Q2 2025 Hooker Furnishings Corp Earnings Call
Speaker Change: Good day and thank you for standing by. Welcome to the Hooker Furnishings Court, 2nd Quarter, 2025, Irings, Woodcast. At this time, all participants are in the Listen Only mode.
Operator: Group, second quarter, 2025, earnings webcast. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press Star 1-1 again.
After this speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need a press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised.
Operator: Please be advised that today's conference is being recorded.
To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.
Daniel: I would now like to hand the conference interview speaker today, Paul Huckfeldt, Chief Financial Officer. Please go ahead.
I would now like to hand the conference that we have your speaker today. Paul Huckfeldt, Chief Financial Officer, please go ahead.
Paul Huckfeldt: Thank you, Daniel.
Paul Huckfeldt: Good morning and welcome to our quarterly conference call to review financial results for the fiscal 2025 second quarter, which began April 29th and ended July 28th of 2024. Joining me this morning is Jeremy Hoff, our Chief Financial Officer. We appreciate your participation.
Paul Huckfeldt: Thank you, Daniel. Good morning and welcome to our quarterly conference call to review financial results for the fiscal 2020-25 second quarter, which began April 29th and ended July 28th 2020.
Paul Huckfeldt: 4th.
Paul Huckfeldt: our Chief Financial Officer.
Paul Huckfeldt: I mean, our Chief Executive Officer. I'm sorry. We appreciate your participation today. During our call, we may make forward-looking statements, which are subject to risks and uncertainties. A discussion of factors that could cause our actual results to differ materially from management's expectations is contained in our press release and SEC filing announcing our fiscal 2025 second quarter results. Any forward-looking statement speaks only as of today, and we undertake no obligation to update or revise any forward-looking statements or reflect events or circumstances after today's call. Despite persistent weak market conditions, sales in the second quarter, typically our slowest quarter, outperform the first quarter.
Speaker Change: We appreciate your participation. I mean, our chief executive officer, I'm sorry.
Speaker Change: We appreciate your participation today.
Speaker Change: During our call, we may make forward-looking statements.
Speaker Change: which is subject to risk on authorities.
Speaker Change: A discussion of factors that could cause our actual results to different materially from management's expectations is contained in our press release and SEC filing announcing our fiscal 2025 second quarter results.
Speaker Change: and he forward looking to speak only as of today and we have to take no obligation to update or revise any forward-looking statements reflect events or circumstances after today's call.
Speaker Change: Despite persistent weak market conditions, sales in the second quarter typically our slowest quarter outperform the first quarter.
Paul Huckfeldt: This morning, we reported consolidated net sales of $95 million for the fiscal 2025 second quarter, a decrease of 2.7 million or 2.8 percent as compared to last year's second quarter. The low single-digit sales decrease was a solid sequential improvement from last quarter's double-digit sales reduction. Net sales decreased by $2.3 million at domestic compulsory and $1.6 million at Hooker Branded, while Home Meridian saw an increase of $1.6 million driven by strong sales in the hospitality business, which more than offset the loss of $3.5 million of liquidation sales from the unprofitable ACH product line we exited last year.
Speaker Change: This morning, we reported consolidated net sales of $95 million for the fiscal 2025 second quarter, and decreased to 2.7 million or 2.8 percent as compared to the last year's second quarter.
Speaker Change: The low single digit sales decrease was a solid sequential improvement from last quarter's double digit sales reduction.
Speaker Change: Net sales decreased by $2.3 million.
Speaker Change: at the domestic compulsory, and 1.6 million at Cooker Branded, while Home Meridian saw an increase of 1.6 million driven by strong sales in the hospitality business.
Speaker Change: which more than offset the loss of 3.5 million liquidation sales from the unprofitable ACH product line we actually did last year.
Paul Huckfeldt: We recorded a consolidated operating loss of 3.1 million at a net loss of 2 million, or 19 cents per diluted share. Both operating and net losses improved compared to the first quarter's losses of 5.2 million and 4.1 million in respect of it. During the fiscal 2025 six-month period, consolidated net sales decreased by 31 million or 14 percent compared to the same period last year, also due to persistent low demand for home furnishings given by macroeconomic uncertainties. The absence of 11 million in revenue from the ACH product line accounted for approximately 35 percent of the sales decrease.
Speaker Change: We recorded a consolidated operating loss of 3.1 million at a net loss of 2 million, or 19 cents.
Speaker Change: for the Louis Vuitton Chair.
Speaker Change: Well, the operating and net losses improved compared to the first quarter's losses of 5.2 million and 4.1 million.
Speaker Change: During the fiscal 2025 six month period consolidated net sales decrease by 31 million or 14%.
Speaker Change: Comparter the same period last year, also due to persistent load demand for home furnishings, driven by macroeconomic uncertainties.
Speaker Change: The absence of 11 million in revenue.
Speaker Change: from the ACH product line, accounted for approximately 35% of the sales decrease.
Paul Huckfeldt: We recorded the consolidated operating loss of 8.2 million and a net loss of 6 million, or 57 cents per diluted share, for the first half.
Speaker Change: We recorded a consolidated operating loss of 8.2 million and a net loss of 6 million or 57 cents per diluted share for the first half.
Jeremy Hoff: Now I'll turn the call over to Jeremy to comment on our fiscal 2025 second quarter results. Thank you, Paul, and good morning, everyone. Challenges in the macroeconomic and furniture retail environment have extended well beyond our expectations. The combination of high interest rates, housing shortage, and elevated home prices have created a sustained housing downturn for over two years. While retail sales are doing well overall, furniture retail is not. In response, we continue to focus on the things we can control to ensure we're in the best possible position to grow when the macro environment improves. As we announced last quarter, we have begun a cost reduction plan aimed at reducing fixed cost by 10% for a total of $10 million in annualized savings.
Speaker Change: Now I'll turn the call over to Jeremy to comment on our fiscal 2025 second quarter result.
Jeremy: Thank you, Paul, and good morning, everyone. Challenges in the macroeconomic and furniture retail environment have extended well beyond our expectations.
Jeremy: The combination of high interest rates, the housing shortage, and elevated home prices have created a sustained housing downturn for over two years.
Jeremy: While retail sales are doing well overall furniture retail is not. In response, we continue to focus on the things we can control to ensure we're in the best possible position to grow when the macro environment improves.
Jeremy: As we announced last quarter, we have begun a cost reduction plan aimed at reducing fixed cost by 10% for a total of $10 million in annualized savings.
