CULP
$15.32
Culp
($.18)
(1.16%)
Earnings Details
2nd Quarter October 2020
Thursday, December 3, 2020 4:15:00 PM
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Summary

Culp (CULP) Recent Earnings

Culp (CULP) reported 2nd Quarter October 2020 earnings of $0.19 per share on revenue of $76.9 million. The consensus earnings estimate was $0.14 per share on revenue of $68.8 million. Revenue grew 5.8% on a year-over-year basis.

Results
Reported Earnings
$0.19
Earnings Whisper
-
Consensus Estimate
$0.14
Reported Revenue
$76.9 Mil
Revenue Estimate
$68.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Culp Announces Results for Second Quarter Fiscal 2021

Board of Directors Authorizes Five Percent Increase in Quarterly Cash Dividend on Solid Results and Strengthened Liquidity

HIGH POINT, N.C.--(BUSINESS WIRE)--Culp, Inc. (NYSE: CULP) today reported financial and operating results for the second quarter ended November 1, 2020.

Fiscal 2021 Second Quarter Financial Summary(1)

  • Net sales were $76.9 million, up 10.5 percent over the prior-year period, with mattress fabric sales up 12.2 percent and upholstery fabric sales up 8.7 percent compared with the second quarter of last year.
  • Pre-tax income from continuing operations improved sequentially to $3.9 million, which included $680,000 in other expense relating mostly to foreign exchange rate fluctuations associated with China, compared with pre-tax income from continuing operations of $4.5 million for the prior-year period, which included $99,000 in other expense.
  • Net income from continuing operations was $2.4 million, or $0.19 per diluted share, compared with net income from continuing operations of $2.2 million, or $0.18 per diluted share, for the prior-year period.
  • The company’s financial position reflected increased total cash and investments of $56.5 million and no outstanding borrowings as of November 1, 2020. This compares with a net cash position of $38.7 million as of the end of the fourth quarter of fiscal 2020. (See summary of cash and investments table on page 9.)
  • Cash flow from operations and free cash flow for the first six months of fiscal 2021 were $22.7 million and $20.5 million, respectively, compared with cash flow from operations and free cash flow of $8.2 million and $5.6 million, respectively, for the prior-year period. (See reconciliation table on page 11.)
  • The company announced a five percent increase in its quarterly cash dividend to $0.11 per share, commencing in the third quarter of fiscal 2021. At an annual indicated dividend of $0.44 per share, the yield is 3.03%, based upon yesterday’s closing stock price of $14.50 per share. Notably, this is the company’s eighth straight year of increasing its annual dividend.

(1) During the fourth quarter of fiscal 2020, the company sold its majority ownership interest in eLuxury, LLC, resulting in the elimination of its home accessories segment. Accordingly, the financial results for this segment are excluded from the reported financial performance of the company’s continuing operations and are presented as a discontinued operation in the company’s consolidated financial statements.

Financial Outlook

  • Due to the continued economic impact of the COVID-19 pandemic and the lack of visibility as to its duration, the company is providing only limited financial guidance for fiscal 2021 at this time.
  • Although subject to unforeseen changes that may arise in connection with the pandemic, the company is encouraged by the ongoing execution of its product-driven strategy and continued strength in demand for home furnishing products, as well as its opportunities for market share growth. The company expects sales and operating income for the third quarter of fiscal 2021 to be comparable to the prior-year period, with the mattress fabrics segment continuing its strong rebound and the upholstery fabrics segment facing ongoing headwinds relating to foreign exchange rate fluctuations associated with its operations located in China, customer supply chain constraints, and sales mix. The company also expects sales and operating income for the fourth quarter of fiscal 2021 to be dramatically improved for both segments as compared to the fourth quarter of fiscal 2020.

Commenting on the results, Iv Culp, president and chief executive officer of Culp, Inc., said, “We are pleased with our strong performance for the second quarter of fiscal 2021, which reflects the tireless efforts of our associates around the world and the strength and resilience of our global platform. Our dedicated team has done an outstanding job in following the protocols we have put in place to operate safely, while also meeting the rapid surge in demand with the high level of service and product quality that our customers know and expect from us. As we continue to navigate our way through these uncertain times, our top priority remains the health and safety of our employees, customers, suppliers, and the communities we serve. We are incredibly proud of our team’s continued drive to deliver innovative products and satisfy the evolving needs of our customers, while also integrating enhanced safety practices and new ways of working virtually throughout our business.

