Greetings, ladies and gentlemen. And welcome to the Hooker Furniture Quarterly Investor Conference Call reporting its operating results for the Fourth Quarter 2022 . As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paul Huckfeldt, Vice President, Finance and Chief Financial Officer for Hooker Furniture Corporation.

Thank you, Liz. Good morning, and welcome to our quarterly conference call to review our financial results for the fiscal 2022 full year and fourth quarter both of which ended on June 30, 2022. Joining me this morning is Jeremy Hoff, our Chief Executive Officer. We appreciate your participation today. During our call, we may make forward-looking statements, which are subject to risks and uncertainties. A discussion of factors that could cause our actual results to differ materially from management's expectations is contained in our press release and SEC filing, announcing our fiscal 2022 year end results. Any forward-looking statements speaks only as of today, and we undertake no obligation to update or revise any forward-looking statements to reflect events or circumstances after today's call. This morning, we reported consolidated net sales of $594 million, an increase of $53.5 million or 10% compared to last year, driven by year-over-year sales increases of more than 20% in both our Hooker Branded and domestic Upholstery segments. These sales gains are partially offset by a 1% sales decrease in the Home Meridian segment. We reported net income of $11.7 million or $0.97 per diluted share this year compared to a net loss of $10 million or 88% per diluted share last year. Last year's loss was $44 million or $34 million net effects, non-cash and tangible impact impairment charge. The fourth quarter, which began on November 1, 2021, and ended on January 30, 2022, was seriously impacted by COVID related factory shutdowns in Vietnam and Malaysia, which resulted in a 13% consolidated sales decrease in the quarter. In the quarter, consolidated net sales were $135 million, the decline driven by a 24% or $19 million revenue decrease at HMI and a 12% or $5.8 million sales decrease at Hooker Branded. These lower sales were slightly offset by a $3 million or 13.5% increase in the domestic Upholstery segment. For the 2022 fourth quarter, the company reported a consolidated net loss of $4 million or $0.33 per diluted share, as compared to a net income of $8.5 million dollars or $0.71 per diluted share in the fourth quarter of fiscal 2021. The quarter operating loss was primarily a function of a $12 million operating loss at Home Meridian. Contributing factors in the fourth quarter loss included inventory unavailability due to COVID related Asian factory shutdowns from August through late in the year, continued high freight costs, decline in ecommerce and hospitality furniture sales and cost of approximately $5 million for the company's planned exit from unprofitable businesses and channels. Now I'll turn the call over to Jeremy to comment on our fiscal 2022 and fourth quarter results.

Thank you, Paul. And good morning, everyone. For much of the year we successfully mitigated a multitude of macroeconomic challenges while growing sales, remaining profitable and undertaking transformative strategic initiatives for a long-term expansion of the business. This was particularly true on the Hooker legacy side of our business and during the first half of the year for all segments. During the first half, all segments achieve double digit sales increases, and we were able to better meet historical levels of demand with the right product assortment and inventory readiness. Some of the macroeconomic challenges we faced included soaring ocean freight costs and shipping bottlenecks through the year, material and component parts installation, staffing and firm shortages. During the course of the last 18 months transportation costs have more than tripled, substantially increasing our cost of imported goods sold. We were able to mitigate these dynamics until late summer when the unexpected COVID related shutdown of Asian factories began in August and continued through late in the year. While incoming orders remain strong and backlogs were at historic highs this loss of production capacity virtually halted much of our supply of imported products. This hit Home Meridian immediately and even began to cause out of stock issues and low inventory receipt at Hooker Branded in the fourth quarter despite that segment’s US warehousing model. All of these factors contributed to the 13.2% consolidated sales decrease in the fourth quarter. Over the last few months, Asian factories have begun to ramp up production again and are currently operating at around 85% to 90% capacity and improving weekly. While we are confident that production of imported goods will reach 100% capacity in the near future, we will not feel the full impact of higher production until the second quarter as we forecasted…

