(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.

美好的一天，歡迎參加 Culp, Inc. 2023 財年第一季度收益電話會議。 （操作員說明）請注意正在記錄此事件。

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

我現在想把會議交給德魯安德森。請繼續。

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

早上好，歡迎參加 Culp 電話會議，回顧公司 2023 財年第一季度的業績。

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.

在我們開始時，讓我聲明，今天上午的電話會議將包含有關公司業務、財務狀況和前景的前瞻性陳述。前瞻性陳述是包括對未來事件或結果的預測、預期或信念的陳述，或者不是歷史事實的陳述。由於各種風險和不確定性，公司的實際業績可能與前瞻性陳述所表明的存在重大差異。這些風險和不確定性在我們定期提交的 SEC 文件中進行了描述，包括公司最近提交的 10-K 表格和 10-Q 表格文件。告誡您不要過分依賴今天做出的前瞻性陳述，每項此類陳述僅代表今天。我們不承擔更新或修改前瞻性陳述的義務。

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.

此外，在本次電話會議期間，該公司將討論非公認會計準則財務指標。這些非 GAAP 財務指標與最直接可比的 GAAP 財務指標的對賬包含在新聞稿的表格中，該新聞稿作為公司昨天提交的 8-K 的展示，並發佈在公司網站 culp.com 上。作為今天電話會議的網絡廣播的一部分，公司網站上還提供了帶有支持性摘要財務信息的幻燈片演示。

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

有了這個，我現在將把電話轉給 Culp 總裁兼首席執行官 Iv Culp。請繼續，先生。

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.

早上好，感謝您今天加入我們。我想歡迎您參加與分析師和投資者的季度電話會議。今天與我通話的是首席財務官 Ken Bowling；和我們的室內裝潢面料業務總裁 Boyd Chumbley。

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.

我將以一些運營開場評論開始電話會議，然後肯將審查本季度的財務業績。之後，我將簡要介紹我們每個運營部門的具體戰略行動，Ken 將審查我們 2023 財年第二季度的業務前景。我們將很樂意回答您的問題。

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.

與 2022 財年第四季度相比，我們第一季度的業績反映了一些環比改善。但是，正如預期的那樣，由於國內床墊行業和住宅家具行業的消費者需求放緩，銷售和經營業績仍然受到很大壓力。這種行業疲軟對我們產品需求的影響因零售和製造商庫存過剩而加劇，這繼續延遲發貨和新產品推出的時間。

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.

本季度的經營業績也受到持續通脹壓力的影響，以及我們的床墊面料業務和我們的閱讀窗產品業務中反復出現的勞動力挑戰，導致本季度員工培訓成本增加和運營效率低下。我們還預計，與我們在海地的新室內裝潢面料裁剪和縫紉工廠的產能增加相關的成本會增加。

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.

儘管存在這些持續的不利因素，但我對我們對營運資金管理的不懈關注感到滿意，包括整個季度的庫存減少。我們在第一季度結束時的現金頭寸高於預期，現金為 1890 萬美元，未償還借款為 0。我們在本季度產生了 530 萬美元的運營現金流和 450 萬美元的自由現金流。

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.

在當前期間，我們認識到宏觀行業銷售疲軟，我們充分理解管理庫存和整體營運資金以保護我們的資產負債表並為未來做好準備的重要性。

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.

在整個季度中，我們繼續在我們的每項業務中執行我們的產品驅動戰略，重點是設計創意和創新。在中國解除與 COVID 相關的限制後，我們的設施於 6 月以正常產能恢復運營，我們在整個季度利用我們的全球製造和採購平台來滿足客戶不斷變化的需求。

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.

本季度，我們還將繼續增加我們在海地新的室內裝潢面料裁剪和縫紉工廠的產能。隨著我們的員工獲得更多培訓和經驗，該工廠現在配備齊全，每週產量不斷擴大。

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.

