Q4 2024 Culp Inc Earnings Call

June 28, 2024

Interpreted by Ralph Zahstick

Anthony Lebiedzinski: Anthony Lebiedzinski, Dru Anderson, Culp, Boyd Chumbley, good morning, and welcome to the Culp Incorporated 4th quarter fiscal 2024 earnings conference. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: Good morning, and welcome to the Culp Incorporated fourth quarter fiscal 2024 earnings conference call. All participants will be in listen-only mode.

Speaker Change: Good morning and welcome to the Culp Incorporated fourth quarter fiscal 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: And should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then 1 on your telephone keypad.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two.

Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2.

Operator: To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Dr. Anderson. Please go ahead.

Operator: Please note, this event is being recorded.

Dru Anderson: I would now like to turn the conference over to Dru Anderson. Please go ahead.

Speaker Change: Please note, this event is being recorded.

Speaker Change: I would now like to turn the conference over to Dru Anderson. Please go ahead.

Dru Anderson: Good morning, and welcome to the Culp conference call to review the company's results for the 4th quarter in fiscal 2024 year. As we start, let me state that this morning's call will contain forward-looking statements about the business, financial conditions, and prospects of the company. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results, or otherwise are not statements of historical facts. The actual performance of the company could differ materially from that indicated by the forward-looking statements because of various risks and uncertainties. These risks and uncertainties are described in our regular SEC filings, including the company's most recent filings on Form 10-K and Form 10-Q.

Dru L. Anderson: Good morning and welcome to the Culp conference call to review the company's results for the fourth quarter of fiscal 2024. As we start, let me state that this morning's call will contain forward-looking statements about the business, financial conditions, and prospects of the company. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results, or otherwise are not statements of historical facts.

Dru L. Anderson: Good morning and welcome to the Culp conference call to review the company's results for the fourth quarter in fiscal 2024 year.

Dru L. Anderson: The actual performance of the company could differ materially from that indicated by the forward-looking statements because of various risks and uncertainties. These risks and uncertainties are described in our regular SEC filings, including the company's most recent filings on Form 10-K and Form 10-Q. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations and financial results. You are cautioned not to place undue reliance on forward-looking statements made today, and each such statement speaks only as of today. We undertake no obligation to update or to revise forward-looking statements.

Dru L. Anderson: As we start, let me state that this morning's call will contain forward-looking statements about the business, financial conditions, and prospects of the company.

Dru L. Anderson: Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results, or otherwise, are not statements of historical fact.

Dru L. Anderson: The actual performance of the company could differ materially from that indicated by the forward-looking statements because of various risks and uncertainties.

Dru L. Anderson: These risks and uncertainties are described in our regular SEC filings, including the company's most recent filings on Form 10-K and Form 10-Q .

Dru Anderson: Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations and financial results. Your caution not to place undue reliance on forward-looking statements made today, and each such statement speaks only as up to day.

Dru L. Anderson: Additional risks and uncertainties that we do not presently know about, or that we currently consider to be immaterial, may also affect our business operations and financial results.

Dru L. Anderson: You are cautioned not to place undue reliance on forward-looking statements made today, and each such statement speaks only as of today. We undertake no obligation to update or to revise forward-looking statements.

Dru Anderson: We undertake no obligation to update or to revise forward-looking statements.

Dru Anderson: In addition, during this call, the company will be discussing non-GAAP financial measurements. A reconciliation of these non-GAAP financial measurements to the most directly comparable GAAP financial measurement is included in the tables to the press release. Included as an exhibit to the company's 8-K file yesterday and posted on the company's website at colp.com.

Dru L. Anderson: In addition, during this call, the company will be discussing non-GAAP financial measurements. A reconciliation of these non-GAAP financial measurements to the most directly comparable GAAP financial measurement is included in the tables to the press release, included as an exhibit to the company's 8K filed yesterday and posted on the company's website at culp.com. A slide presentation on the company's restructuring plan is also available on the company's website as part of the webcast of today's call. I will now turn the call over to Iv Culp, President and Chief Executive Officer of Culp. Please go ahead.

Dru L. Anderson: In addition, during this call, the company will be discussing non-GAAP financial measurements.

Dru L. Anderson: A reconciliation of these non-GAAP financial measurements to the most directly comparable GAAP financial measurement is included in the tables to the press release, included as an exhibit to the company's 8K filed yesterday and posted on the company's website at culp.com.

Dru Anderson: A slide presentation on the company's restructuring plan is also available on the company's website as part of the webcast of today's call.

Speaker Change: A slide presentation on the company's restructuring plan is also available on the company's website as part of the webcast of today's call. I will now turn the call over to Iv Culp, President and Chief Executive Officer of Culp. Please go ahead.

Robert Culp: I will now turn the call over to IvColp, President and Chief Executive Officer of Colp. Please go ahead.

Robert Culp: Good morning, and thank you for joining us today. I would like to welcome everyone to the Co-orderly Conference Call with analysts and investors. With me on the call are Ken Bowling, Chief Financial Officer; Boyd Chumbley, President of our Upholstery Fabrics Business; and Tommy Bruno, President of our Mattress Fabrics Business.

Robert G. Culp: Good morning, and thank you for joining us today. I would like to welcome everyone to the Culp quarterly conference call with analysts and investors. With me on the call are Ken Bowling, Chief Financial Officer, Boyd Chumbley, President of our Upholstery Fabrics business, and Tommy Bruno, President of our Mattress Fabrics business. I will begin the call with some detailed comments, and as mentioned in the introduction, we have posted a slide presentation on our investor relations website that covers information related to our restructuring plan, which I will speak about in detail today. Ken will then review the financial results for the quarter and the full year.

Robert G. Culp: Good morning and thank you for joining us today. I would like to welcome everyone to the Culp quarterly conference call with analysts and investors.

Robert G. Culp: With me on the call are Ken Bowling, Chief Financial Officer, Boyd Chumbley, President of our Upholstery Fabrics business, and Tommy Bruno, President of our Mattress Fabrics business.

Robert Culp: I will begin the call with some detailed comments. And, as mentioned in the introduction, we have posted a slide presentation to our investor relations website that covers information related to our restructuring plan, which I will speak about in detail today. Ken will then review the financial results for the quarter in the full year. And after that, I'll briefly review our business outlook as we turn the page to fiscal 2025, and we will take some questions. Our sales and operating results for the fourth quarter were in line with our expectations announced on May 1, 2024, when we also announced our comprehensive restructuring actions.

Robert G. Culp: I will begin the call with some detailed comments and as mentioned in the introduction we have posted a slide presentation to our investor relations website that covers information related to our restructuring plan which I will speak about in detail today.

Robert G. Culp: And after that, I'll briefly review our business outlook as we turn the page to fiscal 2025, and we will take some questions. Our sales and operating results for the fourth quarter were in line with our expectations announced on May 1st, 2024, when we also announced our comprehensive restructuring action. Our results for Q4 reflected weakness in industry demand in both of our businesses, driven primarily by ongoing macroeconomic headwinds. Our sales performance for the fourth quarter was also affected to some degree by the timing of orders, as many of our larger customers experienced extremely slow conditions beginning in January.

Robert G. Culp: Ken will then review the financial results for the quarter and the full year, and after that I'll briefly review our business outlook as we turn the page to fiscal 2025, and we will take some questions.

Speaker Change: Our sales and operating results for the fourth quarter were in line with our expectations announced on May 1st, 2024, when we also announced our comprehensive restructuring actions.

Robert Culp: Our results for Q4 reflected weakness and industry demand in both of our businesses, driven primarily by ongoing macroeconomic headwinds. Our sales performance for fourth quarter was also affected to some degree by the timing of orders, as many of our larger customers experienced extremely slow conditions beginning in January. Looking back, we posted solid year-over-year sales gains in both of our business segments during our fiscal third quarter. And we were making progress towards our stated improvement goals. However, we faced a significant decline in order, quarter levels during our fourth quarter, related to demand pressures our customers faced early in the calendar year.

Speaker Change: Our results for Q4 reflected weakness and industry demand in both of our businesses.

Speaker Change: driven primarily by ongoing macroeconomic headwinds.

Speaker Change: Our sales performance for fourth quarter was also affected to some degree by the timing of orders, as many of our larger customers experienced extremely slow conditions beginning in January .

Robert G. Culp: Looking back, we posted solid year-over-year sales gains in both of our business segments during our fiscal third quarter, and we were making progress towards our stated improvement goal. However, we faced a significant decline in order levels during our fourth quarter related to demand pressures our customers faced early in the calendar year.

Speaker Change: Looking back, we posted solid year-over-year sales gains in both of our business segments during our fiscal third quarter.

Speaker Change: And we were making progress towards our stated improvement goals.

Speaker Change: However, we faced a significant decline in order levels during our fourth quarter related to demand pressures our customers faced early in the calendar year.

Robert Culp: The impact on fourth quarter revenue, along with the ongoing macroeconomic pressure, led us to take aggressive action to bring our manufacturing costs and capacity in line with current and expected demand. We announced a wide-ranging restructuring plan in early May with a primary focus on our mattress fabric segment, and we are making steady progress on the execution of this restructuring initiative. The announced adjustments, once fully implemented, will enable us to grow more efficiently and profitably with a lower level of fixed costs. Importantly, these strategic steps do not limit our ability to grow the business, but instead allow us to better optimize our global mix of manufacturing action capabilities and long-term sourcing partners.

Robert G. Culp: The impact on fourth-quarter revenue, along with the ongoing macro pressure, led us to take aggressive action to bring our manufacturing costs and capacity in line with current and expected demand. We announced a wide-ranging restructuring plan in early May with a primary focus on our mattress fabric segment, and we are making steady progress on the execution of this restructuring initiative. The announced adjustments, once fully implemented, will enable us to grow more efficiently and profitably with a lower level of fixed costs.

Speaker Change: The impact on fourth quarter revenue, along with the ongoing macro pressure, led us to take aggressive action to bring our manufacturing costs and capacity in line with current and expected demand.

Speaker Change: We announced a wide-ranging restructuring plan in early May with a primary focus on our mattress fabric segment and we are making steady progress on the execution of this restructuring initiative.

Speaker Change: The announced adjustments, once fully implemented, will enable us to grow more efficiently and profitably with a lower level of fixed costs.

Robert G. Culp: Importantly, these strategic steps do not limit our ability to grow the business but instead allow us to better optimize our global mix of manufacturing capabilities and long-term sourcing partners. I also want to be sure and emphasize that we are extremely grateful for the support we have received from our valued customers, suppliers, and employees. And we are confident that the strength of these relationships will help drive our recovery.

Speaker Change: Importantly, these strategic steps do not limit our ability to grow the business.

Speaker Change: But instead, allow us to better optimize our global mix of manufacturing capabilities and long-term sourcing partners.

Robert Culp: I also want to be sure and emphasize that we are extremely grateful for the support we ever see for our valued customers, suppliers, and employees. And we are confident that the strength of these relationships will help drive our recovery. I'll have much more to come on restructuring actions momentarily. I do want to comment that, despite the mentioned headwinds and challenging macro conditions, there were some positive indicators within Culp's business during fiscal 24, including, first, a significant year-over-year operating improvement, albeit still lost and below our intended target.

Speaker Change: I also want to be sure and emphasize that we are extremely grateful for the support we have received from our valued customers, suppliers, and employees, and we are confident that the strength of these relationships will help drive our recovery.

Robert G. Culp: I'll have much more to come on restructuring actions momentarily, but I do want to comment that despite the mentioned headwinds and challenging macro conditions, there were some positive indicators within Culp's business during fiscal 24, including first, a significant year-over-year operating improvement, albeit still lost and below our intended target. And second, consistent and continued operating profits in our upholstery fabrics business. The fiscal year 24 performance for Culp Upholstery Fabric is significantly improved over last year, even when considering the tough industry conditions, thanks to a more profitable mix of sales, better inventory management, improved exchange rates, and reduced fixed costs.

Speaker Change: I'll have much more to come on restructuring actions momentarily.

Speaker Change: I do want to comment that despite the mentioned headwinds and challenging macro conditions, there were some positive indicators within Culp's business during fiscal 24.

Speaker Change: Including first, a significant year-over-year operating improvement, albeit still a loss and below our intended targets.

Robert Culp: Gates. In second, consistent and continued operating profits in our Poll Street fabrics business. The fiscal year 24 performance for Culp of Poll Street Fabrics is significantly improved over last year. Even when considering the tough industry condition, thanks to a more profitable mix of sales, better inventory management, improved exchange rates, and reduced fixed costs. Another highlight for Poll Street Fabrics is the sales performance of our hospitality offerings, making up 38% of total segment sales in Q4. While this percentage is skewed by a weaker residential fabric industry environment, our hospitality fabric and window treatment businesses are solid, and we are expanding our roller shade capacity in production in the first quarter to North Carolina.

Speaker Change: And second, consistent and continued operating profits in our upholstery fabrics business.

Speaker Change: The fiscal year 24 performance for Culp Upholstery Fabrics is significantly improved over last year, even when considering the tough industry condition, thanks to a more profitable mix of sales, better inventory management, improved exchange rates, and reduced fixed costs.

Robert G. Culp: Another highlight for Upholstery Fabrics is the sales performance of our hospitality offering, making up 38% of total segment sales in Q4. While this percentage is skewed by a weaker residential fabric industry environment, our hospitality fabric and window treatment businesses are solid, and we are expanding our roller shade capacity in production in the first quarter to North Carolina. We believe there's much to be excited about within the coal upholstery fabric category.

Speaker Change: Another highlight for Upholstery Fabrics is the sales performance of our Hospitality offerings, making up 38% of total segment sales in Q4.

Speaker Change: While this percentage is skewed by a weaker residential fabric industry environment, our hospitality fabric and window treatment businesses are solid and we are expanding our roller shade capacity in production in first quarter to North Carolina.

Robert Culp: We believe there's much to be excited about within Culp of Poll Street fabrics. The third positive indicator is the year-over-year sales growth in our mattress fabric segment. While we are not where we intend to be, the year-over-year performance in mattress fabrics is indicative of our improving market position, focusing on winning new placements with margins in line with current costs. And fourth, we have pricing, positioning us for return to higher sales growth as micro-conditions improve. We are encouraged by both of our businesses, and with our restructuring actions well underway, we believe we are on track to return to profitability post-restructuring, even if market conditions remain at their currently depressed levels.

Speaker Change: We believe there's much to be excited about within coal upholstery fabrics.

Robert G. Culp: A third positive indicator is the year-over-year sales growth in our mattress fabric segment. While we are not where we intend to be, the year-over-year performance in mattress fabrics is indicative of our improving market position, focusing on winning new placements with margins in line with current costs. And fourth, we have strong product innovation and product placements in both segments at improved prices.

Speaker Change: A third positive indicator is the year-over-year sales growth in our mattress fabric segment.

Speaker Change: while we are not where we intend to be.

Speaker Change: The year-over-year performance in mattress fabrics is indicative of our improving market position.

Speaker Change: focusing on winning new placements with margins in line with current costs.

Speaker Change: And fourth, we have a strong product innovation and product placements in both segments at improved pricing. Position us for a return to higher sales growth as macro conditions improve.

