Flexsteel Industries Inc (FLXS) 2023 Q4 法說會逐字稿

Good morning, and welcome to the Flexsteel Industries Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Derek Schmidt, Chief Operating Officer and Interim Chief Financial Officer for Flexsteel Industries. Please go ahead.

早上好，歡迎參加 Flexsteel Industries 第四季度和 2023 財年收益電話會議。 （操作員說明）請注意，正在記錄此事件。我現在將會議交給 Flexsteel Industries 首席運營官兼臨時首席財務官 Derek Schmidt。請繼續。

Thank you, and welcome to today's call to discuss Flexsteel Industries Fourth Quarter and Fiscal year 2023 financial results. Our earnings release, which we issued after market close yesterday, Monday, August 21, is available on the Investor Relations section of our website at www.flexsteel.com, under News and Events.

謝謝您，歡迎參加今天的電話會議，討論 Flexsteel Industries 第四季度和 2023 財年的財務業績。我們於昨天（8 月 21 日星期一）收盤後發布了我們的收益報告，可在我們網站 www.flexsteel.com 的投資者關係部分的新聞和活動下查看。

I am here today with Jerry Dittmer, President and Chief Executive Officer. On today's call, we will provide prepared remarks, and then we will open the call to your questions.

今天我和總裁兼首席執行官傑里·迪特默 (Jerry Dittmer) 一起來到這裡。在今天的電話會議上，我們將提供準備好的發言，然後我們將開始回答您的問題。

Before we begin, I would like to remind you that the comments on today's call will include forward-looking statements which can be identified using words such as estimate, anticipate, expect and similar phrases. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Such risks and uncertainties include, but are not limited to, those that are described in our most recent annual report on Form 10-K as updated by our subsequent quarterly reports on Form 10-Q and other SEC filings as applicable.

在我們開始之前，我想提醒您，今天電話會議的評論將包括前瞻性陳述，這些陳述可以使用估計、預期、期望和類似短語等詞語來識別。前瞻性陳述本質上涉及估計、預測、目標、預測和假設，並受到風險和不確定性的影響，這些風險和不確定性可能導致實際結果或結果與前瞻性陳述中表達的結果存在重大差異。此類風險和不確定性包括但不限於我們最新的10-K 表年度報告中描述的風險和不確定性，以及我們隨後的10-Q 表季度報告和其他適用的SEC 備案文件中更新的風險和不確定性。

These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. Additionally, we may refer to non-GAAP measures, which are intended to supplement but not substitute for the most directly comparable GAAP measures. The press release available on the website contains the financial and other quantitative information to be discussed today as well as the reconciliation of GAAP to non-GAAP measures.

這些前瞻性陳述僅代表本次電話會議之日的情況，不應被視為對未來事件的預測。此外，我們可能會參考非公認會計準則衡量標準，這些衡量標準旨在補充但不能替代最直接可比的公認會計準則衡量標準。網站上提供的新聞稿包含今天討論的財務和其他定量信息，以及 GAAP 與非 GAAP 指標的調節。

And with that, I will turn the call over to Jerry Dittmer. Jerry?

接下來，我會將電話轉給傑里·迪特默。傑瑞？

Good morning, and thank you for joining us today. I am pleased to share with you our fourth quarter and fiscal year 2023 results. We continued our strong momentum in the fourth quarter, delivering sales of $105.8 million, which was within our guidance range and represents sequential quarter-over-quarter growth of 6.8% compared to the third quarter. While we continue to face market headwinds in the form of pricing pressure and slowing consumer demand, we are executing well, and our growth initiatives are adding meaningful revenue to offset these challenges.

早上好，感謝您今天加入我們。我很高興與您分享我們第四季度和 2023 財年的業績。第四季度我們繼續保持強勁勢頭，銷售額達到 1.058 億美元，在我們的指導範圍內，與第三季度相比環比增長 6.8%。雖然我們繼續面臨價格壓力和消費者需求放緩等形式的市場阻力，但我們的執行情況良好，我們的增長計劃正在增加有意義的收入以抵消這些挑戰。

Our growth initiatives, along with a continued focus on operational efficiency and controlling costs, enabled us to expand our gross margins and deliver operating income for the quarter of $4.2 million or 4%, which was in the upper range of our guidance. While economic uncertainty and market headwinds will remain a challenge in fiscal year 2024, I am encouraged by the positive impact of our strategic priorities and excited to continue our momentum in fiscal year 2024.

我們的增長計劃，加上對運營效率和控製成本的持續關注，使我們能夠擴大毛利率，並實現本季度營業收入 420 萬美元或 4%，這在我們指導的上限範圍內。儘管經濟不確定性和市場逆風仍將是 2024 財年的挑戰，但我對我們戰略重點的積極影響感到鼓舞，並很高興能夠在 2024 財年繼續保持我們的勢頭。

Looking back on fiscal year 2023, it was a very challenging yet exciting year. Coming off a year in 2022 of record high sales due to post-COVID demand, we were faced with slowing consumer demand, which was compounded by a glut of retail inventory that was ordered to meet expected post-COVID demand but backlogged due to supply chain disruptions.