“Overall, we are very pleased with the top line performance for both our mattress fabrics and upholstery fabrics segments. This faster-than-expected recovery indicates an increased consumer focus on the home environment, as well as our ability to service this increase in demand through our strong global platform and stable supply chain. We are also benefitting from market share gains as our innovative products are resonating well with both new and existing customers. Additionally, we delivered significant sequential improvement in operating income as compared to the first quarter, consistent with our expectations.

“We further strengthened our balance sheet with increased liquidity, as total cash and investments reached $56.5 million. Based on this strong financial performance, we are pleased to announce that our Board of Directors approved a five percent increase in our quarterly dividend, which marks the eighth consecutive year of increasing our annual dividend. This is consistent with our capital allocation strategy and our commitment to generate value for our shareholders.

“Looking ahead, our customers’ ability to meet their demand is being challenged by supply chain constraints related primarily to non-fabric components, as well as labor shortages, which could temporarily delay their scheduled delivery of fabric orders from both our mattress and upholstery fabrics segments. Additionally, the ongoing impact and duration of the COVID-19 pandemic remains unknown. We are prepared for a range of macroeconomic scenarios and are confident in our ability to weather these near-term headwinds. Barring additional shutdowns, we are optimistic, based on current industry demand trends and market share opportunities, that we will deliver strong results in the second half of fiscal 2021. We are well positioned for continued growth and look forward to the opportunities ahead for our business in fiscal 2021,” added Culp.

Segment Update

Mattress Fabrics Segment

Sales for this segment were $40.0 million for the second quarter, up 12.2 percent compared with sales of $35.7 million in the second quarter of fiscal 2020.

“We were especially encouraged by the strong growth in sales and operating income for the mattress fabric segment during the second quarter,” said Sandy Brown, president of Culp’s mattress fabrics division. “The COVID-19 pandemic has generated greater consumer awareness and appreciation for overall comfort and wellness within the home environment, leading to an increase in discretionary spending on home furnishing products, including mattresses. We built on the momentum generated during the last eight weeks of the first quarter by utilizing our product-driven strategy for both mattress fabrics and sewn covers, as well as our global supply chain and dedicated attention to our customers. The strength and flexibility of our global manufacturing and sourcing operations in the U.S., Canada, Haiti, Asia, and Turkey enabled us to support current demand and serve the needs of our mattress fabric and cover customers.

“We remain pleased with the growth of our sewn mattress cover business, with demand trends for mattress covers exceeding pre-COVID levels. This trend is driven by the ongoing growth in the boxed bedding space, and we continue to work collaboratively with new and existing customers to develop fresh, innovative products.

“During this uncertain and rapidly evolving environment, we have managed our business with a firm focus on creative designs, innovative fabric and sewn cover products, and exceptional service. We are excited about ongoing developments in product innovation, including expanding our specialty finish options and virtual rendering services. We also expect that our increased capacity in North America resulting from our investment in additional equipment will be available during the fourth quarter of fiscal 2021. Finally, we believe that the domestic mattress industry, and, in turn, our business, will benefit from the recent preliminary antidumping duties imposed by the U.S. Department of Commerce on mattress importers from seven countries.

“Barring additional shutdowns or significant disruption in our customers’ supply chain for raw materials other than fabric, we believe we are well positioned to execute our strategy and increase market share during the second half of fiscal 2021,” added Brown.

Upholstery Fabrics Segment

Sales for this segment were $36.8 million for the second quarter, up 8.7 percent compared with sales of $33.9 million in the second quarter of fiscal 2020.

“We were very pleased with the solid growth in our upholstery fabric sales for the second quarter,” said Boyd Chumbley, president of Culp’s upholstery fabrics division. “Our residential upholstery business saw a significant increase in sales compared to the prior-year period, driven primarily by the increased consumer focus on the at-home experience and overall comfort. Through our strong platform in Asia, including our expanded cut and sew capabilities in Vietnam and our stable, long-term supplier relationships, we were able to respond quickly to meet the upsurge in demand from our customers and increase our market share. We have also generated a historically strong backlog in our residential upholstery business, reflecting the ongoing favorable demand trends for this business.

“Our line of highly durable, stain-resistant LiveSmart® performance fabrics, as well as our line of LiveSmart Evolve® performance plus sustainability fabrics, continued to experience favorable demand trends. We also recently launched LiveSmart Ultra™, which features a new antimicrobial finish as the next step in our LiveSmart performance brand evolution. These LiveSmart performance fabrics are important drivers of growth in our residential business.

