Q4 2024 Hooker Furnishings Corporation Earnings Call
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Operator: Hello, and thank you for standing by. Welcome to Hooker Furnishings Corp.'s fourth quarter 2024 earnings webcast. At this time, all participants are in a listen-only mode.
Hello, and thank you for standing by.
Speaker Change: Welcome to Hooker furnishings Corp, fourth quarter 2024 earnings webcast.
At this time all participants are in a listen only mode.
Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.
Speaker Change: After the speaker's presentation, there will be a question and answer session.
Speaker Change: I asked the question during the session you will need to press star one on your telephone.
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Paul A. Huckfeldt: To withdraw your question, please press star 11 again. I would now like to hand the conference over to Paul Huckfeldt. You may begin. Thank you to all. Good morning, and welcome to our quarterly conference call to review our financial results for the fiscal 2024 fourth quarter and full year, both of which ended on January 28th, 2024. Joining me this morning is Jeremy Hoff, our chief executive officer. We certainly appreciate your participation.
Speaker Change: To withdraw your question. Please press star one again.
Speaker Change: I would now like to hand, the conference over to Paul Farrell you may begin.
Paul Farrell: Thank you Tamara.
Paul Farrell: Good morning, and welcome to our quarterly conference call to review our financial results for the fiscal 2020 for fourth quarter and full year, both of which ended on January 28, 2020 for joining me. This morning is Jeremy Hoff, our Chief Executive Officer, We certainly appreciate your participation today.
Paul A. Huckfeldt: During our call, we may make forward-looking statements that 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 results. Any forward-looking statement speaks only as of today, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after today's call. This morning, we reported consolidated net sales of $433 million for the fiscal 2024 fiscal year, a decrease of $150 million, or 25.7 percent, as compared to last year. This decline can be attributed to industry-wide soft demand and the exit of unprofitable product lines in our home meridian segment, which accounted for about $21 million of the reduction in revenue.
Paul Farrell: 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 results.
Paul Farrell: Any forward looking statements speak only as the.
Paul Farrell: 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.
Paul Farrell: This morning, we reported consolidated net sales of $433 million for the fiscal 2020 for fiscal year, a decrease of $150 million or 25, 7% as compared to last year. This decline is attributed to its industry wide soft demand and the exit of unprofitable product lines in our home Meridian segment, which accounted for them.
$21 million of the reduction in revenue.
Paul A. Huckfeldt: Despite the sales decrease, profitability increased compared to the prior fiscal year due primarily to the absence of a $24 million inventory write-down in the current period in our home rating segment, as well as increased profitability in our Hooker branded segment. We recorded a consolidated operating income of $12.4 million and a net income of $10 million, or $0.91 per diluted share. For the fiscal 2024 fourth quarter, which began on October 30th, 23 and ended on January 28th, 2024, consolidating net sales decreased by 34 million, or 26 percent, to $96.8 million due to sales decreases in all three segments, also driven by soft demand for home furniture. We reported net income of $593,000, or $0.06 per diluted share, compared to a net loss of $17 million, or almost $18 million, or $1.60 per diluted share, in the prior year fourth quarter.
Paul Farrell: Despite the sales decrease profitability increased compared to the prior fiscal year due primarily to the absence of a 24 million inventory write down in the current period.
Paul Farrell: And our home Meridian segment as well as increased profitability in our hooker branded segment.
Paul Farrell: We recorded a consolidated operating income of $12 4 million and net income of $10 million or <unk> 91 per diluted share.
Paul Farrell: For the fiscal 2020 for fourth quarter, which began on October 32003 and ended on January 28, 2020 for consolidated net sales decreased by $34 million or 26% to.
Paul Farrell: To $96 8 million due to sales decreases in all three segments also driven by the soft demand for home furnishings, we reported net income of $593000 or <unk> <unk> per diluted share compared to a net loss of $17 million almost $18 million or $1 60 per diluted share in the prior year fourth quarter.
Jeremy R. Hoff: The fiscal 23 fourth-quarter loss resulted from a $24 million inventory write-down related to the unprofitable ACH product line and other excess inventories in the home meridian segment during that period. Now I'll turn the call over to Jeremy for comments on our fiscal 2024 full year and fourth-quarter results. Thank you, Paul, and good morning, everyone.
Paul Farrell: The fiscal 'twenty three fourth quarter loss resulted from the $24 million inventory write down.
Paul Farrell: Related to unprofitable ACB unprofitable ACTH product line and other excess inventories in the home Meridian segment during that period.
Paul Farrell: Now I will turn the call over to Jeremy Ford.
Comments on our fiscal 2020 for full year and fourth quarter results. Thank you Paul and good morning, everyone. During a challenging year. We are proud of our team's accomplishments and disciplined as they successfully restructured our HMS business model improved profitability and strengthened our balance sheet at the same time were reinforced.
Jeremy R. Hoff: During a challenging year, we are proud of our team's accomplishments and discipline as they successfully restructured our HMI business model, improved profitability, and strengthened our balance sheet. At the same time, we reinforced our belief in our strategic growth initiatives by continuing to make the necessary investments to fuel long-term expansion. While taking comprehensive steps this year to reposition HMI for sustainable profitability, we simultaneously executed an array of long-term growth initiatives, including the launch of the new M Modern Lifestyle brand, new showroom openings, a new enterprise resource planning operating system, and the acquisition of Bobo Intriguing Objects to enhance our ability to be a whole home furnishings resource. Despite difficult business conditions for the home furnishings industry and the 25.6% consolidated sales decrease, our operating income of $12.4 million and net income of $10 million, or $0.91 per diluted share for fiscal year, were significant improvements over the prior year, as Paul noted.
Belief in our strategic growth initiatives by continuing to make the necessary investments to fuel long term expansion.
Paul Farrell: Taking comprehensive steps this year to reposition HMA for sustainable profitability, we simultaneously executed an array of long term growth initiatives, including the launch of the new and modern lifestyle brand new showroom openings, a new enterprise resource planning operating system and the acquisition of Bobo intriguing objects to <unk>.