作為一家整體公司，我們熱衷於提高我們在海地的近岸產能，擁有 2 家剪縫床墊套設施和 1 家剪縫裝飾套件設施。我們相信這個平台為我們的客戶提供了他們業務所需的敏捷性和價值。海地是 Culp 未來的一個重要地點，我們相信我們擁有一個出色的平台，可以在這兩個業務中使用裁剪和縫製產品。

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.

我們也很高興地宣布，Tommy Bruno 將於下週 9 月 6 日加入床墊面料領導團隊，擔任執行副總裁，預計他將在今年年底 Sandy Brown 退休時擔任部門總裁。 Tommy 從 Tempur Sealy International 加入我們，自 2018 年起擔任替代渠道業務發展副總裁。在此之前，Tommy 在 Tempur Sealy 擔任 Comfort Revolution 的高級副總裁兼首席財務官 8 年。 Tommy 在財務、運營、戰略和管理等多個領域帶來了平衡的經驗，他對床上用品行業的廣泛了解將幫助我們加強業務。我們相信 Tommy 非常適合我們的文化以及我們在 Culp Home Fashions 的員工，我們相信他將支持我們未來戰略計劃的執行。

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.

我們特別高興 Tommy 將有機會在過渡期間與 Sandy 合作，並從她對 Culp Home Fashions 的深入了解中學習。在計劃中的過渡之後，Tommy 將繼續從 Sandy 的經驗中受益，她將繼續作為戰略顧問支持床墊面料部門。我們非常感謝 Sandy 39 年來一直致力於為 Culp 提供服務。我們尊重她的許多貢獻，我們感謝她將在我們的業務中發揮的持續作用。

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.

展望未來，我們預計當前的經濟環境將繼續影響消費者支出趨勢，導致行業持續疲軟，這將至少在 2023 財年第三季度影響我們的業務。我們正在努力創造現金、降低成本、提高效率並在面對這些重大挑戰時留住人才，同時確保我們能夠保持競爭優勢並在條件正常時滿足消費者和客戶的需求。

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.

重要的是，我們的市場地位依然穩固，我們將繼續專注於我們的產品創意和創新。我們對預期的新職位和產品開發機會感到興奮，隨著宏觀環境的改善，我們對 Culp 的未來保持樂觀。

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

我現在將把電話轉給肯，他將審查本季度的財務業績。

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.

謝謝，IV。正如之前在電話會議上提到的，我們已經在我們的投資者關係網站上發布了幻燈片，其中涵蓋了關鍵績效指標。我們還發布了我們的資本配置策略。

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.

以下是第一季度的財務亮點。淨銷售額為 6260 萬美元，與去年同期相比下降 24.6%，這對我們的業務來說是一個強勁的季度。該公司報告的運營虧損為 470 萬美元，而去年同期的運營收入為 330 萬美元，而上一財年第四季度的運營虧損為 540 萬美元。我稍後將更詳細地評論部門銷售和運營業績。

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.

第一季度的淨虧損為 570 萬美元或每股攤薄收益 0.47 美元，而去年同期的淨收入為 230 萬美元或每股攤薄收益 0.18 美元。我們第一季度的整體經營業績受到銷售額下降、持續通脹壓力以及床墊面料業務和我們的 Read Window 業務反復出現的勞動力挑戰的顯著影響，導致本季度員工培訓成本增加和運營效率低下。我們還在海地新建的室內裝潢面料裁縫工廠增加了與產能增加相關的額外成本。這些壓力被本季度總 SG&A 費用的減少部分抵消，主要是由於激勵薪酬費用減少。

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.

本財年第一季度的有效所得稅率為負 18.7%，而去年同期為 28.7%。我們本財年第一季度的有效所得稅稅率受到公司在美國和外國子公司之間收益組合的影響。在本財年第一季度，我們在美國的業務發生了重大的稅前虧損，但由於對我們的美國淨遞延所得稅資產應用了估值津貼，我們無法報告與這一虧損相關的所得稅收益。再加上我們第一季度的所有應稅收入都是由我們在中國和加拿大的海外業務賺取的，這兩個地區的所得稅稅率高於美國，導致該季度的所得稅率為負。

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.

