Q2 2024 Hooker Furnishings Corporation Earnings Call
Okay.
Okay.
Good day, and thank you for standing by and welcome to the Hooker furniture, <unk> second quarter 2024 earnings webcast.
At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will 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.
Now I'd like to hand, the conference over to your Speaker today, PA Hook felt chief Financial Officer. Please go ahead.
Hi, good.
Good morning, and 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.
Joining me. This morning is Jeremy <unk>, our Chief Executive Officer, We certainly appreciate your participation.
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 is contained in our press release and SEC filing announcing our fiscal 2024 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 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 domestic upholstery segments.
Consolidated net income was $785000 or seven cents per diluted share for the quarter compared to $5 5 million or 46 cents 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 consol.
Consolidated net income was $2 2 million or <unk> 20 per diluted share compared to $8 7 million or <unk> 73 per diluted share in the prior year six months 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 will 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 in other research.
<unk> is 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 that's heavily discounted home furnishings in the market and.
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 ended 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 at the home Meridian segment as 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 and.
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 3000 to around 14000 annually quadrupling, our interactions with existing and potential customers while we.
We expect that the full impact of this investment will be mostly longer term. We've already opened 1000, new accounts in the first half of the year as visibility and engagement have increased.
The transformation of the home Meridian 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 200000 square feet.
During the quarter and expect to reduce another 100000 to 200000 square feet in early calendar 'twenty four.
Right sizing our footprint to align with our current demand when we no longer stock significant volumes of inventory FERC centric town will not only reduce cost it will improve liquidity and working capital levels.
<unk> recorded a small operating income in fiscal July and while we continue to expect some short term volatility in sales and earnings we expected to achieve profitability in the second half of this fiscal year the.
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 meridian's breakeven point.
Over $150 million, and we will 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.
Want to turn the discussion over to Paul who will discuss highlights in each of our segments.
Thanks, Jeremy.
Beginning with Hooker branded net sales in the segment decreased by $18 million or 34% in the fiscal 2024 second quarter due to decreased unit volume. Furthermore, discounting was 240 basis points higher than the prior year quarter, which was unusually low.
For the fiscal 2024 first half hooker branded sales decreased by $18 5 million or 19% compared to the prior six prior year six month period sales decreases in both periods underscore the softer demand for home furnishings.
Despite a decrease in net sales gross margin increased due primarily to favorable product costs from lower freight rates and to a lesser extent decreased warehousing costs.
The segment reported operating income of $3 2 million and an operating margin of nine 3% compared to $6 1 million and 11, 5% in the prior year second quarter.
While the order backlog was lower than the prior year quarter and it remains 40% higher than pre pandemic levels at the end of the fiscal 2022nd quarter.
Incoming orders increased by almost 19% compared to the prior year quarter Cigna.
A significant portion of hooker branded backlog consistent orders for new products received late last year and earlier this year, which are expected to ship in the second half of this year and positioning this segment positively for upcoming quarters.
Turning to home Meridian, net sales decreased by $30 million or 51% in the fiscal 2024 second quarter.
Due to reduced demand for home furnishings in the absence of sales from exited higher risk unprofitable operations.
Sales decreases in the major furniture chains accounted for about 70% of the decline in E Commerce, <unk> X channel accounted for about 15% of the decrease.
Gross profit and margin both decreased in two.
2024 second quarter, resulting from the net sales decline and under absorbed operating costs product cost decreased as a percentage of net sales due to lower freight costs, but sitcom fixed costs due to warehousing rent and labor expenses adversely impacted the gross margin due to significantly lower net sales.
For the six months period home Meridian sales decreased due to these same factors.
As Jeremy mentioned earlier, we reduced our Georgia warehouse footprint by 200000 square feet during the quarter and expect to further reduce debt in the future, bringing total square footage to around 500 square <unk> thousand square feet in early calendar 2024 versus a 1 million square million square feet a year ago.
Right sizing will reduce costs and improve liquidity and working capital.
Due to the significant sales decline under absorbed operating costs home Meridian reported a $3 $3 million operating loss for the quarter. However, its first half operating loss was consistent with management's expectations.
Quarter end backlog was lower than the previous year's quarter and fiscal 2022nd quarter. This decline is attributed to the absence of orders from the exited operations as well as a reduction in incoming orders from our retail customers, who are still carrying excess inventories ordered during the previous year.
