Culp Inc (CULP) 2023 Q1 法說會逐字稿

Good day, and welcome to the Culp, Inc. First Quarter Fiscal 2023 Earnings Conference Call. (Operator Instructions) Please note this event is being recorded.

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

Good morning, and welcome to the Culp conference call to review the company's results for the first quarter of fiscal 2023.

As we start, let me state that this morning's call will contain forward-looking statements about the business, financial condition and prospects of the company. Forward-looking statements are statements that include projections, expectations or beliefs about future events or results or otherwise are not statements of historical 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. 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.

In addition, during this call, the company will be discussing non-GAAP financial measurements. A reconciliation of these non-GAAP financial measurements to the most directly comparable GAAP financial measurements is included in the tables to the press release included as an exhibit to the company's 8-K filed yesterday and posted on the company's website at culp.com. A slide presentation with supporting summary financial information is also available on the company's website as part of the webcast of today's call.

With that, I will now turn the call over to Iv Culp, President and Chief Executive Officer of Culp. Please go ahead, sir.

Good morning, and thank you for joining us today. I would like to welcome you to the quarterly conference call with analysts and investors. With me on the call today are Ken Bowling, Chief Financial Officer; and Boyd Chumbley, President of our upholstery fabrics business.

I will begin the call with some operating -- opening comments, and Ken will then review the financial results for the quarter. Following that, I will briefly update you on the strategic actions specific to each of our operating segments, and Ken will review our second quarter fiscal 2023 business outlook. We will then be pleased to take your questions.

Our results for the first quarter reflected some sequential improvement as compared to the fourth quarter of fiscal 2022. However, as expected, sales and operating performance remained significantly pressured by slowing consumer demand in both the domestic mattress industry and the residential home furnishings industry. The impact of this industry softness on demand for our products has been exacerbated by an excess of retail and manufacturer inventory that continues to delay the timing of shipments and new product rollouts.

Operating performance for the quarter was also affected by continued inflationary pressures, as well as reoccurring labor challenges within our mattress fabrics business and our Read Window Products business that resulted in increased employee training costs and operating inefficiencies during the quarter. We also had expected ramp-up costs associated with the increasing capacity at our new upholstery fabrics cut-and-sew facility in Haiti.

Despite these ongoing headwinds, I am pleased with our unrelenting focus on working capital management, including inventory reduction throughout the quarter. We ended Q1 with a higher cash position than expected with $18.9 million in cash and 0 outstanding borrowings. We generated cash flow from operations of $5.3 million, and free cash flow of $4.5 million during the quarter.

In the current period, where we recognize there is macro industry sales softness, we fully understand the importance of managing our inventory and overall working capital to protect our balance sheet and prepare us for the future.

Throughout the quarter, we continued to execute our product-driven strategy in each of our businesses, with an emphasis on design creativity and innovation. Following the lifting of COVID-related restrictions in China, our facilities resumed operations at normalized capacity in June, and we utilized our global manufacturing and sourcing platform throughout the quarter to meet the evolving needs of our customers.

We also continue to increase our capacity at our new upholstery fabrics cut-and-sew facility in Haiti during the quarter. This facility is now fully staffed with its weekly production output expanding as our associates gain more training and experience.

As a company overall, we are enthusiastic about growing our near-shore capacity in Haiti with 2 facilities for cut-and-sew mattress covers and 1 facility for cut-and-sew upholstery kits. We believe this platform provides our customers with the agility and value they need for their business. Haiti is an important location for Culp's future, and we believe we have an excellent platform for cut-and-sew products across both businesses.

We are also pleased to announce that Tommy Bruno will join the mattress fabrics leadership team as Executive Vice President next week on September 6, and he is expected to assume the role of Division President at Sandy Brown's retirement at the end of this calendar year. Tommy joins us from Tempur Sealy International, where he served as the Vice President of Business Development for alternative channels since 2018. Prior to that, Tommy served 8 years with Tempur Sealy as Comfort Revolution's Senior Vice President and Chief Financial Officer. Tommy brings balanced experience across several disciplines, including financial, operations, strategy and management, and his extensive knowledge of the bedding industry will help us strengthen our business. We believe Tommy is an excellent fit for our culture and also for our associates at Culp Home Fashions, and we believe he will support the execution of our future strategic plans.

