Greetings, and welcome to the Havertys Second Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A brief 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 your host, Richard Hare, Chief Financial Officer. Thank you, Mr. Hare. You may begin. 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 as such statements, which speak only as of 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 Securities and Exchange Commission. Our Chairman and CEO, Clarence Smith, will now give you an update on our results, and our President, Steve Burdette, will provide additional commentary. Thank you for joining our second quarter conference call. Total sales were $178.6 million, down 13.4% from last year, but an improvement over the 18.1% decline in the first quarter. We've been proactive in reducing costs where appropriate, and that has helped us produce a pre-tax profit of $6.5 million. Gross margins continue to be strong at 60.4%. Our cash position of over $100 million remains solid and continues to be a major strength. Our balance sheet allows us to continue to invest in future growth opportunities, even in tough times for the industry. We're excited to announce the addition of our second store in Indianapolis, in Greenwood, Indiana, which will open late this year. This location will be our fifth new store to open in 2024 and the fifth former Bed Bath & Beyond building. Late this year, we'll open a new store in Pembroke Pines area in Southeast Florida and a store in St. Petersburg, strengthening our position in the Tampa-St. Pete region, both are part of the Bed Bath & Beyond lease acquisition. With these openings, we will have 33 stores serving Florida, our largest state. Our expanded Lakeland, Florida, distribution center is ideally located off I-4 and allows for coastal-specific products and quick delivery to the region. We have been furnishing Texas homes for over 100 years. Our Austin and College Station stores have been serving the northern part of Houston, and now our move back to Houston, Texas, will be a significant effort for the coming years. We plan to open in The Woodlands, Texas, late this year and add a second store in 2025 in Baybrook, Texas. We will end this year with 22 Texas stores, our second-largest state. We're actively working to add stores in the greater Houston market, to add density and to support marketing and to build Havertys brand position. All these stores will be served by our expanded Dallas, Texas, distribution center, allowing for quick delivery and more Western-specific and regional merchandising. We are on target for our goal to open five new stores in 2024 and in 2025, strengthening our service position throughout our 17 states. We're very pleased with the new merchandise that is hitting our floors, which has quickly moved up to best sellers. We've added several locations to the better end of our lineup, which, along with our enhanced special order and custom products, have helped move design business to 35% of sales. These are tough times for a cyclical industry like home furnishings. We're closely tied to housing and interest rates. What we have learned these past decades is the importance of consistent investment in serving and inspiring our customers. This means new locations, upgrading stores, cutting-edge IT systems, and then, most importantly, investing in talent. These are expensive commitments in tough times. We believe that the down cycles provide important opportunities when we can make strategic investments for future growth and position Havertys for significant gains in the months and years ahead. I'll now turn the call over to Steve Burdette. Thank you, Clarence, and good morning. Our second quarter results faced the difficulties of higher interest rates and frozen housing activity. Our Memorial Day event was disappointing, which affected the outcome of the quarter. We hope the potential interest rate cuts being discussed for the September Fed meeting will be a start to getting the housing market moving as we head into 2025. During the quarter, we were excited about the opening of our 2 new stores in Southaven, Mississippi, which is a part of our Memphis market, and Destin, Florida, which is a part of our Pensacola market. Store traffic in both stores has been robust, and we are pleased with the early results. Overall, our store traffic has continued to improve slightly during the quarter, but we are seeing a more deliberate consumer, which has caused our closing rates to slip. However, those customers that are buying are spending more, as our average ticket continues to rise by over 4% to almost $3,500. Our design business continues to be a bright spot by growing over 24% for the quarter as a percentage of our business. Our design and sales teams have been able to increase the number of customers participating in design to almost 19% of our customers, which continues to grow at a double-digit pace. Our average ticket is the driver of our design business as it moved higher to approximately $7,000, which is a 7% increase for the quarter. Our supply chain network continues to operate efficiently, which we feel puts Havertys at a competitive advantage. We have seen a minimal increase in our freight rates due to the container imbalance and the issues around the Red Sea, but have seen no real disruptions due to our partnerships with our carriers and suppliers. Our inventories continue to remain in excellent condition, and we're relatively flat with Q1 and approximately 20% down from Q2 2023. This gives us confidence that we