Good morning, and welcome to the Culp, Inc. First Quarter Fiscal 2024 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing Star, then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, please press star, then one. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Dru Anderson. Please go ahead. Thank you. Good morning, and welcome to the Culp conference call to review the company's results for the first quarter of fiscal 2024. 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. I will now turn the call over to Iv Culp, President and Chief Executive Officer of Culp. Please go ahead, Iv. Thank you, Dru, and good morning, everyone, and thank you 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, Chief Financial Officer, Boyd Chumbley, President of our Upholstery Fabrics business, and Tommy Bruno, President of our mattress fabrics business. So today, I'll begin the call with some detailed comments, including a discussion of key points and topics for the quarter and for both businesses, as well as priorities as we look ahead. After that, Ken will review the financial results for the quarter, and I will then briefly review our business outlook for the second quarter of fiscal 2024, and we will then take your questions. Regarding the current state of our business and the overall furniture and bedding industries, I want to review some overriding themes we discussed last quarter and detail some critical actions we are continuing to execute within both businesses. I will also expand on our comments with a few important points that illustrate where Culp is today. Number one, we are encouraged by our better-than-expected operating improvement for the quarter, both sequentially and YoY, despite the ongoing industry malaise and demand softness within the two industries we service. Number two, we remain excited about the progress of our comprehensive transformation within our CHF mattress fabrics business, and we are pleased to be gaining market position in the face of some contraction in the domestic mattress industry. Number 3, although market conditions are also pressuring the residential home furnishings industry, our Upholstery Fabrics business has remained profitable despite these pressures, and demand remains quite solid in our growing hospitality business. Number 4, we are continuing our diligent focus on prudent financial management, including maintaining a strong balance sheet and ensuring a strategic level of working capital. Going to theme number 1, our results for the first quarter reflected better-than-expected operating performance, both sequentially and YoY, even as industry demand remained soft, especially in residential home furnishings. However, our operating performance improved despite pressure on sales due to internal improvements within both businesses. The strong sequential and YoY improvement in our mattress fabrics business, a 45% improvement sequentially and a 52% improvement YoY, was supported by the rollout of new fabric and cover placements during the period. As we have commented for some time now, these new programs are priced in line with current raw material and operational costs, and we expect these new programs to grow Culp Home Fashions' market position in fiscal 2024. The operating improvement in the CHF business was also driven by our ongoing focus on operational efficiencies and cost reduction initiatives across our locations, and I will expand more on this shortly. I do want to emphasize that mattress fabric sales for the quarter were flat compared to the prior year period, which is a solid performance in the face of difficult industry conditions and certainly reflects our growing position in the market. For the Upholstery Fabrics segment, we saw operational improvements and fixed cost savings, along with solid demand in our hospitality contract fabric business and improvement for Read Window.... But as expected, sales within our residential fabrics business were lower as compared to the first quarter of last fiscal year, which notably was a strong quarter due to a lift in sales following pandemic-related shutdowns in China and the quick recovery that the upholstery furniture industry was experiencing at that time. Our sales for residential fabrics this quarter were certainly affected by the ongoing softness in the home furnishings industry and shifting consumer spending trends following the pandemic stay-at-home surge. While we do understand that the furniture and bedding environment remains challenged, we will continue to manage the aspects of our business we can control, taking necessary steps to withstand current market conditions and position our business for renewed growth. As detailed in earlier quarters, we have made platform changes to our cut- and- sew profile on both mattress fabrics and upholstery, and the cost benefits from these adjustments are coming to bear. We are also focused on managing our operational efficiencies across our fabric platforms and therefore lowering overall costs. Beyond Q1, we believe our continuing recovery will be led by our Mattress Fabrics segment, where our execution of a comprehensive transformation plan is laying the foundation for steady improvement. I'll expand much more on the mattress fabrics transformation plan momentarily, but our sequential and YoY operating improvement reflects some of these initiatives we have undertaken internally to manage our business. While this challenging industry environment is expected to continue for some time, our market position is strong and improving, and we believe we are poised for a considerably