Hooker Furnishings Corporation

Greetings, ladies and gentlemen, and welcome to the Hooker Furniture Quarterly Investor Conference Call, reporting its operating results for the fourth quarter 2021 period. 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'll need to press star 1 on your telephone. As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Paul Huckfeld, Vice President, Finance and Chief Financial Officer for Hooker Furniture Corporation.

Thank you, Josh. Good morning, and welcome to our quarterly conference call to review our financial results for the fiscal 2021 fourth quarter and full year, both of which ended on January 31, 2021. Joining me this morning is Jeremy Hoff, our Chief Executive Officer. We certainly appreciate your participation today. During our call, we may make certain forward-looking statements which are subject to risks and uncertainty. 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 year-end 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. For our fiscal 2021 fourth quarter, which began on November 2nd and ended on November January 31st, 2021. We reported consolidated net sales of $155.3 million, with a net income of $8.5 million, a $1.5 million, or 22% increase compared to the prior fourth quarter. Earnings per share for the quarter were $0.71 per diluted share, an increase of 20%. Net sales for the quarter decreased by $9.6 million, or 5.8%, compared to last year's fourth quarter. Quarterly sales increased in two of the company's three reportable segments, with hooker-branded sales up almost $10 million, or 25%, over the prior year, and domestic upholstery sales up 1.4 million, or about 6%, compared to a year ago. The consolidated sales decrease for the quarter was driven by a $20 million sales decline in the home meridian segment, where global supply chain disruptions constrained these segments' ability to shift their strong order backlog. For the 2021 fiscal year, which began on February 3, 2020 and ended on January 31, 2021, we reported sales of $540 million, an 11.6% decrease from the prior year, driven by a $58 million decrease in the home meridian segment. For the year, the company reported a net loss of $10.4 million, or $0.88 per diluted share, compared to net sales of $610 million, and a net income of $17 million, or $1.44 per diluted share, a year ago. The net loss was due to a $44.3 million non-cash impairment charge, or $33.7 million net of income tax, to write down the goodwill and trade names in the Homeridian segment and goodwill in the Shenandoah division of our domestic upholstery segment. Adverse economic effects of the COVID-19 pandemic on first quarter orders and our share price at the time triggered an intangible asset impairment analysis in the first quarter of fiscal 2021 in the depths of the COVID-19 economic crisis, which required the company to perform a valuation of its intangible assets. The valuation led to the impairment charge, resulting in a $10.4 million loss, Hooker Furniture Corporation's first annual net loss since 1929. Excluding impairment charges, operating income for the fiscal year improved by $7.2 million. Hooker ended the year on a strong note with consolidated orders up almost 6% and an order backlog more than double the same time just a year ago. Now I'll turn the call over to Jeremy to comment on our fiscal 2021 and fourth quarter results.

