CULP - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day everyone and welcome to the Culp, Inc. Fiscal 2018 Second Quarter Conference Call. Today's conference is being recorded. At this time for opening remarks and introductions I would like to turn the conference over to Ms. Dru Anderson. ahead. go Please

Dru Anderson

morning to Good quarter to Culp the fiscal Thank the and Company's call review second results conference XXXX. you. welcome for of the

contain that As and condition the morning's me start, of about state we call business, let prospects will forward-looking Company. financial statements the this

that beliefs differ the performance because are uncertainties. are statements in including statements of by not Form These risks Forward-looking or filings our historical statements materially of filings, or XX-Q. events fact. include and indicated that future are actual the statements could Company various results, risks from expectations and recent forward-looking of SEC Form most The and described projections, about the XX-K on or uncertainties Company's otherwise regular

not or on We You statements. revise morning only to made this statement reliance update each today. as of place to statements to undue and obligation forward-looking such speaks forward-looking no are undertake cautioned

will Executive the performance reconciliation turn Company's with call financial addition, presentation be most I GAAP In the Webcast included over the of financial the supporting Web-site Frank Please financial A Officer filed slide as of to Culp. to sir. now also Company's culp.com. yesterday measurements information to on charts President and summary available these additional as are directly part the go X-K financial of measurements. call. posted Chief and on and the of will ahead, Saxon, today's comparable the is at during measurements non-GAAP discussing schedule non-GAAP a Web-site this call Company A

Franklin N. Saxon

conference of you answer both with happy me on to would quarter, the update were expected our call you the the today. our for analysts the fabrics. and in comment results thank for begin comments line second Ken call business us be Ken will brief Financial sales Culp Overall, is on on I and Bowling, our and today the I businesses, and questions. and morning With the strategic Ken quarter like our Officer. to will Good that with joining then fabrics investors. each welcome will are to you will review your actions call top performance Chief financial quarterly and than after solid we we'll mattress upholstery pleased with third I then higher quarter and and outlook, for

Our our product reflect of platform. innovation our creativity to manufacturing efficient on our focus and and ability the leverage global results strength

a period realize fabrics our changes completed just expect going these have transition to forward. from greater operating in efficiencies major mattress We and we business

and both upholstery Our focused producing are in second strategic more product demand optimistic initiatives on favorable results businesses customer trends fiscal of this Current half business. sales year. as such in we our the are and diversification about our encouraging are growth fabrics for

continue strength we that Importantly, acquisitions objectives. the make potential to including enhance strategic the financial support growth have investments operations, to to our our

who years the and to call with strategy the for financial milestone $X.XX, as turn XXXX, to on results important amount in now our will reinstated our the share when As in our share capital consistent basis. action release, in the $X.XX cash also increase Xx dividend an confirms the per I'll $X.XX and dividend announced also noted press paid per shareholders. of This over is ago. This just quarter annualized review from to our commitment $X.XX an we July value our is five allocation over the or quarterly is for year. an we Ken, generate

Kenneth R. Bowling

Thanks Frank.

cover As performance key on mentioned have Relations we Investor Web-site the our posted earlier call, to presentations that measures. slide

allocation posted our capital strategy. also We have

quarter $X.X second for highlights with due with of $X.X Company's fees the Net X% XX.X%, a compared year income margin consolidated that XX.X% did year. quarter X.X% income with with decrease non-recurring quarter The quarter compared second acquisition for was million not million. was a ago. income compared up ago. business with adjusted $XXX,XXX GAAP proposed XX.X% earnings the rate the second for Net The for included year. China was compared primarily tax The a year. close. consolidated were foreign non-GAAP Pre-tax for the professional between a to financial million the overall and rate was year of The million X.X% Company's approximately $X second sales was Pre-tax with the compared last subsidiaries. the XX.X% second Here legal associated measure, prior parent and was million, the quarter. rate, mix are for the the the $XX.X $X.X income quarter last of tax income second of

