What changed in this filing

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Item 1. Financial Statements

2021-09-09 compared with 2021-06-10 · 222 added, 157 removed, 506 unchanged (43% of the section changed)

39 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Cost of sales

17 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Net Income/(Loss)

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(In thousands)

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Operating Activities:

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Depreciation and amortization

Deferred income tax expense

Deferred income tax expense/(benefit)

Noncash restricted stock and performance awards

Benefit from doubtful accounts and sales allowances

Provision for doubtful accounts and sales allowances

Gain on life insurance policies

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Deferred compensation

Net cash provided by operating activities

Net cash (used in)/provided by operating activities

Investing Activities:

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Proceeds received on life insurance policies

Net cash (used in)/provided by investing activities

Net cash used in investing activities

Financing Activities:

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Supplemental disclosure of cash flow information:

Cash paid for income taxes

Cash paid for interest, net

Cash (refund)/paid for income taxes

Non-cash transactions:

Increase/(decrease) in lease liabilities arising from obtaining right-of-use assets

Decrease in lease liabilities arising from changes in right-of-use assets

Increase in property and equipment through accrued purchases

12 unchanged sentences

Performance-based restricted stock units costs

Balance at May 3, 2020

Balance at August 2, 2020

Balance at January 31, 2021

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Performance-based restricted stock units costs

Balance at May 2, 2021

Balance at August 1, 2021

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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(Dollar and share amounts in tables, except per share amounts, in thousands unless otherwise indicated)

For the Thirteen Weeks Ended May 2, 2021

For the Twenty-Six Weeks Ended August 1, 2021

Preparation of Interim Financial Statements

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Operating results for the interim periods reported herein may not be indicative of the results expected for the fiscal year.

The financial statements contained herein are being filed as part of a quarterly report on Form 10-Q covering the thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” “first quarter” or “quarterly period”) that began February 1, 2021 and ended May 2, 2021.

This report discusses our results of operations for this period compared to the thirteen-week period that began February 3, 2020 and ended May 3, 2020;

and our financial condition as of May 2, 2021 compared to January 31, 2021.

The financial statements contained herein are being filed as part of a quarterly report on Form 10-Q covering the 2022 fiscal year thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” “second quarter” or “quarterly period”) that began May 3, 2021, and the twenty-six week period (also referred to as “six months”, “six-month period” or “first half”) that began February 1, 2021, which both ended August 1, 2021.

This report discusses our results of operations for these periods compared to the 2021 fiscal year thirteen-week period that began May 4, 2020, and the twenty-six-week period that began February 3, 2020, which both ended August 2, 2020;

and our financial condition as of August 1,2021 compared to January 31, 2021.

References in these notes to the condensed consolidated financial statements of the Company to:

32 unchanged sentences

Property, plant and equipment, net

The increase in construction-in-progress (“CIP”) is primarily due to (1) assets purchased for our leased Georgia distribution facility which are expected to be placed into service in the second half of the current fiscal year and (2) lower prior year CIP balances due to cash preservation efforts at the onset of COVID-19 crisis.

Fair Value Measurements

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Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of May 2, 2021 and January 31, 2021, Company-owned life insurance was measured at fair value on a recurring basis based on Level 2 inputs.

As of August 1, 2021 and January 31, 2021, Company-owned life insurance was measured at fair value on a recurring basis based on Level 2 inputs.

The fair value of the Company-owned life insurance is determined by inputs that are readily available in public markets or can be derived from information available in publicly quoted markets.

Additionally, the fair value of the Company-owned life insurance is marked to market each reporting period and any change in fair value is reflected in income for that period.

Our assets measured at fair value on a recurring basis at May 2, 2021 and January 31, 2021, were as follows:

Fair value at May 2, 2021

Our assets measured at fair value on a recurring basis at August 1, 2021 and January 31, 2021, were as follows:

Fair value at August 1, 2021

Fair value at January 31, 2021

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January 31, 2021

August 1, 2021

Non-amortizable Intangible Assets

Beginning Balance

Impairment Charges

Net Book Value

Domestic Upholstery

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Balance at January 31, 2021

Balance at May 2, 2021

Balance at August 1, 2021

For the remainder of fiscal 2022, amortization expense is expected to be approximately $ 1.2 million.

In fiscal 2020, we adopted Accounting Standards Codification Topic 842 Leases.

We recognized $146,000 sub-lease income for the three-month period ended May 2, 2021.

The components of lease cost and supplemental cash flow information for leases for the three-months ended May 2, 2021 were:

We recognized sub-lease income of $ 150,000 for the three-month period and $ 296,000 for the six-month period, both ended August 1, 2021.

The components of lease cost and supplemental cash flow information for leases for the three-months and six-months ended August 1, 2021 were:

Thirteen Weeks Ended

Twenty-Six Weeks Ended

August 1, 2021

August 2, 2020

August 1, 2021

August 2, 2020

Operating lease cost

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Operating cash outflows

The right-of-use assets and lease liabilities recorded on our Condensed Consolidated Balance Sheets as of May 2, 2021 and January 31, 2021 were as follows:

The right-of-use assets and lease liabilities recorded on our Condensed Consolidated Balance Sheets as of August 1,2021 and January 31,2021 were as follows:

August 1, 2021

January 31, 2021

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The weighted-average discount rate is 2.3 %.

The following table reconciles the undiscounted future lease payments for operating leases to the operating lease liabilities recorded in the condensed consolidated balance sheets on May 2, 2021:

The following table reconciles the undiscounted future lease payments for operating leases to the operating lease liabilities recorded in the condensed consolidated balance sheets on August 1, 2021:

Undiscounted Future

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Present value of lease payments

Due to the COVID-19 pandemic, we received concessions on several of our leases, including changes in lease terms and deferred rent payments.

We accounted for the concessions as lease modifications.

None of the modifications had a material effect on our condensed consolidated financial statements or results of operations.

As of May 2, 2021, the Company had an additional lease for a warehouse in Georgia that had not yet commenced with estimated future minimum rental commitments of approximately $ 28 million.

This lease is expected to commence in Fall of 2021 with an initial lease term of 10 years.

Since the lease has not commenced, the undiscounted amounts are not included in the table above.

As of August 1, 2021, the Company had leases for a warehouse in Georgia and a showroom in North Carolina that had not yet commenced with estimated future minimum rental commitments of approximately $ 51 million.

Both leases have an initial lease term of 10 years, with the warehouse lease expected to commence in Fall of 2021 and the showroom lease expected to commence in Fall of 2022.

