(CULP) 2023 Q3 法說會逐字稿

Good morning, and welcome to the Culp, Inc. Third Quarter Fiscal Year 2023 Earnings Conference Call. (Operator Instructions) Please note that this event is being recorded today. I would now like to turn the conference over to Dru Anderson. Please go ahead.

早上好，歡迎來到 Culp, Inc. 2023 財年第三季度收益電話會議。 （操作員說明）請注意，今天正在記錄此事件。我現在想將會議轉交給 Dru Anderson。請繼續。

Thank you. Good morning, and welcome to the Culp conference call to review the company's results for the third 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.

謝謝。早上好，歡迎參加 Culp 電話會議，回顧公司 2023 財年第三季度的業績。首先，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公司。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業績存在重大差異。這些風險和不確定性在我們定期向美國證券交易委員會提交的文件中有所描述，包括公司最近提交的 10-K 表格和 10-Q 表格。

Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations and financial results. You are cautioned not to place undue reliance on forward-looking statements made today, and each such statement speaks only as of today. We undertake no obligation to update or revise forward-looking statements.

我們目前不知道或我們目前認為不重要的其他風險和不確定性也可能影響我們的業務運營和財務結果。請注意不要過分依賴今天所做的前瞻性陳述，每份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 measurement 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，在此次電話會議中，公司將討論非 GAAP 財務衡量標準。這些非 GAAP 財務衡量指標與最直接可比的 GAAP 財務衡量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 的展品，並發佈在公司網站 culp.com 上。作為今天電話會議網絡廣播的一部分，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。

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

我現在將電話轉交給 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. A few housekeeping items. First, I want to let you all know that Tommy Bruno, President of our mattress fabrics business is unable to join us on the call today as he is traveling and working on the business, but we do plan to have him join us next quarter. I also want to point out that we have not posted our usual investor presentation or capital allocation strategy deck on our website as we are preparing a new refreshed investor presentation and improvement road map, which we expect to share within the next few weeks.

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。今天和我一起打電話的是首席財務官 Ken Bowling； Boyd Chumbley，我們的室內裝潢面料業務總裁。一些家政用品。首先，我想讓大家知道，我們床墊面料業務總裁 Tommy Bruno 今天無法參加我們的電話會議，因為他正在出差和處理業務，但我們確實計劃讓他在下個季度加入我們。我還想指出，我們沒有在我們的網站上發布我們通常的投資者介紹或資本配置策略平台，因為我們正在準備新的更新的投資者介紹和改進路線圖，我們希望在未來幾週內分享。

Lastly, I want to quickly thank our 1,400 employees around the world for their dedication and hard work over these challenging times. Our culture at Culp is special, and we are really proud of our associates. We are also grateful to have been awarded the Hearts Award from the Dallas Market Center and Accessories Resource team with nomination from the International Textile Alliance. We are honored to be recognized for our heart-based leadership.

最後，我想快速感謝我們在世界各地的 1,400 名員工，感謝他們在這個充滿挑戰的時代所做的奉獻和辛勤工作。我們在 Culp 的文化很特別，我們為我們的員工感到自豪。我們也很高興獲得達拉斯市場中心和配飾資源團隊頒發的紅心獎，並獲得國際紡織聯盟的提名。我們很榮幸因我們以心為本的領導力而獲得認可。

I'll now begin the call with some opening comments, including a discussion of key themes for the quarter and priorities as we look ahead. After that, Ken will review the financial results for the quarter, and I'll then take our -- then review our business outlook for the fourth quarter and we'll then take some questions. So when we think about the third quarter, there are really 3 major themes. Number one, current weak demand within the 2 industries we service. Number 2 is our focus on maintaining a strong balance sheet and managing our cash position; and number three, the transformation within our CHF mattress fabrics business.

我現在將以一些開放性評論開始電話會議，包括討論本季度的關鍵主題和我們展望未來的優先事項。之後，肯將回顧本季度的財務業績，然後我將回顧我們第四季度的業務前景，然後我們將回答一些問題。所以當我們考慮第三季度時，實際上有 3 個主要主題。第一，我們服務的兩個行業目前需求疲軟。第二是我們專注於維持穩健的資產負債表和管理我們的現金狀況；第三，我們 CHF 床墊面料業務的轉型。

Regarding Theme 1 on the demand side, our sales and operating results for the quarter reflect the continued weakness in the domestic mattress and residential home furnacing industries, especially related to unit volume. With sales at these levels, it is a very tough environment for Culp to thrive despite our market gains. We are a unit-driven company. And in the absence of solid furniture and bedding units being sold within the industry, it is challenging for us to run our facilities and manage our supply chain efficiently. And there's certainly much to complain about regarding macro conditions and inflationary pressures affecting consumer spending, those are things that are out of our control and that are definitely pressuring demand. But it goes deeper than that for Culp and the impacts are different by business segment.

關於需求方面的主題 1，我們本季度的銷售和經營業績反映了國內床墊和住宅家居行業的持續疲軟，尤其是與單位銷量有關。儘管我們的市場有所增長，但在這樣的銷售水平下，Culp 的發展環境非常艱難。我們是一個單位驅動的公司。在行業內沒有出售堅固的家具和床上用品的情況下，我們很難有效地運營我們的設施和管理我們的供應鏈。關於影響消費者支出的宏觀條件和通脹壓力，肯定有很多值得抱怨的地方，這些都是我們無法控制的事情，肯定會對需求造成壓力。但它比 Culp 的影響更深，而且影響因業務部門而異。

Our upholstery fabric segment has experienced a continued lag in residential business due to high inventory levels that are still being worked through and managed at manufacturers and retailers. We expect that could take a few more months to normalize. On our mattress fabrics segment, this business seems to be called in a temporary industry malaise, with some reports of mattress unit sales currently down as much as 25%. Within this tough demand backdrop, we are controlling what we can control in managing our business, including making strategic adjustments and working to expand our market position. We believe the slack will come out of the supply chain at some point and macro conditions will stabilize. When that incurs, we are extremely well positioned and expect much better results.

由於製造商和零售商仍在處理和管理的高庫存水平，我們的室內裝潢面料部門在住宅業務方面持續滯後。我們預計這可能需要幾個月的時間才能正常化。在我們的床墊面料領域，這項業務似乎陷入了暫時的行業萎靡不振，一些報告稱床墊單位銷售額目前下降了 25%。在這種嚴峻的需求背景下，我們在管理我們的業務方面正在控制我們可以控制的東西，包括進行戰略調整和努力擴大我們的市場地位。我們相信供應鏈中的閒置將在某個時候消失，宏觀環境將趨於穩定。當發生這種情況時，我們處於非常有利的位置並期待更好的結果。

Now let me turn to thing 2, which is continuing to manage a strong balance sheet and manage our cash position. This is one of the main things we can control, and I am very pleased with our management teams in both of our businesses for their diligence in maintaining our solid financial position. We have done an excellent job with inventory reductions with a favorable cash impact of $18.2 million since the end of the third quarter of last fiscal year. We have also managed accounts receivable effectively by improving our terms with key customers and navigating 3 major bankruptcies without any material impact.

