Hooker Furnishings Corporation

Greetings, ladies and gentlemen, and welcome to the Hooker Furnishings Quarterly Investor Conference Call, reporting its operating results for its fiscal 2023 third quarter. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paul Huxfeld, Senior Vice President and Chief Financial Officer for Hooker Furnishings Corporation.

Thank you, Michelle. Good morning and welcome to our quarterly conference call to review earnings financial results for the fiscal 2023 third quarter, which began August 1st, 2022 and ended on October 30th, 2022. Joining me this morning is Jeremy Hoff, our Chief Executive Officer. We appreciate your participation today. During our call, we may make 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 2023 third quarter results. Any forward-looking statements speak only as of today, and we undertake no obligation to update or revise any forward-looking statements to reflect events or circumstances after today's call. This morning, we reported consolidated net sales of 152 million, an increase of 18 million, or 13.6%, compared to last year's third quarter. The increase was attributable to the addition of Sunset West results, as well as sales increases across all the other domestic upholstery divisions and higher sales at Home Meridian compared to last year, when container direct business was severely impacted by the temporary COVID-related lockdown in Vietnam and Malaysia. The higher consolidated revenue was slightly offset by a 1.3 million or 2.4% sales decrease at Hooker Branded when comparing to record sales in the third quarter of last year. The company reported net income of 4.8 million or 42 cents per diluted share compared to a net loss of 1.2 million or 10 cents per diluted share a year ago. For the fiscal 2023 nine-month period, consolidated net sales decreased by 7 million or 1.5% compared to last year's same period. due to decreased net sales in the Home Meridian and Hooker branded segment, partially offset by higher sales in the domestic upholstery segment and in our H contract business. Hooker branded sales volume decreased due to inventory unavailability, primarily in the first quarter of this year. Home Meridian sales decrease was attributable to the absence of sales from the unprofitable clubs channel, which we exited at the end of last year, as well as lower sales in the e-commerce channel, and lower sales with some retailers who are delaying shipments to help rationalize inventory levels. We reported net income of $13.6 million or $1.14 per diluted share for the nine-month period compared to $15.7 million and $1.30 in the prior period. Now I'll turn the call over to Jeremy to comment on our fiscal 23 third quarter results.

Thank you, Paul, and good morning, everyone. Despite macroeconomic uncertainties and a challenging retail inventory environment, We were grateful that many of the obstacles we faced last year were behind us, and we were able to report revenue and earnings which both exceeded the prior year third quarter. Steady order backlog fulfillment, full production capacity, healthier inventory levels, and operational improvements fueled these gains, which we expect to build and improve upon next quarter. Year-over-year profitability gains for the quarter were driven by sales growth and successful mitigation of supply chain bottlenecks that have impacted us for over the last two years. Improving our operational cost and exiting unprofitable businesses at HMI is beginning to show up in our margins and will continue to help improve profitability. However, economic indicators are mixed and there are potential headwinds, including rising interest rates, declining home sales, and consumer confidence. On a positive note, the recent fall high point market was the best attended market since the pandemic and gave us a real momentum boost. The market attendance exceeded October 2019 by 12%. We found retailers to be upbeat and receptive to new products they can now expect to receive within several months of order for the first time in a couple of years. HMI debuted a remodeled 100,000 square foot showroom including a 10,000 square foot area showcasing the new portfolio program featuring a breadth of in-stock styles of bedroom, dining, occasional, and upholstery across HMI brands which was very well received. Portfolio's launch was a successful first step in expanding and diversifying HMI's customer base to include interior designers and a greater number of independent furniture retailers. At Hooker Case Goods, we debuted the Charleston collection. The updated traditional styling and finishes were met with enthusiasm from retailers who believe there's a void for timeless designs in the marketplace, a furnishing style that's sought after by a significant set of younger consumers in their prime furniture buying years. This collection will be shipped before the next high point market in spring 2023. When we look forward to the grand opening of our new Hooker Legacy showroom, encompassing an entire floor of the Showplace building in High Point. Now I want to turn the discussion over to Paul, who will discuss highlights in each of our segments.