“Our hospitality business remained under pressure by the ongoing COVID-19 disruption that continued to affect the travel and leisure industries. These lingering pressures also affected Read Window Products, our window treatment and installation business, during the quarter. While sales for our hospitality business remained relatively stable as compared to the first quarter, we expect that the disruption in hospitality and leisure will continue to affect this business in the near-term.

“Additionally, while we saw a material sequential improvement in our operating income as compared to the first quarter of fiscal 2021, our second quarter results compared to the prior-year period were materially affected by unfavorable China foreign exchange rate fluctuations, as well as sales mix. We expect these factors will continue to affect our operating income during the third quarter. Despite these pressures, we were encouraged by our solid operating margin for the second quarter.

“We are encouraged by the strong backlog in our residential upholstery business and are confident in our ability to meet this demand. We expect the strong performance in our residential upholstery business to continue, absent additional pandemic-related shutdowns or material disruption in our customers’ supply chain,” added Chumbley.

Balance Sheet

“As the ongoing impact of the COVID-19 pandemic remains uncertain, maintaining a strong financial position remains one of Culp’s top priorities for fiscal 2021,” added Ken Bowling, executive vice president and chief financial officer of Culp, Inc. “As of November 1, 2020, we reported $56.5 million in total cash and investments and no outstanding borrowings, up from our $38.7 million net cash position as of the end of the fourth quarter of fiscal 2020. For the first six months of fiscal 2021, we incurred $2.0 million in capital expenditures and spent $2.6 million on regular dividends. We also generated cash flow from operations of $22.7 million and free cash flow from operations of $20.5 million for the first half of fiscal 2021, compared with cash flow from operations of $8.2 million and free cash flow of $5.6 million for the prior-year period. (See reconciliation table on page 11.) This year-over-year improvement reflects a focused attention on working capital management during the first half of the year. While we are extremely pleased with our strong cash position and fortified balance sheet going into the second half of the year, it is important to note that our cash position will be affected by our strategic investments in working capital and planned capital expenditures during this period.”

Dividends and Share Repurchases

The company announced that its Board of Directors has approved a five percent increase in the company’s quarterly cash dividend to 11 cents per share, marking the eighth straight year of increasing the annual dividend. At an annual indicated dividend of $0.44 per share, the yield is 3.03%, based upon yesterday’s closing stock price of $14.50 per share. The next quarterly payment will be made on or about January 18, 2021, to shareholders of record as of January 8, 2021. The Board will continue to evaluate the appropriateness of the current dividend rate considering economic conditions and the company’s performance in upcoming quarters.

The company did not repurchase any shares during the second quarter of fiscal 2021, leaving the full $5.0 million available under the share repurchase program approved by the Board in March 2020. As previously disclosed, the company has temporarily suspended its share repurchases given the economic uncertainty related to COVID-19.

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 operations located in the United States, Canada, China, and Haiti.

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 for our future operations, production levels, new product launches, sales, profit margins, profitability, operating income, capital expenditures, working capital levels, 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 potential acquisitions, future economic or industry trends, public health epidemics, or future developments. There can be no assurance that the company will realize these expectations, meet its 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, 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. Also, economic and 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 goodwill or intangible asset impairments could affect our financial results. Finally, increases in market prices for petrochemical products can significantly affect the prices we pay for raw materials, and in turn, increase our operating costs and decrease our profitability. 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.

CULP, INC.

CONSOLIDATED STATEMENTS OF NET INCOME

FOR THREE MONTHS ENDED NOVEMBER 1, 2020, AND NOVEMBER 3, 2019

Unaudited

(Amounts in Thousands, Except for Per Share Data)

 

 

 

 

THREE MONTHS ENDED

 

 

 

 

Amount

 

 

 

 

 

 

Percent of Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

November 1,

 

 

November 3,

 

 

% Over

 

 

November 1,

 

 

November 3,

 

 

 

 

2020

 

 

2019

 

 

(Under)

 

 

2020

 

 

2019

 

Net sales

 

 

$

76,851

 

 

 

69,550

 

 

 

10.5

%

 

 

100.0

%

 

 

100.0

%

Cost of sales

 

 

 

(62,590

)

 

 

(56,024

)

 

 

11.7

%

 

 

81.4

%

 

 

80.6

%

Gross profit from continuing operations

 

