Q3 2024 Haverty Furniture Companies Inc Earnings Call

and our marketing efforts were more focused on attracting and driving new customers. Because we've seen the new customers build higher sales tickets and more quickly grow our volume.

We're targeting a slightly younger customer than we've historically attracted with more digital advertising and social media.

A merchandising effort to also align with this strategy, emphasizing more contemporary styles, customization and special ore.

A poll street continues to be the key driver at over 40% of sales.

We've built an inventory back up in an in a postory and domestic special order delivery times are improving, coming closer to pre-COVID performance levels.

We're finally beginning to fill orders in bedroom and dining room with incoming containers from Vietnam and leather upholstery from China.

Recently our biggest sales gains have been in bedroom and cask goods as we're able to complete back orders after the long delays.

We expect to be in the best inventory position for the important Labor Day events, then we have been in many years.

Our team is to top marketing, merchandising, and AT efforts, while the relaunch of Harry's dot com later this year.

We're actively pursuing a number of store locations within our distribution footprint with a goal of adding five stores a year beginning next year.

We believe that there are very good locations both in new and existing markets that reach our target customer.

We'll be relocating a store in Indianapolis and opening an additional store in the Washington DC market this fall.

Currently, we expect to end the year with a 121 store's level with last year.

Our best-in-class, Malachito Lousest to invest in the latest technologies for efficiency and managing supply chain.

The major relaunch of our website, State of the Art Business Intelligence, and upgrading and repositioning our stores and the best locations in the fastest-goorn markets in the country.

We're also able to build back our inventory to support growth and maintain their ongoing priority position with the industry's top suppliers.

We are pleased with our team's dedicated performance for the first half of 2022. We have challenges with reduced traffic and lower-income orders related to high inflation and slowing home closures.

We encourage our team's dedication to serving our customer better with great values, more design, service, and customization.

We believe that we'll be able to earn a larger share of the home furnishings markets in the months and quarters ahead.

Al-Tron: I'm Al-Tron, the cold back over to Steve Burdette. Thank you, Clarence. Good morning. Our supply chain has gained momentum over the second quarter, with lead towns continuing to improve from our domestic vendors and production becoming more consistent from my poor vendors.

Al-Tron: This is allowed us to increase our inventory's year over year by 16.5% in Q2.

is increasing inventory contributed to our record quarter and is helping to reduce our backlog of outstanding orders.

While our backlog is still healthy, we have to stay below our age of the backlog at 11 weeks.

Our expectations are that we will continue to see the dollars in our backlog drop, and the age of our backlog improve over the coming quarters due to the increase in consistency coming from our vendors, on shipments and lead towns.

Al-Tron: However, we are experiencing some longer shipping times on imports for several reasons.

A shifting of cargo from west coast to east coast and anticipation of the potential disruption during labor talks, resulting in port congestion at some of our gateways.

and increase in orders from retailers getting ready for the second half of the year. And the port seeing longer dwell times of containers is many retailers are not able to receive their access inventories due to a softening in sales.

One bit of encouraging news is we have seen a reduction in some of our contracted container rates with some of our carriers due to the drop in the spot market rates.

Our special order business has remained flat as a percentage of total postured sales for the quarter at around 19%.

Getting our team's confidence restored in our vendors' abilities to meet their new, reducing the time's consistently. We'll go a long way to us, getting back to our special, special order goal of 25% of the post-rend sales.

Al-Tron: Staffing in our distribution centers, home delivery areas, and customer service centers is within 5% of our expected goals for the first time since the pandemic started. Our focus for our teams is on training, execution, and retention.

We are excited to see our results for the second quarter and first half of the year. We are appreciative to all our team members for the dedication and passion for our happiness to all our heritage customers every day. Now we'll turn the call over to Richard.

Richard: Thank you, Steven, good morning and the second quarter of 2022, Nest sales for 250 to 3.2 million, a 1.3% increase over the prior year quarter. Comparable store sales are up 1.1% over the prior period.

Richard: Our gross profit margin increased 130 basis points to 57.9% from 56.6%. Due to better pricing this one in Merchandising Mix.

Selling General Administrative expenses increase $5.7 million or $5.1 per cent to $18.1 million. As a percentage of sales, these calls are approximated 46.7 per cent, up from 45% in the prior year.

As expected, we saw increased selling distribution and transportation expenses here in the quarter.

8.4 A.C. Texas D.C.

5.1,000 dollars to 28.7 million dollars. Our tax expense of 7 million dollars here in the second quarter of 2022 resulted in an effective tax rate of 24.3%.

The primary difference in the effective rate in stashing toward a rate as students stay in contact with the tax benefit from best and stock awards.

Net income for the second quarter of 2022 was $21.7 million or $27 per diluted share on our common stock. Comparing to Net income of $22.9 million or a dollar 21 per share in the comparable quarter last year.

Richard: Now, turning through our balance sheet at the end of the quarter, our inventory is $134.1 million, which was up $22 million from the December 31st, 2021 balance, and up $19 million versus the second quarter, 2021 balance.

At the end of the second quarter, our customer deposit is $0.8 million, which were down $8.1 million from the end of the year, and down $25.3 million versus the second quarter of last year's balance.

We ended the quarter with a 143.5 million dollars of cash to cash at Clarence and we have no fun to debt on our balance sheet at the end of the quarter.

Looking at some of the uses of our cash flow, Catholic expenditures were $13.5 million for the first half of 2022, and we paid $8.8 million of right-wing dividends during the first half of the year.

During the second quarter we purchased $12.5 million of common shares.

which approximated 461,391 shares of stock. During the first half, 22, we purchased 25 of the end dollars of common shares, which approximated 809,899 shares.

Our earnings release lists out several additional forward-looking statements indicating our future expectations of certain financial metrics.

