All right. Hello, everyone, and thank you all for joining us during the Lytham Partners 2024 Investor Select Conference. My name is Robert Blum, Managing Partner of Lytham Partners. During this presentation and fireside chat webcast, I'm excited to welcome Flexsteel Industries, ticker symbol FLXS, on the NASDAQ. Joining us today from the company is Jerry Dittmer, company's Chief Executive Officer, and Derek Schmidt, the company's President. Before we begin, I wanna remind everyone that management is available for one-on-one meetings throughout the conference here today. If you've not already signed up and would like to schedule a one-on-one, you can send me an email, that's blum@lythampartners.com. You can visit our website lythampartners.com/select2024. From there, you can click on the investor registration tab and make a one-on-one selection. With that said, gentlemen, I know we have a few slides that we wanna run through, before we dive into questions. So, Jerry, let me turn the floor over to you, and then we'll jump into things when you're finished. Go ahead and please proceed. Thanks, Robert. Before we begin, I'd like to remind you that the comments on today's presentation will include forward-looking statements as described on this page. This presentation can be referenced in its entirety on our website, www.flexsteel.com. We'll start with a quick company overview. Flexsteel was founded in the late 1800s and is one of the top 10 furniture manufacturers in the U.S., employing over 1,700 team members. We have a diverse hybrid supply chain, with roughly 50% of sales manufactured in North America by Flexsteel, and the other 50% supported by globally sourced products. Our 5 manufacturing sites and 3 distribution centers efficiently support all major U.S. markets and have ample capacity to support future growth without major investment. In our current fiscal year, which ends June 30, 2024, we expect revenue of $403 million-$413 million, which represents approximately a 2%-5% growth in an industry that has seen sizable decline over the past 12 months. We believe our growth strategies are working and enabling us to gain share in a difficult environment. From a product perspective, Flexsteel provides a full suite of solutions to address consumer needs in every major room in a home or apartment. That said, where we excel is in the primary living areas, such as a living room, a basement, a rec room, a great room, which accounts for 85% of our estimated fiscal year 2024 sales. The big growth opportunity for us from a product view is expanding into further penetrating other areas of the home, like the bedroom, dining, storage, outdoor, and health and wellness, and you'll hear more about those in a bit. We currently go to market through three primary brands: Flexsteel, Charisma, and Homestyles, and two new sub-brands, Flex, our small parcel, contemporary modular furniture solution, and Zecliner, our new sleep solutions recliner. The multi-brand approach allows us to tailor solutions to specific consumer needs and effectively win in multiple market segments. Consumer demographics are obviously changing with generational shift, so we are expanding and repositioning our brand portfolio, which I just described, to meet these changing consumer needs. We are extending the Flexsteel brand into more modern style and lower price points to appeal to younger consumers. We also launched both Flex and Charisma in the past few years to address needs of younger generation, and we continue to invest in Homestyles as a good quality, value-oriented, e-commerce solution, notably in storage solutions. In the future, we also envision adding a mid-price modern brand to our portfolio, either through internal development or through acquisition. Turning to our customer base, the breadth of our omni-channel national distribution is one of our greatest strengths. A good majority of our sales go through independent furniture retailers, of which we do business with over 1,400. This channel is of vital importance, and we are competing well, gaining share, and aligned with the right partners for long-term growth. Our growth opportunity is to expand beyond the independent furniture retail channel. We have long-standing relationships with top e-tailers, like Amazon and Wayfair, through our Homestyles brand, and we are now leveraging those relationships to sell our other brands, like Flexsteel, Flex, and Charisma. In the past, we've also developed strong partnerships with Costco and the TJX Companies and are growing profitably with these customers. Lastly, we're experimenting with our own direct-to-consumer site. While this is expected to remain a very small portion of sales in the near term, these sites do complement our core selling channels and will help us build new direct-to-consumer capabilities for longer-term growth. With that, I'll now turn the call over to Derek. Thanks, Jerry. You know, differentiation is important in a business model. The way Flexsteel differentiates