported $7.7 million in operating income and achieved an operating margin at a high level. The Home Meridian segment reported $2.5 million of operating income compared to a $4 million operating loss in the prior year third quarter. The majority of the improvement was the result of reduced excess costs versus the prior year, including lower returns and allowances with a major customer. reduced inventory and carrying costs, and fewer inventory write downs. The domestic upholstery segment reported $2.4 million in operating income for the third quarter, representing solid improvements compared to operating losses in the first and second quarter of the current fiscal year at the height of the initial COVID-19 crisis. With that, I'll turn the call over to Jeremy Hall from President of Hooker Legacy Brands to comment on results for that division.

Thank you, Paul. The Hooker branded segment net sales increased by 3.6 million or 8.2% in the fiscal 2021 third quarter compared to the same period a year ago. Both Hooker Case Goods and Hooker Upholstery had steady sales growth driven by increased overall demand from most residential distribution channels with incoming orders surging 36% compared to prior year. Order backlogs at the end of the quarter were up 159% versus quarter end in the prior year same period. The Hooker branded segment has been able to take advantage of exceptional demand due to our ability to secure manufacturing capacity. Rationalizing our overall assortment while focusing our inventory purchases on our top performing collections has helped us further mitigate supply constraints. Despite the April and October high point markets being disrupted due to COVID-19, we were able to pre-cut, ship, and start selling four major new collections. Developing and utilizing new digital marketing strategies has enabled us to launch new products successfully. Considering the many disruptions of 2020, we are pleased that the hooker branded segment achieved a $7.7 million operating income for the quarter, which represents a 16.3% operating income margin. The sales increase drove the solid profitability performance along with lower sales and administrative spending and warehousing and distribution cost reductions. Our domestic upholstery segment was significantly impacted by COVID-19 in the first and second quarter, and it has taken some time to ramp up production to normal levels. We were pleased to see third quarter sales rebound to prior year levels and profitability increase slightly, despite some material price increases and labor inefficiencies as we ramp back up. All three domestic upholstered divisions are seeing strong demand and are working selective overtime and hiring additional workers to meet this demand and to work down order backlogs. Now I'd like to call on Lee Boone to give more detail on the HMI segment this quarter.

Thank you, Jeremy. HMI's third quarter sales were $73.7 million, down 14% from prior year. Operating profit was $2.5 million, an increase of $6.4 million from the loss recorded in the second quarter of last year. Third quarter profitability was enhanced by improved gross margins over prior year and numerous spending reductions implemented earlier this year in response to the COVID-19 pandemic. In addition, excess returns and allowances were reduced versus prior year. The third quarter revenue decline was primarily the result of ongoing disruptions of COVID-19 on our factories and supply chain. Disrupted supply of raw materials, components, labor, and extremely limited availability of shipping containers have all negatively impacted our ability to produce and ship products in the third quarter and into Q4. Each of these areas are now sources of potential cost increases which we are negotiating with factories to minimize the impact on our business. In addition to the profitability improvements, incoming order rates continue to be a bright spot as they exceeded prior year orders by 36% on a consolidated basis. These orders were primarily driven by conventional retailers placing large orders programmed to ship well into the future. As a result, The combination of significant order programming and factory shipping delays drove third quarter backlog up 80% over prior year and 53% above the second quarter ending backlog just three months earlier. We are working closely with the factory owners and our logistics suppliers to increase production capacity and shipping capacity. Turning now to divisional highlights, Pulaski Furniture, PFC, third quarter operating profit, improved 15% over prior year despite a 23% sales decline. This profit improvement is the result of reduced spending and the reduction of overhead costs we implemented in the first quarter. Samuel Lawrence Furniture, SLF, improved third quarter operating profit by $1.5 million despite flat sales compared to prior year. This performance is also the result of reduced spending and margin improvements versus prior year. Prime Resources International, PRI, recorded a slight profit in the third quarter versus a substantial loss in the third quarter of last year. This improvement is the result of reduced returns and allowances and strong retail demand from a large, mass-channel customer. Eccentrics Home, ACH, operating results were also vastly improved compared to prior year. Third quarter operating profits were $1.6 million over last year, despite reduced service and stock levels due to production capacity and shipping issues. These production and logistic issues are continuing into the fourth quarter and will likely impact results into Q1 of next year. In October, the company announced that HMI will consolidate East Coast warehousing operations in a new 800,000 square foot distribution facility strategically located near the major port of Savannah, Georgia. Progress is continuing on this facility, which is intended to replace multiple older and inefficient warehouse buildings in North Carolina with a new built to spec high cube distribution center that is much closer to the port. This proximity to port will result in significant inbound freight savings for HMI versus our current locations. In addition, the layout of the new building provides us with more functional and efficient space designed to enhance our customer service levels and operational efficiencies. The location near major interstate corridors I-95 and I-16 will provide our outbound carriers with easier access, resulting in further cost savings and efficiencies. Targeted occupancy of the new warehouse is third quarter of next year, and we are on schedule to be fully operational in Q4. As expected, customer attendance at the September High Point premarket and October high point market was atypical. Pre-market attendance was up five-fold, and October market attendance was off about 60%. Taken together, high point fall market traffic was down about 40%. Fortunately, we were able to see most of our largest customers, and we presented virtual markets to many of the customers who did not visit our high point showrooms in person. As a result, our new product introductions pipeline remains healthy. while focused on a smaller assortment of top performers. We expect these well-received, fresh new looks to arrive at retail in the late spring. We are making meaningful progress developing new designs and marketing plans for the spring launch of our recently announced Scott Brothers license. Retail Receptance has been very enthusiastic for the new Scott Living and Drew and Jonathan Home brands. We expect our partnership with Scott Brothers to drive incremental sales and profits across multiple HMI divisions beginning in the second quarter of next year. At this time, I'd like to turn the call over to Paul Huckfeldt, who will elaborate further on quarterly results.

