Culp, Inc. (NYSE: CULP) (together with its consolidated
subsidiaries, “CULP”) today reported financial and operating
results for the second quarter ended October 27, 2024.
Fiscal 2025 Second Quarter Financial Highlights
- Consolidated net sales of $55.7 million
- mattress fabrics segment sales up 7.1 percent sequentially
- 70.7 percent sequential reduction in mattress fabrics operating
loss as restructuring progresses; upholstery fabrics segment
continues to be profitable in challenging industry environment
- GAAP consolidated loss from operations of $(5.4) million
(includes $2.8 million in restructuring expense and related
charges)
- Non-GAAP loss from operations of $(2.6) million (see
reconciliation table on page 14)
- Although sequentially improved, operating performance for the
quarter was affected by lower sales and manufacturing
inefficiencies related to the significant restructuring activity in
the mattress fabrics segment
- $10.5 million in cash, $4.1 million in outstanding borrowings
used to fund worldwide working capital and restructuring
initiatives
- net cash position of $6.5 million (see reconciliation table on
page 9)
Financial Outlook
- Due to the expected continued pressure on sales and the
significant restructuring activity underway in the mattress fabrics
segment, the company is only providing limited financial guidance
at this time.
- Consolidated net sales for the third quarter expected to be
flat to slightly down sequentially, with continued pressure on
residential upholstery fabric sales.
- Currently expect positive adjusted EBITDA (excluding
restructuring and related charges) for the second half of fiscal
2025, and a return to consolidated adjusted operating income
(excluding restructuring and related charges) sometime in the
fourth quarter of fiscal 2025, with continued sequential
improvement in mattress fabrics profitability each quarter.
- The company’s expectations are based on information available
at the time of this press release and reflect certain assumptions
by management regarding the company’s business and trends and the
projected impact of restructuring actions and ongoing external
headwinds.
Iv Culp, President and Chief Executive Officer of Culp, Inc.,
said, “For the second quarter, we continued to experience weakened
industry demand conditions, with accelerated softness in our
residential upholstery fabrics business that resulted in
lower-than-expected sales. However, we remain encouraged with our
strategic approach, our comprehensive restructuring process, and
the growth we expect from market share penetration, along with an
eventual normalized environment. In spite of the 5 percent decline
in consolidated, year-over-year revenue for the second quarter, we
believe we are outperforming the industry average.
"We were pleased with the sequential improvement in sales and
operating performance from our mattress fabrics segment during the
quarter. Sales for this segment increased 7.1 percent compared to
the first quarter of fiscal 2025, driven by higher order levels,
which we believe are indicative of our growing market position. The
mattress fabrics segment also sequentially reduced its operating
loss by 70.7 percent for the quarter, reflecting the solid progress
we are making with our restructuring activity. However, as expected
due to the scope of this initiative, inefficiencies associated with
restructuring affected our operating performance during the
period.
"In our upholstery fabrics segment, sales for our residential
fabrics business were affected by further weakness in residential
home furnishing sales. While we expected some pressure during the
period, we experienced larger impacts from customers adjusting
their inventory levels to align with demand after a more robust
ordering period during the first quarter. This included a
significant temporary reduction in orders from a large customer
during the second quarter, which is also expected to affect sales
during the third quarter. Conversely, revenue for our
hospitality/contract fabric business remained solid during the
second quarter, and overall, we remain pleased with the upholstery
fabrics segment's continuing profitability, supported by our
asset-light platform.
"Looking ahead, we are optimistic about the progress we are
making with our restructuring initiatives, as well as our solid
market position in both businesses. We are optimizing our
operations and cost structure, providing excellent customer
service, and winning new placements with our innovative product
portfolio. Although the restructuring activity involves a
significant undertaking and short-term inefficiencies, we are
demonstrating quarter-by-quarter operating improvement in a tough
macro environment. Importantly, while we anticipate that industry
conditions will remain somewhat pressured through fiscal 2025, we
expect the strategic actions we are taking will position us for a
return to profitability post-restructuring at the currently
depressed demand levels, as well as further growth opportunities as
market conditions improve," added Culp.
Restructuring Update
The restructuring plan announced on May 1, 2024, primarily
focused on the company's mattress fabrics segment, continues to
progress as planned. The consolidation of the company's sewn
mattress cover operation in Haiti was completed during the first
quarter, and the consolidation of the company's North American
mattress fabrics operation is nearing completion, including the
phased wind-down and closure of its manufacturing facility in
Canada. The company discontinued knitting production at this
facility during the second quarter (end of September), and
completed damask weaving production in November. The optimization
and relocation of certain knitting and finishing equipment from the
Canadian facility to the mattress fabrics manufacturing facility in
Stokesdale, North Carolina, is also well underway, with completion
planned in the third quarter.
The company still expects to generate $10.0 - $11.0 million in
annualized savings and operating improvements after the
restructuring initiatives are fully implemented by the end of the
third quarter, with most of the restructuring benefit realized
during the fourth quarter of fiscal 2025.
In addition, based on restructuring activities that have been
completed along with updated estimates on those that remain in
process, the company now expects to incur total restructuring and
restructuring-related costs and charges of $7.3 million in fiscal
2025, of which $4.4 million is now expected to be cash
expenditures. The company expects to fund close to $2.0 million of
the cash costs with proceeds from the sale of excess manufacturing
equipment and proceeds from a building lease termination in
Haiti.
These restructuring and restructuring-related costs and charges
exclude any gain on the sale of real estate, the amount and timing
of which is currently unknown, but which will ultimately reduce the
amount of the restructuring charges incurred. The company is
actively marketing and showing the real estate, and currently
anticipates receiving approximately $6.0 to $8.0 million in cash
proceeds (net of all taxes and commissions) from its eventual
sale.
Second Quarter Fiscal 2025 Results versus Second Quarter
Fiscal 2024 Results
- Net sales were $55.7 million, down 5.2 percent compared with
the prior-year period, with mattress fabrics sales down 4.2 percent
and upholstery fabrics sales down 6.4 percent.
- Loss from operations was $(5.4) million (which included $2.8
million in restructuring expense and related charges during the
period), compared with a loss from operations of $(2.2) million for
the prior-year period (which included $66,000 in restructuring and
related charges during the period).
- Adjusted loss from operations was $(2.6) million, compared with
an adjusted loss from operations of $(2.2) million for the
prior-year period. (See reconciliation table on page 14). Operating
performance compared to the second quarter of fiscal 2024 was
negatively affected by lower sales in both segments, and by
manufacturing inefficiencies primarily related to the significant
restructuring activity underway in the mattress fabrics
segment.
- Net loss was $(5.6) million, or $(0.45) per diluted share,
compared with a net loss of $(2.4) million, or $(0.19) per diluted
share, for the prior-year period. The effective tax rate for the
second quarter was 0.9 percent, reflecting the company’s mix of
taxable income between its U.S. and foreign jurisdictions during
the period.
Business Segment Highlights
Mattress Fabrics Segment (“CHF”)
- Sales for this segment were $30.1 million for the second
quarter, down 4.2 percent compared with sales of $31.4 million in
the second quarter of fiscal 2024. Sequentially, sales were up 7.1
percent compared with sales of $28.1 million for the first quarter
of fiscal 2025.
- While year-over-year sales were pressured by ongoing weakness
in the domestic mattress industry, the sequential improvement in
sales was driven by higher order levels, which are indicative of
CHF's product innovation and improving market position.
- Operating loss was $(1.0) million for the second quarter,
compared to an operating loss of $(936,000) in the prior-year
period and compared to an operating loss of $(3.5) million for the
first quarter of fiscal 2025. Operating performance for the
quarter, as compared to the prior-year period, was pressured by
lower year-over-year sales volume and manufacturing inefficiencies,
including those related to the significant restructuring
initiatives to wind-down CHF's Canadian operation and move certain
knitting and finishing equipment to Stokesdale, North Carolina.
However, while restructuring-related inefficiencies negatively
affected the quarter, the reduction in operating loss as compared
sequentially to the first quarter of fiscal 2025 reflected the
significant progress CHF is making to reduce costs as it executes
its restructuring plan.
Upholstery Fabrics Segment (“CUF”)
- Sales for this segment were $25.6 million for the second
quarter, down 6.4 percent compared with sales of $27.3 million in
the second quarter of fiscal 2024. Sequentially, sales were down
10.0 percent compared with sales of $28.5 million for the first
quarter of fiscal 2025.
- Sales for CUF's residential fabric business were lower than the
prior-year period and lower sequentially. This was driven primarily
by further demand weakness in the residential home furnishings
industry, which resulted in lower order levels as customers,
including a significant customer, adjusted their inventory to align
with soft industry demand. This ordering variability will also
pressure residential fabric sales for the third quarter of fiscal
2025.
- Sales for CUF's hospitality/contract business (including Read
Window) were flat compared to both the prior-year and sequential
periods. Sales from CUF’s hospitality/contract business accounted
for approximately 35 percent of CUF's total sales during the second
quarter.
- Operating income was $615,000 for the second quarter, compared
with operating income of $1.4 million in the second quarter of
fiscal 2024. Operating performance for the second quarter of fiscal
2025, as compared to the prior-year period, was affected by lower
sales, an unfavorable foreign currency exchange rate associated
with CUF's operations in China, and higher freight costs, offset
somewhat by lower SG&A and lower fixed costs.
Balance Sheet, Cash Flow, and Liquidity
- As of October 27, 2024, the company reported $10.5 million in
total cash and $4.1 million in outstanding debt under the company's
China credit facility.
- Cash flow from operations and free cash flow were negative
$(2.6) million and negative $(3.4) million, respectively, for the
first six months of fiscal 2025, compared with cash flow from
operations and free cash flow of negative $(4.5) million and
negative $(5.6) million, respectively for the first six months of
fiscal 2024. (See reconciliation table on page 11 of this press
release.) The company’s cash flow from operations and free cash
flow during the first six months of fiscal 2025 were affected by
operating losses and planned strategic investments in capital
expenditures mostly related to the mattress fabrics segment,
partially offset by lower working capital. Both segments continue
to do an effective job managing inventory during very challenging
business conditions.
- Capital expenditures for the first six months of fiscal 2025
were $1.6 million. The company continues to strategically manage
capital investments, focusing on projects that will increase
efficiencies and improve quality, especially for the mattress
fabrics segment.
- As of October 27, 2024, the company had approximately $33.1
million in liquidity consisting of $10.5 million in cash and $22.6
million in borrowing availability under the company's domestic
credit facility. The company also had $4.1 million in borrowings
outstanding under its China credit facility.
- The company intends to utilize some borrowings under its
domestic and foreign credit facilities during fiscal 2025 in
connection with its restructuring activities, the timing of the
Chinese New Year holiday, and to fund worldwide working capital to
grow the business.
Conference Call
Culp, Inc. will hold a conference call to discuss financial
results for the fiscal 2025 second quarter on Thursday, December 5,
2024, at 9:00 a.m. Eastern Time. A live webcast of this call can be
accessed on the “Upcoming Events” section on the investor relations
page of the company’s website, www.culp.com. A replay of the
webcast will be available for 30 days under the “Past Events”
section on the investor relations page of the company’s website,
beginning at 2:00 p.m. Eastern Time on December 5, 2024.
About the Company
Culp, Inc. is one of the largest marketers of mattress fabrics
for bedding and upholstery fabrics for residential and commercial
furniture in North America. The company markets a variety of
fabrics to its global customer base of leading bedding and
furniture companies, including fabrics produced at Culp’s
manufacturing facilities and fabrics sourced through other
suppliers. Culp has manufacturing and sourcing capabilities located
in the United States, China, Haiti, Turkey, and Vietnam.
Forward Looking Statements
This release contains “forward-looking statements” within the
meaning of the federal securities laws, including the Private
Securities Litigation Reform Act of 1995 (Section 27A of the
Securities Act of 1933 and Section 21E of the Securities and
Exchange Act of 1934). Such statements are inherently subject to
risks and uncertainties that may cause actual events and results to
differ materially from such statements. Forward-looking statements
are statements that include projections, expectations, or beliefs
about future events or results or otherwise are not statements of
historical fact. Such statements are often but not always
characterized by qualifying words such as “expect,” “believe,”
“will,” “may,” “should,” “could,” “potential,” “continue,”
“target,” “predict”, “seek,” “anticipate,” “estimate,” “intend,”
“plan,” “project,” and their derivatives, and include but are not
limited to statements about expectations, projections, or trends
for our future operations, strategic initiatives and plans,
restructuring actions, production levels, new product launches,
sales, profit margins, profitability, operating (loss) income,
capital expenditures, working capital levels, cost savings
(including, without limitation, anticipated cost savings from
restructuring actions), income taxes, SG&A or other expenses,
pre-tax (loss) income, earnings, cash flow, and other performance
or liquidity measures, as well as any statements regarding
dividends, share repurchases, liquidity, use of cash and cash
requirements, ending cash balances and cash positions, borrowing
capacity, investments, potential acquisitions, cash and non-cash
restructuring and restructuring-related charges, expenses, and/or
credits, net proceeds from restructuring related asset
dispositions, future economic or industry trends, public health
epidemics, or future developments. There can be no assurance that
we will realize these expectations or meet our guidance, or that
these beliefs will prove correct.
Factors that could influence the matters discussed in such
statements include the level of housing starts and sales of
existing homes, consumer confidence, trends in disposable income,
and general economic conditions. Decreases in these economic
indicators could have a negative effect on our business and
prospects. Likewise, increases in interest rates, particularly home
mortgage rates, and increases in consumer debt or the general rate
of inflation, could affect us adversely. The future performance of
our business depends in part on our success in conducting and
finalizing acquisition negotiations and integrating acquired
businesses into our existing operations. Changes in consumer tastes
or preferences toward products not produced by us could erode
demand for our products. Changes in tariffs or trade policy,
including changes in U.S. trade enforcement priorities, or changes
in the value of the U.S. dollar versus other currencies, could
affect our financial results because a significant portion of our
operations are located outside the United States. Strengthening of
the U.S. dollar against other currencies could make our products
less competitive on the basis of price in markets outside the
United States, and strengthening of currencies in Canada and China
can have a negative impact on our sales of products produced in
those places. In addition, because our foreign operations use the
U.S. dollar as their functional currency, changes in the exchange
rate between the local currency of those operations and the U.S
dollar can affect our reported profits from those foreign
operations. Also, economic or political instability in
international areas could affect our operations or sources of goods
in those areas, as well as demand for our products in international
markets. The impact of public health epidemics on employees,
customers, suppliers, and the global economy, such as the recent
coronavirus pandemic, could also adversely affect our operations
and financial performance. In addition, the impact of potential
asset impairments, including impairments of property, plant, and
equipment, inventory, or intangible assets, as well as the impact
of valuation allowances applied against our net deferred income tax
assets, could affect our financial results. Increases in freight
costs, labor costs, and raw material prices, including increases in
market prices for petrochemical products, can also significantly
affect the prices we pay for shipping, labor, and raw materials,
respectively, and in turn, increase our operating costs and
decrease our profitability. Also, our success in diversifying our
supply chain with reliable partners to effectively service our
global platform could affect our operations and adversely affect
our financial results. Finally, the future performance of our
business also depends on our ability to successfully restructure
our mattress fabric operations and return the segment to
profitability. Further information about these factors, as well as
other factors that could affect our future operations or financial
results and the matters discussed in forward-looking statements, is
included in Item 1A “Risk Factors” in our most recent Form 10-K and
Form 10-Q reports filed with the Securities and Exchange
Commission.
Many of these factors are macroeconomic in nature and are,
therefore, beyond our control. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, our actual results, performance or achievements may vary
materially from those described in this release as anticipated,
believed, estimated, expected, intended, planned or projected. The
forward-looking statements included in this release are made only
as of the date of this report. Unless required by United States
federal securities laws, we neither intend nor assume any
obligation to update these forward-looking statements for any
reason after the date of this release to conform these statements
to actual results or to changes in our expectations. A
forward-looking statement is neither a prediction nor a guarantee
of future events or circumstances, and those future events or
circumstances may not occur. Additional risks and uncertainties
that we do not presently know about or that we currently consider
to be immaterial may also affect our business operations or
financial results.
CULP, INC.
CONSOLIDATED STATEMENTS OF NET
LOSS
FOR THE THREE MONTHS ENDED
OCTOBER 27, 2024, AND OCTOBER 29, 2023
Unaudited
(Amounts in Thousands, Except
for Per Share Data)
THREE MONTHS ENDED
Amount
Percent of Sales
(1)
(1)
October 27,
October 29,
% Over
October 27,
October 29,
2024
2023
(Under)
2024
2023
Net sales
$
55,674
$
58,725
(5.2
)%
100.0
%
100.0
%
Cost of sales (1)
(49,684
)
(50,775
)
(2.1
)%
89.2
%
86.5
%
Gross profit
5,990
7,950
(24.7
)%
10.8
%
13.5
%
Selling, general and administrative
expenses
(9,359
)
(10,045
)
(6.8
)%
16.8
%
17.1
%
Restructuring expense (2) (3)
(2,031
)
(144
)
N.M
3.6
%
0.2
%
Loss from operations
(5,400
)
(2,239
)
141.2
%
(9.7
)%
(3.8
)%
Interest expense
(30
)
—
100.0
%
(0.1
)%
—
Interest income
244
282
(13.5
)%
0.4
%
0.5
%
Other (expense) income
(508
)
49
N.M.
(0.9
)%
0.1
%
Loss before income taxes
(5,694
)
(1,908
)
198.4
%
(10.2
)%
(3.2
)%
Income tax benefit (expense) (4)
50
(516
)
(109.7
)%
0.9
%
(27.0
)%
Net loss
$
(5,644
)
$
(2,424
)
132.8
%
(10.1
)%
(4.1
)%
Net loss per share - basic
$
(0.45
)
$
(0.19
)
136.8
%
Net loss per share - diluted
$
(0.45
)
$
(0.19
)
136.8
%
Average shares outstanding-basic
12,513
12,456
0.5
%
Average shares outstanding-diluted
12,513
12,456
0.5
%
Notes
(1)
See page 14 for a Reconciliation of
Selected Income Statement Information to Adjusted Results for the
three months ending October 27, 2024, and October 29, 2023.
(2)
During the three months ending October 27,
2024, restructuring expense of $2.0 million represents $2.0 million
and $29,000, related to the mattress fabrics and upholstery fabrics
segments, respectively. The $2.0 million of restructuring expense
represents (i) $1.4 million related to the gradual discontinuation
of operations and the process of selling the manufacturing facility
located in Quebec, Canada, which includes employee termination
benefits of $505,000, additional depreciation related to the
shortening of useful lives of equipment of $465,000, other
associated costs of $373,000 and lease termination costs of
$179,000, partially offset by net gains on the disposal of
equipment totaling $133,000; (ii) $600,000 related to relocating
certain equipment and consolidating production from the mattress
fabric manufacturing facility located in Quebec, Canada to the U.S
facility located in Stokesdale, North Carolina, which includes
other associated costs of $527,000, employee termination benefits
of $58,000, and losses on the disposal of equipment totaling
$15,000; (iii) $29,000 of other associated costs related to moving
certain equipment from our upholstery fabrics operation located in
Knoxville, Tennessee to our upholstery fabrics distribution center
located in Burlington, N.C.; and (iv) $13,000 for losses on the
disposal of equipment related to the consolidation of two leased
facilities at our mattress cover operation located in Ouanaminthe,
Haiti.
(3)
Restructuring expense of $144,000 for the
three-month period ending October 29, 2023, represents $142,000 for
impairment charges related to equipment and $2,000 for employee
termination benefits related to the discontinuation of production
of cut and sewn upholstery kits at our facility located in
Ouanaminthe, Haiti.
(4)
Percent of sales column for income tax
(benefit) expense is calculated as a percent of loss before income
taxes.
CULP, INC.
CONSOLIDATED STATEMENTS OF NET
LOSS
FOR THE SIX MONTHS ENDED
OCTOBER 27, 2024, AND OCTOBER 29, 2023
Unaudited
(Amounts in Thousands, Except
for Per Share Data)
SIX MONTHS ENDED
Amount
Percent of Sales
(1)
(1)
October 27,
October 29,
% Over
October 27,
October 29,
2024
2023
(Under)
2024
2023
Net sales
$
112,211
$
115,387
(2.8
)%
100.0
%
100.0
%
Cost of sales (1)
(101,145
)
(100,352
)
0.8
%
90.1
%
87.0
%
Gross profit
11,066
15,035
(26.4
)%
9.9
%
13.0
%
Selling, general and administrative
expenses
(18,655
)
(19,874
)
(6.1
)%
16.6
%
17.2
%
Restructuring expense (2) (3)
(4,662
)
(482
)
N.M.
4.2
%
0.4
%
Loss from operations
(12,251
)
(5,321
)
130.2
%
(10.9
)%
(4.6
)%
Interest expense
(58
)
—
100.0
%
0.1
%
—
Interest income
507
627
(19.1
)%
0.5
%
0.5
%
Other (expense) income
(913
)
145
N.M.
0.8
%
(0.1
)%
Loss before income taxes
(12,715
)
(4,549
)
179.5
%
(11.3
)%
(3.9
)%
Income tax expense (4)
(190
)
(1,217
)
(84.4
)%
(1.5
)%
(26.8
)%
Net loss
$
(12,905
)
$
(5,766
)
123.8
%
(11.5
)%
(5.0
)%
Net loss per share - basic
$
(1.03
)
$
(0.47
)
119.1
%
Net loss per share - diluted
$
(1.03
)
$
(0.47
)
119.1
%
Average shares outstanding-basic
12,491
12,394
0.8
%
Average shares outstanding-diluted
12,491
12,394
0.8
%
Notes
(1)
See page 15 for a Reconciliation
of Selected Income Statement Information to Adjusted Results for
the six months ending October 27, 2024, and October 29, 2023.
(2)
During the six months ending
October 27, 2024, restructuring expense of $4.7 million represents
$4.5 million and $161,000, related to the mattress fabrics and
upholstery fabrics segments, respectively. The $4.7 million of
restructuring expense represents (i) $3.3 million related to the
gradual discontinuation of operations and the process of selling
the manufacturing facility located in Quebec, Canada, which
includes $1.3 million of additional depreciation related to the
shortening of useful lives of equipment, employee termination
benefits of $1.0 million, other associated costs of $463,000, and
lease termination costs of $443,000, partially offset by net gains
on the disposal of equipment of $38,000; (ii) $767,000 related to
relocating certain equipment and consolidating production from the
mattress fabric manufacturing facility located in Quebec, Canada to
the U.S facility located in Stokesdale, North Carolina, which
includes other associated costs of $694,000, employee termination
benefits of $58,000, and losses on the disposal of equipment
totaling $15,000; (iii) $483,000 related to the consolidation of
two leased facilities at our mattress cover operation located in
Ouanaminthe, Haiti, which includes lease termination costs of
$406,000, employee termination benefits of $48,000, other
associated costs of $16,000, and losses of the disposal of
equipment of $13,000; and (iv) $161,000 related to our upholstery
fabrics segment, which includes employee termination benefits of
$102,000 and other associated costs of $59,000 for moving equipment
from our upholstery fabrics operation located in Knoxville,
Tennessee to our upholstery fabrics distribution center located in
Burlington, N.C.
(3)
Restructuring expense of $482,000
for the six-month period ending October 29, 2023, represents
$379,000 for impairment charges related to equipment and $103,000
for employee termination benefits related to the discontinuation of
production of cut and sewn upholstery kits at our facility located
in Ouanaminthe, Haiti.
(4)
Percent of sales column for
income tax expense is calculated as a percent of loss before income
taxes.
CONSOLIDATED BALANCE
SHEETS
OCTOBER 27, 2024, OCTOBER 29,
2023, AND APRIL 28, 2024
Unaudited
(Amounts in Thousands)
Amounts
(Condensed)
(Condensed)
(Condensed)
October 27,
October 29,
Increase (Decrease)
* April 28,
2024
2023
Dollars
Percent
2024
Current assets
Cash and cash equivalents
$
10,531
$
15,214
(4,683
)
(30.8
)%
$
10,012
Short-term investments - rabbi trust
919
937
(18
)
(1.9
)%
903
Accounts receivable, net
22,330
23,036
(706
)
(3.1
)%
21,138
Inventories
45,132
44,465
667
1.5
%
44,843
Short-term note receivable
522
256
266
103.9
%
264
Current income taxes receivable
979
340
639
187.9
%
350
Assets held for sale
3,301
—
3,301
100.0
%
—
Other current assets
3,187
4,346
(1,159
)
(26.7
)%
3,371
Total current assets
86,901
88,594
(1,693
)
(1.9
)%
80,881
Property, plant & equipment, net
26,510
34,664
(8,154
)
(23.5
)%
33,182
Right of use assets
4,239
6,874
(2,635
)
(38.3
)%
6,203
Intangible assets
1,688
2,064
(376
)
(18.2
)%
1,876
Long-term investments - rabbi
trust
7,105
6,995
110
1.6
%
7,102
Long-term note receivable
1,324
1,596
(272
)
(17.0
)%
1,462
Deferred income taxes
559
472
87
18.4
%
518
Other assets
661
901
(240
)
(26.6
)%
830
Total assets
$
128,987
$
142,160
(13,173
)
(9.3
)%
$
132,054
Current liabilities
Line of credit - China
4,074
—
4,074
100.0
%
—
Accounts payable - trade
32,373
27,903
4,470
16.0
%
25,607
Accounts payable - capital
expenditures
602
298
304
102.0
%
343
Operating lease liability - current
1,108
2,540
(1,432
)
(56.4
)%
2,061
Deferred compensation - current
919
937
(18
)
(1.9
)%
903
Deferred revenue
1,129
853
276
32.4
%
1,495
Accrued expenses
6,196
8,106
(1,910
)
(23.6
)%
6,726
Accrued restructuring
863
—
863
100.0
%
—
Income taxes payable - current
1,165
998
167
16.7
%
972
Total current liabilities
48,429
41,635
6,794
16.3
%
38,107
Operating lease liability - long-term
1,958
2,431
(473
)
(19.5
)%
2,422
Income taxes payable - long-term
1,378
2,055
(677
)
(32.9
)%
2,088
Deferred income taxes
6,624
5,663
961
17.0
%
6,379
Deferred compensation - long-term
6,975
6,748
227
3.4
%
6,929
Total liabilities
65,364
58,532
6,832
11.7
%
55,925
Shareholders' equity
63,623
83,628
(20,005
)
(23.9
)%
76,129
Total liabilities and shareholders'
equity
$
128,987
$
142,160
(13,173
)
(9.3
)%
$
132,054
Shares outstanding
12,559
12,470
89
0.7
%
12,470
* Derived from audited financial
statements.
CULP, INC.
SUMMARY OF CASH AND
DEBT
OCTOBER 27, 2024, OCTOBER 29,
2023, AND APRIL 28, 2024
Unaudited
(Amounts in Thousands)
Amounts
October 27,
October 29,
April 28,
2024
2023
2024*
Cash:
Cash and cash equivalents
$
10,531
$
15,214
$
10,012
Less Debt:
Line of credit - China
4,074
—
—
Net Cash Position
$
6,457
$
15,214
$
10,012
* Derived from audited financial
statements.
CULP, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
FOR THE SIX MONTHS ENDED
OCTOBER 27, 2024, AND OCTOBER 29, 2023
Unaudited
(Amounts in Thousands)
SIX MONTHS ENDED
Amounts
October 27,
October 29,
2024
2023
Cash flows from operating activities:
Net loss
$
(12,905
)
$
(5,766
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation
3,077
3,251
Non-cash inventory credit
(309
)
(2,001
)
Amortization
200
193
Stock-based compensation
364
485
Deferred income taxes
204
(283
)
Gain on sale of equipment
(27
)
(278
)
Non-cash restructuring expense
2,178
379
Foreign currency exchange loss (gain)
237
(697
)
Changes in assets and liabilities:
Accounts receivable
(1,162
)
1,644
Inventories
117
2,304
Other current assets
194
(1,355
)
Other assets
107
(123
)
Accounts payable
6,506
(495
)
Deferred revenue
(366
)
(339
)
Accrued restructuring
875
—
Accrued expenses and deferred
compensation
(738
)
(762
)
Income taxes
(1,185
)
(633
)
Net cash used in operating activities
(2,633
)
(4,476
)
Cash flows from investing activities:
Capital expenditures
(1,578
)
(1,972
)
Proceeds from the sale of equipment
527
309
Proceeds from note receivable
180
150
Proceeds from the sale of investments
(rabbi trust)
462
986
Purchase of investments (rabbi trust)
(378
)
(472
)
Net cash used in investing activities
(787
)
(999
)
Cash flows from financing activities:
Proceeds from line of credit - China
4,010
—
Common stock surrendered for withholding
taxes payable
(68
)
(146
)
Net cash provided by (used in) financing
activities
3,942
(146
)
Effect of foreign currency exchange rate
changes on cash and cash equivalents
(3
)
(129
)
Increase (decrease) in cash and cash
equivalents
519
(5,750
)
Cash and cash equivalents at beginning of
year
10,012
20,964
Cash and cash equivalents at end of
year
$
10,531
$
15,214
Free Cash Flow (1)
$
(3,423
)
$
(5,604
)
(1) See next page for Reconciliation of
Free Cash Flow for the six months ending October 27, 2024, and
October 29, 2023.
CULP, INC.
RECONCILIATION OF FREE CASH
FLOW
FOR THE SIX MONTHS ENDED
OCTOBER 27, 2024, AND OCTOBER 29, 2023
Unaudited
(Amounts in Thousands)
SIX MONTHS ENDED
Amounts
October 27,
October 29,
2024
2023
A) Net cash used in operating
activities
$
(2,633
)
$
(4,476
)
B) Minus: Capital expenditures
(1,578
)
(1,972
)
C) Plus: Proceeds from the sale of
equipment
527
309
D) Plus: Proceeds from note receivable
180
150
E) Plus: Proceeds from the sale of
investments (rabbi trust)
462
986
F) Minus: Purchase of investments (rabbi
trust)
(378
)
(472
)
G) Effects of foreign currency exchange
rate changes on cash and cash equivalents
(3
)
(129
)
Free Cash Flow
$
(3,423
)
$
(5,604
)
CULP, INC.
STATEMENTS OF OPERATIONS BY
SEGMENT
FOR THE THREE MONTHS ENDED
OCTOBER 27, 2024, AND OCTOBER 29, 2023
Unaudited
(Amounts in Thousands)
THREE MONTHS ENDED
Amounts
Percent of Total Sales
October 27,
October 29,
% Over
October 27,
October 29,
Net Sales by Segment
2024
2023
(Under)
2024
2023
Mattress Fabrics
$
30,074
$
31,377
(4.2
)%
54.0
%
53.4
%
Upholstery Fabrics
25,600
27,348
(6.4
)%
46.0
%
46.6
%
Net Sales
$
55,674
$
58,725
(5.2
)%
100.0
%
100.0
%
Gross Profit
Gross Margin
Mattress Fabrics
$
2,444
$
2,483
(1.6
)%
8.1
%
7.9
%
Upholstery Fabrics
4,315
5,389
(19.9
)%
16.9
%
19.7
%
Total Segment Gross Profit
6,759
7,872
(14.1
)%
12.1
%
13.4
%
Restructuring Related (Charge) Credit
(1)
(769
)
78
N.M.
(1.4
)%
0.1
%
Gross Profit
$
5,990
$
7,950
(24.7
)%
10.8
%
13.5
%
Selling, General and Administrative
Expenses by Segment
Percent of Sales
Mattress Fabrics
$
3,481
$
3,419
1.8
%
11.6
%
10.9
%
Upholstery Fabrics
3,700
3,998
(7.5
)%
14.5
%
14.6
%
Unallocated Corporate Expenses
2,178
2,628
(17.1
)%
3.9
%
4.5
%
Selling, General and Administrative
Expenses
$
9,359
$
10,045
(6.8
)%
16.8
%
17.1
%
(Loss) Income from Operations by
Segment
Operating Margin
Mattress Fabrics
$
(1,037
)
$
(936
)
10.8
%
(3.4
)%
(3.0
)%
Upholstery Fabrics
$
615
$
1,391
(55.8
)%
2.4
%
5.1
%
Unallocated Corporate Expenses
$
(2,178
)
$
(2,628
)
(17.1
)%
(3.9
)%
(4.5
)%
Total Segment Loss from Operations
(2,600
)
(2,173
)
19.7
%
(4.7
)%
(3.7
)%
Restructuring Related (Charge) Credit
(1)
(769
)
78
N.M
(1.4
)%
0.1
%
Restructuring Expense (1)
(2,031
)
(144
)
N.M
(3.6
)%
(0.2
)%
Loss from Operations
$
(5,400
)
$
(2,239
)
141.2
%
(9.7
)%
(3.8
)%
Depreciation Expense by Segment
Mattress Fabrics (2)
$
1,787
$
1,468
21.7
%
Upholstery Fabrics
174
149
16.8
%
Depreciation Expense
$
1,961
$
1,617
21.3
%
Notes
(1)
See page 14 for a Reconciliation of
Selected Income Statement Information to Adjusted Results for the
three months ending October 27, 2024, and October 29, 2023.
(2)
During the three-month period ending
October 27, 2024, depreciation expense for the mattress fabrics
segment included additional depreciation expense related to the
shortening of useful lives of equipment associated with the gradual
discontinuation of operations at our manufacturing facility located
in Quebec, Canada. The amount of additional depreciation expense
totaling $465,000 was classified as restructuring expense in our
Consolidated Statements of Net Loss.
CULP, INC.
STATEMENTS OF OPERATIONS BY
SEGMENT
FOR THE SIX MONTHS ENDED
OCTOBER 27, 2024, AND OCTOBER 29, 2023
Unaudited
(Amounts in Thousands)
SIX MONTHS ENDED
Amounts
Percent of Total Sales
October 27,
October 29,
% Over
October 27,
October 29,
Net Sales by Segment
2024
2023
(Under)
2024
2023
Mattress Fabrics
$
58,150
$
60,599
(4.0
)%
51.8
%
52.5
%
Upholstery Fabrics
54,061
54,788
(1.3
)%
48.2
%
47.5
%
Net Sales
$
112,211
$
115,387
(2.8
)%
100.0
%
100.0
%
Gross Profit:
Gross Margin
Mattress Fabrics
$
2,118
$
4,477
(52.7
)%
3.6
%
7.4
%
Upholstery Fabrics
9,833
10,659
(7.7
)%
18.2
%
19.5
%
Total Segment Gross Profit
11,951
15,136
(21.0
)%
10.7
%
13.1
%
Restructuring Related Charge (1)
(885
)
(101
)
N.M.
(0.8
)%
(0.1
)%
Gross Profit
$
11,066
$
15,035
(26.4
)%
9.9
%
13.0
%
Selling, General and Administrative
Expenses by Segment
Percent of Sales
Mattress Fabrics
$
6,704
$
6,811
(1.6
)%
11.5
%
11.2
%
Upholstery Fabrics
7,506
7,939
(5.5
)%
13.9
%
14.5
%
Unallocated Corporate Expenses
4,445
5,124
(13.3
)%
4.0
%
4.4
%
Selling, General and Administrative
Expenses
$
18,655
$
19,874
(6.1
)%
16.6
%
17.2
%
(Loss) Income from Operations by
Segment
Operating Margin
Mattress Fabrics
$
(4,586
)
$
(2,334
)
96.5
%
(7.9
)%
(3.9
)%
Upholstery Fabrics
2,327
2,720
(14.4
)%
4.3
%
5.0
%
Unallocated Corporate Expenses
(4,445
)
(5,124
)
(13.3
)%
(4.0
)%
(4.4
)%
Total Segment Loss from Operations
(6,704
)
(4,738
)
41.5
%
(6.0
)%
(4.1
)%
Restructuring Related Charge (1)
(885
)
(101
)
N.M.
(0.8
)%
(0.1
)%
Restructuring Expense (1)
(4,662
)
(482
)
N.M.
(4.2
)%
(0.4
)%
Loss from Operations
$
(12,251
)
$
(5,321
)
130.2
%
(10.9
)%
(4.6
)%
Return on Capital Employed (ttm) (2)
Mattress Fabrics
(15.1
)%
(14.2
)%
6.3
%
Upholstery Fabrics
71.0
%
29.0
%
144.8
%
Unallocated Corporate
N.M.
N.M.
N.M.
Consolidated
(17.5
)%
(19.4
)%
(9.8
)%
Capital Employed (2) (3)
Mattress Fabrics
$
54,313
$
61,185
(11.2
)%
Upholstery Fabrics
6,602
11,324
(41.7
)%
Unallocated Corporate
4,613
3,562
29.5
%
Consolidated
$
65,528
$
76,071
(13.9
)%
Depreciation Expense by Segment
Mattress Fabrics (4)
$
4,084
$
2,922
39.8
%
Upholstery Fabrics
333
329
1.2
%
Depreciation Expense
$
4,417
$
3,251
35.9
%
Notes
(1)
See page 15 for a Reconciliation
of Selected Income Statement Information to Adjusted Results for
the six months ending October 27, 2024, and October 29, 2023.
(2)
See pages 17 through 20 for
calculation of Return on Capital Employed by Segment for the
trailing twelve months ending October 27, 2024, and October 29,
2023, and a reconciliation to information from our U.S. GAAP
financial statements.
(3)
The capital employed balances are
as of October 27, 2024, and October 29, 2023.
(4)
During the six-month period
ending October 27, 2024, depreciation expense for the mattress
fabrics segment included additional depreciation expense related to
the shortening of useful lives of equipment associated with the
gradual discontinuation of operations at our manufacturing facility
located in Quebec, Canada. The amount of additional depreciation
expense totaling $1.3 million was classified as restructuring
expense in our Consolidated Statements of Net Loss.
CULP, INC.
RECONCILIATION OF SELECTED
INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS
FOR THREE MONTHS ENDED OCTOBER
27, 2024, AND OCTOBER 29, 2023
Unaudited
(Amounts in Thousands)
As Reported
Adjusted Results
October 27,
October 27,
2024
Adjustments
2024
Net sales
$
55,674
—
$
55,674
Cost of sales (1)
(49,684
)
769
(48,915
)
Gross profit
5,990
769
6,759
Selling, general and administrative
expenses
(9,359
)
—
(9,359
)
Restructuring expense (2)
(2,031
)
2,031
—
Loss from operations
$
(5,400
)
2,800
$
(2,600
)
Notes
(1)
During the three months ending
October 27, 2024, cost of sales included restructuring related
charges totaling $769,000 for losses on the disposal and valuation
of inventory related to the gradual discontinuation of operations
at our manufacturing facility located in Quebec, Canada.
(2)
During the three months ending
October 27, 2024, restructuring expense of $2.0 million represents
$2.0 million and $29,000, related to the mattress fabrics and
upholstery fabrics segments, respectively. The $2.0 million of
restructuring expense represents (i) $1.4 million related to the
gradual discontinuation of operations and the process of selling
the manufacturing facility located in Quebec, Canada, which
includes employee termination benefits of $505,000, additional
depreciation related to the shortening of useful lives of equipment
of $465,000, other associated costs of $373,000, and lease
termination costs of $179,000, partially offset by net gains on the
disposal of equipment totaling $133,000; (ii) $600,000 related to
relocating certain equipment and consolidating production from the
mattress fabric manufacturing facility located in Quebec, Canada to
the U.S facility located in Stokesdale, North Carolina, which
includes other associated costs of $527,000, employee termination
benefits of $58,000, and losses on the disposal of equipment
totaling $15,000; (iii) $29,000 of other associated costs related
to moving certain equipment from our upholstery fabrics operation
located in Knoxville, Tennessee to our upholstery fabrics
distribution center located in Burlington, N.C.; and (iv) $13,000
for losses on the disposal of equipment related to the
consolidation of two leased facilities at our mattress cover
operation located in Ouanaminthe, Haiti.
As Reported
Adjusted Results
October 29,
October 29,
2023
Adjustments
2023
Net sales
$
58,725
—
$
58,725
Cost of sales (1)
(50,775
)
(78
)
(50,853
)
Gross profit
7,950
(78
)
7,872
Selling, general and administrative
expenses
(10,045
)
—
(10,045
)
Restructuring expense (2)
(144
)
144
—
Loss from operations
$
(2,239
)
66
$
(2,173
)
Notes
(1)
During the three months ending
October 29, 2023, cost of sales included a restructuring related
credit totaling $78,000 for adjustments made for inventory
markdowns related to the discontinuation of production of cut and
sewn upholstery kits at the company's facility in Ouanaminthe,
Haiti.
(2)
During the three months ending
October 29, 2023, restructuring expense represents $142,000 for
impairment charges related to equipment and $2,000 for employee
termination benefits related to the discontinuation of production
of cut and sewn upholstery kits at our facility located in
Ouanaminthe, Haiti.
CULP, INC.
RECONCILIATION OF SELECTED
INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS
FOR SIX MONTHS ENDED OCTOBER
27, 2024, AND OCTOBER 29, 2023
Unaudited
(Amounts in Thousands)
As Reported
Adjusted Results
October 27,
October 27,
2024
Adjustments
2024
Net sales
$
112,211
—
$
112,211
Cost of sales (1)
(101,145
)
885
(100,260
)
Gross profit
11,066
885
11,951
Selling, general and administrative
expenses
(18,655
)
—
(18,655
)
Restructuring expense (2)
(4,662
)
4,662
—
Loss from operations
$
(12,251
)
5,547
$
(6,704
)
Notes
(1)
During the six months ending
October 27, 2024, cost of sales included restructuring related
charges totaling $885,000 for losses on the disposal and valuation
of inventory related to the gradual discontinuation of operations
at our manufacturing facility located in Quebec, Canada.
(2)
During the six months ending
October 27, 2024, restructuring expense of $4.7 million represents
$4.5 million and $161,000, related to the mattress fabrics and
upholstery fabrics segments, respectively. The $4.7 million of
restructuring expense represents (i) $3.3 million related to the
gradual discontinuation of operations and the process of selling
the manufacturing facility located in Quebec, Canada, which
includes $1.3 million of additional depreciation related to the
shortening of useful lives of equipment, employee termination
benefits of $1.0 million, other associated costs of $463,000, and
lease termination costs of $443,000, partially offset by net gains
on the disposal of equipment of $38,000; (ii) $767,000 related to
relocating certain equipment and consolidating production from the
mattress fabric manufacturing facility located in Quebec, Canada to
the U.S facility located in Stokesdale, North Carolina, which
includes other associated costs of $694,000, employee termination
benefits of $58,000, and losses on the disposal of equipment
totaling $15,000; (iii) $483,000 related to the consolidation of
two leased facilities at our mattress cover operation located in
Ouanaminthe, Haiti, which includes lease termination costs of
$406,000, employee termination benefits of $48,000, other
associated costs of $16,000, and losses of the disposal of
equipment of $13,000; and (iv) $161,000 related to our upholstery
fabrics segment which includes employee termination benefits of
$102,000 and other associated costs of $59,000 for moving equipment
from our upholstery fabrics operation located in Knoxville,
Tennessee to our upholstery fabrics distribution center located in
Burlington, N.C.
As Reported
Adjusted Results
October 29,
October 29,
2023
Adjustments
2023
Net sales
$
115,387
—
$
115,387
Cost of sales (1)
(100,352
)
101
(100,251
)
Gross profit
15,035
101
15,136
Selling, general and administrative
expenses
(19,874
)
—
(19,874
)
Restructuring expense (2)
(482
)
482
—
Loss from operations
$
(5,321
)
583
$
(4,738
)
Notes
(1)
During the six months ending
October 29, 2023, cost of sales included restructuring related
charges totaling $101,000, which represents the markdown of
inventory totaling $179,000 which occurred during the first quarter
of fiscal 2024, partially offset by a gain on disposal of inventory
totaling $78,000 which occurred during the second quarter of fiscal
2024, related to the discontinuation of production of cut and sewn
upholstery kits at the company's facility in Ouanaminthe,
Haiti.
(2)
During the six months ending
October 29, 2023, restructuring expense represents $379,000 for
impairment charges related to equipment and $103,000 for employee
termination benefits related to the discontinuation of production
of cut and sewn upholstery kits at our facility located in
Ouanaminthe, Haiti.
CULP, INC.
