HOOKER FURNITURE CORP (HOFT) SEC Filing 10-Q Quarterly report for the period ending Sunday, October 28, 2018

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EXHIBIT 99.1

Hooker Furniture Quarterly Sales, Income Gains Led by Hooker Branded Segment

MARTINSVILLE, Va., Dec. 06, 2018 (GLOBE NEWSWIRE) -- Hooker Furniture Corporation (NASDAQ-GS: HOFT) today reported consolidated net sales of $171.5 million and net income of $9.3 million, or $0.79 per diluted share, for its fiscal 2019 third quarter ended October 28, 2018.


Net sales increased 8.6%, or $13.5 million, from the comparable prior year quarter, and net income increased 29.6%, or $2.1 million. Earnings per diluted share increased 29.5% from $0.61 a year ago.

“Revenues increased across all three of our business segments during the quarter, with Hooker Branded achieving a 9% sales gain,” said Paul B. Toms, chairman and chief executive officer. “The efforts we’ve made to focus on winning channels of distribution are benefiting all segments of our business,” he said.

For the fiscal 2019 first nine months, consolidated net sales were $483 million, with net income of $25.2 million, or $2.13 per diluted share. Net sales increased 8.5%, or $37.9 million, compared to last year’s first nine months. Earnings per diluted share increased 26.0% to $2.13 from $1.69 in the comparable prior year period.  Prior-year quarter and prior-year first nine months results include only one month of earnings for Shenandoah Furniture, which was acquired by the Company in September 2017.

During the third quarter, consolidated gross profit increased 4.5%, or $1.6 million. The increase was driven by increased gross profit in the Hooker Branded segment and in All Other which includes the Company’s domestic upholstery operations, partially offset by decreased gross profit in the Home Meridian Segment. All Other gross profit gains were primarily because of the inclusion of Shenandoah Furniture results for all three months in the current year quarter, while last year’s results only included one month of Shenandoah’s results. Gross profit improvement in the Hooker Branded Segment was driven by a 9% net sales increase in both components of the Hooker Branded segment.

For the fiscal 2019 first nine months, consolidated gross profit increased 8.3% or $7.9 million, due primarily to the inclusion of Shenandoah Furniture results and sales growth in the Hooker Branded segment.

Consolidated operating income of $12.3 million in the quarter improved by almost $1 million, or 8.2%, and consolidated operating income of $33.5 million in the first nine months improved by $3.0 million, or 9.9%, compared to the same periods a year ago.

During the quarter, a 10% tariff was imposed on furniture and component parts imported from China. The Company responded with slight price increases on portions of its product line imported from China. “We don’t believe the price increases negatively impacted sales in the quarter,” Toms said. “With a modest price increase to our customers and price concessions from our Chinese vendors, we have effectively mitigated the negative impact of the current 10% tariffs,” he said.

During the quarter and year-to-date periods, the Company benefited from lower effective tax rates due to the recently enacted Tax Cut and Jobs Act of 2017. Effective tax rates for the quarter and year-to-date periods were 22.9% and 23.0%, respectively, compared to 35.7% and 34.9%, respectively, for the comparable prior year periods.

Segment Reporting: Hooker Branded

After sales were essentially flat last quarter following two consecutive quarters of sales growth, the Hooker Branded Segment strongly rebounded with a 9% year-over-year improvement in both the Casegoods and Upholstery Divisions. “The sales increases were driven by our focus on winning channels of distribution, strong product lines and in-stock positions on best-sellers,” said Toms. “We also had a good Fall High Point Market and expect to enjoy profitable growth in the Hooker Branded Segment for the coming quarter.”

Hooker Casegoods has fueled momentum with a speed-to-market strategy in which the division pre-ordered two major new collections prior to the Fall High Point Market that had been favorably previewed by major retailers in late summer. Because these collections will begin shipping to retailers in early January, several months quicker than the typical product introduction cycle, “We were able to get additional retail placements at market,” Toms said. “Retailers like the opportunity of having exciting new products to offer at the beginning of the year. Not only will shipments of these products have favorable impact on this year’s fourth quarter and next year’s first quarter; we also expect to achieve additional turns at retail next year on these collections,” he said.

The Hooker Branded Segment, along with the domestic upholstery divisions, continue to gain positive traction from a long-range strategy to develop new business in winning channels of distribution, particularly the interior design and e-commerce channels. At the Fall High Point Market, the company launched two comprehensive programs to address interior designers: Design Pro, a paid membership program providing features and benefits to interior designers, and MARQ, a line of modern upholstery and premium bedding designed especially for and available exclusively to the interior design trade. “We had good reception to both programs, which demonstrate our level of commitment to the interior design channel,” said Toms, adding that attendance from interior designers at market was up about 10%, even though overall attendance at the market was down due to Hurricane Florence, which hit the Carolinas and other parts of the region just prior to market.

