Anthony Lebiedzinski: Good morning. And thank you for taking the questions. And likewise, it’s good to see that you guys are proactively managing your liquidity, as well. So I guess, just first just a quick housekeeping question. So I think Ken, you mentioned that there was some pricing and started to charge actions taken in the third quarter. Can you just share with us how much of that was impacted as far as the quarter here?
Ken Bowling: Well, as you know, Anthony we took, we started those pricing actions last year, and we really had him out all throughout last fiscal year. So we’re getting the benefit of having the, when you compare it to last year, the benefit of having the third and fourth quarter, third and fourth quarter increases in there. I don’t, I can’t quantify exactly what those amounts are. But they’re certainly helping. We’re trying to navigate the pricing with all the different cost measures and efficiency projects that we’ve got going on. But as compared to last year it’s definitely some tailwind there. But as we’ve said, in the past, especially on the CHF side, we did lag in our ability to keep up. So that’s one thing that, as Iv said in his remarks that with these new products, we’re hoping to really get better pricing to reflect the current market.
Iv Culp: Anthony, thank you for the question. Ken answered it well. But just a couple of — add a couple of things. As we’ve touched on a lot, we’ve been chasing price to cost in both businesses all year, and we pass on several price increases. And we have always lagged. It’s never been enough. So we’re thankful that we’re now seeing some relief in ocean freight not inland yet, but in ocean, and in raw materials, which will be a big help going forward. Certainly, it takes a little time to work through the system. But seen costs finally become, I think we can see costs maybe become a tailwind for us in the medium term. And I just want to I want to call it don’t discount our labor stabilization that I’ve touched on, getting some stability with our associates and having them trained effectively, will definitely be a cost control measure going forward.
So we have done some surcharges and increases, but we’ve lagged demand, I think that can turn for us in the back half of our year.
Anthony Lebiedzinski: Okay, that’s good to hear. So just a follow up on the labor front. So you mentioned today and your release last night about a stabilizing but inexperienced labor force. So, in your experience, I mean, what’s been a typical learning curve for new associates or like, when would be a reasonable timeframe as to when you would expect your labor force to be as efficient as they should be?
Iv Culp: Yes, good question, Anthony. And I’m glad you picked up on that, I tried to call it out. Especially for a while labor has been a big challenge for us. And as I mentioned, our North American facilities, which is primarily impacted, home fashions, some and upholstery business, too. We’ve had turnover of 35% to 40% in some locations. Now we don’t we don’t have that kind of issue in other parts of the world, but in the U.S. it’s been challenging. Today, our turnover rate is very low. And we have a lot of talented people placed in roles but they’re new. And we’re not we’re not a major skilled labor operation, but we are skilled labor and it does take some expertise to run equipment and to understand what’s acceptable and to view it and inspect it properly.
So what it just takes a little time. We typically will have, we’d like to have a month type of training for any associate and then we would say, well it may take them two or three more months to get up to what’s a normal cadence so it could easily take a quarter to get someone fully trained, doesn’t mean it can’t be productive. But to get fully trained and really start to improve, and with for many, many years, we had the benefit of a very stable, high retention labor force. And that just changed in the last year. And we’re, we’re getting back to a place where we can, we can build on some people in place, which should always have been a hallmark recall, because our people. We value that as much as our balance sheet people are so important. And we just, we got to get the right folks in the right places and give them time to succeed.
Anthony Lebiedzinski: That’s great to hear. And then. So you mentioned obviously, ocean freight costs have come down. And you’re expecting some labor stabilization. Any other costs tailwinds that you’re seeing are you expect to see raw materials?
Iv Culp: I mean, I think when we think about costs, Anthony, outside of that, certainly we’re starting to see some tailwind with raw materials. We know we got to work through supply chains. And in some cases, we have to work this mentors we’ve already built. But we are seeing raw material tailwind. And that’s the biggest portion of our cost on the CHF side. So seeing raw materials turn in a positive direction for us is very helpful.
Anthony Lebiedzinski: And three remain in cost savings we call it out.
Iv Culp: And certainly the cost savings from adjusting the cut and sew platform.
Anthony Lebiedzinski: Yes, sir. Yes. Right. Right. And as far as that, just to follow up on that. So will that be mostly SG&A and more a cost of goods as far as that $3 million number that you called out?
Ken Bowling: It’s, it’s a little bit of both. It’s just now starting. So we’re seeing some impact in Q4 and then beyond. But it’s really, it’s, it’s lease cost. That’s a big piece of it. Labor cost is a big piece of it, other fixed expenses down. So there’s just an array of different areas that, that incorporate that close to $3 million in savings.
Anthony Lebiedzinski: Got you. Okay. And then lastly, you talked about SKU rationalization and the better inventory management. Was just wondering, how quickly can you do that? And, how should we think about the significance of this?
Iv Culp: Yes, good, good question too Anthony, that’s specific to the CHF business. And we’re just trying, we have become, over time a very custom design business. And we don’t want to say no to any customers; it’s just not in our makeup. But what we can do a better job is of having a more rationalized product line with more rationalized raw materials, to be able to develop still a lot of very fashionable and exciting looks, for some segments of the market that we don’t need to develop custom. And that just as the process of designing, and then selling and marketing that project. So easy to do, just takes a little time to flush through to the market. So certainly for our bigger customers, we are always going to do things they want to do and we’ll do custom work, or some of the smaller opportunities, we need to, we need to make products of common raw material banks.
We need to make them with efficient processes, and we need to have customer commitment to take the goods. And those are all pretty much blocking and tackling things that we just need to get better at. So I’d say I mean, it’s going to take us — you’re going to see the fruits of that in FY 24 for sure. I’d like to have it goes quicker depends on how quick we get these products released and placed. And so much of what’s driving us as when we get them placed into the market. Hope that helps.
Anthony Lebiedzinski: Yes, absolutely. Well, thank you very much and best of luck.
