Q2 2022 Hooker Furniture Corp Earnings Call
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Greetings, ladies and gentlemen, and welcome to the Hooker furniture quarterly Investor Conference call reporting its operating results for the second quarter of fiscal 2022 at this time all participants are in a listen only mode.
Brief question and answer session will follow the formal present presentation to ask a question. During the session you will need to press star one on your telephone.
As a reminder, this conference is being recorded it is now my pleasure to introduce your host Paul Heartfelt, Vice President Finance and Chief Financial Officer for Hooker Furniture Corporation.
If I could.
Morning, and welcome to our quarterly conference call to review our financial results for the fiscal 2022 second quarter, which began on May three 2021 and ended on August one 2020.
Joining me this morning is Jeremy Hoff, our Chief Executive Officer.
Certainly appreciate your participation this morning.
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.
As contained in our press release, and SEC filing announcing our fiscal 'twenty to 'twenty two second quarter results.
Any forward looking statements speaks 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 $167.0 million and net income of $12.0 million or 62 per diluted share for our fiscal 2022 second quarter, which ended on August 1st.
Prior to last year's second quarter, net sales increased by $32 million or 25%, while net income increased $8.0 million or 29%, earning.
Earnings per diluted share also increased 29% from 48 cents a year ago, all three reportable segments reported year over year sales increases of more than 20%.
For the fiscal 2022 first half consolidated net sales were 32 point 3300, $29.0 million.
Up $90 million or 38% compared to last year's first half.
We reported net income of $25.0 million or $41.0 per diluted share compared to a net loss of $29 million or $2.46 per diluted share a year ago, principally due to $47.0 million or $40.0 million net of tax in noncash impairment charges last year.
Now I'll turn the call over to Jeremy to comments on our fiscal 2022 second quarter results.
Thank you Paul and good morning, everyone.
We are pleased the hooker furnishings achieved double digit sales and profitability increases for the second consecutive quarter each of our reportable segments Hooker branded home Meridian and domestic upholstery also achieved double digit sales gains of $52.0, and 29% respectively, while we expected improvements compared to the early.
Most of the pandemic a year ago, we continue to surpass our goal to return to our pre pandemic growth track.
<unk> sales were up over $10 million compared to the second quarter of fiscal 2020, and profits were up about 79% compared to the same quarter.
Sumer and retail demand remain historically strong with consolidated backlogs doubled compared to last year and incoming orders up 27% over last year and the six month period.
Industry wide demand continues to be high.
However, we are facing significant headwinds on the supply side that will impact us in the short term the surge of the Delta variant of COVID-19 has caused factories and our source countries of Vietnam, and Malaysia to close temporarily with recent talk of reopening in Vietnam around September 15th.
In addition, global logistics challenges with higher freight and transit cost and lower transportation capacity, along with raw materials inflation and some labor shortages remain ongoing.
We are utilizing all available levers to help mitigate these headwinds and we remain optimistic about our long term position as we work our way through these transitory disruptions.
To turn the discussion over to Paul heartfelt, who will discuss highlights of each of our reportable segments.
Jim I'll.
I'll begin with the Hooker branded segment, which performed exceptionally well for the second consecutive quarter exceeding expectations in sales profitability product flow and efficiency net.
Net sales increased by $11 million or 29% versus the prior year period incoming orders increased by 38% in the backlog triple as compared to the prior year's second quarter.
Operating income in the fiscal 2022 second quarter was $17.0 million, a 17, 9% operating margin compared to $7.0 million or 15, 4% 15, 7% margin in the second year second quarter of last year and.
In Hooker branded contributed over 90% of the consolidated operating profit during the period.
We attribute our vibrant sales and profitability performance in the Hooker branded segment stuff to high industry wide demand and the dramatic improvements and expansions of our product lines.
June high point International markets with the best for Hooker branded written orders.
April of 2016.
We're also seeing success with new lines, such as the Commerce and market collection, which offers pricing scale and styling targeting millennials and one of them is one of the largest accent furniture launches in our company's history.
In addition, our strategy to rationalize our stocking inventory to focus on top sellers is helping us maximize shipping in production capacity product flow and cash utilization.
Having best sellers in stock enabled us to limit our order cancellation rate is single digits.
And to ship more than expected despite limitations on ocean and land shipping capacity.
Additionally, we were able to increase prices to mitigate higher product costs from rising ocean freight expenses and inflation on good source of information.
Turning now to the home Meridian segment, HMA second quarter sales were $87 million up approximately 23% over the prior year rare.
Revenues were boosted by continued strong retail demand versus especially wheat shipments during the second quarter last year due to COVID-19 related disruption.
Year to date, we've seen strong a strong sales rebound with our traditional furniture channel retail base as those customers pick up share loss through emerging channels. During the opening months of the pandemic shutdowns last year.
In contrast, emerging channel sales have declined somewhat as a result of exceptionally strong sales in the prior year period.
Combined with global supply chain challenges.
Lower allowances and reduce fixed expenses were not enough to mitigate the impact of all time record high freight costs. The home Meridian segment finished the quarter at essentially breakeven despite higher sales due to these high freight costs.
Incoming orders increased about 4% as compared to the fiscal 2022 first quarter, but decreased by about 35%.
Compared to the prior year second quarter when business remap rebounded dramatically after the height of the initial Covid crisis.
Backlog at the end of the quarter was 62% higher than the prior year's second quarter. The result of strong incoming orders, but also somewhat attributable to production and shipping delays.
Ah Pulaski furniture division delivered particularly strong Q2 results with net sales exceeding the prior year by 68% and operating income increasing by $4.0 million.
83% of PSC shipments in Q2.
Container ship directly to large retailer warehouses new.
New orders and backlog of PSC remains robust robust, but current factory closures in Vietnam Covid hampered shipments for at least the next several months.
Samuel Lawrence furniture, our value focused case goods division and PRA, our promotional upholstery Division also recorded strong double digit sales increases in Q2.
With year over year increases of 38, 75%, respectively. Backlogs were also up in both divisions compared to last year. The temporary factory factory closures in Vietnam will negatively impact Q3 shipments.
As mentioned in previous quarterly results SLA, our hospitality division continues to struggle with significantly diminished demand in the COVID-19 disrupted hospitality sector.
Net sales were up 48% in the period and incoming orders were practically nonexistent.
<unk> will continue to operate a loss until the contract hospitality sector, ultimately rebound, which we expect to begin next year.
