Hooker Furniture Reports Income Gains on Higher Sales for Fiscal Year 2018
Consolidated net sales increased
“We’re pleased with our performance for the fiscal year, with solid sales growth, double-digit gains in profitability and strong cash flow generation,” said
Higher sales in all reportable segments contributed to the annual consolidated revenue increase, driven by a 6% increase in the Home Meridian segment and a 20% sales increase in the All Other Segment. Nearly 80% of the All Other segment net sales increase was due to the inclusion of four months of revenues from the business of
“Over the last few years, our strategy has been to leverage the financial strength of our traditional businesses to grow profitably, both organically and through acquisitions,” said Toms. “That strategy has helped us build a more diverse and robust portfolio of brands yielding strong results, as we focus our resources and management around winning distribution channels, products and price-points.”
For the fiscal 2018 fourth quarter, consolidated net sales were
Earnings per diluted share decreased 21% from
The Home Meridian segment’s strong sales results for the year were tempered somewhat by a fourth quarter sales decrease compared to the prior year’s record fourth-quarter shipments. In addition, the All Other Segment experienced some unfavorable impact on margins from raw materials inflation and excess capacity in two domestic-manufacturing divisions in that segment.
During the fiscal year, higher revenues helped boost consolidated operating income by
Segment Reporting: Hooker Branded
Hooker Branded segment revenues grew
“The segment continues to trend in the right direction, with sales and incoming orders up approximately 8.6% in the first two months of the current fiscal year versus the similar period in fiscal 2018. Hooker Branded is a significant earnings engine for the company that has allowed us to fund many of our growth initiatives. Our strategy to align our resources around winning and emerging channels of distribution while continuing to support the traditional channels that have been Hooker’s bread and butter over the years is yielding positive results.”
Segment operating margin remained a solid 13.0% for the fiscal year. For the quarter, the operating margin was 15.3%, reflecting the leverage gained from the uptick in sales.
Segment Reporting: Home Meridian
“For the fiscal year, the Home Meridian segment grew its net sales 6%, its operating profit nearly 30%, and met its financial goals” said
“Fourth quarter orders were up 2% and backlog was down 8%. However, as of the end of fiscal 2019 March period, Home Meridian’s current backlog is up 19.3% over prior year and orders fiscal year to date are up 12.2%. While some of these orders are scheduled out over the next several quarters and will not affect our first quarter, this is a positive trend. Our emerging channels of distribution for the year grew at 2.5 times the rate of our traditional channels, led again by our sales to eCommerce customers, which grew 46%,” Revington said
Segment Reporting: “All Other”
“The All Other segment increased sales by about 20% on the strength of the addition of Shenandoah’s revenues for the last four months of the year, and to a lesser extent, sales increases at Bradington-Young and H Contract. “Specializing in upscale furnishings for senior living facilities and retirement centers, H Contract contributed over
Cash, Debt and Inventory
The Company finished the fiscal 2018 year with
“Because of our strong cash flow, we were able to make an unscheduled, additional payment on our debt of
Outlook
“Both current retail conditions and our business results can be best described as mixed,” said Toms. “Business during the President’s Day promotions at retail was very good for most retailers and for us, but overall activity varies by region of the country, by region of the world and by distribution channel. Our businesses cross various home furnishings product segments, price points and distribution channels, so at any given time we have winners and losers. Currently, our Hooker branded business in the higher price points is faring well, with orders up about 9% compared to this time last year. While Home Meridian’s orders are up 12% over prior year, its hospitality business, their smallest marketing group, remains weak and their suppliers’ post-Chinese New Year’s recovery has been slower than normal. We expect these situations will be temporary. With our diverse portfolio and strategy to focus on winning channels, we are well-positioned to grow sales and income in the coming year, thanks to the solid foundation of our traditional business and our initiatives to create new opportunities,” Toms concluded.