In domestic upholstery net sales decreased by $7 4 million or 19% in.
In the second quarter.
Due to sales decreases at Shenandoah and HFF custom, formerly known as Sam Moore.
Partially offset by a 10% increase at Sunset West granting to young net sales were about the same as the prior year second quarter.
Despite the sales decrease gross margin was 200 basis points higher than the prior year due to decreased direct cost, including more stable raw material costs and lower direct labor costs due to reduced production at <unk> customer Shenandoah.
Partially offset by under absorbed indirect costs.
For the fiscal 2024 first half net sales decreased at HFF custom Shenandoah and Sunset West <unk> reported a small sales increase in the six month period.
Incoming orders increased by 36% compared to the prior year quarter. However orders in the prior year period were relatively low due to the higher backlog and longer lead times.
Quarter end backlog for brands in young remains three times that of pre pandemic levels at fiscal 2000 for fiscal 2000 22022nd quarter.
While the backlogs at ACF customer Shenandoah decreased to levels similar to fiscal 2020.
While other net sales increased in both the second quarter and first half driven by higher sales at H contract as the senior living industry continues to recover after the COVID-19 pandemic and to a lesser extent. The addition of global net sales gross profit and margin also increased in the all other.
Great.
On the balance sheet, we made considerable progress in our cash and inventory position and strategic capital investments.
Cash and cash equivalents stood at $50 million fiscal 2024 quarter, and an increase of $31 million from the prior year.
Inventory levels decreased by $35 million from year end and $70 million from year ago.
During the six month period $51 million of cash generated from operating activities funded $8 $7 million in share repurchases $4 9 million in cash dividends $4 million in capital expenditures, including investments in our new showrooms $2 6 million for the development of our cloud based ERP system as well as $2 4 million.
For the <unk> acquisition.
Since the share repurchase repurchase program began in the second quarter of last year. We spent approximately 22 million to purchase and retire one 3 million shares of our common stock as of the end of this quarter.
In addition to cash balances in aggregate $27 million available under our existing revolver.
At quarter end.
For the remainder of the year, we plan to continue to strengthen our balance sheet continue our share repurchase program as appropriate and continue to invest in organic growth opportunities, which we believe will position us favorably as business continues to improve.
Now I will turn the discussion back to Jeremy for his outlook.
We believe there are mixed signals in the economy and housing shortage in the over 20 year high on fixed mortgage rates have slowed down the housing activity.
The continued rise in interest rates has suppressed customer cost cut consumer confidence, however, overall retail spending and activity in the manufacturing sector and new business startups is healthy while the unemployment rate remains near a 30 year low.
As we anticipated the first half of the year was difficult as the industry work through bloated inventories and changing consumer spending habits, we expect demand and business to pick up in the second half for several reasons.
First consolidated orders are up in the mid double digits over this time, a year ago with orders trending up in each segment for the past few months secondly, a second a significant portion of hooker branded backlog consist of orders for new products launched at the high point market and are expected to ship in the second half of this year thirdly in the second half home right.
<unk> expects to ship over 1000 retail floors, what we believe to be the largest number of new product placements in its history. We believe all the right pieces are in place to return home meridian to profitability in the second half of the year, while we are focused on reducing overhead cost keeping our balance sheet strong and judiciously deploying capital.
We have continued to invest significantly in initiatives that promote higher visibility with potential customers and ensure future growth and believe these things will put us in the strongest position as demand continues to improve.
This ends the formal part of our discussion and at this time I will turn the call back over to our operator Catherine for questions.
As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
Your question. Please press star one again.
Please please standby, while we compile the Q&A roster.
And our first question will come from Anthony <unk>.
<unk> lynskey.
Sidoti <unk> company your line is open.
Good morning, and thank you for taking the questions.
Good morning, So first.
Hi, good morning.
So just curious about the cadence of sales from May through July if you could comment on that and then can you give us an early read on Q3 and I'm curious to hear your thoughts.
As far as what are you hearing from your.
Retail customers about labor day, which is an important holiday for the <unk>.
Furniture industry.
Sure when you say cadence of sales, you mean shipments or orders.
