Greetings, and welcome to Havertys Fourth Quarter 2023 Earnings Call. At this time, all participants are in listen-only mode. A Q&A session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on the telephone on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Richard Hare, Chief Financial Officer. Please go ahead, sir. Thank you, Operator. 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 additional commentary about our business. Good morning. Thank you for joining our 2023 fourth quarter and full year conference call. Our fourth quarter sales were $210.7 million, down 24.9%. Total written sales were down 13.1%, and written comp store sales declined 14.3% for the quarter. Total sales for the year were $862.132 million, down 17.7% from 2022. Our current sales performance returned to the pre-COVID sales trends we experienced in 2019 and 2018. In the fourth quarter, our teams did a solid job in expense control, higher gross margins, and excellent inventory management. Improvement in average ticket, higher designer sales, and maintaining high-quality service helped produce pre-tax margins of 8.7% and $18.5 million. For the full year, we produced $72.7 million pre-tax earnings versus $119.5 million in 2022. Following record sales and profit years post-COVID, the furniture industry was first hit by consumer spending on travel and entertainment, and by most recently, the higher mortgage and interest rates, which significantly impacted housing sales. For Havertys, home sales in the South have historically been highly correlated to our furniture sales. Currently, home sales have been at historic lows and have clearly impacted on our customers' interest in buying furniture. These trends are reflected in our recent performances. We're encouraged that we believe that home sales seem to have bottomed out after dramatic declines. It is evident now that we've experienced a two year pull forward of furniture and accessory sales due to COVID, and now have experienced a two year falloff in sales. Our teams have done a fine job in reducing our costs in reaction to weakening sales trends and adjusting across all areas of our business. Our headcount compared to 2019 pre-COVID is down from approximately 3,500 to 2,500 team members making similar sales volume. We're continuing to evaluate all areas of our business for opportunities to consolidate and add productivity. We've focused on serving our customers better with improved in-store and online technology, strengthening of our design service, adding customization and special order products, and upgrading our product lines. All these areas will continue to separate us from the more promotional players in our markets. The acquisition of four former Bed Bath & Beyond locations is on track for converting to Havertys stores in the first half of 2024. All these stores are in adjacent markets to current Havertys stores, and we're leveraging existing management. We're currently training staff in nearby stores to prepare for the spring/early summer openings. We're very pleased with the three important Florida stores and one store outside Memphis in Southaven, Mississippi. We're in due diligence on several additional opportunities, including other former Bed Bath & Beyond locations in our regions, and expect to meet our goal of five new stores per year in 2024 and 2025. Our plans are to add stores in adjacent and existing markets within our distribution footprint. This could expand to several states from our soon-to-be 17th state. We have several sites and locations we're evaluating and expect to see additional store opportunities soon from retailers struggling with sliding sales and refinancing debt. Havertys financial strength with zero funded debt and over $100 million in cash allows us to continue to invest in new stores and upgrading stores and systems to better serve our customers. We continue to focus on helping our customers' vision of their home come to life. We have a long history of gaining market share and building on our strengths in difficult times. We believe that we're especially well-positioned to grow our business in many of the fastest-growing markets in the country in the near term and into the future. Thank you, Clarence, and good morning. Our fourth quarter in 2023 yearly results were certainly below our expectations, but we are proud of all our team members for providing what turned out to be our third best year for the company in sales and operating profits. Store traffic continues to be a struggle in all markets as we battle the headwinds of high interest rates along with the worst housing market in 30 years. However, we continue to see our design business and product assortment driving our overall average ticket as it increased low single digits for the quarter and year. Also, our closing rates remain strong, but we're down low single digits for Q4 in the year. Our supply chain network has not felt any impact yet that would affect our business from the geopolitical issues in the Middle East. We have seen some extended lead times due to the shipping lanes being adjusted due to the inability to use the Suez Canal, but the impact on our customers and inventories is minimal. Our inventories are in excellent condition, and we're down at year-end by approximately 20%, with backlogs remaining consistent. Our special order business continues to remain strong with an increase of over 31% in Q4 and over 40% for the year. Our design business continues to be a big driver of our business as it continued to grow to over 31% of our total business in the quarter and approximately 29% of our business for the year. Designer average ticket continues to grow at high single digits, and we are encouraged that we've been able to grow the number of customers that are engaging with our designers by 15% in Q4 and by 8% for the year. There is still tremendous opportunity for us in our design business as we see the opportunity to grow double digits by increasing the percentage of engaged customers