Thanks, Lee. Consolidated net sales decreased primarily due to the sales decline in the home rating segment, partially offset by increased net sales in the hooker-branded segment. Average selling price increased 12.3% on a consolidated basis, due to increased ASP in all reportable segments and all others. Hooker branded net sales increased due to a 6.2% increased unit volume and to a lesser extent, a 1% increased average selling price. The Home Meridian net sales decrease was driven by a 20% unit volume decrease due to inventory availability as well as lower sales in the Samuel Lawrence hospitality division due to the negative impact of COVID-19 on the hospitality industry. HMI average selling price increased 7.9%, but it was not sufficient to offset the unit volume losses. Domestic upholstery average selling price increased by 4.7% due to increases in the Sam Moore and Shenandoah divisions and an increased mix of higher-priced Braddington Young products. Unit volumes were down 3% in the domestic upholstery segment due to production delays as we emerged from temporary plant shutdowns. as well as some scarcity of raw materials and components. Consolidated gross profit increased in absolute terms and as a percentage of net sales from $28 million, or 18%, to $33 million, or 22.4%, in the fiscal 2021 third quarter. Despite a sales decline, most of the increase was in the home meridian segment. This segment was heavily impacted by excess chargebacks with one major customer's excess inventory and carrying costs due to customer returns and surplus inventory, and inventory write-downs, all of which did not repeat in the current year. Hooker-branded gross profit increased primarily due to higher sales. Domestic upholstery gross profit decreased slightly in absolute terms and as a percentage of net sales due to decreased gross profit in our Shenandoah division, resulting from modest increases in material costs as well as slightly higher direct labor and underabsorbed fixed costs as production ramped back up after the earlier slowdown. Our other domestic manufacturing plants experienced some of these issues during the quarter as well, but all plants are now operating at full capacity and working to increase capacity since we believe the increased demand will be with us for some time. All other net sales decreased 9.4% in the fiscal 2021 third quarter due primarily to a decline at H contract as senior living facilities, which comprise the majority of H contract's business, are significantly impacted by the COVID-19 pandemic. Gross profit decreased in absolute terms and as a percentage of net sales due to the sales decline and unfavorable product mix. Although it's a smaller part of our consolidated results, All other reported an operating income and maintained an operating margin above 10%. Consolidated selling and administrative expenses decreased in absolute terms and as a percentage of net sales during the third quarter due to lower selling expenses in the home meridian segment and the cost reduction efforts we made company-wide in response to the COVID-19 pandemic. The decreases were partially offset by increased sales incentives in the hyper-branded segment, and to a lesser extent, increased bad debt expense, including the recognition of current expected credit losses under a newly adopted accounting standard, ASC 326. For these reasons, operating income for the fiscal 2021 third quarter increased $8 million to $13 million, compared to $5 million in the prior year's second quarter, and operating margin improved from 3.2% to 8.7%. Our cash balance stood at $94 million at the end of the quarter, an increase of nearly $58 million from the fiscal 2020 year end. So far this year, we've generated $68 million in cash from operating activities, much of it from the reduction of inventory level and the collection of accounts receivable. As noted above, we're in the process of rebuilding our inventories to meet current demand, but given current lead times with our Asian partners, we have and may continue to experience out-of-stocks with respect to certain imported products. We're revisiting our sales forecasts regularly and adjusting production orders based on incoming demand, and we're strategically monitoring our inventory levels to focus on getting our best-selling products back in stock as quickly as possible. Now I'll turn the discussion back to Paul Toms for his outlook.

