Q1 2025 Culp Inc Earnings Call

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Operator: First quarter, fiscal 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please to know 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 and then one on your touch to your telephones. So withdraw your questions. You may press star and two. There's also no kidding. Event is being recorded.

Speaker Change: Good morning everyone and welcome to the Culp Inc. 1st quarter fiscal 2025 earnings conference call.

Speaker Change: All participants will be in a listen-only mode. Should you need assistance? Please send a little comfort 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: The ask of question, you may press star and then one on your touchdown telephones. So withdraw your questions, you may press star and two.

Dru Anderson: At this time, I'd like to turn the floor over to Dru Anderson, and please go ahead. Thank you. Good morning and welcome to the conference call to review the company's results for the first quarter of fiscal 2025.

Speaker Change: Wilson O'Klee's event is being recorded.

Speaker Change: At this time, I'd like to turn the floor over to Dru Anderson, and please go ahead.

Dru Anderson: Thank you. Good morning and welcome to the call conference call to review the company's results for the first quarter of fiscal 2025. 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 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. Forward-looking statements or statements that include projections, expectations, or beliefs about future events or results, or otherwise are not statements of historical fact. 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 can.

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

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

Speaker Change: These risk and uncertainties are described in our regular SEC filings, including the company's most recent filings on Form 10K and Form 10Q.

Dru Anderson: Currently considered 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.

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

Speaker Change: You are caution not to place undue reliance on forward-looking statements made today and each such statement speaks only as up-to-day. 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 followed yesterday and posted on the company's website at COP.com. A slide presentation on the company's restructuring plan is also available on the website as part of the webcast of today's call.

Speaker Change: In addition, during this call, the company will be discussing non-gap financial measurements. A reconciliation of these non-gap financial measurements, probably yesterday, and posted on the company's website at called.com.

Speaker Change: A slide presentation on the company's restructuring plan is also available on the website as part of the webcasts of today's call.

Dru Anderson: I will now turn the call over to Is COP. President and Chief Executive Officer of COP. Please go ahead.

Speaker Change: I will now turn the call over to Isculp, President and Chief Executive Officer of Culp. Please go ahead.

Is COP: Thank you, Drew, and good morning, and thanks to everyone for joining us today. I would like to welcome you to the COP quarterly conference call with analysts and investors. With me on the call, are Ken Bowling, our Chief Financial Officer, Mary Beth Hunsberger, President of our Apollo Chief Fabrics Business, and Tommy Bruno, the President of our Mattress Fabrics Business.

Speaker Change: Shhh!

Isculp: Thank you, Dru, and good morning and thanks to everyone for joining us today.

Isculp: I would like to welcome you to the Col. Quarterly Conference Call with analysts and investors.

Speaker Change: With me on the call, our Ken Bowling, our Chief Financial Officer, Mary Beth Huntsberger, President of our Poleshoot Fabric Business, and Tommy Bruno, the President of our Matcher Stabric Business.

Is COP: Today I will begin the call with some detailed comments, and as mentioned in the introduction, we have posted an updated slide presentation to our investor relations website that covers information related to our restructuring plan, which I will refer to today. Ken will then review the financial results for the quarter, and after that, I'll briefly discuss our business outlook for the second quarter of fiscal 25, and we will then take some questions.

Operator: First quarter, fiscal 2025 earnings conference call. All participants will be in a listen only mode. Should you need assistance? Please send to 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 and then one on your touch to your telephones. So withdraw your questions. You may press star and two.

Operator: You also know today's event is being recorded.

Speaker Change: Today, I will begin to call with some detailed comments and as mentioned in the introduction, we have posted an updated slide presentation to our Investor Relations website that covers information related to our restructuring plan, which I will refer to today.

Speaker Change: Ken will then review the financial results for the quarter and after that I'll briefly discuss our business outlook for the second quarter of fiscal 25 and we will then take some questions.

Is COP: Before starting, I would first like to express our sympathy to the family of Bud Bugage on his recent passing. Bud was a friend to many of us personally and certainly to call. We appreciate Bud's coverage for close to 40 years, and we learned much from him about the larger furniture industry. Bud's talents, expertise, and heart were unique, and we will miss him. We look forward to the continuing relationship with Water Tower Research, and we appreciate their handling of a tough situation. To turn into our first quarter, our sales results reflected strong sequential improvement is compared to last quarter, with mattress fabric sales at 9% and a post-requit fabric sales at 19.7%.

Dru Anderson: At this time, I'd like to turn the floor over to Dru Anderson and please go ahead. Thank you.

Speaker Change: Before starting, I would first like to express our sympathy to the family of Bud Boogatch on his recent passing.

Dru Anderson: Good morning and welcome to the Culp conference call to review the company's results for the first quarter, a fiscal 2025. 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 or statements that include projections, expectations, or beliefs about future events or results, or otherwise are not statements of historical fact. The actual performance of the company could differ materially from that indicated by the forward looking statements because of various risks and uncertainties.

Speaker Change: Bowling was a friend to many of us personally and certainly to Culp.

Speaker Change: We appreciate his buzz coverage for close to 40 years, and we learned much from how about the larger furniture industry.

Dru Anderson: These risks and uncertainties are described in our regular SEC filings, including the company's most recent filings on form 10K and form 10Q. Additional risks and uncertainties that we do not presently know about, or that we can see the results. Currently considered to be immaterial may also affect our business operations and financial results. You are caution 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.

Speaker Change: Buds, talents, expertise, and heart, where you meet and we will miss him.

Speaker Change: We look forward to the continuing relationship of the Water Tower Research and we appreciate their handling of a tough situation.

Speaker Change: To turn into our first quarter.

Speaker Change: Our sales results reflected strong sequential improvement is compared to last quarter. With mattress fabric sales at 9% and a poultry fabric sales at 19.7%.

Is COP: While we continue to experience challenge macro industry conditions, our sequential sales growth was better than expected, and year-over-year consolidated sales were flat despite the overall industry weakness. These impressive sales results are largely driven by our improving market position in both businesses. Our innovative styling, our dedicated and talented personnel, and our diverse and robust global supply chain are all factors in growing our market share. We have discussed previously that we believe our most recent quarter, or Q4 of FY24, was the bottom point for our sales levels. When we are pleased to see this growth in our first quarter.

Speaker Change: While we continue to experience challenge macro industry conditions

Speaker Change: Our sequential sales growth was better than expected, and year-over-year consolidated sales were flat despite the overall industry weakness.

Speaker Change: These impressive sales results are largely driven by our improving market position in both businesses.

Speaker Change: Our innovative styling, our dedicated intelligence personnel, and our diverse and robust global supply chain are all factors in growing on market share.

Dru Anderson: In addition, during this call, the company will be discussing non-gap financial measurements, a reconciliation of these non-gap financial measurements followed 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 website as part of the webcast of today's call.

Speaker Change: We have discussed previously that we believed our modest recent quarter, or Q4 of FY24, was the bottom point for our sales levels.

Is COP: As we look beyond Q1, we believe the impact of our new placements will allow us to recover at a faster rate than market recovery. Our compulsory fabric segment delivered a significant improvement in operating income both year over year and sequentially, with 6% operating margins for the quarter. The strategic actions we have taken in this segment are working, as we have reduced our cost structure while maintaining and enhancing our ability to grow sales. And we are able to reach normalized margins quicker, even in this pressure of the macro environment. The actions we have taken over the last year have lowered our manufacturing costs, which give us confidence to navigate our business through a variety of environments.

Speaker Change: and we are pleased to see this growth in our first quarter.

Speaker Change: As we look beyond you, one

Speaker Change: We believe the impact of our new placements will allow us to recover in a faster rate than market recovery.

Robert Culp: I will now turn the call over to Is Culp, President and Chief Executive Officer of Culp. Please go ahead. Thank you, Drew, and good morning and thanks to everyone for joining us today. I would like to welcome you to the Culp Quarterly Conference call with analysts and investors. With me on the call, our Ken Bowling, our Chief Financial Officer, Mary Beth Hunsberger, President of our Opulsary Fabrics Business, and Tommy Bruno, the President of our Mattress Fabrics Business.

Speaker Change: Our policy fabric segment delivered a significant improvement in operating income, both year every year and sequentially, with 6% operating margins for the quarter.

Speaker Change: The strategic actions we have taken in this segment are working as we've reduced our cost structure while maintaining and enhancing our ability to grow sales.

Speaker Change: and we are able to reach normalized margins quicker even in this pressure's macro environment.

Robert Culp: Today, I will begin the call with some detailed comments, and as mentioned in the introduction, we have posted an updated slide presentation to our investor relations website that covers information related to our restructuring plan, which I will refer to today. Ken will then review the financial results for the quarter, and after that, I'll briefly discuss our business outlook for the second quarter of fiscal 25, and we will then take some questions.

Speaker Change: The actions we have taken over the last year have lowered our manufacturing calls, which give us confidence to navigate our business through a variety of environments.

Is COP: But it also provides upside with improving macro conditions. Additionally, there are several other factors supporting the solid improvement in poultry fabrics for both residential and hospitality. First, we have a strong Asia platform utilizing our tenured China operations, along with developing strategic relationships and capabilities for fabrics, as well as cutting some kits in Vietnam and also other regions. Also, our talented design and innovation team has continued to deliver superior offerings in recent seasons. We have repeated solid residential placements from Highpoint and Las Vegas furniture markets. And we are looking forward to releasing another on-trend and innovative residential product line for the Interwoven Textile Fair in November.

Speaker Change: but it also provides upside with improving macro conditions.

Speaker Change: Additionally, there are several other factors supporting the solid improvement in a post-week fabrics for both residential and hospitality.

Speaker Change: First, we have a strong Asia platform utilizing our 10-year China operations, along with developing strategic relationships and capabilities for fabrics, as well as cutting some kits and Vietnam, and also other regions.

