(CULP) 2024 Q1 法說會逐字稿

Good morning, and welcome to the Culp, Inc. First Quarter Fiscal 2024 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Dru Anderson. Please go ahead.

早安，歡迎參加 Culp, Inc. 2024 財年第一季財報電話會議。 （操作員說明）請注意，正在記錄此事件。我現在想把會議交給德魯·安德森。請繼續。

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

謝謝。早安，歡迎參加卡爾普電話會議，回顧公司2024 財年第一季的業績。在我們開始之前，請允許我聲明，今天早上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。前瞻性陳述是指包括對未來事件或結果的預測、期望或信念的陳述，或不是歷史事實的陳述。

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.

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示的業績有重大差異。這些風險和不確定性在我們定期向 SEC 提交的文件中進行了描述，包括公司最近提交的表格 10-K 和表格 10-Q。

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

我們目前不了解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營運和財務表現。請注意不要過度依賴今天發表的前瞻性聲明，每項此類聲明僅代表今天的情況。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. I will now turn the call over to Iv Culp, President and Chief Executive Officer of Culp. Please go ahead, Iv.

此外，在這次電話會議中，該公司將討論非公認會計準則財務衡量標準。這些非GAAP 財務衡量指標與最直接可比較的GAAP 財務衡量指標的調節表包含在新聞稿的表格中，該新聞稿作為該公司昨天提交的8-K 報表的附件，並發佈在該公司網站culp. com 上。我現在將把電話轉給 Culp 總裁兼執行長 Iv Culp。請繼續，IV。

Thank you Dru, and good morning, everyone, and thank you for joining us today. I would like to welcome you to the Culp quarterly conference call with analysts and investors.

謝謝 Dru，大家早安，謝謝你們今天加入我們。歡迎您參加卡爾普與分析師和投資者舉行的季度電話會議。

With me on the call are Ken Bowling, Chief Financial Officer; Boyd Chumbley, President of our upholstery fabrics business; and Tommy Bruno, President of our Mattress Fabrics business. So today, I'll begin the call with some detailed comments, including a discussion of key points and topics for the quarter and for both businesses as well as priorities as we look ahead. After that, Ken will review the financial results for the quarter, and I will then briefly review our business outlook for the second quarter of fiscal '24, and we will then take your questions.

和我一起參加電話會議的是財務長肯‧鮑林 (Ken Bowling)； Boyd Chumbley，我們的室內裝飾布料業務總裁；以及我們的床墊布料業務總裁 Tommy Bruno。因此，今天，我將以一些詳細的評論開始電話會議，包括討論本季和雙方業務的要點和主題以及我們展望未來的優先事項。之後，Ken 將回顧本季的財務業績，然後我將簡要回顧我們對 24 財年第二季的業務前景，然後我們將回答您的問題。

Regarding the current state of our business, in the overall furniture and bedding industries. I want to review some overriding themes we discussed last quarter and detail some critical actions we are continuing to execute within both businesses. I will also expand on our comments with a few important points that illustrate where Culp is today.

就我們整個家具和床上用品行業的業務現狀而言。我想回顧一下我們上季度討論的一些重要主題，並詳細介紹我們在兩家公司中繼續執行的一些關鍵行動。我還將用幾個重要的觀點來擴展我們的評論，以說明卡爾普今天的處境。

Number one, we are encouraged by our better-than-expected operating improvement for the quarter both sequentially and year-over-year despite the ongoing industry malaise and demand softness within the two industries we service. Number two, we remain excited about the progress of our comprehensive transformation within our CHF mattress fabrics business, and we are pleased to be gaining market position in the face of some contraction in the domestic mattress industry.

第一，儘管我們所服務的兩個行業持續存在行業低迷和需求疲軟，但本季的營運改善無論是環比還是同比都好於預期，這令我們感到鼓舞。第二，我們對CHF床墊布料業務全面轉型的進展感到興奮，並且很高興在國內床墊行業出現一些萎縮的情況下獲得市場地位。

Number three, although market conditions are also pressuring the residential home furnishings industry, our upholstery fabrics business has remained profitable despite these pressures, and demand remains quite solid in our growing hospitality business. And number four, we are continuing our diligent focus on prudent financial management, including maintaining a strong balance sheet and ensuring a strategic level of working capital.

第三，儘管市場狀況也給住宅家具行業帶來壓力，但我們的室內裝飾布料業務儘管面臨這些壓力，仍然保持盈利，而且我們不斷增長的酒店業務的需求仍然相當強勁。第四，我們將繼續致力於審慎的財務管理，包括維持強勁的資產負債表和確保營運資本的策略水準。

So going to theme #1. Our results for the first quarter reflected better-than-expected operating performance, both sequentially and year-over-year even as industry demand remains soft, especially in residential home furnishings. However, our operating performance improved despite pressure on sales due to internal improvements within both businesses. The strong sequential and year-over-year improvement in our Mattress Fabrics business, a 45% improvement sequentially and a 52% improvement year-over-year was supported by the rollout of new fabric and cover placements during the period.

那麼轉到主題#1。儘管產業需求依然疲軟，尤其是住宅家具領域，但我們第一季的業績反映出，無論是環比還是同比，經營業績都比預期好。然而，儘管由於兩項業務的內部改進而帶來銷售壓力，我們的經營業績仍有所改善。我們的床墊布料業務環比和同比強勁增長，環比增長 45%，同比增長 52%，這得益於在此期間推出新面料和覆蓋層。

As we have commented for some time now, these new programs are priced in line with current raw material and operational costs and we expect these new programs to grow Culp Home Fashion's market position in fiscal '24.

正如我們已經評論了一段時間的那樣，這些新計劃的定價符合當前的原材料和營運成本，我們預計這些新計劃將在 24 財年提高 Culp Home Fashion 的市場地位。

The operating improvement in the CHF business was also driven by our ongoing focus on operational efficiencies and cost reduction initiatives across our locations, and I will expand more on this shortly. I do want to emphasize that Mattress Fabric sales for the quarter were flat compared to the prior year period, which is a solid performance in the face of difficult industry conditions and certainly reflects our growing position in the market.

CHF 業務的營運改善也得益於我們對各地營運效率和成本削減措施的持續關注，我將很快對此進行更多闡述。我確實想強調，本季的床墊布料銷售額與去年同期相比持平，在面臨困難的行業條件的情況下，這是一個穩健的表現，當然也反映了我們在市場中日益增長的地位。

For the Upholstery Fabric segment, we saw operational improvements and fixed cost savings along with solid demand in our hospitality/contract fabric business and improvement for Read window. But as expected, sales within our residential fabrics business were lower as compared to the first quarter of last fiscal year, which notably was a strong quarter due to a lift in sales following pandemic-related shutdowns in China and the quick recovery that the upholstery furniture industry was experiencing at that time.

對於室內裝飾布料領域，我們看到了營運改善和固定成本節省，以及飯店/合約布料業務的強勁需求和閱讀窗口的改進。但正如預期的那樣，我們的住宅布料業務的銷售額與上一財年第一季相比有所下降，尤其是由於中國因疫情導致的停工導致銷售額上升以及室內裝飾家具的快速復甦，該季度表現強勁。當時工業界正在經歷。

Our sales for residential fabrics this quarter were certainly affected by the ongoing softness in the home furnishings industry and shifting consumer spending trends following the Pandemic stay-at-home surge. While we do understand that the furniture and bedding environment remains challenged, we will continue to manage the aspects of our business we can control, taking necessary steps to withstand current market conditions, and position our business for renewed growth.