As expects a last reminder, this in loss had Company carryforwards $X year. of Company of now these approximately million to end The year. the as loss fiscal be during fully the fiscal utilized carryforwards

guidelines, tax tax expects to income of XXXX thereafter. income corporate pay in range a blended federal for the to rate XX% XX% XX% U.S. Company XX% current to the fiscal Given and

if passed. these XX% XX% of Annualized year ago. a assumptions return on is with all change tax compared course, reform was consolidated Of capital

take let's look businesses. our Now a at two

income with operating sales $X.X with compared $X.X ago. ago, of For year year income mattress a a up fabrics, XX.X% an margin last with XX.X%, with X% year's million, million $XX.X second Operating million compared was were quarter. compared

was achieved across the half changes of during still a solid extensive the primarily disruptions facilities fiscal we operating production margin our this of took that year. from first XX.X%, While due to production place the decrease

for XX%. came Annualized return We also capital a expenses associated expected incurred higher strong product than fabrics in at new with mattress rollouts. on

on quarter, X.X% income income million. down was continued impressive, later. the X.X% in for quarter sales the the up million cost in be with more impacted return capital slightly at $X.X for discuss were during last $XX.X fabrics associated in second quarter pressure supply-chain XX%. prior Annualized disruptions million, business upholstery will China. year's performance by issue the over year. coming with margin fabrics, Operating compared $X.X was last Frank from upholstery this X.X% detail for Operating year. to was For Operating

balance Here sheet are highlights. the

quarter, total of no we $XX.X off reported outstanding investments cash second end of As We debt debt. paid quarter. in million second the and with the during the

During payments, same expenditures, a cash last operations first decrease compared was includes this of we $X.X the due $X.X first million on year. compared use $XX.X ago. for capital months for and to associated from The primarily capital with lower this income million to financed and fiscal $XX as net vendor a the year payments. of period greater working which million was with flow year on spent half of million the dividend six fiscal year Cash

comparable last to we half the year's the ahead, full With flow significantly that, to in the call level be to bringing fiscal cash turn Looking year, stronger a total Frank. second expect of more I'll total. back this over year to

Franklin N. Saxon

mattress second Thanks mattress uncertain had for solid Ken. again in as growth fabrics I'll in the mattress sales We fabrics. an outperformed trends we the reported quarter marketplace. with start industry growth

product drivers some Sales quarter on and diverse offering to of key sales sewn our fiscal also including focus provide reflected aggressive the across and for have ability creativity strategic all and product a innovation new covers, the rollouts. been our Our design, second points, of performance. for some mattress marketing XXXX price fabrics

and progress operations. North transformation made of major we in American across have as capabilities, manufacturing platform completed period enhancing our have excellent our We production a recently

we experienced the with quarter expected, some product production higher noted expenses well as second as Ken throughout our As to rollouts, the as associated disruptions earlier.

to realize half we the on expect in forward basis. However, efficiencies greater operating second a going

cover into been fabric and All its location, equipment of knitting facility, placed Carolina. called operation fully Carolina, North new Stokesdale, now U.S. is North forming other mattress operational service also our has in CLASS our expanded our in in and

now operation on overall our further there We inspection refinement equipment continuous of quality improvement have to are initiatives. support also installation new focused and finished the and of our processes in Canadian our

from business, we bed-in-a-box markets, growing We our increasing customers have segment, business and customer expanded strides about new impressive CLASS are the the in mattress our excited reaching space. traditional especially cover as fast contribution with our made sales

grow will CLASS our newest cover facility our joint our Haiti business. mattress Additionally, in strengthen ability venture further to production

have and to line activities add in demand. in gradually will Haiti We with expected production commenced continue capacity

ability our there to platform also utilize China our sew and expand and the to markets. cut We new to business have fabric

strategies of our transformation capabilities our for in that for fabric the time, of segments all North market. American supportive sewn support same acquisitions very we look global production and our are or we our well the operations meet add opportunities the will to demand covers, platform through other At With growth. both and to to to continue positioned

into the in distribution Looking position capacity by see a solid half supported across this ahead, and results of sufficient platform our has competitive all capability. operating a global product to with improvement we move expect Overall, we sustainable quarterly as categories, and efficient year. Culp second solid

to turn fabrics. upholstery I'll Now

from upholstery the various solid pleased sales success second as fabric for are our are the We benefitting of quarter, growth the initiatives. with our in growth we

