Flexsteel Industries, Inc.

Good morning and welcome to the Flex Steel Industries first quarter of fiscal year 2020 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. 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 Donny Case, Investor Relations for Flex Steel Industries. Please go ahead.

Thank you and welcome to today's call to discuss Flex Steel Industries' first quarter of fiscal year 2020 financial results. Our earnings release, which we issued after market closed yesterday, Monday, October 28th, is available on the Investor Relations section of our website www.flexsteel.com under news and events. I am here today with Jerry Dittmer, Chief Executive Officer and Marcus Hamilton, Chief Financial Officer. On today's call, management will provide prepared remarks and then we will open the call to your questions. Before we begin, I would like to remind you that the comments on today's call will include forward-looking statements which can be identified by the use of the words such as estimate, anticipate, expect and similar phrases. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts, and assumptions, and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Such risks and uncertainties include, but are not limited to, those that are described in our most recent annual report on Form 10-K, as updated by our subsequent quarterly reports on Form 10Q and other SEC filings as applicable. These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. Additionally, management may refer to non-GAAP measures which are intended to supplement but not substitute for the most directly comparable GAAP measures. The press release available on the website contains the financial and other quantitative information to be discussed today, as well as the reconciliation of the GAAP to non-GAAP measures. And with that, I'd like to turn the call over to Jerry Dittmer. Jerry?

Good morning, and thank you for joining us today. Since our fourth quarter and fiscal 2019 year-end call, we have been busy executing the restructuring plan that we set forth last April to drive transformation and business simplification. During the first quarter of fiscal year 2020, we continued to make progress on all fronts. That said, the only material event to report in quarter one was the completed sale of the Riverside, California facility and other capital assets for net proceeds of $18.9 million. This monetization was a timely and important capital infusion that we will use to continue driving FlexDeal's transformation. As I mentioned on our last call, we have been very successful in attracting top talent to our organization for mission-critical positions across the company. This quarter, we have also strengthened our board of directors, and I am very pleased to welcome two new members who have impressive credentials in major areas of importance to us. Charlie Idle has served as CEO, COO, and Chairman of four public companies, as well as nine years in leadership roles at Simmons Bedding Company. His proven leadership as a change agent and deep understanding of our industry will be a valuable asset to us. Matt Kness is well respected as an innovator, operator, and strategist in the digital, consumer, and retail industries. His acknowledged leadership in the e-commerce space is especially relevant to guiding our strategy in this important channel. Matt's experiences include being on Walmart's global leadership team in its e-commerce U.S. division, chief strategy officer at Urban Outfitters, heading the development of its e-commerce channel, as well as now serving as the interim chairman and CEO of Lucky Brand Dungarees. As you can imagine, there's a tremendous competition in the corporate world to attract top board members. So we are very excited that Charlie and Matt could see Flexsteel's potential and contribute their talents and insight to transforming our company. We are very confident that we are on the right path with the right people, even with the extremely strong headwinds that many of our industry are facing. With our high exposure to China, the 25% tariff is greatly pressuring both our top and bottom lines. Outside of our self-driven initiatives where we continue to make good progress, unfortunately, we are in reactive mode on tariffs. We have a plan, but it will take some time to bear fruit. Like others in our industry, we want to move business out of China. This has resulted in a stampede to Vietnam and to a lesser degree to other Southeast Asian countries, causing labor shortages, stresses on distribution and logistics, as well as basic infrastructure capabilities such as ports and highways. This challenges the speed of execution in which Flixsteel can pivot its supply chain without putting our customers' business at risk of delivery disruption or potential quality issues. All of that said, We will continue to be as aggressive as possible to reposition the supply chain. With our China import volume down approximately 18% in units in the quarter, the tariff has caused unmistakable damage to our business. Switching gears to e-commerce, we are seeing positive signs of recovery in our e-commerce channel as sales were up over 5% sequentially in the first quarter versus the fourth quarter of last year. This is on the back of a fourth quarter which saw an approximate 24% increase in sales sequentially over the third quarter. There's still work to unlock the full potential of this important channel, and I want to see positive sequential comps turn into positive year-over-year comps before I will feel like we are back on track. In the first quarter, we've been working on a lot of moving pieces that will soon fall into place. As I said earlier, we will be able to discuss them in more detail as they unfold. But rest assured, we are going big and broad and fast to make them happen. Now I will turn the call over to Marcus to review our financial results and give you some more color on operations.