Since the leases have not yet commenced, the undiscounted amounts are not included in the table above.

Long-Term Debt

As of May 2, 2021, we had an aggregate $ 28.7 million available under our $ 35 million revolving credit facility (the “Existing Revolver”) to fund working capital needs.

Standby letters of credit in the aggregate amount of $ 6.3 million, used to collateralize certain insurance arrangements and for imported product purchases, were outstanding under the revolving credit facility as of May 2, 2021.

There were no additional borrowings outstanding under the Existing Revolver as of May 2, 2021.

As of August 1, 2021, we had an aggregate $ 28.7 million available under our $ 35 million revolving credit facility (the “Existing Revolver”) to fund working capital needs.

There were no additional borrowings outstanding under the Existing Revolver as of August 1, 2021.

Employee Benefit Plans

We maintain two “frozen” retirement plans, which are paying benefits and may include active employees among the participants.

We do not expect to add participants to these plans in the future.

The two plans include:

a supplemental retirement income plan (“SRIP”) for certain former and current executives of Hooker Furniture Corporation;

the Pulaski Furniture Corporation Supplemental Executive Retirement Plan (“SERP”) for certain former executives.

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Net periodic benefit costs

Interest cost

Actuarial loss

Consolidated net periodic benefit costs

The SRIP and SERP plans are unfunded plans.

In fiscal 2022, we paid $ 365,000 in the second quarter and $ 544,000 in the first half and expect to pay a total of approximately $ 489,000 in benefit payments from our general assets during the remainder of fiscal 2022 to fund SRIP and SERP payments.

Earnings Per Share

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Thirteen Weeks Ended

Twenty-Six Weeks Ended

Net income/(loss)

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Diluted earnings/(loss) per share

We recorded income tax expense of $ 2.8 million for the fiscal 2022 first quarter, compared to income tax benefit of $ 10.9 million for the comparable prior year period, of which $ 10.6 million was recorded related to goodwill and trade name impairment charges.

The effective tax rates for the fiscal 2022 and 2021 first quarters were 22.7 % and 23.8 %, respectively.

We recorded income tax expense of $ 2.2 million for the fiscal 2022 second quarter compared to $ 1.6 million for the comparable prior year quarter.

The effective tax rates for the fiscal 2022 and 2021 second quarters were 22.7 % and 21.8 %, respectively.

For the fiscal 2022 first half, we recorded income tax expense of $ 5.0 million, compared to income tax benefit of $ 9.3 million for the comparable prior year period, of which $ 10.7 million was recorded related to goodwill and trade name impairment charges.

The effective tax rates for the fiscal 2022 and 2021 first half periods were 22.7 % and 24.2 %, respectively.

No material and non-routine positions have been identified that are uncertain tax positions.

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Thirteen Weeks Ended

Twenty-Six Weeks Ended

August 1, 2021

August 2, 2020

August 1, 2021

August 2, 2020

Hooker Branded

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Hooker Branded

$ 38 $ 29 $ 121 $ 82

Home Meridian

1,109 20 2,455 108

Domestic Upholstery

130 54 889 294

$ 1,277 $ 103 $ 3,465 $ 484

& Amortization

Hooker Branded

$ 750 $ 445 $ 1,200 $ 894

Home Meridian

567 533 1,068 1,068

Domestic Upholstery

549 700 1,309 1,397

$ 1,868 $ 1,681 $ 3,583 $ 3,365

As of August 1,

As of January 31,

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Thirteen Weeks Ended

Twenty-Six Weeks Ended

August 1, 2021

August 2, 2020

August 1, 2021

August 2, 2020

Subsequent Events

On June 3, 2021 , our board of directors declared a quarterly cash dividend of $ 0.18 per share, which will be paid on June 30, 2021 to shareholders of record at June 16, 2021 .

On September 2, 2021 , our board of directors declared a quarterly cash dividend of $ 0.18 per share, which will be paid on September 30, 2021 to shareholders of record at September 16, 2021 .

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

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the health and productivity of our employees;

and the impact on our global supply chain, the retail environment and our customer base;

and the impact on our global supply chain, inflation, the retail environment and our customer base;

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;

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administration’s imposition of a 25% tariff on certain goods imported into the United States from China including almost all furniture and furniture components manufactured in China, which is still in effect, with the potential for additional or increased tariffs in the future;

sourcing transitions away from China, including the lack of adequate manufacturing capacity and skilled labor and longer lead times, due to competition and increased demand for resources in those countries;

risks associated with our reliance on offshore sourcing and the cost of imported goods, including fluctuation in the prices of purchased finished goods, ocean freight costs and warehousing costs and the risk that a disruption in our offshore suppliers could adversely affect our ability to timely fill customer orders;

risks associated with our reliance on offshore sourcing and the cost of imported goods, including fluctuation in the prices of purchased finished goods, ocean freight costs, including the price and availability of shipping containers, vessels and domestic trucking, and warehousing costs and the risk that a disruption in our offshore suppliers could adversely affect our ability to timely fill customer orders;

changes in U.S.

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difficulties in forecasting demand for our imported products;

risks associated with product defects, including higher than expected costs associated with product quality and safety, and regulatory compliance costs related to the sale of consumer products and costs related to defective or non-compliant products, including product liability claims and costs to recall defective products;

disruptions and damage (including those due to weather) affecting our Virginia, North Carolina or California warehouses (and our new Georgia warehouse when occupied), our Virginia or North Carolina administrative facilities or our representative offices or warehouses in Vietnam and China;

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the direct and indirect costs and time spent by our associates associated with the implementation of our Enterprise Resource Planning system, including costs resulting from unanticipated disruptions to our business;

achieving and managing growth and change, and the risks associated with new business lines, acquisitions, restructurings, strategic alliances and international operations;

achieving and managing growth and change, and the risks associated with new business lines, acquisitions, including the selection of suitable acquisition targets, restructurings, strategic alliances and international operations;

the impairment of our long-lived assets, which can result in reduced earnings and net worth;

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Accordingly, investors should not assume that we agree with any projection, forecast or report issued by any analyst regardless of the content of the statement or report, as we have a policy against confirming information issued by others.

This quarterly report on Form 10-Q includes our unaudited condensed consolidated financial statements for the thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” “first quarter” or “quarterly period”) that began February 1, 2021 and ended May 2, 2021.

This report discusses our results of operations for this period compared to the 2021 fiscal year thirteen-week period that began February 3, 2020 and ended May 3, 2020;

and our financial condition as of May 2, 2021 compared to January 31, 2021.

