Culp, Inc.

Good day, and welcome to the CULP's fourth quarter 2021 earnings conference call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Ms. True Anderson. Please go ahead, ma'am.

Thank you. Good morning, and welcome to the CULP conference call to review the company's results for the fourth quarter in fiscal 2021. 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 10-Q. 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 either the tables to the press release, included as an exhibit to the company's 8K filed yesterday, and posted on the company's website at culp.com, or in the slide presentation with supporting summary financial information that is also available on the company's website as part of the webcast of today's call. I will now turn the call over to Yves Culp, President and Chief Executive Officer of Culp. Please go ahead, sir.

Good morning, and thank you all 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 today are Ken Bolling, our Chief Financial Officer, and Boyd Chumley, President of our Upholstery Fabrics business. I will begin the call with some opening comments, and Ken will then review the financial results for the quarter and the full year. I will then update you on the strategic actions in each of our operating segments. And after that, Ken will review our first quarter and fiscal 2022 full-year business outlook. We will then be happy to take your questions. We are pleased to have delivered a strong fourth quarter with dramatic sales growth across both our divisions and consolidated operating income in line with expectations. Despite some ongoing headwinds, we ended a tumultuous year with strength and momentum. Demand remained strong during the quarter as consumer focus on the home continued and our robust global platform utilizing our manufacturing and sourcing capabilities across six countries and our long-term supplier relationships enabled us to service the surge in demand for fabric and sewn covers from both new and existing customers. For the full year, we overcame tremendous adversity to deliver strong growth in sales and operating performance compared to the prior year. Our company's solid foundation, stable supply chain, and spirit of innovation helped us to successfully weather the initial pandemic-related downturn in our business at the end of last fiscal year and capitalize on market share opportunities throughout fiscal 2021. The exceptional execution by both divisions during this challenging operating environment strengthened our customer relationships and generated positive momentum to start fiscal 2022. In addition to our improved sales and operating performance, our cash flow for the year and our balance sheet remain strong. We ended the fiscal year with $46.9 million in total cash and investments and no outstanding debt. Our existing Haiti operations have performed very well for our mattress fabric segment during fiscal 2021. As previously reported, we acquired the remaining 50% ownership interest in our former unconsolidated joint venture in Haiti during the fourth quarter, and we are now the sole owner with full control of this mattress cover operation. With respect to this acquisition, we reported a gain from bargain purchase totaling $819,000. We are also happy to announce an additional expansion to our Haiti operations to include a third facility. This new building will be dedicated to production of cut and sewn upholstery kits. Construction began during the fourth quarter and is expected to be complete during the second quarter of fiscal 2022. The new facility will primarily support committed demand from an existing customer of the upholstery fabrics division. We believe this move will enhance our speed to market, provide growth opportunities and mitigate some risk for our upholstery fabrics business with near-shore capabilities that complement our already strong Asian platform. Importantly, we finished the year as a stronger company both operationally and financially, thanks to extraordinary efforts and resilience of our associates around the world. We are extremely proud of their hard work, adaptability, and perseverance in the face of unique challenges and uncertainties. We are grateful for their unwavering dedication and tremendous accomplishment during this challenging time. Looking ahead, we are entering fiscal 2022 with a positive outlook for our business. We are proud of our ability to absorb the significant increase in demand during fiscal 2021, and we are even more pleased about the outlook that supports our continued growth during fiscal 2022. We also believe our hospitality business will begin to see improvement if conditions normalize in the travel and leisure industry. Heading into the first quarter, we are faced with some continued near-term pressures in both divisions relating to ongoing customer capacity limitations, primarily due to supply chain disruption for non-fabric components and labor shortages, as well as increasing raw material and freight costs and foreign currency fluctuations in China and Canada. We do expect that most of these headwinds are temporary and will be mitigated to some extent by recent pricing actions taken by both divisions, all of which were effective by May 1. Despite these challenges, we believe our business will continue at solid and improved performance during fiscal 2022. We will maintain our focus on innovation, and we will emphasize efforts to increase our market share and make progress on ESG initiatives throughout the year. On the innovation front, we are excited to advance the tremendous synergies developing between our two businesses by combining our design, innovation, and sales team for both divisions into a shared space at our new innovation campus in downtown High Point, North Carolina. This design-driven space will pull our top creative talent together to support collaboration across divisions and provide an everyday space to gather, meet with customers, develop new products, and showcase our technologies and innovations from fabric to sewn cover. I am extremely proud of our company's accomplishments in fiscal 2021, and I am confident that we are well positioned to deliver value for our customers, employees, and our shareholders in fiscal 2022 and beyond. I'll now turn the call over to Ken, who will review the financial results for the quarter and the full year.