回顧2023財年，這是非常具有挑戰性但又令人興奮的一年。 2022 年，由於新冠疫情后的需求，我們的銷售額創下了歷史新高，但我們面臨著消費者需求放緩的問題，而零售庫存過剩則加劇了這種情況，這些庫存本來是為了滿足新冠疫情後的預期需求而訂購的，但由於供應鏈而積壓了庫存干擾。

At the same time, the industry experienced pervasive price reductions as many manufacturers and retailers quickly dropped prices in response to lower ocean freight and other cost inputs, forcing others to follow suit. The imbalance between supply and demand further intensified pressure to lower prices in order to remain competitive. And while ocean container rates began to return to normal levels, fuel prices surged. Despite the significant decline in year-over-year sales caused by these challenges, our strong team of dedicated employees identified the obstacles early and executed plans to navigate them, which resulted in higher full year operating income of $10.5 million compared to $6.6 million in the prior year.

與此同時，該行業普遍降價，許多製造商和零售商因海運費和其他成本投入下降而迅速降價，迫使其他公司效仿。供需失衡進一步加劇了為了保持競爭力而降低價格的壓力。儘管海運集裝箱費率開始恢復到正常水平，但燃油價格卻飆升。儘管這些挑戰導致銷售額同比大幅下降，但我們強大的敬業員工團隊及早發現了障礙並執行了克服這些障礙的計劃，從而使全年營業收入增加到1,050 萬美元，而上年同期為660 萬美元。去年。

It was exciting to see the advancement of our strategic growth initiatives which included expanding our big-box distribution channel, launching our Zecliner sleep solutions recliner and our flex contemporary modular furniture solution and launching the new Charisma brand. The impact of these growth initiatives created sequential quarter-over-quarter sales growth in the second half of the fiscal year despite the challenges already mentioned.

我們很高興看到我們的戰略增長計劃取得進展，其中包括擴大我們的大型分銷渠道、推出我們的 Zecliner 睡眠解決方案躺椅和我們的 Flex 現代模塊化家具解決方案以及推出新的 Charisma 品牌。儘管存在已經提到的挑戰，但這些增長舉措的影響在本財年下半年創造了環比連續銷售增長。

We continue to see near-term challenges due to competitive pricing pressure and a return of demand to pre-pandemic levels amid macroeconomic uncertainty. However, we are maintaining our commitment to our strategic priorities in delivering long-term profitable growth. With that in mind, we will continue to invest pragmatically in growth initiatives to drive sales and focus on operational excellence to drive margin expansion.

在宏觀經濟不確定性的情況下，由於競爭性定價壓力以及需求恢復到大流行前的水平，我們繼續看到近期的挑戰。然而，我們將繼續致力於實現長期盈利增長的戰略重點。考慮到這一點，我們將繼續務實地投資於增長計劃以推動銷售，並專注於卓越運營以推動利潤率擴張。

I'll now turn the call over to Derek to discuss our strategic initiatives and financial results as well as our outlook for Q1 2024. I'll be back at the end of the call with some closing comments on what we see ahead.

我現在將把電話轉給德里克，討論我們的戰略舉措和財務業績以及我們對 2024 年第一季度的展望。我將在電話會議結束時對我們的未來展望發表一些總結評論。

Thank you, Jerry, and good morning, everyone. Like Jerry, I'm optimistic about the trajectory of our business and feel great about the momentum we've built with our growth initiatives. A few noteworthy highlights to share. With respect to new sales distribution, we continue to execute well and gain momentum with big-box customers most notably Costco.

謝謝杰瑞，大家早上好。和傑里一樣，我對我們業務的發展軌跡感到樂觀，並對我們通過增長計劃建立的勢頭感到非常高興。分享一些值得注意的亮點。在新的銷售分銷方面，我們繼續表現良好，並在大型客戶（尤其是 Costco）中獲得動力。

Big box represented approximately 5% of our total sales in the fourth quarter and is expected to grow faster than our other channels in fiscal year 2024 as we expand the breadth of product offerings and optimize our marketing and demand generation efforts within this channel. As important, we are building Flexsteel brand awareness with a different consumer audience through big box, which we feel will have positive, long-term growth benefits across all our channels.

Big Box 約占我們第四季度總銷售額的 5%，隨著我們擴大產品供應的廣度並優化該渠道內的營銷和需求生成工作，預計 2024 財年的增長速度將快於我們的其他渠道。同樣重要的是，我們正在通過大賣場在不同的消費者群體中建立 Flexsteel 品牌知名度，我們認為這將為我們所有渠道帶來積極的長期增長效益。

In new product categories, we had good, early success with flex, which is our small parcel, contemporary, modular furniture solution. Flex was initially launched in the big-box channel last quarter, and we've accelerated distribution expansion to make flex available across a wide variety of selling platforms, including e-commerce partners like Amazon; Wayfair; Overstock, which recently rebranded itself as Bed Bath & Beyond; homedepot.com; and our own direct-to-consumer site, www.flexsteelstore.com.