現在讓我轉向第二件事，即繼續管理強大的資產負債表並管理我們的現金頭寸。這是我們可以控制的主要事情之一，我對我們兩家公司的管理團隊為維持我們穩健的財務狀況所做的努力感到非常滿意。自上財年第三季度末以來，我們在減少庫存方面做得非常出色，產生了 1820 萬美元的有利現金影響。我們還通過改善與主要客戶的條款並在沒有任何重大影響的情況下應對 3 次重大破產，有效地管理了應收賬款。

Additionally, we have generated positive cash flow for the first 9 months of this fiscal year, a significant improvement compared to last year, and we now expect to end this fiscal year with a cash level comparable to the end of last fiscal year. This is outstanding cash management and preservation in the face of very challenging times. Importantly, we also have no outstanding debt, and we have entered into a new asset-based revolving credit facility that enhances our liquidity position if we ever need it. We fully recognize that management of Culp's strong balance sheet is paramount to our future success.

此外，我們在本財年的前 9 個月產生了正現金流，與去年相比有了顯著改善，我們現在預計本財年結束時的現金水平與上一財年末相當。面對非常具有挑戰性的時代，這是出色的現金管理和保存。重要的是，我們也沒有未償債務，而且我們已經簽訂了一項新的基於資產的循環信貸安排，以在我們需要時增強我們的流動性狀況。我們充分認識到，管理 Culp 強大的資產負債表對我們未來的成功至關重要。

The third key theme for us, both for the quarter and as we look ahead is the business transformation underway in Culp Home Fashions, our mattress fabrics segment. This certainly falls within the scope of areas we can control, and we recognize that CHF mattress fabrics is the business that meets our most immediate attention. This is where we believe the majority of our value exists in what we think is our best opportunity for growth from current levels.

對於我們來說，本季度和展望未來的第三個關鍵主題是我們的床墊面料部門 Culp Home Fashions 正在進行的業務轉型。這當然在我們可以控制的範圍內，我們認識到CHF床墊面料是我們最直接關注的業務。這就是我們認為我們的大部分價值存在於我們認為是我們從當前水平增長的最佳機會的地方。

Our CHF mattress fabrics business is executing the transformation plan in every facet of the business, from processes to people. This business possesses a rich history with an excellent reputation and a strong global platform. While our market position remains solid, we have struggled through extremely volatile demand periods over the last 2 years, and we have needed better cost control and pricing as well as better overall discipline. We are in the process of transforming those areas, among others, under the leadership of new division President, Tommy Bruno. And we believe that engaging in this holistic business improvement strategy will position us to emerge even stronger when conditions normalize.

我們的 CHF 床墊面料業務正在業務的各個方面執行轉型計劃，從流程到人員。該企業擁有悠久的歷史、卓越的聲譽和強大的全球平台。雖然我們的市場地位依然穩固，但在過去 2 年中，我們在需求極度波動的時期苦苦掙扎，我們需要更好的成本控制和定價以及更好的整體紀律。在新任部門總裁 Tommy Bruno 的領導下，我們正在對這些領域進行轉型。我們相信，參與這一整體業務改進戰略將使我們在情況正常化時變得更加強大。

I am overwhelmingly pleased with the new leadership under Tommy as he brings an ideal mix of energy, strategic thinking and experience in the mattress industry. In Tommy short time with CHF and as reflected in our numerous recent announcements to trade publications and on our social media channels, we have already made excellent progress with getting the right people in the right places, including new managers in sales, customer service, operations and manufacturing. We are focusing on production efficiency, quality management and balancing our product mix to proper volume SKUs and study run schedules. We have an intensive focus on improving our operational excellence.

我對 Tommy 領導下的新領導層感到非常高興，因為他在床墊行業帶來了活力、戰略思維和經驗的完美結合。湯米在 CHF 的短暫時間以及我們最近向貿易出版物和我們的社交媒體渠道發布的眾多公告中所反映的那樣，我們已經在將合適的人選到合適的位置方面取得了很好的進展，包括銷售、客戶服務、運營方面的新經理和製造。我們專注於生產效率、質量管理和平衡我們的產品組合以適當的體積 SKU 和研究運行時間表。我們高度重視提高我們的卓越運營。

We are also noting now some raw material price improvement, although as we previously disclosed, we are still lagging somewhat in our price cost structure for existing products. Some good news is we are winning new business and gaining market position and our new opportunities are priced in line with current market costs. It was also very encouraging to see the activity level at the January Las Vegas market. The industry has previously been in a cycle of deferring new product introductions, which affects our unit volume. So we were pleased to see many new products and innovations presented at this market, featuring Culp mattress fabrics and sewn covers that are launching throughout calendar 2023.

我們現在還注意到一些原材料價格有所改善，儘管正如我們之前披露的那樣，我們在現有產品的價格成本結構方面仍然有些落後。一些好消息是我們正在贏得新業務並獲得市場地位，我們的新機會的定價與當前的市場成本一致。看到 1 月拉斯維加斯市場的活動水平也非常令人鼓舞。該行業之前一直處於推遲新產品推出的周期，這影響了我們的單位銷量。因此，我們很高興看到許多新產品和創新出現在這個市場上，其中包括將在整個 2023 年推出的 Culp 床墊面料和縫製床罩。

Looking ahead, we expect all of these elements will be the building blocks for a steady sequential improvement in CHF business. Though notably the price of -- the pace of our improvement will be dictated by overall macro industry demand. We are working diligently to regain profitability in fiscal 2024 and we do expect that CHF mattress fabrics will lead that recovery. Regarding our upholstery fabrics business, despite the elevated inventory levels affecting demand for our residential fabric products, we remain well positioned for the long term with our scalable global platform and innovative product offerings, including the popular portfolio of LiveSmart performance products.

