Greetings and welcome to the La-Z-Boy Incorporated Third Quarter Fiscal 2015 Earnings Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Kathy Liebmann, Director of Investor Relations and Corporate Communications for La-Z-Boy. Thank you, Ms. Liebmann. You may begin.

Thank you, Kevin. Good morning and thank you for joining us to discuss our fiscal 2015 third quarter results. With us today are Kurt Darrow, La-Z-Boy's Chairman, President and Chief Executive Officer; and Mike Riccio, our Chief Financial Officer. Kurt will begin today's call and then Mike will speak about the financials before turning the call back to Kurt for his concluding remarks. We will then open the call to questions. A telephone replay of the call will be available for one week beginning this afternoon. These regular quarterly investor conference calls are one of La-Z-Boy's primary vehicles to communicate with investors about the company's current operations and future prospects. We will make forward-looking statements during this call, so I will repeat our usual Safe Harbor remark. While these statements reflect the best judgments of management at the present time, they are subject to numerous future risks and uncertainties as detailed in our regular SEC filings, and they may differ materially from actual results due to a wide range of factors. We undertake no obligation to update any forward-looking statements made during this call. And with that let me turn over the call to Kurt Darrow, La-Z-Boy's Chairman, President, and Chief Executive Officer. Kurt? Kurt L. Darrow - Chairman, President & Chief Executive Officer: Thank you, Kathy, and good morning, everyone. Yesterday afternoon, we reported third quarter results for fiscal 2015. Fundamentally, it was a solid quarter and I'm pleased with our ability to continue to balance several strategic initiatives which include driving increased sales, investing in the business to provide ongoing long-term profitable growth, and returning value to the shareholders. As we move into the fourth quarter, I'm confident about our business and positioning within the marketplace. We have a strong growth strategy that is already delivering results with…

Thank you, Kurt. We will begin the question-and-answer period now. Kevin, please review the instructions for getting into the queue to ask questions.

Certainly. Our first question today is coming from Brad Thomas with KeyBanc Capital Markets. Please proceed with your question.

Thanks. Good morning, Kurt, Mike, and Kathy. I wanted to ask a question about sales and then a follow-up about margins, if I could. This was a very good quarter for written results. I think this is the strongest in over a year for written same-store sales. Kurt, I was hoping you could just talk a little bit more about the momentum that you had at the end of the quarter as you started to face easier comparisons, and perhaps how Presidents Day fared when the weather across the country wasn't perhaps quite as good. Kurt L. Darrow - Chairman, President & Chief Executive Officer: You were doing real well with that question, Brad, until you talked about Presidents Day this year. So typically for us, the period between after Thanksgiving and prior to Christmas is not the strongest few weeks in the furniture business. But immediately after Christmas, the time between Christmas and New Year's and the month of January is normally one of the strongest periods, and that's the pattern that we experienced this year. So we were really pleased with our pace of business from December 26 through the first couple weeks of February. And because the orders, as we mentioned, came in late in the quarter, we just didn't have the time to get them manufactured and out the door, but we will convert all that business in February and early March and recover to a normal cycle. If you look at Presidents Day weekend over a four or five-day period, the first couple of days we were pretty enthused about the prospects of another really strong increased holiday season, but obviously the weather in the last two days dampened that a little bit. It wasn't terrible. It just leveled out some of our expectations. And in total, if you look at the five days it was still positive, but obviously, we had higher expectations on Sunday and Monday that due to some of our markets even being closed starting Monday afternoon, didn't pan out.

Great. And then just as we try to connect the dots between the written orders and the total sales, can you help us think about how many millions of dollars you perhaps could have delivered in the quarter if the orders had come earlier, or perhaps what that backlog looks like that you have the tailwind as we move into your fourth quarter here? Kurt L. Darrow - Chairman, President & Chief Executive Officer: Our backlog, Brad, is only about a four to six-week period, so it's not an entire quarter. But we're pleased with where it is. Our backlog is up higher than what our written sales for the quarter was in the third quarter. So it's a significant amount of business, but there is some of it that happens every year because Christmas always falls on the same date, so there's some comparative there. But if you go back in the last few years and in the first quarter of 2014 and in the fourth quarter of 2012, similar things happened when we outsold but did not deliver the backlog out. And then when the following quarter comes on, it proves the underlying strength of the business and the orders get delivered out. So I don't want to give you a number on it because it would be misleading that that would continue for the whole quarter and that probably won't in that kind of a pace, but there is a large amount – we do have a large increase in our backlog year-over-year.