Segment Reporting: Home Meridian

“Home Meridian’s net sales in the quarter were up approximately 3% over the prior year, with three of our five divisions posting year- over- year gains,” said Doug Townsend, co-president of the Home Meridian Segment. Operating income for the quarter was also up 4.1%.

“Year to date, net sales are up about 2%, led by gains in e-commerce, which is up 33%, and Hospitality, which is up approximately 40%. Sales to traditional channels were down 7%,” he said.  Townsend added, “Several initiatives are now in place to re-energize our business through the traditional channels.  These initiatives are across multiple divisions and are expected to begin delivering improved sales results in Q4. We expect improved sales in the 4th quarter will leverage fixed costs and improve profitability for the period.”

“In addition, we have implemented margin improvement measures that will improve profitability with specific customers across multiple divisions. Demand is strong, with orders in the third quarter up 32% and backlog up 21%. We expect fourth quarter shipments to be very strong based on current order and backlog trends.”

Segment Reporting: All Other

Sales growth of nearly 29% for the quarter and nearly 40% year to date in All Other was driven mainly by the inclusion of Shenandoah’s net sales and a 10% net sales increase at upscale leather upholstery specialist Bradington-Young. Bradington-Young’s incoming orders increased about 6%, and backlogs were 30% higher than a year ago. “With the solid growth at Bradington-Young for the last four years, we are investing $5 million in a factory expansion in Hickory, N.C. that will be completed early next year. Capacity will increase by 50%,” Toms said.

He added that “While the top line is solid at Bradington-Young and Shenandoah, we are working on improvements that will help to bring profitability at each division back in line with expectations.”

While sales at Sam Moore continued to run below prior-year levels for the quarterly and year-to-date periods, better-controlled labor costs and other expenses improved Sam Moore’s gross and operating margins. Incoming orders decreased slightly, but quarter-end backlog was 27% higher than the prior year period. The division is currently actively searching for a new president, after the departure of the previous president. “We expect to have a new president in place by the end of the fiscal year,” Toms said.

“H Contract is on the front end of a strategy to broaden its product line and pursue a more aggressive product introduction strategy,” Toms said. “Orders were up nearly 8% in the quarter, and quarter-end backlog is up over 26% compared to the same period last year.”

Cash, Debt and Inventory

“We intentionally grew inventories during the quarter for several reasons,” Toms said. “First, to prepare for the strong fall and winter selling periods and second, to bring in more inventory from China ahead of the tariffs being implemented, and finally to support our actual and planned growth. The fastest growing parts of our business are supported by a strong in-stock position on best-selling products.”

The Company finished the fiscal first nine months with $29.4 million in cash and cash equivalents and $37.7 million in acquisition-related debt. Additionally, $28.5 million was available on its $30.0 million revolving credit facility, net of $1.5 million reserved for standby letters of credit. Consolidated inventories stood at $101 million.

Outlook

“As of quarter end on October 28, consolidated orders were up 19%, and backlog was up 17% compared to the prior-year quarter, with the higher backlog largely driven by HMI,” Toms said.

The company views macroeconomic trends as “a bit more mixed and uncertain than in recent months,” said Toms, pointing to a bumpy stock market, a slow-down in the housing sector and “continued uncertainty about a further increase in the tariffs on products imported from China should U.S.-China negotiations fail.”

“However, based on incoming order trends, higher backlogs at HMI and overall momentum in our businesses, we are bullish as we look to the fourth quarter, encouraged by recent progress in negotiations between the U.S. and China. Our longer-term outlook is tempered by the uncertainty surrounding the ultimate outcome of the tariff situation.”

Dividends

On December 6, 2018, our board of directors declared a quarterly cash dividend of $0.15 per share, representing an increase of 7.1% or $0.01 per share, payable on December 31, 2018 to shareholders of record at December 17, 2018.

Conference Call Details

Hooker Furniture will present its fiscal 2019 third quarter results via teleconference and live internet web cast on Thursday afternoon, December 6, 2018, at 2:00 PM Eastern Time.  The dial-in number for domestic callers is 877-665-2466, and 678-894-3031 is the number for international callers.  The conference ID number is 8891614. The call will be simultaneously web cast and archived for replay on the Company's web site at www.hookerfurniture.com in the Investor Relations section.