Dividends
On
Conference Call Details
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) the risks specifically related to the concentrations of a material part of our of sales and accounts receivable in only a few customers; (3) achieving and managing growth and change, including the recent Shenandoah acquisition, and the risks associated with new business lines, acquisitions, restructurings, strategic alliances and international operations; (4) 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; (5) 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, including the implementation of a possible border-adjustment tax; (6) our ability to successfully implement our business plan to increase sales and improve financial performance; (7) 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; (8) the possible impairment of our long-lived assets, which can result in reduced earnings and net worth; (9) the cost and difficulty of marketing and selling our products in foreign markets; (10) disruptions involving our vendors or the transportation and handling industries, particularly those affecting imported products from
Table I |
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
(In thousands, except per share data) |
Thirteen Weeks Ended | Fifty-Two Weeks Ended | |||||||||||||||
January 28, | January 29, | January 28, | January 29, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net sales | $ | 175,519 | $ | 173,927 | $ | 620,632 | $ | 577,219 | ||||||||
Cost of sales | 135,800 | 133,809 | 485,376 | 451,098 | ||||||||||||
Gross profit | 39,719 | 40,118 | 135,256 | 126,121 | ||||||||||||
Selling and administrative expenses | 23,140 | 22,728 | 87,279 | 83,767 | ||||||||||||
Intangible asset amortization | 793 | 334 | 2,084 | 3,134 | ||||||||||||
Operating income | 15,786 | 17,056 | 45,893 | 39,220 | ||||||||||||
Other income, net | 483 | 294 | 1,536 | 930 | ||||||||||||
Interest expense, net | 388 | 199 | 1,248 | 954 | ||||||||||||
Income before income taxes | 15,881 | 17,151 | 46,181 | 39,196 | ||||||||||||
Income tax expense | 7,046 | 6,172 | 17,620 | 13,909 | ||||||||||||
Net income | $ | 8,835 | $ | 10,979 | $ | 28,561 | $ | 25,287 | ||||||||
Earnings per share | ||||||||||||||||
Basic | $ | 0.75 | $ | 0.95 | $ | 2.45 | $ | 2.19 | ||||||||
Diluted | $ | 0.75 | $ | 0.95 | $ | 2.44 | $ | 2.18 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 11,747 | 11,537 | 11,633 | 11,531 | ||||||||||||
Diluted | 11,771 | 11,564 | 11,663 | 11,563 | ||||||||||||
Cash dividends declared per share | $ | 0.14 | $ | 0.12 | $ | 0.50 | $ | 0.42 | ||||||||
Table II | |
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES | |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |
(In thousands) |
Thirteen Weeks Ended | Fifty-Two Weeks Ended | ||||||||||||||||
January 28, | January 29, | January 28, | January 29, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Net Income | $ | 8,835 | $ | 10,979 | $ | 28,561 | $ | 25,287 | |||||||||
Other comprehensive income (loss): | |||||||||||||||||
Amortization of actuarial (loss) gain | (190 | ) | 605 | (144 | ) | 551 | |||||||||||
Income tax effect on amortization | 43 | (223 | ) | 26 | (204 | ) | |||||||||||
Adjustments to net periodic benefit cost | (147 | ) | 382 | (118 | ) | 347 | |||||||||||
Total comprehensive Income | $ | 8,688 | $ | 11,361 | $ | 28,443 | $ | 25,634 | |||||||||
Table III |
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In thousands) |
As of | January 28, | January 29, | |||||
2018 | 2017 | ||||||
(unaudited) | |||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 30,915 | $ | 39,792 | |||
Trade accounts receivable, net | 92,461 | 92,578 | |||||
Inventories | 84,898 | 75,303 | |||||
Prepaid expenses and other current assets | 5,314 | 4,244 | |||||
Total current assets | 213,588 | 211,917 | |||||
Property, plant and equipment, net | 29,249 | 25,803 | |||||
Cash surrender value of life insurance policies | 23,622 | 22,366 | |||||
Deferred taxes | 3,168 | 7,264 | |||||
Intangible assets, net | 38,139 | 25,923 | |||||
Goodwill | 40,058 | 23,187 | |||||
Other assets | 2,234 | 2,236 | |||||
Total non-current assets | 136,470 | 106,779 | |||||
Total assets | $ | 350,058 | $ | 318,696 | |||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities | |||||||
Current portion of term loan | $ | 7,528 | $ | 5,817 | |||
Trade accounts payable | 32,685 | 36,552 | |||||
Accrued salaries, wages and benefits | 9,248 | 8,394 | |||||
Income tax accrual | 3,713 | 4,323 | |||||
Customer deposits | 3,951 | 5,605 | |||||
Other accrued expenses | 2,893 | 3,369 | |||||
Total current liabilities | 60,018 | 64,060 | |||||
Long term debt | 45,778 | 41,772 | |||||
Deferred compensation | 11,164 | 10,849 | |||||
Pension plan | 2,441 | 3,499 | |||||
Other long-term liabilities | 886 | 589 | |||||
Total long-term liabilities | 60,269 | 56,709 | |||||
Total liabilities | 120,287 | 120,769 | |||||
Shareholders’ equity | |||||||
Common stock, no par value, 20,000 shares authorized, | |||||||
11,762 and 11,563 shares issued and outstanding on each date | 48,970 | 39,753 | |||||