However, by operating slightly associated performance China anticipated our freight was operation. costs than our higher with affected

quarter, disrupted costs and chain freight control ensure dye incurred in deliveries. the second supply we our government environmental to Chinese a in During for shutdown certain mills forced meet additional textile and order customer

rate. some experienced foreign China also impact an We unfavorable exchange from

for highly our fabrics. our LiveSmart, the performance success product-driven highlighted popular reflect by the of of quarter results of expanded stain-resistant second sales Our durable, line strategy,

the reach growth are have in diverse a for to fabrics seen the base. designed market more we sales and solid customer We of also about hospitality excited opportunities

acquisitions Point, potential performance with fabrics, manufacturers fabrics hospitality at the of the are will fabric in our market an North in We response upholstery as showing October were High line furniture business, favorable excellent Carolina market exploring pleased showrooms. that had especially their we residential this customer our is We featuring in to and the which many recent market. are in principally complement the

Web-site new of aggressive and We marketing year sales specifically launched campaign half more second have in remain the product the this recently about a beyond. along optimistic opportunities for for Culp with we and a this line

forward positioned continued is more we are encouraged consumer year. ahead, believe Ken the second home market from your further any for outlook will a by furnishings improvement this trends questions. benefit the for spending we as starting now well and demand look of we'll Culp in outlook quarter favorable pick in to take the to is up. and third growth We fiscal review to then half Looking

Kenneth R. Bowling

exchange previous to of China full China report the income to to factors, in ago. year $X.X lower as the year, to for higher the as we expect pre-tax be of Operating million year. expected fabrics compared additional related Pre-tax was expect capital are million. segment to D&A the sales a ago. segment, year to expenditures, our slightly to be expected mattress third are be year and income an this to higher In sales income higher Operating compensation year. to and for with Company unfavorable respect depreciation higher sales quarter payments, expects overall projects expected to the in Considering financed expected slightly the higher rate. added a income be third million. are same segment and fabrics as last expected somewhat expect slightly quarter comparable We the for ago. of stock-based year a fabrics. this $X.X quarter slightly year's higher mostly vendor in year, out to last range be as fiscal or these fiscal period we shipment compared last and and than than be margins currently margins the $X same With than third slightly are last including amortization is to improvement period Mattress to compared upholstery be to costs to

Additionally, of that, capital. we'll now flow, capital cash working expects expenditures level modest even with take good of the another your expected in growth year With the Company and questions.

Operator

from Baugh comes Stifel. Instructions] [Operator question John first with The

John A. Baugh

have recently the needs incremental of in here? us will about bring I for context terms Is things brought what in question Haiti, about you spending all had growth could way fair that first what's current for capital going up revenue, spend think a revenue bit accelerating on that going doing think is, The there in capacity the had you side, online a forward, of capital or you're and the produce you've shortly, we Canada, China. to how

Franklin N. Saxon

of latter first. question the part your take I'll

years transformed In three-year $XX are million of of record million may spending each talked recall. significantly some higher and terms platform, $XX we prior been range mattress has of expanded the three about. year in ongoing last ending this fabric significant capital year, as you to CapEx, years capital we fiscal The expenditures of have our which than have as

able million for to two CapEx do forward, that range. all probably would see As absorb being we things million next next year see be spending, next to go CapEx as significantly $X we capacity the the We'll and $X in and point with million less maintenance a firm decline the up but call, at say capital we continue range, or I we significant to for $X done. year our on we've in this

your are And the can easily them take to about and with to have double there part grow capacity operation our smaller more we quicker volumes building of question what be Carolina we and we your operation. we could separately, delivery. with of doing Haiti would terms today first in So, are we at. programs, with I'll plenty of as and of and in capacity thinking the thinking Haiti, North Haiti memory that too, larger of opportunity, revenue mean refresh simpler terms items there what to I in are

the with for we see that of I does capacity more is. our fabrics of fabric have likely where more knit room ample have In to the area. be our demand in our Knitted add appear the knit constraints spending would mostly with support the to on terms basis capital products. we North Canada, knitted year Canada, part next Carolina operation all the and used American no In and our machine. bed-in-a-box the at fabric machines, and U.S. program area, capital that Stokesdale, that an But expenditure woven will we operations, be growth. done are North knit Part of ongoing believe to expansion be

that. So, positioned well to we grow are

John A. Baugh

Okay.

