Culp, Inc. (NYSE: CULP) (together with its consolidated
subsidiaries, “CULP”) today reported financial and operating
results for the third quarter ended January 28, 2024.
Fiscal 2024 Third Quarter Financial Summary
- Net sales for the third quarter of fiscal 2024 were $60.4
million, up 15.0 percent compared with the prior-year period, with
mattress fabrics sales up 21.6 percent, and upholstery fabrics
sales up 9.2 percent.
- Gross margin for the third quarter of fiscal 2024 was 12.7%,
compared with 4.0% for the third quarter of fiscal 2023.
- Loss from operations was $(1.7) million (which included
$111,000 in restructuring and related credits during the period),
compared with a loss from operations of $(7.8) million for the
prior-year period (which included $711,000 relating to certain
restructuring expenses during the period).
- Net loss was $(3.2) million, or $(0.26) per diluted share,
compared with a net loss of $(9.0) million, or $(0.73) per diluted
share, for the prior-year period. The effective tax rate for the
third quarter was negative (47.5) percent, reflecting the company’s
mix of taxable income between its U.S. and foreign jurisdictions
during the period.
- The company maintained a solid financial position, with its
balance sheet reflecting $12.6 million of total cash and no
outstanding borrowings as of January 28, 2024. Total liquidity as
of January 28, 2024, was $38.8 million (consisting of $12.6 million
in cash and $26.2 million in borrowing availability under the
company's domestic credit facility).
CEO Commentary
Commenting on the results, Iv Culp, president and chief
executive officer of Culp, Inc., said, “We are pleased to report
continued year-over-year and sequential improvement in our
consolidated sales and operating performance for the third quarter.
Both of our core business segments reported increased revenue
year-over-year, which is impressive considering the challenging
demand environment in the bedding and furniture industries.
Additionally, our consolidated operating performance for the
quarter was better than our revised outlook announced on January
17, 2024, due to stronger improvement in our upholstery fabrics
segment.
"Culp upholstery fabrics achieved a year-over-year increase in
residential sales for the first quarterly period since the end of
last fiscal year, driven by both the timing of the Chinese New Year
holiday and some improvement during the quarter in customer demand
for residential fabric products. While this increase in residential
sales was offset somewhat by lower sales in our
hospitality/contract business due partly to weather-related events
in January and shortterm supply chain issues that affected Read
Window, overall demand remains solid for our hospitality/contract
business. Also, our upholstery fabrics segment once again saw a
significant improvement in operating performance, driven primarily
by higher sales, a more profitable mix of sales, and fixed cost
savings.
"In our mattress fabrics segment, we continued our significant
year-over-year improvement in sales and operating performance,
driven largely by a focus on new fabric and cover placements that
are priced with proper margins and in line with current raw
material costs. However, the sequential results for this segment,
as compared to the second quarter, reflect ongoing market weakness
in the bedding industry, as well as internal efficiency issues
primarily related to the start-up and production of certain new
products and costs for these program launches that occurred during
the quarter.
“We maintained our solid balance sheet during the quarter, with
a continued focus on prudent financial management, while allowing
for critical capital expenditures and ensuring a strategic level of
working capital to support the needs of our businesses. We ended
the quarter with $12.6 million in cash, no outstanding borrowings,
and $26.2 million in borrowing availability under our domestic
credit facility.
“As we enter the fourth quarter, we continue to implement
improvement initiatives within our mattress fabrics segment to
support future profitable sales growth and enhance operating
efficiencies. We are diligently focused on winning new placements
to drive revenue and increase margins, and we are optimistic about
mid-to-long term growth potential for this business. However, while
we knew the timing of Chinese New Year would be an impact on
quarterly revenue, the industry demand backdrop in both of our
businesses has deteriorated further than expected during the first
few weeks of the fourth quarter, especially in our upholstery
fabrics segment.
"We remain confident in our market position in both of our
businesses, but to maintain our sequential progress, we need some
macro-industry and end-consumer support. Also, the internal
inefficiencies relating to the start up and production of certain
new products in mattress fabrics during the third quarter will also
affect operating performance during the fourth quarter. As a result
of these challenges, we now expect that our return to consolidated
operating profitability will be delayed into fiscal 2025.
"In the face of various ongoing macro-economic headwinds, our
attention is on managing the aspects of our business we can
control. With the uncertainty of consumer demand in the near term,
we are also evaluating strategic actions to adjust and right-size
our global platform to align with current demand levels, while
still supporting our valued customers. Importantly, we remain well
positioned for the long term with our solidly performing upholstery
fabrics business and a recovering mattress fabrics business. We are
committed to taking steps to position our business for renewed
profitability in fiscal 2025, and we are confident in our ability
to leverage our competitive advantages, including our innovative
product offerings, creative designs, global manufacturing and
sourcing platform, and solid financial management, to support our
future growth, especially when market conditions improve," added
Culp.
Business Segment Highlights
Mattress Fabrics Segment (“CHF”) Summary
- Sales for this segment were $30.0 million for the third
quarter, up 21.6 percent compared with sales of $24.7 million in
the third 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.
- Operating loss was $(1.6) million for the third quarter, a
significant improvement compared to the $(4.2) million operating
loss in the prior-year period. This reduction in losses was driven
by higher sales, coming mostly from better pricing and a more
favorable product mix. These factors were partially offset by
production inefficiencies relating to the start up of certain new
product launches, as well as higher SG&A business investments
during the period.
Upholstery Fabrics Segment (“CUF”) Summary
- Sales for this segment were $30.4 million for the third
quarter, up 9.2 percent compared with sales of $27.8 million in the
third quarter of fiscal 2023.
- Sales for CUF's residential fabric business were higher than
the prior-year period, driven by improved residential home
furnishing sales, as well as the timing of the Chinese New Year
holiday (which this year fell primarily in the fourth quarter,
rather than the third quarter).
- Sales for CUF's hospitality/contract business were moderately
lower than the prior-year period due primarily to the impact of
winter weather events and short-term supply chain issues that
affected production in our Read Window business, as well as some
impact from increased construction costs affecting demand for new
and ongoing hospitality/contract projects. Sales for the
hospitality/contract business accounted for approximately 26
percent of CUF's total sales during the quarter.
