Greetings, and welcome to Third Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Richard Hare, Chief Financial Officer. Thank you. You may begin. Thank you, operator, and good morning. During this conference call, we'll make forward-looking statements which are subject to risk and uncertainties. Actual results may differ materially from those made or implied in such statements, which speak only as the date they are made, and which we undertake no obligation to publicly update or revise. Factors that could cause actual results to differ include economic and competitive conditions and other uncertainties detailed in the company's reports filed with the SEC. Our Chairman and CEO, Clarence Smith, will now give you an update on our results, and our President, Steve Burdette, will provide some additional commentary about our business. Thank you for joining our third quarter conference call. Our net sales of $200.3 million were down 19.7% over last year, with comparable store sales down 20.7%. Total written sales were down 11.5%, and written comp store sales declined 12.6%. These trends reflect the strong deliveries of backordered goods last year and the current difficult headwinds in the shift in consumer spending and housing declines related to elevated mortgage rates. Our Q3 delivered sales compared to Q3 of 2019, pre-COVID, were up 5.3%. This quarter, our teams did a fine job in expense control, improving gross margins, managing inventories, and executing high-quality service, which helped produce double-digit pre-tax margins of 10.4% or $22.9 million. Our growing design service with special order and custom upholstery continues to separate us from the more promotional players in the industry. Our relationships and partnerships throughout the industry, both domestic and international, have helped us develop terrific merchandise values, which we believe is gaining share and building our reputation as a top-quality home furnisher. Several of our merchandising team recently returned from the International Home Furnishings Market in High Point, followed by a trip to visit our key case goods suppliers in Vietnam. John Gill, Executive Vice President of Merchandising, led these trips and reports that while orders are significantly down in the factories, in these factories, Havertys is moving exciting new collections through production to ship before Chinese New Year. I believe that our long-term relationships and partnerships are a major strength across the industry. Our collection of outdoor products, a new category for our stores, will be hitting the floors late this year and early next year, in time for the key selling season. Several updated bedroom and dining room products are in the process of arriving early next year. Recently committed major upholstery collections have hit our floors and quickly moved up as best sellers. The recent acquisition of 4 Bed Bath & Beyond leases are on track for converting to Havertys stores in the first half of 2024. We're in due diligence on several existing store opportunities in our regions and expect to be on track of our goal of 5 new stores per year in 2024 and 2025. The furniture industry is clearly in a recession directly related to higher interest and mortgage rates, and the consumers move to travel and entertainment. We believe that these are times when our strong balance sheet, outstanding long-term supplier relationships, and excellent new store opportunities align to set up real market share gains throughout our regions. We continue to focus on helping our customers' vision of their home come to life. We're in an excellent position throughout our regions to make that happen and grow our business. I now would like to turn the call over to Steve Burdette, President. Thank you, Clarence, and good morning. Our third quarter results were weaker than expected, fueled by a weak Labor Day event, proving to be slower than anticipated as our written sales were down roughly 16% from our record Labor Day event last year. Store traffic continues to be our biggest obstacle. However, we were pleased to see our overall ticket, average ticket, rise low single digits, and our closing rate percentage remained basically flat for the quarter when compared to Q3 last year. Our supply chain network is continuing to experience no headwinds with production or shipping times from our vendors. Our inventories were down approximately 26% from Q3 last year. Our backlogs continue to remain consistent with pre-pandemic levels, and our inventories are balanced to the current business conditions. Our lead times from our vendors continue to help drive our special order business. For Q3, our special order business was up approximately 47% over last year and represents 33% of our upholstery business for the quarter. These increases have continued to be driven by our design business, which grew to 29% of our business for the quarter, with our designer average ticket growing just over 10%.... Our focus is to continue to make sure that we are exposing all our customers to our complimentary design services and increasing the number of customers that are engaging with our designers, which will