This quarterly report on Form 10-Q includes our unaudited condensed consolidated financial statements for the 2022 fiscal year thirteen-week period (also referred to as “three months,” “three-month period,” “quarter,” “second quarter” or “quarterly period”) that began May 3, 2021, and the twenty-six week period (also referred to as “six-months”, “six-month period” or “first half”) that began February 1, 2021, which both ended August 1, 2021.

This report discusses our results of operations for these periods compared to the 2021 fiscal year thirteen-week period that began May 4, 2020 and the twenty-six week period that began February 3, 2020, which both ended August 2, 2020;

and our financial condition as of August 1, 2021 compared to January 31, 2021.

References in this report to:

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They are discussed in greater detail below and are essential to understanding our prospects.

At May 2, 2021, our backlog of unshipped orders was as follows:

At August 1, 2021, our backlog of unshipped orders was as follows:

Order Backlog

(Dollars in 000s)

Reporting Segment

August 1, 2021

January 31, 2021

Reporting Entity

August 2, 2020

Hooker Branded

1 unchanged sentence

Domestic Upholstery

At the end of fiscal 2022 first quarter, order backlog had increased $32.4 million or 13% as compared to the end of fiscal 2021 and increased $188.9 million or 206% as compared to the prior-year first quarter end, due to increased incoming orders in all three reportable segments as well as the supply chain disruptions in the Home Meridian and, to a lesser degree, Hooker Branded segments and production delays in the Domestic Upholstery segment.

At the end of fiscal 2022 first half, order backlog increased $72.3 million or 29% as compared to the end of fiscal 2021 and increased $157.9 million or 97% as compared to the prior-year six months end, due to increased incoming orders in all three reportable segments as well as longer delivery times resulting from the supply chain disruptions in the Home Meridian and, to a lesser degree, Hooker Branded segments and production delays in the Domestic Upholstery segment.

We are very encouraged by the current historic levels of orders and backlogs;

however, due to the current supply chain issues including the lack of shipping containers and vessel space and limited overseas vendor capacity, orders are not converting to shipments as quickly as could be expected compared to the pre-pandemic environment and we expect that to continue at least into the second half of fiscal 2022.

The current logistics challenges are slowing order fulfillment, particularly for Home Meridian whose average order sizes tend to be larger and more episodic versus orders for the traditional Hooker businesses, which tend to be smaller and more predictable.

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Executive Summary-Results of Operations

As discussed in greater detail under “Results of Operations” below, the following are the primary factors that affected our consolidated fiscal 2022 first quarter results of operations:

Consolidated net sales for fiscal 2022 first quarter increased by $58.3 million or 55.7% as compared to the prior year period, from $104.6 million to $162.9 million, due to an 89% sales increase in the Hooker Branded segment and 46% sales increases in both Home Meridian and Domestic Upholstery segments.

All Other net sales decreased by 12.3% as H Contract has not yet recovered from certain impacts of the COVID-19 pandemic.

Consolidated gross profit increased both in absolute terms and as a percentage of net sales, due to increased gross profit and margin at Hooker Branded and Domestic Upholstery segments.

Home Meridian’s gross profit increased slightly as a percentage of net sales as this segment was heavily impacted by higher freight costs which largely offset the sales increase.

All Other’s gross profit decreased in absolute terms and as a percentage of net sales.

Consolidated operating income was $12.2 million compared to $45.4 million operating loss in the prior year period, which was largely attributable to $44.3 million in non-cash impairment charges.

Consolidated net income was $9.4 million or $0.78 per diluted share, as compared to net loss of $34.8 million or $(2.95) per diluted share in the prior year period.

We are pleased to report fiscal 2022 first quarter results with strong rebound and record growth one year after the severe onset of the COVID-19 pandemic as the Company witnessed the most significant downturn in its history in the prior year.

Despite logistics challenges that impacted our Hooker Branded and Home Meridian segments and some raw material shortages affecting our Domestic Upholstery segment, consolidated net sales increased by 55.7% or $58.3 million as compared to the prior year period with all three reportable segments delivering significant revenue growth, driven by industry-wide ongoing high demand and consumer interest in home furnishings and home-related projects.

The Hooker Branded segment’s net sales increased by $24.2 million or 89% versus the prior year period as incoming orders nearly doubled and finished the quarter with a backlog that more than tripled versus the prior year first quarter end.

Consolidated net sales for the fiscal 2022 second quarter increased by $32.0 million or 24.5% as compared to the prior year period, from $130.5 million to $162.5 million, as all three reportable segments had net sales increases over 20%.

For the fiscal 2022 first half, consolidated net sales increased by $90.2 million or 38.4% as compared to the prior year period, due to 53.5% net sales increase in the Hooker Branded segment and over 30% sales increases in both Home Meridian and Domestic Upholstery segments.

All Other net sales decreased by over 10% in the fiscal 2022 second quarter and first half as compared to the prior year periods, as the senior living industry which comprises the majority of H Contract’s business, has not yet recovered from certain impacts of the COVID-19 pandemic.

Consolidated gross profit for the fiscal 2022 second quarter increased due to increased gross profit and margin at Hooker Branded and Domestic Upholstery segments, while margin decreased due to decreased gross profit and margin at Home Meridian as this segment was heavily impacted by higher freight costs which largely offset the gross profit gains from its sales increase.

For the fiscal 2022 first half, consolidated gross profit and margin increased as compared to the prior year period, due to increased gross profit in all three reportable segments, partially offset by decreased gross margin in the Home Meridian segment due to higher freight costs.

All Other’s gross profit and margin decreased in the fiscal 2022 second quarter and first half as compared to the respective prior year periods due to decreased net sales.

Consolidated operating income for the fiscal 2022 second quarter was $9.7 million as compared to $7.5 million in the prior year period and operating margin was essentially flat due to the adverse impact of higher freight costs.

Consolidated net income for the quarter was $7.5 million or $0.62 per diluted share, as compared to $5.8 million or $0.48 per diluted share in the prior year quarter.

For the fiscal 2022 first half, consolidated operating income was $21.9 million compared to a $37.9 million operating loss in the prior year period, which was largely attributable to $44.3 million in non-cash impairment charges on certain of our intangible assets due to the impact of the Covid crisis on the Company’s share price in the prior year.

Consolidated net income for the fiscal 2022 first half was $16.9 million or $1.40 per diluted share, as compared to net loss of $29.0 million or $(2.46) per diluted share in the prior year period.

Our fiscal 2022 second quarter and first-half performance are discussed in greater detail below under “Review” and “Results of Operations.”