- Operating income was $2.1 million for the third quarter, up
significantly compared with an operating loss of $(420,000) in the
third quarter of fiscal 2023. Operating margin for the third
quarter was 6.9 percent, again a significant improvement compared
to the prior-year period. Operating performance for the third
quarter was positively affected by higher sales volume; a more
profitable mix of sales; a more favorable foreign exchange rate
associated with CUF's operations in China; and lower fixed costs
resulting from the previous restructuring of CUF's cut and sew
platforms. These factors were partially offset by higher SG&A
business investments during the period.
Balance Sheet, Cash Flow, and Liquidity
- As of January 28, 2024, the company reported $12.6 million in
total cash and no outstanding debt.
- Cash flow from operations and free cash flow were negative
$(6.0) million and negative $(8.2) million, respectively, for the
first nine 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 nine months of fiscal 2024
were $3.2 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 January 28, 2024, the company had approximately $38.8
million in liquidity, consisting of $12.6 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 third
quarter of fiscal 2024, leaving approximately $3.2 million
available under the current share repurchase program as of January
28, 2024. Despite the current share repurchase authorization, the
company does not expect to repurchase any shares during the fourth
quarter of fiscal 2024.
Financial Outlook
- Due to the uncertainty in the macro-environment, the company is
only providing financial guidance for the fourth quarter of fiscal
2024. The company’s consolidated net sales for the fourth quarter
are expected to be lower as compared to the fourth quarter of
fiscal 2023. This is due partly to the timing of the Chinese New
Year holiday (which this year falls primarily in the fourth
quarter, as compared to the third quarter last year), as well as
weakness in the industry demand environment that is expected to
pressure sales in both of the company's business segments,
especially in the residential upholstery fabrics business. The
company also expects a consolidated operating loss (loss from
operations) for the fourth quarter of fiscal 2024 that is
comparable to the fourth quarter of fiscal 2023.
- 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 third quarter of fiscal 2024 on March 7, 2024, at
11:00 a.m. Eastern Time. A live webcast of this call can be
accessed on the “Upcoming Events” section on the investor relations
page of the company’s website, www.culp.com. A replay of the
webcast will be available for 30 days under the “Past Events”
section on the investor relations page of the company’s website,
beginning at 2:00 p.m. Eastern Time on March 7, 2024.
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, 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. Further information about these factors, as
well as other factors that could affect our future operations or
financial results and the matters discussed in forward-looking
statements, is included in Item 1A “Risk Factors” in our most
recent Form 10-K and Form 10-Q reports filed with the Securities
and Exchange Commission. A forward-looking statement is neither a
prediction nor a guarantee of future events or circumstances, and
those future events or circumstances may not occur. Additional
risks and uncertainties that we do not presently know about or that
we currently consider to be immaterial may also affect our business
operations and financial results.
CULP, INC.
CONSOLIDATED STATEMENTS OF NET
LOSS
FOR THE THREE MONTHS ENDED
JANUARY 28, 2024, AND JANUARY 29, 2023
Unaudited
(Amounts in Thousands, Except
for Per Share Data)
THREE MONTHS ENDED
Amount
Percent of Sales
(1)
(1)
January 28,
January 29,
% Over
January 28,
January 29,
2024
2023
(Under)
2024
2023
Net sales
$
60,418
$
52,523
15.0
%
100.0
%
100.0
%
Cost of sales (2)
(52,715
)
(50,430
)
4.5
%
87.3
%
96.0
%
Gross profit
7,703
2,093
268.0
%
12.7
%
4.0
%
Selling, general and administrative
expenses
(9,493
)
(9,165
)
3.6
%
15.7
%
17.4
%
Restructuring credit (expense) (3) (4)
50
(711
)
(107.0
)%
(0.1
)%
1.4
%
Loss from operations
(1,740
)
(7,783
)
(77.6
)%
(2.9
)%
(14.8
)%
Interest income
284
196
44.9
%
0.5
%
0.4
%
Other expense
(705
)
(1,095
)
(35.6
)%
(1.2
)%
(2.1
)%
Loss before income taxes
(2,161
)
(8,682
)
(75.1
)%
(3.6
)%
(16.5
)%
Income tax expense (5)
(1,027
)
(286
)
259.1
%
(47.5
)%
(3.3
)%
Net loss
$
(3,188
)
$
(8,968
)
(64.5
)%
(5.3
)%
(17.1
)%
Net loss per share - basic
$
(0.26
)
$
(0.73
)
(64.4
)%
Net loss per share - diluted
$
(0.26
)
$
(0.73
)
(64.4
)%
Average shares outstanding-basic
12,470
12,299
1.4
%
Average shares outstanding-diluted
12,470
12,299
1.4
%
Notes
(1)
See page 13 for a Reconciliation of
Selected Income Statement Information to Adjusted Results for the
three months ending January 28, 2024, and January 29, 2023.
(2)
Cost of sales for the three months ending
January 28, 2024, includes a restructuring related credit totaling
$61,000 for a gain on disposal of inventory related to the
discontinuation of production of cut and sewn upholstery kits at
the company's facility in Ouanaminthe, Haiti. There were no
restructuring related credits or charges included in cost of sales
for the three months ending January 29, 2023.
(3)
The restructuring credit of $50,000 for
the three months ending January 28, 2024, represents a gain from
the sale of equipment associated with the discontinuation of
production of cut and sewn upholstery kits at the company's
facility in Ouanaminthe, Haiti.
(4)
Restructuring expense of $711,000 for the
three months ending January 29, 2023, represents lease termination
costs of $434,000 and an impairment loss for leasehold improvements
totaling $277,000 related to the consolidation of certain leased
facilities located in Ouanaminthe, Haiti.
(5)
Percent of sales column for income tax
expense is calculated as a percent of loss before income taxes.
CULP, INC.