Paul Farrell: Hence our ability to be a whole home furnishings resource.
Paul Farrell: Despite difficult business conditions for the home furnishings industry and the 25, 6% consolidated sales decrease our operating income of $12 4 million and net income of $10 million or <unk> 91 per diluted share for fiscal year were significant improvements over the prior year as Paul noted during the year. We also stir.
Jeremy R. Hoff: During the year, we also strengthened our financial position and balance sheet, increasing cash by $24 million to over $43 million at year-end, and adjusted our inventory levels to align with demand, resulting in a $35 million, or 36 percent, reduction, including the successful liquidation of HMI's obsolete inventory. Fiscal 24 was a pivotal year for us as we move forward from the initial COVID crisis, but still feel some of the effects. Since 2020, we have navigated through some of the most volatile macroeconomic conditions in our 100-year history.
Paul Farrell: And our financial position and balance sheet, increasing cash by $24 million to over $43 million at year end and adjusted our inventory levels to align with demand, resulting in a $35 million or 36% reduction, including the successful liquidation of <unk> obsolete inventories.
Paul Farrell: <unk> 24 was a pivotal year for us as we move forward from the initial COVID-19 crisis, but still feel some of the effects.
Paul Farrell: Since 2020, we have navigated through some of the most volatile macroeconomic conditions of our 100 year history. The severe initial downturn of the pandemic followed by a demand surge for home furnishings supply chain disruptions inventory unavailability historically high ocean freight costs significant inflation higher interest rates a slug.
Jeremy R. Hoff: The severe initial downturn of the pandemic, followed by a demand surge for home furnishings, supply chain disruptions, inventory unavailability, historically high ocean freight costs, significant inflation, higher interest rates, a sluggish housing market, and a temporary shift in discretionary spending away from home furnishings. Against the backdrop of these disruptions and recent weak industry-wide demand, we've strengthened our financial position, made strategic investments to expand our addressable market, and continued our over 50-year history of dividend payments, including our eighth consecutive annual dividend increase. We are also excited to announce changes to our organization, which we believe will ideally position us for growth into the future. We have consolidated merchandising for our legacy brands under a chief creative officer designed to drive creative excellence and deliver a more integrated and aspirational presentation in our approach to the market.
Paul Farrell: I wish housing market and a temporary shift in discretionary spending away from home furnishings against the backdrop of these disruptions and recent weak industry wide demand, we've strengthened our financial position made strategic investments to expand our addressable market and continued our over 50 year history of dividend payments, including our eighth consecutive annual.
Paul Farrell: Dividend increase we are also excited to announce changes to our organization, which we believe will ideally position us for growth into the future. We've consolidated merchandising for our legacy brands under a chief Creative officer designed to drive creative excellence and delivering more integrated and aspirational presentation in our approach to the market.
Jeremy R. Hoff: This move is expected to position Hooker as a whole-home, consumer-centric resource for its customers, drive synergies among our brands, and ultimately drive increased sales and earnings when demand returns. As we celebrate our 100th year of business, the adaptability that has been integral to our culture since 1924 continues to be vital to our success today and will drive us forward as we start our next century. Now I want to turn the discussion over to Paul, who will discuss the highlights in each of our segments. Thank you, Jeremy.
This move is expected to position Hooker has a whole home consumer centric resource to its customers drive synergies among our brands and ultimately drive increased sales and earnings when demand returns as we celebrate our 100th year of business. The adaptability thats been integral to our culture since $19 24.
Paul Farrell: Continues to be vital to our success today and will drive us forward as we start the next century now I want to turn the discussion over to Paul who will discuss highlights in each of our segments. Thank you Jeremy.
Paul A. Huckfeldt: The Hooker branded segment decreased net sales by $49 million, or 24% compared to the prior fiscal year, primarily due to soft demand for home furniture. This decrease was further amplified by strong sales in the prior year driven by the surge in demand after the initial COVID crisis and fulfillment of historically high backlog carried over from fiscal 2020. Despite the sales decrease, gross margins increased significantly due to the combination of reduced ocean freight costs and the lingering impact of price increases implemented in the prior year. For fiscal 24, Hooker Branded achieved $16.8 million in operating income with a 10.8% operating margin, compared to $22 million and a 10.7% operating margin last year. For the fiscal 24 fourth quarter, net sales decreased by 14 million, or 27 percent, compared to the prior year fourth quarter.
Paul Farrell: The Hooker branded segment increased net sales by 49 days sales decreased by $49 million or 24% compared to the prior fiscal year, primarily due to soft demand for home furnishings.
Paul Farrell: This decrease was further amplified by strong sales in the prior year driven by the surge in demand after the initial COVID-19 crisis and fulfillment of historically high backlog carried over from fiscal 2022.
Paul Farrell: Despite the sales decrease gross margins increased significantly due to the combination of reduced ocean freight cost and the lingering impact of price increases implemented in the prior year for fiscal 'twenty for Hooker branded achieved $16 8 million of operating income with a 10, 8% operating margin compared to $22 million and a $10 <unk>.
Paul Farrell: 7% operating margin last year.
For the fiscal 'twenty, four fourth quarter, net sales decreased by $14 million or 27% compared to the prior year fourth quarter, while the incoming orders remained flat compared to last year's fourth quarter. The backlog was 25% lower than the previous year, and but remains 40, 40% higher than the fiscal 2020 year end.
Paul A. Huckfeldt: While incoming orders remained flat compared to last year's fourth quarter, the backlog was 25 percent lower than the previous year end, but remains 40 percent higher than the fiscal 2020 year end. In April 2023, we relocated and expanded our High Point showroom to create a wider audience for our Hooker Legacy and Sunset West product lines, while opening two smaller showrooms in Las Vegas and Atlanta. We set attendance records at both the spring and fall high point markets with year-over-year increases of 92% and 86%, respectively. The collective impact of our new showrooms in these markets has more than quadrupled our customer contacts annually, which we believe will begin to show substantial benefits as furniture demand improves. Moving to our Home Meridian segment, segment net sales decreased by $73 million, or 34 percent, compared to the prior fiscal year, due primarily to soft demand for home furnishings, which resulted in reduced sales across all channels, including traditional furniture chains, mass merchants, and e-commerce.