Thanks Jeremy. I'll go over the performance of each of our segments beginning with Hooker Branded. For the 2022 fiscal year, net sales increased by $38 million or 23.5% compared to the prior year. Revenue gains are attributed to a stronger product portfolio, effective supply chain and logistics management and robust consumer demand. Hooker Branded managed well through some turbulent economic conditions while achieving double digit sales gains and increased profitability through the first nine months of the year. Our decision to auto prices in the backlog had a short term unfavorable impact on margins but by the end of fiscal 2022, the majority of shipments in the Hooker Branded segment carry price increases, which were implemented in July 2021 to mitigate higher ocean freight and product cost inflation. However, sales volume declined in the fourth quarter due to reduced inventory availability resulting in lower operating income compared to the fiscal 2021 fourth quarter. Incoming orders increased by 24% compared to the prior year period, when business had already dramatically rebounded from the initial COVID crisis. Backlog remains historically high and nearly doubled as compared to the prior year end when backlog was already at a high level, although part of that increase is due to lower shipments in the fourth quarter. Moving to the Home Meridian segment, net sales decreased by 1% compared to the prior year period, due to decreased unit volume as a result of COVID related factory shutdowns in Vietnam and Malaysia, which led to lower shipment. For the fiscal 2022 Fourth quarter, the HMI segment’s sales decreased by $19 million or 23.7% as compared to the prior year fourth quarter. Sales increases in the first and second quarters at HMI were offset by sales volume loss during the second half. Driven by higher freight costs,…

Thank you, Paul. Incoming orders and backlogs continue to be strong across most divisions. We are concerned about ongoing global logistics constraints and economic headwinds affecting the consumer that could impact short-term demand such as inflation, high gas prices and the war in Ukraine. As we mentioned earlier, we expect production capacity of our Asians suppliers to improve significantly reaching 100% capacity at some point during the first quarter. Although the full financial impact of this improvement in inventory readiness won't be felt until the second quarter. As the Spring High Point market concluded last week, our attendance was at 26% compared to June 2021 High Point market and about 12% compared to the 2021 fall market. We add major new product placements across all brands at Hooker legacy and HMI with the market as close to normal as we have seen since pre pandemic Big Sky a 60-piece whole home collection with rustic finishes at Hooker casegoods, inspired by the natural beauty of the American wilderness was the hit of the market. In addition, customers were very excited to see the Sunset West outdoor furniture line shown for the first time at High Point market. And Pulaski, Samuel Lawrence and PRI had very significant new placements with their major customers. We continue to be encouraged by long-term trends such as demand for housing, the renewed and sustainable focus on home interiors and exteriors, and the prospect of the two largest demographic groups in history entering their prime earning and household formation years. While we have worked through a broad spectrum of challenges during the year, our team has continued to focus on multiple strategic growth initiatives, many of which will positively impact us in the next six to 12 months. This ends the formal part of our discussion and at this time, I will turn the call back over to our operator Liz for questions.

Our first question comes from Anthony Lebiedzinski with Sidoti.

Good morning, and thank you for taking the questions. So yes, I do have a few questions here. So first, can you quantify the backlog? And are you seeing any notable order cancellations?

Ended the year, $340 million consolidated backlog. We have seen some cancellations. Mostly on the Home Meridian side, Home Meridian’s backlog is still pretty helpful.

And the reason -- why would you attribute the order cancellations for HMI? Is just these retailers don't want to wait too long, what would best describe the reasons for the order cancellations?

Now with the shut, this is Jeremy, Anthony. Good morning. With the shutdown of factories, there was a buildup of inventories with many retailers which caused space issues. Also their business model is much more of a very far out planned on every level. So all those containers are planned out. So we weren't surprised to see some level of cancellation with everything going on.

Got it, okay. So, obviously, HMI, it's been a headache for you guys for a while here. Are you done pretty much now with the costs related to the RTA exit and the Club channel issues, or will any of that spill over into the first quarter or the rest of the fiscal year?

Yes, so we feel like we got a lot of the things we talked about the unprofitable businesses. Getting out of those is very much we think it's mostly behind us. The only remaining really is about $1.7 million in RTA inventory, which is really low compared to what we would have been if we had canceled all those orders.

And some of that we referred to right taking inventory right now. So we should be reserved for loss of time next step, that’s it. So, yes, we're rewinding it.

Okay, so that $1.7 million, is that going to be all in the first quarter? Or was that already reserved? I just want to get a little bit more clarity about that.

That's not going to, $1.7 million, I'm not saying it's going to be any type of write-down, I am just saying that’s the level of inventory we have left in RTA which we will sell and not necessarily which money.

And we reserved against it, so as we sell it off it shouldn't impact our results.

Okay, got it.

Very low and almost gone.

Yes. We are almost done.

Okay, got it. Thanks for clarifying that. Okay, so prior to COVID, and a tariff issues, HMI had segment operating margins, typically in the mid-single digits. So is there a viable path to get that back to those types of segment margins? And if so, when would be a reasonable timeframe to expect that.