CONSOLIDATED STATEMENTS OF NET
LOSS
FOR THE NINE MONTHS ENDED
JANUARY 28, 2024, AND JANUARY 29, 2023
Unaudited
(Amounts in Thousands, Except
for Per Share Data)
NINE MONTHS ENDED
Amount
Percent of Sales
(1)
(1)
January 28,
January 29,
% Over
January 28,
January 29,
2024
2023
(Under)
2024
2023
Net sales
$
175,804
$
173,508
1.3
%
100.0
%
100.0
%
Cost of sales (2) (3)
(153,067
)
(169,500
)
(9.7
)%
87.1
%
97.7
%
Gross profit
22,737
4,008
467.3
%
12.9
%
2.3
%
Selling, general and administrative
expenses
(29,366
)
(27,133
)
8.2
%
16.7
%
15.6
%
Restructuring expense (4) (5)
(432
)
(1,326
)
(67.4
)%
0.2
%
0.8
%
Loss from operations
(7,061
)
(24,451
)
(71.1
)%
(4.0
)%
(14.1
)%
Interest income
911
292
212.0
%
0.5
%
0.2
%
Other expense
(560
)
(348
)
60.9
%
0.3
%
0.2
%
Loss before income taxes
(6,710
)
(24,507
)
(72.6
)%
(3.8
)%
(14.1
)%
Income tax expense (6)
(2,244
)
(2,332
)
(3.8
)%
(33.4
)%
(9.5
)%
Net loss
$
(8,954
)
$
(26,839
)
(66.6
)%
(5.1
)%
(15.5
)%
Net loss per share - basic
$
(0.72
)
$
(2.19
)
(67.1
)%
Net loss per share - diluted
$
(0.72
)
$
(2.19
)
(67.1
)%
Average shares outstanding-basic
12,419
12,272
1.2
%
Average shares outstanding-diluted
12,419
12,272
1.2
%
Notes
(1)
See page 14 for the Reconciliation of
Selected Income Statement Information to Adjusted Results for the
nine months ending January 28, 2024, and January 29, 2023.
(2)
Cost of sales for the nine months ending
January 28, 2024, includes a restructuring related charge totaling
$40,000 representing markdowns of inventory related to the
discontinuation of production of cut and sewn upholstery kits at
the company's facility in Ouanaminthe, Haiti.
(3)
Cost of sales for the nine months ending
January 29, 2023, includes a restructuring related charges totaling
$98,000, which pertained to a loss on disposal and markdowns of
inventory related to the exit of the company's cut and sew
upholstery fabrics operation located in Shanghai, China.
(4)
Restructuring expense of $432,000 for the
nine months ending January 28, 2024, represents impairment charges
related to equipment totaling $329,000 and $103,000 for employee
termination benefits related to the discontinuation of production
of cut and sewn upholstery kits at the company's facility in
Ouanaminthe, Haiti.
(5)
Restructuring expense of $1.3 million for
the nine months ending January 29, 2023, relates to both
restructuring activities for the company's cut and sew upholstery
fabrics operations located in Shanghai, China, which occurred
during the second quarter of fiscal 2023, and located in
Ouanaminthe, Haiti, which occurred during the third quarter of
fiscal 2023. Restructuring expense consists of lease termination
costs of $481,000, employee termination benefits of $468,000,
impairment losses totaling $357,000 that relate to leasehold
improvements and equipment, and $20,000 for other associated
costs.
(6)
Percent of sales column for income tax
expense is calculated as a percent of loss before income taxes.
CONSOLIDATED BALANCE
SHEETS
JANUARY 28, 2024, JANUARY 29,
2023, AND APRIL 30, 2023
Unaudited
(Amounts in Thousands)
Amounts
(Condensed)
(Condensed)
(Condensed)
January 28,
January 29,
Increase (Decrease)
* April 30,
2024
2023
Dollars
Percent
2023
Current assets
Cash and cash equivalents
$
12,585
16,725
(4,140
)
(24.8
)%
20,964
Short-term investments - rabbi trust
937
2,420
(1,483
)
(61.3
)%
1,404
Accounts receivable, net
23,686
21,241
2,445
11.5
%
24,778
Inventories
46,877
47,627
(750
)
(1.6
)%
45,080
Short-term note receivable
260
—
260
100.0
%
219
Assets held for sale
—
1,950
(1,950
)
(100.0
)%
—
Current income taxes receivable
476
238
238
100.0
%
—
Other current assets
4,237
2,839
1,398
49.2
%
3,071
Total current assets
89,058
93,040
(3,982
)
(4.3
)%
95,516
Property, plant & equipment, net
34,021
37,192
(3,171
)
(8.5
)%
36,111
Right of use assets
6,952
8,913
(1,961
)
(22.0
)%
8,191
Intangible assets
1,970
2,346
(376
)
(16.0
)%
2,252
Long-term investments - rabbi trust
7,083
7,725
(642
)
(8.3
)%
7,067
Long-term note receivable
1,530
—
1,530
100.0
%
1,726
Deferred income taxes
531
463
68
14.7
%
480
Other assets
853
919
(66
)
(7.2
)%
840
Total assets
$
141,998
150,598
(8,600
)
(5.7
)%
152,183
Current liabilities
Accounts payable - trade
29,793
22,540
7,253
32.2
%
29,442
Accounts payable - capital
expenditures
19
25
(6
)
(24.0
)%
56
Operating lease liability - current
2,524
2,785
(261
)
(9.4
)%
2,640
Deferred compensation - current
937
2,420
(1,483
)
(61.3
)%
1,404
Deferred revenue
1,798
1,430
368
25.7
%
1,192
Accrued expenses
7,300
6,701
599
8.9
%
8,533
Income taxes payable - current
1,070
467
603
129.1
%
753
Total current liabilities
43,441
36,368
7,073
19.4
%
44,020
Operating lease liability - long-term
2,656
4,399
(1,743
)
(39.6
)%
3,612
Income taxes payable - long-term
2,072
2,648
(576
)
(21.8
)%
2,675
Deferred income taxes
6,177
6,089
88
1.4
%
5,954
Deferred compensation - long-term
6,856
7,590
(734
)
(9.7
)%
6,842
Total liabilities
61,202
57,094
4,108
7.2
%
63,103
Shareholders' equity
80,796
93,504
(12,708
)
(13.6
)%
89,080
Total liabilities and shareholders'
equity
$
141,998
150,598
(8,600
)
(5.7
)%
152,183
Shares outstanding
12,470
12,312
158
1.3
%
12,327
* Derived from audited financial
statements.