Robert Culp: Before starting, I would first like to express our sympathy to the family of Bud Bugage on his recent passing. Bud was a friend to many of us personally and certainly to Culp. We appreciate Bud's coverage for close to 40 years, and we learned much from him about the larger furniture industry. Bud's talents, expertise, and heart were unique, and we will miss him. We look forward to the continuing relationship with water tower research, and we appreciate their handling of a tough situation.

Speaker Change: Also, our talented design and innovation team has continued to deliver superior offerings and recent seasons.

Speaker Change: We have repeated solid residential placements from high-point and Las Vegas furniture markets.

Speaker Change: and we are looking forward to releasing another on-trend and innovative residential product line for the Interwoven textile fair in November.

Is COP: Additionally, our hospitality and commercial segment is performing well, representing 33% of our upholstery business fabrics for Q1. Our hospitality fabrics have been refreshed with new patterns and colors, and we are encouraged by new opportunities and strong marches. and our Reed Window business has solid growth potential, including new roller-shaped production capacity that we established in our existing Burlington, North Carolina location at the tail end of Q1.

Robert Culp: To turn into our first quarter, our sales results reflected strong sequential improvement is compared to last quarter, with mattress fabric sales at 9% and a post-reface fabric sales at 19.7%. While we continue to experience challenge macro industry conditions, our sequential sales growth was better than expected, and year over year consolidated sales were flat despite the overall industry weakness. These impressive sales results are largely driven by our improving market position in both businesses.

Speaker Change: Additionally, our hospitality and commercial segment is performing well, representing 33% of our future business fabrics for Q1.

Speaker Change: Our hospitality fabrics have been refreshed with new patterns and colors, and we are encouraged by new opportunities and strong margins.

Speaker Change: and our Read Wind Up Business has solid drug potential, including new roller-shaped production capacity that we established in our existing Burlington North Carolina location at the tail end of Q1.

Is COP: Lastly, for a couple of upholstery fabrics, I'd like to recognize Boyd Chumbley for his recent retirement after 40 years of exemplary service. We are thankful for Boyd's many years of dedicated leadership, and we are pleased to have his ongoing support for strategic discussion and actions.

Speaker Change: Lastly for a couple of poultry fabrics, I'd like to recognize Boy Chumlee for his recent retirement after 40 years of the exemplary service.

Robert Culp: Our innovative styling, our dedicated and talented personnel, and our diverse and robust global supply chain are all factors in growing our market share. We have discussed previously that we believe our most recent quarter, or Q4 of FY24, was the bottom point for our sales levels, and we are pleased to see this growth in our first quarter. As we look beyond Q1, we believe the impact of our new placements will allow us to recover at a faster rate than market recovery.

Speaker Change: We are thankful for Boyd's many years of dedicated leadership and we are pleased to have his ongoing support for strategic discussion and actions.

Is COP: But we are equally excited to welcome Mary Beth Hunsberger to our executive team and to our call today. Mary Beth has already brought much benefit to Culp, and her strong background in finance, global operations, and brand marketing brings fresh perspectives to our solid upholstery business.

Speaker Change: But we are equally excited to welcome Mary Beth Hansberger to our executive team and to our call today.

Speaker Change: Mary Beth has already brought much benefit to Culp and her strong background in finance, global operations and brand marketing brings fresh perspectives to our solid upholstery business.

Is COP: Turning now to Culp and Fashion's, our mattress fabric segment. As expected, Q1 operating performance for the segment was pressured by manufacturing inefficiencies, primarily related to our significant restructuring activity. While this negatively and disproportionately affected operating performance for the quarter, our use of cash was minimal. With our net cash position only $560,000 lower is compared to the end of fiscal 24. Additionally, both segments reduced inventory from the end of the fiscal 24, despite the strong sequential increase in sales. We have an intense focus on managing working capital, including inventory, accounts receivable, and accounts payable, all of which benefited us in Q1.

Speaker Change: 30 now to call phone vacions are mattress fabric segment. As expected, Q1 operating performance for this segment was pressured by manufacturing inefficiencies.

Robert Culp: Our compulsory fabric segment delivered a significant improvement in operating income, both year-over-year and sequentially, with 6% operating margins for the quarter. The strategic actions we have taken in this segment are working as we have reduced our cost structure while maintaining and enhancing our ability to grow sales. And we are able to reach normalized margins quicker, even in this pressure of the macro environment. The actions we have taken over the last year have lowered our manufacturing costs, which give us confidence to navigate our business through a variety of environments, but it also provides upside with improving macro conditions.

Speaker Change: from merely related to our significant restructuring activity.

Speaker Change: While this negatively and disproportionately affected operating performance for the quarter, our use of cash was minimal. With our net cash position only $560,000 lower, it's compared to the end of fiscal 24.

Speaker Change: Additionally, both segments reduced inventory from the end of the fiscal 24 despite the strong sequential increase in sales.

Speaker Change: We have an intense focus on managing working capital, including inventory, accounts receivable and accounts payable, all of which benefited us in Q1

Robert Culp: Additionally, there are several other factors supporting the solid improvement in a poultry fabrics for both residential and hospitality. First, we have a strong Asia platform utilizing our tenured China operations, along with developing strategic relationships and capabilities for fabrics, as well as cutting some kits and Vietnam, and also other regions. Also, our talented design and innovation team has continued to deliver superior offerings in recent seasons. We have repeated solid residential placements from Highpoint and Las Vegas furniture markets, and we are looking forward to releasing another on-trend and innovative residential product line for the interwoven textile fair in November.

Is COP: I was very pleased to see both businesses post strong sequential sales increases, along with reduced inventory. We are also encouraged by the progress of our mattress fabric's restructuring actions.

Speaker Change: I was very pleased to see both businesses post strong sequential sales increases along with reduced inventories.

Is COP: As we discussed last quarter, we announced a wide-ranging restructuring plan in early May with the primary focus on our mattress fabric segment. The announced adjustments, once fully implemented, will enable us to operate more efficiently and properly with a lower level of fixed costs and without limiting our ability to grow the business. While mattress fabric's operating results are being pressured by these restructuring actions in the first half of the year, especially in the first quarter, we believe we are on schedule to deliver the targeted outcomes from the restructuring plan, including a consolidated return to near-break even adjusted EBITDA in the second quarter and a return to positive consolidated adjusted operating income in the third quarter.

Speaker Change: We are also encouraged by the progress of our mattress fabrics restructuring actions.

Speaker Change: As we discussed last quarter, we announced a wide-ranging restructuring plan in early May, with the primary focus on our Master's Fabric segment.

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

Speaker Change: and without limiting our ability to grow the business.

Speaker Change: While mattress fabric stop-brain results are being pressured by these restructuring actions in the first half of the year, especially in the first quarter.

Robert Culp: Additionally, our hospitality and commercial segment is performing well, representing 33% of our upholstery business fabrics for Q1. Our hospitality fabrics have been refreshed with new patterns and colors, and we are encouraged by new opportunities and strong marches, and our Reed Window business has solid growth potential, including new roller-shaped production capacity that we established in our existing Burlington, North Carolina location at the tail end of Q1.

Speaker Change: We believe we are on schedule to deliver the targeted outcomes from the restructuring plan.

Speaker Change: including a consolidated return to near-break even adjusted EBITDA in the second quarter, and a return to positive consolidated adjusted operating income in the third quarter.

Is COP: mattress fabric's improvement is the critical catalyst to our consolidated recovery. As we rationalize our capacity, reduce fixed cost, and increase efficiency, we expect to make significant improvements to our financial results even without typical sales growth from the macro market recovery. This point is illustrated mathematically in a hypothetical example on page 6 of our posted updated restructuring deck. Our mattress fabric's restructuring is a comprehensive undertaking that impacts people, plant consolidations, equipment relocation, and process improvements. and Thomas. But with it, we are successfully low in our cost structure despite weak demand, and we look forward to meeting our state of objectives.

Speaker Change: Matches fabrics improvement is the critical catalyst to our consolidated recovery.

Speaker Change: As we rationalize our capacity, reduce fixed cost and increase efficiency, we expect to make significant improvements to our financial results even without typical sales growth from the macro market recovery.

Robert Culp: Lastly, for a couple ofholstery fabrics, I'd like to recognize Boyd Chumbley for his recent retirement after 40 years of exemplary service. We are thankful for Boyd's many years of dedicated leadership, and we are pleased to have his ongoing support for strategic discussion and actions.

Speaker Change: This point is illustrated mathematically in a hypothetical example on page 6 of our posted updated restructuring deck.

Robert Culp: But we are equally excited to welcome Marybeth Hunsberger to our executive team and to our call today. Marybeth has already brought much benefit to Culp and her strong background in finance, global operations and brand marketing brings fresh perspectives to our solid upholstery business.

Speaker Change: Our match of service restructuring is a comprehensive undertaking that impacts people, plant consolidations, equipment, relocation and process improvements.

Speaker Change: But with it, we are successfully lowering our call structure despite week to man and we look forward to meeting our state objectives.

Is COP: We are thankful for our dedicated employees and the leadership of Tommy Bruno and his team as they exfute our plan to return to profitable operating results post-restructuring. Also want to emphasize that we are grateful for the support we have received from our valued customers and suppliers during this process. We are confident that the strength of these relationships is helping to drive our recovery. It is our goal to transition and consolidate our operating facilities effectively without disruption to any program or any customer. The scale and scope of our mattress fabric restructuring cannot be overstated. It's a dynamic process, but one that will be a creative.

Speaker Change: We are thankful for our dedicated employees on the leadership of Tommy Bruno and his team as they execute our plan to return the profitable operating results post restructuring.

Robert Culp: Turning now to Culp and Vashans, our mattress fabric segment. As expected, Q1 operating performance for the segment was pressured by manufacturing inefficiencies, primarily related to our significant restructuring activity. While this negatively and disproportionately affected operating performance for the quarter, our use of cash was minimal. With our net cash position only $560,000 lower, it's compared to the end of fiscal 24. Additionally, both segments reduced inventory from the end of the fiscal 24 despite the strong sequential increase in sales.

Speaker Change: Also want to emphasize that we are grateful for those support we have received from our value customers and suppliers during this process.

