Earnings call transcript Q3 2023

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Operator

Good morning, and welcome to the Culp, Inc.

Third Quarter Fiscal Year 2023 Earnings Conference Call. All participants will be in a listen-only mode today. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded today.

to conference like Anderson. to now would turn over the Dru I go Please ahead.

Dru Anderson

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

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

statements statements that statements about results or events are are include not beliefs Forward-looking or historical of fact. future projections, expectations otherwise or

that the These most The SEC the could are company indicated actual and from various uncertainties. by the recent statements materially and described of XX-K Form risks Form of because company's performance on filings, including regular forward-looking differ XX-Q. uncertainties filings in risks our and

know may currently to about or Additional affect uncertainties also risks and and that be consider presently that financial immaterial business not we operations our results. we do

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

In company an the company's A posted addition, the most filed is to discussing in comparable financial included non-GAAP release the GAAP on be the the website to directly measurements included will call, of these company's measurements. financial reconciliation tables financial exhibit measurement and non-GAAP to culp.com. press as this during X-K the yesterday at

of call. also the company's on today's information website available A of presentation is summary part the supporting slide webcast financial with as

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

Iv Culp

the joining and with quarterly to thank would you Good investors. to like analysts for you I call today. and morning, us conference welcome

Boyd President Fabrics our Upholstery business. are Officer; With me Ken Chief of Bowling, Financial on Chumbley, and today call the

items. A few housekeeping

quarter. Bruno, join have on do on traveling you all next working want President and is join to Fabrics call the Mattress to Tommy him I business we plan business, the us to today First, he is unable of as that us know our let but

our want we presentation investor have not share weeks. we next our posted also preparing website usual we capital road and presentation point a which refreshed I map, to are out on the that within as or to expect few investor deck improvement strategy allocation new

employees quickly and their for to hard challenging thank work these want world our times. X,XXX I around over the Lastly, dedication

Our culture we at are proud and Culp our really is associates. special, of

the are We Center from and have to nomination the Resource the Award Dallas Team Accessories also awarded International Textile HEARTS grateful been from Alliance. with Market

to leadership. honored We be heart-based are our recognized for

we the some the begin our the priorities and fourth take comments, take quarter, then including as After I'll results then some that, quarter, opening outlook business Ken review for will quarter key a I'll look and call the our review themes -- we'll now with questions. ahead. financial for discussion and then of for the

themes: quarter, transformation third managing one, number is demand Fabrics about we business. on within the current three and really cash when sheet our think Mattress we number major service; the and within weak CHF So, maintaining number two are strong position; there balance a two three, our our the focus industries

side, in a demand despite With volume. thrive to results quarter at continued for mattress for the reflect our and levels, the sales our the one, Regarding these related unit weakness to tough home market sales residential on theme it especially industries, and is Culp environment operating furnacing domestic the very gains.

bedding chain company. industry, run manage unit-driven efficiently. our the sold furniture solid and being it the us a supply And units We absence our facilities is to for challenging within are and of in

But segment. are our the Culp deeper pressuring different are and control complain business and definitely to macro much for conditions out demand. certainly it consumer affecting pressures and there's things about that are by regarding inflationary spending, than are impacts that goes And those that of

business inventory manufacturers due and residential Our Upholstery levels being through lag managed are still that Fabrics segment to has worked at continued high retailers. in experienced and a

our normalize. some segment, We reports this XX%. as unit more sales as to of few mattress called business Mattress with Fabrics months seems temporary a currently could expect in take a down malaise, that industry much On to be

are are Within this supply positioned at making and managing controlling macro results. what can conditions of come When expect adjustments position. tough incurs, including working we demand expand stabilize. in strategic the business, slack our will market will and point some much extremely backdrop, out our well chain that we control we and better believe to the We

cash the sheet our to Now in I balance diligence This with which things turn me very in financial of manage am is businesses for can solid manage our position. one teams maintaining of our strong and pleased we position. a our and main let theme both their two, to management is continuing control,