better second half of fiscal 2024, and that's November to April by the calendar, with a return to operating profitability in this fiscal year. Regardless of the current demand backdrop, we expect continued progress in improving our operating results. But we understand the speed of our recovery may be affected by overall industry trends. We would like to see some macro tailwinds to allow recovery to happen quicker. We are well prepared for the long term, and our strong leadership teams, innovative product offerings, creative designs, and a resilient global manufacturing and sourcing platform will support us into the future, especially when the environment improves. The second important thing to expand on is the business transformation update within Culp Home Fashions, our Mattress Fabrics segment, under the leadership of Division President Tommy Bruno, along with his restructured management team. Our transformation plan focuses on long-term improvement in every facet of the business, including quality, sales, marketing, and operational processes, supply chain optimization, employee engagement, and organizational management structure. As we've said, we believe CHF improvement is our best short-term opportunity for recovery and growth from our current levels. Tommy and the CHF management team remain focused on operational excellence, as well as balancing our product mix to proper volumes and steady run schedules. Even after our previous cost-saving adjustment to our domestic North Carolina cut- and- sew capabilities, we continue with a robust global platform featuring manufacturing and sourcing capabilities in six countries: the U.S., Canada, Turkey, Haiti, China, and Vietnam. Our combination of onshore, nearshore, and offshore options provide our mattress fabric and sewn cover customers with the agility and value they need for their business. Combining this platform with our expertise in design and product innovation, we are making excellent progress for sustainable improvement in fiscal 2024. Overall, as we've mentioned, the domestic mattress industry is experiencing significant contraction, with industry reports showing aggregate reductions of 10% in dollars and 20% in units through the first six months of calendar 2023. But notably, again, CHF revenue over the same general period has remained flat, indicating that CHF has made gains with customers in a difficult market environment. While the mattress industry slowness may remain for some period, we still expect to improve our performance through new programs and improved operations. Our recovery in CHF is not fully dependent on the industry environment, and assuming our sales volumes in fiscal 2024 do not materially fall below the prior year, we expect to see significant progress with steady, sustainable improvement in CHF this year and beyond. The third important theme is the continued profitability of Culp Upholstery Fabrics. I've detailed just now a lot of excitement about CHF, but it is equally as important to note the steady performance of CUF. Division President Boyd Chumbley and his strong leadership team have managed effectively in the midst of abnormal, tumultuous times. CUF has maintained profitability with a focus on improving operational efficiencies and proactively taking strategic action to reduce our cost structure to align with demand levels, while also always supporting our customers with our flexible global platform. I believe CUF has best-in-class in servicing our customers, and our design and product excellence, combined with an effective global platform, has led the way. Our improved operating costs within CUF began with the restructuring of our cut-and-sew upholstery kit platform in China during the second quarter of last fiscal year, and then continued with the rationalization of our upholstery cut-and-sew platform in Haiti near the end of last fiscal year. We took further action in Haiti this quarter to discontinue production of cut-and-sew upholstery kits at this location based on demand softness. This step further reduces CUF's cost structure and avoids losses that would have otherwise been incurred, while allowing this business to continue to support customers through its strong Asian supply chain. Notably, through these actions and other improvements in operational efficiencies, CUF has been effective in lowering its overall cost levels to remain profitable in the face of reduced demand. Just one quick aside, I do want to again reiterate that while we have discontinued production of upholstery cut-and-sew kits in Haiti, our Haiti cut-and-sew platform for mattress covers remains an integral part of our strategic plan. Now, turning back to CUF, we are also adjusting our global platform for the fabrics portion of our Upholstery Fabrics business. As we look to provide options within our supply chain in China, Vietnam, and multiple other new countries. Customer service is a hallmark for Culp, and a diversified platform provides improved risk management and a more stable supply base. Of note, our hospitality contract business accounted for 33% of segment sales for the first quarter. While this percentage is higher than normal due to lower residential sales, it does reflect the ongoing solid performance of our hospitality contract business, as well as its importance to our overall strategy of product diversification for this segment. While the tough demand environment may continue for some time, Culp Upholstery Fabrics remains well positioned for the long term, with a scalable global platform and innovative product offerings, including our popular