Hooker Furniture Corporation, in its 94th year of business, is a designer, marketer and importer of casegoods (wooden and metal furniture), leather furniture and fabric-upholstered furniture for the residential, hospitality and contract markets. The Company also domestically manufactures premium residential custom leather and custom fabric-upholstered furniture. It is ranked among the nation’s largest publicly traded furniture sources, based on 2016 shipments to U.S. retailers, according to a 2017 survey by a leading trade publication. Major casegoods product categories include home entertainment, home office, accent, dining, and bedroom furniture in the upper-medium price points sold under the Hooker Furniture brand.  Hooker’s residential upholstered seating product lines include Bradington-Young, a specialist in upscale motion and stationary leather furniture, Sam Moore Furniture, a specialist in upscale occasional chairs, settees, sofas and sectional seating with an emphasis on cover-to-frame customization, Hooker Upholstery, imported upholstered furniture targeted at the upper-medium price-range and Shenandoah Furniture, an upscale upholstered furniture company specializing in private label sectionals, modulars, sofas, chairs, ottomans, benches, beds and dining chairs in the upper-medium price points for lifestyle specialty retailers.  The H Contract product line supplies upholstered seating and casegoods to upscale senior living facilities. The Home Meridian division addresses more moderate price points and channels of distribution not currently served by other Hooker Furniture divisions or brands. Home Meridian’s brands include Accentrics Home, home furnishings centered around an eclectic mix of unique pieces and materials that offer a fresh take on home fashion, Pulaski Furniture, specializing in casegoods covering the complete design spectrum in a wide range of bedroom, dining room, accent and display cabinets at medium price points, Samuel Lawrence Furniture, specializing in value-conscious offerings in bedroom, dining room, home office and youth furnishings, Prime Resources, value-conscious imported leather upholstered furniture, and Samuel Lawrence Hospitality, a designer and supplier of hotel furnishings. Hooker Furniture Corporation’s corporate offices and upholstery manufacturing facilities are located in Virginia and North Carolina, with showrooms in High Point, N.C. and Ho Chi Minh City, Vietnam. The company operates eight distribution centers in North Carolina, Virginia, California and Vietnam. Please visit our websites hookerfurniture.com, bradington-young.com, sammoore.com, hcontractfurniture.com, homemeridian.com, pulaskifurniture.com, accentricshome.com and slh-co.com.

Certain statements made in this release, other than those based on historical facts, may be forward-looking statements. Forward-looking statements reflect our reasonable judgment with respect to future events and typically can be identified by the use of forward-looking terminology such as “believes,” “expects,” “projects,” “intends,” “plans,” “may,” “will,” “should,” “would,” “could”  or “anticipates,” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy.  Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.  Those risks and uncertainties include but are not limited to: (1) general economic or business conditions, both domestically and internationally, and instability in the financial and credit markets, including their potential impact on our (i) sales and operating costs and access to financing or (ii) customers and suppliers and their ability to obtain financing or generate the cash necessary to conduct their respective businesses; (2) adverse political acts or developments in, or affecting, the international markets from which we import products, including duties or tariffs imposed on those products by foreign governments or the U.S. government, such as the current U.S. administration imposing a 10% tariff on certain goods imported into the United States from China, including almost all furniture and furniture components manufactured in China, with the potential for the tariffs to increase to 25% in 2019; (3) the risks specifically related to the concentrations of a material part of our sales and accounts receivable in only a few customers; (4) the  risks related to the  recent Shenandoah acquisition including  integration costs, costs related to acquisition debt, maintaining Shenandoah’s existing customer relationships, debt service costs, interest rate volatility, the use of operating cash flows to service debt to the detriment of other corporate initiatives or strategic opportunities,  the recognition of significant additional depreciation and amortization expenses by the combined entity,  the loss of key employees from Shenandoah, the disruption of ongoing businesses or inconsistencies in standards, controls, procedures and policies across the business which could adversely affect our internal control or information systems and the costs of bringing them into compliance and failure to realize benefits anticipated from the Shenandoah acquisition; (5) disruptions involving our vendors or the transportation and handling industries, particularly those affecting imported products from Vietnam and China, including customs issues, labor stoppages, strikes or slowdowns and the availability of shipping containers and cargo ships; (6) the interruption, inadequacy, security breaches or integration failure of our information systems or information technology infrastructure, related service providers or the internet; (7) disruptions and damage (including due to weather) affecting our Virginia, North Carolina or California warehouses, our Virginia or North Carolina administrative facilities or our representative offices or warehouses in Vietnam and China; (8) achieving and managing growth and change, and the risks associated with new business lines, acquisitions, restructurings, strategic alliances and international operations; (9) risks associated with our reliance on offshore sourcing and the cost of imported goods, including fluctuation in the prices of purchased finished goods and transportation and warehousing costs; (10) higher than expected employee medical and workers’ compensation costs that may increase the cost of our high-deductible healthcare and workers compensation plans; (11) our ability to successfully implement our business plan to increase sales and improve financial performance; (12) changes in actuarial assumptions, the interest rate environment, the return on plan assets and future funding obligations related to the Home Meridian segment’s legacy Pension Plan, which can affect future funding obligations, costs and plan liabilities; (13) the possible impairment of our long-lived assets, which can result in reduced earnings and net worth; (14) the cost and difficulty of marketing and selling our products in foreign markets; (15) price competition in the furniture industry; (16) changes in domestic and international monetary policies and fluctuations in foreign currency exchange rates affecting the price of our imported products and raw materials; (17) the cyclical nature of the furniture industry, which is particularly sensitive to changes in consumer confidence, the amount of consumers’ income available for discretionary purchases, and the availability and terms of consumer credit; (18) risks associated with domestic manufacturing operations, including fluctuations in capacity utilization and the prices and availability of key raw materials, as well as changes in transportation, warehousing and domestic labor costs, availability of skilled labor, and environmental compliance and remediation costs; (19) risks associated with distribution through third-party retailers, such as non-binding dealership arrangements; (20) capital requirements and costs, including the servicing of our floating-rate term loans; (21) competition from non-traditional outlets, such as internet and catalog retailers.; (22) changes in consumer preferences, including increased demand for lower-quality, lower-priced furniture due to, among other things, declines in consumer confidence, amounts of discretionary income available for furniture purchases and the availability of consumer credit; (23) higher than expected costs associated with product quality and safety, including regulatory compliance costs related to the sale of consumer products and costs related to defective or non-compliant products; and (24) other risks and uncertainties described under Part I, Item 1A. "Risk Factors" in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2018. Any forward-looking statement that we make speaks only as of the date of that statement, and we undertake no obligation, except as required by law, to update any forward-looking statements whether as a result of new information, future events or otherwise and you should not expect us to do so.