展望未來，我們預計所有這些要素都將成為瑞士法郎業務穩步連續改善的基石。儘管值得注意的是——我們改進的速度將取決於整體宏觀行業需求。我們正在努力工作以在 2024 財年恢復盈利，我們確實預計 CHF 床墊面料將引領復甦。關於我們的室內裝潢面料業務，儘管庫存水平上升影響了我們住宅面料產品的需求，但我們憑藉可擴展的全球平台和創新產品（包括廣受歡迎的 LiveSmart 高性能產品組合）在長期內保持有利地位。

Our upholstery fabrics business has generally been more stable over the last 2 years in market volatility, supported in part by our hospitality contract business over the last year following its recovery from COVID impact. Hospitality contract accounted for approximately 30% of the segment sales for the third quarter. And while this percentage is higher than normal due to lower residential sales, it does reflect the ongoing solid performance of our hospitality contract business as well as the importance to our overall strategy of product diversification for this segment. We also took some action during the quarter to align our upholstery cut and sew platform in Haiti with current demand trends. While this did result in some restructuring charges, we were able to accomplish this adjustment without sacrificing our ability to support customers and grow our cut and sew business.

在過去 2 年的市場波動中，我們的室內裝潢面料業務總體上更加穩定，部分原因是我們的酒店合同業務在從 COVID 影響中恢復過來後，在過去一年中得到了部分支持。酒店合同約佔第三季度分部銷售額的 30%。雖然由於住宅銷售下降，這一百分比高於正常水平，但它確實反映了我們酒店合同業務的持續穩健表現，以及我們對該領域產品多元化的整體戰略的重要性。我們還在本季度採取了一些行動，使我們在海地的室內裝潢裁剪和縫紉平台與當前的需求趨勢保持一致。雖然這確實導致了一些重組費用，但我們能夠在不犧牲我們支持客戶和發展裁剪業務的能力的情況下完成這一調整。

Ken is going to go into more detail on this and his review of divisional performance, but I'm pleased that we will have a go-forward annualized savings from this section, and we will recoup a majority of our prepaid rent costs over time. Also I want to be very clear that we still view Haiti as a critical nearshore location for Culp. We have a strong mattress cover platform running in Haiti, and we expect Haiti to be an important part of the company's future for cut and sewn mattress kit and covers.

肯將詳細介紹這一點以及他對部門績效的審查，但我很高興我們將從本節中獲得向前的年度化節省，並且我們將隨著時間的推移收回大部分預付租金成本。此外，我想非常清楚地表明，我們仍然將海地視為 Culp 的重要近岸位置。我們在海地擁有強大的床墊套平台，我們希望海地成為公司未來裁剪和縫製床墊套件和套子的重要組成部分。

I'll now turn the call over to Ken, who will review the financial results for the quarter, and then I'll come back and review the outlook for the fourth quarter of this fiscal year. Ken?

我現在將電話轉給肯，他將審查本季度的財務業績，然後我會回來審查本財年第四季度的前景。肯？

Thanks, Iv. As mentioned earlier on the call, we have posted a slide presentation to our Investor Relations website to cover certain summary financial information, and we will also post a new investor presentation in the upcoming weeks. Here are the financial highlights for the third quarter. Net sales were $52.5 million, down 34.6% compared with the prior year period. The company reported a loss from operations of $7.8 million compared with income from operations of $1.1 million for the prior year period. The loss from operations for the quarter includes $711,000 in restructuring expense relating to the rationalization of the upholstery fabrics cut and sew platform in Haiti that Iv mentioned earlier. I'll comment in more detail on divisional sales and operating performance in a moment, including more on this rationalization.

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一份幻燈片演示文稿，以涵蓋某些摘要財務信息，我們還將在接下來的幾週內發布一份新的投資者演示文稿。以下是第三季度的財務亮點。淨銷售額為 5250 萬美元，較上年同期下降 34.6%。該公司報告的運營虧損為 780 萬美元，而去年同期的運營收入為 110 萬美元。本季度的運營虧損包括 711,000 美元的重組費用，與 Iv 之前提到的海地裝飾織物裁剪和縫紉平台的合理化有關。稍後我將更詳細地評論部門銷售和經營業績，包括更多關於這種合理化的內容。

Net loss for the third quarter was $9 million or $0.73 per diluted share compared with a net loss of $289,000 or $0.02 per diluted share for the prior year period. Our overall operating performance for the third quarter was primarily affected by operating inefficiencies due to lower sales and holiday shutdowns affecting both of our businesses, operating inefficiencies in our upholstery fabric segment's cut and sew facility in Haiti and in our Read Window Products business, and restructuring charges associated with our Upholstery Fabrics segment.

第三季度淨虧損為 900 萬美元或攤薄後每股虧損 0.73 美元，而去年同期淨虧損為 289,000 美元或攤薄後每股虧損 0.02 美元。我們第三季度的整體運營業績主要受到運營效率低下的影響，原因是銷售額下降和假日停工影響了我們的業務，我們的室內裝飾面料部門在海地的裁剪和縫紉設施以及我們的 Read Window Products 業務運營效率低下，以及重組與我們的室內裝飾面料部門相關的費用。

Overall performance for the third quarter was also affected by $1.1 million in other expense, up from $322,000 for the prior year period due primarily to unfavorable foreign exchange rates associated with our operations in China. Notably, performance for the 9-month year-to-date period was favorably affected by foreign exchange rates associated with our China operations. SG&A expense for the quarter was also higher than prior year period due mostly to last year's reversal of accrued bonus and accrued stock compensation expense during the period.

第三季度的整體業績也受到 110 萬美元其他費用的影響，高於去年同期的 322,000 美元，主要原因是與我們在中國的業務相關的不利匯率。值得注意的是，今年迄今 9 個月的業績受到與我們中國業務相關的匯率的有利影響。本季度的 SG&A 費用也高於去年同期，這主要是由於去年期間應計獎金和應計股票補償費用的逆轉。

The effective income tax rate for the third quarter of this fiscal year was a negative 3.3% compared with 129% for the same period a year ago. Our effective income tax rate for the third quarter of this fiscal year was affected by the company's mix of earnings between our U.S. and foreign subsidiaries. Our cash income tax payments totaled $1.9 million for the first 9 months of this fiscal year and we currently expect cash income tax payments of $3.1 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 by a variety of factors over the course of the year.

本財年第三季度的實際所得稅率為負的 3.3%，而去年同期為 129%。我們本財年第三季度的實際所得稅率受到公司在美國和外國子公司之間的收益組合的影響。我們在本財年的前 9 個月支付的現金所得稅總額為 190 萬美元，我們目前預計整個 2023 財年的現金所得稅支付額為 310 萬美元。重要的是，我們估計本財年的現金所得稅支付只是管理層當前的預測，並且在這一年中可能會受到多種因素的影響。

Now let's take a look at our business segments. For the mattress fabrics segment, sales for the third quarter were $24.7 million, down 35.8% compared with last year's third quarter and down 5.8% compared sequentially with the second quarter of this fiscal year. Sales for the quarter were pressured by reduced demand with mattress industry analysis reflecting significant unit contraction. The impact of this industry softness was heightened as mattress manufacturers took longer than normal holiday shutdowns resulting in fewer billing days.