在新產品類別中，我們在 Flex 方面取得了良好的早期成功，這是我們的小包裹、現代、模塊化家具解決方案。 Flex 最初於上個季度在大型渠道推出，我們加速了分銷擴張，使 Flex 在各種銷售平台上可用，包括亞馬遜等電子商務合作夥伴；韋費爾； Overstock，最近更名為 Bed Bath & Beyond； homedepot.com；以及我們自己的直接面向消費者的網站 www.flexsteelstore.com。

In addition, we are aggressively expanding flex into brick-and-mortar retail with our strongest, independent retail partners. New product additions will be released in October with additional plans developed to meaningfully expand the line over the next 18 months. Zecliner, our new sleep solutions recliner, has become a home run. Over 500 retailers have placed the product with strong initial sales. We've also signed up multiple regional sleep store chains with more anticipated in fiscal year 2024. We expanded the line in April and have more innovation planned for release in October.

此外，我們還與我們最強大的獨立零售合作夥伴一起，積極將 Flex 擴展到實體零售領域。新產品將於 10 月發布，並製定額外計劃，在未來 18 個月內有意義地擴展產品線。我們的新型睡眠解決方案躺椅 Zecliner 已成為全壘打。超過 500 家零售商對該產品進行了強勁的初始銷售。我們還簽約了多家區域睡眠連鎖店，預計 2024 財年將有更多連鎖店。我們在 4 月份擴大了產品線，併計劃在 10 月份發布更多創新產品。

This is an exciting category, and our plan is to stay ahead of any competition by constantly innovating. To expand our customer base. Last year, we launched our new Charisma brand, targeting the style and price preferences of younger consumers. With a major competitor in the sub-$1,000 sofa market recently closing their operations, we have an opportunity near term to gain additional retail penetration with Charisma. In the midterm, we are also pursuing cost-efficient innovations to bolster Charisma's brand position of differentiated quality and comfort at affordable prices.

這是一個令人興奮的類別，我們的計劃是通過不斷創新在任何競爭中保持領先地位。擴大我們的客戶群。去年，我們推出了新的 Charisma 品牌，針對年輕消費者的風格和價格偏好。由於 1,000 美元以下沙發市場的主要競爭對手最近關閉了其業務，我們近期有機會通過 Charisma 獲得更多的零售滲透率。從中期來看，我們還將追求具有成本效益的創新，以鞏固 Charisma 以實惠的價格提供差異化​​品質和舒適度的品牌地位。

The success of these new growth outlets coupled with our continued investments in our core business give us confidence to profitably grow the company in fiscal year 2024 and beyond. We are also proud to have published our first annual ESG report, which can be found on our website at www.flexsteelindustries.com. This report lays out the foundation of our approach to environmental, social and governance matters and formalizes our ongoing commitment to sustainable and responsible business practices.

這些新增長點的成功加上我們對核心業務的持續投資，讓我們有信心在 2024 財年及以後實現公司的盈利增長。我們還很自豪地發布了第一份年度 ESG 報告，該報告可以在我們的網站 www.flexsteelindustries.com 上找到。本報告闡述了我們處理環境、社會和治理問題的方法的基礎，並正式確立了我們對可持續和負責任的商業實踐的持續承諾。

We are dedicated to making a positive difference wherever we can guided by the belief that not only is it the right thing to do, but it's also the right thing for our business long term. We are already combining sustainable business practices with product innovation to bring differentiated value solutions to the market as exemplified by our new Sky seating line, which utilizes CloudLux, a cushion fill made from recycled plastic bottles. Not only does CloudLux provide exceptional comfort but every 3-piece Sky sofa helps prevent 730 plastic water bottles from entering waterways and landfills.

我們致力於在任何可能的情況下做出積極的改變，我們相信這不僅是正確的事情，而且對我們業務的長期發展也是正確的事情。我們已經將可持續商業實踐與產品創新相結合，為市場帶來差異化的價值解決方案，我們的全新Sky 座椅系列就是一個例子，該系列採用了CloudLux（一種由回收塑料瓶製成的坐墊填充物）。 CloudLux 不僅提供卓越的舒適度，而且每張 3 件式 Sky 沙發都有助於防止 730 個塑料水瓶進入水道和垃圾填埋場。

We're excited about our ESG journey and convinced that we can positively impact people, communities and our planet while also supporting and accelerating our growth strategies through these efforts. With that, I'll now give you some additional details on the financial performance for the fourth quarter and the outlook for the first quarter of fiscal year 2024.

我們對我們的 ESG 之旅感到興奮，並相信我們可以對人們、社區和地球產生積極影響，同時通過這些努力支持和加速我們的增長戰略。現在，我將向您提供有關第四季度財務業績和 2024 財年第一季度前景的更多詳細信息。

For the fourth quarter, net sales were $105.8 million, within our guidance of $100 million to $110 million, provided during our third quarter earnings call. More importantly, our sales results represent a sequential increase of 6.8% from the third quarter, which is our second consecutive quarter of sequential sales growth and reflects the strong sales momentum driven by our growth initiatives.