million even $XX mouth to but you for something, high revenues or not stay above range, would up or next know to the need $XX thought per would and of CapEx about in say couple I to a cause that in bad not a hold wouldn't be million not single-digit ramp but next this words CapEx if number, we million for to your $X you're year that, if Frank, two years, million that put of for necessarily $X So, a in the predicting years?

Franklin N. Saxon

what million $X that's John, million. say to even say. would I would $X exactly I

We have facilities. each done in so much years our last of few

John A. Baugh

sounds us Okay. drag but that in stays looks Could it if you now? a QX China the what end, in you and guess will I well, It like your head where are QX right in where I the with they quantify FX know is? top off like, it the don't help know FX as comparison be QX of assuming

Franklin N. Saxon

during U.S. Okay. of of second of In last to after six years the about strengthening the It The exchange rate months, of been you quarter the to over X.X. in X.X. may in year been X.XX X.X last two was dollar. year China the X.X range X.X as know, from range to the it's weakening to has this

on different been about the $XXX,XXX, side effect was the had not lot So experiencing. the in quarter but upholstery a second what $XXX,XXX we fabrics to from

John A. Baugh

kind magnitude similar And Okay. QX? for of maybe

Franklin N. Saxon

Yes.

even China, the in weakening some the Of like the lot A that there seen Congress course of over currency. and the strengthened It's the conference over we the experts that ahead Party was once see steady currency some felt in have in currency, that of and October we few have weakening right and been expecting held weeks. would XXth was not it. X.X around been we be last would of

John A. Baugh

the maybe and mattresses pace see has do and the you my exceeding question Okay. clearly they get I fairly call traditional that lessened, guess are mix be, first you. growth, is, just from benefit helpful or terms see bucket, do points I'll at bed-in-a-box, curious price let's overall hurtful? the it's shift? it and market, whether but in neutral seat hurt does online you generally that in speaking, growth know would question, imported from even then Thank mix strengthened, it's On your that bedding of is bedding, I throw high-end how similar, of second the Culp that or or

Franklin N. Saxon

Okay.

Let the me question. of first answer part the

going is product. of the that believe certainly and seeing are be We more sales trend to bed-in-a-box

bedding be think Internet to most you is has trend folks. seems do mattress from can Some That But people run that. cover to boxed days. a increasing box. well. more people there needs be delivered be definitely mattresses of a an calling that, and as can be we from these to that it the there when are traditional several the time for going in years it And It

traction our So, sources, as of we now, from believe you all are which gain Canadian this perfectly Haiti, expanded suited product, are But products where getting well. a most bed-in-a-box the we just we to knitted as not have are requests these operations. require the trend, said I global U.S. folks. cut foam China, sew and mostly and is of U.S., usually may variety as Also, the platform fabric, our Internet and know. is memory starting people, Hybrids them a in for

see the trends, to comes in way whatever positioned perfectly that be our to So, as development. we be we handle to able seem

if this It's I So grow Does anybody's to at definitely is, will rate guess. it we how are fast which the that. the bed-in-a-box grow? And not but does is help? able that know answer question growing,

John A. Baugh

And margin is of helpful, impact from hurtful? all it this,

Franklin N. Saxon

is margin the when cut positive case. the That remember our do us, fabric. of for mattress obviously to covers, isn't the and always like sew use impact but we we No,

he a which the we capturing is are Sometimes will mattress margin the margin. someone cover and margin, else's a than fabric That's uses less do for and only we obviously because as a cut not fabric. customer sew good

in fabric fabrics that XXX% them efforts our we are get of programs, mattress covers. but will sew cut constantly probably we for – marketing and are and are, most our So, never Culp in constantly pushing our

added had on before fabric margin, the and ago, the you in range were neutral. four expansion gives I XX% XX% are at years think historically can mattress at us minimum margin fabric. that profit we've to the cover look Culp an cover to The we gross margins

as the a sew cut margin. lower It's high, So, and and margin cut not margins sew are just business.