Thank you, Paul. As we head into the fourth quarter, we're very encouraged by our significant backlog and robust demand from all residential channels. We're making progress with our supply chain challenges as our overseas suppliers and own factories ramp up production to allow us to meet the strong demand. However, some of these challenges will continue to impact us through the fourth quarter and into early next year. We're concerned about the recent surge in COVID infections and hospitalizations nationally. We continue to maintain rigorous safety protocols in all our workplaces, and are proud that we have had essentially no workplace spread in any location. Those employees who can work remotely continue to do so. The safety and health of our employees remains a top priority. As we look forward to the next two to three quarters, we're very optimistic and believe we have the backlog, quarter velocity, and momentum to continue to deliver very strong results. This ends the formal part of our discussion, and at this time I will turn the call back over to Joelle for questions.

Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Anthony Libidizinski with Sedodian Company. Your line is now open.

Thank you, Michael. and thanks for taking the question. So just one, as obviously you guys have seen very robust, strong demand, and thanks for providing the data about the incoming orders and backlogs. So what is your sense as to the demand, you know, how long do you think this can continue? You know, what is your sense of that?

Anthony, this is Paul Toms, and that's a good question. We get that quite a bit on Twitter. from recent investor presentations. I think it's kind of a mixed bag, but generally I think we expect that we're in a very advantaged position, and a lot of it will be longer term. In the shorter term, say in the next six to nine months, I think we continue to benefit from less competition for discretionary spending from industries that we typically compete with, like travel, dining out, leisure and entertainment. However, I believe with the vaccination, maybe by second to third quarter next year, some of those industries will bounce back a little bit. However, I think a bigger impact on our business is what's going on with demographics, with millennials, Gen X, becoming a bigger part of home buying, people moving out of metropolitan areas to suburbs and more rural areas. Moving into larger homes, I think housing looks like it's going to be good for an extended period of time. Inventory is obviously a challenge, but interest rates are very favorable and affordability is still good. I think that housing could benefit us for you know, two, three, four years or longer. It's really been since before the 2008-9 recession that housing has been this robust. So we're encouraged by housing trends. We're encouraged by demographic trends. We think that, you know, things that have been positive in terms of competing with other industries for discretionary spending will probably last another six months or so and And even then, I think some travel will take longer to come back than just the absence of, you know, when we have vaccines. So I hope that helps.

Yes, absolutely. Thanks so much for that, Paul. So the gross margin that we saw in this quarter was the best one in a while, for sure. So what's your sense as to the sustainability of this gross margin improvement?

I think that we're getting back to more normal conditions. But the gross margin is a little skewed because our hooker branded division has higher gross margins than the HMI division. And so our sales mix was a little bit skewed out of normal. I don't think that the margin is going to be sustainable at this level once HMI gets their shipments back on track. But I think that we'll return to more historical levels. which I think are still healthy, but I think that 22.4 is at the high end of the range right now.

Got it. Okay. Thanks for that, Paul. And as far as the distribution center that you will be opening up in Georgia, can you give us a sense as to the – that you'll need to put in or maybe some other quantifiable measures? And as far as once you have that facility up and running, is there any way that you guys can quantify the freight savings or operational efficiencies?

Well, it looks like next year we'll probably spend $3 to $3.5 million in capital expenditures. And we'll have some expense items that we'll call out to – probably in the million-ish dollar range. We'll call those out as we incur those. That'll be like moving costs, inventory relocations, and advanced training. So we'll call those out as we pin those numbers down. I think that we should be able to do a rough calculation of freight savings. Freight's a commodity item, and freight rates vary. But I think that, you know, we can count the number of containers and calculate a difference. So we can certainly quantify that. And obviously that's an important part of that and the operational efficiencies of a new building, of a new building designed for us are the reasons we're doing this in the first place.

