Culp, Inc. (NYSE:CULP) Q1 2025 Earnings Call Transcript

Culp, Inc. (NYSE:CULP) Q1 2025 Earnings Call Transcript September 5, 2024

Operator: Good morning, everyone, and welcome to the Culp, Inc. First Quarter Fiscal 2025 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please also note today’s event is being recorded. At this time, I’d like to turn the floor over to Dru Anderson. Ma’am, please go ahead.

Dru Anderson: Thank you. Good morning, and welcome to the Culp conference call to review the company’s results for the first quarter of fiscal 2025. As we start, let me state that this morning’s call will contain forward-looking statements about the business, financial condition, and prospects of the company. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results, or otherwise are not statements of historical fact. The actual performance of the company could differ materially from that indicated by the forward-looking statements because of various risks and uncertainties. These risks and uncertainties are described in our regular SEC filings, including the company’s most recent filings on Form 10-K and Form 10-Q.

Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations and financial results. You are cautioned not to place undue reliance on forward-looking statements made today, and each such statement speaks only as of today. We undertake no obligation to update or to revise forward-looking statements. In addition, during this call, the company will be discussing non-GAAP financial measurements. A reconciliation of these non-GAAP financial measurements to the most directly comparable GAAP financial measurements is included in the tables to the press release included as an exhibit to the company’s 8-K filed yesterday and posted on the company’s website at culp.com.

A slide presentation on the company’s restructuring plan is also available on the website as part of the webcast of today’s call. I will now turn the call over to Iv Culp, President and Chief Executive Officer of Culp. Please go ahead.

Robert Culp: Thank you, Dru, and good morning and thanks to everyone for joining us today. I would like to welcome you to the Culp quarterly conference call with analysts and investors. With me on the call are Ken Bowling, our Chief Financial Officer; Mary Beth Hunsberger, President of our Upholstery Fabrics business; and Tommy Bruno, the President of our Mattress Fabrics business. Today, I will begin the call with some detailed comments. And as mentioned in the introduction, we have posted an updated slide presentation to our Investor Relations website that covers information related to our restructuring plan, which I will refer to you today. Ken will then review the financial results for the quarter. And after that, I’ll briefly discuss our business outlook for the second quarter of fiscal 2025, and we will then take some questions.

Before starting, I would first like to express our sympathies to the family of Budd Bugatch on his recent passing. Budd was a friend to many of us personally and certainly to Culp. We appreciated Budd’s coverage for close to 40 years, and we learned much from him about the larger furniture industry. Budd’s talents, expertise, and heart were unique, and we will miss him. We look forward to a continuing relationship with Water Tower Research, and we appreciate their handling of a tough situation. So turning to our first quarter, our sales results reflected strong sequential improvement as compared to last quarter, with mattress fabric sales at 9% and upholstery fabric sales at 19.7%. While we continue to experience challenged macro industry conditions, our sequential sales growth was better than expected, and year-over-year consolidated sales were flat despite the overall industry weakness.

These impressive sales results are largely driven by our improving market position in both businesses. Our innovative styling, our dedicated and talented personnel, and our diverse and robust global supply chain are all factors in growing our market share. We have discussed previously that we believe our most recent quarter, Q4 of FY 2024, was the bottom point for our sales levels, and we are pleased to see this growth in our first quarter. As we look beyond Q1, we believe the impact of our new placements will allow us to recover at a faster rate than market recovery. Our upholstery fabrics segment delivered a significant improvement in operating income, both year-over-year and sequentially, with 6% operating margins for the quarter. The strategic actions we have taken in this segment are working as we have reduced our cost structure, while maintaining and enhancing our ability to grow sales.

And we are able to reach normalized margins quicker, even in this pressure of the macro environment. The actions we have taken over the last year have lowered our manufacturing costs, which give us confidence to navigate our business through a variety of environments, but it also provides upside with improving macro conditions. Additionally, there are several other factors supporting the solid improvement in upholstery fabrics for both residential and hospitality. First, we have a strong Asia platform utilizing our tenured China operations along with developing strategic relationships and capabilities for fabrics as well as cut-and-sewn kits in Vietnam and also other regions. Also, our talented design and innovation team has continued to deliver superior offerings in recent seasons.