Shipments, Okay, just making sure we're on the same page so as far as shipments obviously, our backlogs got to.
A level that wasn't really great for sustainable shipments throughout the quarter as how it summarize it.
As the quarter progressed orders increased as we mentioned and our backlogs are improving but that that the timing issue on all of that definitely affected us for the quarter. Our feedback from labor day has been really positive.
I would say in almost every area that we've checked the reports back.
Were either they were above last year or they were just barely they were either added or just below last year, which last year was really big So we think thats really positive a positive sign for us overall.
That's good to hear Jeremy.
So nice job with your own balance sheet improvements with lower.
Lower inventories and improved cash position.
So.
Do you think you can make further progress with inventories or do you think that is.
Quarters pick up further.
Youre kind of business may be the low point of inventories. So just maybe if you could just help us understand like where do we where do you think inventories go from here.
We think inventories are going to stabilize from here. We believe we this is as healthy or an inventory position that we've been in since I started.
<unk> with the <unk> that we've gone through the eccentrics home and everything Thats been public but.
From our standpoint.
What I would really say is I feel the best about all of our controllable as an overall company as I have since I started.
So and it has lots to do with the balance sheet. It has a lot to do with the inventories were in a great position from a demand standpoint as it relates to our inventories and our order rates are significantly up so all of the things. We believe we can actually effect I feel really good about.
Gotcha and then so.
So as order rates improve as you talked about double digit order increases that you've seen.
Does that imply that you will see shipment and sales increases in the back half of the year or you think there will still be somewhat somewhat of a disconnect there.
Mike My question is on a year over year basis by the way.
I would say year over year, we're going to compete pretty well in the second half versus what we did in the first half I'm not ready to say that we'll beat the second half last year, because it was a pretty substantial ship in half because.
Because we were still somewhat inflated from sales from pandemic, but.
I do feel like it's going to be a little bit of a tale of two halves for us and we're going to we're going to have a lot more positive shipping and order rate throughout the second half and we've reduced operating costs. Yes same time right. So we're really going against a whole different denominator throughout that have as well.
Understood Okay Gotcha.
It looks like Youre, making further progress with home meridian overhead.
And their warehousing space so.
Yes, it looks like some sort of west was one of the key highlights in the quarter here whats driving that do you think that growth is sustainable.
We do it's actually one of our larger growth initiatives without throughout the whole company and we see it is on several levels the big opportunity one is when.
When we bought the company there.
Theyre very west coast centric.
So our ability to expand their distribution throughout the U S with our sales team.
Throughout our territories, you know, whether Youre talking Florida, South Carolina, Texas anywhere throughout the U S. We definitely have more representation in stronger relationships than what they had before we bought them.
Number two being able to.
Position Savannah with Sunset West also doing some cut and sew cushion stuffing things, we need to do out of our HFF custom facility in Bedford. We've created we've created the supply chain really on both sides of the U S, which is going to really feed growth.
In the eastern half of the United States due to the cost savings of freight and really just the visibility again.
Before we bought them they didn't have a high point showroom now there and of course, our showplace.
We're in Chicago for the for the casual show there now Theyre in Atlanta, Theyre visibility has gone up exponentially and their ability to ship from both sides of the countries. All of those factors are going to contribute in a pretty major way to their growth.
That's good to hear and then.
So you made a small acquisition in the quarter just curious about your appetite for additional acquisitions.
We're always we're always open minded and what comes along we're pretty candidly, we're pretty particular at this point.
It has to really be a white space, we don't want anything that will cannibalize. What we currently are focused on within our throughout our portfolio.
However in this instance for example, Bobo.
Our number one question when our customers look at Hooker case goods.
Who did this sliding can I buy the lighting and the number one reason we bought it.
So that we can change the node to a yes on that question.
That makes a lot of sense, Okay, and then my last question as far as the buyback. So you guys have certainly done a good job of having a well balanced I think <unk>.
Capital allocation between dividends and buybacks so.
You guys have.
Much left on the buyback or have you exhausted.
Purchase authorization.
If you can give us an update on that that would be very helpful.
We have.
At the end of the quarter I think we had about $2 million to $2 5 million less.
<unk>.
It's since then since then we purchased another million or so so so we have a fairly small amount left on that repurchase which will continue we will continue to execute that's been at 75, one plan I think it's worked really well.
