Q4 2024 La-Z-Boy Inc Earnings Call

Participants

Mark Becks; Director of IR and Corporate Development; La-Z-Boy Inc

Melinda Whittington; President, Chief Executive Officer, Director; La-Z-Boy Inc

Bob Lucian; Senior Vice President and Chief Financial Officer; La-Z-Boy Inc

Bobby Griffin; Analyst; Raymond James Financial, Inc.

Brad Thomas; Analyst; KeyBanc Capital Markets Inc

Presentation

Operator

Good morning, everyone, and welcome to the La-Z-Boy fiscal 2024 fourth-quarter conference call. (Operator Instructions) Please note this conference is being recorded. I will now turn the conference over to your host, Mark Becks, Director of IR and Corporate Development of La-Z-Boy Incorporated. Mark, over to you.

Mark Becks

Thank you, Jenny. Good morning, everyone, and thanks for joining us to discuss our fiscal 2024 fourth quarter and full fiscal year. With us today are Melinda Whittington, La-Z-Boy Incorporated's President and Chief Executive Officer, and Bob Lucian, La-Z-Boy's SVP and CFO. Melinda will open and close the call and Bob will speak to segment performance and the financials midway through. We will then open the call to questions. Slides will accompany this presentation and may view them through our webcast link, which will be available for one year and a telephone replay of the call will be available for one week beginning this afternoon.
Before I begin the presentation, I would like to remind you that some statements made in today's call include forward-looking statements about La-Z-Boy's future performance and other matters. Although we believe these statements to be reasonable, our actual results could differ materially. The most significant risk factors that could affect our future results are described in our annual report on Form 10-K. We encourage you to review those risk factors as well as other key information detailed in our SEC filings. Also, our earnings release is available under the News and Events tab on the Investor Relations page of our website and includes reconciliations of certain non-GAAP measures, which are also included as an appendix at the end of our conference call slide deck.
With that, I will now turn the call over to Melinda Whittington, La-Z-Boy's President and Chief Executive Officer. Melinda?