Table I
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
            
    For the
   Thirteen Weeks Ended Thirty-Nine Weeks Ended
   October 28,October 29, October 28,October 29,
   20182017 20182017
            
Net sales $ 171,474 $ 157,934 $ 483,026 $ 445,114
            
Cost of sales   135,638   123,656   379,579   349,576
            
  Gross profit    35,836    34,278    103,447    95,538
            
Selling and administrative expenses    22,979    22,318    68,150    63,746
Intangible asset amortization    596   624    1,788   1,291
            
  Operating income   12,261   11,336   33,509   30,501
            
Other income, net   200   199   275   659
Interest expense, net   354   327   1,099   860
            
  Income before income taxes   12,107   11,208   32,685   30,300
            
Income tax expense   2,775   4,006   7,504   10,574
            
  Net income $ 9,332 $ 7,202 $ 25,181 $ 19,726
            
Earnings per share:          
  Basic $ 0.79   0.62   2.14   1.70
  Diluted $ 0.79   0.61   2.13   1.69
            
Weighted average shares outstanding:         
 Basic  11,763 11,679  11,758 11,596
 Diluted  11,780 11,700  11,779 11,626
            
            
Cash dividends declared per share $ 0.14 $ 0.12 $ 0.42 $ 0.36

 


 
Table II
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
      
  For the
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
  October 28, October 29, October 28, October 29,
   2018   2017   2018   2017 
         
Net Income $ 9,332   $ 7,202  $ 25,181   $ 19,726 
  Other comprehensive income:        
  Amortization of actuarial loss   43     15    129     46 
  Income tax effect on amortization   (10)   (5)   (31)   (17)
  Adjustments to net periodic benefit cost   33     10    98     29 
  Reclassification of tax effect due to the adoption         
  of ASU 2018-02   -     -    111     - 
         
Total comprehensive Income $ 9,365   $ 7,212  $ 25,390   $ 19,755 
         

 


 
Table III
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
     
     
As of October 28, January 28,
  2018 2018
Assets (Unaudited)  
Current assets    
  Cash and cash equivalents $ 29,449  $ 30,915
  Trade accounts receivable, net   86,978    92,461
  Inventories   100,743    84,459
  Prepaid expenses and other current assets   6,667    5,314
  Insurance proceeds receivable   4,000    -
  Total current assets   227,837    213,149
Property, plant and equipment, net   28,105    29,249
Cash surrender value of life insurance policies   23,499    23,622
Deferred taxes   2,979    3,264
Intangible assets, net   36,351    38,139
Goodwill   40,058    40,058
Other assets   1,453    2,235
  Total non-current assets   132,445    136,567
  Total assets $ 360,282  $ 349,716
     
Liabilities and Shareholders’ Equity    
Current liabilities    
  Current portion of term loans $ 6,112  $ 7,528
  Trade accounts payable   38,355    32,685
  Accrued salaries, wages and benefits   9,019    9,218
  Income tax accrual   1,419    3,711
  Customer deposits   3,480    3,951
  Other accrued expenses   3,464    2,894
  Legal contingency   4,000    -
  Total current liabilities   65,849    59,987
Long term debt   31,574    45,778
Deferred compensation   11,433    11,164
Pension plan   -    2,441
Other long-term liabilities   1,002    886
Total long-term liabilities   44,009    60,269
  Total liabilities   109,858    120,256
     