第四季度淨銷售額為 1.058 億美元，處於我們第三季度財報電話會議期間提供的 1 億至 1.1 億美元指導範圍內。更重要的是，我們的銷售業績較第三季度環比增長 6.8%，這是我們連續第二個季度實現銷售環比增長，反映了我們的增長舉措推動的強勁銷售勢頭。

From a profit perspective, the company delivered operating income of $4.2 million or 4% of sales in the fourth quarter, which was at the high end of our guidance range and represents a continuation of sequential quarter-over-quarter operating margin improvement throughout fiscal year 2023, even with increased strategic investments to support long-term growth.

從利潤角度來看，該公司第四季度營業收入為 420 萬美元，佔銷售額的 4%，處於我們指導範圍的高端，代表整個財年營業利潤率持續環比改善2023 年，即使增加戰略投資以支持長期增長。

Moving to the balance sheet and statement of cash flows. The company ended the quarter with a cash balance of $3.4 million, working capital of $115.5 million and a balance on our revolving line of credit of $28.3 million, a 25% decrease from the prior year. Working capital and our debt balance did increase from the third quarter due to the timing of inventory receipts, which were heavier in the fourth quarter as we bring in new products and additional inventory to support our growth initiatives.

轉向資產負債表和現金流量表。該公司本季度末現金餘額為 340 萬美元，營運資金為 1.155 億美元，循環信貸額度餘額為 2830 萬美元，比上年減少 25%。由於庫存收貨的時間安排，我們的營運資本和債務餘額確實比第三季度有所增加，第四季度的庫存收貨量更大，因為我們引入了新產品和額外的庫存來支持我們的增長計劃。

However, compared to prior year, we have executed our plan to reduce inventory levels and pay down debt and our balance sheet remains strong. We continue to prioritize debt reduction and expect inventory to be a meaningful source of cash in fiscal year 2024 to further pay down debt. Looking forward, sales guidance for the first quarter is between $92 million and $100 million. The first quarter is historically our slowest quarter of the year as furniture purchases are often deferred by consumers in favor of travel and entertainment during the summer months.

然而，與去年相比，我們已經執行了降低庫存水平和償還債務的計劃，並且我們的資產負債表仍然強勁。我們繼續優先考慮削減債務，並預計庫存將成為 2024 財年的重要現金來源，以進一步償還債務。展望未來，第一季度的銷售指導在 9200 萬美元至 1 億美元之間。從歷史上看，第一季度是我們一年中最慢的季度，因為消費者經常推遲購買家具，轉而在夏季進行旅行和娛樂。

That said, we are anticipating year-over-year unit volume growth in the low to mid-single digits as a result of our growth initiatives. But the elimination of ocean freight surcharges which occurred in the most recent quarter, will reduce revenue by approximately $5 million compared to the prior year first quarter and ultimately keep year-over-year total sales dollars relatively flat. This revenue drag from the prior year ocean freight surcharges will lessen throughout the year, and we expect our growth initiatives which have begun to drive meaningful revenue to more than offset this and result in subsequent quarter-over-quarter and year-over-year sales growth.

也就是說，由於我們的增長舉措，我們預計單位銷量的同比增長將達到低至中個位數。但最近一個季度取消海運費附加費後，與去年第一季度相比，收入將減少約 500 萬美元，最終使總銷售額與去年同期相比持平。上一年海運附加費對收入的拖累將在全年中減輕，我們預計我們的增長舉措已經開始推動有意義的收入，足以抵消這一影響，並導致隨後的季度環比和同比銷售生長。

Regarding profitability, we expect gross margins between 18% and 19.5% in the first quarter. We expect gross margins to grow modestly throughout the fiscal year with expected sales growth and continued operational productivity. Near term, the recent strength of the Mexican peso versus the U.S. dollar is having an adverse impact on our margins given our large manufacturing presence in Mexico and is masking the favorable benefits of our operational efficiency gains.

就盈利能力而言，我們預計第一季度毛利率在18%至19.5%之間。我們預計，隨著預期銷售增長和持續的運營生產力，整個財年的毛利率將小幅增長。短期內，鑑於我們在墨西哥擁有大量製造業務，墨西哥比索兌美元近期走強對我們的利潤率產生了不利影響，並掩蓋了我們運營效率提高的有利效益。

We will continue to prudently manage SG&A spend while investing in our growth initiatives, and expect SG&A costs between $15.5 million and $16.5 million for the quarter. We are projecting operating income as a percent of sales in the range of 1% to 3% in the first quarter and expect operating income margins to improve throughout the year in parallel with forecasted gross margin improvement. The most significant drivers of variability in the first quarter guidance range continue to be consumer demand and competitive pricing conditions, both of which will be shaped by macroeconomic factors.

我們將繼續謹慎管理 SG&A 支出，同時投資於我們的增長計劃，預計本季度的 SG&A 成本在 1550 萬美元至 1650 萬美元之間。我們預計第一季度營業收入佔銷售額的百分比將在 1% 至 3% 之間，並預計全年營業利潤率將隨著毛利率的預期改善而改善。第一季度指導範圍變化的最重要驅動因素仍然是消費者需求和競爭性定價條件，這兩者都將受到宏觀經濟因素的影響。

Regarding our cash flow outlook, working capital is expected to be a source of cash flow in the first quarter and full year as we anticipate inventories to steadily decline throughout the year. Near-term priorities for cash remain reducing debt, resourcing new innovation and funding capital expenditures. We may continue to be opportunistic with share repurchases at modest spending levels if the stock price remains at a significant discount to our view of intrinsic value.