A C. H R E Commerce focused business unit struggled with extremely unfavorable ocean freight costs in Q2.
In addition to access a freight cost <unk> was impacted by supply chain related service issues and diminished order demand, resulting from our efforts to pass along portions of the freight cost increases.
The price sensitive nature of much of <unk> business limit itself through thereby reducing the benefit of our price increases.
While we have mitigating measures in place to reduce excess freight costs, we cannot eliminate them and therefore these headwinds are expected to continue impacting ACTH result for.
For the remainder of this fiscal year.
In the domestic upholstery segment net sales increased by $5 million or 29% in the fiscal 2022 second quarter compared to the prior year quarter due to significant sales increases at <unk>, and Shenandoah and to a lesser extent our same workers.
Operating income for the fiscal 2022 second quarter was 457000 or 2% of net sales compared to a small operating loss in the prior year second quarter.
Backlogs at all three divisions were at historical highs and incoming orders increased by 73% compared to the prior year second quarter.
There's a lot of optimism into the best domestic upholstery segment for the second half of this year. In addition to strong demand we've seen a stabilization of some raw material issues, such as palm allocation shortages that impacted us near the end of Q1 and earlier this quarter.
Our management focus is on servicing backlogs with quality product and improve speed of delivery.
And all other sales increased by 300000 or 10% in India.
In the second quarter as compared to the prior year period due to an 11.
<unk> sales decreased at H contract.
Operating income for the quarter was 230000 or eight 5% of net sales compared to 350000 or 11, 5% of net sales from the prior year.
As a retirement living market begins to slowly recover H contract incoming orders were up six 4% over the prior year second quarter and the backlog is 49% higher than the prior year quarter end.
Finally, touching on our cash and inventory position cash and cash equivalents stood at 37.4 million at the end of the quarter, a decrease of $28 million compared to the.
For the fiscal 2021 year end due primarily to a $33 million increase in inventory as we continue to build inventory to meet increased customer demand and prepare for the holiday selling season, we have a substantial amount of inventory in transit much of which is sold and it can be shipped to customers. Shortly after receipt in our warehouses.
Accounts receivable balances increased by $15 million as a result of increased net sale we.
We used existing cash to pay a $7.0 million in cash dividends and $8.0 million of cash capital expenditures, which is more than we typically spend because we are in the process of upgrading our end of like ERP systems with newer technology and we've begun equipping our new more efficient, Georgia distribution center, which is expected to go online in October.
This year.
Now turning back to Jeremy for his outlook.
Thank you Paul as we look ahead to significantly increase demand continues while we are still dealing with many of the same logistics and supply issues. The recent COVID-19 related factory shutdowns in Vietnam, and Malaysia, We will particularly have negative ripple effects throughout the global supply chain for a period of time.
The recent news of possible reopening in Vietnam. This month is encouraging.
Our hooker branded and domestic upholstery segments, where we have the ability to keep product flowing into ship from our significant warehouse warehousing capacity is less challenged than home Meridian home Meridian ships, primarily to larger customers via container and as more quickly impacted by the shutdowns are strong balance sheet and variable cost business model gives us.
Confidence that we can weather this current industry wide challenge and should allow us to take advantage of the healthy consumer demand environment long term positive economic indicators and demographic trends for home related industries.
Lastly, I would like to mention that Lee Boone, who most recently served as president of HMA as left Hooker furniture <unk>. This change as part of an overall effort to reorganize and realign the home Meridian division, while reducing operating cost and improving segment profitability.
While we are not making wholesale changes at HMA, we have changed some reporting relationships to better align with strategic initiatives reduce the executive team eliminated some unnecessary layers and we will exit a high cost west coast warehouse by the end of the first quarter of fiscal 'twenty three without significant negative impact on our revenues.
These changes further streamline the organization and reduce cost. We appreciate leaves dedicated service and contributions to the company over the last nine and a half years as he served in various roles, including President and co President of HMA and Division President of Samuel Lawrence furniture.
This ends the formal part of our discussion and at this time I will turn the call back over to our operator Gigi for questions.
As a reminder to ask a question you will need to press star one on your telephone.
Kelly Your question press the pound key please standby, while we compile the Q&A roster.
Our first question comes from the line of Anthony Maybe then scheme from Sidoti. Your line is now open.
Thank you and good morning, yeah, thanks for the opportunity to ask questions. So.
So first.
Yes, a couple of just more or less housekeeping things here, so as far as the second quarter. So just wanted to get a better idea about pricing versus unit volume on a consolidated basis. If you have that information.
Well, obviously pricing is going to be a big part of it give me a second.
Sure.
Yeah.
In fact, if you want to you want to go onto your next question I'll look for that number. So I can give you didn't were filed with SEC.
Got it Okay, and then no worries.
As far as me also saw obviously I know you have taken up price increases I guess.
Just wanted to get a sense as to whether you plan to take.
Price increases.
Let's take additional price increases and if so are you taking anything on the existing backlog.
Good morning, Anthony This is Jeremy.
Good morning, John.
So we are taking it more through e-commerce currently.
Through our Hgh business we.
We had to adjust more drastically than than we thought originally and so that's ongoing and a lot of those.
Went in place to the back they did affect backlog. So that's the case on that.
We were getting cost increases from suppliers for raw materials kind of on a daily basis. So.
Typically we don't raise prices through our backlogs throughout our company.
We of course would do so if we really had to but we feel like we're in pretty good position other than the first part of what I mentioned.
Got it okay understood and then.
Do you have.
A number as far as for the backlog.
I know, it's up overall, but as far as the dollar amount for the backlog as well at the end of the second quarter.
Our backlog is $320 million.
Okay got it thank you for that and then.
Yeah. So Jeremy you did mentioned that.
A few times.
Demand is strong.
<unk> to hear.
Can you give us a sense as to like what you heard from retailers here for the Labor day weekend.
Yes, what we've heard is labor day weekend was was really strong and.
We continue to hear positive things from our from our retail partners, Okay, Anthony going back to your other question.
Unit volumes up four 4% consolidated and average selling prices up 12, 2%.
Got it okay. Thanks, Paul.
Okay and then.
As far as you know Jeremy you talked about the using your available levers to help to mitigate the supply chain headwinds can you go into a little bit more specifics as to what Youre doing obviously.
Realizing that Vietnam is still in a shutdown mode, but could you just maybe expand on.