Shareholders’ equity    
  Common stock, no par value, 20,000 shares authorized,    
   11,785 and 11,762 shares issued and outstanding on each date  49,390    48,970
  Retained earnings   200,457    180,122
  Accumulated other comprehensive income   577    368
  Total shareholders’ equity   250,424    229,460
  Total liabilities and shareholders’ equity $ 360,282  $ 349,716
     

 


  
 Table IV
 HOOKER FURNITURE CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
       For the
       Thirty-Nine Weeks Ended
       October 28, October 29,
        2018   2017 
 Operating Activities:       
 Net income     $ 25,181   $ 19,726 
 Adjustments to reconcile net income to net cash     
 provided by operating activities:      
 Depreciation and amortization     5,558     4,399 
 Gain on disposal of assets     (66)   (37)
 Deferred income tax expense     254     1,735 
 Noncash restricted stock and performance awards   919     1,175 
 (Benefit from)/provision for doubtful accounts and sales allowances   (1,692)   125 
 Gain on life insurance policies     (608)   (453)
 Changes in assets and liabilities:      
 Trade accounts receivable     8,147     16,179 
 Income tax recoverable     -    (954)
 Inventories      (16,862)   (5,867)
 Prepaid expenses, other current assets and insurance proceeds receivable  (484)   (836)
 Trade accounts payable and legal contingency   5,566     (3,529)
 Accrued salaries, wages, and benefits    (484)   (539)
 Accrued income taxes     (2,412)   (4,323)
 Customer deposits      (470)   (1,314)
 Other accrued  expenses     503     (254)
 Deferred compensation     (2,253)   (435)
 Other long-term liabilities     122     267 
   Net cash provided by operating activities  $ 20,919   $ 25,065 
          
 Investing Activities:       
 Acquisitions      -    (32,650)
 Purchases of property and equipment    (2,464)   (2,708)
 Proceeds received on notes from sale of assets    99     98 
 Proceeds received on life insurance policies    1,225    - 
 Premiums paid on life insurance policies    (620)   (639)
   Net cash used in investing activities    (1,760)   (35,899)
          
 Financing Activities:       
 Proceeds from long-term debt     -    12,000 
 Payments for long-term debt     (15,679)   (4,393)
 Debt issuance cost      -    (39)
 Cash dividends paid      (4,946)   (4,169)
   Net cash (used in)/provided by financing activities   (20,625)   3,399 
          
 Net decrease in cash and cash equivalents    (1,466)   (7,435)
 Cash and cash equivalents - beginning of year    30,915     39,792 
 Cash and cash equivalents - end of quarter  $ 29,449   $ 32,357 
          
 Supplemental disclosure of cash flow information:     
 Cash paid for income taxes   $ 9,661   $ 14,103 
 Cash paid for interest, net     973     754 
 Non-cash transactions:       
 Acquisition cost paid in common stock   $ -  $ 8,396 
 Increase in property and equipment through accrued purchases   104     26 

 


   
 Table V 
 HOOKER FURNITURE CORPORATION AND SUBSIDIARIES 
 NET SALES AND OPERATING INCOME BY SEGMENT 
 (In thousands) 
 Unaudited 
           
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
  October 28, October 29,  October 28, October 29, 
  2018 2017  2018 2017 
   % Net % Net  % Net % Net
Net Sales  Sales Sales  Sales Sales
  Hooker Branded$ 46,479 27.1%$ 42,57327.0% $ 129,801 26.9%$ 120,93427.2%
  Home Meridian   95,01355.4%  92,06858.3%   266,631 55.2%  262,17358.9%
  All other   29,982 17.5%  23,29314.7%   86,594 17.9%  62,00713.9%
Consolidated $ 171,474100%$ 157,934100% $ 483,026 100%$ 445,114100%
           
           
           
           
Operating Income         
  Hooker Branded$ 5,712 12.3%$ 4,96411.7% $ 17,381 13.4%$ 15,04712.4%
  Home Meridian   4,829 5.1%  4,6375.0%   10,168 3.8%  10,7484.1%
  All other   1,720 5.7%  1,7357.4%   5,960 6.9%  4,7067.6%
Consolidated $ 12,261 7.2%$ 11,3367.2% $ 33,509 6.9%$ 30,5016.9%


For more information, contact:
Paul B. Toms Jr.
Chairman and Chief Executive Officer
Phone: (276) 632-2133, or
Paul A. Huckfeldt, Senior Vice President, Finance & Accounting & Chief Financial Officer
Phone: (276) 666-3949


