Haverty (NYSE:HVT)'s Furniture (ticker: HVT) reported a decrease in total sales by 13.4% in the second quarter of 2024 compared to the same period last year, marking an improvement from the 18.1% decline seen in the first quarter. Despite the dip in sales, the company announced a pretax profit of $6.5 million and a robust cash position, exceeding $100 million. With strategic investments in new stores and merchandise, Haverty's is aiming to bolster its market presence and drive future sales growth.
Key Takeaways
- Haverty's total sales fell 13.4% in Q2 2024, improving from an 18.1% decline in Q1.
- The company posted a pretax profit of $6.5 million and has a strong cash reserve over $100 million.
- New stores are planned in Indianapolis, Florida, and Texas, with investments in merchandise and design offerings.
- Sales trends in Q2 showed a decrease, with written business and deliveries down across April, May, and June.
- Haverty's is realigning its supply chain away from China, looking towards Cambodia, Vietnam, and Mexico.
- The company is targeting a higher-end customer base and avoiding the promotional pricing trend.
Company Outlook
- Haverty's is optimistic about the third quarter, focusing on increasing store traffic.
- Investments in website enhancement and merchandise talent are underway.
Bearish Highlights
- Sales have decreased consistently over the past months, with a notable 18% drop in May attributed to disappointing Memorial Day sales.
- Deliveries also saw a significant decline, especially a 20% drop in June.
Bullish Highlights
- A new media firm, Carmichael Lynch, has been introduced, showing early signs of improved traffic.
- The company maintains a consistent backlog throughout the year, indicating stable future revenues.
Misses
- Memorial Day sales were weaker than expected, suggesting cautious consumer spending patterns.
Q&A Highlights
- Haverty's does not perceive a significant impact from competitors' promotional strategies or businesses going out of business.
- Weather-related issues have not majorly affected sales.
- There is optimism regarding the Federal Reserve's indication of potential rate cuts, which could improve housing demand and positively influence Haverty's business.
In conclusion, Haverty's Furniture is navigating a challenging market with a strategic focus on high-end customers and market expansion through new stores and product offerings. Despite recent sales declines, the company's financial health remains strong, and there is a sense of optimism for the future, bolstered by macroeconomic factors such as potential interest rate cuts by the Federal Reserve. Haverty's invites stakeholders to its next earnings call for further updates on its third-quarter performance.
InvestingPro Insights
Haverty's Furniture (ticker: HVT) has demonstrated resilience in a challenging market, focusing on strategic growth and maintaining a strong financial position. Here are some insights based on recent data from InvestingPro that may provide a clearer picture of the company's performance and future outlook:
- The company has been adept at managing its finances, boasting an impressive gross profit margin of 61.03% over the last twelve months as of Q2 2024. This indicates Haverty's ability to retain a significant portion of its sales as gross profit, which can be crucial for its operational success and expansion plans.
- Haverty's commitment to rewarding its shareholders is evident through its significant dividend yield of 7.8% as of the latest data, coupled with a track record of maintaining dividend payments for 50 consecutive years. This could be an attractive point for investors seeking steady income streams, especially in times of market volatility.
- The market has recognized Haverty's efforts and potential, reflected in a strong one-month price total return of 21.63%. This performance suggests growing investor confidence in the company's strategy and execution.
InvestingPro Tips indicate that while analysts anticipate a sales decline in the current year and expect net income to drop, Haverty's cash flows can sufficiently cover interest payments, and the company operates with a moderate level of debt. These factors, combined with the company's liquid assets exceeding short-term obligations, provide a cushion against financial uncertainties.
For investors seeking more in-depth analysis and additional tips, InvestingPro offers a comprehensive list of 11 additional tips to help evaluate Haverty's Furniture's financial health and investment potential. Access these valuable insights by visiting InvestingPro's dedicated page for Haverty's Furniture at https://www.investing.com/pro/HVT.
Full transcript - Haverty Furniture Companies Inc (HVT) Q2 2024:
Operator: Greetings, and welcome to the Haverty's 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. [Operator Instructions] 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.