portfolio of LiveSmart performance products and our new product technologies. We are also beginning to see increases in newly written fabric orders, and we believe we will see the benefit from this in the second half of fiscal 2024. Similar to the first quarter, we also expect the Upholstery Fabric segment will continue to benefit Culp through the remainder of fiscal 2024, with improved inventory management, a solid hospitality contract fabric business, improvement in our Read Window business, and a rationalized cut-and-sew platform. And lastly, I'll shift to the fourth theme, which is constant focus on prudent financial management, including maintaining a strong balance sheet and ensuring a strategic level of working capital. I'm very pleased with the management team for its continued effort in maintaining our cash and total liquidity position. We ended the quarter with $16.8 million in cash and no outstanding borrowings, and we had total liquidity of $42.3 million, consisting of cash and borrowing availability under our domestic credit facility. We are continuing to carefully manage inventory against current demand levels, and we are strategically investing in our business. I have repeatedly, through my remarks, mentioned the softness within our industries, and that has been most evident to us by several recent closures within the furniture industry. Remember, this is on the heels of several bankruptcies we've witnessed in the last year as well. We are seeing some suppliers, competitors, and customers endure financial difficulty, and it gives us more appreciation for our financial stability and its importance to our future. We are managing accounts receivable effectively, and we do not have any material exposure with respect to the recent closures. I am grateful to our credit teams and divisional management for how we conduct Culp's business with a lens towards the future and careful partner selection. We fully recognize that the management of Culp's strong balance sheet is a critical initiative, and we believe we are well positioned to focus on investing and optimizing our global manufacturing platform and growing profitable sales. I'll now turn the call over to Ken, who will review the financial results for the quarter, and then I'll briefly review the outlook for the second quarter of this fiscal year. Ken? Thanks, Iv. Here are the financial highlights for the first quarter. Starting with consolidated results, net sales were $56.7 million, down 9.5% compared with the prior year period, driven almost entirely by a decline in upholstery fabric sales. The company reported a loss from operations of $3.1 million, which included $517,000 in mostly non-cash restructuring-related charges associated with the discontinued production of cut-and-sew upholstery kits in Haiti during the quarter, as Dru discussed earlier. Excluding this $517,000, adjusted loss from operations for the quarter was $2.6 million, a better-than-expected improvement as compared with a loss from operations of $4.7 million for the prior year period, and a loss from operations of $4 million for the fourth quarter of last fiscal year. Net loss for the first quarter was $3.3 million, or $0.27 per diluted share, compared with a net loss of $5.7 million, or $0.47 per diluted share for the prior year period. Net loss for the quarter included the $517,000 in restructuring-related charges I just mentioned. Our overall operating performance for the first quarter, as compared to the prior year period, was positively affected by improved margins on new products, improvement in operating efficiencies and lower overhead costs in both segments, a higher contribution from hospitality fabrics and the Read Window business, and a more favorable foreign exchange rate associated with China. This YoY improvement in operating performance was partially offset by margin pressures due to lower sales and higher SG&A expense. SG&A expense was higher than last year due to increased compensation expense, most related to wage inflation and higher incentive compensation or pools, higher professional fees, and increased sampling expense driven by new product rollouts in both businesses. Importantly, with regard to SG&A expense, as business conditions improve and demand for new products rise, we believe that we'll get significant leverage from the increased sales. Adjusted EBITDA for the period was close to breakeven at - $416,000, as compared to Adjusted EBITDA of - $2.7 million for the prior year period. The effective income tax rate for the first quarter of this fiscal year was a - 26.5%, compared with a - 18.7% for the same period a year ago. Our effective income tax rate for the quarter was impacted by the company's mix of earnings between our U.S. and foreign subsidiaries, with an operating loss in the U.S., while China and Canada generated income that was taxed at higher rate as compared to the U.S. Our cash income tax payments totaled $1.1 million for the first quarter of this fiscal year, and based on current expectations, we currently plan for cash income tax payments of approximately $3.2 million for the entire fiscal 2024 year. Importantly, our estimated cash income tax payments for fiscal 2024 are management's current projections only and can be affected by a variety of factors over the course of the year. Now let's take a look at our business segments. For the Mattress Fabrics segment, sales for the first quarter were $29.2 million, down 0.5% compared to last year's first quarter, outperforming overall industry trends. Operating loss for the quarter was $1.4 million, a 