Culp, Inc. (NYSE: CULP) (together with its consolidated
subsidiaries, “CULP”) today reported financial and operating
results for the second quarter ended October 29, 2023.
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.
CEO Commentary
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.
Business Segment Highlights
Mattress Fabrics Segment (“CHF”) Summary
- Sales for this segment were $31.4 million for the second
quarter, up 19.6 percent compared with sales of $26.2 million in
the second quarter of fiscal 2023.
- The higher sales, as compared to the prior-year period, were
primarily driven by new fabric and sewn cover placements that are
priced in line with current costs. While the domestic mattress
industry remains pressured, CHF continues to make gains with
customers in a difficult market environment.
- Operating loss was $(936,000) for the second quarter, a 90
percent improvement compared to the $(9.0) million operating loss
in the prior-year period (which included $5.0 million relating to
certain inventory impairment charges and losses from inventory
close out sales). This substantial reduction in losses was driven
by balanced inventory management, higher sales, better pricing and
margins, and improvement in operating efficiencies. These factors
were partially offset by higher SG&A business investments
during the period.
Upholstery Fabrics Segment (“CUF”) Summary
- Sales for this segment were $27.3 million for the second
quarter, down 14.9 percent compared with sales of $32.2 million in
the second quarter of fiscal 2023.
- Sales for CUF's residential fabric business were affected by
ongoing softness in the residential home furnishings industry,
where demand remains pressured by a challenging macro-economic
environment. Demand remained solid for CUF’s hospitality/contract
business, with sales for this business accounting for approximately
33 percent of CUF's total sales.
- Operating income was $1.4 million for the second quarter, up
significantly compared with $262,000 in the second quarter of
fiscal 2023 (which included approximately $1.0 million in
higher-than-normal inventory markdowns). Operating margin for the
second quarter was 5.1 percent, again a significant improvement
compared to the prior-year period. Operating performance for the
second quarter was positively affected by better inventory
management; lower fixed costs resulting from the previous
restructuring of CUF's cut and sew platforms; lower freight costs;
and a more favorable foreign exchange rate associated with CUF's
operations in China. These factors were partially offset by lower
residential fabric sales and higher SG&A business investments
during the period.
Balance Sheet, Cash Flow, and Liquidity
- As of October 29, 2023, the company reported $15.2 million in
total cash and no outstanding debt.
- Cash flow from operations and free cash flow were negative
$(4.5) million and negative $(5.6) million, respectively, for the
first six months of fiscal 2024. (See reconciliation table at the
back of this press release.) As expected, the company’s cash flow
from operations and free cash flow during the period were affected
by operating losses and planned strategic investments in capital
expenditures mostly related to the CHF transformation plan.
- Capital expenditures for the first six months of fiscal 2024
were $2.0 million. The company continues to manage capital
investments, focusing on projects that will increase efficiencies
and improve quality, especially for the CHF segment.
- As of October 29, 2023, the company had approximately $41.4
million in liquidity, consisting of $15.2 million in total cash and
$26.2 million in borrowing availability under the company's
domestic credit facility.
Share Repurchases
The company did not repurchase any shares during the second
quarter of fiscal 2024, leaving approximately $3.2 million
available under the current share repurchase program as of October
29, 2023. Despite the current share repurchase authorization, the
company does not expect to repurchase any shares during the third
quarter of fiscal 2024.
Financial Outlook
- CULP achieved sequential and year-over-year improvement in its
sales and operating results for the second quarter of fiscal 2024.
While the current macroeconomic conditions affecting consumer
spending and demand trends are likely to continue for some period,
the company remains well positioned, especially with the
transformation strategy underway in its mattress fabrics
division.
- Due to the uncertainty in the macro-environment, the company is
only providing financial guidance for the third quarter of fiscal
2024. The company’s consolidated net sales for the third quarter
are expected to be sequentially comparable to second quarter of
fiscal 2024 and moderately higher as compared to the third quarter
of fiscal 2023, even in the face of ongoing demand headwinds. The
company expects a consolidated operating loss (loss from
operations) for the third quarter of fiscal 2024 that is in the
range of $(1.2) to $(1.6) million, sequentially improved from the
previous quarter's results, and a significant improvement compared
to the $(7.8) million operating loss for the prior-year period
(which included $711,000 in restructuring expense).
- 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 the ongoing headwinds.
Conference Call
Culp, Inc. will hold a conference call to discuss financial
results for the second quarter of fiscal 2024 on December 5, 2023,
at 11:00 a.m. Eastern Time. A live webcast of this call can be
accessed on the “Upcoming Events” section on the investor relations
page of the company’s website, www.culp.com. A replay of the
webcast will be available for 30 days under the “Past Events”
section on the investor relations page of the company’s website,
beginning at 2:00 p.m. Eastern Time on December 5, 2023.
About the Company
Culp, Inc. is one of the world’s largest marketers of mattress
fabrics for bedding and upholstery fabrics for residential and
commercial furniture. The company markets a variety of fabrics to
its global customer base of leading bedding and furniture
companies, including fabrics produced at Culp’s manufacturing
facilities and fabrics sourced through other suppliers. Culp has
manufacturing and sourcing capabilities located in the United
States, Canada, China, Haiti, Turkey, and Vietnam.
