La-Z-Boy Incorporated (NYSE:LZB) Q1 2018 Earnings Conference Call - Preliminary Transcript

Aug 23, 2017 • 08:30 am ET

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La-Z-Boy Incorporated (NYSE:LZB) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Greetings, and welcome to La-Z-Boy Fiscal 2018 First Quarter Results Conference Call. At this time, all participants are in a listen-only mode. A brief 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 Kathy Liebmann, Director of Investor Relations and Corporate Communications. Please go ahead.

Executive
Kathy Liebmann

Thank you, Rob. Good morning and thank you for joining us to discuss our fiscal 2018 first quarter results. With us today are Kurt Darrow, La-Z-Boy's Chairman, President and Chief Executive Officer and Mike Riccio, our Chief Financial Officer.

Kurt will begin this morning'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.

We will make forward-looking statements during this call, so I will repeat our usual Safe Harbor remark. While these statements reflect the best judgment of management at the present time, they are subject to numerous future risks and uncertainties as detailed in our regular SEC filings. And they may differ materially from actual results due to a wide range of factors. We undertake no obligation to update any forward-looking statements made during this call.

And with that, let me turn over the call to Kurt Darrow, La-Z-Boy's Chairman, President, and Chief Executive Officer. Kurt?

Executive
Kurt Darrow

Thank you, Kathy and good morning everyone. Yesterday afternoon, we reported our results for the fiscal 2018 first quarter. While our results came in lower than anticipated and we were disappointed after having turned in such a strong finish to fiscal 2017, we do not believe there is a systemic issue with the business. Rather, the performance for the period was primarily reflected of lower volume going through our plants and the challenge of absorbing fixed costs.

Although, we posted a consolidated sales increase for the period, much of it was a result of acquisitions and therefore that additional volume did not go through our manufacturing plants. We also had an increase in SG&A as a percent of sales during that period, which we intend to better manage moving forward given shifts in volume.

Finally, going forward, a normal quarter without the seasonality factor and with 13 weeks of production as opposed to quarter one's 12 weeks, our average quarterly sales should be $30 million to $40 million higher than this current quarter and our ratios on SG&A and absorption should correlate with our normal patterns.

Let me assure you, our manufacturing operations are lean and efficient. Our productivity has been in an all-time high and we have demonstrated consistently that when we have adequate volume, we perform