CULP, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
FOR THE NINE MONTHS ENDED
JANUARY 28, 2024, AND JANUARY 29, 2023
Unaudited
(Amounts in Thousands)
NINE MONTHS ENDED
Amounts
January 28,
January 29,
2024
2023
Cash flows from operating activities:
Net loss
$
(8,954
)
$
(26,839
)
Adjustments to reconcile net loss to net
cash (used in)
provided by operating activities:
Depreciation
4,897
5,228
Non-cash inventory (credit) charge (1)
(2)
(1,978
)
6,301
Amortization
291
323
Stock-based compensation
747
887
Deferred income taxes
172
150
Gain on sale of equipment
(284
)
(312
)
Non-cash restructuring expense
330
791
Foreign currency exchange gain
(347
)
(362
)
Changes in assets and liabilities:
Accounts receivable
1,040
954
Inventories
—
12,477
Other current assets
(1,190
)
(39
)
Other assets
(107
)
(76
)
Accounts payable
963
3,051
Deferred revenue
606
910
Accrued expenses and deferred
compensation
(1,437
)
885
Income taxes
(719
)
254
Net cash (used in) provided by operating
activities
(5,970
)
4,583
Cash flows from investing activities:
Capital expenditures
(3,249
)
(1,602
)
Proceeds from the sale of equipment
363
465
Proceeds from note receivable
240
—
Proceeds from the sale of investments
(rabbi trust)
1,224
70
Purchase of investments (rabbi trust)
(704
)
(870
)
Net cash used in investing activities
(2,126
)
(1,937
)
Cash flows from financing activities:
Common stock surrendered for withholding
taxes payable
(146
)
(33
)
Payments of debt issuance costs
—
(289
)
Net cash used in financing activities
(146
)
(322
)
Effect of exchange rate changes on cash
and cash equivalents
(137
)
(149
)
(Decrease) increase in cash and cash
equivalents
(8,379
)
2,175
Cash and cash equivalents at beginning of
year
20,964
14,550
Cash and cash equivalents at end of
period
$
12,585
$
16,725
Free Cash Flow (3)
$
(8,233
)
$
2,497
(1)
The non-cash inventory credit of $2.0
million for the nine months ending January 28, 2024, represents
credits of approximately $2.0 million related to adjustments for
inventory markdown reserve estimates based on the company's policy
for aged inventory for both the mattress and upholstery segments,
partially offset by a charge of $40,000 which represents the
markdown of inventory related to the discontinuation of production
of cut and sewn upholstery kits at the company's facility in
Ouanaminthe, Haiti.
(2)
The non-cash inventory charge of $6.3
million for the nine months ending January 29, 2023, represents a
$2.9 million charge for the write down of inventory to its net
realizable value associated with the mattress fabrics segment, $3.3
million related to markdowns of inventory estimated based on the
company's policy for aged inventory for both the mattress and
upholstery fabrics segments, and $98,000 for the loss on disposal
and markdowns of inventory related to the exit of the company's cut
and sew upholstery fabrics operation located in Shanghai,
China.
(3)
See next page for Reconciliation of Free
Cash Flow for the nine-month periods ending January 28, 2024, and
January 29, 2023.
CULP, INC.
RECONCILIATION OF FREE CASH
FLOW
FOR THE NINE MONTHS ENDED
JANUARY 28, 2024, AND JANUARY 29, 2023
Unaudited
(Amounts in Thousands)
NINE MONTHS ENDED
Amounts
January 28,
January 29,
2024
2023
A) Net cash (used in) provided by
operating activities
$
(5,970
)
$
4,583
B) Minus: Capital expenditures
(3,249
)
(1,602
)
C) Plus: Proceeds from the sale of
equipment
363
465
D) Plus: Proceeds from note receivable
240
—
E) Plus: Proceeds from the sale of
investments (rabbi trust)
1,224
70
F) Minus: Purchase of investments (rabbi
trust)
(704
)
(870
)
G) Effects of exchange rate changes on
cash and cash equivalents
(137
)
(149
)
Free Cash Flow
$
(8,233
)
$
2,497
CULP, INC.
STATEMENTS OF OPERATIONS BY
SEGMENT
FOR THE THREE MONTHS ENDED
JANUARY 28, 2024, AND JANUARY 29, 2023
Unaudited
(Amounts in Thousands)
THREE MONTHS ENDED
Amounts
Percent of Total Sales
January 28,
January 29,
% Over
January 28,
January 29,
Net Sales by Segment
2024
2023
(Under)
2024
2023
Mattress Fabrics
$
30,021
$
24,697
21.6
%
49.7
%
47.0
%
Upholstery Fabrics
30,397
27,826
9.2
%
50.3
%
53.0
%
Net Sales
$
60,418
$
52,523
15.0
%
100.0
%
100.0
%
Gross Profit (Loss)
Gross Margin
Mattress Fabrics
$
1,520
$
(1,237
)
(222.9
)%
5.1
%
(5.0
)%
Upholstery Fabrics
6,122
3,330
83.8
%
20.1
%
12.0
%
Total Segment Gross Profit
7,642
2,093
265.1
%
12.6
%
4.0
%
Restructuring Related Credit (1)
61
—
100.0
%
0.1
%
—
Gross Profit
$
7,703
$
2,093
268.0
%
12.7
%
4.0
%
Selling, General and Administrative
Expenses by Segment
Percent of Sales
Mattress Fabrics
$
3,102
$
2,992
3.7
%
10.3
%
12.1
%
Upholstery Fabrics
4,030
3,750
7.5
%
13.3
%
13.5
%
Unallocated Corporate Expenses
2,361
2,423
(2.6
)%
3.9
%
4.6
%
Selling, General and Administrative
Expenses
$
9,493
$
9,165
3.6
%
15.7
%
17.4
%
(Loss) Income from Operations by
Segment
Operating Margin
Mattress Fabrics
$
(1,582
)
$
(4,229
)
(62.6
)%
(5.3
)%
(17.1
)%
Upholstery Fabrics
2,092
(420
)
(598.1
)%
6.9
%
(1.5
)%
Unallocated Corporate Expenses
(2,361
)
(2,423
)
(2.6
)%
(3.9
)%
(4.6
)%
Total Segment Loss from Operations
(1,851
)
(7,072
)
(73.8
)%
(3.1
)%
(13.5
)%
Restructuring Related Credit (1)
61
—
100.0
%
0.1
%
—
Restructuring Credit (Expense) (1)
50
(711
)
(107.0
)%
0.1
%
(1.4
)%
Loss from Operations
$
(1,740
)
$
(7,783
)
(77.6
)%
(2.9
)%
(14.8
)%
Depreciation Expense by Segment
Mattress Fabrics
$
1,492
$
1,536
(2.9
)%
Upholstery Fabrics
154
203
(24.1
)%
Depreciation Expense
$
1,646
$
1,739
(5.3
)%
Notes
(1)
See page 13 for a Reconciliation of
Selected Income Statement Information to Adjusted Results for the
three months ending January 28, 2024, and January 29, 2023.