We have to balance that with.
Bolstering the balance sheet, the economy is still a little bit of uncertainty so.
We're trying to balance.
Our capital allocation strategy along.
Maintaining a strong balance sheet.
Understood well, thank you very much and best of luck.
Thank you Anthony.
Thank you one moment for our next question.
Our next question comes from Dave storms with Stonegate. Your line is open.
Good morning.
Good morning, good morning.
I appreciate you taking my call I, just wanted to start towards the top of the balance sheet it looks like.
Gross profit margin is up about 355 basis points or so.
Can you just talk about what the drivers are of that on a year over year basis.
Right now, we're benefiting from from lower costs.
Well as we mentioned on the call are <unk>.
<unk> margins are up because cost.
Cost of stabilized and we've been able to balance our labor better.
On the on the imported product side, we're benefiting from somewhat reduced factory cost, but mostly from the benefit of freight costs.
And increased.
<unk>.
Are the last of our higher prices as we've had we've reduced prices.
Corresponding with the with these rate decreases, but the last of the higher priced inventory.
West the higher costs are now rolling out.
So all of those combined with exiting some difficult businesses. This time last year, we were burdened with.
With the upside down cost structure of the business, which is which is why we chose to exit it.
So I think.
These margins were probably gross margins are probably a little bit high.
What we'll see going forward, but.
A more normal than they were this time last year.
Would it be fair to say that it's more a factor of pricing.
<unk> at this point.
Yes.
Perfect. That's very helpful. Thank you.
And then just looking downstream you've mentioned that orders are really starting to increase.
Downstream suppliers are still.
Walking through some of their inventory are you seeing that come to some sort of turning point just with the orders increasing or do you expect destocking to continue going forward.
Yes, we're actually.
Seeing some of that loosening up.
But it definitely has been a factor and it's continued to be a factor in that.
That situation seems to be a little different with each retailer. So it's not really it's hard to give a blanket answer one retailers dealing with this and another retailer may have bought differently during that time and so but overall, we definitely are feeling now a little bit looser environment with regards to <unk>.
Inventory for sure.
And I think the strong labor day sales are going to help us although I can't say that at this point because we are we will see that in the next few weeks.
Very helpful. Thank you and then just going back to.
Paul I think you mentioned about maintaining a strong balance sheet and how thats very important for you guys can you just talk about your comparability with.
Your current debt position and the revolver availability that you have.
Well.
This company has always managed the balance sheet pretty conservatively and I think it served us very well over the almost 100 year history of the company.
So it's a core value to try to maintain a strong balance sheet. We have at this point in 'twenty.
$27 million of availability on our revolver, we've got seven $7 million tied up above that we've got a $35 million revolver $7 million.
It is tied up in letters of credit.
But we've got 27 million available there we've got 20.
$2 million in debt.
So it's a pretty low level of debt I know this industry is pretty diverse, but I think still feeling comfortable with that level of debt, we've got $50 million in cash.
So.
I think that's a pretty comfortable level.
And.
Yeah.
So that's a pretty comfortable level, so, but we'd like to as we see the economy develop over this next year.
This year I think we're going to try to manage things cautiously and then.
Make our capital allocation decisions for next year as we see as.
As we see what happens to the remainder of this year and.
Always mentioned, we are in over 50 year history of paying our dividend as well right given.
Dividend yield is just under 4% right now we think it's important for me that the priority.
Understood one more for me if I could just from a modeling perspective.
Opex budgets running around four to five mill a quarter is that fair to extrapolate for the foreseeable the.
Excuse me for the remainder of 2023.
Capex for the remainder of this year is probably a $1 million.
In a normal year, our capex is probably five or six this one this year has been a little bit bigger with new showrooms with our ERP project.
So if youre modeling going forward I would probably put $6 million a year for capex.
That's all very helpful. Thank you for taking my questions.
Youre welcome. Thank you.
Thank you.
One moment for our next question.
We have a question from Budd <unk> from water Tower Research your line is open.
Thank you very much and thank you for taking my questions as well.
Congratulations I want to echo the congratulations on.
The way you have maintained your balance sheet and your financial condition and <unk> got to have been I think the most volatile time, we've ever seen in the industry maybe.