and their average tickets. We have enhanced our marketing campaign, We Furnish Happiness, to include with a regret-free experience. This messaging circles around four pillars that we feel are key to our customers' happiness and experience: choices, quality, design, and service. We have built our company's success over the last 138 years by instilling a culture of not selling a customer one time, but selling a customer for a lifetime. We believe in our products, our team members, our systems, and our execution. At the same time, we are continuing to right-size our staffing to match our current business conditions through attrition in all areas of the business. Extended financing continues to play an important part in our holiday events each quarter as we manage these costs. However, we are experimenting with a different. Richard, thank you, Steve. In the fourth quarter of 2023, we reported net sales of $210.7 million, a 24.9% decrease over the prior quarter. Comparable store sales were down 25.5% over the prior period. Our gross profit margin increased 540 basis points to 62.4% from 57% due to reductions in freight, a positive LIFO inventory adjustment, and pricing discipline. SG&A expenses decreased $13.8 million or 10.7% to $114.7 million. As a percentage of sales, these costs approximated 54.4% of sales, up from 45.8% in the prior year quarter. We experienced decreased selling cost, advertising, distribution, and transportation expenses during the quarter. Other income expense in the fourth quarter of 2024 was negligible, and interest income was approximately $1.8 million during the fourth quarter as we earned more on our cash deposits due to higher interest rates. Income before income taxes decreased $14 million to $18.5 million. Our tax expense was $3.5 million during the fourth quarter of 2023, which resulted in an annual effective tax rate of 22.5%. The primary difference in the effective rate and the statutory rate is due to state income taxes and the additional tax benefit from the impact of the vesting of stock awards during the year. Net income for the fourth quarter of 2023 was $15 million or $0.90 per diluted share on a common stock compared to net income of $23.7 million or $1.42 per share in the comparable quarter last year. Now, turning to our balance sheet at the end of the fourth quarter, our inventories were $93.9 million, which was down $24.4 million from December 31st, 2022, and down $8.4 million versus Q3, 2023. At the end of the fourth quarter, our customer deposits were $35.8 million, which was down $12.1 million from December 31st, 2022, and down $10.5 million versus the Q3, 2023 balance. We ended the quarter with $120.6 million of cash and cash equivalents, and we have no funded debt on our balance sheet at the end of the year. Looking at some of our uses of cash flow, capital expenditures were $53.1 million for the calendar year of 2023. As a reminder, we repurchased our Florida distribution facility in the second quarter for $28.2 million. In addition, during 2023, we paid $19.1 million in quarterly dividends and $16.1 million in special dividends. During the fourth quarter, we purchased 122,850 shares of common stock under our existing stock buyback program for $3.7 million. We have approximately $13.1 million of existing authorization in our buyback program. Our earnings release lists out several additional forward-looking statements, including our future expectations on certain financial metrics. I'll highlight a few, but please refer to our press release for additional commentary. We expect our gross margins for 2024 to be between 59.5%-60%. We anticipate gross profit margins will be impacted by our current estimates of product and freight costs and changes in our LIFO reserve. Our fixed and discretionary type SG&A expenses for 2024 are expected to be in the $295 million -$297 million range. The variable type costs within SG&A for 2024 are expected to be in the range of 19.9%-20.2%, with the increases over 2023 primarily being inflation-driven. Our planned Cap Ex for 2024 is $32 million. Anticipated new or replacement stores, remodels, and expansions account for $27 million. Investments in our distribution network are expected to be $2.5 million, and investments in our information technology are expected to be approximately $2.5 million. Our anticipated effective tax rate for 2024 is expected to be 26.5%. This projection excludes the impact from vesting of stock awards and any potential new tax legislations. This completes my commentary on the fourth quarter financial results. Operator, we would like to open up the call for questions at this time. Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad, and 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 keys. Our first question comes from the line of Anthony Lebiedzinski with Sidoti. Please proceed. Good morning, gentlemen, and thank you for taking the questions. Good morning. Hey, Anthony. First, yeah, can you talk, please, about the cadence of your Written Sales as the quarter progressed? Just wondering if you saw any notable changes in terms of different geographies or different regions? Sure, Anthony. No significant changes in geography or regions, but in October, our orders or our written business was down almost 21%. Then in November, it was down slightly over 9%. And then in December, it was down around 11%-12%. So for the quarter, around 13.1%. Deliveries were pretty consistent. They were down in the mid-20s, basically, each month of the quarter. Understood. Yeah, thanks for that color, Richard. So just wondering, as far as the big change between October and the rest of the quarter, was this just more people buying stuff around the holidays or anything you can share as far as what drove the 21% decrease in October than you were, I guess, less bad in the rest of the quarter? I don't think. I think it really kind of came back to normal, is what I would say. 21% was a pretty strong decline. I think it just leveled off, frankly, is what