我們本財年第一季度的現金所得稅支付總額為 637,000 美元，我們目前預計整個 2023 財年的現金所得稅支付約為 280 萬美元。重要的是，我們本財年估計的現金所得稅支付僅是管理層當前的預測，全年可能會受到我們位於中國和加拿大的外國子公司的實際收益與年度預測的影響，以及與我們中國相關的匯率變化運營等因素。

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.

現在讓我們來看看我們的業務部門。床墊面料板塊一季度銷售額為2940萬美元，同比下降31.8%，環比同比下降1.4%。本季度的銷售，包括在此期間生效的定價和附加費措施，受到國內床墊行業消費者需求持續放緩的巨大壓力。隨著床墊製造商和零售商繼續解決庫存過剩問題，推遲了發貨和新產品推出的時間，這種行業疲軟的影響加劇了。

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.

本季度的營業虧損為 290 萬美元，而一年前的營業收入為 360 萬美元。我們今年第一季度的經營業績受到銷量下降、持續的勞動力挑戰（包括招聘和培訓新員工造成的效率低下）以及原材料成本上漲等因素導致的經營效率低下的巨大壓力。這些壓力被本季度較低的 SG&A 略微抵消，主要是由於激勵薪酬費用較低。

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.

對於室內裝潢面料部門，第一季度的銷售額為 3320 萬美元，比去年同期下降 16.9%，這是該部門異常強勁的一個季度。與上一財年第四季度相比，室內裝飾面料部門的銷售額依次增長了 22.4%。

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.

由於住宅家具行業的新零售業務放緩，需求減少，本季度住宅裝飾面料產品的銷售受到壓力。然而，我們的室內裝潢業務的收入繼續復甦——在我們的酒店業務中，與去年同期相比，我們的酒店合同面料業務的銷售額有所增加，儘管我們的閱讀窗業務的銷售額同比持平，主要是由於勞動力影響產量的挑戰。與去年同期相比，第一季度的銷售業績得到了該期間有效的價格和附加費措施的補充。

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.

本季度的運營收入為 542,000 美元，而一年前的運營收入為 230 萬美元。值得注意的是，542,000 美元的營業收入扭轉了上一財年第四季度 116,000 美元的虧損。與去年同期相比，我們本財年第一季度的經營業績受到銷售額下降、勞動力挑戰和通貨膨脹壓力的影響，影響了該部門海地的再經營和額外的員工培訓成本以及運營效率低下——在我們的新海地裁縫工廠繼續通過其全部計劃產量水平擴大產能。期內的經營業績受到與我們在中國的業務相關的有利匯率的積極影響。

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.

現在我將轉向資產負債表。截至第一季度末，我們報告了 1890 萬美元的現金和 0 項未償債務。相比之下，截至上一財年末，現金為 1460 萬美元，未償債務為 0。

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.

本財年前 3 個月的運營現金流和自由現金流分別為 530 萬美元和 450 萬美元，而前 3 個月的運營現金流和自由現金流分別為 160 萬美元和負 782,000 美元上一財年的幾個月。我們在本財年第一季度的運營現金流和自由現金流受到營運資金管理的有利影響，包括主要與公司在中國的業務相關的應付賬款增加，因為本季度取消了與 COVID 相關的限制，減少庫存和降低資本支出。

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.

值得注意的是，與上一財年第四季度相比，我們的庫存減少了 280 萬美元或 4.2%，與上一財年第三季度末的峰值水平相比，我們的庫存減少了 940 萬美元或 12.8%年。

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.

在本財年第一季度暫停我們普通股的季度現金股息後，公司在本財年第一季度沒有支付任何股息。該公司在本財年第一季度也沒有回購任何股票，在我們目前的股票回購計劃下留下了大約 320 萬美元。儘管目前獲得了股票回購授權，但我們預計本財年第二季度不會有任何活動，因為我們仍然專注於保持流動性並為支持未來的增長機會做好準備。

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

有了這個，我會把電話轉回給 Iv。

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

謝謝你，肯。讓我對每個部門再發表一些評論，從床墊面料部分開始。

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.