Speaker Change: and we are confident that the strength of these relationships are helping to drive our recovery.

Speaker Change: It is our goal to transition and consolidate our operating facilities effectively, without disruption to any program or any customer.

Speaker Change: The scale and scope of our mattress fabric for drug strain cannot be overstated.

Is COP: We are dramatically enhancing our business platform in the current environment and with our growing market position driven by innovation and styling, along with improving operational activities and best-in-class manufacturing and sourcing capabilities. We believe we are very well positioned for the future.

Speaker Change: It's a dynamic process, but one that will be a creative.

Robert Culp: We have an intense focus on managing and working capital, including inventory, accounts receivable and accounts payable, all of which benefited us in Q1. I was very pleased to see both businesses post strong sequential sales increases along with reduced inventory. We are also encouraged by the progress of our mattress fabric's restructuring actions. As we discussed last quarter, we announced a wide-ranging restructuring plan in early May, with the primary focus on our mattress fabric segment.

Speaker Change: We are dramatically enhancing our business platform in the current environment, and with our growing market position driven by innovation and styling along with improving operational activities and best-in-class manufacturing and sourcing capabilities.

Is COP: I also again just remind everyone that we've updated our restructuring slide deck that is posted on the Investor Relations page. As we've discussed before, this slide deck is to help illustrate the details of our restructuring plan, including the actions being taken and the expected financial impact. Since we announced this restructuring plan on May 1st, we have completed the consolidation of our Haiti-sown mattress cover operation, which is located on the northeast border of the Dominican Republic. And we have already reduced our cost and established steady run schedules. This platform serves an important piece of our mattress fabrics cut and sew supply chain for new short capacity.

Speaker Change: We believe we are very well positioned for the future.

Robert Culp: The announced adjustments, once fully implemented, will enable us to operate more efficiently and profitably with a lower level of fixed costs and without limiting our ability to grow the business. While mattress fabric's operating results are being pressured by these restructuring actions in the first half of the year, especially in the first quarter, we believe we are on schedule to deliver the targeted outcomes from the restructuring plan, including a consolidated return to near-break even adjusted EBITDA in the second quarter, and a return to positive consolidated adjusted operating income in the third quarter, mattress fabric's improvement is the critical catalyst to our consolidated recovery.

Speaker Change: Also again to remind everyone that we've updated our restructuring slide deck that is posted on the investor relations page.

Speaker Change: As we've discussed before, this slide deck is to help illustrate the details of our restructuring plan.

Speaker Change: including the actions being taken in the expected financial impact.

Speaker Change: Since we announced this reception plan on May 1st, we have completed the consolidation of our Haiti-Sone mattress cover operation.

Speaker Change: which is located on the North East border of the Dominican Republic.

Speaker Change: and we have already reduced our cost and established steady run schedules.

Speaker Change: This platform serves an important piece of our mattress fabrics cut and sew supply chain for new shore capacity.

Is COP: We have also completed the rationalization of our upholstery fabrics finishing operation in China to deliver more efficient operations and reduced costs. The consolidation of our North American mattress fabrics operation is well underway, including the phase one down enclosure of our manufacturing facility in Canada, in the planned relocation of some knitting and finishing equipment to our facility in North Carolina. Also, we are making excellent progress in transitioning our damage-queuing business to a sourcing model, primarily with one of our long-term dedicated manufacturing partners. We are encouraged by the pace of these transitions, and we expect both will be largely completed by the end of our fiscal Q2.

Speaker Change: We have also completed the rationalization of our upholstery fabric, finishing operation in China, delivering more efficient operations and reduced calls.

Speaker Change: The consolidation of North American mattress fabric separation is well underway, including the phase wind down enclosure of our manufacturing facility in Canada, in the planned relocation of some knitting and finishing equipment to our facility in North Carolina.

Robert Culp: As we rationalize our capacity, reduce fixed costs and increase efficiency, we expect to make significant improvements to our financial results even without typical sales growth from the macro market recovery. This point is illustrated mathematically in a hypothetical example on page 6 of our posted updated restructuring deck. Our mattress fabric's restructuring is a comprehensive undertaking that impacts people, plant consolidations, equipment relocation and process with us. But with it, we are successfully low in our cost structure despite weak demand, and we look forward to meeting our state of objectives.

Speaker Change: Also, we are making an excellent progress and transition our damage-gleaving business to a sourcing model, primarily one of our long-term, dedicated manufacturing partners.

Speaker Change: We are encouraged by the pace of these transitions.

Is COP: We have also listed for sale and are actively marketing and showing our Canadian facility, and we intend to exit and sell that facility in the second half of our fiscal year. But of course, the timing of that will be dependent on the market and interest for the building. More details of the actions and general timeline can be found on page 4 of the update of Restructuring Day.

Speaker Change: and we expect both will be largely completed by the end of our fiscal Q2.

Speaker Change: We've also listed for sale and are actively marketing and showing our Canadian facility.

Speaker Change: and we tend to exit and sell that facility in the second half of our fiscal year.

Robert Culp: We are thankful for our dedicated employees on the leadership of Tommy Bruno and his team as they execute our plan to return to profitable operating results post-restructuring. Also want to emphasize that we are grateful for the support we have received from our value customers and suppliers during this process. We are confident that the strength of these relationships are helping to drive our recovery. It is our goal to transition and consolidate our operating facilities effectively without disruption to any program or any customer.

Speaker Change: 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 in a general timeline can be found on page 4 of the updated Restructuring Day.

Is COP: Beyond this comprehensive restructuring, our expectation is to return to positive, consolidated, adjusting, operating income, excluding restructuring and related charges, sometime in the third quarter of fiscal 25. Chris. Our plan estimates 10 to $11 million in annualized cost and productivity savings from the restructuring, mostly via the mattress fabric division, but we are expecting close to $1 million in annualized savings from reductions within unallocated corporate and shared services. Based on the restructuring activities that have been completed, along with updated estimates on those that remain underway, we now expect to incur total restructuring-related charges of $5.1 million, of which $3 million are now expected to be cash charges.

Speaker Change: Beyond this comprehensive restructuring, our expectation is to return to positive, consolidated, adjusting, operating income.

Speaker Change: Excluding Restructuring and Related Charges is some time in the third quarter of fiscal 25.

Speaker Change: Our plan estimates ten to eleven million dollars in annual last cost and productivity savings from the restructuring, mostly via the mattress service division, but we are expecting close to one million dollars in annual last savings from reductions within unallocated corporate and shared services.

Robert Culp: The scale and scope of our mattress fabric restructuring cannot be overstated. It's a dynamic process but one that will be a creative. We are dramatically enhancing our business platform in the current environment, and with our growing market position driven by innovation and styling, along with improving operational activities and best in-class manufacturing and sourcing capabilities, we believe we are very well positioned for the future. I also again just remind everyone that we have updated our restructuring slide deck that is posted on the investor relations page.

Speaker Change: Based on the restructuring activities that have been completed, along with updated estimates on those that remain underway, we now expect to incur total restructuring related charges of $5.1 million.

Is COP: We expect most of these charges will be incurred in the first half of Fiscal 25. We also anticipate funding approximately $2 million of the cash calls with proceeds from the sale of excess manufacturing equipment and proceeds from building lease termination in Haiti, and we currently expect approximately $9 to $10 million of tax proceeds from the sale of our Canadian facility. A cash and liquidity update is shown on flat five of the updated restructuring slide deck. The expected benefit of our restructuring actions on both profitability and liquidity is evident. This is all again assuming no lifts and market demand.

Speaker Change: of what $3 million are now expected to be cash charges.

Speaker Change: We expect most of these charges will be incurred in the first half of fiscal 25.

Robert Culp: As we have discussed before, this slide deck is to help illustrate the details of our restructuring plan, including the actions being taken and the expected financial impact. Since we announced this restructuring plan on May 1st, we have completed the consolidation of our Haiti-Sown mattress cover operation, which is located on the northeast border of the Dominican Republic, and we have already reduced our cost and established steady run schedules. This platform serves an important piece of our mattress fabrics cut and sew supply chain for new short capacity.

Speaker Change: We also anticipate funding approximately $2 million of the cash costs with proceeds from the sale of excess manufacturing equipment and proceeds from a building lease termination in Haiti.

Speaker Change: and we currently expect approximately $9 to $10 million of after-tax proceeds from the sale of our Canadian facility.

Speaker Change: A cash and liquidity update is shown on flat 5 of the updated restructuring flat deck.

Speaker Change: The expected benefit of our restructuring actions on both profitability and liquidity is evident. This is all, again, assuming no list in market demand.

Is COP: So looking ahead and summarizing, we are encouraged by one, our solid and improving market position in both businesses; two, our consistently profitable upholstery fabrics business; three, expected further improvement in our hospitality fabrics and weed windowed businesses; and four, the steady progress we are making to restructuring our mattress fabrics business, which we believe is setting us up for a strong future in that business. We anticipate macro industry conditions may remain pressured during fiscal 25, although we also believe there is some stabilizing of industry trends. Market dynamics have been pressured for some time, so we are pleased to see some demand consistency.

Robert Culp: We have also completed the rationalization of our upholstery fabrics finishing operation in China, which will be more efficient operations and reduced costs. The consolidation of North American mattress fabrics operation is well underway, including the phase 1 down enclosure of our manufacturing facility in Canada, in the planned relocation of some knitting and finishing equipment to our facility in North Carolina. Also, we are making excellent progress in transitioning our damas-queeding business to a sourcing model, primarily with one of our long-term dedicated manufacturing partners.

Speaker Change: no

Speaker Change: So we're going to head and summarize and we are encouraged by one, our solid and improving mark of position in both businesses.

Speaker Change: 2, are consistently profitable across your family's business.

Speaker Change: 3 expected further improvement in our hospitality fabrics and weed, weed, windowed businesses.

Speaker Change: and Fourth, the steady progress we are making to restructure our mattress fabrics business, which we believe is setting us up for a strong future in that business.

Speaker Change: We anticipate macro-industry conditions may remain pressure during fiscal 25th.

