CULP Culp Inc

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 06, 2024

 

 

Culp, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

North Carolina			1-12597	56-1001967
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
1823 Eastchester Drive
High Point, North Carolina				27265
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 336 889-5161

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.05 per share		CULP		The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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This report and the exhibit attached hereto contain “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties that may cause actual events and results to differ materially from such statements. 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 (loss) income, capital expenditures, working capital levels, cost savings, income taxes, SG&A or other expenses, pre-tax (loss) income, earnings, cash flow, and other performance or liquidity measures, as well as any statements regarding dividends, share repurchases, liquidity, uses 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 that has affected 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.

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Item 2.02 – Results of Operations and Financial Condition

On March 6, 2024, we issued a news release to announce our financial results for our third quarter ended January 28, 2024. A copy of the news release is attached hereto as Exhibit 99.1.

The information set forth in this Item 2.02 of this Current Report, and in Exhibit 99.1, is intended to be “furnished” under Item 2.02 of Form 8-K. Such information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

The news release contains adjusted income statement information for the three and nine-month periods ending January 28, 2024, and January 29, 2023, respectively, which disclose adjusted loss from operations, a non-U.S. GAAP performance measure that eliminates items which are not expected to occur on a recurring or regular basis. For the three and nine-month periods ending January 28, 2024, these items include, as applicable for the period presented, restructuring-related credits, restructuring-related charges, and restructuring expense associated with the discontinued production of cut and sewn upholstery kits in Ouanaminthe, Haiti. For the three and nine- month periods ending January 29, 2023, these items include restructuring expense associated with the consolidation of certain leased facilities located in Ouanaminthe, Haiti, during the third quarter of fiscal 2023, as well as restructuring expense and restructuring-related charges associated with the exit of the company's cut and sew upholstery fabrics operation located in Shanghai, China, during the second quarter of fiscal 2023. The company has included this adjusted information in order to show operational performance excluding the effects of items not expected to occur on a recurring or regular basis. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. Management believes this presentation aids in the comparison of financial results among comparable financial periods. Management uses adjusted income statement information in evaluating the financial performance of our overall operations and business segments. Also, adjusted income statement information is used as a performance measure in our incentive-based executive compensation program. We note, however, that this adjusted income statement information should not be viewed in isolation or as a substitute for loss from operations calculated in accordance with U.S. GAAP.

The news release contains disclosures about free cash flow, a non-U.S. GAAP liquidity measure that we define as net cash (used in) provided by operating activities, less cash capital expenditures and payments on vendor-financed capital expenditures, plus any proceeds from sale of property, plant, and equipment, plus proceeds from note receivable, plus proceeds from the sale of investments associated with our rabbi trust, less the purchase of investments associated with our rabbi trust, and plus or minus the effects of foreign currency exchange rate changes on cash and cash equivalents, in each case to the extent any such amount is incurred during the period presented. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. Management believes the disclosure of free cash flow provides useful information to investors because it measures our available cash flow for potential debt repayment, stock repurchases, dividends, additions to cash and investments, or other corporate purposes. We note, however, that not all of the company’s free cash flow is available for discretionary spending, as we may have mandatory debt payments and other cash requirements that must be deducted from our cash available for future use. In operating our business, management uses free cash flow to make decisions about what commitments of cash to make for operations, such as capital expenditures (and possible financing arrangements for these expenditures), purchases of inventory or supplies, SG&A expenditure levels, compensation, and other commitments of cash, while still allowing for adequate cash to meet known future commitments for cash, such as debt repayment, and also for making decisions about dividend payments and share repurchases.

The news release contains disclosures about our Adjusted EBITDA, which is a non-U.S. GAAP performance measure that reflects net (loss) income excluding income tax expense (benefit), net interest income, and restructuring expense or credit and restructuring related charges or credits, as well as depreciation and amortization expense, and stock-based compensation expense. This measure also excludes other non-recurring charges and credits associated with our business, if and to the extent any such amount is incurred during the period presented. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. We believe presentation of Adjusted EBITDA is useful to investors because earnings before interest income and expense, income taxes, depreciation and amortization, and similar performance measures that exclude certain charges from earnings, are often used by investors and financial analysts in evaluating and comparing companies in our industry. We note, however, that such measures are not defined uniformly by various companies, with differing expenses being excluded from net income to calculate these performance measures. For this reason, Adjusted EBITDA should not be viewed in isolation by investors and should not be used as a substitute for net income (loss) calculated in accordance with GAAP, nor should it be used for direct comparisons with similarly titled performance measures reported by other