現在讓我們來看看我們的業務部門。對於床墊面料部門，第三季度銷售額為 2470 萬美元，與去年同期相比下降 35.8%，與本財年第二季度相比下降 5.8%。本季度的銷售額受到需求減少的壓力，床墊行業分析反映出單位收縮顯著。由於床墊製造商比正常假期停工時間更長，導致開票天數減少，因此該行業疲軟的影響加劇。

Manufacturers and retailers also continue to work to excess inventory, delaying the timing of shipments and new product rollouts. Although we did begin the rollout of some new customer programs near the end of the quarter. These new programs are priced in line with current market costs, and we expect to benefit as they expand across more sales channels and retail floors and as additional new product rollouts launched during this calendar year.

製造商和零售商還繼續努力解決庫存過剩問題，從而推遲發貨和新產品推出的時間。儘管我們確實在本季度末開始推出一些新的客戶計劃。這些新計劃的定價與當前市場成本一致，我們預計隨著它們在更多銷售渠道和零售樓層的擴展以及本日曆年推出的更多新產品而受益。

Operating loss for the quarter was $4.2 million compared with operating income of $364,000 a year ago. Our operating performance for the third quarter this year was primarily pressured by operating inefficiencies driven by lower sales volume and holiday shutdowns across both -- across our mattress fabrics locations. For the upholstery fabric segment, sales for the third quarter were $27.8 million, down 33.5% over the prior year, which was the segment's strongest sales -- quarterly sales performance since 2006. Sequentially, sales for the upholstery fabric segment were down 13.5% compared with the second quarter of this fiscal year.

本季度營業虧損為 420 萬美元，而一年前營業收入為 364,000 美元。我們今年第三季度的經營業績主要受到銷量下降和假期停工導致的運營效率低下的壓力——我們的床墊面料基地。對於室內裝潢織物部門，第三季度銷售額為 2780 萬美元，比上年同期下降 33.5%，這是該部門自 2006 年以來最強勁的銷售額——季度銷售業績。因此，室內裝潢織物部門的銷售額與去年同期相比下降了 13.5%與本財年第二季度。

Sales for the residential upholstery fabric products remained under pressure during the quarter by reduced demand driven by high inventory levels for the residential home furnishings industry. This pressure is expected to continue through at least the first quarter of next fiscal year as retailers and manufacturers work through their inventory positions. Demand remained solid in our hospitality business during the third quarter with sales for our hospitality contract business accounted for approximately 30% of the upholstery fabric segment's total sales.

由於住宅家具行業的高庫存水平導致需求減少，本季度住宅裝飾織物產品的銷售仍然面臨壓力。隨著零售商和製造商努力解決庫存狀況，預計這種壓力至少會持續到下一財年的第一季度。第三季度，我們酒店業務的需求依然強勁，酒店合同業務的銷售額約佔室內裝潢面料部門總銷售額的 30%。

Operating loss for the quarter was $420,000 compared with income from operations of $2.4 million a year ago. Our operating performance for the third quarter of this fiscal year as compared to the prior year period was mostly pressured by lower residential sales as well as operating inefficiencies in this segment's Haiti cut and sew facility and in its Read Window Products business. These pressures were partially offset by a significantly more favorable foreign exchange rate associated with this segment's operations in China as well as lower costs resulting from the restructuring of this segment's cut and sew platform in China during the prior quarter.

本季度的營業虧損為 420,000 美元，而一年前的營業收入為 240 萬美元。與去年同期相比，我們本財年第三季度的經營業績主要受到住宅銷售下降以及該部門海地裁剪和縫紉設施及其 Read Window Products 業務運營效率低下的壓力。這些壓力部分被與該部門在中國的業務相關的更有利的匯率以及上一季度該部門在中國的裁剪和縫紉平台重組導致的成本降低所部分抵消。

Based on demand trends and customer sentiment, we began a rationalization and consolidation of our cut and sew upholstery kit platform in Haiti through the end of the third quarter. This restructuring aligns our capacity and cost with current demand levels for upholstery kits, while still allowing us to support our customers and scale for additional capacity if conditions improve. The adjustment will be completed during the fourth quarter of this fiscal year and includes terminating a lease and relocating to an existing mattress cover facility. We expect annualized savings of approximately $1.5 million from this initiative, and we will recoup $2.4 million in prepaid rent expense over the next 6.5 years.

根據需求趨勢和客戶情緒，我們在第三季度末開始對我們在海地的裁剪和縫製內飾套件平台進行合理化和整合。這種重組使我們的產能和成本與當前對內飾套件的需求水平保持一致，同時仍然允許我們支持我們的客戶並在情況改善時擴大產能。調整將在本財年第四季度完成，包括終止租賃和搬遷到現有的床墊套設施。我們預計該計劃每年可節省約 150 萬美元，我們將在未來 6.5 年內收回 240 萬美元的預付租金費用。

Now I'll turn to the balance sheet. We reported $16.7 million in cash and no outstanding debt as of the end of the third quarter. This compares with $14.6 million in cash and investments and no debt as of the end of last fiscal year. Cash flow from operations and free cash flow were $4.6 million and $2.5 million, respectively, for the first 9 months of this fiscal year as compared with cash flow from operations and free cash flow of a negative $12.4 million and negative $18.5 million, respectively, for the first 9 months of last fiscal year. Our cash flow from operations and free cash flow during the first 9 months of this fiscal year were favorably affected by working capital management, namely reductions in inventory.

現在我將轉向資產負債表。截至第三季度末，我們報告有 1670 萬美元現金，沒有未償債務。相比之下，截至上一財年末，現金和投資為 1,460 萬美元，沒有債務。本財政年度前 9 個月的運營現金流和自由現金流分別為 460 萬美元和 250 萬美元，而前 9 個月的運營現金流和自由現金流分別為負 1240 萬美元和負 1850 萬美元上一財政年度的前 9 個月。本財政年度前 9 個月，我們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，即庫存減少。

Importantly, since the end of the third quarter of last fiscal year, inventory reduction has contributed $18.2 million to the company's cash position. Consistent with our focus on inventory, we are tightly managing our capital spending with emphasis on business-critical projects only. Capital expenditures through the first -- through the third quarter of this fiscal year were $1.6 million compared with $5.3 million for the same period last year. For the full fiscal year, we expect capital expenditures to be in the range of $2.5 million to $2.8 million. We also completed the closing of a new 3-year asset-based revolving credit facility of up to $35 million. Borrowing availability under this new facility is based on a calculation using certain of the company's accounts receivable and inventory determined on a monthly basis. While we do not currently foresee a need to borrow, we are pleased that as compared to our prior facility, this new facility gives us enhanced liquidity and more flexibility with minimal financial covenants as we continue to navigate a difficult environment.