 

 

14,261

 

 

 

13,526

 

 

 

5.4

%

 

 

18.6

%

 

 

19.4

%

Selling, general and administrative expenses

 

 

 

(9,743

)

 

 

(9,117

)

 

 

6.9

%

 

 

12.7

%

 

 

13.1

%

Income from continuing operations

 

 

 

4,518

 

 

 

4,409

 

 

 

2.5

%

 

 

5.9

%

 

 

6.3

%

Interest expense

 

 

 

 

 

 

(21

)

 

 

100.0

%

 

 

0.0

%

 

 

(0.0

)%

Interest income

 

 

 

59

 

 

 

258

 

 

 

(77.1

)%

 

 

0.1

%

 

 

0.4

%

Other expense

 

 

 

(680

)

 

 

(99

)

 

 

586.9

%

 

 

0.9

%

 

 

0.1

%

Income before income taxes from continuing operations

 

 

 

3,897

 

 

 

4,547

 

 

 

(14.3

)%

 

 

5.1

%

 

 

6.5

%

Income tax expense (1)

 

 

 

(1,613

)

 

 

(2,279

)

 

 

(29.2

)%

 

 

41.4

%

 

 

50.1

%

Income (loss) from investment in unconsolidated joint venture

 

 

 

100

 

 

 

(16

)

 

N.M.

 

 

 

0.1

%

 

 

(0.0

)%

Net income from continuing operations

 

 

 

2,384

 

 

 

2,252

 

 

 

5.9

%

 

 

3.1

%

 

 

3.2

%

Loss before income taxes from discontinued operation (2)

 

 

 

 

 

 

(441

)

 

 

(100.0

)%

 

 

 

 

 

(0.6

)%

Income tax benefit (2) (3)

 

 

 

 

 

 

381

 

 

 

(100.0

)%

 

 

 

 

 

86.4

%

Net loss from discontinued operation (2)

 

 

 

 

 

 

(60

)

 

 

(100.0

)%

 

 

 

 

 

(0.1

)%

Net income

 

 

$

2,384

 

 

 

2,192

 

 

 

8.8

%

 

 

3.1

%

 

 

3.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations per share - basic

 

 

$

0.19

 

 

$

0.18

 

 

 

6.8

%

 

 

 

 

 

 

 

 

Net income from continuing operations per share - diluted

 

 

$

0.19

 

 

$

0.18

 

 

 

6.6

%

 

 

 

 

 

 

 

 

Net loss from discontinued operation per share - basic

 

 

$

 

 

$

(0.00

)

 

 

(100.0

)%

 

 

 

 

 

 

 

 

Net loss from discontinued operation per share - diluted

 

 

$

 

 

$

(0.00

)

 

 

(100.0

)%

 

 

 

 

 

 

 

 

Net income per share - basic

 

 

$

0.19

 

 

$

0.18

 

 

 

9.7

%

 

 

 

 

 

 

 

 

Net income per share - diluted

 

 

$

0.19

 

 

$

0.18

 

 

 

9.5

%

 

 

 

 

 

 

 

 

Average shares outstanding-basic

 

 

 

12,298

 

 

 

12,408

 

 

 

(0.9

)%

 

 

 

 

 

 

 

 

Average shares outstanding-diluted

 

 

 

12,324

 

 

 

12,408

 

 

 

(0.7

)%

 

 

 

 

 

 

 

 

Notes

(1)

Percent of sales column for income tax expense is calculated as a % of income before income taxes from continuing operations.

 

(2)

Effective March 31, 2020, we sold our entire ownership of eLuxury, LLC to its noncontrolling interest holder, resulting in the elimination of the home accessories segment at such time.

 

(3)

Percent of sales column for income tax benefit is calculated as a % of loss before income taxes from discontinued operation.

 

CULP, INC.