Forward Looking Statements
This release contains “forward-looking statements” within the
meaning of the federal securities laws, including the Private
Securities Litigation Reform Act of 1995 (Section 27A of the
Securities Act of 1933 and Section 21E of the Securities and
Exchange Act of 1934). Such statements are inherently subject to
risks and uncertainties that may cause actual events and results to
differ materially from such statements. Further, forward looking
statements are intended to speak only as of the date on which they
are made, and we disclaim any duty to update such statements to
reflect any changes in management’s expectations or any change in
the assumptions or circumstances on which such statements are
based, whether due to new information, future events, or otherwise.
Forward-looking statements are statements that include projections,
expectations, or beliefs about future events or results or
otherwise are not statements of historical fact. Such statements
are often but not always characterized by qualifying words such as
“expect,” “believe,” “anticipate,” “estimate,” “intend,” “plan,”
“project,” and their derivatives, and include but are not limited
to statements about expectations, projections, or trends for our
future operations, strategic initiatives and plans, production
levels, new product launches, sales, profit margins, profitability,
operating income, capital expenditures, working capital levels,
cost savings, income taxes, SG&A or other expenses, pre-tax
income, earnings, cash flow, and other performance or liquidity
measures, as well as any statements regarding dividends, share
repurchases, liquidity, use of cash and cash requirements,
borrowing capacity, investments, potential acquisitions, 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 global
coronavirus pandemic currently affecting countries around the
world, 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. Finally, disruption in our customers’
supply chains for non-fabric components may cause declines in new
orders and/or delayed shipping of existing orders while our
customers wait for other components, which could adversely affect
our financial results. Further information about these factors, as
well as other factors that could affect our future operations or
financial results and the matters discussed in forward-looking
statements, is included in Item 1A “Risk Factors” in our most
recent Form 10-K and Form 10-Q reports filed with the Securities
and Exchange Commission. A forward-looking statement is neither a
prediction nor a guarantee of future events or circumstances, and
those future events or circumstances may not occur. Additional
risks and uncertainties that we do not presently know about or that
we currently consider to be immaterial may also affect our business
operations and financial results.
CULP, INC.
CONSOLIDATED STATEMENTS OF NET
LOSS
FOR THREE MONTHS ENDED OCTOBER
29, 2023, AND OCTOBER 30, 2022
Unaudited
(Amounts in Thousands, Except
for Per Share Data)
THREE MONTHS ENDED
Amount
Percent of Sales
(1)
(1)
October 29,
October 30,
% Over
October 29,
October 30,
2023
2022
(Under)
2023
2022
Net sales
$
58,725
$
58,381
0.6
%
100.0
%
100.0
%
Cost of sales (2)(3)
(50,775
)
(60,594
)
(16.2
)%
86.5
%
103.8
%
Gross profit (loss)
7,950
(2,213
)
(459.2
)%
13.5
%
(3.8
)%
Selling, general and administrative
expenses
(10,045
)
(9,103
)
10.3
%
17.1
%
15.6
%
Restructuring expense (4) (5)
(144
)
(615
)
(76.6
)%
0.2
%
1.1
%
Loss from operations
(2,239
)
(11,931
)
(81.2
)%
(3.8
)%
(20.4
)%
Interest income
282
79
257.0
%
0.5
%
0.1
%
Other income
49
829
(94.1
)%
0.1
%
1.4
%
Loss before income taxes
(1,908
)
(11,023
)
(82.7
)%
(3.2
)%
(18.9
)%
Income tax expense (6)
(516
)
(1,150
)
(55.1
)%
(27.0
)%
(10.4
)%
Net loss
$
(2,424
)
$
(12,173
)
(80.1
)%
(4.1
)%
(20.9
)%
Net loss per share - basic
$
(0.19
)
$
(0.99
)
(80.4
)%
Net loss per share - diluted
$
(0.19
)
$
(0.99
)
(80.4
)%
Average shares outstanding-basic
12,456
12,280
1.4
%
Average shares outstanding-diluted
12,456
12,280
1.4
%
Notes (1)
See page 12 for our Reconciliation of
Selected Income Statement Information to Adjusted Results for the
three months ending October 29, 2023, and October 30, 2022.
(2)
Cost of sales for the three months ending
October 29, 2023, includes a restructuring related credit totaling
$78,000 for the gain on disposal inventory related to the
discontinuation of production of cut and sewn upholstery kits at
our facility in Ouanaminthe, Haiti.
(3)
Cost of sales for the three months ending
October 30, 2022, includes a restructuring related charge totaling
$98,000, which pertains to loss on disposal and markdowns of
inventory related to the exit of our cut and sew upholstery fabrics
operation located in Shanghai, China.
(4)
Restructuring expense for the three months
ending October 29, 2023, represents $142,000 for impairment charges
related to equipment and $2,000 for employee termination costs
related to the discontinuation of production of cut and sewn
upholstery kits at our facility in Ouanaminthe, Haiti.
(5)
Restructuring expense for the three months
ending October 30, 2022, represents $468,000 for employee
termination benefits, $80,000 for a loss on disposal of equipment,
$47,000 for lease termination costs, and $20,000 of other
associated costs related to the exit of our cut and sew upholstery
fabrics operation located in Shanghai, China.
(6)
Percent of sales column for income tax
expense is calculated as a percent of loss before income taxes.
CULP, INC.