The economic recovery continued in our fiscal 2022 second quarter as furniture and home furnishings sales outperformed many other retail categories.

We are pleased to report over 20% net sales increases in all three reportable segments and solid consolidated operating margins as compared to the prior year quarter despite the continued adverse impact of high ocean freight costs and industry-wide logistics challenges.

The Hooker Branded segment’s net sales increased by $11.1 million, or 28.6%, as compared to the prior year quarter due to higher sales volume and lower discounting driven by increased demand.

The majority of Hooker Branded sales are shipped out of U.S.

warehouses and because we source product on a consistent weekly basis, we were better able to flow imports from Asia and utilize lower cost freight contracts, which helped reduce the unfavorable impacts of vessel space and container shortages and domestic trucking availability.

Additionally, we were also able to sell some slower-moving inventory from our warehouses.

As the result of this higher sales volume, transportation cost containment, and to a lesser extent lower discounting, this segment remained highly profitable and contributed over 75% of consolidated operating profit during the quarter.

The Home Meridian segment’s net sales increased by $26.7 million or 46.4% in the fiscal 2022 first quarter versus the fiscal 2021 first quarter due to increased sales with major furniture chains and retail stores driven by increased demand and incoming orders.

The Pulaski Furniture, Samuel Lawrence Furniture and Prime Resources International divisions experienced increased incoming orders and reported significantly increased net sales.

warehouses and because we source product on a consistent weekly basis, we are better able to flow imports from Asia.

These factors helped reduce some of the unfavorable impacts of shortages of vessel space and shipping containers and domestic trucking availability.

Thanks to our strategy of focusing on keeping our best sellers in stock, we were able to limit order cancellation rates in this segment.

Additionally, the Hooker Branded segment was able to increase prices to mitigate increased product costs from higher ocean freight and inflation on goods sourced from Asia.

As a result, the segment remained highly profitable and contributed over 90% of our consolidated operating profit during the quarter.

Incoming orders increased by 38% as compared to the prior year second quarter and 10% as compared to fiscal 2022 first quarter and the segment finished the quarter with a backlog tripled versus the prior year second quarter end.

The Home Meridian segment’s net sales increased by $16.2 million or 22.7% in the fiscal 2022 second quarter as compared to the prior year period due to increased sales with major furniture chains and retail stores, partially offset by decreased sales in the e-commerce, hospitality, and clubs channels.

The Pulaski Furniture, Samuel Lawrence Furniture and Prime Resources International divisions reported significantly increased net sales driven by increased sales volume.

However, profits on these increased sales were largely offset by higher freight costs as the result of continued global supply chain challenges.

Freight costs have a more material and adverse impact on the Home Meridian segment compared to Hooker Branded segment due to relatively lower value of each of Home Meridian’s containers and Home Meridian’s greater reliance on the spot market for container freight.

Net sales in the Accentrics Home division, which focuses on the e-commerce channel, increased slightly versus the prior year period as inventory availability had a more adverse impact on its sales, since ecommerce customers generally expect immediate shipment.

The HMidea division’s sales to its Club accounts remained stable;

however, current sales volumes are not sufficient to fully cover fixed costs at the relatively lower margins in this channel.

The Samuel Lawrence Hospitality division was also unprofitable during the quarter due to very low sales volume as a result of continued low building and remodeling activity in the hospitality industry as it continues its slow climb out of the depths of the COVID crisis.

The Home Meridian segment finished the quarter with a small operating profit and backlog tripled as compared to the prior year quarter end.

Freight surcharges and price increases were imposed during the quarter to try to mitigate these increased costs;

however these customer increases often trail the increases passed on by our suppliers.

The Domestic Upholstery segment’s net sales increased by $7.7 million or 45.9% in the fiscal 2022 first quarter versus the prior year period due to significantly increased sales volume at all three divisions.

(In response to the COVID-19 restrictions and reduced orders, we temporarily closed our manufacturing plants at Bradington-Young and Shenandoah for about a month during the prior year first quarter, and Sam Moore operated at about 50% capacity.

As a result, these divisions did not report sales or reported sales at much lower levels during that month.) Although we are encouraged by 156% higher incoming orders during this quarter, we started to experience foam shortages and inflation in certain raw materials, such as foam, lumber, plywood, fabric and mechanisms.

These manufacturing constraints led to reduced production levels later this quarter, which adversely impacted sales volume and led to operating inefficiencies in this segment.

We believe the foam shortage is beginning to show signs of improvement and we are increasing prices to our customers where possible to offset increased raw material costs.

All Other’s net sales decreased by $368,000 or 12.3% as compared to the prior year period due principally to 16.6% sales decrease at H Contract.

The senior living industry, which comprises the majority of H Contract’s business, has not yet recovered from the COVID-19 crisis.

However, we believe the ongoing vaccination progress has helped the senior living industry as H Contract’s incoming orders increased by 9.5% during the quarter and backlog was 35% higher than prior year quarter end.

Despite the sale decline, H Contract still reported operating income for the quarter.

Lifestyle Brands, a new business started in fiscal 2019, also reported a profit.

We used $238,000 generated from operating activities and existing cash on hand to pay $2.2 million of capital expenditures to enhance our business systems and facilities and $2.1 million in cash dividends to our shareholders.

Cash and cash equivalents stood at $61.6 million at fiscal 2022 first quarter-end, a decrease of $4.2 million compared to the balance at fiscal 2021 year-end.

Meanwhile, our inventory balance increased $11.3 million as production capacity at our Asian suppliers continues to return to pre-pandemic levels.

We expect our cash balances to decrease as we continue to build inventories to meet increased customer demand.

In addition to our cash balance, we have an aggregate of $28.7 million available under our existing revolver to fund working capital needs, which we believe we have the financial resources to fund our business operations, including weathering the logistics issues, cost increases and production capacity constraints which are currently impacting our industry.

The Accentrics Home division, which focuses on the e-commerce channel, reported a 20% net sales decrease due to lack of inventory brought on by current logistics challenges.

Higher freight costs adversely impacted the profitability in this division and resulted in an operating loss in the second quarter.

The HMidea division also reported a 20% sales decline due to decreased sales with club accounts.

On a positive note for that division, product chargebacks decreased by 400 bps in the second quarter largely as a result of favorable product mix and better quality experience in the clubs channel;

however, sales volumes were not sufficient to fully cover fixed costs at the relatively lower margins in this channel.