CONSOLIDATED STATEMENTS OF NET (LOSS) INCOME

FOR SIX MONTHS ENDED NOVEMBER 1, 2020, AND NOVEMBER 3, 2019

Unaudited

(Amounts in Thousands, Except for Per Share Data)

 

 

 

 

SIX MONTHS ENDED

 

 

 

 

Amount

 

 

 

 

 

 

Percent of Sales

 

 

 

 

(4)

 

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

November 1,

 

 

November 3,

 

 

% Over

 

 

November 1,

 

 

November 3,

 

 

 

 

2020

 

 

2019

 

 

(Under)

 

 

2020

 

 

2019

 

Net sales

 

 

$

141,315

 

 

 

140,269

 

 

 

0.7

%

 

 

100.0

%

 

 

100.0

%

Cost of sales

 

 

 

(117,153

)

 

 

(114,331

)

 

 

2.5

%

 

 

82.9

%

 

 

81.5

%

Gross profit from continuing operations

 

 

 

24,162

 

 

 

25,938

 

 

 

(6.8

)%

 

 

17.1

%

 

 

18.5

%

Selling, general and administrative expenses

 

 

 

(17,761

)

 

 

(18,266

)

 

 

(2.8

)%

 

 

12.6

%

 

 

13.0

%

Restructuring credit

 

 

 

-

 

 

 

35

 

 

 

(100.0

)%

 

 

(0.0

)%

 

 

0.0

%

Income from continuing operations

 

 

 

6,401

 

 

 

7,707

 

 

 

(16.9

)%

 

 

4.5

%

 

 

5.5

%

Interest expense

 

 

 

(51

)

 

 

(21

)

 

 

142.9

%

 

 

0.0

%

 

 

0.0

%

Interest income

 

 

 

117

 

 

 

518

 

 

 

(77.4

)%

 

 

0.1

%

 

 

0.4

%

Other expense

 

 

 

(1,046

)

 

 

(194

)

 

 

439.2

%

 

 

0.7

%

 

 

0.1

%

Income before income taxes from continuing operations

 

 

 

5,421

 

 

 

8,010

 

 

 

(32.3

)%

 

 

3.8

%

 

 

5.7

%

Income tax expense (1)

 

 

 

(5,937

)

 

 

(3,971

)

 

 

49.5

%

 

 

109.5

%

 

 

49.6

%

Income (loss) from investment in unconsolidated joint venture

 

 

 

167

 

 

 

(3

)

 

N.M.

 

 

 

0.1

%

 

 

(0.0

)%

Net (loss) income from continuing operations

 

 

 

(349

)

 

 

4,036

 

 

 

(108.6

)%

 

 

(0.2

)%

 

 

2.9

%

Loss before income taxes from discontinued operation (2)

 

 

 

 

 

 

(1,062

)

 

 

(100.0

)%

 

 

0.0

%

 

 

(0.8

)%

Income tax benefit (2) (3)

 

 

 

 

 

 

392

 

 

 

(100.0

)%

 

 

0.0

%

 

 

36.9

%

Net loss from discontinued operation (2)

 

 

 

 

 

 

(670

)

 

 

(100.0

)%

 

 

0.0

%

 

 

(0.5

)%

Net (loss) income

 

 

$

(349

)

 

 

3,366

 

 

 

(110.4

)%

 

 

(0.2

)%

 

 

2.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income from continuing operations per share - basic

 

 

$

(0.03

)

 

$

0.33

 

 

 

(108.7

)%

 

 

 

 

 

 

 

 

Net (loss) income from continuing operations per share - diluted

 

 

$

(0.03

)

 

$

0.33

 

 

 

(108.7

)%

 

 

 

 

 

 

 

 

Net loss from discontinued operation per share - basic

 

 

$

 

 

$

(0.05

)

 

 

(100.0

)%

 

 

 

 

 

 

 

 

Net loss from discontinued operation per share - diluted

 

 

$

 

 

$

(0.05

)

 

 

(100.0

)%

 

 

 

 

 

 

 

 

Net (loss) income per share - basic

 

 

$

(0.03

)

 

$

0.27

 

 

 

(110.5

)%

 

 

 

 

 

 

 

 

Net (loss) income per share - diluted

 

 

$

(0.03

)

 

$

0.27

 

 

 

(110.5

)%

 

 

 

 

 

 

 

 

Average shares outstanding-basic

 

 

 

12,293

 

 

 

12,403

 

 

 

(0.9

)%

 

 

 

 

 

 

 

 

Average shares outstanding-diluted

 

 

 

12,293

 

 

 

12,413

 

 

 

(1.0

)%

 

 

 

 

 

 

 

 

Notes

 

(1)

Percent of sales column for income tax expense is calculated as a % of income before income taxes from continuing operations.

 

(2)

Effective March 31, 2020, we sold our entire ownership of eLuxury, LLC to its noncontrolling interest holder, resulting in the elimination of the home accessories segment at such time.

 

(3)

Percent of sales column for income tax benefit is calculated as a % of loss before income taxes from discontinued operation.