52% improvement compared to an operating loss of $2.9 million a year ago. This operating improvement was driven by new placements priced in line with current costs, improvements in operating efficiencies, and lower costs resulting from the restructuring and rationalization of this segment's mattress cover platform initiated last fiscal year, offset somewhat by higher SG&A expense. For the upholstery fabric segment, sales for this first quarter were $27.4 million, down 17.4% over the prior year period, which was a strong quarter due to a lift in sales following pandemic-related shutdowns in China. Sales for our residential fabric business for the quarter were affected by ongoing softness in the residential home furnishings industry. However, demand remained solid in our upholstery, in our hospitality contract business during the first quarter, with sales for this business accounting for approximately 33% of the upholstery fabric segment's total sales. Operating income and operating margin for the quarter were $1.3 million and 4.8%, 145% and 320 basis point improvement, respectively, compared with the prior year period. This operating performance was positively affected by a higher contribution from hospitality fabrics and Read Window business, lower costs resulting from the restructuring of this segment's cut- and- sew platforms during earlier periods, and a more favorable foreign exchange rate associated with this segment's operations in China, as well as other operational improvements. These factors were partially offset by lower residential fabric sales and higher SG&A during the period. Now I'll turn to the balance sheet. We reported $16.8 million in total cash and no outstanding debt as of the end of the first quarter. Cash flow from operations and free cash flow were - $4.4 million and - $4.2 million, respectively, for the first three months of this fiscal year. Our cash flow from operations and free cash flow during the period were affected by an operating loss and investments in working capital and capital expenditures, most related to the mattress fabrics transformation plan. Capital expenditures for the first three months of this fiscal year were $513,000. Based on current expectations, capital spending for this fiscal year is projected in the range of $5 million-$6 million and will center mostly on maintenance CapEx and quick payback projects focused on improving quality and efficiency in our mattress fabrics business. Based on current expectations, depreciation for this fiscal year is expected to be approximately $7 million. With respect to liquidity, as of the end of the first quarter, we had $42.3 million, consisting of $16.8 million in total cash and $25.5 million in borrowing availability under our asset-based domestic credit facility. Borrowing availability under this facility is based on a calculation using certain of the company's accounts receivable and inventory, determined on a monthly basis. The company did not repurchase any shares during the first quarter 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 of this fiscal year, 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'll take your questions. Iv? Thank you, Ken. Due to the continued volatility in the macro environment, we are providing only limited financial guidance for the second quarter of fiscal 2024. We expect consolidated net sales for the second quarter to be comparable to the second quarter of fiscal 2023... driven by further improvement in the Mattress Fabrics segment, but offset by lower residential upholstery fabric sales. We expect consolidated operating loss for the second quarter of fiscal 2024, that is in the range of $2.2 million-$2.6 million. A significant improvement compared to the $11.9 million operating loss for the prior year period, which did include approximately $6 million relating to certain inventory impairment charges, losses from inventory closeout sales, and greater than normal inventory markdowns. Again, I will comment that we believe we are poised for a considerably better second half performance, with a return to operating profitability this fiscal year. Finally, we will continue to be laser focused on prudent financial management, with the goal of always maintaining a strong balance sheet, especially with regard to ensuring a strategic balance in our working capital. We are optimistic about Culp's future, and we know that financial stability is paramount to our success. So with that, we will now take questions. We will now begin the Q&A session. To ask a question, you may press star, then one on your touchtone phone. If you're using a speakerphone, please pick up the handset before pressing the keys. If at any time your question has been addressed, and you would like to withdraw your question, please press star, then two. Our first question comes from Anthony Lebiedzinski with Sidoti & Company. Please go ahead. Good morning, and thank you for taking the questions. So first, just a quick comment. You know, overall, perfect job of maintaining a strong balance sheet, and certainly nice to see solid gross profit gains here in the quarter. So first thing, Thank you. Yeah, sure. So first question here for CHF. So you mentioned that new placements are in line with current costs, and that's great to hear. So I guess for the quarter, can you give us just a kind of a rough breakdown between pricing and unit volumes? Would love to hear your thoughts on that. Yeah, can you start? Yeah, yeah. Anthony, I mean, we, I think we've mentioned this before. I mean, we price new products to capture the cost, and that pricing flows