We are especially pleased that Tommy will have the opportunity to work with Sandy during the transition period and learn from her deep knowledge of Culp Home Fashions. Tommy will continue to benefit from Sandy's experience, following the planned transition and she will continue to support the mattress fabrics division as a strategic adviser. We are extremely grateful for Sandy's 39 years of leadership in dedicated service to Culp. We honor her many contributions, and we are thankful for the ongoing role she will play in our business.

Looking ahead, we expect the current economic environment will continue to affect consumer spending trends, resulting in ongoing industry softness that will affect our business through at least the third quarter of fiscal 2023. We are working diligently to generate cash, reduce costs, improve efficiencies and retain talent in the face of these significant challenges, while also ensuring we can maintain our competitive advantages and meet the needs of our consumers and customers when conditions normalize.

Importantly, our market position remains solid, and we will continue to focus on our product creativity and innovation. We are excited about the expected new placements and product development opportunities, and we remain optimistic about Culp's future as the macro environment improves.

I'll now turn the call over to Ken, who's going to review the financial results for the quarter.

Thanks, Iv. As mentioned earlier on the call, we have posted slide presentations to our Investor Relations website that cover key performance measures. We have also posted our capital allocation strategy.

Here are the financial highlights for the first quarter. Net sales were $62.6 million, down 24.6% compared with the prior year period, which was a strong quarter for our business. The company reported a loss from operations of $4.7 million compared with income from operations of $3.3 million for the prior year period and compared sequentially with a loss from operations of $5.4 million for the fourth quarter of last fiscal year. I'll comment in more detail on divisional sales and operating performance in a moment.

Net loss for the first quarter was $5.7 million or $0.47 per diluted share compared with net income of $2.3 million or $0.18 per diluted share for the prior year period. Our overall operating performance for the first quarter was significantly affected by lower sales, continued inflationary pressures and reoccurring labor challenges within our mattress fabrics business and our Read Window's business that resulted in increased employee training costs and operating inefficiencies during the quarter. We also had additional costs associated with increasing capacity at our new upholstery fabrics cut-and-sew facility in Haiti. These pressures were partially offset by lower total SG&A expense for the quarter due mainly to lower incentive compensation expense.

The effective income tax rate for the first quarter of this fiscal year was a negative 18.7% compared with 28.7% for the same period a year ago. Our effective income tax rate for the first quarter this fiscal year was affected by the company's mix of earnings between our U.S. and foreign subsidiaries. We incurred a significant pretax loss in our U.S. operations during the first quarter of this fiscal year, but we were unable to report an income tax benefit in connection with this loss due to the valuation allowance applied against our U.S. net deferred income tax assets. This, coupled with the fact that all of our taxable income for the first quarter was earned by our foreign operations in China and Canada, which have higher income tax rates than the U.S., resulted in the negative income tax rate for the quarter.

Our cash income tax payments totaled $637,000 for the first quarter of this fiscal year, and we currently expect cash income tax payments of approximately $2.8 million for the entire fiscal 2023 year. Importantly, our estimated cash income tax payments for this fiscal year are management's current projections only and can be affected over the year by actual earnings from our foreign subsidiaries located in China and Canada versus annual projections, changes in the foreign exchange rates associated with our China operations and other factors.

Now let's take a look at our business segments. For the mattress fabrics segment, sales for the first quarter were $29.4 million, down 31.8% compared with last year's first quarter and down 1.4% compared sequentially with last year's fourth quarter. Sales for the quarter, which included pricing and surcharge actions that were in effect during the period, were significantly pressured by the ongoing slowdown in consumer demand in the domestic mattress industry. The impact of this industry softness was heightened as mattress manufacturers and retailers continue to work through in excess of inventory, delaying the timing of shipments and new product rollouts.

Operating loss for the quarter was $2.9 million compared with operating income of $3.6 million a year ago. Our operating performance for the first quarter of this year was significantly pressured by operating inefficiencies due to lower sales volume, ongoing labor challenges, including inefficiency due to hiring and training new employees and higher raw material costs, among other factors. These pressures were offset slightly by lower SG&A for the quarter due mainly to lower incentive compensation expense.