The Samuel Lawrence Hospitality division was also unprofitable during the quarter due to very low sales volume as the hospitality industry has not yet recovered from the COVID crisis.

The Home Meridian segment recorded $43,000 in operating income in the fiscal 2022 second quarter due to the factors discussed above.

Freight surcharges and price increases were imposed during the quarter;

however, they did not fully mitigate increased costs as larger customers required advanced notice ahead of price increases.

Incoming orders increased by about 4% as compared to the fiscal 2022 first quarter but decreased by 35% as compared to prior year second quarter when business rebounded dramatically after the height of the initial COVID crisis.

Backlog was 62% higher than prior year second quarter end and we built inventory about $20 million higher than fiscal 2021 year- end.

The Domestic Upholstery segment’s net sales increased by $5.0 million or 28.7% in the fiscal 2022 second quarter as compared to the prior year period due to significant sales increases at Bradington-Young and Shenandoah and to a lesser extent at Sam Moore.

In the prior year period, both Bradington-Young and Shenandoah temporarily closed their factories due to COVID and thus operated at reduced capacities.

Although foam allocation and certain other raw materials shortages impacted production levels in May 2021, Bradington-Young and Shenandoah returned to normal levels in July 2021, while Sam Moore recovered at a slower pace as this division experienced labor retention and productivity issues, which adversely impacted sales volume during the second quarter of fiscal 2022.

Other manufacturing constraints adversely impacted our profitability, including the inflation in raw materials such as foam, lumber, plywood, fabric and mechanisms, and supply chain disruptions such as domestic truck availability.

We are increasing prices to our customers where possible to offset increased raw material inflation.

Incoming orders continued to grow as compared to the fiscal 2022 first quarter and the prior year second quarter.

At the end of fiscal 2022 second quarter, backlog was at historic levels for all three divisions and managements’ priorities continue to focus on servicing the backlog, with quality and speed of delivery.

All Other’s net sales decreased by $307,000 or 10.1% in the fiscal 2022 second quarter as compared to the prior year period due to an 11.3% sales decrease at H Contract.

The senior living industry, which comprises the majority of H Contract’s business, has been severely impacted by the pandemic and has reduced capital spending due to increased costs and uncertain revenues.

Although we are encouraged by a 6.4% increase in incoming orders during the quarter and nearly 50% higher backlog than the prior year quarter, our Domestic Upholstery production capacity limited H Contract’s shipments as it sold more domestically manufactured products.

Despite the sale decline, All Other still reported an 8.5% operating margin for the quarter.

Cash and cash equivalents stood at $37.4 million at fiscal 2022 second quarter-end, a decrease of $28.4 million compared to the balance at fiscal 2021 year-end due primarily to a $33.4 million increase in inventory as we continue to build inventories to meet increased customer demand and prepare for the holiday selling season.

Accounts receivable balances increased by $15 million as the result of increased net sales.

During the first six months of fiscal 2022, we used existing cash on hand to pay $4.3 million in cash dividends to our shareholders and $3.5 million of capital expenditures to enhance our business systems and facilities including $2.1 million in our new Georgia distribution center.

In addition to our cash balance, we have an aggregate of $28.7 million available under our existing revolver to fund working capital needs.

We believe we have the financial resources to fund our business operations for the foreseeable future, including weathering an extended impact of COVID-19 pandemic as well as the logistics issues, cost increases and production capacity constraints which are currently impacting our industry.

Results of Operations

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Thirteen Weeks Ended

Twenty-Six Weeks Ended

Cost of sales

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Net income/(loss)

Fiscal 2022 First Quarter Compared to Fiscal 2021 First Quarter

Fiscal 2022 Second Quarter and First-Half Compared to Fiscal 2021 Second Quarter and First-Half

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Hooker Branded

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Domestic Upholstery

Average Selling Price

Average Selling Price (ASP)

Hooker Branded

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Domestic Upholstery

Consolidated net sales increased significantly due to strong sales in all three reportable segments compared to the prior year period.

The Hooker Branded segment’s net sales increased by 89% as compared to the prior year period due to increased unit volume and ASP, driven by increased demand and lower discounting.

A strong retail environment also enabled this segment to sell slower-moving inventory with less promotional and discounting costs.

The Home Meridian segment’s net sales increased due to increased unit volume with major furniture chains and retail stores as the result of strong demand, partially offset by decreased sales in the Samuel Lawrence Hospitality as the hospitality business has not recovered from the pandemic.

Accentrics Home net sales increased slightly compared to prior year first quarter as e-commerce sales were more impacted by inventory availability.

The ASP decrease was attributable to customer mix.

The Domestic Upholstery segment’s net sales increased due to increased unit volume in all three divisions.

In the prior year period, we temporarily shut down Bradington-Young and Shenandoah manufacturing plants and kept the Sam Moore division operating at 50% capacity for a month.

In fiscal 2022 first quarter, all three divisions were operated near full capacity in response to increased orders and backlog.

However, we saw foam allocations and certain material shortages later in the quarter that limited our production levels and adversely impacted sales volume.

All Other’s net sales decrease was attributable to H Contract, as this division has not yet recovered from the pandemic, partially offset by continued growth at Lifestyle Brands.

Consolidated net sales increased significantly in the fiscal 2022 second quarter and first half due to strong sales in all three reportable segments as compared to the prior year periods.

The Hooker Branded segment’s net sales increased in the fiscal 2022 second quarter and first half, as compared to the prior year periods respectively, due to both increased unit volume and ASP, driven by increased demand, lower discounting, and price increases in response to higher freight costs and product inflation.

The Home Meridian segment’s net sales increased in the fiscal 2022 second quarter and first half due to increased sales volume with major furniture chains and retail stores as the result of strong demand, partially offset by decreased net sales and unit volume in e-commerce channel, Samuel Lawrence Hospitality, and the clubs business.

The ASP increase was attributable to price increases to mitigate higher freight costs;

however, the increases were not sufficient to cover increased product costs driven by higher freight.

The Domestic Upholstery segment’s net sales increased in the fiscal 2022 second quarter and first half due to significant sales increases at Bradington-Young and Shenandoah as compared to the prior year periods when these two divisions experienced temporary factory shutdowns.

ASP increased at all three divisions in this segment in response to the inflation of material costs.

Sam Moore net sales increased by single digit in fiscal 2022 second quarter due to increased ASP, partially offset by its decreased unit volume due to production constraints.

Foam allocation and certain material shortages impacted all three divisions early in the fiscal 2022 second quarter.

Bradington-Young and Shenandoah resumed normal production level late in the quarter while Sam Moore recovered at a slower pace due to labor retention and productivity issues.