Jeremy Hoff: As of now, we expect to exceed that target. Approximately $5 million in savings is expected to be realized this fiscal year, split between the third and fourth quarters. In our cost reduction measures, we are focused on reducing non-strategic cost while continuing to invest in revenue and profit generation.
Jeremy: As of now, we expect to see that target.
Jeremy: Approximately $5 million in savings is expected to be realized this fiscal year.
Jeremy: split between the third and fourth quarters.
Jeremy: In our cost reduction measures, we are focused on reducing non-strategic cost while continuing to invest in revenue and profit generating initiatives.
Jeremy Hoff: We are generating initiatives. Reductions will come from the consolidation of certain operations and fixed cost reductions, including reducing the company's Savannah warehouse footprint by half, and restructuring the Bobo business into the Hooker branded business, eliminating Bobo's retail store and separate warehouse, among other measures. In addition, the company just completed an earlier time and offered to qualifying employees, and just yesterday further reduced our workforce for an annualized savings of almost $6 million. We expect to record $3 million of severance expenses in our fiscal 25 third quarter. While we continue to focus on our growth in April, industry veteran Caroline Hippel joined us in the new position of Chief Creative Officer to lead a reemerging of Hooker Legacy Brands, which aims to position a company as a more integrated, whole-home, consumer-centric resource with an elevated aesthetic and presentation.
Jeremy: Reductions will come from the consolidation of certain operations and fixed cost reductions, including reducing the company's Savannah Warehouse footprint by half and restructuring the Bobo business into hooker into the hooker branded business.
Jeremy: Eliminating Bobo's retail store and separate warehouse among other measures.
Jeremy: In addition, the company just completed an earlier tarman offer to qualifying employees and just yesterday further reduced our workforce for an annualized savings of almost $6 million. We expect to record 3 million hours of severance expenses in our fiscal 25-third quarter.
Caroline Hipple: While we continue to focus on our growth in April, industry veteran Caroline Hipple joined us in the new position of Chief Creative Officer.
Caroline Hipple: to lead a remerchandising of Hooker Legacy Brands, which aims to position a company as a more integrated, whole-home, consumer-centric resource with an elevated aesthetic and presentation.
Jeremy Hoff: While early in the shift in our merchandising strategy, we have had a very positive reaction from customers and previews of new products targeted for the next high-point market. Our partners' positive feedback has given us the confidence to place initial cuttings prior to the October high-point market launch. Essentially, this gives us a three-month head start on selling these products. The increased speed to market mentality helps strengthen our assortment for next year. We remain confident that the strategies we are pursuing in operations, marketing, and merchandising are transformative.
Caroline Hipple: Well, early in the shift in our merchandise and strategy.
Caroline Hipple: We have had a very positive reaction from customers in previews of new products targeted for the next high point market.
Caroline Hipple: Our partners positive feedback has given us the confidence to place initial cuttings prior to the October High Point Market Launch. Essentially, this gives us a three-month head start on selling these products. The increased speed to market mentality helps strengthen our assortment for next year.
Caroline Hipple: We remain confident that the strategies we are pursuing in operations, marketing, and merchandising are transformative. Extended downturns present opportunities to recalibrate and reinvent aspects of our business. Now I want to turn the discussion over to Paul, who will discuss highlights in each of our segments.
Jeremy Hoff: Extended downturns present opportunities to recalibrate and reinvent aspects of our business.
Paul Huckfeldt: Now I want to turn the discussion over to Paul, who will discuss highlights in each of our segments. Thanks, Jeremy. Hooker brand segment net sales decreased by 1.6 million, or 4.5%, in the second quarter compared to the prior period. Primarily due to lower average selling prices, following price reductions implemented in the second half of last year, driven by reduced ocean freight costs. Unit volume, however, exceeded the prior year second quarter by 11% and improved compared to the first quarter. The quarter-end order backlog remains 20% higher than pre-pandemic levels at the end of the fiscal 2020 second quarter.
Paul Huckfeldt: Thanks, Jeremy.
Paul Huckfeldt: The book of Brandon segment net sales decreased by 1.6 million or 4.5% in the second quarter.
Paul Huckfeldt: to pay attention to the prior period.
Paul Huckfeldt: Primarily due to lower average selling prices, following price reductions implemented in the second half of last year, driven by reduced ocean freight costs.
Paul Huckfeldt: University of California, however, exceeded the prior year second quarter by 11%.
Paul Huckfeldt: and improved compared to the first quarter.
Paul Huckfeldt: The quarter-end quarterback law remains 20% higher than pre-pandemic levels at the end of the fiscal 2020-second quarter.
Paul Huckfeldt: For the current six-month period, net sales decreased 9.7 million or 12%, driven by the same decrease in average selling prices, and to a lesser extent, decreased unit volume in the first quarter, reflecting the ongoing industry headlines. Moving on to the home meridian segment, we saw several improvements. HMI net sales increased by 1.6 million or 5.6% in the second quarter. Primarily due driven by strong performance in the hospitality division. This marks the first year-over-year quarterly sales. and increased in two years for this second. Additionally, sales through major furniture chains and mass merchants increased during the quarter.
Paul Huckfeldt: For the current six month period, net sales decreased 9.7 million or 12 percent, driven by the same decrease in average selling prices, and to a lesser extent decreased unit volume in the first quarter, reflecting the ongoing industry headlines.
Speaker Change: We'll be on to the home already in segment. We saw several improvements. HMI net sales increased by 1.6 million or 5.6% in the second quarter.
Speaker Change: Primarily do driven by strong performance in the hospitality division.
Speaker Change: This marks the first year over year, quarterly sales increase in two years for this second.
Speaker Change: Additionally, sales through major furniture chains and mass merchants increase during the quarter. These gains were partially offset by decreases in sales to independent furniture stores and through the e-commerce channel.
Paul Huckfeldt: These gains were partially offset by decreases in sales to independent furniture stores and through the e-commerce channel. The quarter-end backlog was 2% higher than the same period last year and 22% higher than the fiscal 2024 year-end back in January. Home Meridian reported an increase in gross profit, achieving a gross margin of 19.5%, one of the highest levels since the acquisition of that business in 2016. The quarter, our quarterly operating loss was below a million dollars, which was an improvement from the $3.4 million loss in the first quarter and the $3.3 million loss in the prior year's same period.
Speaker Change: The quarter end backlog was 2% higher in the same period last year and 22% higher in the fiscal 2024 year end back in January.