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companies. Use of Adjusted EBITDA as an analytical tool has limitations in that this measure does not reflect all expenses that are necessary to fund and operate our business, including funds required to pay taxes, service our debt, and fund capital expenditures, among others. Management uses Adjusted EBITDA to help it analyze the company’s earnings and operating performance, by excluding the effects of expenses that depend upon capital structure and debt level, tax provisions, and non-cash items such as depreciation, amortization and stock-based compensation expense that do not require immediate uses of cash.

The news release contains disclosures about return on capital for both the entire company and for individual business segments. We define return on capital as adjusted operating income (loss) (measured on a trailing twelve-month basis) divided by average capital employed (excluding intangible assets related to acquisitions at the divisional level only). Adjusted operating income (loss) excludes certain charges or credits that are not expected to occur on a recurring or regular basis, if applicable for the period presented. Average capital employed is calculated over rolling five fiscal periods, depending on which quarter is being presented. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. We believe return on capital is an accepted measure of earnings efficiency in relation to capital employed, but it is a non-U.S. GAAP performance measure that is not defined or calculated in the same manner by all companies. This measure should not be considered in isolation or as an alternative to net income (loss) or other performance measures, but we believe it provides useful information to investors by comparing the adjusted operating income (loss) we produce to the net asset base used to generate that income (loss). Also, adjusted operating income (loss) on a trailing twelve-months basis does not necessarily indicate results that would be expected for the full fiscal year or for the following twelve months. We note that, particularly for return on capital measured at the segment level, not all assets and expenses are allocated to our operating segments, and there are assets and expenses at the corporate (unallocated) level that may provide support to a segment’s operations and yet are not included in the assets and expenses used to calculate that segment’s return on capital. Thus, the average return on capital for the company’s segments will generally be different from the company’s overall return on capital. Management uses return on capital to evaluate the company’s earnings efficiency and the relative performance of its segments.

Item 9.01 (d) – Exhibits

 

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EXHIBIT INDEX

 

Exhibit Number		Exhibit
99.1		News Release dated March 6, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

		CULP, INC. (Registrant)
		By:	/s/ Kenneth R. Bowling
			Chief Financial Officer
			(principal financial officer and principal accounting officer)

 

 

Dated: March 6, 2024

 

 

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CULP ANNOUNCES RESULTS FOR THIRD QUARTER FISCAL 2024,

WITH CONTINUED SEQUENTIAL AND YEAR-OVER-YEAR OPERATING IMPROVEMENT

 

 

HIGH POINT, N.C. (March 6, 2024) ─ 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

 

 

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 short-term 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

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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

 

 

 

 

Upholstery Fabrics Segment (“CUF”) Summary

 

 

 

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Balance Sheet, Cash Flow, and Liquidity

 

 

 

 

 

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

 

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

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“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.

 

Investor Relations Contact

Ken Bowling, Executive Vice President, Chief Financial Officer, and Treasurer:

(336) 881-5630

krbowling@culp.com

 

 

 

About the Company

 

Culp, Inc. is one of the 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

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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.

 

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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.

 

 

 

 

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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 Ouananminthe, 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.

 

 

 

 

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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 JANAURY 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.

 

 

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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

 

 

 

 

 

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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.

 

 

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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.

 

 

 

 

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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 Ouananminthe, 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.

 

 

 

 

 

 

 

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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.

 

 

 

 

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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

 

 

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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.

 

 

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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
	Janaury 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

 

 

 

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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.

 

 

 

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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	)%

 

-END-

 

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v3.24.0.1

Document And Entity Information	Mar. 06, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Mar. 06, 2024
Entity Registrant Name	Culp, Inc.
Entity Central Index Key	0000723603
Entity Emerging Growth Company	false
Entity File Number	1-12597
Entity Incorporation, State or Country Code	NC
Entity Tax Identification Number	56-1001967
Entity Address, Address Line One	1823 Eastchester Drive
Entity Address, City or Town	High Point
Entity Address, State or Province	NC
Entity Address, Postal Zip Code	27265
City Area Code	336
Local Phone Number	889-5161
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, par value $0.05 per share
Trading Symbol	CULP
Security Exchange Name	NYSE

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