我們本季住宅布料的銷售肯定受到家居產業持續疲軟以及大流行留在家中激增後消費者支出趨勢變化的影響。雖然我們確實了解家具和床上用品環境仍然面臨挑戰，但我們將繼續管理我們可以控制的業務方面，採取必要措施應對當前的市場狀況，並使我們的業務實現新的成長。

As detailed in earlier quarters, we have made platform changes to our cut and sew profile on both Mattress Fabrics and Upholstery. And the cost benefits from these adjustments are coming to bear. We are also focused on managing our operational efficiencies across our fabric platforms and therefore, lowering overall costs.

正如前幾季所詳述的，我們對床墊布料和室內裝潢的裁剪和縫製配置文件進行了平台更改。這些調整帶來的成本效益即將顯現。我們也專注於管理整個布料平台的營運效率，從而降低整體成本。

Beyond Q1, we believe our continuing recovery will be led by our Mattress Fabrics segment, while our execution of a comprehensive transformation plan is laying the foundation for steady improvement. I'll expand much more on the Mattress Fabrics transformation plan momentarily, but our sequential and year-over-year operating improvement reflects some of these initiatives we have undertaken internally to manage our business.

在第一季之後，我們相信我們的持續復甦將由床墊布料部門引領，而我們全面轉型計畫的執行正在為穩步改善奠定基礎。我將立即詳細介紹床墊布料轉型計劃，但我們的連續和逐年營運改善反映了我們內部為管理業務而採取的一些舉措。

While the challenging industry environment is expected to continue for some time, our market position is strong and improving, and we believe we are poised for a considerably better second half of fiscal '24 and that's November to April by the calendar, with a return to operating profitability in this fiscal year.

雖然充滿挑戰的產業環境預計將持續一段時間，但我們的市場地位強勁且正在改善，我們相信我們將在2024 財年下半年（按日曆計算11 月至4 月）迎來明顯更好的業績，並恢復到本財年的營業利潤。

Regardless of the current demand backdrop, we expect continued progress in improving our operating results, but we understand the speed of our recovery may be affected by overall industry trends. We would like to see some macro tailwinds to allow recovery to happen quicker. We are well prepared for the long term, and our strong leadership teams, innovative product offerings, creative designs and a resilient global manufacturing and sourcing platform will support us into the future, especially when the environment improves.

無論目前的需求背景為何，我們預計在改善經營績效方面將繼續取得進展，但我們了解復甦的速度可能會受到整體產業趨勢的影響。我們希望看到一些宏觀利好因素，以使復甦更快發生。我們為長期發展做好了充分準備，我們強大的領導團隊、創新的產品、創意的設計以及有彈性的全球製造和採購平台將為我們的未來提供支持，特別是當環境改善時。

The second important thing to expand on is the business transformation update within Culp Home Fashions, our Mattress Fabrics segment. Under the leadership of Division President, Tommy Bruno, along with his restructured management team.

第二件需要擴展的重要事情是我們的床墊布料部門 Culp Home Fashions 的業務轉型更新。在部門總裁 Tommy Bruno 及其重組後的管理團隊的領導下。

Our transformation plan focuses on long-term improvement in every facet of the business, including quality, sales, marketing and operational processes, supply chain optimization, employee engagement and organizational management structure.

我們的轉型計劃專注於業務各個方面的長期改進，包括品質、銷售、行銷和營運流程、供應鏈優化、員工敬業度和組織管理結構。

As we said, we believe CHF improvement is our best short-term opportunity for recovery and growth from our current levels. Tommy and the CHF management team remains focused on operational excellence as well as balancing our product mix to proper volumes and steady run schedules.

正如我們所說，我們相信瑞郎的升值是我們從當前水準實現復甦和成長的最佳短期機會。 Tommy 和 CHF 管理團隊仍然專注於卓越營運以及平衡我們的產品組合以達到適當的產量和穩定的運作計劃。

Even after our previous cost-saving adjustment to our domestic North Carolina cut and sew capabilities, we continue with a robust global platform featuring manufacturing and sourcing capabilities in six countries: The U.S., Canada, Turkey, Haiti, China and Vietnam. Our combination of onshore, nearshore and offshore options provide our Mattress Fabric and sewn cover customers with the agility and value they need for their business.

即使我們之前對北卡羅來納州國內裁剪和縫紉能力進行了節省成本的調整，我們仍然擁有強大的全球平台，在六個國家擁有製造和採購能力：美國、加拿大、土耳其、海地、中國和越南。我們將陸上、近岸和離岸選項相結合，為我們的床墊布料和縫製被套客戶提供其業務所需的靈活性和價值。

Combining this platform with our expertise in design and product innovation, we are making excellent progress for sustainable improvement in fiscal '24.

將此平台與我們在設計和產品創新方面的專業知識相結合，我們在 24 財年的可持續改進方面取得了巨大進展。

Overall, as we've mentioned, the domestic mattress industry is experiencing significant contraction with industry reports showing aggregate reductions of 10% in dollars and 20% in units through the first 6 months of calendar '23. But notably, again, CHF revenue over the same general period has remained flat, indicating that CHF has made gains with customers in a difficult market environment.

總體而言，正如我們所提到的，國內床墊行業正在經歷顯著收縮，行業報告顯示，截至2023 年的前6 個月，以美元計算的總價格減少了10%，按單位計算的價格減少了20%。但值得注意的是，同期瑞士法郎的收入仍保持平穩，這表明瑞士法郎在困難的市場環境中從客戶那裡獲得了收益。

While the mattress industry slowness may remain for some period, we still expect to improve our performance through new programs and improved operations. Our recovery in CHF is not fully dependent on the industry environment, and assuming our sales volumes in fiscal '24 do not materially fall below the prior year, we expect to see significant progress with steady sustainable improvement in CHF this year and beyond.

儘管床墊行業的緩慢發展可能會持續一段時間，但我們仍然希望透過新計劃和改進營運來提高我們的表現。我們的瑞郎復甦並不完全取決於行業環境，假設我們 24 財年的銷售不會大幅低於上一年，我們預計今年及以後瑞郎將取得重大進展，瑞郎將穩步可持續改善。

The third important theme is the continued profitability of Culp Upholstery Fabrics. I've detailed just now a lot of excitement about CHF, but it is equally as important to note the steady performance of CUF. Division President, Boyd Chumbley and his strong leadership team have managed effectively in the most -- in the midst of abnormal tumultuous times.

第三個重要主題是 Culp 室內裝飾布料的持續獲利能力。我剛剛詳細介紹了 CHF 的許多令人興奮的內容，但同樣重要的是要注意 CUF 的穩定表現。部門總裁博伊德·查布利 (Boyd Chumbley) 和他強大的領導團隊在異常動蕩的時期進行了有效的管理。

CUF has maintained profitability with a focus on improving operational efficiencies and proactively taking strategic actions to reduce our cost structure to align with demand levels while also always supporting our customers with our flexible global platform. I believe CUF has best-in-class in servicing our customers and our design & product excellence, combined with an effective global platform has led the way.

CUF 一直保持獲利能力，專注於提高營運效率，並積極採取策略行動來降低成本結構，以滿足需求水平，同時始終透過靈活的全球平台為客戶提供支援。我相信 CUF 在為我們的客戶提供一流的服務、卓越的設計和產品以及有效的全球平台方面處於領先地位。

Our improved operating cost within CUF began with the restructuring of our cut and sew upholstery kit platform in China during the second quarter of last fiscal year and then continued with the rationalization of our upholstery cut and sew platform in Haiti near the end of last fiscal year. We took further action in Haiti this quarter to discontinue production of cut and sewn upholstery kits at this location based on demand softness.