Retained earnings | 180,433 | 157,688 | |||||
Accumulated other comprehensive income | 368 | 486 | |||||
Total shareholders’ equity | 229,771 | 197,927 | |||||
Total liabilities and shareholders’ equity | $ | 350,058 | $ | 318,696 | |||
Table IV |
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In thousands) |
Unaudited |
Fifty-Two Weeks Ended | ||||||||||||
January 28, | January 29, | |||||||||||
2018 | 2017 | |||||||||||
Operating Activities: | ||||||||||||
Net income | $ | 28,561 | $ | 25,287 | ||||||||
Adjustments to reconcile net income to net cash | ||||||||||||
provided by operating activities: | ||||||||||||
Depreciation and amortization | 6,647 | 8,000 | ||||||||||
Loss/(Gain) on disposal of assets | 571 | (72 | ) | |||||||||
Deferred income tax expense (benefit) | 4,207 | (2,224 | ) | |||||||||
Noncash restricted stock and performance awards | 1,175 | 1,157 | ||||||||||
Provision for doubtful accounts | (531 | ) | 2,188 | |||||||||
Gain on life insurance policies | (582 | ) | (964 | ) | ||||||||
Changes in assets and liabilities: | ||||||||||||
Trade accounts receivable | 4,224 | (21,507 | ) | |||||||||
Inventories | (7,215 | ) | 6,016 | |||||||||
Prepaid expenses and other current assets | (1,067 | ) | (115 | ) | ||||||||
Trade accounts payable | (4,623 | ) | 4,662 | |||||||||
Accrued salaries, wages, and benefits | 159 | 1,950 | ||||||||||
Accrued income taxes | (611 | ) | 3,966 | |||||||||
Customer deposits | (1,655 | ) | 2,187 | |||||||||
Other accrued expenses | (696 | ) | 2,303 | |||||||||
Deferred compensation | (1,151 | ) | (1,715 | ) | ||||||||
Other long-term liabilities | 333 | 121 | ||||||||||
Net cash provided by operating activities | $ | 27,746 | $ | 31,240 | ||||||||
Investing Activities: | ||||||||||||
Acquisitions | $ | (32,773 | ) | $ | (86,062 | ) | ||||||
Purchases of property and equipment | (3,166 | ) | (2,454 | ) | ||||||||
Proceeds received on notes receivable | 120 | 146 | ||||||||||
Proceeds from sale of property and equipment | 9 | 2 | ||||||||||
Premiums paid on life insurance policies | (673 | ) | (715 | ) | ||||||||
Proceeds received on life insurance policies | - | 1,022 | ||||||||||
Net cash used in investing activities | (36,483 | ) | (88,061 | ) | ||||||||
Financing Activities: | ||||||||||||
Proceeds from long-term debt | $ | 12,000 | $ | 60,000 | ||||||||
Payments for long-term debt | (6,286 | ) | (12,290 | ) | ||||||||
Debt issuance cost | (39 | ) | (165 | ) | ||||||||
Cash dividends paid | (5,815 | ) | (4,854 | ) | ||||||||
Net cash (used in) provided by financing activities | (140 | ) | 42,691 | |||||||||
Net decrease in cash and cash equivalents | (8,877 | ) | (14,130 | ) | ||||||||
Cash and cash equivalents - beginning of year | 39,792 | 53,922 | ||||||||||
Cash and cash equivalents - end of year | $ | 30,915 | $ | 39,792 | ||||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash paid for interest, net | $ | 1,135 | $ | 848 | ||||||||
Cash paid for income taxes, net | 14,122 | 12,164 | ||||||||||
Non-cash transactions: | ||||||||||||
Acquisition cost paid in common stock | $ | 8,396 | $ | 20,267 | ||||||||
Increase in property and equipment through accrued purchases | 58 | - | ||||||||||
Table V | |||||||||||||||||||
HOOKER FURNITURE CORPORATION AND SUBSIDIARIES | |||||||||||||||||||
NET SALES AND OPERATING INCOME BY SEGMENT* | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
Unaudited | |||||||||||||||||||
Thirteen Weeks Ended | Fifty-Two Weeks Ended | ||||||||||||||||||
January 28, | January 29, | January 28, | January 29, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||
% Net | % Net | % Net | % Net | ||||||||||||||||
Net Sales | Sales | Sales | Sales | Sales | |||||||||||||||
Hooker Branded | $ | 45,821 | 26.1 | % | $ | 43,212 | 24.8 | % | $ | 166,754 | 26.9 | % | $ | 158,685 | 27.5 | % | |||
Home Meridian | 103,299 | 58.9 | % | 113,244 | 65.1 | % | 365,472 | 58.9 | % | 344,635 | 59.7 | % | |||||||
All other | 26,399 | 15.0 | % | 17,471 | 10.0 | % | 88,406 | 14.2 | % | 73,899 | 12.8 | % | |||||||
Consolidated | $ | 175,519 | 100 | % | $ | 173,927 | 100 | % | $ | 620,632 | 100 | % | $ | 577,219 | 100 | % | |||
Operating Income | |||||||||||||||||||
Hooker Branded | $ | 6,990 | 15.3 | % | $ | 7,722 | 17.9 | % | $ | 21,732 | 13.0 | % | $ | 20,203 | 12.7 | % | |||
Home Meridian | 8,016 | 7.8 | % | 8,421 | 7.4 | % | 18,674 | 5.1 | % | 14,375 | 4.2 | % | |||||||
All other | 780 | 3.0 | % | 913 | 5.2 | % | 5,487 | 6.2 | % | 4,642 | 6.3 | % | |||||||
Consolidated | $ | 15,786 | 9.0 | % | $ | 17,056 | 9.8 | % | $ | 45,893 | 7.4 | % | $ | 39,220 | 6.8 | % | |||
*The Company continually monitors its reportable segments for changes in facts and circumstances to determine whether changes in the identification or aggregation of operating segments are necessary. In the fourth quarter of FY2018, the Company updated its reportable segments as follows:
For more information, contact:
Chairman and Chief Executive Officer
Phone: (276) 632-2133, or
Phone: (276) 666-3949
Source: Hooker Furniture Corporation