I would suggest. And also, we're seeing the business, Anthony, around the holiday events, certainly after Thanksgiving, Veterans Day, certainly were more driving the factor and driving the number and then heading into the holidays of December. And some of the comparables from each month could have been different from year-over-year. Understood. Okay. And one of your peers said yesterday during its conference call that they were hurt by severe weather in January, though they said their Presidents' Day sales were somewhat better. Can you share with us anything directionally as far as how the current year has started for you? Yeah, we don't like to give input on the current quarter, but I will say clearly the weather was a factor. I mean, it hit us just like it hit anybody that was trying to operate. We had bad weather, particularly in the Mid-South area, but it did affect us. We're not giving any numbers out yet on this quarter. Understood. Okay. All right. But just wondering if you also saw that impact as well. Gotcha. Okay. And then, Steve, you talked about right-sizing of staffing. Can you share with us as far as what your employee count was, whether at the end of the year or where it is now, and how does that compare to the prior year? Obviously, four years ago, when you had the COVID pandemic initially hit, you guys did a big cut to your employee base, then you rehired some people. So can you just share us some perspective as to how you're structurally different than where you are now versus pre-pandemic levels as far as the employee count? Yeah, we're down. If you go back to pre-pandemic, Anthony, we're down about 1,000 associates. And then from last year, we're down about 250 is a number. And we're continuing to make sure we right-size it to the business where we are. Gotcha. Okay. And then lastly for me before I pass it on to others, so Steve also mentioned that you were experimenting, I guess, with some new alternative financing programs. Can you expand on that, give us some additional color? Yeah, we made a decision, and we started utilizing 48 months, more than 60 months. And we also adjusted some of our minimum purchases and down payment percentages to what we're doing there. So we've got to manage that cost. And so far, and we did that some in the fourth quarter, we have not seen an impact to the business by making that move. And it's more cost-effective for Havertys. Understood. 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. Thanks. Good morning. Wanted to follow up a little bit on the financing question. What% of your sales were financed? And then of the consumers who tried to finance, what did you see from the approval rate versus historic trends? We haven't really seen much of a change. This is Steve. Any of the approval rates is where it is. Our business has continued to remain around a third of our business is on credit. We haven't seen a change there. Okay. And then, promotions in the industry, can you talk what you're seeing from competitors in your area? Yeah, I think you're seeing certainly, there are some that are getting more aggressive and chasing the price and offering those values. But we're focused on a value that we're offering our customer with a quality product. So we're not chasing the price, Michael, on what that happens. And we don't want to panic and move that way. We work too hard to get our margins where they are. Richard gave the guidance out there, 59.5%-60%. We still feel very comfortable with that. That will allow us to be able to make sure that we have the same cadence of promotions out there for the consumer and then have the same values out for our customers, so. But we've definitely seen it on the lower end more aggressive with it. I'd say the use of it has been about the same as far as the advertisement of it. Their visibility is about the same. There's really no change there. Okay. Then we have the store growth with the Bed Bath & Beyond leases that you took over. Previously, we had mentioned that you had been looking at some out of the auction on your own. What's your viewpoint now of still going after new stores that you don't have already? Well, certainly, we're planning on growing five stores. I mean, we've got those four that are lined up right now. We've got one store that we'll close at the end of the first quarter that's been announced. We feel comfortable that we'll get to five stores this year and five stores next year. There's opportunities out there. We got a lot going, but we can't discuss it right now, Michael, because we don't have anything firm. We're still in that negotiation process. Okay. Great. Thanks. And one more question. Just on the design initiative, I know we have roughly one designer per store. There had been talk, I believe, about possibly increasing that despite the headcount reduction that's been planned. What's going on on the designer staffing? Yeah, we increased it. We've got about 15 or so stores that have two designers, and we're right now going to hold tight on that where it is right now and how we look forward with it. Those are in our better stores where we needed the two designers. And we're just going to monitor it with the business, what we're doing, Michael, make sure we stay focused on that, control the cost. With the decrease in traffic, the one designer can deal with and handle what we got going. So we don't feel the need as much to press it across the board. But that's still going to be a direction as we go forward when we start adding back sales consultants and/or designers. We'll make a choice there. And we'll probably lean more toward designers than sales consultants. And then just as sales have pulled back after COVID, are any of the sales commissions and the salespeople, are they still making the money they need to be happily employed, or are their compensation is it down? How does that look? Well, I can tell you for 2023, I mean, they were down about 10% compensation. But overall, we've adjusted those numbers down relative