我們在 CUF 內營運成本的改善始於上一財年第二季度重組我們在中國的內飾裁剪和縫紉套件平台，然後繼續在上一財年末對我們在海地的內飾裁剪和縫紉平台進行合理化。由於需求疲軟，本季我們在海地採取了進一步行動，停止在該地點生產裁剪和縫製內飾套件。

This step further reduces CUS cost structure and avoids losses that would have otherwise been incurred while allowing this business to continue to support customers through its strong Asian supply chain.

這項措施進一步降低了 CUS 的成本結構，避免了原本可能發生的損失，同時使該業務能夠繼續透過其強大的亞洲供應鏈為客戶提供支援。

Notably through these actions and other improvements in operational efficiencies, CUF has been effective in lowering its overall cost levels to remain profitable in the face of reduced demand.

值得注意的是，透過這些行動和其他營運效率的改進，CUF 有效降低了整體成本水平，從而在需求減少的情況下保持獲利。

Just want to quick aside, I do want to again reiterate that while we have discontinued production of upholstery, cut and sew kits in Haiti, our Haiti cut and sew platform for mattress covers remains an integral part of our strategic plan.

順便說一句，我確實想再次重申，雖然我們已經停止在海地生產室內裝飾、裁剪和縫紉套件，但我們的海地床墊套裁剪和縫紉平台仍然是我們戰略計劃不可或缺的一部分。

Now turning back to CUF, we are also adjusting our global platform for the fabrics portion of our upholstery fabrics business as we look to provide options within our supply chain in China, Vietnam and multiple other new countries. Customer service is a hallmark for Culp and a diversified platform provides improved risk management and a more stable supply base.

現在回到 CUF，我們也在調整我們的室內裝飾布料業務的布料部分的全球平台，因為我們希望在中國、越南和其他多個新國家的供應鏈中提供選擇。客戶服務是 Culp 的標誌，多元化的平台提供了改進的風險管理和更穩定的供應基礎。

Of note, our hospitality contract business accounted for 33% of segment sales for the first quarter. 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 its importance to our overall strategy of product diversification for this segment.

值得注意的是，我們的飯店合約業務佔第一季部門銷售額的 33%。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的酒店/合約業務持續穩健的業績及其對我們該領域產品多元化整體策略的重要性。

While the tough demand environment may continue for some time, Culp upholstery fabrics remains well positioned for the long term with a scalable global platform and innovative product offerings, including our popular portfolio of LiveSmart performance products and our new product technologies.

雖然嚴峻的需求環境可能會持續一段時間，但 Culp 室內裝飾布料憑藉可擴展的全球平台和創新產品系列（包括我們廣受歡迎的 LiveSmart 高性能產品組合和新產品技術），長期處於有利地位。

We are also beginning to see increases in newly written fabric orders, and we believe we will see the benefit from this in the second half of fiscal '24.

我們也開始看到新簽訂的布料訂單增加，我們相信我們將在 24 財年下半年看到由此帶來的好處。

Similar to the first quarter, we also expect the upholstery fabric segment will continue to benefit Culp through the remainder of fiscal '24 with improved inventory management, a solid hospitality/contract fabric business, improvement in our Read Window business and a rationalized cut-and-sew platform.

與第一季類似，我們也預計室內裝飾布料部門將在24 財年剩餘時間內繼續使Culp 受益，其中包括改善庫存管理、穩健的酒店/合約布料業務、閱讀窗業務的改善以及合理化的裁剪和調整。- 縫製平台。

And lastly, I'll shift to the fourth theme, which is constant focus on prudent financial management including maintaining a strong balance sheet and ensuring a strategic level of working capital. I am very pleased with the management team for its continued effort in maintaining our cash and total liquidity position.

最後，我將轉向第四個主題，即持續關注審慎的財務管理，包括維持強勁的資產負債表和確保營運資本的策略水準。我對管理團隊持續努力維持我們的現金和總流動性狀況感到非常滿意。

We ended the quarter with $16.8 million in cash and no outstanding borrowings, and we had total liquidity of $42.3 million, consisting of cash and borrowing availability under our domestic credit facility. We are continuing to carefully manage inventory against current demand levels, and we are strategically investing in our business.

截至本季末，我們擁有 1,680 萬美元現金，沒有未償還借款，流動性總額為 4,230 萬美元，包括現金和國內信貸安排下的可用借款。我們將繼續根據當前的需求水準仔細管理庫存，並對我們的業務進行策略性投資。

I have repeatedly through my remarks, mentioned the softness within our industries, and that has been most evident to us by several recent closures within the furniture industry. And remember, this is on the heels of several bankruptcies we witnessed in the last year as well. We are seeing some suppliers, competitors and customers endure financial difficulty and it gives us more appreciation for our financial stability and it's important to our future.

我在演講中多次提到我們行業內部的疲軟，這在家具業最近的幾起倒閉事件中最為明顯。請記住，這是在我們去年目睹的幾起破產事件之後發生的。我們看到一些供應商、競爭對手和客戶面臨財務困難，這讓我們更加欣賞我們的財務穩定性，這對我們的未來很重要。

We are managing accounts receivable effectively, and we do not have any material exposure with respect to the recent closures. I am grateful to our credit teams and divisional management for how we conduct Culp's business with a lens towards the future and careful partner selection.

我們正在有效地管理應收帳款，並且我們沒有因最近的關閉而面臨任何重大風險。我感謝我們的信貸團隊和部門管理層在開展 Culp 業務時著眼於未來並仔細選擇合作夥伴。

We fully recognize that the management of Culp's strong balance sheet is a critical initiative, and we believe we are well positioned to focus on investing and optimizing our global manufacturing platform and growing profitable sales.

我們充分認識到管理卡爾普強勁的資產負債表是一項關鍵舉措，我們相信我們有能力專注於投資和優化我們的全球製造平台以及增加盈利銷售。

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

現在我將把電話轉給肯，他將審查本季的財務業績，然後我將簡要回顧本財年第二季的前景。肯？

Thanks, Iv. Here are the financial highlights for the first quarter. Starting with consolidated results, net sales were $56.7 million, down 9.5% compared with the prior year period, driven almost entirely by a decline in upholstery fabric sales.

謝謝，四。以下是第一季的財務亮點。從合併業績開始，淨銷售額為 5,670 萬美元，比上年同期下降 9.5%，幾乎完全是由於室內裝飾布料銷售額下降所致。

The company reported a loss from operations of $3.1 million, which included $517,000 in mostly non-cash restructuring and related charges associated with the discontinued production of cut and sewn upholstery kits in Haiti during the quarter, as Iv discussed earlier.

正如 Iv 之前所討論的，該公司報告營運虧損 310 萬美元，其中包括 517,000 美元的非現金重組費用以及與本季度在海地停止生產裁剪和縫製內飾套件相關的相關費用。

Excluding this $517,000, adjusted loss from operations for the quarter was $2.6 million, a better-than-expected improvement as compared with a loss of operations of $4.7 million for the prior year period and a loss from operations of $4 million for the fourth quarter of last fiscal year.