Melinda Whittington

Thanks, Mark, and good morning, everyone. Yesterday following the close of the market, we reported results for our April ended fourth quarter and fiscal year. I am pleased to share that we delivered solid results despite ongoing economic and furniture and home furnishings industry, headwinds. Highlights for the quarter included consolidated delivered sales of $554 million, up 22% versus our most recent pre-pandemic fourth quarter and down 1% versus prior year which benefited from delivering the above normal pandemic backlog, non-GAAP operating margin of 9.4%, non-GAAP EPS of $0.95, strong operating cash flow of $53 million for the quarter and continued progress against our Century vision growth strategy, including completing the acquisition of a two store independent Furniture Galleries network in Florida, and signing an agreement to acquire another single store independent dealer in the Midwest in the first quarter of fiscal 2025.
Highlights for the year included consolidated delivered sales of just over $2 billion, roughly flat versus prior year when adjusting for the fiscal 23 pandemic related backlog deliveries, gross margin expansion on both a GAAP and a non-GAAP basis across all segments, strong operating cash flow of $158 million, a healthy balance sheet with $341 million in cash, and no external debt and continued progress against our Century vision growth strategy, including opening six company-owned stores, and the acquisition of 11 independently owned La-Z-Boy Furniture Galleries stores and $85 million returned to shareholders through share repurchases and dividends, including increasing our dividend by 10% for the third consecutive year.
We're proud of our strong finish to the fiscal year as quarter results exceeded expectations. These were particularly impressive results in the context of the overall furniture and home furnishings industry, which continues to grapple with higher-for-longer interest rates and housing turnover near 30-year lows negatively impacting store traffic. La-Z-Boy continues to stand out as an iconic brand in the category for our unique ability to turn houses into homes with our broad assortment and offering personalization at scale.
Retail in-store execution is the strongest it has ever been, including conversion rates at all-time highs and average ticket and design sales continuing to strengthen. Additionally, we have strengthened our supply chain by optimizing our North American manufacturing footprint to improve productivity while driving strong service levels. We will continue to play offense despite the sluggish demand environment, supported by our strong balance sheet to favorably position us for accelerated growth when an underlying industry tailwind reemerges. Our first quarter is off to a good start, and we are encouraged by our solid Memorial Day results as our assortment and the best-in-class motion offerings are resonating with consumers in the marketplace.
Recapping our fourth quarter written sales trends, total written sales for our company-owned retail segment increased 1% versus last year's fourth quarter. Written same-store sales for our company-owned retail segment in the fourth quarter declined 5% versus the prior year. Same-store sales were strongest early in the quarter around key holiday events and recovery from January weather disruption, but strengthened again in May when we began our new fiscal year.
Despite ongoing challenging traffic trends, our stores continue to execute very well with higher conversion, higher ticket and designed sales, partially mitigating the traffic headwinds. Written same-store sales for the entire La-Z-Boy Furniture Galleries network of 355 stores declined 3% in the fourth quarter versus the prior year. Against the backdrop of an 8% industry contraction during our fourth quarter, we are encouraged by our La-Z-Boy franchise Galleries network, again outperforming by approximately 500 basis points.
Summarizing our full fiscal year, written same-store sales across our Furniture Galleries network were down just 2%, while the industry was down 6% as our significant outperformance versus the market persisted throughout the year. Consistent with our Century vision strategy, our objective remains to drive disproportionate growth over the long term and to consistently gained share in the fragmented furniture and home furnishings industry.
Turning to Joybird, written sales declined 1% in the quarter versus a year ago and delivered sales were roughly flat as sales trends have largely stabilized. The brand is making steady progress and execution is improving as we focus on balancing growth and profitability. As we conclude the fiscal year and begin a new one, I'd like to reflect on the progress made in strengthening our enterprise for the long term and highlight some of our objectives for the year ahead.