For the upholstery fabric segment, sales for the first quarter were $33.2 million, down 16.9% over the prior year, which was an exceptionally strong quarter for this segment. Sequentially, sales for the upholstery fabric segment were up 22.4% compared with the fourth quarter of last fiscal year.

Sales for residential upholstery fabrics products were pressured during the quarter by reduced demand, driven by a slowdown in new retail business for the residential home furnishings industry. However, top line recovery continued in our upholstery -- in our hospitality business with higher sales in our hospitality contract fabric business compared to the prior year period, although sales for our Read Window business were flat year-over-year, primarily due to labor challenges affecting production output. Sales results for the first quarter were supplemented by the price and the surcharge actions that were in effect during the period as compared to the prior year period.

Income from operations for the quarter was $542,000 compared with income from operations of $2.3 million a year ago. Notably, the $542,000 operating income reverses a $116,000 loss experienced in the fourth quarter of last fiscal year. Our operating performance for the first quarter this fiscal year as compared to the prior year period was pressured by lower sales, labor challenges and inflationary pressures affecting the re-business and additional employee training costs and operating inefficiencies in the segment's Haiti -- in our new Haiti cut-and-sew facility as it continued to scale capacity through its full planned output level. Operating performance for the period was positively affected by a favorable foreign exchange rate associated with our operations in China.

Now I'll turn to the balance sheet. We reported $18.9 million in cash and 0 outstanding debt as of the end of the first quarter. This compares with $14.6 million in cash and 0 outstanding debt as of the end of last fiscal year.

Cash flow from operations and free cash flow were $5.3 million and $4.5 million, respectively, for the first 3 months of this fiscal year as compared with cash flow from operations and free cash flow of $1.6 million and negative $782,000, respectively, for the first 3 months of last fiscal year. Our cash flow from operations and free cash flow during the first quarter of this fiscal year were favorably affected by working capital management, including an increase in accounts payable primarily associated with the company's operations in China as COVID-related restrictions were lifted during the quarter, reductions in inventory and lower capital expenditures.

Notably, we reduced our inventory by $2.8 million or 4.2% as compared sequentially to the fourth quarter of last fiscal year and have reduced our inventory by $9.4 million or 12.8% as compared to the peak level at the end of the third quarter of last fiscal year.

The company did not pay any dividends during the first quarter of this fiscal year following the suspension of our quarterly cash dividend on our common stock during the period. The company also did not repurchase any shares during the first quarter of this fiscal year, leaving approximately $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 of this fiscal year as we remain focused on preserving liquidity and being positioned to support future growth opportunities.

With that, I'll turn the call back over to Iv.

Thank you, Ken. Let me just give a few more comments about each division, beginning with the mattress fabrics segment.

Despite the headwinds in this business, Culp Home Fashions remain focused on working capital management and cash generation throughout the quarter, reducing this inventory by $2.5 million, balancing its raw materials with production needs and generating cash despite an operating loss for the quarter. This focus will remain for CHS as we move into Q2, and there are further inventory reductions possible in both finished goods and raw materials.

Our dedicated team of associates executed our product-driven strategy for this business with an emphasis on innovation, design creativity and personalized customer service. We began to see the rollout of a few new product launches in this business during the first quarter, and we expect additional rollouts beginning at the start of the 2023 calendar year as customers work through their existing inventories and as retailers plan refreshed offerings on their floors. However, the gains from these new product launches are currently being offset by industry weakness, which is affecting the demand for this segment's traditional business.

Additionally, management is continuing its diligent focus on controlling costs and is implementing an additional targeted price increase on certain product lines during the second quarter to help offset the continued rise in raw material costs.

We are also moving and consolidating our domestic mattress cover cut-and-sew operation during the second quarter from its current location in High Point, North Carolina to our existing CHF facility in Stokesdale, North Carolina. Our CHF cut-and-sew platform is an important part of our strategic direction, and we have an unparalleled service model with onshore, near-shore and offshore capabilities. This relocation of our onshore business will improve efficiency and will further complement our growing and well-received Haiti near-shore operations. We will also continue to make workforce adjustments across our fabric and cover platforms to align with demand conditions.