Operator: Group, Second Quarter, 2025 Earnings Webcast At this time, all participants are in the listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press Star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press Star 1-1 again. Please be advised that today's conference is being recorded.
Home Meridian: Home Meridian reported an increase in gross profit, achieving a gross margin of 19.5% of one of the highest levels since the acquisition of that business in 2016.
Home Meridian: The Quarter Act, quarterly operating loss, was below a million dollars.
Home Meridian: which is an improvement from the $3.4 million loss in the first quarter and the $3.3 million loss in the prior year is same period.
Paul Huckfeldt: We believe we reached the point at HMI where we have a significant path to profitability that is sustainable for the foreseeable future once the man normalizes for the home furnishings industry.
Home Meridian: We believe we reach the point at HMI where we have a significant path to profitability that is sustainable for the foreseeable future once the man normalizes for the home furnishing industry.
Operator: I would now like to hand a conference interview speaker today.
Paul Huckfeldt: The current six month period net sales decreased by 13.9 million or 19% at HMI, largely due to the absence of $11 million of ACA's liquidation sales. The remaining decrease was attributable to lower sales through independent furniture stores and e-commerce, while partially offset by increased sales in the hospitality business.
Paul Huckfeldt: Paul Huckfeldt, Chief Financial Officer, please go ahead. Thank you, Daniel.
Home Meridian: The current six month period, net sales decreased by 13.9 million or 19% at HMI. Why do we do to the absence of 11 million dollars of ACH liquidation sales?
Paul Huckfeldt: Good morning and welcome to our quarterly conference call to review financial results for the fiscal 2025 Second Quarter, which began April 29th and ended July 28th of 2024.
Home Meridian: The remaining decrease was attributable to lower sales through independent furniture stores and e-commerce while Parsley's offset by increased sales in the hospitality business.
Paul Huckfeldt: Joining me this morning is Jeremy Hoff, our Chief Financial Officer. We appreciate your participation. I mean, our Chief Executive Officer, I'm sorry. We appreciate your participation today. During our call, we may make forward-looking statements, which are subject to risks and uncertainties. A discussion of factors that could cause our actual results to differ materially from management's expectation is contained in our press release and SEC filing announcing our fiscal 2025 Second Quarter results. Any forward-looking statement speaks only as of today, and we undertake no obligation to update or revise any forward-looking statements or reflect events or circumstances after today's call.
Paul Huckfeldt: Domestic upholster segment net sales decreased by 2.3 million, or 7.6%, in the second quarter. Primarily due to lower unit volumes of Braddington Young at HF Custom. Sunset West and Shenandoah each reported single-digit sales increases. Industry weakness continues to affect order aids and backlog levels, leading to reduced production at Braddington Young and HF Customs for this quarter. On a more positive note, excluding Sunset West, the order backlog remains 20% higher than pre-pandemic levels at the end of that 20 statistical 2020 second quarter. Sunset West net sales increased during the quarter following a 20% increase in revenues last quarter.
Speaker Change: Domestic Apulse Resegment Net Sales decreased by 2.3 million or 7.6% in the second quarter. Primarily due to lower unit volumes of bread into young at HF Custom.
Speaker Change: Sunset West and Shannon Dawa each reported single-bidget sales increase.
Speaker Change: In this year we've been continuous to affect the order rates and backlog levels, leading to reduce production at Brad and Danielle and HF Custom for this course.
Speaker Change: On a more positive note, excluding sunset west, the orderback log remains 20% higher than pre-pandemic levels, at the end of that's 20% to 20% in quarter.
Paul Huckfeldt: Despite persistent weak market conditions, sales in the second quarter, typically our slowest quarter, outperformed the first quarter. This morning, we reported consolidated net sales of $95 million for the fiscal 2025 Second Quarter, a decrease of 2.7 million or 2.8% as compared to the last year's Second Quarter. The low single-digit sales decrease was a solid sequential improvement from last quarter's double-digit sales reduction. Net sales decreased by $2.3 million at domestic compulsory and $1.6 million at Hooker Branded, while home meridian saw an increase of 1.6 million driven by strong sales in its hospitality business, which more than offset the loss of 3.5 million liquidation sales from the unprofitable ACH product line we exited last year.
Speaker Change: Sunset West, net sales increase, increased during the quarter, following a 20% increase in revenue's last quarter.
Paul Huckfeldt: Now that we've repositioned Sunset West from a West Coast-centric distribution and supply chain to buy coastal operations. The division is hitting its stride, and we believe it will be a key area for growth for our company. Approximately 50% of the man is now coming from the East Coast, a trend that we believe will continue to grow. For the six-month period, net sales in this segment decreased by 7.4 million or 11%, with Braddington Young, HF Custom, and Shenandoah all experiencing sales decreases, while Sunset West reported a 10.7% sales increase.
Speaker Change: Now that we've re-positioned sunset west from a west coast-centric distribution and supply chain to buy coast to a buy coastal operation.
Speaker Change: The Division is hitting its stride and we believe it will be a key area for grudges for our company.
Speaker Change: Approximately 50% of the man is now coming from the East Coast, a transit we believe will continue to grow.
Speaker Change: for the six months period. That's how it's going to be.
Speaker Change: in this segment decreased by 7.4 million or 11%. With Brad and跳, HF Custon and Shannon Dowa all experiencing sales decreases.
Speaker Change: Walsense at West reported at 10.7% sales increase.
Paul Huckfeldt: Moving out of cash debt inventory, cash and cash equivalents were 42.1 million at the end of the second quarter, down 1.1 million from the fiscal year end, but up 1.2 million from the first quarter, which ended back in April. Inventory levels decreased by 4.7 million from year-end. During the six-month period, we used cash and cash equivalents on hand, as well as 5.3 million of cash generated from operating activities. To fund 4.9 million in cash dividends, 2.4 million to further develop our cloud-based ER-P system, and 1.4 million of capital expenditures. In addition to our cash balance, we had an aggregate of $28 million available under our existing revolver, at quarter end, to fund our working capital need, as well as $24.9 million, a cash surrender value of company or of life insurance.
Paul Huckfeldt: We recorded a consolidated operating loss of $3.1 million at a net loss of $2 million, or $0.19 per diluted share. Both operating and net losses improved compared to the first quarter's losses of $5.2 million and $4.1 million respectively.
Speaker Change: will be now to cash that inventory.