排除這 517,000 美元，本季調整後的營運虧損為 260 萬美元，與去年同期的營運虧損 470 萬美元和 2017 年第四季的營運虧損 400 萬美元相比，改善幅度優於預期。上一個財政年度。

Net loss for the first quarter was $3.3 million or $0.27 per diluted share compared with a net loss of $5.7 million or $0.47 per diluted share for the prior year period. Net loss for the quarter included the $517,000 restructuring-related charges I just mentioned.

第一季淨虧損為 330 萬美元，即稀釋後每股 0.27 美元，而去年同期淨虧損為 570 萬美元，即稀釋後每股 0.47 美元。該季度的淨虧損包括我剛才提到的 517,000 美元的重組相關費用。

Our overall operating performance for the first quarter as compared to the prior year period was positively affected by improved margins on new products, improvement in operating efficiencies and lower overhead costs in both segments, a higher contribution from hospitality fabrics in the Read window business and a more favorable foreign exchange rate associated with China. This year-over-year improvement in operating performance was partially offset by margin pressures due to lower sales and higher SG&A expense.

與上年同期相比，我們第一季的整體經營業績受到新產品利潤率提高、營運效率提高和兩個部門管理成本降低、閱讀窗業務中酒店面料貢獻增加以及與中國相關的更有利的外匯匯率。營業業績的年比改善部分被銷售額下降和銷售管理及行政費用增加所帶來的利潤壓力所抵銷。

SG&A expense was higher than last year due to increased compensation expense mostly related to wage inflation and higher incentive compensation pools, higher professional fees and increased sampling expense driven by new product rollouts in both businesses. Importantly, with regard to SG&A expense, as business conditions improve and demand for new products rise, we believe that we'll get significant leverage from the increased sales.

SG&A 費用高於去年，原因是薪資費用增加，主要與薪資上漲和激勵薪資池增加、專業費用增加以及兩家公司新產品推出推動的抽樣費用增加有關。重要的是，就銷售管理費用而言，隨著業務狀況的改善和新產品需求的增加，我們相信我們將從銷售增加中獲得巨大的槓桿作用。

Adjusted EBITDA for the period was close to breakeven at negative $416,000 as compared to adjusted EBITDA of negative $2.7 million for the prior year period. The effective income tax rate for the first quarter of this fiscal year was a negative 26.5% compared with a negative 18.7% for the same period a year ago.

本期調整後 EBITDA 為負 416,000 美元，接近盈虧平衡，而上年同期調整後 EBITDA 為負 270 萬美元。本財年第一季的有效所得稅率為負26.5%，而上年同期為負18.7%。

Our effective income tax rate for the quarter was impacted by the company's mix of earnings between our U.S. and foreign subsidiaries with an operating loss in the U.S. while China and Canada generated income that was packed at higher rate as compared to the U.S.

我們本季的有效所得稅率受到公司美國和外國子公司之間的收入組合的影響，其中美國的營運虧損，而中國和加拿大的收入則高於美國。

Our cash income tax payments totaled $1.1 million for the first quarter of this fiscal year, and based on current expectations, we currently plan for cash income tax payments of approximately $3.2 million for the entire fiscal '24 year. Importantly, our estimated cash income tax payments for fiscal '24, our management's current projections only and can be affected by a variety of factors over the course of the year.

本財年第一季我們的現金所得稅繳納總額為 110 萬美元，根據目前的預期，我們目前計劃 24 財年整個財年的現金所得稅繳納額約為 320 萬美元。重要的是，我們對 24 財年現金所得稅支付的估計僅是我們管理層當前的預測，並且可能會受到全年各種因素的影響。

Now let's take a look at our business segments. For the Mattress Fabrics segment, sales for the first quarter were $29.2 million, down 0.5% compared to last year's first quarter, outperforming overall industry trends. Operating loss for the quarter was $1.4 million, a 52% improvement compared to an operating loss of $2.9 million a year ago. This operating improvement was driven by new placements priced in line with current cost, improvements in operating efficiencies and lower costs resulting from the restructuring and rationalization of this segment's mattress cover platform initiated last fiscal year, offset somewhat by higher SG&A expense.

現在讓我們來看看我們的業務部門。床墊布料領域，第一季銷售額為 2,920 萬美元，比去年第一季下降 0.5%，跑贏整體產業趨勢。該季度的營運虧損為 140 萬美元，比一年前的營運虧損 290 萬美元減少了 52%。這項營運改善的推動因素包括按當前成本定價的新安置、營運效率的提高以及上一財年啟動的該部門床墊套平台的重組和合理化帶來的成本降低，但在一定程度上被較高的銷售管理費用所抵銷。

For the Upholstery Fabrics Segment, sales for this first quarter were $27.4 million, down 17.4% over the prior year period, which was a strong quarter due to a lift in sales following pandemic-related shutdowns in China.

對於室內裝飾布料細分市場，第一季銷售額為 2,740 萬美元，比去年同期下降 17.4%，這是一個強勁的季度，因為中國因疫情導致的停工導致銷售額成長。

Sales for our residential fabric business for the quarter were affected by ongoing softness in the residential home furnishings industry, however demand remains solid in our upholstery -- in our hospitality contract business during the first quarter with sales for this business accounted for approximately 33% of the upholstery fabric segment's total sales.

我們的住宅布料業務本季的銷售額受到住宅家具產業持續疲軟的影響，但我們的室內裝潢需求仍然強勁——第一季我們的飯店合約業務，該業務的銷售額約佔總銷售額的33 %。室內裝潢布料部門的總銷售額。

Operating income and operating margin for the quarter were $1.3 million and 4.8%, 145% and 320 basis point improvement, respectively, compared with the prior year period. This operating performance was positively affected by a higher contribution from hospitality fabrics and Read window business, lower costs resulting from the restructuring of this segment's cut and sew platforms during earlier periods, and a more favorable foreign exchange rate associated with this segment's operations in China as well as other operational improvements. These factors were partially offset by lower residential fabric sales and higher SG&A during the period.

本季營業收入和營業利潤率分別為 130 萬美元和 4.8%、145% 和 320 個基點，較上年同期增加。此經營業績受到以下因素的正面影響：飯店布料和閱讀窗業務的貢獻增加，該部門前期剪裁和縫製平台重組導致成本降低，以及與該部門在中國業務相關的更有利的外匯匯率。以及其他營運改善。這些因素被該期間住宅織物銷售量下降和銷售、一般管理費用（SG&A）上升部分抵消。

Now I'll turn to the balance sheet. We reported $16.8 million in total cash and no outstanding debt as of the end of the first quarter. Cash flow from operations and free cash flow were negative $4.4 million and negative $4.2 million, respectively, for the first three months of this fiscal year. Our cash flow from operations and free cash flow during the period were affected by an operating loss and investments in working capital and capital expenditures mostly related to the Mattress Fabrics transformation plan.

現在我將轉向資產負債表。截至第一季末，我們的現金總額為 1,680 萬美元，沒有未償債務。本財年的前三個月，營運現金流和自由現金流分別為負 440 萬美元和負 420 萬美元。在此期間，我們的營運現金流量和自由現金流量受到營運虧損和營運資本投資以及資本支出的影響，這些支出主要與床墊布料轉型計畫有關。

Capital expenditures for the first three months of this fiscal year were $513,000. Based on current expectations, capital spending for this fiscal year is projected to be in the range of $5 million to $6 million and will center mostly on maintenance CapEx and quick payback projects focused on improving quality and efficiency in our Mattress Fabrics business. Based on current expectations, depreciation for this fiscal year is expected to be approximately $7 million.