重要的是，自上財年第三季度末以來，庫存減少為公司的現金狀況貢獻了 1820 萬美元。與我們對庫存的關註一致，我們嚴格管理我們的資本支出，只強調關鍵業務項目。本財年第一至第三季度的資本支出為 160 萬美元，而去年同期為 530 萬美元。對於整個財政年度，我們預計資本支出將在 250 萬至 280 萬美元之間。我們還完成了一項新的 3 年期資產循環信貸額度高達 3500 萬美元的關閉。這項新貸款下的借款可用性是基於使用公司每月確定的某些應收賬款和存貨的計算得出的。雖然我們目前沒有預見到需要藉款，但我們很高興，與我們之前的貸款相比，在我們繼續應對困難環境的過程中，這項新貸款以最少的財務契約為我們提供了更強的流動性和更大的靈活性。

The company did not pay any dividends during the third quarter of this fiscal year following the suspension of our quarter cash dividend on our common stock earlier in the year. The company also did not repurchase any shares during the third 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 fourth quarter of this fiscal year, and we remain focused on preserving liquidity and being positioned to support future growth opportunities.

在今年早些時候暫停普通股的季度現金股息後，公司在本財年第三季度沒有支付任何股息。公司在本財年第三季度也沒有回購任何股票，根據我們目前的股票回購計劃，剩餘 320 萬美元可供使用。儘管目前已獲得股票回購授權，但我們預計本財年第四季度不會有任何活動，我們將繼續專注於保持流動性並做好支持未來增長機會的準備。

With that, I'll turn the call over to Iv to discuss the general outlook for the fourth quarter of this fiscal year, and then we will take your questions. Iv?

有了這個，我會把電話轉給 Iv 來討論本財年第四季度的總體前景，然後我們會回答你的問題。靜脈？

Thank you, Ken. Due to the continued volatility in the macro environment, we are providing only limited sequential financial guidance for the fourth quarter of this fiscal year. We expect net sales for the fourth quarter to be moderately higher as compared to $52.5 million in net sales for the third quarter of this fiscal year, driven largely by strong sales improvement in the mattress fabrics segment, and comparable sales performance in the upholstery fabrics segment. We expect to consolidate an operating loss for the fourth quarter of this fiscal year that is meaningfully lower to the $7.8 million operating loss for the third quarter of this fiscal year. We also expect our cash position as of the end of the fourth quarter of this fiscal year to remain comparable to the $14.6 million at the end of last fiscal year.

謝謝你，肯。由於宏觀環境持續波動，我們僅提供本財年第四季度有限的連續財務指引。我們預計第四季度的淨銷售額將略高於本財年第三季度的 5250 萬美元，這主要是由於床墊面料部門的強勁銷售增長以及室內裝飾面料部門的可比銷售業績.我們預計本財年第四季度的運營虧損將顯著降低至本財年第三季度的 780 萬美元運營虧損。我們還預計，截至本財年第四季度末，我們的現金狀況仍將與上一財年末的 1,460 萬美元相當。

And now I know some of you are wondering what we mean by meaningfully lower operating loss for the fourth quarter as compared sequentially to the third quarter, and here's what we can say about that. We have found these uncertain times, it is very challenging to give precise guidance. What we believe is that we have come off of our bottom, and we are starting to improve, specifically related to the CHF mattress fabrics segment.

現在我知道你們中的一些人想知道我們所說的第四季度營業虧損與第三季度相比顯著降低是什麼意思，這就是我們可以說的。我們發現這些不確定的時期，給出精確的指導是非常具有挑戰性的。我們相信我們已經走出谷底，並且開始改善，特別是與 CHF 床墊面料部分相關。

As mentioned earlier, revenue has been a challenge in the macro environment, but we have reason for some optimism as we go forward. We are starting to see the product wins we had previously disclosed and we believe we are gaining market share in both businesses, but the most recovery is in CHF mattress fabrics with new business placed at proper margins and based on actual costing. So the pace of our recovery will be dictated by the recovery in the macro environment. We expect to improve our business sequentially and organically via market position, but we need some macro tailwinds for recovery to happen quicker. We are certainly committed to achieving a sustainable sequential improvement and regaining profitability during fiscal 2024.

如前所述，收入在宏觀環境中一直是一個挑戰，但我們有理由在前進的過程中保持樂觀。我們開始看到我們之前披露的產品獲勝，我們相信我們在這兩個業務中都獲得了市場份額，但恢復最多的是 CHF 床墊面料，新業務根據實際成本計算獲得了適當的利潤。因此，我們復甦的步伐將取決於宏觀環境的複蘇。我們希望通過市場地位順序和有機地改善我們的業務，但我們需要一些宏觀順風才能更快地實現復甦。我們當然致力於在 2024 財年實現可持續的連續改進並恢復盈利能力。

Importantly, 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.

重要的是，在我們應對當前挑戰的過程中，我們將繼續專注於審慎的財務管理，以始終保持強勁的資產負債表為目標，尤其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，我們知道金融穩定對我們的成功至關重要。

So with that, we'll be happy to take some questions.

因此，我們很樂意回答一些問題。

(Operator Instructions) And our first question here will come from Anthony Lebiedzinski with Sidoti & Company.

（操作員說明）我們在這裡的第一個問題將來自 Sidoti & Company 的 Anthony Lebiedzinski。

So first, a nice job with maintaining a solid balance sheet and this difficult operating environment. So that's a quick comment from me. As far as my questions, so with the raw material costs moderating and just overall, it seems like stabilization and some cost trends. What would you say is your confidence level as far as your ability to maintain pricing at these levels?

因此，首先，在保持穩健的資產負債表和這種困難的運營環境方面做得很好。這是我的快速評論。就我的問題而言，隨著原材料成本的緩和，總體而言，它似乎趨於穩定和一些成本趨勢。就您將定價維持在這些水平的能力而言，您認為您的信心水平如何？

Yes. That's a good question, Anthony. Thank you. And we did note that. Thanks for picking up on it. We are -- the way we talk about raw materials as there was such a inflationary pressure on us in raw materials over the last couple of years. And we did not pass enough price on or we weren't able to and did not get enough price. So we're finally getting to the point with new products where we are able to catch up to that price lag.

