La-Z-Boy Incorporated (NYSE:LZB) Q3 2019 Earnings Conference Call - Final Transcript

Feb 20, 2019 • 08:30 am ET

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La-Z-Boy Incorporated (NYSE:LZB) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to your La-Z-Boy's Fiscal 2019 Third Quarter Results Conference Call. All lines have been placed in a listen-only mode and the floor will be opened for your questions and comments following the presentation. (Operator Instructions)

At this time, it is my pleasure to turn the floor over to your host, Kathy Liebmann. Ma'am, the floor is yours.

Executive
Kathy Liebmann

Thank you, Christie. Good morning and thank you for joining us to discuss our fiscal 2019 third quarter results. With us today are Kurt Darrow, La-Z-Boy's Chairman, President and CEO; and Melinda Whittington, Senior Vice President and CFO. Kurt will open and close the call and Melinda will speak to the financials midway through; we'll then open the call to questions.

Slides will accompany this presentation and you may view them through our webcast link, which will be available for one year, and a telephone replay of the call will be available for one week beginning this afternoon. 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 L. Darrow

Thank you, Kathy; and good morning, everyone. Yesterday afternoon we reported our fiscal 2019 third quarter results. Consolidated sales increased 13%, reflecting solid growth across the entire enterprise including the base businesses and those recently acquired. We also grew consolidated operating income on a GAAP and non-GAAP basis with all three segments posting improved performance. EPS for the quarter was the highest in any third quarter in more than a decade and the company-owned retail segment turned in a delivered same-store increase of plus 6.7% and doubled its operating income. Additionally, we generated strong operating cash during the period, which provides us with the ability to continue to make strategic investments in the business to drive growth. A good quarter overall, highlighting our strong portfolio of brands, our vast distribution network, our global supply chain and a very solid balance sheet.

I'll now take a few minutes to review each business. First, Upholstery, sales in the segment increased 4.2% from last year's third quarter, driven by improvements in mix, selling prices and the surcharge pass-throughs for tariffs, which I'll discuss in more detail in a few minutes. Operating margin was 10.3% on a GAAP basis; and non-GAAP basis, up from last year's third quarter GAAP operating margin of 9.9% and non-GAAP of 9.7%. While there were a number of puts and