Paul Farrell: Sure.
Paul Farrell: In April 2023, we relocated and expanded our high point showroom to create a wider audience for our hooker legacy and Sunset West product lines, while opening two smaller showrooms in Las Vegas, and Atlanta, We set record attendance records at both the spring and fall Highpoint markets with year over increases year over year increases of nine.
Paul Farrell: Andy to an 86% respectively.
Paul Farrell: The collective impact of our new showrooms in these markets has more than quadrupled our customer contacts annually, which we believe will begin to show substantial benefits as furniture demand improves.
Paul Farrell: Moving to our home Meridian segment segment sale net sales decreased by $73 million or 34% compared to the prior fiscal year due primarily to soft demand for home furnishings, which resulted in reduced sales across all channels, including traditional furniture chains mass merchants and e-commerce.
Paul Farrell: Additionally, the exit of unprofitable businesses accounted for about 26% of the sales decrease within the segment.
Paul A. Huckfeldt: Additionally, the exit of unprofitable businesses accounted for about 26% of the sales decrease within the segment. On a positive note, Samuel Lawrence Hospitality achieved robust sales growth with a 38% increase thanks to a strong rebound in the hospitality industry, despite reduced revenue and gross profit. Gross profit was $24 million compared to a gross loss of $2.6 million in the prior year.
Paul Farrell: On a positive note Samuel Lawrence hospitality achieved robust sales growth with a 38% increase thanks to a strong rebound in the hospitality industry.
Paul Farrell: Despite reduced revenue and gross profit.
Paul Farrell: Gross profit was $24 million compared to a gross gross loss of $2 6 million in the prior year.
Paul Farrell: This significant improvement was primarily due to the absence of a $24 million write down of inventories and other excess inventory.
Paul A. Huckfeldt: This significant improvement was primarily due to the absence of a $24 million write-down of ACH inventories and other excess inventories. The company made significant progress in restructuring HMI to focus on its core business and product lines, allowing the segment to achieve profitability in the third quarter for the first time since calendar 2021 and to improve fiscal year gross profit, setting it on a path to Sustained Profitability. The segment reported an operating loss of $5.5 million, or 3.9%, a $31.7 million improvement from the prior year and part of a trend of reduced losses over the last few years, which we believe will result in a return to profitability for the segment. For the fiscal 24 fourth quarter, net sales decreased by $15 million, or 35% compared to the prior year fourth quarter.
Paul Farrell: The company made significant progress in restructuring <unk> to focus on its core business and product lines, allowing the segment to achieve profitability in the third quarter for the first time since calendar 2021.
Paul Farrell: And to improved fiscal year fiscal year gross profit setting it on a path.
Paul Farrell: To sustained profitability.
Paul Farrell: The segment reported an operating loss of $5 5 million or three 9%, a $31 $7 million improvement from the prior year and part of a trend of reduced losses over the last few years, which we believe will result in a return to profitability for the segment.
Paul Farrell: For the fiscal 'twenty, four fourth quarter, net sales decreased by $15 million or <unk>, 35% compared to the prior year fourth quarter.
Paul Farrell: Incoming orders at HMA outpaced all segments, increasing by over $74 million more than doubling compared to the prior year.
Paul Farrell: This rising demand as an affirmation of <unk> efforts to strengthen product offerings and focus on core profitable businesses, such as plastic EPRI and SL H.
Paul Farrell: To a lesser extent the absence of order cancellations from exited businesses in the current year impacted the order improvement at Hsni.
Paul A. Huckfeldt: Incoming orders at HMI outpaced all segments, increasing by over 74 million, more than doubling compared to the prior year. This rising demand is an affirmation of HMI's efforts to strengthen product offerings and focus on core profitable businesses such as Pulaski, PRI, and SLA. To a lesser extent, the absence of order cancellations from exited businesses in the current year impacted the order improvement at HMI. The year-end backlog was 16% lower than the previous year-end, but it increased by 30% compared to the fiscal 2024 third quarter end. And since the end of the year, we've seen the backlog grow by about another $15 million. Moving to domestic upholstery, the domestic upholstery segment's net sales decreased by $30 million, or 19%, compared to the all-time record sales this segment achieved in the prior fiscal year, which resulted from the fulfillment of historically high order backlogs. All four divisions experienced sales decreases driven by reduced demand for home furniture.
Paul Farrell: The year end backlog was 16% lower than the previous year, and but 30, but increased by 30% compared to the fiscal 2024 third quarter end.
Paul Farrell: And since the end of the year, we've seen the backlog grow by about another $15 million.
Paul Farrell: Moving to domestic upholstery.
Paul Farrell: Domestic upholstery segment net sales decreased by $30 million or 19% compared to the all time record sales. This segment achieved in the prior fiscal year, which resulted from the fulfillment of historically high order backlogs.
Paul Farrell: All four divisions experienced sales decreases driven by reduced demand for home furnishings.
Paul Farrell: But gross profit and margin decreased both gross profit and margins decreased due to a combination of decreased net sales and under absorbed overhead when operating at reduced production levels during the year.
Paul Farrell: On a more positive note all four divisions benefitted from a more stable raw material costs.
Paul Farrell: For the fiscal 2024 fourth quarter net sales decreased by about $5 5 million or 16% compared to the prior year fourth quarter.
Paul A. Huckfeldt: But gross profit and margin decreased. Both gross profit and margin decreased due to a combination of decreased net sales and under-absorbed overhead when operating at reduced production levels during the year. On a more positive note, all four divisions benefited from more stable raw material costs. For the fiscal 2024 fourth quarter, net sales decreased by about five and a half million, or 16% compared to the prior year fourth quarter. However, incoming orders increased across all four divisions in Fiscal 24. The year-end order backlog was 36% lower than the prior year-end.