是的。這是個好問題，安東尼。謝謝。我們確實注意到了這一點。感謝您接受它。我們是——我們談論原材料的方式，因為在過去幾年中，我們在原材料方面面臨著如此大的通脹壓力。我們沒有傳遞足夠的價格，或者我們不能也沒有得到足夠的價格。所以我們終於到了能夠趕上價格滯後的新產品的地步。

And historically, in our business, there's frequent introductions into the market. And so we can catch up to any raw material swings by introducing new products. But through this last couple of years, there's just been no intros. Everything has been deferred, so we have been able to do that, and we didn't do a good enough job pushing price. So I'm not worried. We don't have price deflation of raw material to the point where we need to be adjusting pricing, but we can finally get on our new products where we can have fair margins in the market. So we just have been really pushing towards new products getting launched and we're finally glad to see it happen because we've at least neutralized a standard cost, which is terrific.

從歷史上看，在我們的業務中，經常將產品引入市場。因此，我們可以通過推出新產品來趕上任何原材料波動。但是在過去的幾年裡，一直沒有介紹。一切都被推遲了，所以我們能夠做到這一點，但我們在推動價格方面做得不夠好。所以我不擔心。我們沒有原材料價格通縮到需要調整價格的地步，但我們最終可以推出我們的新產品，我們可以在市場上獲得公平的利潤。所以我們真的一直在推動新產品的推出，我們最終很高興看到它發生，因為我們至少抵消了標準成本，這太棒了。

Got it. Okay. Yes. So yes, it sounds like you're optimistic about the pipeline of new products. You also talked about some new customer programs as well. I think, Ken, I think you mentioned that in your prepared remarks that you saw late in the quarter. So just -- if you could just kind of expand on that, maybe just give us some examples of some of some new customer programs or new product that you're particularly excited about here?

知道了。好的。是的。所以是的，聽起來你對新產品的管道很樂觀。您還談到了一些新的客戶計劃。我想，肯，我想你在本季度末看到的準備好的評論中提到了這一點。所以只是 - 如果你可以對此進行擴展，也許只是給我們一些你在這里特別興奮的一些新客戶計劃或新產品的例子？

Yes. Well, I think the way I would speak to it, and we're excited about both businesses, but both CHF mattress fabrics and CUF upholstery fabrics have positive trends to their market position, that's for sure. But what we've tried to point to harder in the remarks, in the release is where we need to improve certainly is in the mattress fabrics segment. So when I speak about that, I'm not trying to minimize upholstery fabrics role in this. They've just been more stable, where we're seeing the growth from current levels is in mattress fabrics.

是的。好吧，我想我會這麼說，我們對這兩家公司都很興奮，但 CHF 床墊面料和 CUF 室內裝飾面料的市場地位都有積極的趨勢，這是肯定的。但我們試圖在評論中更努力地指出，在發布中我們需要改進的地方當然是在床墊面料領域。因此，當我談到這一點時，我並不是要盡量減少室內裝飾織物在其中的作用。它們只是更加穩定，我們看到床墊面料從當前水平開始增長。

And what got us pretty pumped up was the Las Vegas market. And if you went back to our last couple of earnings calls, I've been speaking to product positioning that we know we're winning both on traditional bedding retailers and bed-in-the-box mattress cover customers for us, but the rollouts kept getting delayed. So in some cases, things that were due to launch last January of 2022, got deferred to the summer and then got deferred again to January of 2023.

讓我們興奮的是拉斯維加斯市場。如果你回到我們最近的幾次財報電話會議，我一直在談論產品定位，我們知道我們正在為我們贏得傳統床上用品零售商和盒裝床床墊罩客戶，但推出一直被耽誤。因此，在某些情況下，原定於 2022 年 1 月推出的產品被推遲到夏季，然後又被推遲到 2023 年 1 月。

So at the market most recent Las Vegas market, finally, a lot of the things we had been building to started to ship, and we're starting to have success billing and shipping those items to our customer. And there's more plan throughout this year. I feel like the industry is doing quite a bit of catch-up of putting new products into the market. And again, that's traditional bedding and bed-in-box, so it's across the board. We know it's not going to happen overnight. We know things have to be staggered.

因此，在最近的拉斯維加斯市場上，最終，我們一直在建造的許多東西開始發貨，我們開始成功地為客戶開具賬單並將這些物品運送給我們的客戶。今年還有更多計劃。我覺得這個行業正在努力將新產品推向市場。再一次，這是傳統的床上用品和盒裝床，所以它是全面的。我們知道這不會在一夜之間發生。我們知道事情必須錯開。

And again, like to keep pointing to the pace of the industry tailwind will help us immeasurably. So we're going to organically grow our position and our share, but we need some lift in the macro side. And we know we'll come at some point. We're going to grow and we can grow faster with some pull-through. So I hope that helps.

再一次，喜歡繼續指出行業順風的步伐將對我們有不可估量的幫助。因此，我們將有機地增加我們的地位和份額，但我們需要在宏觀方面有所提升。我們知道我們會在某個時候來。我們將成長，我們可以通過一些拉動來更快地成長。所以我希望能有所幫助。

Yes, absolutely. And hopefully, that momentum from the Vegas market continues at the high point market for you. Now, I may have missed this. Did you comment on as far as the growth rate for the hospitality segment? Just wondering how that's fared in the quarter?

是的，一點沒錯。希望拉斯維加斯市場的這種勢頭能在高點市場繼續為您服務。現在，我可能錯過了這個。您是否評論過酒店業的增長率？只是想知道本季度的表現如何？

Yes, Anthony, this is Ken. We commented on the 30% of the upholstery fabrics business, but we did not comment on the growth rate. But I mean, it was it was definitely more stable than the residential part. I mean residential was under significant pressure. Hospitality was probably in line with last year.

是的，安東尼，這是肯。我們評論了 30% 的裝飾面料業務，但我們沒有評論增長率。但我的意思是，它絕對比住宅部分更穩定。我的意思是住宅承受著巨大的壓力。款待可能與去年一致。

Got you. Okay. All right. And then last question. So Ken, you talked about the CapEx, obviously, being down because you're looking to conserve cash. So just wondering, how much of that has been are you deferring to next year? I mean, typically, you guys spend somewhere around $6 million to $7 million at least the last couple of years, you've done that type of CapEx spending. So how much of the CapEx, you think you'll need to catch up whether in fiscal '24 or fiscal '25?