CONSOLIDATED STATEMENTS OF NET
LOSS
FOR SIX MONTHS ENDED OCTOBER
29, 2023, AND OCTOBER 30, 2022
Unaudited
(Amounts in Thousands, Except
for Per Share Data)
SIX MONTHS ENDED
Amount
Percent of Sales
(1)
(1)
October 29,
October 30,
% Over
October 29,
October 30,
2023
2022
(Under)
2023
2022
Net sales
$
115,387
$
120,985
(4.6
)%
100.0
%
100.0
%
Cost of sales (2)(3)
(100,352
)
(119,071
)
(15.7
)%
87.0
%
98.4
%
Gross profit
15,035
1,914
685.5
%
13.0
%
1.6
%
Selling, general and administrative
expenses
(19,874
)
(17,968
)
10.6
%
17.2
%
14.9
%
Restructuring expense (4) (5)
(482
)
(615
)
(21.6
)%
0.4
%
0.5
%
Loss from operations
(5,321
)
(16,669
)
(68.1
)%
(4.6
)%
(13.8
)%
Interest income
627
96
553.1
%
0.5
%
0.1
%
Other income
145
747
(80.6
)%
(0.1
)%
(0.6
)%
Loss before income taxes
(4,549
)
(15,826
)
(71.3
)%
(3.9
)%
(13.1
)%
Income tax expense (6)
(1,217
)
(2,046
)
(40.5
)%
(26.8
)%
(12.9
)%
Net loss
$
(5,766
)
$
(17,872
)
(67.7
)%
(5.0
)%
(14.8
)%
Net loss per share - basic
$
(0.47
)
$
(1.46
)
(68.1
)%
Net loss per share - diluted
$
(0.47
)
$
(1.46
)
(68.1
)%
Average shares outstanding-basic
12,394
12,259
1.1
%
Average shares outstanding-diluted
12,394
12,259
1.1
%
Notes (1)
See page 13 for our Reconciliation of
Selected Income Statement Information to Adjusted Results for the
six months ending October 29, 2023, and October 30, 2022.
(2)
Cost of sales for the six months ending
October 29, 2023, includes a net restructuring related charge
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 our facility in Ouanaminthe, Haiti.
(3)
Cost of sales for the six months ending
October 30, 2022, includes a restructuring related charge totaling
$98,000, which pertains to loss on disposal and markdowns of
inventory related to the exit of our cut and sew upholstery fabrics
operation located in Shanghai, China.
(4)
Restructuring expense for the six months
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 in Ouanaminthe, Haiti.
(5)
Restructuring expense for the six months
ending October 30, 2022, represents $468,000 for employee
termination benefits, $80,000 for a loss on disposal of equipment,
$47,000 for lease termination costs, and $20,000 of other
associated costs related to the exit of our cut and sew upholstery
fabrics operation located in Shanghai, China.
(6)
Percent of sales column for income tax
expense is calculated as a percent of loss before income taxes.
CONSOLIDATED BALANCE
SHEETS
OCTOBER 29, 2023, OCTOBER 30,
2022, AND APRIL 30, 2023
Unaudited
(Amounts in Thousands)
Amounts
(Condensed)
(Condensed)
(Condensed)
October 29,
October 30,
Increase (Decrease)
* April 30,
2023
2022
Dollars
Percent
2023
Current assets
Cash and cash equivalents
$
15,214
19,137
(3,923
)
(20.5
)%
20,964
Short-term investments - Rabbi Trust
937
2,237
(1,300
)
(58.1
)%
1,404
Accounts receivable
23,036
22,443
593
2.6
%
24,778
Inventories
44,465
52,224
(7,759
)
(14.9
)%
45,080
Short-term note receivable
256
—
256
100.0
%
219
Current income taxes receivable
340
510
(170
)
(33.3
)%
—
Other current assets
4,346
3,462
884
25.5
%
3,071
Total current assets
88,594
100,013
(11,419
)
(11.4
)%
95,516
Property, plant & equipment, net
34,664
38,832
(4,168
)
(10.7
)%
36,111
Right of use assets
6,874
11,609
(4,735
)
(40.8
)%
8,191
Long-term investments - Rabbi Trust
6,995
7,526
(531
)
(7.1
)%
7,067
Intangible assets
2,064
2,440
(376
)
(15.4
)%
2,252
Long-term note receivable
1,596
—
1,596
100.0
%
1,726
Deferred income taxes
472
493
(21
)
(4.3
)%
480
Other assets
901
717
184
25.7
%
840
Total assets
$
142,160
161,630
(19,470
)
(12.0
)%
152,183
Current liabilities
Accounts payable - trade
27,903
24,298
3,605
14.8
%
29,442
Accounts payable - capital
expenditures
298
200
98
49.0
%
56
Operating lease liability - current
2,540
2,655
(115
)
(4.3
)%
2,640
Deferred compensation
937
2,237
(1,300
)
(58.1
)%
1,404
Deferred revenue
853
1,527
(674
)
(44.1
)%
1,192
Accrued expenses
8,106
7,594
512
6.7
%
8,533
Accrued restructuring
—
33
(33
)
100.0
%
—
Income taxes payable - current
998
969
29
3.0
%
753
Total current liabilities
41,635
39,513
2,122
5.4
%
44,020
Operating lease liability - long-term
2,431
4,194
(1,763
)
(42.0
)%
3,612
Income taxes payable - long-term
2,055
2,629
(574
)
(21.8
)%
2,675
Deferred income taxes
5,663
5,700
(37
)
(0.6
)%
5,954
Deferred compensation
6,748
7,486
(738
)
(9.9
)%
6,842
Total liabilities
58,532
59,522
(990
)
(1.7
)%
63,103
Shareholders' equity
83,628
102,108
(18,480
)
(18.1
)%
89,080
Total liabilities and shareholders'
equity
$
142,160
161,630
(19,470
)
(12.0
)%
152,183
Shares outstanding
12,470
12,294
176
1.4
%
12,327
* Derived from audited financial
statements.
