0000723603false00007236032024-12-042024-12-04
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Date of Report (Date of earliest event reported): December 04, 2024 |
Culp, Inc.
(Exact name of Registrant as Specified in Its Charter)
|
|
|
|
|
North Carolina |
1-12597 |
56-1001967 |
(State or Other Jurisdiction
of Incorporation) |
(Commission File Number) |
(IRS Employer
Identification No.) |
|
|
|
|
|
1823 Eastchester Drive |
|
High Point, North Carolina |
|
27265 |
(Address of Principal Executive Offices) |
|
(Zip Code) |
|
Registrant’s Telephone Number, Including Area Code: 336 889-5161 |
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
|
|
|
|
|
Title of each class
|
|
Trading
Symbol(s) |
|
Name of each exchange on which registered
|
Common stock, par value $0.05 per share |
|
CULP |
|
The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
This report and the exhibits attached hereto contain “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 report and the exhibits attached hereto as anticipated, believed, estimated, expected, intended, planned or projected. The forward-looking statements included in this report and the exhibits attached hereto are made only as of the date of 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 report 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.
Item 2.02 – Results of Operations and Financial Condition
On December 4, 2024, we issued a news release to announce our financial results for our second quarter ended October 27, 2024. A copy of the news release is attached hereto as Exhibit 99.1.
The information set forth in this Item 2.02 of this Current Report, and in Exhibit 99.1, is intended to be “furnished” under Item 2.02 of Form 8-K. Such information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
The news release contains adjusted income statement information for the three and six month periods ending October 27, 2024, and October 29, 2023, respectively, which disclose adjusted loss from operations, a non-U.S. GAAP performance measure that eliminates items which are not expected to occur on a recurring or regular basis. For the three and six month periods ending October 27, 2024, these items include, as applicable for the period presented, restructuring related charges and restructuring expense associated with the gradual discontinuation of the mattress fabrics manufacturing operations in Quebec, Canada, the process of selling the facility located in Quebec, Canada, and the relocation of certain equipment from Quebec, Canada, to Stokesdale, North Carolina; restructuring expense associated with consolidation of the mattress fabrics sewn cover operation in Haiti from two buildings into one building; and restructuring expense associated with the rationalization of the upholstery fabrics finishing operation located in Shanghai, China. For the three and six month period ending October 29, 2023, these items include, as applicable for the period presented, a restructuring-related credit, restructuring related charges, and restructuring expense associated with the discontinued production of cut and sewn upholstery kits in Ouanaminthe, Haiti. The company has included this adjusted information in order to show operational performance excluding the effects of items not expected to occur on a recurring or regular basis. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. Management believes this presentation aids in the comparison of financial results among comparable financial periods. Management uses adjusted income statement information in evaluating the financial performance of our overall operations and business segments. Also, adjusted income statement information is used as a performance measure in our incentive-based executive compensation program. We note, however, that this adjusted income statement information should not be viewed in isolation or as a substitute for loss from operations calculated in accordance with U.S. GAAP.
The news release contains disclosures about our net cash, which is a non-U.S. GAAP liquidity measure that we define as cash and cash equivalents (which we sometimes refer to as “cash”) plus investments that are available to fund operations minus the total amount of outstanding borrowings under our lines of credit or other debt instruments. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. We believe this non-GAAP measure is useful to investors as it provides a way to compare our cash position across periods on a consistent basis, regardless of the impact of financing activities. Net cash should not be viewed in isolation by investors and should not be used as a substitute for GAAP measures of liquidity.