本財年前三個月的資本支出為 513,000 美元。根據目前的預期，本財年的資本支出預計在 500 萬至 600 萬美元之間，主要集中在維護資本支出和快速投資回收項目上，重點是提高床墊布料業務的品質和效率。根據目前的預期，本財年的折舊預計約為 700 萬美元。

With respect to liquidity, as of the end of the first quarter, we had $42.3 million consisting of $16.8 million in total cash and $25.5 million in borrowing availability under our asset-based domestic credit facility. Borrowing availability under this facility is based on a calculation using [1/3] of the company's accounts receivable and inventory determined on a monthly basis.

在流動性方面，截至第一季末，我們擁有 4,230 萬美元，其中包括 1,680 萬美元的現金總額和 2,550 萬美元的基於資產的國內信貸安排下的可用借款。該設施下的借款可用性是根據公司每月確定的應收帳款和庫存的 1/3 計算得出的。

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

該公司在本財年第一季沒有回購任何股票，因此我們目前的股票回購計畫還剩下 320 萬美元。儘管目前已獲得股票回購授權，但我們預計本財年第二季不會有任何活動，因為我們仍然專注於保持流動性並做好支持未來成長機會的準備。

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

接下來，我將把電話轉給 Iv，討論本財年第二季的整體前景，然後我們將回答您的問題。四號？

Thank you, Ken. Due to the continued volatility in the macro environment, we are providing only limited financial guidance for the second quarter of fiscal '24. We expect consolidated net sales for the second quarter to be comparable to the second quarter of fiscal '23 driven by further improvement in the mattress fabrics segment, but offset by lower residential upholstery fabric sales.

謝謝你，肯。由於宏觀環境持續波動，我們僅為 24 財年第二季提供有限的財務指引。我們預計，在床墊布料領域進一步改善的推動下，第二季的綜合淨銷售額將與 23 財年第二季相當，但會被住宅室內裝飾布料銷售額的下降所抵消。

We expect consolidated operating loss for the second quarter of fiscal '24, that is in the range of $2.2 million to $2.6 million, a significant improvement compared to the $11.9 million operating loss for the prior year period, which did include approximately $6 million relating to certain inventory impairment charges, losses from inventory close out sales and greater-than-normal inventory markdowns.

我們預計 24 財年第二季的綜合營運虧損將在 220 萬美元至 260 萬美元之間，與去年同期的 1,190 萬美元營運虧損相比，有顯著改善，其中包括約 600 萬美元某些庫存減損費用、庫存清倉銷售損失以及高於正常水準的庫存降價。

Again, I will comment that we believe we are poised for a considerably better second half performance, with a return to operating profitability this fiscal year.

我再次強調，我們相信下半年業績將顯著改善，本財年將恢復營業利潤。

Finally, 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. So with that, we will now take questions.

最後，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，特別是確保營運資金的策略平衡。我們對卡爾普的未來感到樂觀，我們知道財務穩定對我們的成功至關重要。那麼，我們現在將回答問題。

(Operator Instructions) Our first question comes from Anthony Lebiedzinski with Sidoti & Company.

（操作員說明）我們的第一個問題來自 Sidoti & Company 的 Anthony Lebiedzinski。

So first, just a quick comment. Overall, a perfect job of maintaining a strong balance sheet and certainly nice to see a solid gross profit gains here in the quarter. So first question here for CHF, so you mentioned that new placements are in line with current costs and that's great to hear. So I guess for the quarter, can you give us just kind of a rough breakdown between pricing and unit volumes? I would love to hear your thoughts on that.

首先，簡單評論一下。總體而言，維持強勁的資產負債表是一項完美的工作，當然很高興看到本季毛利的穩健成長。第一個問題是關於瑞士法郎的，所以你提到新的展示位置符合目前的成本，很高興聽到這一點。所以我想對於本季度，您能給我們提供定價和單位數量之間的粗略細分嗎？我很想聽聽您對此的想法。

Ken, can you?

肯，你可以嗎？

Yes. yes. Anthony, I mean, we -- I think we've mentioned this before. I mean we price new products to capture the cost and that pricing flows throughout the year. I mean, obviously, we were right in line with sales and units were close as well. So really, it wasn't a big difference at all, pretty consistent on both.

是的。是的。安東尼，我的意思是，我們——我想我們之前已經提到過這一點。我的意思是，我們對新產品定價是為了捕捉成本，並且定價全年都會流動。我的意思是，顯然，我們的銷量與銷量相符，銷量也很接近。所以實際上，兩者根本沒有太大差別，非常一致。

We were building in the mattress fabrics business, Anthony, and you hopefully hear our excitement as we talk about the business. It's such a strong turnaround that's underway, and we're growing dollars and units. I mean we're a unit-driven company. So we're not going to have success without also growing the units. So we're doing both.

安東尼，我們正在進行床墊布料業務，希望您在我們談論這項業務時聽到我們的興奮之情。這是一個如此強勁的轉變正在進行中，我們正在增加美元和單位。我的意思是我們是一家單位驅動的公司。因此，如果不增加單位數量，我們就不會成功。所以我們兩者都做。

So before COVID, I mean, the gross margin at CHF was in the mid-teens and even higher in prior years. So given the transformation underway, do you think it's reasonable that you could get back to at least double-digit segment margin sometime this fiscal year?

所以在新冠疫情之前，我的意思是，瑞士法郎的毛利率在十幾歲左右，前幾年甚至更高。因此，考慮到正在進行的轉型，您認為本財年某個時候您可以恢復到至少兩位數的部門利潤率是否合理？

Well, Anthony, we -- I'll let Tommy make some comments to what he's seeing. The problem won't be as bold to tell you exactly when that's going to happen. But in our -- all the investor information that we're putting out through our new deck, sort of a minimum standard for our expectation in the CHF business is double-digit operating income percent. And we certainly have every intention of being at that in our intermediate future. Now whether we can get all the way to double-digit profitability in this fiscal year, TBD, but we are expecting to return to profitability both in the division and consolidated in this year.

好吧，安東尼，我們——我會讓湯米對他所看到的內容發表一些評論。問題不會那麼大膽地告訴你具體什麼時候會發生。但在我們透過新平台發布的所有投資者資訊中，我們對瑞郎業務預期的最低標準是兩位數的營業收入百分比。我們當然有意在不久的將來實現這一目標。現在，我們能否在本財年實現兩位數的獲利能力，還待定，但我們預計今年該部門和合併部門都將恢復獲利。

Tommy, anything you would add as you're just going through the process?

湯米，在您剛經歷這個過程時，您還有什麼要補充的嗎？

No, I think that's a good representation of the improvement. I think, Anthony, we expect it to be sequentially higher quarter-over-quarter and with the objective of getting back to historical profitability rates.

不，我認為這是改進的一個很好的體現。安東尼，我認為，我們預計季度環比將連續上升，目標是恢復到歷史盈利率。

Okay. That sounds good. And then for CUF, the residential, obviously, as you called out, is softer but are you seeing any notable customers moving away from Culp? Or is it just -- is that you're just seeing that customers are just ordering less across the board now?

好的。聽起來很好。然後，對於 CUF 來說，顯然，正如您所說，住宅市場較為疲軟，但您是否看到任何知名客戶正在離開卡爾普？或者只是——您只是看到客戶現在的訂購量全面減少了？

I'll let Boyd speak to that question, Anthony.