And society.
We appreciate that thank you.
Youre welcome and well deserved.
When I think about Hooker Hooker has the widest diversity of customers in terms of.
Geography.
Number of customers and the type of business model and I was wondering Jeremy if you could give us maybe.
Read on what Youre hearing from various levels of customers, who may be deep.
Then I know the majors have had a big are seem to have had a big problem. When the order book in <unk>. So what are you seeing.
As you look around the country and hearing from the retailers what is there what are they talking about.
No.
It's interesting, but it's a really good question, so what I've observed and things.
Things I've heard is.
It seems like the type of model.
Each customer is really flowing their inventories through has a lot to do with what position they've been in from an inventory standpoint. So.
The larger customers of course, they are bringing in containers. They are bringing in larger positions of inventory. So those are those are more difficult to just turn around quickly. So the model of container and case goods I would say has been the toughest model across our industry as you get into domestically.
Inventory positioned by manufacturers, where they can buy anything kind of one at a time that model has been less disrupted because.
You could fit you could actually get some orders into some places that didn't have the situation I. Just described which is typically probably more of a medium to smaller customer also interior designers and of course e-commerce than if you get into another segment, which is domestically made upholstery that again that was probable.
<unk> in my opinion, the most advantaged place to be throughout the situation, we've all been add.
For all the reasons I just stated from an inventory position, it's a lot of it custom order.
A lot of it's one at a time, so really the different models kind of in my opinion determined what type of position each retailer was in.
And going digging down on that and Labor day, which makes you may have heard and I realize its only anecdotal at this time. What are you are you hearing any differences in how the demand is coming back to these retailers and to the various classes of retailers and the health of the inventory as you mentioned I think that the inventory seems to.
Do you think <unk> seen the end of Destocking. So how are inventories at retail.
Among the majors, obviously cause.
Waller guys would offer as you said order one by one.
So when we hear really.
We believe theyre getting in a much better position, but I think labor day, and we're going to find out if that really put them over the.
Over that line of feeling better about ordering more products.
I think I think a lot of that has affected.
Producers overseas, Yes of course, it's been slow.
In my opinion, and it's just strictly my opinion I think that.
There will be some may be overreaction in lighting inventories get possibly too low and then there might be at okay. How do I get things quick enough and we may be in a little bit of a bottleneck towards the end of the year I don't know this by the way I'm just telling you what I think may happen.
We've seen it before in the industry, that's happening right right.
Sure.
When you look at sales on a comparable basis I realize we've got the AC H discontinuation and we've got some other things how does it look on a same kind of same base seems same location basis.
Segment by segment of our overall company.
So I want to make sure I understand your question.
Are you asking how how we will look across the different businesses now that ACTH and the clubs business and whatnot are gone.
I'm not looking at the future and looking at the at the quarter or year to date, how was it on that basis.
Taking out the discontinued operations are the things that you.
Initiatives that you are paring back.
I'm sure you look at it on a kind of a comparable basis as well as an overall consolidated basis.
Yes.
<unk> would've been $8 million to $10 million of that picture I don't have the exact number youre looking forward, but we'd be happy to jump on a call in fig figure that number out.
Back to you later.
That would be great.
And when you look at it.
You've talked about the destocking with the majors.
And the way you flow goods, you've got probably maybe the largest one of the larger import businesses as well. So what are you seeing.
Talked about I think.
Before youre going to try and move away from your sourcing from China, Obviously, that's a big issue in society and in the country. What are you seeing what's your progress on that and then what's the health of your suppliers.
In the Pacific rim.
We feel really good about the health of our suppliers overseas, we're less than 10% now in China.
As much as I believe.
I think we're around 35% at one point in China.
So we've made a significant reduction in that.
Also.
A major improvement for us that we haven't talked about is the number of factories, we used to deal with when we had the clubs business when we add et cetera X home at RTA I mean, just to give you an idea just eccentrics home at over 60 factories. So when you think about the people we have overseas, which is really pretty substantial team.
But then being able to focus on the number of factories. We have now which is we feel the correct number for our business and it is not spreading out our team because we have quality and other individuals that have to be in those factories. So as you do that you lose sight and focus on the things that actually matter, which is a big benefit to what we've done as well.
So Vietnam now the largest.