明白了好的。好的。然後是最後一個問題。所以肯，你談到了資本支出，顯然是因為你想節省現金。所以只是想知道，你有多少推遲到明年？我的意思是，通常情況下，你們至少在過去幾年花費了大約 600 萬到 700 萬美元，你們已經完成了這種類型的資本支出。那麼，您認為無論是在 24 財年還是 25 財年，您都需要追趕多少資本支出？

Yes, Anthony, that's a great question. I mean, obviously, this year, we have been focused on preserving cash and really just prioritizing every project. That said, we've tried to certainly maintain our maintenance level CapEx as much as we can, as much as we could, and we continue to address that in the fourth quarter. I think looking ahead, we've always said maintenance CapEx is in that $4 million to $5 million range. We're in the process now of looking at those projects for next year and prioritizing. But at the same time, we've made it clear to the divisions that they need to earn and they need to be in a position where being able to justify those CapEx. But at the same time, we also agree and understand that we have to maintain the equipment. So that's going to be a delicate balance as we go into next year.

是的，安東尼，這是一個很好的問題。我的意思是，顯然，今年，我們一直專注於保留現金，實際上只是對每個項目進行優先排序。也就是說，我們已經盡力盡可能多地保持我們的維護水平資本支出，我們將在第四季度繼續解決這個問題。我認為展望未來，我們一直說維護資本支出在 400 萬到 500 萬美元之間。我們現在正在研究明年的這些項目並確定優先順序。但與此同時，我們已經向各部門明確表示他們需要賺錢，並且他們需要處於能夠證明這些資本支出合理的位置。但同時，我們也同意並理解我們必須對設備進行維護。因此，隨著我們進入明年，這將是一個微妙的平衡。

And our next question will come from Rexford Henderson with Water Tower Research.

我們的下一個問題將來自水塔研究公司的 Rexford Henderson。

Let me add my congratulations about your balance sheet management. It's really gratifying to see that in such a difficult environment. I had some questions. If you mentioned that you are aiming to get back to profitability in fiscal 2024. Can you clarify that a little bit in terms of -- do you mean that for the full year or for specific periods later in the year? And on what basis are you thinking about that profitability on the EBIT line, on the EBITDA line or in net income?

讓我對您的資產負債表管理表示祝賀。在如此困難的環境中看到這一點真的很令人欣慰。我有一些問題。如果你提到你的目標是在 2024 財年恢復盈利。你能否澄清一下——你的意思是全年還是今年晚些時候的特定時期？您在什麼基礎上考慮 EBIT 線、EBITDA 線或淨收入的盈利能力？

Well, Rex, great question. Thanks for calling that out. We've talked kind of over and over in the prepared remarks about sequential improvement. And we know we're digging, digging out of a hole in some ways. And yes, we would love to have profitability for the whole year. We would love that. But we -- again, some of it is going to depend on what kind of tailwind we can get in just general demand. We are going to manage our margins and our sales better this year, no question. And we're going to grow our market position. We need some tailwind.

好吧，雷克斯，好問題。謝謝你這麼說。我們已經在準備好的關於順序改進的評論中一遍又一遍地談論了。我們知道我們正在挖掘，以某種方式從洞裡挖出來。是的，我們希望全年都能盈利。我們會喜歡的。但我們——同樣，其中一些將取決於我們能在一般需求中獲得什麼樣的順風。毫無疑問，今年我們將更好地管理我們的利潤和銷售。我們將擴大我們的市場地位。我們需要順風。

So I think the way I'm looking at it is we know the first half of the year is not likely to rebound in a great way, but we can control our sequential improvement in those quarters. And then I will have every expectation that we should be moving towards breakeven and then to some profitability later in the year. It's how we look at it. And Ken, I don't know if you want to tell him how we look at that more. No, I don't know what -- we've been guiding to operating income so much.

所以我認為我看待它的方式是我們知道今年上半年不太可能大幅反彈，但我們可以控制這些季度的連續改善。然後我完全期望我們應該在今年晚些時候實現收支平衡，然後實現一定的盈利。這就是我們如何看待它。肯，我不知道你是否想告訴他我們是如何看待這個問題的。不，我不知道是什麼——我們一直在指導營業收入。

Yes. No, that's exactly right. I mean, as we look at -- as we head into '24, I mean we understand it's going to take the continued -- some time to get to that profitability. But we're looking at the second half of the year where we break through in our profitable at an EBIT level. And so that's just going to take some time. And so we're not guiding right now for the profitability of the year. But what we're seeing is that by -- in that time by a certain time in FY '24, we will be profitable on an EBIT level.

是的。不，完全正確。我的意思是，正如我們所看到的那樣——當我們進入 24 世紀時，我的意思是我們理解這將需要持續的——一段時間才能實現盈利。但我們正在關註今年下半年我們在息稅前利潤水平上的突破。所以這需要一些時間。因此，我們現在不指導今年的盈利能力。但我們看到的是，到 24 財年的某個時間，我們將在息稅前利潤水平上實現盈利。

And Rex, I'll just say, I mean, that's what we think. I would love it if there would just be some lift in the business that could help us go faster with the sales reductions that we're dealing with, that come so much from the macro environment. It just makes it challenging. We are buying our time because we know when that gets normalized it can happen for us faster. So it is not even us to think that's going to happen and to try to predict it. But man, it should be fun if it would go a little quicker.

雷克斯，我只想說，我的意思是，這就是我們的想法。如果業務有一些提升可以幫助我們更快地應對我們正在處理的銷售減少，我會很高興，這在很大程度上來自宏觀環境。它只是讓它變得具有挑戰性。我們正在爭取時間，因為我們知道當這種情況正常化時，它可以更快地發生。因此，我們甚至都不會認為這會發生並試圖預測它。但是，伙計，如果它能走得快一點，那應該會很有趣。

Sure. Let me ask a little bit more about the mattress fabrics business, which has been showing an operating loss in the last -- this year so far. So -- and you're transforming that business and getting some efficiencies and new product and some better pricing through those new products, how much volume, where the -- where does the line cross in terms of volume in that business to get -- make this segment profitable? How much additional volume are you going to need? And kind of when and -- can you give me some guidance on what it takes to get that business back to profitability in the top line?

當然。讓我多問一些關於床墊面料業務的問題，該業務在去年 - 今年到目前為止一直出現運營虧損。所以 - 你正在轉變該業務並通過這些新產品獲得一些效率和新產品以及一些更好的定價，有多少數量，在哪裡 - 就該業務的數量而言，這條線在哪裡交叉 -讓這個細分市場盈利？您需要多少額外的體積？以及什麼時候 - 你能給我一些指導，讓我知道如何讓該業務恢復盈利嗎？

Good question. And you're picking right up on it. That's the business that we recognize carry so much value for us as a company and that has a great history and all these things that we need to get back to, and we're making incredible improvements every day under the leadership of Tommy Bruno. His knowledge of all facets of the business are making a big difference.