Thank you, Paul, and good morning, everyone. While the volatile economic environment driven by the COVID-19 pandemic resulted in one of the most challenging years in our 97 year history. We're very pleased with our recovery in the second half of the year, and we believe that our company emerged stronger through adversity. Considering the once in a century global health crisis that occurred during fiscal 2021 and how severe the downturn in our industry was during much of the first half of the year, our recovery in the second half was significant, particularly in the areas of profitability and demand. Our fourth quarter results included a 22% increase in net income and higher sales in two of our three reportable segments. Our solid profitability performance in the fourth quarter built on momentum from the third quarter in which we reported net income of $10 million, an increase of $6.2 million, or 158% compared to the same period a year ago. Beginning in June, the company experienced historically high levels of demand and and backlogs that continue to be strong. We believe this level of demand sets us up for a solid shipping year in fiscal 2022, assuming global logistics bottlenecks, such as the scarcity of ocean vessels and containers, higher transportation costs, raw materials shortages, and lowered worldwide production capacity improve. Another indicator of our strong second half recovery is that about 75% of the consolidated net sales decrease for the year occurred in the first half of fiscal 2021, caused by the initial severity of the COVID-19-related economic crisis to our company and the industry as a whole. During that time, many of our retail partners closed for weeks, global production was on hold, our Q1 orders plummeted by over 40%, and we had to temporarily close five of our six upholstery plants for more than a month. After around 10 weeks of significantly lower demand, Orders surged as furniture emerged as an advantage sector during the economic downturn. Home furnishings benefited and continue to take advantage of pent-up demand, strengthen the housing market, and less competition from other discretionary spending such as travel, dining out, apparel, and entertainment. Since summer of 2020, we have been working to ramp up production in our domestic factories and with our international suppliers to keep up with demand. As our company responded to multiple disruptions during the year, we believe our strategic adaptations placed the company in a stronger competitive position than pre-pandemic. The scale of our company, strength of our balance sheet, and the skills and dedication of our U.S. and international teams enable us to successfully navigate a devastating macroeconomic event in a way we believe positions the company to take advantage of the positive momentum and favorable demographics for the home furnishings industry. Some of the enduring strategic adaptations Hooker Furniture Corporation made during the year, including reduced dependency on suppliers in China, a faster product-to-market strategy utilizing video for customer showroom tours and improved photography, and the rationalization of our product line to maximize production capacity and capital utilization. At HMI, significant progress was made on multiple fronts that positively impacted profitability for the year. Operating profit for the fiscal year was nearly $2 million at HMI, an improvement of almost $9 million compared to the previous year and after excluding the impact of the intangibles charge. This profit improvement was primarily the result of significant spending reductions implemented early last year to mitigate the impact of the pandemic disruptions. In addition, HMI's strategies to minimize the impact of China tariffs were largely accomplished in fiscal 21. Excess returns and allowances were significantly reduced versus prior year as well. Growth and profit enhancement strategies have been put in place at HMI to mitigate the global supply chain headwinds, and the company is entering fiscal 2022 with record backlogs, reduced overhead, proven product sales performance, strong customer relationships, and the exciting new Scott Brothers brand launch on track for the year. For the consolidated company during the year, we launched our One Company, One Culture initiative, designed to bring together the best practices, processes, people, and culture through our 12 divisions to build a stronger and more cohesive organization. Centered around a common ERP system, Project One will bring the entire company onto a single system and standardize best practices across the company and industry. At year end, we made changes in our management structure as our longtime CEO, Paul Thomas, retired. As I succeeded him on February 1st, 2021, the transition provided an opportunity to combine our operations and marketing teams to support the growth of our 12 unique businesses. Each of the 12 has a leader, product line, price point focus, and distribution channel targets that keep them distinct. Our one-team approach ensures all are supported with the full scope and scale of our company. We cannot say enough how appreciative we are of our entire team who gave exemplary effort under trying circumstances over the past year. Our team pulled together and produced extraordinary results under difficult conditions. They found new ways to work, to show product, and stay in touch with customers and suppliers throughout the world while staying positive, productive, and engaged. Our employees dealt with personal and business disruptions while working from home and other remote locations. Many employees who could not work remotely followed strict safety protocols in warehouses and factories. All of these adaptations were made with energy and a spirit of teamwork that will serve us well as we strive to become one company, one culture. Now I want to turn the discussion back to Paul, who will discuss highlights in each of our reportable segments.