So all of the margins that you've seen from HMI obviously included the Clubs channel and included the RTA mess included everything that we're talking about that we're almost out of. So when you take those terrible margins out of that overall average, we had these good businesses underneath that that will now show up. So I believe that we're in -- we're going to get a pretty respectable margin with HMI within the next quarter or two and ongoing from there because we're not going to be in these high risk scenarios where we're not sure which surprise is coming next.

It was tougher for HMI even looking at starting with the tariffs, it was tougher for them to react to the tariffs. And I think that they've absorbed that now to it.

And to further cement my point, Pulaski, Samuel Lawrence, PRI, they were all hitting budgets before hit the eight one factory shut down. No one can see that because of the reasons I just stated.

Got you. Okay. So now that you're exiting the Clubs channel business, can you just talk about how much revenue did that contribute to the fiscal year from the Clubs channel? And now that you don't have those sales, are those loss sales or will -- do you expect to at least partially offset that with sales to other customers?

Yes, so it was roughly $20 million, it's been as much as $90 million previous years, we were down to $20 million. And now, of course, we're going to zero. We won't be exactly zero this year, but we'll be closer, much closer to getting clear out. So as far as how we replace that we believe, number one, it was a capacity constraint for the rest of our businesses. So we feel a lot, much of that can transfer over to PRI, for example, from a production capacity. So we really, we don't feel like we're going to lose $20 million in revenue, because we got out of Clubs business.

Okay, got it. Yes, thanks for that. And so just in terms of the cost issues, obviously called out the freight costs, which have been impacting not just you guys, but the entire industry. Since the fiscal year end, have you seen any changes to the costs, whether it's ocean freight or anything else that you want to call out?

I would say we've seen a little bit of relief, but not enough to really talk about in that positive of a way, it's how I would summarize it, we're in the season isn't a good strategy. But we're hopeful that the costs are going to come down as the year progresses. But right now, the logistics, the freight situation, all of those things are still very difficult. I will say, the entire year, fiscal year last year, we mitigated and managed through that very well, from a profitability standpoint for the overall company, until we hit a one factory shutdown. So I feel our team feels positive and optimistic about what we're able to do if you just have the factories running like they are now and soon to be 100%.

Got it. Okay. Thanks for that, Jeremy. And then so given the timing of your call today, I mean, you're only about two and a half weeks from finishing up the first quarter. What can you tell us about current quarter revenue and bottom line trends? If you guys, I know you guys don’t give guidance, I mean, just kind of give, if you could give us some more color as to what you're seeing thus far, that'd be very helpful.

I don't think we can give a really good answer on the quarter yet and where we think it's going to be. Paul?

I have to agree, I mean, it's only two and a half weeks by the time we pull this all together, I think it's probably in line with what we're hoping but I can't say much more than that.

Okay, that's fair. Okay. And then, obviously, you guys have a strong balance sheet, generating positive free cash flow. So how should we think about the Euro cash flow priorities, particularly interested in your outlook for potential share repurchases?

We get this question all the time. I think with the uncertainty still in the economy right now, I think we're cautious about communication. I know that our stock we genuinely believe our stock is a terrific buy. But I think we're also cautious -- caution has been the theme of this company for 98 years. And I think that right now, our first priority is to bolster the balance sheet, we just spent $25 million on what we think is a great acquisition. And we talked about that before. And I think that the first step is to bolster the balance sheet in case -- just in case of some of these macroeconomic events don't settle down in the near future, between the war and the freight issues, Jeremy said we think that freight stabilize but I think that right now the primary objective is to make sure we have a strong balance sheet to get through whatever materialize in the coming months.

Our next question comes from Sandy Mehta with Evaluate Research.

Yes and good morning. Thanks for taking my question. Two questions. Could you talk a little bit about price increases? Everybody in the industry is increasing prices and what is the elasticity of demand in terms of, are consumers accepting the price increases? And housing prices have gone up a lot. Is there a crowding up phenomenon that people are spending as much money or their budget on the house that the furniture purchase will happen but it may be different? Maybe some comments on that, please?