Oh, how high do you have please refer to our press release for additional commentary?

We expect our gross product margins for 2022 to be between 57.7% and 58%. We anticipate gross product margins will be impacted by our current estimates of product and freight costs and changes in our life-overservant.

Richard: Our fixed and discretionary type SNA expenses for 2022 are expected to be in the 293 to $295 billion range and approximate 5% increase over prior levels.

Richard: The Verbal Type Costs will then SGNA for 2022 are expected to be in the range of 18.2 to 18.4%.

Our plans have to spend its years for 2022, it's now $32 million, anticipated new or replacement stores, remodels and expansions account for $21.3 million.

and our distribution network are expected to be six and a half million, and investments in our information technology are expected to be approximately 4.2 million dollars.

This estimate reflects a deferral of the conversion of our Home Delivery Center in Virginia to regional distribution facility due to availability and pricing of building materials.

Richard: Our anticipated effective tax rate in 2022 is expected to be 25% this projection excludes the impact from best in obstacord in any potential new tax legislation.

This concludes my commentary on the second quarter financial results. Operator, we would like to open a call up for any questions at the time.

Richard: [inaudible]

Richard: The End

Operator, we'd like to open a call-up request into this time.

Thank you. The floor is now open for questions. If you'd like to ask a question, please press star one on your telephone keypad at this time.

Okay, we have a question from Anthony Levitt Lingsky from Sudotiti Stater Question

Speaker Change: Good morning gentlemen and thank you for taking the question.

So taking a step back, so, Planarce, you talked about how you're doing more with less now, as far as on the people side end and one of the things you attributed to that to improve productivity because of higher closing rates.

What's driven that? I mean, do you feel like you have done anything as far as training your associates better? What would be the main reasons why you think you're more productive with your sales team now?

Well, I do think we're turning our people better. The biggest reduction that we had in category was in our sales staff number and in the clerical and office. And we really retained our best sales people.

who are making more money. They're selling more for more.

Speaker Change: We, I think, have the best people who are now dealing with our customers, we're able to close higher because of that. I think we're serving our customer better. They're just the top performers and we're not adding back.

That's the main thing that I'm pushing is that we're not adding back to the count since we've reduced about 18 to 20%.

when we had the...

COVID-Hittice, we've cut our store hours, which is allowed us to staff with fewer people and our stores and actually have our salespeople, manned the floors, a longer period, for a whole day, for instance.

Speaker Change: We think this is something we can maintain and we're certainly not planning to add back there.

Speaker Change: and the other key thing that has certainly improved since pre-COVID as you've rose margin going up from roughly 54% and 2019 for now around 58% so quite a meaningful

and the program is in the program. So I know this story talked about improved the pricing discipline and mix.

Speaker Change: Drifting the smart improvement, you know, going forward out, how should we think about your ability to sustain?

Your Cross Margins, obviously as you pointed out, there's a lot of uncertainty in terms of the macroeconomic landscape inflation and higher interest rates. So kind of broadly speaking, if you could just talk about the Cross Margins.

How should we think about those?

Well, we think we can maintain and possibly and plan to increase our growth smart as we...

Speaker Change: We have gained it and made that happen with discipline. It's not only pricing discipline in the store level, but it's also with our merchants. We've been very...

Speaker Change: and the last idea is about following up on any changes and making sure that if we have any creases, we increase the price on the floor and we've been able to do that. I think we're getting more credit for the product that we're developing and customers are willing to pay the price.

We believe that we can maintain and frankly increase our margins in the years ahead. We've got that pricing ability.

Speaker Change: Got it, okay, so thanks for that and then as far as you know just looking at the quarter here so you know you're written sales you give us a number for the quarter just wondering was there any meaningful change from month to month between April and June as far as that written.

Speaker Change: Trang was always a consistent throughout the quarter.

I would say, Anthony is Richard, I would say in the quarter, in April and May, several digits, declines or written business, a June was single digits decline.

but April and May were a little poor with a good time June with the last.

Okay, so it was better if it's just to hear here. As far as the backlog, I know you guys don't quantify that exactly, but...

If you could give us maybe a little bit more color on that and then I think your lead times are down to 11 weeks so by the end of.

Speaker Change: for a year, kind of where would you expect the backlog and your lead times speed? She could give us the rough estimate that great.

Speaker Change: and this is Steve. We're anticipating that as we said, we stabilize the age of that pool and on the back of our product flow is our inventory is increased for the quarter. We see that product flow continuing for the rest of the year. I've been getting more consistency.

and their production schedules, and then we're able to see the obviously the lead times come down. I still think it'll take us in the next year before we get back to where we were.

Pre-COVID, exactly, but I think, with every month and every quarter, it goes by, we're going to continue to see that improvement, without getting specific.

and the Farc conversion of the Home Delivery Center in Virginia. Does that impact your strong growth expectations longer term or is it just a temporary deferral?

Speaker Change: It was just a temporary deferral due to cost and you just being prudent with our dollars and money and we just felt like right now it has no hindrance on our growth and what we can do going forward.

Got it. Okay, that's good to hear. And lastly, just one thing I would just thought so on doing additional sharing partuses.

and the, you know, our board encourages.

Speaker Change: You know, make sure of uh...

Speaker Change: Chair Bob Bax and dividends to return shareholders, valuable valuable back to our shareholders. We have exhausted our current limit. You know, that's something we'll, the board will evaluate it on a quarter of our quarter basis. And if that changes, we'll let you know.

But we have, it's beginning to year, we did say we planned on going through our $25 million out in the first half of the year and we certainly completed that in the second quarter.

Speaker Change: Okay, well thanks for having me best of luck.

Speaker Change: and now we're going to the question.

Well, we appreciate everyone's participation in today's call. We look forward to talking to you in the future when we release our third four results.