help drive—continue to drive our average ticket higher. Our business partner continues to work with us as we are seeing improvements in our website's performance. Additionally, our more robust analytics have allowed us to make progress on our A/B testing roadmap that is leading to more personalization and improved user experience. We continue to get good feedback from our sales and design teams on the new products that our merchandising teams are bringing to our stores. Extended financing continues to play an important part in our largest promotional holiday events each quarter, as we manage these costs with rising interest rates. Distribution, home delivery, and service are executing well, staying focused on getting it right the first time for our customers. Finally, I want to thank all of our team members throughout the company for all they do every day to help set Havertys apart from our competition. Now I'll turn the call over to Richard. Thank you, Steve. Looking at our income statement in the third quarter of 2023, net sales were $220.3 million, a 19.7% decrease over the prior year quarter. Comparable store sales were down 20.7% over the prior year period. Our gross profit margin increased 370 basis points to 60.8% from 57.1%, due to reductions in freight and positive LIFO inventory adjustment and better pricing discipline. SG&A expenses decreased $11.8 million, or 9.5% to $112.7 million. As a percent of sales, these costs approximated 51.1% of sales, up from 45.4% in the prior year quarter. We experienced decreased selling costs, advertising, distribution, and transportation expenses during the quarter. Other income and expense in the third quarter of 2023 was negligible, and interest income was approximately $1.7 million during the third quarter, as we earned more on our cash deposits due to higher interest rates. Income before income taxes decreased $9.7 million to $22.9 million. Our tax expense was $5.8 million during the third quarter of 2023, which resulted in an effective tax rate of 25.2%. The primary difference in the effective rate and statutory rate is due to state income taxes. Net income for the third quarter of 2023 was $17.2 million, or $1.02 per diluted share on our common stock, compared to net income of $24.6 million, or $1.46 per share in the comparable quarter last year. Now, turning to our balance sheet. At the end of the third quarter, our inventories were $102.3 million, which was down $16 million from December 31, 2022 balance, and down $35 million versus Q3 2022 balance. At the end of the third quarter, our customer deposits were $46.3 million, which was down $1.7 million from December 31, 2022, and down $33.4 million versus the Q3 2022 balance. We ended the quarter with $134.3 million of cash and cash equivalents, and we have no funded debt on our balance sheet at the end of the third quarter of 2023. Looking at some of our uses of cash flow, capital expenditures were $46.4 million for the first nine months of 2023. As a reminder, we repurchased our Florida distribution facility in the second quarter for $28.2 million. In addition, during the first nine months of 2023, we paid $14.3 million in quarterly dividends. During the third quarter, we purchased 104,221 shares of common stock under our existing buyback program for $3.2 million. We have approximately $16.8 million of existing authorization in our buyback program. Our earnings release lists out several additional forward-looking statements indicating our future expectations of certain financial metrics. I will highlight a few, but please refer to our press release for additional commentary. We expect our gross margins for 2023 to be between 60% and 60.2%. We anticipate gross profit margins will be impacted by our current estimate of product and freight costs and changes in our LIFO reserve. Our fixed and discretionary type SG&A expenses for 2023 are expected to be in the $286 million-$288 million range. The variable type costs within SG&A for 2023 are expected to be in the range of 19.6%-19.8%. Our planned CapEx for 2023 is $55 million. Anticipated new or replacement stores, remodels, and expansions account for $19 million. Investments in our distribution network are expected to be $33.5 million, and investments in our information technology are expected to be approximately $2.5 million. Our anticipated effective tax rate in 2023 is expected to be 25%. This projection excludes the impact from vesting of stock awards and any potential new tax legislation. This completes my financial commentary on the third quarter results. Operator, we would like to open up the call for questions at this time. Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. If you'd like to ask a question, you may press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.... You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Anthony Lebiedzinski with Sidoti & Company. Please proceed with your question. Good morning, gentlemen, and thank you for taking the questions. So, you know, so good morning. So, you know, as I look, actually, you know, the third quarter written trends, they were actually down less than what you guys had in the second quarter, so I guess there was some sequential improvement there. I know you guys talked about Labor Day, but just wondering, you know, as far as, like, the rest of the business, throughout the quarter, how did that perform, you know, versus your expectations? And did you see any big changes of, you know, other versus what you had, you know, thought about as far as business progression? Yeah. Hey, Anthony, good morning. This is Richard. Just in terms of our written business and cadence during the quarter, if you recall, in the second quarter, I believe we were down around 14.7%. In July, we were down a little slightly over 8% down, so there was a nice improvement there. And then in August and September, we kind of went back to the same range that we saw for the quarter, you know, in the second quarter overall. So we saw some slight improvement in July and then back to, you know, the 14.7% range in August, and then slightly lower than that, but still double- digits in September. Okay, yeah, that's helpful color, Richard. So, and do you know, as far as like what drove that? Was there anything competitively happening in your marketplace or, you know, or is it just macro headwinds? I think it's just macro. We haven't seen anything dramatically different with any of our competition, and wasn't anything happening differently with us. So I think it's just the overall mood of the market. And as I commented, Richard, I mean, Anthony, about the Labor Day event, that drove the August, September number. You know, looking at it over a two-week promotional period, I mean, we were just, we were down more over that two weeks than we were outside of it, you know, for those two months, but it drove the overall on both of them. We were encouraged coming out of July, you know, with the single digits, but certainly we were going against a record Labor Day last year. We had a fabulous, you know, promotional period last year, an all-time high. So, we were down off of that, and that's what contributed to the bigger decreases in August and September. Okay. So it sounds like it was a tough comparison. Okay. And then, you know, Clarence, you mentioned the outdoor furniture. Just wondering about the opportunity there, as far as what we can see, whether this... And also, will this be in all stores or in just some stores? How should we think about that? Well, I said it was a new category. It's a new category because we dropped the last iteration of it several years back. We're gonna do it the right way this time. It will not be in all of our stores, but it'll be in the ones that make the most sense for us, and eventually, probably all of our stores. So, it'll be a more limited program, and there are some special order opportunities in it. I don't see it as a significant part of our business. It could be a couple of%, maybe 2%-3%, ultimately. But I think it's important, particularly for our special or custom design sales, which is now a bigger part of our business. Our customers want to have the whole home done, and this allows us to do that. So we're excited about it. Okay, thanks, Clarence. And then, you know, last question from me before I pass it on to others. So, you know, your gross margin has, you know, certainly done very well. It's had a nice tail end, tailwind, I'm sorry, from LIFO. So, how should we think about the overall gross margins beyond this year? Anthony, it's Richard. That's a great question. So this particular quarter, we had a pickup of around $2.3 million in the third quarter. Last year, it was an expense of about the same amount, $2.5 million. So the overall improvement in gross margins for the quarter, in terms of our merchandise margins, freight, and product discipline, that was about 45% of the increase. 55% of it is LIFO. We expect that to continue for the remainder of this year. We're still, you know, forecasting next year's, and we'll release our, you know, on the fourth quarter call, we'll give guidance for gross margins for 2024. Gotcha. Okay. Well, thank you very much, and best of luck. Thanks, Anthony. Our next question comes from the line of Michael Legg with The Benchmark Company. Please proceed with your question. Thanks. Good morning, everyone. Congrats on a nice quarter. Can you talk about just a couple quick questions? One, from a competition perspective, what you're seeing from a promotional perspective in your regions, and how that's playing out? Second, your design initiatives obviously are doing well. Can you talk about any opportunity to expand that? You know, how many designers do you have in each store? Is that something you're looking to expand? And then just on the outdoor furniture, what's that margin profile like compared to the rest of the company products? Thanks. ... Okay. So, Mike, this is Steve. So from a competitive standpoint, I would say, you know, activity certainly has picked back up. I've seen probably a little more conservative approach to the financing. You know, people are looking at that because of the rising cost and what goes on there. But obviously, you're still seeing the activity around the holiday events. And from the promotional players, you're seeing, you