CULP - Earnings call transcript Q3 2020

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Operator

Good day, and welcome to Culp's Third Quarter 2020 Earnings Conference Call. Today's call is being recorded.

At this time, for opening remarks and introductions, I'd like to turn the call over to Ms. Dru Anderson. Please go ahead.

Dru Anderson

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

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

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

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

Company of the on A website most non-GAAP discussing this schedule filed Company's information during be posted Company's non-GAAP will to addition, GAAP comparable directly on website measurements also A the measurements. financial the included financial webcast measurements financial financial call, and slide presentation as available In summary yesterday is culp.com. a these of to the reconciliation at part with X-K as today. supporting is the Company’s the

is filed the reconciling With in cash respect significance available to the the website. is posted to yesterday not information the and information, without certain and on flow available efforts, the flow GAAP cash is historical forward-looking its similar free significance comparable which unreasonable and X-K Company's information, free of

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

Robert Culp

welcome call Boyd our would Culp for today. are I and to Business. the Ken conference Upholstery investors. Chief on with With Chumbley, thank joining call today of President and Officer Culp; Fabrics like you morning, and analysts the Bowling, Financial Good me quarterly us to of

dialed-in who's the Saxon, Chairman Frank We also remotely. Executive of company, have

I and the call review with some outlook. of actions you the comments, fourth results will will for I each now that, XXXX quarter. then strategic brief segments. after then update will business fiscal in our financial quarter read operating the our Ken will bring And then in Ken the on

We to take happy will then be questions. any

begin significant third like to virtually impacts on chain. operating I China comments first Before and businesses. seen our work. the impact regarding results, to our our our I'd the my upholstery reporting Culp In thoughts Currently, to is not quarter Culp any supply from current has fabrics all our address location employees of with levels, normal in business, virus any our coronavirus at

and We long-term supply work have in China, due also who our strong, a stable, favor trusted vendors relationships. we base Culp built with to

continue full and We backed have our as to suppliers have most experienced nearly of prioritize output our production. delays minimal

production as a amount we we we and delays with and relocated our locations also Vietnam. Likewise, needed. business, cut not in any to accessories significant considerable mattress of for our work alternative in both have and have home sew production fabrics experiencing also Asia, We two currently are facilities in

This in includes and Vietnam capabilities production U.S., or Turkey. sourcing Haiti, Canada, the

our whether predict disruption stable any any created consumer have manage consumer ability believe our we U.S. to the cannot the we While chain in solid confidence virus negative the impact supply on market, and by our platform outbreak. will and supports global

third quarter the to turn results. I'll Now

our quarter particularly reflected lower-than-expected business results previously in core sales, announced, for As the our segments.

medium well factors quarter, for our external for Culp third believe long-term. the several and positioned we results affected While the is

market platform distinct global is to dynamics. respond is for quickly company, ability the advantage and Our providing competitive changing reactive a the to

we our businesses, diverse fostering across our of focused product-driven in on our all, base. to remain development changing customer customers innovation of and in markets. are that better segments We the ability collaboration business product are all also serve us Above benefit and and and and confident synergies from significant meet demands in strategy a to our we all the designs creative allow

Throughout supplier fabrics marketplace. global a have trusted as of XXXX, our a position for we fiscal maintained

Importantly, execute our our funds look ahead strength and strategies opportunities have and to XXXX for remainder to to financial and the support returning the fiscal we of the forward We continue shareholders. beyond.

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

Kenneth Bowling

Iv. Thanks,

also Investor on earlier strategy. capital allocation to presentations website have performance our the measures. we mentioned cover Relations posted slide We've As posted key that call, our

Here highlights were basis, of compared period. million Net a a $XX GAAP for pretax the year year. with for the loss income million, of third prior quarter X.X% pretax company quarter. reported million of financial are a sales the On net $X.X the last with the down third compared $X.X

$XX.X division, a accessories $X.X million recorded contingent million ago a for a as non-cash million. charges the well to February As results on charge the net few of non-cash previously include as a XX, disclosed, resulted quarter weeks of year current third home of the impairment related reversal the fiscal in $X.X liability of earn-out