 

(4)

See page 14 for our Reconciliation of Selected Income Statement Information to Adjusted Results for the six-month periods ending November 1, 2020 and November 3, 2019, which includes certain adjustments to income tax expense from continuing operation.

 

CULP, INC.

CONSOLIDATED BALANCE SHEETS

NOVEMBER 1, 2020, NOVEMBER 3, 2019, AND MAY 3, 2020

Unaudited

(Amounts in Thousands)

 

 

 

Amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Condensed)

 

 

(Condensed)

 

 

 

 

 

 

 

 

 

 

(Condensed)

 

 

 

November 1,

 

 

November 3,

 

 

Increase (Decrease)

 

 

* May 3,

 

 

 

2020

 

 

2019

 

 

Dollars

 

 

Percent

 

 

2020

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

45,288

 

 

 

46,955

 

 

 

(1,667

)

 

 

(3.6

)%

 

 

69,790

 

Short-term investments - Held-To-Maturity

 

 

5,005

 

 

 

 

 

 

5,005

 

 

 

100.0

%

 

 

4,271

 

Short-term investments - Available for Sale

 

 

5,462

 

 

 

 

 

 

5,462

 

 

 

100.0

%

 

 

923

 

Accounts receivable

 

 

32,960

 

 

 

23,890

 

 

 

9,070

 

 

 

38.0

%

 

 

25,093

 

Inventories

 

 

47,726

 

 

 

51,443

 

 

 

(3,717

)

 

 

(7.2

)%

 

 

47,907

 

Current income taxes receivable

 

 

 

 

 

776

 

 

 

(776

)

 

 

(100.0

)%

 

 

1,585

 

Current assets - Discontinued operation

 

 

 

 

 

4,760

 

 

 

(4,760

)

 

 

(100.0

)%

 

 

 

Other current assets

 

 

3,509

 

 

 

2,745

 

 

 

764

 

 

 

27.8

%

 

 

2,116

 

Total current assets

 

 

139,950

 

 

 

130,569

 

 

 

9,381

 

 

 

7.2

%

 

 

151,685

 

Property, plant & equipment, net

 

 

41,599

 

 

 

45,221

 

 

 

(3,622

)

 

 

(8.0

)%

 

 

43,147

 

Goodwill

 

 

 

 

 

13,569

 

 

 

(13,569

)

 

 

(100.0

)%

 

 

 

Intangible assets

 

 

3,192

 

 

 

3,711

 

 

 

(519

)

 

 

(14.0

)%

 

 

3,380

 

Long-term investments - Rabbi Trust

 

 

8,060

 

 

 

7,575

 

 

 

485

 

 

 

6.4

%

 

 

7,834

 

Long-term investments - Held-To-Maturity

 

 

759

 

 

 

 

 

 

759

 

 

 

100.0

%

 

 

2,076

 

Right of use asset

 

 

6,165

 

 

 

4,883

 

 

 

1,282

 

 

 

26.3

%

 

 

3,903

 

Noncurrent income taxes receivable

 

 

 

 

 

733

 

 

 

(733

)

 

 

(100.0

)%

 

 

 

Deferred income taxes

 

 

645

 

 

 

511

 

 

 

134

 

 

 

26.2

%

 

 

793

 

Investment in unconsolidated joint venture

 

 

1,859

 

 

 

1,504

 

 

 

355

 

 

 

23.6

%

 

 

1,602

 

Long-term note receivable affiliated with discontinued operation

 

 

 

 

 

1,800

 

 

 

(1,800

)

 

 

(100.0

)%

 

 

 

Noncurrent assets - Discontinued operation

 

 

 

 

 

22,950

 

 

 

(22,950

)

 

 

(100.0

)%

 

 

 

Other assets

 

 

547

 

 

 

496

 

 

 

51

 

 

 

10.3

%

 

 

664

 

Total assets

 

$

202,776

 

 

 

233,522

 

 

 

(30,746

)

 

 

(13.2

)%

 

 

215,084

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Line of credit - China operations

 

$

 

 

 

 

 

 

 

 

 

 

 

 

1,015

 

Paycheck Protection Program Loan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,606

 

Accounts payable - trade

 

 

38,247

 

 

 

26,336

 

 

 

11,911

 

 

 

45.2

%

 

 

23,002

 

Accounts payable - capital expenditures

 

 

68

 

 

 

398

 

 

 

(330

)

 

 