itself is by providing superior value through compelling designs with unmatched quality, comfort, and durability. And the source of that differentiation is derived from innovation. Some examples, number 1, our patented Blue Steel Spring. Secondly, our patented quick assembly, no tools required connection system on our new product, Flex. And thirdly, our unique combination of technology and material innovation that achieves superior sleep results with our new Zecliner product. We are committed to driving new innovation that is relevant to consumer needs as a key source of our future growth. From a top-line perspective, we are winning in a difficult environment, as Jerry alluded to earlier, because of our growth strategies that Jerry also outlined. To give you a contextual perspective, home furnishing retail sales have been down year over year, 11 consecutive months out of the last 12, largely due to consumer spending shift towards experiences and away from things like furniture, appliances, and electronics. Despite these challenging conditions, which we expect to continue likely for the next 12 months, we delivered 7.5% year-over-year growth in the Q2, and we are forecasting growth to continue over the next 6 months, with 2%-7% growth anticipated in our Q3 and 1%-6% growth anticipated in our Q4. We also have a solid margin improvement momentum and expect to double operating margins here this year compared to prior year. And we're pretty confident that we can extend this trajectory into fiscal year 2025 and beyond. There's really three key drivers to this profit improvement. First, operationally, we're executing really well. The team is driving meaningful cost savings and continuous improvement, and we believe that's sustainable. Second, we continue to leverage new product launches with higher margin profiles than the overall portfolio average, to extend profitability over time. And lastly, sales operating leverage. Jerry noted earlier, we have ample capacity both in manufacturing and DCs to support pretty sizable growth over the next couple of years without minimum investment. So we feel like we should get some pretty significant operating leverage as we grow the top line. And then when we start to think about cash flow, we're anticipating generating pretty sizable free cash flow here for the foreseeable future and strengthening our balance sheet. Capital requirements are relatively low in this business. It's labor intensive, not capital intensive, and as we mentioned earlier, we have ample manufacturing DC capacity to support growth without any major investment, which is supporting our free cash flow forecast also going forward. Then lastly, from a capital allocation standpoint, first we expect that we'll be debt-free within the next nine months. So continue to strengthen the balance sheet, accumulate cash, and we believe that we're gonna generate ample operating cash going forward to reinvest in growth, and that includes acquisitions, and then return capital to shareholders both through dividends and share buybacks. If you look at our track record over the last five years, we've returned almost $90 million to shareholders. So I think we've got a demonstrated history of disciplined capital allocation. With that, as a summary kind of overview, we'll wrap it up and take any questions. Robert, back to you. Yeah, no, I, I appreciate that. Yeah, there we go. Pull the screen down. Let's, let's dive into a couple of the, the points on each of the slides that you that you walked through there. Let's start with kind of how it is that you sell. Again, historically, kind of brick-and-mortar, expanding into some of the e-tailers, the big box retailers. What does... If, if we were to look out here a couple of years, how dramatic of a shift do we anticipate that sort of distribution breakdown looking over the next few years? Is, is it gonna be significant, or is it just gonna be sort of a rising tide across the board there? How, how, how do you sort of envision that going forward? And my belief is we'll see some growth, Robert, in all those. I mean, those 1,400 dealers with 2,700 locations, it is really the core markets we're in. And those core markets, especially in what's called the Top 100 in the industry, we continue to see really, really good growth in that. What we do is we're out trying to gain share. How we know we gain share is by placements on the floors. So if we sit there and say that, "Hey, we just picked up three more placements," and basically it's room on the floor, much like a shelf in a grocery store or something, and we continue to see that in a lot of different places. Our belief is we'll continue to grow in that area, and it's obviously, it's a big part of our business now, but it's not like it's gonna go down. We think we can continue to grow there. We also think we will continue to expand our distribution. We mentioned the TJX Companies and Costco. In fact, we were just mentioned on a Costco call today as their one of their