throughout the year. I mean, obviously, we, you know, we were right in line with sales and units were close as well, so really, wasn't a big difference at all, pretty consistent on both sides. We were building in the mattress fabrics business, Anthony, and you, you hopefully, you hear our excitement as we talk about the business. It's such a, such a strong turnaround that's underway, and we're growing dollars in units. I mean, we're a unit-driven company, so we're not gonna have success without also growing the units. So we're doing both. Got you. Understood. Okay. Okay, so, so I mean, so before COVID, I mean, the gross margin at CHF was in the mid-teens and even higher in prior years. So given the transformation underway, do you think it's reasonable that you could get back to at least double-digit segment margins sometime this fiscal year? Well, Anthony, I'll let Tommy make some comments to what he's seeing. Sure. We probably won't be as bold to tell you exactly when that's gonna happen. But in our all the investor information that we're putting out through our new deck, you know, sort of a minimum standard for our expectation in the CHF business is double-digit operating income percent, and we certainly have every intention of being at that in our intermediate future. Now, whether we can get all the way to double-digit profitability in this fiscal year, TBD, but we are expecting to return to profitability, both in the division and consolidated in this year. Tommy, anything you would add as you're just going through the process? No, I think that's a good representation of the improvement. I think, Anthony, we expect it to be sequentially higher QoQ, and with the objective of getting back to historical profitability rates. Okay, that, that sounds good. And then, for CUF, you know, the, the residential, obviously, as you call that, is softer, but, are, are you seeing any, you know, notable customers moving away from Culp, or is, is just, is that you're just seeing that customers are just ordering less across the board now? I'll let Boyd speak to that question, Anthony. Yes, Anthony. No, we're really not seeing any dramatic changes in our customer base. I think this is more just an overall industry demand situation that we're being impacted with. And of course, we have to remember, too, that for this quarter, we were comparing to an abnormally high first quarter of last year due to the pandemic. So, you know, the extreme pandemic-induced swings in demand over the last several years have made YoY comparisons difficult. But no, to answer your question, don't see that we're having any changes in our customer mix in any significant way. This is more just industry-wide demand depression at the moment. Anthony, as Boyd, Boyd has worked here with Culp for almost 40 years, and we have seen our shares of ups and downs in the residential furniture business over many, many times. We always think- Mm-hmm. And it has typically borne itself out, we gain market position in times like this. And typically, when these times pass, we find ourselves in better position, and this is no different. We believe on our side, we're actually gaining market position now. And we think it's fully driven by just the slowness in the current industry. As supply chains are adjusting, new products are being rolled out on the floor. Remember, we skipped about a year of new intros in that business for a little bit, as no one needed the relaunched retail. So as that starts to happen, we're pretty optimistic about where it's gonna go, and we noted in our script that we are now starting to see new written orders gradually increase. We are seeing optimism as we look past, probably looking past second quarter, but we do see those sales levels starting to pick back up. That's great to hear. And then, you know, last question before I turn the call over to others. I guess, probably a question for Ken. So inventory management, that has certainly been a nice source of cash, so nice job with that. So do you think you can further reduce inventories? How about cash flows? How should we think about that? Yeah, Anthony, that's. I mean, as we look to you know, grow the business on both sides, I mean, we've both teams have done a. If you look over the last six quarters, they've done a remarkable job of getting inventory down and really meeting demand. And so, as we proceed ahead into the next quarters, you know, our focus is gonna be on growing the business. And as we said in the prepared remarks, you know, balancing inventory with sales, and that's that we preach that every day. So is there some opportunity to continue to maximize efficiencies in inventory? Probably some, but right now, we've got to make sure we've got the right amount of inventory on hand to support growth. And so, but that said, we're gonna be very careful about balancing both as we grow the business. Understood. Okay, well, thank you very much, and best of luck. Thank you, Anthony. Have a great day. Happy weekend. You too. Yep. Likewise. Our next question comes from Budd Bugatch with Water Tower Research. Please go ahead. Hi, good morning. Thank you for taking my questions. First, I just want to make a comment that I know it's been a very tumultuous time for everybody. Congratulations on keeping the financial condition of Culp pretty strong, making it through these times. Thank you. I guess- Thanks, Bud. Yeah. You're welcome, and thank you. I guess the first question is, you talk about the improvements in CHF, and I guess I would love to get some color on that, maybe anecdotally, what you've done, you talk