The following information was filed by HOOKER FURNITURE CORP on Thursday, December 6, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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  • 18486581_77
    MA - Other
    Our nine-month operating results also benefited from $1.0 million gains on Company-owned life insurance recorded in the first quarter, the absence of $700,000 Shenandoah-acquisition related costs and lower bad debt expense due to the absence of a write-off of a customer balance in the prior year, partially offset by the $500,000 casualty loss in the Hooker Branded segment recorded in the fiscal 2019 second quarter.
  • 18486581_93
    Financial - Earnings
    The Hooker Branded segment contributed $1.2 million to the consolidated gross profit increases due to its strong sales in the quarter.
  • 18486581_61
    Revenue - Product
    Higher net sales were driven by higher incoming orders and good in-stock positions, which led to solid shipping in the third quarter.
  • 18486581_181
    Other - Other
    Due to our strong cash position, we made an unscheduled $10 million payment during the first quarter of fiscal 2019 towards the amounts outstanding under the New Unsecured Term Loan.
  • 18486581_106
    Financial - Expense
    Intangible asset amortization expense decreased in the current year quarter due to the absence of amortization expense on some shorter-lived Shenandoah acquisition-related intangible assets.
  • 18486581_37
    Financial - Earnings
    Our strategy is to leverage the financial strength afforded us by our slower-growing but highly profitable traditional Hooker divisions in order to boost revenues and earnings both organically and by acquiring businesses selling in faster-growing channels of distribution in which our legacy businesses are under-represented.
  • 18486581_108
    Financial - Expense
    Consolidated interest expense increased due to increases in the interest rates on our variable-rate term loans, partially offset by the unscheduled $10 million debt payment made earlier in the fiscal year on the New Unsecured Term Loan.
  • 18486581_166
    Financial - Dividend
    We believe these resources are sufficient to meet our business requirements through fiscal 2019 and for the foreseeable future, including: capital expenditures; working capital, including capital required to fund our Pension Plan, SERP and SRIP plans; the payment of regular quarterly cash dividends on our common stock; and the servicing of our acquisition-related debt.
  • 18486581_130
    MA - Other
    These increases were partially offset by a $1.0 million gain on company-owned life insurance recognized during the fiscal 2019 first quarter, the absence of $700,000 Shenandoah-acquisition related costs recorded in fiscal 2018 third quarter, and lower bad debts expense in the first nine months.
  • 18486581_165
    Financial - Cash Flow
    Liquidity, Financial Resources and Capital Expenditures Our financial resources include: available cash and cash equivalents, which are highly dependent on incoming order rates and our operating performance; expected cash flow from operations; and available lines of credit.
  • 18486581_152
    Revenue - Product
    We expect fourth quarter shipments to be very strong based on current order and backlog trends and that improved sales in the fourth quarter will leverage fixed costs and improve profitability at Home Meridian for the period.
  • 18486581_7
    Other - Other
    These statements reflect our reasonable judgment with respect to future events and typically can be identified by the use of forward-looking terminology such as "believes," "expects," "projects," "intends," "plans," "may," "will," "should," "would," "could" or "anticipates," or the negatives thereof, or other variations thereof, or comparable terminology, or by discussions of strategy.
  • 18486581_31
    Revenue - Product
    Contract furniture sales are driven largely by senior living facility construction and remodeling activity, which is linked to the number of consumers entering retirement, which is partially related to the strength of the overall economy, including stock market performance.
  • 18486581_188
    Financial - Shares / Equity
    Share Repurchase Authorization During fiscal 2013, our Board of Directors authorized the repurchase of up to $12.5 million of shares of the Company?s common stock.
  • 18486581_131
    Financial - Expense
    Home Meridian segment S&A; expenses increased in absolute terms and stayed essentially flat as a percentage of net sales, driven by increased employee compensation and benefits expense and increased professional service fees due primarily to higher compliance costs.
  • 18486581_66
    Revenue - Product
    The Home Meridian operating segment?s hospitality business unit had another strong quarter, with increased hotel projects and the continued success of a new product line launched earlier this year, growing sales by over 50% in the third quarter and 40% in the first nine months, respectively, compared to prior year periods.
  • 18486581_52
    Revenue - Product
    With solid sales of luxury motion products, Bradington-Young incoming orders increased about 6% and backlog was over 30% higher than the prior year quarter.
  • 18486581_60
    Revenue - Product
    The Hooker Branded segment?s net sales increased over 9% in the quarter, driven by our focus on advantaged channels of distribution, strong product lines and in-stock positions on best-sellers.
  • 18486581_65
    Revenue - Product
    Fiscal 2019 first nine months net sales were up $4.5 million or 1.7% compared to prior year period.
  • 18486581_163
    Financial - Cash Flow