So first part of the question, we believe that the price increases have obviously been ongoing. And for a while, it seemed like particularly in raw materials, as it relates to our domestic manufacturing, it seemed like daily things were going up in different ways. We've obviously reacted to those from a price increase standpoint. And, really, if you look at the difference, or the delta between raw materials and factory increases, versus how much of our increases have been freight, it's dramatically increased on the freight side of the equation versus what has happened on actual inflation for manufacturing cost and raw materials and whatnot, driving prices up. So regarding the inflection point, and where that starts to hurt us, from a demand standpoint, I really can't pretend to know that. I know that this is a -- these issues are across not just our industry, but across the world, obviously. And we feel as though we're competitively in line across the board. As far as who we would compete with and what they've had to do and how they've had to react. We, of course, get Intel from seeing prices go up out in the market. And we understand where we're pricing as it relates to where others are. So I think that we've done what we have to do for the costs that have been coming in from every direction. But I don't know if I can give you a really great answer on where demand will go due to the pricing.

I'll say that our pricing increases have only been to try to keep pace with our cost increases. We certainly we are not using this as an opportunity to expand margins. And in fact, sometimes our pricing increase is trail, which I think we referenced in the call.

Correct. Is that answer question, Sandy?

Yes. Is there a crowding out phenomenon that with home prices still rising, that people, their budgets for the furniture while they will spend, but maybe it's deferred or that gets squeezed out a bit a little bit?

We haven't seen that yet. Yes, housing prices are still high. There's still a huge demand for housing. And, yes, you're right. Everything's a lot more expensive. Furniture is more expensive, too. But I think that with the housing demand, and I think we referenced in our call, millennials and Gen Z, entering prime earning years and household formation, we still think that demand is going to be there. People may adjust their purchasing patterns. But we haven't seen any evidence of that yet. But I'm sure there's an inflection point somewhat.

And also, I would mention that our team, I believe, basically pretended like we weren't in the high demand environment we have been in. And we've been working on a lot of initiatives that are going to actually hit us in a positive way in the next six to 12 months. So that we believe that gives us a lot of reasons to be optimistic, when you look at everything we have going on, that's going to help the company from a market share standpoint as well.

Our next question comes from Barry Haimes with Sage Asset Management.

Thanks so much. I had a couple three questions. One is you talked about Vietnam and Malaysia, but could you just remind us of your sourcing countries kind of by percent just to get a feel for where the product is coming from?

Good morning. We can give you kind of a general answer on that. Is that right? I'm going to give --

Yes, just trying to get a sense, correct.

Vietnam is obviously a major part of our sourcing. And then you would get said 75% would be roughly the Vietnamese number for how much products we have been sourced out of that country. And then it would be split between China and Malaysia. Malaysia is probably second, then you get into China, Mexico, India, we even have some Portugal. There's some things we're looking at Eastern Europe, which of course, we're rethinking that entire thought process. But that's really where we're dominant. And of course, our domestic US footprint is significant to us as well.

Got it. That's very helpful. And then secondly we talked a little bit about the freight cost, and since it generally went up, as we went through last year. If we look at kind of budget all of this year versus last year, any feel for what percent increase, we should be baking into our thinking.

So you're asking, what maybe what we averaged last year, versus what we maybe think will average this year percentage wise?

Correct, yes, I know we're off the peak, for example, in terms of spot rates and such, but the contract rates, I believe for this year are higher than last. And when you shake that all out again, I'm just kind of looking directionally, should we be looking for a double digits, by single digit in any kind of field for kind of year-over-year freight.

Well, if you just simply go by contract rates, which the history thus far in this whole challenge has been the contract rate, you have that and of course, you can't get enough capacity on the contract rate, and you end up getting spot rates that average that number up for the overall company. So we're not sure. And I don't think anyone is sure whether the contract rate is going to average up or average down this year, meaning our spot rates are going to start to come down and spot rates are going to drive the entire company average down. So I start -- to answer that question has to start with, we aren't sure which direction that could go average wise. But if you simply go by contract rates, we're going to average probably in the neighborhood of 40% more on a contract rate basis than we did last year.

Got it. So again, just one follow up question on that. Again, without predicting this year. If we look at last year, in terms of what percent was under contract versus what percent you had to be in the spot market? And you're getting rough feel for that?

Paul, I would say it was 50% of each last year.

Got it, okay, and thanks. It was very helpful. And then my final question is, I totally agree with you guys that the demographic outlook is positive. But one possible offset could be demand pull forward as we went through the pandemic, and everyone focused on home and consumer durables, and couldn't travel and so on. So as you guys are thinking about your business, how do you think about that? Is there any way you can try to keep your finger on the pulse? Do you get POS data from any of your customers? Anything you can share on how you're thinking about that would be great. Thanks so much.