Speaker Change: Although we also believe there is some stabilizing of industry trends.

Robert Culp: We are encouraged by the pace of these transitions, and we expect both will be largely completed by the end of our fiscal Q2. We have also listed for sale and are actively marketing and showing our Canadian facility, and we intend to exit and sell that facility in the second half of our fiscal year. But of course, the timing of that will be dependent on the market and interest for the building. More details of the actions and general timeline can be found on page 4 of the update of Restructuring Day.

Speaker Change: Market Deaf Dynamics have been pressured for some time, so we are pleased to see some demand consistency.

Is COP: Admittedly, it can be difficult to decide for the catalyst for demand, as we believe a good portion of our sequential revenue increase is due to our improving market position, and we expect that to continue. We are thinking the toughest macro conditions are behind us, but even if they are not, we believe the restructuring adjustments we have made in both businesses will allow us to perform well in the current depressed environment. Specifically, operational improvements in mattress fabrics, as we discussed, are critical to our consolidated recovery, and we were encouraged to see some improvements beginning to materialize late in Q1, and we expect this trend to continue throughout the year.

Speaker Change: Admittedly, it can be difficult to decipher the catalyst for demand as we believe a good portion of our sequential revenue increase is due to our improving market position. And we expect that to continue.

Speaker Change: We are thinking the toughest macro conditions are behind us, but even if they are not, we believe the restructuring adjustments we have made in both businesses will allow us to perform well in the current depressed environment.

Robert Culp: Beyond this comprehensive restructuring, our expectation is to return to positive, consolidated, adjusting, operating income, excluding restructuring and related charges sometime in the third quarter of fiscal 25. Debt. Our plan estimates 10 to $11 million in annualized cost and productivity savings from the restructuring, mostly via the mattress service division, but we are expecting close to $1 million in annualized savings from reductions within unallocated corporate and shared services. Based on the restructuring activities that have been completed, along with updated estimates on those that remain underway, we now expect to incur total restructuring related charges of $5.1 million, of which $3 million are now expected to be cash charges.

Speaker Change: Specifically, operational improvements in mattress fabrics as we discussed are critical to our consolidated recovery. And we were encouraged to see some improvements beginning to material lives late in Q1.

Is COP: Again, we anticipate the strategic actions we are taking will position us for a return to profitability at current demand levels and further growth opportunities as market conditions improve.

Speaker Change: and we expect this trend to continue throughout the year.

Speaker Change: Again, we anticipate the strategic actions we are taking. We will position us for a return to profitability at current demand levels and further growth opportunities as market conditions improve.

Kenneth Bowling: With that, I will turn the call over to Ken, who will review the financial results for the quarter, and then I will review the outlook we are providing as we look ahead to the second quarter of fiscal 2025.

Speaker Change: So with that, now turn the color but it can, we will review the financial results for the quarter and then our view the outlook we're providing is we look ahead to second quarter of fiscal 2025.

Kenneth Bowling: Thanks. Here are the financial highlights for the first quarter. That sells for 56.5 million, down 0.2 percent compared with prior year period.

Dave: Thanks Dave. Here are the financial highlights for the first quarter. That sells for 56.5 million down 0.2% compared with the prior year period.

Robert Culp: We expect most of these charges will be incurred in the first half of fiscal 25. We also anticipate funding approximately $2 million of the cash calls with proceeds from the sale of excess manufacturing equipment and proceeds from a building lease termination in Haiti, and we currently expect approximately $9 to $10 million of after-tax proceeds from the sale of our Canadian facility. A cash and liquidity update is shown on slide five of the updated restructuring slide deck. The expected benefit of our restructuring actions on both profitability and liquidity is evident. This is all, again, assuming no lifts and market demand.

Kenneth Bowling: The company reported a loss of operations of 6.9 million, which included 2.7 million in restructuring expense and related charges, compared with a loss of operations of 3.1 million for the prior year period, which included 517,000 in restructuring related charges. Lewis, adjusted laws and operations with 4.1 million, comparably an adjusted laws and operations with 2.6 million for the prior period. I'll comment in more detail on the visual sales and operating performance in a moment. Net law for the first quarter was 7.3 million, or 58 cents per diluted share, compared with the net loss of 3.3 million, or 27 cents per diluted share for the prior period.

Speaker Change: The company reported a loss of operations of 6.9 million, which included 2.7 million and restructuring expense in related charges. As compared with a loss of operations of 3.1 million for the prior period, which included 517,000 and restructuring related charges.

Speaker Change: Adjusted law from operations was 4.1mm compared with an adjusted law from operations to 2.6mm for the prior period.

Speaker Change: I'll comment in more detail on the business sales and operating performance in a moment. Net loss for the first quarter was 7.3 million or 58 cents per diluted share compared with a net loss of 3.3 million or 27 cents per diluted share per year period.

Robert Culp: So looking ahead and summarizing, we are encouraged by one, our solid and improving market position in both businesses, two are consistently profitable upholstery fabrics business, three, expected further improvement in our hospitality fabrics and weed window businesses, and four, the steady progress we are making to restructuring our mattress fabrics business, which we believe is setting us up for a strong future in that business. We anticipate macro industry conditions may remain pressured during fiscal 25, although we also believe there is some stabilizing of industry trends.

Kenneth Bowling: Our overall operating performance for the first quarter as compared to the prior period was pressured by inefficiencies primarily related to the significant restructuring activity underway in the matches fabric segment. Offset somewhat by increased gross profit in our post-Ufabrics business and lower SCNA expenses, mainly related to lower incentive compensation expense and lower professional fees. Adjusted EBITDA for the 12-month period ending with Q1 with a negative 5.7 million as compared to the Adjusted EBITDA of a negative 16.7 million with a comparable prior period, 66% improvement. The effective income tax rate for the first quarter of this fiscal year was a negative 3.4 percent, compared with a negative 26.5 percent for the same period a year ago.

Speaker Change: Our overall operating performance for the first quarter has compared to the prior period, was pressured by inefficiencies primarily related to significant restrictions activity underway in the match's fabric segment, offset somewhat by increased gross profit in our policy fabrics business and lower SNA expenses.

Speaker Change: Mimi related to Lawrence in his conversation, expense and lower professional fees.

Speaker Change: Adjusted EBITDAF for the 12-month period ending for Q1 was a negative 5.7 million as compared to Adjusted EBITDAF and negative 16.7 million with a comparable prior period, only 66% improvement.

Robert Culp: Market dynamics have been pressured for sometime, so we are pleased to see some demand consistency. Admittedly, it can be difficult to decide for the catalyst for demand, as we believe a good portion of our sequential revenue increase is due to our improving market position. And we expect that to continue. We are thinking the toughest macro conditions are behind us, but even if they are not, we believe the restructuring adjustments we have made in both businesses will allow us to perform well in the current depressed environment.

Speaker Change: The effect of income tax rate for the first quarter of this fiscal year was a negative 3.4%.

Kenneth Bowling: Our effective income tax rate for the quarter continues to be impacted by the company's mix of earnings between our U.S. and foreign city areas with an operating loss in the U.S. and taxable income mostly from China, which has a higher income tax rate compared to the U.S.

Speaker Change: Compare with the negative 26.5% for the same period of year ago.

Speaker Change: Our effective income tax rate for the quarter 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. and tax will income mostly from China, which has a higher income tax rate compared to the U.S.

Kenneth Bowling: 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 first quarter, which 28.1 million, down 3.9 percent compared to last year's first quarter. Sequentially, sales were up 9 percent compared to the prior quarter. While year-over-year self is affected by weakness in the domestic mattress industry, the sequential improvement in sales was driven by higher order levels, which we believe are indicative of CHS product innovation and improving market position. Operating loss for the quarter was $3.5 million compared with an operating loss of $1.4 million a year ago.

Robert Culp: Specifically, operational improvements in mattress fabrics, as we discussed, are critical to our consolidated recovery, and we were encouraged to see some improvements beginning to materialize late in Q1, and we expect this trend to continue throughout the year. Again, we anticipate the strategic actions we are taking will position us for a return to profitability at current demand levels and further growth opportunities as market conditions improve.

Speaker Change: Expected casting contacts payments for fiscal 2025 will not be given at this time due to the restructuring effort.

Speaker Change: Now let's take a look at our business segments for the mattress fabric segment cell for the first quarter, which 28.1 million, down 3.9% compared to last year's first quarter, sequentially cells were up 9% compared to the prior quarter.

Speaker Change: While year over yourselves, respected by weakness in the domestic mattress industry, the sequential improvement in sales was driven by higher order levels, which we believe are indicative of CHS product innovation and improving market position.

Kenneth Bowling: So with that, now turn the call over to Ken, who will review the financial results for the quarter, and then I will review the outlook we are providing as we look ahead to second quarter of fiscal 2025. Thanks, Ed. Here are the financial highlights for the first quarter. Net sales for 56.5 million down 0.2% compared with prior year period. The company reported a loss of operations of 6.9 million, which included 2.7 million in restructuring expense and related charges, as compared with a loss of operations of 3.1 million for the prior year period, which included 517,000 in restructuring Lewis, Adjustive Laws from Operations with 4.1 million, Comparably with an Adjustive Laws from Operations with 2.6 million for the prior period.

Speaker Change: Operating loss of the quarter was 3.5 million compared with an operating loss of 1.4 million a year ago.

Kenneth Bowling: Our operating performance for the quarter was pressured by lower sales volumes and manufacturing inefficiencies, including inefficiencies related to the significant restructuring initiatives to wind down CHS Canadian operation and move certain Indian equipment to our Stokesdale, North Carolina facility. For the opposite fabric segment, sales for the first quarter were 28.5 million, up 3.7 percent over the prior year period. Sequentially, sales were up 19.7 percent compared with the prior quarter. Sales for our residential fabric business and hospitality contract fabric business, including Reed Window, were both higher than the prior year period and higher sequentially, driven by stronger demand and, with respect to sequential improvement in residential fabric, partially affected by the timing of the Chinese New Year, which pressured sales during last year's fourth quarter.