Excluding this fiscal quarter non-GAAP, $X.X year. net this the million third for income, charge, adjusted was of pretax

fiscal The company's in due production and $XXX,XXX to of closure non-recurring for charges facility. restructuring South included third financial the the related results and Anderson, mostly credits other the items quarter year of last and approximately Carolina

pretax last income net year charge, third for of the was quarter $X million. Excluding this

for noted. shareholders income I share period. diluted Inc. year or per both the restructuring-related charges for was the for third fiscal the million just of to years the and $X.XX with $X.X $X.XX Culp, of credits share per The results diluted attributable prior compared quarter loss include quarter third or Net net respective $XX,XXX

The XXX.X% company's have year-to-date this by in third effective the rates rate tax for the operations in in The charges earned year. the and income for XX% previously fiscal effective period includes China quarter that is for taxable the company's mix company's income, the period rate which located effects higher year-to-date significant U.S. a taxable consolidated the discussed of tax income income as income high as to the impairment relation foreign in U.S., projected for that the decline asset income annual and particularly the Canada consolidated of well reflects was tax the

current mix a our income GILTI a with to The the tax represents income Intangible increase on associated Income, forward significant taxable tax, rate income which effective tax Low in or U.S. has Global that Taxed led is earnings. of

carryforwards Importantly, U.S. minimal of income company's fiscal expected projected a immediate taxes utilization U.S. net be for incurred to the of capital operating U.S. cash expenditures. on to the expensing basis in XXXX the are loss and federal due

range effective facts and we of Looking high above. rate by as be and the on know will ahead rest tax factors and remain the XXX% based this affected the fiscal today to we the consolidated our XXX% estimate income that year, noted in

if Internal U.S. subject beginning Department should Tax high-tax under the that in and and subject the newly Notably, and or later, as us when Treasury Service enacted, enacted could to apply proposed retroactive. determination U.S. if and with XXXX some the provide regulations any have that Treasury to fiscal the proposed, GILTI issued relief enactment GILTI Revenue the Department exception of proposed election and exceptions IRS timing by from the

based as exception year and regulations GILTI proposed exception until election is proposed effective non-recurring tax in proposed XXXX XXXX would not enacted income, rate XX% and estimate If our on and do finalized not XX%. be assumptions, that would fiscal effective. Tax available the is to our our have we of The Tax current impairments becomes reduce for the fiscal assuming the for or charges we are election our to then proposed GILTI range high-tax pretax

adjusted the return sales. rate, a Trailing the trailing parts for period However, X.X%. are including capital XX-months this of on let third that of Consolidated this affect of so was this change. previously, moving or fiscal year me of XX-month was million of stress many estimate as EBITDA lot that I've end discussed $XX.X the there factors X.X% quarter could the

Now look business our let's take a segments. at

with compared segment, for Operating million, For with sales the $X.X $XX.X the $X.X fabrics primarily year-ago, Return lower-than-expected income quarter for was The the a was X.X% affected mattress year-ago. XX-month capital last with performance third period mattress with X% were an operating operating compared X.X% of quarter. XX.X%. compared fabrics trailing for income by million a year's was million sales. on margin down

down sales which third – year, tariffs. $XX quarter very positively performance year the by additional advanced a was was for anticipation upholstery strong prior million, sales the over that prior fabrics segment, the affected For the of customer in X.X% – were quarter purchases

for of the quarter year-ago, a compared was income $X compared X.X% year-ago. with Operating margin a $X.X million income million an XX.X% operating with with

during the to trailing at Chinese achieved pleased be that XX-month XX%. this capital on segment was when shutdown the fabric impressive, upholstery occurred. for period New X.X% year, the Return for it with We the quarter continues in are the margin coming given Year

goods, reported quarter $X.X million year-ago. includes products the which The business bedding finished for offering accessories a home e-commerce our compared home and and segment, third sales with million accessories $X.X

$XXX,XXX loss in experienced $XXX,XXX, quarter quarter. in the continued which loss the on was experienced first the reflects more operating $XXX,XXX second We'll for performance the and loss Operating quarter comment on. later the improvement sequential from

a and $XX.X are Here cash position outstanding balance $XXX,XXX total million. We borrowings reported investments $XX.X cash and highlights. million net of the sheet for of