All Other’s net sales decreased in the fiscal 2022 second quarter and first half as compared to the prior year periods due principally to reduced unit volume at H Contract, as this division has not yet recovered from the impact of reduced capital spending by the senior living industry in response to increased costs and uncertain revenues as a result of COVID.

Gross Profit and Margin

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Twenty-Six Weeks Ended

Hooker Branded

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Domestic Upholstery

Consolidated gross profit and margin both increased in the fiscal 2022 first quarter as compared to the prior year period.

The Hooker Branded segment’s gross profit and margin both increased due primarily to the net sales increase as well as lower fixed distribution costs.

Product costs benefited from a favorable sourcing mix as we imported a higher portion of product from Vietnam which carried lower costs.

The favorable sourcing mix was negatively impacted by higher freight costs and inflation from Asian vendors.

The Home Meridian segment’s gross profit increased in absolute terms and slightly as a percentage of net sales.

Freight costs increased 300 bps as compared to prior year period, which was the primary driver of product costs increase.

Despite a net sales increase, Home Meridian’s gross margins were negatively impacted by some higher-volume but lower-margin sales programs.

The Domestic Upholstery segment’s gross profit and margin increased significantly due to the net sales increases and operating efficiency improvements this segment experienced as compared to the prior year period that included lower sales volumes and operating inefficiencies due to temporary factory shutdowns.

However, foam allocations and other critical material shortages began to impact production in the first quarter of fiscal 2022.

This led to operating at reduced production volumes and resulted in production inefficiencies which adversely impacted gross profit.

Inflation of raw material costs also drove increased product costs in this segment.

All Other’s gross profit and margin decreased in the first quarter due principally to net sales decline at H Contract.

For the fiscal 2022 second quarter, consolidated gross profit increased and margin decreased as compared to the prior year quarter.

For the fiscal 2022 first half, consolidated gross profit and margin both increased as compared to the prior year period.

The Hooker Branded segment’s gross profit and margin both increased in the fiscal 2022 second quarter and first half, due primarily to the net sales increase as well as lower discounting due to higher demand.

However, product costs have begun to be negatively impacted by inflation and higher freight costs in this segment.

The Home Meridian segment’s gross profit and margin decreased in the fiscal 2022 second quarter as compared to the prior year period despite a net sales increase, due primarily to significantly increased freight costs which negatively impacted gross margin by 550 bps.

For the fiscal 2022 first half, Home Meridian gross profit increased due to net sales growth while margin decreased as compared to the prior year period.

Freight costs increased about 400 bps, which was the primary driver of product cost increase in fiscal 2022 first half.

On a more positive note, chargebacks which adversely impacted Home Meridian profits in prior years were at much lower levels due to favorable product mix and better-quality experience in the clubs channel.

The Domestic Upholstery segment’s gross profit and margin increased in the fiscal 2022 second quarter and first half due to net sales increases and production efficiencies from operating near full capacity due to historic levels of backlog.

In the prior year first and early second quarters, this segment experienced reduced sales volumes and operating inefficiencies due to temporary factory shutdowns, which led to lower gross profit and margin for both the fiscal 2021 second quarter and first half.

Foam allocations and certain other raw material shortages which impacted Domestic Upholstery production in the fiscal 2022 first quarter improved significantly by late in the second quarter.

However, inflation of raw material costs drove increased product costs in this segment and adversely impacted gross margin by about 200 bps in fiscal 2022 second quarter.

All Other’s gross profit and margin decreased in the fiscal 2022 second quarter and first half due principally to net sales declines and to a lesser extent unfavorable product mix as more product sold was manufactured domestically.

Selling and Administrative Expenses (S&A)

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Twenty-Six Weeks Ended

Hooker Branded

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Domestic Upholstery

Consolidated selling and administrative (“S&A”) expenses increased in absolute terms while decreased as a percentage of net sales in the fiscal 2022 first quarter versus the prior year period.

The Hooker Branded segment’s S&A expenses increased in absolute terms due primarily to increased selling costs as the result of higher net sales, and to a lesser extent increased expenses incurred as part of our ERP system implementation.

The increases were partially offset by lower bad debt expenses due to a customer write-off in the prior year and lower advertising supplies and market expenses due to the postponement of the Spring High Point Furniture Market.

Hooker Branded segment’s S&A expenses decreased as a percentage of net sales due to increased net sales.

The Home Meridian segment’s S&A expenses increased slightly in absolute terms but decreased as a percentage of net sales.

The increase was principally attributable to increased selling expenses due to higher net sales, partially offset by decreased travel expenses, decreased professional service expenses and other spending reductions.

The Domestic Upholstery segment’s S&A expenses increased in absolute terms due to increased selling expenses on higher net sales, higher salaries and wages compared to the prior year, when a number of employees were furloughed due to factory shutdowns, and increased depreciation expenses due to the accelerated depreciation of our existing ERP system, partially offset by lower medical claims costs.

All Other S&A expenses decreased in absolute terms due to decreased selling expenses as well as decreased advertising supply expenses.

Consolidated selling and administrative (“S&A”) expenses increased in absolute terms while decreased as a percentage of net sales in the fiscal 2022 second quarter and first half versus the prior year periods.

The Hooker Branded segment’s S&A expenses increased in absolute terms and stayed essentially flat as a percentage of net sales in fiscal 2022 second quarter.

The increases were driven by increased selling costs as the result of higher net sales, increased salaries and wages due to the absence of salary reductions and furloughs seen in the prior year period, increased selling expenses due to Spring High Point Furniture Market which was held in June 2021, and to a lesser extent increased expenses incurred as part of our ERP upgrade project.

For the fiscal 2022 first half, Hooker Branded segment S&A increased in absolute terms due to the factors discussed above, partially offset by lower bad debt expenses due to a customer write-off in the prior year.

S&A expenses decreased as a percentage of net sales in fiscal 2022 first half due to increased net sales.

The Home Meridian segment’s S&A expenses increased slightly in absolute terms but decreased as a percentage of net sales in the fiscal 2022 second quarter and first half.

The increases were attributable to severance expenses due to personnel changes, the absence of employee furloughs in the prior year period, and increased market expenses and other spending as business returned to more normal levels, partially offset by lower professional expenses, decreased compensation expense on lower profits, and decreased advertising supply expense.

