Q3 2024 Haverty Furniture Companies Inc Earnings Call

But weaker traffic during the weekdays returning to more historically normal sales path.

and our marketing efforts will be more focused on attracting and driving new customers.

because we've seen the new customers build higher at sales tickets and more quickly grow our volume.

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

and Richard Eftard's also along 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 build an inventory back up in an upholstery 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 bad room and case 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 that we have been in many years.

Our team is top marketing, merchandising, and IT efforts.

of Harry's.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 their very good locations both in new and existing markets that reach our target customer.

will 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 121 stores level with last year.

Our best in class, Malachita Loussus, to invest in the latest technologies for efficiency and managing supply chain.

and Major Re- Launcher for Web site.

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

We're also able to build back our inventories to support growth and maintain an 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're encouraged by our team's dedication to serving our customer better with great values, more design, service and customization.

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

on the call back over to Steve Burdette. Thank you, Florence. 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 our import vendors.

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 it is helping to reduce our backlog of outstanding orders.

While our backlog is still healthy, we have to stay below our stage 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.

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 Ritoers getting ready for the second half of the year.

and the port seeing a longer dwell times of container because 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, reduced lead times consistently. We'll go a long way to us, getting back to our special, or go a little bit of 25% of the post-rend sales.

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, furnishing happiness to all our heritage customers every day. Now we'll turn the call over to Richard.

Thank you, Steven, good morning. In the second quarter of 2022, Net Sales, or 253.2 million, a 1.3% increase over the prior year quarter. Comparable source sales are up 1.1% over the prior period.

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 $118.1 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 during the quarter.

8.4 A.C. Texas decreased.

5.1,000 dollars to 28.7 million dollars. Our tax expense of 7 million dollars gives us second quarter of 2022, resulted in an effect of tax rate of 24.3%.

The primary difference in the effective rate in stashing toward a rate as soon as they didn't come taxes and the tax benefit from best to 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 $1.21 per share in the comparable quarter last year.

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

At the end of the second quarter, our customer deposit were $9.8 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 bounce.

We ended the quarter with a 143.5 million dollars of cash to cash equivalence, 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, capital expenditures were $13.5 million for the first half of 2022, and we paid $8.8 million of right-foot dividends during the first half of this year.

During the second quarter we purchased $12.5 million of common shares, which are approximated $461,391 shares of stock.

2,000, they're in the first half 2022. We purchased 25 of the dollars of common shares, which are approximated 809,000, 809,000,

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

I'll highlight a few of the 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 freight costs and changes in our life-overseers.

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.

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 a expenditure for 2022 is now $32 million and anticipated new or replacement stores, remodels and expenses 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 availability and pricing of building materials.

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

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

The

and the

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 bar one on your telephone keypad at its time.

Speaker Change: Okay, we have a question from Anthony, Lev and Lainstee from Sudotipic Nature Question.

Anthony: Hey, yes, good morning gentlemen, and thank you for taking the question.

Anthony: So taking a step back, so Clarence, 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 tire closing rates.

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

Clarence: Well, I do think we're turning our people better with 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 food more.

We, I think, have the best people who are now dealing with our customers, we're able to close fire 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 percent.

Clarence: 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 floor is a longer period for a whole day, for instance.

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

Clarence: got a good effect with the Clarence. And the other key thing that has certainly improved since pre-COVID, as you've brought more than going up from roughly 54% to 2019 to now around 58% so quite a meaningful.

and the program is a very important program.

and driving the most modern improvement. Going forward out how should we think about your ability to sustain.

You're a cross-margin, obviously, as you pointed out, there's a lot of uncertainty in terms of the macroeconomic landscape, the situation in higher interest rates. So kind of broadly speaking, if you could just talk about the gross margins, how should we think about those.

Speaker Change: Well, we think we can maintain and possibly and plan to increase our growth smart. We have gained it and make 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...

for the last video about following up on any changes and making sure that we, if we have an increase,

Clarence: We increased 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.

Okay, thanks for that and then as far as just looking at the quarter here, so 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?

Tranquilers or as a consistent throughout the quarter.

Speaker Change: I would say, Anthony is Richard, I would say in the quarter, in April and May, double digits to climbs or written business, June was single digits to climb.

Speaker Change: but April and May were a little perfect decline in June with less.

Okay, this was better off as still about that's just here 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 the year kind of where would you expect the backlog and your lead times speed if you could give us the rough estimate that to be great.

and the Justice Steve. We're anticipating that as we said, we stabilize the age of that pool and on the back of it, we see that 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 there's 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.

Clarence: Pre-COVID, exactly, but I think with every month and every quarter it goes by we're going to continue to see that improvement as 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?

It was just a temporary deferral due to cost and just being prudent with our dollars and money and we just fell right right now. It has no hindrance on our growth and what we can do going forward.

got it. Okay, that's good to hear. Lastly, just just wondering what your thoughts are on doing additional sharing purchases.

and the, you know, our board encourages.

you know, a mixture of share-by-backed and dividend, the return share of polar value back to our shareholders. We have exhausted our current limit, you know, that's something we'll, the board will evaluate it, you know, on a quarter by quarter basis. And if that changes, we'll let you know.

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

Okay, well thanks for adding best of luck.

The End

and now with our only 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.

Clarence: [inaudible]

Clarence: [inaudible]