關於我們的現金流前景，預計營運資金將成為第一季度和全年現金流的來源，因為我們預計全年庫存將穩步下降。近期現金的優先事項仍然是減少債務、為新的創新提供資源並為資本支出提供資金。如果股價仍大大低於我們對內在價值的看法，我們可能會繼續以適度的支出水平回購股票。

We expect debt levels at the end of fiscal 2024 in the range of $0 million to $15 million. And for the first quarter, we expect capital expenditures between $1.5 million and $2.5 million. The effective tax rate for fiscal 2024 is expected to be in the range of 27% to 29%.

我們預計 2024 財年末的債務水平在 000 萬美元至 1500 萬美元之間。我們預計第一季度的資本支出在 150 萬美元至 250 萬美元之間。 2024財年的有效稅率預計在27%至29%之間。

Now I'll turn the call back over to Jerry to share his perspectives on our outlook.

現在我將把電話轉回給傑里，分享他對我們前景的看法。

Thanks. While economic uncertainty remains, I am confident that our long-term growth outlook remains promising. Our team's commitment to profitable growth and the foundations we have put in place have positioned us to successfully deliver improved earnings and an even stronger balance sheet in fiscal year 2024. We are focused on our strategic growth initiatives, investing in future innovation and delivering sustainable profit through operational efficiencies while continuing to reduce inventory levels and pay down debt.

謝謝。儘管經濟不確定性依然存在，但我相信我們的長期增長前景仍然充滿希望。我們團隊對盈利增長的承諾以及我們所建立的基礎使我們能夠在 2024 財年成功實現盈利改善和資產負債表更加強勁。我們專注於戰略增長計劃，投資未來創新並實現可持續利潤通過提高運營效率，同時繼續降低庫存水平並償還債務。

In summary, we're enthusiastic about fiscal year 2024 and the long-term growth opportunities for the company while being mindful that we still face near-term economic uncertainty.

總之，我們對 2024 財年和公司的長期增長機會充滿熱情，同時也注意到我們仍然面臨短期經濟不確定性。

With that, we will open up the call to your questions. Operator?

至此，我們將開始電話詢問您的問題。操作員？

(Operator Instructions) Our first question will come from Budd Bugatch of Water Tower Research.

（操作員說明）我們的第一個問題將來自 Water Tower Research 的 Budd Bugatch。

Just can you talk a little bit about the revenue pattern and the way it materialized during the quarter? How did it look year-over-year? And maybe talk about units versus price as it came out for the first -- for the fourth quarter?

您能否簡單談談本季度的收入模式及其實現方式？與去年同期相比情況如何？也許可以談談第一季度（第四季度）發布的單位與價格？

Actually, if you were to look at the quarter, Budd, we started probably the quarter a little bit slow in April and then saw a really nice pick up in May and June kind of around Memorial Day Holiday. So I feel like we finished the quarter strong. It's interesting. Year-over-year, total net sales were down 15%. Unit growth was actually up 2% year-over-year.

事實上，如果你看看這個季度，巴德，我們在四月份開始的季度可能有點慢，然後在五月和六月陣亡將士紀念日假期前後看到了一個非常好的回升。所以我覺得我們本季度表現強勁。這真有趣。總淨銷售額同比下降 15%。單位增長率實際上同比增長了 2%。

So all the decline in the net sales number was related to pricing, of which a large amount of that pricing decline was related to ocean freight surcharges. So if you remember, if you go back 12 months ago in Q4 of fiscal year '22 is when we had peak ocean freight rates, probably our surcharges were at their peak. And then we virtually -- I mean we eliminated those ocean surcharges here in our most recent fourth quarter. So there was a big revenue decline related to that.

因此，淨銷售額的所有下降都與定價有關，其中定價下降很大一部分與海運費附加費有關。因此，如果您還記得的話，如果您回到 12 個月前的 22 財年第四季度，當時我們的海運費率達到了峰值，那麼我們的附加費可能也達到了峰值。然後我們實際上 - 我的意思是我們在最近的第四季度取消了這些海洋附加費。因此，與此相關的收入大幅下降。

But we feel good about our momentum in the market, the fact that we had positive year-over-year unit growth and then we're anticipating carrying that momentum into Q1 and expect to have mid-single-digit unit growth in the upcoming quarter as well.

但我們對市場勢頭感到滿意，事實上我們的銷量同比增長，我們預計將這種勢頭帶入第一季度，並預計在下一季度實現中個位數的銷量增長以及。

So Budd, most of that pricing is behind us. We will see some of that as the year goes on. There will be probably $4 million, $5 million of it we'll see here in this first quarter from the pricing actions, and that's because we -- in May when we took the last of our ocean freight charges away. So it would be pretty encouraging, probably the most encouraging thing we really saw in the fourth quarter was our unit volume being up year-over-year. That was very encouraging.