Paul Farrell: Incoming orders increased across all four divisions in fiscal 'twenty for the.
Paul Farrell: The year end order backlog was 36% lower than the prior year end.
Paul Farrell: Domestic upholstery backlog remains 7% higher than the fiscal 2020 year end, excluding sunset West which was acquired on the first day of the company's 2023 fiscal year.
Paul Farrell: Moving to the balance sheet.
Paul Farrell: Cash and cash equivalents stood at $43 2 million at the fiscal 'twenty for year end, an increase of $24 million from the prior year end inventory levels decreased by $35 million from the prior year end due to adjusted inventory planning based on current demand and our business structure.
Paul Farrell: During fiscal 'twenty for $55 million of cash generated from these operating activities funded $11 $7 million of share repurchases $9 7 million of cash dividends of $6 8 million in capital expenditures, including investments in the new high point, Atlanta, and Las Vegas showrooms.
Paul A. Huckfeldt: The domestic upholstery backlog remains 7% higher than the fiscal 2020 year-end, excluding Sunset West, which was acquired on the first day of the company's 2023 fiscal year. Moving to the balance sheet, cash and cash equivalents stood at $43.2 million at the fiscal 24-year end, an increase of $24 million from the prior year end.
Paul Farrell: $5 million for four implement continued implementation of our ERP system.
Paul Farrell: $2 8 million of principal and interest payments on our term loan and $2 4 million for the <unk> acquisition.
We completed the share repurchase program, which began in the second quarter of last fiscal year spending a total of $25 million to purchase and retire one 4 million shares of our common stock.
Paul A. Huckfeldt: Inventory levels decreased by $35 million from the prior year end due to adjusted inventory planning based on current demand and our business structure. During fiscal 24, $55 million of cash generated from these operating activities funded $11.7 million of share repurchases, and $9.7 million of cash dividends. $6.8 million in capital expenditures, including investments in the new High Point Atlanta and Las Vegas showrooms, and $5 million for the continued implementation of our ERP system. $2.8 million in principal and interest payments on our term loans and $2.4 million for the BOBO Act.
Paul Farrell: In addition to our cash balances, we have an aggregate of $28 3 million available under our available under our existing line of credit and $28 $5 million of cash surrender value of company owned life insurance.
Paul Farrell: Aligning our inventories with current demand has contributed to the increase in cash during the year and we have disciplines in place to help prevent future inventory spike.
Paul Farrell: Our capital allocation priorities right now are continuing to invest in organic growth and strategic initiatives.
Paul Farrell: And maintain a strong balance sheet until the demand environment improves while continuing to pay a meaningful dividend, which we've paid for 53 consecutive years.
Jeremy R. Hoff: We completed the share repurchase program, which began in the second quarter of last fiscal year, spending a total of $25 million to purchase and retire 1.4 million shares of our common stock. In addition to our cash balances, we have an aggregate $28.3 million available under our existing line of credit and $28.5 million of cash surrender value of company-owned life insurance. Aligning our inventories with current demand has contributed to the increase in cash during the year, and we have disciplines in place to help prevent future inventory spikes. Our capital allocation priorities right now are continuing to invest in organic growth and strategic initiatives and maintain a strong balance sheet until the demand environment improves while continuing to pay a meaningful dividend, which we've paid for 53 consecutive years. Now I'll turn the discussion back to Jeremy for his outline. Thank you, Paul. Home furnishings industry demand is exceptionally soft, and about two and a half months into the new fiscal year, year-to-date consolidated orders are down in the mid-single digits as compared to the same prior year period.
Paul Farrell: Now I will turn the discussion back to Jeremy for his outlook.
Jeremy: Thank you Paul home furnishings industry demand is exceptionally soft in about two and a half months into the new fiscal year year to date consolidated orders are down in the mid single digits as compared to the same prior year period. However, we believe the investments and improvements we made in the past year will be a springboard to higher <unk>.
Jeremy: <unk> ability, especially as demand improves economic indicators are mixed giving us a cautiously optimistic outlook home furnishings industry demand is soft and consumer confidence ticked down recently after several months of improvement indices measuring consumers assessments about the current situation and future expectations.
Jeremy: Worsened over the last month, despite what appear to be encouraging signs, including easing inflation inflation and likely interest rate cuts. However, there are some positives as well we're encouraged by recent strong growth in building permits and single family housing starts recent decreases in mortgage interest rates continuing positive.
Jeremy R. Hoff: However, we believe the investments and improvements we made in the past year will be a springboard to higher profitability, especially as demand improves. Economic indicators are mixed, giving us a cautiously optimistic outlook. Home furnishings industry demand is soft, and consumer confidence ticked down recently after several months of improvement.
Jeremy: Employment data and the stock market strong performance, our consolidated order backlog has increased from $72 million to about $85 million since the end of fiscal 'twenty. Four we're confident we've made the right strategic investments in sales channels people systems and products and that we are positioned to grow as the economy gains momentum.
Jeremy R. Hoff: Indices measuring consumers' assessments of both the current situation and future expectations worsened over the last month, despite what appear to be encouraging signs, including easing inflation and likely interest rate cuts. However, there are some positives as well. We're encouraged by recent strong growth in building permits and single-family housing starts, recent decreases in mortgage interest rates, continuing positive employment data, and the stock market's strong performance. Our consolidated order backlog has increased from $72 million to about $85 million since the end of fiscal 24.
Jeremy: Going forward, we intend to use the strength of our balance sheet and variable cost model to weather current economic volatility until consumer confidence improves and demand normalizes. We are looking forward to the spring high point market that opens this week and expect strong attendance as we offer an exciting assortment of new products across divisions at the market.
Jeremy: We are kicking off a year long celebration to chronicle, our 100 year history of design leadership culture and legacy of given as we prepare to embark on our 100 year. We're privileged to celebrate this incredible milestone with our employees our partners and our communities and 24 2024, we will honor our.