The news release contains disclosures about free cash flow, a non-U.S. GAAP liquidity measure that we define as net cash (used in) provided by operating activities, less cash capital expenditures and any payments on vendor-financed capital expenditures, plus any proceeds from sale of property, plant, and equipment, plus proceeds from note receivable, plus proceeds from the sale of investments associated with our rabbi trust, less the purchase of investments associated with our rabbi trust, and plus or minus the effects of foreign currency exchange rate changes on cash and cash equivalents, in each case to the extent any such amount is incurred during the period presented. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. Management believes the disclosure of free cash flow provides useful information to investors because it measures our available cash flow for potential debt repayment, stock repurchases, dividends, additions to cash and investments, or other corporate purposes. We note, however, that not all of the company’s free cash flow is available for discretionary spending, as we may have mandatory debt payments and other cash requirements that must be deducted from our cash available for future use. In operating our business, management uses free cash flow to make decisions about what commitments of cash to make for operations, such as capital expenditures (and possible financing arrangements for these expenditures), purchases of inventory or supplies, SG&A expenditure levels, compensation, and other commitments of cash, while still allowing for adequate cash to meet known future commitments for cash, such as debt repayment, and also for making decisions about dividend payments and share repurchases.
The news release contains disclosures about our Adjusted EBITDA, which is a non-U.S. GAAP performance measure that reflects net (loss) income excluding income tax expense (benefit), net interest income, and restructuring expense or credit and restructuring related charges or credits, as well as depreciation and amortization expense, and stock-based compensation expense. This measure also excludes other non-recurring charges and credits associated with our
business, if and to the extent any such amount is incurred during the period presented. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. We believe presentation of Adjusted EBITDA is useful to investors because earnings before interest income and expense, income taxes, depreciation and amortization, and similar performance measures that exclude certain charges from earnings, are often used by investors and financial analysts in evaluating and comparing companies in our industry. We note, however, that such measures are not defined uniformly by various companies, with differing expenses being excluded from net income to calculate these performance measures. For this reason, Adjusted EBITDA should not be viewed in isolation by investors and should not be used as a substitute for net income (loss) calculated in accordance with GAAP, nor should it be used for direct comparisons with similarly titled performance measures reported by other companies. Use of Adjusted EBITDA as an analytical tool has limitations in that this measure does not reflect all expenses that are necessary to fund and operate our business, including funds required to pay taxes, service our debt, and fund capital expenditures, among others. Management uses Adjusted EBITDA to help it analyze the company’s earnings and operating performance, by excluding the effects of expenses that depend upon capital structure and debt level, tax provisions, and non-cash items such as depreciation, amortization and stock-based compensation expense that do not require immediate uses of cash.
The news release contains disclosures about return on capital employed for both the entire company and for individual business segments. We define return on capital employed as adjusted operating income (loss) (measured on a trailing twelve-month basis) divided by average capital employed (excluding intangible assets related to acquisitions at the divisional level only). Adjusted operating income (loss) excludes certain charges or credits that are not expected to occur on a recurring or regular basis, if applicable for the period presented. Average capital employed is calculated over rolling five fiscal periods, depending on which quarter is being presented. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. We believe return on capital employed is an accepted measure of earnings efficiency in relation to capital employed, but it is a non-U.S. GAAP performance measure that is not defined or calculated in the same manner by all companies. This measure should not be considered in isolation or as an alternative to net income (loss) or other performance measures, but we believe it provides useful information to investors by comparing the adjusted operating income (loss) we produce to the net asset base used to generate that income (loss). Also, adjusted operating income (loss) on a trailing twelve-months basis does not necessarily indicate results that would be expected for the full fiscal year or for the following twelve months. We note that, particularly for return on capital employed measured at the segment level, not all assets and expenses are allocated to our operating segments, and there are assets and expenses at the corporate (unallocated) level that may provide support to a segment’s operations and yet are not included in the assets and expenses used to calculate that segment’s return on capital. Thus, the average return on capital employed for the company’s segments will generally be different from the company’s overall return on capital employed. Management uses return on capital employed to evaluate the company’s earnings efficiency and the relative performance of its segments.