(82.9

)%

 

 

107

 

Operating lease liability - current

 

 

2,316

 

 

 

2,090

 

 

 

226

 

 

 

10.8

%

 

 

1,805

 

Deferred revenue

 

 

375

 

 

 

375

 

 

 

 

 

 

 

 

 

502

 

Accrued expenses

 

 

11,684

 

 

 

8,263

 

 

 

3,421

 

 

 

41.4

%

 

 

5,687

 

Accrued restructuring costs

 

 

 

 

 

35

 

 

 

(35

)

 

 

(100.0

)%

 

 

 

Current liabilities - Discontinued operation

 

 

 

 

 

1,907

 

 

 

(1,907

)

 

 

(100.0

)%

 

 

 

Income taxes payable - current

 

 

1,413

 

 

 

1,539

 

 

 

(126

)

 

 

(8.2

)%

 

 

395

 

Total current liabilities

 

 

54,103

 

 

 

40,943

 

 

 

13,160

 

 

 

32.1

%

 

 

40,119

 

Line of credit - U.S. operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,750

 

Accrued expenses - long-term

 

 

 

 

 

333

 

 

 

(333

)

 

 

(100.0

)%

 

 

167

 

Operating lease liability - long-term

 

 

4,008

 

 

 

2,614

 

 

 

1,394

 

 

 

53.3

%

 

 

2,016

 

Contingent consideration affiliated with

discontinued operation

 

 

 

 

 

6,006

 

 

 

(6,006

)

 

 

(100.0

)%

 

 

 

Income taxes payable - long-term

 

 

3,325

 

 

 

3,442

 

 

 

(117

)

 

 

(3.4

)%

 

 

3,796

 

Deferred income taxes

 

 

6,089

 

 

 

3,283

 

 

 

2,806

 

 

 

85.5

%

 

 

1,818

 

Deferred compensation

 

 

8,000

 

 

 

7,429

 

 

 

571

 

 

 

7.7

%

 

 

7,720

 

Noncurrent liabilities - Discontinued operation

 

 

 

 

 

3,550

 

 

 

(3,550

)

 

 

(100.0

)%

 

 

 

Total liabilities

 

 

75,525

 

 

 

67,600

 

 

 

7,925

 

 

 

11.7

%

 

 

85,386

 

Shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity attributable to Culp Inc.

 

 

127,251

 

 

 

161,520

 

 

 

(34,269

)

 

 

(21.2

)%

 

 

129,698

 

Non-controlling interest - Discontinued Operation

 

 

-

 

 

 

4,402

 

 

 

(4,402

)

 

 

(100.0

)%

 

 

 

 

 

 

127,251

 

 

 

165,922

 

 

 

(38,671

)

 

 

(23.3

)%

 

 

129,698

 

Total liabilities and shareholders' equity

 

$

202,776

 

 

 

233,522

 

 

 

(30,746

)

 

 

(13.2

)%

 

 

215,084

 

Shares outstanding

 

 

12,303

 

 

 

12,412

 

 

 

(109

)

 

 

(0.9

)%

 

 

12,285

* Derived from audited financial statements.

 

CULP, INC.

SUMMARY OF CASH, INVESTMENTS, AND DEBT

NOVEMBER 1, 2020, NOVEMBER 3, 2019, AND MAY 3, 2020

Unaudited

(Amounts in Thousands)

 

 

 

 

 

 

 

Amounts

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

 

 

 

 

 

 

November 1,

 

 

 

November 3

 

 

May 3,

 

 

 

2020

 

 

 

2019

 

 

2020*

 

Cash and Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

45,288

 

 

 

$

47,183

 

 

$

69,790

 

Short-term investments - Available for Sale

 

 

5,462

 

 

 

 

 

 

 

923

 

Short-term investments - Held-To-Maturity

 

 

5,005

 

 

 

 

 

 

 

4,271

 

Long-term investments - Held-To-Maturity

 

 

759

 

 

 

 

 

 

 

2,076

 

Total Cash and Investments

 

$

56,514

 

 

 

$

47,183

 

 

$

77,060

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

Line of credit - China operations

 

$

 

 

 

$

 

 

$

1,015

 

Paycheck Protection Program Loan

 

 

 

 

 

 

 

 

 

7,606

 

Line of credit - U.S. operations

 

 

 

 

 

 

 

 

 

29,750

 

Total debt

 

$

 

 

 

$

 

 

$

38,371

 

Net Cash Position

 

$

56,514

 

 

 

$

47,183

 

 

$

38,689

 

* Derived from audited financial statements.

