Hooker Furnishings Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Anthony Lebiedzinski - Sidoti & Company, LLC - Analyst : Good morning and thank you for taking the questions. Nice to see the bottom-line outperformance and certainly a stronger balance sheet from a year ago.

Question: Anthony Lebiedzinski - Sidoti & Company, LLC - Analyst : So yeah, sure. So as far -- I guess, HMI, certainly big improvement of profitability versus a year ago. The gross margin there was about 20%. So is this how we should think about segment gross margins going forward? Or was there anything unusual in the quarter that maybe this pace of gross margin expansion is not sustainable?

Question: Anthony Lebiedzinski - Sidoti & Company, LLC - Analyst : Okay. So that's certainly better than it used to be historically. So that's encouraging --

Question: Anthony Lebiedzinski - Sidoti & Company, LLC - Analyst : Correct. Right. Okay. And then the gross margin at the Hooker Branded was unusually strong as you pointed out. Do you think you'll see any sort of benefits from the higher-priced products in the fourth quarter? Or do you think you've pretty much flushed out all of that in the third quarter?

Question: Anthony Lebiedzinski - Sidoti & Company, LLC - Analyst : Got you. And in terms of your outlook. So for the fourth quarter, you gave us some quantifiable numbers for the Hooker Branded. You think your sales will be kind of flat down at HMI. There was no mention really about Domestic Upholstery. So I guess, with the orders coming in, 16% higher, which is encouraging, but the talk of softened demand. So in total, how should we think about the fourth-quarter revenue, I guess, if we put all the pieces together?

Question: Anthony Lebiedzinski - Sidoti & Company, LLC - Analyst : Okay.

Question: Anthony Lebiedzinski - Sidoti & Company, LLC - Analyst : Yeah. Okay. All right. Sounds good. And then lastly before I pass the call to others. So as far as the buyback, you completed the repurchase authorization. What is your appetite for doing another share buyback? Or would you say your preference would be to pay off whatever debt you have given the higher interest rate environment?

Question: Anthony Lebiedzinski - Sidoti & Company, LLC - Analyst : Understood. All right. Well, thank you very much and best of luck.

Question: David Storms - Stonegate Capital Partners - Analyst : Good morning.

Question: David Storms - Stonegate Capital Partners - Analyst : So just wanted to start with some of the normalization in demand and how you think about productivity and capacity, specifically in the Home Meridian segment. I noticed that orders were up, but backlog was down. Is this just efficiency is going way up, or is there more capacity that you could get out of that segment?

Question: David Storms - Stonegate Capital Partners - Analyst : Understood. Very helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 07, 2023 / 2:00PM, HOFT.OQ - Q3 2024 Hooker Furnishings Corp Earnings Call

Question: David Storms - Stonegate Capital Partners - Analyst : Yeah. No, it does. Thank you. And then just when we're thinking about the increased visibility you have going forward as you open up your new showrooms and such, how -- what kind of runway do you think there is for that to improve demand and then ultimately turn into new orders?

Question: David Storms - Stonegate Capital Partners - Analyst : Okay. And then just one follow-up on that. What kind of timeline do you expect around going from making contacts to opening accounts to that turning into sales?

Question: David Storms - Stonegate Capital Partners - Analyst : That's very helpful. Thank you very much and I'll pass on.

Question: Budd Bugatch - Water Tower Research LLC - Analyst : Good morning, Jeremy, and good morning, Paul. And congratulations on the profit performance in the quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 07, 2023 / 2:00PM, HOFT.OQ - Q3 2024 Hooker Furnishings Corp Earnings Call

Question: Budd Bugatch - Water Tower Research LLC - Analyst : And then that's notable. Hard to do that with down sales.

Question: Budd Bugatch - Water Tower Research LLC - Analyst : You talked about getting back to normalized margins, gross margins in the Hooker Legacy business. What are those now after having gone through COVID and supply chain and inflation and disinflation? And what are those normalized margins today?

Question: Budd Bugatch - Water Tower Research LLC - Analyst : So my question is how long does it take to get back to those normalized margins? That sounds like that mix is somewhere at low-20s -- or low-30s, high-20s kind of range. And that's a notable time, notable delta. How long does it take to get back to that normalized gross margin?

Question: Budd Bugatch - Water Tower Research LLC - Analyst : Okay. That's encouraging. And my next question is I'm confused a little bit about the 14,000 contact number. Those are not unique accounts. So if you see the same account multiple times inside that number and --

Question: Budd Bugatch - Water Tower Research LLC - Analyst : So help me out here. Hooker has always been known to have a wide -- be very widely distributed with a lot of accounts. So those are notable numbers. And maybe just give us a comparison of High Point. How much did the moving to showplace from the 10th floor increase those contracts or those interactions?

Question: Budd Bugatch - Water Tower Research LLC - Analyst : So that's -- and that's exactly where I was going to go next, because I mean, that seems to be the growth, the delta. Is there a level of volume for even some of the small designers that make it an unprofitable account to handle? Do you have to -- how do you manage the profitability of an account?

Question: Budd Bugatch - Water Tower Research LLC - Analyst : Okay. It's fascinating. And of the 14,000, can you separate for us maybe the retailers versus the designer or the different type or the alternative type of distribution?

Question: Budd Bugatch - Water Tower Research LLC - Analyst : Okay. That's okay. I understand that's competitive, and it's certainly fair for you to tell me. But our job is to ask.

Question: Budd Bugatch - Water Tower Research LLC - Analyst : Okay. Thank you very much. Congratulations and good luck on the future.

Question: Budd Bugatch - Water Tower Research LLC - Analyst : Thank you.