Item 7.01 Regulation FD Disclosure
On December 4, 2024, we posted a restructuring presentation to our website at https://culpinc.gcs-web.com/ (the "Restructuring Presentation"). A copy of the Restructuring Presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated into this Item 7.01 by reference. We expect to use the Restructuring Presentation from time to time, in whole or in part, and possibly with modifications, in connection with presentations to investors, analysts, and others.
The information contained in the Restructuring Presentation is summary information that should be considered within the context of the company's filings with the Securities and Exchange Commission ("SEC") and other public announcements the company may make by press release or otherwise from time to time. The Restructuring Presentation speaks only as of the date of this Current Report on Form 8-K. We undertake no duty or obligation to publicly update or revise the information contained in the Restructuring Presentation, including, without limitation, any targets, estimates, goals, or other forward-looking statements, although we may do so from time to time. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases, or through other public disclosure.
The Restructuring Presentation contains statements intended as "forward-looking statements" that are subject to the cautionary statements about forward-looking statements set forth on page 2 of the Restructuring Presentation. By furnishing the information contained in this Current Report on Form 8-K, including Exhibit 99.2, we make no admission as to the materiality of any such information.
The information in this Current Report on Form 8-K, including Exhibit 99.2, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference to such filing.
Item 9.01 (d) – Exhibits
EXHIBIT INDEX
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
|
|
|
|
|
|
CULP, INC. (Registrant) |
|
|
|
|
|
|
By: |
/s/ Kenneth R. Bowling |
|
|
|
Chief Financial Officer |
|
|
|
(principal financial officer and principal accounting officer) |
|
|
|
|
Dated December 4, 2024
CULP ANNOUNCES RESULTS FOR SECOND QUARTER FISCAL 2025, HIGHLIGHTED BY
SEQUENTIAL IMPROVEMENT IN MATTRESS FABRICS PERFORMANCE, ALONG WITH
STEADY RESTRUCTURING PROGRESS
HIGH POINT, N.C. (December 4, 2024) ─ 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.
CULP Announces Results for Second Quarter Fiscal 2025
Page 2
December 4, 2024
"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.
CULP Announces Results for Second Quarter Fiscal 2025
Page 3
December 4, 2024
▪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.
CULP Announces Results for Second Quarter Fiscal 2025
Page 4
December 4, 2024
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.
Investor Relations Contact
Ken Bowling, Executive Vice President, Chief Financial Officer, and Treasurer:
(336) 881-5630
krbowling@culp.com
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,
CULP Announces Results for Second Quarter Fiscal 2025
Page 5
December 4, 2024
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 Announces Results for Second Quarter Fiscal 2025
Page 6
December 4, 2024
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 Announces Results for Second Quarter Fiscal 2025
Page 7
December 4, 2024
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.
CULP Announces Results for Second Quarter Fiscal 2025
Page 8
December 4, 2024
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 Announces Results for Second Quarter Fiscal 2025
Page 9
December 4, 2024
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 Announces Results for Second Quarter Fiscal 2025
Page 10
December 4, 2024
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 Announces Results for Second Quarter Fiscal 2025
Page 11
December 4, 2024
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 Announces Results for Second Quarter Fiscal 2025
Page 12
December 4, 2024
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 Announces Results for Second Quarter Fiscal 2025
Page 13
December 4, 2024
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 Announces Results for Second Quarter Fiscal 2025
Page 14
December 4, 2024
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 Announces Results for Second Quarter Fiscal 2025
Page 15
December 4, 2024
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 Announces Results for Second Quarter Fiscal 2025
Page 16
December 4, 2024
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 Announces Results for Second Quarter Fiscal 2025
Page 17
December 4, 2024
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 Announces Results for Second Quarter Fiscal 2025
Page 18
December 4, 2024
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 Announces Results for First Quarter Fiscal 2025
Page 19
September 4, 2024
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 Announces Results for Second Quarter Fiscal 2025
Page 20
December 4, 2024
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 Announces Results for Second Quarter Fiscal 2025
Page 21
December 4, 2024
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 |
)% |
-END-
CULP Positioning for the Future Culp Restructuring Plan - December 2024
Forward Looking Statements This presentation 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 US 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 presentation as anticipated, believed, estimated, expected, intended, planned or projected. The forward-looking statements included in this presentation are made only as of the date of this presentation. 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 presentation 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. 2 CULP
Financial and Business Implications of Restructuring Plan RESTRUCTURING ACTIONS 1. Consolidate CHF North American Fabric Operations Wind Down and Close Operations in Quebec, Canada Move Knitting and Finish Capacity to Stokesdale, NC Optimize Capacity and Overhead in North America in One Facility (NC) 2. Transition Mattress Fabric Damask Weaving Operation to Sourcing Model 3. Consolidate Haiti Cut & Sew Operations into One Facility 4. Reduce CHF workforce by approximately 240 people (35% of segment total workforce) 5. Restructure Upholstery Fabrics (CUF) Finishing Operation in China 6. Reduce Unallocated Corporate and Shared Service Expenses RESTRUCTURING OUTCOMES Projected Cost Savings 1. $10-11 million in annualized cost and productivity savings, primarily via mattress segment COGS $7.3 million total restructuring & related charges with $4.4 million cash charges primarily from: • Severance . Restructuring • Relocation of Equipment • Wind-Down of Canadian Operation Close to $1.0 million reduction in annualized unallocated corporate/shared services savings Projected Proceeds from Asset Sales & Other 1. Anticipate $6-8 million of after-tax proceeds from sale of owned Canadian Faciality 2. Anticipate close to $2.0 million from sale of excess equipment and termination of Haiti building lease Offset against cash restructuring expense 3 CULP
Steps and Timing of Restructuring: Measuring Success FISCAL Q1 25 (MAY-JULY 2024) Major restructuring actions announced in early May Communicated phased closure of Canadian mattress fabrics facility to affected employees, customers, vendors, and Canadian regulatory authorities Initiated and completed negotiation of severance and stay bonus agreements Engaged broker to sell Canadian real estate Worked with supply partners on transition of damask SKUS Preliminary moving and optimizing Stokesdale facility floor space for relocation of Canadian knitting and finishing equipment Completed consolidation of Haiti operations into one building Completed restructuring of upholstery fabric (CUF) finishing operation in China FISCAL Q2 25 (AUGUST - OCTOBER 2024) Negotiated termination of Haiti building lease in early Q2 (expected to generate $250,000 cash during FY25 Q4) Market and show Canadian real estate Completed transition of Damask SKUS with supply partners Made continued progress with relocation of knitting and finishing equipment to Stokesdale Made early-stage operational improvements for plant and equipment consolidation SECOND HALF FISCAL 25 (NOVEMBER 2024 - APRIL 2025) Discontinued production at Canadian mattress fabrics facility in November Complete relocation of equipment to Stokesdale Complete sale of excess equipment Estimated completion for sale of Canadian real estate (timing dependent upon buyer interest/ market conditions) Further progress on operational improvements from plant and equipment consolidation 4 CULP
Liquidity, Access to Capital to be Strengthened Cash 0.0 Total Liquidity As of 10/27/2024 (in millions) ABL Availability $10.5 22.6 China Credit Line Availability Total Liquidity $33.1 Estimated Proceeds from Canadian Real Estate Sale* $7.0 Total Liquidity Including Future Real Estate Sale Proceeds* $40.1 *Hypothetical pro forma assuming sale of Canadian real estate based on estimated net proceeds of $7 million (current estimates are approximately $6.0 to $8.0 million, net of all taxes and commissions). Timing and amount of actual proceeds currently unknown and may differ from hypothetical. BALANCE SHEET IMPACT • Cash and access to liquidity remains solid • Utilizing some borrowing during fiscal 2025 to fund restructuring activity and worldwide working capital to grow the business ($4.1 million in borrowings outstanding under China credit line as of 10/27/2024) • Expect to fund close to $2.0 million of cash restructuring costs with proceeds from the sale of excess manufacturing equipment and proceeds from a building lease termination in Haiti • Eventual proceeds from sale of Canadian facility enhances balance sheet ■ Post-restructuring, cost actions to dramatically lower expected operating and cash burn at current low sales levels to ride out industry softness Restructuring and balance sheet actions allow for continued investment in the business to benefit consolidated company in market recovery CULP 5
Restructuring Puts CHF on Path to Segment Breakeven Hypothetical pro forma model of projected annualized savings on CHF profitability post-restructuring, assuming the same level of sales from fiscal 2024 (model is before any corporate allocation at segment level) • Projected annualized cost and productivity savings of approximately $9.5 million (CHF only) Post restructuring, mattress fabrics segment expected to return to positive operating income sometime in the third quarter of fiscal 2025 CHF Revenue Gross Profit $ Gross Profit % 2017 2021 2022 2023 2024 $190.8 $157.7 $152.2 $111.0 $ 116.4 $ 43.1 $23.9 $16.5 $ (6.7) $ 6.3 23% 15% 11% -6% Pro Forma* Revenue Gross Profit $ 5% Restructuring Savings $ 116.4 $ 6.3 $ 9.5 New Gross Profit $ New Gross Profit % $ 15.8 13.6% * Reflects FY 2024 CHF results restated as a hypothetical pro forma with estimated cost and productivity savings from CHF restructuring actions included. This is a hypothetical model only - it is not intended as guidance/projections. Also, this model does not include any allocation of corporate costs at segment level. ** Estimated restructuring savings for CHF segment only. CULP 6
Mattress Fabrics: Current Industry Demand Near Previous Recession (2009) Bottom Levels · Current level of domestic unit production of 18 million units near 2009 recession levels Unique factors affecting current cycle • Post Covid stimulus, at home demand pull forward • Supply chain challenges and cost pressures in addition to labor shortage • Pressures on lower end consumer discretionary spending due to inflation Figure 6 Annual U.S.-Produced Mattress Unit Volume Trends - Below Pre-Pandemic Levels in millions 26 24 24 22 23 22 22 21 2 22 20 18 16 14 25 24 24 23 24 23 22 21 20 20 19 19 18 20 19 Note: Annual unit volume data is composed of reported and projected U.S.-produced mattress shipments and does not include imported mattress shipments or U.S.- produced or imported stationary foundations. 2022 an 22 annual unit volume data, for U.S.-produced mattresses, may not equal the summed total of quarterly unit volume data, for 2022, due to ISPA's quarterly data restatements. 2021 annual unit volume data, for U.S.-produced mattresses, may not equal the summed total of quarterly unit volume data, for 2021, due to ISPA's annual data restatements. Source: International Sleep Products Association, KeyBanc Capital Markets Inc. CULP 7
Restructuring of Mattress Fabrics Segment 8 Strengthened leadership team focused on profitable growth Leverage long history of success within the bedding industry Drive operating efficiencies: > Optimize manufacturing and sourcing capabilities for customer reactivity and improved cost advantage Phased wind down and closure of fabric formation facility in Canada and consolidation of manufacturing and sourcing capabilities to USA, Turkey and Asia Consolidate cut and sew operations on Haiti / Dominican Republic border to one facility Diligent focus on production scheduling and quality management ➤ Invest in high ROI, quick payback capital projects to drive cost savings New commercial approach including: Strong focus on winning new market position as customer innovation cycle increases ➤ New product introductions priced in line with current costs to improve profit ➤ Restructured and energized sales team ➤ Customer, product, and design segmentation including a focused selling strategy and significant SKU rationalization, especially in damask weaving ➤ Establishment of an open line to balance custom design work with curated fabric offerings where volumes warrant Continued focus on new product placements and growing market position CHF Manufacturing & Sourcing Locations Post-Restructuring USA TURKEY-CHINA-VIETNAM-HAITI CULP
Solidly Profitable Upholstery Fabrics Segment With Key Initiatives Underway to Accelerate Performance Leading position in a fragmented market Asset light model to maintain flexibility and product profit performance Growing innovative performance products > LiveSmart® performance brand > LiveSmart EvolveR, performance plus recycled fibers ➤ Nanobionic® wellness-focused technology Growing Hospitality segment < Targeting >25% of normalized sales with higher margin Expanding capacity of roller shades within Read Window Products Drive operating efficiencies Cut & Sew platform restructuring completed in both Haiti and Asia ➤ Improved Read Window operations ➤ Lower inventory markdown expense Accelerating Segment Performance LIVESmart ENJOY LIFE. STAY SPO LiveSmart EVOLVE POWERED BY REPREVE CULPO Powered by nanobionic CULP 9
What Gives CULP Confidence in Restructuring Plan / Recovery? Key Success Factors ◆ Experienced leadership team focused on profitable growth ❖ Successfully navigated significant restructuring of CUF beginning in early 2000's Solid balance sheet and available liquidity * Strong relationships with key customers and long-term suppliers → Emphasis on design creativity and product innovation ❖ Strategic and optimized manufacturing and global sourcing platform ❖ Market position improving with solid placements priced in line with current costs ❖ Solid sequential sales growth for CHF in the first and second quarters of fiscal 2025, in very difficult demand environment 10 CULP
CULP
v3.24.3
| X |
- DefinitionBoolean flag that is true when the XBRL content amends previously-filed or accepted submission.
| Name: |
dei_AmendmentFlag |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionFor the EDGAR submission types of Form 8-K: the date of the report, the date of the earliest event reported; for the EDGAR submission types of Form N-1A: the filing date; for all other submission types: the end of the reporting or transition period. The format of the date is YYYY-MM-DD.
| Name: |
dei_DocumentPeriodEndDate |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:dateItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
| Name: |
dei_DocumentType |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:submissionTypeItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionAddress Line 1 such as Attn, Building Name, Street Name
| Name: |
dei_EntityAddressAddressLine1 |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- Definition
+ References
+ Details
| Name: |
dei_EntityAddressCityOrTown |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionCode for the postal or zip code
| Name: |
dei_EntityAddressPostalZipCode |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionName of the state or province.
| Name: |
dei_EntityAddressStateOrProvince |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:stateOrProvinceItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionA unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityCentralIndexKey |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:centralIndexKeyItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionIndicate if registrant meets the emerging growth company criteria. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityEmergingGrowthCompany |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionCommission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
| Name: |
dei_EntityFileNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:fileNumberItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTwo-character EDGAR code representing the state or country of incorporation.
| Name: |
dei_EntityIncorporationStateCountryCode |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:edgarStateCountryItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityRegistrantName |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityTaxIdentificationNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:employerIdItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionLocal phone number for entity.
| Name: |
dei_LocalPhoneNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 13e
-Subsection 4c
| Name: |
dei_PreCommencementIssuerTenderOffer |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14d
-Subsection 2b
| Name: |
dei_PreCommencementTenderOffer |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTitle of a 12(b) registered security. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b
| Name: |
dei_Security12bTitle |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:securityTitleItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionName of the Exchange on which a security is registered. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection d1-1
| Name: |
dei_SecurityExchangeName |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:edgarExchangeCodeItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14a
-Subsection 12
| Name: |
dei_SolicitingMaterial |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTrading symbol of an instrument as listed on an exchange.
| Name: |
dei_TradingSymbol |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:tradingSymbolItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Securities Act
-Number 230
-Section 425
| Name: |
dei_WrittenCommunications |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
Culp (NYSE:CULP)
過去 株価チャート
から 11 2024 まで 12 2024
Culp (NYSE:CULP)
過去 株価チャート
から 12 2023 まで 12 2024