We first the million in incurred fiscal For third capital of through repurchases to returned we regular dividends this year, shareholders year. months nine $X.X quarterly the $X.X share of million quarter and of this expenditures. fiscal

the Year of respectively, We of operations cash free million, $X.X and had nine negative primarily first to in cash this flow Chinese timing of the of This fabrics year and advance cash payments New months with from shutdowns, compared positive due flow year mostly fiscal for and negative $XXX,XXX and cash $X.X positive prior the for flow in operations period. business. free flow of higher million our respectively million than expected mattress $X.X and inventories, from

previous significantly common inventory, March leaving flow quarter flow repurchased including The repurchase in additional fourth third and stock XX,XXX under the capital working shares of fiscal free better approximately performance, to year improve cash year. With XX,XXX this company of million available from through of expect operations program. and repurchased we the of $X.X management cash shares our this share the quarter during X, better

has may open press $X discretion share market from in authorization back company's approved transactions. repurchase or negotiated release, in privately be at Shares repurchased to in in Board reported our As the increase our the an time-to-time our million.

to intrinsic repurchase continue to to shares our value share. opportunities reflects price consider a per will calculated a We at discount that

a very capital the highlighted sheet balance our in and our which remain is current cash the disciplined Investor capital maintaining approach uncertainty focused allocation, environment. we particularly the as in on in section strong strategy, position, a Relations global to business of solid However, given including website, posted allocation

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

Robert Culp

Thanks, Ken.

Let me segment. start with the mattress fabrics

Our anticipated the customers. continued and shutdowns quarter pressured industry sales year, pressured more were as of more business legacy we mattress than from for or for weakness expected third we holiday by the got – were lower expected fabric than than our

multiple low-priced losing in and Mattress weeks CLASS industry. a measures covers business Haiti when productive have business. become of increasingly more and important part yet the in China, our mattress provided also anti-dumping legacy softness relating operations expected for to combined domestic an with from caused the Also, have imports China not relief for impact our our cover mattress in the significant

challenges, of manage these relentless with focus designs, In to and service. we innovative creative products spite continue business on exceptional our a

full with sewn production supports global Our these and evolving and customer to covers, efficient fabrics of complement the adapt capabilities needs. platform to distribution a efforts flexibility with to mattress provide

and our existing by our the in China U.S., Haiti, strengthened are Turkey. sourcing in manufacturing platform Canada, We operations

new production capabilities a expanding building sewn our equipment. and are cover calendar add this production also to Vietnam we fabric year, additional and capabilities Haiti expect in We with in

expansions Further, countries, imports platform for imported appears these global disruption China our well and now to enhance of to a market to capture we believe from us low-priced moving mattress many going fabric from other has forward. customers. mattresses believe result continuing to strong our domestic share covers as with We Asia be will imports positioned in abilities while serve

with China favorable, operations boxed and we business. existing Additionally, growing space, both while with the are especially to we quarter, fresh Demand pleased third develop during and the trends our our mattress the mattress shutdowns continued new CLASS sewn covers for customers. holiday the disrupted continue products of in remains and cover bedding growth for Haiti

fabric the With capabilities allows covers. U.S., cover to Haiti Asia, and finished to us now a sewn our in strong from platform full maximize have very potential supply production that we chain

speed the We continue and latest invest management project market and improve capabilities our software. tools to experience marketing to in new design with and with digital technologies customer to

capabilities, very XD initial in which Fashions. our are the being as reflects Home with Re.Imagine our customer business. response to marketed mattress and pleased This rendering new spirit We Culp mapping of the innovation fabrics is

shorter be new to process, ongoing enhancing will demand inventory we drive also part service lead implementing control. to are as greater a with We customer efforts times and our more of believe are which management platform responsive our we

I'm now longtime to platform over in to President segment, I the the Having XX expertise the strive this in experience, with division. of CFO especially confident fabrics years, Sandy mattress for most has efficient the we manner. lead operate she business the with and our pleased Sandy Brown, worked is as strong am our vision

to a that provider new We and will legacy support our Looking ahead, with with leading opportunities efforts capabilities covers. of our and there from our sewn marketing are position many sales and believe to further efforts our design technologies advanced mattress and ongoing fabrics customers. benefit and recent as advance we service both

fabrics to turn I'll Now the upholstery segment.