Recall, Century vision is our strategic framework setting up La-Z-Boy Incorporated for the next 100 years as we celebrate our first century in 2027. This is measured by our intention to grow top line at a pace, double the market and deliver consistent double digit operating margins over the long term. As an industry, underlying demand trends have been plagued by housing affordability, high mortgage rates, and low housing turnover. With mortgage rates hovering around 7% and existing home sales down 40% from peak levels, furniture and home furnishings demand remains under pressure. However, we are not waiting for the macroeconomic environment to improve. Our team remains focused on servicing customers and consumers and delivering the La-Z-Boy brand promise of comfortable custom furniture with quick delivery.
The category is highly fragmented and is one of the largest players, but still with only roughly 5% market share. We are well positioned to continue to strategically grow our business. La-Z-Boy's brand reach expanded significantly over the past year. Our total Furniture Galleries network ended the fiscal at 355 stores, up six from the prior year and our company-owned store count increased to 187, including six new store openings and 11 acquisitions. Further in May, we signed an agreement to acquire an additional one store market from an independent dealer in the Midwest scheduled to close in the first quarter of fiscal 25. Retail company-owned stores now represent 53% over half of the total La-Z-Boy Furniture Galleries network for the first time in history. Growing our company-owned network is important as it enables the brand to control the end to end consumer experience and leverage the strength of our vertically integrated model.
We remain confident in our ability to grow the total La-Z-Boy Furniture Galleries network to approximately 400 stores over the next several years and see meaningful opportunity to expand the company-owned portion of the network through new store growth and acquisitions. These store acquisitions are immediately accretive to our profitability, allowing the company to benefit from the integrated wholesale and retail margins. Bob will provide more specific details on our new store targets for the year ahead in a moment. We're also growing our business through our broader channel strategy, which enables us to grow share of voice for the La-Z-Boy brand and provide access to the brand to a broader range of consumers.
Our strategic partnership with Rooms To Go is a great example of this strategy. We continue to look for new and innovative ways to reach a broader audience and bring products like the beloved La-Z-Boy recliner into more homes.
Another core pillar of our Century vision is to expand La-Z-Boy's brand reach via our long lived The La-Z campaign. We launched the campaign last August with the initial goal of enhancing brand awareness and keeping a top of mind, I'm happy to share while less than a year end, that we have been successful in increasing awareness consideration, and purchase intent, among those who have seen long lived The land connected to lazy.
Boy, while difficult to quantify, given the extended purchase cycles in furniture and furnishings, we have seen promising performance in the early impacts of the campaign. We will continue to adapt and expand the campaign as underlying industry fundamentals improve to achieve our goal of connecting with an even broader audience, another focus area for expanding La-Z-Boy brand reach within our product development. We continue to shift organizational decision making to be more consumer centric while also leveraging a data driven approach. This is enabling us to develop more consumer relevant, on-trend and bolstered furniture, particularly in the motion and reclining categories where we are a market leader.
Joybird is another core pillar of our Century vision, and we are optimizing the brand to deliver a balance of sales growth and profit profitability. Sales trends for the brand improved throughout the year and with 12 stores opened across major metro markets. The digitally native e-commerce brand is benefiting from the synergistic effect of a growing retail footprint. Joybird has considerable opportunity to expand market share and we will continue to make prudent investments in the brand to position it for long-term success. Strengthening our foundational capabilities, including building a more dynamic supply chain is our final pillar in Century vision. We again made steady progress, building a more agile business model with the moves to better optimize our global supply chain operations throughout the year.
Our North America footprint is a key differentiator in our ability to manufacture comfortable custom furniture with quick speed to market. It is also crucial in helping us manage volatility in consumer demand and ordering patterns as we begin fiscal 2025, we expect to continue a continued challenge macro environment for most of our new fiscal year.
However, I'm optimistic about our ability to continue to outperform the market consistent with our performance in fiscal 2024, and I expect to deliver modest growth even against these industry challenges. Further, we are optimistic on the eventual rebound in category demand. And during fiscal 2025, we will continue progress on our Century vision pillars so that we are able to disproportionately benefit when the industry tailwinds do return. We've delivered meaningful results to date and the best is still to come.
Now let me turn the call over to Bob to review the results in more details. Bob?

