Haverty Furniture(HVT) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported record fourth quarter and full year performance, achieving net sales of $1.05 billion in 2022, a 3.4% increase from 2021, with earnings per share of$ 5.24, up 6.9% year-over-year [3][9] - In Q4 2022, net sales were $280.6 million, a 5.5% increase over the prior quarter, with comparable store sales up 5.8% year-over-year [9] - Gross profit margins increased by 60 basis points to 57% from 56.4% due to better pricing discipline and merchandising [9] Business Line Data and Key Metrics Changes - Written business for the quarter was down 6.2% compared to Q4 2021 but was up compared to 2019, with store traffic also tracking lower [3][5] - The breakdown of annual sales showed case goods at 35.5%, upholstery at 42.5%, mattresses at 8.1%, and accessories at 13.8% [13] - Special order business improved, with 23.1% of total upholstery sales coming from special orders in Q4 [26] Market Data and Key Metrics Changes - Customer deposits decreased by 51% year-over-year and 40% from Q3 2022, indicating a significant drop in backlog [10] - The company’s inventory at the end of Q4 was$ 118.3 million, up $6.3 million from the previous year but down$ 90 million from Q3 2022 [10] Company Strategy and Development Direction - The growth strategy focuses on adding stores in high-growth real estate markets, with plans to open three more stores in 2023 [4][24] - Capital expenditures for 2023 are planned at $28 million, with significant investments in stores, distribution, and IT enhancements [11][30] - The company aims to maintain a goal of opening five stores per year for the next three years [24] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2023, citing challenges from inflation and slowing housing sales but also highlighting improvements in supply chain operations [5][27] - The company expects gross profit margins for 2023 to be between 58% and 58.5%, impacted by product and freight costs [30] Other Important Information - The company has no funded debt and ended Q4 with$ 123.1 million in cash and cash equivalents [10] - During 2022, the company returned approximately $64 million to shareholders through share repurchases and dividends [30] Q&A Session Summary Question: Can you provide a breakdown of delivered sales growth from upholstery versus case goods and mattresses? - The annual sales breakdown showed case goods at 35.5%, upholstery at 42.5%, mattresses at 8.1%, and accessories at 13.8% [13] Question: What are the trends in customer deposits and backlog? - Customer deposits dropped significantly, correlating with a 40% decrease in backlog in Q4 [18] Question: What are the expectations for share repurchases and capital deployment in 2023? - The company has not made any share repurchases in Q4 but evaluates opportunities quarterly with the board [41][57]