What you're doing to mitigate the supply chain constraints that'd be very helpful. Well first of all separating the factory shutdown from everything else factories shut down.
Difficult to have a lever for that and we're the best news that we've had so far is where there's there's worried that that could open those could open back up in Vietnam.
As early as the 15th of this month, so so kind of separating that out.
Regarding <unk>, so let's start with logistics, so logistics, it's all about additional cost of goods right. So it comes in and we pay.
A certain amount maybe it's 15000.20000, we've heard as much as 28000, I think 30000, even came up for container I'm not sure we paint it alright. So so are our mitigation efforts on that are really looking at each of our businesses. So if it's a lower price lower cost lower price point business.
Were they higher container cost doesn't make sense.
Have measures in place to actually make that decision more on the fly than we have in the past. So we're not just allowing a ridiculous container cost to come in on a business that really can't support that so that's one big thing that we're doing.
And on the higher end price points.
Can we can take more of that and we have to make sure that we have enough margin in pricing to do so but in our warehouse supported businesses and the higher end, specifically hooker branded it's all about having enough product and keep it flowing and did not run out so we aren't as sensitive about bringing the higher priced containers.
Then and we've been able to average.
<unk>.
She still way above what we normally would but our average is lower than than a lot of the higher ones a year about so we're trying to keep that average as low as possible.
We put our logistics team into one big team because it's somewhat of all hands on deck effort. It's a it's a daily constant drive to make sure that we're trying to get the rates that we can get so that's a major part of what.
What I mean, when I say were <unk>.
And everything we can to mitigate a lot of these additional costs.
Then getting into.
Capacity capacity of course from a container standpoint, it's all about being we feel it's about being consistent with what we're booking. So we're trying to keep our bookings is consistent into our contract countries. As we can of course all of that is a little bit out the window with factories shut down currently in Vietnam.
But that's one thing we're really trying to do is have a consistent number of containers at our major factories that we can get as many contract rates as possible on these containers. So.
Another big part is managing all the marriage that that's out there. So it's not only is it difficult to get containers from overseas, it's difficult once they get once they hit the United States getting them to our warehouses as another major challenge in.
And a lot of these things its focus its putting enough people on enough.
Jeff horsepower on each issue and make sure you're watching it on a daily basis. Its not something that you can take your eye off of it and look up in a month and say, okay. What just happened because youre not going to like the result.
Yes.
Got it okay. Thanks for that detailed explanation Jeremy so.
Yeah.
So given the kind of supply chain.
There.
How are you thinking about strategically going forward as far as you look into longer term diversify your sourcing capabilities.
Given what's happened here just wanted to get your high level thoughts about that.
Yes, we're always looking for additional sourcing opportunities to diversify what we're doing.
One we feel one areas, Mexico as an area, where we're trying to diversify into it's easier said than done candidly.
One other big areas with upholstery import upholstery, not domestic but import.
We actually have diversified quite a bit out of Vietnam.
We're in Thailand.
In.
We're in different areas, where even candidly, we've even gone back to China, a little bit when necessary, if we feel more stability as in a country. Currently that's what we're going to do and upholstery is easier too.
Move then case goods, especially when you get into higher price points of our case goods. It gets more difficult to diversify that from a from a factory standpoint.
Yeah.
Got it Okay and then.
As far as home Meridian, you did mentioned about the leadership change there.
As far as longer term.
How should we think about.
The opportunities for <unk>.
For <unk>.
Obviously, there are some near term challenges certainly understand that but how should we think about the <unk> sales and profitability standpoint longer term.
So one.
One thing that we're very focused on and somewhat said it is.
I have not found additional layers to be effective specifically when youre trying to figure out business out so number one being closer connected as a team and actually really working together to run the same direction I think that's a really big deal.
Secondly, we have really good businesses that have been.
Somewhat hidden by.
A couple of things couple of businesses that are not as strong and are not us.
Good for our company. So we've been really working on mitigating knows either down or.
Or getting the prices to where they need to be even if it's a loss of volume in that particular business.
And really trying to magnify and invest more in the businesses that we see are really strong and have great opportunities currently and in the future. So I believe I really fully believe that once we do what I. Just described it will be a whole different picture and there's the good news.
As we have really good leadership in each of those businesses, which is why I mentioned layers. It almost gets confusing when you have another layer on top of these leaders with those businesses. So I really feel good actually about our position it's going to be as I said in the outlook, it's going to be tough with factories closed it affects them quicker but beyond that.
I am very optimistic.
Okay, that's great to hear and then.
Now last question from me I mean, obviously you guys have a strong balance sheet and I know the current environment as far as the supply chain is constrained but.
Just wondering what is your appetite for acquisitions, especially in light of potential changes to the.
Tax laws I mean are you seeing or are you interested in doing any any M&A activity.
We definitely aren't.
Currently going to you know.
Hide from an opportunity I mean, we have rise opening is open and we review things in.
We have a board of directors, that's open to that as well so our one of our big strategies is to grow through acquisition, but it also means do it correctly and do it with a business that would actually bolt on correctly to our overall business and be at actual cultural and good fit with what we do so.
I know I'm not giving you.
As much information as you want but the answer is we're definitely open to it.
Got it understood all right well.
Alright, well, thank you and best of luck.
We appreciate it thank you Anthony.
Thank you. Our next question comes from the line of John Di Shire from Pinnacle. Your line is now open.
Hi, good morning, Thanks for taking my question.
Just curious.
Shutdowns in Vietnam and Malaysia.
What was the timing of that in other words to dose shutdowns and affect the entire quarter.
Did they come into play at the end of the quarter or help us understand how that impacted the current quarter.
Good morning, this is Jeremy.
We actually started.
Down that road about August 1st is when it really became where the government.
You bet.
So Malaysia actually happened a little earlier, probably Paul.
June or July hit Malaysia was earlier, but Malaysia is a pretty small it's not as big in Vietnam is a bigger for us a bigger footprint. So eight one would be the answer on that.
It was pretty it was pretty dramatic it went from a few.
The Delta various then came out it went from just a few cases too.
So pretty aggressive lockdown I think because Vietnam is not worth it.
Particularly well vaccinated the government was very aggressive about about mandating shutdowns.
Okay. So August 1st no it really didn't impact.
Last quarter.
Do you anticipate.
Being able to meet your sales going forward I know inventory is up.
But if the factories don't come back online anytime soon.
Would there be a shortfall in terms of lost sales.