Robert G. Culp: Position us for a return to higher sales growth as macro conditions improve. We are encouraged by both of our businesses, and with our restructuring actions well underway, we believe we are on track to return to profitability post-restructuring, even if market conditions remain at their currently depressed levels. We also maintained a solid balance sheet and a $10 million cash position at the end of the fourth quarter, with a focus on prudent financial management, and we are taking proactive steps to ensure the long-term success of our business.

Speaker Change: We are encouraged by both of our businesses, and with our restructuring actions well underway, we believe we are on track to return to profitability post-restructuring, even if market conditions remain at their currently depressed levels.

Robert Culp: We also maintain the silent ballot sheet in a $10 million cash position at the end of the fourth quarter, with a focus on prudent financial management, and we are taking proactive steps to ensure the long-term success of our business. We are diligently focused on executing our restriction initiatives and therefore strengthening our ballot sheet, optimizing our operations and cost structure, and supporting our customers, while also continuing to win new placements with our innovative product portfolio.

Speaker Change: We also maintained a silent balance sheet and a $10 million cash position at the end of the fourth quarter with a focus on prudent financial management, and we are taking proactive steps to ensure the long-term success of our business.

Robert G. Culp: We are diligently focused on executing our construction initiatives and therefore strengthening our balance sheet, optimizing our operations and call structure, and supporting our customers, while also continuing to win new placements with our innovative product portfolio. I'd now like to circle back and discuss further detail on our restructuring actions that are better aligning our business. Again, there's a new slide deck posted on our investor relations page to help illustrate the process. Our plan is comprehensive and involves every facet of our business within both divisions. The vast majority of actions taken are within mattress fabrics, called pump fashions.

Speaker Change: We are diligently focused on executing our construction initiatives and therefore strengthening our balance sheet, optimizing our operations and call structure, and supporting our customers.

Speaker Change: while also continuing to win new placements with our innovative product portfolio.

Robert Culp: I would now like to circle back and discuss further detail on our restructuring actions that are better aligned in our business. Again, there is a new slide deck posted on our Investor Relations page to help illustrate the process. Our plan is comprehensive and involves every facet of our business within both divisions. The vast majority of actions taken are within mattress fabrics, called home fashions, but are a view of everything was necessary in this challenging macro environment. The plan was announced on May 1st, and commensuously communicated to employees, customers, and vendors. The summary and key takeaway of the plan is we are reducing our North American footprint by closing our mattress fabric weaving, knitting, and finishing facility in Canada, and optimizing our production capacity and overhead into our Stokesdale, North Carolina location.

Speaker Change: I'd now like to circle back and discuss further detail on our restructuring actions.

Speaker Change: that are better aligning our business.

Speaker Change: Again, there's a new slide deck posted on our investor relations page to help illustrate the process.

Speaker Change: Our plan is comprehensive and involves every facet of our business within both divisions.

Speaker Change: The vast majority of actions taken are within mattress fabrics, called pump fashions.

Robert G. Culp: But a review of everything was necessary in this challenging macroenvironment. The plan was announced on May 1st and commensurately communicated to employees, customers, and vendors. The summary and key takeaway of the plan is that we are reducing our North American footprint by closing our mattress fabric weaving, knitting, and finishing facility in Canada and optimizing our production capacity and overhead into our Stokesdale, North Carolina location. As part of this, our damask weaving business will transition to a sourcing model, primarily with a long-term manufacturing partner. We are also consolidating our operations in Haiti, located on the Dominican Republic and Haitian border, into a smaller footprint with just one building.

Speaker Change: But a review of everything was necessary in this challenging macroenvironment.

Speaker Change: The plan was announced on May 1st and commensurately communicated to employees, customers, and vendors.

Speaker Change: The summary and key takeaway of the plan is we are reducing our North American footprint by closing our mattress fabric weaving, knitting, and finishing facility in Canada and optimizing our production capacity and overhead into our Stokesdale, North Carolina location.

Robert Culp: As part of this, our damask weaving business will transition to a sourcing model, primarily with a long-term manufacturing partner.

Speaker Change: As part of this, our damask weaving business will transition to a sourcing model, primarily with a long-term manufacturing partner.

Robert Culp: Blair. We are also consolidating our operations in Haiti, located on the Dominican Republic-Haiti border, into a smaller footprint with just one building. These operational changes reduce our mattress fabric employee base by approximately 240 people, or 35% of the segment's total workforce. While these are very difficult decisions, they are necessary to align our costs with current demand and better position Cope for the future. We have already initiated severance and state bonus agreements with affected employees, and we are working to optimize our production facilities and sourcing strategies. Productive work is already occurring with our partners on our damask weaving transition, and we are organizing floor space to prepare for knitting and finishing equipment relocation to North Carolina.

Speaker Change: We are also consolidating our operations in Haiti, located on the Dominican Republic and Haiti border, into a smaller footprint with just one building.

Robert G. Culp: These operational changes reduce our mattress fabric employee base by approximately 240 people, or 35% of the segment's total workforce. While these are very difficult decisions, they are necessary to align our costs with current demand and better position Culp for the future. We have already initiated severance and stay bonus agreements with affected employees, and we are working to optimize our production facilities and sourcing strategies. Productive work is already occurring with our partners on our damask weaving transition, and we are organizing floor space to prepare for knitting and finishing equipment relocation to North Carolina. Our cut and sew operations in Haiti have been consolidated, and the restructuring of our upholstery fabrics finishing operation in Asia is complete.

Speaker Change: These operational changes reduce our mattress fabric employee base by approximately 240 people, or 35% of the segment's total workforce.

Speaker Change: While these are very difficult decisions, they are necessary to align our costs with current demand and better position Culp for the future.

Speaker Change: We have already initiated severance and stay bonus agreements with affected employees and we are working to optimize our production facilities and sourcing strategies.

Speaker Change: Productive work is already occurring with our partners on our dam-esque weaving transition, and we are organizing floor space to prepare for knitting and finishing equipment relocation to North Carolina.

Robert Culp: Our cut and sew operations in Haiti have been consolidated, and the restructuring of our upholstery fabric finishing operation in Asia is complete. We have also chosen a broker to sell our Canadian facility, and we intend to exit and sell that facility in the second half of our fiscal year and hopefully by the end of calendar year 2024. But of course, the timing of that will be dependent on the market and interest for the building. More details of the actions in a general timeline can be found on page 5 of the newly posted restructuring deck. Beyond this comprehensive restructuring, our expectation is to return to profitability on a monthly basis sometime in the second half of fiscal 25.

Speaker Change: Our cut and sew operations in Haiti have been consolidated, and the restructuring of our upholstery fabrics finishing operation in Asia is complete.

Robert G. Culp: We've also chosen a broker to sell our Canadian facility, and we intend to exit and sell that facility in the second half of our fiscal year and, hopefully, by the end of calendar year 2024. But, of course, the timing of that will be dependent on the market and interest for the building. More details of the actions and a general timeline can be found on page 5 of the newly posted restructuring deck.

Speaker Change: We've also chosen a broker to sell our Canadian facility and we intend to exit and sell that facility in the second half of our fiscal year and hopefully by the end of calendar year 2024 but of course the timing of that will be dependent on the market and interest for the building.

Speaker Change: More details of the actions and a general timeline can be found on page 5 of the newly posted restructuring deck.

Robert G. Culp: Beyond this comprehensive restructuring, our expectation is to return to profitability on a monthly basis sometime in the second half of fiscal 25. Our plan estimates 10 to 11 million dollars in annualized cost and productivity savings. Mostly via the Mattress Fabrics Division, but we are also expecting $1 million to $1.5 million in annualized savings from reductions in unallocated corporate and shared services. We expect to incur approximately $8 million in restructuring-related charges, but importantly, only $2.5 million of these charges are cash charges, most of which will be incurred in the first half of fiscal 25.

Speaker Change: Beyond this comprehensive restructuring, our expectation is to return to profitability on a monthly basis sometime in the second half of fiscal 25.

Robert Culp: Our plan estimates 10 to 11 million dollars in annualized cost and productivity savings. Mostly via the mattress fabric division, though we are also expecting 1 million dollars to 1 and a half million dollars in annualized savings from reductions with an unallocated corporate and shared services. We expect to incur approximately 8 million dollars in restructuring-related charges, but importantly only 2 and a half million dollars of these charges are cash charges, most of which will be incurred in the first half fiscal 25. We anticipate funding these cash charges mostly from the sale of excess equipment, and then we also expect 10 to 12 million dollars of after-tax proceeds from the sale of our Canadian facility.

Speaker Change: Our plan estimates 10 to 11 million dollars in annualized cost and productivity savings.

Speaker Change: Mostly via the Mattress Fabrics Division, but we are also expecting $1 million to $1.5 million in annualized savings from reductions with unallocated corporate and shared services.

Speaker Change: We expect to incur approximately $8 million in restriction-related charges, but importantly, only $2.5 million of these charges are cash charges.

Speaker Change: Most of which will be incurred in the first half of Fiscal 25.

Robert G. Culp: We anticipate funding these cash charges mostly from the sale of excess equipment, and then we also expect 10 to 12 million dollars of after-tax proceeds from the sale of our Canadian facility. A cash and liquidity update, as well as a restated FY24 mattress fabrics hypothetical pro forma on operating income that assumes the restructuring was already completed, are shown on the new slide deck on pages 6 and 7. The expected benefit of our restructuring actions on both profitability and liquidity is evident, and this is all assuming no lift in market demand.

Speaker Change: We anticipate funding these cash charges mostly from the sale of excess equipment and then we also expect 10 to 12 million dollars of after-tax proceeds from the sale of our Canadian facility.

Robert Culp: A cash and liquidity update, as well as a restated FY24 mattress fabrics hypothetical performance on operating income that assumes the restructuring was already completed, are shown on the new slide deck on pages 6 and 7. The expected benefit of our restructuring actions on both profitability and liquidity is evident, and this is all assuming no lift and market demand. We are restructuring the business to return to profitability in this current environment, but also preparing cost we much stronger as in when demand conditions normalize. Also want to again reiterate that nothing in our plan prevents us from growing the business.

Speaker Change: A cash and liquidity update, as well as a restated FY24 mattress fabrics hypothetical pro forma on operating income that assumes the restructuring was already completed, are shown on the new slide deck on pages 6 and 7.

Speaker Change: The expected benefit of our restructuring actions on both profitability and liquidity is evident.

Speaker Change: And this is all assuming no lift in market demand.

Robert G. Culp: We are restructuring the business to return to profitability in this current environment, and we're also preparing Culp to be much stronger as and when demand conditions normalize. I want to again reiterate that nothing in our plan prevents us from growing the business. Through this process, we are maintaining our preferred network of manufacturing and sourcing capabilities in the United States, Turkey, China, Vietnam, and Haiti. Our North American platform will be more efficient and optimized, and we will complement that with strong international... As we look ahead to fiscal 25, we expect industry conditions will remain pressured for some time, but we believe our fiscal 24 fourth-quarter revenue levels represented a bottom point for Culp.

Speaker Change: We are restructuring the business to return to profitability in this current environment.

Speaker Change: We're also preparing Culp to be much stronger as and when demand conditions normalize.

Speaker Change: Also, I want to again reiterate that nothing in our plan prevents us from growing the business.

Robert Culp: Through this process, we are maintaining our preferred network of manufacturing and sourcing capabilities in the United States, Turkey, China, Vietnam, and Haiti.

Speaker Change: Through this process, we are maintaining our preferred network of manufacturing and sourcing capabilities in the United States, Turkey, China, Vietnam, and Haiti.

Robert Culp: Lee. Our North American platform will be more efficient and optimized, and we will complement that with strong international options. As we look ahead to fiscal 25, we expect industry conditions will remain pressured for some time, but we believe our fiscal 24th quarter revenue levels represented a bottom point for coal. We have seen some increased sales conditions from Memorial Day, holiday, and mattress fabrics, and that combined with our improved market position in both businesses is driving some sequential sales growth into Q1 of FY25. We are fortunate to call up to have an experienced leadership team focused on improving growth, and we have navigated many challenges throughout our 52 years.

Speaker Change: Our North American platform will be more efficient and optimized, and we will complement that with strong international options.

Speaker Change: As we look ahead to Fiscal 25, we expect industry conditions will remain pressured for some time.

Speaker Change: But we believe our fiscal 24 fourth quarter revenue levels represented a bottom point for Culp.

Robert G. Culp: We have seen some increased sales conditions from the Memorial Day holiday in mattress fabrics. And that, combined with our improved market position in both businesses, is driving some sequential sales growth into Q1 of FY25. We are fortunate at Culp to have an experienced leadership team focused on improvement and growth, and we have navigated many challenges throughout our 52 years. We have strong long-term partnerships with customers and vendors, and an emphasis on product innovation leading to an improving market position. A strategic manufacturing and sourcing platform, and, most importantly, a solid balance sheet with available liquidity.

Speaker Change: We have seen some increased sales conditions from the Memorial Day holiday and mattress fabrics, and that combined with our improved market position in both businesses is driving some sequential sales growth into Q1 of FY25.

Speaker Change: We are fortunate at Culp to have an experienced leadership team focused on improvement and growth and we have navigated many challenges throughout our 52 years.

Robert Culp: We have strong long-term partnerships with customers and vendors, and emphasis on product innovation, leading to an improving market position, a strategic manufacturing and sourcing platform, and, most importantly, a solid balance sheet with available liquidity. We believe the strategic actions we are taking will position us for profitable growth opportunities, and we remain committed to delivering sustainable results and enhancing value for our shareholders over the long term.

Speaker Change: We have strong long-term partnerships with customers and vendors, an emphasis on product innovation leading to an improving market position, a strategic manufacturing and sourcing platform, and most importantly, a solid balance sheet with available liquidity.

Robert G. Culp: We believe the strategic actions we are taking will position us for profitable growth opportunities, and we remain committed to delivering sustainable results and enhancing value for our shareholders over the long term. I'll now turn the call over to Ken, who will review the financial results for the quarter, and then I'll review the limited outlook we are providing as we look ahead into fiscal 2025. Thanks, Iv.

Speaker Change: We believe the strategic actions we are taking will position us for profitable growth opportunities, and we remain committed to delivering sustainable results and enhancing value for our shareholders over the long term.

Kenneth Bowling: I will now turn the call over to Ken, who will review the financial results for the quarter, and then I will review the limited outlook we are providing as we look ahead into fiscal 2025. Thanks, if here are the financial highlights of the 4th quarter, net sales are 49.5 million, down 19.4% compared with the prior year period. The company reported an awesome operation of 4.2 million, which included 204,000 in restriction expense, as compared with the loss from operations of 4 million for the prior year period, which included 70,000 in restriction expense. I will comment on more detail on the visual sales and operating performance in a moment.

Kenneth R. Bowling: Here are the financial highlights for the fourth quarter. Net sales were $49.5 million, down 19.4% compared with the prior year period. The company reported a loss from operations of $4.2 million, which included $204,000 in restructuring expense, as compared with a loss from operations of $4 million for the prior year period, which included $70,000 in restructuring expense. I'll comment in more detail on divisional sales and operating performance in a moment. The net loss for the fourth quarter was $4.9 million, or $0.39 per diluted share.

Speaker Change: I'll now turn the call over to Ken who will review the financial results for the quarter and then I'll review the limited outlook we are providing as we look ahead into fiscal 2025.