John A. Baugh

Got it. good luck. and Great. that for Thanks color

Operator

Our next question comes James. Raymond Budd from with Bugatch

Budd Bugatch

try areas just into some of me and growth. Let get

that the was this last growth of of quarter quarters. things we Your some over a reversal the seen have several

to in growth in fabrics Is LiveSmart pointed all product came growth the where is the that LiveSmart? upholstery from, coming line. You the

Franklin N. Saxon

of fabric, the a would is second, coming the growth us. hospitality areas, our meaningful Number third impact, all for third, is in haven't from residential. the iClean I is three stationary say LiveSmart the The from fabric, And we lot one, performance market Budd. area, and but largest coming which LiveSmart/ stationary stationary growth opportunities customer mentioned hospitality

Budd Bugatch

And by stationary new stationary, does a customers mean that you in stationary, for in have because time? long been

Franklin N. Saxon

A take correct. as means take those Hickory, stationary a products, line, with La-Z-Boy Flexsteel, well folks customers. Carolina. good a that's customers question. all the Take correct, That's new new a expanded penetration It as existing North Bassett, at

Budd Bugatch

at most order you Okay. in the the growth XX% the said And each? of of and XX% magnitude, other LiveSmart two

Franklin N. Saxon

performance, we and throw we is that iClean performance brand Yes, the LiveSmart, LiveSmart, we La-Z-Boy. when say say licensed in would which there when to too I

Budd Bugatch

I understand.

Franklin N. Saxon

those fabric other us competitors and as well. So, are yes, popular with increasingly

Budd Bugatch

are placements that on rising Okay. And product?

Franklin N. Saxon

Placements are absolutely rising, absolutely.

Budd Bugatch

So areas. I relationship you growth the three the was asking quantify of to between

the of was You most, the growth? majority XX% said the LiveSmart it, of

Franklin N. Saxon

that, is say, guess I mean good Again, estimate. let's a a of XX% good

Budd Bugatch

is in mattress Okay, is coming the all growth all And all the growth that out CLASS, right. CLASS? of fabrics, from there,

Franklin N. Saxon

of in growth a has fabric you from growth in have lot Most it. that to but the of remember product is its CLASS CLASS, coming Culp

CLASS? really it is fabric, really it is So,

Budd Bugatch

question, a going tell it was the of that? portion is not to as my just So CLASS us and it CLASS you're or next is sub-segment value-added that

Franklin N. Saxon

now, and both. the to platforms and definitely to is both, with I It's be. in what's on mean going looks up CLASS and will industry certainly good continue us significantly various our Budd,

Budd Bugatch

all continuing quarter, growth the LiveSmart two place hospitality, those some placements, stationary in is then you that are capacity with about and and new excited and right, take during new areas getting new have all it capacity? is I growing, didn't the life, that second and showing So, and CLASS CLASS you the

Franklin N. Saxon

online we Haiti as That is coming is speak. correct.

people, until First little as production next benefit a more in capacity quarter, a fiscal third year little Haiti. but of ramp really more was up, in We'll more probably fourth to lot not train have out we October. quarter

Budd Bugatch

the on that? each So, we says comparison square modestly much that last those just that harder? going quarter there Why that something the is around is in the of with how sub-segments better Was revenue do year with third guidance up revenue? where X%,

Franklin N. Saxon

question a Budd, good that's again.

we As I typically right and the it on pretty you you been have side, will feels know, that conservative good tell now.

I better, and reasonable chance think outlooks. Our to do those a current trends be are we is conservative to but good in like there

Budd Bugatch

Okay.

so John somebody pretty side the think Thank explored I Frank. will have question, let think I else the margin much the of floor. I you,

Franklin N. Saxon

question? to going not capital ask expenditure You're a

Budd Bugatch

find capital you have going acquisition, opportunity have already Frank, that I to excludes you're right? lower an said that expenditures, suspect so to the

Franklin N. Saxon

is That that's correct, correct, yes.