所以巴德，大部分定價已經過去了。隨著時間的推移，我們將會看到其中的一些。我們將在第一季度從定價行動中看到其中可能有 400 萬美元、500 萬美元，這是因為我們在 5 月份取消了最後的海運費用。因此，這將是非常令人鼓舞的，我們在第四季度真正看到的最令人鼓舞的事情可能是我們的單位銷量同比增長。這非常令人鼓舞。

I agree. I'm painfully aware of what happened to ocean freight during the post-pandemic time frame. And historically, much of your sales were retailer-based and special orders. Now with the big-box strategy, I take it that there's a lot more placed on stock. How is -- how did that balance unfold during the quarter? And what do you see going forward on that?

我同意。我痛苦地意識到大流行後時期海運發生的情況。從歷史上看，您的大部分銷售都是基於零售商的特殊訂單。現在，通過大賣場策略，我認為庫存有更多。本季度這種平衡是如何展開的？您對此有何看法？

Yes. In terms of, again, unit volume, we feel good about really performance in both traditional retail as well as kind of our e-commerce pursuits, including big box. So I think we're competing well in kind of both channels. Obviously as we alluded to in our opening remarks, we expect that big box will grow faster than the other channels given the fact that, again, this is a relatively kind of new (inaudible) for us. But beyond that, we're not seeing really any material kind of changes in mix.

是的。就單位數量而言，我們對傳統零售以及我們的電子商務追求（包括大賣場）的實際表現感到滿意。所以我認為我們在這兩個渠道上都競爭得很好。顯然，正如我們在開場白中提到的，我們預計大盒子將比其他渠道增長得更快，因為這對我們來說又是一種相對較新的渠道（聽不清）。但除此之外，我們並沒有看到任何實質性的混合變化。

And are you seeing better reports from your retailers? You have a wide swath of retailers throughout the country? How is their demand looking? What can you see from that from your incoming order book?

您是否看到零售商提供了更好的報告？您在全國各地擁有眾多零售商嗎？他們的需求如何？從您收到的訂單簿中您可以看到什麼？

Yes, so our retailers are not panicking at all. They're actually -- it's pretty strong, especially year-over-year. And as Derek said, both the retail and the big box are both up year-over-year, especially on the order side, which is very encouraging. Obviously, we are worried like everybody about what's going to happen if there's going to be an economic slowdown. But right now, we really haven't seen that. So we're pretty encouraged where we're at right now.

是的，所以我們的零售商一點也不驚慌。事實上，它們非常強勁，尤其是同比。正如德里克所說，零售和大型零售都同比增長，尤其是訂單方面，這是非常令人鼓舞的。顯然，我們和所有人一樣擔心如果經濟放緩將會發生什麼。但現在，我們確實還沒有看到這一點。所以我們對現在的處境感到非常鼓舞。

Yes. Orders for the fourth quarter, actually, total company were up 20% year-over-year. So again, we feel like we're competing well. As Jerry alluded to, most retailers will tell us that traffic is a bit slow. So the fact that we're seeing pretty robust year-over-year order growth would suggest certainly that we're gaining some share and we have good momentum.

是的。事實上，第四季度公司總訂單量同比增長了 20%。再說一次，我們感覺我們競爭得很好。正如傑里提到的，大多數零售商都會告訴我們交通有點慢。因此，我們看到相當強勁的同比訂單增長這一事實無疑表明我們正在獲得一些份額並且我們擁有良好的勢頭。

I'll ask just a couple of more, but let some others have at it. Just the gross margin progress was notable. Can you give us a little bit of color on that? You called it from operational efficiencies. How does it look like with the material labor and overhead? What's -- where were those efficiencies and the reduced inventory write-downs, give us some color on that and maybe a walk from quarter-to-quarter or year to year?

我會再問幾個問題，但讓其他人也能解決。僅毛利率進步就引人注目。您能為我們提供一些信息嗎？您稱其為運營效率。物質勞動和間接費用看起來怎麼樣？這些效率和減少的庫存減記在哪裡，讓我們對此有一些了解，也許可以逐季度或逐年進行分析？

Yes. So from a productivity and operational efficiency standpoint, Budd, we made really good gains across all the aspects of our supply chain. So that's manufacturing, that's global sourcing, that's logistics. So we have 3 strong leaders in each of those areas, and they're doing a great job executing from my viewpoint in terms of just constantly driving cost savings. They've been doing that all fiscal year '23. Unfortunately, a lot of that got used to fund some price concessions in the market. So good momentum on that front. And I'm sorry, Budd, the second part of your question? Operational efficiencies?

是的。因此，從生產力和運營效率的角度來看，巴德，我們在供應鏈的各個方面都取得了非常好的收益。這就是製造、全球採購、物流。因此，我們在每個領域都有 3 位強有力的領導者，從我的角度來看，他們在不斷推動成本節約方面做得非常出色。他們在整個 23 財年都在這樣做。不幸的是，其中很多資金都被用來為市場上的一些價格優惠提供資金。這方面的勢頭非常好。對不起，巴德，你問題的第二部分？運營效率？

Right. Yes. What do you see going forward on that? How far can you take the gross margin level?

正確的。是的。您對此有何看法？毛利率水平能達到多少？

Yes. Again, we've talked about near term, midterm, certainly, our goal is to get our gross margins at or above kind of 20%. Continued operational efficiency will be a really important part of that. The other piece that you noted, which was in the press release is year-over-year reduction in inventory kind of write-downs. If you remember in fiscal year '24, Q4, we had a lot of inventory. We put reserves against some of that because demand was slowing.