to the traffic, Michael. So we've tried to maintain that. So our average salesperson still made in 2023 over $85,000. And that was well up from where we were pre-pandemic when we were in the mid-50s. And so we still feel comfortable with that. Now, there's a certain minimum that we can go to, Michael. We've got to have a certain amount of sales consultants to serve the business. So we won't go below that level, but we are certainly adjusting based on the traffic to ensure that we have a better experience for the customer. We think we get increased close rates because we're serving them better. And so it just feels like that works better. And it's better for our sales consultants as a whole. Great. Then just one more. Outdoors, is that still slated to start launching and select stores? It's just started. We're bringing it in now. I saw some of it in the stores a couple of weeks ago. It's just begun. We don't have it all out there yet. So I don't have a track record. I think initially, the response has been good. Great. Thanks, guys. Thank you. Thanks, everyone. Our next question comes from the line of Cristina Fernández with Telsey Advisory Group. Please proceed. Hi. Good morning. Wanted to start with a big picture question. Can you talk about what your view is of the housing market in 2024 that's informing your planning for the business? And do you think, based on your positioning, that you can outperform the overall market? Well, I think I'll comment on the housing. It definitely has affected our business. Now, the houses are getting built. It's just not enough of them. The interest rates have certainly affected the ability for these people to afford it. Our biggest states are Florida, Texas, Georgia, where people are moving. When people move into Florida, they buy new furniture. Anything involving a new transaction helps our business. I don't see through any of that. I don't see any clarity beyond that other than when we have new houses, it helps our business. I don't see any new insights into that. Do you have any comments on that? Okay. Okay. So then another question. Wanted to understand better the cost inflation that you're seeing on the various categories and the increase on the fixed SG&A. I know you don't get to revenues, but when I do the math, let's assume, let's say, flat revenues, it implies an operating margin that's down, based on my calculation, about 250 basis points at the midpoint, based on the ranges you gave. So maybe just kind of walk us through sort of the increases you're seeing. And do you see this as temporary, or are there efforts to kind of try to get back to that high single-digit, double-digit operating margin? Sure. Let me walk through the three guidance points that we put out in the press release. So first of all, on the gross profit margins, we're projecting out a decline. I want to point out that in 2023, we had the impact of LIFO benefit that was about 100 basis points. In the previous year, in 2022, it was about 100 basis points going the other direction. So in 2024, we're really not anticipating any significant LIFO movement. So we're kind of going in without the benefit of a $9 million benefit going into 2024 that we had in 2023. Yet, we're still going to have strong margins of 59.5%-60%. On the variable G&A, we pointed out earlier a little bit about the financing cost. We're doing some things in that regard where we're going more towards the 48 versus the 60 month. It's less expensive, and we're not seeing any kind of a drop-off in sales. And if you look at where we were in the fourth quarter of the one that we're reporting now, we were right around 20%. So at these volume levels, you have less cost absorption. So based on kind of where we were in the fourth quarter, I felt comfortable in guiding 19.9%-20.2%, kind of where we were in the fourth quarter is kind of right in the middle of that guidance. And then on the non-variable SG&A, there's about a $10 million spread between the results in 2023 versus the guidance in 2024. About half of that is occupancy cost. So you got $2 million of the new stores that we're opening that we'll have in 2024 that we didn't have in 2023. Then you've got about a $2 million-$3 million in 2023. We had about a $3 million credit through a lease modification that we don't have recurring in 2024. You've got in all about $5 million worth of increased occupancy expense between those two things. Then if you just use about a 2% inflation rate on $285 million, that'll get you the rest of the spread. It's just basically occupancy cost in general, 2% cost inflation kind of gets you the rest of the non-variable G&A increase. Okay. That's very helpful. And then the last question I had, on the store openings, I guess, how should we think about the contribution of your new stores? You're opening more stores this year. If your average store did about $7 million in sales in 2023, how is normally the ramp-up of a new store to get to that level? Usually, what's year one? How does it ramp up to maturity? Yeah, great question. So yeah, if you look at the average number of stores we have in our revenue, you're going to get $6 million-$7 million per location. And it usually takes us about a year to break within the end of year one, we're usually breaking even. And then by the end of year three, we're fully ramped up, throttled, so full to go. So I don't know, Steve, you have any more operational color there, but just from a financial standpoint, that's kind of the way we model things. Okay. Great. Thank you for the color. Best luck this quarter. Thank you. Thank you. Thank you. Ladies and gentlemen, there are no further questions at this time. I'd like to turn the call back to management for closing remarks. Thank you for your participation in today's call, and we look forward to talking with you in the future when we release our first quarter results later this year. Thank you. This concludes today's conference. You may now disconnect your lines. Enjoy the rest of your day.