Richard Hare: Thank you, operator. During this conference call, we'll make forward-looking statements, which are subject to risks and uncertainties. Actual results may differ materially from those made or implied in such statements, which speak only as of the date they are made, in 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.
Clarence Smith: 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 pretax 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 a 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 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's brand position. All these stores will be served by 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 IT systems and then, most importantly, investing in talent. And 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.
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 two new stores in South Haven, 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 conditions and were 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 four to week 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 cost 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 rightsized 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 Haverty 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.
Richard Hare: 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 cost, 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 non-deductible 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 the 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 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, and 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 utilized 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 list 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 to $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% to 20%. We anticipate continued reductions in third-party credit costs as well as delivery costs. Our planned CapEx for 2024 is $33 million; anticipated new or replacement stores, remodels and expansions account for $28 million. Investments in our distribution network are expected to be $2.5 million and investments in our information technology are expected to be approximately $2.5 million. Our anticipated effective tax rate 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.
Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question is from Anthony Lebiedzinski from Sidoti. Please proceed.
Anthony Lebiedzinski: Good morning, gentlemen. And thank you for taking the questions. So firstly, just wondering if you could comment on the sales trends throughout the quarter. I know you talked about Memorial Day being, I guess, somewhat disappointing. But just overall, as we look from April through June, how did that go in terms of written comps or however you want to handle that?
Richard Hare: Sure, Anthony. Good morning. This is Richard. In terms of the -- I can give you the written and delivery trends. In April, our written business was down approximately 14%. Steve mentioned the 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.
Anthony Lebiedzinski: That's very helpful, Richard. Thanks for that. And then so on your last conference call now, you guys talked about a new media firm and a new media approach. Can you talk about that and like what you've loaned from that? And how are you guys thinking about that for the back half of the year?
Steve Burdette: Yeah, Anthony, this is Steve. Yeah, we did introduce Carmichael Lynch, started in April. Really the first impact that we started seeing in of that would have been in May. It's too early to tell though. 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. Some of the changes I looked at that I talked about is from a TV perspective, we're still doing streaming in OTT, but we're also doing a little bit 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. So we're encouraged right now. And so that's kind of why we're optimistic heading the third quarter, and we'll continue to see those traffic trends improve.
Anthony Lebiedzinski: Got you. Yeah, thanks, Steve. And then I guess with the upcoming election and your 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 have normally like to do?
Steve Burdette: Well, we could be basically cut off because the election takes priority of those ads, but we won't know that until we get there. And there'll probably be more so in certain states than others. 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 and Co and Carmichael Lynch.
Anthony Lebiedzinski: Got it. Okay. And then 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 in store growth that you've had, can you talk more broadly about the -- some of the other recent store openings? How have those done relative to your expectations?
Steve Burdette: Yeah. So I mentioned on the call, as you said, South Haven and Dustin 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 -- with all four of those store openings and look forward to the two more that we're adding this year in Pembrooke Pines down in South Florida and then obviously, St. Pete in Tampa. Again, Florida being our largest concentration of stores. We're really looking forward to that, along with Indiana and then getting into Houston.
Anthony Lebiedzinski: Got it. Well thank you very much. And best of luck.
Steve Burdette: Thank you.
Operator: Our next question comes from Cristina Fernandez from Telsey Advisory Group. Please proceed.
Cristina Fernández: Hi, good morning. I wanted to follow up on Anthony's question on demand. And I wanted to see, as you looked at how the quarter progressed, in 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.
Steve Burdette: Yeah, Christina, this is Steve. We're focusing -- from a promotional standpoint, we're not going to chase that. We don't feel like that's the 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 it 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 and driving. And so it's too early right now coming out of 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. And we're going to stay consistent, maintain our margins and continue off the customer quality and value product.
Cristina Fernández: 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 specifics, like what areas? Where do you need more talent and on IT, like is it systems? Is it supply chain?
Clarence Smith: The main investments we continue to do there is enhancing our website and just 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.
Cristina Fernández: And then anything on talent, where you need to make investments?
Clarence Smith: On talent. Well, yeah, we actually -- we have some issues -- 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.
Steve Burdette: Cristina, we're making -- 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 AB testing is something we continually are doing and evolving and changing.