We have repeated solid residential placements from High Point and Las Vegas furniture markets, and we are looking forward to releasing another on-trend and innovative residential product line for the Interwoven Textile Fair in November. Additionally, our hospitality and commercial segment is performing well, representing 33% of our upholstery business fabrics for Q1. Our hospitality fabrics have been refreshed with new patterns and colors, and we are encouraged by new opportunities and strong margins. And our Read Window business has solid growth potential, including new roller shade production capacity that we established in our existing Burlington, North Carolina location at the tail end of Q1. Lastly, for a Culp Upholstery Fabric, I’d like to recognize Boyd Chumbley for his recent retirement after 40 years of exemplary service.

We are thankful for Boyd’s many years of dedicated leadership, and we are pleased to have his ongoing support for strategic discussion and actions. But we are equally excited to welcome Mary Beth Hunsberger to our executive team and to our call today. Mary Beth has already brought much benefit to Culp, and her strong background in finance, global operations, and brand marketing brings fresh perspectives to our solid upholstery business. Turning now to Culp Home Fashions, our mattress fabric segment. As expected, Q1 operating performance for this segment was pressured by manufacturing inefficiencies primarily related to our significant restructuring activity. While this negatively and disproportionately affected operating performance for the quarter, our use of cash was minimal.

With our net cash position only $560,000 lower as compared to the end of fiscal 2024. Additionally, both segments reduced inventory from the end of the fiscal 2024, despite the strong sequential increase in sales. We have an intense focus on managing working capital including inventory, accounts receivable, and accounts payable, all of which benefited us in Q1. I was very pleased to see both businesses post strong sequential sales increases along with reduced inventories. We are also encouraged by the progress of our mattress fabrics restructuring actions. As we discussed last quarter, we announced a wide-ranging restructuring plan in early May, with a primary focus on our mattress fabric segment. The announced adjustments once fully implemented, will enable us to operate more efficiently and profitably with a lower level of fixed costs and without limiting our ability to grow the business.

While mattress fabrics operating results are being pressured by these restructuring actions in the first half of the year, especially in the first quarter, we believe we are on schedule to deliver the targeted outcomes from the restructuring plan, including a consolidated return to near breakeven adjusted EBITDA in the second quarter and a return to positive consolidated adjusted operating income in the third quarter. Mattress fabrics improvement is the critical catalyst to our consolidated recovery. As we rationalize our capacity, reduce fixed costs and increase efficiency, we expect to make significant improvements to our financial results, even without typical sales growth from a macro market recovery. This point is illustrated mathematically in a hypothetical example on Page 6 of our posted updated restructuring deck.

Our mattress fabrics restructuring is a comprehensive undertaking that impacts people, plant consolidations, equipment relocation and process improvements. But with it, we are successfully lowering our cost structure despite weak demand and we look forward to meeting our stated objectives. We are thankful for our dedicated employees on the leadership of Tommy Bruno and his team as they execute our plan to return to profitable operating results post restructuring. Also want to emphasize that we are grateful for the support we have received from our valued customers and suppliers during this process. And we are confident that the strength of these relationships are helping to drive our recovery. It is our goal to transition and consolidate our operating facilities effectively without disruption to any program or any customer.

The scale and scope of our mattress fabrics restructuring cannot be overstated. It’s a dynamic process, but one that will be accretive. We are dramatically enhancing our business platform and the current environment, and with our growing market position driven by innovation and styling, along with improving operational activities and best-in-class manufacturing and sourcing capabilities, we believe we are very well positioned for the future. I’d also again just remind everyone that we’ve updated our restructuring slide deck that is posted on the Investor Relations page. As we’ve discussed before, this slide deck is to help illustrate the details of our restructuring plan, including the actions being taken and the expected financial impact.

Since we announced this restructuring plan on May 1st, we have completed the consolidation of our Haiti sewn mattress cover operation, which is located on the northeast border of the Dominican Republic. And we have already reduced our cost and established steady run schedules. This platform serves an important piece of our mattress fabrics cut-and-sew supply chain for nearshore capacity. We have also completed the rationalization of our upholstery fabrics finishing operation in China, it will be more efficient operations and reduced costs. The consolidation of our North American mattress fabrics operation is well underway, including the phase wind down and closure of our manufacturing facility in Canada, and the planned relocation of some knitting and finishing equipment to our facility in North Carolina.