Speaker Change: Our operating performance for the Florida was pressured by lower sales volumes and manufacture and inefficiencies, including inefficiencies related to the significant restructuring initiatives to wind down CHF, Canadian operation and move certain equipment to our Stokesdale and work your own facility.

Speaker Change: for the Apostle Fabric segment sells for the first quarter, which 28.5 men up 3.7% of the prior year period. So, points linked sales were up 19.7% compared with the prior quarter.

Kenneth Bowling: I'll comment in more detail on the visual sales and operating performance in a moment. Net loss for the first quarter was 7.3 million or 58 cents per diluted share, compared with the net loss of 3.3 million or 27 cents per diluted share for the prior period. Our overall operating performance for the first quarter, as compared to the prior period, was pressured by inefficiencies primarily related to the significant restructuring activity underway in the matches Fabric segment.

Speaker Change: Sales for our Residential Fabric Business and Hospitality Contracts Fabric Business, including Reed Windows, were both higher than the prior year period and higher sequentially driven by Stronger Demand.

Speaker Change: and with respect to substantially improvement in residential fabric, partially affected by the timing of the Chinese New Year, which prefecture sales during the last year's fourth quarter.

Kenneth Bowling: Offset somewhat by increased gross profit in our post-Ufabrics business and lower SNA expenses, mainly related to lower incentive compensation expense and lower professional fees. Adjusted EBITDA for the 12-month period ending with Q1 with a negative 5.7 million as compared to the Adjusted EBITDA of a negative 16.7 million with a comparable prior period, 66% improvement. The effective income tax rate for the first quarter of this fiscal year was a negative 3.4%, compared with a negative 26.5% for the same period a year ago.

Kenneth Bowling: Hospitality contract business during the first quarter counted for approximately 33 percent of the opposing fabric segment's total sale.

Speaker Change: Apostle, I contract business during the first quarter count for a process of 33% of the

Kenneth Bowling: Jones. Income from operations to the quarter was 1.7 million, compared with income from operations of 1.3 million a year ago. Operating margin for the quarter was 6%, compared with 4.8% a year ago, an increase of 120 basis points. This year of your improvement is driven by higher sales, lower fixed costs, and lower SG&A offset somewhat by higher freight costs.

Speaker Change: Income from my operation, since the quarter was 1.7 million, compared with the income from my operation as a 1.3 million a year ago.

Speaker Change: Operating at margin for the port of a 6% compared with 4.8% a year ago in increase of the 120 basis ports.

Speaker Change: This year of your improvements driven by higher sales, lower fixed costs, and lower SNA offset somewhat by higher freight costs.

Kenneth Bowling: Now let me turn to the balance sheet. We reported 13.5 million total cash and 4 million out of any debt under our China credit line as of the end of the first quarter. Cash flow from operations and free cash flow are negative 206,000 and a negative 550,000, respectively, for the quarter, compared with cash flow from operations and free cash flow of 4.4 million and a negative 4.2 million, respectively, for the same period last fiscal year. Our cash flow from operations and free cash flow during the quarter were driven by operating losses, partially offset by lower working capital, mainly from low inventory balances and plans for teaching investments in capital expenditures, mostly related to the mattress fabric segment.

Bowling: Now let me turn as a Bowling, Chief.

Speaker Change: We report a 13.5-main in total cash and 4-main in now Sanidad under our China credit line as of the end of the first quarter.

Kenneth Bowling: Our effective income tax rate for the quarter continues to be impacted by the company's mix of earnings between our U.S, and foreign city areas with an operating loss in the U.S, and taxable income mostly from China, which has a higher income tax rate compared to the U.S.

Speaker Change: Casual from Operations and Free Casual in negative 206,000 and in negative 550,000, and respectively for the quarter, compared with Casual from Operations and Free Casual in negative 4.4, and negative 4.2 million, respectively for the same period last fiscal year.

Kenneth Bowling: Expected cash income tax payments for fiscal 2025 will not be given at this time due to the restructuring effort.

Speaker Change: Our castle from operations and pre-castle during the quarter were driven by operating losses, partially offset by lower working capital mainly from lower inventory balances, and plans for teaching investments in capital expenditures, mostly related to the mattress fabric segment.

Kenneth Bowling: Now let's take a look at our business segments for the mattress fabric segment. Sales for the first quarter were 28.1 million down 3.9% compared to the last year's first quarter. Sequentially sales were up 9% compared to the prior quarter.

Kenneth Bowling: Both segments continued to do an effective job managing working capital during very challenging business conditions. Capital expenditures for the first three months of this fiscal year were 501,000. Based on current expectations, capital spending for this fiscal year is projected to be approximately 4.8 million and will center mostly on maintenance catbacks and quick payback projects that will increase efficiencies and improve quality, especially the mattress fabric segment. Based on current expectations, depreciation for this fiscal year is expected to be approximately 5.4 million. With respect to liquidity, as of the end of the first quarter, we had approximately 32.7 million, consisting of 13.5 million in cash and 19.2 million in borrow availability under our domestic credit facility.

Speaker Change: Bow segments continue to do an effective job managing working capital during very challenging business conditions.

Kenneth Bowling: While year over your sales were affected by weakness in the domestic mattress industry, the sequential improvement in sales was driven by higher order levels, which we believe are indicative of CHS product innovation and improving market position. Operating loss for the quarter was 3.5 million compared with an operating loss of 1.4 million a year ago.

Speaker Change: Catholic Stages for the first three months of this fiscal year, 5,000-1000.

Speaker Change: Based on current expectations, capital spending for this fiscal year is projected to be a approximately 4.8 million and we'll see our mostly on maintenance cat backs and quick payback projects that will increase efficiencies and improve quality, especially with a massive fabric segment.

Kenneth Bowling: Our operating performance for the quarter was pressured by lower sales volumes and manufacturing inefficiencies, including inefficiencies related to the significant restructuring initiatives to wind down CHS Canadian operation and move certain Indian equipment to our Stokesdale North Carolina facility.

Speaker Change: Based on current expectations, depreciation for this year's expected BF5.4 name.

Speaker Change: With respect to liquidity, as of the end of the first quarter, we had approximately 32.7 million consisting of 13.5 million in cash and 19.2 million in borough availability under our domestic credit facility.

Kenneth Bowling: As noted earlier, we also had 4 million and borrowings outstanding under our China credit line as of the end of the quarter. As we selected the borrowings outstanding, we do intend to utilize some borrowings under our domestic and or foreign credit facilities during this fiscal year in connection with our restructuring activities and to fund worldwide working capital to grow the business. Importantly, we still expect to maintain a positive net cash position and to fund approximately 2 million of the cash costs associated with the restructuring from the eventual sale of excess equipment and proceeds from a building lease termination in Haiti.

Kenneth Bowling: For the opposite fabric segment, sales for the first quarter were 28.5 million up 3.7% over the prior year period. Sequentially sales were up 19.7% compared with the prior quarter.

Speaker Change: As noted earlier, we also have 4 million borrowings outstanding under a China credit line as of the end of the quarter.

Speaker Change: As reflect in the Bowling's outstanding, we do intend to utilize some borrowings under a domestic and or four credit facilities during this fiscal year and connection with our restructuring activities and to fund worldwide working capital to grow the business.

Kenneth Bowling: Sales for our residential fabric business and hospitality contract fabric business, including read window were both higher than the prior year period and higher sequentially driven by stronger demand and with respect to sequentially improvement in residential fabric, partially affected by the timing of the Chinese New Year which pressure sales during the last year's fourth quarter. Hostile contract business during the first quarter count for a proxy 33% of the opposing fabric segments total sales.

Speaker Change: Importantly, we still expect to maintain a positive net cast position and to find approximately two million of the cast costs associated with the restructuring from the eventual self-exes equipment and proceeds from a building lease termination in Haiti.

Kenneth Bowling: Assuming the completion of all restructuring actions and the sale of associated real estate by the end of this fiscal year, we currently project our cash position as of the end of this fiscal year to be higher than the 10 million cash as of the end of this last fiscal year.

Speaker Change: Assuming the completion of all restructions actions and the self-associated real estate by the end of this fiscal year, we currently project our cash position as of the end of this fiscal year to be higher than the 10 min cash as of the end of this last fiscal year.

Kenneth Bowling: The income from operation to the quarter was 1.7 million compared to the income from operations of 1.3 million a year ago. Operating margin for the quarter was 6% compared with 4.8% a year ago an increase of the 120 basis points. This year of your improvement is driven by higher sales, lower fixed costs, and lower SGNA offset somewhat by higher freight costs.

Kenneth Bowling: We did not repurchase any shares during the first quarter of this fiscal year, leaving 3.2 million available under our current share repurchase program. Despite the current share repurchase authorization, we do not expect any activity during the second quarter. As we remain focused on preserving liquidity and being positioned to support future growth opportunities.

Speaker Change: We did not repurchase any shares during the first quarter of this fiscal year, leaving 3.2 May available under our current share repurchase program.

Speaker Change: Despite the current share-reporteous authorization, we do not expect any activity during the second quarter. As we remain focused on preserving liquidity,

Kenneth Bowling: Now let me turn to the balance sheet. We reported 13.5 million total cash and 4 million outstanding debt under our China credit line as of the end of the first quarter. Cash flow from operations and free cash flow are negative 206,000 and a negative 550,000 respectively for the quarter compared with cash flow from operations and free cash flow negative 4.4 million and negative 4.2 million respectively for the same period last fiscal year.

Is COP: With that, Attorney Colbert, he has discussed the general outlook for the second quarter of this fiscal year, and then we will take your questions.

Speaker Change: and be in position to support future growth opportunities. With that, I've turned it all over to you. It's got to general outlook for the second quarter of this fiscal year. And then we will take your questions.

