Hooker Furnishings Corporation

Ladies and gentlemen, and welcome to the Hooker Furniture Quarterly Investor Conference Call, reporting its operating results for the first quarter 2022. At this time, all participants are in 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, then 1 on your telephone keypad. 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 Herka Furniture Corporation.

Thank you, Liz. Good morning, and welcome to our quarterly conference call to review the financial results for our fiscal 2022 first quarter, which ended May 2, 2021. Joining me this morning is Jeremy Hoff, our Chief Executive Officer. We certainly appreciate your participation this morning. During our call, we may make certain 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 2022 first 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. For our fiscal 2022 first quarter, which began February 1, 2021 and ended on May 2nd, Consolidated net sales were $163 million, an increase of $58 million, or 55%, compared to the prior year first quarter. We reported revenue gains in all three of the company's reportable segments, with Home Meridian sales up $27 million, or 46%, Hooker Branded sales up $24 million, or 89%, and domestic upholstery sales up $7.7 million, or 46%, compared to the prior year first quarter. The company reported a net income of $9.4 million, or 78 cents per diluted share, compared to a net loss of $34.8 million a year ago, which was principally due to a $44.3 million or $33.7 million after-tax non-cash impairment charge. Now I'll turn this call over to Jeremy to comment on our first quarter results.

Thank you, Paul, and good morning, everyone. Our goal this quarter was to return to the growth trajectory we were on prior to the global pandemic and economic downturn. We are pleased to have surpassed that goal. While we expected a sizable sales improvement over last year's first quarter, when the pandemic-driven economic downturn began in mid to late March, our results this quarter represent a strong improvement over the first quarter of fiscal 2020 as well. Sales are up 20% compared to the first quarter two years ago, profitability has improved significantly in all segments, and incoming order rates are more than double our historical norms. In fact, both our quarterly revenues and net profit performance represent record high sales and earnings for the company's fiscal first quarter. I'm especially proud of our team for delivering this strong rebound a year after the onset of the pandemic, despite industry-wide logistics challenges, including higher ocean and freight transit costs, and shipping equipment bottlenecks, raw materials shortages, and inflation. The Hooker branded segment led the way during the quarter with a nearly 90% sales increase compared to a year ago, while the Home Meridian and domestic upholstery segments both reported sales increases of approximately 46%. We attribute the double-digit gains to industry-wide high consumer demand for home products and dramatic improvements and expansions of our product lines, and rationalizing our stocking inventory, helping us to maximize shipping and production capacity along with improving our cash utilization. In order to accommodate travel restrictions in place earlier this year, the High Point Spring Market was officially pushed to June. In its place, the Hooker-branded home renting and domestic upholstery segments participated in a High Point pre-market event in late April. Hooker Furnishing's results from the pre-market were exceptionally strong in terms of traffic, buying activity, and reception to new product introductions. We enjoyed record attendance at the High Point pre-market with very positive customer response to a number of introductions, including Hooker Case Goods Collections, the new brand launches of the Scott Brothers License Collections, Commerce and Market, and Accent Furniture Line with pricing, styling, and materials to reach millennials and Gen X customers. and Hooker Upholstery's launch of the upscale Aspire motion seating brand. Consolidated operating income for the quarter was $12.2 million compared to a $45.4 million operating loss in the prior year period. Last year's loss was primarily attributable to $44.3 million in non-cash impairment charges related to a write-down of goodwill and trade names in the Home Radiance segment, and goodwill in the Shenandoah division prompted by the impact of the COVID-19 downturn on our financials last year. Now I want to turn the discussion over to Paul Huckfelt, who will discuss highlights in each of our reportable segments.