Speaker Change: Cash and Cash Equivalence were 42.1 million at the end of the second quarter. That was 1.1 million from the fiscal year-end, but up 1.2 million from the first quarter, which ended back in April.
Paul Huckfeldt: During the fiscal 2025 six-month period, consolidated net sales decreased by $31 million or 14% compared to the same period last year, also due to persistent low demand for home furnishings driven by macroeconomic uncertainties. The absence of $11 million in revenue from the ACH product line accounted for approximately 35% of the sales decrease. We recorded a consolidated operating loss of $8.2 million and a net loss of $6 million or $0.57 per diluted share for the first half.
Speaker Change: In the story, Levels decreased by 4.7 million during the year-end.
Speaker Change: During the six months period we used cash and cash equivalent on hand, as well as 5.3 million of cash generated from operating hip activities.
Speaker Change: to fund $4.9 million cash dividends.
Speaker Change: 2.4 million to further develop our cloud-based ERT system.
Speaker Change: and 1.4 million of capital expenditures.
Speaker Change: In addition to our cash balance, we had an aggregate of $28 million available under our existing revolver at quarter end.
Speaker Change: to fund our work in capital need, as well as 24, 29.4 million cash surrender value of company of life and change.
Jeremy Hoff: Now I'll turn the call over to Jeremy to comment on our fiscal 2025 second quarter results. Thank you Paul and good morning everyone. Challenges in the macroeconomic and furniture retail environment have extended well beyond our expectations. The combination of high interest rates, housing shortage, and elevated home prices have created a sustained housing downturn for over two years. While retail sales are doing well overall, furniture retail is not. In response, we continue to focus on the things we can control to ensure we're in the best possible position to grow when the macro environment improves.
Paul Huckfeldt: Focused inventory management and capital expenditures, as well as those in expense management, we believe we have sufficient financial resources to support our business operations and continue our 50 plus year history of paying quarterly dividends for the foreseeable future.
Speaker Change: Focus the inventory management and capital expenditures, as well as those in expense management. We believe we have sufficient financial resources.
Speaker Change: to support our business operations and continue our 50 plus year history of paying quarterly dividends for the foreseeable future.
Paul Huckfeldt: We're in the process of refinancing our credit facility and expect to have that completed in the near future. In addition, we plan to pay off $22 million of term debt during the third quarter, demonstrating our confidence in our company's future.
Speaker Change: We're in the process of refinancing our credit facility and expect to have that completed in the near future.
Speaker Change: In addition, we plan to pay off $20 million of term debt during the third quarter demonstrating our confidence in our company's future.
Jeremy Hoff: Now I'll turn the discussion back to Jeremy for his outlook. Thank you, Paul. We are encouraged that inflation hit its lowest post-pandemic level in July, with the consumer price index cooling to 2.9 percent, setting up a possible interest rate cut in September. There's been a recent surge in mortgage refinancing in August, which is another positive indicator as consumers benefit from higher monthly disposable income from lower monthly payments on credit cards, homes, and cars. We believe that if the interest rates are lowered, housing activity will accelerate.
Jeremy Hoff: As we announced last quarter, we have begun a cost reduction plan aimed at reducing fixed cost by 10% for a total of $10 million in annualized savings. As of now, we expect to exceed that target. Approximately $5 million in savings is expected to be realized this fiscal year, split between the third and fourth quarters. In our cost reduction measures, we are focused on reducing non-strategic cost while continuing to invest in revenue and profit generating initiatives.
Speaker Change: and now I'll turn to the discussion back to Jeremy for his album.
Jeremy: Thank you Paul. We are encouraged that inflation hit its lowest post-pandemic level in July with the consumer price index cooling to 2.9% setting up a possible interest rate cut in September.
Speaker Change: There's been a recent surge in mortgage refinancing in August, which is another positive indicator as consumers will benefit from higher monthly disposable income from lower monthly payments on credit cards, homes and cars. We believe that if the interest rates are lowered, housing activity will accelerate.
Jeremy Hoff: While the U.S. Department of Commerce reported at 17th consecutive month of lower home furnishings retail sales in July; overall retail sales rose about 3 percent during the same period, and the University of Michigan consumer sentiment index rose in August for the first time since March. Additionally, existing home sales grew in July and in a four-month sales decline. Our strong balance sheet, financial condition, and season management team will allow us to navigate the remaining downturn as we focus on maximizing efficiencies with the planned cost reductions. We'll continue investing in expansion strategies that will position us for improved profitability and revenue growth when demand returns.
Jeremy Hoff: Reductions will come from the consolidation of certain operations and fixed cost reductions, including reducing the company's Savannah warehouse footprint by half, and restructuring the Bobo business into Hooker Branded business, eliminating Bobo's retail store and separate warehouse among other measures. In addition, the company just completed an earlier time and offered to qualifying employees and just yesterday further reduced our workforce for an annualized savings of almost $6 million. We expect to record $3 million of severance expenses in our fiscal 25-third quarter.
Speaker Change: While the U.S. Department of Commerce reported its 17th consecutive month of lower home furnishings, retail sales in July, overall retail sales rows about 3% during the same period, and a university-mishkin consumer sentiment index rose in August for the first time since March.
Speaker Change: Additionally, existing home sales grew in July and in a four-month sales decline.
Speaker Change: Our strong balance sheet, financial condition and season management team will allow us to navigate the remaining downturn as we focus on maximizing efficiencies with the planned cost reductions.
Speaker Change: will continue investing in expansion strategies that will position us for improved profitability and revenue growth when demand returns. This ends the formal part of our discussion and at this time I will turn the call back over to our operator Daniel for questions.
Jeremy Hoff: While we continue to focus on our growth in April, Industry, Veteran, Caroline Hipple joined us in the new position of Chief Creative Officer to lead a reemerging of Hooker Legacy Brands, which aims to position the company as a more integrated, whole-home, consumer-centric resource with an elevated aesthetic and presentation. While early in the shift in our merchandising strategy, we have had a very positive reaction from customers and previews of new products targeted for the next high-point market.
Operator: This ends the formal part of our discussion, and at this time, I will turn the call back over to our operator, Daniel, for questions. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
Daniel: As a reminder and ask a question, please press star 11 on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question, please press star 1-1 again.
Daniel: Please stand by while we compile the Q&A roster.
Jeremy Hoff: Our partners' positive feedback has given us the confidence to place initial cuttings prior to the October high-point market launch. Essentially, this gives us a three-month head start on selling these products. The increased speed to market mentality helps strengthen our assortment for next year. We remain confident that the strategies we are pursuing in operations, marketing, and merchandising are transformative.