We of an end the third with excellent inventory reductions have of with $XX.X the favorable cash of done impact job million since last fiscal a year. quarter

our without navigating with bankruptcies customers terms major We and material receivable accounts improving by impact. any have key three also managed effectively

year, and face year Additionally, cash we flow level to the comparable fiscal compared very this now first cash significant year. times. with months challenging fiscal outstanding the a to have nine we improvement is expect of preservation and last last a end to for year, in positive generated end cash This of the this management of fiscal

our sheet need new no asset-based our into strong a future outstanding balance is that credit and to fully if success. of debt, Culp's position We Importantly, management it. that we enhances have recognize facility we have entered paramount liquidity also revolving we ever

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

from the is history Mattress a and in platform. people. reputation rich transformation a an Fabrics processes the excellent possesses plan This business CHF Our business with facet global executing to every strong business, of

volatile through periods control last have pricing overall solid, extremely better market discipline. years, have our and cost the we as we demand While better as and needed well position struggled over remains two

in leadership under holistic President, strategy improvement the position to of new transforming process are stronger us we others, even We business this among Bruno. the that division areas, in of conditions And Tommy when those normalize. believe engaging will emerge

brings with overwhelmingly and our have people we customer with the an with places, progress numerous as getting made leadership am managers as mattress CHF, already pleased and strategic recent sales, mix manufacturing. industry. short channels, in I under in announcements right our social to and ideal the experience time trade the publications thinking Tommy reflected excellent energy, of In operations Tommy he new the on right in media new service, and including in

product volume We balancing SKUs schedules. run and to are focusing proper management quality study on our mix and production efficiency,

We excellence. improving our intensive have an focus on operational

previously We in are price are lagging now some for our cost also products. somewhat as raw existing structure noting disclosed, material we although improvement, still we price

which industry been It position Some the previously volume. news to are level good deferring line the in encouraging is business a our market market new cycle new at current winning affects our with priced and in see activity Vegas of The also has unit costs. very was and we January Las product market. opportunities introductions, new are gaining

many market, at see Culp So, and products launching pleased presented are mattress featuring new that XXXX. sewn were to and this throughout we innovations calendar fabrics covers

industry the of elements Looking notably -- expect CHF in these the improvement the be steady price though ahead, blocks we for of building all macro will dictated our pace overall demand. business, will be improvement by sequential of

are to We regain profitability that working lead expect we will Mattress in fiscal do CHF XXXX Fabrics that recovery. diligently and

popular our fabric for affecting inventory the our products, we products. despite the and Regarding of portfolio performance innovative LiveSmart term scalable for product Fabrics global our long residential positioned remain demand Upholstery including business, offerings, platform with elevated levels well the

for Fabrics generally year XX% business from in more over last its been hospitality stable business as contract our performance this has product over of two quarter. normal is this market residential Upholstery Hospitality higher does business well the in of sales, by the years impact. to contract following sales the our supported for approximately it accounted COVID percentage the for third contract strategy last importance to our the of diversification than reflect lower solid segment. ongoing segment overall And hospitality as part while volatility, recovery due Our the

took action demand also We to and our with Haiti upholstery cut some during align in the sew trends. quarter current platform

to charges, While sew and will we have rent time. will result detail accomplish in this recoup our pleased some support in annualized is our his this savings sacrificing cut into of from of able I'm more and without adjustment ability majority customers go going to we our business. this action, but costs divisional were grow this and on performance, we a go-forward a Ken over to did prepaid review that restructuring

Also, be still I Culp. location clear for critical we nearshore to want Haiti view as that very a

have mattress and cover kit Haiti We important sewn covers. Haiti, we and and be of the in for company's running future platform part to strong expect an mattress a cut