Yes, it's a fair question, we're going to we believe we're going to be in better shape for hooker branded and domestic upholstery HMA. So closely attached to that production and shipping containers off of production that we believe there could be a miss there.
Okay, Alright, but held the pipeline refilled certainly.
It's probable.
Okay.
<unk> is the most vulnerable at this point.
During the last quarter.
How much actually came out of Vietnam as a percentage of sales roughly.
Hum.
Probably about half.
Yes, I'd say, it's close it's around half.
Alright.
What was China roughly for the quarter.
I'm, sorry, 20%, 20% okay.
Alright domestic and other.
Yes, right, Okay, so about 70%.
Last quarter came out of Vietnam and China.
Alright.
Okay, I think that does it.
Alright. Thank you welcome. Thank you.
Thank you. Our next question comes from the line of Jeff Gagan from global value investment. Your line is now open.
Thank you good morning, gentlemen, I appreciate the additional commentary around your press release to this yes. Good morning.
Can you go back to the HMA transition will give us an expected timeframe and financial impact on that.
So I'll start with time frame and then I'll, let Paul go through the financial impact but are.
It's somewhat fluid because you know.
There are some unknowns we did receive we've received we think some decent news that.
Vietnam is looking to open up.
915 of this month the challenge is going to be youre going to start out at a low.
Shut down a factory you don't just go from zero to all of a sudden 100%. So there's going be some challenge with capacity going to lower and then it will work its way up and.
But there is there are some.
There's more and more vaccines getting out in the country.
The government there what we're hearing is they're actually pushing that fully vaccinated people back to work so there's not going to be this.
We don't feel that there will be a lag to people going back to work once they're either vaccinated or if they've had COVID-19 apparently they are also being told that they would need to go back to work. So.
I think.
I think that.
We're going to see.
Good.
Would you say, it's going to hurt for a quarter on on on the <unk>, specifically third quarter <unk> net sales by.
30% right right, it's going to be significant and I believe we will start to make.
Somewhat of a comeback, but not recover for the year, but I think we will start to see much better shipments fourth quarter, but it will still be a recovery and I think we'll hit first quarter in a healthier way with <unk> that favorable yes. It is and that's what that's all predicated of course on the behavior of.
The macro events like the like the virus right.
That's our that's our thinking today.
Alright, and then I guess two follow ups number one I was more specifically interested in leadership changes there or conceivably you do have the leadership team you want right now, but secondly, given the.
Percentage of revenue represented by HMA put the zero margin contribution on a 30% lower revenue could you actually start seeing margin contribution from that.
Division.
No. We don't we don't expect to see modest contribution in the third quarter.
We think that some of these restructuring moves and then and then as we rebuild we're focusing on unprofitable businesses.
So we expect them.
To be back in the margin contribution world.
Maybe fourth quarter.
But but third quarter, it's going to be tough.
That's like that when you can't ship when you can't ship from the factories closing, it's a rough deal for a little bit, but we do feel short term.
Alright, Thanks regarding the list just to cool issues need to Asian supply chain challenges, you're facing how do you expect that to impact your holiday sales and what contingencies have you made.
Uh huh.
Holiday sales really aren't a big driver of accepting the Ath division.
Those will probably be adversely affected the hopkins the hunker side of the business.
We participate in.
<unk>.
Wayfarers cyber five and it's important to us, but it's not a key and that's all business shipped out of our warehouse already so we don't expect to see a major impact there I think the ACTH Division is the only division that specifically could be adversely affected in the like of holiday sales.
Expectation.
Alright, and you mentioned your SKU rationalization, you've made some general comments around that can you add a little more color in terms of the impact to your P&L or balance sheet.
Well you know there was a major effort at the start of the pandemic say, okay. There's once it once we got through the first part and we saw the demand start to hit specifically.
Hooker Hooker branded.
Really the whole company at the demand portion, but with the warehousing.
Focus at Hooker branded we went into okay. If we have this much capacity and this is going on we're going to make sure we're making the right things. So we cut down a significant number of the Skus I believe it was 18% of the Skus at the time, we cut last year immediately and then we continue that effort and we kept to Washington.
Kept folks and said, okay, A's and B's and really forget fees. So you didn't really it's mostly as I mean, it's so when we we get a percentage every month showing us.
What percent of the A's actually are shipping on containers to us in all of them are always sold of course, and then what percentage of bees and if we see any CS We review those again and say why did we ship sees why did this happen and so there's just it's a constant effort and I think it's had a major impact on hooker branded bottomline.
Topline, but yes, topline and bottomline, because we've been able to get the right production for the right pieces in.
So that really has had a major positive impact for the company.
And can you speak to your balance sheet inventory as well.
I think we are.
Including in transit on the Hooker branded side of the business I think we're reasonably happy with with a flow I mean, given the constraints.
<unk> is.
His challenge because their inventory flow is much different they built inventory.
But a lot of their sales are contingent or our container direct sales. So so that's that 30% sales lift, but we're gonna have we don't have the inventory is not built yet.
I think on the hooker side.
Reasonably happy with our inventory onto the circumstances obviously.
With the demand we'd love to have more.
I think we're servicing where we're exceeding our expectations every month I think we're servicing reasonably well.
Compared to what we believe on the Hooker branded it's more of a hiccup right as long as it opens in the time and we think it's going to open.
And then on the other side, we've talked about where it's it's definitely more impactful.
Thank you and last question and Paul Circling back to me and she gave Anthony you earlier I thought you indicated your average selling prices were up roughly 12% and volumes about four 5%.
If that's correct would would that really imply that organically.
<unk> seen strong demand at four 5% roughly.
Unit volume growth.
Well actually profit.
The demand is probably more than that because our backlogs continue to grow the four 5% is what we were able to ship.
So.
We're very confident demand and we are in.
I think too often but we're not experiencing cancellations of any outsized cancellations I think that the.
Demand industry wide is really good so I think I think it's more than 4%. It's just the 4% is what we can serve.
I see thank you. Good luck I think the issues you're facing are being faced by everybody that's moving product.
Around the world. So we'll get through this and look forward to seeing it on the other side, we really appreciate those sentiments. Thank you.
Sure sure.
Thank you at this time I'm showing no further questions I would like to turn the call back over to Jeremy Hall for closing remarks.
Gigi we would like to thank everyone for their participation in today's call. We look forward to sharing our third quarter results in early December with you. Thank you and have a great day.
[music].