CULP, INC.
STATEMENTS OF OPERATIONS BY
SEGMENT
FOR THE NINE MONTHS ENDED
JANUARY 28, 2024, AND JANUARY 29, 2023
Unaudited
(Amounts in Thousands)
NINE MONTHS ENDED
Amounts
Percent of Total Sales
January 28,
January 29,
% Over
January 28,
January 29,
Net Sales by Segment
2024
2023
(Under)
2024
2023
Mattress Fabrics
$
90,619
$
80,299
12.9
%
51.5
%
46.3
%
Upholstery Fabrics
85,185
93,209
(8.6
)%
48.5
%
53.7
%
Net Sales
$
175,804
$
173,508
1.3
%
100.0
%
100.0
%
Gross Profit (Loss)
Gross Margin
Mattress Fabrics
$
5,997
$
(7,330
)
(181.8
)%
6.6
%
(9.1
)%
Upholstery Fabrics
16,780
11,436
46.7
%
19.7
%
12.3
%
Total Segment Gross Profit
22,777
4,106
454.7
%
13.0
%
2.4
%
Restructuring Related Charge (1)
(40
)
(98
)
(59.2
)%
(0.0
)%
(0.1
)%
Gross Profit
$
22,737
$
4,008
467.3
%
12.9
%
2.3
%
Selling, General and Administrative
Expenses by Segment
Percent of Sales
Mattress Fabrics
$
9,913
$
8,821
12.4
%
10.9
%
11.0
%
Upholstery Fabrics
11,969
11,053
8.3
%
14.1
%
11.9
%
Unallocated Corporate Expenses
7,484
7,259
3.1
%
4.3
%
4.2
%
Selling, General and Administrative
Expenses
$
29,366
$
27,133
8.2
%
16.7
%
15.6
%
(Loss) Income from Operations by
Segment
Operating Margin
Mattress Fabrics
$
(3,916
)
$
(16,151
)
(75.8
)%
(4.3
)%
(20.1
)%
Upholstery Fabrics
4,811
383
1156.1
%
5.6
%
0.4
%
Unallocated Corporate Expenses
(7,484
)
(7,259
)
3.1
%
(4.3
)%
(4.2
)%
Total Segment Loss from Operations
(6,589
)
(23,027
)
(71.4
)%
(3.7
)%
(13.3
)%
Restructuring Related Charge (1)
(40
)
(98
)
(59.2
)%
(0.0
)%
(0.1
)%
Restructuring Expense (1)
(432
)
(1,326
)
(67.4
)%
(0.2
)%
(0.8
)%
Loss from Operations
$
(7,061
)
$
(24,451
)
(71.1
)%
(4.0
)%
(14.1
)%
Return on Capital (2)
Mattress Fabrics
(10.1
)%
(24.8
)%
(59.3
)%
Upholstery Fabrics
58.9
%
1.3
%
N.M.
Unallocated Corporate
N.M.
N.M.
N.M.
Consolidated
(13.5
)%
(28.1
)%
(52.1
)%
Capital Employed (2) (3)
Mattress Fabrics
$
67,338
$
65,882
2.2
%
Upholstery Fabrics
5,884
15,450
(61.9
)%
Unallocated Corporate
3,074
3,815
(19.4
)%
Consolidated
$
76,296
$
85,147
(10.4
)%
Depreciation Expense by Segment
Mattress Fabrics
$
4,422
$
4,624
(4.4
)%
Upholstery Fabrics
475
604
(21.4
)%
Depreciation Expense
$
4,897
$
5,228
(6.3
)%
Notes
(1)
See page 14 for a Reconciliation of
Selected Income Statement Information to Adjusted Results for the
nine months ending January 28, 2024, and January 29, 2023.
(2)
See pages 16 through 19 for the Return on
Capital Employed by Segment for the nine months ending January 28,
2024, and January 29, 2023.
(3)
The capital employed balances are as of
January 28, 2024, and January 29, 2023.
CULP, INC.
RECONCILIATION OF SELECTED
INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS
FOR THREE MONTHS ENDED JANUARY
28, 2024, AND JANUARY 29, 2023
Unaudited
(Amounts in Thousands)
As Reported
Adjusted Results
January 28,
January 28,
2024
Adjustments
2024
Net sales
$
60,418
—
$
60,418
Cost of sales (1)
(52,715
)
(61
)
(52,776
)
Gross profit
7,703
(61
)
7,642
Selling, general and administrative
expenses
(9,493
)
—
(9,493
)
Restructuring Credit (2)
50
(50
)
—
Loss from operations
$
(1,740
)
(111
)
$
(1,851
)
Notes
(1)
Cost of sales for the three months ending
January 28, 2024, includes a restructuring related credit totaling
$61,000 for a gain on disposal of inventory related to the
discontinuation of production of cut and sewn upholstery kits at
the company's facility in Ouanaminthe, Haiti.