Supply countries, yes.
Okay.
Last for me would be <unk> any other actions you're contemplating here that you can talk about obviously, if you've got some that may affect people you probably can't talk about it but any other things strategically that you've seen do you think they need to be with <unk>.
No.
Nice thing about home Meridian at this point is it's just we need to grow and we're focused on growing Pulaski growing Samuel Lawrence.
Breakeven point for <unk> is such a different place now that's why we feel so confident about how we're going to do within that business for the future.
And I would've thought it would've been a real strong point during the quarter with what's going on in the country. So true.
Sorry, I missed the first part of your question I'm, sorry, I would say hospitality should've been wood.
I would think would have been very strong during the quarter.
Bright spot it was definitely a bright spot for US also the H contract, which is focused on senior living was another bright spot for us throughout the quarter.
Okay. Thank you very much.
I'm sorry again.
I'm, sorry, but the remaining cost reductions of those warehouse reductions that we've got planned we don't have any personnel related no actively say, we don't have any personnel related.
Feel really good about our overhead position and also the cost.
Next cost reductions I'll have to do with.
More space in Savannah.
Getting out of more space in Savannah to get to the 500000, we talked about and also we believe there is labor efficiency that will save us down there as well so but most of our cost reductions have been taken care of in our plan moving forward is just run as solid sustainable business that that is actually predictable we don't.
Have the surprises we've had to report in the past.
Okay.
So I would have thought one thing you did say is that the higher freight costs or is that out of the inventory now.
Has it impacted inventory it had to flow in there where you think all of those excess of container freight costs <unk>, Yes, I think through the summer we worked our way out of it by the end of the summer I think most of the excess costs were not.
Thank you well congratulations good luck on the next part of the year.
Thank you Bob we appreciate it.
One moment.
Our next question comes from Barry Haimes.
With Sage asset management your line is open.
Alright, thanks, very much I had a couple of questions first is could.
Could you give the backlog number at the end of the quarter and then what the comparison was a quarter ago and a year ago.
And in July the backlog was.
With $88 million.
Versus $201 million.
A year ago.
And what was it at the end of the first quarter.
We ended the first quarter it was.
$87 million.
Versus $2 82 of the prior year.
Got it. Thank you so much that's very helpful and then.
Just on <unk>.
The acquisition of certainly makes sense, but could you give us is it already close and if so what was the closing date and.
Could you give us the price that you pay for it.
It was mid June June 12.
And we paid $2 4 million.
It was a small acquisition.
Got it thanks, so much appreciate it.
Thank you.
Thank you.
And our last question comes from.
John Dacian with clinical value Fund your line is open.
Hi, good morning, Thanks for taking my questions.
Just back.
Back to <unk> for a second.
Can you share with us what the revenue run rate.
Was when you bought it.
When we bought it the revenue run rate was around $5 million.
It's been.
Yes.
Okay.
Yes.
Obviously you have.
Growth expectations for it.
<unk>.
How soon before that product line is integrated in terms of your sales force and distribution capabilities when will that be accomplished.
So it will be fully integrated with our sales force and distribution as of the October market coming up.
Okay.
When does that at the end of October .
Believe me.
Our third week of October Okay, alright good.
And what do you think that business is capable of 11, it's fully integrated.
What would the dream in terms of.
Revenue for that business.
We believe it will be a smaller brand for us on the top line. So.
<unk> 15 ish million is what we believe it can do fairly.
<unk>.
A couple of years two to three years, but the bottom line.
The margins and whatnot in those categories are different from kind of anything we do now. So it is it's somewhat impactful for us even at that volume level and supporting us.
Sales of our branded right. It helps us complete our more whole home picture and we can sell really the entire room and in many ways.
Yes, no. It makes total sense. So you would say the margin profile is better than the core business.
Correct, Okay fair enough.
Okay. Then one final question what were the orders for the quarter.
Sure.
$96 million.
Okay.
Alright.
Thanks, very much and good luck.
Thank you. Thank you.
Thank you I would now like to turn the conference over to Jeremy Hoff for closing remarks.
I would like to thank everyone on the call for their interest in Hooker furnishings, we look forward to sharing our fiscal 'twenty for third quarter results in December take care.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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Okay.
Okay.
Great.
Okay.
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