Hooker Furniture Corp. (NASDAQ:HOFT) Q3 2020 Earnings Conference Call - Final Transcript

Dec 06, 2019 • 09:00 am ET

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Hooker Furniture Corp. (NASDAQ:HOFT) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Greetings, ladies and gentlemen, and welcome to the Hooker Furniture Quarterly Investor Conference Call reporting its operating results for the Third Quarter of 2020. 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.

It is now my pleasure to introduce your host, Paul Huckfeldt, Vice President, Finance and Chief Financial Officer for Hooker Furniture Corporation.

Executive
Paul A. Huckfeldt

Thank you, Liz. Good morning, and welcome to our quarterly conference call to review the financial results of our fiscal 2020 third quarter, which ended November 3, 2019. We certainly appreciate your participation tonight.

Paul Toms, our Chairman and CEO; and Doug Townsend, Co-President of our Home Meridian division will join me for our prepared remarks. For the question-and-answer portion of the call, some of our business unit heads will be available to take questions, including Michael Delgatti, President of Hooker Domestic Upholstery and Emerging Channels; and Jeremy Hoff, President of our Hooker Branded segment.

During our call, we may make forward-looking statements, which are subject to risks and uncertainties. A discussion of factors that could cause our actual results to differ materially from Management's expectations is contained in our press release and SEC filing, announcing our fiscal 2020 third quarter results. Any forward-looking statements speaks only as of today and we undertake no obligation to update or revise any forward-looking statements to reflect events or circumstances after today's call.

This morning, we reported consolidated net sales of $158.2 million and net income of $3.9 million or $0.33 per diluted share for our fiscal 2020 third quarter, which ended on November 3. Compared to last year's third quarter, our net sales decreased (Technical Difficulty) with net income of $10 million or $0.85 per diluted share. Net sales were down 7.7% or $37 million compared to last year's first nine months. Earnings per diluted share for the first nine months decreased 60% to $0.85 a share from $2.13 in the prior year.

Now, I'll turn the call over to Paul Toms to comment on our fiscal 2020 third quarter results.

Executive
Paul B. Toms

Thank you, Paul, and good morning, everyone. Significantly higher chargebacks and reduced volume from a single large retail customer at Home Meridian was the most significant driver in our lower third quarter sales and earnings. In addition, lingering effects of 25% tariffs on finished goods and component parts imported from China, along with spotty retail demand that's continued through the first nine months of the year are other factors negatively impacting our results.

The sales decline with the single major customer represented 70% or $6.4 million of a $9 million volume reduction in the HMI segment. And approximately $3 million in excess chargebacks from the same retailer drove a $4 million operating loss for the quarter in that segment. That compares to operating income of about $5 million at Home Meridian in the same quarter a year-ago. Despite the headwinds, we have positive achievements this quarter in