Also, we are making excellent progress in transitioning our damask weaving business to a sourcing model, primarily with one of our long-term dedicated manufacturing partners. We are encouraged by the pace of these transitions, and we expect both will be largely completed by the end of our fiscal Q2. We have also listed for sale and are actively marketing and showing our Canadian facility and we intend to exit and sell that facility in the second half of our fiscal year. But, of course, the timing of that will be dependent on the market and interest for the building. More details of the actions and general timeline can be found on Page 4 of the updated restructuring deck. Beyond this comprehensive restructuring, our expectation is to return to positive, consolidated, adjusting, operating income, excluding restructuring and related charges sometime in the third quarter of fiscal 2025.

Our plan estimates $10 million to $11 million in annualized cost and productivity savings from the restructuring, mostly via the mattress fabrics division. But we are expecting close to $1 million in annualized savings from reductions within unallocated corporate and shared services. Based on the restructuring activities that have been completed along with updated estimates on those that remain underway, we now expect to incur total restructuring related charges of $5.1 million, of which $3 million are now expected to be cash charges. We expect most of these charges will be incurred in the first half of fiscal 2025. We also anticipate funding approximately $2 million of the cash costs with proceeds from the sale of excess manufacturing equipment and proceeds from a building lease termination in Haiti.

And we currently expect approximately $9 million to $10 million of after-tax proceeds from the sale of our Canadian facility. A cash and liquidity update is shown on Slide 5 of the updated restructuring slide deck. The expected benefit of our restructuring actions on both profitability and liquidity is evident. This is all, again, assuming no lift in market demand. So looking ahead and summarizing, we are encouraged by: one, our solid and improving market position in both businesses; two, our consistently profitable upholstery fabrics business; three, expected further improvement in our hospitality fabrics and we Read Window businesses, and fourth, the steady progress we are making to restructure our mattress fabrics business, which we believe is setting us up for a strong future in that business.

We anticipate macro industry conditions may remain pressured during fiscal 2025, although we also believe there is some stabilizing of industry trends. Market depth dynamics have been pressured for some time, so we are pleased to see some demand consistency. Admittedly, it can be difficult to decide for the catalyst for demand as we believe a good portion of our sequential revenue increase is due to our improving market position and we expect that to continue. We are thinking the toughest macro conditions are behind us, but even if they are not we believe that restructuring adjustments we have made in both businesses will allow us to perform well in the current depressed environment. Specifically, operational improvements in mattress fabrics as we discussed are critical to our consolidated recovery and we were encouraged to see some improvements beginning to materialize late in Q1 and we expect this trend to continue throughout the year.

Again, we anticipate the strategic actions we are taking will position us for return to profitability at current demand levels and further growth opportunities as market conditions improve. So, with that, I’ll now turn the call over to Ken, who will review the financial results for the quarter, and then I’ll review the outlook we’re providing as we look ahead to second quarter of fiscal 2025.

Kenneth Bowling: Thanks, Iv. Here are the financial highlights for the first quarter. Net sales were $56.5 million, down 0.2% compared with the prior year period. The company reported loss from operations of $6.9 million, which included $2.7 million in restructuring expense and related charges as compared with the loss from operations of $3.1 million for the prior year period, which included $517,000 in restructuring related charges. Adjusted loss from operations was $4.1 million compared with an adjusted loss from operations of $2.6 million for the prior year period. I’ll comment in more detail on divisional sales and operating performance in a moment. Net loss for the first quarter was $7.3 million or $0.58 per diluted share, compared with the net loss of $3.3 million or $0.27 per diluted share for the prior year period.

Our overall operating performance for the first quarter as compared to the prior year period was pressured by inefficiencies primarily related to the significant restructuring activity underway in the mattress fabric segment offset somewhat by increased gross profit in our upholstery fabrics business and lower SG&A expenses, mainly related to lower incentive compensation expense and lower professional fees. Adjusted EBITDA for the 12-month period ending for the Q1 was a negative $5.7 million as compared to adjusted EBITDA for negative $16.7 million with a comparable prior year period of 66% improvement. The effective income tax rate for the first quarter of this fiscal year was a negative 3.4% compared with a negative 26.5% for the same period a year ago.