Thanks, Jeremy. Let's look at highlights from each segment, beginning with Hooker Branded. The hooker-branded segment recovered from the pandemic downturn at the fastest pace of all of our segments, with sales rebounding in the third and fourth quarters. In the fourth quarter, hooker-branded sales were 49.2 million, up almost 10 million, or 25% over the prior year. Net sales for the full fiscal year were essentially flat, increasing by about $450,000, or 0.3%, despite the pandemic-related shortfalls during Q1 and Q2. Incoming orders increased at a double-digit rate starting in June, sustaining through year-end, and the segment finished the year with a backlog three times the level of a year ago. The segment is in the process of rebuilding inventories to meet this current higher demand. For the year, the hooker-branded segment reported $22.8 million of operating income, an increase of $1.3 million, or about 6% compared to the prior year. Given the economic circumstances, we're especially pleased to have not only maintained but improved hooker branded segment profitability compared to the pre-pandemic conditions a year ago. We believe increased sales and demand were driven by a few factors. In the second half of 2019, we pre-ordered our 2020 introductions of three collections that have been among our most well-received introductions in several years, with all three rising into the top ten of our bestsellers. Two of the collections fill style voids in our line in soft, modern, and coastal design, representing incremental business for us. We never canceled production orders for these collections, which help with product flow and availability. We were disciplined in Hooker Taste Goods and Hooker Upholstery to rationalize our inventory and drop underperforming SKUs in order to maximize production capacity around top sellers. Reduced expenses and higher sales helped us make improvements on already solid profitability in hooker branding. Now turning to home meridian segment, HMI Q4 sales were $80 million, down 20% from the prior year. The Q4 sales decline was the direct result of disrupted global logistics driven by the economic impact of COVID-19 on manufacturing capacities, raw materials, and the cost and availability of shipping containers. Fourth quarter operating income was $683,000, a decrease of $1.2 million versus the prior year. The reduction in profit was caused by the smaller top line compared to a year ago, as well as increased freight expenses and a bad debt accrual of about $600,000, which more than offset improved gross margins and operating cost reductions implemented during the year. Retail demands remained strong for Home Radiant products, and we ended Q4 with backlogs more than double their levels a year ago. Orders in the quarter were down 26% versus last year after being up 36% in Q3. However, this decline is primarily the result of earlier ordering and extended shipping leave times. Full-year results also were significantly impacted by the pandemic-related economic downturn. HMI fiscal year 2021 revenue was off 17% versus the prior year, driven by the same dynamics that deflated the Q4 sales. In addition, current dramatic downturn in the hospitality industry, which is highly dependent on travel, resulted in a sales decrease in our Samuel Lawrence hospitality division that accounted for 45% of our total revenue decline in the HMI segment. Business unit highlights in HMI include for Pulaski Furniture, Sales were off year over year due to limited production capacity and shipping issues. This is the case in most HMI brands. However, like other brands, Velasti finished the year with a record backlog. Interestingly, with the exception of our hospitality business and ACH, which is less dependent on backlog, backlogs grew in each of our residential divisions in excess of the divisional sales shortfall for the year. These comparisons suggest that retail demand remains strong and above prior year pre-COVID demand. At Samuel Lawrence Furniture, although sales were down compared to the prior year, orders, backlog, and profits were up significantly in FY21. These improvements are validations of our mega-account sales strategy and our low-cost sourcing strategy. With a sizable backlog programmed out through November, Samuel Lawrence shipments are expected to remain strong throughout the year. Regarding Samuel Lawrence Hospitality, it's no secret that the hospitality business in the U.S. was severely disrupted by the pandemic. As a result, Samuel Lawrence came up short of break even in fiscal 21 and will continue to struggle until business conditions improve. We are watching that segment carefully. Although Prime Resources, our import upholstery division, is not yet at target performance, Prime Resources generated a significant turnaround in last year, finishing FY21 with a 102% increase in backlog and a significantly improved operating result. This improvement is the result of our strategies to move away from lower-profit businesses and dramatically improve returns and allowances, as well as focused spending reductions. Accenture's home, ACH, started the year strong and benefited from the consumer shift to e-commerce early in the pandemic. but ultimately struggled with service problems in the latter part of fiscal 21. These issues were especially impactful to ACH's performance, given the unprecedented demand in the e-commerce channel. Despite service challenges, ACH performance improved significantly due to lower customer chargebacks and enhanced pricing strategies. Lastly, at HM Idea, our business unit focused on upscale, ready-to-assemble furniture and our clubs business. We experienced improved orders, sales, and backlogs for the year. Unfortunately, excessive returns and allowances from the club business in prior years negatively impacted HMI's results for the year. Accordingly, we've taken strong measures, including significant additional reserves, to minimize the impact of these issues going forward. We believe we're appropriately priced and reserved for the future. Also of note, business disruptions from the pandemic delayed and reduced the launch of our new ready-to-assemble product categories. Given the strong consumer demand for ready-to-assemble products, we have confidence that we'll make good progress in this category in the future, especially branded lines sold through our e-commerce channels. Turning now to the domestic upholstery segment, the year ended on a high note with this segment with net sales up 1.4 million or 6% in the fourth quarter compared to a year ago. Operating income also increased by $1.2 million during the quarter, as all three domestic upholstery divisions ramped up production during the third quarter and returned to full capacity and a normal shipping cycle in the fourth quarter. For the full 2021 year, the domestic upholstery segment net sales decreased by $12 million, or 12.5%, due to temporary factory shutdowns and production delays in all three of our domestic upholstery operations at the onset of the pandemic-related economic downturn. The segment resumed production in the second quarter, and all three divisions operated at full capacity for much of the fourth quarter and into early fiscal 22. Since March, production has been temporarily slowed by a shortage of upholstery foam, resulting from a disruption in the petroleum industry. Finally, and all other, net sales decreased by about $1 million, or 7.9%, due to sales declines in each contract as this business unit, which services senior living facilities, was adversely impacted by the pandemic. These decreases were offset by the addition of net sales in our lifestyle brands business unit, which targets the interior design channel. H-Contract incoming orders decreased by about 12% for fiscal 2021. However, the company expects the COVID vaccine rollout to help senior living industry begin to recover, and H-Contract's order deterioration eased in the fourth quarter. And finally, our balance sheet remains strong. Cash and cash equivalents stood at $65.8 million at the end of fiscal 2021, an increase of nearly $30 million compared to the balance of the prior year, even after we paid off $24.3 million in term loans at the end of January 2021. Additionally, we have access to $28.7 million under our revolving credit facility to fund our working capital needs, and about $25 million in cash surrender value of company-owned life insurance policy. We're confident that our strong financial position can weather the expected short-term impacts of COVID-19, disruptions to the supply chain, raw material pricing, and the overall economy. Inventories stood at $70.2 million at year-end compared to $92.8 million at the prior year-end. Building inventory to meet increased demand and order backlog remains a top management priority. In early March, our directors approved an $0.18 per share dividend which at current share prices gives us a dividend yield of about 1.9%. Now I'll turn the discussion back to Jeremy for his outlook.