Anthony Lebodzicki: Our first question comes from Anthony Lebodzicki with Sadowdy. Your line is open. Good morning, and thank you for taking the questions. It is certainly nice to see the sequential improvements and the continued strong balance sheet. Can you just comment on the monthly progression of shipments and orders that you saw during the quarter? It's pretty steady throughout the quarter. I would say this is still a lot to go to recover, and I think we're sort of bouncing along. at this point. Got it.
Speaker Change: Okay, I'm going to start with the door.
Daniel: Our first question comes from Anthony LeBidzinski with Sidotte Your Line is open.
Anthony LeBidzinski: Good morning and thank you for taking the questions and certainly nice to see the sequential improvements and the continued strong balance sheet. So first, can you just just comment on the monthly progression of shipments and orders that you saw during the quarter?
Jeremy Hoff: Extended downturns present opportunities to recalibrate and reinvent aspects of our business.
Paul Huckfeldt: Now I want to turn to the discussion over to Paul who will discuss highlights in each of our segments. Thanks, Jeremy. Hooker Brands segment net sales decreased by $1.6 million or 4.5% in the second quarter compared to the prior period. Primarily due to lower average selling prices, following price reductions implemented in the second half of last year driven by reduced ocean freight costs.
Speaker Change: is pretty steady throughout the corner.
Speaker Change: I would say...
Speaker Change: Ah, it's...
Speaker Change: You know, if this is still, this is still got a lot to go to recover and I think we're sort of bouncing along. I think that's through both the orders and shipments at this point.
Paul Huckfeldt: Thanks, Paul.
Paul Huckfeldt: Unit volume, however, exceeded the prior year second quarter by 11%, and improved compared to the first quarter. The quarter-end order backlog remains 20% higher than pre-pandemic levels at the end of the fiscal 2020 second quarter. For the current six-month period net sales decreased $9.7 million or 12% driven by the same decrease in average selling prices and to a lesser extent decreased unit volume in the first quarter reflecting the ongoing industry headlines.
Anthony Lebodzicki: And it's just wondering if you guys saw any notable regional or geographic differences in terms of your sales patterns? More in Anthony. You know, not really. I mean, it's interesting because, more times than not, you would see that, but it seems to be what I'll call kind of equally tough everywhere. It's not as regional as you would usually see it is how I would describe it right now. Gotcha. Okay. Yeah. Thanks for that.
Speaker Change: Uh-huh, got it. Thanks Paul. And it's just wondering if you guys saw any notable regional or geographic differences in terms of your sales patterns.
Speaker Change: Good morning, Anthony. You know, not really. I mean, it's interesting because
Anthony LeBidzinski: More times than not, you would see that, but it seems to be what I'll call kind of equally tough everywhere. It's not as regional as you would usually see it as how I would describe it right now.
Paul Huckfeldt: Moving on to the home meridian segment, we saw several improvements. HMI net sales increased by $1.6 million or 5.6% in the second quarter. Primarily due driven by strong performance in the hospitality division.
Anthony Lebodzicki: And Jeremy, you said earlier that you guys expect to exceed the target for cost cuts of the $10 million. So can you expand on that?
Jeremy Hoffman: and Jeremy Hoffman.
Jeremy Hoffman: [inaudible]
Speaker Change: You guys expect to see the target for cost cuts of the $10 million. So can you expand on that? I don't know if there's any, I don't feel prepared to share any additional numbers, but if you could just, you know, where are you finding opportunities to further streamline the business?
Jeremy Hoff: And I don't know if there's any; I don't feel prepared to share any additional numbers. But if you could just, you know, where are you finding opportunities to further streamline the business? Well, you know, our first objective when we started the exercise and announced to the public that we were doing this is we went to really every cost center that we have without the company and tried to find any non-personnel, non-strategic cost that we could eliminate to reach as much savings as possible that was non-personnel related. Once we were through that exercise, we of course went to the personnel as well.
Paul Huckfeldt: This marks the first year over year quarterly sales, and increased in two years for this second. Additionally, sales through major furniture chains and mass merchants increased during the quarter. These gains were partially offset by decreases in sales to independent furniture stores and through the e-commerce channel. The quarter end backlog was 2% higher than the same period last year and 22% higher than the fiscal 2024 year end back in January. Home Meridian reported an increase in gross profit, achieving a gross margin of 19.5%, one of the highest levels since the acquisition of that business in 2016. The quarter of our quarterly operating loss was below a million dollars, which was an improvement from the $3.4 million loss in the first quarter and the $3.3 million loss in the prior year same period.
Speaker Change: Well, you know, our first objective when we started the exercise and announced.
Speaker Change: to public that we were doing. This is we went to really every cost center that we have without the company and tried to find any non-personal, non-strategic cost.
Speaker Change: that we could eliminate.
Speaker Change: to reach as much savings as possible that was non-personality related. Once we were through that exercise, we, of course, went to the personnel as well. And again, even with the personnel, we, we, we were very focused on making sure we weren't eliminating strategic.
Jeremy Hoff: And again, even with the personnel, we were very focused on making sure we weren't eliminating strategic cost in order to be able to, you know, execute our organic growth strategy that's in place.
Speaker Change: Cost in order to be able to execute our organic growth strategy that's in place. I know I'm not specifically answering your question, but I will tell you that when we say we're confident we will surpass the 10 million, we are very confident we will surpass the 10 million.
Jeremy Hoff: I know I'm not specifically answering your question, but I will tell you that when we say we're confident, we will surpass the $10 million, we are very confident we will surpass the $10 million. Okay, fair. That's fair enough.
Paul Huckfeldt: We believe we reached a point at HMI where we have a significant path to profitability that is sustainable for the foreseeable future once the man normalizes for the home furnishings industry.
Anthony Lebodzicki: And then, you know, so as far as HMI, you know, certainly a nice growth margin; they are 19.5%. And this is still obviously a tough operating environment.
Paul Huckfeldt: The current six month period that sales decreased by 13.9 million or 19% at HMI largely due to the absence of $11 million of ACA liquidation sales. The remaining decrease was attributable to lower sales through independent furniture stores and e-commerce while partially offset by increased sales in the hospitality business.
Speaker Change: OK, fair enough. As far as HMI, certainly a nice gross margin they are 19 and a half percent, and it is still obviously a tough operating environment. When the business doesn't prove, what would be a reasonable?