is lower It than year-to-year. in the slowdown difficult greater into experienced predict year, Our sales than we upholstery holiday in Chinese holiday was leading shutdown up the Year to the in of holiday, impact New to for affected a decline shipments a heading quarter. resulting the expected expected this from And period. the fabrics January business by

result, XXXX. a with showed a last the business faced, sales As pleased performance environment are quarter our modest overall with fiscal given business, period. a the the we in of a the in year of upholstery strong fabric we prior very light very uncertain compared In performance year in we strong to comparison particularly drop

the a Culp, the resumed have due China, that outbreak. government-mandated end associated stable, platform and supplier We to prioritize quarter with we our operations in strong an advantage in important of This those relationships. for been at extended following China as relationships strong coronavirus an the third long-term vendors has especially shutdown with very production

fiscal procedures Chinese government. platform sew by Vietnam our in to this platform. believe of We the our manage towards by required disruptions supports the augmented further our of the outbreak created has cut ability Also, end current the and capabilities addition this XXXX Asian and

have strategic customer base. our XXXX, to on execute fiscal we continued introducing new our Throughout diversifying and focus products

continued the are hospitality especially as business, growing pleased We this we've reach market. our with our extended growth in in

business market. key about Products, our sales growth we installation services Window opportunities driver has business, Read been we product are expand window this portfolio and in excited growing the our as and to hospitality treatment of continued our a the

Product of marketplace, success innovation competitive hallmark for provides advantage and the a a is also distinct our in Culp.

both continues Our stain-resistant to very line existing popular customers. and of fabrics new be durable, with highly LiveSmart

yarns, of Evolve, the sustainability LiveSmart about the use excited same with are the for We demand along trends performance. fabrics, featuring our recently-introduced stain-resistant recycled of line

coronavirus Looking are favorable execute the we uncertain ahead, while and in the business believe with environment our remains China we with positioned to health issues well strategy surrounding the beyond, results.

a unique and business base to growing hospitality residential customer a and a meet platform of have global innovative creative demand. and markets both combination design, products, changing our We support customer across

fiscal our solid in upholstery As another such, to confident deliver our we remain business performance fabrics in ability in XXXX.

goods. which Lastly, includes finished Home I'll accessories Accessories, home for bedding and the comment Culp our offering business, products and on results e-commerce

our refine home for our accessories segment. and to drive worked hard have strategy results We improved

initial reach for are business-to-business expected this marketplaces we is with it longer to and we taking online projections opportunities recent our encouraged than business, by channels. sales new While

which new improving about Vegas to recent and for our those We and new of Culp and In continuing are on potential leverage performance a important very new Culp. also with Las these showing remain products to we fabrics sales Accessories to channel reach pleased for tandem We mattress channel the market. Home sales new remain is customers solid a legacy this ability Culp e-commerce optimistic with at opportunities for the dedicated develop growth upholstery our business. strategies, principal featuring products we to fabrics, are Amazon,

then and we will the Ken questions. some take review outlook will fourth for quarter, now

Kenneth Bowling

our does assume varying greater-than-anticipated impact of the coronavirus to quarter on fourth the the each a have affect the expectations for Importantly, operations, not may levels. outbreak company's which divisions company's

our We and are workforce. processes for daily monitoring in protect company's plan disease following procedures the pandemic to situation contingent provided global the and the

to assumptions the this we contain of to compared given to and slightly disease the fluidity the to reasonably of and the coronavirus actions limitations, However, estimate with year. spread. fourth the quarter and to impact the being Subject overall increase related sales is those expect potential its circumstances difficult taken point last at

be mattress last the during due to fourth continuing down with year fabric are business increase slightly quarter period. with legacy income to expected and pressure to the of expect year sales compared our the We softness operating fourth prior quarter compared while market margins and in slightly

and the be Home to sales operating quarter segment, period. last to In we segment, to quarter year. fabrics upholstery comparable expect our income be In of higher fourth slightly fourth and fiscal sales our fourth we than expect prior Accessories the margin quarter year

operating compared continued year period fourth the quarter, to an year. and fiscal sequential the quarter-over-quarter improvement for improvement expect significant this loss but We with for prior

company report fourth million, these million, the non-recurring of related $XXX,XXX. $X.X last excluding income for if a expects and the or any. to non-recurring year's $X.X was Considering in quarter million impairment other Pretax for fourth the pretax factors, charges included $X.X of charges, range charges charge credits, income restructuring which and quarter to

pretax Excluding the quarter for last income this fourth year charge, $X of was million.