The Domestic Upholstery segment’s S&A expenses increased in absolute terms in fiscal 2022 second quarter and first half due to increased selling expenses on higher net sales, increased salaries and wages due to the absence of a number of employees furloughed due to factory shutdowns in the prior year period, and increased depreciation expenses due to the accelerated depreciation of our existing ERP system due to the expected implementation of an upgraded cloud-based ERP solution in fiscal 2023.

All Other S&A expenses decreased in absolute terms in the fiscal 2022 second quarter and first half due to decreased selling expenses, partially offset by increased advertising supply expenses in the current second quarter due to the postponement of the High Point Furniture Market.

S&A expenses increased as a percentage of net sales due to lower net sales.

Goodwill impairment charges

Thirteen Weeks Ended

Home Meridian

Domestic Upholstery

Trade name impairment charges

Thirteen Weeks Ended

Home Meridian

In the prior year first quarter, we recorded $23.2 million and $16.4 million in non-cash impairment charges to write down goodwill in Home Meridian segment and the Shenandoah division under Domestic Upholstery segment, respectively.

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Twenty-Six Weeks Ended

Intangible asset amortization

Intangible asset amortization expense stayed the same compared to the prior year first quarter.

Intangible asset amortization expense stayed the same compared to the prior year periods.

Operating Profit/(Loss) and Margin

Thirteen Weeks Ended

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Hooker Branded

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Thirteen Weeks Ended

Twenty-Six Weeks Ended

Consolidated interest expense, net

Consolidated interest expense decreased in fiscal 2022 first quarter primarily due to the payoff of our term loans in fiscal 2021 fourth quarter.

Consolidated interest expense decreased in both the second quarter and first half of fiscal 2022 due to the payoff of our term loans in fiscal 2021 fourth quarter.

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Consolidated income tax expense/(benefit)

Effective Tax Rate

We recorded income tax expense of $2.8 million for the fiscal 2022 first quarter compared to income tax benefit of $10.9 million for the comparable prior year period.

The effective tax rates for the fiscal 2022 and 2021 first quarters were 22.7% and 23.8%, respectively.

We recorded income tax expense of $2.2 million for the fiscal 2022 second quarter compared to $1.6 million for the comparable prior year quarter.

The effective tax rates for the fiscal 2022 and 2021 second quarters were 22.7% and 21.8%, respectively.

For the fiscal 2022 first half, we recorded income tax expense of $5.0 million, compared to income tax benefit of $9.3 million for the comparable prior year period, of which $10.7 million was recorded related to goodwill and trade name impairment charges.

The effective tax rates for the fiscal 2022 and 2021 first half periods were 22.7% and 24.2%, respectively.

Net Income/(Loss)

Thirteen Weeks Ended

Net income/(loss)

Twenty-Six Weeks Ended

Net income/(loss) Consolidated

Diluted earnings/(loss) per share

We monitor information on COVID-19 from the CDC and believe we are adhering to their recommendations regarding the health and safety of our personnel.

To address the potential human impact of the virus, much of our administrative staff are telecommuting.

To address the potential human impact of the virus, many of our administrative staff are telecommuting for at least part of their work-week.

For those administrative staff not telecommuting and our warehouse and domestic manufacturing employees, we have implemented appropriate social distancing policies and have stepped-up facility cleaning at each location.

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As more state and local governments have eased restrictions on retail activities, we have seen a significant improvement in our business conditions, including order rates, profitability, and financial condition.

We continue to cautiously make decisions regarding our financial resources to weather and adapt to changes in market conditions, including any remaining impacts of COVID-19 and future pandemics.

Our consolidated orders and backlogs are more than double historical norms as we head into the summer months.

Given this strong position, we are cautiously optimistic, considering the industry-wide supply chain, logistics and raw materials shortages and inflation.

We continue to manage our logistics issues, with the goal of minimizing costs and maximizing delivery;

however, there is no indication that ocean freight container rates will return to pre-COVID-19 levels in the near term.

We believe we have mitigated these dynamics as much as possible through surcharges and price increases, but these increases often trail price increases received by logistics partners and suppliers.

However, we continue to cautiously make decisions regarding our financial resources to weather and adapt to changes in market conditions, including any further impacts of COVID-19, including certain COVID variants and possible future pandemics.

Consumer and retail demand remain historically strong, with consolidated backlogs nearly double and incoming orders up 27% over last year as of the end of the fiscal 2022 second quarter.

However, we are facing significant headwinds on the supply side that will impact us in the short-term.

The surge of the Delta variant of COVID-19 has caused factories in our source countries of Vietnam and Malaysia to close temporarily, with reopening prospects uncertain.

In addition, global logistics challenges with higher freight and transit costs and lower transportation capacity, along with raw materials inflation and some labor shortages continue.

Our Hooker Branded and Domestic Upholstery segments, where we have more of an ability to keep product flowing and to ship from our significant US and Asia warehousing capacity, is less challenged than Home Meridian, since Home Meridian ships primarily to larger customers via direct container and is more impacted by shipping costs and capacity, especially in the short-term.

Consequently, we expect our second-half net sales and income to be adversely affected by these challenges, particularly in our Home Meridian segment.

We continue to manage our logistics issues, with the goal of minimizing costs and maximizing delivery however there is no indication that ocean freight container rates will return to pre-COVID-19 levels in the near term.

We believe we have mitigated these dynamics as much as possible through surcharges and price increases, but these increases can trail price increases received from logistics partners and suppliers for up to ninety days.

Additionally, these supply-side factors are unpredictable and often involve frequent, unexpected changes with little or no notice.

We believe that several macroeconomic factors provide a nice path for growth such as the strong housing market and favorable demographics with the large Millennial generation becoming highly engaged in household formation and home furnishings purchases.

However, we expect increased competition for consumer discretionary income from industries such as travel, apparel, dining out and in-person events as vaccination rates increase.

Longer-term, we believe that several macroeconomic factors provide a path for growth such as the strong housing market and favorable demographics with the large Millennial generation becoming highly engaged in household formation and home furnishings purchases.

While we expect the extraordinary levels of demand for home furnishings to diminish somewhat, we also expect that demand for home furnishings will settle into a higher level of demand than pre-pandemic.

We believe we are well positioned to help consumers enhance their homes with comfortable, stylish and quality home furnishings.

We believe we are utilizing all available levers to help mitigate these headwinds, and we remain optimistic about our long-term position as we work our way through these transitory disruptions.

Our strong balance sheet and variable cost business model give us confidence that we can weather this current industry-wide challenge and will allow us to take advantage of the healthy consumer demand environment and long-term positive economic indicators and demographic trends for home-related industries.

