Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from of Budd Bugatch - Raymond James.
Budd Bugatch - Raymond James
A couple of questions, in the Upholstery segment did raw materials play a piece of the improvement year-over-year or quarter-over-quarter? How will that factor going forward?
Kurt Darrow
I think there is three factors in the gross margin improvement. The raw material to price ratio, the lack of restructuring this year compared to last year, and the efficiencies of our cellular production. All three of those pieces played a role and we’re not going to quantify them anymore than we have in our filings, but it played a significant roll.
Budd Bugatch - Raymond James
How persist are the raw materials’ price? Will that persist all of this fiscal or when does that turn a run-off?
Kurt Darrow
Hopefully, if demand picks up throughout a lot of sectors including the housing, I would think lumber and some other things might tend to go back up, but it’s anybody’s guess, if that’s going to happen. The last couple of years, raw materials has been volatile and have gone up quickly and back down quickly and so, it’s something that our bias probably is it is not going to stay at this level for the next year and a half, two years, but that’s just speculation at this point.
Budd Bugatch - Raymond James
The segment operating income margin at 8.3%, do you think that the first quarter is historically the weakest quarter of the year, if I remember right. Will the margins in there, do you believe the margins for Upholstery and next three quarters will be higher than the 8.3%? I guess that’s the operable question?
Kurt Darrow
I would answer that question, Bud with this. If we historically we would do more volume in the succeeding quarters primarily even than the first quarter, we’re shutdown one week. So, yes I believe if we can do more volume, we can see improvement to our margins in the future in the Upholstery segment.
Budd Bugatch - Raymond James
You do shutdown a week too in third quarter, right?
Kurt Darrow
Yes, we do at the Christmas time.
Budd Bugatch - Raymond James
Okay.
Kurt Darrow
If there is sufficient demand, we can figure out a way to work.
Budd Bugatch - Raymond James
In casegoods, how much of the casegoods is now and in the future will be sourced versus produced domestically? You get off one casegoods factory left, is that right?
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