Jeremy Hoff: So when the business does improve, what would be a reasonable margin or growth? 20 would be a reasonable mark for or goal for HMI. And it's just a stress we haven't raised prices. We've simply been able to exit businesses that we're dragging that overall margin down. So that's really given the ability we have to improve that number. Yeah, and there's been a focus on making sure that the margins, you know, the margins on the programs that we have are right. So now it's a matter of, you know, just growing sales. You know, the FTA leverage is where there's where the profitability is coming.
Speaker Change: Margin, or gross margin, that is for for HMI, you think, once the business recovers.
Paul Huckfeldt: Domestic upholster segment net sales decreased by 2.3 million or 7.6% in the second quarter. Primarily due to lower unit volumes of Bradington Young and HF Custom. Sunset West and Shenandoah each reported single-digit sales increases.
Speaker Change: Paul and I believe 20 would be a reasonable mark for our goal for HMI.
Speaker Change: and it's just a stress we haven't raised prices. We've simply been able to exit businesses that were dragging that overall margin down.
Paul Huckfeldt: Industry weakness continues to affect order aids and backlog levels leading to reduced production at Bradington Young and HF Custom for this quarter. On a more positive note, excluding Sunset West, the order backlog remains 20% higher than pre-pandemic levels at the end of that 20, 20, 20, 20 second quarter. Sunset West's net sales increased during the quarter following a 20% increase in revenues last quarter. Now that we've repositioned Sunset West from a West Coast-centric distribution and supply chain to buy coast to a buy coastal operation.
Speaker Change: So that's really give a good opportunity. We have to improve that number. And there's been a focus on making sure that the margins, you know, the margins on the programs that we have are right. So now it's a matter of...
Speaker Change: you know, just growing sales, you know, the FC&A leverage is where the profitability will come.
Anthony Lebodzicki: Gotcha. Alright, yeah, thanks, guys.
Anthony Lebodzicki: And then, you know, my last question before I pass it on to others. So the Labor Day obviously is a big holiday for the home furniture sector. I certainly realized that we're only a few days away from the holiday. But just wondering, what are you hearing from your retail partners coming out of the holiday in terms of, you know, with traffic or order patterns or anything like that? If you could, sure, that'd be great. Thank you. You know, as far as from our retailers, we heard it was a reasonably good holiday. They were obviously needed an after a tough summer from a little more tangible but not very long trend standpoint.
Speaker Change: He thinks it.
Speaker Change: got you all right, yes, thanks guys, and then you know my last question before I pass it on to others so
Speaker Change: The Labor Day obviously is a big holiday for the home furniture sector, I certainly realize that we're only a few days away from the holiday, but just wondering what are you hearing from your retail partners coming out of the holiday in terms of traffic or what are patterns or anything like that if you could sure that'd be great. Thank you.
Paul Huckfeldt: The division is hitting its strike and we believe it will be a key area for growth for our company. Approximately 50% of the man is now coming from the East Coast, a trend that we believe will continue to grow.
Paul Huckfeldt: For the six-month period, net sales in this segment decreased by 7.4 million or 11% with Bradington Young, HF Custom, and Shenandoah all experiencing sales decreases while Sunset West reported a 10.7% sales increase.
Speaker Change: You know, as far as from our retailers we heard it was a reasonably good holiday. They were obviously needed and after a tough summer from a little more tangible, but not very long trend standpoint. Our order rates have been.
Paul Huckfeldt: Our order eight's been pretty good, actually really good right after, you know, the holiday weekend, which, you know, tells me that we did pretty well. So, as an industry, better than we've been doing. So that's a good sign, even though it's a pretty short; you know, it's not really a trend yet. Mm-hmm, understood.
Speaker Change: Pretty good, actually really good right after the holiday weekend, which tells me that we did pretty well, so as an industry better than we've been doing, so that's a good sign even though it's a pretty short, you know, it's not really a trend yet.
Paul Huckfeldt: Moving out of cash debt inventory, cash and cash equivalents were 42.1 million at the end of the second quarter, down 1.1 million from the fiscal year end, but up 1.2 million from the first quarter which ended back in April.
Anthony Lebodzicki: Well, thank you very much, and best of luck. Yeah, thank you, Anthony. We appreciate it. Thank you.
Paul Huckfeldt: Inventory levels decreased by 4.7 million from year end. During the six-month period we used cash and cash equivalents on hand, as well as 5.3 million of cash generated from operating activities. To fund 4.9 million in cash dividends, 2.4 million to further develop our cloud-based PR, and 1.4 million of capital expenditures. In addition to our cash balance, we had an aggregate of $28 million available under our existing revolver at quarter-hand.
Speaker Change: Well, thank you very much and best of luck. Yeah, thank you Anthony, we appreciate it.
Operator: Again to ask a question, please press star 11 on your telephone.
Speaker Change: Thank you. Again to answer the question, please press star 1-1 on your telephone.
Dave Storms: Our next question comes from Dave Storms with Stonegate. Your line is open. Morning and thank you for taking my questions. Morning.
Speaker Change: Our next question comes from Dave Storms with Stone Gate, your line is open.
Jeremy Hoff: When thinking about the outlook and, you know, maybe just the duration of the remaining downturn, are there any green shoes that we should be taking a look at? It seems like back while the remaining fairly stable, volumes are coming up and branded, you know, sequential gross margin increases. Anything else that you're kind of keeping your eye on that we should think about, call it the next two to four quarters? You know, we've talked about; we keep our focus solely on how we get better, how we make sure our product line is at the right level, meaning hot enough, good enough for our customers.
Speaker Change: Good morning and thank you for taking my questions, morning, what thinking about the outlook and you know
Speaker Change: and the Middle Ages Federation of the Main and Down Turn.
Dave Storms: Are there any green shoes that we should be taking a look at? It seems like back while there's remaining fairly stable volumes are coming up and branded, you know, sequential, gross margin increases. Anything else that you're kind of keeping your eye on that we should think about?
Paul Huckfeldt: Fund our working capital need, as well as $24.9.4 million, a cash surrender value of company or of life insurance. Focused inventory management and capital expenditures, as well as those in expense management, we believe we have sufficient financial resources to support our business operations and continue our 50-plus-year history of paying quarterly dividends for the foreseeable future.
Dave Storms: in the next two to four quarters.
Speaker Change: We've talked about, we keep our focuses solely on how we get better, how we make sure our product line is at the right level, meaning hot enough, good enough for our customers.