Jeremy R. Hoff: We are confident we've made the right strategic investments in sales channels, people, systems, and products and that we are positioned to grow as the economy gains momentum. Going forward, we intend to use the strength of our balance sheet and variable cost model to weather current economic volatility until consumer confidence improves and demand normalizes. We are looking forward to the Spring High Point Market that opens this week and expect strong attendance as we offer an exciting assortment of new products across divisions. Additionally, at the market, we are kicking off a year-long celebration to chronicle our 100-year history of design leadership, culture, and legacy of giving. As we prepare to embark on our 100th year, we are privileged to celebrate this incredible milestone with our employees, our partners, and our communities.
Jeremy: <unk> with a variety of activities, none more important and knows the demonstrated heritage centered around enhancing the lives of the people we touch throughout the years, our team has put integrity and our philanthropic culture at the forefront of everything we do so it's appropriate that as the cornerstone of our 100 year anniversary celebration. The company is launching a.
Jeremy: Signature philanthropic program 100 acts of kindness designed to amplify our spirit of given in an even more meaningful way during our centennial year. The nationwide program aims to further enhance the lives of those needs broadening our reach to communities across the U S. This ends the formal part of our discussion and at this.
Jeremy R. Hoff: In 2024, we will honor our anniversary with a variety of activities, none more important than those that demonstrate a heritage centered around enhancing the lives of the people we touch. Throughout the years, our team has put integrity and our philanthropic culture at the forefront of everything we do. So it's appropriate that as the cornerstone of our 100th year anniversary celebration, the company is launching a signature philanthropic program, 100 Acts of Kindness, designed to amplify our spirit of giving in an even more meaningful way during our centennial year. The nationwide program aims to further enhance the lives of those in need, broadening our reach to communities across the U.S.
Jeremy: Time, I will turn the call back over to our operator, operator to Wanda for questions. Thank you.
Jeremy: You.
Operator: Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and wait to hear your name announced.
Operator: Withdraw your question. Please press star one again please.
Operator: Please standby, while we compile the Q&A roster.
Wanda: Our first question comes from the line of Anthony <unk> with Sidoti Your line is open.
Anthony: Good morning, and thank you for taking the questions. So first congratulations on your 100th anniversary.
Certainly nice to see the improved balance sheet as well. So so Jeremy as you said, it's been a crazy last few years.
Operator: This ends the formal part of our discussion, and at this time, I will turn the call back over to our operator, Tawanda, for questions. Thank you. Ladies and gentlemen, as a reminder to ask a question, please press star 1-1 on your telephone and then wait to hear your name announced. To withdraw your question, please press star 1 once again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Anthony Lebiedzinski with Sidoti.
Anthony: For sure since Covid, So I guess, maybe just to kick things off for the fourth quarter can you just talk maybe about unit volumes versus pricing.
Anthony: Certainly pricing went up your <unk> bank came down so just wanted to get a better frame framework as far as just overall top line.
Anthony: Happen with unit volumes and pricing during the fourth quarter, then I have a couple of other questions as well.
Anthony Chester Lebiedzinski: Your line is open, and thank you for taking the questions. So first, congratulations on your 100th anniversary. And it's certainly nice to see the improved balance sheet as well. Jeremy, as you said, it's been a crazy last few years, for sure, since COVID.
Speaker Change: Yes, Anthony just one moment. Please we are working on it.
Speaker Change: Got you okay.
Speaker Change: I appreciate your comments on the 100 year end.
Speaker Change: The few years that we've had thank you.
Yeah.
Speaker Change: Well, you'll see it you'll see the details in the in the K, which we'll file.
Operator: So I guess maybe just to kick things off, for the fourth quarter, can you just talk maybe about unit volumes versus pricing? Certainly, pricing went up during COVID and then came down. So I just wanted to get a better framework as far as just the overall top line and what happened with unit volumes and pricing during the fourth quarter. Then I have a couple of other questions as well. Yeah, Anthony. Just one moment, please.
I Hope tomorrow morning, or by mid day Tomorrow, but generally.
Speaker Change: Unit.
That volume is down pricing is pricing is down a little bit.
Speaker Change: Particularly.
Speaker Change: Particularly in our <unk> and HMA pricing is down a little bit but.
Speaker Change: It's mostly unit volume that's down at this point.
Speaker Change: Sure.
Speaker Change: Okay. Thanks I'll take.
Speaker Change: Go ahead sorry.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: I was going to say that ill look at the 10-K, when it's filed for the details but go ahead Jeremy.
Operator: We're working on it. Gotcha, okay. Appreciate your comments on the 100th year and the few years we've had.
Jeremy: That's perfect. That's what we should do think your unit volumes are down about twentyish percent yet.
Jeremy R. Hoff: Well, you'll see the details in the K, which we'll follow. I hope tomorrow morning or by midday tomorrow, but generally... its unit volume is down, pricing is down a little bit, particularly in HMI, but.
Jeremy: Got you got it okay, alright, thanks for that color and then.
Jeremy: So overall, a nice improvement in the gross margin certainly significantly above versus last year.
Jeremy: Certainly.
Jeremy R. Hoff: It's mostly unit volume that's down. Yeah, I see. Okay, thanks. Yeah, I'll take it. Go ahead, sorry.
Jeremy: It is down from the third quarter when you had.
Jeremy: So some LIFO benefit I believe but then.
Anthony Chester Lebiedzinski: I was going to say that I'll look at the 10K when it's filed for the details, but go ahead, Jeremy. No, that's perfect. That's what we should do. Thank you. Unit volumes are down about 20-ish percent, a nice improvement in the gross margin, certainly significantly above versus last year. Certainly, you know, it is down from the third quarter when you had some LIFO benefit, I believe.
Jeremy: Just looking forward I guess, given the various puts and takes in the business. How should we think about your available availability I'm sorry, your ability to sustain the gross margins.
Jeremy: I think during the during the quarter, we had we had some ups and downs, but I think.