Kenneth R. Bowling: Comparing the net loss to $4.7 million, or $0.38 per diluted share for the prior year period, Our overall operating performance for the fourth quarter as compared to the prior year period was primarily pressured by lower sales in both divisions as well as operating inefficiencies in the mattress fabric segment during the quarter and a one-time customer payment received during the fourth quarter of last fiscal year that did not reoccur this fiscal year, offsetting some of the operating pressure with lower S&A expenses due primarily to lower incentive compensation.

Kenneth R. Bowling: Thanks, Iv. Here are the financial highlights for the fourth quarter. Net sales were $49.5 million down 19.4% compared with the prior year period.

Kenneth R. Bowling: The company reported a loss from operations of $4.2 million, which included $204,000 in restructuring expense, as compared with a loss from operations of $4 million for the prior year period, which included $70,000 in restructuring expense.

Kenneth R. Bowling: I'll comment in more detail on divisional sales and operating performance in a moment. Net loss for the fourth quarter was $4.9 million, or $0.39 per diluted share, compared with a net loss of $4.7 million, or $0.38 per diluted share for the prior year period.

Kenneth Bowling: Net loss for the 4th quarter was 4.9 million, or 39 cents per diluted share, compared with the net loss of 4.7 million, or 38 cents per diluted share for the prior year period. Our over-operative performance for the 4th quarter, as compared to the prior year period, was primarily pressured by lower sales in both the visions, as well as operating inefficiencies in the matches fabric segment during the quarter, and a one-time customer payment received during the 4th quarter of last fiscal year that did not re-occur this fiscal year. Offsetting some of the operating pressure was lower, as she may expenses due primarily to lower incentive compensation.

Kenneth R. Bowling: Our overall operating performance for the fourth quarter as compared to the prior year period was primarily pressured by lower sales in both divisions.

Kenneth R. Bowling: As well as operating inefficiencies in the mattress fabric segment during the quarter and a one-time customer payment received during the fourth quarter of last fiscal year that did not reoccur this fiscal year.

Kenneth R. Bowling: Offsetting some of the operating pressure was lower S&A expenses due primarily to lower incentive compensation.

Kenneth Bowling: For the full fiscal year, net sales were 225.3 million, down 4.1 percent compared to the previous year. Loss of operations for the full fiscal year was 11.3 million, which included 676,000 in restriction-related expense during the period, compared with the loss from operations of 28.5 million for the prior year, which included approximately 9.9 million relating to certain inventory impairment and other charges and restructuring-related expenses during the period. Net loss of the full fiscal year was 13.8 million, or $1.11 per diluted share, compared with the net loss of 31.5 million, or $2.57 per diluted share for the prior year.

Kenneth R. Bowling: For the full fiscal year, net sales were $225.3 million, down 4.1% compared to the previous year. The loss from operations for the full fiscal year was $11.3 million, which included $676,000 in restructuring-related expenses during the period compared with a loss from operations of $28.5 million for the prior year, which included approximately $9.9 million relating to certain inventory impairment and other charges and restructuring-related expenses during the period. The net loss for the full fiscal year was $13.8 million, or $1.11 per diluted share, compared with a net loss of $31.5 million, or $2.57 per diluted share, for the prior year.

Kenneth R. Bowling: For the full fiscal year, net sales were $225.3 million, down 4.1% compared to the previous year.

Kenneth R. Bowling: Lawsome operations for the full fiscal year was $11.3 million, which included $676,000

Kenneth R. Bowling: in restructuring related expense during the period compared with a loss from operations of $28.5 million for the prior year, which included approximately $9.9 million related to certain inventory impairment and other charges and restructuring related expenses during the period.

Kenneth R. Bowling: Net loss of the full fiscal year was $13.8 million, or $1.11 per diluted share, compared with a net loss of $31.5 million, or $2.57 per diluted share for the prior year.

Kenneth Bowling: Operating performance for the year, as compared to the prior year period, which was pressured by inventory impairment charges and restructuring-related charges, was positively affected by a favorable product mix, improved inventory management, a favorable forward exchange rate in China, and lower fixed costs.

Kenneth R. Bowling: Operating performance for the year, as compared to the prior year period, which was pressured by inventory impairment charges and restructuring-related charges, was positively affected by a favorable product mix, improved inventory management, a favorable foreign exchange rate in China, and lower fixed costs. However, these factors were partially offset by lower sales during the year as well as production inefficiencies related to certain new product launches in the mattress fabric segment. Adjusted EBITDA for the 12-month period ending in Q4 was a negative $3.4 million as compared to adjusted EBITDA of a negative $19 million for the comparable prior year period. The effective income tax rate for the 4th quarter of this fiscal year was a negative 19.8%, compared with a negative 20.6% for the same period a year ago.

Kenneth R. Bowling: Operating performance for the year, as compared to the prior year period, which was pressured by inventory impairment charges and restructuring related charges, was positively affected by a favorable product mix, improved inventory management, a favorable foreign exchange rate in China, and lower fixed costs.

Kenneth Bowling: Lewis. These factors were partially all set by our sales during the year, as well as production inefficiencies related to certain new product launches in the mattress fabric segment. Adjusted EBITDA for the 12-month period with Q4 was a negative 3.4 million, as compared to adjusted EBITDA of a negative 19 million for the comparable prior year period. The effective income tax rate for the fourth quarter of this fiscal year was a negative 19.8 percent compared to the negative 20.6 percent for the same period of the year ago. The effective income tax rate for fiscal 2024 was a negative 28.3 percent, compared to the negative 11 percent for the prior fiscal year.

Kenneth R. Bowling: These factors were partially offset by lower sales during the year, as well as production inefficiencies related to certain new product launches in the mattress fabric segment.

Kenneth R. Bowling: Adjusted EBITDA for the 12-month period ending with Q4 was a negative $3.4 million as compared to adjusted EBITDA of a negative $19 million for the comparable prior year period.

Kenneth R. Bowling: The effective income tax rate for the fourth quarter of this fiscal year was a negative 19.8 percent compared with a negative 20.6 percent for the same period a year ago.

Kenneth R. Bowling: The effective income tax rate for fiscal 2024 was a negative 28.3% compared with a negative 11% for the prior fiscal year. Our effective income tax rate for the fourth quarter and for the full fiscal year continues to be impacted by the company's mix of earnings between our U.S. and foreign subsidiaries with an operating loss in the U.S. while China and Canada generate income that was taxed at a higher rate as compared to the U.S. Our cash income tax payments total $3.3 million for this fiscal year, expected cash income tax payments for fiscal 2025 will not be given at this time due to the restructuring effort.

Kenneth R. Bowling: The effective income tax rate for fiscal 2024 was a negative 28.3% compared with a negative 11% for the prior fiscal year.

Kenneth Bowling: Our effective income tax rate for the fourth quarter and for the full fiscal year continues to be impacted by the company's mix of earnings between our US and four subsidiaries, with an operating loss in the US, while China and Canada generate income that was taxed at a higher rate as compared to the US.

Kenneth R. Bowling: Our effective income tax rate for the fourth quarter and for the full fiscal year continues to be impacted by the company's mix of earnings between our U.S. and foreign subsidiaries, with an operating loss in the U.S. while China and Canada generate income that was taxed at a higher rate as compared to the U.S.

Kenneth Bowling: Our cash income tax payments total 3.3 million for this fiscal year. Expected cash income tax payments for fiscal 2025 will not be given at this time due to the restructuring effort. Now let's take a look at our business segments for the mattress fabric segment sales for the fourth quarter were 25.8 million, down 16.1 percent compared to last year's fourth quarter. Sales were pressured during the quarter by further weakness in the domestic mattress industry driven by a challenging macroeconomic environment that is affecting consumer discretionary spending. Operating loss for the quarter was $2.9 million compared with an operating loss of $2.5 million a year ago.

Kenneth R. Bowling: Our cash income tax payments total $3.3 million for this fiscal year. Expected cash income tax payments for fiscal 2025 will not be given at this time due to the restructuring effort.

Kenneth R. Bowling: Now let's take a look at our business segments. For the mattress fabric segment, sales for the fourth quarter were $25.8 million, down 16.1% compared with last year's fourth quarter. Sales were pressured during the quarter by further weakness in the domestic mattress industry driven by a challenging macroeconomic environment that is affecting consumer discretionary spending. Operating loss for the quarter was $2.9 million compared with an operating loss of $2.5 million a year ago.

Kenneth R. Bowling: Sales were pressured during the quarter by further weakness in the domestic mattress industry driven by a challenging macroeconomic environment that is affecting consumer discretionary spending.

Kenneth R. Bowling: Operating loss for the quarter was $2.9 million compared with an operating loss of $2.5 million a year ago.

Kenneth Bowling: Our operating performance for the quarter was primarily pressured by lower sales and operating inefficiencies. For the posted fabric segment, sales for the fourth quarter were 23.8 million, down 22.6 percent over the prior period. Sales for our residential fabric business were lower than the prior period, driven mostly by further weakening in residential home furnishing sales, as well as the timing of the Chinese New Year holiday, which this year failed primarily in the fourth quarter rather than the third quarter. Additionally, approximately 3 percent of the 22.6 percent decline in sales was related to a one-time customer payment received during the fourth quarter last year that did not reoccur this year.

Kenneth R. Bowling: Our operating performance for the quarter was primarily pressured by lower sales and operating inefficiencies. For the Upholstery Fabric segment, sales for the fourth quarter were $23.8 million, down 22.6% over the prior year period. Sales for our residential fabric business were lower than the prior year period, driven mostly by further weakening in residential home furnishing sales, as well as the timing of the Chinese New Year holiday, which this year fell primarily in the fourth quarter rather than the third quarter.

Kenneth R. Bowling: Our operating performance for the quarter was primarily pressured by lower sales and operating inefficiencies.

Kenneth R. Bowling: Additionally, approximately 3% of the 22.6% decline in sales was related to a one-time customer payment received during the fourth quarter last year that did not reoccur this year. Hospitality contract business during the fourth quarter accounted for approximately 38% of the upholstery fabric segment's total sales. Income from operations for the quarter was $975,000 compared with income from operations of $1.6 million a year ago.

Kenneth R. Bowling: For the Upholstery Fabric segment, sales for the fourth quarter were $23.8 million, down 22.6% over the prior year period.

Kenneth R. Bowling: Sales for our residential fabric business were lower than the prior year period, driven mostly by further weakening in residential home furnishing sales, as well as the timing of the Chinese New Year holiday, which this year fell primarily in the fourth quarter rather than the third quarter.

Kenneth Bowling: Host of out-of-contract business during the fourth quarter accounted for approximately 38 percent of the posted fabric segment's total sales. Income from operations for the quarter was 975,000, compared with income from operations of 1.6 million a year ago. Operating income margin for the quarter was 4.1 percent compared with 5.2 percent a year ago. Our operating performance for the fourth quarter this year as compared to the prior period was primarily pressured by lower sales and the one-time customer payment noted earlier. Excluding the one-time payment from last year, operating income for this year's fourth quarter would have been higher compared to the prior period.

Kenneth R. Bowling: Hospitality contract business during the fourth quarter accounted for approximately 38% of the upholstery fabric segment's total sales.

Kenneth R. Bowling: Income from operations for the quarter was $975,000 compared with income from operations of $1.6 million a year ago. Operating income margin for the quarter was 4.1% compared with 5.2% a year ago.

Kenneth R. Bowling: Operating income margin for the quarter was 4.1%, compared with 5.2% a year ago. Our operating performance for the fourth quarter of this year as compared to the prior year period was primarily pressured by our lower sales and the one-time customer payment noted earlier. Excluding the one-time payment from last year, operating income for this year's fourth quarter would have been higher compared to the prior year period. Now, let me turn to the balance sheet.

Kenneth R. Bowling: Our operating performance for the fourth quarter of this year as compared to the prior year period was primarily pressured by our lower sales and the one-time customer payment noted earlier. Excluding the one-time payment from last year, operating income for this year's fourth quarter would have been higher compared to the prior year period.

Kenneth Bowling: Now let me turn to the balance sheet. Re-reported 10 million total cash and no outstanding debt as of the end of this fiscal year. Cash flow from operations and free cash flow were negative 8.2 million and a negative 10.8 million, respectively, for this fiscal year. As expected, our cash flow from operations and free cash flow during this fiscal year were pressured by operating losses and planned strategic investments in capital expenditures, mostly related to the mattress fabric transformation plan. Importantly, both segments have done a solid job of managing the key components of working capital: accounts receivable, inventory, and accounts payable.

Kenneth R. Bowling: We reported $10 million in total cash and no outstanding debt as of the end of this fiscal year. Cash flow from operations and free cash flow were a negative $8.2 million and a negative $10.8 million, respectively, for this fiscal year.

Kenneth R. Bowling: Now let me turn to the balance sheet. We reported $10 million in total cash and no outstaying debt as of the end of this fiscal year.

Kenneth R. Bowling: Cash flow from operations and free cash flow were a negative $8.2 million and a negative $10.8 million respectively for this fiscal year.

Kenneth R. Bowling: As expected, our cash flow from operations and free cash flow during this fiscal year were pressured by our operating losses and planned strategic investments and capital expenditures mostly related to the Mattress Fabrics Transformation Plan. Importantly, both segments have done a solid job of managing the key components of working capital, accounts receivable, inventory, and accounts payable. Capital expenditures were $3.7 million for the year compared with $2.1 million for last fiscal year.

Kenneth R. Bowling: Importantly, both segments have done a solid job of managing the key components of working capital, accounts receivable, inventory, and accounts payable.

Kenneth Bowling: Capital expenditures were $3.7 million for the year compared with $2.1 million for last fiscal year. Based on current expectations, capital spending for fiscal 2025 is expected to be approximately $4.5 million and will center mostly on maintenance cap ex and quick payback projects. Based on current expectations, depreciation for fiscal 2025 is expected to be approximately $5.5 million. With respect to the liquidity as of the end of fiscal 2024, we had approximately $32.5 million, consisting of $10 million in cash and $22.5 million in borrowability under our domestic and foreign credit facilities. We do intend to utilize some borrowings under our domestic and/or foreign credit facilities during fiscal 2025 in connection with our restructuring activities and to fund working capital to grow the business.

Kenneth R. Bowling: Capital expenditures were $3.7 million for the year compared with $2.1 million for last fiscal year.

Kenneth R. Bowling: Based on current expectations, capital spending for fiscal 2025 is expected to be approximately $4.5 million and will center mostly on maintenance capital expenditures and quick payback projects. Additionally, based on current expectations, depreciation for fiscal 2025 is expected to be approximately $5.5 million. With respect to liquidity, as of the end of fiscal 2024, we had approximately $32.5 million, consisting of $10 million in cash and $22.5 million in borrowing availability under our domestic and foreign credit facility.

Kenneth R. Bowling: Based on current expectations, capital spending for fiscal 2025 is expected to be approximately $4.5 million and will center mostly on maintenance capex and quick payback projects.

Kenneth R. Bowling: Based on current expectations, depreciation for fiscal 2025 is expected to be approximately $5.5 million.

Kenneth R. Bowling: With respect to liquidity, as of the end of fiscal 2024, we had approximately $32.5 million, consisting of $10 million in cash and $22.5 million in borrowing availability under our domestic and foreign credit facilities.

