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CULP, Inc. Reports First Quarter Results Ended July 30

September 4, 2023  by HFBusiness Staff in Business Strategy, Industry   

Fiscal 2024 First Quarter Financial Summary

Net sales for the first quarter of fiscal 2024 were $56.7 million, down 9.5 percent compared with the prior-year period, with mattress fabrics sales flat, down 0.5 percent (a solid performance in the face of industry softness), and upholstery fabrics sales down 17.4 percent compared to a strong quarter the prior year (fueled by a lift in sales following pandemic-related shutdowns in China).

Loss from operations was $(3.1) million, which included $517,000 in mostly non-cash restructuring and related charges associated with the discontinued production of cut and sewn upholstery kits in Haiti during the quarter.

Excluding this $517,000, adjusted loss from operations for the quarter was $(2.6) million, a better-than-expected improvement as compared with loss from operations of $(4.7) million for the prior-year period and loss from operations of $(4.0) million for the fourth quarter of fiscal 2023. (See reconciliation table at the back of this press release.)

Net loss was $(3.3) million, or $(0.27) per diluted share, compared with a net loss of $(5.7) million, or $(0.47) per diluted share, for the prior-year period. Net loss for the quarter included the $517,000 in restructuring and related charges noted above. The effective tax rate for the first quarter was negative (26.5) percent, reflecting the company’s mix of taxable income between its U.S. and foreign jurisdictions during the period. The company maintained a solid balance sheet, with total cash of $16.8 million and no outstanding borrowings as of July 30, 2023. Total liquidity as of July 30, 2023, was $42.3 million (consisting of $16.8 million in cash and $25.5 million in borrowing availability under the company's domestic credit facility).

Adjusted EBITDA for the period was close to breakeven at negative $(416,000), as compared to adjusted EBITDA of negative $(2.7) million for the prior-year period.

Commenting on the results, Iv Culp, president and chief executive officer of Culp, Inc., said, "We are pleased to report better than expected improvement in our operating performance for the first quarter, as we are continuing our aggressive business transformation.”

“As expected, our top-line performance was impacted by the difficult macro-economic environment that continues to pressure the industries we service. However, our operating performance improved despite this pressure on sales, driven by internal improvements in both businesses.”

“In our mattress fabrics segment, we continue to gain market position with the roll out of new fabric and sewn cover placements that are priced in line with current costs. This segment also achieved a 52 percent improvement in its operating results as compared to the prior-year period, and a 45 percent improvement as compared sequentially to the prior quarter.”

“These gains were driven by our ongoing focus on operational efficiencies and cost reduction initiatives across our locations. For the upholstery fabrics segment, we saw operational improvements and fixed cost savings, along with solid demand in our hospitality/contract business, including improvement for Read Window. However, sales in our residential fabrics business were lower as compared to the first quarter of last fiscal year, which was a strong quarter, due to the ongoing demand softness affecting the home furnishings industry.”

"We also continued our diligent focus on prudent financial management, including maintaining a strong balance sheet and ensuring a strategic level of working capital. We ended the quarter with $16.8 million in cash and no outstanding borrowings. We believe we are well positioned, and we are strategically investing in our business, especially within our mattress fabrics segment, to support future profitable sales growth and further improve operating efficiencies.”