Thank you, Paul. Hooker Furniture is entering fiscal 22 with confidence and a positive outlook for our company and our industry. Demand is strong with incoming orders up substantially in all segments and order backlogs more than double the prior year. Optimizing these high levels of demand and backlog will be our operational priority in the near term, as we also work to continue the momentum of improved profitability during the last two quarters. Moving forward, we are confronted with what we believe to be temporary headwinds, including global manufacturing capacities, raw materials, logistics, and upholstery foam issues, all of which we believe to be short- to mid-term constraints. While competition for the consumer's discretionary spending, such as travel, restaurants, and entertainment, will increase as COVID vaccinations roll out, we see sustainable, positive market conditions for home furnishings. We are optimistic about the economic and industry environment, and we are even more confident in our team's ability to execute our strategies to grow profitably in each of our 12 businesses and adapt to the unexpected challenges. That ends the formal part of our discussion, and at this time, I will turn the call back over to our operator, Josh, for questions.

Thank you. As a reminder, to ask a question, you'll need to press star 1 on your telephone to withdraw your question. Press the pound key. Please stand by. We'll compile the Q&A roster. Our first question comes from Anthony Levitsinsky with Sedodian Company. You may proceed with your questions.

Good morning, and thank you for taking the questions. First, I have a multi-part question about Home Meridian. First, just curious as to whether you're seeing any improvements as far as ocean shipping container issues. How has that situation evolved the last months? The second part of that question, in terms of the reduced overhead that you highlighted. Can you give us a sense as to if you could quantify that? And then third part of that question is as far as the inflation comments, are you taking price increases to offset and whether those price increases will offset some of the inflationary issues? And then I have a couple of other questions after that as well. Thank you.

So the first part, Anthony, first of all, good morning. I would say that we're seeing somewhat positive momentum towards an improvement in the constraint we've been having with containers and availability. It's definitely not where we need it to be, but it's showing improvement. We're looking at new contract rates and whatnot, and we are seeing some improvement, but we're not there yet. So definitely not trying to say that. And I'm going to let Paul have those other two.

We made the Across the company, we made cost reductions last year. Now, some of those, many of those are temporary, and obviously, you know, in response to this improved business environment, you know, probably more of them turned out to be temporary than we expected. You know, we've brought most of our staff back. We had, as we've disclosed in prior calls, we had a limited number of layoffs, about a dozen layoffs. across the whole company. And we're pleased that it didn't get any worse than that. So we're back to full staffing. The plants are generally operating at full speed with full staffing, in fact, trying to hire more. Except right now, we're in a little bit of a temporary delay because of this phone situation. I would say that we've tightened up on things like travel. We're probably never going to go back to the level of travel we did in the past. You know, if I was going to try to put a number on it, I would say probably reduce spending by, you know, a half a million to a million dollars. I don't think it's any bigger than that because, you know, right now business is good, so it's hard to compare. But I would say that, you know, we've taken some overhead out, but I don't think it's not a huge number.

Got it. Okay. And then as far as to wrap up that multi-part question, as far as inflationary issues, as you highlighted – How should we think about your ability to raise prices to offset that?

Anthony, I would say that in this environment, we're on a, I would call it a level playing field with everything going on. The things that are creating the inflation through the raw materials and increased logistics costs, everything we're talking about, competitors, the entire industry is going through all of those same things. So, you know, raising prices in that environment where you're not alone with what's going on is definitely a lot easier than it would be otherwise.

