The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Brian Gordon - Water Tower Research LLC - Analyst
: Hey. Good morning, everyone. So my first question would be sort of about the change in guidance. And so my understanding from what you said
this morning and from the press release would be that at current demand levels, you're now kind of expecting early first quarter, maybe first half
at the latest for a return to profitability. Just want to clarify this.
Question: Brian Gordon - Water Tower Research LLC - Analyst
: Great. So it sounds like -- and switching gears a little bit here. So it sounds like you guys are definitely gaining market share with mattress and with
the hospitality and contract side of the business. Could you talk a little bit about that and maybe then also what you're seeing from a market share
perspective with upholstery in general?
Question: Brian Gordon - Water Tower Research LLC - Analyst
: So just to follow up there, so it's not just with existing customers. It sounds like there are potentially some new wins in there as well.
Question: Brian Gordon - Water Tower Research LLC - Analyst
: Yes. No, thank you for that update. It's particularly exciting to see the growth on the hospitality side. It's something like 40% of the business now
you noted in the press release. Kind of looking forward, do you see that level continuing as growth returns to the industry kind of more generally?
Question: Brian Gordon - Water Tower Research LLC - Analyst
: Yes. No, definitely. I mean, clearly, with the macro headwinds, it's challenging. But what is exciting, I think, is the share gains that you guys have
been able to generate across both of the segments and hospitality and residential on the upholstery side, too.
Question: Brian Gordon - Water Tower Research LLC - Analyst
: So I want to pivot though a little bit to some of the restructuring. So if we look back at the first wave of the restructuring that you guys announced,
that's mostly completed. But you've mentioned two things on the call this morning and on the press release that I kind of want to dig into a little
bit. First is that incremental $1 million that you guys announced. I was hoping that you could talk a little bit more about what that involves and
when those impacts might start hitting the results?
Question: Brian Gordon - Water Tower Research LLC - Analyst
: Okay. So the $1 million, we'll start seeing that kicking in, in the fourth quarter?
Question: Brian Gordon - Water Tower Research LLC - Analyst
: And so I know you're saying it's a little bit early, but could you talk about what this additional restructuring might entail both in terms of like what
are you guys looking at across the business and timing and magnitude, if any of that's available at this point?
Question: Brian Gordon - Water Tower Research LLC - Analyst
: Okay. That is exciting and definitely looking forward to hearing more as you kind of announce that. My apologies. So is this kind of more like
something that you're expecting to see in the first half?
Question: Brian Gordon - Water Tower Research LLC - Analyst
: Okay. Excellent. I want to ask a little bit, though, additionally about the tariffs and what the potential opportunities are there for you? Because I
think it's -- well, so first, kind of what percentage of production right now would be affected by tariffs. And obviously, there is a lot of volatility there
on the policy side. But then how does this position Culp in particular, to maybe potentially gain share?
Question: Brian Gordon - Water Tower Research LLC - Analyst
: So I was going to follow up on that. Is that going to be more of like a surcharge? Or how are you actually thinking about handling any of these
tariffs?
Question: Brian Gordon - Water Tower Research LLC - Analyst
: Got it. One final question, I think, for this morning. When you're looking at consolidation, especially on the mattress side, do you see it more in
terms of like risk to the business or more in terms of opportunities for the business?
Question: Brian Gordon - Water Tower Research LLC - Analyst
: Exactly, exactly. That's the question.
Question: Brian Gordon - Water Tower Research LLC - Analyst
: Great. And that's all that I have for this morning. So good luck with the quarter.
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