Paul Huckfeldt: We're in the process of refinancing our credit facility and expect to have that completed in the near future.
Jeremy Hoff: And can we shift quickly? Can we achieve the speed to market we want to? So all those factors for us, we think will improve our backlog as the year progresses. And one of our, one of our goals is to try to get the backlog as strong as we can, going towards the last part of this year, with really a high focus on the October market and trying to maximize that opportunity as much as we can, which would help the backlog. Yeah, and our, you know, our move to pre-cut multiple collections, you know, we're trying to lead into a strong market with having product available so that, you know, we can try to jump start into the new year.
Speaker Change: Can we ship quickly? Can we achieve the speed to market we want to? So all of those factors for us, we think will improve our backlog as the year progresses.
Paul Huckfeldt: In addition, we plan to pay off $22 million of term debt during the third quarter demonstrating our confidence in our company's future.
Jeremy Hoff: Now I'll turn to the discussion back to Jeremy for his outlook. Thank you, Paul. We are encouraged that inflation hit its lowest post-pandemic level in July with the consumer price index cooling to 2.9% setting up a possible interest rate cut in September. There's been a recent surge in mortgage refinancing in August, which is another positive indicator as consumers benefit from higher monthly disposable income from lower monthly payments on credit cards, homes, and cars.
Speaker Change: One of our goals is to try to get the backlog as strong as we can going towards the last part of this year with really a high focus on the October market and trying to maximize that opportunity as much as we can, which would help the backlog.
Speaker Change: and our, you know, our move to pre-cut multiple collections, you know, we're trying to lead into a strong market with having product available so that, you know, we can try to jump start into the, into the new year.
Jeremy Hoff: We believe that if the interest rates are lower, housing activity will accelerate. While the U.S. Department of Commerce reported its 17th consecutive month of lower home furnishings retail sales in July, overall retail sales rose about 3% during the same period, and the University of Michigan consumer sentiment index rose in August for the first time since March. Additionally, existing home sales grew in July and in a four-month sales decline.
Jeremy Hoff: I think, so that's what we're looking for is income orders and backlog right now. And we don't pre-cut without understanding what our, a significant part of our customer base feels about the product. So that's been a lot of work to get out there and be our customers and understand where we are from a product level to be able to make that decision.
Speaker Change: I think so that's what we're looking for as in kind of orders and back a lot right now.
Speaker Change: and we don't pre-cut without understanding what our significant part of our customer-based field about the product, so that's been a lot of work to get out there and hear our customers understand where we are from a product level to be able to make that decision.
Dave Storms: Understood. Thank you.
Paul Huckfeldt: And then just turn into the income statement. It looked like a pretty sizable jump in other income. Is there any more color you could give us on what calls that jump, both sequential thing year over year? The biggest item is reversing in a cruel for a, for a potential earn out on an acquisition. That was about half of that, of that increase. That would be a non-recurring item. And it's also point out that our tax rates will wear this quarter because, you know, because of our profitability and the impact of permanent differences on our tax rate.
Jeremy Hoff: Our strong balance sheet, financial condition, and season management team will allow us to navigate the remaining downturn as we focus on maximizing efficiencies with the planned cost reductions. We'll continue investing in expansion strategies that will position us for improved profitability and revenue growth when demand returns.
Speaker Change: Thank you. And then just turn into the accompaniment. It looked like a pretty sizable jump in other income. Is there any more color you could give us on what calls that jump both to a crunch thing you're over here?
Speaker Change: The biggest item is reversing an accrual for a year.
Operator: This ends the formal part of our discussion, and at this time, I will turn the call back over to our operator, Daniel, for questions. As a reminder to ask a question, please press star 11 on your telephone, and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
Speaker Change: for a potential turnout on the neck position.
Speaker Change: That was...
Speaker Change: about half of that increase.
Speaker Change: Um...
Speaker Change: That would be a non-recurring item.
Speaker Change: and it can also point out the arc.
Speaker Change: Tax Rates will win at this quarter because of profitability and the impact of permanent differences on our tax rate. I would not use the current tax rate in any kind of forecast it to do.
Paul Huckfeldt: I would not use the current tax. in any kind of forecast that you do. Let's go back to a more normal, like a 20-23% normalized tax rate. While we're talking about that part of the income statement. Understood. That's very helpful. Thank you.
Anthony Lebiedzinski: Our first question comes from Anthony Lebedzydski with Siddoti, your line is open. Good morning, and thank you for taking the questions and certainly nice to see the sequential improvements and the continued strong balance sheet. So, first, can you just comment on the monthly progression of shipments and orders that you saw during the quarter? It's pretty steady throughout the quarter.
Speaker Change: and go back to a more normal bucket, 2023%
Speaker Change: Normalized Taxree.
Speaker Change: While we're talking about that part of the inconstation.
Paul Huckfeldt: And then just one more from me, with regards to the cost savings, do you anticipate any corollary reduction in maintenance, catback spending to go along with these cost savings? We took another look at our capital budget for the year, and we're deferring a fairly significant amount of catbacks. I think most of the growth issues that Jeremy talks about are people and product related and not capital expenses. We're pulling back on our capital spending to try to preserve cash, as we see the economic conditions change. We'll reevaluate that. I think we're deferring. We're not canceling the projects, but right now we're deferring.
Speaker Change: and just let us very helpful. Thank you. And then just one more for me with regards to the cost savings, do you anticipate any corollary production in maintenance cat-back spending to go along with these cost savings?
Paul Huckfeldt: I would say this is still a lot to go to recover, and I think we're sort of bouncing along. I think that's through both the orders, at this point. Mm-hmm. Got it. Thanks, Paul.
Speaker Change: with.
Speaker Change: We took another look at our capital budget for the year and yeah, we're deferring.
Jeremy Hoffman: is a fairly significant amount of CapEx. I think most of the growth initiatives that Jeremy talks about are people and products related and not capital expenses. We're pulling back on our capital spending to try to preserve cash as we, as we, as we
Anthony Lebiedzinski: And it's just wondering if you guys saw any notable regional or geographic differences in terms of your sales patterns? More in Anthony. You know, not really. I mean, it's interesting because more times than not, you would see that, but it seems to be what I'll call kind of equally tough everywhere. It's not as regional as you would usually see it as I would describe right now. Gotcha. Okay. Yeah. Thanks for that.
Jeremy Hoffman: As we see the economic conditions change, we'll re-enviuate that. I think we defer it and we're not canceling projects, but right now we're deferring.