Kenneth R. Bowling: We do intend to utilize some borrowings under our domestic and or foreign credit facilities during fiscal 2025 in connection with our restructuring activities and to fund working capital to grow the business. However, importantly, we still expect to maintain a positive net cash position and to fund most of the cash costs associated with the restructuring effort from the eventual sale of excess equipment. Assuming the completion of all restructuring actions and the sale of associated real estate by the end of fiscal 2025, the company currently projects its cash position as of the end of fiscal 2025 to be higher than its $10 million in cash as of the end of fiscal 2024. The company did not repurchase any shares during this fiscal year, leaving 3.2 million available under our current share repurchase program.

Kenneth Bowling: Importantly, we still expect to maintain a positive net cash position and to fund most of the cash costs associated with the restructuring effort from the eventual sale of excess equipment. Assuming the completion of all restructuring actions and the sale of associated real estate by the end of fiscal 2025, the company currently projects its cash position as the end of fiscal 2025 to be higher than its $10 million in cash as of the end of fiscal 2024. The company did not repurchase any shares during this fiscal year, leaving $3.2 million available under our current share repurchase program.

Kenneth R. Bowling: Importantly, we still expect to maintain a positive net cash position and to fund most of the cash costs associated with the restructuring effort from the eventual sale of excess equipment.

Kenneth R. Bowling: Assuming the completion of all restructuring actions and the sale of associated real estate by the end of fiscal 2025, the company currently projects its cash position as of the end of fiscal 2025 to be higher than its $10 million in cash as of the end of fiscal 2024.

Speaker Change: The company did not repurchase any shares during this fiscal year, leaving $3.2 million available under our current share repurchase program.

Robert G. Culp: Despite the current share repurchase authorization, we do not expect any activity during the first quarter of fiscal 2025. As we remain focused on preserving liquidity and being positioned to support future growth opportunities, With that, I'll turn the call over to Iv to discuss the general outlook for the first quarter of fiscal 2025, and then we will take your questions. Thank you, Ken, due to the uncertainty in the macro environment, as well as the significant activity underway in connection with our restructuring initiative. We are only providing limited financial guidance at this time. While macro demand is expected to remain challenged in the first quarter of fiscal 25, pressuring year-over-year sales results.

Kenneth Bowling: Despite the current share repurchase authorization, we do not expect any activity during the first quarter of fiscal 2025, as we remain focused on preserving liquidity and being positioned to support future growth opportunities.

Speaker Change: Despite the current share repurchase authorization, we do not expect any activity during the first quarter of fiscal 2025 as we remain focused on preserving liquidity and being positioned to support future growth opportunities.

Robert Culp: With that, I'll turn the call over to you to discuss a general outlook for the first quarter of fiscal 2025, and then we will take your questions. Thank you, Ken.

Speaker Change: With that, I'll turn the call over to Iv to discuss the general outlook for the first quarter of fiscal 2025, and then we will take your questions.

Robert Culp: Due to the uncertainty in the macro environment, as well as a significant activity underway in connection with our restructuring initiatives, we are only providing limited financial guidance at this time. While macro demand is expected to remain challenged in the first quarter of fiscal 2025, pressuring year-over-year sales results, we do expect our consolidated net sales for the first quarter to be moderately higher as compared sequentially to the fourth quarter of fiscal 24. The sequential growth is driven by an improving market position for Culp, as well as some lift and sales conditions from the Memorial Day holiday.

Speaker Change: Thank you, Ken.

Robert G. Culp: Due to the uncertainty in the macro environment.

Robert G. Culp: as well as a significant activity underway in connection with our restructuring initiatives.

Robert G. Culp: We are only providing limited financial guidance at this time.

Speaker Change: While macro demand is expected to remain challenged in the first quarter of Fiscal 25, pressuring year-over-year sales results.

Robert G. Culp: We do expect our consolidated net sales for the first quarter to be moderately higher as compared sequentially to the fourth quarter of fiscal 24. The sequential growth is driven by an improving market position for Culp, as well as some lift in sales conditions from the Memorial Day holiday. We are not providing specific first quarter operating income guidance.

Speaker Change: We do expect our consolidated net sales for the first quarter to be moderately higher as compared sequentially to the fourth quarter of fiscal 24.

Speaker Change: The sequential growth is driven by an improving market position for Culp as well as some lift in sales conditions from the Memorial Day holiday.

Robert Culp: We are not providing specific first quarter operating income guidance, as there are many possible outcomes related to the timing of the restructuring and the charges and benefits that will occur. A significant portion of this activity will affect operating results in Q1. We will update progress in our restructuring initiatives every quarter.

Speaker Change: We are not providing specific first quarter operating income guidance.

Speaker Change: As there are many possible outcomes related to the timing of the restructuring and the charges and benefits that will occur. A significant portion of this activity will affect operating results in Q1.

Robert Culp: In post-restructuring, we expect a return to a positive operating income on a monthly basis sometime in the second half of fiscal 2025.

Speaker Change: We will update progress on our restructuring initiatives every quarter, and post-restructuring, we expect to return to a positive operating income on a monthly basis sometime in the second half of fiscal 2025.

Operator: With that, we will now take questions. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two.

Operator: There are many possible outcomes related to the timing of the restructuring and the charges and benefits that will occur. A significant portion of this activity will affect operating results in Q1. We will update progress on our restructuring initiatives every quarter, and post-restructuring, we expect to return to a positive operating income on a monthly basis sometime in the second half of fiscal 2025. With that, we will now take questions. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: With that, we will now take questions.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

Operator: To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question is from Brian Gordon with Water Tower Research. Please go ahead. Good morning, everyone.

Operator: At this time, we will pause momentarily to assemble our roster.

Brian Gordon: Our first question is from Brian Gordon with Water Tower Research. Please go ahead.

Speaker Change: Our first question is from Brian Gordon with Water Tower Research. Please go ahead.

Brian Gordon: Good morning, everyone. Thank you for taking my questions. It's obviously been a tough quarter, but we know that the parking has been really laser focused on new structuring and managing costs, and it definitely shows the results even with sales down, you know, significant light.

Brian Gordon: Thank you for taking my questions. It's obviously been a tough quarter, but we know that, you know, the entire team has been really laser-focused on restructuring and managing costs, and it definitely shows in the results, even with sales down, you know, significantly. I do have several questions, though, about the restructuring. And in your comments, I know you touched on this a bit already, but when the restructuring was first announced, you noted that the bulk of the $8 million should be booked in the first quarter of 2025. Do you have any update on the timing, the expected timing of the cash and non-cash components of these charges? Yeah, Brian. Good morning.

Brian Gordon: Good morning, everyone. Thank you for taking my questions.

Speaker Change: It's obviously been a tough quarter, but we know that the entire team has been really laser focused on restructuring and managing costs.

Speaker Change: And it definitely shows in the results, even with sales down, you know, significantly.

Brian Gordon: I do have several questions, though, that I want to cover about the structuring. And if in your comments, I know you touched on this a bit already. But when the structuring was first announced, you noted that the bulk of the $8 million should be booked in the first quarter of 25. Do you have any update on the timing, the expected timing of the cash and down cash components of these charges?

Speaker Change: I do have several questions, though, that I want to cover about the restructuring.

Speaker Change: And, Iv, in your comments, I know you touched on this a bit already, but when the restructuring was first announced, you noted that the bulk of the $8 million should be booked in the first quarter of 2025. Do you have any update on the timing, the expected timing of the cash and non-cash components of these charges? Thank you. Thank you. Thank you.

Robert Culp: Brian, good morning. Thank you for the questions. We tried to lay out a general timeline in that new structuring deck, so we can speak to it maybe generally there. We do expect the bulk of the charges, both non-cash and cash, to be impacting the first half.

Robert G. Culp: Thank you for the questions. And we tried to answer them as best we could. We do expect the bulk of the charges, both non-cash and cash, to be impacted in the first half. Ken, you may want to add something more towards how it lays out Q1 or first half, or maybe it's we just got it to first half at this point. Yeah, it's just it's just based on expectations of how the restructuring effort will continue, but it's mostly related to the first half. I mean, we're going to push it quick, Brian.

Brian Gordon: Yeah, Brian , good morning. Thank you for for the questions and we tried to

Speaker Change: lay out a general timeline in that new restructuring deck. And so we can, we'll speak to it maybe generally there. We do expect the bulk of the charges, both non-cash and cash, to be impacted in the first half.

Kenneth Bowling: Ken, you may want to add something more towards how it lays out Q1 or first half, or maybe we just got it the first half at this point. Yeah, it's just based on expectations of how the restructuring effort will continue, but it's mostly latest in the first half. I mean, we're going to push it quick, Brian. We're trying to go as rapid speed as we can, balancing service in our customers very well, transitioning equipment at the right time and the right pace. I mean, it's a significant portion in Q1, but there will be some drift into Q2, for sure.

Speaker Change: Ken, you may want to add something more towards how it lays out Q1 or first half, or maybe it's we just got it to first half at this point. Yeah, it's just based on expectations of how the restructuring effort will continue, but it's mostly related to the first half.

Robert G. Culp: We're trying to go at the rapid speed as we can, balancing serving our customers very well, and transitioning equipment at the right time and the right pace. I mean, it's a significant portion of Q1, but there will be some drift into Q2 for sure. Okay, thank you.

Brian Gordon: I mean, we're going to push it quick, Brian . We're trying to go as rapid speed as we can, balancing servicing our customers very well, transition equipment at the right time and the right pace.

Brian Gordon: It's a significant portion in Q1, but there will be some drift into Q2 for sure.

Brian Gordon: Okay, thank you.

Brian Gordon: On a similar note, do you have any update on the expected magnitude and timing of the cost savings over the second half? When we're thinking about how to model the savings, should we be expecting something like a two to $3 million improvement by Q4? And maybe how much should we expect for Q3? Yeah, Brian, this is Ken.

Brian Gordon: On the similar note, do you have any update on the expected magnitude and timing of the cost savings over the second half? When we're thinking about how to model the savings, should we be expecting something like the $23 million improvement by Q4, and maybe how much should we expect for Q3?

Speaker Change: Okay, thank you. On a similar note, do you have any update on expected magnitude and timing of the cost savings over second half? When we're thinking about how to model the savings, should we be expecting something like a two to three million dollar improvement by Q4? And maybe how much should we expect for Q3?

Kenneth Bowling: Yeah, Brian, this is Ken. I think the way we've laid it out, we've talked about annual life savings, and the second half of the year will definitely be improved operating results. It just depends on the timing of all the different aspects of the project, but the benefits will start coming into play in the second half.

Kenneth R. Bowling: I think the way we've laid it out, you know, we've talked about annualized savings, and the second half of the year will definitely see improved operating results. It just depends on the timing of all the different aspects of the project, but the benefits will start coming into play in the second half. Okay, thank you.

Kenneth R. Bowling: Yeah, Brian , this is Ken. I think the way we've laid it out, you know, we've talked about annualized savings and the second half of the year will definitely be improved operating results.

Kenneth R. Bowling: It just depends on the timing of all the different aspects of the project, but the benefits will start coming into play in the second half.

Brian Gordon: Okay, thank you.

Brian Gordon: Kind of following on, you know, and maybe, you know, looking out a little bit longer term, you've said for mattress fabric that your long-term goal is an operating income of targeted something like nine to 10% in two to three years. When we think about the restructuring, how much of that longer-term target do you think will be achieved? Do you reach the current restructuring activities? And how much do you think is going to depend on anticipated, Good question, Brian. And yeah, you're picking up on the points very well. We do, in our investor communications point to a normalized Operating Income Margin of 9-10%. That's historically where we had wanted to be, at a minimum.

Brian Gordon: Kind of following on, and maybe looking out a little bit longer term, we've said for mattress fabrics that your long-term goal is an operating income target of something like 9 to 10% in 2 to 3 years.

Speaker Change: Okay, thank you. Kind of following on, you know, and maybe, you know, looking out a little bit longer term, you've said for mattress fabrics that your long-term goal is an operating income, you know, target of something like nine to ten percent in two to three years,

Robert Culp: When we think about the restructuring, how much of that longer term target do you reach to this current restructuring activity, and how much do you think is going to depend on anticipated revenue growth? and Brian. Good question, Brian, and yeah, you're picking up on the points very well. We do in our investor communications point to a normalized margin, an operating income margin of 9% to 10%. That's historically where we had wanted to be at a minimum. And what we're doing in the restructuring process is recognizing the current depressed volume in the macro industry. So the restructuring actions are generally getting us back to break even to small profitability without any change in demand.

Speaker Change: When we think about the restructuring, how much of that longer-term target do you reach through this current restructuring activity, and how much do you think is going to depend on anticipated revenue growth?

Speaker Change: Good question, Ryan. And yeah, you're picking up on the points very well. We do, in our investor communications, point to a normalized

Speaker Change: operating income margin of nine to 10%. That's historically where we had wanted to be at a minimum. And what we're doing in the restructuring process is recognizing the current depressed volume in the macro industry.

Robert G. Culp: What we're doing in the restructuring process is recognizing the current depressed volume in the macro industry. So the restructuring actions are generally getting us back to break even or small profitability without any change in demand. And the growth past that is based on revenue. So we feel really good about our product placement.

Speaker Change: So the restructuring actions are generally getting us back to break even, to small profitability without any change in demand.

Speaker Change: and the growth past that is based on revenue.

Robert G. Culp: We feel encouraged about our sales team. We're encouraged by our products and design innovation process. So we know we're going to grow the business. I think we can grow the business without the industry getting better, but we also know at some point it will. So we're really trying to guide them to returning to profitability with these actions and then banking on our product placement and macro tailwind to drive us back to normalization. Okay, thank you.

Speaker Change: So we feel really good about our product placements. We feel encouraged about our sales team. We're encouraged by our product and design innovation process.

Speaker Change: So we know we're going to grow the business.

Speaker Change: I think we can grow the business without industry getting better.

Robert Culp: So we're really, really trying to guide to returning to profitability with these actions and then banking on our product placement and macro tailwind to drive us back to normalization.

Speaker Change: But we also know at some point it will.

Speaker Change: So, we're really trying to guide to returning to profitability with these actions and then banking on our product placement and macro tailwind to drive us back to normalization.

Brian Gordon: Okay, thank you. I'm understood. Obviously, the part of the restructuring is, you know, moving to a more agile, you know, sourcing model for mattress fabrics. And part of that is consolidating production in the folks' tail, facilitating creating the center of excellence there. But when we think about, you know, what you're doing in terms of closing Quebec and moving some of that equipment to North Carolina. How should we think of like what percentage of the equipment in North Carolina is going to or in Quebec is going to be new to North Carolina versus how much is going to be sold.

Brian Gordon: Obviously, a big part of the restructuring is, you know, moving to a more agile sourcing model for mattress fabrics. And part of that is consolidating production in the Dugsdale facility and creating a center of excellence there. But when we think about, you know, what you're doing in terms of closing Quebec and moving some of that equipment to North Carolina, how should we think about, like, what percentage of the equipment in North Carolina is going to be moved to North Carolina versus how much is going to be sold?

Speaker Change: Okay, thank you, understood.

Speaker Change: Obviously a big part of the restructuring is moving to a more agile sourcing model.

Speaker Change: for Mattress Fabrics, and part of that is consolidating production in the Stokesdale facility and creating a center of excellence there.

Speaker Change: But when we think about what you're doing in terms of closing Quebec and moving some of that equipment to North Carolina, how should we think about what percentage of the equipment in Quebec is going to be moved to North Carolina versus how much is going to be sold, and where are you guys in that process?