我會讓博伊德回答這個問題，安東尼。

Yes, Anthony. No, we're really not seeing any dramatic changes in our customer base. I think this was more just an overall industry demand situation that we're being impacted with. And of course, we have to remember, too, that for this quarter, we were comparing to an abnormally high first quarter of last year due to the pandemic. So the extreme pandemic-induced swings in demand over the last several years have made year-over-year comparisons difficult.

是的，安東尼。不，我們確實沒有看到我們的客戶群發生任何巨大變化。我認為這更多的是我們受到影響的整體行業需求情況。當然，我們還必須記住，就本季而言，我們將其與去年第一季由於大流行而異常高的水平進行比較。因此，過去幾年大流行引發的需求極端波動使得逐年比較變得困難。

So -- but no, to answer your question, don't see that we're having any changes in our customer mix in any significant way. This is more just industry-wide demand depression at the moment.

所以，但不，要回答你的問題，我們沒有看到我們的客戶組合有任何重大變化。這更多的是目前整個產業的需求低迷。

And Anthony, as Boyd -- Boyd has worked here with Culp for almost 40 years and we have seen our shares of ups and downs in the residential furniture business over many, many times. And we always think and it has typically beared itself out, we gain market position in times like this. And typically, when these times pass, we find ourselves in a better position. And this is no different. We believe on our side, we are actually gaining market position now and we think it's fully driven by just the slowness in the current industry.

安東尼（Boyd）——博伊德（Boyd）與卡爾普（Culp）在這裡工作了近 40 年，我們多次見證了我們在住宅家具業務中的份額的起伏。我們總是認為，在這樣的時期，我們獲得了市場地位，而這一點通常得到了證實。通常，當這些時期過去後，我們會發現自己處於更好的位置。這也不例外。我們相信，就我們而言，我們現在實際上正在獲得市場地位，我們認為這完全是由當前行業的緩慢發展所推動的。

If supply chains are adjusting, new products are being rolled out on the floor. Remember, we skipped about a year of new intros in that business for a little bit as no one needed to relaunch retail. So as that starts to happen, we're pretty optimistic about where it's going to go. And we noted in our script that we are now starting to see new written orders gradually increase. So we are seeing optimism as we look past -- probably looking past second quarter, but we do see those sales levels starting to pick back up.

如果供應鏈正在調整，新產品就會推出。請記住，我們跳過了該業務大約一年的新推出，因為沒有人需要重新啟動零售業務。因此，當這種情況開始發生時，我們對它的發展方向非常樂觀。我們在腳本中指出，我們現在開始看到新的書面訂單逐漸增加。因此，當我們回顧過去（可能是第二季）時，我們看到了樂觀情緒，但我們確實看到這些銷售水平開始回升。

That's great to hear. And then last question before I turn the call over to others. I guess probably a question for Ken. So inventory management, that has certainly been a nice source of cash, so a nice job with that. So do you think you can further reduce inventories? How about cash flow? So how should we think about that?

聽到這個消息我很高興。然後是我將電話轉給其他人之前的最後一個問題。我想這可能是問肯的問題。庫存管理無疑是一個很好的現金來源，所以做得很好。那麼您認為可以進一步減少庫存嗎？現金流怎麼樣？那我們該如何思考呢？

Yes, Anthony, that's -- I mean, as we look to grow the business on both sides, I mean, we -- both teams have done -- if you look over the last six quarters, they've done a remarkable job of getting inventory down and really meeting demand. And so as we proceed ahead into the next quarters, our focus is going to be on growing the business, and as we said in the prepared remarks, balancing inventory with sales, and that's -- that we preach that every day.

是的，安東尼，那就是——我的意思是，當我們希望發展雙方的業務時，我的意思是，我們——兩個團隊都做到了——如果你看看過去的六個季度，他們做得非常出色降低庫存並真正滿足需求。因此，當我們進入下一個季度時，我們的重點將是發展業務，正如我們在準備好的演講中所說，平衡庫存與銷售，這就是我們每天都宣揚的。

So is there some opportunity to continue to maximize efficiencies in inventory? Probably some but right now, the we've got to make sure we've got the right amount of inventory on hand to support growth. And so -- but that said, we're going to be very careful about balancing both as we grow the business.

那麼是否有機會繼續最大限度地提高庫存效率呢？可能有一些，但現在，我們必須確保手邊有適量的庫存來支持成長。所以——但話雖如此，在我們發展業務的過程中，我們將非常小心地平衡兩者。

Our next question comes from Bud Bugatch with Water Tower Research.

我們的下一個問題來自 Water Tower Research 的 Bud Bugatch。

First, I just want to make a comment that I know it's been a very tumultuous time for everybody. Congratulations on keeping the financial condition of Culp pretty strong, making it through these times.

首先，我只想發表評論，我知道這對每個人來說都是一個非常動盪的時期。恭喜卡爾普保持強勁的財務狀況，度過了這段時期。

Thank you.

謝謝。

You're welcome. I guess the first question is, you talk about the improvements in CHF. And I guess I would love to get some color on that, maybe anecdotally what you've done, what -- you talked about some of the operational cost efficiencies. Do you have some examples of what that was or maybe put some color to numbers on that?

不客氣。我想第一個問題是，你談到了瑞郎的改善。我想我很想對此有所了解，也許是軼事，你做了什麼，你談到了一些營運成本效率。你有一些例子來說明那是什麼嗎？或是可以為數字加上一些顏色嗎？

Yes. And I'll let Tommy speak to that, Bud, because he's living it. He's living -- we're happy to have him here with us in the office and not on the plant floor. We got him, we had to pry him out from that. But Tommy, why don't you touch on anything from your standpoint?

是的。我會讓湯米來談談這個，巴德，因為他正在經歷這樣的事情。他還活著——我們很高興他和我們一起在辦公室而不是在工廠車間。我們抓住了他，我們必須把他從困境中撬出來。但是湯米，為什麼不從你的角度談談任何事情呢？

Yes, sure. Bud, it's really, for us, improving our gross profit is really a combination of working on our mix, working on improving previous programs that weren't costed in line with the market conditions through COVID. As it related to operational efficiencies, we continue to really push our supply chain for best cost position on raw materials as well as continuous improvement, quality and manufacturing efficiency initiatives in Stokesdale and in Canada. Other initiatives we're doing is making sure that we're really leveraging our global platform for efficiency and profitability and balancing those together with our manufacturing assets.

是的，當然。巴德，對我們來說，提高毛利實際上是我們的組合工作和改進以前的項目的結合，這些項目在新冠疫情期間的成本不符合市場條件。由於這與營運效率相關，我們將繼續真正推動我們的供應鏈在原材料方面取得最佳成本地位，並在斯托克斯代爾和加拿大實施持續改進、品質和製造效率措施。我們正在採取的其他措施是確保我們真正利用我們的全球平台來提高效率和獲利能力，並將這些與我們的製造資產相平衡。

And Tommy, can you kind of maybe characterize the importance of that? Was pricing more important than the operational efficiencies? How do you -- what's the relative mix between the two?

湯米，你能描述一下這一點的重要性嗎？定價比營運效率更重要嗎？兩者之間的相對組合如何？

Yes. That's a really -- I don't want to take the easy way out of this question. I would say that they're equally important Bud, because we had some programs that weren't profitable that we had to reshift away. But we also have opportunities through a challenging COVID environment to really engage and drive operational improvement as the macro environment and raw materials opportunities have come along. So we're focused equally on both of them.