Bob Lucian

Thank you, Melinda, and good morning, everyone. As a reminder, we our results on both a GAAP and non-GAAP basis. We believe the non-GAAP presentation better reflects underlying operating trends and performance of the business. Non-GAAP results exclude items, which are detailed in our press release and in the tables in the appendix section of our conference call slides.
On a consolidated basis, fiscal 2024 fourth quarter sales decreased 1% to $554 million versus the prior year, which benefited from above normal pandemic backlog deliveries. This sales result represents a 22% increase versus the most recent pre-pandemic fourth quarter in fiscal 2019. Consolidated GAAP operating income decreased to $50 million and non-GAAP operating income was $52 million, a decrease of 5% versus last year's fourth quarter. Consolidated GAAP operating margin was 9.1% and non-GAAP operating margin was 9.4%, reflecting a 40 basis point decline versus last year primarily driven by lower gross margin from segment mix, partially offset by lower SG&A.
GAAP diluted EPS was $0.91 for the fourth quarter versus $0.79 in the prior year quarter. Non-GAAP diluted EPS was $0.95 in the current year quarter versus $0.99 last year.
As I move to the segment discussion, my comments from here will focus on our non-GAAP reporting unless specifically stated otherwise. Starting with the retail segment for the quarter, delivered sales were $228 million, a 6% decrease over the prior year's fourth quarter, which benefited from higher deliveries and backlog. Importantly, fourth quarter sales were 50% higher than our pre-pandemic fiscal 2019 fourth quarter retail non-GAAP operating margin decreased to 14.2% versus 15.5% in the prior year quarter. Gross margin increased due to a more favorable product mix, but was more than offset by fixed cost deleverage on lower delivered sales for our wholesale segment, delivered sales for the quarter declined to $392 million, a 1% decrease versus the prior year period.
Growth in external wholesale sales, driven by our channel expansion strategy were offset by decreases in freight revenue and comparisons to last year's fourth quarter, which included pandemic-related backlog deliveries primarily to our company-owned retail stores. Non-GAAP operating margin for the wholesale segment was 8.5% versus 8.7% in last year's fourth quarter as unfavorable freight, product mix, and higher operating costs related to recovering lost third quarter production were mostly offset by lower material costs and sourcing savings. Joybird reported in Corporate and Other delivery sales were $37 million, roughly flat versus the prior year quarter as sales trends have largely stabilized. Joybird again, made meaningful progress on improving profitability in the quarter with lower freight and warranty expenses, improved product mix, and higher returns on advertising spending.
Moving on to full-year results for fiscal 2024, enterprise delivered sales were roughly flat versus the prior year at $2.05 billion when excluding $300 million of pandemic related backlog deliveries, which occurred in fiscal 2023. On an unadjusted basis, delivered sales were down 13% versus the prior year and trends improved sequentially as the year progressed. Consolidated GAAP operating income amounted to $151 million and non-GAAP operating income was $159 million, a 29% decrease versus fiscal 2023. Consolidated GAAP operating margin was 7.4% and non-GAAP operating margin was 7.8%, down 170 basis points versus last year. GAAP diluted EPS was $2.83 for fiscal 2024 versus $3.48 last fiscal. Non-GAAP diluted EPS was $2.98 for the fiscal versus a record $3.86 in fiscal 2023.
Moving on to our consolidated non-GAAP gross margin and SG&A performance for fiscal 2024 fiscal year, consolidated non-GAAP gross margin for the entire company increased by 210 basis points versus the prior year. Gross margin increased in all segments driven by reduced commodity prices, improved sourcing, and a favorable shift in product mix.
SG&A non-GAAP expense dollars decreased by 2% year over year. Non-GAAP SG&A as a percentage of sales for the year increased by 380 basis points compared with the same period last year, primarily due to lower delivery sales relative to fixed costs.
Our effective tax rate on a GAAP basis for the year was 24.8% for fiscal 2024 versus 26.2% for fiscal 2023. Fiscal 2024 was lower primarily due to non-taxable gains on company-owned life insurance investments and an increase in R&D tax credits.
Turning to liquidity, we ended the year with a robust balance sheet, including $341 million in cash and no externally funded debt. We generated $53 million in cash from operating activities in the quarter. Solid cash generation was primarily driven by profit performance and lower inventory levels. For the full fiscal year, cash flow from operations was $158 million, down from last year due to lower sales after fulfilling our pandemic backlog, but still at very healthy levels. We spent $54 million in capital expenditures for the years, primarily related to retail store openings and remodels and upgrades at our manufacturing and distribution facilities. We also spent $39 million on acquisitions during the year.
During the fiscal year, we returned approximately $85 million to shareholders. This included $33 million paid in dividends and repurchasing $1.6 million shares during the year, which leaves $5.7 million shares available under our existing share repurchase authorization. We view share repurchases and our dividend as an attractive use of our cash and positive return to shareholders. Our capital allocation target is to reinvest approximately 50% of operating cash flow back into the business and return about 50% to shareholders and share repurchases and dividends over the long term.
Fiscal 2024, our capital allocation was 52% reinvested into the business and 48% return to shareholders. Before turning the call back to Melinda, let me highlight several important items for fiscal 2025 and our first quarter. Consistent with our Century vision strategy, we continue to target sales growth, double the industry growth rate and double digit operating margins over the long term with the benefit of more normalized industry growth rates.
Looking forward, we expect the industry to continue to be challenged down by as much as 5% during our fiscal 2025 with any improved trends weighted late in our fiscal year towards calendar 2025, when expected interest rate cuts filter through the economy and begin to positively impact housing activity. We expect to continue to outperform the market consistent with our performance in fiscal 2024, which should result in modest sales growth year over year for fiscal 2025. We expect to open 12 to 15 new La-Z-Boy Furniture Galleries stores skewed towards the second half of the year. And for the first quarter, we expect delivery sales to be in the range of $475 million to $495 million and non-GAAP operating margin to be in the range of 6% to 7%.
Also, as a reminder, our first quarter is generally the lowest sales and margin quarter in the fiscal year due to seasonally lower industry sales and our annual week-long manufacturing plant shutdown in July. We expect our tax rate for the full fiscal year to be in the range of 25.5% to 26.5%. We anticipate non-GAAP adjustments for purchase accounting charges for the year to be in the range of $0.03 to $0.03 per share. We expect capital expenditures to be in the range of $70 million to $80 million for fiscal 2025 as we invest to strengthen the company for the future consist consistent with our Century vision strategy. This includes land and building investments in stores to maintain the growth rate of our retail network. And finally, presuming no significant worsening of macroeconomic trends, we expect to continue share repurchases at dollar levels consistent with pre-COVID levels. And now I will turn the call back to Melinda.

Melinda Whittington

Thanks, Bob. The momentum in our business is accelerating, and we continue to make progress towards achieving our Century vision goals. Our focus on execution will remain paramount as we continue the expansion of retail through new and acquired stores, improve agility across our supply chai, and drive efficiency and margin expansion throughout our business, as the underlying demand environment improves. We will also continue to expand our brand reach with new and existing consumers through our award-winning and innovative brand campaign and our on-trend, high-quality comfortable products.
Before I conclude the call, I want to thank the entire La-Z-Boy Incorporated team for their hard work and continued progress towards our goals throughout the year, even in the challenging environment. I look forward to the year ahead and getting back to growth. And we thank you all for your time this morning, and I'll turn the call back to Mark.