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

Ken Bowling

Iv. Thanks,

investor we Relations As a information, to mentioned will presentation slide summary posted and cover Investor to earlier presentation on have the post certain website upcoming we in our the new weeks. call, a financial also

quarter. third the for highlights financial the are Here

$XX.X to includes in and $X.X fabric from with divisional $X.X sales rationalization on rationalization. Iv compared in compared The were moment, the including mentioned I'll The from down sew this the reported loss million in comment that company from operating the of million, XX.X% $XXX,XXX operations sales relating period. million cut more income of upholstery on platform detail quarter in for Net more loss expense Haiti prior-year and restructuring performance earlier. the period. prior-year with for a the operations operations a of even

loss quarter or $X diluted share the net $XXX,XXX compared million prior-year was the per a $X.XX with Net or diluted period. $X.XX for per for share of loss third

for by was in Fabrics our Products Upholstery Upholstery Fabric Haiti with charges operating performance and due cut our overall primarily sew and lower our both operating holiday Read our segment. inefficiencies restructuring sales affected inefficiencies facility associated and to in Our quarter business and segment's affecting operating shutdowns Window in of businesses, third the

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

a was ago. year income rate XXX% X.X% tax period negative third quarter effective of fiscal a The the same year the compared for with this for

Our and tax between for subsidiaries. effective of of was the quarter company's our affected income rate foreign year U.S. earnings by third the mix fiscal this

million Our tax the the cash $X.X nine fiscal entire payments year this million $X.X expect payments income year. currently fiscal for tax months cash XXXX for income totaled we and of first of

Importantly, the year. fiscal of our payments variety projections estimated only be cash a current the income and factors this by management's are of year tax over affected for can course

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

reflecting sequentially the of by Mattress demand Sales X.X% significant XX.X% second with quarter and analysis $XX.X third pressured for the contraction. quarter quarter down mattress industry Fabrics year. For last fiscal this for sales year's with with unit reduced third compared compared segment, the quarter million, were were down the

was softness industry product new this through retailers holiday in mattress days. resulting work took of shutdowns, Manufacturers shipments of and excess and continued impact billing as delaying timing to the rollouts. also longer-than-normal heightened fewer manufacturers The inventory,

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

$X.X the $XXX,XXX for loss was year Operating compared with million of a ago. quarter operating income

both pressured third -- for across quarter lower primarily fabrics driven our was performance year by mattress shutdowns inefficiencies and by across volume locations. holiday the operating sales operating this Our

second since the For of segment, which compared sales third Upholstery XXXX. were Fabrics quarter $XX.X were XX.X% the Sequentially, the down was sales Upholstery XX.X% the strongest for the segment with performance year. prior sales the segment's down over sales this fiscal for -- Fabrics year, quarter million, quarterly

manufacturers levels pressure least upholstery fabric This during the home of reduced pressure residential remained the is to for driven at quarter for under next by positions. furnishings and high Sales expected inventory inventory their the quarter demand, year retailers residential work through first products fiscal continue the by as through industry.

hospitality hospitality the total contract XX% Upholstery our Fabrics of for in solid sales. business during accounted for our remained the Demand sales segment's with third approximately quarter business

operations million was a loss $XXX,XXX with the year of from compared income ago. Operating for quarter $X.X

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

to additional completed mattress of capacity capacity quarter. levels the we scale and conditions The cost customers kit trends kids, terminating be demand still began our sew upholstery during quarter includes customer in into restructuring and allowing near while upholstery improve. for and year aligns us end and third our relocating Haiti facility. of demand rationalization will for cut on the current sentiment, platform Based of a this and a fourth consolidation fiscal This with support an cover and existing the lease if and adjustment our

annualized recoup X.X next expense savings initiative rent $X.X approximately the this of million prepaid will expect in we million from We and over years. $X.X

of and of fiscal We and to the in $XX.X as compares reported balance year. $XX.X I'll end last sheet. quarter. the debt debt no the cash Now as end cash in the This of and turn with outstanding third of investments million no million

last Cash operations for the from nine flow this were million with of year respectively, a million for and first year. million, flow flow cash and from cash negative and the first respectively, negative compared free of fiscal nine $X.X $XX.X months flow $XX.X free of $X.X months as million, and cash fiscal operations

the capital management, fiscal and first from inventory. of namely flow months favorably reductions cash in cash nine operations during free were Our flow year this by working affected

position. Importantly, quarter since reduction third to fiscal cash $XX.X last contributed the year, million inventory the of end of company's has the