Great. And if I could just ask maybe one question on the margin side here then, if we dissect the drivers in the Upholstery segment specifically, it looked like you had a nice legal benefit, the supply chain efficiency is where I think a bigger tailwind than what you'd seen last quarter. On the flip side, it looks like ERP and raw materials were a bigger drag. Any more color you could provide about those and how those may play out in the next quarter or two? Kurt L. Darrow - Chairman, President & Chief Executive Officer: No, I think you identified them pretty well. In our press release, we try to always tell you some of the things that are a little bit unusual to our normal business cycle. And we're in a fluid business and every quarter we have things that happen that are planned and unplanned, and we just try to give you some basis for what we see. But this simply was a quarter where we didn't get the delivered sales to match the investments we're making to improve our business. And had we had $10 million or $15 million more sales in the quarter, these things wouldn't be significant, but on close to flat sales, they do pop their head up. So nothing out of the ordinary, our business is still running very well. And I think the other thing is the – and there's a ramp down of this, but we're moving into our headquarters next month, the E1 implementation in the plants will be done in the first quarter, and we're launching our website in August. So that – all that spending that's been going on in some cases for the last couple of years, all that is winding down. But that doesn't mean that we might have a couple of other things that we need to invest in going forward. But these have been three very large projects for us that have taken a lot of CapEx, a lot of time, and some expense that have crept into our numbers that are not ongoing forever. So you'll see some of that, and we'll give you some more color on that in June as far as what we expect that to do in our 2016 forecast.

Great, thank you so much. Kurt L. Darrow - Chairman, President & Chief Executive Officer: Thank you.

Thank you. Our next question today is coming from Budd Bugatch from Raymond James. Please proceed with your question. Bobby K. Griffin - Raymond James & Associates, Inc.: Good morning, Kurt, Mike, and Kathy. This is actually Bobby filling in for Budd. Thank you for taking my questions. And, Kurt, thanks for the additional store information on calendar year 2014 revenue. That's very helpful. Kurt L. Darrow - Chairman, President & Chief Executive Officer: You're welcome. Bobby K. Griffin - Raymond James & Associates, Inc.: First off, in the press release you referenced the four-week to six-week lead time, is that longer than normal? Kurt L. Darrow - Chairman, President & Chief Executive Officer: No, it's not longer than normal. I mean that's not the manufacturing time either. That's the time from when we receive the order until we get it to the dealer and then he gets it to the customer. So that's the cycle of our revenue and production cycle. So that's pretty consistent. Now, that doesn't mean that when an item is sold out of stock at a local retail store, it's probably available to the customer within that week. But when it's a special order or when our dealers are projecting their needs for stock into the future, our normal production cycle is in that range. Bobby K. Griffin - Raymond James & Associates, Inc.: All right, perfect. Thank you. And then you guys referenced the pace of business accelerating in the second half of the quarter versus the first half. Can you maybe point to anything in particular that might have caused that? Was the promotional cadence different in the second half or was the marketing strategy a little bit different? Kurt L. Darrow - Chairman, President & Chief Executive Officer: I wish we can…

Thank you. Our next question today is coming from Matt McCall from BB&T Capital Markets. Please proceed with your question. Matthew S. McCall - BB&T Capital Markets: Thanks. Good morning, everybody. Kurt L. Darrow - Chairman, President & Chief Executive Officer: Good morning. Louis M. Riccio - Chief Financial Officer & Senior Vice President: Good morning. Matthew S. McCall - BB&T Capital Markets: So let's see. Just to make sure the ERP pressure, Mike, you went through kind of what's going on and I just want to make sure I heard you right. That was not – there was no pressure that was associated with any kind of issue, this was just a normal process of closing facilities and the inefficiencies that follow, correct? Louis M. Riccio - Chief Financial Officer & Senior Vice President: Right. I was just trying to give some more color on what we perceive as being the inefficiencies. And this was one of our larger plants during the quarter, the third, and it had a two-shift operation. So just trying to give – nothing, there was no issues with the system or that we all of a sudden encountered some problems. It's just that we keep getting more and more on the system and working through it and more people have to learn the system. So we're just trying to give some understanding of some of the inefficiencies and where they come from, but nothing unusual this quarter than any other quarter. Matthew S. McCall - BB&T Capital Markets: Okay. Yeah. Just clearing that up. All right. On the 4-4-5 strategy, Kurt, you said – so I guess the question is really around, first part of the question is around Southern California when you got your 400 store goal, does that include – did that…

Thank you. Our next question today is coming from John Baugh from Stifel. Please proceed with your question. John A. Baugh - Stifel, Nicolaus & Co., Inc.: Good morning, Kurt. Good morning, Kathy. Just quickly, I was curious in the backlog, which is quite strong. You mentioned I think some more promotional activity on the retail side. So I was curious. Is the backlog margin, if you will, when it shifts appreciably different or unrelated to that promotional comment? Kurt L. Darrow - Chairman, President & Chief Executive Officer: The margin on the backlog, there's substantially no change, John. We may have had a slight decrease in our gross margin in retail for the quarter, nothing significant. and we just had some different offers at retail that caused that to happen, and they were intentional. But it isn't significant enough to be concerned about. John A. Baugh - Stifel, Nicolaus & Co., Inc.: Great, thank you. And then as we look at February, I'm going to leave Presidents Day out because you talked about that. But from December 26 through mid-February, I remember weather was a bit of an issue last year. So you talked about the second half of the quarter being stronger in orders, but that's always the case, so that presumably is a year-over-year similarity. Is the strength you're seeing in your view the easy weather comparison, or do you really sense the customers coming in at a greater rate, your ads are more effective, your product offering is working, any color there? Kurt L. Darrow - Chairman, President & Chief Executive Officer: That's a good question and you could add in lower gas prices and rising consumer confidence. We do see – we did see from that period we referred to the customer more willing to…

Thank you. Our next question today is coming from Kristine Koerber from Barrington Research Associates. Please proceed with your question.