CULP, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
FOR THE SIX MONTHS ENDED
OCTOBER 29, 2023, AND OCTOBER 30, 2022
Unaudited
(Amounts in Thousands)
SIX MONTHS ENDED
Amounts
October 29,
October 30,
2023
2022
Cash flows from operating activities:
Net loss
$
(5,766
)
$
(17,872
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation
3,251
3,489
Non-cash inventory (credit) charge (1)
(2)
(2,001
)
6,439
Amortization
193
214
Stock-based compensation
485
565
Deferred income taxes
(283
)
(269
)
Gain on sale of equipment
(278
)
(232
)
Non-cash restructuring expense
379
—
Foreign currency exchange gain
(697
)
(1,168
)
Changes in assets and liabilities:
Accounts receivable
1,644
(443
)
Inventories
2,304
7,192
Other current assets
(1,355
)
(728
)
Other assets
(123
)
58
Accounts payable
(495
)
6,027
Deferred revenue
(339
)
1,007
Accrued restructuring
—
33
Accrued expenses and deferred
compensation
(762
)
1,254
Income taxes
(633
)
601
Net cash (used in) provided by operating
activities
(4,476
)
6,167
Cash flows from investing activities:
Capital expenditures
(1,972
)
(1,051
)
Proceeds from the sale of equipment
309
465
Proceeds from note receivable
150
—
Proceeds from the sale of investments
(rabbi trust)
986
46
Purchase of investments (rabbi trust)
(472
)
(505
)
Net cash used in investing activities
(999
)
(1,045
)
Cash flows from financing activities:
Common stock surrendered for withholding
taxes payable
(146
)
(33
)
Payments of debt issuance costs
—
(206
)
Net cash used in financing activities
(146
)
(239
)
Effect of exchange rate changes on cash
and cash equivalents
(129
)
(296
)
(Decrease) increase in cash and cash
equivalents
(5,750
)
4,587
Cash and cash equivalents at beginning of
year
20,964
14,550
Cash and cash equivalents at end of
period
$
15,214
$
19,137
Free Cash Flow (3)
$
(5,604
)
$
4,826
(1)
The non-cash inventory credit of $2.0
million for the six months ending October 29, 2023, represents a
$2.1 million credit related to adjustments made to our inventory
markdown reserve estimated based on our policy for aged inventory
for both our mattress and upholstery segments, partially offset by
a net charge of $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 our facility in Ouanaminthe, Haiti.
(2)
The non-cash inventory charge of $6.4
million for the six months ending October 30, 2022, represents a
$2.9 million write down of inventory to its net realizable value
associated with our mattress fabrics segment, $3.4 million related
to markdowns of inventory estimated based on our policy for aged
inventory for both our mattress and upholstery fabrics segments,
and $98,000 for the loss on disposal and markdowns of inventory
related to the exit of our cut and sew upholstery fabrics operation
located in Shanghai, China.
(3)
See next page for Reconciliation of Free
Cash Flow for the six-month periods ending October 29, 2023, and
October 30, 2022, respectively.
CULP, INC.
RECONCILIATION OF FREE CASH
FLOW
FOR THE SIX MONTHS ENDED
OCTOBER 29, 2023, AND OCTOBER 30, 2022
Unaudited
(Amounts in Thousands)
SIX MONTHS ENDED
Amounts
October 29,
October 30,
2023
2022
A) Net cash (used in) provided by
operating activities
$
(4,476
)
$
6,167
B) Minus: Capital expenditures
(1,972
)
(1,051
)
C) Plus: Proceeds from the sale of
equipment
309
465
D) Plus: Proceeds from note receivable
150
—
E) Plus: Proceeds from the sale of
investments (rabbi trust)
986
46
F) Minus: Purchase of investments (rabbi
trust)
(472
)
(505
)
G) Effects of exchange rate changes on
cash and cash equivalents
(129
)
(296
)
Free Cash Flow
$
(5,604
)
$
4,826
CULP, INC.