growth vehicles in furniture, so it's pretty exciting for us. And, so but there's a lot of good things going on there, and that is an expansion for us and it's some new areas for us. The other area would be just with, and Derek talked a little bit about it, too, is with younger consumers where we can get into other places. Can we get into other categories? Can we get into, to dining in a bigger way? Can we get into outdoor furniture in a bigger way? We talked about our, our health and wellness with the Zecliner, so a lot of good areas for us to grow there. But we think that it won't be, like, at the expense of one area. Our belief is we can continue to grow in all these areas. Okay. Maybe talking about your customers, right? You've talked about wanting to move towards these growth areas. You know, but at the moment, 85% or thereabouts, I think, of your business is sort of Baby Boomers and Gen X. Growth trends are Millennials, Gen Z. You know, what is it from a operational perspective that you're doing to attract them? Is it just marketing? Is it social? Is it... You know, what are the different activities that you're doing to try to attract that younger growth consumer? Yeah, I think it's part of all of what you just articulated, Robert. So the good thing is we're intending on going to market through multiple brands, and each of those brands are targeted and tuned and tailored towards, you know, a unique set of consumer needs. So as Jerry kind of outlined, we've got the Flexsteel brand that's been wildly successful, been a bit more traditional in style, and so we're extending that brand into more modern styles at lower price points, again, to appeal to a younger consumer. At the same time, we launched a new Charisma brand, which is even lower price point. It's still a great value. Doesn't necessarily have the, the premium, say, quality that a Flexsteel brand would, but relative to its competitors at that price point, it's superior quality and comfort, again, with more modern designs, et cetera, that's appealing to a younger consumer. And then we've got this new Flex brand, which is, it's modular. It flexes and it adapts as people's lives change, whether that's they start an apartment and they migrate to a, you know, a first home. It's modular. It kind of changes with their lifestyle. Again, that's an important kind of value proposition to younger consumers. So multi-branded approach is number one in terms of how we're appealing to certainly younger consumers, and then how we generate that demand and how we engage with those consumers is through all those vehicles that you mentioned earlier, whether it be social media, et cetera. But again, we're approaching this opportunity in the market through a multi-branded lens. Okay. Another sort of growth area that you talked about here is moving. You know, you excel, as I think the word you said, in the great room or the rec room here, but looking to expand into some other areas, dining, et cetera. How difficult of a leap is that? Is it something that requires a different distribution base? Is it a different customer? What sort of are the activities, some of the operational initiatives that you guys are undertaking to make that entry into these other areas successful? Yeah. So today, the 85% that's in, you know, the living spaces throughout a home are what we do best. With that said, we are in the dining room today, we are in the bedrooms today. It's really not that we're gonna start from scratch. It's really expanding out. We've got, we've got, some new capabilities in our sourcing. We've got a lot of really great partners, some from our Homestyles brand, some from our existing Flexsteel, and a lot of new ones. A lot of it's just resourcing and putting more people there. We have the infrastructure both in Asia, in Eastern Europe, in the U.S. with our distribution centers to handle most of this volume, and it's just one that we're gonna be focusing on more with the right talent. Okay, perfect. You know, comment that was made there, I think it was, what was it? 11 of the last 12 months, sort of the home furnishings macros have been in a decline. You guys have significantly bucked that trend there. What's your view into your guidance suggests that you're gonna continue that, but what's your view into sort of the macro outlook there for the broader industry? I think in the near term, Robert, it's gonna continue to be choppy. So if you think about the dynamics that occurred during the pandemic, people stayed at home, they invested in their home, and so you saw all this demand for furniture and other home-related things really get pushed ahead during the pandemic. And what we're seeing now is kind of an unwind of that. People are spending more of their money on vacationing and dining out, and those experiences that they didn't necessarily spend money at during the peak of the pandemic. Our belief is that unwind probably still has another 12 months before we get to maybe a more normal mix of consumer