儘管該業務面臨逆風，但 Culp Home Fashions 在整個季度仍專注於營運資金管理和現金產生，將庫存減少 250 萬美元，平衡原材料與生產需求，並在本季度經營虧損的情況下產生現金。隨著我們進入第二季度，CHS 將繼續關注這一重點，成品和原材料的庫存可能進一步減少。

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.

我們敬業的員工團隊為這項業務執行了我們以產品為導向的戰略，重點是創新、設計創意和個性化的客戶服務。我們在第一季度開始看到該業務推出了一些新產品，我們預計隨著客戶處理現有庫存以及零售商計劃在他們的地板上更新產品，從 2023 日曆年初開始更多的推出.然而，這些新產品發布的收益目前正被行業疲軟所抵消，這正在影響對該細分市場傳統業務的需求。

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.

此外，管理層將繼續努力控製成本，並在第二季度對某些產品線實施額外的目標價格上漲，以幫助抵消原材料成本的持續上漲。

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.

我們還將在第二季度將國內床墊套裁縫業務從其位於北卡羅來納州海波因特的當前位置轉移並整合到我們位於北卡羅來納州斯托克斯代爾的現有 CHF 工廠。我們的 CHF 裁縫平台是我們戰略方向的重要組成部分，我們擁有無與倫比的陸上、近岸和海上能力的服務模式。我們在岸業務的搬遷將提高效率，並將進一步補充我們不斷增長且廣受好評的海地近岸業務。我們還將繼續對我們的面料和覆蓋平台進行勞動力調整，以適應需求狀況。

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.

現在對室內裝潢面料部分發表一些評論。儘管該季度的銷售額與去年同期相比有所下降，但與上一財年第四季度相比，銷售額確實環比增長了約 22.4%，這得益於 COVID 停工的解除，這極大地影響了我們在上一財年末的中國業務年。這些停工現已完全解除，我們目前以正常產能運營。我們還看到第一季度的經營業績連續改善，扭轉了上一財年第四季度的經營虧損。本季度，我們在新的海地室內裝潢裁剪和縫紉設施中繼續增長。該設施現已配備齊全，並且隨著我們的員工在培訓方面獲得更多經驗，其每週產量繼續增加。與瑞士法郎相似，海地是我們裁剪和縫製內飾套件戰略方向的關鍵部分。

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.

儘管影響住宅家具行業的消費者支出趨勢發生了變化，但我們相信我們的室內裝潢面料業務憑藉其可擴展的全球平台以及對創新產品的持續關注，包括我們廣受歡迎的 LiveSmart 性能產品組合，長期處於有利地位。我們繼續跟進 LiveSmart 的成功，包括最近增加了帶紫外線性能的室內室外產品線，並且我們正在擴展我們的 LiveSmart Evolve 可持續發展系列。

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.

國內市場的可持續性現在是越來越多消費者的首要考慮因素，這將繼續成為我們持續創新的一部分。我們專注於為家庭和我們的產品線帶來性能和可持續性創新，同時讓普通消費者能夠負擔得起。

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.

我們繼續多樣化我們的面料開發和採購選擇，以增強我們全球平台內的供應鏈彈性。我們還將繼續根據需要擴展我們靈活的中國平台，以適應需求趨勢，同時也認識到我們的製造和採購能力在我們的全球平台中向其他地點轉移。

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

肯現在將討論 2023 財年第二季度的總體前景，然後我們將回答一些問題。

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.

我們繼續應對各種不利因素，包括影響消費者支出的顯著通脹壓力、製造商和零售商的高庫存水平、充滿挑戰的勞動力市場和其他宏觀經濟不確定性。儘管該公司憑藉其產品驅動的戰略和靈活的全球平台在長期內處於有利地位，但其目前的狀況可能會至少在本財年第三季度繼續對業績造成壓力。

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.

由於宏觀環境的持續波動，我們僅為本財年第二季度提供有限的連續財務指導。我們預計本財年第二季度的淨銷售額將比本財年第一季度略有下降。我們預計本財年第二季度的綜合經營虧損與本財年第一季度相當。

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.