on year to in now expected Depreciation expenditures for million. approximately and $X our fiscal $X.X projection, is to $X.X be expected be amortization this million current to million Based range. the capital are

down fiscal flow free Additionally, cash year is to results. moderately for as last to year's this expected compared be

questions. we your that, With take will now

Operator

first Griffin Thank Please ahead. question Instructions] James. you. Bobby with We'll [Operator Raymond our from take go

Robert Griffin

taking my for you questions. Thank everybody. morning, Good

Robert Culp

Bobby. morning, Good

Robert Griffin

to wanted mattresses call to Vietnam. U.S.? can And import we would production maybe what, more? participate we about can you on for those I talk what the kind is in I of strategy market And guess maybe Asia expand give capabilities So thing into the what's fabric first capabilities the back guess, I some the guys? And adding

Robert Culp

that I'll Bobby. is This take question. Iv. Right. Thank you,

go little to a have bit. You back

As about and it different. over quite last both The we which think feels the year, talking now like rules and a was significant pretty mattress not that even are XXX anymore, about tariffs, fabrics disruption – antidumping tariffs. Section that but for we're upholstery of

is in looking as reason extra a the establish manufacturing we're China significant Vietnam because tariff mattress So covers. do from XXX fabric fabrics primarily to coming have mattress today, fairly

Vietnam, we pay cover, still or unless upholstery sewn full a from fabric all fabric where furniture to you to cover to way China tariff, avoid Unlike ship you the tariff. make in the could fabric Vietnam the the extra can

sell us, certainly, a gives management is we back into own ability Vietnam can fabric making that the it. other that and us covers beds for are countries make through the play, bring cost-saving that to then the establishing up fulfill a U.S. and and U.S. us in So that in play can risk in hope our we to We of covers answers or Vietnam

Robert Griffin

very covers that make priced some U.S. to curious – operation I'm helpful. Once beds get That’s imported set imports you from a Vietnam corresponding up, can that today? the competitively will of are into the Yes. on be going just standpoint. already competitive those this the you now in covers

Robert Culp

Yes, sure, Bobby.

competitive to costs, We very covers tariff are expect be making advantageous opportunities and and could we're Mattress through But in Vietnam been And China there deal very been there. cases. with already that potentially more covers U.S. advantageous with be platform rules – competitive. certain already. more materializing we've to to has Culp our

Robert Griffin

improvement, about home Okay. you some me, maybe secondly talked performance Amazon the then the accessories the on for channel. And on of business,

And those bit to of little those on can retail maybe products sell bigger finished then locations? expand secondly, there you a So is strategies? in a some opportunity

Robert Culp

are questions, Bobby. really sir, Those too. Yes, good

of of When on has the costly in money business to the to we're focused part the time invested might home we we find rank to rankings, ended up yourself the just and so was on Amazon more touch sole really higher first really, to I'll they that. part. Amazon business, invested Adwords we've accessories, more sales. become the expected. First, the up have Since to And XX% or primary the in Google us do costing than higher

we're be offerings advertising. back dialed cost-effective an most we on to do our core, stable, Amazon So products. our of what what And appropriate we trying to most to level consider consider really we've

have service too we to don't today, a and rank good-quality have then over well what it it placed advertise make So and It's we believe, we much spend on that we work. money Amazon can well. to product should

So business not we're more and share but piece. such a a anticipating a our significant, Amazon like being heavy XX% of

all great side. accessory we BXB For have on of certain, products opportunities our the in

We lot have customers, have that looking for products additional are and a of accessories. sales to customers bedding on roll-packed attack

We that some to had also sell chance working. retail of products some is into and our direct distribution, a

it's to opportunity get it as be want very but optimistic it are as the to fast because never that in Sometimes, about takes retail we also. cycle, time we

Robert Griffin

luck. I That’s Best helpful. very appreciate of [indiscernible].