will be able to maintain our margin guidance for the year. Our vendors continue to provide us with excellent lead times that vary between 4-7 weeks. This has helped us to drive our special order business, which was up approximately 9% in dollars for the quarter. Extended financing continues to be a part of our promotional calendars, but we continue to manage the use and length of terms, which has helped us to lower our credit costs for the quarter by over 16% as a percent of the business. Also, we have been continuing to make the necessary adjustments with our headcount throughout the organization to ensure that we are right-sized for the current business conditions. We are optimistic heading into the, what is historically our largest promotional event of the year, Labor Day. I want to thank all the Havertys team members across the company for their hard work and dedication to furnishing happiness to our customers every day. Now I'll turn the call over to Richard. Thank you, Steve. In the second quarter of 2024, net sales were $178.6 million, a 13.4% decrease over the prior year quarter. Comparable store sales were down 13.6% over the prior year period. Our gross profit margin decreased 10 basis points to 60.4% from 60.5%. The decrease was driven by the change in the LIFO reserve, which generated an immaterial impact on gross profit in 2024, compared to a positive impact of $3.4 million in the second quarter of 2023. Excluding the impact of our LIFO reserve, our gross margins increased over 170 basis points over the prior year period. Selling, general, and administrative expenses decreased $6.9 million, or 6.3% to $103.1 million. As a percentage of sales, these costs approximated 57.7% of sales, up from 53.3% in the prior year quarter. We experienced decreased selling costs, advertising, warehouse, and delivery expenses during the quarter. Interest income was approximately $1.5 million during the second quarter, as we earned more on our cash deposits due to higher interest rates. Income before income taxes decreased $9.4 million to $6.5 million. Our tax expense was $2.8 million during the first six months of 2024, which resulted in an effective annual tax rate of 29.2%. The primary difference in the effective rate and statutory rate is due to expected state income taxes and nondeductible items for the year. Net income for the second quarter of 2024 was $4.4 million, or $0.27 per diluted share on our common stock, compared to net income of $11.8 million, or $0.70 per share in a comparable quarter last year. Now, turning to our balance sheet. At the end of the second quarter, our inventories were $92.4 million, which was down $1.6 million from the year-end balance and down $22.3 million versus the second quarter of 2023. At the end of the second quarter, our customer deposits were $38.7 million, which was up $2.9 million from the year, December 31, 2023 balance, and down $6.9 million versus the Q2 2023 balance. We ended the quarter with $109.9 million of cash and cash equivalents. We have no funded debt on our balance sheet at the end of the second quarter of 2024. Looking at some of our uses of cash flow, capital expenditures were $16 million for the first six months of 2024. We also paid out $10.1 million of regular dividends in the first six months of 2024. We did not utilize our share repurchase program during the second quarter of this year, and we have approximately $13.1 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 do expect our gross margins for 2024 to be between 60.0% and 60.5%. We anticipate gross profit margins will be impacted by our current estimates of product and freight costs. Our fixed and discretionary type SG&A expenses for 2024 are expected to be in the $282 million-$284 million range, which is a reduction in our previous estimate. We anticipate continued reductions in advertising, incentive compensation, and professional fees. The variable type costs within SG&A for 2024 are expected to be in the range of 19.7%-20%. We anticipate continued reductions in third-party credit costs as well as delivery costs. Our planned CapEx for 2024 is $33 million dollars. Anticipated new or replacement stores, remodels, and expansions account for $28 million dollars. Investments in our distribution network are expected to be $2.5 million, and investments in our IT, our information technology, are expected to be approximately $2.5 million. Our anticipated effective tax rate in 2024 is expected to be 27.5%. This projection excludes the impact of vesting of stock awards and any potential new tax legislation. This completes the commentary on the second quarter financial results. Operator, we would like to open the call at this time for any questions. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please 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 handsets before pressing the star keys. One moment, please, while we pull for questions. Thank you. Our first question is from Anthony Lebiedzinski from Sidoti. Please proceed. Good morning, gentlemen, and thank you for taking the questions. So, you know, first, just, just wondering if you could comment on, on the sales trends throughout the quarter. I know you talked about Memorial Day being, I guess, somewhat disappointing, but just, just overall, as we look from April through June, how did that go in terms of, you know, written comps or however you want to handle that? Sure, Anthony. Good morning. This is Richard. In terms of, I can give you the written and delivered trends. In April, our written business was down approximately 14%. Steve mentioned a disappointing Memorial Day. In May, we were down approximately 18%. June, we were down approximately 8%. And then in terms of deliveries, April, we were down approximately 12 in April, about 6 in May, and about 20% in June. That's very helpful, Richard. Thanks for that. And then, so, on your last conference call in May, you guys talked about a new media firm and a new media approach. Can you talk about that and then, like, what you've learned from that, and how are you guys thinking about that for the back half of the year? Yeah, Anthony, this is Steve. Yeah, we did introduce Carmichael Lynch, started in April. Really the first impact that we started seeing of that would've been in May. I mean, it's too early to tell, though. You know, one of our indicators is traffic that we're looking at, and I made a comment that we're starting to see a little bit of improvement in traffic, so we consider that to be a positive, with what they're doing. You know, some of the changes they looked at that I talked about is from a TV perspective, we're still doing streaming and OTT, but we're also doing a little more broadcast in our bigger markets, on a balance there. And then we've kind of changed up our search, direction, what we're doing there in search, to drive more traffic to the stores. We're encouraged right now, and so that's kind of why we're optimistic heading into the third quarter, that we'll continue to see those traffic trends improve. Got you. Yeah. Thanks, Steve. And then, so I guess with the upcoming election, and your, I guess, pivot to broadcast TV, with the election coming up, will that kind of prevent you guys from doing as much broadcast TV as you would've normally like to do? Well, we could be, you know, basically cut off because the election takes priority of those ads, but- Mm-hmm. We won't know that till we get there. And it'll probably be more so in certain states than others. You know, those, those states that like Georgia, maybe North Carolina, Virginia, are really the states in our market where our footprint is, that are, considered to be swing states. So in those states, possibly so, but we'll monitor that and manage that. Our marketing team will, with our, with EP+Co and Carmichael Lynch. Got it. Okay, and my last question before I pass it on to others. So you mentioned that you're happy with the two new stores that just opened, but just overall, given the acceleration and store growth that you've had, can you talk more broadly about some of the other recent store openings? How have those done relative to your expectations? Yeah. So, I mentioned on the call, as you said, Southaven and Destin have both exceeded our expectations. And then we opened last year, Dayton, Ohio, and Concord, North Carolina. And both of those stores, from a traffic perspective, have done as well. Our closing out of the two new stores this year has been stronger than the two new stores last year from their initial start, but they are getting better and building strength there. But we have been pleased with both, you know, with all four of those store openings. And look forward to the two more that we're adding this year in Pembroke Pines, down in South Florida, and then obviously St. Pete and Tampa. You know, again, Florida being our largest concentration of stores, we're really looking forward to that, along with Indiana and then getting into Houston. Got it. Well, thank you very much, and best of luck. Thank you. Our next question comes from Cristina Fernández from Telsey Advisory Group. Please proceed. Hi, good morning. I wanted to follow up on Anthony's question on demand, and wanted to see, as you looked at how the quarter progressed, particular Memorial Day event being disappointing, I guess, what are you planning differently? How does it change your approach?... for the back half, particularly for, like, the big promotional holiday weekends, like Labor Day, which you mentioned is the biggest of the year, that would be helpful. Thank you. Yeah, Cristina, this is Steve. We're focusing from a promotional standpoint, we're not gonna chase that. We don't feel like that's a need that we need to go after right now, lowering prices or being more aggressive in that state. We will certainly be out with our normal promotions, our credit financing, as we're doing it. But what we're leaning on and feel really positive about is, again, like I talked about, our new media partner and what we're doing there to reach the consumer and driving more traffic to our stores. Because the end result, if we can increase our traffic to our stores, that gives us the opportunity, obviously, to close more business. That's the number one thing we're focused on right now in driving. It's too early right now, coming out of the second quarter. We've got some positive trends that we feel good on, as they just started their first promotion with Memorial Day. But we feel confident in what we got with our promotions that we have. There's no need to do anything different. We don't think that's the reason consumers are not buying. We just think they're a little more deliberate, a little more cautious, in this environment. You know, we're gonna stay consistent, maintain our margins, and continue to offer the customer a quality and value product. Thanks. And then the second question I have for Clarence or Steve. Clarence, you talked about investments in the business and talent and IT. Can you expand on some specifics, like what areas, where do you need more talent