我們還預計，截至本財年第二季度末，我們的現金狀況將略低於本財年第一季度末，但高於上一財年末。

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.

隨著我們應對當前的挑戰，我們將繼續專注於審慎的財務管理，目標是始終保持強勁的資產負債表，特別是在確保營運資金的戰略平衡方面。我們對 Culp 的未來持樂觀態度，我們知道財務穩定對我們的成功至關重要。

With that, we will now take your questions.

有了這個，我們現在將回答您的問題。

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

（操作員說明）我們的第一個問題來自 Water Tower 的 Rex Henderson。

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.

我要祝賀你在非常困難的情況下保護你的現金頭寸和保護資產負債表方面做得非常出色。因此，您應該為此獲得很多讚譽。

Thank you, Rex.

謝謝你，雷克斯。

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?

我的第一個問題是真的 - 我想討論 - 你說有 - 你的下游，你的一些客戶，製造商，零售商庫存過剩。我想知道你在趨勢中看到了什麼。通過本季度，您是否看到這個問題變得更糟，變得更好？你對最糟糕的地方是什麼以及清除需要多長時間有什麼期望？

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.

雷克斯，謝謝你的問題。這是IV。我將從這個開始，我很高興讓博伊德更具體地評論他在我們業務的室內裝潢部分所看到的內容。

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.

對此，雷克斯，真正的答案是我們不能 100% 確定。我只能告訴你的是，我們繼續聽到，當我們發布新產品時，我們從客戶那裡聽到零售業對其中一些新產品的推出感到非常興奮，但他們不准備推出這些產品，直到他們清空一些庫存他們在他們的系統中，他們想在他們把新產品放在地板上之前把它排除在外。

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.

所以我認為我們毫無疑問地知道我們在一些非常好的領域獲得了一些市場份額。在這些事情發生之前，我們很難認識到這一點。所以我想我的直覺會告訴我，它可能正在好轉。我的意思是只有這麼多的庫存限制。希望，一個強大的勞動節。如果這能承受，那將有助於通過渠道轉移一些東西。我認為在床墊方面，與傳統零售產品相比，盒裝床產品的庫存位置可能更大。但同樣，我們沒有關於它的實際數據。我們只是繼續從我們的客戶那裡聽到他們無法通過新的發布，直到他們 - 直到零售區沖走已經準備好的庫存。

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

博伊德，你對室內裝潢有什麼更多評論嗎？

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.

是的。我只想說我同意 Iv，我認為有跡象表明它正在開始改善，並且零售和製造水平的一些庫存開始下降一些。當然，這種情況何時發生以及如何發生取決於消費者的零售購買速度，而家具方面的零售購買速度一直在放緩。因此，確切地說庫存將在何時以及以何種速度再次正常化仍然有點困難。但我認為有跡象表明它已經開始取得進展，並且現在正在有所降低。

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?

好的。然後把你的注意力轉向你的營運資金，你自己的庫存。您說您將繼續努力降低床墊業務的庫存。你能告訴我們你認為你仍然有點庫存過剩的地方嗎？你認為你有點庫存的地方 - 有沒有你庫存不足的地方，例如中國的原材料當你加速的時候？您是否有任何需要建立庫存的區域？

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.

讓我先嘗試一下，雷克斯。好問題，我也會讓肯對此發表評論。我們認為仍有一些庫存調整需要我們進行的原因首先是床墊面料方面，這可能是我們可以努力實現的一些容易實現的目標。當然，我們還有可以做的進一步成品工作。擁有一些庫存始終是床墊面料業務的一部分，因為它通常是按庫存生產的模式。我們在一些可以移動的領域庫存過多。我們不認為任何東西都過時了，儘管我們認識到我們必須做一些價格折扣才能在某些情況下搬家。

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.

我們還擁有強大的原材料庫存，我們可以說我們是在供應鏈挑戰期間戰略性地購買的，我們本來希望到現在將其通過生產轉移到客戶手中。但只是在較慢的條件下，它阻止了我們盡可能快地移動它。

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.