Robert Culp

Yes, sir. Thank you.

Operator

[Operator with next Betz Instructions] from We’ll take question our Paul Stifel.

Paul Betz

Amazon. Good everyone. morning, Continuing with

competition? are new some going maybe And lose violating gets rectified, on terms. sellers see Can mentioned you if you that – what's You some there? explain less may

Robert Culp

have Yes, for press been Amazon sellers reviews. specific you too. terms commodity the that, acquire and since there's pads Paul, things in. started you the primarily, protectors on And Chinese mattress the in items, X-star that the marketplace first I'll times There happened way this. of with and where, mattress specialized sir. service, pretty thank has we flooded a what's we take Basically, lot stories Well, of question. have been about It's Amazon, Iv. and

to have processes, downgrading really with It's of steady, terms in getting things. a items normal found be of to all we lot of and free competitors selling We fabricating earned have reviews those a be reviews and pay and reviews. views, through service of which per also lot we've doing giveaways not that instances

And headway. we Amazon levels made and them reported in really high some have to

violations. that primarily. get by But time falsified But make big sight service way quick. of reviews, to suppliers. So impact mean working and I someone we long think for method, will better. what change hard like a us pretty rank Amazon it's really is really to that's their And really terms the they a It's in fabricated

Paul Betz

– cash? Is some? Okay. did CapEx you lower Thanks. the And conserve areas might just that to what reduced. that Or was

Kenneth Bowling

looked This our projects. and given started Ken. the Yes. at year we cash position, prioritizing We Paul. is Yes,

of is $X range. certain so a have we maintenance that call we or so CapEx, And amount in million what which

keep then So as when end going projects projected we uncertainty, of looking you look – this to prioritize in are I we will the as and to closely to always to, are prioritize forward, mean, at where continue a just we very they up in along. going we're to we projects invest ending said, eye up, business close and we just time and on cash. things as have, But and the our we'll come have mark

Paul Betz

lastly, And Is gross on margins our expectations, holiday from thanks. year-over-year. the Okay, in anything the else the mattress segment, the Or down there there? just shutdown? disruption is below going that

Kenneth Bowling

and No, that's that but moving a a good lower the had impact, insight are lot with shutdowns the there. quarter. sales in of Obviously, parts the an there all

And so being was the reason down. primary the for that margin

sales other the disruptions as the and You well. have lower

Paul Betz

very you Thank Okay. much.

Kenneth Bowling

Thank you.

Robert Culp

Thank you.

Operator

from We'll our Please go next Marco Capital question with Markets. ahead. Rodriguez Stonegate take

Marco Rodriguez

Good more and the morning, if Vietnam little a questions. wondering you're guys. maybe Thank you that in bit activities could doing for Good about you taking Haiti. expansion I my talk was here morning.

you costs If a when those? place, will capabilities there then the maybe these just could as as far associated with be and time line

Robert Culp

and expansions in terms for for and of mattress cut sew upholstery are expansion operating kits both that Vietnam and the well. fabrics Yes, pretty that's in targeted Vietnam performing significantly sir. standpoint. Thanks Marco, question, and our We're already for really the Haiti business in

at started covers. we two-pronged strategy mattress three-pronged a strategy – Haiti, a really, for

prototyping rollout recovery emergency that us. that is and for business well U.S. and We works quick have our platform

a we near often sourcing potential. very opportunity that is low-cost Haiti see, a

in we're drive a just So the success able faster far, for so times to really Haiti. It's expanding resounding we're significantly building. and been lead

it's a So not significant expense.

is venture. and add cut space machines. into just sewing more We're and extra building CapEx a some not heavy Getting sew some

that having Haiti. additional fast and in So this excited pretty uprise we're summer. capacity in we would a anticipate plan It's being and there, about

in of is no and fabrics to out. the or in back we on if The sewn in U.S. products There's Haiti, from today, good anywhere can duty bring it's of comes it the any the world part that

times faster should we inventories that right platform in-store advantageous if very with, us the forecast lead places. So at provide