about some of the operational cost efficiencies. Do you have some examples of what that was, and maybe put some color to numbers on that? Yeah, and I'll let Tommy speak to that, Budd, because he's living it. He's living it. We're happy to have him here with us in the office and not on the plant floor. We got him. We had to pry him out from then. But, Tommy, why don't you touch on anything from your standpoint? Yeah, sure. Budd, it's really a, for us, improving our gross profit is really a combination of working on our mix, working on improving previous programs that weren't costed in line with the market conditions through COVID. As it related to operational efficiencies, we continue to really push our supply chain for best cost position on raw materials, as well as continuous improvement, quality and manufacturing efficiency initiatives in Stokesdale and in Canada. Other initiatives we're doing is making sure that we're really leveraging our global platform for efficiency and profitability and balancing those together with our manufacturing assets. And, Tommy, what can you kind of maybe characterize the importance of that? Was pricing more important than the operational efficiencies? How do you, what's the relative mix between the two? Yeah, that's a really—I don't wanna take the easy way out of this question. I would say that they're equally important, Budd, because we had some programs that weren't profitable that we had to reshift away. But we also have opportunities through a challenging COVID environment to really engage and drive operational improvement as the macro environment and raw materials opportunities have come along. Okay. So we're focused equally on both of them. And so do we think about them as 50/50 kind of improvement? You get 50% of the improved gross margin from pricing and 50% from pricing that you can finally get a hold of or get either through new programs or realigning previously unprofitably priced programs and 50% is through operational efficiencies? Yes, sir. I would characterize it as 50/50. Okay. What I get excited about, Budd, from what Tommy's working on, I agree, it's both, half and half, better pricing and better cost, cost improvement. What makes me excited watching it is the business is gradually picking up. We're doing that internally by gaining market position. We've been around this mattress business for some time, and we know our position is strong, and we're gonna have periods where demand's gonna be really high. We just hope that will start to turn a little bit to our favor, and having all these operational improvements in place will benefit us so much more when that happens. I think something he said is really important to realize: We always want to leverage our strong global options. That's gonna always be important, and if we get the right product priced-... and manufacture them in the right places. So the right things for U.S., right things for Canada, right things for Asia, right things for Haiti. That's where we really have the ability, when the cylinders start firing, to, to generate strong profit. So, really good work being done, in being prepared for the turnaround. Okay. Turning to CUF, Read is embedded within CUF. I think that's... And you said that Read, for this quarter, looked like about a third of the revenue, so somewhere around $9 million for Read. How did that compare to last year for Read in the first quarter? What was that comparison like? Yeah, Budd, this is Boyd. Last year, first quarter, we were around 25% for that, that's the total hospitality business, as opposed to our total sales, which is the way we, you know, characterize that. So, 25% last year versus 33% this year. And, that percentage was gaining throughout the year, last fiscal year. I see. And so then, on that basis, and Read's gross margin, how would you characterize that versus the fleet margin, the average margin in CUF? Yeah, Budd, this is Ken. I, you know, as we... The critical point that we made was Read had dramatic improvement YoY from last year. In fact, you know, we were at a loss last year, now we're making money. The margin is comparable to the overall margin right now for CUF. Obviously, we wanna continue to grow both as we make progress over the coming quarters, but we're just excited that that business has really improved and really contributing this year. Okay, that's great. And turning a little bit to the future now, and I know that the guidance for the second quarter in the midst of a very uncertain macro environment's been tough, and we appreciate what you did give. But if you also did say you, you're looking to make operating profitability for the second half of the year, and I'm trying to make sure I understand, is that, do you think you'll be operating profitable for all of the second half of the year, or you think you'll be operating profitable for the entire year based upon the improvements that you're seeing in the second half of the year? How do we- Yeah, the way- Look at that. Yeah, thank you, Budd. Good question. The way we're talking about that is, certainly, we aren't, because we're coming from the first couple of quarters, we aren't forecasting operating profitability for the entire year, but we do believe somewhere in that back half of our year, we'll have months and a quarter that will turn to consolidated operating profitability. We don't know if it's gonna be the end of third, going to fourth, but somewhere in the second half. And a lot of that, we aren't dependent to keep sequentially improving on the macro demand. But if that happens faster, we'll turn