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Greetings, ladies and gentlemen, and welcome to the Hooker furniture quarterly Investor Conference call reporting its operating results for the second quarter of fiscal 2022 at this time all participants are in a listen only mode. A brief question and answer session will follow the formal present presentation.
To ask a question during the session you will need to press star one on your telephone as a reminder, this conference is being recorded it is now my pleasure to introduce your host Paul Heartfelt, Vice President Finance and Chief Financial Officer for Hooker Furniture Corporation.
Thank you Gigi.
Good morning, and welcome to our quarterly conference call to review our financial results for the fiscal 2022 second quarter, which began may three 2021 and ended on August one 2021. Joining me. This morning is Jeremy Hoff, our Chief Executive Officer.
We certainly appreciate your participation this morning.
During our call we may make forward looking statements, which are subject to risks and uncertainties.
Discussion of factors that could cause our actual results to differ materially from management's expectations.
As contained in our press release and SEC filing announcing our fiscal 2022 second quarter result.
Any forward looking statements speaks 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 $167.0 million and net income of seven 5 million or 62 cents per diluted share for our fiscal 2022 second quarter, which ended on August 1st.
Compared to last year's second quarter, net sales increased by $32 million or 25%, while net income increased $8.0 million or 29%.
Earnings per diluted share also increased 29% from 48 cents a year ago, all three reportable segments reported year over year sales increase is up more than 20%.
For the fiscal 2022 first half consolidated net sales was 32 point 3300, $29.0 million.
$90 million or 38% compared to last year's first half.
We reported net income of $25.0 million or $41.0 per diluted share compared to a net loss of $29 million or $2.46 per diluted share a year ago, principally due to $47.0 million or $40.0 million net of tax in noncash impairment charges last year.
Now I'll turn the call over to Jeremy to comments on our fiscal 2022 second quarter results.
Thank you Paul and good morning, everyone.
We are pleased the hooker furnishing achieved double digit sales and profitability increases for the second consecutive quarter.
Each of our reportable segments Hooker branded home Meridian and domestic upholstery also achieved double digit sales gains of 29, 23% and 29% respectively. While we expected improvements compared to the early months of the pandemic a year ago, we continue to surpass our goal to return to our pre pandemic growth track.
Consolidated sales were up over $10 million compared to the second quarter of fiscal 2020, and profits were up about 79% compared to the same quarter.
Consumer and retail demand remain historically strong with consolidated backlogs doubled compared to last year and incoming orders up 27% over last year and the six month period.
Industry wide demand continues to be high however.
However, we are facing significant headwinds on the supply side that will impact us in the short term the surge of the Delta variant of COVID-19 has caused factories and our source countries of Vietnam, and Malaysia to close temporarily with recent talk of reopening in Vietnam around September 15th.
In addition, global logistics challenges with higher freight and transit cost and lower transportation capacity, along with raw materials inflation and some labor shortages remain ongoing.
We are utilizing all available levers to help mitigate these headwinds and we remain optimistic about our long term position as we work our way through these transitory disruptions.
Turn the discussion over to Paul heartfelt, who will discuss highlights of each of our reportable segments.
Jamie I'll.
I'll begin with the Hooker branded segment, which performed exceptionally well for the second consecutive quarter exceeding expectations and sale profitability product flow and efficiency net.
Net sales increased by $11 million or 29% versus the prior year period incoming orders increased by 38% in the backlog triple as compared to prior year's second quarter.
Operating income in the fiscal 2022 second quarter was $17.0 million or 17, 9% operating margin compared to $7.0 million or 15, 4% 15, 7% margin in the second year second quarter of last year.
And hooker branded contributed over 90% of the consolidated operating profit during the period.
We attribute our vibrant sales and profitability performance in the Hooker branded segment to high industry wide demand and the dramatic improvements and expansions of our product lines.
June high point international market with the best for Hooker branded written orders since April of 2016.
We're also seeing success with new lines, such as the Commerce market collection, which offers pricing scale and styling targeting millennials and one of them is one of the largest accent furniture launches in our company's history.
In addition, our strategy to rationalize our stocking inventory to focus on top seller is helping us maximize shipping in production capacity product flow and cash utilization.
Having best sellers in stock enabled us to limit our order cancellation rate is single digits.
And to ship more than expected despite limitations on ocean and land shipping capacity.
Additionally, we were able to increase prices to mitigate higher product costs from rising ocean freight expenses and inflation on goods sourced from Asia.
Turning now to the home Meridian segment, <unk> second quarter sales were $87 million up approximately 23% over the prior year rare.
Revenues were boosted by continued strong retail demand versus especially wheat shipments during the second quarter last year due to COVID-19 related disruption.
Year to date, we've seen strong a strong sales rebound with our traditional furniture channel retail base as those customers pick up share loss through emerging channels. During the opening months of the pandemic shutdowns last year.
In contrast, emerging channel sales have declined somewhat as a result of exceptionally strong sales in the prior year period.
Combined with global supply chain challenges.
Lower allowances and reduce fixed expenses were not enough to mitigate the impact of all time record high freight costs. The home Meridian segment finished the quarter at essentially breakeven despite higher sales due to these high freight costs.
Incoming orders increased about 4% as compared to the fiscal 2022 first quarter, but decreased by about 35%.
Compared to the prior year second quarter when business remap rebounded dramatically after the height of the initial Covid crisis.
Backlog at the end of the quarter was 62% higher than the prior year second quarter. The result of strong incoming orders, but also somewhat attributable to production and shipping delays.
Ah Pulaski furniture division delivered particularly strong Q2 results with net sales exceeding the prior year by 68% and operating income increasing by $4.0 million.
83% of PSC shipments in Q2.
Container ship directly to large retailer warehouses new.
New orders and backlog of PSC remains robust robust.
Our current factory closures in Vietnam could hamper shipments for at least the next several months.
Samuel Lawrence furniture, our value focused case goods division and PRA, our promotional upholstery Division also recorded strong double digit sales increases in Q2.
With year over year increases of 38% and 75% respectively. Backlogs were also up in both divisions compared to last year. The temporary factory factory closures in Vietnam will negatively impact Q3 shifts.
Yes.
As mentioned in previous quarterly results SLA edge, our hospitality division continues to struggle with significantly diminished demand in the COVID-19 disrupted hospitality sector.
Net sales were up 48% in the period and incoming orders were practically nonexistent escalates.