Got it. Okay. And then switching gears to the domestic upholstery, just curious, other than the foam issues that you highlighted, and I know everyone in the industry going through, are you seeing any other

issues um and as far as the foam issue when would you expect that to uh to get better so first of all on foam uh foam allocations are easing uh with an expected return to near normal levels in may um and then you know the potential issue coming next is plywood um so uh that we don't know exactly um you know, what that means yet because we're not in it, but we're seeing it coming. But we don't know what level that will be. But definitely foam is already improving, and we see full improvement. We're anticipating May right now.

Got it. All right. And just, you know, overall, looking at the company overall, I mean, where would you say you are as far as penetration to e-commerce companies? I know it was about 15% to 20% of your sales, as you've highlighted before. Is that still the case?

Yeah, that's pretty much still in that same area, for sure.

Okay, got it. And a couple of questions, a couple more questions here. So as far as overall SG&A came in higher than before, what I had modeled here. Was there anything unusual in the quarter? I think, Paul, you had something about a bad debt. But if you could just go over that, please.

Well, we reserved $600,000 of bad debt accrual. We've got a payment arrangement with that particular customer. But in the interest of caution, we accrued $600,000 there, which I think that accounts for most of the $0.04 missed from your number. by the time you tax-effect that. Other than that, I think you probably model based on mid-year costs, but like I said earlier, with volumes increasing and being so busy, except for travel, we've pretty much restored most of our regular costs. Everybody's working full-time. Layoffs and furloughs are all done. So it's kind of back to business as usual.

But I would also add that we did figure out that as many people as we were sending overseas, for example, don't need to go overseas. So there's things like that kind of all over the place that I would tell you that I'm not sure what that adds up to at this point as far as savings. But it's a big deal. We figured out a lot of ways to do product development virtually where you don't have as many people traveling back and forth. And marketing-wise, we're doing... We're doing better photography, but we're doing it in a way that really doesn't cost us as much. We're not doing it off-site. We're not taking the products out of the showroom. All those little things add up, as you know. Again, I can't put a number on it yet, but obviously we will as time goes by.

Got it. Okay. Last question for me. How should we think about the tax rate and CapEx for this fiscal year now?

Tax rates should be back to our sort of normal tax rate of 23%, 23.5%, you know, barring, of course, a tax change. CapEx is going to be a little higher this year. We're, you know, launching the CRP project. So I would say, you know, the $5 million to $7 million, depending on how things go with the ERP project. You know, still not a lot.

That's it. Yeah, absolutely. Thanks very much, and best of luck.

Thank you, Anthony. Thank you. Our next question comes from Jeff Wiggin from Global Value. You may proceed with your question.

Thank you. Hey, good morning, gentlemen. Congratulations on a really solid year after a challenging start.

Thank you, Jeff.

Can you talk a little bit about your balance sheet cash and what your thoughts are in terms of deploying that other than some obvious inventory rebuild?

Well, yeah, inventory rebuild has got to be our highest priority. We'd like to think of, you know, working capital in general, I'd like to think some of it's going to be invested in receivables, too. Beyond that, you know, we, I think, again, you know, weathering a downturn, we're really comfortable having what's Other people might say it's too much cash on our balance sheet. Beyond that, I think we've been, over the years, pretty clear that we intend to continue to grow by acquisition as we find appropriate white space acquisitions. I think that some of this is involved in building a war chest for that opportunity. Again, I think we've been a pretty cautiously managed company. I think we get pretty good reviews for for being conservative. So I think that it's building both cushion and acquisition resources are primary.

Yeah, and I agree. I think you've been quite judicious over the years with your balance sheet. Can you talk a little bit more about your acquisition pipeline, what that looks like, you know, what potential size segments or verticals that you might have more or less interest in? So

I would tell you that our team has a profile that we follow as far as what would interest us as a company. And it really has a lot to do with white space that we're currently not in product-wise. One thing that we talk about is white space from a supply chain standpoint. So if there's a different avenue to getting products through a company that we could buy that would be attractive to us because it diversifies the company even more. So culturally, you know, that's a huge one for us. We really are not interested in buying something just to buy it. And if it's not really our culture and we feel like it won't be a creative to us, you know, we're really – so we're, you know, we're in a position where, we would be very interested in the right company. We're not in a hurry for anything else.

We have good borrowing capacity, and so size is more a function of whether it fits the rest of the profile. Whether it's a tuck-in, like a product line acquisition, or a bigger acquisition, I think we can scale that based on how it fits the rest of the profile.