Dave Storms: Thank you for taking my questions, and good luck on the third quarter. Thank you.
Speaker Change: Thank you for taking my questions and good luck in the third quarter. Thank you.
Operator: I'm showing no further questions at this time.
Jeremy Hoff: I would now like to turn it back 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 25 third quarter results in December. Take care.
Speaker Change: Thank you. I'm showing no further questions at this time. Oh, now I'd like to turn it back to Jeremy Hoff for closing remarks.
Jeremy Hoff: I would like to thank everyone on the call for their interest in hooker furnishings. We look forward to sharing our fiscal 25-3rd quarter results in December. Take care.
Anthony Lebiedzinski: And Jeremy, you said earlier that you guys expect to exceed the target for cost cuts of the $10 million. So can you expand on that?
Operator: This concludes today's conference call. Thank you for participating.
Jeremy Hoff: And, you know, I don't know if there's any, I don't know if you're prepared to share any additional numbers, but if you could just, you know, where are you finding opportunities to further streamline the business? Well, you know, our first objective when we started the exercise and announced to public that we were doing this is we went to really every cost center that we had with throughout the company and tried to find any non-personnel, non-strategic cost that we could eliminate to reach as much savings as possible that was non-personnel related.
Operator: You may now disconnect.
Speaker Change: This concludes today's conference call.
Speaker Change: Thank you for participating, you may now disconnect.
Jeremy Hoff: Once we were through that exercise, we of course went to the personnel as well. And again, even with the personnel, we were very focused on making sure we weren't eliminating strategic cost in order to be able to, you know, execute our organic growth strategy that's in place. I know I'm not specifically answering your question, but I will tell you that when we say we're confident, we will surpass the $10 million. We are very confident we will surpass the $10 million. Okay, fair enough.
Anthony Lebiedzinski: And then, you know, so as far as HMI, you know, certainly at nice growth margin, they are 19.5 percent. And this is still obviously at tough operating environment.
Jeremy Hoff: So when the business does improve, what would be a reasonable margin or growth margin that is for for HMI, you think, once, you know, business recovers? Paul and I believe 20 would be a reasonable mark for or goal for HMI. And it's just a stress we haven't raised prices. We've simply been able to exit businesses that we're dragging that overall margin down. So that's really given the ability we have to improve that number.
Jeremy Hoff: And there's been a focus on making sure that the margins on the programs that we have are right. So now it's a matter of, you know, just growing sales. You know, the FTA leverage is where there's where the profitability is. Gotcha. Alright. Yeah. Thanks guys.
Anthony Lebiedzinski: And then, you know, my last question before I pass it on to others. So the Labor Day obviously is a big holiday for the home furniture sector. I certainly realized that we're only a few days away from the holiday.
Jeremy Hoff: But the just wondering, what are you hearing from your retail partners coming out of the holiday in terms of, you know, with traffic or order patterns or anything like that, if you could sure that'd be great. Thank you. You know, as far as from our retailers, we heard it was a reasonably good holiday. They were obviously needed an after a tough summer from a little more tangible but not very long trend standpoint.
Jeremy Hoff: Our order eight's been pretty good, actually really good right after, you know, the holiday weekend, which, you know, tells me that we did pretty well. So as an industry, better than we've been doing. So that's a good sign even though it's a pretty short, you know, it's not really a trend yet. Mm-hmm, understood.
Anthony Lebiedzinski: Well, thank you very much and best of luck. Yeah, thank you, Anthony. We appreciate it. Thank you.
Operator: Again, to ask a question, please press star 11 on your telephone.
Dave Storms: Our next question comes from Dave Storms with Stungate. Your line is open. Morning, and thank you for taking my questions. Morning.
Jeremy Hoff: When thinking about the outlook and, you know, maybe just the duration of the remaining downturn, are there any green shoes that we should be taking a look at? It seems like back while the remaining fairly stable, volumes are coming up and branded, you know, sequential gross margin increases. Anything else that you're kind of keeping your eye on that we should think about.
Jeremy Hoff: Call off the next two to four quarters. You know, we talked about we keep our focuses solely on how we get better, how we make sure our product line is at the right level, meaning hot enough good enough for our customers. And can we ship quickly? Can we achieve the speed to market we want to? So all those factors for us, we think will improve our backlog as the year progresses. And one of our, one of our goals is to try to get the backlog as strong as we can going towards the last part of this year with really a high focus on the October market and trying to maximize that opportunity as much as we can, which would help the backlog.
Jeremy Hoff: And our move to pre-cut multiple collections, you know, we're trying to lead into a strong market with having product available so that, you know, we can try to jump start into the new year. I think so that's what we're looking for is in kind of orders and backlog right now. And we don't pre-cut without understanding what our, a significant part of our customer base feels about the product. So that's a lot of work to get out there and be our customers and understand where we are from a product level to be able to make that decision.
Dave Storms: Understood.
Dave Storms: Thank you.
Dave Storms: And then just turn into the income statement. It looked like a pretty sizable jump in other income. Is there any more color you could give us on what clause that jump, both sequential thing and year over year? The biggest item is reversing in a cruel for a, for a potential earn out on an acquisition. That was about half of that, of that increase.
Paul Huckfeldt: That would be a non-recurring item. And it's also point out that our tax rates will wear this quarter because of, you know, because of our profitability and the impact of permanent differences on our tax rate. I would not use the current tax, in any kind of forecast that you do. Let's go back to a more normal, like a 20-23% normalized tax rate.
Dave Storms: While we're talking about that part of the income statement. Understood. That's very helpful.
Dave Storms: Thank you.
Dave Storms: And then just one more for me with regards to the cost savings.
Paul Huckfeldt: Do you anticipate any corollary reduction in maintenance, cat-back spending to go along with these cost savings? We took another look at our capital budget for the year and we're deferring a fairly significant amount of cat-backs. I think most of the growth issues that Jeremy talks about are people and products related and not capital expenses. We're pulling back on our capital spending to try to preserve cash. As we see the economic conditions change, we'll reevaluate that. I think we're deferring. We're not canceling the projects, but right now we're deferring.
Dave Storms: Thank you for taking my questions and good luck in the third quarter. Thank you.
Operator: I'm showing no further questions at this time.
Jeremy Hoff: I would now like to turn it back 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 25 third quarter results in December.
Operator: Take care. This concludes today's conference call. Thank you for participating.
Operator: You may now disconnect.
Operator: Thank you.