Now a few comments on the upholstery fabrics segment. Although sales for the quarter were down compared to the prior year period, sales did grow about 22.4% sequentially compared to the fourth quarter of last fiscal year, aided by the lifting of COVID shutdowns has significantly affected our China operations at the end of last fiscal year. Those shutdowns have now been fully lifted, and we are currently operating at normal capacity. We also saw sequentially improved operating performance for the first quarter, reversing an operating loss from the fourth quarter of last fiscal year. We continued the growth at our new Haiti upholstery cut-and-sew facility during the quarter. This facility is now fully staffed and its output per week continues to rise as our employees gain more experience in training. Similar to CHF, Haiti is a critical part of our strategic direction for cut-and-sew upholstery kits.

Despite change in consumer spending trends affecting the residential home furnishings industry, we believe our upholstery fabrics business remains well positioned for the long-term with its scalable global platform and its sustained focus on innovative product offerings, including our popular portfolio of LiveSmart performance products. We continue to follow-up on the success of LiveSmart, including a recent addition of an indoor outdoor with UV performance line, and we are expanding our LiveSmart Evolve sustainability collection.

Sustainability in the home market is now a top-of-mind consideration for a growing number of consumers, and this will continue to be a part of our ongoing innovation. We are focused on bringing performance and sustainability innovation for the home and to our product lines, while also keeping them affordable for the average consumer.

We continue to diversify our options for fabric development and sourcing as an enhancement to the supply chain resiliency within our global platform. We also continue to scale our flexible China platform as needed to align with demand trends while also recognizing the pivot of our manufacturing and sourcing capacities to other locations throughout our global platform.

Ken will now discuss the general outlook for the second quarter of fiscal 2023, and then we'll take some questions.

We continue to navigate a convergence of headwinds, including significant inflationary pressures that are affecting consumer spending, high inventory levels at manufacturers and retailers, a challenging labor market and other macroeconomic uncertainties. Although, the company remains well-positioned over the long-term with its product-driven strategy and flexible global platform, their current conditions are likely to continue pressure results through at least the third quarter of this fiscal year.

Due to the continued volatility in the macro environment, we are providing only limited sequential financial guidance for the second quarter of this fiscal year. We expect net sales for the second quarter of this fiscal year to be slightly down as compared to the first quarter of this fiscal year. We expect a consolidated operating loss for the second quarter of this fiscal year that is comparable to the first quarter of this fiscal year.

We also expect our cash position as of the end of the second quarter of this fiscal year to be somewhat lower than the end of the first quarter of this fiscal year, but higher than the end of last fiscal year.

As we weather the current challenges, we will continue to be laser-focused on prudent financial management with the goal of always maintaining a strong balance sheet, especially with regard to ensuring a strategic balance in our working capital. We are optimistic about Culp's future, and we know that financial stability is paramount to our success.

With that, we will now take your questions.

(Operator Instructions) Our first question is coming from Rex Henderson from Water Tower.

I want to offer congratulations to you for really doing a quite admirable job of defending your cash position and defending the balance sheet in really very difficult circumstances. So you deserve a lot of credit for that.

Thank you, Rex.

My first question is really talking -- I want to discuss the -- you said that there were -- your downstream, some of your customers, manufacturers, retailers are over inventoried. I'm wondering what you're seeing in trends there. Through the quarter, do you see that issue getting worse, getting better? And kind of what's your expectations for where the worst of it is and how long it takes to clear?

Rex, thank you for that question. This is Iv. I'll start with this, and I'm happy to let Boyd comment maybe more specifically to what he's seeing in the upholstery part of our business.

The true answer to that, Rex, is we're not 100% sure. All I can tell you is that we continue to hear, as we place new products, we hear from our customers that retail is very excited about some of these new launches, but they're not prepared to launch them until they flush through some inventory they have in their system, and they want to get that out of the way before they put the new product on the floor.

So I think we know without really much question that we're gaining some market share in some really nice areas. It's just hard for us to recognize that until those things hit the floor. So I guess my gut would tell me, it's probably getting better. I mean there's only so much limit of inventory. Hopefully, a strong Labor Day. If that bears, that will help move some things through the channel. I think in the mattress side, it's probably a bigger inventory position on bed-in-a-box products than it would be traditional retail products. But again, we don't have actual data on it. We just continue to hear from our customers that they can't pull through a new launch until they -- until the retail areas flush out inventory that's already prepared.