we fiscal compared -- this spending through third Capital year for our of projects $X.X only. same Consistent emphasis the period last focus million capital with are through on year. inventory, million were on the expenditures the managing tightly quarter business-critical with with our first $X.X

to in million. the For to range the full year, fiscal we of $X.X expenditures million expect capital be $X.X

new monthly up receivable revolving of to asset-based inventory completed also availability Borrowing on We calculation on is based closing the three-year certain the facility a new $XX and million. credit facility a this a of under basis. of using accounts company's determined

flexibility foresee we While this environment. not our minimal to as facility, and prior to need us more continue facility pleased enhanced do borrow, we gives covenants difficult navigate we are to compared currently new with a financial liquidity as a that

not available also dividends any on repurchase share the The our year, during The the of program. pay the repurchase of dividend activity do any this company fiscal year did share the following we cash we current positioned not support and fiscal million preserving the third did year. this liquidity stock remain quarterly company fiscal during current quarter repurchase quarter in during any earlier Despite of on $X.X not under our the focused third this and our common suspension authorization, being shares expect quarter opportunities. fourth growth leaving future to year, of

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

Iv Culp

you, Thank Ken.

continued fiscal for quarter financial macro we provided guidance year. the limited the fourth have Due volatility of to the environment, this only in sequential

to of as fiscal the for this in the Fabrics in Mattress segment. the quarter by net moderately Fabrics largely segment, the year, comparable expect improvement net million strong sales $XX.X in quarter Upholstery We the fourth sales third be sales driven compared and sales to higher for performance

year. of for loss to this operating this quarter We meaningfully expect to third lower fiscal fiscal year quarter consolidate $X.X that operating of loss fourth the is an for the the million

also as to the end the at the of fiscal this year to year. quarter We remain end cash of expect fiscal our last of of comparable $XX.X million fourth position the

are know can compared we by what some you wondering sequentially I as of quarter, operating here's fourth third what mean say that. about for meaningfully And to lower we quarter the the loss and now

is off precise We Fabrics to believe it challenging times, come have What we of improve, these our is CHF give found are specifically we and the very related to uncertain have we guidance. segment. that bottom, Mattress starting to

for we in but some reason as revenue been mentioned As the challenge go earlier, optimism we have a has forward. environment, macro

but and businesses, is Mattress business We and are Fabrics, the gaining recovery at on in proper new we in most margins are starting based market believe placed to we had see with both costing. the disclosed wins previously product share CHF we actual

be of environment. the pace the will macro the in recovery dictated So, our by recovery

business We we organically expect our position, market and macro recovery sequentially some to need to but via improve quicker. for tailwinds happen

achieving committed certainly XXXX. during profitability improvement to fiscal and are sustainable We regaining a sequential

we as the current be strategic a to management balance in with a our regard always goal prudent capital. we laser-focused with financial strong weather will Importantly, of especially balance to on working continue challenges, the ensuring maintaining sheet,

We are stability future, optimistic know financial about success. to Culp's paramount that our is we and

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

Operator

session. question-and-answer with Lebiedzinski will Please go will first Sidoti from & And begin here come Instructions] Company. now We ahead. Anthony [Operator the question our

Anthony Lebiedzinski

the Yes, good gentlemen, questions. morning, and taking you thank for

first, So, operating difficult sheet a job nice a maintaining solid environment. with this balance in

from that's So me. quick comment a

just confidence As would cost questions, seems ability these some your is as material levels? pricing far with stabilization What as trends. your level it as so to at and my raw overall, the maintain moderating and far costs like say you

Iv Culp

Thanks that. on note That's Yes. picking And it. a Thank you. Anthony. for question, we did good up

last way not did pass inflationary pressure us able on we enough about of not years. the price. there raw And enough the a on materials talk such weren't and -- as raw price materials in or we over are couple we get to did We was

with we to able So, we're the finally catch products point up are getting to to where new price lag. that

And there's frequent in into our business, the historically, introductions market.