spending on experiences and things. So our view is next 12 months, choppy for the industry. But thinking about the long term, we're really, really, you know, encouraged by what the outlook is long term, because there's three primary drivers that we believe are gonna drive healthy long-term growth for furniture. The first one, which we kind of talked about, is this, this shift in, in demographics. Younger consumers, Gen Z, Millennials, continue to make up a larger portion of, of purchasing power, for furniture buyers. The things that they like and they want are different than, say, an older generation. That churn will create, demand kind of naturally.... The second big driver of the long-term growth for the industry is, is kind of domestic migration. So when people move from house A to house B, typically the space is different, and there's a need to potentially outfit it with new furniture. What we saw in the pandemic is, people started moving from state to state. As remote working has been embraced, we continue to see that trend. That generates furniture demand, which is similar to the third kind of macro driver, which is housing, new housing demand. Housing production, I think you can look at lots of metrics, has lagged household formation and population growth, and so we believe that there's a strong multi-year run here for housing. Again, that's gonna generate, you know, demand for furniture. So we're optimistic and encouraged by the overall long-term outlook, so we're doing the right things to gain share and grow in a difficult market. You know, as we look forward, I think there's even bigger growth opportunities if we can continue to position ourselves competitively to continue to outgrow the market in what I would argue is a more positive environment. Right. You know, I, something that you, you've mentioned here a couple of times, whether, you know, specifically almost as it pertains to the market, choppiness, right? COVID-related issues, some of the other things, sounds like, you know, you gave some narratives on where you think that's at. Specifically, looking at Flexsteel here over the last few years, why is it that maybe some of the choppiness that we saw in the past is not sort of to be expected going forward here? From a Flexsteel standpoint, we will see that same choppiness. We're just handling it differently. So we're out. If our retailers are down, that doesn't mean we're gonna be down in that retailer. That's why I mentioned earlier, we're out, we're trying to take floor placement. We're out, we're trying to get more of our product in any given store. Same thing, we're also seeing that where we're going out in some of the new areas that Derek talked about with younger consumers. We're also, you know, the TJX and the Costcos are newer areas for us to go into. So we think some of that choppiness, even if it's in all of those, our belief is we can take a larger share in all those, and that's one of the main reasons we think we'll continue to see this growth trajectory. I think, too, I'll add to that, Robert. I think the choppiness that Jerry alluded to won't be as nearly as volatile as it was the last, say, three, four years. I mean, we went, the industry went through this massive demand spike when the pandemic hit, and then there was all this disruption around global supply chain, additional costs, rising inflation, and then we've seen, you know, a big demand dip. I think that level of volatility, we're not necessarily gonna see kind of going forward, and it was that volatility that I think led to, you know, some ups and downs in terms of our results. There is gonna be choppiness, but I think it's gonna be really manageable choppiness, and I think we're already demonstrating that we can perform well in that type of environment going forward. Right. Well, to that, obviously, the proof is the numbers, right? The numbers that you discussed there, I think it was January eleventh, you pre-announced, right? Q2 fiscal 2024 sales up 7.5%, again, sort of above the guidance rate. Your margins were up. I think you did a good job sort of talking through some of the rationales on OpEx. But is there anything... Or on the operating margins, rather, you know, from, I think it was just sort of sales leverage, higher margin products. Is there anything else that you see as sort of key drivers to step change, improvements in operating margins going forward, that maybe hasn't been thought about, or maybe it's something that you're looking a year or two out? Yeah, I think it's the same drivers, but maybe the relative contribution of those drivers changes. As you heard from both Jerry and I, I mean, we're focused on growth. We believe that there's a lot of different markets that we have a right to win in. We've got the competitive advantages to actually succeed in those markets, and we believe we can grow much faster than the industry over multiple years. So when you combine that, the operating leverage from the top-line growth, with the fact that