Tommy Bruno: And where are you guys in that process?

Robert Culp: I can, I can pivot some of this to Tommy because he's managing this process for us daily. If not hourly, he's working on it really hard. We have an advantage in the process, Brian, as we've had, we've kind of had to what I would consider super plants. They can do most of our production. We had North Carolina and Canada. We have generally very good equipment in both. But this process allows us to optimize the best equipment, you know, into one location. And generally, just having economies of scale across one location, one set of overhead, and just being very diligently focused, a strong North American business with very strategic, flexible sourcing options.

Brian Gordon: And where are you guys in that process? I can, I can pivot some of this to Tommy because he's managing this process for us daily, if not hourly, and he's working on it really hard. We have an advantage in the process, Brian, is that we've kind of had two, what I would consider super plants that can do most of our production. We had North Carolina. We have generally very good equipment in both, but this process allows us to optimize. The best equipment, you know, into one location, economies of scale across one location, one set of overhead, and just being very diligent about very strategic, flexible sourcing options.

Speaker Change: I can I can pivot some of this to Tommy because he's managing this process for us daily, if not hourly, he's working on it really hard. We have an advantage in the process, Brian , as we've had, we've kind of had two

Speaker Change: but I would consider super plants.

Speaker Change: They can do most of our production. We had North Carolina and Canada.

Speaker Change: We have generally very good equipment in both, but this process allows us to optimize.

Speaker Change: the best equipment, you know, into one location.

Speaker Change: And generally just having economies of scale across one location, one set of overhead, and just being very diligently focused, a strong North American business.

Speaker Change: with very strategic, flexible sourcing options. So, Tommy, as to where you are in the process, you might be able to give some guidance. It's going to be a sprint over the quarter, but...

Tommy Bruno: So Tommy, as to where you are in the process, you might be able to give some guidance. And it's going to be a sprint over the quarter. But maybe got into where we are so far. Absolutely. So we're, we'll be selling 100% of our damaged weaving assets from Quebec as a part of this process. And we'll be moving roughly half of our knitting and knit finishing assets to Stokesdale. As where we are in that process, we have to retain that equipment as we service our customers as a part of the restructuring until such time that we see operations.

Robert G. Culp: So Tommy, as to where you are in the process, you might be able to give some guidance. It's going to be a sprint over the quarter, maybe getting to where we are so far. Absolutely. So we're selling 100% of our damask weaving assets from Quebec as a part of this process. And we'll be moving roughly half of our knitting and knit finishing assets to Stokesdale. However, where we are in that process, we have to retain that equipment as we serve our customers as a part of the restructuring until such time that we cease operations.

Speaker Change: to Stokesdale. As where we are in that process, we have to retain that equipment as we service our customers as a part of the restructuring until such time that we cease operations. We would expect that all the equipment would move to Stokesdale over the summer.

Brian Gordon: But we would expect that all the equipment would move to Stokesdale over the end of the third into the fourth calendar quarter. And we'll start selling equipment. We're already in the process of selling some. We expect the rest to be sold by the end of the calendar year. and based on how the market is. Okay, thank you.

Robert G. Culp: We would expect that all the equipment would move to Stokesdale at the end of the third and beginning of the fourth quarter, calendar quarter, and we'll start selling it. We're already in the process of selling some. We expect the rest to be sold by the end of the calendar year, based on how the market is. Okay, thank you. That's all very helpful.

Speaker Change: End of the third into the fourth quarter, calendar quarter, and we'll start selling equipment. We're already in the process of selling some. We expect the rest to be sold by the end of the calendar year based on how the market is.

Tommy Bruno: I certainly want to be respectful to other callers who might have questions. Do I have time, though, to ask maybe a few questions about demand in the current environment? Certainly, Brian. And I was just going to maybe add one more thing on, Tommy's and I stretched this a couple of times around the place, and I think it's important for investors to hear. He has a really good plan, and his team has a really good plan to optimize the equipment in the right place.

Brian Gordon: That's all very helpful.

Brian Gordon: I kind of want to be respectful to other colleagues who might have questioned. Do I have time, though, to ask maybe a few questions about demand in the current environment?

Speaker Change: Okay, thank you, that's all very helpful. I certainly want to be respectful to other callers who might have questions. Do I have time, though, to ask maybe a few questions about demand in the current environment? Certainly, Brian , and I was just going to maybe add one more thing on...

Robert Culp: Certainly, Brian. And I was just going to maybe add one more thing on Tommy's. And I suppressed this a couple of times in the States. And I think it's important for investors to hear. He has a really good plan, and his team has a really good plan to optimize the equipment in the right places. But when we talk about selling some equipment and downsizing, none of that prevents us from growing the business. We have really, really solid partners. We have a really good plan to service our customers. And we expect to be able to grow the business on a lower asset base, which will be fantastic when that starts to occur.

Speaker Change: I think it's important for investors to hear, he has a really good plan and his team has a really good plan to optimize the equipment in the right places.

Robert G. Culp: But when we talk about selling some equipment and downsizing, none of that prevents us from growing the business. We have really, really solid partners. We have a really good plan to service our customers, and we expect to be able to grow the business on a lower asset base, which will be fantastic when that starts to occur. So I just want to be sure it's always very clear that we aren't. We may be scaling our internal capacity in our North American facility, but we aren't, in any way, losing our ability to grow the business. An important point.

Speaker Change: But when we talk about selling some equipment and downsizing, none of that prevents us from growing the business. We have really solid partners, we have a really good plan to service our customers, and we expect to be able to grow the business on a lower asset base.

Robert Culp: So I just want to be sure it's always very clear that we aren't.

Speaker Change: which will be fantastic when that starts to occur. So I just want to be sure it's always very clear that we aren't...

Brian Gordon: We may be scaling our internal capacity in our North American facility, but we aren't in any way losing our ability to grow the business. Important point. Yeah, no, definitely. When you talk about the guidance in terms of like some modest sequential improvement, is that low single digits? Is that how we should be thinking about that? Yeah, that's right, Brian. We've got, we've got, you know, the year-over-year parts pressured, but we do see some sequential growth there. You're from the fourth quarter of the first quarter. Right. Okay.

Speaker Change: We may be scaling our internal capacity in our North American facility, but we aren't in any way losing our ability to grow the business.

Brian Gordon: You know, definitely. When you talk about the guidance in terms of like, you know, some modest sequential improvement, is that low single digits? Is that how we should be thinking about that? Yeah, that's right, Ron. We've got, you know, the year over year parts pressure, but we do see some sequential growth there. You're from the fourth quarter to the first quarter.

Speaker Change: Important point.

Speaker Change: you know definitely it when you talk about the guidance in terms of like you know some modest sequential improvement is that low single digits is that how we should be thinking about that

Speaker Change: Yeah, that's right, Ron. We've got, we've got, you know, the year-over-year parts pressured, but we do see some sequential growth there.

Robert G. Culp: Right, okay, thank you. One of the things that you both noted in your comments and release was that hospitality and contract is up to 38% of sales per upholstery. How much of that is winning new business versus maybe weakness on the residential furniture side? I'll pivot that to Boyd.

Boyd Chumbley: Thank you. One of the things that you both noted in your comments and released with that, you know, hospitality and contract, we've looked at 30% of sales per poll straight. How much of that is, you know, winning new business versus maybe, you know, weakness in the residential current risk tide? I'll let, I'll pivot that to Boyd. He's managing that business for us really well. So Boyd wants you to take that question. Sure, I'd be happy to. Yeah, Brian, we are really encouraged by this segment of our business as it's really remained solid throughout FY24, and backlogs are currently increasing.

Speaker Change: You're from fourth quarter to first quarter.

Speaker Change: Right, okay, thank you.

Speaker Change: One of the things that you both noted in your comments and release was that you know hospitality and contractors up to 38% of sales per upholstery. How much of that is you know winning new business versus maybe you know weakness in the residential furniture side?

Boyd B. Chumbley: He's managing that business for us really well. So Boyd, why don't you take that question? Sure, I'd be happy to.

Boyd B. Chumbley: I'll pivot that to Boyd. He's managing that business for us really well. So Boyd, why don't you take that question? Sure, I'd be happy to. Yeah, Brian , we are really encouraged by this segment of our business as it's

Boyd B. Chumbley: Yeah, Brian, we are really encouraged by this segment of our business. It really remained solid throughout FY24, and backlogs are currently increasing. As you noted, and we've noted in our comments, the segment did grow to 38% of total CUF sales in the fourth quarter. Now granted, that is somewhat due to residential weakness, but we have been seeing solid business here throughout our fiscal year. And with the increasing demand, we have recently initiated a capacity expansion for the roller shade category of our window treatments business, and we are establishing that output in North Carolina, one of our North Carolina operations, and that's expected to come on stream in Q2 of this year.

Boyd B. Chumbley: really remained solid throughout FY24.

Boyd Chumbley: As you noted, and we've noted in our comments, Segment did grow to 38% of total CUF sales in the fourth quarter. Granted, that is somewhat due to residential weakness, but we have been seeing a solid business here throughout our fiscal year, and with the increasing demand, we have recently initiated a capacity expansion for the roller shade category of our winded treatments business, and we are establishing that output in our North Carolina, one of our North Carolina operations, and that's expected to come on stream in Q2 this year. So we remain very excited about the prospects of this part of our business as the consumer is continuing to prioritize spending on travel and experiences and do see a good outlook for that business.

Boyd B. Chumbley: and backlogs are currently increasing.

Boyd B. Chumbley: As you noted, and we've noted in our comments, the segment did grow to 38% of total CUF sales in fourth quarter. Now, granted, that is somewhat due to residential weakness.

Boyd B. Chumbley: But we have been seeing a solid business here throughout our fiscal year and with the increasing demand we have recently initiated a capacity expansion for the roller shade category of our window treatments business.

Boyd B. Chumbley: And we are establishing that output in our North Carolina, one of our North Carolina operations and that's expected to come on stream in Q2 of this year.

Boyd B. Chumbley: So we remain very excited about the prospects of this part of our business as the consumer is continuing to prioritize spending on travel and experiences and we do see a good outlook for that business. Great, great. And anecdotally, there was some evidence that the Memorial Day weekend was a positive for mattress sales, even though May as a whole may have been flat. What have you been hearing from your customers on the demand side? I think, Brian, a good call out. We are saying that

Robert Culp: Great, great, thank you. And it clearly, there was some evidence that Memorial Day weekend was with a positive premature sale, even though as a whole may have been flat. What have you been hearing from your customer along the demand high? I think Brian could call out, we are saying that, we are hearing more and more from our customers that it's sales are getting very promotional, holiday driven, so it's not atypical for us to see boost of business around holidays and promotions, and that's a lot of those are in the summer. So we've been seeing some of that as well.

Speaker Change: Great, great, thank you. And anecdotally, there was some evidence that, you know, Memorial Day weekend was a positive for mattress sales, even though May as a whole may have been flat. What have you been hearing from your customers on the demand side?

Robert G. Culp: We're hearing more and more from our customers that sales are getting very promotional and holiday-driven. So it's not atypical for us to see boosts of business around holidays and promotions, and a lot of those are in the summer. So we've been seeing some of that as well.

Brian Gordon: I think, Brian , good call out. We are saying that. We have, we're hearing more and more from our customers that it's.

Speaker Change: Sales are getting very promotional holiday driven. So it's not atypical for us to see boosts of business around holidays and promotions and that's a lot of those are in the summer. So we have we've been seeing some of that as well. I think for us we're trying to distinguish

Robert Culp: I think for us we're trying to distinguish the excitement we have from a promo period, but also balancing that with our intensive focus on placing and winning new business. And that's happening at a very good rate in both businesses, and we, I listen, we understand the fruits and the pudding, and those seeds are being planted, and there will be days as a better market condition. And we will see improvements in both. So I think we have a lift from the holiday, and I think we have a lift from the efforts we're doing on both sides to place more products at retail.

Robert G. Culp: I think for us, we're trying to distinguish the excitement we have from a promotion period, but also balancing that with our intense focus on placing and winning new business, and that's happening at a very good rate in both businesses, and we listen, we understand the fruits and the pudding, and those seeds are being planted, and there will be days when the better market conditions prevail, we'll see improvements in both. So I think we have a lift from the holiday, and I think we have a lift from the efforts we're doing on both sides to place more, and sell more products at retail. Thank you.

Speaker Change: the excitement we have from a promo period, but also balancing that with our...

Speaker Change: intensive focus on placing and winning new business. And that's happening.

Speaker Change: at a very good rate in both businesses and we.

Speaker Change: Listen, we understand the fruits of the pudding.

Speaker Change: And those seeds are being planted, and there will be days as the better market condition, we'll see improvements in both. So, I think we have a lift from the holiday, and I think we have a lift from the efforts we're doing on both sides to place more products at retail.

Robert Culp: Thank you. Obviously, new product introductions have been really important from a margin perspective, especially given the compression that inflation and higher cost have had in recent quarters. As investors are kind of thinking about the business. First of all, where are your terms of pricing of the new products versus your targets, and when we're thinking about fiscal year 25 or revenues beyond? What percentage of sales are going to come from these new placements and new and innovative products?

Brian Gordon: Obviously, new product introductions have been really important from a margin perspective, especially given the compression that inflation and higher costs have had on recent quarters. As investors are kind of thinking about the business, first of all, where are you in terms of, you know, pricing of the new products versus your targets? And when we're thinking about, you know, fiscal year 25, revenues, and beyond, what percentage of sales are going to come from these kind of new placements and new and beta products?

Speaker Change: Thank you. Obviously, new product introductions have been really important from a margin perspective, especially given, you know, the compression that inflation and higher costs have had in recent quarters.

Speaker Change: as investors are kind of thinking about the business.

Speaker Change: First of all, where are you in terms of like, you know, pricing of the new products?

Speaker Change: versus your targets. And when we're thinking about like, you know, fiscal year 25, revenues and beyond, what percentage of, you know, sales are going to come from these kind of new placements and new and beta products?

Robert Culp: It's a good question, and let's break that down by business. We did a better job through cost pressure when we had raw material and freight and other pressures. We did a better job passing those prices on in a poultry factory. This was before Tommy's joining Colt. He had a transformation process underway in the mattress side to move our underperforming products to better margins, either through a skew rationalization or just price adjustment. And he's in the middle of that now. I'll let you tell you how far he's in that. We still need to exit or change margin on older skews, making great progress and the strategies underway in a big way.

Brian Gordon: It's a good question, and let's break that down by business. We did a better job through cost pressure. When we had raw materials and freight and other pressures, we did a better job passing those prices on in upholstery fabrics. This was before Tommy joined Culp.

Speaker Change: It's a good question and let's break that down by business.

Speaker Change: We did a better job through cost pressure.

Speaker Change: When we had raw material and freight and other pressures, we did a better job passing those prices on in upholstery fabrics. This was before Tommy's joining Culp.

Robert G. Culp: He had a transformation process underway in the mattress side to move our underperforming products to better margins, either through askew rationalization or just price adjustment, and he's in the middle of that now. I'll let him tell you how far he's got. We still need to exit, or change margin on, older SKUs, but we are making great progress, and the strategy is underway in a big way. So Tommy, I don't know how you feel where you are in it.

Speaker Change: He had a transformation process underway.