You're welcome. Our thoughts on that is, of course, we acknowledge a COVID bubble of demand, which I don't think anyone believe would be sustainable at that level. And candidly, I don't know of a company that was able to supply at that level effectively either. So our team has been watching closely versus 2019 pre-pandemic to see where we are, where we believe we are from a market share standpoint, and again, trying to build on these strategic initiatives that we feel are going to help us gain market share towards our organic growth as well.

On the defensive side, we have an S&OP process. So we're constantly monitoring incoming orders and incoming demand and shipments so I think we're not going to get caught with too much inventory. We may if business slows down. I think we have enough systems in place that will catch that so we won't get caught. We may have a little bump in inventory, but we're not going to get caught with excessive massive excess inventory.

Great. And just one follow up on that. What is your normal sort of supply timeline coming from Asia to the US, as you have given order to the Asian factory when is it sort of ready to be delivered in the US? How long is that timeframe?

So, first of all, it depends on the factory, and it depends on the country, and it depends on a lot of different things. But in general, lead times have started to come down, we've just actually recently got word of this. And it's very positive because that ascertains the amount of safety stock that we have to obviously carry. So factories are starting to definitely improve their capacity and our lead times. I mean, we could have been on a lot of our factories, we could have been a year out or over a year out on a lot of things, whereas we're seeing more in that five or six months type arena, which we can very well hand -- we can handle that. That's a little more in our historic wheelhouse.

I think our average lead times were up including those year outs, and some of the biggest players were up around 9 to 10 months and they're down to --

It’s prior somewhere over a year.

Yes.

Our next question comes from John Deysher with Pinnacle.

Good morning. Most of my questions have been answered. But I just have a couple. The $5 million non-recurring expense in the fourth quarter for the wind down of the RTA, what was that for the year, it was $5 million for the fourth quarter. But what did those issues, how did they impact the year?

Most of those happened in the fourth quarter or third or fourth quarters. It's -- we got $2.5 million for the get out of the RTA business. Another $2.5 million of chargebacks from the Clubs channel or two, almost $3 million in the Clubs channel. The rest of it was inventory write-downs, and reserves which we took at the end of the year. And let me be clear, we say non-recur one time charges. These are unique charges. I mean technically we can't call them, we shouldn't call them one time charges. But they're unique charges that we're getting out of businesses. So we should be, these are cost of exit.

Okay, so there was nothing in prior quarters related to these.

The RPA exit was within the third quarter.

I am sorry. I just don't recall what the charge was of exiting?

$2.5 million of exit in RCA business was in the third quarter.

Sorry, what was the amount?

$2.5 million.

In the third quarter, okay. So then it was $5 million in the fourth quarter for everything?

Yes, rest that was inventory write-downs.

Okay, got you. And all of that ran through the gross margin line, correct?

Yes.

Okay, good. Now that you've completed the Savannah warehouse and the showrooms, what would you guess is your CapEx budget for the coming fiscal year?

We haven't displayed the showroom but we started showroom. But next year, I would say that the CapEx budgets probably in the $8 million range. With European showrooms are going to be the biggest piece of that next year. And then we should return to I would guess $6 million. Subsequent to that probably in the $6 million, $5 million, $6 million range after next year.

Okay, great. That's helpful. And I guess finally, the acquisition of Sunset West that seems like a new segment for you. Can you give us some color there, as to the seasonality of that business? What kind of revenues are generated at least for the most recent fiscal year? Will it be a separate segment to report going forward?

So I believe as far as segment report, I believe it's going to be under domestic upholstery because they have domestic cuts operations and the seasonality of it actually, an outdoor category has changed to very much a year round business. Obviously, I don't mean you're going to be in Minnesota and selling a bunch of outdoor in the winter, but there are a lot of states that do sell outdoor year round, and some of those would probably surprise you, but so we don't think there's a big seasonality component in that business. It's pretty consistent. As far as one of the big why's for us was you got a relatively smaller company that has a great look, a great customer base, higher margin profile, that we're able to bolt-on a lot of -- to a lot of our scale and operations from logistics to warehouse into showrooms. So that's why they were -- it's the first time that they've been able to show at the high point market, which was really pretty dramatic from the response -- from a response standpoint. So we feel like our ability to grow that business and make it incredibly accretive for us is really in our wheelhouse. And it's the biggest reason we did it as we felt like we can make it accretive.

Okay, go ahead.

As part of the scale, so it's roughly $25 million business today, but we believe that's quickly going to change.

Okay, great. And where did they manufacture on-shore? Do they import? How is their sourcing?