know, maybe, an increased activity, at those levels as well. But really no real change overall from, you know, discounts or anything like that, that they're offering. Those have been pretty consistent. From a designer opportunity, I think, you know, we have certainly opportunity to grow that. We average right now about one designer per showroom, and, you know, our opportunity is to look at how can we increase that to get seven-day coverage, and what does that look like? And we're doing some experimentations of adding either a designer to additional stores where it makes sense to make sure we got that coverage in our bigger showrooms, and then we'll continue to see how we can expand that out. So, you know, I do think we'll increase that number as we go forward into 2024, so that we can have that coverage in our bigger stores. So we, you know, probably could push toward, you know, one and a half per showroom on average as you go forward into 2024. And then as far as the margins on the outdoor furniture, I don't anticipate it to be any different than our regular margins that we get and intended. So it won't be a hindrance on our margins, and it won't be a plus. It'll be in line with all the other merchandise. Hope that answered your questions. Yep, thanks. And then just to follow up on the designer piece. When you look at that, is there an opportunity to get higher scaled furniture with that? I mean, it's almost like you're getting into a different category of, you know, custom designing. And does that change the price point at maybe the high end of furniture you may start to carry longer term? We do have access and have more products available to our designers that are special order, that they have access to. Our sales consultants do as well. We think that's an important piece to fill in, and that is on the better end side of the product line that we see. But I, I do think our opportunity there is getting into the home. And so if we can get into the home, we will see our average tickets continue to increase. We know that that is, you know, the largest average ticket, is when we get to the home. If we involve the designer in the showroom, we know that that's obviously increased, you know, about, you know, 50% from where it is, you know, on, on average for the company. You know, we're running about 3,300 now. So there is opportunity to grow it, and it is opportunity we're looking at better products. Not necessarily that we're bringing to the lineup, but that we can access the special order to be able to meet their needs. Great. Thanks, and congratulations. Thank you. Our next question comes from the line of Cristina Fernandez with Telsey Advisory Group. Please proceed with your question. Hi, good morning. I had a couple of questions. The first one is on the ticket trends you're seeing, the up 2%. You know, still good to see it up year-over-year, but it's decelerating, even with the designer penetration going up. So I wanted to see, you know, what, what's the offset on the ticket side, and do you think ticket can continue to move up as we go through the next couple of quarters? Yeah, Cristina, I definitely do. I think we can continue to increase that. Is it gonna be at the same rate we did over the, you know, from 2019 as we came out? No. You know, so obviously, I think it'll stay in that low single digits. But I think the opportunity lies with our designer and us continuing to increase and drive that. You know, I talk about it, the number of customers. We're really focused on trying to engage more of our customers. And so we're seeing that increase, and I think we, you know, still have a lot of legroom there to go and opportunity. So, yes, we have seen, you know, maybe there's some smaller tickets that drove a little bit of that decrease that you saw. You're looking at it being in the 2% range, but we see it long term as an opportunity for us to continue to grow, but it will be in the low single-digit range. I think it's not just the designers. We're also adding some better lines to our whole collection here, some upper-end product that allows for more customization that we've ever had before, and I think it will be well received. So the combination, I believe, will help us continue to drive average ticket up. Okay. Yeah, and then following on that comment, Clarence, you mentioned earlier on the call about the teams going to Vietnam and coming up with some new collections. So should we think about the newness that's coming in next year higher than what you saw this year? Or is it just, you know, count the same overall percentage, but the timing a little bit different? I think we're emphasizing the better end of the market across our lineup, and we're getting great results from it. And I think we're getting more workability with the vendors to do customization across the line. For instance, we're now bringing in leather from China, actually, on some of our best-selling upholstery that is custom, and we're getting it in quick ship from China. But I think the overall trend is towards the upper end with us and where we're having the most success. ... Then the second question I had was around the store