是的。這確實是——我不想簡單地解決這個問題。我想說它們同樣重要，夥計，因為我們有一些無法獲利的項目，我們不得不重新轉移。但隨著宏觀環境和原料機會的出現，我們也有機會在充滿挑戰的新冠疫情環境中真正參與並推動營運改善。所以我們對他們兩個都同樣關注。

And so do we think about them as 50-50 kind of improvement? You get 50% of the improved gross margin from pricing and 50% -- from pricing that you can finally get a hold of or get either through new programs or realigning previously unprofitably priced programs and 50% through operational efficiencies?

那麼我們是否認為它們有 50-50 種改進？毛利率提高的 50% 來自定價，50% 來自您最終能夠掌握或透過新計劃或重新調整以前無利可圖的定價計劃獲得的定價，50% 來自營運效率？

Yes, sir. I would characterize it as 50-50.

是的先生。我將其描述為 50-50。

And what I get excited about Bud from what Tommy is working on, I agree. It's both half and half, better pricing and better cost improvement. What makes me excited watching it is the business is gradually picking up. We are -- and we're doing that internally by gaining market position.

我同意巴德對湯米正在做的事情感到興奮。這是一半一半，更好的定價和更好的成本改善。令我興奮的是，生意逐漸好轉。我們是——而且我們正在內部透過獲得市場地位來做到這一點。

We've been around this mattress business for some time, and we know our position is strong, and we're going to have periods where demand is going to be really high. We just hope that will start to turn a little bit to our favor. And having all these operational improvements in place will benefit so much more when that happens.

我們從事床墊業務已經有一段時間了，我們知道我們的地位很穩固，而且我們將會經歷一段時期，需求將會非常高。我們只是希望這會開始變得對我們有利。當這種情況發生時，所有這些營運改進都將受益匪淺。

And I think something he said is really important to realize, we always want to leverage our strong global options. That's going to always be important, and if we get the right product priced and manufacturing them in the right places, so the right things for U.S., right things for Canada, the right things for Asia, right things for Haiti, that's where we really have the ability when the cylinders start firing to generate strong profit. So really good work being done and being prepared for the turnaround.

我認為他所說的一些話非常重要，我們始終希望利用我們強大的全球選擇。這始終很重要，如果我們獲得正確的產品定價並在正確的地方製造它們，那麼為美國提供正確的產品，為加拿大提供正確的產品，為亞洲提供正確的產品，為海地提供正確的產品，這就是我們真正的目標有能力在汽缸開始點火時產生豐厚的利潤。因此，我們所做的工作非常出色，並為扭轉局面做好了準備。

Okay. Turning to CUF, Read is embedded within CUF and that's -- and you said Read for this quarter looks like about 1/3 of the revenue, so somewhere around $9 million for Read. How did that compare to last year for Read in the first quarter. What was that comparison like?

好的。談到 CUF，Read 嵌入在 CUF 中，您說本季的 Read 看起來約佔收入的 1/3，因此 Read 的收入約為 900 萬美元。 Read 第一季的情況與去年相比如何？那個比較是什麼樣的？

Yes, Bud, this is Boyd. And last year, first quarter, we were around 25% for that -- that's the total hospitality business. As a [percentage] of our total sales, which is the way we characterize that. So 25% last year versus 33% this year and that percentage was gaining throughout the year last fiscal year.

是的，巴德，這是博伊德。去年第一季度，我們的佔比約為 25%——這就是整個酒店業務。作為我們總銷售額的[百分比]，這就是我們描述這一點的方式。去年為 25%，而今年為 33%，而且這一比例在上一財年全年都在增長。

I see. And so then on that basis and Read's gross margin, how would you characterize that versus the fleet margin, the average margin in CUF?

我懂了。那麼，在此基礎上以及 Read 的毛利率，您如何描述其與機隊利潤率（以 CUF 為單位的平均利潤率）的關係？

Yes, Bud, this is Ken. As we -- the critical point that we made was Read had dramatic improvement year-over-year from last year. In fact, we were at a loss last year, now we're making money. The margin is comparable to the overall margin right now for CUF, Obviously, we want to continue to grow both as we make progress over the coming quarters. But we're just excited that, that business has really improved and really contributing this year.

是的，巴德，這是肯。我們提出的關鍵點是，Read 比去年同期有了顯著的進展。事實上，去年我們是虧損的，現在我們是賺錢的。利潤率與 CUF 目前的整體利潤率相當，顯然，隨著我們在未來幾季取得進展，我們希望繼續成長。但我們很興奮的是，今年這項業務確實有所改善並做出了真正的貢獻。

Okay. great. And turning a little bit to the future now, and I know that the guidance for the second quarter in the midst of a very uncertain macro environment being tough, and we appreciate what you did give. But Iv, you also did say you're looking to make operating profitability for the second half of the year. And I'm trying to make sure I understand, is that -- do you think you'll be operating profitable for all of the second half of the year? Or you think you'll be operating profitable for the entire year based upon the improvements that you're seeing in the second half of the year? How do we (inaudible) about that?

好的。偉大的。現在轉向未來，我知道在非常不確定的宏觀環境中第二季的指導是艱難的，我們感謝您所做的一切。但是，IV，您也確實說過您希望在今年下半年實現營業利潤。我試著確保我理解，你認為你會在今年下半年獲利嗎？或者您認為根據下半年看到的改進，您全年的營運將實現盈利？我們（聽不清楚）對此有何看法？

Yes. Thank you, Bud. Good question. And the way we're talking about that is certainly, we aren't -- because we're coming from the first couple of quarters, we aren't forecasting operating profitability for the entire year. But we do believe somewhere in that back half of our year, we'll have months and a quarter that will turn to consolidated operating profitability. We don't know if it's going to be the end of third, going to fourth, but somewhere in the second half.

是的。謝謝你，巴德。好問題。我們談論這一點的方式當然是，我們不是——因為我們來自前幾季度，我們並沒有預測全年的營運獲利能力。但我們確實相信，在今年下半年的某個時候，我們將有幾個月和一個季度的時間轉向綜合營運獲利能力。我們不知道是否會在第三節結束時進入第四節，但會在下半場的某個地方。

And a lot of that, we aren't dependent to keep sequentially improving on the macro demand. But if that happens faster, we'll turn faster. But even without -- if demand at current levels, we will have a quarter in the back half that turns profitable, most likely towards the end of the year, Bud.

其中很多，我們並不依賴宏觀需求的持續改善。但如果這種情況發生得更快，我們就會加快速度。但即使沒有——如果需求保持在目前的水平，我們也將在後半段有一個季度實現盈利，很可能是在年底，巴德。

And so even if it does not sufficiently to make the second half overall profitable, but just in the particular quarter in which you reach operating profitability? Is that (inaudible).

因此，即使它不足以使下半年整體盈利，但只是在您實現營業盈利的特定季度？是這樣嗎（聽不清楚）。

Yes, that's what -- that's -- now we hope your first statement is right. But that's -- today, we're saying, we're not saying for the whole second half. We're saying we'll turn to profitability in the second half.

是的，這就是——就是——現在我們希望你的第一個陳述是正確的。但今天，我們要說的是，我們並不是說整個下半場。我們說我們將在下半年實現盈利。

In the second half. Okay. And looking farther down the road. So now going from the near term, intermediate term to a little bit longer term, you continue to exude confidence and comfort longer term. And I think that if I got your message is even stronger now than it might have been even in some of the past calls, can you kind of give us a framing of what that looks like? Tell us what we should think about success when you get to success in the longer term.