Cristina Fernández: Thank you. And the last question I had was with the election coming up, there's also increased talk 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?
Steve Burdette: 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 have an alternative and do not expect any kind of impact from tariffs that they were to come about for China, additional tariffs.
Cristina Fernández: Thank you.
Steve Burdette: Thank you.
Operator: Our next question comes from Budd Bugatch from Water Tower Research. Please proceed.
Budd Bugatch: 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 of 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?
Richard Hare: Yeah. Budd, it's Richard. We -- the overall relationship really hasn't changed over the quarter in terms of the relationship between deposits in our backlog. So backlog is fairly consistent now with what it's been throughout this calendar year.
Budd Bugatch: And any read through the change in -- I know that Memorial Day might have been a disappointment, Steven, I was wondering if you had thought about it as still 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?
Steve Burdette: I don't know what we did -- we were just on the wrong side of it in that mix you just described. Obviously, we're not happy. It was still a great weekend. It just wasn't what our expectations and what it was last year. And it was probably -- it was equal to our President's Day and typically, it's a stronger holiday than President's Day. So it was not a horrible weekend. It just was disappointing from a comparable basis for what we had done there. I think Budd, the consumer, we're just seeing as being a little more cautious and delivered in their -- taking the money out of their wallets and spending it. So we feel good where we are and what we're doing and 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.
Budd Bugatch: And that does go to the -- 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? And are you -- how do you participate in the trade down? That's not something Haverty’s is known for, and I wouldn't expect you to change it, and we wouldn't want you to change your strides, but you still have to be aware of what's going on around you.
Clarence Smith: Yeah. 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 Steve talked about that. The bottom end of this industry is being devastated right now. The bankruptcies that you're seeing, the cons, Babcock 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 bailey wick. 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 are 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 will pay off for us. It might take a little while, but I think it will pay off for us.
Budd Bugatch: I don't disagree with that at all. And remind me again what you're planning to open the balance of this year? You've got St. Pete and --
Steve Burdette: Yeah, we hope to open in Pembrooke 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 and the Woodlands will be opened in late fourth quarter. So that's what we have planned for the remainder of this year, we should, with that store count, that will get us somewhere around 129 stores for the year.
Clarence Smith: Budd, you can walk down the street for our store opening in St. Pete. We'll just see you there.
Budd Bugatch: 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.
Clarence Smith: We'll buy you a cup of coffee.
Budd Bugatch: Cookie and Burberry. Okay. Thanks.
Operator: Our next question comes from Mickey Legg from the Benchmark Company. Please proceed.
Mickey Legg: Hey, guys. Thanks for taking my questions. Looks like you touched on the business 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 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 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 avoid that? Any color on that would be helpful.
Clarence Smith: We try not to give weather reports. I mean, sometimes it does impact, but no, we haven't really had any major impact there. These GOB sales really don't affect us, and 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 certainly in parts of our market, but I don't think it might have a very short-term impact, but nothing significant.
Steve Burdette: Yeah. Mickey, it's Steve. On the promotional side of things, I think it's still -- they're still consistent. The lower-end players are going to be aggressive with credit and with 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 in their mind, better values or what they're putting out there. But from our perspective, I don't see it being any different. In the upper end is still doing the same thing in promoting service and design and not as much credit. So I don't really see the change in general, still people are promoting when it gets around the holidays, you still see it, and there's still a lot of it.
Mickey Legg: Got it. Got it. That's helpful. And then maybe just some additional color on the interest rate environment going forward. We're expecting cuts over the next 12 months. How do you see that impacting the consumer environment and maybe a little bit on the timing of that impact?
Richard Hare: This is Richard. We certainly are pleased to see the Fed's recent indications or signals that the rates are going to be coming down this year. 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 you're reading in the industry publications and things that nature, next year will certainly -- we should see an improvement in overall demand for housing, which certainly will affect us in a positive way.
Mickey Legg: All right, great. That’s all for me.
Richard Hare: Thanks, Mickey.
Operator: This concludes our question-and-answer session. I would like to turn the floor back over to Mr. Richard Hare for closing comments.
Richard Hare: 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.
Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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