Hooker Furniture(US:HOFT)2022-06-09 15:21Financial Data and Key Metrics Changes - Consolidated net sales for Q1 2023 were reported at $147 million, a decrease of $15.5 million or 9.5% compared to the same period last year, primarily due to sales declines in the Home Meridian and Hooker Branded segments caused by supply chain disruptions [4][5] - Net income for the quarter was $3.2 million or $0.26 per diluted share, down from $9.4 million or $0.78 per diluted share a year ago [5] Business Line Data and Key Metrics Changes - Hooker Branded Segment: Net sales decreased by $9 million or 17.5% year-over-year, driven by casegoods inventory unavailability due to factory shutdowns in Vietnam [12] - Home Meridian Segment: Net sales decreased by $22 million or 26% compared to the prior year, impacted by supply chain disruptions and the exit from the unprofitable Clubs channel [15] - Domestic Upholstery Segment: Continued strong performance with net sales increasing by $15.8 million or 62% year-over-year, attributed to strong sales at Bradington Young, Sam Moore, and Shenandoah, along with the addition of Sunset West's sales [17] Market Data and Key Metrics Changes - Backlogs at the end of Q1 2023 were reported at 283 million, slightly up from 280 million a year ago, indicating sustained demand despite recent order cancellations [29] - Order backlogs in the Home Meridian segment decreased due to the exit from the Clubs channel but remained about 50% higher than pre-pandemic levels [16] Company Strategy and Development Direction - The company is focusing on a leaner portfolio targeting profitable channels and products, with the acquisition of Sunset West expected to provide significant long-term growth opportunities in the outdoor furnishings market [10] - Strategic initiatives include a program called Portfolio aimed at expanding the customer base and increasing e-commerce business, as well as relocating showrooms to enhance visibility and sales potential [39] Management's Comments on Operating Environment and Future Outlook - Management noted a leveling off of demand with incoming orders stabilizing above fiscal 2020 levels, and backlogs remain sizable to support sales targets for upcoming quarters [22] - The company remains optimistic about the housing market, citing strong employment levels and generational trends favoring furniture purchases, despite concerns over inflation and interest rates [23][51] Other Important Information - Cash and cash equivalents stood at $10 million at the end of the quarter, down from $69 million at year-end, primarily due to increased inventory and acquisition costs [18][19] - A dividend of $0.20 per share was declared, representing about a 4.5% yield, and a share repurchase authorization of up to $20 million was approved [20] Q&A Session Summary Question: Can you provide consolidated backlog numbers at the end of the quarter? - Backlog at the end of the first quarter this year was 283 million, compared to 280 million this time last year [29] Question: Are order cancellations seen only on the HMI side? - Cancellations have mostly occurred on the HMI side, primarily affecting orders planned further out due to changing lead times [30] Question: How much revenue was impacted by the acquisition of Sunset West? - The acquisition of Sunset West contributed approximately $7.5 million to revenue [33] Question: What drove the increase in SG&A expenses? - SG&A was 19% higher than last year due to lower volume, the addition of Sunset West, and increased labor costs [34] Question: How should we think about HMI sales and profitability for the back half of the year? - Management feels optimistic about HMI due to the elimination of previous headwinds and expects to manage day-to-day business effectively [37] Question: Can you elaborate on the strategic initiatives for organic growth? - The company is launching a program to target a broader customer base and enhance e-commerce capabilities, with plans to relocate showrooms for better exposure [38][39] Question: How have price increases affected different market segments? - Price increases have been more significant in lower price points, with freight costs driving much of the increase in the Hooker branded segment [50] Question: What is the outlook for the housing market? - Management remains confident in the housing market despite potential slowdowns, noting a backlog of homes and continued consumer interest [51][53]