Jeremy: Fourth quarter gross margin is probably indicative of what we should sustain going forward.
Jeremy R. Hoff: But then, just looking forward, I guess, you know, given the various puts and takes in the business, how should we think about your availability, I'm sorry, your ability to sustain these gross margins? I think, you know, during the quarter, we had some ups and downs, but I think... Fourth quarter gross margin is probably indicative of what we should sustain going forward. That's very helpful. Okay, great. Okay, I got it.
That's very helpful. Okay great.
Jeremy: County.
Speaker Change: Okay got it Okay and then so.
Speaker Change: So.
Speaker Change: You guys talked about seeing so far in this fiscal year.
Speaker Change: You're already two five months into the U S.
First fiscal quarter here, you said, you're down mid single digits in terms of orders.
Speaker Change: So how should we think about this in terms of revenue for the quarter or anything you can eat dementia.
Anthony Chester Lebiedzinski: Okay. And then, you guys talked about what you've seen so far in this fiscal year, you're already two and a half months into the new first fiscal quarter here, and you say you're down mid single digits in terms of orders. So how should we think about this in terms of revenue for the quarter or anything you can mention? I know sometimes there's a lag between orders and when that translates into revenue. So maybe you can help us to square that away?
Speaker Change: I know, sometimes there is a lag between orders and when that translates into revenue. So maybe can you help us square that away.
Speaker Change: Think about that from a revenue perspective.
Speaker Change: I think Anthony from a revenue perspective being that we went into the first quarter from the fourth quarter with lower backlogs.
Jeremy R. Hoff: How should we think about that from a revenue perspective? I think, Anthony, from a revenue perspective, being that we went into the first quarter from the fourth quarter with a lower backlog. We see a fairly conservative view on that, but we're encouraged by the increased order rate that is building our backlog. I believe I mentioned the number. It's up around $15 million from the same time last year. We're encouraged by that, but that really didn't hit us until partway through the first quarter, which is probably going to impact the first quarter more from a revenue standpoint. Then we'll continue improvement in the second. A lot of that is in Home Meridian, which typically has a little bit longer order-to-ship cycle. It's going to push it out.
Speaker Change: We see a fairly conservative view on that but we.
Anthony: We are encouraged by the increased order rate that is building our backlog I believe I mentioned, a number around its up around $15 million same time lag from same time last year. So we're encouraged by that but it didn't hit that really didn't hit us.
Anthony: Until partway through the first quarter, which is probably going to impact first quarter more from a revenue standpoint, and then we will we will continue improvement in the second.
Anthony: And some of them a lot of that's it's at home Meridian, which which typically has a little bit longer order to shipment cycle. So it is going to be it's going to push it down.
Anthony Chester Lebiedzinski: Okay, that's very helpful, Collar. And then, um... As far as the upcoming market here, you talked about some of the new products that you're introducing. Jeremy, are there any particular product collections or anything that you're excited about to showcase at the market? Um, you know, I was in both showrooms yesterday and, um... We really have.
Anthony: Okay.
Speaker Change: That's very helpful color.
Speaker Change: And then.
Speaker Change: As far as the.
Speaker Change: The upcoming market here, you talked about some of the new products that you.
Speaker Change: We're introducing Jeremy or are there any particular.
Speaker Change: Product collections or do you think that youre excited about with the showcase at market.
Jeremy: I was in the both showrooms yesterday.
Jeremy R. Hoff: Really good introductions on really all sides of the business. I will say, as far as improvement is concerned, just because of where we've been before, HMI continues to gain momentum with their new products, and, you know, as Pulaski has definitely been leading, they really, in my opinion, were able to get started earlier in their improvement on the product side. PRI and Samuel Lawrence continue to gain momentum, and, you know, whenever you fall into the place we did from a lack of focus, we had a lot of other businesses we needed to get out of. Whenever you go through that, you know, it takes a lot of time, you can't just improve something in a market or two, you know, and get something back.
We have really.
Jeremy: Really good introductions.
Jeremy: Really both sides of the business I will say.
Jeremy: As far as improvement just because of where we've been where we've been before <unk> continues to gain momentum with their new products and as we <unk> has been definitely.
Jeremy: Leading they really in my opinion, we're able to get started earlier in their improvement on the product side.
Jeremy: And Samuel Lawrence continue to gain momentum.
Jeremy: Whenever you fall into the place we did from a I'll call. It a lack of focus and we had a lot of other businesses, we need to get out of whenever you go through that.
Jeremy: You can't just improve something in a market or two I.
Jeremy R. Hoff: But Samuel Lawrence is definitely, you know, on their way back, and we're seeing that in a lot of ways, but, you know, our partners that we speak with and that are giving us commitments and placements, they are giving us that feedback, which is, candidly, where I'm getting it, right? So I'm very encouraged by their improvements and where they're headed. Gotcha.
Jeremy: Get something back, but Samuel Lawrence is definitely.
Jeremy: On their way back and we're seeing that in a lot of ways, but.
Jeremy: Our partners that we speak with the net are given us commitments in placements.
Jeremy: They are they are giving us that feedback, which candidly is where I'm getting it right.
Jeremy: I am very encouraged by.
Jeremy: They are improvements and where they're headed.
Anthony Chester Lebiedzinski: And the last question before I pass it on to others here: Can you expand on the recent management changes in terms of your merchandising functions? Are there also benefits that you expect, maybe from an expense standpoint, as you look to consolidate your merchandising strategy? Just overall, just wondering, Jeremy, if you could provide additional color on that. That'd be helpful.
Speaker Change: Got you got it and then the last question before I'll pass it onto others. So.
Jeremy: Can you.
Jeremy: And on the recent management changes in terms of your merchandising functions.
Jeremy: Are there also.
I'll take that spot maybe from an expense.
Jeremy: Standpoint.
Jeremy: Look to consolidate your merchandising strategy just overall if you just wondering Jeremy if you could provide additional color on that that'd be helpful. Thank you well I'll start with the latter part of your question, we Didnt do it to save money, we did it to invest in what we'll call the most profitable side of our business.