So they import a lot of their frames and things that they're utilizing tables, frames for sofas, things like that. But they domestically do the cushions and the cut and so they do that domestically in California.

Okay, so they have a separate plant?

That's correct.

Okay, great. Do you know who was a seller?

It was the founders, it was a partnership.

There were three partners.

Okay, so it was the founding family plus two other partners?

Correct.

And no private equity involved?

That's correct. And family. The founding member has stayed with us and works for us today.

And he's under that's what Steward?

That's correct.

And he's on an employment contract.

Yes, that's correct.

Okay, good, that sounds like a winner. Thanks for the questions.

Thank you. We believe so too.

Our next question comes from Jeff Geygan with Global Value Investment.

Good morning, gentlemen. Couple quick questions regarding your accelerated or elevated level of freight cost. How much of that have you been able to pass on to your customer?

I would say across our businesses. Okay, so start with Hooker Branded, we were able to pass on most if not all of it. We were a little bit; we've been a little bit behind due to our philosophy of protecting the backlog on Hooker Branded, mainly because that's a mostly sold order backlog. So when you affect that with a price increase, you're actually affecting an actual sold order to customer that one of our partners is already priced. So that's the reason for our philosophical difference on that. Number two, on the other side of the business, we were definitely -- we were probably in line for most of the year. And most of the brands of HMI, one that was not -- one that did not keep up with ACH, which fell drastically behind and really created what's the PPV, Purchase Price Variance created high levels of purchase price variance where you had these high levels of freight coming in where the pricing was not adjusted appropriately and it really hurt us.

I see, thank you. With regard to your inventory level at $75 million year end, what is your objective inventory level?

We probably could do with another $10 million. I think on the HMI side, I think we just need to redeploy inventory dollars. On the Hooker side, I think it'd be another $10 million we can better service our customers.

Okay. Jeremy, you said the Sunset West would be incredibly accretive. How are you measuring the accretiveness?

Really, we're measuring that by what we believe we can increase operating income, profitability of that company is really how I'm thinking about it.

We think we can leverage sales.

We believe we can grow it in revenues. But as far as what I consider accretive, definitely a profit.

Appreciate that. How does its margin profile compared to your business overall?

It compares much more aligned with the Hooker Branded segment closely.

Right And last question in your prepared comments and your press release, you use the term, transformative strategic initiatives, although you've talked about a lot of things that are changing with your business, what specifically were you referencing in making that statement?

Well, transformative really when you look at the Hooker legacy companies going from what's called the main building and high point showroom which doesn't have the higher ceilings, it does have the natural light, and it doesn't have the audience that we feel we will get in the show place, show room. Show place, we believe we'll have it could be as much as 10 times exposure, particularly in the interior designer channel, which will give us, it'll feed into our desire to do more business in that channel. We also believe it will be great for our brick and mortar channel. And as you know, ecommerce really isn't as dependent on showroom, but we believe that's going to help us in a pretty major way. So that's why I categorize as transformative.

I see.

On the other side of the business portfolios, a new initiative that we're working through on HMI side, HMI historically really went to a, we're going to sell megas. And we're not going to focus on a lot of the other brick and mortar retailers. So we're changing that approach, we still want to grow our mega business with some really good customers on that side of the business that we're going to continue to try to grow with new projects, there's a lot of things going on in that arena. But portfolio is we're going to really combine the power of Pulaski, Samuel Lawrence, ACH, and PRI to really show what these lines -- what these companies can do together from a presentation standpoint and all in stock and Savannah and at a 90 plus percent level of inventory, able to ship right away is a very new scenario for that company, and it will grow. It will grow incremental business in a very different way than what we're focused on now.

Appreciate that. As a follow on, how and how long will this transformative change affect your capital allocation priorities?

We don't believe it's going to necessarily raise our working capital significantly. Because for example portfolio that I just spoke of, that's more of a working capital shift. So much of our working capital was in ACH and driven towards really just ecommerce. So we're shifting a significant portion of that to the other companies like Pulaski, Samuel Lawrence, in order to drive their business through different channels versus just ecommerce. So it's going to, it's really going to shift versus increase.

Beyond updating showrooms. That's really the only –

Correct.

That concludes today's question-and-answer session. I'd like to turn the call back to Jeremy Hoff for closing remarks.

Thank you, Liz. I would like to thank everyone on the call for their interest in Hooker Furnishings. We look forward to sharing our fiscal 2023 first quarter results in June. Take care.

This concludes today's conference call. Thank you for participating. You may now disconnect.