and on IT? Like, is it systems, is it supply chain? The main investments we continue to do there is enhancing our website and just the everything about that to make sure that we're reaching the customer better than anybody else and getting our message across. It is a continual investment, and it escalates. It's just so dadgum important that we are looked at as one of the better sites and easier to operate. So we spend a lot of energy there. A lot of our team is dedicated to it, and certainly, we're trying to stay on the leading edge for website and just making sure that we can easily communicate with our customer there. Anything on talent, where you need to make investments? On talent? Well, yeah, we actually, we have some changes that we will be making in the next several months, particularly in the merchandise area. We've had a couple of retirements, one of which we've already announced, and we will be supplementing our team here and adding creative talent. We're excited about that opportunity, and that is underway right now. We just promoted our IT head, Greg Davis. He just was promoted. We had a retirement there, but we have a strong team there we feel good about. Our main interest right now is supplementing our merchandising team here under John Gill. And Cristina, this is Steve. We're making a few investments in the store side of things, as far as the in-store experience. We have two test stores right now going, that has to do with basically, point-of-purchase materials that are in the store to help the consumers, and help the salespeople, in communicating and hopefully improving the closing rate by providing better information, for the consumer there. So we're excited about that. There's a change with the design centers. We're investing more with those, providing a few more options, more like rug choices, bigger screens, bigger TVs to make the experience for the consumer better. So we're doing a test with that as well. So that is an investment. And then, of course, on the website, as Clarence mentioned, the A/B testing is something we continually are doing and evolving and changing. Thank you. And the last question I had was with the election coming up, there's also increased talk and perhaps concern around tariffs on goods from China. I know your exposure has decreased to 15%. Can you talk if there were to be tariffs, how you can manage them this time? And maybe remind us of what you did last time. Is it pricing, shifting goods to other countries, et cetera? Yeah, Cristina, our merchants are already working with our suppliers. Basically, we have leather that's coming out of China, some fabric, but mainly leather. And we've already got majority of our vendors already have alternative production, either in Cambodia, Vietnam, Mexico, that they're already in the midst of executing on. And so we, we have an alternative and do not expect any kind of impact from tariffs, if they were to come about for China, additional tariffs. Thank you. Thank you. Our next question comes from Budd Bugatch from Water Tower Research. Please proceed. Hello, good morning, and thank you for taking my questions. First, congratulations on really managing pretty well through this pretty difficult period. Been a real challenge and your financials, they don't compare as well as you would like them. They look strong, so congratulations on that. I do have a couple questions about the written business, and as you went through that, Richard, I think you said that June was down 8% or so. When you look at the change in customer deposits at the end of the quarter, that's down in the mid-teens, and I wonder if there's any relationship or any change in the relationship with deposits to backlog or what you're looking for out of the retail system going forward in terms of deliveries? Yeah, Budd, it's Richard. We get the overall relationship really hasn't changed over the quarter in terms of the relationship between deposits and our backlog. So backlog is fairly consistent now with what it's been, you know, throughout this calendar year. And any read through the change in. I know that Memorial Day might have been a disappointment, Steve, and I was wondering if you had a thought about as to maybe why that was. We heard Memorial Day had mixed results across the industry, so maybe what did you think maybe you did right or did wrong in Memorial Day, if anything? I don't know what we did. We were just on the wrong side of it in that mix you just described. Obviously, we were not happy. It was still a great weekend. It just wasn't what our expectations and what it was last year. It was equal to our President's Day, and typically it's a stronger holiday than President's Day. So it was not a, you know, horrible weekend, it just was disappointing from a comparable basis of what we had done there. You know, and I think, Budd, the consumer, we've just seen, has been a little more cautious in delivering in their, you know, taking the money out of their wallets and spending it. So but we still feel, we feel good where we are and what we're doing, the product we have. As Clarence mentioned, we've got new product coming in. It's hitting some price points in places that we maybe had some voids. And as Clarence said, it's resonating, and we still have more coming. So we're excited for that and excited to get that in. that does go to kind of the next area, because we're seeing from others outside of the furniture industry, we're hearing a lot about the trade down issue, and it looks like that's where the economy might