Speaker Change: to in the mattress side to move our underperforming products to better margins either through a skew rationalization or just price adjustment. And he's in the middle of that now. He can, I'll let him tell you how far he's in that.

Speaker Change: We still need to exit.

Speaker Change: or Change Margin on Older SKUs, making great progress.

Tommy Bruno: Tommy, I don't know how you feel where you are in it. I know it's moving every day. Maybe some advice for Brian. Absolutely. Brian, one other element of the business restructuring that we've announced is that in moving our business to a sourcing model, it's allowing us to rationalize our skews and move to a better degree of profitability as a result of lowering our fixed expense. So the business restructuring is pushing a portion of our portfolios before we rationalize by the end of calendar Q3.

Speaker Change: and the strategy is underway in a big way. So Tommy, I don't know how you feel, where you are in it. I know it's moving every day. Maybe some advice for Brian . Yeah, absolutely.

Tommy Bruno: I know it's moving every day, but maybe some advice for Brian. Yeah, absolutely. So Brian, one other element of the business restructuring that we've announced is that in moving our business to a sourcing model, it's allowing us to rationalize our SKUs and move to a better degree of profitability as a result of lowering our fixed expenses. So the business restructuring is pushing a portion of our portfolio to be fully rationalized by the end of calendar Q3. And then I think we're about halfway to our objective on the other portion of the business that will be manufactured in North America on a continuing basis. Okay, okay, thank you.

Speaker Change: So, Brian , one other element of the business restructuring that we've announced is that in moving our business to a sourcing model, it's allowing us to rationalize our skews and move to a better degree of profitability as a result of lowering our fixed expense.

Speaker Change: So, the business restructuring is pushing a portion of our portfolio to be fully rationalized by the end of calendar Q3, and then I think we're about halfway to our objective on the other portion of the business that will be manufactured in North America on a continuing basis.

Brian Gordon: And then I think we're about halfway to our objective on the other portion of the business that will be manufactured in North America on a continuing basis. Okay, okay, thank you.

Brian Gordon: One final question, if I may. There's also been reports about both freight surcharges and potentially anticipated delays with shipping, especially coming out of Asia. Any comments on how this, you know, potentially is going to affect you guys in fiscal 25? Yeah, Brian, this is Boyd. And thanks for the question. We certainly have experienced some of this with the global route changes that took place to avoid the Suez Canal.

Speaker Change: Okay, thank you. One final question, if I may. There's also been reports about both freight surcharges and potentially anticipated delays with shipping, especially coming out of Asia. Any comments on how this, you know, potentially is going to affect you guys in fiscal 25?

Boyd Chumbley: Yeah, Brian, this is Boyd, and thanks for the question. We certainly have been experiencing some of this with the global route changes that took place to avoid the Suez Canal. I'd say that generally has increased transit times by probably two weeks. And we have been seeing some delays, both of our own and certainly with some of our customers that we ship direct to, some delays in getting equipment and vessel space. But I'll say it really hasn't had any significant impact to us at this point. We've been successfully managing through this by adjusting our supply chain and logistics planning.

Boyd B. Chumbley: I'd say that generally has increased transit times by probably two weeks. And we have been seeing some delays, both of our own and certainly with some of our customers that we ship direct to, some delays in getting equipment and vessel space. But I'll say it really hasn't had any significant impact on us at this point.

Boyd B. Chumbley: Yeah Brian , this is Boyd and thanks for the question. We certainly have been experienced some of this with the global route changes.

Boyd B. Chumbley: that took place to avoid the Suez Canal. I'd say that generally has increased transit times by probably two weeks.

Boyd B. Chumbley: And we have been seeing some delays, both of our own and certainly with some of our customers that we ship direct to, some delays in getting equipment and vessel space.

Boyd B. Chumbley: We've been successfully managing through this by adjusting our supply chain and logistics planning, and it really had no real significant disruption to deliveries anywhere. As you noted, certainly costs have been escalating since, you know, earlier this calendar year because of all these factors, but they're still below the peaks that we saw in 21 and 22.

Boyd B. Chumbley: But I'll say it really hasn't had any significant impact to us at this point. We've been successfully managing through this by adjusting our supply chain and logistics planning.

Boyd Chumbley: And it really had no real significant disruption to deliveries anywhere. As you noted, certainly calls have been escalating since earlier this calendar year because of all these factors. But there's still below the peaks that we saw in 21 and 22. So, at this point, we're just continuing to monitor, and we'll, of course, take any appropriate steps as required depending on how that plays out from here.

Boyd B. Chumbley: And it really had no real significant disruption to deliveries anywhere. As you noted, certainly costs have been escalating since earlier this calendar year.

Boyd B. Chumbley: Because of all these factors, but they're still below the peaks that we saw in 21 and 22.

Brian Gordon: So at this point, you know, we're just continuing to monitor, and we'll, of course, take any appropriate steps as required depending on how that plays out from here. Thank you. And thank you everyone for the very generous time that you've allocated to my questions. I'll let anyone else ask questions at this point.

Boyd B. Chumbley: So, at this point, you know, we're just continuing to monitor and we'll, of course, take any appropriate steps as required, depending on how that plays out from here.

Brian Gordon: Thank you. And thank you, everyone, for the very generous time that you've allocated me a question.

Speaker Change: Thank you and thank you everyone for the very generous time that you've allocated to my question. I'll let anyone else ask questions at this point. Thank you. Thank you, Brian . Appreciate you.

Operator: I'll let anyone else ask questions at this point. Thank you.

Operator: Thank you, Brian. Appreciate you.

Operator: Thank you. Thank you, Brian. I appreciate you. The next question is from John Dasher with Pinnacle. Please go ahead. Hi, good morning. Thanks for taking my question. Most of my questions have been answered, I guess. What remains is the $10 to $12 million from proceeds from real estate and equipment. How does that break down in terms of Mix?

John Desher: The next question is from John Desher with Pinnacle. Please go ahead. Hi, good morning.

Speaker Change: The next question is from John Dasher with Pinnacle. Please go ahead.

John Desher: Thanks for taking my question. Most of my questions have been answered. I guess the one remaining is the append 12 million from proceeds of real estate and equipment. I was not break down in terms of mix. What percentage would be real estate and what percentage would be equipment, roughly?

John Dasher: Hi, good morning. Thanks for taking my question. Most of my questions have been answered. I guess the one remaining is the $10 to $12 million from

John Dasher: How does that break down in terms of mix? What percentage would be real estate and what percentage would be equipment, roughly?

John Dasher: What percentage would be real estate and what percentage would be equipment? Yeah, John, this is Ken. It's 10 to 12 relating to the real estate, and we said two and a half for the equipment. Oh, I just said, okay, so 10 to 12 for real estate plus two and a half for equipment. Correct, correct, that's right, and the 10 to 12 for real estate. How did you get to that number?

Kenneth Bowling: Yeah, John, this is Ken. It's 10 to 12 relating to the real estate, and we said two and a half from the equipment. Oh, I just said, okay, so 10 to 12 for real estate plus two and a half for equipment. Correct, correct. And the 10 to 12 for the real estate. How did you get to that number? I mean, it appraisals.

Kenneth R. Bowling: Yeah, John , this is Ken. It's 10 to 12 relating to the real estate and we said two and a half from the equipment.

Speaker Change: Oh, I just thought, okay, so 10 to 12 for real estate, plus two and a half for equipment. Correct, correct.

Speaker Change: And the 10 to 12 for the real estate, how did you get to that number, I mean, appraisals, how did you get to the number and at what point...

John Desher: How did you get to the number?

John Desher: And at what point do you actually sell the real estate? Obviously, you market it in advance, but at what point can you actually sell it once you put things out?

Speaker Change: Do you actually sell the real estate? Obviously, you market it in advance, but at what point can you actually...

Kenneth Bowling: Yeah, John, this is Ken again. It's, you know, we've looked at, you know, several different ranges as far as the sales opportunity up there. We've worked with our broker on that. We worked with our tax partners on determining our tax liability. You know, there's different aspects of unwinding the business up there. So that 10 to 12 is an estimate and range of potential scenarios. And that's kind of where it failed. You know, we again, we've already engaged a broker and we started that process. Obviously, you know, there's some things to get the plant and, you know, obviously get our, get our restructuring completed, get the plant in shape.

Kenneth R. Bowling: I mean, Appraisals, uh... How did you get to the number, and at what point do you actually sell the real estate? Obviously, you market it in advance, but at what point can you actually sell it once your equipment is out? Yeah, John, this is Ken again. We've looked at several different ranges as far as the sales opportunity up there, and we worked with our broker on that.

Speaker Change: Sell a bunch of equipment and go.

Kenneth R. Bowling: Yeah, John , this is Ken again. It's, you know, we've looked at, you know, several different ranges, as far as the sales opportunity up there. We've worked with, with our broker on that. We worked with our

Kenneth R. Bowling: tax partners on determining our tax liability. You know, there's different aspects of unwinding the business up there. So, that 10 to 12 is an estimate in a range of potential scenarios.

Kenneth R. Bowling: And that's kind of where it fell.

Kenneth R. Bowling: You know, we again, we've already engaged a broker and we started that process. Obviously, you know, there's some things to get the plant and, you know, obviously get our

Kenneth Bowling: Not much to do there, but there's some things we need to do to get everything ready. So all that's in motion right now.

Kenneth R. Bowling: We've got our restructuring completed, get the plant in shape, not much to do there but there's some things we need to do to get everything ready. So all that's in motion right now and as we said in the prepared remarks, we hope to get it sold before the end of the year.

Kenneth Bowling: And, as we said in the prepared remarks, we hope he had us sold before the end of the year. Good. So the broker is actually marketing it now. He is in the process of getting materials ready and reaching out to contacts.

Speaker Change: Okay, so the broker is actually marketing it now.

Speaker Change: He is in the process of getting materials ready and reaching out to contacts.

Kenneth Bowling: It's a little, John, a little tricky for us. This is it. Tommy's a little tricky only because we're still winding down the facility and servicing our customers for products that we have placed there. Just getting things structured. So that takes a little time. Every indication we have is there's a lot of interest in the building. So we just need to get, we need to phase down, line down, exit, and then just get it marketed. And then Ken's range is just an all-after-tax kind of net. So it feels like a good range. We hopefully will, you know, hopefully move as quickly as we can, and all indications seem positive.

Speaker Change: Okay.

Speaker Change: It's a little tricky for us. This is Ib. Tommy is a little tricky only because we're still winding down the facility and servicing our customers for products that we have placed there. Just getting things structured. So that takes...

Speaker Change: A little time. Every indication we have is there's a lot of interest in the building, so we just need to get, we need to phase down, wind down, exit, and then just get it marketed, and then Ken's range is just an all after tax kind of net.

Speaker Change: So, it feels like a good range, hopefully we'll move as quick as we can and all indications seem positive.

John Desher: Okay. Just to be clear, I mean you've had appraisals done on the property. Yes, oh yes, sir. Yes. Okay. All right. Great.

Speaker Change: Just to be clear, you've had appraisals done on the property? Yes. Oh, yes, sir. Yes. Okay. Okay.

John Desher: I appreciate it. Good luck. Thank you.

Speaker Change: All right, great. I appreciate it. Good luck.

Operator: This concludes our question and answer session.

Speaker Change: Thank you. Thank you.

Robert Culp: I would like to turn the conference back over to IvCulp for any closing remarks. Thank you, operator. And I look forward to updating everyone on our progress next quarter.

Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Iv Culp for any closing remarks.

Robert G. Culp: Thank you, Operator. And again, thank you for your participation and your interest in Culp. We look forward to updating everyone on our progress next quarter. Have a great day.

Operator: Have a great day.

Operator: The conference is now concluded. Thank you for attending today's presentation.

Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Anthony Lebiedzinski: You may now disconnect. Anthony Lebiedzinski, Dru Anderson, Culp, Boyd Chumbley, Anthony Lebiedzinski, Dru Anderson, Culp, Boyd Chumbley, Anthony Lebiedzinski, Dru Anderson, Culp, Anthony Lebiedzinski, Dru Anderson, Culp. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: Thanks for watching!

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Kenneth R. Bowling: We worked with our tax partners on determining our tax liability. You know, there's different aspects of unwinding the business up there. So that 10 to 12 is an estimated range of potential scenarios. And that's kind of where it failed.

Speaker Change: Good morning, and welcome to the Culp Incorporated 4th Quarter Fiscal 2024 Earnings Conference Call. All participants will be in listen-only mode.

Speaker Change: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: After today's presentation, there will be an opportunity to ask questions.

Speaker Change: To ask a question, you may press star, then 1 on your telephone keypad.

Operator: Please note this event is being recorded.

Speaker Change: To withdraw your question, please press star then 2.

Dru Anderson: I would now like to turn the conference over to Dru Anderson. Please go ahead. Good morning and welcome to the Culp conference call to review the company's results for the fourth quarter in fiscal 2024 year. As we start, let me state that this morning's call will contain forward-looking statements about the business, financial conditions, and prospects of the company. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results, or otherwise are not statements of historical facts. The actual performance of the company could differ materially from that indicated by the forward-looking statements because of various risks and uncertainties.

Kenneth R. Bowling: You know, we've already engaged a broker, and we started that process. Obviously, you know, there are some things to get the plant and, you know, obviously, get our restructuring completed, get the plant in shape. Not much to do there. But there are some things we need to do to get everything ready.

Speaker Change: Please note, this event is being recorded.

Speaker Change: I would now like to turn the conference over to Dru Anderson. Please go ahead.

Kenneth R. Bowling: So all that's in motion right now. And as we said in the prepared remarks, we hope to get it sold before the end of the year. Okay, so the broker is actually marketing it now. He is in the process of getting materials ready and reaching out to contacts. It's a little tricky for us. This is it.

Dru L. Anderson: Good morning and welcome to the Culp conference call to review the company's results for the fourth quarter in fiscal 2024 year.

Tommy Bruno: It's a little, Tommy's a little tricky only because we're still winding down the facility and servicing our customers for products that we have placed there, just getting things structured. So that takes a little time. Every indication we have is there's a lot of interest in the building, so we just need to get it, we need to phase down, wind down, exit, and then just get it marketed, and then Ken's range is just an all-after-tax kind of net. So it feels like a good range.

Dru L. Anderson: As we start, let me state that this morning's call will contain forward-looking statements about the business, financial condition, and prospects of the company.

Dru L. Anderson: Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results, or otherwise, are not statements of historical fact.

Dru L. Anderson: The actual performance of the company could differ materially from that indicated by the forward-looking statements because of various risks and uncertainties.

Dru Anderson: These risks and uncertainties are described in our regular FEC filings, including the company's most recent filings on Form 10-K and Form 10-Q. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations and financial results.

Dru L. Anderson: These risks and uncertainties are described in our regular SEC filings, including the company's most recent filings on Form 10-K and Form 10-Q .

Dru Anderson: Your caution not to place undue reliance on forward-looking statements made today, and each such statement speaks only as up today.

Dru Anderson: We undertake no obligation to update or to revise forward-looking statements. In addition, during this call the company will be discussing non-GAAP financial measurements. A reconciliation of these non-GAAP financial measurements to the most directly comparable GAAP financial measurement is included in the tables to the press release. Included as an exhibit to the company's 8-K file yesterday and posted on the company's website at colp.com. A slide presentation on the company's restructuring plan is also available on the company's website as part of the webcast of today's call.

