Culp, Inc. Reports Fiscal 2024 Second Quarter Summary

December 10, 2023  by HFBusiness Staff in Business Strategy, Industry   

Fiscal 2024 Second Quarter Financial Summary

Net sales for the second quarter of fiscal 2024 were $58.7 million, up 0.6 percent compared with the prior-year period, with mattress fabrics sales up 19.6 percent, and upholstery fabrics sales down 14.9 percent.

Loss from operations was $(2.2) million, compared with a loss from operations of $(11.9) million for the prior-year period (which included $6.7 million relating to certain inventory impairment and other charges and restructuring and related expenses during the period).

Net loss was $(2.4) million, or $(0.19) per diluted share, compared with a net loss of $(12.2) million, or $(0.99) per diluted share, for the prior-year period. The effective tax rate for the second quarter was negative (27.0) percent, reflecting the company’s mix of taxable income between its U.S. and foreign jurisdictions during the period.

The company maintained a solid financial position, with its balance sheet reflecting $15.2 million of total cash and no outstanding borrowings as of October 29, 2023. Total liquidity as of October 29, 2023, was $41.4 million (consisting of $15.2 million in cash and $26.2 million in borrowing availability under the company's domestic credit facility).

Adjusted EBITDA for the period was close to break-even at negative $(247,000), as compared to adjusted EBITDA of negative $(8.2) 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 both sequential and year-over-year improvement in our consolidated sales and operating performance for the second quarter, a solid outcome considering the challenging macro environment for furniture and bedding.”

“These results, which were in line with our expectations, reflect the strategic business transformation initiatives underway in both divisions that are focused on driving performance despite ongoing demand softness. In our mattress fabrics segment, we are increasing sales and gaining market position with new fabric and sewn cover placements.”

“This segment also achieved a 90 percent improvement in its operating results as compared to the prior-year period, and a 33 percent improvement as compared sequentially to the prior quarter. This performance was driven by balanced inventory management, higher sales, better pricing and margin, and an ongoing focus by our strengthened leadership team on operational efficiencies across our locations.”

“For our upholstery fabrics segment, as expected, sales for residential fabrics were lower than the prior-year period due to demand softness affecting the home furnishings industry. However, demand remained solid in our hospitality/contract business. The segment also saw a significant improvement in operating performance, driven by better inventory management, fixed cost savings, and other operational improvements.”

“Additionally, we continued our focus on prudent financial management, including maintaining a strong balance sheet and ensuring a strategic level of working capital. We ended the quarter with $15.2 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.”

“As we enter the third quarter, we acknowledge that the various external headwinds and pressures on consumer spending for furniture and bedding products may remain for some time. However, our market position is strong and growing, and we are diligently focused on internal improvement initiatives that will enable us to withstand these industry conditions and position our business for renewed growth and profitability.”

“Regardless of the current demand backdrop, we expect to continue on a path of sequential and year-over-year operating improvement, including a return to positive adjusted EBITDA in the third quarter. We also believe we are poised to return to consolidated operating profitability by the end of the fiscal year.”

“We are well positioned with our innovative product offerings, creative designs, resilient global manufacturing and sourcing platform, strong leadership teams, and focused financial management. These hallmarks of our business will support us into the future, especially when market conditions improve,” added Culp.