La-Z-Boy(US:LZB)2020-11-18 16:56Financial Data and Key Metrics Changes - Consolidated sales increased by 2.7% to $459 million, reflecting record demand across all businesses [49] - Non-GAAP operating income rose to $51 million from $34 million in the previous year, with non-GAAP operating margin increasing to 11.1% from 7.5% [50] - Non-GAAP EPS was $0.82 per diluted share compared to $0.52 in the same quarter last year [50] - Cash generated from operations year-to-date was $196 million, with cash at the end of the period reaching $353 million, nearly triple the $120 million from the previous year [55] Business Line Data and Key Metrics Changes - Wholesale segment sales declined by 2% to $343 million due to lower delivery unit volume, but non-GAAP operating margin increased to 12.2% [14][15] - Retail segment delivered sales increased by 9% to $162 million, with same-store sales for company-owned stores rising by 36% [34] - Joybird achieved its first profitable quarter, with sales increasing by 42% to $29 million and written sales up by 25% [41][42] Market Data and Key Metrics Changes - Written same-store sales across the La-Z-Boy furniture gallery network increased by 34% [13] - The backlog for La-Z-Boy branded business is five times larger than the previous year, with lead times extending from 16 to 26 weeks [17][123] Company Strategy and Development Direction - The company is expanding its manufacturing footprint to better service the western portion of North America, including a new facility in Mexico [20][21] - Focus on enhancing the omni-channel experience to facilitate seamless customer interactions between online and in-store shopping [29] - Plans to balance investments in top-line growth while monitoring bottom-line performance, particularly for Joybird [43] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business trajectory, anticipating strong sales growth in the third and fourth quarters, with expectations of 40% to 45% growth in the fourth quarter compared to the previous year [68][70] - Acknowledgment of ongoing challenges related to supply chain volatility, particularly foam supply issues impacting production capacity [23][65] - Management emphasized the importance of maintaining a strong cash position amid uncertainty, with plans to explore capital investment opportunities [94][138] Other Important Information - The company reinstated its quarterly dividend to $0.14 per share, restoring it to pre-pandemic levels [59][61] - Capital expenditures for fiscal 2021 are expected to be in the range of $40 million to $45 million, focusing on upgrades and new production capacity [57] Q&A Session Summary Question: Performance of non-La-Z-Boy branded distribution - Management noted that all businesses benefited from sector rotation, with some hiccups in Europe, but overall performance exceeded expectations [86][87] Question: Impact of foam supply issues on sales - Management indicated that foam supply issues could impact sales by approximately 2% in Q3, similar to Q2 [90] Question: Capital allocation and cash balance - Management acknowledged the high cash balance and indicated a conservative approach to capital deployment, considering acquisitions if appropriate [92][94] Question: Seattle acquisition performance - The Seattle acquisition is performing well, with plans for store upgrades and potential new locations [111][112] Question: Joybird's profitability and revenue expectations - Joybird is expected to achieve a revenue run rate of $90 million to $100 million for the fiscal year, with profitability anticipated [128][130] Question: Future cash returns to shareholders - Management stated that while they are focused on investing in growth, they will evaluate opportunities for shareholder returns as conditions improve [139]