faster. But even without, if demand at current levels, we will have a quarter in the back half that turns profitable, most likely towards the end of the year, Budd. And so even if it does, not sufficiently to make the second half overall profitable, but just in the particular quarter in which you reach operating profitability. Is that right? Yeah, that's what. Now, we hope your first statement's right, but today, we're saying we're not saying for the whole second half. We're saying we'll turn to profitability in the second half. In the second half. Okay. And looking farther down the road, so now going from the near term, intermediate term, to a little bit of longer term, you continue to exude confidence and comfort longer term, and I think that if I got your message, it's even stronger now than it might have been even in some of the past calls. Can you kinda give us a framing of what that looks like? Tell us, tell us what we should think about success when you get to success in the longer term. Yeah, certainly, Budd. Thank you for picking up on that. We certainly understand that we're in a tough period. We're recovering from an even tougher period, but there's a lot of confidence in all of us as executive management that we see brighter times for the business. We see where we're positioned, we see our innovative products and the platform we have to service customers, and we know that our industry is generally, over our history, been a stable, slow-growing industry. We haven't been used to these ups and downs that we've had the last two, three years. That's taken a toll on our results. But as we get to some stability and the teams that we have in place operating in both divisions are really confidence inspiring. So when we look out in the beyond 2024, into 2025, 2026, I mean, we're back to double-digit operating incomes and mattress fabrics and high single-digit operating income percentages and Upholstery Fabrics. Now, and we'd like to go past that, but that's our first target to recover to. And, you know, I guess it depends on your horizon of medium- to long-term, but we would see that happening in the, in our medium term as we look out forward. Okay. So that gets us to the, to the margin side of that. And then in terms of the top line, you think you can match the industry's slow-growing, low to mid-single digit kind of growth over time, top line? Yes, sir. Yes, sir. I mean, ideally, in our best days, and we hope we can grow faster than the industry grows. That's always our goal, and, I don't see why we can't, but we certainly will stay with industry pace and see that steady growth. ... Okay. All right, and last for me, the other thing that I noticed in the quarter was, SG&A was a little bit heavier than what we were looking for, and operating expenses a little bit heavier. Maybe you can give us some color as to why that might have been and what we should expect, as we go down the road. Yeah, Budd, this is Ken. And we listed some of the reasons for the higher. Obviously, wage inflation was a part of it. We did have some higher incentive compensation accrual. You know, keep in mind, we're coming off of a very, very tough year, and the way we're looking at this year is significant improvement, so we've got some opportunity there. We also have some professional fees that, you know, just various professional fees, and this is something that both divisions had to contend with, was sampling expense. And people forget about that, but, you know, this time last year, we didn't have any, hardly any new programs, and now both teams are dealing with new, great opportunities and new rollouts, and so the sampling expense was higher. So all those reasons kind of impacted all three, the corporate account or corporate expense and divisionals. What we're excited about is that, you know, we've talked about this in the prepared remarks. As we grow the business, we've got our SG&A level right now is supporting our activities and our business models. As we grow sales, we're gonna have significant leverage opportunity to bank a lot of that profitability, and so both SG&A and fixed costs. So we've got everything ready to go. We just need that lift in sales to get that leverage. And is there an order of magnitude on the sampling costs that you're willing to share? And doesn't that go into gross margin? I mean, sampling costs would be fabric you create, or do you take out that sample cost that you can isolate and then make sure that's showing up in SG&A and operating expense? Hey, Budd. The way that we characterize our sampling cost is really as a part of our launches, so it's really a part of our commercial process of sampling, creating, doing all the development and design work relative to new programs. Okay, so it's not just the cost of the fabric you produce for the samples you produce or maybe send out to your clients, but it's the wages and the costs inside of there for the team to develop those new samples. Yeah, it's all, it's all the costs from sampling, design, and launch preparation. That winds up in operating expense. Is that right? Yes, sir. Yes. Oh, okay. Thank you. Well, again, congratulations on navigating through a challenging period. There's some in the industry that, well, they're not there anymore to do that. Thank you. Sure. Thank you very much. Thank you, Budd. Thank you. Have a good weekend. You too. This concludes our question and answer session. I would like to turn the call back over to Iv Culp for any closing remarks. 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. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.