Is COP: Thank you, Ken. So, due to the significant activity underway in connection with our restructuring initiatives, we are only providing limited financial guidance at this time. Although we are encouraged by the updated and improved guidance we are giving, especially when looking at the second half of the fiscal year. While macro demand is expected to remain challenged, we expect our consolidated net sales for the second quarter to be comparable to the first quarter of fiscal 2025. We currently expect to return to near-break even adjusted EBITDA, excluding restructuring and related charges, in the second quarter of this fiscal year, and to return to positive consolidated adjusted operating income, excluding restructuring and related charges, in the third quarter of this fiscal year.

Ken: Thank you, Ken.

Speaker Change: So due to the significant activity underway in connection with our restructuring initiatives, we are only providing limited financial guidance at this time.

Speaker Change: Although we are encouraged by the updated and improved guidance we are giving, if that's what's been looking at the second half of the fiscal year.

Kenneth Bowling: Our cash flow from operations and free cash flow during the quarter were driven by operating losses, partially offset by lower working capital mainly from lower inventory balances and plans for teaching investments in capital expenditures, mostly related to the mattress fabric segment. Both segments continued to do an effective job managing working capital during very challenging business conditions. Capital expenditures for the first three months of this fiscal year were 501,000. Based on current expectations, capital spending for this fiscal year is projected to be approximately 4.8 million and will center mostly on maintenance cap ex and quick payback projects that will increase efficiencies and improve quality, especially the mattress fabric segment.

Speaker Change: While macro demand is expected to remain challenged, we expect our consolidated net sales for the second quarter to be comparable to the first quarter of fiscal 2025.

Speaker Change: We currently expect you to return to near-break even adjusted the evidah, excluding restrictions in related charges in the second quarter of this fiscal year.

Speaker Change: In to return to positive consolidated, just an operating income, excluding restructuring and related charges, in the third quarter of this fiscal year.

Operator: So, with that, we will take some questions. Ladies and gentlemen, at this time we will begin the question-and-answer session. To ask a question, you may press star and then one. If you are using a speaker phone, we do ask that you please pick up the answer prior to pressing the keys to ensure the best sound quality. And we draw your questions. You may press star and two. Again, that it's star and then one to join the question through.

Speaker Change: With that, we'll take some questions.

Speaker Change: Ladies and gentlemen, at this time we'll begin the question and answer session. To ask you a question you may press star and then one month. If you are using a speaker phone, we do ask you please pick up the hands that prior to pressing the keys to ensure the best sound quality.

Kenneth Bowling: Based on current expectations, depreciation for this fiscal year is expected to be approximately 5.4 million. With respect to liquidity, as of the end of the first quarter, we had approximately 32.7 million consisting of 13.5 million and cash and 19.2 million and borrow availability under our domestic credit facility. As noted earlier, we also had 4 million and borrowings outstanding under our China credit line as of the end of the quarter. As we selected the borrowings outstanding, we do intend to utilize some borrowings under our domestic and or foreign credit facilities during this fiscal year and connection with our restructuring activities and to fund worldwide working capital to grow the business.

Speaker Change: and we draw your questions. You may press star into.

Brian Gordon: Our first question today comes from behind the one, the water tellers. Please go ahead with your question. Good morning. It can. I'm very bass and Tommy. At first, I definitely want to congratulate you guys on what is, I think, a very solid quarter given a substantial growth in both segments. And what is a challenging environment for sure, better margins in the poll street. And the progress that you guys have demonstrated with the restructuring initiative. I guess my first question would be about the cadence of business over the quarter in the last few weeks, given the very strong sequential growth that you guys had.

Thor: Yes, that is Thor and then one, is your on-the-question to do.

Michael Moniz: Our close question today comes from behind on some water towers.

Speaker Change: Search. Please go ahead with your question.

Speaker Change: Good morning, it can very best in telling me. I definitely want to congratulate you guys on what I think a very solid quarter, given the substantial growth in both segments, and what is a challenging environment for sure, better margins in the post-strait, and the progress that you guys have demonstrated with the restructuring initiative.

Kenneth Bowling: Importantly, we still expect to maintain a positive net cash position and to fund approximately 2 million of the cash costs associated with the restructuring from the eventual sale of excess equipment and proceeds from a building lease termination in Haiti. Assuming the completion of all restructuring actions and the sale of associated real estate by the end of this fiscal year, we currently project our cash position as of the end of this fiscal year to be higher than the 10 million cash as of the end of this last fiscal year.

Speaker Change: I guess my first question would be about the cadence of business over the quarter in the last few weeks, given the very strong sequential growth that you guys had. How did that play out across both the poultry and mattress?

Brian Gordon: How did that play out across both the poll street and mattress?

Is COP: Thank you, Brian. This is you.

Is COP: I'm going to pivot those questions and let Tommy and Mary Beth give you the feedback from the ground level and the businesses. But again, just want to thank you for your support and water to our. I know it's a tough cycle with Bud. We're grateful. Thanks for following us. We appreciate it.

You: Thank you Brian, this is you. I'm going to pivot those questions and let Tommy and Mary Beth give you the feedback from the ground level on the businesses, but

Speaker Change: Again, just want to thank you for your support and water tower. If you want to know the tough cycle with Bud, we're just grateful to have your participation with us and thanks for following us. We appreciate it. But Mary Beth, I want to go first if you want to, what you're seeing in a poultry trends.

Kenneth Bowling: We did not repurchase any shares during the first quarter of this fiscal year, leaving 3.2 million available under our current share repurchase program. Despite the current share repurchase authorization, we do not expect any activity during the second quarter.

Mary Beth Hunsberger: But Mary Beth, want to go first if you want on what you're seeing in the poll street trends? Sure. Thanks, Brian. Thank you. So we definitely saw in Q1 a nice rebound from Q4. We started out very strong, majoring July. We have seen; you know, we did see some weakness in July, more so than in the prior months. Again, I think the industry trends are really hard to predict at the moment. But in general, the business is still strong, and we're feeling good about our market share specifically in the industry.

Speaker Change: Sure, thanks, Brian. So we definitely saw in Q1 a nice rebound from Q4. We started out very strong, majoring.

Kenneth Bowling: As we remain focused on preserving liquidity and being positioned to support future growth opportunities.

Robert Culp: With that, Attorney Colbert, he has discussed the general outlook for the second quarter of this fiscal year and then we will take your questions. Thank you, Ken. So, due to the significant activity underway in connection with our restructuring initiatives, we are only providing limited financial guidance at this time. Although we are encouraged by the updated and improved guidance we are giving, especially when looking at the second half of the fiscal year.

Mary Beth: July. We did see some weakness in July, more so than in the prior months.

Speaker Change: Again, I think the industry trends are really hard to predict at the moment, but in general, the business is still strong and we're feeling good about our market share, specifically in the industry.

Tommy Bruno: Hey, Brian. It's Tommy. I think for us, we saw some of the same similar things that Mary Beth saw. I think art, we've seen consistency through July into August as well. So I think we, the visibility we have to new placements and market share opportunities, remain strong through Q2 and into Q3. So I think we feel like we are on a good path for sequential growth throughout the year based on what we see today. Obviously, that is all that's tied to the programs launching in the periods in which they're expected to launch.

Speaker Change: Hey Brian, it's Tommy. I think for us we saw some of the same similar things that Mary Beth saw. I think we've seen consistency through July into August as well.

Robert Culp: While macro-demand is expected to remain challenged, we expect our consolidated net sales for the second quarter to be comparable to the first quarter of fiscal 2025. We currently expect to return to near-break even adjusted EBITDA, excluding restructuring and related charges in the second quarter of this fiscal year, and to return to positive consolidated, adjusted operating income, excluding restructuring and related charges in the third quarter of this fiscal year. So with that, we will take some questions.

Speaker Change: So I think we the visibility we have to new placements and market share opportunities remain strong through P2.

Speaker Change: and Indicute 3, so I think we feel like we are on a good path for sequential growth throughout the year. Based on what we see today. Obviously, that's tied to the programs launching in the periods in which they're expected to launch.

Brian Gordon: Rich. Great, thank you for that.

Brian Gordon: I definitely want to dig in a bit on the restructuring.

Speaker Change: Great, great. Thank you for that. I definitely want to dig in a bit on the restructuring. First, I'm engaged with question for Ken. Could you talk a little bit about where the savings from that original $8 million estimate for the restructuring of coming from?

Kenneth Bowling: First, maybe the question for Ken: could you talk a little bit about where the savings from that original $8 million estimate for the restructuring that was coming from? Yeah, I'll begin there, Brian, and I have much lower fixed costs. And then I would just consolidate the operation, get in the efficiencies of having operations in one plant, and then the savings about sourcing our damage line, all those kind of add up to the projected savings that we're looking at. Tommy, if you want to jump in here as well, I mean, yeah, no, for us, it's really the fixed cost savings associated with combining plants.

Operator: Ladies and gentlemen, at this time we will begin the question and answer session. To ask your question you may press star and then one. If you are using a speaker phone we do ask the please pick up the answer, prior to pressing the keys to ensure the best sound quality. And we draw your questions. You may press star and two. Again, that is star and then one is drawing the question through.

Ken: Yeah, I'll begin there, Brian, I'll head to Tommy Jumpy, and obviously with the closure of the Canadian plant, we're going to have a little bit of much lower face calls.

Anthony Lebiedzinski: Our first question today comes from behind the water tower research. Please go ahead with your question. Good morning. It can. I am very fast and tall.

Tommy Jumpy: and then I would be just consolidating the operation, getting the efficiencies of having operations in one plant. And then the savings about sourcing our damage line, all those kind of add up to the projected savings that we're looking at. Tommy, if you want to jump in here as well, I mean.

Anthony Lebiedzinski: At first, I definitely want to congratulate you guys on what is, I think, a very solid quarter given a substantial growth in both segments and what is a challenging environment for sure, better margins in the poultry, and the progress that you guys have demonstrated with the restructuring initiative. I guess my first question would be about the cadence of business over the quarter in the last few weeks, given the very strong sequential growth that you guys had. How did that play out across both the poultry and mattress? Thank you, Brian. This is you.

Tommy Jumpy: Yeah, no for us, it's really the fixed cost savings associated with combining plants. There's other operational improvements that will benefit from by being in one facility in Stokesdale with consolidate leadership.