Our effective income tax rate for the quarter continues to be impacted by the company’s mix of earnings between our U.S. and foreign subsidiaries with an operating loss in the U.S. and taxable income mostly from China, which has a higher income tax rate compared to the U.S. Expected cash income tax payments for fiscal 2025 will not be given at this time due to the restructuring effort. Now, let’s take a look at our business segments. For the mattress fabric segment sales for the first quarter were $28.1 million, down 3.9% compared with last year’s first quarter. Sequentially, sales were up 9% compared with the prior quarter. While year-over-year sales were affected by weakness in the domestic mattress industry, the sequential improvement in sales was driven by higher order levels, which we believe are indicative of CHF product innovation and improving market position.

Operating loss of the quarter was $3.5 million, compared with an operating loss of $1.4 million a year ago. Our operating performance for the quarter was pressured by lower sales volumes and manufacturing inefficiencies, including inefficiencies related to the significant restructuring initiatives to wind down CHF’s Canadian operation and move knitting equipment to our Stokesdale, North Carolina facility. For the upholstery fabrics segment sales for the first quarter were $28.5 million, up 3.7% over the prior year period. Sequentially, sales were up 19.7% compared with the prior quarter. Sales for our residential fabric business and hospitality/contract fabric business, including Read Window, were both higher than the prior year period and higher sequentially driven by stronger demand and with respect to sequentially improvement in the residential fabric, partially affected by the timing of the Chinese New Year, which pressured sales during the last year’s fourth quarter.

Hospitality/contract business during the first quarter accounted for approximately 33% of the upholstery fabrics segment total sales. Income from operation for the quarter was $1.7 million compared with income from operations of $1.3 million a year ago. Operating margin for the quarter was 6%, compared with 4.8% a year ago, an increase of 120 basis points. This year-over-year improvement was driven by higher sales, lower fixed costs, and lower SG&A offset somewhat by higher freight costs. Now, let me turn to the balance sheet. We reported $13.5 million total cash and $4 million in outstanding debt under our China credit line as of the end of the first quarter. Cash flow from operations and free cash lower were negative $206,000 and a negative $550,000, respectively, for the quarter, compared with cash flow from operations and free cash flow of negative $4.4 million and negative $4.2 million, respectively, for the same period last fiscal year.

Our cash flow from operations and free cash flow during the quarter were driven by operating losses, partially offset by lower working capital, mainly from lower inventory balances and plans for strategic investments and capital expenditures, mostly related to the mattress fabric segment. Both segments continued to do an effective job of managing working capital during very challenging business conditions. Capital expenditures for the first 3 months of this fiscal year were $501,000. Based on current expectations, capital spending for this fiscal year is projected to be approximately $4.8 million and will center mostly on maintenance CapEx and quick payback projects that will increase efficiencies and improve quality, especially with the mattress fabric segment.

Based on current expectations, depreciation for this fiscal year is expected to be approximately $5.4 million. With respect to liquidity, as of the end of the first quarter, we had approximately $32.7 million, consisting of $13.5 million in cash and $19.2 million in borrowing availability under our domestic credit facility. As noted earlier, we also had $4 million in borrowings outstanding under our China credit line as of the end of the quarter. As reflected in the borrowings outstanding, we do intend to utilize some borrowings under our domestic and/or foreign credit facilities during this fiscal year in connection with our restructuring activities and to fund worldwide working capital to grow the business. Importantly, we still expect to maintain a positive net cash position and to fund approximately $2 million of the cash costs associated with restructuring from the eventual sale of excess equipment and proceeds from a building lease termination in Haiti.

Assuming the completion of all restructuring actions and the sale of associated real estate by the end of this fiscal year, we currently project our cash position as of the end of this fiscal year to be higher than the $10 million in cash as of the end – of the last fiscal year. We did not repurchase any shares during the first floor of this fiscal year, $leaving 3.2 million available under our current share repurchase program. Despite the current share repurchase authorization, we do not expect any activity during the second quarter as we remain focused on preserving liquidity and being positioned to support future growth opportunities. With that, I’ll turn the call over to Iv to discuss the general outlook for the second quarter of this fiscal year, and then we will take your questions.