Great. That's helpful. I appreciate it. And segueing a little bit on comments you made earlier, can you share with us your view of the future in terms of brick and mortar versus e-commerce and your outlook and the trends that you see affecting that?

Well, you know, we have a lot of really good partners in both channels. And it's interesting, the pandemic showed the strength really of both. You know, there's a lot of success going on in both channels at this point, and it doesn't seem to have, from what we can see, an end in the short term. So strategically, our goal is to win in any channel that we compete in. So we're very focused on our strategies for each of the 12 businesses and how they approach the channels they are targeting and And if they're targeting brick and mortar, we want to be the best in brick and mortar for that product line and for that price point and what we are targeting. Same thing with e-commerce. We want to be the best partner and the best at product, the best logistics that we can be for that channel as well.

Yep, great. Thank you. Last question. I'm a little bit curious about your labor program. and specifically the availability where we've seen many labor-intensive businesses using skilled or semi-skilled labor having availability issues. And secondly, related to that, what type of wage inflation are you experiencing in attracting and retaining that labor? Thank you.

So labor definitely is a challenge, particularly in our domestic manufacturing and also in our warehousing industry. We have programs in place now that are different from what we even had last year to try and attract employees. It is working. I think we're doing a relatively good job in our domestic facilities attracting new people. We actually have a person that we've added that that's their primary job is to search for good people that we could add to our teams. That has shown improvement. With the demand environment we're in, you've got to be on what you just asked every day. It's an everyday activity, and it's trying to figure out how do we need to change to make sure we not only attract new people, but we retain people and create an environment that they want to be in and stay. It's a challenge, but I feel like we're meeting that. It's not where we want it to be, but we and we're putting new things in place daily to get there.

And can you share anything on wage inflation?

Paul, would you like to answer that?

Well, I think the industry is seeing inflation across all categories. And I think that we are going to see wage inflation. I think we're going to be able to pass a lot of that along. I wouldn't be surprised to say 3% to 5% wage inflation, but I think that that's going to be part of the overhead and subsequent price increases. We're seeing the same thing coming out of Asia, and everything is being priced up. The whole industry is facing that.

Currently, if we experience some wage inflation, but we do a better job with our capacity, it really does end up either canceling or it shows an improvement because our model, if we get more out the door, it makes a lot of those fixed costs up.

Thank you for the comments. Good luck.

Thank you. Thank you. And as a reminder, you'll need to press star 1 to ask any questions. Our next question comes from Sandy Mehta with Valuate Research. You may proceed with your question.

Yes. Congratulations on a strong quarter. Could you talk a little bit quantitatively or qualitatively about the backlog and what trends you're seeing in sort of incoming order rates? Is your backlog expanding? Because anecdotally there seems to be a lot of news reports about, you know, strong demand for housing and furniture.

Yeah, so, Sandy, you're exactly right. You know, it's an environment that we just – it kind of surprises us. quite a bit on a daily, weekly, monthly, and a quarterly basis. And it really, we have not seen a slowdown from that at all. So backlogs continue to grow. And as logistics continue to get better for us and the other constraints that we talked about earlier, again, we're optimistic. So, and I, you know, what you just said about the housing market, is obviously a major thing for our industry. And then the demographics as well. There's a lot of things that stay in place, we believe, as the discretionary spending model changes due to the vaccines rollout. We think we're in a really good position as an industry.

And, you know, there's a lot of news reports about people leaving big cities. People would say you're fleeing the big cities. And people moving from cities, I would have to think they have a lot of purchasing power if they're moving to a suburban area or a rural area, a lot of purchasing power to buy furniture. And would that, you know, that and other factors, would you – believe that this industry has legs for one or two years in terms of housing and furniture. It's not just a short-term phenomenon, but some of these things are a little bit more structural at least for a few years. Thank you.

Yes, I think you're absolutely right. And not only is there additional, as you said, money from moving from a bigger city out into the suburbs, but you also typically it's a larger space, larger home, which is an advantage for for selling more furniture as well. And when you get into a larger home, typically larger rooms, we sell a lot of big furniture in several of our brands. So that plays in for us as well.

Thank you.

You're welcome.

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

Thank you, Josh. I appreciate it. We want to thank everyone for participating in the call and look forward to reporting our quarter next quarter. And thank you very much. Thank you, ladies and gentlemen. This concludes today's conference call.

Thank you for participating. You may now disconnect.