Budd Bugatch

guess I Anderson on this is, what is side? how So, the like ask on the usually U.S. the will side and do I question China, is, versus Chinese growth upholstery, only that I look U.S. and margin ask we in doing that versus

Franklin N. Saxon

of our we the are work. it's platform – all products. areas of are down struggling China-based I'm at is manufacturing current Anderson and still on administration. from But emphasis still new and still Anderson our trying hold to with We as growth about three want products gains the a to the and we China only XX% hopeful. fabric struggling U.S. Anderson do. on The it's Anderson. to China the or We revenues But are we hedge out the operation and there still really still as are upholstery want of our

Budd Bugatch

you. Got

So, is, last your tolerant are this less year? today you it tolerance, were being than as time small you as

Franklin N. Saxon

be you. hope U.S. It's I to would It in promise down going holds in product-wise us, trying fabrics. but and part would we things some, Maybe upholstery easier Anderson if supply have some traction. of get be terrific be different some out some that of one gain it could nice chain it whole are there, we a would we really a we great, what products have will really lot

more days, So, the we but our near results these are but decisions from China it are not the gains platform. and are watching produced we carefully any

Kenneth R. Bowling

pointing, looking I Budd, Anderson are as think opportunities too. for we keep actively for we

Franklin N. Saxon

Yes, actively do. I looking. really I want it to work.

Budd Bugatch

Okay. very Thank much. you

Operator

from comes Capital Marco question Markets. Rodriguez with next Our Stonegate

Marco Rodriguez

I could fabric side. fabrics circle around if the on was wondering side, back here we maybe the upholstery

I that to missed in freight I in increase not, had due know charges shutdown. called the for guys, or you stoppage don't if Can there You work incur you the but China quantify this guys to you that? out for

Franklin N. Saxon

I course, strong to of freight. Yes, would to quarter freight, for Marco, to of of Culp, second fabrics delivery up the $XXX,XXX And approximately that the know customers say from you extra air and we committed we keeping delivery are on-time absolutely reputation our have.

is with supply tune in the ocean-freighted, the were $XXX,XXX. have and we we more carrying to third, we product the in China So, of quarter, about challenges than lot some air-freighting second normally had in a it would

Marco Rodriguez

Got it.

Kenneth R. Bowling

get and to upholstery Marco, so point been were the can more – we at from promotions business, offer in fabrics business certain aggressive fact growing able – chime the is we've been we've and margin to maybe the another higher you in customers. Frank, more

Franklin N. Saxon

Some done targeted customers, have we key or programs. to volume pricing

Marco Rodriguez

in Okay. on in gross impact And was upholstery fabrics? there margin also that your QX an the

Franklin N. Saxon

as second Yes, we up air may or UPS as through we and that freight can a over but to back we the measure currency. the and work air be issue, ocean think late the through going were work and heard are we'll increased have to is issues freight next rather you from hope quarter and which thing freight, – all rates well. FedEx read freight I has of get temporary hope more China, But than the it. it's demand bigger I And going really the and the

Kenneth R. Bowling

third in quarter Yes, both guided have we to have those an of impact. the

Franklin N. Saxon

two for gross course. those But good main quarter. was the second were level that given our really down really were the factors, of pretty absolute did Margins factors. slightly, of down two two It dollars. we So factors profit

Marco Rodriguez

Got you that the in freight headwind expecting is QX, you. from are cost And correct? additional some

Franklin N. Saxon

We are.

Kenneth R. Bowling

Yes.

Franklin N. Saxon

are. We

Marco Rodriguez

is what the to to on And the something as that far so then here fabrics, is upholstery coming Okay. aggressive you you that volume referring back the that were or different? marketing provided discounts as here

Franklin N. Saxon

the social marketing fabrics, lot in aggressive Web-sites, more introduced our have media, during was we performance haven't in initiatives, we we which performance QX line where of variety more have to fabrics. of line market of campaigns, but targeted have the marketing historically our done, ad think side I we upholstery quarter done introduced a to

Marco Rodriguez

to drop that expected expense here through anticipate that is And do sequentially you of fiscal or sort of maintaining level you. Got marketing XXXX?