Robert Culp: Thank you, Ken. So due to the significant activity underway in connection with our restructuring initiatives, we are only providing limited financial guidance at this time. Although we are encouraged by the updated and improved guidance we are giving, especially as we look into the second half of the fiscal year. While macro demand is expected to remain challenged, we expect our consolidated net sales for the second quarter to be comparable to the first quarter of fiscal 2025. We currently expect to return to near breakeven adjusted EBITDA, excluding restructuring and related charges in the second quarter of this fiscal year, and to return to positive consolidated adjusted operating income, excluding restructuring and related charges in the third quarter of this fiscal year. So with that, we will take some questions.

Operator: Ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instructions] Our first question today comes from Brian Gordon from Water Tower Research. Please go ahead with your question.

Q&A Session

Brian Gordon: Good morning, Iv, Ken, Mary Beth, and Tommy. First, I definitely want to congratulate you guys on what is, I think, a very solid quarter, given the substantial growth in both segments and what is a challenging environment for sure, better margins in upholstery, and the progress that you guys have demonstrated with the restructuring initiative. I guess my first question would be about the cadence of business over the quarter in the last few weeks, given the very strong sequential growth that you guys had. How did that play out across both upholstery and mattress?

Robert Culp: Thank you, Brian. This is Iv, and I’m going to pivot those questions, and let Tommy and Mary Beth give you the feedback from the ground level on the businesses, but again, just want to thank you for your support on Water Tower. If you want to know, it’s a tough cycle with Budd. We’re just grateful to have your participation with us, and thanks for following us. We appreciate it. Mary Beth, why don’t you go first, if you want, on what you’re seeing in upholstery trends.

Mary Beth Hunsberger: Sure. Thanks, Brian. Thanks, Iv. So we definitely saw in Q1 a nice rebound from Q4. We started out very strong May, June, July. We have seen – we did see some weakness in July, more so than in the prior months. Again, I think the industry trends are really hard to predict at the moment, but in general, the business is still strong and we’re feeling good about our market share specifically in the industry.

Tommy Bruno: Hey, Brian, it’s Tommy. I think, for us, we saw some of the same similar things that Mary Beth saw. I think we’ve seen consistency through July into August as well. So, I think the visibility we have to new placements and market share opportunities remain strong through Q2 and into Q3. So, I think we feel like we are on a good path for sequential growth throughout the year based on what we see today. Obviously, that’s tied to the programs launching in the periods in which they’re expected to launch.

Brian Gordon: Great. Great. Thank you for that. I definitely want to dig in a bit on the restructuring. First, and maybe to the question for Ken, could you talk a little bit about where the savings from that original $8 million estimate for the restructuring are coming from?

Kenneth Bowling: Yeah, I’ll begin there, Brian, and I’ll let Tommy jump in. I mean, obviously, with the closure of the Canadian plant, we’re going to have much lower fixed costs. And then with just consolidating the operation, getting the efficiencies of having operations in one plant, and then the savings of outsourcing our damask line, all of those kind of add up to the projected savings that we’re looking at. And, Tommy, if you want to jump in here as well, I mean…

Tommy Bruno: Yeah. No, for us, it’s really the fixed cost savings associated with combining plants. There’s other operational improvements that we’ll benefit from by being in one facility in Stokesdale with consolidated leadership. And as we move our damask business offshore, separately, we’re expecting margins to improve some as a part of that transition and that all gets phased in as we sell through that inventory. That’s why we’re cautious about Q2. But we expect that benefit to start to impact results in back half of the year.

Brian Gordon: Thanks.

Robert Culp: [We expect to finish your question, Brian] [ph], or are you asking more about the reduction in the cost for the restriction? We want to make sure we hit your question the way you want it there.

Brian Gordon: Well, I mean I was going to ask about the anticipated savings too, but I was specifically asking about the difference from the $8 million to the $5.1 million for the restructuring cost.

Kenneth Bowling: Okay, Brian. I’ll take that. Yeah, we had in late April estimated the restriction expense to be about $8 million. Of course at that time, we were just getting into things and looking at the different pieces, and so we’ve obviously had many months since then to get a much clearer picture of our expected expense. The difference is really broken down into about in roughly three areas. Number one is we looked at certain operating expenses related to our Canadian operation that we originally felt would be classified as restructuring and related, but those ended up being classified as normal expenses, so that’s a reduction. Secondly, our original estimate for equipment and inventory write-downs and impairments is coming in less than we expected due to the simple fact that we are using those assets, so after looking at things and looking out the structure where we’re going, we were able to use more assets than we anticipated.