STATEMENTS OF OPERATIONS BY
SEGMENT
FOR THE THREE MONTHS ENDED
OCTOBER 29, 2023, AND OCTOBER 30, 2022
Unaudited
(Amounts in Thousands)
THREE MONTHS ENDED
Amounts
Percent of Total Sales
October 29,
October 30,
% Over
October 29,
October 30,
Net Sales by Segment
2023
2022
(Under)
2023
2022
Mattress Fabrics
$
31,377
$
26,230
19.6
%
53.4
%
44.9
%
Upholstery Fabrics
27,348
32,151
(14.9
)%
46.6
%
55.1
%
Net Sales
$
58,725
$
58,381
0.6
%
100.0
%
100.0
%
Gross Profit (Loss)
Gross Margin
Mattress Fabrics
$
2,483
$
(6,057
)
(141.0
)%
7.9
%
(23.1
)%
Upholstery Fabrics
5,389
3,942
36.7
%
19.7
%
12.3
%
Total Segment Gross Profit (Loss)
7,872
(2,115
)
(472.2
)%
13.4
%
(3.6
)%
Restructuring Related Credit (Charge)
(1)
78
(98
)
(179.6
)%
0.1
%
(0.2
)%
Gross Profit (Loss)
$
7,950
$
(2,213
)
(459.2
)%
13.5
%
(3.8
)%
Selling, General and Administrative
Expenses by Segment
Percent of Sales
Mattress Fabrics
$
3,419
$
2,945
16.1
%
10.9
%
11.2
%
Upholstery Fabrics
3,998
3,680
8.6
%
14.6
%
11.4
%
Unallocated Corporate Expenses
2,628
2,478
6.1
%
4.5
%
4.2
%
Selling, General and Administrative
Expenses
$
10,045
$
9,103
10.3
%
17.1
%
15.6
%
(Loss) Income from Operations by
Segment
Operating Margin
Mattress Fabrics
$
(936
)
$
(9,002
)
(89.6
)%
(3.0
)%
(34.3
)%
Upholstery Fabrics
1,391
262
430.9
%
5.1
%
0.8
%
Unallocated Corporate Expenses
(2,628
)
(2,478
)
6.1
%
(4.5
)%
(4.2
)%
Total Segment Loss from Operations
(2,173
)
(11,218
)
(80.6
)%
(3.7
)%
(19.2
)%
Restructuring Related Credit (Charge)
(1)
78
(98
)
(179.6
)%
0.1
%
(0.2
)%
Restructuring Expense (1)
(144
)
(615
)
(76.6
)%
(0.2
)%
(1.1
)%
Loss from Operations
$
(2,239
)
$
(11,931
)
(81.2
)%
(3.8
)%
(20.4
)%
Depreciation Expense by Segment
Mattress Fabrics
$
1,468
$
1,519
(3.4
)%
Upholstery Fabrics
149
200
(25.5
)%
Depreciation Expense
$
1,617
$
1,719
(5.9
)%
Notes
(1)
See page 12 for our Reconciliation of
Selected Income Statement Information to Adjusted Results for the
three months ending October 29, 2023, and October 30, 2022.
CULP, INC.
STATEMENTS OF OPERATIONS BY
SEGMENT
FOR THE SIX MONTHS ENDED
OCTOBER 29, 2023, AND OCTOBER 30, 2022
Unaudited
(Amounts in Thousands)
SIX MONTHS ENDED
Amounts
Percent of Total Sales
October 29,
October 30,
% Over
October 29,
October 30,
Net Sales by Segment
2023
2022
(Under)
2023
2022
Mattress Fabrics
$
60,599
$
55,602
9.0
%
52.5
%
46.0
%
Upholstery Fabrics
54,788
65,383
(16.2
)%
47.5
%
54.0
%
Net Sales
$
115,387
$
120,985
(4.6
)%
100.0
%
100.0
%
Gross Profit (Loss)
Gross Margin
Mattress Fabrics
$
4,477
$
(6,093
)
(173.5
)%
7.4
%
(11.0
)%
Upholstery Fabrics
10,659
8,105
31.5
%
19.5
%
12.4
%
Total Segment Gross Profit
15,136
2,012
652.3
%
13.1
%
1.7
%
Restructuring Related Charge (1)
(101
)
(98
)
3.1
%
(0.1
)%
(0.1
)%
Gross Profit
$
15,035
$
1,914
685.5
%
13.0
%
1.6
%
Selling, General and Administrative
Expenses by Segment
Percent of Sales
Mattress Fabrics
$
6,811
$
5,829
16.8
%
11.2
%
10.5
%
Upholstery Fabrics
7,939
7,302
8.7
%
14.5
%
11.2
%
Unallocated Corporate Expenses
5,124
4,837
5.9
%
4.4
%
4.0
%
Selling, General and Administrative
Expenses
$
19,874
$
17,968
10.6
%
17.2
%
14.9
%
(Loss) Income from Operations by
Segment
Operating Margin
Mattress Fabrics
$
(2,334
)
$
(11,922
)
(80.4
)%
(3.9
)%
(21.4
)%
Upholstery Fabrics
2,720
803
238.7
%
5.0
%
1.2
%
Unallocated Corporate Expenses
(5,124
)
(4,837
)
5.9
%
(4.4
)%
(4.0
)%
Total Segment Loss from Operations
(4,738
)
(15,956
)
(70.3
)%
(4.1
)%
(13.2
)%
Restructuring Related Charge (1)
(101
)
(98
)
3.1
%
(0.1
)%
(0.1
)%
Restructuring Expense (1)
(482
)
(615
)
(21.6
)%
(0.4
)%
(0.5
)%
Loss from Operations
$
(5,321
)
$
(16,669
)
(68.1
)%
(4.6
)%
(13.8
)%
Return on Capital (2)
Mattress Fabrics
(14.2
)%
(18.2
)%
(22.0
)%
Upholstery Fabrics
29.0
%
15.2
%
90.8
%
Unallocated Corporate
N.M.
N.M.
N.M.
Consolidated
(19.4
)%
(19.5
)%
(0.5
)%
Capital Employed (2) (3)
Mattress Fabrics
$
61,185
$
68,471
(10.6
)%
Upholstery Fabrics
11,324
18,826
(39.8
)%
Unallocated Corporate
3,562
3,962
(10.1
)%
Consolidated
$
76,071
$
91,259
(16.6
)%
Depreciation Expense by Segment
Mattress Fabrics
$
2,922
$
3,088
(5.4
)%
Upholstery Fabrics
329
401
(18.0
)%
Depreciation Expense
$
3,251
$
3,489
(6.8
)%
Notes
(1)
See page 13 for our Reconciliation of
Selected Income Statement Information to Adjusted Results for the
six months ending October 29, 2023, and October 30, 2022.