Vietnam small on after the is ability focused do both get and Asia, way. fabrics And start customers. ability lead cover. it sewn the good need for mattress a a we also do bring be and as-needed we'll to of If to time to, an XXX basis Not dabble our some that's and of a to mainly important being mattress really the preferred that back we cost, made would for can small, basis, with Asian an serving on are but with We'll U.S. could fabric some in tariff. on that to us that avoid Section beds attempt we with the have that or just in we

Marco Rodriguez

of inventory on Understood. P&L taking the bit expand and/or look you sheet it. new can or in platform balance what impact, the those? And might at the management, then see with in additions any, terms service you you're sort the of Got if enhancements that a maybe a little more on

Robert Culp

was Ken shift everything much we a let and always and part still thinking the the you, But impact. the I'll day a comment the the I'll for reason that mattress we Well, industry about market. a where speed-to-market inventory time it we're quick tell business, for on pretty pretty is of do – same way big long

mattresses But as things with imported gotten have longer. gotten have more diverse and components, a little imported times lead

Haiti, So the multi-countries match global we've then even Canada, strategy. China, in and we're sourcing Vietnam We that want our in: platform then with down, to Turkey. our lead with U.S., back times tried that business to bring all

out as longer so the market we've times recently, water times lead that be would of conditions change. anticipation our the much on to those down exposure we're get shorten had lead with So not not so caught

of management to for a inventory. them efficient better, extra we're So to and which time bring exposure will lead make intention just our our reduce – then is scheduling, our faster happy customers,

Kenneth Bowling

quarter a The obviously, This we Yes, had. better Marco. is expecting, than extra were Ken. we inventory,

new up – keep of will that line built the we that down inventory flow get consistently, fourth so cash it materialize. now But the to materialize. in where and excited in with situation improve and those in up build inventory more focus, the this And about process, anticipation inventory sales get quarter. we didn't back we able don't in help sales we're hopefully a which be obviously new don't should But

this move So started. and – get we're exciting an is anxious one that that's to

Marco Rodriguez

here last of guidance. difficult It's a it. question. Got quick And one on kind

is You've coronavirus. more an can consumer around look the maybe China for that also Are you right obviously, kind concerned? But now. impact a as shutdowns U.S. does you confidence built of as risk of if unknown And fact or big know you mean as some the put stands far sort it like. a in for brought what bit worsening we is in conditions in talking additional curious the I little just that color

Kenneth Bowling

if Yes, Marco, Yes. forecasting We to I'll lot in. put difficult. of Boyd the and in this uncertainty. answer around extremely language then a environment it's is jump and wants

what everybody know, out. you The As reads happens daily. comes news

right things are well And China. Things operating are in now, recovering. so

So daily. we've got news that change things But there.

to where So see. we But fourth said, have are, we just things good and change as and quarter quickly, we'll given wait expect I've can quarter. a in the

a got flexible flexible in react but we've processes make very, and to platforms, and time Now can it's changes our just we systems right very now. uncertain that be and

cautious very I want being just if we're know you don't we Boyd, forecast. to… in so And how

Boyd Chumbley

government operating. situations before our to And one for delay delay getting seen very return situations, add a Marco, I'll as base. get you. normal to in some to able relayed, we've from now relation upholstery were We in supply Thank Ken. mostly to we delays situation had mandated China, And week there. a current to in to operation we've quickly really Yes, that, just China normal back side seen our then we've back the one-week the

our suppliers of full output are to almost all again. now nearly currently, But back

So supply to experienced disruptions a positive. been We've delays our the very base result. and current as minimal has situation to customer

And to the supply at so may remains situation recovered – so while has it sure, moment, it. to dynamic from output, full uncertainty current back minimal and China nicely picture quite coming appears and base is be for and near is the a delays our there

Marco Rodriguez

your Thanks guys. appreciate time. a I lot

Robert Culp

Marco. you, Thank

Kenneth Bowling

you, Thank Marco.

Operator

you for any remarks. like there conference this to It additional the no are closing questions Culp, or turn appears further Iv Mr. to I'd time. back at

Robert Culp

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

Operator

call. This your concludes Thank participation. today's for you

disconnect. now may You

Culp (CULP) 5 Mar 202020 Q3 Earnings call transcript