    Cash Flows - Operating, Investing and Financing Activities During the nine months ended October 28, 2018, cash generated from operations of $20.9 million (despite a $3.0 million contribution to our Pension Plan) and $1.2 million in proceeds received under Company-owned life insurance policies helped to pay $15.7 million in long-term debt payments, $4.9 million in cash dividends, $2.5 million of capital expenditures to enhance our business systems and facilities, and $620,000 in life insurance premiums.
  • 18486581_123
    Revenue - Product
    All Other?s unit volume decreased due to the volume decline at Sam Moore and the lack of Homeware unit volume in the current fiscal year.
  • 18486581_136
    Financial - Expense
    Consolidated interest expense increased due to increases in the interest rates on our variable-rate term loans and additional interest expense on the Shenandoah acquisition-related term loan, partially offset by the $10 million unscheduled loan payment made on the New Unsecured Term Loan in the first quarter of fiscal 2019.
  • 18486581_56
    Financial - Earnings
    All upholstery units experienced a negative impact on margins from price increases in materials and components such as foam, plywood and steel and we experienced a lag between those cost increases and our own price increases to customers.
  • 18486581_74
    Revenue - Product
    We do not believe the price increases negatively impacted sales in the fiscal 2019 third quarter.
  • 18486581_153
    Financial - Earnings
    In All Other, while the top line is solid at Bradington-Young and Shenandoah, we are working on improvements that will help to bring profitability at each division back to historical levels.
  • 18486581_105
    Financial - Expense
    All Other S&A; expenses increased principally due to the inclusion of Shenandoah?s operations as well as higher compensation and benefits expenses.
  • 18486581_151
    Revenue - Product
    These initiatives span multiple business units and we expect they will begin delivering improved sales results in the fourth quarter of fiscal 2019.
  • 18486581_45
    Revenue - Product
    All Other grew net sales by approximately 40% and contributed $24.6 million to the consolidated net sales increase mostly due to the addition of Shenandoah business.
  • 18486581_111
    Other - Other
    Our effective tax rate was lower in the fiscal 2019 third quarter as a result of the recently enacted Tax Cuts and Jobs Act of 2017.
  • 18486581_133
    Financial - Expense
    The increased expenses in All Other are due principally to the inclusion of Shenandoah?s operations.
  • 18486581_90
    Other - Other
    Home Meridian segment ASP increased due to favorable customer allowances.
  • 18486581_119
    Revenue - Product
    Home Meridian segment sales were negatively affected by vendor shipping delays in the first quarter as the result of the timing of Chinese New Year.
  • 18486581_95
    Financial - Expense
    Segment product costs remained favorable as the direct impact of the tariffs did not begin until late in the quarter.
  • 18486581_63
    Revenue - Product
    The Home Meridian segment grew net sales by $2.9 million or 3.2% in the third quarter.
  • 18486581_148
    Other - Other
    At Hooker Branded, Hooker Casegoods has fueled momentum with a speed-to-market strategy in which the division pre-ordered two major new collections prior to the Fall High Point Market that had been favorably previewed by major retailers in late summer.
  • 18486581_80
    Financial - Earnings
    Profitability, along with inventory management and cautious capital expenditures, have helped us maintain our strong, stable balance sheets.
  • 18486581_120
    Revenue - Product
    Primarily in the third quarter, sales recovered from this issue, resulting in an increase of $4.5 million over prior year nine months.
  • 18486581_210
    Other - Other
    The guidance is effective for fiscal years ending after December 15, 2020.
  • 18486581_87
    Revenue - Product
    All Other?s unit volumes decreased primarily due to decreased sales volume at Sam Moore.
  • 18486581_68
    Revenue - Product
    Ecommerce sales continued to grow in both periods increasing 55% % during the quarter and over 30% in the nine-month period, respectively.
  • 18486581_28
    Other - Other
    We believe that consumer home furnishings purchases are impacted by an array of factors, including general economic conditions (such as consumer confidence, availability of consumer credit, energy and other commodity prices), and housing and mortgage markets.
  • 18486581_142
    Revenue - Geography
    Effective September 24, 2018, the current U.S. administration imposed a 10% tariff on certain goods imported into the United States from China, including almost all furniture and furniture components manufactured in China, with the potential for the tariffs to increase to 25% in 2019.
  • 18486581_47
    Revenue - Product
    Home Meridian segment net sales increased $4.5 million or 1.7% in the fiscal 2019 first nine months.
  • 18486581_62
    Revenue - Product
    Year-to-date, Hooker Branded segment?s net sales increased 7.3%.
  • 18486581_64
    Revenue - Product
    Increased net sales in the second and third quarters have now fully recovered from the sales miss due to disruptions with its Asian suppliers in the first quarter.
  • 18486581_86
    Revenue - Product
    All Other?s ASP increased due to increased sales of higher-priced Bradington-Young products.
  • 18486581_78
    Financial - Dividend
    In addition to our operating results, we generated almost $21 million in cash from operating activities, despite a $3 million cash contribution to our Pension Plan, paid about $16 million towards our term loans, including a $10 million unscheduled payment and paid approximately $5 million in cash dividends to our shareholders.