(2)
See pages 15 through 18 for our Return on
Capital Employed by Segment for the six months ending October 29,
2023 and October 30, 2022.
(3)
The capital employed balances are as of
October 29, 2023, and October 30, 2022.
CULP, INC.
RECONCILIATION OF SELECTED
INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS
FOR THREE MONTHS ENDED OCTOBER
29, 2023, AND OCTOBER 30, 2022
Unaudited
(Amounts in Thousands)
October 29,
As Reported
2023
October 29,
Adjusted
2023
Adjustments
Results
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)
Cost of sales for the three months ending
October 29, 2023, includes a restructuring related credit totaling
$78,000 for adjustments made to our inventory markdown reserves
related to the discontinuation of production of cut and sewn
upholstery kits at our facility in Ouanaminthe, Haiti.
(2)
Restructuring expense for the three months
ending October 29, 2023, represents $142,000 for impairment charges
related to equipment and $2,000 for employee termination costs
related to the discontinuation of production of cut and sewn
upholstery kits at our facility in Ouanaminthe, Haiti.
October 30,
As Reported
2022
October 30,
Adjusted
2022
Adjustments
Results
Net sales
$
58,381
—
$
58,381
Cost of sales (1)
(60,594
)
98
(60,496
)
Gross loss
(2,213
)
98
(2,115
)
Selling, general and administrative
expenses
(9,103
)
—
(9,103
)
Restructuring expense (2)
(615
)
615
—
Loss from operations
$
(11,931
)
713
$
(11,218
)
Notes
(1)
Cost of sales for the three months ending
October 30, 2022, includes restructuring related charges totaling
$98,000, which pertains to loss on disposal and markdowns of
inventory related to the exit of our cut and sew upholstery fabrics
operation located in Shanghai, China.
(2)
Restructuring expense for the three months
ending October 30, 2022, represents $468,000 for employee
termination benefits, $80,000 for a loss on disposal of equipment,
$47,000 for lease termination costs, and $20,000 of other
associated costs related to the exit of our cut and sew upholstery
fabrics operation located in Shanghai, China.
CULP, INC.
RECONCILIATION OF SELECTED
INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS
FOR SIX MONTHS ENDED OCTOBER
29, 2023, AND OCTOBER 30, 2022
Unaudited
(Amounts in Thousands)
October 29,
As Reported
2023
October 29,
Adjusted
2023
Adjustments
Results
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)
Cost of sales for the six months ending
October 29, 2023, includes a net restructuring related charge
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 our facility in Ouanaminthe, Haiti.
(2)
Restructuring expense for the six months
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 in Ouanaminthe, Haiti.
October 30,
As Reported
2022
October 30,
Adjusted
2022
Adjustments
Results
Net sales
$
120,985
—
$
120,985
Cost of sales (1)
(119,071
)
98
(118,973
)
Gross profit
1,914
98
2,012
Selling, general and administrative
expenses
(17,968
)
—
(17,968
)
Restructuring expense (2)
(615
)
615
—
Loss from operations
$
(16,669
)
713
$
(15,956
)
Notes
(1)
Cost of sales for the six months ending
October 30, 2022, includes restructuring related charges totaling
$98,000, which pertains to loss on disposal and markdowns of
inventory related to the exit of our cut and sew upholstery fabrics
operation located in Shanghai, China.
(2)
Restructuring expense for the six months
ending October 30, 2022, represents $468,000 for employee
termination benefits, $80,000 that relates to a loss on disposal of
equipment, $47,000 for lease termination costs, and $20,000 of
other associated costs related to the exit of our cut and sew
upholstery fabrics operation located in Shanghai, China.
CULP, INC.
CONSOLIDATED STATEMENTS OF
ADJUSTED EBITDA
FOR THE TWELVE MONTHS ENDED
OCTOBER 29, 2023, AND OCTOBER 30, 2022
Unaudited
(Amounts in Thousands)
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
$
(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
)%
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Trailing 12 Months
January 30,
May 1,
July 31,
October 30,
October 30,
2022
2022
2022
2022
2022
Net income (loss) (1)
$
(289
)
$
(6,023
)
$
(5,699
)
$
(12,173
)
$
(24,184
)
Income tax expense
1,284
253
896
1,150
3,583
Interest income, net
(214
)
(26
)
(17
)
(79
)
(336
)
Depreciation expense
1,732
1,791
1,770
1,719
7,012
Restructuring expense
—
—
—
615
615
Restructuring related charge
—
—
—
98
98
Amortization expense
150
142
105
109
506
Stock based compensation
171
253
252
313
989
Adjusted EBITDA (1)
$
2,834
$
(3,610
)
$
(2,693
)
$
(8,248
)
$
(11,717
)
% Net Sales
3.5
%
(6.3
)%
(4.3
)%
(14.1
)%
(4.5
)%
% Over (Under)
(311.6
)%
(42.9
)%
(84.5
)%
(97.0
)%
(25.6
)%
(1)
Net loss and adjusted EBITDA for the
three-month and the twelve-month periods ended October 30, 2022,
include a non-cash charge totaling $5.2 million, which represents a
$2.9 million write down of inventory to its net realizable value
associated with our mattress fabrics segment and $2.3 million
related to markdowns of inventory estimated based on our policy for
aged inventory for both our mattress and upholstery fabrics
segments.