是的。我們再次討論了近期、中期，當然，我們的目標是使毛利率達到或高於 20%。持續的運營效率將是其中非常重要的一部分。您在新聞稿中提到的另一篇文章是庫存減記的逐年減少。如果您還記得 24 財年第四季度，我們有大量庫存。由於需求放緩，我們為此預留了部分儲備。

So that comment as it relates to fiscal year '23, Q4 was simply -- there was a negative kind of comparison in fiscal year '22. So overall, we feel good about our inventory levels, the quality of inventory. So no concerns on that front. So I think as we go forward, we feel pretty confident around our ability to continue to expand overall margins throughout fiscal year '24, and the big levers there are twofold. It's continued operational efficiencies and then second, volume leverage.

因此，與 23 財年第四季度相關的評論很簡單 - 與 22 財年存在負面比較。總的來說，我們對庫存水平和庫存質量感覺良好。所以在這方面不用擔心。因此，我認為，隨著我們的前進，我們對我們在整個 24 財年繼續擴大整體利潤率的能力充滿信心，而且其中的重要槓桿是雙重的。首先是持續的運營效率，其次是銷量槓桿。

The other thing, too, Budd and there are 2 things is the inventory will continue to come down. We don't feel that there'll be growth during this fiscal year in inventory even as our revenue goes up. And probably the only thing we really, that's kind of an uncontrolled one right now, is obviously the peso versus the dollar is having a negative effect on us here in the short term and maybe even longer term. We saw about $1 million last year, and we'll see probably a good $400,000 this year in this first quarter as the peso and the dollar aren't really moving in the best direction for us. .

巴德還有另一件事，就是庫存將繼續下降。我們認為，即使我們的收入增加，本財年庫存也不會增長。也許我們現在唯一真正不受控制的事情，顯然是比索兌美元在短期甚至長期內對我們產生負面影響。去年我們看到了大約 100 萬美元，今年第一季度我們可能會看到 40 萬美元，因為比索和美元並沒有真正朝著對我們來說最好的方向發展。 。

I see. And you did talk about inventory as a source of cash and is it, what, [$122 million] at the end of the year? Do you think -- what's the goal for the end of fiscal '24? Is it $100 million back to where it was maybe before pandemic time frame?

我懂了。您確實談到庫存作為現金來源，是嗎，什麼，年底時[1.22 億美元]？您認為 24​​ 財年末的目標是什麼？ 1 億美元是否回到了大流行之前的水平？

Yes, I think in that range. Our goal would even be a little bit better than that but that would -- definitely our goal.

是的，我認為在這個範圍內。我們的目標甚至會比這更好一點，但這絕對是我們的目標。

And so that would get your funded debt down to just about 0, if not at 0?

這樣一來，您的融資債務即使不是 0，也能降至 0 左右嗎？

Correct. I mean we stated it's $0 million to $15 million, but our ultimate goal, obviously, is to get that down to 0.

正確的。我的意思是，我們說的是 000 萬到 1500 萬美元，但顯然我們的最終目標是將其降至 0。

(Operator Instructions) The next question comes from Anthony Lebiedzinski of Sidoti & Co.

（操作員說明）下一個問題來自 Sidoti & Co. 的 Anthony Lebiedzinski。

Just curious as far as the revenue impact from the growth initiatives. I know, Derek, you talked about the big-box impact for the quarter. But just overall, when we look at collectively big-box expansion as well as Zecliner and flex and others, how much of that you think contributed to the fourth quarter sales? And then the kind of -- how should we think about that as far as outlook for fiscal '24?

只是好奇增長計劃對收入的影響。我知道，德里克，您談到了本季度的大型影響。但總體而言，當我們綜合考慮大賣場擴張以及 Zecliner 和 Flex 等產品時，您認為其中對第四季度銷售額的貢獻有多大？然後，我們應該如何思考 24 財年的前景？

Yes. In terms of the fourth quarter, a little less than $10 million was derived from kind of growth initiatives. So going into certainly fiscal year '24, we feel good about the momentum there. As it relates to fiscal year '24, we would estimate that our growth initiatives would contribute probably another -- on an annual basis, another at least $30 million to $40 million over and above what we delivered here in fiscal year '23.

是的。就第四季度而言，來自某種增長舉措的收入略低於 1000 萬美元。因此，進入 24 財年，我們對那裡的勢頭感到滿意。由於它與 24 財年相關，我們估計我們的增長舉措可能會貢獻另一筆資金——每年，在我們 23 財年交付的基礎上，再貢獻至少 3000 萬至 4000 萬美元。

We're hoping, Anthony, that the plan is for that to be maybe the rise of somewhere in that 15% range going forward on an annual basis.

安東尼，我們希望計劃未來每年的增幅可能在 15% 的範圍內。

Got it. Yes. And then certainly, a terrific job with gross margin expansion. I know for the upcoming quarter here, it looks like there will be a little bit of a sequential decrease because of, I guess, lower revenue. But overall, do you think you can get above 20% at some point later this fiscal year? Or is that not doable just yet?

