Culp, Inc. Reports Fourth Quarter and Fiscal 2024 Results, Updates on Restructuring Initiatives
Culp, Inc. (NYSE: CULP) (together with its consolidated subsidiaries, “CULP”) has announced its financial and operating results for the fourth quarter and fiscal year ended April 28, 2024.
Fiscal 2024 Fourth Quarter Financial Summary
- Net Sales: $49.5 million, a decrease of 19.4% from the prior-year period. Mattress fabrics sales were down 16.1%, and upholstery fabrics sales were down 22.6%.
- Loss from Operations: $(4.2) million, including $204,000 in restructuring expenses, compared to a loss of $(4.0) million in the prior-year period, which included $70,000 in restructuring expenses.
- Net Loss: $(4.9) million, or $(0.39) per diluted share, compared to $(4.7) million, or $(0.38) per diluted share, in the prior-year period. The effective tax rate was negative (19.8)% due to the mix of taxable income between U.S. and foreign jurisdictions.
- Financial Position: The company maintained $10.0 million in total cash and had no outstanding borrowings as of April 28, 2024. Total liquidity was $32.5 million, consisting of $10.0 million in cash and $22.5 million in borrowing availability.
- Fiscal 2024 Full Year Financial Summary
- Net Sales: $225.3 million, a decline of 4.1% from the prior year. Mattress fabrics sales increased by 4.8%, while upholstery fabrics sales decreased by 12.1%.
- Loss from Operations: $(11.3) million, including $676,000 in restructuring and related expenses, compared to a loss of $(28.5) million in the prior year, which included approximately $9.9 million in inventory impairment and other charges.
- Net Loss: $(13.8) million, or $(1.11) per diluted share, compared to $(31.5) million, or $(2.57) per diluted share, in the prior year. The effective tax rate was negative (28.3)% due to the mix of taxable income between U.S. and foreign jurisdictions.
Restructuring Plan Update
The restructuring plan, announced on May 1, 2024, primarily focuses on the company’s mattress fabrics segment and is progressing as planned:
Annualized Savings: Expected to achieve $10.0 – $11.0 million in annualized savings and operating improvements by the end of the calendar year, with most benefits realized during the second half of fiscal 2025.
- Break-even Operating Results: Anticipates returning to break-even operating results at current industry demand levels post-restructuring.
- Restructuring Costs: Expect to incur approximately $2.5 million in cash restructuring costs, primarily funded by the sale of excess manufacturing equipment.
- Real Estate Sales: Anticipates receiving $10.0 – $12.0 million in cash proceeds from the sale of real estate associated with the restructuring plan.
- Non-Cash Costs: Expects approximately $5.4 million in non-cash restructuring costs.
CEO Commentary
Iv Culp, President and CEO of Culp, Inc., stated, “Our fourth quarter results were in line with expectations despite ongoing macroeconomic challenges. Our restructuring plan is progressing, and we are making strategic adjustments to optimize our operations and cost structure. We are committed to returning to profitability and maintaining a solid balance sheet, supported by strong customer and supplier relationships.”
Business Segment Highlights
Mattress Fabrics Segment (“CHF”)
- Fourth Quarter Sales: $25.8 million, a 16.1% decrease from the prior-year period, due to weakness in the domestic mattress industry.
- Fourth Quarter Operating Loss: $(2.9) million, compared to $(2.5) million in the prior-year period, driven by lower sales and operating inefficiencies.
- Fiscal Year Sales: $116.4 million, a 4.8% increase from fiscal 2023, due to higher sales in the first nine months of fiscal 2024, offset by lower fourth-quarter sales.
- Fiscal Year Operating Loss: $(6.8) million, an improvement from $(18.7) million in fiscal 2023, due to better inventory management and higher sales earlier in the year, partially offset by increased SG&A expenses and production inefficiencies.