CULP, INC.
RETURN ON CAPITAL EMPLOYED BY
SEGMENT
FOR THE TWELVE MONTHS ENDED
OCTOBER 29, 2023
Unaudited
(Amounts in Thousands)
Adjusted Operating (Loss)
Income
Twelve Months Ended
Average Capital
Return on Avg. Capital
October 29, 2023 (1)
Employed (3)
Employed (2)
Mattress Fabrics
$
(9,093
)
$
64,140
(14.2
)%
Upholstery Fabrics
3,910
13,489
29.0
%
Unallocated Corporate
(10,584
)
3,724
N.M.
Total
$
(15,767
)
$
81,354
(19.4
)%
Average Capital Employed
As of the three Months 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
non-current
—
—
6,748
6,748
—
—
6,966
6,966
—
—
6,842
6,842
Total Capital Employed
$
61,185
$
11,324
$
3,562
$
76,071
$
61,056
$
12,357
$
4,086
$
77,499
$
64,107
$
9,489
$
3,197
$
76,793
CULP, INC.
RETURN ON CAPITAL EMPLOYED BY
SEGMENT - CONTINUED
FOR THE TWELVE MONTHS ENDED
OCTOBER 29, 2023
Unaudited
(Amounts in Thousands)
As of the three Months Ended
January 29, 2023
As of the three Months Ended
October 30, 2022
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Total assets (4)
$
75,393
39,817
35,388
150,598
$
78,366
44,934
38,330
161,630
Total liabilities
(9,511
)
(24,367
)
(23,216
)
(57,094
)
(9,895
)
(26,108
)
(23,519
)
(59,522
)
Subtotal
$
65,882
$
15,450
$
12,172
$
93,504
$
68,471
$
18,826
$
14,811
$
102,108
Cash and cash equivalents
—
—
(16,725
)
(16,725
)
—
—
(19,137
)
(19,137
)
Short-term investments - Rabbi
Trust
—
—
(2,420
)
(2,420
)
—
—
(2,237
)
(2,237
)
Current income taxes receivable
—
—
(238
)
(238
)
—
—
(510
)
(510
)
Long-term investments - Rabbi
Trust
—
—
(7,725
)
(7,725
)
—
—
(7,526
)
(7,526
)
Deferred income taxes -
non-current
—
—
(463
)
(463
)
—
—
(493
)
(493
)
Deferred compensation - current
—
—
2,420
2,420
—
—
2,237
2,237
Accrued restructuring
—
—
—
—
—
—
33
33
Income taxes payable - current
—
—
467
467
—
—
969
969
Income taxes payable -
long-term
—
—
2,648
2,648
—
—
2,629
2,629
Deferred income taxes -
non-current
—
—
6,089
6,089
—
—
5,700
5,700
Deferred compensation
non-current
—
—
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
Total
Average Capital Employed (3)
$
64,140
$
13,489
$
3,724
$
81,354
Notes
(1)
See last page of this presentation for
calculation.
(2)
Return on average capital employed
represents the 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.
(3)
Average capital employed was computed
using the five quarterly periods ending October 29, 2023, July 30,
2023, April 30, 2023, January 29, 2023, and October 30, 2022.
(4)
Intangible assets are included in
unallocated corporate for all periods presented and therefore, have
no effect on capital employed and return on capital employed for
our mattress fabrics and upholstery fabrics segments.
CULP INC.
RETURN ON CAPITAL EMPLOYED BY
SEGMENT
FOR THE TWELVE MONTHS ENDED
OCTOBER 30, 2022
Unaudited
(Amounts in Thousands)
Adjusted Operating (Loss)
Income
Twelve Months Ended
Average Capital
Return on Avg. Capital
October 30, 2022 (1)
Employed (3)
Employed (2)
Mattress Fabrics
$
(14,460
)
$
79,364
(18.2
)%
Upholstery Fabrics
3,134
20,661
15.2
%
Unallocated Corporate
(8,910
)
3,908
N.M.