Jeremy R. Hoff: Thank you. Well, I'll start with the latter part of your question. We didn't do it to save money.
Jeremy R. Hoff: We did it to invest in what we'll call the most profitable side of our business. And if you go back to early 2000, when we started to purchase, we had the purchase of BY, Bradenstine, and then we had the purchase of Sam Moore. Later on, of course, HMI and Shenandoah.
Jeremy: And if you go back to early 2000.
Speaker Change: When we started to purchase we had the purchase of <unk>, Brian and then we had the purchase of Sam Moore.
Jeremy R. Hoff: But as you look at that legacy model, with really everything in the showplace building, you have Hooker Case Goods, Hooker Upholstery, HF Custom, M, and Bradenton Young, and then Sunset West, and Bobo, and Interesting Objects, which is a lot. The way things are bought, sold, and viewed today, and with our capabilities to be a whole home resource, it made sense for us to create a chief creative officer position in order to get the different companies throughout Legacy aligned so that we can truly become a whole home resource. If you picture, you know, these different talented groups working together but not really having an ability to work across those different lines, that's, you know, limiting our ability to grow if we don't figure out a way to really head in the same direction aesthetically and really move in a more powerful way together, becoming a marketing company. I got it. All right. That makes a lot of sense.
Speaker Change: Later on of course, <unk> and Shenandoah, but as you as you look at that legacy model with really in the show place building you have hooker case goods Hooker upholstery.
Jeff custom.
Speaker Change: And Brad it's in young and incense at West Bobo intriguing objects, which is a lot you really.
Speaker Change: Hey, things are bought and sold.
Speaker Change: <unk> today, and with our capabilities to be a whole home resource it made sense for us to create a chief creative officer position in order to get.
Speaker Change: Get the different companies throughout legacy aligned so that we can truly become a whole home resource if you picture.
Speaker Change: These different talented groups working together, but not really have an ability to work across those different lines.
Speaker Change: That's eliminating our ability to grow if we don't figure out a way to really had the same direction aesthetically and really move in a more powerful way together.
Becoming.
Speaker Change: Marketing company, yes.
Anthony Chester Lebiedzinski: All right. Well, thank you very much. Best of luck. I'll pass it on to others. Thank you, Anthony. Please stand by for our next question. Our next question comes from the line of Dave Storms with Stone Gate. Your line is open. More in a minute. Good morning, Dave.
Got it that makes a lot of sense all right well. Thank you very much best of luck.
I'll pass it onto others.
Speaker Change: Thank you Anthony.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from the line of Dave storms with Stonegate. Your line is open.
David Joseph Storms: Good morning.
David Joseph Storms: Just hoping we can start. Great to see the inventory work you all have been able to do. How should we think about that going forward and any impact that might have on working capital? Assuming this market starts to rebound in the short to medium term, could we expect to see an inventory build at that point? We, yes, we, you know, we'll need to fund growth, but I think it's going to be pretty modest. Frankly, you know, the whole COVID disruption caused inventory spikes.
David Joseph Storms: Good morning, guys good morning.
David Joseph Storms: Good morning, just hoping we could start great to see.
David Joseph Storms: The inventory, where you all have been able to do.
David Joseph Storms: How should we think about that going forward and any impact that might have on working capital.
David Joseph Storms: Assuming this market starts to rebound.
David Joseph Storms: In the short to medium term.
David Joseph Storms: We expect to see an inventory build at that point.
Speaker Change: Yes, we'll need to fund will need to fund growth, but I think it's going to be pretty modest.
Speaker Change: Frankly, the whole COVID-19 disruption caused inventory spikes and we since then we've put processes in place to much better manage the inventories across the whole company.
Paul A. Huckfeldt: And since then, we've put processes in place to much better manage the inventories across the whole company. So, yes, I mean, obviously, if sales go up, we'll need more inventory, but I think it's going to be a pretty modest inventory build. But also, more specifically, we really didn't have the inventory issues on the Hooker side of our business. And we had the SOP process, the controls that Paul just spoke of, those were already in place on the Hooker side of our business.
So yes, I mean, obviously as sales go up we will need more inventory, but I think it's going to be a pretty modest inventory build but also more specifically, we really didn't have the inventory issues on the hooker side of our business and we had the <unk> process. The controls that Paul just spoke of those were already on the hooker side of our business and we simply expanded those <unk>.
Paul A. Huckfeldt: And we simply expanded those controls over the HMI companies as well, which is why we believe we're in a really good position from an inventory standpoint. And also, getting out of the ACH business; that was the only really inventory-intensive business in the home meridian segment. And so we're out of that business completely. So I would not expect significant fluctuations in inventory. So that's very helpful. And then, just from a supply chain view, what are you seeing in terms of shipping? Have you seen any disruptions with some of the geopolitical stuff going on around the Red Sea?
Speaker Change: Trolls over the <unk> companies as well, which is why we believe we're in a really good position from an inventory and also getting out of the <unk> business that was the that was the only really inventory intensive business in the home Meridian segment right and so we are out of that business completely. So so I wouldn't I would not expect significant fluctuations in inventory.
Speaker Change: Understood. That's very helpful. And then just from a more supply chain.
Speaker Change: What are you seeing in terms of shifting are you seeing any disruptions.
Speaker Change: The geopolitical stuff going on around the wed see any issues with sourcing our capacity just kind of an overall feeling of.
David Joseph Storms: Any issues with sourcing or capacity? Just kind of an overall feeling of where that's at. From a shipping standpoint, from an ocean freight standpoint, I think we saw some delays when shipping lines went around the heart of Africa instead of going through the canals, which added a little bit of cost.
Speaker Change: Where that stands.
Speaker Change: From a shipping from an ocean freight standpoint, I think we saw some delays.
Speaker Change: Shipping lines went around the horn of Africa, instead of going through the canal.