<unk> will continue to operate at a loss until the contract hospitality sector, ultimately rebound, which we expect to begin next year.
H R E Commerce focused business unit struggled with extremely unfavorable ocean freight costs in Q2 in.
In addition to access a freight costs.
Was impacted by supply chain related service issues and diminished order demand, resulting from our efforts to pass a law enforcement of the freight cost increases.
The price sensitive nature of much of <unk> business limited sell through thereby reducing the benefit of our price increases.
While we have mitigating measures in place to reduce excess freight costs, we cannot eliminate them and therefore these headwinds are expected to continue impacting <unk> results for.
For the remainder of this fiscal year.
In the domestic upholstery segment net sales increased by $5 million or 29% in the fiscal 2022 second quarter compared to the prior year quarter due to significant sales increases at Brad anything young in Shenandoah and to a lesser extent our same workers.
Operating income for the fiscal 2022 second quarter was 457000 or 2% of net sales compared to a small operating loss in the prior year's second quarter.
Backlogs at all three divisions were at historical highs and incoming orders increased by 73% compared to the prior year second quarter.
There's a lot of optimism into the best domestic upholstery segment for the second half of this year. In addition to strong demand we've seen a stabilization of some raw material issues, such as palm allocation shortages that impacted us near the end of Q1 and earlier this quarter.
Our management focus is on servicing backlogs with quality products and improved speed of delivery.
And all other sales increased by 300000 or 10% in the second quarter as compared to the prior year period due to an 11% sales decrease at H contract.
Operating income for the quarter was 230000 or eight 5% of net sales compared to 350000 or 11, 5% of net sales in the prior year.
As the retirement living market begins to slowly recover H contract incoming orders were up six 4% over the prior year second quarter and the backlog is 49% higher than the prior year quarter end.
Finally, touching on our cash and inventory position cash and cash equivalents stood at $41.0 million at the end of the quarter, a decrease of $28 million compared to the.
To the fiscal 2021 year end due primarily to a $33 million increase in inventory as we continue to build inventories to meet increased customer demand and prepare for the holiday selling season, we have a substantial amount of inventory in transit much of which is sold and can be shipped to customers. Shortly after receiving our warehouses account.
Accounts receivable balances increased by $15 million as a result of increased net sales.
We used existing cash to pay a $7.0 million in cash dividends and $8.0 million of tax capital expenditures, which is more than we typically spend because we are in the process of upgrading our end of life ERP systems with newer technology and we finally began equipping our new more efficient, Georgia distribution center, which is expected to go online in October.
This year now.
Ill turn it back to Jeremy for his outlook.
Thank you Paul as we look ahead to significantly increase demand continues while we are still dealing with many of the same logistics and supply issues. The recent COVID-19 related factory shutdowns in Vietnam, and Malaysia, We will particularly have negative ripple effects throughout the global supply chain for a period of time the recent news of Pos.
We'll reopening in Vietnam. This month is encouraging our hooker branded and domestic upholstery segments, where we have the ability to keep product flowing into ship from our significant warehouse warehousing capacity is less challenged than home Meridian home meridian ships, primarily to larger customers via container and as more quickly impacted by the shutdowns.
Our strong balance sheet and variable cost business model gives us confidence that we can weather. This current industry wide challenge and should allow us to take advantage of the healthy consumer demand environment long term positive economic indicators and demographic trends for home related industries.
Lastly, I would like to mentioned that Lee Boone, who most recently served as president of HMA has left hooker furniture <unk>.
This change is part of an overall effort to reorganize and realign the home Meridian division, while reducing operating cost and improved segment profitability.
While we are not making wholesale changes at HMA, we have changed some reporting relationships to better align with strategic initiatives reduced the executive team eliminated some unnecessary layers and we will exit a high cost west coast warehouse by the end of the first quarter of fiscal 'twenty three without significant negative impact on our revenues.
These changes further streamline the organization and reduce cost. We appreciate leaves dedicated service and contributions to the company over the last nine and a half years as he served in various roles, including President and co President of HMA and Division President of Samuel Lawrence furniture.
This ends the formal part of our discussion and at this time I will turn the call back over to our operator <unk> for questions.
As a reminder to ask a question you will need to press star one on your telephone.
Kelly the question Brett.
Please standby, while we compile the Q&A roster.
Our first question comes from the line of Anthony maybe Vince scheme from Sidoti. Your line is now open.
Thank you and good morning, thanks for the opportunity to ask questions here. So.
So first I guess, a couple of just more or less kind of a housekeeping things here. So as far as the second quarter, just wanted to get a better idea about pricing versus unit volume on a consolidated basis. If you have that information.
Well, obviously pricing is going to be a big part of it give me a second.
Sure.
In fact, if you want to you want to go onto your next question I'll look for that number. So I can give you were filed on our Q SEC.
Got it no worries so.
Yes.
Obviously, I know you have taken up price increases I guess.
Just wanted to get a sense as to whether you plan to take.
Price increases.
Let's take additional price increases and if so are you taking anything on the existing backlog.
Yeah.
Good morning, Anthony This is Jeremy.
Good morning.
Hey.
We are taking it more through e-commerce currently.
Through our ADH business.
We had to adjust more drastically than than we thought originally and so that's ongoing and a lot of those.
Went in place to the back they did affect backlog. So that's the case on that.
We are getting cost increases from suppliers for raw materials kind of on a daily basis. So.
Typically we don't raise prices through our backlogs throughout our company. We of course would do so if we really had to but we feel like we're in pretty good position other than the first part of what I mentioned.
Got it okay understood and then.
Do you have.
Number as far as for the backlog.
It's up overall, but as far as the do you have a dollar amount for the backlog as well at the end of the second quarter.
Backlog of $320 million.
Okay got it thank you for that and then.
So Jeremy you did mentioned that few times that industry demand is strong which is encouraging to hear.
Can you give us a sense as to like what you heard from retailers here for the Labor day weekend.
Yes, what we've heard is labor day weekend was was really strong and.
We continue to hear positive things from our from our retail partners, Okay, Anthony going back to your other question.
Unit volumes up four 4% consolidated and average selling prices up 12, 2%.
Got it okay. Thanks, Paul.
And then.
As far as Jeremy you talked about the use of your available levers to help to mitigate the supply chain headwinds can you go into a little bit more specifics as to what youre doing.
Obviously.
Realizing that Vietnam is still shutdown mode could you just maybe expand.