Question and Answer Session

Mark Becks

Thank you, Melinda. We will begin the question and answer period now. Jenny, please review the instructions for getting into the queue to ask questions.

Operator

No problem. We will now be conducting our question and answer session. (Operator Instructions) Thank you.
Bobby Griffin, Raymond James.

Bobby Griffin

Hey everybody. Good morning. Thanks for taking my questions. We were, I guess, personally, I just wanted to maybe dive into the margin performance in the quarter came in nicely above expectations. Was that just a function of the volume side of the business being a little bit better than what you laid out when we started the quarter or was it on some of these manufacturing efficiencies that we've talked about in the past, starting to come to fruition and getting more efficient inside the facilities and kind of back to what I would say, the normal La-Z-Boy wholesale performances?

Bob Lucian

Bobby, I would say it's probably the former more than the latter. We continue to make progress on the efficiencies of our plants. But during that quarter, we're still in the process of our Mexico project where we're moving around production and we're moving our cut-and-sew facilities and trying to get that all and ready to go. So that was occurring and that had some direct costs in Q4. The rest of the business did do fairly well from a plant production perspective. It really was more a function of the higher volume that we got. As you recall, we had a pretty challenging January due to weather and that pushed more volume into Q4. And as a result, that helped to drive the overall margins up a little bit higher than what we had expected.

Bobby Griffin

Okay. And that was actually a good segue to my next one. I was going to ask about the restructuring process. Just how is it progressing on time? Are we still expecting the 50 basis points to 60 basis points, I believe was what we talked about for wholesale margin improvement?

Bob Lucian

We still expect that improvement to occur, but we are, I would say, one quarter delayed as we were going through and making all the changes across all the plants. There's a number of plants that are involved in this. We've been going a little bit more prudently and cautiously to ensure that, number one, that we're maintaining with the quality. And this is all about our cut-and-sew operations done in Mexico, that we're maintaining the quality of the product as we bring new people online, as well as ensuring customer service and that we don't fall behind and get behind there. So we're being a little more cautious. By the end of Q1 we expect that to be completed and then we'll start seeing that 50 basis points to 60 basis points we talked about.

Bobby Griffin

Okay, great. And then on the new store galleries, the 12 to 15, that's all organic and doesn't include if you buy in on any of the independents or does it include, I guess, the one that you've already signed?

Melinda Whittington

That's correct. That's new store openings, separate from any acquisitions that we would do.

Bobby Griffin

So maybe, I guess the question then is that's a nice step up versus I believe it was six that we opened in FY24. So Melinda and Bob, maybe unpack kind of what you're seeing from the real estate side or is it just a timing that you now kind of have the pipeline built out that allows you to accelerate it or you do some different from a capital standpoint or putting a little bit more of your own capital on up first to kind of accelerate and then sell them back or something from a leverage point?

Melinda Whittington

Yes. So certainly our goal has been to go after that pace and get ourselves up kind of a north of 10 a year. This year, we opened six new stores and as you said, it does take a little bit of time to get that machine going. And we done some things to help move that along. Bob alluded to the fact that where we need to, so that can be our business for the long term. But where we need to we're leveraging some of that balance sheet to put the capital up so that we can keep these stores moving rather than be delayed again. And that's just laying the groundwork because we don't want to open up the sites for the sake of opening them and not have good sites, but having that groundwork laid on where we want to be and then the decision to help that process but using our own capital on a limited basis. Those two things are sort of the inflection between six closed this year -- six opened this year versus north of a dozen next year.

Bob Lucian

Very good. I appreciate the detail. I'll jump back in the queue, turn it over to somebody else, but congrats on the strong quarter.

Melinda Whittington

Thanks, Bobby.

Bob Lucian

Thank you.

Operator

Thank you very much. (Operator Instructions) Brad Thomas, KeyBanc Capital Markets.

Brad Thomas

Thanks. Morning, Melinda, Bob, and Mark. First of all, congrats on the good year and strong execution and a still tough backdrop. I guess just as we look at the first few quarters of the year, you are up against these positive comps in 1Q and 2Q were written same-store sales were positive in fiscal 1Q and fiscal 2Q. And so I guess the question is, you commented on being happy or pleased with what you were seeing out of Memorial Day weekend. But just as we're thinking about the shape of the year and the beginning of the year, how should we take into consideration the fact that comparisons get a little bit easier? Does that really even matter because the two and three year comparisons are somewhat easy, but I guess from your comments, it would seem likes hopefully same-store sales get better from the negative three that you just did in the fourth quarter? But again, I just want to make sure we're not missing anything as we think about timing and comparisons.