Total
$
(20,236
)
$
103,933
(19.5
)%
Average Capital Employed
As of the three Months Ended
October 30, 2022
As of the three Months Ended
July 31, 2022
As of the three Months Ended
May 1, 2022
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Total assets (4)
$
78,366
44,934
38,330
161,630
$
90,842
51,053
38,595
180,490
$
92,609
51,124
33,830
177,563
Total liabilities
(9,895
)
(26,108
)
(23,519
)
(59,522
)
(11,934
)
(30,762
)
(23,799
)
(66,495
)
(8,569
)
(25,915
)
(23,578
)
(58,062
)
Subtotal
$
68,471
$
18,826
$
14,811
$
102,108
$
78,908
$
20,291
$
14,796
$
113,995
$
84,040
$
25,209
$
10,252
$
119,501
Cash and cash equivalents
—
—
(19,137
)
(19,137
)
—
—
(18,874
)
(18,874
)
—
—
(14,550
)
(14,550
)
Short-term investments - Rabbi
Trust
—
—
(2,237
)
(2,237
)
—
—
—
—
—
—
—
—
Current income taxes receivable
—
—
(510
)
(510
)
—
—
(798
)
(798
)
—
—
(857
)
(857
)
Long-term investments - Rabbi
Trust
—
—
(7,526
)
(7,526
)
—
—
(9,567
)
(9,567
)
—
—
(9,357
)
(9,357
)
Deferred income taxes -
non-current
—
—
(493
)
(493
)
—
—
(546
)
(546
)
—
—
(528
)
(528
)
Deferred compensation - current
—
—
2,237
2,237
—
—
—
—
Accrued restructuring
—
—
33
33
—
—
—
—
—
—
—
—
Income taxes payable - current
—
—
969
969
—
—
587
587
—
—
413
413
Income taxes payable -
long-term
—
—
2,629
2,629
—
—
3,118
3,118
—
—
3,097
3,097
Deferred income taxes -
non-current
—
—
5,700
5,700
—
—
6,007
6,007
—
—
6,004
6,004
Deferred compensation
—
—
7,486
7,486
—
—
9,528
9,528
—
—
9,343
9,343
Total Capital Employed
$
68,471
$
18,826
$
3,962
$
91,259
$
78,908
$
20,291
$
4,251
$
103,450
$
84,040
$
25,209
$
3,817
$
113,066
CULP INC.
RETURN ON CAPITAL EMPLOYED BY
SEGMENT - CONTINUED
FOR THE TWELVE MONTHS ENDED
OCTOBER 30, 2022
Unaudited
(Amounts in Thousands)
As of the three Months Ended
January 30, 2022
As of the three Months Ended
October 31, 2021
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Total assets (4)
$
103,370
67,272
40,925
211,567
$
97,390
55,862
56,073
209,325
Total liabilities
(16,540
)
(45,596
)
(22,697
)
(84,833
)
(18,818
)
(38,560
)
(23,493
)
(80,871
)
Subtotal
$
86,830
$
21,676
$
18,228
$
126,734
$
78,572
$
17,302
$
32,580
$
128,454
Cash and cash equivalents
—
—
(11,780
)
(11,780
)
—
—
(16,956
)
(16,956
)
Short-term investments -
Available-For-Sale
—
—
(438
)
(438
)
—
—
(9,709
)
(9,709
)
Short-term investments -
Held-To-Maturity
—
—
(1,315
)
(1,315
)
—
—
(1,564
)
(1,564
)
Current income taxes receivable
—
—
(367
)
(367
)
—
—
(613
)
(613
)
Long-term investments -
Held-To-Maturity
—
—
(8,677
)
(8,677
)
—
—
(8,353
)
(8,353
)
Long-term investments - Rabbi
Trust
—
—
(9,223
)
(9,223
)
—
—
(9,036
)
(9,036
)
Deferred income taxes -
non-current
—
—
(500
)
(500
)
—
—
(452
)
(452
)
Income taxes payable - current
—
—
240
240
—
—
646
646
Income taxes payable -
long-term
—
—
3,099
3,099
—
—
3,099
3,099
Deferred income taxes -
non-current
—
—
5,484
5,484
—
—
4,918
4,918
Deferred compensation
—
—
9,180
9,180
—
—
9,017
9,017
Total Capital Employed
$
86,830
$
21,676
$
3,931
$
112,437
$
78,572
$
17,302
$
3,577
$
99,451
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Average Capital Employed (3)
$
79,364
$
20,661
$
3,908
$
103,933
Notes
(1)
See last page of this presentation for
calculation.
(2)
Return on average capital employed
represents the last twelve months operating (loss) income as of
October 30, 2022, divided by average capital employed. Average
capital employed does not include cash and cash equivalents,
short-term investments Available-For-Sale, short-term and long-term
investments Held-To-Maturity, long-term investments – Rabbi Trust,
accrued restructuring, income taxes receivable and payable,
noncurrent deferred income tax assets and liabilities, and deferred
compensation.
(3)
Average capital employed was computed
using the five quarterly periods ending October 30, 2022, July 31,
2022, May 1, 2022, January 30, 2022, October 31, 2021.
(4)
Intangible assets are included in
unallocated corporate for all periods presented and therefore, have
no effect on capital employed and return on capital employed for
our mattress fabrics and upholstery fabrics segments.
CULP INC.
CONSOLIDATED STATEMENTS OF
ADJUSTED OPERATING (LOSS) INCOME
FOR THE TWELVE MONTHS ENDED
OCTOBER 29, 2023, AND OCTOBER 30, 2022
Quarter Ended
Trailing 12
Months
01/29/2023
4/30/2023
07/30/2023
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
)
Quarter Ended
Trailing 12
Months
01/30/2022
5/1/2022
7/31/2022
10/30/2022
10/30/2022
Mattress Fabrics
$
364
$
(2,901
)
$
(2,921
)
$
(9,002
)
$
(14,460
)
Upholstery Fabrics
2,446
(116
)
542
262
3,134
Unallocated Corporate
(1,707
)
(2,366
)
(2,359
)
(2,478
)
(8,910
)
Operating income (loss)
$
1,103
$
(5,383
)
$
(4,738
)
$
(11,218
)
$
(20,236
)
% Over (Under)
(741.2
)%
(26.5
)%
(45.9
)%
(80.6
)%
(22.1
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231204438447/en/
Investor Relations Contact Ken Bowling, Executive Vice
President, Chief Financial Officer, and Treasurer: (336) 881-5630
krbowling@culp.com
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