products. and of up swings And new so enough do been to pushing deferred, no do didn't we we that, able this haven't years, raw been has Everything material job a through last by couple good any just can introducing so, catch to But been price. there's we intros.

finally pricing, So, in have margins market. fair we products, price be deflation adjusting I'm where the have need we raw of can the don't so not We material on to to can we our worried. but point new get

So, we glad have to and really launched at a products we've least standard it been new just pushing neutralized because we're towards finally happen getting is cost, terrific. which see

Anthony Lebiedzinski

Got it.

thanks for that Yes, explanation. Okay.

optimistic yes, the So like new about pipeline products. it you're of sounds

You programs well. some about talked also as new customer

I think, late in quarter. Ken, that the I mentioned remarks think prepared your in that you you saw

or kind if new that, product of you're some customer new on just expand of So could -- you maybe give just that excited here? about programs particularly just of some us examples some

Iv Culp

would the Yes. we've the sure. the about is to that's both Fabrics Fabrics CUF Upholstery segment. tried release I and and position, the I is in have certainly way Mattress to for think improve Fabrics need Well, it, But in where positive businesses, to to Mattress market what their to excited both speak trends in CHF we harder we're remarks point

is growth Mattress minimize I seeing trying in I'm from when to about Upholstery this. Fabrics. They've So, just Fabrics the Where in been levels role we're stable. more speak current not that,

you pretty cover retailers but back the went traditional got been kept in rollouts our pumped mattress us to we're we box of market. bedding us, earnings And to for product winning was the getting and And last that know, the calls, Vegas bed up I've delayed. customers couple if on speaking both what positioning Las

to got and things last XXXX, again to cases, of that launch got due to some the deferred January summer then of in were January So, XXXX. deferred

that's So, most of items have at we're those market ship, doing lot a board. bedding we traditional throughout quite market. been market, -- plan products and more recent and to so success our like And shipping there's new things to of putting the feel industry Vegas Las customer. And year. to had of starting to a again, the started finally, catch-up the is the bed-in-box, this billing across bit building and into I the

And us the not going have to to pointing like it's keep be help tailwind pace will of overnight. immeasurably. know We know to to industry things staggered. again, happen the We

lift we'll position So, going we're our grow our going at and to we with macro can share, and we the some know side. in we grow point. pull-through. organically to grow some And come faster but We're need some

helps. that hope I So,

Anthony Lebiedzinski

And on in how hopefully, have you. from segment? the absolutely. point you the this. Vegas may continues as that's the Yes, far hospitality momentum rate missed high as Did for for No, growth market wondering at the fared quarter? comment I that market Just the

Ken Bowling

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

Anthony Lebiedzinski

Got you.

last And All question. right. Okay. then

So, looking conserve the Ken, cash. down you to obviously, talked about because being CapEx, you're

has that deferring somewhere guys million of much mean, how last you of wondering, you've typically, that the at least just done next million to years, to I type spending. year? $X $X been are CapEx spend of couple So around you

'XX to up of whether or in think fiscal much how catch CapEx fiscal you'll you So, 'XX? the need

Ken Bowling

much mean, prioritizing we as quarter. and project. really focused on said, That preserving certainly great as I in this we've Yes, just obviously, our that could, the to question. a level have we address Anthony, maintenance continue that's cash can, we year, maintain fourth tried been as as to we every much and CapEx

prioritizing. and ahead, to We're projects think that is at million $X $X I maintenance always we've year in of CapEx looking for range. now those million said next the looking process in

it to to CapEx. able the the same that time, time, they be need the those to divisions maintain earn we've justify and agree position also where to we at need to have they But and But a we same equipment. being that at clear the made in understand

balance next year. that's as going be to delicate we go into a So

Anthony Lebiedzinski

luck. you very of thank much, and Well, right. All best it. Got

Iv Culp

Have Thank you, a day. great Anthony.