Melinda Whittington

Sure. No, I appreciate the question. And yeah, speaking first to Memorial Day and sort of how it may have started, we commented, as you said in the prepared remarks about a solid start. I think as we've been in the call this morning, the government's number came out in the industry for May and they're pretty negative numbers. And I would say, I can say, with comfort that we are continuing to outperform the market. So very pleased with that. I think that consumer overall is still bumpy, and we're seeing behaviors like the holidays tend to be stronger and the periods in between tend to be a little bit weaker. So we remain cautious, keeping our eyes on what we can control in this space. But broadly, we feel good about our ability to continue to outperform, and that's reflected in our guidance put out for Q1.
But I'd also note that summer tends to be a super slow period for furniture, and we expect between the actions we're taking and then hopefully by the end of our fiscal, a little bit of help out, maybe, seeing some interest rate help and seeing some of that start to trickle through the economy. We feel good about being able to grow this year.

Brad Thomas

That's very helpful Melinda. And maybe just to follow up on that. It seems to us that you have many, many encouraging initiatives underway to help drive the business but just as you think about it across the marketing, the merchandising, some of the store execution, are there a couple of things that you think will be most impactful as you look out over the year ahead?

Melinda Whittington

Yes, as you call out our Century vision that we know, we're entering the fourth year on now, is really around a lot of tightening up on sound foundation, some of the things that have gotten us through our first 100 years, but getting better at that, right. So building, we've always had this great supply chain, but making it even more agile and leveraging the learnings that we've had over the last couple of years of a lot of curveballs thrown at us as one example. Reinvigorating our brand and really investing in both the consumer knowledge and to educate us on how to really drive the brand, both in the products and the messaging and then bringing that to life and investing. We know there are consumers out there still investing in their home, even in a challenging economy.
And we believe we're disproportionately capturing them. But if I were to step back and say what is the biggest pivot for us as a total enterprise, it's really this focus on driving our own company-owned retail. And the reason for that is two-fold. We can control that brand experience for the consumer end to end. We can avail ourselves of the data from that consumer by interacting with them directly. And from a financial standpoint, we can take advantage of that integrated margin of owning the entire chain from pieces of fabric and steal all the way to putting that product in consumer's home. And so we believe that's good for the consumer, and that's good for our financials as well.
So really, I would call continuing to expand our reach of our own retail is probably the number one biggest driver.

Brad Thomas

That's very helpful. Thank you, Melinda. And if I could squeeze in one more here for Bob. Just on how to think about margins for the year would appreciate any color, maybe kind of asking it from two different ways, for one, maybe in a world where on all of this sort of equal from a sales perspective, can you help us think about what's going on in terms of cost initiatives and raw materials and what that might impact the margins or maybe said another way, if sales remain pressured through the year because the industry is still challenged? Maybe what levers can you pull how much flexibility you have to support margins and support earnings in a challenging backdrop? Thanks.

Bob Lucian

In kind of a challenging backdrop drop, we have opportunities for how we are operating our plants relative to the number of shifts, the number of hours the plants are working. If things were to really get, is that more challenged? We have offered opportunities with how we operate our stores with the hours that they're worth that are open as well as the number of personnel we have in those stores. So there are things that can that we can do from a margin protection perspective if things get more challenging than they have been.
But we're really focusing on the other side of it, which is really focusing on the in-store execution and growing those same store sales. If we do that, we end up getting some of the margin accretion we expect to see in retail, and then we will continue to work on the project that I just mentioned when Bobby was answering, asking his question, we expect to get that 50 basis points to 60 basis points on an annualized basis. We won't get it in the first quarter, but that that big project that we have as we have readjusted where our poultry being made, as well as where our cut and sew is being done in Mexico. That project is when it again starts up and is finalized going into Q2, will deliver some meaningful margin improvement for the overall company, that we have talked about last year, is just coming a little bit later than we had expected.

Brad Thomas

Very helpful. Thank you so much.

Melinda Whittington

Thanks, Brad.