However, we expect increased competition for consumer discretionary income from industries such as travel, apparel, dining out and in-person events as vaccination rates increase.

Additionally, potential adverse effects of new COVID-19 variants on the US and global economies remains uncertain.

Financial Condition, Liquidity and Capital Resources

Cash Flows – Operating, Investing and Financing Activities

Thirteen Weeks Ended

Net cash provided by operating activities

Twenty-Six Weeks Ended

Net cash (used in)/provided by operating activities

Net cash used in investing activities

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Net (decrease)/increase in cash and cash equivalents

During the three months ended May 2, 2021, we used a portion of the existing cash and cash equivalent on hand to pay $2.2 million of capital expenditures to enhance our business systems and facilities, $2.1 million in cash dividends, and $155,000 in life insurance premiums on Company-owned life insurance policies.

In comparison, during the three months ended May 3, 2020, we used a portion of the $18.9 million cash generated from operations and $673,000 life insurance proceeds to pay $2.2 million in principal and interest payments on our term loans, $1.9 million in cash dividends, and $162,000 in life insurance premiums on Company-owned life insurance policies.

During the six months ended August 1, 2021, we used a portion of the existing cash and cash equivalent on hand to pay $3.5 million of capital expenditures to enhance our business systems and facilities, $4.3 million in cash dividends, and $473,000 in life insurance premiums on Company-owned life insurance policies.

In comparison, during the six months ended August 2, 2020, we used a portion of the $53.2 million cash generated from operations and $673,000 life insurance proceeds to pay $3.8 million in cash dividends, $3.2 million in principal and interest payments on our term loans, and $453,000 in life insurance premiums on Company-owned life insurance policies.

Liquidity, Financial Resources and Capital Expenditures

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Loan Agreements and Revolving Credit Facility

We paid off the remaining $24.3 million term loans at the end of fiscal 2021 and currently have one $35 million revolving credit facility (the “Existing Revolver”).

The credit facility was provided for in the amended and restated loan agreement (the “Original Loan Agreement”), which we entered into on February 1, 2016 with Bank of America, N.

We entered a Second Amended and Restated Loan Agreement dated as of September 29, 2017 (the “Second Amended and Restated Loan Agreement”), a First Amendment to Second Amended and Restated Loan Agreement dated as of January 31, 2019, a Second Amendment to Second Amended and Restated Loan Agreement dated as of November 4, 2020, and a Third Amendment to the Second Amended and Restated Loan Agreement dated as of January 27, 2021.

Details of our Existing Revolver are outlined below:

We currently have one $35 million revolving credit facility (the “Existing Revolver”) with Bank of America, N.

(“BofA”), which we entered into on January 27, 2021.

The credit facility is based on successive past amendments to previous BofA banking agreements which are collectively referred to as the “Previous Agreements.” Details of our Existing Revolver are outlined below:

The facility is available between January 27, 2021 and February 1, 2026 or such earlier date as the availability may terminate or such later date as BofA may from time to time in its sole discretion designate in any extension notice;

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We must also pay a quarterly unused commitment fee at a rate of 0.15% determined by the actual daily amount of credit outstanding during the applicable quarter.

The loan covenants agreed to under the Second Amended and Restated Loan Agreement continue to apply to us.

The loan covenants agreed to under the Previous Agreements continue to apply to us.

They include customary representations and warranties and requires us to comply with customary covenants, including, among other things, the following financial covenants:

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They do not restrict our ability to pay cash dividends on, or repurchase shares of our common stock, subject to our compliance with the financial covenants discussed above, if we are not otherwise in default under the agreements.

We were in compliance with each of these financial covenants at May 2, 2021 and expect to remain in compliance with existing covenants for the foreseeable future.

We were in compliance with each of these financial covenants at August 1,2021,and expect to remain in compliance with existing covenants for the foreseeable future.

We believe we have the financial resources to fund our business operations, including weathering the logistics issues, cost increases and production capacity constraints which are currently impacting our industry.

Revolving Credit Facility Availability

As of May 2, 2021, we had an aggregate $28.7 million available under our Existing Revolver to fund working capital needs.

Standby letters of credit in the aggregate amount of $6.3 million, used to collateralize certain insurance arrangements and for imported product purchases, were outstanding under the Existing Revolver as of May 2, 2021.

There were no additional borrowings outstanding under the revolving credit facility as of May 2, 2021.

As of August 1, 2021, we had $28.7 million available under our Existing Revolver to fund working capital needs.

Standby letters of credit in the aggregate amount of $6.3 million, used to collateralize certain insurance arrangements and for imported product purchases, were outstanding under the Existing Revolver as of August 1, 2021.

There were no additional borrowings outstanding under the revolving credit facility as of August 1, 2021.

Capital Expenditures

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Of those amounts, we expect to spend approximately:

$3.0 million outfitting a newly built leased warehouse space in Savannah, Georgia that we expect to occupy in the fall of 2021.

$1.5 million outfitting a newly built leased warehouse space in Savannah, Georgia.

Hiring of staff is in process and we expect to commence operations at the new facility in October 2021.

The facility will consolidate several older, less efficient Home Meridian segment warehouses into a single strategically located distribution facility near the port of Savannah and major interstate highways.

We believe this is critical to servicing customers and is expected to reduce transportation costs and increase operating efficiencies;

$1.0 million on implementation costs for a new common, cloud-based Enterprise Resource Planning (“ERP”) platform which we expect to be online in our Hooker Branded segment and certain divisions under Domestic Upholstery segment by mid-2022, with other segments following thereafter.

$1.5 million on implementation costs for a new common, cloud-based Enterprise Resource Planning (“ERP”) platform which we expect to be online in our Hooker Branded segment and certain divisions under Domestic Upholstery segment by mid-calendar 2022, with other segments following thereafter.

Enterprise Resource Planning

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We anticipate spending approximately $5.5 million over the course of this project, with a significant amount of time invested by our associates.

In the fiscal 2022 first quarter, we spent approximately $400,000 on this project.

Subsequent to the end of the fiscal 2022 first quarter, on June 3, 2021, our board of directors declared a quarterly cash dividend of $0.18 per share, which will be paid on June 30, 2021 to shareholders of record at June 16, 2021.

We spent approximately $1.5 million on this project in the first half of fiscal 2022.

On September 2, 2021, our board of directors declared a quarterly cash dividend of $0.18 per share, which will be paid on September 30, 2021 to shareholders of record at September 16, 2021.

The Board will continue to evaluate the appropriateness of the current dividend rate considering our performance and economic conditions in future quarters.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements