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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Culp Inc | NYSE:CULP | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 6.55 | 0 | 01:00:00 |
Culp, Inc. (NYSE: CULP) (together with its consolidated subsidiaries, “CULP”) today reported financial and operating results for the fourth quarter and fiscal year ended April 28, 2024.
Fiscal 2024 Fourth Quarter Financial Summary
Fiscal 2024 Full Year Financial Summary
Restructuring Plan Update
The restructuring plan announced on May 1, 2024, primarily focused on the company's mattress fabrics segment, is progressing as planned.
CEO Commentary
Commenting on the results, Iv Culp, president and chief executive officer of Culp, Inc., said, “Our sales and operating results for the fourth quarter were in line with our expectations announced on May 1, 2024. These results reflected weakness in industry demand in both of our businesses, driven primarily by ongoing macro-economic headwinds. Our sales performance for the fourth quarter was also affected to some degree by the timing of orders, as many of our larger customers experienced extremely slow conditions beginning in January. We posted solid year-over-year sales gains in both businesses during our fiscal third quarter, and we were making progress towards our stated improvement goals. However, we faced a significant decline in order levels during our fourth quarter, related to demand pressures our customers faced early in the calendar year.
"This impact on fourth quarter revenue, along with ongoing macro-challenges, led us to take aggressive action to bring our manufacturing costs and capacity in line with current and expected demand. We announced a major restructuring plan in early May, with a primary focus on our mattress fabrics segment, and we are making steady progress on the execution of this restructuring initiative. The announced adjustments, once fully implemented, will enable us to grow more efficiently and profitably with a lower level of fixed costs. Importantly, these strategic steps do not limit our ability to grow the business, but instead allow us to better optimize our global mix of manufacturing capabilities and long-term sourcing partners. Also, we are extremely grateful for the support we have received from our valued customers, suppliers, and employees, and we are confident that the strength of these relationships will help drive our recovery.
“Despite the headwinds, there were some positive indicators within CULP’s business during fiscal 2024, including (1) significant year-over-year operating improvement (though still a loss and below intended targets); (2) consistent operating profits in our upholstery fabrics business; (3) year-over-year sales growth in our mattress fabrics segment; and (4) strong product innovation and placements in both segments, positioning us for a return to higher sales growth as macro conditions improve. We are encouraged by our solid market position in both businesses, and with our restructuring actions well underway, we believe we are on track to return to profitability post-restructuring even if market conditions remain at their currently depressed levels.
“We also maintained a solid balance sheet during the fourth quarter, with a focus on prudent financial management, and we are taking proactive steps to ensure the long-term success of our business. We are diligently focused on executing our restructuring initiatives, and therefore strengthening our balance sheet, optimizing our operations and cost structure, and supporting our customers, while also continuing to win new placements with our innovative product portfolio.
"As we look ahead to fiscal 2025, we expect industry conditions will remain pressured for some time, but we believe our fiscal 2024 fourth quarter revenue levels represented a bottom point for CULP. We believe the strategic actions we are taking will position us for profitable growth opportunities, and we remain committed to delivering sustainable results and enhancing value for our shareholders over the long term," added Culp.
Business Segment Highlights
Mattress Fabrics Segment (“CHF”) Summary
Upholstery Fabrics Segment (“CUF”) Summary
Balance Sheet, Cash Flow, and Liquidity
Financial Outlook
Conference Call
Culp, Inc. will hold a conference call to discuss financial results for the fourth quarter and fiscal 2024 year on Friday, June 28, 2024, at 11:00 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 June 28, 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, Canada, 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. Further, forward looking statements are intended to speak only as of the date on which they are made, and we disclaim any duty to update such statements to reflect any changes in management’s expectations or any change in the assumptions or circumstances on which such statements are based, whether due to new information, future events, or otherwise. 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,” “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, restructurings, 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, borrowing capacity, investments, potential acquisitions, restructuring and restructuring-related charges, expenses, and/or credits, 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 fabrics operation 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. 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 and financial results.
CULP, INC.
CONSOLIDATED STATEMENTS OF NET LOSS
FOR THE THREE MONTHS ENDED APRIL 28, 2024, AND APRIL 30, 2023
Unaudited
(Amounts in Thousands, Except for Per Share Data)
THREE MONTHS ENDED
Amount
Percent of Sales
(1)
(1)
April 28,
April 30,
% Over
April 28,
April 30,
2024
2023
(Under)
2024
2023
Net sales
$
49,528
$
61,426
(19.4
)%
100.0
%
100.0
%
Cost of sales
(44,327
)
(54,538
)
(18.7
)%
89.5
%
88.8
%
Gross profit
5,201
6,888
(24.5
)%
10.5
%
11.2
%
Selling, general and administrative expenses
(9,245
)
(10,845
)
(14.8
)%
18.7
%
17.7
%
Restructuring expense (2) (3)
(204
)
(70
)
191.4
%
0.4
%
0.1
%
Loss from operations
(4,248
)
(4,027
)
5.5
%
(8.6
)%
(6.6
)%
Interest expense
(11
)
—
100.0
%
(0.0
)%
—
Interest income
263
239
10.0
%
0.5
%
0.4
%
Other expense
(64
)
(95
)
(32.6
)%
(0.1
)%
(0.2
)%
Loss before income taxes
(4,060
)
(3,883
)
4.6
%
(8.2
)%
(6.3
)%
Income tax expense (4)
(805
)
(798
)
0.9
%
(19.8
)%
(20.6
)%
Net loss
$
(4,865
)
$
(4,681
)
3.9
%
(9.8
)%
(7.6
)%
Net loss per share - basic
$
(0.39
)
$
(0.38
)
2.6
%
Net loss per share - diluted
$
(0.39
)
$
(0.38
)
2.6
%
Average shares outstanding-basic
12,470
12,316
1.3
%
Average shares outstanding-diluted
12,470
12,316
1.3
%
Notes
(1) See page 14 for a Reconciliation of Selected Income Statement Information to Adjusted Results for the three months ending April 28, 2024, and April 30, 2023.
(2) Restructuring expense of $204,000 for the three months ending April 28, 2024, represents employee termination benefits related to the rationalization of the upholstery fabrics finishing operation located in Shanghai, China.
(3) Restructuring expense of $70,000 for the three months ending April 30, 2023, represents employee termination benefits of $39,000 and other associated costs $31,000 related to the consolidation of certain leased facilities located in Ouanaminthe, Haiti.
(4) Percent of sales column for income tax expense is calculated as a percent of loss before income taxes.
CULP, INC.
CONSOLIDATED STATEMENTS OF NET LOSS
FOR THE TWELVE MONTHS ENDED APRIL 28, 2024, AND APRIL 30, 2023
Unaudited
(Amounts in Thousands, Except for Per Share Data)
TWELVE MONTHS ENDED
Amount
Percent of Sales
(1)
(1)
April 28,
April 30,
% Over
April 28,
April 30,
2024
2023
(Under)
2024
2023
Net sales
$
225,333
$
234,934
(4.1
)%
100.0
%
100.0
%
Cost of sales (2) (3)
(197,394
)
(224,038
)
(11.9
)%
87.6
%
95.4
%
Gross profit
27,939
10,896
156.4
%
12.4
%
4.6
%
Selling, general and administrative expenses
(38,611
)
(37,978
)
1.7
%
17.1
%
16.2
%
Restructuring expense (4) (5)
(636
)
(1,396
)
(54.4
)%
0.3
%
0.6
%
Loss from operations
(11,308
)
(28,478
)
(60.3
)%
(5.0
)%
(12.1
)%
Interest expense
(11
)
—
100.0
%
—
%
—
Interest income
1,174
531
121.1
%
0.5
%
0.2
%
Other expense
(625
)
(443
)
41.1
%
0.3
%
0.2
%
Loss before income taxes
(10,770
)
(28,390
)
(62.1
)%
(4.8
)%
(12.1
)%
Income tax expense (6)
(3,049
)
(3,130
)
(2.6
)%
(28.3
)%
(11.0
)%
Net loss
$
(13,819
)
$
(31,520
)
(56.2
)%
(6.1
)%
(13.4
)%
Net loss per share - basic
$
(1.11
)
$
(2.57
)
(56.8
)%
Net loss per share - diluted
$
(1.11
)
$
(2.57
)
(56.8
)%
Average shares outstanding-basic
12,432
12,283
1.2
%
Average shares outstanding-diluted
12,432
12,283
1.2
%
Notes
(1) See page 15 for the Reconciliation of Selected Income Statement Information to Adjusted Results for the twelve months ending April 28, 2024, and April 30, 2023.
(2) Cost of sales for the twelve months ending April 28, 2024, includes a restructuring related charge totaling $40,000 representing markdowns of inventory related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti.
(3) Cost of sales for the twelve months ending April 30, 2023, includes a restructuring related charge totaling $98,000, which pertained to a loss on disposal and markdowns of inventory related to the exit of the company's cut and sew upholstery fabrics operation located in Shanghai, China.
(4) Restructuring expense of $636,000 for the twelve months ending April 28, 2024, represents impairment charges related to equipment of $329,000 and employee termination benefits of $103,000 related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti. In addition, during the fourth quarter of fiscal 2024, restructuring expense of $204,000 was incurred for employee termination benefits related to the rationalization of the upholstery fabrics finishing operation located in Shanghai, China.
(5) Restructuring expense of $1.4 million for the twelve months ending April 30, 2023, relates to restructuring activities for both the company's cut and sew upholstery fabrics operations located in Shanghai, China, which occurred during the second quarter of fiscal 2023, and located in Ouananminthe, Haiti, which occurred during the third and fourth quarters of fiscal 2023. Restructuring expense represents employee termination benefits of $507,000, lease termination costs of $481,000, impairment losses totaling $357,000 that relate to leasehold improvements and equipment, and $51,000 for other associated costs.
(6) Percent of sales column for income tax expense is calculated as a percent of loss before income taxes.
CONSOLIDATED BALANCE SHEETS
APRIL 28, 2024, AND APRIL 30, 2023
Unaudited
(Amounts in Thousands)
Amounts
(Condensed)
(Condensed)
April 28,
*April 30,
Increase (Decrease)
2024
2023
Dollars
Percent
Current assets
Cash and cash equivalents
$
10,012
20,964
(10,952
)
(52.2
)%
Short-term investments - rabbi trust
903
1,404
(501
)
(35.7
)%
Accounts receivable, net
21,138
24,778
(3,640
)
(14.7
)%
Inventories
44,843
45,080
(237
)
(0.5
)%
Short-term note receivable
264
219
45
20.5
%
Current income taxes receivable
350
—
350
100.0
%
Other current assets
3,371
3,071
300
9.8
%
Total current assets
80,881
95,516
(14,635
)
(15.3
)%
Property, plant & equipment, net
33,182
36,111
(2,929
)
(8.1
)%
Right of use assets
6,203
8,191
(1,988
)
(24.3
)%
Intangible assets
1,876
2,252
(376
)
(16.7
)%
Long-term investments - rabbi trust
7,102
7,067
35
0.5
%
Long-term note receivable
1,462
1,726
(264
)
(15.3
)%
Deferred income taxes
518
480
38
7.9
%
Other assets
830
840
(10
)
(1.2
)%
Total assets
$
132,054
152,183
(20,129
)
(13.2
)%
Current liabilities
Accounts payable - trade
25,607
29,442
(3,835
)
(13.0
)%
Accounts payable - capital expenditures
343
56
287
512.5
%
Operating lease liability - current
2,061
2,640
(579
)
(21.9
)%
Deferred compensation - current
903
1,404
(501
)
(35.7
)%
Deferred revenue
1,495
1,192
303
25.4
%
Accrued expenses
6,726
8,533
(1,807
)
(21.2
)%
Income taxes payable - current
972
753
219
29.1
%
Total current liabilities
38,107
44,020
(5,913
)
(13.4
)%
Operating lease liability - long-term
2,422
3,612
(1,190
)
(32.9
)%
Income taxes payable - long-term
2,088
2,675
(587
)
(21.9
)%
Deferred income taxes
6,379
5,954
425
7.1
%
Deferred compensation - long-term
6,929
6,842
87
1.3
%
Total liabilities
55,925
63,103
(7,178
)
(11.4
)%
Shareholders' equity
76,129
89,080
(12,951
)
(14.5
)%
Total liabilities and shareholders' equity
$
132,054
152,183
(20,129
)
(13.2
)%
Shares outstanding
12,470
12,327
143
1.2
%
* Derived from audited financial statements.
CULP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED APRIL 28, 2024, AND APRIL 30, 2023
Unaudited
(Amounts in Thousands)
TWELVE MONTHS ENDED
Amounts
April 28,
April 30,
2024
2023
Cash flows from operating activities:
Net loss
$
(13,819
)
$
(31,520
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation
6,521
6,845
Non-cash inventory (credit) charge (1) (2)
(1,628
)
5,819
Amortization
390
438
Stock-based compensation
915
1,145
Deferred income taxes
387
(2
)
Gain on sale of equipment
(299
)
(314
)
Non-cash restructuring expense
330
791
Foreign currency exchange gain
(593
)
(537
)
Changes in assets and liabilities:
Accounts receivable
3,559
(2,642
)
Inventories
1,593
15,370
Other current assets
(329
)
(297
)
Other assets
(115
)
86
Accounts payable
(2,926
)
10,274
Deferred revenue
303
672
Accrued expenses and deferred compensation
(1,870
)
853
Income taxes
(643
)
823
Net cash (used in) provided by operating activities
(8,224
)
7,804
Cash flows from investing activities:
Capital expenditures
(3,711
)
(2,108
)
Proceeds from the sale of equipment
385
468
Proceeds from note receivable
330
15
Proceeds from the sale of investments (rabbi trust)
1,449
2,058
Purchase of investments (rabbi trust)
(884
)
(1,185
)
Net cash used in investing activities
(2,431
)
(752
)
Cash flows from financing activities:
Proceeds from line of credit - China
4,166
—
Payments associated with line of credit - China
(4,146
)
—
Common stock surrendered for withholding taxes payable
(146
)
(33
)
Payments of debt issuance costs
—
(403
)
Net cash used in financing activities
(126
)
(436
)
Effect of exchange rate changes on cash and cash equivalents
(171
)
(202
)
(Decrease) increase in cash and cash equivalents
(10,952
)
6,414
Cash and cash equivalents at beginning of year
20,964
14,550
Cash and cash equivalents at end of year
$
10,012
$
20,964
Free Cash Flow (3)
$
(10,826
)
$
6,850
(1) The non-cash inventory credit of $1.6 million for the twelve months ending April 28, 2024, mostly represents adjustments for inventory markdowns based on the company's policy for aged inventory. The $1.6 million is based on inventory on hand as of April 28, 2024, and relates to both the mattress fabrics and upholstery fabrics segments. In addition, the $1.6 million includes a $40,000 charge associated with the upholstery fabrics segment related to markdowns of inventory associated with the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti.
(2) The non-cash inventory charge of $5.8 million for the twelve months ending April 28, 2023, represents a $2.9 million charge for the write down of inventory to its net realizable value associated with the mattress fabrics segment, $2.8 million related to markdowns of inventory estimated based on the company's policy for aged inventory for both the mattress and upholstery fabrics segments, and $98,000 for the loss on disposal and markdowns of inventory related to the exit of the company's cut and sew upholstery fabrics operation located in Shanghai, China.
(3) See next page for Reconciliation of Free Cash Flow for the twelve-month periods ending April 28, 2024, and April 29, 2023.
CULP, INC.
RECONCILIATION OF FREE CASH FLOW
FOR THE TWELVE MONTHS ENDED APRIL 28, 2024, AND APRIL 30, 2023
Unaudited
(Amounts in Thousands)
TWELVE MONTHS ENDED
Amounts
April 28,
April 30,
2024
2023
A) Net cash (used in) provided by operating activities
$
(8,224)
$
7,804
B) Minus: Capital expenditures
(3,711)
(2,108)
C) Plus: Proceeds from the sale of equipment
385
468
D) Plus: Proceeds from note receivable
330
15
E) Plus: Proceeds from the sale of investments (rabbi trust)
1,449
2,058
F) Minus: Purchase of investments (rabbi trust)
(884)
(1,185)
G) Effects of exchange rate changes on cash and cash equivalents
(171)
(202)
Free Cash Flow
$
(10,826)
$
6,850
CULP, INC.
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED APRIL 28, 2024, AND APRIL 30, 2023
Unaudited
(Amounts in Thousands)
THREE MONTHS ENDED
Amounts
Percent of Total Sales
April 28,
April 30,
% Over
April 28,
April 30,
Net Sales by Segment
2024
2023
(Under)
2024
2023
Mattress Fabrics
$
25,750
$
30,696
(16.1
)%
52.0
%
50.0
%
Upholstery Fabrics
23,778
30,730
(22.6
)%
48.0
%
50.0
%
Net Sales
$
49,528
$
61,426
(19.4
)%
100.0
%
100.0
%
Gross Profit
Gross Margin
Mattress Fabrics
$
292
$
591
(50.6
)%
1.1
%
1.9
%
Upholstery Fabrics
4,909
6,297
(22.0
)%
20.6
%
20.5
%
Total Gross Profit
5,201
6,888
(24.5
)%
10.5
%
11.2
%
Selling, General and Administrative Expenses by Segment
Percent of Sales
Mattress Fabrics
$
3,221
$
3,121
3.2
%
12.5
%
10.2
%
Upholstery Fabrics
3,934
4,686
(16.0
)%
16.5
%
15.2
%
Unallocated Corporate Expenses
2,090
3,038
(31.2
)%
4.2
%
4.9
%
Selling, General and Administrative Expenses
$
9,245
$
10,845
(14.8
)%
18.7
%
17.7
%
(Loss) Income from Operations by Segment
Operating Margin
Mattress Fabrics
$
(2,929
)
$
(2,530
)
15.8
%
(11.4
)%
(8.2
)%
Upholstery Fabrics
975
1,611
(39.5
)%
4.1
%
5.2
%
Unallocated Corporate Expenses
(2,090
)
(3,038
)
(31.2
)%
(4.2
)%
(4.9
)%
Total Segment Loss from Operations
(4,044
)
(3,957
)
2.2
%
(8.2
)%
(6.4
)%
Restructuring Expense (1)
(204
)
(70
)
191.4
%
(0.4
)%
(0.1
)%
Loss from Operations
$
(4,248
)
$
(4,027
)
5.5
%
(8.6
)%
(6.6
)%
Depreciation Expense by Segment
Mattress Fabrics
$
1,461
$
1,426
2.5
%
Upholstery Fabrics
162
193
(16.1
)%
Depreciation Expense
$
1,623
$
1,619
0.2
%
Notes
(1) See page 14 for a Reconciliation of Selected Income Statement Information to Adjusted Results for the three months ending April 28, 2024, and April 30, 2023.
CULP, INC.
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE TWELVE MONTHS ENDED APRIL 28, 2024, AND APRIL 30, 2023
Unaudited
(Amounts in Thousands)
TWELVE MONTHS ENDED
Amounts
Percent of Total Sales
April 28,
April 30,
% Over
April 28,
April 30,
Net Sales by Segment
2024
2023
(Under)
2024
2023
Mattress Fabrics
$
116,370
$
110,995
4.8
%
51.6
%
47.2
%
Upholstery Fabrics
108,963
123,939
(12.1
)%
48.4
%
52.8
%
Net Sales
$
225,333
$
234,934
(4.1
)%
100.0
%
100.0
%
Gross Profit (Loss):
Gross Margin
Mattress Fabrics
$
6,289
$
(6,739
)
(193.3
)%
5.4
%
(6.1
)%
Upholstery Fabrics
21,690
17,733
22.3
%
19.9
%
14.3
%
Total Segment Gross Profit
27,979
10,994
154.5
%
12.4
%
4.7
%
Restructuring Related Charge (1)
(40
)
(98
)
(59.2
)%
(0.0
)%
(0.0
)%
Gross Profit
$
27,939
$
10,896
156.4
%
12.4
%
4.6
%
Selling, General and Administrative Expenses by Segment
Percent of Sales
Mattress Fabrics
$
13,134
$
11,942
10.0
%
11.3
%
10.8
%
Upholstery Fabrics
15,903
15,739
1.0
%
14.6
%
12.7
%
Unallocated Corporate Expenses
9,574
10,297
(7.0
)%
4.2
%
4.4
%
Selling, General and Administrative Expenses
$
38,611
$
37,978
1.7
%
17.1
%
16.2
%
(Loss) Income from Operations by Segment
Operating Margin
Mattress Fabrics
$
(6,845
)
$
(18,681
)
(63.4
)%
(5.9
)%
(16.8
)%
Upholstery Fabrics
5,787
1,994
190.2
%
5.3
%
1.6
%
Unallocated Corporate Expenses
(9,574
)
(10,297
)
(7.0
)%
(4.2
)%
(4.4
)%
Total Segment Loss from Operations
(10,632
)
(26,984
)
(60.6
)%
(4.7
)%
(11.5
)%
Restructuring Related Charge (1)
(40
)
(98
)
(59.2
)%
(0.0
)%
(0.0
)%
Restructuring Expense (1)
(636
)
(1,396
)
(54.4
)%
(0.3
)%
(0.6
)%
Loss from Operations
$
(11,308
)
$
(28,478
)
(60.3
)%
(5.0
)%
(12.1
)%
Return on Capital Employed (2)
Mattress Fabrics
(10.8
)%
(25.8
)%
(58.1
)%
Upholstery Fabrics
62.5
%
11.2
%
458.0
%
Unallocated Corporate
N.M.
N.M.
N.M.
Consolidated
(13.9
)%
(28.7
)%
(51.6
)%
Capital Employed (2) (3)
Mattress Fabrics
$
62,257
$
64,107
(2.9
)%
Upholstery Fabrics
7,259
9,489
(23.5
)%
Unallocated Corporate
4,999
3,197
56.4
%
Consolidated
$
74,515
$
76,793
(3.0
)%
Depreciation Expense by Segment
Mattress Fabrics
$
5,883
$
6,050
(2.8
)%
Upholstery Fabrics
638
795
(19.7
)%
Depreciation Expense
$
6,521
$
6,845
(4.7
)%
Notes
(1) See page 15 for a Reconciliation of Selected Income Statement Information to Adjusted Results for the twelve months ending April 28, 2024, and April 30, 2023.
(2) See pages 17 through 20 for calculation of Return on Capital Employed by Segment for the twelve months ending April 28, 2024, and April 30, 2023, and a reconciliation to information from our U.S. GAAP financial statements.
(3) The capital employed balances are as of April 28, 2024, and April 30, 2023.
CULP, INC.
RECONCILIATION OF SELECTED INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS
FOR THREE MONTHS ENDED APRIL 28, 2024, AND APRIL 30, 2023
Unaudited
(Amounts in Thousands)
As Reported
Adjusted Results
April 28,
April 28,
2024
Adjustments
2024
Net sales
$
49,528
—
$
49,528
Cost of sales
(44,327
)
—
(44,327
)
Gross profit
5,201
—
5,201
Selling, general and administrative expenses
(9,245
)
—
(9,245
)
Restructuring expense (1)
(204
)
204
—
Loss from operations
$
(4,248
)
204
$
(4,044
)
Notes
(1) Restructuring expense of $204,000 for the three months ending April 28, 2024, represents employee termination benefits related to the rationalization of the upholstery fabrics finishing operation located in Shanghai, China.
As Reported
Adjusted Results
April 30,
April 30,
2023
Adjustments
2023
Net sales
$
61,426
—
$
61,426
Cost of sales
(54,538
)
—
(54,538
)
Gross profit
6,888
—
6,888
Selling, general and administrative expenses
(10,845
)
—
(10,845
)
Restructuring expense (1)
(70
)
70
—
Loss from operations
$
(4,027
)
70
$
(3,957
)
Notes
(1) Restructuring expense of $70,000 for the three-months ending April 30, 2023, represents employee termination benefits of $39,000 and other associated costs of $31,000 that related to the consolidation of certain leased facilities located in Ouanaminthe, Haiti.
CULP, INC.
RECONCILIATION OF SELECTED INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS
FOR TWELVE MONTHS ENDED APRIL 28, 2024, AND APRIL 30, 2023
Unaudited
(Amounts in Thousands)
As Reported
Adjusted Results
April 28,
April 28,
2024
Adjustments
2024
Net sales
$
225,333
—
$
225,333
Cost of sales (1)
(197,394
)
40
(197,354
)
Gross profit
27,939
40
27,979
Selling, general and administrative expenses
(38,611
)
—
(38,611
)
Restructuring expense (2)
(636
)
636
—
Loss from operations
$
(11,308
)
676
$
(10,632
)
Notes
(1) Cost of sales for the twelve months ending April 28, 2024, includes a restructuring related charge totaling $40,000 representing markdowns of inventory related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti.
(2) Restructuring expense of $636,000 for the twelve months ending April 28, 2024, represents impairment charges related to equipment of $329,000 and employee termination benefits of $103,000 related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti. In addition, during the fourth quarter of fiscal 2024, restructuring expense of $204,000 was incurred for employee termination benefits related to the rationalization of the upholstery fabrics finishing operation located in Shanghai, China.
As Reported
Adjusted Results
April 30,
April 30,
2023
Adjustments
2023
Net sales
$
234,934
—
$
234,934
Cost of sales (1)
(224,038
)
98
(223,940
)
Gross profit
10,896
98
10,994
Selling, general and administrative expenses
(37,978
)
—
(37,978
)
Restructuring expense (2)
(1,396
)
1,396
—
Loss from operations
$
(28,478
)
1,494
$
(26,984
)
Notes
(1) Cost of sales for the twelve months ending April 28, 2024, includes a restructuring related charge totaling $98,000, which pertained to a loss on disposal and markdowns of inventory related to the exit of the company's cut and sew upholstery fabrics operation located in Shanghai, China.
(2) Restructuring expense of $1.4 million for the twelve months ending April 30, 2023, relates to restructuring activities for both the company's cut and sew upholstery fabrics operations located in Shanghai, China, which occurred during the second quarter of fiscal 2023, and located in Ouananminthe, Haiti, which occurred during the third and fourth quarters of fiscal 2023. Restructuring expense represents employee termination benefits of $507,000, lease termination costs of $481,000, impairment losses totaling $357,000 that relate to leasehold improvements and equipment, and $51,000 for other associated costs.
CULP, INC.
CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA
FOR THE TWELVE MONTHS ENDED APRIL 28, 2024, AND APRIL 30, 2023
Unaudited
(Amounts in Thousands)
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Trailing 12 Months
July 30,
October 29,
January 28,
April 28,
April 28,
2023
2023
2024
2024
2024
Net loss
$
(3,342
)
$
(2,424
)
$
(3,188
)
$
(4,865
)
$
(13,819
)
Income tax expense
701
516
1,027
805
3,049
Interest income, net
(345
)
(282
)
(284
)
(252
)
(1,163
)
Depreciation expense
1,635
1,617
1,646
1,623
6,521
Restructuring expense (credit)
338
144
(50
)
204
636
Restructuring related charge (credit)
179
(78
)
(61
)
—
40
Amortization expense
96
97
98
99
390
Stock based compensation
322
163
262
168
915
Adjusted EBITDA
$
(416
)
$
(247
)
$
(550
)
$
(2,218
)
$
(3,431
)
% Net Sales
(0.7
)%
(0.4
)%
(0.9
)%
(4.5
)%
(1.5
)%
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Trailing 12 Months
July 31,
October 30,
January 29,
April 30,
April 30,
2022
2022
2023
2023
2023
Net loss (1)
$
(5,698
)
$
(12,173
)
$
(8,968
)
$
(4,681
)
$
(31,520
)
Income tax expense
896
1,150
286
798
3,130
Interest income, net
(17
)
(79
)
(196
)
(239
)
(531
)
Depreciation expense
1,768
1,719
1,739
1,619
6,845
Restructuring expense
—
615
711
70
1,396
Restructuring related charge
—
98
—
—
98
Amortization expense
105
109
109
115
438
Stock based compensation
252
313
322
258
1,145
Adjusted EBITDA (1)
$
(2,694
)
$
(8,248
)
$
(5,997
)
$
(2,060
)
$
(18,999
)
% Net Sales
(4.3
)%
(14.1
)%
(11.4
)%
(3.4
)%
(8.1
)%
% Over (Under)
(84.6
)%
(97.0
)%
(90.8
)%
7.7
%
(81.9
)%
(1) Net loss and adjusted EBITDA for the quarter ended October 30, 2022, and the twelve-month period ending April 30, 2023, includes a non-cash charge totaling $5.2 million, which represents a $2.9 million charge for the write down of inventory to its net realizable value associated with the mattress fabrics segment and $2.3 million related to markdowns of inventory estimated based on the company's policy for aged inventory for both the mattress and upholstery fabrics segments.
CULP, INC.
RETURN ON CAPITAL EMPLOYED BY SEGMENT
FOR THE TWELVE MONTHS ENDED APRIL 28, 2024
Unaudited
(Amounts in Thousands)
Adjusted Operating (Loss) Income
Twelve Months Ended
Average Capital
Return on Avg. Capital
April 28, 2024
Employed (2)
Employed (1)
Mattress Fabrics
$
(6,845
)
$
63,189
(10.8
)%
Upholstery Fabrics
5,787
9,263
62.5
%
Unallocated Corporate
(9,574
)
3,784
N.M.
Total
$
(10,632
)
$
76,235
(13.9
)%
Average Capital Employed
As of the three Months April 28, 2024
As of the three Months January 28, 2024
As of the three Months October 29, 2023
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Total assets (3)
$
72,060
32,629
27,365
132,054
$
75,572
38,085
28,341
141,998
$
75,924
35,082
31,154
142,160
Total liabilities
(9,803
)
(25,370
)
(20,752
)
(55,925
)
(8,234
)
(32,201
)
(20,767
)
(61,202
)
(14,739
)
(23,758
)
(20,035
)
(58,532
)
Subtotal
$
62,257
$
7,259
6,613
$
76,129
$
67,338
$
5,884
$
7,574
$
80,796
$
61,185
$
11,324
$
11,119
$
83,628
Cash and cash equivalents
—
—
(10,012
)
(10,012
)
—
—
(12,585
)
(12,585
)
—
—
(15,214
)
(15,214
)
Short-term investments - Rabbi Trust
—
—
(903
)
(903
)
—
—
(937
)
(937
)
—
—
(937
)
(937
)
Current income taxes receivable
—
—
(350
)
(350
)
—
—
(476
)
(476
)
—
—
(340
)
(340
)
Long-term investments - Rabbi Trust
—
—
(7,102
)
(7,102
)
—
—
(7,083
)
(7,083
)
—
—
(6,995
)
(6,995
)
Deferred income taxes - non-current
—
—
(518
)
(518
)
—
—
(531
)
(531
)
—
—
(472
)
(472
)
Deferred compensation - current
—
—
903
903
—
—
937
937
—
—
937
937
Income taxes payable - current
—
—
972
972
—
—
1,070
1,070
—
—
998
998
Income taxes payable - long-term
—
—
2,088
2,088
—
—
2,072
2,072
—
—
2,055
2,055
Deferred income taxes - non-current
—
—
6,379
6,379
—
—
6,177
6,177
—
—
5,663
5,663
Deferred compensation non-current
—
—
6,929
6,929
—
—
6,856
6,856
—
—
6,748
6,748
Total Capital Employed
$
62,257
$
7,259
$
4,999
$
74,515
$
67,338
$
5,884
$
3,074
$
76,296
$
61,185
$
11,324
$
3,562
$
76,071
CULP, INC.
RETURN ON CAPITAL EMPLOYED BY SEGMENT - CONTINUED
FOR THE TWELVE MONTHS ENDED APRIL 28, 2024
Unaudited
(Amounts in Thousands)
As of the three Months Ended July 30, 2023
As of the three Months Ended April 30, 2023
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Total assets (3)
$
72,286
37,592
33,024
142,902
$
75,494
39,127
37,562
152,183
Total liabilities
(11,230
)
(25,235
)
(20,320
)
(56,785
)
(11,387
)
(29,638
)
(22,078
)
(63,103
)
Subtotal
$
61,056
$
12,357
$
12,704
$
86,117
$
64,107
$
9,489
$
15,484
$
89,080
Cash and cash equivalents
—
—
(16,812
)
(16,812
)
—
—
(20,964
)
(20,964
)
Short-term investments - Rabbi Trust
—
—
(791
)
(791
)
—
—
(1,404
)
(1,404
)
Current income taxes receivable
—
—
(202
)
(202
)
—
—
-
-
Long-term investments - Rabbi Trust
—
—
(7,204
)
(7,204
)
—
—
(7,067
)
(7,067
)
Deferred income taxes - non-current
—
—
(476
)
(476
)
—
—
(480
)
(480
)
Deferred compensation - current
—
—
791
791
—
—
1,404
1,404
Accrued restructuring
—
—
10
10
—
—
—
—
Income taxes payable - current
—
—
526
526
—
—
753
753
Income taxes payable - long-term
—
—
2,710
2,710
—
—
2,675
2,675
Deferred income taxes - non-current
—
—
5,864
5,864
—
—
5,954
5,954
Deferred compensation non-current
—
—
6,966
6,966
—
—
6,842
6,842
Total Capital Employed
$
61,056
$
12,357
$
4,086
$
77,499
$
64,107
$
9,489
$
3,197
$
76,793
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Average Capital Employed (3)
$
63,189
$
9,263
$
3,784
$
76,235
Notes
(1) Return on average capital employed represents the twelve months operating (loss) income as of April 28, 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, noncurrent deferred income tax assets and liabilities, and current and non-current deferred compensation.
(2) Average capital employed was computed using the five quarterly periods ending April 28, 2024, January 28, 2024, October 29, 2023, July 30, 2023, and April 30, 2023.
(3) 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 APRIL 30, 2023
Unaudited
(Amounts in Thousands)
Adjusted Operating (Loss) Income
Twelve Months Ended
Average Capital
Return on Avg. Capital
April 30, 2023
Employed (2)
Employed (1)
Mattress Fabrics
$
(18,681
)
$
72,282
(25.8
)%
Upholstery Fabrics
1,994
17,853
11.2
%
Unallocated Corporate
(10,297
)
3,808
N.M.
Total
$
(26,984
)
$
93,943
(28.7
)%
Average Capital Employed
As of the three Months Ended April 30, 2023
As of the three Months Ended January 29, 2023
As of the three Months Ended October 30, 2022
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Total assets (3)
$
75,494
39,127
37,562
152,183
$
75,393
39,817
35,388
150,598
$
78,366
44,934
38,330
161,630
Total liabilities
(11,387
)
(29,638
)
(22,078
)
(63,103
)
(9,511
)
(24,367
)
(23,216
)
(57,094
)
(9,895
)
(26,108
)
(23,519
)
(59,522
)
Subtotal
$
64,107
$
9,489
$
15,484
$
89,080
$
65,882
$
15,450
$
12,172
$
93,504
$
68,471
$
18,826
$
14,811
$
102,108
Cash and cash equivalents
—
—
(20,964
)
(20,964
)
—
—
(16,725
)
(16,725
)
—
—
(19,137
)
(19,137
)
Short-term investments - Rabbi Trust
—
—
(1,404
)
(1,404
)
—
—
(2,420
)
(2,420
)
—
—
(2,237
)
(2,237
)
Current income taxes receivable
—
—
—
—
—
—
(238
)
(238
)
—
—
(510
)
(510
)
Long-term investments - Rabbi Trust
—
—
(7,067
)
(7,067
)
—
—
(7,725
)
(7,725
)
—
—
(7,526
)
(7,526
)
Deferred income taxes - non-current
—
—
(480
)
(480
)
—
—
(463
)
(463
)
—
—
(493
)
(493
)
Deferred compensation - current
—
—
1,404
1,404
—
—
2,420
2,420
—
—
2,237
2,237
Accrued restructuring
—
—
—
—
—
—
—
—
—
—
33
33
Income taxes payable - current
—
—
753
753
—
—
467
467
—
—
969
969
Income taxes payable - long-term
—
—
2,675
2,675
—
—
2,648
2,648
—
—
2,629
2,629
Deferred income taxes - non-current
—
—
5,954
5,954
—
—
6,089
6,089
—
—
5,700
5,700
Deferred compensation - long-term
—
—
6,842
6,842
—
—
7,590
7,590
—
—
7,486
7,486
Total Capital Employed
$
64,107
$
9,489
$
3,197
$
76,793
$
65,882
$
15,450
$
3,815
$
85,147
$
68,471
$
18,826
$
3,962
$
91,259
CULP INC.
RETURN ON CAPITAL EMPLOYED BY SEGMENT - CONTINUED
FOR THE TWELVE MONTHS ENDED APRIL 30, 2023
Unaudited
(Amounts in Thousands)
As of the three Months Ended July 31, 2022
As of the three Months Ended May 1, 2022
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Total assets (3)
$
90,842
51,053
38,595
180,490
$
92,609
51,124
33,830
177,563
Total liabilities
(11,934
)
(30,762
)
(23,799
)
(66,495
)
(8,569
)
(25,915
)
(23,578
)
(58,062
)
Subtotal
$
78,908
$
20,291
$
14,796
$
113,995
$
84,040
$
25,209
$
10,252
$
119,501
Cash and cash equivalents
—
—
(18,874
)
(18,874
)
—
—
(14,550
)
(14,550
)
Current income taxes receivable
—
—
(798
)
(798
)
—
—
(857
)
(857
)
Long-term investments - Rabbi Trust
—
—
(9,567
)
(9,567
)
—
—
(9,357
)
(9,357
)
Deferred income taxes - non-current
—
—
(546
)
(546
)
—
—
(528
)
(528
)
Income taxes payable - current
—
—
587
587
—
—
413
413
Income taxes payable - long-term
—
—
3,118
3,118
—
—
3,097
3,097
Deferred income taxes - non-current
—
—
6,007
6,007
—
—
6,004
6,004
Deferred compensation - long-term
—
—
9,528
9,528
—
—
9,343
9,343
Total Capital Employed
$
78,908
$
20,291
$
4,251
$
103,450
$
84,040
$
25,209
$
3,817
$
113,066
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Average Capital Employed (3)
$
72,282
$
17,853
$
3,808
$
93,943
Notes
(1) Return on average capital employed represents the last twelve months operating (loss) income as of April 30, 2023, divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term and long-term investments – Rabbi Trust, accrued restructuring, income taxes receivable and payable, noncurrent deferred income tax assets and liabilities, and current and non-current deferred compensation.
(2) Average capital employed was computed using the five quarterly periods ending April 30, 2023, January 29, 2023, October 30, 2022, July 31, 2022, and May 1, 2022.
(3) 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240627649838/en/
Investor Relations Contact Ken Bowling, Executive Vice President, Chief Financial Officer, and Treasurer (336) 881-5630 krbowling@culp.com
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