Boyd, any more comments from you specific to upholstery, about that?

Yes. I would just say I agree Iv that I think indications are that it is starting to improve and that some of the inventories at the retail and manufacturing levels are starting to come down some. Of course, when that's going to and how that's going to play out is dependent on the pace of retail purchases by the consumer, which has been slowing on the furniture side. So it's still a little difficult to say exactly when and at what pace that inventory will be normalized again. But I think indications are that it's starting to be progress made and some lowering of that is now taking place.

Okay. And then turning your attention to your working capital, your own inventory. You say you're continuing to work to lower inventory in the mattress business. Can you give us a little color on where you think you're still a little over inventoried, where you think you're a little bit -- is there any areas where you're under inventoried, for instance, in raw materials in China as you ramp that up? Have you got any areas where you need to build inventory?

Let me take a first stab at that, Rex. Good question, and I'll let Ken comment to it as well. The reason we think there's some inventory adjustment for us still to go through is on the mattress fabrics side first, and that's probably where we have some low-hanging fruit we can work on. We have further finished goods work we can do, for sure. And having some inventory is always part of the mattress fabrics business because it's generally a make-to-stock model. We're over inventoried in some areas that we can move. We don't think anything there is obsolete, although we recognize that we have to do some price discounting to move things in certain situations.

We also have a strong position of raw material inventory that we could say we bought strategically during a time of supply chain challenge, and we would have expected to move that through production and into a customer by now. But just with the slower conditions, it's prevented us moving it through as quick as we wanted to.

So there still will be some tailwind, both in finished goods and raw materials on the mattress side of the business. I don't think today we're in a bad inventory position at all in our upholstery fabrics business, and we always have to manage that as we move towards Q3 or the Chinese New Year period would come into play, but we're already planning for that and already watching it in advance of that.

Ken, any more comments from you?

No, I think you covered it well. I think we've obviously focused on all aspects of inventory, both raw materials and finished goods and looking at current needs versus expected demand. So yes, I think you've covered it well, and we're looking at all opportunities to get our inventory down further without affecting our performance.

Okay. And then one other just kind of a detailed modeling question. Your payables were a significant source of cash in this quarter and I assume that as cost comes down in the coming quarter, that paying off some of those payables is part of that. Can you give me an idea of how much of a drag that's going to be on cash in the next quarter or 2?

Rex, we -- you jumbled up a minute there. I know you were asking us about payables, but can you state that question one more time to make sure we hear?

Sure. Sorry, if there was a little static on the line. Payables were a big source of cash in this quarter, and I assume that over the next couple of quarters that that's going to come down. And I'm just wondering for modeling purposes, for my model, can you give me an idea of how much cash consumption was going to be coming out of payables over the next couple of quarters?

Yes, Rex, this is Ken. That's difficult to quantify, but you are correct in that we had a nice normal build during Q1 as China came back online, and that normally happens in Q4 during normal years, but with the shutdown, it happened in Q1. So that was as expected. And as you pointed out and as you see in our projection, we are expecting to have some of that payable impact as we pay those bills in the second quarter.

I think beyond that, as Iv said, we are watching the situation with Chinese New Year in the third quarter. That can always have an impact on payables going forward. So that's -- we're going to have to balance that very carefully. So I think as we said, we're -- given the opportunity, we're going to extend payables where we can and strategically pay them where we can as well. And so I think just rest assured that on all fronts, we're going to watch it carefully and manage it as closely as we can with the understanding that we have to consider this potential impact for Chinese New Year as we go forward.

We hear it. A lot of time we're focused on your working capital management. That's why we're asking all these kind of detailed questions on that area. But again, congratulations on doing a really good job of managing that in the last couple of quarters. I'll pass this to some other questioners.

Thank you, Rex.

Our next question is coming from Anthony Lebiedzinski from Sidoti & Company.

Let me echo the positive comments about the balance sheet strength. Nice job there. So first, just a quick question on China. So there are some headlines today about yet another lockdown in China that's coming in the Chengdu region. Will that -- hopefully not have any impact on any, but I just wanted to clarify that whether that could be an issue?

Yes, Anthony, this is Boyd. And no, those recently announced shutdowns that have occurred are in areas that are not affecting any of our operations or our supply base. So there is no expected impacts from that, the most recent shutdowns there.