Franklin N. Saxon

the more level only to going have really Not make to more of much. lot Really expense the this we be a any are think we I or of in will see expense also area going to forward person but forward media dedicated a social and Web-site, that ads. prevalent. don't do that

Marco Rodriguez

have just what shifting made had that impact sort fabrics, have that on and you Can quantify the that little given Got completed. the shifts mattress called you. gears quarterly quarter for mattress a you obviously bit results of you obviously to Then here the you out you had some the fabrics? all in disruptions

Franklin N. Saxon

last have last of at related normally let's factor to year, fabulous year, that said, quarter the quarter, take I production higher have you Also, XX.X% we decrease, majority is when disruptions. to you second think basis point XXX year, look What than XX.X% XX.X% margin, we of this the was the do. a in quarter, operating little

good off is but off disruptions. to of the is think margin. XX.X%, most we were a margin pretty the level encouraging us point, darn what's in other Marco, margin And related is the last from still production is I So, year,

Marco Rodriguez

Sure.

Kenneth R. Bowling

costs costs marketing time. mean new called higher or new we costs I product some rollouts. aggressive had on get products to with out two, to that some Marco, Also our some we associated shipping is customers where

too. had pressure some that so And

Marco Rodriguez

Sure.

guys if efficiency from sort you that have obviously see aspects justification, impact that shouldn't up, all next a there? quarter is expansion in kind Haiti as a we seeing of correctly, but should margin negative understand ramping expansion And and now to Okay. I'm see still to the the that of we complete, you start

Franklin N. Saxon

come Yes, already the That facility. long a we November our seeing we week every results look have and to are it in is stuff we in week at, way correct.

point are in to beginning one but I Canada, some point As North what you very point though to is there increase and we're Carolina should want out, right that Haiti out do are polyester prices. we we up, coming pleased we see efficiency. in with thing still that about to out, asked are has seeing nobody

We had run long of run, favorable a prices. probably very have two-year low a

hedged don't raw in well quarters, six it's are we the are I uptick starting it's for going but something material see watch. us to next feel four like see months, to we two Now prices. out but might that to pretty some we affecting

Marco Rodriguez

for your optimism of specific you. optimism? quick any talk metrics are at, of level to kind might kind you guys trends vis-a-vis you was clients are your you economic if half looking increased giving of mentioned maybe can bit that sort end changed the here some there is a looking last just more be your with about positive and guidance, able just it at that have is Got this you wondering little And you XXXX I high-level, second talk conversations are question, real you of that

Franklin N. Saxon

had X% think from of I GDP quarters growth. a two we've macro basis,

That's sales holds growth. it macro highest now, to correlation We metric. has have correlating true now GDP been whether mattress the that heard, best the always been

is Unemployment housing So, bit, good. it little better… income up pretty that's seems discretionary like consumer low, a starts

Kenneth R. Bowling

Consumer confidence up.

Franklin N. Saxon

are favorable traditional for confidence, all indicators our business. these Consumer

we're our certainly on too. business some getting certainly macro that's a more broad-based micro on basis, Now seems a late we of basis. like of both On it are sides seeing demand

are taking we how more second seems maybe place. are growth our it year. cautiously the half we why and our head we know optimistic initiatives could And that's optimistic it but turn, better fast but feels finally as of So, certainly into because

We they fruit, to good bearing is are seeing which see. are

Marco Rodriguez

time. Got lot, guys. it. Appreciate your Thanks a

Operator

It queue appears time. the have other in questions we this no at

Franklin N. Saxon

Okay. Everyone, look and Have for thank forward a us joining call few a you you months. QX today in the we great day. to on updating

Operator

today's for participation. conclude does That you conference. your Thank

Culp (CULP) 1 Dec 172018 Q2 Earnings call transcript