  • 18486581_44
    Revenue - Product
    For the fiscal 2019 first nine months, consolidated net sales increased $37.9 million or 8.5% to $483.0 million primarily due to sales increases in All Other and in the Hooker Branded segment.
  • 18486581_84
    Revenue - Product
    Consolidated net sales increased due to sales increases in both Hooker Branded and Home Meridian segments, and All Other.
  • 18486581_114
    Revenue - Product
    Consolidated net sales increased due primarily to the inclusion of Shenandoah?s net sales in All Other as well as sales increases in the Hooker Branded and Home Meridian segments.
  • 18486581_144
    Other - Other
    We are increasing inventory levels ahead of the possible imposition of the 25% tariff.
  • 18486581_186
    Other - Other
    There were no additional borrowings outstanding under the revolving credit facility as of October 28, 2018.
  • 18486581_30
    Revenue - Product
    Hospitality furniture sales are driven primarily by new hotel construction and hotel remodeling activity, which is linked to the strength of the overall economy, including business and personal spending levels.
  • 18486581_43
    Revenue - Product
    Consolidated net sales for fiscal 2019 third quarter increased $13.5 million or 8.6% as compared to the prior year period, to $171.5 million due primarily to the inclusion of Shenandoah?s net sales for the full quarter, a $3.9 million or 9.2% net sales increase in the Hooker Branded segment and a $2.9 million or 3.2% net sales increase at the Home Meridian segment in the third quarter.
  • 18486581_132
    Financial - Expense
    These increases were partially offset by decreased selling expenses and favorable bad debts expense due to a customer balance written off during the prior year period.
  • 18486581_46
    Revenue - Product
    The Hooker Branded segment?s net sales increased $8.9 million or 7.3%, as compared to the prior year first nine months.
  • 18486581_112
    Revenue - Product
    FY19 YTD % Increase vs. FY18 YTD Hooker Branded Hooker Branded Home Meridian Home Meridian All Other* All Other* Consolidated Consolidated *Shenandoah is excluded from All Other in the Unit Volume and ASP tables above since only one month of its results was included in our fiscal 2018 first nine-month results.
  • 18486581_134
    Financial - Expense
    Intangible asset amortization expense was higher in the current year nine-month period due to the addition of Shenandoah acquisition-related amortization expense.
  • 18486581_124
    Financial - Earnings
    Consolidated gross profit increased in absolute terms due to increases in All Other and in the Hooker Branded segment.
  • 18486581_98
    Financial - Earnings
    Increased gross profit in All Other was due primarily to the inclusion of Shenandoah?s results.
  • 18486581_164
    MA - Other
    In comparison, during the nine months period ended October 29, 2017, cash generated from operations, cash on hand and $12 million term-loan proceeds helped fund the Shenandoah acquisition, pay $4.4 million in long-term debt payments, cash dividends of $4.2 million ,capital expenditures of $2.7 million to enhance our business systems and facilities, and $639,000 in life insurance premiums.
  • 18486581_15
    Other - Other
    Investors should also be aware that while we occasionally communicate with securities analysts and others, it is against our policy to selectively disclose to them any material nonpublic information or other confidential commercial information.
  • 18486581_118
    Revenue - Product
    The Home Meridian segment?s net sales increased modestly for the year.
  • 18486581_122
    Revenue - Product
    All Other?s ASP increased due to increased sales of higher-priced Bradington-Young products and the lack of Homeware liquidation sales due to the shuttering of that division in the prior year.
  • 18486581_117
    Revenue - Product
    Hooker Branded segment unit volume increased due to our focus on winning channels of distribution, strong product lines and in-stock positions on best-sellers.
  • 18486581_101
    Financial - Expense
    Hooker Branded segment S&A; expenses increased in absolute terms in the fiscal 2019 third quarter driven by higher employee compensation and benefits expenses due to increased headcount and higher employee medical costs, as well as higher bonus accrual and commissions due to increased net sales.
  • 18486581_129
    Financial - Expense
    Hooker Branded segment S&A; expenses increased due primarily to increased compensation and benefits expense, as well as higher bonus and selling costs as the result of sales growth.
  • 18486581_110
    Other - Other
    The effective tax rates for the fiscal 2019 and 2018 third quarters were 22.9% and 35.7%, respectively.
  • 18486581_138
    Other - Other
    The effective tax rates for the fiscal 2019 and 2018 first nine-months were 23.0% and 34.9%, respectively.
  • 18486581_83
    Other - Other
    Consequently, we believe including its fiscal 2019 third quarter results would skew All Other?s results and reduce the usefulness of the table above.
  • 18486581_113
    Other - Other
    Consequently, we believe including its fiscal 2019 first nine-month results would skew All Other results and reduce the usefulness of the table above.
  • 18486581_182
    Financial - Expense
    We believe we will save approximately $300,000 in interest expense in fiscal 2019 because of this payment.

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  • Form Type: Quarterly
  • Number of times amended: 0
  • Accession Number: 0001185185-18-002124
  • Submitted to the SEC: Thursday, December 6, 2018 3:42:15 PM EST
  • Accepted by the SEC: Thursday, December 6, 2018
  • Period ending: October 2018
  • Industry: Household Furniture