知道了。是的。當然，毛利率的擴張也是一項出色的工作。我知道在即將到來的季度，由於收入下降，看起來會出現一些連續下降。但總體而言，您認為本財年晚些時候的某個時候可以達到 20% 以上嗎？或者這還不能實現嗎？

If we do it sequentially, I think the answer would be yes. I mean, obviously, our revenue will be down in that $10 million type range, so that does have an effect here in the first quarter. But historically, our second, third, fourth quarters are stronger quarters, and so the plan will be to continue to take that upward. And maybe for the year, it'll average close to that 20%. But hopefully, by the end of the fiscal year, we will be above that 20%.

如果我們按順序進行，我認為答案是肯定的。我的意思是，很明顯，我們的收入將下降到 1000 萬美元的範圍內，因此這確實會對第一季度產生影響。但從歷史上看，我們的第二、第三、第四季度都是強勁的季度，因此計劃將繼續提高。也許今年的平均增長率會接近 20%。但希望到本財年結束時，我們能夠達到 20% 以上。

Okay. Very good. And then as far as inventories at retail, I would like to hear your perspective. I know you talked about last year having a glut of inventory at the retail level. What's your sense now as far as inventory levels to your customers?

好的。非常好。至於零售庫存，我想听聽您的看法。我知道您去年談到零售層面的庫存過剩。您現在對客戶的庫存水平有何看法？

From where we're at or from where our retailers are at?

從我們所在的地方或我們的零售商所在的地方？

As far as where the retailers are at. I mean so last year, obviously, there was this big glut of inventory just as demand started to slow down. But fast forward a year later, I mean, do you feel like your retail customers have, in general, appropriate inventory levels or built maybe too much? Or just wanted to get a better perspective from you?

至於零售商在哪裡。我的意思是去年，顯然，隨著需求開始放緩，庫存大量過剩。但快進一年後，我的意思是，您是否覺得您的零售客戶總體上擁有適當的庫存水平，或者庫存水平可能過多？或者只是想從你那裡得到更好的觀點？

Yes, it's a good question. So our retailers for the most part, especially our strong retailers are in a good place. Of course, the everyone is a little bit cautious (inaudible) what's going to happen from an economic standpoint. But most of our retailers are in a decent place. A lot of their caution comes from store traffic is what's really down. Sales are hanging in there pretty well and most of the folks coming in are coming in to buy.

是的，這是一個好問題。所以我們的零售商，尤其是實力雄厚的零售商，大部分都處於有利地位。當然，從經濟角度來看，每個人都對將要發生的事情有點謹慎（聽不清）。但我們的大多數零售商都處於不錯的境地。他們的謹慎很大程度上來自於商店客流量的下降。那裡的銷售情況相當不錯，大多數進來的人都是來購買的。

But true retail traffic is down. And as that correlates into inventories, people are a little bit cautious. But for the most part, retailers are in good place, and we're seeing a lot of good -- they sell through, the orders come back our way, which is good.

但真正的零售客流量卻在下降。由於這與庫存相關，人們有點謹慎。但在大多數情況下，零售商處於良好狀態，我們看到了很多好處——他們銷售旺盛，訂單又回到了我們的方式，這很好。

Okay. That's good to hear. And then -- so by fiscal -- by the end of fiscal '24, you could potentially be debt free. So as you move beyond that, what would you say would be your cash flow priorities as you look to be -- it looks like debt free by the end of '24.

好的。聽起來還不錯。然後，從財政角度來看，到 24 財年結束時，您可能會擺脫債務。因此，當你超越這個目標時，你會說你的現金流優先事項是什麼——到 24 年底，它看起來會沒有債務。

Yes. The main one, of course, will be to continue with our growth initiatives because we plan on taking a lot of our growth initiatives and doing more with each one of them coming out with new products, enhancements, things like that. Obviously, we'll continue to look at acquisitions if there's things that are favorable there but those are really the main 2.

是的。當然，最主要的是繼續我們的增長計劃，因為我們計劃採取許多增長計劃，並在每一項計劃推出新產品、增強功能等方面做更多的事情。顯然，如果有有利的事情，我們將繼續考慮收購，但這些確實是主要的兩個。

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

我們的問答環節到此結束。我想將會議轉回傑里·迪特默（Jerry Dittmer）發表閉幕詞。

Great. Thanks. In closing, I want to thank all of our Flexsteel employees for their dedication and outstanding performance during the fiscal year. I'm also thankful to all of you, Budd and Anthony, for participating in today's call. We really appreciate that. Obviously, you can please contact us if you have any additional questions, and we look forward to updating you on our next call. Thanks, everyone, for listening and participating today.

偉大的。謝謝。最後，我要感謝所有 Flexsteel 員工在本財年的奉獻精神和出色表現。我還感謝你們所有人，巴德和安東尼，參加今天的電話會議。我們真的很感激。顯然，如果您有任何其他問題，可以聯繫我們，我們期待在下次通話時向您通報最新情況。感謝大家今天的聆聽和參與。

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

會議現已結束。感謝您參加今天的演示，您現在可以斷開連接了。