Operator

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

Rexford Henderson

my taking for thanks and morning, call. Good

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

Iv Culp

would Well, for Rex, we we're calling prepared out. We've the and And to about great have improvement. that would We Thanks over we remarks to yes, hole some love depend general again, we But, of to year. question. digging sequential can the in of some get kind demand. just a of over know is of tailwind for talked kind going in profitability what that. And ways. it on love out whole

to no year, margins going And tailwind. this we're We better are sales going some our market our and to manage our question. grow need We position.

those later we at it. year. every moving think I'm in the looking great towards but the in So, half we first know profitability that how we of then breakeven control rebound expectation to at a in then, will year be to our have way, quarters. And not I look the I and can way likely we is improvement some sequential it should the It's is

how tell so them operating to income that to much. look And been at you more. I want Ken, we've [indiscernible] guiding we know if don't

Ken Bowling

time year 'XX, as we through at our we of understand right. I half -- the look mean, exactly EBIT that's an that some to the it's I we're No, at looking where at head break mean to going continued Yes. get profitable take the we to in as profitability. we level. second But into

And so just time. to take going some that's

we we're But -- an 'XX, now by -- the so, we're the level. saying time And that year. that in not will be is what certain EBIT for on in time guiding profitable right of profitability FY

Iv Culp

just we're the some if business much reductions I And that help dealing challenging. it the macro I could that's Rex, sales would faster It what there we it lift would so us be I'll makes with, the from love environment. just go say, just in come think. with that that mean,

We because us are for can our time buying that normalized, faster. gets know happen we it when

quicker. us it's it, little happen fun if to should to but would man, it So, would and go going evil to that's not it of to think try predict be a

Rexford Henderson

sure. Yes,

Let a Fabrics loss the last bit little this been which about so business, an has ask in showing more Mattress the -- me year operating far.

back -- top-line? profitable? into you are volume much when can and and you of transforming some those -- additional the product where business And in -- much on and volume some volume need? How make So get products, the you're new line does this kind profitability terms the getting segment where that -- guidance give that efficiencies to it to business me better -- new cross to that through and pricing going -- some on how what and of in takes get business to

Iv Culp

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

that, efficiency, pricing, think those personnel, excellence what so there's I all through are getting being doing, quality, things What better. costing, driven much we're of operational

we're So, We our are. rate. revenue lowering definitely breakeven

rise. tailwinds cost to some not continuing finally have with We

turn volume take profitable it -- pressures. have would it through to as through the can as So, much we COVID inflationary and won't

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

Rexford Henderson

That's useful. Okay.

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

Ken Bowling

right. we've to on there made, be Yes, all get a exactly be -- Ken. than this is before. able with we'll activity the able back That's less With enhancements to basis, comparable we'll

all right we've to need leading got now, going as not So that's before. to again, ability different much projects on as that the that's

Iv Culp

just Rex, We sales out pressure. I don't XX we as there's we good questions. really don't But say months, XX, -- again, think look

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

Rexford Henderson

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

Boyd Chumbley

is This of points couple to related Rex. a Sure, Boyd. China. touch on I'll And

place COVID impacts and resulted the uncertainty, This that disruption that for in in chain. that saw and certainly policy positive from change the from change. our December, First both associates in less supply our of came took some all, China

So positive. was that very

business is holidays. And normally through the back Chinese we all chain this this from then, which has course, but the we've come Year functioning aspects, from seen a is -- and slows New supply time, -- at returned point have of just coming at normally period, the

So, we're pleased with that.

general, supply is say in Rex, functioning So, I'd that chain well.

We are do our continuing and that. stay to we'll platform, on diversify focused continuing global to

know, Vietnam, to you As have we to diversified Haiti.

place some diversification Turkey. We have taking in

and works doing intend fiscal steps in the year. be to those expand next fully that, locations this and So, we have more now in aggressively in other to we'll that do

on continue prudent a China -- that's started. for is diversification path issues, and think overall we our business as not So have while to still well it's performing anticipating

Rexford Henderson

All for good right. and luck. taking again, my call Well, you thank

Iv Culp

day. you, Rex. great a Thank Have

Operator

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

Iv Culp

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

Operator

much The now concluded. very you has Thank conference presentation. today's for attending

now may You disconnect lines. your

Culp (CULP) 2 Mar 232023 Q3 Earnings call transcript