openings for next year, particularly the Bed Bath & Beyond stores. How are the retrofits progressing? And is the timing still to open those stores in the first quarter of next year? It's gonna stretch a little bit, Cristina. This is Steve. We've had a little bit of a delay in some permitting, especially in Florida. It's taken us a little bit longer than anticipated. And if you remember, when we acquired those stores, we talked about, I believe, on the last call, we basically brought in the Halloween Spirit stores for a temporary period to help offset some costs. And so we took those stores back over here. In the next couple of weeks here, and we'll start the redo process and then working on the permitting as part of that. But it will start. One of the stores will open up, we anticipate, late first quarter, and the other three will come in the second quarter. Thank you. And then last question on the buybacks. It's good to, for you, you know, for us to see you buying back stocks. You hadn't done it in the three prior quarters, so what gave you the confidence to go ahead and do that this quarter? Well, our cash position and the fact that we feel our position in the marketplace is strong. I mean, sales are tough, but we know that we're able to gain share. We like, we like all of our work here. We think that we're in a position to grow our business. So, the main thing is that we've got the cash and the opportunity to do it. The stock did drop some, and we're back, we were back in the market. Now, we meet next Friday with our board, and we go over this every single board meeting, and that'll be clearly a conversation that we'll bring back up as far as giving cash back to our shareholders. Thank you, and best of luck this quarter. Thank you. Thanks, Cristina. Our next question comes from the line of Bud Bugatch with Water Tower Research. Please proceed with your question. Good morning, and thanks for taking my questions. Good morning, Clarence, Steve and Richard, and congratulations on the profit performance of this quarter. Very impressive. Welcome back, Bud. It's been a long time. Thank you. Thank you. Thank you, Clarence. It's good to be back. Let me, the questions I have primarily relate to the sales impact. And you all have got a wide swath in stores and talk to a lot of consumers in the stores as you visit the stores. And we've had the, and Clarence, you noted the, the twin effects of movement from focusing on the home, which we saw during COVID, and then the higher interest rates, kind of a double whammy to to industry demand right now. I wonder if as you talk to consumers, are you seeing that change? It seems like we've, we've watched this diversion to to services away from the home now for maybe 3-5 quarters. So are you seeing that come to an end? Do you sense that as you talk to consumers in the stores? Well, Steve and I have been with the industry players, and we’re listening to what’s happening out there. It’s certainly an impact, and I don’t see a clear ending to it. Some of the terms we’ve heard is the second half of next year, it might start to get better. That’s probably as good as I can give you as far as what we anticipate. I mean, we’re in a tough situation now for the industry, and those who have debt and need to refinance will have issues. And there are gonna be opportunities for us. So we’re prepared to take advantage of converting existing boxes to Havertys. We’re very good at that, and that’s what we’re looking at. It is a tough time, and I don't see a clear ending to it, but I would think late next year should be better. Steve, are you seeing any change in the cycle times of when customers start the process? And I'm particularly thinking of design customers. They begin, and you go through a process. Has the sales cycle at all changed, and can you can you- But on that side of it. Yeah, from a designer standpoint, it hasn't changed. I mean, it's still the same. I mean, you know, it's somebody's either moving, they're redoing a home, and that's been part of the process. What may have sped it up is our availability of product. We can get it quicker and provide it quicker to them, where a year ago, we, two years ago, we were struggling with that. And so that stretched it out because of us. Now, it's because it's where the consumer is, and so we're able to meet them. So I'd say from that standpoint, it has condensed because the consumers, you know, we're able to deliver the product quicker to the consumer based on their needs. But overall, I'd say the cycle is still, you know, the same. We can deliver quickly on in-stock product. We still deliver within less than a week, and, you know, some cases within 2-3 days. Just depends on the area we're going to when that market, you know, when that's available. That's always been a strength of Havertys, so, and you have a number of different regions. Are you seeing any geographical changes between differences between the regions in terms of comps and order comps? We really aren't, Bud. I mean, it's, it's pretty much across the board, you know, in the, across all the districts. You know, we've got seven districts, and they're all, you know, equally