好問題。你正在接受它。這是我們認識到的業務對我們作為一家公司具有如此巨大的價值，並且擁有偉大的歷史和所有這些我們需要回歸的東西，我們每天都在湯米布魯諾的領導下取得令人難以置信的進步。他對業務各個方面的了解正在發揮重要作用。

What I think -- what we're doing, there's so much operational excellence being driven through that, personnel, efficiency, quality, costing, pricing, all of those things are getting better. So we're lowering our breakeven revenue rate. We definitely are. We have some tailwinds finally with cost not continuing to rise. So we can -- we won't take as much volume to turn profitable as it would have through COVID and through the inflationary pressures.

我的想法——我們正在做的事情，通過這種方式推動瞭如此多的卓越運營，人員、效率、質量、成本、定價，所有這些事情都在變得更好。因此，我們正在降低盈虧平衡收入率。我們絕對是。我們終於有了一些順風，成本不會繼續上升。所以我們可以——我們不會像通過 COVID 和通貨膨脹壓力那樣通過大量交易來實現盈利。

Ken, I don't know if we can talk about a break -- a line where that breaks. But it's definitely -- we're more -- we're going to be more profitable. We don't have to get all of our profit and volume anymore. We can get profit through operations. And we're going to prove that we can do that and then having some sales will just help us push it further. But I hope that helps you a little bit.

肯，我不知道我們是否可以談談休息 - 休息的地方。但它肯定 - 我們更多 - 我們將獲得更多利潤。我們不必再獲得所有的利潤和銷量。我們可以通過運營獲得利潤。我們將證明我們可以做到這一點，然後進行一些銷售只會幫助我們進一步推動它。但我希望這對你有一點幫助。

Okay. That's useful. So what I'm hearing is, I don't need to model -- I don't need to look at sales volumes equivalent to 2019, 2020, or going back to even 2022 in order to get back there at some level below that, you think you can get back to profitability?

好的。這很有用。所以我聽到的是，我不需要建模——我不需要查看相當於 2019 年、2020 年或什至回到 2022 年的銷量，以便回到低於該水平的某個水平，您認為您可以恢復盈利嗎？

Yes, Rex, this is Ken. That's exactly right. With all the enhancements we've made, we'll be able to -- on a comparable basis, we'll be able to get back there with less activity than before. So that's again, all the different projects we've got going on right now, that's leading to that ability to not need as much as before.

是的，雷克斯，這是肯。這是完全正確的。通過我們所做的所有改進，我們將能夠——在可比的基礎上，我們將能夠以比以前更少的活動回到那裡。所以這又是我們現在正在進行的所有不同項目，這導致這種能力不像以前那樣需要那麼多。

But I just say again, Rex, really good questions. We don't -- as we look out 12, 24 months, we don't think their sales pressure. We have a lot of room to run with our sales level from where we are today. We've been at levels considerably higher than this, and we can go back to those. Obviously, again, I keep saying that we just need -- we're going to do it organically. It will be faster if we can get some support from just general conditions. But we're not trying to run the business at a lower level. We want to go back to those levels. But it's so hard to predict.

但我再說一遍，雷克斯，非常好的問題。我們不——當我們展望 12、24 個月時，我們不認為他們的銷售壓力。從今天的銷售水平來看，我們有很大的發展空間。我們一直處於比這高得多的水平，我們可以回到那些水平。顯然，我再次強調，我們只需要——我們將有機地做到這一點。如果我們能從一般情況下獲得一些支持，它會更快。但我們並不想在較低的層面上經營業務。我們想回到那些水平。但這很難預測。

Okay. All right. And I guess this is something we've talked about in the past, but can you kind of recap what you're seeing in China with the workforce and an operating environment there? Are you comfortable? Are you seeing any imminent risk to your operations in China at all? Kind of give us some confidence that things are going smoothly there.

好的。好的。我想這是我們過去討論過的事情，但你能概括一下你在中國看到的勞動力和運營環境嗎？你舒服嗎？您是否看到您在中國的業務面臨任何迫在眉睫的風險？讓我們有信心那裡的事情進展順利。

Sure, Rex. This is Boyd. And I'll touch on a couple of points related to China. First of all, certainly saw some positive impacts from the change in the China COVID policy that took place in December, both for our associates and our supply chain. This resulted in less disruption and uncertainty, that came from that change. So that was very positive.

當然，雷克斯。這是博伊德。我將談談與中國有關的幾點。首先，12 月份發生的中國 COVID 政策變化肯定對我們的員工和供應鏈產生了一些積極影響。這減少了這種變化帶來的破壞和不確定性。所以這是非常積極的。

And then, of course, we've just come through the Chinese New Year period, which is -- normally slows business at this time, but we have seen a -- from all aspects, the supply chain has returned and is functioning normally at this point coming back from the holidays. So we're pleased with that. So in general, Rex, I'd say that supply chain is functioning well. We are continuing to diversify our global platform, and we'll stay focused on continuing to do that. As you know, we have diversified to Vietnam, to Haiti. We have some diversification taking place in Turkey.

然後，當然，我們剛剛度過了農曆新年期間，這通常是此時業務放緩，但我們已經看到 - 從各個方面來看，供應鏈已經恢復並且正常運作這一點從假期回來。所以我們對此感到滿意。所以總的來說，雷克斯，我想說供應鏈運作良好。我們正在繼續使我們的全球平台多樣化，我們將繼續專注於繼續這樣做。如您所知，我們已經多元化發展到越南和海地。我們在土耳其進行了一些多元化。

So we fully intend to expand in those other locations and have steps in the works now to do that, and we'll be doing that more aggressively in this next fiscal year. So that's -- while China is performing well and not anticipating issues, still think it's prudent for our business overall to continue on a diversification path as we have started.

因此，我們完全打算在其他地方進行擴張，並且現在正在採取措施來做到這一點，我們將在下一個財政年度更加積極地做到這一點。所以這就是 - 雖然中國表現良好並且沒有預料到問題，但仍然認為我們的整體業務繼續走在我們已經開始的多元化道路上是謹慎的。

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

我們的問答環節到此結束。我想將會議轉回給 Iv Culp 作閉幕詞。

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

謝謝你，運營商。再次感謝大家的參與和對 Culp 的興趣。我們期待在下個季度向您通報我們的進展情況。祝你有美好的一天。

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

會議現已結束。非常感謝您參加今天的演講。您現在可以斷開線路。