因此，在床墊業務的成品和原材料方面，仍然會有一些順風。我不認為今天我們的室內裝潢面料業務處於糟糕的庫存狀況，隨著我們進入第三季度或農曆新年期間開始發揮作用，我們總是必須管理這一點，但我們已經計劃並提前觀看。

Ken, any more comments from you?

肯，你還有什麼意見嗎？

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.

不，我認為你覆蓋得很好。我認為我們顯然已經關注庫存的各個方面，包括原材料和成品，並查看當前需求與預期需求。所以是的，我認為你已經很好地涵蓋了它，我們正在尋找所有機會在不影響我們業績的情況下進一步降低庫存。

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?

好的。然後另一個只是一個詳細的建模問題。您的應付賬款是本季度的重要現金來源，我認為隨著下一季度成本的下降，支付其中一些應付賬款是其中的一部分。你能告訴我下一季度或第二季度現金會有多大的拖累嗎？

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?

雷克斯，我們——你在那兒搞砸了一分鐘。我知道您在問我們有關應付賬款的問題，但您能否再說明一下這個問題以確保我們聽到？

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?

當然。對不起，如果有一點靜電就行了。應付賬款是本季度的一大現金來源，我認為在接下來的幾個季度中，這種情況將會下降。而且我只是想知道出於建模目的，對於我的模型，您能否告訴我在接下來的幾個季度中，應付賬款中將有多少現金消耗？

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.

是的，雷克斯，這是肯。這很難量化，但你是對的，因為隨著中國重新上線，我們在第一季度有一個很好的正常構建，這通常發生在正常年份的第四季度，但隨著關閉，它發生在第一季度。所以這正如預期的那樣。正如您所指出的以及您在我們的預測中看到的那樣，我們預計在第二季度支付這些賬單時會產生一些應付影響。

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.

我認為除此之外，正如 Iv 所說，我們正在關注第三季度中國新年的情況。這總是會對未來的應付賬款產生影響。所以這就是——我們將不得不非常小心地平衡這一點。所以我認為正如我們所說，我們 - 如果有機會，我們將在我們可以的地方擴大應付賬款，並在我們可以的地方戰略性地支付他們。因此，我認為請放心，在所有方面，我們都會仔細觀察並儘可能密切地管理它，因為我們理解在我們前進的過程中必須考慮這種對中國新年的潛在影響。

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.

我們聽到了。很多時候，我們都專注於您的營運資金管理。這就是為什麼我們要在該領域提出所有這些詳細的問題。但是，再次祝賀您在過去幾個季度中做得非常好。我會把這個傳遞給其他一些提問者。

Thank you, Rex.

謝謝你，雷克斯。

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

我們的下一個問題來自 Sidoti & Company 的 Anthony Lebiedzinski。

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?

讓我回應對資產負債表實力的積極評價。那裡的工作很好。首先，關於中國的一個簡短問題。因此，今天有一些頭條新聞是關於成都地區即將到來的中國又一次封鎖。這是否會 - 希望不會對任何人產生任何影響，但我只是想澄清這是否可能是一個問題？

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.

是的，安東尼，這是博伊德。不，最近宣布的停工發生在不影響我們的任何運營或供應基地的地區。所以沒有預期的影響，最近的停工在那裡。

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.

安東尼，這是IV。 Boyd 絕對是我們的常駐中國專家，他在該國長期為我們的平台取得成功。它仍然是我們平台的重要組成部分。所以我們非常仔細地觀察它。博伊德說得對，我們沒有預料到問題。我們也了解世界各地都存在挑戰，特別是在中國，這就是為什麼我們繼續轉向我們的平台，只是為我們可能看不到的事情做好準備。但值得慶幸的是，今天，我們覺得我們的中國平台運行良好，並且處於一個好地方，來自我們一直到 6 月份的艱難時期。但是今天，我們處於一個好位置。

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.

聽到這個消息我很高興。所以我只是想澄清一下。顯然，那裡有很多頭條新聞，所以我只想讓你們公開澄清這一點。很高興聽到這對您來說不是問題。

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?