(2)
The restructuring credit of $50,000 for
the three months ending January 28, 2024, represents a gain from
the sale of equipment associated with the discontinuation of
production of cut and sewn upholstery kits at the company's
facility in Ouanaminthe, Haiti.
As Reported
Adjusted Results
January 29,
January 29,
2023
Adjustments
2023
Net sales
$
52,523
—
$
52,523
Cost of sales
(50,430
)
—
(50,430
)
Gross profit
2,093
—
2,093
Selling, general and administrative
expenses
(9,165
)
—
(9,165
)
Restructuring expense (1)
(711
)
711
—
Loss from operations
$
(7,783
)
711
$
(7,072
)
Notes
(1)
Restructuring expense of $711,000 for the
three months ending January 29, 2023, represents lease termination
costs of $434,000 and an impairment loss for leasehold improvements
totaling $277,000 related to consolidation of certain leased
facilities located in Ouanaminthe, Haiti.
CULP, INC.
RECONCILIATION OF SELECTED
INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS
FOR NINE MONTHS ENDED JANUARY
28, 2024, AND JANUARY 29, 2023
Unaudited
(Amounts in Thousands)
As Reported
Adjusted Results
January 28,
January 28,
2024
Adjustments
2024
Net sales
$
175,804
—
$
175,804
Cost of sales (1)
(153,067
)
40
(153,027
)
Gross profit
22,737
40
22,777
Selling, general and administrative
expenses
(29,366
)
—
(29,366
)
Restructuring expense (2)
(432
)
432
—
Loss from operations
$
(7,061
)
472
$
(6,589
)
Notes
(1)
Cost of sales for the nine months ending
January 28, 2024, includes a restructuring related charge totaling
$40,000 related to the discontinuation of production of cut and
sewn upholstery kits at the company's facility in Ouanaminthe,
Haiti.
(2)
Restructuring expense of $432,000 for the
nine months ending January 28, 2024, represents impairment charges
related to equipment totaling $329,000 and $103,000 for employee
termination benefits related to the discontinuation of production
of cut and sewn upholstery kits at the company's facility in
Ouanaminthe, Haiti.
As Reported
Adjusted Results
January 29,
January 29,
2023
Adjustments
2023
Net sales
$
173,508
—
$
173,508
Cost of sales (1)
(169,500
)
98
(169,402
)
Gross profit
4,008
98
4,106
Selling, general and administrative
expenses
(27,133
)
—
(27,133
)
Restructuring expense (2)
(1,326
)
1,326
—
Loss from operations
$
(24,451
)
1,424
$
(23,027
)
Notes
(1)
Cost of sales for the nine months ending
January 29, 2023, includes restructuring related charges totaling
$98,000, which pertained to a loss on disposal and markdowns of
inventory related to the exit of the company's cut and sew
upholstery fabrics operation located in Shanghai, China.
(2)
Restructuring expense of $1.3 million for
the nine months ending January 29, 2023, relates to restructuring
activities for both the company's cut and sew upholstery fabrics
operations located in Shanghai, China, which occurred during the
second quarter of fiscal 2023, and located in Ouanaminthe, Haiti,
which occurred during the third quarter of fiscal 2023.
Restructuring of lease termination costs of $481,000, employee
termination benefits of $468,000, impairment losses totaling
$357,000 that relate to leasehold improvements and equipment, and
$20,000 for other associated costs.
CULP, INC.
CONSOLIDATED STATEMENTS OF
ADJUSTED EBITDA
FOR THE TWELVE MONTHS ENDED
JANUARY 28, 2024, AND JANUARY 29, 2023
Unaudited
(Amounts in Thousands)
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Trailing 12 Months
April 30,
July 30,
October 29,
January 28,
January 28,
2023
2023
2023
2024
2024
Net loss
$
(4,681
)
$
(3,342
)
$
(2,424
)
$
(3,188
)
$
(13,635
)
Income tax expense
798
701
516
1,027
3,042
Interest income, net
(239
)
(345
)
(282
)
(284
)
(1,150
)
Depreciation expense
1,619
1,634
1,617
1,646
6,516
Restructuring expense (credit)
70
338
144
(50
)
502
Restructuring related charge
(credit)
—
179
(78
)
(61
)
40
Amortization expense
115
96
97
98
406
Stock based compensation
258
322
163
262
1,005
Adjusted EBITDA
$
(2,060
)
$
(417
)
$
(247
)
$
(550
)
$
(3,274
)
% Net Sales
(3.4
)%
(0.7
)%
(0.4
)%
(0.9
)%
(1.4
)%
Quarter Ended
Quarter Ended
Quarter Ended
Quarter Ended
Trailing 12 Months
May 1,
July 31,
October 30,
January 29,
January 29,
2022
2022
2022
2023
2023
Net loss (1)
$
(6,023
)
$
(5,699
)
$
(12,173
)
$
(8,968
)
$
(32,863
)
Income tax expense
253
896
1,150
286
2,585
Interest income, net
(26
)
(17
)
(79
)
(196
)
(318
)
Depreciation expense
1,791
1,770
1,719
1,739
7,019
Restructuring expense
—
—
615
711
1,326
Restructuring related charge
—
—
98
—
98
Amortization expense
142
105
109
109
465
Stock based compensation
253
252
313
322
1,140
Adjusted EBITDA (1)
$
(3,610
)
$
(2,693
)
$
(8,248
)
$
(5,997
)
$
(20,548
)
% Net Sales
(6.3
)%
(4.3
)%
(14.1
)%
(11.4
)%
(8.9
)%
% Over (Under)
(42.9
)%
(84.5
)%
(97.0
)%
(90.8
)%
(84.1
)%
(1)
Net loss and adjusted EBITDA for the
quarter ended October 30, 2022, and the twelve-month period ending
January 29, 2023, 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 the mattress fabrics segment and
$2.3 million related to markdowns of inventory estimated based on
the company's policy for aged inventory for both the mattress and
upholstery fabrics segments.
CULP, INC.
