Hooker Furnishings Corporation

Welcome to Hookah Furnishing Corporation third quarter 2024 earning webcast. At this time, all participants are on 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 automatic message advising your hand is raised. Please be advised that today's conference is being recorded. I will now hand the conference over to your speaker host today, Paul Huckfeld, Chief Financial Officer. Please go ahead, sir.

Thank you, Livia. Good morning and welcome to our quarterly conference call to review our financial results for the fiscal 2025 third quarter, which began July 29th and ended October 27th, 2024. 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 uncertainties. A discussion of factors that could cause our actual results to differ materially from management's expectations in our press release and SEC filing announcing our fiscal 2025 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. Our fiscal 2025 third quarter and nine-month results were adversely affected by the ongoing low demand in the home furnishings industry, as well as charges totaling about $7.5 million including approximately $3.1 million of restructuring costs related to the company's previously announced cost savings plan, $2.4 million of bad debt expense related to the bankruptcy of a single large customer, and $2 million of non-cash impairment charges to certain trade names under the Home Meridian segment. These factors resulted in an operating loss of $7.3 million and a consolidated net loss of $4.1 million, or $0.39 per diluted share for the third quarter. Consolidated net sales were $104 million, a decrease of $12.5 million, or 10.7% compared to the same quarter of the previous year. For the nine-month period, Consolidated net sales were $293 million, a decrease of $43 million, or 12.9%, compared to the same period of the previous year. This decrease was also due to low demand affecting the home furnishing industry and the absence of $11 million of liquidation sales from the unprofitable ACH product line, which the company exited last year. The company reported a consolidated operating loss of $15 million and a net loss of $10.2 million, or $0.97 per diluted share, attributed to lower overall sales, higher ocean freight costs at Hooker Branded, underabsorbed indirect costs at domestic upholstery, as well as the $7.5 million in charges mentioned earlier. Now I'll turn the call over to Jeremy to comment on our fiscal 2025 third quarter results.

Thank you, Paul, and good morning, everyone. Despite sustained macroeconomic challenges and the charges recorded in Q3, We are encouraged by the sequential quarterly improvement in our core business profitability and by the results of our cost reduction efforts, which will be more fully realized beginning fourth quarter. These improvements reflect our team's focus in managing controllables and reducing non-strategic costs in a difficult environment while investing in impactful initiatives to expand our addressable market and growth opportunities, including our recently announced global licensing agreement with Margaritaville. We're also encouraged by positive developments in the macroeconomic environment, such as cooling inflation and recent interest rate cuts in September and November, which should begin to increase demand for furnishings. Our October high point market introductions were positively received with significant placements across the board. In addition, we had the best retail placement market to date at outdoor furniture specialist Sunset West. The early feedback of three major case gigs collections for hooker branded gave us the confidence to place initial cuttings early before these groups were officially introduced in October. As a result, the collections will ship this month with a second cutting in January, increasing our speed to market by six months. This puts us in a strong position for the coming fiscal year with our available product assortment. In anticipation of increased demand and the typically stronger fall selling season, we built up Hooker branded inventory by $11 million or 40% compared to previous quarter end. In addition, we are aggressively producing our top collections to ensure we will be in stock during the first quarter of fiscal 26. These inventories are high quality assortments centered on our best selling and most profitable SKUs. Now I want to turn the discussion over to Paul who will discuss highlights in each of our segments.