下半場。好的。並把目光投向更遠的地方。因此，現在從近期、中期到更長期，您將繼續散發出長期的信心和舒適感。我認為，如果我現在收到的訊息比過去的一些電話中傳達的訊息更加強烈，您能否給我們一個大概的框架？告訴我們，當您取得長期成功時，我們應該如何看待成功。

Yes, certainly, Bud, thank you for picking up on that. We are -- we certainly understand that we're in a tough period. We're recovering from an even tougher period, but there's a lot of confidence in all of us, its executive management that we see -- we see brighter times for the business. We see where we're positioned. We see our innovative products and the platform we have to service customers and we know that our industry is, generally over our history, been a stable slow growing industry.

是的，當然，巴德，謝謝你接受這一點。我們當然知道我們正處於一個艱難的時期。我們正在從更困難的時期中恢復過來，但我們所有人以及我們看到的執行管理層都充滿信心——我們看到了企業的光明時期。我們看到我們所處的位置。我們看到我們的創新產品和我們為客戶提供服務的平台，我們知道，在我們的歷史上，我們的行業總體上是一個穩定、緩慢成長的行業。

We haven't been used to these ups and downs that we've had in the last two, three years. That's been -- that's taken a toll on our results. But as we get to some stability and the teams that we have in place operating in both divisions are really confidence inspiring.

我們還沒有習慣過去兩三年的起起落落。這對我們的結果造成了影響。但當我們達到一定程度的穩定後，我們在兩個部門中運作的團隊確實令人充滿信心。

So when we look out into beyond '24 and to '25, '26, I mean we're back to double-digit operating incomes in mattress fabrics and high single-digit operating income percentages in upholstery fabrics. And we'd like to go past that. But that's our first target to recover to and I guess it depends on your horizon of medium to long term, but we would see that happening in our medium term as we look out forward.

因此，當我們展望 24 年後以及 25 年、26 年時，我的意思是，床墊布料的營業收入將回到兩位數，室內裝飾布料的營業收入將恢復到個位數的高水準。我們希望超越這一點。但這是我們要恢復的第一個目標，我想這取決於你的中長期視野，但我們會在中期看到這種情況發生，因為我們展望未來。

Okay. So that gets us to the margin side of that. And then in terms of the topline, you think you can match the industry's slow growing low to mid-single-digit kind of growth over time topline?

好的。這讓我們進入了邊緣部分。然後就營收而言，您認為您可以與該行業緩慢增長的低至中個位數的隨著時間推移的營收成長相匹配嗎？

Yes, sir. I mean ideally, in our best days, and we hope we can grow faster than the industry grows. That's always our goal. And I don't see why we can't, but we certainly will stay with industry pace and see that steady growth.

是的先生。我的意思是，理想情況下，在我們最好的日子裡，我們希望我們的成長速度能超過產業的成長速度。這始終是我們的目標。我不明白為什麼我們不能，但我們肯定會跟上行業步伐並看到穩定成長。

All right. And last for me, the other thing that I noticed in the quarter was SG&A was a little bit heavier than what we were looking for and operating expenses a little bit heavier. Maybe you can give us some color as to what we -- why that might have been and what we should expect as we go down the road.

好的。最後對我來說，我在本季注意到的另一件事是 SG&A 比我們想要的要重一點，營運費用也重一點。也許你可以給我們一些解釋，告訴我們我們會做什麼——為什麼會這樣，以及我們在前進的過程中應該期待什麼。

Yes, Bud, this is Ken. We listed some of the reasons for the higher. Obviously, wage inflation was a part of it. We did have some higher incentive compensation accrual. Keep in mind, we're coming off of a very, very tough year, and our -- the way we're looking at this year is significant improvement. So we've got some opportunity there.

是的，巴德，這是肯。我們列出了較高的一些原因。顯然，工資上漲是其中的一部分。我們確實有一些更高的應計激勵薪酬。請記住，我們即將度過非常非常艱難的一年，而我們對今年的看法是重大改進。所以我們在那裡有一些機會。

We also have some professional fees that -- just various professional fees. And also, and this is something that both divisions had to contend with was sampling expense and people forget about that. But this time last year, we didn't have any hardly any new programs, and now both teams are dealing with new great opportunities and new rollouts, and so the sampling expense was higher.

我們還有一些專業費用——只是各種專業費用。而且，這兩個部門都必須應付抽樣費用，但人們卻忘記了這一點。但去年這個時候，我們幾乎沒有任何新項目，現在兩個團隊都在應對新的巨大機會和新的推出，因此採樣費用更高。

So all those reasons kind of impacted all three, the corporate account, our corporate expense and divisionals. What we're excited about is that we've talked about this in the prepared remarks, as we grow the business, we've got -- our SG&A level right now is supporting our activities in our business models. As we grow sales, we're going to have significant leverage opportunity to bank a lot of that profitability, and so both SG&A and fixed costs. So we've got everything ready to go, we just need that lift in sales to get that leverage.

因此，所有這些原因都對這三個方面產生了影響，即公司帳戶、我們的公司費用和部門。令我們興奮的是，我們在準備好的發言中已經討論過這一點，隨著我們業務的發展，我們現在的 SG&A 水平正在支持我們業務模式中的活動。隨著我們銷售額的成長，我們將有很大的槓桿機會來儲存大量的獲利能力，包括銷售管理費用和固定成本。所以我們已經做好了一切準備，我們只需要銷量的提升就能獲得槓桿作用。

And is there an order of magnitude on the sampling cost that you're willing to share? And does that go into -- doesn't that go into gross margin? I mean, sampling costs would be fabric you create? Or do you take out those -- that sample cost that you can isolate and then make sure that's showing up in SG&A and operating expense?

您願意分享樣品成本的數量級嗎？這會影響毛利率嗎？我的意思是，樣品成本是你創造的布料？或者您是否取出那些可以隔離的樣本成本，然後確保其顯示在 SG&A 和營運費用中？

Bud, the way that we characterize our sampling cost is really is a part of our launches, so it's really a part of our commercial process of sampling, creating -- doing all the development and design work relative to new programs.

巴德，我們描述採樣成本的方式實際上是我們發布的一部分，因此它實際上是我們採樣、創建的商業流程的一部分——完成與新程序相關的所有開發和設計工作。

Okay. So it's not just the cost of the fabric you produce for the samples, you produce or maybe send out to your clients, but it's the wages and the cost inside of there for the team to develop those? There's no (inaudible).

好的。因此，這不僅僅是您為樣品生產、生產或發送給客戶的布料的成本，而是團隊開發這些布料的工資和內部成本？沒有（聽不清楚）。

It's all the cost from sampling, design and launch preparations.

這是採樣、設計和發射準備的全部成本。

And that winds up in operating expense. Is that right?

這最終會增加營運費用。是對的嗎？

Yes.

是的。

Okay. Again, congratulations on navigating through a challenging period. There are some in the industry that -- well, they're not there anymore to do that.

好的。再次恭喜您度過了充滿挑戰的時期。業內有些人——好吧，他們不再這樣做了。

Thank you, Bud. Have a good weekend.

謝謝你，巴德。有一個美好的周末。

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

我們的問答環節到此結束。我想將電話轉回 Iv Culp，讓其發表結束語。

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

謝謝你，接線生。再次感謝大家的參與以及對 Culp 的興趣。我們期待向您通報下季的最新進展。

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。您現在可以斷開連線。