Okay. Got it. Okay. And then... So, you know, as far as cash flow, obviously you guys talked about benefiting from, you know, inventory reductions and accounts payable. So looking forward, you know, other than planned inventory increases and kind of a normalization of accounts payable, what would you say are the primary usages of cash flow and what is your outlook on potential acquisitions?

Well, paying down debt is going to be our first step. I think our credit facility expires in February, and we're negotiating a new revolver, but I think that we're going to pay down the $25 million of term debt that we have on the books. It's not a lot of money, but I think that that's probably one of the better uses of cash in the short term. Acquisitions, I think that we've stated pretty regularly that we believe we can grow by acquisitions. and we're comfortable making acquisitions, so we're looking for acquisitions. I can't tell you that we have anything on the books right now, but that's certainly one of our primary capital allocation targets is to grow by making smart acquisitions.

Do you guys have anything to add? Okay. Well, thank you so much, and best of luck. Thanks, Sam. Thanks, Anthony.

Thank you. Our next question comes from Sandy Mehta with Evaluate Research. Your line is now open.

Yes. Congratulations on the very strong earnings this quarter. Following up on the prior question, you know, you have a very high net cash position, strong free cash flow. You talked about acquisitions. What about possible special dividends? I've noticed that several of the other furniture companies have declared special dividends. Is that something that you may consider?

This is Paul Toms. We historically have paid out a healthy dividend. Some of the companies that you see paying special dividends in our industry either suspended or reduced their dividend earlier this year. But I think if you look at the payout of our dividend over time as a percent of earnings and as a percent of share price is pretty good. So at this point, no, we don't have any dividends. intentions of paying out a special dividend. We did just increase the dividend 12.5% for the fifth consecutive year. I think that we've increased it. We believe that we've paid a dividend for the last 50 years. So it's been very consistent. And even in the 2008-2009 downturn, we didn't cut the dividend. So we're very proud of our record of paying a dividend and consistently increasing it and most environments.

One follow-up question also. I know you have shifted a lot of the imports to Vietnam and other geographies. The whole China tariff issue which impacted you and the industry over the last couple of years, is that now largely over? I know you have other supply issues, but the China tariff issue, is that sort of behind you now? Thank you.

I think that it's mostly behind us. We do still source some product in China, and especially in this environment where we're having a hard time getting all the production we need, we have moved some products back or some excess production back to China. But I also believe that we have mostly mitigated the impact of those 25% tariffs through price increases to our customers. So we're definitely less impacted than we were you know, a year, year and a half ago. And it's very manageable at this point. Also, as a percent of our total production, the amount of product we produce in China has dropped from probably north of 40% to less than 20% of our total.

Lifting those tariffs would benefit our customers and the consumers, though. Yeah. I don't think that's likely.

Thank you very much.

All right.

Thank you. Our next question comes from John Descher with Pinnacle. Your line is now open.

Good morning. Thanks for taking my question. I was just curious what the backlog was at the end of the quarter, please.

I don't have that number handy. I'd rather not make it up.

Okay. In terms of the potential headwinds, you highlighted higher shipping container costs, issues with supply chain. How is that tracking quarter to date in the fourth quarter?

This is Paul Toms. We're still dealing with those challenges. I don't think that container availability hasn't really improved. significantly at this point. We hope it will, but honestly, we're looking at probably after Chinese New Year and Tet before it does. Vessel space is also a challenge, but probably less of a challenge than the container availability. And up until this point, I would say more in the second quarter than the third quarter, but still trailing into the third quarter, just production capacity in Vietnam was a challenge, but I think our vendors are ramping up every month. They seem to be producing more than the prior month, and so that would be behind the challenge of containers and vessel space.

So it's a positive trend going forward. It's not getting worse?

I would say production is increasing. I think vessel space is probably more available now than it was in the second quarter. containers, the availability of shipping containers is probably the one area that hasn't improved. And quite honestly, until that does, the production capacity and the vessel space doesn't really help us that much unless we can get the cans to put the product in. So I think we're managing our way through it, but we could certainly have another couple of months of challenges just with that.