And then finally, with respect to certain cash costs, such as employee termination costs, we just expect to come in lower than we originally forecasted. So that’s kind of the breakdown between the $8 million and the $5 million expectation. And, obviously, the current $5.1 million is a fluid number, so just we’ll provide updates in the future.

Brian Gordon: Right. Thank you very much for that. That’s helpful as the original comments on how those cost savings are going to play out. I kind of wanted to step back maybe a little bit and ask kind of a bigger picture on how the restructuring is really going to change the business model for CHF in terms of like what percentage of the product is going to be produced in-house versus what percentage of the product is going to be in that strategic sourcing model that you guys have talked about, which is more similar to upholstery? And then as investors look at that, how should they think about how that change is going to impact margins and the economics of the business?

Robert Culp: Brian, thank you. This is Iv. I’ll take that one first and anyone can certainly add to it. It’s a good question. And just we really overemphasize this in the release. There’s no doubt. The point of this restructuring decision is to reduce our cost level on the CHF business primarily. So we’re really proud of CUF and the asset-light model they have, which is especially important today due to variable business conditions and political economic risks that are just happening all over the world. So we love that asset-light model. And CUF is a, upholstery fabrics is a shining star in our current scenario. So we’re proud of that. In CHF mattress fabrics, that restructuring is a significantly reduced cost and effectively lower our breakeven.

So remember the point we’ve been making all along here is that we’re going to get the business back to breakeven or to profitability in this current environment. And then we know other tailwinds will eventually really improve that business that the macro industry improves. So we’re going to go asset-light on our damask business, which is a portion of our business, and we’ll leverage a long-term very dedicated partner to source that business. That’s a smart move. And remember, our cut-and-sew business is going to utilize low labor cost strategies in Asia and also in Haiti, combined with right on the border there, the DR, and really just a great labor force that we have in offering us nearshore capabilities and just having low labor costs throughout our cut-and-sew platform.

But the businesses, CHF and CUF, are some different, and we do need to maintain some significant manufacturing service customers in this competitive quick-ship world. So we’re going to have a very super plant, robust manufacturing in North Carolina for circular knits, and then our cut-and-sew covers will be low labor cost driven, and our damask business will be asset-light. So we’re making really good progress reducing that cost level and becoming much more agile to service our customers, but we do think we need in this business, some higher asset level mix to be successful in the mattress fabric side. So hopefully that answers kind of where our heads are.

Brian Gordon: Yeah. No, that’s incredibly helpful. Thank you, Iv. I have one more question, and I guess this would be for Mary Beth. Hospitality looks like it’s continuing to grow quite nicely. I was hoping you might be able to give us a little bit more color on what’s driving the growth of that business and where you see this going from here.

Mary Beth Hunsberger: Sure. Great question. So the hospitality industry in general is booming coming out of COVID. The focus on travel and experiences is outweighing purchases of things with most people, so we’re seeing the boom of hotel rooms, especially in the mid-price range, the extended stay where people are utilizing hotels more in their life than they were before. So the industry is certainly helping us. For Culp, in particular, we have a beautiful new line, a new portfolio of products specially designed for this type of hotel that is really helping us gain market share, number one; and then the second piece helping drive this business is our window treatment business. We have expanded roller shade capacity in our Burlington facility, as Iv mentioned, and really just capturing the market with a number of hotel properties that we are now approved brand partners with.

So very exciting, a lot of potential in this segment and we really hope to see this segment become a very significant portion of our business.

Brian Gordon: Thank you for that. I think you brought up a point which I hadn’t fully realized before that that gives you guys effectively a little bit more exposure to the experience economy and less dependence on what’s happening with the residential furniture per se. So I think that’s an exciting point to highlight. So thank you.

Mary Beth Hunsberger: Sure. It is definitely nice to have a portfolio within CUF that strikes both industries. So when one is up, you kind of have cover with the other. So it’s a nice mix.

Brian Gordon: Thank you. And I’ll turn it over the call to anyone else who might have a question. So thank you.

Robert Culp: Thank you, Brian. Have a great day.

Operator: And ladies and gentlemen, at this point, we’ll be concluding the question-and-answer session. I’d like to turn the floor back over to management for any closing remarks.

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

Operator: And ladies and gentlemen, with that, we’ll conclude today’s conference call. We do thank you for attending. You may now disconnect your lines.