And Anthony, this is Iv. Boyd is definitely our resident China expert, with his long tenured success of our platform in that country. And it still remains an important part of our platform. And so we watch it very close. And Boyd's right, we don't anticipate problems. We also understand there are challenges everywhere in the world, specifically in China, and that's why we're continuing to make pivots to our platform just to be prepared for things that we may not see. But thankfully, today, we feel like our China platform is operating pretty well and in a good place coming from a tough place where we were up until June. But today, we're in a good spot.

That's great to hear. So I just wanted to clarify that. Obviously, there's a lot of headlines out there, so I just want you guys to publicly clear that up. So glad to hear that that's not an issue there for you now.

Okay. And then you talked about some expected efficiency gains, consolidating the High Point facility into Stokesdale. How should we think about the opportunities there for the cost savings for the balance of the year?

Yes, Anthony, it's Iv. Thanks for asking that question. Again, as we touched on in the script, our domestic cut-and-sew onshore business is very important to the start-up and emergency supply and just the general sustaining our cut-and-sew platform.

So what's good about this relocation is we have some space in our current facility in Stokesdale, where we can relocate our cut-and-sew operation. We're going to be able to exit some leases that we have in High Point, moving into a building that we own in Stokesdale. We're going to limit some freight. We're going to be much closer to the fabric production. It's going to allow some cross-training of associates. It's just there's a lot of built-in efficiency and built-in nuance and speed to market that's very positive for this move.

Ken, I don't know if you want to guide anything towards numbers to this, but this is probably not really going to impact us until Q3. We're going to make the move in Q2, and we're going to do it as quick as we can, but it's already underway. Employees have been notified. And I think there's a lot of excitement within our business about making this move. It feels very strategic for us.

So Ken, if you…

Yes. No. Anthony, I would say we're very early in the process. And like Iv said, it's going to be probably Q3. So we'll certainly, as we get closer, add more color to that, but it will be a material savings for sure. We just got to continue planning and execute the move up there, but it will be material.

Okay. That sounds great. So looking forward to further commentary about that next quarter.

And then in terms of the labor challenges, so obviously that was an issue during the quarter. I mean do you think the worst is behind you in terms of those challenges?

Anthony, this is Iv. It's an excellent question. The labor challenges have been very bumpy for us over the last year. And let's make sure I couch that. It's bumpy for us. And our domestic operations would impact our mattress fabric business and our Read Window Products business in Knoxville.

We have seen it. Over the last year, it's been difficult. It's gotten better. It got difficult again in Q1, and now it's better again. So I'd like to think the worst is behind us, but it's just been so bumpy.

I think our employees -- we've done the right things in terms of wage rate movement. I know we're doing the right things on employee retention. We're showing our associates how they can grow in the company. I believe most of them are very happy with the direction and the opportunities they see in front of them. But we've been surprised on labor challenges. So I certainly hope the worst of it is behind us, but we'll be watching that really close. And today, we're in a good staffing position, and that certainly helps as we look forward.

Got it. Okay. And then you guys talked about the popularity of the LiveSmart performance product. Just wanted to get a better sense how big is that piece of the business and whether or not you expect that to perform better than the rest of your fabrics that you [offer to supersede that]?

Yes, Anthony, you were breaking up there a little bit, but I think -- this is Boyd. And I think I understood your question as far as the strength of the LiveSmart business and how that's contributing to driving our overall business. And yes, that entire performance category of product has been our main driver of growth for the past couple of years now. And we have continued to enhance and add product offering with new innovations into that product category umbrella.

Some of the latest things we've done is we've recently come out with an indoor outdoor with UV protection. And as we said now for maybe a couple of quarters, we are really seeing the strength along the sustainability demand and desire in the marketplace and our sustainability products under our Evolve product category, continue to really be gaining ground in the market and gaining traction and being very well received. We expect that to continue to be a big driver of our growth going forward is the -- with the success that we're seeing and the reaction we're having to this whole performance category.

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

Thank you very much, operator. And again, thanks to all of you for your participation and your interest in Culp, and we certainly look forward to updating you on our progress next quarter. Hope everyone has a nice day and a long Labor Day weekend.

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