Speaker Change: <unk> added a little bit of cost I don't think anything really appreciable that seems to be pretty stable right now.
Paul A. Huckfeldt: I don't think anything really appreciable. It seems to be pretty stable right now. Supply chains are, I think, in pretty good shape. This downturn, obviously, factories need work, too, so I think we've actually seen an improvement in some delivery times. They do seem to have a lot of capacity should something pique your interest from an acquisition standpoint. Do you have a sense of what any ideal acquisition targets would look like, or are you just more focused? of what you already have in.
Speaker Change: Supply chains are I think in pretty good shape.
This downturn, obviously factories need work too so.
Speaker Change: I think we've actually seen an improvement in some delivery times.
Speaker Change: That's perfect. Thank you and then just one more I know you laid out your capital allocation priorities.
Speaker Change: You do seem to have a lot of capacity should something feature interest from an acquisition standpoint.
Speaker Change: Do you have a sense of what any ideal acquisition targets would look like are you just more focused on what you already have in house.
David Joseph Storms: So the key word for us right now is what you said, which is focus. We actually are going to treat several of our businesses like they are new acquisitions at this point, with the whole strategy to pull them together into this whole home environment, which we believe will be like creating a new part of our company that will really position us, we feel like, for growth. All very helpful. I appreciate the color and wish you luck in this upcoming quarter.
Speaker Change: So the key word for US right now is what you said which is focus.
Speaker Change: We actually are going to treat several of our businesses like they are new new acquisitions at this point with the whole strategy to pull them together into this whole home environment, which we believe will be like creating a new part of our company that will be.
Speaker Change: Really position us we feel like for growth.
Speaker Change: That's all very helpful. I appreciate the color and wish you luck in this upcoming quarter.
David Joseph Storms: As a reminder, ladies and gentlemen, that's star 11 to ask the question. Our next question comes from the line of John Deysher, one moment. John Deysher with Pinnacle.
Speaker Change: Thank you.
Speaker Change: Thank you as a reminder, ladies and gentlemen that star one to ask the question.
Speaker Change: Our next question comes from the line of John Day, Sir one moment.
John Eric Deysher: Your line is open. Okay. Good morning.
John Eric Deysher: John <unk> with Pinnacle Your line is open.
John Eric Deysher: Thanks for taking questions. Congratulations on a good quarter. One, what were the orders for the fourth quarter and what was the backlog at the end of the quarter again, please? It was $72 million. The orders for the corridor were $94 million, up from $88 million in the prior year.
John Eric Deysher: Okay.
Good morning, Thanks for taking our questions.
Congrats on a good.
John Eric Deysher: So it <unk> just a couple of quick questions. One what was the orders for the fourth quarter and what was the backlog at the end of the quarter again players.
John Eric Deysher: Backlog at the end of the quarter.
John Eric Deysher: Was $72 million.
John Eric Deysher: Orders for the quarter were $94 million up from 88 million in the prior year.
John Eric Deysher: And regarding capital allocation, I think you brought back $25 million worth of stock, 1.4 million shares, which works out to about $18 a share. The stock price today is about $1 above that $18 a share. It currently looks like it's going to open around $19.
Speaker Change: Okay great.
Speaker Change: And regarding capital allocation.
Speaker Change: Thank you bought back 25 million.
Speaker Change: $1 million worth of stock one 4 million shares.
Speaker Change: It works out to about $18 a share.
Speaker Change: Stock price today is about one dollar above that $18 a share. It is currently it looks like it's going to open around 19.
John Eric Deysher: I'm just curious if the board has given any thought to implementing a new buyback program given where the current stock price is. Obviously, you know, we'll talk about it, but I think with the economic uncertainty that we're facing right now, I think we're going to be pretty cautious about a buyback. You know, stability is probably, as much as a share repurchase is an important part of our strategy, economic stability is probably more so. But when you say economic stability, what exactly are you referring to?
Speaker Change: Curious if the board has given any thought to implementing a new buyer.
Speaker Change: Hi back program, given where the current stock prices.
Speaker Change: Sure.
Speaker Change: Obviously, we'll talk about it but I think with the economic uncertainty that we're facing right now I.
Speaker Change: I think we're going to be pretty cautious about a buyback stability is probably is.
Speaker Change: As much as the share repurchase is an important part of our strategy.
Speaker Change: Economic stability is probably more so.
Speaker Change: When you say economic stability.
Speaker Change: Youre referring to.
Jeremy R. Hoff: He's just saying that in the downturn that we're in currently, we're watching our balance sheet, and we're doing things that are necessary to feed our organic business and our growth. Okay, so... I've got you. So growth and cash are taking priority at this point.
Speaker Change: He is just saying that in a downturn that we're in currently we're watching our balance sheet, we're doing things that are necessary to feed our organic business and our growth.
Speaker Change: Okay.
Speaker Change: Hey, guys just a growth in cash are taking priority at this point correct, Yes, I'm sure we will have a conversation if the price falls.
John Eric Deysher: Correct. Yes. I'm sure we'll have a conversation if the price falls. Yeah, I encourage you to do so. But thanks and good luck. Thanks. Thank you. Thank you. I'm showing no further questions in the queue. I would now like to turn the call back over to Jeremy for closing remarks. Thank you. I would like to thank everyone on the call for their interest in Hooker Furnishings. We look forward to sharing our fiscal 25 first quarter results in June. Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect. Thanks for watching!
Speaker Change: Yes.
Speaker Change: We encourage you to do so.
Speaker Change: Thanks, and good luck.
Speaker Change: Thanks, Thank you.
Speaker Change: Thank you.
I'm showing no further questions in the queue I would now like to turn the call back over to Jeremy for closing remarks.
Jeremy: Thank you I would like to thank everyone on the call for their interest in Hooker furnishings, we look forward to sharing our fiscal 'twenty five first quarter results in June.
Jeremy: Ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect.
Jeremy: Okay.
Jeremy: [music].
Jeremy: Okay.
Okay.
Jeremy: Yes.