Hooker Furnishings Corporation

Good day and thank you for standing by. Welcome to the Hooker Furnishings second quarter 2024 earnings webcast. At this time, our participants are in listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Paul Huckfeldt, Chief Financial Officer. Please go ahead.

Thank you, Catherine. Good morning. Welcome to our quarterly conference call to review our financial results for the fiscal 2024 second quarter, which began May 1st and ended on July 30th, 2023. Joining me this morning is Jeremy Hoff, our Chief Executive Officer. We certainly appreciate your participation today. During our call, we may make forward-looking statements which are subject to risks and uncertainties. The 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 2024 second 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 for the fiscal 2024 second quarter of $97.8 million, a decrease of $55 million, or 36%, as compared to last year's second quarter, driven by industry-wide weak demand for home furnishings and the planned exit of unprofitable operations within our Home Meridian segment. Net sales decreased by $30 million in the Home Meridian segment and $18 million in our Hooker branded segment, as well as $7.4 million in the domestic upholstery segment. Consolidated net income was $785,000 or $0.07 per diluted share for the quarter, compared to $5.5 million or $0.46 per diluted share in the prior year period. For the fiscal 2024 first half, consolidated net sales were $219 million, down $80 million or 26.8% compared to last year's first half. Consolidated net income was $2.2 million or $0.20 per diluted share compared to 8.7 million or 73 cents per diluted share in the prior year six-month period. Now I'll turn the call over to Jeremy to comment on our fiscal 2024 second quarter results.

Thank you, Paul, and good morning, everyone. On our call today, we'll discuss second quarter and first half results. In addition, we will report on our progress in strengthening our financial position in this challenging environment and strategically deploying capital and other resources to invest in future growth and higher visibility with potential customers. We believe the current industry-wide softer demand is driven by retailers continuing to sell through over-inventory positions and a glut of heavily discounted home furnishings in the market. In addition, the year-over-year comparisons reflect our exit from the higher-risk, unprofitable operations in the Home Meridian segment. We are encouraged that incoming orders have trended higher each month through the summer compared to prior year, and consolidated orders are up by double digits versus a year ago. During the quarter, we bolstered our financial position, generating over $51 million in cash from operations and ending the quarter with cash and cash equivalents of $50 million. Additionally, we reduced inventory levels by $70 million from a year ago and completed most of our targeted liquidation sales of the Home Radiance segment's discontinued inventories. The quality of our inventories is much better than it was at the end of last year and is aligned with expected demand. In addition, our investments focused on building a larger customer base are working. For example, the collective impact of our new showrooms in High Point, Atlanta, and Las Vegas increased our customer contacts from about 3,000 to around 14,000 annually, quadrupling our interactions with existing and potential customers. While we expect that the full impact of this investment will be mostly longer term, we've already opened 1,000 new accounts in the first half of the year as visibility and engagement have increased. The transformation of the home reading segment to a sustainably profitable business model is well underway. Most of the excess inventories connected to the business unit closures at the end of the last fiscal year have been sold, and the related cost reduction efforts are paying off. In addition, we reduced our Georgia warehouse footprint by 200,000 square feet during the quarter and expect to reduce another 100,000 to 200,000 square feet in early calendar 24. Right-sizing our footprint to align with our current demand when we no longer stock significant volumes of inventory for Eccentric's home will not only reduce cost, it will improve liquidity and working capital levels. HMI recorded a small operating income in fiscal July, and while we continue to expect some short-term volatility in sales and earnings, we expect it to achieve profitability in the second half of this fiscal year. The hard work and difficult decisions we've made over the past 18 months are beginning to show benefits. We have reduced our overhead run rate from a high of over 40 million to about 32 million now and expect to be below 30 million by year's end. Coupled with improvements in contribution margin, we believe we will have lowered Home Reading's break-even point by over $150 million, and we'll be able to focus on building stable, profitable volume for the segment. During the quarter, we were pleased to have completed the acquisition of Atlanta-based decorative accessories specialist Bobo Intriguing Objects. This acquisition broadens our product diversity to include lighting, decor, textiles, and wall art. Adding Bobo to our brand portfolio positions us as an even more valuable and comprehensive partner for our customer base. Like last year's Sunset West acquisition, we intend to scale Bobo using our existing sales, marketing, and operations teams to make it a material part of our consolidated sales in the medium to longer term. Now I want to turn the discussion over to Paul, who will discuss highlights in each of our segments.