be going over the immediate future. Your inventories are in awfully good shape, but maybe are they in too good a shape? Are you -- how do you participate in the trade down? That's not something Havertys is known for, and I wouldn't expect you to change it, and wouldn't want you to change your stripes, but you still have to be aware of what's going on around you. Yeah, we -- Budd, we feel really good about our position. I do think we're reaching a better customer. Actually, our deposits and the better product is higher than it was. We're doing more custom special order. Richard, Steve talked about that. The bottom end of this industry is being devastated right now. The bankruptcies that you're seeing, the Conn's, Badcock, and maybe Bed Bath & Beyond, is devastating to the promotional end of this business, and we certainly don't want to go get into that bailiwick. I was talking with some of our suppliers about the Mississippi parts of the market, which is where the promotional upholstery comes from, and they are absolutely devastated. We're not going down in price point. We are targeting a better customer. It's working. I do think we get more credit for it. We get more margin. I think we're taking some from that end of the market, and I think it'll pay off for us. It might take a little while, but I think it will pay off for us. I don't disagree with that at all. Remind me again what you're planning to open the balance of this year. You got St. Pete and— Yeah, we hope to open Pembroke Pines before Labor Day, is what we're hoping. St. Pete, before the end of the quarter. In the third quarter, we open up Greenwood, Indiana, and sometime in the middle of the fourth quarter, and we'll open up Houston, our first store there, in The Woodlands, will be open in late fourth quarter. So that's what we have planned for the remainder of this year. We should, you know, with that store count, that'll get us somewhere around 129 stores for the year. Hey, Budd, you can walk down the street for our store opening in St. Pete. We'll just see you there. I do that fairly often, and there's not as much activity there going on as I'd like to see, so I'd like to see that open before the end of the quarter, boy. We'll buy you a cup of coffee. I'll cook you a burger. Okay, thanks. Our next question comes from Mickey Legg, from The Benchmark Company. Please proceed. Hey, guys. Thanks for taking my questions. Looks like you touched on a bit of this already, so I'll try to frame it from a fresh perspective. If you could just talk about the competitive landscape a little bit. Are you seeing, you know, more companies going out of business? And I know you don't engage in pricing promotion too much on your end, but are you seeing any trends on, you know, competitors using more promotions? And I think you also talked a little bit about this in your prepared remarks about maybe any weather-related impact that may have impacted sales or how you were able to, you know, avoid that? Any color on that would be helpful. Thanks. We, we try not to give weather reports. I mean, sometimes it does impact, but no, we haven't really had any major impact there. You know, these GOB sales really don't affect us. I mean, that's not something that I feel impacts us. Most of the time, that's by closeout people, it's on the lower end of the market. We don't see that really affecting us. There'll be a lot of it in certainly in parts of our market, but I don't think it might have very short-term impact, but nothing, nothing significant. Yeah, from Mickey, Steve, from the promotional side of things, I think it's still—they're still consistent. The lower-end players are gonna be aggressive with credit and with, you know, price points trying to hit on that. I don't think any different than what they've been. They may be trying to seek out, you know, in their mind, better values of what they're putting out there, but from my perspective, I don't see it being any different. And the upper end is still doing the same thing and promoting, you know, service and design and, you know, not as much credit. You know, so I don't really see a change. In general, it's still people are promoting. When it gets around the holidays, you still see it, and there's still a lot of it. Got it. Got it. That's, that's helpful. And then maybe just some additional color on the interest rate environment going forward. If we're expecting cuts over the next 12 months, how do you see that, you know, impacting the consumer environment and, you know, maybe a little bit on the timing of that impact? Yeah, this is Richard. We certainly are pleased to see the Fed's recent indications or signals that the rates are gonna be coming down this year. You know, we're tied to housing and mortgage rates, and so we know it's coming. We just don't know exactly when, but we certainly feel like, based on things we're reading in the industry publications and things of that nature, you know, next year will certainly, you know, we should see an improvement in overall demand for housing, which certainly will affect us in a positive way. All right, great. That's all for me. Thanks, Mickey. This concludes our question and answer session. I would like to turn the floor back over to Mr. Richard Hare for closing comments. Well, we thank you for your participation in today's call, and we look forward to talking to you in the future when we release our third quarter results later this year. Thank you. This concludes today's teleconference. You may disconnect your lines at this time.