好的。然後你談到了一些預期的效率提升，將 High Point 設施整合到斯托克斯代爾。我們應該如何考慮在今年餘下時間中節省成本的機會？

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.

是的，安東尼，它是IV。謝謝你問這個問題。再次，正如我們在劇本中提到的，我們的國內裁剪和縫製業務對於啟動和應急供應非常重要，並且只是維持我們的裁剪和縫製平台的一般性。

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.

所以這次搬遷的好處是我們在斯托克斯代爾的現有工廠中有一些空間，我們可以在那裡搬遷我們的裁剪和縫紉業務。我們將能夠退出我們在 High Point 的一些租約，搬進我們在斯托克斯代爾擁有的建築物。我們將限制一些運費。我們將更接近面料生產。這將允許對員工進行一些交叉培訓。只是有很多內在的效率、內在的細微差別和上市速度，這對這一舉措非常有利。

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.

肯，我不知道您是否想針對數字對此進行任何指導，但這可能要到第三季度才會真正影響我們。我們將在第二季度採取行動，我們將盡快採取行動，但它已經在進行中。已通知員工。而且我認為我們的業務中有很多關於採取這一舉措的興奮。這對我們來說非常具有戰略意義。

So Ken, if you…

所以肯，如果你……

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.

是的。不，安東尼，我想說我們在這個過程中還很早。就像 Iv 說的那樣，這可能是第三季度。因此，隨著我們越來越近，我們肯定會為其添加更多顏色，但這肯定會節省材料。我們只需要繼續計劃並在那裡執行移動，但這將是重要的。

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

好的。聽起來不錯。因此，期待對下一季度的進一步評論。

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?

然後就勞動力挑戰而言，顯然這是本季度的一個問題。我的意思是，就這些挑戰而言，您認為最壞的情況已經過去了嗎？

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.

安東尼，這是IV。這是一個很好的問題。去年，我們面臨的勞工挑戰非常坎坷。讓我們確保我沙發。對我們來說很坎坷。我們的國內業務將影響我們在諾克斯維爾的床墊面料業務和閱讀窗產品業務。

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.

我們已經看到了。在過去的一年裡，這很困難。它變得更好了。第一季度再次變得困難，現在又好轉了。所以我想認為最壞的情況已經過去，但它是如此顛簸。

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.

我認為我們的員工——我們在工資率變動方面做了正確的事情。我知道我們在留住員工方面做的事情是正確的。我們正在向我們的員工展示他們如何在公司中成長。我相信他們中的大多數人都對他們看到的方向和機會感到非常滿意。但我們對勞動力挑戰感到驚訝。所以我當然希望最壞的情況已經過去，但我們會密切關注。今天，我們處於良好的人員配置位置，這肯定有助於我們展望未來。

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]?

知道了。好的。然後你們談到了 LiveSmart 性能產品的受歡迎程度。只是想更好地了解這部分業務有多大，以及您是否期望它比您 [提供取代它] 的其他面料表現更好？

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.

是的，安東尼，你在那里分手了一點，但我想——這是博伊德。我想我理解你的問題，就 LiveSmart 業務的實力以及這對推動我們的整體業務有何貢獻。是的，在過去的幾年裡，整個性能類別的產品一直是我們增長的主要驅動力。我們繼續通過新的創新來增強和添加產品供應到該產品類別的保護傘中。

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.

我們最近所做的一些事情是，我們最近推出了具有紫外線防護功能的室內室外。正如我們現在所說的可能幾個季度，我們確實看到了市場對可持續性需求和願望的力量，以及我們 Evolve 產品類別下的可持續性產品，繼續真正在市場上取得進展並獲得牽引力和很受歡迎。我們預計，這將繼續成為我們未來增長的主要驅動力——我們所看到的成功以及我們對整個績效類別的反應。

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

我們的問答環節到此結束。我想把會議轉回給 Iv Culp 做任何閉幕詞。

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.

非常感謝您，接線員。再次感謝大家的參與和對 Culp 的興趣，我們當然期待在下個季度向您介紹我們的進展情況。希望每個人都有一個美好的一天和一個漫長的勞動節週末。

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

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。