Okay, thanks. That's helpful. You mentioned possibly paying off the term loan before it comes due, I think February 1st of next year. Do you think that will happen? And what about the revolver? Where are you with the negotiations for extending that?

We're in the final stages of those negotiations. I'm very comfortable that we'll replace the revolver. And like I said earlier, we feel like paying off the term loan is a wise use of capital in this environment and with our capital needs. If we make an acquisition that requires additional capital, we'll go back to the capital markets and look for another term loan.

Okay, that makes sense. Just back to the backlog, will that be disclosed in the 10-Q when that comes out?

I believe it is.

It is, okay. It would just be helpful to know that, so it would be good if it is. Thanks, and good luck to you.

Thank you.

As a reminder, to ask a question, you'll need to press star 1 on your telephone. Our next question comes from Jeff Gagan with Global Value Investment. Your line is now open.

Hey, good morning, gentlemen. Thank you for taking my question. The Four new collections. Jeremy, could you give us a little more color on that, what it is, how do you see it scaling, where does it fit in, and so on?

Good morning. This is Jeremy Hoff. I would say that four new collections is somewhat typical of what we would probably be able to cut, get out into the marketplace and sell in a full year. which is how we tried to look at the disrupted markets that we had. As far as putting context around how large they are, I really can't answer that without guessing, but early indications are there's two of them that I would call, you know, A category, top category for us, and the other two would probably be more in a B category. So, and I don't know how to help you more than that on the volume. We hope it's, you know, as big as anything we've done, but I just can't say that at this point.

Yeah, that's fair. The AB is helpful. Appreciate it. Paul Huckfeld, regarding margin, I think you mentioned the mix. Back to HMI, which got off to kind of an unexpected start with the consolidation, where should we think about margin for that division or segment in the future as it stabilizes and matures?

They're inherently a lower margin business. I would say they're in the mid to high teens is probably a sustainable model. Obviously, we're trying to push that margin up and some combination of efficiencies, price increases where we need to but I'd say it's a mid to high team overall.

All right. I appreciate that. And last question for you, and this is back to the prior question of the, um, supply constraints or disruptions you've had.

Um, and you've explained it very well in terms of capacity and logistics, which is the bigger issue in the short term, the logistics, just getting, uh, containers to put products in and, um, Longer term, I just don't see... I think there's plenty of shipping vessels that are available. Things got kind of out of kilter earlier in the year, and I think they'll get the equipment located in the right spots. They'll make additional containers, and I don't think those are going to be long-lasting impacts. And production capacity is... They're already doing a good job of ramping up. I expect that we'll see... Our backlogs come down some as we enter next year. And also domestically, which is only about 15% to 20% of our total volume, but we're ramping up production in all five of our domestic upholstery facilities. And we're very bullish on next year there because of the backlogs we have and the increased production that we're producing. planning. We have to get through the current COVID challenges that we have. We do have employees that are either out because they've tested positive or they've been around somebody that tested positive and need to quarantine. So we'll probably have 10% of our workforce at any given time that is out for part of our safety protocols. And I think we'll certainly make progress on that, but it may be closer to when we have a vaccine.

All right. I appreciate your time today. Congratulations. I think you've managed this pandemic brilliantly, so I look forward to seeing your future results.

Thanks for that. Thank you.

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Paul Toms for closing remarks.

All right. Thank you, Joelle. And thanks, everybody, for joining us today for the third quarter earnings call. We're encouraged by the momentum that we have in the business. As previously announced, I'll be retiring as CEO on January 31, 2021, so this will be my last call. I will remain as chairman of the board. Jeremy Hoff, our current president of Booker Legacy, will become the CEO effective February 1, 2021. He and the entire leadership team are well-equipped to lead Hooker Furniture into the future, and a bright future it is. We have a great deal of momentum driven by positive demographic and housing trends. We have numerous strategies to grow both organically and through strategic accretive acquisitions. We have a very strong balance sheet that has sustained us through the current COVID challenges, but also 10 or 12 years ago through the economic downturn then. That balance sheet will continue to help us as we go forward with acquisitions. We have a unique culture that has sustained this company for 96 years. A very strong, cohesive management team with a good runway left ahead in their careers. I've never been more bullish on the prospects of Booker Furniture. Thanks again for joining us today. Best wishes to you and your families for a safe and healthy holiday. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.