RETURN ON CAPITAL EMPLOYED BY
SEGMENT
FOR THE TWELVE MONTHS ENDED
JANUARY 28, 2024
Unaudited
(Amounts in Thousands)
Adjusted Operating (Loss)
Income
Twelve Months Ended
Average Capital
Return on Avg. Capital
January 28, 2024 (1)
Employed (3)
Employed (2)
Mattress Fabrics
$
(6,446
)
$
63,914
(10.1
)%
Upholstery Fabrics
6,422
10,901
58.9
%
Unallocated Corporate
(10,522
)
3,547
N.M.
Total
$
(10,546
)
$
78,361
(13.5
)%
Average Capital Employed
As of the three Months January
28, 2024
As of the three Months October
29, 2023
As of the three Months Ended
July 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)
$
75,572
38,085
28,341
141,998
$
75,924
35,082
31,154
142,160
$
72,286
37,592
33,024
142,902
Total liabilities
(8,234
)
(32,201
)
(20,767
)
(61,202
)
(14,739
)
(23,758
)
(20,035
)
(58,532
)
(11,230
)
(25,235
)
(20,320
)
(56,785
)
Subtotal
$
67,338
$
5,884
$
7,574
$
80,796
$
61,185
$
11,324
$
11,119
$
83,628
$
61,056
$
12,357
$
12,704
$
86,117
Cash and cash equivalents
—
—
(12,585
)
(12,585
)
—
—
(15,214
)
(15,214
)
—
—
(16,812
)
(16,812
)
Short-term investments - Rabbi
Trust
—
—
(937
)
(937
)
—
—
(937
)
(937
)
—
—
(791
)
(791
)
Current income taxes receivable
—
—
(476
)
(476
)
—
—
(340
)
(340
)
—
—
(202
)
(202
)
Long-term investments - Rabbi
Trust
—
—
(7,083
)
(7,083
)
—
—
(6,995
)
(6,995
)
—
—
(7,204
)
(7,204
)
Deferred income taxes -
non-current
—
—
(531
)
(531
)
—
—
(472
)
(472
)
—
—
(476
)
(476
)
Deferred compensation - current
—
—
937
937
—
—
937
937
—
—
791
791
Accrued restructuring
—
—
—
—
—
—
—
—
—
—
10
10
Income taxes payable - current
—
—
1,070
1,070
—
—
998
998
—
—
526
526
Income taxes payable -
long-term
—
—
2,072
2,072
—
—
2,055
2,055
—
—
2,710
2,710
Deferred income taxes -
non-current
—
—
6,177
6,177
—
—
5,663
5,663
—
—
5,864
5,864
Deferred compensation
non-current
—
—
6,856
6,856
—
—
6,748
6,748
—
—
6,966
6,966
Total Capital Employed
$
67,338
$
5,884
$
3,074
$
76,296
$
61,185
$
11,324
$
3,562
$
76,071
$
61,056
$
12,357
$
4,086
$
77,499
CULP, INC.
RETURN ON CAPITAL EMPLOYED BY
SEGMENT - CONTINUED
FOR THE TWELVE MONTHS ENDED
JANUARY 28, 2024
Unaudited
(Amounts in Thousands)
As of the three Months Ended
April 30, 2023
As of the three Months Ended
January 29, 2023
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Total assets (4)
$
75,494
39,127
37,562
152,183
$
75,393
39,817
35,388
150,598
Total liabilities
(11,387
)
(29,638
)
(22,078
)
(63,103
)
(9,511
)
(24,367
)
(23,216
)
(57,094
)
Subtotal
$
64,107
$
9,489
$
15,484
$
89,080
$
65,882
$
15,450
$
12,172
$
93,504
Cash and cash equivalents
—
—
(20,964
)
(20,964
)
—
—
(16,725
)
(16,725
)
Short-term investments - Rabbi
Trust
—
—
(1,404
)
(1,404
)
—
—
(2,420
)
(2,420
)
Current income taxes receivable
—
—
-
-
—
—
(238
)
(238
)
Long-term investments - Rabbi
Trust
—
—
(7,067
)
(7,067
)
—
—
(7,725
)
(7,725
)
Deferred income taxes -
non-current
—
—
(480
)
(480
)
—
—
(463
)
(463
)
Deferred compensation - current
—
—
1,404
1,404
—
—
2,420
2,420
Income taxes payable - current
—
—
753
753
—
—
467
467
Income taxes payable -
long-term
—
—
2,675
2,675
—
—
2,648
2,648
Deferred income taxes -
non-current
—
—
5,954
5,954
—
—
6,089
6,089
Deferred compensation
non-current
—
—
6,842
6,842
—
—
7,590
7,590
Total Capital Employed
$
64,107
$
9,489
$
3,197
$
76,793
$
65,882
$
15,450
$
3,815
$
85,147
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Average Capital Employed (3)
$
63,914
$
10,901
$
3,547
$
78,361
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 January
28, 2024, divided by average capital employed. Average capital
employed does not include cash and cash equivalents, short-term and
long-term investments – Rabbi Trust, income taxes receivable and
payable, accrued restructuring, noncurrent deferred income tax
assets and liabilities, and current and non-current deferred
compensation.
(3)
Average capital employed was computed
using the five quarterly periods ending January 28, 2024, October
29, 2023, July 30, 2023, April 30, 2023, and January 29, 2023.
(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
JANUARY 29, 2023
Unaudited
(Amounts in Thousands)
Adjusted Operating (Loss)
Income
Twelve Months Ended
Average Capital
Return on Avg. Capital
January 29, 2023 (1)
Employed (3)
Employed (2)
Mattress Fabrics
$
(19,053
)
$
76,826
(24.8
)%
Upholstery Fabrics
268
20,290
1.3
%
Unallocated Corporate
(9,626
)
3,955
N.M.