Good morning, a couple of questions. First, as we look at the investment spending that you've been doing over the last couple of years, how much of that – how much of the major investment spending has flowed through the P&L at this point? Louis M. Riccio - Chief Financial Officer & Senior Vice President: We talk about it in our MD&A that we had probably about between the technology costs and – it's probably been about 0.3 – 0.4 percentage points of our sales that we could net cost there. We do feel confident though that as we go through this year and we compare to next year, as we – and as Kurt said, we'll give some more color on this during our June call of projects that we're going to do, not do, and what that impact is on us. But we don't see this being an ongoing problem now that we're anniversarying these costs next year.

Right. I was... Louis M. Riccio - Chief Financial Officer & Senior Vice President: But probably at that level.

But I was looking at a total number just trying to get some idea of how much you've spent over the last couple of years in total, not just this recent quarter. Kurt L. Darrow - Chairman, President & Chief Executive Officer: We'd have to do some research on that to answer that adequately. But in total, when you take the entire E1 project, our headquarters, and our spend on e-com, it's going to push $90 million to $100 million. And most of that is capital, but some percentage of that is expense as well.

Okay. And then, Mike, you had indicated that next project is front end – implementation of front-end systems. Can you talk about the timing of that? And I'm assuming that's relatively minor and we shouldn't expect any disruption. Is that correct? Louis M. Riccio - Chief Financial Officer & Senior Vice President: So a couple different things on that. So the sales order management system will not be shutting the plants down as we go live, but it is going to touch every part of ERP as it's the order entry system, it's the – how all the invoicing is done. It's a major part of the consumer interface or the dealer interface with our system. So it will cost us some money to go live on that, some will be capital and some will be expensed. We've been working on that all along the time that we've been working on the rest of the system, but we wanted to get all the plants on first before we started installing different parts of the system. So we will have some expenses over the fall and into next calendar year. But we're hoping that it won't as disruptive on the plants but as we go live this will be – we can't really go live in bits and parts of that. It's going to turn the system all at one time in the fourth quarter of next year. So we're working through that and making sure that we test it properly, but I can't say that it won't be as costly, there will be more capital because we're designing that part of the system. And then when we implement it, but we'll be giving some more flavor on that as we go through the summer.

Okay. That's helpful. Thanks. And then geographically any change in trends geographically in the markets or is it pretty consistent across the country? Kurt L. Darrow - Chairman, President & Chief Executive Officer: I would say it was pretty consistent across the company. We didn't see a big variation between the highs and the lows and there really were no way underperforming regions. So we were pretty pleased at the broad based participation in the increased sales for the quarter.

Okay, great. And then just lastly, any update on Urban Attitudes and kind of what you're seeing there? Kurt L. Darrow - Chairman, President & Chief Executive Officer: So I think we reported last quarter that it was performing at slightly above 30% of our overall Upholstery business, and it's still in that range. And we think as time goes and people understand they can shop that type of product category in our stores, we think it's going to continue to go up. Certainly, we don't – we never intended it to be 50% or 60% of our business, but we intended it to serve both the more fashion forward customer and a customer who has needs for smaller products. So I think it's been a huge success for us and this will continue to mature.

Great. Thank you. Kurt L. Darrow - Chairman, President & Chief Executive Officer: Thank you.

Thank you. Your next question today is coming from Todd Schwartzman from Sidoti & Company. Please proceed with your question. Todd A. Schwartzman - Sidoti & Co. LLC: Hi all. I wanted to ask you if you could talk about the landscape in Southern Cal with regard to format, design format, how the 19 stores shake out. And also if you're going to own all the stores in that market, what's the right number there? How many do you expect to add to that? And what's your timeframe for getting there? Kurt L. Darrow - Chairman, President & Chief Executive Officer: Good question. All of the 15 that the company had previously owned are either all new gen or new concept. And the four we purchased only one of them is a new gen and then the other three are old concept. So they will be immediately either remodeled or relocated. I think we probably, if we can find the right locations at the right cost I think we have the potential to eventually have as many as 25 stores in Southern California. And so it would be a $100-million-plus market for us if it performs like it is now and we get that store count in there. So we're pretty bullish on that market. Todd A. Schwartzman - Sidoti & Co. LLC: Are there any other markets Kurt where you think you are either equally underpenetrated or more so perhaps? Kurt L. Darrow - Chairman, President & Chief Executive Officer: Well, I think we've been very transparent, Todd, about our struggles in Greater New England, Boston in specific, Miami and Greater New York. We know we're not penetrating those markets to the same degree as we are Baltimore, Washington, Chicago, Southeastern Michigan. So those have our attention and have…

Thank you. We've reached the end of our question-and-answer session, if I could turn the floor back over to management for any further closing comments.

Thank you for participating on our call this morning. Should you have any additional questions, please give me a call. Have a great day. Bye-bye.

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.