Bob Lucian

Thanks, Brad.

Operator

Thank you very much. Bobby Griffin, Raymond James.

Bobby Griffin

Thank you, everybody. Just a couple of quick follow-ups for me. I guess, Bob, I want to talk about a cash flow in some of the moving parts. Was fiscal year 2024 fairly normal year from a working capital standpoint, when we look at the $158 million of cash flow from ops, that's fairly normal at this level of demand?

Bob Lucian

I would say, yes. We made some improvements in inventory. We had some very high external wholesale sales in the fourth quarter and that caused receivables to go up. But in general, I would say, I would answer, yes.

Bobby Griffin

Okay. And then I guess the build off of that is if that's the case and we kind of plug in the midpoint of CapEx and modestly higher dividends. And maybe in mind, shares, we're probably trending pretty close to about $160 million in cash flow -- I mean, in total cash spent next fiscal year, this fiscal year 2025, which leaves the cash balance relatively flat year over year, rough numbers. So just curious kind of thoughts around that and you know, what you need to see you, and Melinda, and the Board, and everybody there need to see from the economy or the industry to maybe start working down the cash balance a little bit?

Bob Lucian

I'm not sure how you were doing your math there. But if you think about what we're looking at, again, the acquisitions that we do, particularly the independent furniture galleries (multiple speakers)

Bobby Griffin

Yeah, including those.

Bob Lucian

Yeah. So with those and again, as we think about the capital we're doing the acquisitions. We'll continue to pursue when we're able to, along with a good, healthy share buyback and a continued dividend, we'll be in excess of the operating cash flow that we would expect to have this year.

Bobby Griffin

Okay. So that was my next. So you do still feel there's a good pipeline for acquisitions. So because in the math I just ran through, I didn't include the acquisitions of independents. So that was the next question.

Bob Lucian

Okay. We continue to look for those. We can't predict those aren't call options we have, but we continue to work with dealers who are interested in selling their business.

Bobby Griffin

Okay. Very good. That's very helpful. That's good to hear as well. And I guess, and maybe lastly for me, if we can dig in a little more into kind of just the progression of the quarter, it seems like things were strong to start maybe tailed off a little bit after what would be, I guess, the Presidents' Day holiday and then you called out a nice pickup back in May. Is it right to think that May picked up to kind of how things started the quarter? Or could you put any more color around on the May in the quarter to date written performance to help us think about the business is trending here around Memorial Day and into mid-June?

Melinda Whittington

Yeah, I think I'd go back to sort of the importance of some of these key holidays. And so Memorial Day is a very important period for our industry. And so as we noted, I'm really pleased with kind of the solid start into the year with Memorial Day, the balance of the quarter and consumers have better things to do than shop for furniture through June and July and even from a from a financial standpoint, we closed down our plans for routine maintenance, everything over July 4, give our folks a rest. So again, I guess I would go into -- we felt very good about May. We've seen the industry data come out on May, doesn't look like the industry feels particularly good about May and that just points to a challenged consumer and I'm not in a position to make a prediction of when the consumer broadly is feeling a little less pressure.
What I do know is we are seeing the results of where we're playing offense, where we're investing in messaging, where we're investing and having the right products and the right experience for our consumer because there are folks out there that are still buying furniture. And we are fortunate in that, given the quality of our products and what our brand stands for, that, we attract a consumer that tends to be a little more in the upper middle income range. And so they still have a little more discretionary spending. If you can convince them, that is worth it. And I think we're doing a good job of that with everything around our brand and our execution. So again, May is off to a solid start. We're going to get we're going to operate this year prudently. We believe we will get to growth in the year, and that helps us with our bottom line. But we expect the year is going to be still going to be challenged from just the environment that we're operating in for the majority of the year.

Bobby Griffin

Very good. I appreciate the second chance to answer questions and congrats again on putting up a good year in a tough operating environment. Best of luck here in the first quarter.

Bob Lucian

Thank you.

Melinda Whittington

Thanks, Bobby.

Operator

Thank you very much. Well, we appear to have reached the end of our question and answer session, and I will now turn the call back over to Mark for closing comments.

Mark Becks

Thanks, Jenny. Melinda, Bob, and I will be in our offices today to take any follow-up questions. Have a great day.

Operator

Thank you very much, everyone. This does conclude today's conference. You may now disconnect your phone lines and have a wonderful day. Thank you for your participation.