down, within a percentage or two of each other. ... There's no real difference there. Okay. And the quarter-ending backlog versus the quarter-beginning backlog, can you comment, is there much change in that? I know you had less the orders were down less than delivery, so that would say that backlog probably grew during the quarter. Is that a good way to look at it? Hey, Bud, it's Richard. I'd say the backlog number in the last quarter, in the end of quarter, in the third quarter is basically flat. And our customer deposit number at the end of the third quarter versus the end of the second quarter, you know, is basically flat as well. So we're kind of at a -- you know, we're back to the old backlog. We're delivering what the orders that we take in. It's- You haven't made any changes? I'm sorry. Go ahead, Clarence. I said, eat what you kill again, Bud. Gotcha. I hear it. I know that phrase, Clarence. We're in our industry, we're very familiar with that phrase. The issue that you mentioned, and I think it's very accurate. You're a strong player with your suppliers, and the suppliers have got to be hurting maybe even worse than the customers are, than their customers are. And you have some opportunity there. What are you hearing from them? And you've talked about some of the new collections coming in. Obviously, you're not gonna take advantage of them, but that doesn't mean that you don't get great new product and great new pricing. I mentioned John Gill in Vietnam last week, and he told me that a number of our key suppliers, who are the best players in the industry, are down anywhere from 30 to, from 30 to 50%, and they're all looking for orders. So, I mean, we're not worried about these guys failing or anything like that, but it is hitting the manufacturers, I think, more dramatically than the retailers right now, and that all catches up. So, everything was on hold last year. I mean, it took us sometimes up to 9 months to get product, and now it's down to the normal or even shorter. So, a number of vendors are hurting, but, I think our suppliers, we feel very good about, and the partnership theirs are, are strong, and they come to us and give us great values, and we, we appreciate that. Okay. And you did mention you were bringing in some leather from China. Are there any geopolitical issues that are going on that might worry you with China? I know, the country's got its own issues, but just- You know, we used to do almost everything from China. Now only basically the better-end leather. They're very good suppliers. We like them. It does make you sound comfortable with what's happening, but they're able to work through it, and we're getting the product, and they're good, good partners. So they still, with even the tariff on top of them, are offering better quality product than we're getting elsewhere. But you certainly have to look at moving it to other places like Vietnam or even Cambodia, things like that. We're looking at all of that, but right now we have some very strong players in China that we're still doing good business with. Much of the leather in China, as I recall, was being imported from Italy and actually tanned either in Italy or also in China because of their lack of environmental. That's right. It comes from- Is it still coming from Italy? I'm sorry. It does. Italy, and it comes from the U.S., too, and South America. But that's where most- Gotcha. Anyway. Okay. And last for me, I'm always curious to get into the outdoor furniture business. When I was in the retail business, it was the product category I both hated and loved the most, because of the seasonality and the differences. So you said you're gonna do it right this time. Can you maybe give us a feeling of what you meant by that, and what was different this time than the last time? It's fewer collections. It's fewer collections. It's only two or three collections that we'll have available, and then we do the rest of it through our out suppliers who do it as a third-party arrangement. And we won't roll it out everywhere. We'll only start where we know it's gonna do the best and expand it from there. And these suppliers are very good at it. We're just gonna be more controlled, more focused, more strategic. Havertys branded? That scenario where there are brands in outdoor, is it Havertys branded or is it national branded? Oh, no, it'll be Havertys branded product. Okay. What about accessories like fire pits and the other stuff that usually go along with that category? We'll have some of that, but it'll still be Havertys branded. Gotcha. Well, good luck on it. Be interested to see it in the stores. When does it hit? When does it get in the stores? It starts arriving in December and then January. Okay, great. Thank you and good luck on next quarter and the year. Thank you. Thank you, Bud. There are no further questions in the queue. I'd like to hand the call back to Mr. Hare for closing remarks. Well, thank you for your participation in today's call. We look forward to talking with everybody in the future when we release our fourth quarter results, later on this year. Thank you. Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.