Dru L. Anderson: In addition, during this call, the company will be discussing non-GAAP financial measurements.

Robert Culp: I will now turn the call over to IvCulp, President and Chief Executive Officer of Culp. Please go ahead. Good morning, and thank you for joining us today.

Kenneth R. Bowling: We hopefully will, you know, hopefully move as quick as we can, and all indications seem positive. Just to be clear, I mean, you've had appraisals done on the property. Yes. Oh, yes, sir. Yes.

John Dasher: All right, great. I appreciate it. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Iv Culp for any closing remarks. Thank you, Operator.

Robert Culp: I would like to welcome everyone to the quarterly conference call with analysts and investors. With me on the call are Ken Bowling, Chief Financial Officer; Boyd Chumbley, President of our Upholstery Fabrics Business; and Tommy Bruno, President of our Mattress Fabrics Business. I will begin the call with some detailed comments, and as mentioned in the introduction, we have posted a slide presentation to our investor relations website that covers information related to our restructuring plan, which I will speak about in detail today. Ken will then review the financial results for the quarter and the full year, and after that I'll briefly review our business outlook as we turn the page to fiscal 2025, and we will take some questions.

Robert G. Culp: Good morning and thank you for joining us today. I would like to welcome everyone to the Culp Quarterly Conference Call with Analysts and Investors.

Robert G. Culp: And again, thank you for your participation and your interest in Culp. We look forward to updating everyone on our progress next quarter. Have a great day.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. [inaudible] ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good morning, and welcome to the Culp Incorporated 4th Quarter Fiscal 2024 Earnings Conference Call. All participants will be in listen-only mode.

Robert G. Culp: I will begin the call with some detailed comments, and as mentioned in the introduction, we have posted a slide presentation to our investor relations website that covers information related to our restructuring plan, which I will speak about in detail today.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2.

Dru L. Anderson: Please note, this event is being recorded. I would now like to turn the conference over to Dr. Dru Anderson. Please go ahead.

Dru L. Anderson: Good morning, and welcome to the Culp conference call to review the company's results for the fourth quarter of fiscal 2024. As we start, let me state that this morning's call will contain forward-looking statements about the business, financial condition, and prospects of the company. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results, or otherwise, are not statements of historical facts.

Robert G. Culp: Ken will then review the financial results for the quarter and the full year.

Robert G. Culp: And after that, I'll briefly review our business outlook as we turn the page to Fiscal 2025, and we will take some questions.

Robert Culp: Our sales and operating results for the fourth quarter were in line with our expectations announced on May 1st, 2024, when we also announced our comprehensive restructuring actions. Our results for Q4 reflected weakness and industry demand in both of our businesses, driven primarily by ongoing macroeconomic headwinds. Our sales performance for fourth quarter was also affected to some degree by the timing of orders, as many of our larger customers experienced extremely slow conditions beginning in January. Looking back, we posted solid year-over-year sales gains in both of our business segments during our fiscal third quarter, and we were making progress towards our stated improvement goals.

Robert G. Culp: Our sales and operating results for the fourth quarter were in line with our expectations announced on May 1st, 2024, when we also announced our comprehensive restructuring actions.

Robert G. Culp: Our results for Q4 reflected weakness in industry demand in both of our businesses.

Robert G. Culp: driven primarily by ongoing macroeconomic headwinds.

Robert G. Culp: Our sales performance for fourth quarter was also affected to some degree by the timing of orders as many of our larger customers experienced extremely slow conditions beginning in January .

Robert G. Culp: Looking back, we posted solid year-over-year sales gains in both of our business segments during our fiscal third quarter.

Robert G. Culp: Looking back, we posted solid year-over-year sales gains in both of our business segments during our fiscal third quarter, and we were making progress towards our stated improvement goal. However, we experienced a significant decline in order levels during our fourth quarter related to demand pressures our customers faced early in the calendar year.

Robert G. Culp: And we were making progress towards our stated improvement goals.

Robert Culp: However, we faced a significant decline in order levels during our fourth quarter related to demand pressures our customers faced early in the calendar year. The impact on fourth quarter revenue, along with the ongoing macroeconomic pressure, led us to take aggressive action to bring our manufacturing costs and capacity in line with current and expected demand. We announced a wide-ranging restructuring planning early May with a primary focus on our mattress fabric segment, and we are making steady progress on the execution of this restructuring initiative. The announced adjustments, once fully implemented, will enable us to grow more efficiently and profitably with a lower level of fixed costs.

Robert G. Culp: However, we face a significant decline in order levels during our fourth quarter related to demand pressures our customers faced early in the calendar year.

Robert G. Culp: The impact on fourth quarter revenue along with the ongoing macro pressure led us to take aggressive action to bring our manufacturing costs and capacity in line with current and expected demand.

Robert G. Culp: We announced a wide-ranging restructuring plan in early May with a primary focus on our mattress fabric segment and we are making steady progress on the execution of this restructuring initiative.

Robert G. Culp: The announced adjustments, once fully implemented, will enable us to grow more efficiently and profitably with a lower level of fixed costs.

Robert Culp: Importantly, these strategic steps do not limit our ability to grow the business, but instead allow us to better optimize our global mix of manufacturing capabilities and long-term sourcing partners. I also want to be sure and emphasize that we are extremely grateful for the support we ever see for our valued customers, suppliers, and employees, and we are confident that the strength of these relationships will help drive our recovery.

Robert G. Culp: Importantly, these strategic steps do not limit our ability to grow the business.

Robert G. Culp: But instead, allow us to better optimize our global mix of manufacturing capabilities and long-term sourcing partners.

Robert Culp: I'll have much more to come on restructuring actions momentarily.

Robert Culp: Lee. I do want to comment that despite the mentioned headwinds and challenging macro conditions, there were some positive indicators within Culp's business during fiscal 24, including, first, a significant year-over-year operating improvement, albeit still lost and below our intended targets. And second, consistent and continued operating profits in our is significantly improved over last year, even when considering the tough industry condition, thanks to a more profitable mix of sales, better inventory management, improved exchange rates, and reduced fixed costs.

Robert Culp: Another highlight for policy fabrics is the sales performance of our hospitality offerings, making up 38% of total segment sales in Q4. While this percentage is skewed by a weaker residential fabric industry environment, our hospitality fabric and window treatment businesses are solid, and we are expanding our roller-shade capacity in production in the first quarter to North Carolina.

Robert Culp: We believe there's much to be excited about within Culp's poultry fabrics. The third positive indicator is the year-over-year sales growth in our mattress fabric segment. While we are not where we intend to be, the year-over-year performance in mattress fabrics is indicative of our improving market position, focusing on winning new placements with margins in line with current costs. And fourth, we have a strong product innovation in product placements in both segments at improved pricing. Position us for a return to higher sales growth as micro-conditions improve. We are encouraged by both of our businesses, and with our restructuring actions well underway, we believe we are on track to return to profitability post-restructuring, even if market conditions remain at their currently depressed levels.

Robert Culp: We also maintain the silent balance sheet and a $10 million cash position at the end of the fourth quarter, with a focus on prudent financial management, and we are taking proactive steps to ensure the long-term success of our business. We are diligently focused on executing our restriction initiatives and therefore strengthening our balance sheet, optimizing our operations and cost structure, and supporting our customers, while also continuing to win new placements with our innovative product portfolio.

Robert Culp: I'd now like to circle back and discuss further detail on our restructuring actions that are better aligned in our business. Again, there's a new slide deck posted on our Investor Relations page to help illustrate the process. Our plan is comprehensive and involves every facet of our business within both divisions. The vast majority of actions taken are within mattress fabrics, cold home fashions, but are a view of everything was necessary in this challenging macro environment. The plan was announced on May 1st and commensurately communicated to employees, customers, and vendors. The summary and key takeaway of the plan is we are reducing our North American footprint by closing our mattress fabric weaving, knitting, and finishing facility in Canada, and optimizing our production capacity and overhead into our Stokesdale, North Carolina location.

Robert Culp: As part of this, our damask weaving business will transition to a sourcing model, primarily with a long-term manufacturing partner. We are also consolidating our operations in Haiti, located on the Dominican Republic-Haiti border, into a smaller footprint with just one building. These operational changes reduce our mattress fabric employee base by approximately 240 people, or 35% of the segments so to work for us. While these are very difficult decisions, they are necessary to align our costs with current demand and better position Cope for the future. We have already initiated severance and stay bonus agreements with effective employees, and we are working to optimize our production facilities and sourcing strategies.

Robert Culp: Productive work is already occurring with our partners on our damask weaving transition, and we are organizing floor space to prepare for knitting and finishing equipment relocation to North Carolina. Our cut and sew operations in Haiti have been consolidated, and the restructuring of our upholstery fabric finishing operation in Asia is complete. We have also chosen a broker to sell our Canadian facilities, and we intend to exit and sell that facility in the second half of our fiscal year. And hopefully by the end of calendar year 2024, but of course the timing of that will be dependent on the market and interest for the building.

Robert Culp: More details of the actions in a general timeline can be found on page 5 of the newly posted restructuring deck.

Robert Culp: Beyond this comprehensive restructuring, our expectation is to return to profitability on a monthly basis sometime in the second half of fiscal 25. Our plan estimates 10 to $11 million in annualized cost and productivity savings, mostly via the mattress fabric division, but we are also expecting $1 million to $1.5 million in annualized savings from reductions with an unallocated corporate and shared services. We expect to incur approximately $8 million in restructuring-related charges, but importantly only $2.5 million of these charges are cash charges, most of which will be incurred in the first half of fiscal 25. We anticipate funding these cash charges, mostly from the sale of excess equipment, and then we also expect $10 to $12 million after-tax proceeds from the sale of our Canadian facility.

Robert Culp: A cash and liquidity update, as well as a restated FY24 mattress fabrics hypothetical pro forma on operating income that assumes the restructuring was already completed, are shown on the new slide deck on pages 6 and 7. The expected benefit of our restructuring actions on both profitability and liquidity is evident, and this is all assuming no lift and market demand. We are restructuring the business to return to profitability in this current environment. We are also preparing coal to be much stronger as in when demand conditions normalize. Also want to reiterate that nothing in our plan prevents us from growing the business.

Robert Culp: and Thomas. Through this process, we are maintaining our preferred network of manufacturing and sourcing capabilities in the United States, Turkey, China, Vietnam, and Haiti. Our North American platform will be more efficient and optimized, and we will complement that strong international options. As we look ahead to fiscal 25, we expect industry conditions will remain pressured for some time, but we believe our fiscal 24th quarter revenue levels represented a bottom point for Culp. We have seen some increased sales conditions, some Memorial Day holiday and mattress fabrics, and that combined with our improved market position in both businesses is driving some sequential sales growth into Q1 of FY25.

Robert Culp: We are fortunate to call up to have an experienced leadership team focused on improvement and growth, and we have navigated many challenges throughout our 52 years. We have strong long-term partnerships with customers and vendors, and emphasis on product innovation, leading to an improving market position, a strategic manufacturing and sourcing platform, and, most importantly, a solid balance sheet with available liquidity. We believe the strategic actions we are taking will position us for profitable growth opportunities, and we remain committed to delivering sustainable results and enhancing value for our shareholders over the long term.

Kenneth Bowling: I will now turn the call over to Ken, who will review the financial results for the quarter, and then I will review the limited outlook we are providing as we look ahead into fiscal 2025. Thanks, if here are the financial highlights of the fourth quarter, net sales are 49.5 million, down 19.4% compared with the prior year period. The company reported a loss from operations of 4.2 million, which included 204,000 in Restructuring Expense, as compared with a loss from operations of 4 million for the prior year period, which included 70,000 in Restructuring Expense.

Kenneth Bowling: I will comment on more detail on the visual sales and operating performance in a moment. Net loss for the fourth quarter was 4.9 million, or 39 cents per diluted share, compared with the net loss of 4.7 million, or 38 cents per diluted share for the prior year period. Our overoperative performance for the fourth quarter, as compared to the prior year period, was primarily pressured by lower sales in both divisions, as well as operating inefficiencies in the match of fabric segment during the quarter, and a one-time customer payment received during the fourth quarter of last fiscal year that did not reoccur this fiscal year.

Kenneth Bowling: Offsetting some of the operating pressure was lower, as she may expenses due primarily to lower incentive compensation.

Kenneth Bowling: For the full fiscal year, net sales were 225.3 million, down 4.1% compared to the previous year. The loss from operations for the full fiscal year was 11.3 million, which included 676,000 in Restruction and Related Expense during the period, compared with a loss from operations of 28.5 million for the prior year, which included approximately 9.9 million related to certain inventory impairment and other charges and Restruction Related Expenses during the period. Net loss for the full fiscal year was 13.8 million, or $1.11 per diluted share, compared with a net loss of 31.5 million, or $2.57 per diluted share for the prior year.

Kenneth Bowling: Robert Culp. Operating performance for the year, as compared to the prior year period, which was pressured by inventory impairment charges and restructuring-related charges, was positively affected by a favorable product mix, improved inventory management, a favorable forwarding change rate in China, and lower fixed costs. These factors were partially offset by lower sales during the year, as well as production inefficiencies related to certain new product launches in the mattress fabric segment.

Kenneth Bowling: Adjusted EBITDA for the 12-month period with Q4 was a negative 3.4 million, as compared to adjusted EBITDA of a negative 19 million for the comparable prior year period. The effective income tax rate for the fourth quarter of this fiscal year was a negative 19.8 percent compared to the negative 20.6 percent for the same period a year ago. The effective income tax rate for fiscal 2024 was a negative 28.3 percent, compared to the negative 11 percent for the prior fiscal year. Our effective income tax rate for the fourth quarter and for the full fiscal year continues to be impacted by the company's mix of earnings between our US and four subsidiaries, with an operating loss in the US, while China and Canada generate income that was taxed at a higher rate as compared to the US.

Kenneth Bowling: Now let's take a look at our business segments. For the mattress fabric segment, sales for the fourth quarter were 25.8 million, down 16.1 percent compared to last year's fourth quarter. Sales were pressured during the quarter by further weakness in the domestic mattress industry driven by a challenging macroeconomic environment that is affecting consumer discretionary spending.

Kenneth Bowling: Operating loss for the quarter was $2.9 million compared to an operating loss of $2.5 million a year ago. Our operating performance for the quarter was primarily pressured by lower sales and operating inefficiencies.

Kenneth Bowling: For the opposed to fabric segment, sales for the fourth quarter were 2.3.8 million, down 22.6 percent over the prior period. Sales for our residential fabric business were lower than the prior period, driven mostly by further weakening in residential home furnishing sales, as well as the timing of the Chinese New Year holiday, which this year failed primarily in the fourth quarter rather than the third quarter. Additionally, approximately 3 percent of the 22.6 percent declining sales was related to a one-time customer payment received during the fourth quarter last year that did not re-occur this year. Hospitality contract business during the fourth quarter accounted for approximately 38 percent of the opposed to fabric segments total sales.

Kenneth Bowling: Income from operations for the quarter was 975,000 compared with income from operations of 1.6 million a year ago. Operating income margin for the quarter was 4.1 percent compared with 5.2 percent a year ago. Our operating performance for the fourth quarter this year, as compared to the prior period, was primarily pressured by lower sales and the one-time customer payment noted earlier. Excluding the one-time payment from last year, operating income of this year's fourth quarter would have been higher compared to prior period.