CONSOLIDATED STATEMENTS OF
ADJUSTED EBITDA
FOR THE TWELVE MONTHS ENDED
OCTOBER 27, 2024, AND OCTOBER 29, 2023
Unaudited
(Amounts in Thousands)
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Trailing 12 Months
January 28,
April 28,
July 28,
October 27,
October 27,
2024
2024
2024
2024
2024
Net loss
$
(3,188
)
$
(4,865
)
$
(7,261
)
$
(5,644
)
$
(20,958
)
Income tax expense (benefit)
1,027
805
240
(50
)
2,022
Interest income, net
(284
)
(252
)
(235
)
(214
)
(985
)
Depreciation expense
1,646
1,623
1,581
1,496
6,346
Restructuring (credit) expense
(50
)
204
2,631
2,031
4,816
Restructuring related (credit)
charge
(61
)
—
116
769
824
Amortization expense
98
99
99
101
397
Stock based compensation
262
168
176
188
794
Adjusted EBITDA
$
(550
)
$
(2,218
)
$
(2,653
)
$
(1,323
)
$
(6,744
)
% Net Sales
(0.9
)%
(4.5
)%
(4.7
)%
(2.4
)%
(3.0
)%
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Trailing 12 Months
January 29,
April 30,
July 30,
October 29,
October 29,
2023
2023
2023
2023
2023
Net loss (1)
$
(8,968
)
$
(4,681
)
$
(3,342
)
$
(2,424
)
$
(19,415
)
Income tax expense
286
798
701
516
2,301
Interest income, net
(196
)
(239
)
(345
)
(282
)
(1,062
)
Depreciation expense
1,739
1,619
1,634
1,617
6,609
Restructuring expense
711
70
338
144
1,263
Restructuring related charge
(credit)
—
—
179
(78
)
101
Amortization expense
109
115
96
97
417
Stock based compensation
322
258
322
163
1,065
Adjusted EBITDA
$
(5,997
)
$
(2,060
)
$
(417
)
$
(247
)
$
(8,721
)
% Net Sales
(11.4
)%
(3.4
)%
(0.7
)%
(0.4
)%
(3.8
)%
% Over (Under)
(90.8
)%
7.7
%
536.2
%
435.6
%
(22.7
)%
CULP, INC.
RETURN ON CAPITAL EMPLOYED BY
SEGMENT
FOR THE TWELVE MONTHS ENDED
OCTOBER 27, 2024
Unaudited
(Amounts in Thousands)
Adjusted Operating (Loss)
Income
Twelve Months Ended
Average Capital
Return on Avg. Capital
October 27, 2024 (1)
Employed (2)
Employed (3)
Mattress Fabrics
$
(9,097
)
$
60,301
(15.1
)%
Upholstery Fabrics
5,394
7,595
71.0
%
Unallocated Corporate
(8,896
)
4,284
N.M.
Consolidated
$
(12,599
)
$
72,179
(17.5
)%
Average Capital Employed
As of the Three Months Ended
October 27, 2024
As of the Three Months Ended
July 28, 2024
As of the Three Months Ended
April 28, 2024
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Total assets (4)
$
69,261
31,385
28,341
128,987
$
66,713
31,763
30,663
129,139
$
72,060
32,629
27,365
132,054
Total liabilities
(14,948
)
(24,783
)
(25,633
)
(65,364
)
(10,303
)
(24,857
)
(24,855
)
(60,015
)
(9,803
)
(25,370
)
(20,752
)
(55,925
)
Subtotal
$
54,313
$
6,602
2,708
$
63,623
$
56,410
$
6,906
5,808
$
69,124
$
62,257
$
7,259
6,613
$
76,129
Cash and cash equivalents
—
—
(10,531
)
(10,531
)
—
—
(13,472
)
(13,472
)
—
—
(10,012
)
(10,012
)
Short-term investments - Rabbi
Trust
—
—
(919
)
(919
)
—
—
(954
)
(954
)
—
—
(903
)
(903
)
Current income taxes receivable
—
—
(979
)
(979
)
—
—
(532
)
(532
)
—
—
(350
)
(350
)
Long-term investments - Rabbi
Trust
—
—
(7,105
)
(7,105
)
—
—
(7,089
)
(7,089
)
—
—
(7,102
)
(7,102
)
Deferred income taxes -
non-current
—
—
(559
)
(559
)
—
—
(528
)
(528
)
—
—
(518
)
(518
)
Line of credit - China
—
—
4,074
4,074
—
—
4,017
4,017
—
—
—
—
Deferred compensation - current
—
—
919
919
—
—
954
954
—
—
903
903
Accrued restructuring
863
863
633
633
—
—
—
—
Income taxes payable - current
—
—
1,165
1,165
—
—
759
759
—
—
972
972
Income taxes payable -
long-term
—
—
1,378
1,378
—
—
2,180
2,180
—
—
2,088
2,088
Deferred income taxes -
non-current
—
—
6,624
6,624
—
—
6,449
6,449
—
—
6,379
6,379
Deferred compensation
non-current
—
—
6,975
6,975
—
—
6,946
6,946
—
—
6,929
6,929
Total Capital Employed
$
54,313
$
6,602
$
4,613
$
65,528
$
56,410
$
6,906
$
5,171
$
68,487
$
62,257
$
7,259
$
4,999
$
74,515
CULP, INC.
RETURN ON CAPITAL EMPLOYED BY
SEGMENT - CONTINUED
FOR THE TWELVE MONTHS ENDED
OCTOBER 27, 2024
Unaudited
(Amounts in Thousands)
As of the Three Months Ended
January 28, 2024
As of the Three Months Ended
October 29, 2023
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Total assets (4)
$
75,572
38,085
28,341
141,998
$
75,924
35,082
31,154
142,160
Total liabilities
(8,234
)
(32,201
)
(20,767
)
(61,202
)
(14,739
)
(23,758
)
(20,035
)
(58,532
)
Subtotal
$
67,338
$
5,884
$
7,574
$
80,796
$
61,185
$
11,324
$
11,119
$
83,628
Cash and cash equivalents
—
—
(12,585
)
(12,585
)
—
—
(15,214
)
(15,214
)
Short-term investments - Rabbi
Trust
—
—
(937
)
(937
)
—
—
(937
)
(937
)
Current income taxes receivable
—
—
(476
)
(476
)
—
—
(340
)
(340
)
Long-term investments - Rabbi
Trust
—
—
(7,083
)
(7,083
)
—
—
(6,995
)
(6,995
)
Deferred income taxes -
non-current
—
—
(531
)
(531
)
—
—
(472
)
(472
)
Deferred compensation - current
—
—
937
937
—
—
937
937
Accrued restructuring
—
—
—
—
—
—
—
—
Income taxes payable - current
—
—
1,070
1,070
—
—
998
998
Income taxes payable -
long-term
—
—
2,072
2,072
—
—
2,055
2,055
Deferred income taxes -
non-current
—
—
6,177
6,177
—
—
5,663
5,663
Deferred compensation
non-current
—
—
6,856
6,856
—
—
6,748
6,748
Total Capital Employed
$
67,338
$
5,884
$
3,074
$
76,296
$
61,185
$
11,324
$
3,562
$
76,071
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Consolidated
Average Capital Employed (2)
$
60,301
$
7,595
$
4,284
$
72,179
Notes
(1)
See last page of this
presentation for calculation.
(2)
Average capital employed is
calculated independently for each segment and on a consolidated
basis using the five quarterly periods ending October 27, 2024,
July 28, 2024, April 28, 2024, January 28, 2024, and October 29,
2023.
(3)
Return on average capital
employed represents the twelve months operating (loss) income as of
October 27, 2024, divided by average capital employed. Average
capital employed does not include cash and cash equivalents,
short-term and long-term investments – Rabbi Trust, income taxes
receivable and payable, accrued restructuring, line of credit -
China, noncurrent deferred income tax assets and liabilities, and
current and non-current deferred compensation.
(4)
Intangible assets are included in
unallocated corporate for all periods presented and therefore, have
no effect on capital employed and return on capital employed for
our mattress fabrics and upholstery fabrics segments.
