Hooker Furnishings Corporation

Good day, and thank you for standing by. Welcome to the Hooker Furniture Fiscal 24 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised, today's conference call is being recorded. I would now like to turn the conference over to your speaker for today, Paul Huxfield. The floor is yours.

Thank you, Lisa. Good morning. Welcome to our quarterly conference call to review our financial results for the fiscal 2024 third quarter, which began July 31st and ended October 29th, 2023. Joining me this morning is Jeremy Hoff, our Chief Executive Officer. We appreciate your participation. During our call, we may make forward-looking statements which are subject to risks and uncertainties. A discussion of factors which 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 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 for our fiscal 2024 third quarter of $116.8 million, a decrease of $35 million, or about 23%, compared to last year's third quarter, driven by continued soft demand for home furnishings, as well as our exit from Eccentric's home product line. Despite the sales decline, operating income and margin both increased due to decreased product costs at Hooker Branded and improved margin, at-home rating due to the exit from unprofitable categories. Consolidated net income was $7 million, or $0.65 per diluted share for the quarter, compared to $4.8 million, or $0.42 per diluted share in the prior year period. For fiscal 2024 nine-month period, consolidated net sales decreased by $115 million, or 25%, to $336 million, as compared to last year's same period. consolidated net income was $9.3 million or $0.85 per diluted share compared to $13.6 million or $1.14 per diluted share in the prior period. Now I'll turn the call over to Jeremy to comment on our fiscal 2024 third quarter results.

Thank you, Paul, and good morning, everyone. On our call today, we'll discuss third quarter and first nine months results and how our strategy to reposition the Home Meridian segment from a volatile high-risk model with unpredictable revenue and profitability to a low risk, more sustainable profit model that is yielding tangible results. While the housing market slowdown, high interest rates and a shift in consumer discretionary spending away from home furnishings continue to challenge, we're encouraged by positive indicators like the normalization of ocean freight rates, eased supply chain constraints, more stable raw material costs and increased labor availability. As we have forecasted for some time now, profitability improved significantly as we moved into the second half of the year. The home rating segment achieved a quarterly operating income for the first time since calendar year 2021, contributing $900,000 to income in the current year, third quarter, compared to $3.2 million loss in the prior year, third quarter. Despite a challenging macroeconomic environment for the home furnishings industry, we're proud of our team for persevering through some difficult decisions and short-term pain to create a more sustainable and profitable business model for the segment. After spending the last couple of years repositioning HMI to focus on its core products and businesses, it is encouraging to see HMI report a quarterly profit for the first time in two years and contribute to our overall profitability. HMI inventory levels decreased by 15 million as compared to the year end and 46 million compared to the prior year third quarter. In addition, we have realigned our inventory mix to reflect our current business plan and reduced our footprint in the Georgia warehouse by 200,000 square feet in the second quarter and entered into an agreement in the third quarter to reduce another 200,000 square feet by early next year. Liquidating excess inventories, right-sizing our overhead, and exiting unprofitable businesses has put us in a much stronger overall position. Our main focus continues to be execution of our strategic growth initiatives and the drivers we can control. Demand has decreased versus prior quarters, but consolidated orders are still up 12.7 million or 15.7% for the third quarter. For the first nine months, consolidated orders increased by 75.8 million or 33.5%. Most of the consolidated increase is driven by home rating segment orders, which were unusually low in the prior year period. We've continued this quarter to bolster our financial position, generating about $49 million in cash from operations in the first nine months of the fiscal year. At the end of the quarter, cash and cash equivalents were at $40 million, an increase of $21 million from the prior year end. Inventory levels decreased by $32 million from the year end and $69 million from this time a year ago. The recent fall high point market was positive by all measurables across the company. Increased visibility is one of our major strategic objectives. Adding two smaller showrooms in Las Vegas and Atlanta while moving our largest high point showroom has created an exponentially larger audience for our products on the legacy side of our business as well as Sunset West. HMI also had a good market as they focused on strengthening the product assortment for Pulaski, Samuel Lawrence Furniture, and PRI The efforts by our team at HMI to re-energize and reposition the product offerings for growth received a lot of positive retail feedback and new placements from our major customers. As reported before, the collective impact of our new showrooms in High Point, Atlanta, and Las Vegas has increased our customer contacts from about 3,000 to around 14,000 annually, more than quadrupling the number of existing and potential customers. In this first half, In the first half, we opened 1,000 new accounts as visibility and engagement increased. This quarter, that pace continued as we added 150 new customers on average per month. The furniture industry as a whole continues to experience softer business conditions. However, we feel very good about all of our controllables. We're in a healthy inventory and overhead position. Most of our cost reductions other than warehousing are behind us, and we do not expect more personnel reductions. Now I want to turn the discussion over to Paul, who will discuss highlights in each of our segments.