What you're doing to mitigate the supply chain constraints that'd be very helpful. Well first of all separating the factory shutdown from everything else factory shutdown.
It's difficult to have a lever for that.
The best news that we've had so far is whether there is worried that that could open those could open back up in Vietnam.
As early as the 15th of this month, so so kind of separating that out.
Regarding wood, so let's start with logistics, so logistics, it's all about additional cost of goods right. So it comes in and we pay.
A certain amount maybe it's 15000.20000, we've heard as much as 28, I think 30000, even came up for a container I am not sure we paint it alright. So so are our mitigation efforts on that are really looking at each of our businesses. So if it's a lower price lower cost lower price point business.
Were they higher container cost doesn't make sense, we have measures in place to actually make that decision more on the fly than we have in the past. So we're not just allowing a ridiculous container cost to come in on a business that really can't support that so that's one big thing that we're doing.
And on the higher end price points, we can we can take more of that and we have to make sure that we have enough margin in price and to do so.
But in our warehouse supported businesses in the higher end, specifically hooker branded it's all about having enough product and keep it flowing Indian dot run out so we aren't as sensitive about bringing the higher priced containers in and we've been able to average.
Still way above what we normally would but our average is lower than than a lot of the higher ones a year about so we're trying to keep that average as low as possible and we put our logistics team into one big team because it's somewhat of an all hands on deck effort. It's a it's a daily cant.
That drive to make sure that we're trying to get the rates that we can get so that's a major part of what what I mean, when I say were trying everything we can to mitigate a lot of these additional cost.
Then getting into.
Capacity capacity of course from a container standpoint, it's all about being we feel it's about being consistent with what we're booking. So we're trying to keep our bookings is consistent into our contract countries. As we can of course all of that is a little bit out the window with factories shut down currently in Vietnam.
But that's one thing we're really trying to do is have a consistent number of containers at our major factories that we can get as many contract rates as possible on these containers.
No.
Another big part is managing all the marriage that's out there so not only is it difficult to get containers from overseas, it's difficult once they get once they hit the United States getting them to our warehouses as another major challenge.
And a lot of these things its focus I mean, it's putting enough people on enough enough horsepower on each issue and make sure youre watching it on a daily basis. Its not something you can take your eye off of it and look up in a month and say, okay. What just happened because youre not going to like the result.
Got it okay. Thanks for that detailed explanation Jeremy so.
Yes.
So given the kind of supply chain.
How are you thinking about strategically going forward as far as you look into longer term diversify your sourcing capabilities.
Given what's.
Happen here.
To get your high level thoughts about that.
Yes, we're always looking for additional sourcing opportunities to diversify what we're doing.
One we feel one areas, Mexico as an area, where we're trying to diversify into it's easier said than done candidly.
One other big areas with upholstery import upholstery, not domestic but import.
I actually have diversified quite a bit out of Vietnam.
In Thailand, we are in.
Yes, we're in different areas, where even candidly, we've even gone back to China, a little bit when necessary. If we feel more stability as in a country. Currently thats what were going to do and upholstery is easier too.
Move then case goods and especially when you get into higher price points of our case goods. It gets more difficult to diversify that from a from a factory standpoint.
Yes.
Got it Okay and then.
As far as home Meridian, you did mentioned about the leadership change there.
As far as the longer term.
How should we think about.
The opportunities for <unk>.
For <unk>.
Obviously, there are some near term challenges certainly understand that but how should we think about the <unk>.
<unk> sales and profitability standpoint longer term.
So.
One thing that we're very focused on somewhat said it is.
I have not found additional layers to be effective specifically when you're trying to figure out business out so number one being closer connected as a team and actually.
Working together to run the same direction I think thats, a really big deal secondly, we have really good businesses that have been.
Somewhat hidden by.
A couple of things couple of businesses that are not as strong and not us.
Good for our company. So we've been really working on mitigating those either down or.
Or getting the prices to where they need to be even if it's a loss of volume in that particular business.
And really trying to magnify and invest more in the businesses that we see are really strong and have great opportunities currently and in the future. So I believe I really fully believe that once we do what I just described it'll be a whole different picture and there is the good news.
As we have really good leadership in each of those businesses, which is why I mentioned layers. It almost gets confusing when you have another layer on top of these leaders with those businesses. So I really feel good actually about our position.
As I've said in the outlook, it's going to be tough with factories closed it affects them quicker, but beyond that I am very optimistic.
Okay, that's great to hear and then.
Last question from me I mean, obviously you guys have a strong balance sheet.
Current environment this part of the supply chain.
But.
Just wondering what is your appetite for acquisitions, especially in light of potential changes.
Tax laws I mean, how are you.
Seeing or are you interested in doing any any M&A activity.
We definitely aren't.
Currently again.
Hide from an opportunity I mean, we ever eyes open ears open and we review things in.
Yes, we have a board of directors, that's open to that as well so our one of our big strategies is to grow through acquisition, but it also means do it correctly and do it with a business that would actually be.
Bolt on correctly to our overall business and be at actual cultural and good fit with what we do so I know I'm not giving you.
As much information as you want but the answer is we're definitely open to it.
Got it understood alright, well.
Alright, well, thank you and best of luck.
We appreciate it thank you Anthony.
Thank you. Our next question comes from the line of John Di Shire from clinical your line is now open.
Hi, good morning, Thanks for taking my question.
I was just curious on the shut downs in Vietnam and Malaysia.
What was the timing of that in other words.
Those shutdowns and affect the entire quarter.
Did they come into play at the end of the quarter or help us understand how that impacted the current quarter.
Good morning, this is Jeremy.
We actually started down that road about August 1st is when it really became where the government.
Okay.
So Malaysia actually happened a little earlier, probably Paul.
June or July.
July Malaysia was earlier, but Malaysia is a pretty small it's not as big in Vietnam is a bigger for us a bigger footprint.
So eight one would be the answer on that.
It was pretty it was pretty dramatic from a few.
When the Delta I think came out it went from just a few cases too.
Pretty aggressive lockdown I think because Vietnam is not with us.
I was not particularly well vaccinated the government was very aggressive about about mandating shutdowns.
Okay. So August 1st so it really didn't impact the.
Last quarter.
Do you anticipate.
Being able to meet your sales going forward I know inventories up.
But if the factories don't come back online anytime soon.
Would there be a shortfall in terms of lost sales.
Yes, it's a fair question, we're going to we believe we're going to be in better shape for hooker branded and domestic upholstery.