CULP INC.
RETURN ON CAPITAL EMPLOYED BY
SEGMENT
FOR THE TWELVE MONTHS ENDED
OCTOBER 29, 2023
Unaudited
(Amounts in Thousands)
Adjusted Operating (Loss)
Income
Twelve Months Ended
Average Capital
Return on Avg. Capital
October 29, 2023 (1)
Employed (2)
Employed (3)
Mattress Fabrics
$
(9,093
)
$
64,140
(14.2
)%
Upholstery Fabrics
3,910
13,489
29.0
%
Unallocated Corporate
(10,584
)
3,724
N.M.
Consolidated
$
(15,767
)
$
81,354
(19.4
)%
Average Capital Employed
As of the Three months ended
October 29, 2023
As of the Three Months Ended
July 30, 2023
As of the Three Months Ended
April 30, 2023
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Total assets (4)
$
75,924
35,082
31,154
142,160
$
72,286
37,592
33,024
142,902
$
75,494
39,127
37,562
152,183
Total liabilities
(14,739
)
(23,758
)
(20,035
)
(58,532
)
(11,230
)
(25,235
)
(20,320
)
(56,785
)
(11,387
)
(29,638
)
(22,078
)
(63,103
)
Subtotal
$
61,185
$
11,324
$
11,119
$
83,628
$
61,056
$
12,357
$
12,704
$
86,117
$
64,107
$
9,489
$
15,484
$
89,080
Cash and cash equivalents
—
—
(15,214
)
(15,214
)
—
—
(16,812
)
(16,812
)
—
—
(20,964
)
(20,964
)
Short-term investments - Rabbi
Trust
—
—
(937
)
(937
)
—
—
(791
)
(791
)
—
—
(1,404
)
(1,404
)
Current income taxes receivable
—
—
(340
)
(340
)
—
—
(202
)
(202
)
—
—
—
—
Long-term investments - Rabbi
Trust
—
—
(6,995
)
(6,995
)
—
—
(7,204
)
(7,204
)
—
—
(7,067
)
(7,067
)
Deferred income taxes -
non-current
—
—
(472
)
(472
)
—
—
(476
)
(476
)
—
—
(480
)
(480
)
Deferred compensation - current
—
—
937
937
—
—
791
791
—
—
1,404
1,404
Accrued restructuring
—
—
—
—
—
—
10
10
—
—
—
—
Income taxes payable - current
—
—
998
998
—
—
526
526
—
—
753
753
Income taxes payable -
long-term
—
—
2,055
2,055
—
—
2,710
2,710
—
—
2,675
2,675
Deferred income taxes -
non-current
—
—
5,663
5,663
—
—
5,864
5,864
—
—
5,954
5,954
Deferred compensation -
long-term
—
—
6,748
6,748
—
—
6,966
6,966
—
—
6,842
6,842
Total Capital Employed
$
61,185
$
11,324
$
3,562
$
76,071
$
61,056
$
12,357
$
4,086
$
77,499
$
64,107
$
9,489
$
3,197
$
76,793
CULP INC.
RETURN ON CAPITAL EMPLOYED BY
SEGMENT - CONTINUED
FOR THE TWELVE MONTHS ENDED
OCTOBER 29, 2023
Unaudited
(Amounts in Thousands)
As of the Three Months Ended
January 29, 2023
As of the Three Months Ended
October 30, 2022
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Total assets (4)
$
75,393
39,817
35,388
150,598
$
78,366
44,934
38,330
161,630
Total liabilities
(9,511
)
(24,367
)
(23,216
)
(57,094
)
(9,895
)
(26,108
)
(23,519
)
(59,522
)
Subtotal
$
65,882
$
15,450
$
12,172
$
93,504
$
68,471
$
18,826
$
14,811
$
102,108
Cash and cash equivalents
—
—
(16,725
)
(16,725
)
—
—
(19,137
)
(19,137
)
Short-term investments - Rabbi
Trust
—
—
(2,420
)
(2,420
)
—
—
(2,237
)
(2,237
)
Current income taxes receivable
—
—
(238
)
(238
)
—
—
(510
)
(510
)
Long-term investments - Rabbi
Trust
—
—
(7,725
)
(7,725
)
—
—
(7,526
)
(7,526
)
Deferred income taxes -
non-current
—
—
(463
)
(463
)
—
—
(493
)
(493
)
Deferred compensation - current
—
—
2,420
2,420
—
—
2,237
2,237
Accrued restructuring
—
—
—
—
—
—
33
33
Income taxes payable - current
—
—
467
467
—
—
969
969
Income taxes payable -
long-term
—
—
2,648
2,648
—
—
2,629
2,629
Deferred income taxes -
non-current
—
—
6,089
6,089
—
—
5,700
5,700
Deferred compensation -
long-term
—
—
7,590
7,590
—
—
7,486
7,486
Total Capital Employed
$
65,882
$
15,450
$
3,815
$
85,147
$
68,471
$
18,826
$
3,962
$
91,259
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Consolidated
Average Capital Employed (2)
$
64,140
$
13,489
$
3,724
$
81,354
Notes
(1)
See last page of this
presentation for calculation.
(2)
Average capital employed was
calculated independently for each segment and on a consolidated
basis using the five quarterly periods ending October 29, 2023,
July 30, 2023, April 30, 2023, January 29, 2023, and October 30,
2022.
(3)
Return on average capital
employed represents the last twelve months operating (loss) income
as of October 29, 2023, divided by average capital employed.
Average capital employed does not include cash and cash
equivalents, short-term and long-term investments – Rabbi Trust,
income taxes receivable and payable, accrued restructuring,
noncurrent deferred income tax assets and liabilities, and current
and non-current deferred compensation.
(4)
Intangible assets are included in
unallocated corporate for all periods presented and therefore, have
no effect on capital employed and return on capital employed for
our mattress fabrics and upholstery fabrics segments.
CULP INC.
CONSOLIDATED STATEMENTS OF
ADJUSTED OPERATING (LOSS) INCOME
FOR THE TWELVE MONTHS ENDED
OCTOBER 27, 2024, AND OCTOBER 29, 2023
Unaudited
(Amounts in Thousands)
Quarter Ended
Trailing 12
Months
01/28/2024
04/28/2024
07/28/2024
10/27/2024
10/27/2024
Mattress Fabrics
$
(1,582
)
$
(2,929
)
$
(3,549
)
$
(1,037
)
$
(9,097
)
Upholstery Fabrics
2,092
975
1,712
615
5,394
Unallocated Corporate
(2,361
)
(2,090
)
(2,267
)
(2,178
)
(8,896
)
Operating loss
$
(1,851
)
$
(4,044
)
$
(4,104
)
$
(2,600
)
$
(12,599
)
Quarter Ended
Trailing 12
Months
1/29/2023
4/30/2023
7/30/2023
10/29/2023
10/29/2023
Mattress Fabrics
$
(4,229
)
$
(2,530
)
$
(1,398
)
$
(936
)
$
(9,093
)
Upholstery Fabrics
(420
)
1,611
1,328
1,391
3,910
Unallocated Corporate
(2,423
)
(3,038
)
(2,495
)
(2,628
)
(10,584
)
Operating loss
$
(7,072
)
$
(3,957
)
$
(2,565
)
$
(2,173
)
$
(15,767
)
% Over (Under)
(73.8
)%
2.2
%
60.0
%
19.7
%
(20.1
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241204507304/en/
Investor Relations Contact Ken Bowling, Executive Vice
President, Chief Financial Officer, and Treasurer: (336) 881-5630
krbowling@culp.com
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