Tommy Bruno: There's other operational improvements that will benefit from being in one facility in Stokesdale with consolidated leadership. And as we move our damaged business offshore, separately, we're expecting margins to improve some as a part of that transition. And that all gets phased in as we sell through that inventory. That's why we're cautious about Q2. But we expect that benefit to start to impact results in back after the year. Thanks, Brian. That's your question, Brian.

Tommy Jumpy: and as we move our damage business offshore, separately we're expecting margins to improve some as a part of that transition.

Robert Culp: I am going to pivot those questions and let Tommy and Mary Beth give you the feedback from the ground level in the businesses. But again, just want to thank you for your support and water tower. You know, I know it's a tough cycle with bud. We're just grateful to have your participation with us. Thanks for following us. We appreciate it.

Tommy Jumpy: and that all gets phased in as we sell through that inventory. That's why we're cautious about Q2. But we expect that benefit to start to impact results in back after the year.

Brian Gordon: Are you asking more about the reduction in the cost for the restructuring? One way should we hit your question the way you want it there? Well, I mean, I was going to ask about the anticipated savings too, but I was specifically asking about the difference from the $8 million to the $5.1 million for the restructuring cost. Okay.

Speaker Change: Thanks. Brian, that depends on your question. Brian, or you ask him more about the reduction in the cost for the restructuring. You want to make sure we hit your question the way you want it there.

Mary Beth Hunsberger: But Mary Beth, want to go first if you want on what you're seeing in the poultry trends? Sure. Thanks, Brian. Thank you. So we definitely saw in Q1 a nice rebound from Q4. We started out very strong major in July. We have seen, you know, we did see some weakness in July, more so than in the prior months. Again, I think the industry trends are really hard to predict at the moment. But in general, the business is still strong and we're feeling good about our market share specifically in the industry.

Brian: Well, I mean, I was going to ask about the anticipated savings too, but I was specifically asking about the difference between 8 million to the 5.1 million for the restructuring cost.

Kenneth Bowling: Brian, I'll take that. Yeah. We had in late April estimated the restructuring expense to be about eight million. Of course, at that time, we were just getting into things and looking at the different pieces. And so we've obviously had many months, or many months since then, to get a much clearer picture of our expected expense. The difference is really broken down into about roughly three areas. Number one is we looked at certain operating expenses related to our Canadian operation that we originally felt would be classified as restructuring and related, but those ends up being classified as normal expenses.

Speaker Change: Okay, okay, Brian. Yeah, I'll take that. Yeah, we had in late April estimated the restructuring expense to be about eight million. And of course, at that time, we were just getting into things.

Speaker Change: Looking at the different pieces and so we've obviously had many months or many months since then to get a much clearer picture of our expected expense. The difference is really broken down into about three areas. Number one is...

Tommy Bruno: Hey, Brian, it's Tommy. I think for us, we saw some of the same similar things that Mary Beth saw. I think art, we've seen consistency through July into August as well. So I think the visibility, we have the new placements and market share opportunities remain strong through Q2 and into Q3. So I think we feel like we are on a good path for sequential growth throughout the year based on what we see today. Obviously, that is all that's tied to the programs launching in the periods in which they're expected to launch. Great, thank you for that.

Speaker Change: We looked at certain operating expenses related to our Canadian operation that we originally felt would be classified as restructuring and related, but those end up being classified as normal expenses, so that's a reduction.

Kenneth Bowling: So that's a reduction. Secondly, our original estimate for equipment and inventory right down to impairments is coming in less than we expected due to the simple fact that we are using those assets. So, after looking at things and looking out the structure where we're going, we were able to use more assets than we anticipated. And then finally, with respect to certain cash costs, such as employee termination costs, we just expect to come in lower than we originally expected, than we originally forecasted. So that's kind of the breakdown between the eight million and the five million expectations.

Speaker Change: Secondly, our original estimate for equipment and inventory right now is an impairment.

Speaker Change: is coming in less than we expect to do to the simple fact that we are using those assets. So after looking at things and looking out the structure where we're going, we're able to use more assets than we anticipated.

Kenneth Bowling: I definitely want to dig in a bit on the restructuring. First, maybe the question for Ken, could you talk a little bit about where the savings from that original $8 million estimate for the restructuring that was coming from? Yeah, I'll begin there, Brian, and I'll talk to Tommy jump in. I mean, you know, obviously with the closure of the Canadian plant, we're going to have much lower fixed costs. And then I'll with the just consolidating the operation, getting the efficiencies of having operations in one plant, and then the savings about sourcing our damage line, all those kind of add up to the projected savings that we're looking at.

Speaker Change: and then finally with respect to certain cast costs such as employee termination costs, we just expect to come in lower than we originally expect, then we re-result four cast. So that's kind of the breakdown between the eight million and the five million expectation.

Kenneth Bowling: And obviously, the current $5.1 million is a fluid number. So we'll provide updates in the future.

Speaker Change: and obviously the current 5.1 million is a fluid number, so we'll provide updates in the future.

Brian Gordon: Thank you very much for that. That's helpful. As is the original comments on how those costings are going to play out.

Speaker Change: Right, thank you very much for that, that's helpful. As is the original your comments on how those coughing are going to play out.

Brian Gordon: I kind of want to step back maybe a little bit, and that's kind of a bigger picture on how the restructuring is really going to change the business model for CHF. In terms of what percentage of the product is going to be produced in house versus what percentage of the product is going to be in that strategic sourcing model that you guys have talked about, which is more similar to a poultry. As investors look at that, how should they think about how that change is going to impact margins and the economics of the business? Brian, thank you.

Kenneth Bowling: And Tommy, you know, if you want to jump in here as well, I mean, we had no for us, it's really the fixed cost savings associated with combining plants. There's other operational improvements that will benefit from by being in one facility in Stokesdale with consolidated leadership. And as we move our damaged business offshore separately, we're expecting margins to improve some as a part of that transition. And that all gets phased in as we sell through that inventory.

Speaker Change: I kind of wanted to step back maybe a little bit and ask kind of a bigger picture on, you know, how the restructuring is really going to change the business model for CHF.

Speaker Change: In terms of like what percentage of the product is going to be produced in house versus what percentage of the product is going to be in that strategic source model that you guys have talked about, which is more similar to a poultry. And then as investors look at that, how should they think about how that change is going to impact?

Kenneth Bowling: That's why we're cautious about Q2. But we expect that benefit to start to impact results in back after the year. Thanks. Brian, that depends on your question. Brian, were you asking more about the reduction in the cost for the restriction? One way should we hit your question the way you want it there? Well, I mean, I was going to ask about the anticipated savings too, but I was specifically asking about the difference from the $8 million to the $5.1 million for the restructuring cost.

Speaker Change: Morgan and the economic in the business.

Is COP: I'll take that in the first, and anyone can certainly add to it. It's a good overemphasize this in the release. There's no doubt the point of this restructuring decision is to reduce our cost level on the CHF business primarily. So we're really proud of CUF and the asset light model they have, which is especially important today due to variable business conditions and political economic risks that are just happening all over the world. So we love that asset light model. And CUF is a poultry fabric. It is a shining star in our current area. So we're proud of that.

Speaker Change: Brian, thank you, this is the deal. I'll take that one first and anyone can certainly add to it. It's a good question. And just see, we really over-emphasize this in the release. There's no doubt.

Speaker Change: The point of this restructuring decision is to reduce our cost level on the CHF business primarily. So we're really proud of CUS and the asset light model they have.

Speaker Change: Which is especially important today due to variable business conditions and political economic risk that are just happening all over the world. So we love that asset light model.

Kenneth Bowling: Okay. Brian, I'll take that. Yeah, we had in late April estimated the restructuring expense to be about $8 million. Of course, at that time, we were just getting into things and looking at the different pieces. And so we've obviously had many months or many months since then to get a much clearer picture of our expected expense. The difference is really broken down into about roughly three areas. Number one is we looked at certain operating expenses related to our Canadian operation that we originally felt would be classified as restructuring and related, but those ends up being classified as normal expenses.

Kenneth Bowling: So that's a reduction. Secondly, our original estimate for equipment and inventory right down in impairments is coming in less than we expected due to the simple fact that we are using those assets. So after looking at things and looking out the structure where we're going, we were able to use more assets than we anticipated. And then finally, with respect to certain cash costs, such as employee termination costs, we just expect to come in lower than we originally expected, than we originally forecasted.

Speaker Change: and see you out as a pulse refabric, is a shining star in our current scenario, so we're proud of that.

Is COP: In CHF mattress fabric, that restructuring is the significantly reduced cost and effectively lower our break even. So remember the point we've been making all along here is that we're going to get the business back to break even or to profitability in this current environment. And then we know other tailwinds will eventually really improve that business that the macro industry improves. So we're going to go asset light on our damaged business, which is the portion of our business. And we'll leverage a long-term, very dedicated partner to source that business. That's a smart move. And remember our cut and sew business is going to utilize low labor cost strategies in Asia and also in Haiti, combined with right on the border there, the DR, and really just a great labor force that we have.

Speaker Change: in CHF mattress fabric, stat restructions and significantly reduced costs and effectively lower our break even.

Speaker Change: So remember, the point we've been making all along here is that we're going to get the business back to break even or to profitability in this current environment. And then we know other tailwinds will eventually really improve that business at the macro industry improves.

Speaker Change: So we're going to go ask that light on our Damis business, which is a portion of our business, and we'll leverage a long-term, very dedicated partner to source that business. That's a smart move.

Speaker Change: And remember our cut and so business is going to utilize low labor call strategies in Asia And also in Haiti, combined with right on the border there, the DR and really just a great labor force that we have.

Is COP: And offering us near shore capabilities and just having low labor costs throughout our cut and sew platform. But the businesses CHF and CUF are some different. And we do need to maintain some significant manufacturing service customers in this competitive quickship world. So we're going to have a very super plant robust manufacturing in North Carolina for circular units. And then our cut and sew covers will be low labor cost driven, and our damaged business will be asset light. So we're making really good progress reducing that cost level and becoming much more agile to service our customers.