<unk>, so closely attached to that production and shipping containers off of production that we believe there could be a miss there.
Okay Alright.
Pipeline refills certainly.
Probable.
Okay. So <unk> is the most vulnerable at this point.
During the last quarter.
How much actually came out of Vietnam as a percentage of sales roughly.
Probably about half.
Okay.
Yes, I'd say, it's quite it's around half.
Alright.
What was China roughly for the quarter.
I'm sorry, 20%.
90% Okay.
Alright domestic and other.
Yes, right, Okay, so about 70%.
Last quarter came out of Vietnam and China.
Alright.
Okay, I think that does it.
Alright. Thank you welcome. Thank you.
Thank you. Our next question comes from the line, Jeff Gagan from global value investment. Your line is now open.
Thank you good morning, gentlemen, I appreciate the additional commentary around your press release today, yes.
Yes, good morning.
Can you go back to the HMA transaction will give us an expected timeframe and financial impact on that.
So I'll start with timeframe and then.
I'll, let Paul go through the financial impact.
It's somewhat fluid because.
There are some unknowns we did receive we've received we think some decent news that.
Vietnam is looking to open up.
<unk> 15 of this month the challenge is going to be you're going to start out at a low.
Shut down a factory you don't just go from zero to all of a sudden 100%. So theres going be some challenge with capacity going to lower and then it will work its way up and.
But there is there are some there is more and more vaccines getting out in the country.
Government there what we're hearing is they're actually pushing that fully vaccinated people back to work. So there is not going to be this.
We don't feel that there will be a lag to people going back to work once they're either vaccinated or if they've had COVID-19 apparently they are also being told that they would need to go back to work.
I think.
I think that.
We're going to see that.
Good.
Would you say, it's going to hurt for a quarter on on an HMO, specifically third quarter ATM market, yes, net sales by.
30% right right, it's going to be significant and I believe we will start to make somewhat of a comeback but not recover for the year, but I think we will start to see much better shipments fourth quarter, but it will still be a recovery and I think we'll hit first quarter in a healthier way with <unk> that favorable yes. It is.
It's all predicated of course on the behavior of.
The macro events like the like the virus right.
That's our that's our thinking today.
Sure.
Alright, and then I guess two follow ups number one I was more specifically interested in leadership changes there or conceivably you do have the leadership team you want right now, but secondly, given the.
Percentage of revenue represented by HMA put the zero margin contribution on a 30% lower revenue could you actually start seeing margin contribution from <unk>.
Division.
No. We don't we don't expect to see modest contribution in the third quarter.
We think that some of these restructuring moves and then and then as we rebuild we're focusing on unprofitable businesses.
So I think we.
We expect them.
To be back in the written and the margin contribution world.
Maybe fourth quarter.
But the third quarter, it's going to be tough with the sales Miss like that when you can't shift when you can't ship from the factories closing, it's a rough deal for a little bit, but we do feel short term.
Alright, Thanks regarding the list just to cool issues need to Asian supply chain challenges, you're facing how do you expect that to impact your holiday sales and what contingencies have you made.
Holiday sales really aren't a big driver except in the AC H Division.
Sure.
Those will probably be adversely affected.
Hooker side of the business.
We participate in.
<unk>.
Wayfarers cyber five and it is important to us, but it's not a key and that's all business shipped out of our warehouse already so we don't expect to see a major impact there I think the <unk> Division is the only division that specifically could be adversely affected in the like of holiday sales.
Expectations.
Alright, and you mentioned your SKU rationalization, you've made some general comments around that can you add a little more color in terms of the impact to your P&L or balance sheet.
Well there was a major effort at the start of the pandemic say, okay. There's once it once we got through the first part and we saw the demand start to hit specifically.
<unk> Hooker Hooker branded.
Really the whole company at the demand portion, but with the warehousing.
Focus at Hooker branded we went into your okay. If we have this much capacity and this is going on we're going to make sure we're making the right things. So we cut down a significant number of the Skus I believe it was 18% of the Skus at the time, we cut last year immediately and then we continue that effort and we kept watch.
<unk> kept folks and said, okay, A's and B's and really forget fees, so and really it's mostly as I mean it.
So when we we get a percentage every month showing us what percent of the <unk> actually are shipping on containers to us and all of them are always sold of course, and then what percentage of <unk> and if we see any CS We review those again and say why did we ship sees why did this happen and so they're just it's a constant effort and I think it has had a major.
Impact on Hooker branded Bottomline.
Topline topline and Bottomline, because we've been able to get the right production for the right pieces and so that really has had a major positive impact for the company.
Okay.
And can you speak to your balance sheet inventory as well.
I think we are.
Including in transit on the Hooker branded side of the business I think we're reasonably happy with.
I mean, given the constraints.
HMA.
Is challenged because their inventory flow as much differently they built inventory.
But but a lot of their sales are contingent or our container direct sales. So so that's that 30% sales mix that we're gonna have.
We don't have the inventory is not built yet.
I think on the hooker side.
Reasonably happy with our inventory under the circumstances obviously.
With the demand we'd love to have more.
But I think we're servicing where we're exceeding our expectations every month I think we're servicing reasonably well.
Compared to we believe on the Hooker branded it's more of a hiccup.
As long as it opens in the time and we think it's going to open.
And then on the other side, we've talked about where it's it's definitely more impactful.
Thank you and last question Paul circling back to the answer you gave Anthony earlier I thought you indicated your average selling prices were up roughly 12% and volumes about four 5%.
If that's correct would would that really imply that organically you are still seeing strong demand at four 5% roughly.
Like unit volume growth.
Well actually profit.
The demand is probably more than that because our backlogs continue to grow the four 5% is what we are able to ship.
So.
We're very confident in demand.
And I would say too often but we're not experiencing cancellations of any outsized cancellations I think.
The demand industry wide is really good.
So I think I think it's more than 4%. It's just the 4% is what we can serve.
I see thank you. Good luck I think the issues you're facing are being faced by everybody that's moving product.
Around the world. So we'll get through this and look forward to seeing you on the other side.
We really appreciate those sentiments. Thank you. Thank you.
Sure sure.
Thank you at this time I am showing no further questions I would like to turn the call back over to Jeremy Hall for closing remarks.
Thank you Gigi we would like to thank everyone for their participation in today's call. We look forward to sharing our third quarter results in early December with you.
Thank you and have a great day.