Kenneth Bowling: Now let me turn to the balance sheet. Re-reported 10 million total cash and no outstanding debt as of the end of this fiscal year. Cash flow from operations and free cash flow were a negative 8.2 million and a negative 10.8 million, respectively, for this fiscal year. As expected, our cash flow from operations and free cash flow during this fiscal year were pressured by operating losses and plans strategic investments in capital expenditures mostly related to the mattress fabric transformation plan. Importantly, both segments have done a solid job of managing the key components of working capital: accounts receivable, inventory, and accounts payable.

Kenneth Bowling: Capital expenditures were 3.7 million for the year compared with 2.1 million for last fiscal year. Based on current expectations, capital spending for this fiscal 2025 is expected to be approximately 4.5 million and will center mostly on maintenance, capex, and quick payback projects. Based on current expectations, depreciation for fiscal 2025 is expected to be approximately 5.5 million. With respect to the liquidity, as of the end of fiscal 2024, we had approximately 32.5 million, consisting of 10 million in cash and 22.5 million in borrowability under our domestic and foreign credit facilities. We do intend to utilize some borrowings under our domestic and/or foreign credit facilities during fiscal 2025 in connection with our restructuring activities and to plan working capital to grow the business.

Kenneth Bowling: Importantly, we still expect to maintain a positive net cash position and to plan most of the cash costs associated with the restructuring effort from the eventual sale of excess equipment. Assuming the completion of all restructuring actions and the sale of associated real estate by the end of fiscal 2025, the company currently projects its cash position as of the end of fiscal 2025 to be higher than its 10 million in cash as of the end of fiscal 2024. The company did not repurchase any shares during this fiscal year, leaving 3.2 million available under our current share repurchase program.

Robert Culp: With that, I'll turn to call over to you to discuss a general outlook for the first quarter of fiscal 2025, and then we will take your questions. Thank you, Ken. Due to the uncertainty in the macro environment, as well as a significant activity underway in connection with our restructuring initiatives, we are only providing limited financial guidance at this time. While macro demand is expected to remain challenged in the first quarter of fiscal 2025, pressuring year-over-year sales results, we do expect our consolidated net sales for the first quarter to be moderately higher as compared sequentially to the fourth quarter of fiscal 24.

Robert Culp: The sequential growth is driven by an improving market position for cult as well as some lift and sales conditions from the Memorial Day holiday. We are not providing specific first quarter operating income guidance, as there are many possible outcomes related to the timing of the restructuring and the charges and benefits that will occur. , A significant portion of this activity will affect operating results in Q1. We will update progress in our restructuring initiatives every quarter.

Robert Culp: In post-restructuring, we expect to return to a positive operating income on a monthly basis sometime in the second half of fiscal 2025.

Operator: With that, we will now take questions. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two.

Operator: At this time, we will pause momentarily to assemble our roster.

Brian Gordon: Our first question is from Brian Gordon with Water Tower Research. Please go ahead.

Brian Gordon: Good morning, everyone. Thank you for taking my questions. It's obviously been a tough quarter, but we know that the parking has been really laser focused on the restructuring and managing costs, and it definitely shows the results even with sales down significantly.

Brian Gordon: I do have several questions, though, that I want to cover about the restructuring. If in your comments, I know you touched on this a bit already, but when the restructuring was personnel, you noted that the bulk of the $8 million should be booked in the first quarter of 25. Do you have any update on the timing, the expected timing of the cash and volume cash components of these charges?

Robert Culp: Brian, good morning. Thank you for the questions. We tried to lay out a general timeline in that new restructuring deck, so we can speak to it maybe generally there. We do expect the bulk of the charges, both non-cash and cash, to be impacted in the first half. Ken, you may want to add something more towards how it lays out Q1 or a first half, or maybe we just got it the first half at this point? Yeah, it's just based on expectations of how the restructuring effort will continue, but it's mostly related to the first half.

Kenneth Bowling: We're going to push it quick, Brian. We're trying to go as rapid speed as we can, balancing service in our customers very well, transitioning equipment at the right time and the right pace. It's a significant portion in Q1, but there will be some drift into Q2, for sure.

Brian Gordon: Okay, thank you. On a similar note, do you have any update on the expected magnitude and timing of the cost savings over a second half? When we're thinking about how to model the savings, should we be expecting something like a $2 million improvement by Q4 and maybe how much should we expect for Q3?

Kenneth Bowling: Brian, this is Ken. I think the way we've laid it out, we've talked about annual life savings, and the second half of the year will definitely be improved operating results. It just depends on the timing of all the different aspects of the project, but the benefits will start coming in the plane in a second. Okay.

Brian Gordon: Thank you. Kind of following on, you know, and maybe, you know, looking out a little bit longer term. You said for mattress fabrics that your long term goals and operating income, you know, targeted something like nine to 10% or two or three years.

Robert Culp: When we think about the restructuring, how much of that longer term target do you reach to this current restructuring activities? And how much do you think is going to do? It depends on anticipated revenue growth. The good question, Brian, and yeah, you're picking up on the points very well. We do in our investor communications point to a normalized margin, operating income margin of nine to 10%. That's historically where we had wanted to be at a minimum. And what we're doing in the restructuring process is recognizing the current depressed volume in the macro industry. So the restructuring actions are generally getting us back to break even to small profitability without any change in demand.

Robert Culp: And the growth path that is based on revenue. So we feel really good about our product placements. We feel encouraged about our sales team. We're encouraged by our products and design innovation process. So we're, we know we're going to grow the business. I think we can grow the business without the industry getting better. But we also know at some point it will. So we're really, really trying to guide to returning to profitability with these actions and then banking on our product placement and macro tailwind to drive aspects of normalization.

Brian Gordon: Okay. Thank you. I'm understood.

Brian Gordon: Obviously, the part of the restructuring is moving to a more agile, you know, sourcing model for mattress fabric. And part of that is consolidating production in the Doug Stale facility and creating the Center of Excellence there. But when we think about what you're doing in terms of closing Quebec and moving some of that equipment to North Carolina. How should we think of like what percentage of the equipment in North Carolina is going to be moved to North Carolina versus how much is going to be sold. And where are you guys in that process?

Robert Culp: I can, I can pivot some of this to Tommy because he's managing this process for us daily. It's not hourly. He's working on it really hard. We have an advantage in the process. We've had kind of had to what I would consider super plants. They can do most of our production. We had North Carolina and Canada. We have generally very good equipment in both. But this process allows us to optimize the best equipment, you know, into one location. And generally, just having economies of scale across one location, one set of overhead, and just being very diligently focused, a strong North American business with very strategic, flexible sourcing options.

Tommy Bruno: So Tommy, it's to where you are in the process. You might be able to give some guidance. And it's going to be a sprint over the quarter, but maybe gotten to where we are so far. Absolutely.

Tommy Bruno: So we'll be selling 100% of our damnest weaving assets from Quebec as a part of this process. And we'll be moving roughly half of our knitting and knit finishing assets. to Stokesdale. As where we are in that process, we have to retain that equipment as we service our customers as a part of the restructuring until such time that we cease operations. We would expect that all the equipment would move to Stokesdale over the end of the third into the fourth quarter, calendar quarter, and we'll start selling equipment. We're already in the process of selling some.

Brian Gordon: We expect the rest to be sold by the end of the calendar year based on how the market is.

Brian Gordon: Okay, thank you. That's all very helpful.

Brian Gordon: I kind of want to be respectful to other scholars who might have questioned.

Brian Gordon: Do I have time, though, to ask maybe a few questions about demand in the current environment? Certainly, Brian.

Robert Culp: And I was just going to maybe add one more thing on Tommy's. I suppressed the Culp times in the States. I think it's important for investors to hear. He has a really good plan, and his team has a really good plan to optimize the equipment in the right places. But when we talk about selling some equipment and downsizing, none of that prevents us from growing the business. We have really, really solid partners. We have a really good plan to service our customers. And we expect to be able to grow the business on a lower asset base, which will be fantastic when that starts to occur.

Robert Culp: So I just want to be sure it's always very clear that we aren't. We may be scaling our internal capacity in our North American facility, but we aren't in any way losing our ability to grow the business.

Brian Gordon: Important point. Yeah, no, definitely. When you talk about the guidance in terms of like some modest sequential improvement, is that low single digits? Is that how we should be thinking about that? That's right, Ron. We've got the year-over-year parts pressured, but we do see some sequential growth there from fourth quarter to the first quarter. Right.

Brian Gordon: Okay, thank you.

Boyd Chumbley: One of the things that you both noted in your comments and released was that hospitality and contract we looked at 30 for some sales per post-straight. How much of that is, you know, winning new business versus maybe, you know, weakness in the residential financial side? I'll pivot that to Boyd. He's managing that business for us really well. So Boyd wants you to take that question. Sure, we're happy to. Yeah, Brian, we are really encouraged by this segment of our business as it's really remained solid throughout FY 24, and backlogs are currently increasing. As you noted, and we've noted in our comments, the segment did grow to 38% of total CUF sales in the fourth quarter.

Boyd Chumbley: Now, granted, that is somewhat due to residential weakness, but we have been seeing solid business here throughout our fiscal year. And with the increasing demand, we have recently initiated a capacity expansion for the roller shade category of our window treatments business. And we are establishing that output in our North Carolina, one of our North Carolina operations. And that's expected to come on stream in Q2 this year.

Boyd Chumbley: So we remain very excited about the prospects of this part of our business as the consumer is continuing to prioritize spending on travel and experiences and do see a good outlook for that business. Great.

Robert Culp: Thank you. And anecdotally, there was some evidence that Memorial Day weekend was with a positive permatrice health, even though as a whole may have been flat. What have you been hearing from your customers on the demand side? I think Brian, good to call out. We are saying that we're hearing more and more from our customers that its sales are getting very promotional, holiday-driven. So it's not atypical for us to see a boost of business around holidays and promotions, and that's a lot of those are in the summer. So we've been seeing some of that as well.

Robert Culp: I think for us we're trying to distinguish the excitement we have from a promo period, but also balancing that with our intensive focus on placing and winning new business. And that's happening at a very good rate in both businesses. And we, I listen, we understand the proofs in the pudding, and those seeds are being planted, and there will be days as the better market condition. We'll see improvements in both. So I think we have a lift from the holiday, and I think we have a lift from the efforts we're doing on both sides to place more, place more products at retail.

Robert Culp: Thank you.

Robert Culp: Obviously, new product introductions have been really important from a margin perspective, especially given the compression that inflation and higher cost have had in recent quarters. As investors are thinking about the business, first of all, where are your terms of pricing of the new products versus your targets. And when we're thinking about like, you know, Piscuit year 25, what percentage of, you know, sales are going to come from these kind of new placements and new and beta products? It's a good question. And let's break that down about business. We did a better job through cost, pressure when we had raw material and freight and other pressures.

Robert Culp: We did a better job passing those prices on, in a poultry factory. And this was before Tommy's joining Culp. He had a transformation process underway to, in the mattress side, to move our underperforming products to better margins either through a skewer rationalization or just price adjustment. And he's in the middle of that now. I'll tell you how far he is in that. We still need to exit or change margin on older skews, making great progress. And the strategy is underway in a big way. So Tommy, I don't know how you feel where you are in it.

Tommy Bruno: I know it's moving every day. Maybe some advice for Brian. Yeah, absolutely. So Brian, one other element of the business restructuring that we've announced is that in moving our business to a sourcing model, it's allowing us to rationalize our skews and move to a better degree of profitability as a result of lowering our fixed expense. So the business restructuring is pushing a portion of our portfolio to be fully rationalized by the end of calendar Q3.

Tommy Bruno: And then I think we're about halfway to our objective on the other portion of the business that will be manufactured in North America on a continuing basis.

Brian Gordon: Francis. Okay, okay, thank you.

Boyd Chumbley: Yeah, Brian, this is Boyd. And thanks for the question. And we certainly have been experiencing some of this with the global route changes that took place to avoid the Suez Canal. I'd say that generally has increased transit times by probably two weeks. And we have been seeing some delays, both of our own and certainly with some of our customers that we shift direct to, some delays in getting equipment and investable space. But I'll say it really hasn't had any significant impact to us at this point. We've been successfully managing through this by adjusting our supply chain and logistics planning.

Boyd Chumbley: And it really had no real significant disruption to deliveries anywhere. As you noted, certainly calls have been escalating since, you know, earlier this calendar year because calls have all these factors. But they're still below the peaks that we saw in 21 and 22. So at this point, you know, we're just continuing to monitor, and we'll of course take any appropriate steps as required, depending on how that plays out from here.

Brian Gordon: Thank you. And thank you, everyone, for the very generous time that you've allocated to my question. I'll wait if anyone else has questions at this point. Thank you.

Operator: Thank you, Brian. Appreciate you.

John Desher: The next question is from John Desher with Pinnacle. Please go ahead. Hi.

John Desher: Good morning. Thanks for taking my question. Most of my questions have been answered. I guess the one remaining is the 10 to 12 million from proceeds of real estate and equipment. I was not break down in terms of mix.

John Desher: What percentage would be real estate and what percentage would be equipment, roughly?

Kenneth Bowling: Yeah, John, this is Ken. It's 10 to 12 relating to the real estate. And we said, "two and a half" from the equipment. Oh, I just said, okay, so 10 to 12 for real estate plus two and a half for equipment. Correct. And the 10 to 12 for the real estate.

John Desher: How did you get to that number? I mean, it appraisals.

John Desher: How did you get to the number?

Kenneth Bowling: And at what point do you actually sell the real estate? Obviously, you market it in advance. But at what point can you actually sell it once you put things out?

Kenneth Bowling: Yeah, John, this is Ken again. We've looked at several different ranges. As far as the sales opportunity up there, we've worked with our broker on that. We worked with our tax partners on determining our tax liability. There's different aspects of unwinding the business up there. So that 10 to 12 is an estimate and range of potential scenarios. And that's kind of where it failed. You know, we again, we've already engaged a broker and we started that process. Obviously, you know, there's some things to get the plant, and obviously get our restructuring completed. Get the plant in shape.

Kenneth Bowling: Not much to do there, but there's some things we need to do to get everything ready. So all that's in motion right now.

Kenneth Bowling: And, as we said in the prepared remarks, we hope to get it sold before the end of the year. Okay, so the burger is actually marketing it now. He is in the process of getting materials ready and reaching out to contacts.

Kenneth Bowling: It's a little tricky for us.

Kenneth Bowling: This is it. Tommy's a little tricky only because we're still winding down the facility and servicing our customers for products that we have placed there, just getting things structured. So that takes a little time. Every indication we have is there's a lot of interest in the building. So we just need to get, we need to phase down, line down, exit, and then just get it marketed, and then Ken's range is just an all-after-tax kind of net. So it feels like a good range. We hopefully will, you know, hopefully move as quickly as we can, and all indications seem positive.

John Desher: Okay, just to be clear, I mean you've had appraisals done on the property. Yes. Oh, yes, sir. Yes. Okay.

John Desher: All right. Great.

John Desher: I appreciate it. Good luck. Thank you.

Operator: This concludes our question and answer session.

Robert Culp: I would like to turn the conference back over to IvCulp for any closing remarks. Thank you, operator. And again, thank you for your participation in your interest in Culp. We look forward to updating everyone on our progress next quarter. Have a great day.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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