La-Z-Boy Incorporated (NYSE:LZB) Q1 2017 Earnings Conference Call - Final Transcript

Aug 24, 2016 • 08:30 am ET


La-Z-Boy Incorporated (NYSE:LZB) Q1 2017 Earnings Conference Call - Final Transcript


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Greetings and welcome to the La-Z-Boy Incorporated fiscal 2017 first quarter results conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Kathy Liebmann, Director of Investor Relations and Corporate Communications for La-Z-Boy. Thank you. You may begin.

Kathy Liebmann

Thank you, Melissa. Good morning and thank you for joining us to discuss our fiscal 2017 first quarter results. With us this morning are Kurt Darrow, La-Z-Boy's Chairman, President, and Chief Executive Officer; and Mike Riccio, our Chief Financial Officer. Kurt will begin today's call and then Mike will speak about the financials before turning the call back to Kurt for his concluding remarks. We will then open the call to questions. A telephone replay of the call will be available for one week beginning this afternoon.

Slides will accompany this presentation and are available for viewing through our webcast link. These regular quarterly investor conference calls are one of La-Z-Boy's primary vehicles to communicate with investors about the Company's current operations and future prospects. (Forward-Looking Cautionary Statements) And with that, let me turn over the call to Kurt Darrow, La-Z-Boy's Chairman, President and Chief Executive Officer. Kurt?

Kurt Darrow

Thank you, Kathy and good morning, everyone. Yesterday afternoon, we reported our fiscal 2017 first quarter results. Given the current retail environment, we were pleased to improve our earnings reflecting the great strides we have made with our supply chain initiatives, which include not only procurement but efficiencies throughout our manufacturing operations as well.

Highlights for the quarter include an increase in consolidated operating income, an increase in operating margin for both the upholstery and casegoods segments and significant increase in cash flow from operations to $34.1 million from $1.5 million in last year's first quarter. We also provided returns to our shareholders with a purchase of more than 500,000 shares or approximately 1% of shares outstanding on the open market. We are continuing to execute against many strategic growth initiatives and opened five new stores in the first quarter across the network as part of our 4-4-5 store build-out strategy.

Subsequent to quarter-end, the Company moved into Canada with the acquisition of four stores representing another step as the Company grows its percentage of ownership of the La-Z-Boy Furniture Galleries network. As we move into what is typically a stronger fall selling season, we are in an excellent service position for both our dealers and the consumer. I will now turn into a brief discussion of each of our operating segments. First, our two wholesale segments, upholstery and casegoods.

On a 1.9% sales decrease in the first quarter versus the prior year, we achieved 11.1% operating margin. This performance highlights the efficiencies of our plants and the effectiveness of our other supply chain initiatives particularly with respect to procurement, productivity, and overall client efficiencies. We have talked a lot about supply