La-Z-Boy Incorporated

Good morning, ladies and gentlemen, and welcome to the Lazy Boy Fiscal 2022 Fourth Quarter and Full Year Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Cathy Lieberman, Investor Relations. Cathy, over to you.

Thank you, Jenny. Good morning, and thank you for joining us to discuss our fiscal 2022 fourth quarter and full year results. With us this morning are Melinda Whittington, Lazy Boy's president and chief executive officer, and Bob Lucien, chief financial officer. Melinda will open and close the call, and Bob will speak to segment performance in the financials midway through. We will then open the call to questions. Slides will accompany this presentation, and you may view them through our webcast link, which will be available for one year. and a telephone replay of the call will be available for one week beginning this afternoon. Before we begin the presentation, I would like to remind you that some statements made in today's call include forward-looking statements about Lazy Boy's future performance and other matters. Although we believe these statements to be reasonable, our actual results could differ materially. The most significant risk factors that could affect our future results are described in our annual report on Form 10-K. We encourage you to review those risk factors as well as other key information detailed in our SEC filings. Also, our earnings release is available under the News and Events tab on the Investor Relations page of our website, and it includes reconciliations of certain non-GAAP measures, which are also included as an appendix at the end of our conference call slide deck. With that, I will now turn over the call to Melinda Whittington, Lazy Boy's president and CEO. Melinda?

Thanks, Kathy, and good morning, everyone. Late yesterday afternoon, following the close of market, we reported record results for fiscal 22. Highlights for the year included record delivered sales and profits for the fourth quarter and the full fiscal year for the total consolidated company. record delivered sales for our wholesale segment, record delivered sales and profits for our company-owned retail segment, strong delivered sales and profit performance for Joybird, returns of $118 million to shareholders through dividends and share repurchase, the highest level in our history, and the launch of Century Vision, our growth strategy through our centennial year in 2027. All in, These are great results in a volatile environment. Sales were $2.4 billion driven by the strength of our consumer brands, our vast distribution, and strong demand for home furnishings. We delivered $3.11 in non-GAAP earnings per share, 19% ahead of last year, and 45% more than pre-pandemic fiscal 19, all while continuing to navigate the challenges of the pandemic global supply chain disruption, and a tight labor market. And we finished the year strong. Sequentially from Q3, our fourth quarter exhibited momentum in delivered sales and significant operating margin improvement. I'd like to take this opportunity to thank our talented team across the entire company for their hard work, perseverance, and dedication. Our employees are amongst our greatest assets, and are responsible for delivering these phenomenal results in challenging times. As we celebrate these outstanding results, we note that written sales for Q4 reflect the consumer impact of inflationary pressures and geopolitical concerns. After a strong February with positive year-over-year growth, we saw significant deterioration of written trends in March, some recovery in April, and ongoing volatility. Written same-store sales for our company-owned retail segment decreased 9% for fiscal 22 fourth quarter, primarily due to lower traffic. Written same-store sales across the entire Lazy Boy Furniture Gallery's network decreased 4% in the fourth quarter. The difference versus retail is mainly due to the base period, as many Canadian stores were closed in last year's fourth quarter, and this more dramatically impacted the broader network than our own retail segment. For the full fiscal year, written same-store sales for the Lazy Boy Furniture Gallery's network increased 1% and were flat for the company-owned retail segment. And compared with fiscal 2020, written same-store sales for the entire network as well as for our company-owned retail segment grew at a compound annual growth rate of approximately 15% over the last two years. Our Joybird business wrote 3% more this Q4 than last year's fourth quarter. And for the full fiscal year, Joybird's written sales were up 27% and grew at a compound annual growth rate of 44% over the last two years. As we begin fiscal 23, we will leverage our strong balance sheet and historically high backlog to continue to grow the business and strengthen our capabilities for the long term. We are focused on, first, continuing to enhance our manufacturing capability to better service our consumers and customers with shorter lead times. In fact, over the Memorial Day weekend, we were pleased to begin offering consumers customized product in 10 to 14 weeks versus our previously quoted 4 to 7 months. Second, focusing on consumer with enhanced marketing and shopper execution to drive traffic and sales conversion. And third, strategically investing in our century vision work to enhance the power of our Lazy Boy brand with the consumer, disproportionately grow the Young Joybird business, and strengthen our company's foundational capabilities. so that we continue to profitably grow the company from this new base. In our first year of Century Vision execution, we've expanded our consumer insights organization, initiated significant consumer research, and launched new television spots featuring Lazy Boy brand ambassador Kristen Bell, who resonates with a broad range of consumers, including a younger demographic. And in fiscal 23, we have plans to expand the Lazy Boy Furniture Gallery's network by about 10 new stores. These investments will allow us to canvas the marketplace, improve shopability, and ensure our omnichannel offering enables us to engage consumers wherever they wish to purchase. On Joybird, since acquiring the company in 2018, we've more than tripled sales and achieved reliable profitability. As a relatively new brand with significant opportunity to grow share, we will continue to invest in marketing to build Joybird's brand awareness and accelerate growth. And while we'll stay true to Joybird's digital roots, the important element of our strategy is focusing on reaching new consumers and enhancing the omnichannel experience. We already have five well-performing small format Joybird showrooms in popular urban locales and have several more stores slated to open in the first six months of fiscal 23. And finally, as we strengthen foundational capabilities across the company, we're improving our ability to execute acquisitions, including opportunistic purchases of independently owned Lazy Boy Furniture Gallery stores which further strengthen our high-performing company-owned retail segment. These margin-enhancing acquisitions provide the benefit of our integrated retail model, where we earn a profit on both the wholesale and retail sides of the business, and our strongest ownership of the end-to-end consumer experience. In fiscal 22, we acquired eight Lazy Boy Furniture Gallery stores, and I'm pleased to note that we have already signed agreements to acquire six stores in fiscal 23, five in the Denver market, and one in Spokane, Washington. And we are enhancing the agility of our supply chain. Today we are producing more furniture than ever, a testament to the strong manufacturing foundation Lazy Boy developed over its 95-year history. Building on that strength and recognizing the environment will remain dynamic We are focused on increasing agility across the enterprise to work down our backlog, significantly shorten lead times, and position Lazy Boy to successfully complete and win share going forward. During fiscal 22, we made a series of enhancements across the enterprise to drive agility and increase production capacity efficiently. We've added to our experienced team with key leadership from other industries to bring fresh perspectives And we've made structural changes across our supply chain to increase production, including expanding our North American operations with multiple new facilities in Mexico. These operations will help in servicing our backlog in the short term as they ramp to full capacity and longer term will contribute to a lower cost manufacturing footprint with improved capabilities to service the West Coast. We have also changed processes within our plants to maximize output with a better product mix, shifted procurement strategies with an expanded supplier base in multiple geographies, and are strategically managing inventories to protect against future parts outages and disruptions. Sales and operating margin progress made in Q4 reflect these initial moves, but there is more work to do. We're structuring the business to be successful in what will continue to be a volatile environment. As a premier, well-loved furniture company that ranks number two in a highly fragmented market, we'll become more nimble going forward to ensure we grow out of the pandemic and gain share. Now let me turn the call over to Bob to review the results in more detail.