we've established higher, you know, growth margin expectations for new products, I think going forward, those are gonna be the two biggest drivers of continued operating margin expansion. Right. From a working capital perspective here, right? You've brought down inventories substantially already this year. You've sort of been able to accomplish that without, it appears, any impact to customer service levels. You know, what is sort of the key drivers from an inventory reduction standpoint? Is this sustainable on a go-forward basis, or are there some sort of ebbs and flows that are gonna normalize themselves out here over the next 12-24 months? Yeah, I can I'll take a first crack at it, and then Jerry can add anything. But we've made some, I think, you know, systemic changes in our business model that has allowed us and enabled us to reduce inventories while still you know, managing to exceptional service levels with our customers. If you're to go back before the pandemic, we're, you know, our mix of business was 70% globally sourced, 30% domestic... as you can imagine, I mean, lead times from globally sourced product are much longer, and so we have to carry kind of more safety stock. Now we're at a 50/50 balance, so that's enabled us to bring inventories down. At the same time, we've reduced complexity within our own network. We have, you know, one less DC than we did, you know, several years ago. So the reduced number of nodes and network complexity, again, allows us to concentrate inventory, fewer locations, and get better velocity. And then I think, you know, just the stabilization of kind of demand, it allows us to better forecast and kind of optimize inventories. And I think that probably if I were gonna add a fourth thing, is the head of our global sourcing group has done a great job working with our partners, you know, over in Asia to reduce lead times, and so we can reduce safety stock. So again, those are the four drivers. So we've been able to deliver, I think, really great results in terms of inventory reduction and absolutely no impact on customer service levels. Right. You've got about five minutes here left, I think. Two maybe final topics. First, allocation priorities for cash, right? Strong cash flows, talked about paying down debt. What is sort of the priorities here? And maybe as sort of a second question, what sort of becomes the future investments that might be needed to support all of the various growth initiatives that you've talked about here? I think so, as I mentioned earlier, I mean, we're forecasting at this point to be debt-free kind of within the next nine months. And as I also suggested earlier, this is a business that can generate a lot of cash, and we're growth-oriented. So some of the areas that Jerry mentioned earlier around, like, you know, we want to expand into outdoor. We wanna potentially launch a mid-price kind of modern brand. Those are all potential candidates for an acquisition. So, we really, first and foremost, wanna invest in growth, both organically and acquisitively. But we're disciplined. We're only gonna, you know, deploy capital against an acquisition if we got confidence it's gonna return ROI, you know, above our cost of capital. And if it doesn't, then we're gonna allocate that cash back to shareholders, either through, you know, dividends or share buybacks. And as I noted earlier, I think we've got a good track record of doing that, so we're good stewards of capital allocation. Perfect. The primary focus here is growth going forward. Fantastic. All right, well, look, I know we're kind of coming up on the end of the time. I greatly appreciate the participation in the conference here today. I guess, are there any sort of final comments or statements that you wanted to leave with folks before we wrap things up here today? No, we appreciate Robert your time and Lytham Partners giving us an opportunity to chat with you for a little bit. If you do have any your folks who would love to reach out to him, obviously you can pass them on to us. We'd love to talk to him. We're really excited about the future of Flexsteel. It's a 130-year-old company, and the future's all in front of us. So we're really excited, and again, thanks for your time today. Fantastic. Well, Jerry, Derek, thank you very much for your time today. Certainly found that very informative. I believe our audience will as well. Before we wrap it up, just two quick reminders to everyone out there. As Jerry just mentioned, if you've not already signed up for a one-on-one, would like to schedule a meeting, you can email me, blum@lythampartners.com. I will get that taken care of for you as quickly as possible. And then lastly, we have a number of additional fireside chats coming up throughout the day here today. You can visit the homepage there at lythampartners.com/select2024. Click on that Presentations tab in the top left corner, and that will take you there. So gentlemen, thank you once again today. We hope you enjoy the conference.