Speaker Change: and offering us near shore capabilities and just having a lot of labor calls throughout our cut and so platform.

Speaker Change: But the business is CHF and CUFR some different.

Kenneth Bowling: So that's kind of the breakdown between the $8 million and the $5 million expectation. And obviously, the current $5.1 million is a fluid number, so we'll provide updates in the future. Thank you very much for that. That's helpful. As is the original comments on how those costings are going to play out.

Speaker Change: and we do need to maintain some significant manufacturing service customers in this competitive quickship world. So we're going to have a very super plant, robust manufacturing in North Carolina for circular in it.

Speaker Change: and then our cut and so covers will be low labor cost driven and our damage business will be asset light. So we're making really good progress for addition to that cost level and becoming much more agile to service our customers, but we do think we need in this business.

Robert Culp: I kind of want to step back maybe a little bit and ask kind of a bigger picture on how the restructuring is really going to change the business model for CHF. In terms of what percentage of the product is going to be produced in house versus what that percentage of the product is going to be in that strategic sourcing model that you guys have talked about which is more similar to a poll street. And then as investors look at that, how should they think about how that change is going to impact margins and the economics of the business?

Brian Gordon: But we do think we need in this business some higher asset level mix to be successful in the mattress fabric side. So hopefully that answers kind of where our heads are. Yeah, no, that's that's incredibly helpful. Thank you.

Speaker Change: Some higher asset level mix to be successful in the mattress fabric side.

Speaker Change: So hopefully that answer is kind of where our heads are.

Mary Beth Hunsberger: I have one more question, and I guess this would be for Mary Beth. Hospitality looks like it's continuing to grow quite nicely. I was hoping you might be able to give us a little bit more color on what's driving the growth of that business and where you see this going from here. Sure. Great question. So the hospitality industry in general is booming, coming out of COVID. The focus on travel and experiences is outweighing purchases of things with most people. So we're seeing the boom of hotel rooms, especially in the mid-price range, the extended stay where people are utilizing hotels more in their life than they were before.

Speaker Change: Yeah, that's incredibly helpful. Thank you. I have one more question and I guess this will be for Mary Beth.

Mary Beth: Hospitality looks like it's continuing to grow quite nice. I was hoping you might be able to give us a little bit more color on what's driving the growth of that business and where you see this going from here.

Robert Culp: Brian, thank you. This is Ian. I'll take that one first and anyone can certainly add to it. It's a good question. And just you know, we really overemphasize this in the release. There's no doubt the point of this restructuring decision is to reduce our cost level on the CHF business primarily. So we're really proud of CUF and the asset light model they have, which is especially important today due to variable business conditions and political, economic risk that are just happening all over the world.

Speaker Change: Sure, great question.

Mary Beth: So the hospitality industry in general is booming, coming out of COVID, the focus on travel and experiences is outweighing.

Speaker Change: Purchases of things with most people, so we're seeing the boom of hotel rooms, especially in the mid-price range, the extended stay, what people are utilizing to tell more in their lives than they were before. So the industry is certainly helping us.

Mary Beth Hunsberger: So the industry is certainly helping us. For Culp in particular, we have a beautiful new line, a new portfolio of products, especially designed for this type of hotel that is really helping us gain market share, number one. And then the second piece helping drive this business is our window treatment business. We have expanded roller shade capacity in our Burlington facility, as I've mentioned, and really just capturing the market with a number of hotel properties that we are now approved brand partners with. So very exciting. A lot of potential in this segment. And we really hope to see this segment become a very significant portion of our business.

Robert Culp: So we love that asset light model. And CUF is a poll street fabric is a shining star in our current area. So we're proud of that. In CHF mattress fabric, that restructuring is significantly reduced cost and effectively lower our break even. So remember the point we've been making all along here is that we're going to get the business back to break even or the cost of ability in this current environment. And then we know other tailwinds will eventually really improve that business that the macro industry improves.

Speaker Change: In particular, we have a beautiful new line, a new portfolio of products, specially designed for this type of hotel.

Speaker Change: that is really helping us gain market share.

Speaker Change: 1. The second piece helping drive this business is our window treatment business. We have expanded.

Speaker Change: Rolershake capacity in our Burlington facility is mentioned.

Speaker Change: and really just capturing the market with a number of hotel properties that we are now approved of brand partners with. So, very exciting, a lot of potential in this segment and we really hope to see this segment become a very significant portion of our business.

Robert Culp: So we're going to go asset light on our damage business, which is a portion of our business. And we'll leverage a long term, very dedicated partner to source that business. That's a smart move. And remember our cut and sew business is going to utilize low labor cost strategies in Asia and also in Haiti, combined with right on the border there, the DR, and really just a great labor force that we have.

Mary Beth Hunsberger: Thank you for that.

Brian Gordon: I think you brought up a point which I hadn't fully realized before that gives you guys effectively a little bit more exposure to the experience economy and less dependence on what's happening with the residential furniture, per se. So I think that's an exciting point to highlight. So thank you. Sure. No, it is definitely nice to have a portfolio within the US that strikes both industries. You know, so when one is up, you kind of have cover with the other. So it's a nice, a nice mix. Thank you.

Speaker Change: Thank you for that. I think you brought up a point which I hadn't fully realized before that that gives you guys effectively a little bit more exposure to the experience economy and you know, left.

Robert Culp: And offering us near shore capabilities and just having low labor costs throughout our cut and sew platform. But the businesses, CHF and CUF are some different. And we do need to maintain some significant manufacturing service customers in this competitive quickship world. So we're going to have a very super plant, robust manufacturing in North Carolina for circular units. And then our cut and sew covers will be low labor cost driven and our damaged business will be asset light.

Speaker Change: and you know, dependence on what's happening with the residential furniture per se. So I think that's an exciting point to highlight the thank you.

Speaker Change: It is definitely nice to have a portfolio within the UF that strike both industries. When one is up, you kind of have a cover with the other. So it's a nice, nice mix.

Brian Gordon: And I'll turn over to the call to anyone else who might have a question. So thank you. Thank you, Brian. Have a great day.

Speaker Change: Thank you, and I'll turn over to the call to anyone else who might have a question, so thank you.

Speaker Change: Thank you, Brian. Have a great day.

Operator: And ladies and gentlemen, at this point, we'll be concluding the question-and-answer session.

Robert Culp: So we're making really good progress in that cost level and becoming much more agile to service our customers. But we do think we need in this business. Some higher asset level mix to be successful in the mattress fabric side. So hopefully that answers kind of where our heads are.

Speaker Change: [inaudible]

Is COP: I'd like to turn the floor back over to management for any closing remarks. Thank you, operator. And again, thank you to everyone for your participation and your interest and call. We look forward to updating you on our progress next quarter. Have a great afternoon.

Speaker Change: and ladies and gentlemen at this point we'll be concluding the question and answer session like to turn the floor back over to management for any closing remarks.

Speaker Change: Thank you, operator and again thank you to everyone for your participation in your interest and call. We look forward to updating you on our progress next quarter. Have a great afternoon.

Anthony Lebiedzinski: Yeah, no, that's that's incredibly helpful. I think thank you.

Operator: Ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending. You may now disconnect your lines.

Mary Beth Hunsberger: I have one more question. And I guess this would be for Mary Beth. Hospitality looks like it's continuing to grow quite nicely. I was hoping you might be able to give us a little bit more color on what's driving the growth of that business and where you see this going from here. Sure, great question. So the hospitality industry in general is booming, coming out of COVID. The focus on travel and experiences is outweighing purchases of things with most people.

Speaker Change: Hey ladies and gentlemen, with that we'll conclude today's conference call. We do thank you for attending. You may now disconnect your lines.

Speaker Change: I'm going to make a video about the

Mary Beth Hunsberger: So we're seeing the boom of hotel rooms, especially in the mid-price range, the extended stay where people are utilizing hotels more in their life than they were before. So the industry is certainly helping us. For Culp in particular, we have a beautiful new line, a new portfolio of products, especially designed for this type of hotel that is really helping us gain market share. Number one, and then the second piece helping drive this business is our window treatment business. We have expanded roller shade capacity in our Burlington facility, as I've mentioned, and really just capturing the market with a number of hotel properties that we are now approved of brand partners with. So very exciting.

Speaker Change: I'm going to make a video about the

Mary Beth Hunsberger: A lot of potential in this segment, and we really hope to see this segment become a very significant portion of our business. Thank you for that. I think you brought up a point which I haven't fully realized before that that gives you guys effectively a little bit more exposure to the experience economy and, you know, less dependence on what's happening with the residential furniture. So I think I think that's an exciting point to highlight.

Speaker Change: I'm going to make a video about the

Mary Beth Hunsberger: So thank you. Sure. No, it is definitely nice to have a portfolio within the US that strike both industries. You know, so when, when one is up, you kind of have cover with the other. So it's a nice, a nice mix.

Anthony Lebiedzinski: Thank you.

Operator: And I'll turn over to the call to anyone else who might have a question. So thank you. Thank you, Brian.

Operator: Have a great day. And ladies and gentlemen, at this point, we'll be concluding the question in the answer session.

Robert Culp: I'd like to turn the floor back over to management for any closing remarks. Thank you, operator. And again, thank you to everyone for your participation on your interest and call. We look forward to updating you on our progress next quarter.

Operator: Have a great afternoon.

Speaker Change: I'm going to make a video about the

Operator: And ladies and gentlemen, with that, we'll conclude today's conference call. We thank you for attending. You may now disconnect your lines. Thank you.

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Speaker Change: I'm going to make a video about the

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here, you're not here, you're not here, you're not here, you're not here, you're not here, you're not here, you're not here, you're not here, you're not here, you're not here, you're not here In the name of God, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful, the Most

Speaker Change: The

Speaker Change: Music

Speaker Change: Music Music

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Speaker Change: The

Speaker Change: I'm going to make a video about the

Speaker Change: I'm going to make a video about the