Total
$
(28,411
)
$
101,072
(28.1
)%
Average Capital Employed
As of the three Months Ended
January 29, 2023
As of the three Months Ended
October 30, 2022
As of the three Months Ended
July 31, 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)
$
75,393
39,817
35,388
150,598
$
78,366
44,934
38,330
161,630
$
90,842
51,053
38,595
180,490
Total liabilities
(9,511
)
(24,367
)
(23,216
)
(57,094
)
(9,895
)
(26,108
)
(23,519
)
(59,522
)
(11,934
)
(30,762
)
(23,799
)
(66,495
)
Subtotal
$
65,882
$
15,450
$
12,172
$
93,504
$
68,471
$
18,826
$
14,811
$
102,108
$
78,908
$
20,291
$
14,796
$
113,995
Cash and cash equivalents
—
—
(16,725
)
(16,725
)
—
—
(19,137
)
(19,137
)
—
—
(18,874
)
(18,874
)
Short-term investments - Rabbi
Trust
—
—
(2,420
)
(2,420
)
—
—
(2,237
)
(2,237
)
—
—
—
—
Current income taxes receivable
—
—
(238
)
(238
)
—
—
(510
)
(510
)
—
—
(798
)
(798
)
Long-term investments - Rabbi
Trust
—
—
(7,725
)
(7,725
)
—
—
(7,526
)
(7,526
)
—
—
(9,567
)
(9,567
)
Deferred income taxes -
non-current
—
—
(463
)
(463
)
—
—
(493
)
(493
)
—
—
(546
)
(546
)
Deferred compensation - current
—
—
2,420
2,420
—
—
2,237
2,237
—
—
—
—
Accrued restructuring
—
—
—
—
—
—
33
33
—
—
—
—
Income taxes payable - current
—
—
467
467
—
—
969
969
—
—
587
587
Income taxes payable -
long-term
—
—
2,648
2,648
—
—
2,629
2,629
—
—
3,118
3,118
Deferred income taxes -
non-current
—
—
6,089
6,089
—
—
5,700
5,700
—
—
6,007
6,007
Deferred compensation
—
—
7,590
7,590
—
—
7,486
7,486
—
—
9,528
9,528
Total Capital Employed
$
65,882
$
15,450
$
3,815
$
85,147
$
68,471
$
18,826
$
3,962
$
91,259
$
78,908
$
20,291
$
4,251
$
103,450
CULP INC.
RETURN ON CAPITAL EMPLOYED BY
SEGMENT - CONTINUED
FOR THE TWELVE MONTHS ENDED
JANUARY 29, 2023
Unaudited
(Amounts in Thousands)
As of the three Months Ended
May 1, 2022
As of the three Months Ended
January 30, 2022
Mattress
Upholstery
Unallocated
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Fabrics
Fabrics
Corporate
Total
Total assets (4)
$
92,609
51,124
33,830
177,563
$
103,370
67,272
40,925
211,567
Total liabilities
(8,569
)
(25,915
)
(23,578
)
(58,062
)
(16,540
)
(45,596
)
(22,697
)
(84,833
)
Subtotal
$
84,040
$
25,209
$
10,252
$
119,501
$
86,830
$
21,676
$
18,228
$
126,734
Cash and cash equivalents
—
—
(14,550
)
(14,550
)
—
—
(11,780
)
(11,780
)
Short-term investments -
Available-For-Sale
—
—
—
—
—
—
(438
)
(438
)
Short-term investments -
Held-To-Maturity
—
—
—
—
—
—
(1,315
)
(1,315
)
Current income taxes receivable
—
—
(857
)
(857
)
—
—
(367
)
(367
)
Long-term investments -
Held-To-Maturity
—
—
—
—
—
—
(8,677
)
(8,677
)
Long-term investments - Rabbi
Trust
—
—
(9,357
)
(9,357
)
—
—
(9,223
)
(9,223
)
Deferred income taxes -
non-current
—
—
(528
)
(528
)
—
—
(500
)
(500
)
Income taxes payable - current
—
—
413
413
—
—
240
240
Income taxes payable -
long-term
—
—
3,097
3,097
—
—
3,099
3,099
Deferred income taxes -
non-current
—
—
6,004
6,004
—
—
5,484
5,484
Deferred compensation
—
—
9,343
9,343
—
—
9,180
9,180
Total Capital Employed
$
84,040
$
25,209
$
3,817
$
113,066
$
86,830
$
21,676
$
3,931
$
112,437
Mattress
Upholstery
Unallocated
Fabrics
Fabrics
Corporate
Total
Average Capital Employed (3)
$
76,826
$
20,290
$
3,955
$
101,072
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
January 29, 2023, 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, short-term and long-term investments
– Rabbi Trust, accrued restructuring, income taxes receivable and
payable, noncurrent deferred income tax assets and liabilities, and
current and non-current deferred compensation.
(3)
Average capital employed was computed
using the five quarterly periods ending January 29, 2023, October
30, 2022, July 31, 2022, May 1, 2022, and January 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.
CONSOLIDATED STATEMENTS OF
ADJUSTED OPERATING (LOSS) INCOME
FOR THE TWELVE MONTHS ENDED
JANUARY 28, 2024, AND JANUARY 29, 2023
Quarter Ended
Trailing 12
Months
4/30/2023
07/30/2023
10/29/2023
01/28/2024
01/28/2024
Mattress Fabrics
$
(2,530
)
$
(1,398
)
$
(936
)
$
(1,582
)
$
(6,446
)
Upholstery Fabrics
1,611
1,328
1,391
2,092
6,422
Unallocated Corporate
(3,038
)
(2,495
)
(2,628
)
(2,361
)
(10,522
)
Operating loss
$
(3,957
)
$
(2,565
)
$
(2,173
)
$
(1,851
)
$
(10,546
)
Quarter Ended
Trailing 12
Months
5/1/2022
7/31/2022
10/30/2022
1/29/2023
1/29/2023
Mattress Fabrics
$
(2,901
)
$
(2,921
)
$
(9,002
)
$
(4,229
)
$
(19,053
)
Upholstery Fabrics
(116
)
542
262
(420
)
268
Unallocated Corporate
(2,366
)
(2,359
)
(2,478
)
(2,423
)
(9,626
)
Operating loss
$
(5,383
)
$
(4,738
)
$
(11,218
)
$
(7,072
)
$
(28,411
)
% Over (Under)
(26.5
)%
(45.9
)%
(80.6
)%
(73.8
)%
(62.9
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240306567088/en/
Investor Relations Contact Ken Bowling, Executive Vice
President, Chief Financial Officer, and Treasurer: (336) 881-5630
krbowling@culp.com
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