Notes

 

(1)

As of November 3, 2019, cash and cash equivalents totaled $47.2 million, of which $47.0 million and $228,000 were classified as (i) cash and cash equivalents and (ii) within current assets – discontinued operation, respectively, in the accompanying Consolidated Balance Sheets.

 

CULP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED NOVEMBER 1, 2020, AND NOVEMBER 3, 2019

Unaudited

(Amounts in Thousands)

 

 

 

SIX MONTHS ENDED

 

 

 

Amounts

 

 

 

November 1,

 

 

November 3,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(349

)

 

$

3,366

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

3,538

 

 

 

3,893

 

Amortization

 

 

235

 

 

 

353

 

Stock-based compensation

 

 

474

 

 

 

467

 

Deferred income taxes

 

 

4,419

 

 

 

53

 

Gain on sale of property, plant, and equipment

 

 

 

 

 

(93

)

Realized loss on short-term investments available for sale

 

 

6

 

 

 

 

(Income) loss from investment in unconsolidated joint venture

 

 

(167

)

 

 

3

 

Foreign currency exchange loss (gain)

 

 

723

 

 

 

(106

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(7,663

)

 

 

(835

)

Inventories

 

 

602

 

 

 

(4,797

)

Other current assets

 

 

(1,175

)

 

 

(31

)

Other assets

 

 

(40

)

 

 

133

 

Accounts payable

 

 

14,156

 

 

 

3,564

 

Deferred revenue

 

 

(127

)

 

 

(24

)

Accrued expenses and deferred compensation

 

 

6,019

 

 

 

1,620

 

Accrued restructuring costs

 

 

 

 

 

(89

)

Income taxes

 

 

2,052

 

 

 

770

 

Net cash provided by operating activities

 

 

22,703

 

 

 

8,247

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(2,041

)

 

 

(2,410

)

Proceeds from the sale of equipment

 

 

12

 

 

 

363

 

Investment in unconsolidated joint venture

 

 

(90

)

 

 

 

Proceeds from the sale of short-term investments (Held to Maturity)

 

 

1,800

 

 

 

5,000

 

Purchase of short-term and long-term investments (Held to Maturity)

 

 

(1,245

)

 

 

 

Purchase of short-term investments (Available for Sale)

 

 

(5,010

)

 

 

 

Proceeds from the sale of short-term investments (Available for Sale)

 

 

455

 

 

 

 

Proceeds from the sale of long-term investments (rabbi trust)

 

 

77

 

 

 

 

Purchase of long-term investments (rabbi trust)

 

 

(257

)

 

 

(479

)

Net cash (used in) provided by investing activities

 

 

(6,299

)

 

 

2,474

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments associated with lines of credit

 

 

(30,772

)

 

 

 

Payments associated with Paycheck Protection Program Loan

 

 

(7,606

)

 

 

 

Proceeds from subordinated loan payable associated with the noncontrolling interest of discontinued operation

 

 

 

 

 

250

 

Cash paid for acquisition of business

 

 

 

 

 

(1,532

)

Dividends paid

 

 

(2,583

)

 

 

(2,482

)

Common stock surrendered for withholding taxes payable

 

 

(25

)

 

 

(51

)

Capital contribution associated with the noncontrolling interest of discontinued operation

 

 

 

 

 

360

 

Payments of debt issuance costs

 

 

(15

)

 

 

 

Net cash used in financing activities

 

 

(41,001

)

 

 

(3,455

)

Effect of exchange rate changes on cash and cash equivalents

 

 

95

 

 

 

(91

)

(Decrease) increase in cash and cash equivalents

 

 

(24,502

)

 

 

7,175

 

Cash and cash equivalents at beginning of year

 

 

69,790

 

 

 

40,008

 

Cash and cash equivalents at end of period (1)

 

$

45,288

 

 

$

47,183

 

Free Cash Flow (2)

 

$

20,499

 

 

$

5,630

 

Notes

 

(1)

As of November 3, 2019, cash and cash equivalents totaled $47.2 million, of which $47.0 million and $228,000 were classified as (i) cash and cash equivalents and (ii) within current assets – discontinued operation, respectively, in the accompanying Consolidated Balance Sheets.

CULP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED NOVEMBER 1, 2020, AND NOVEMBER 3, 2019

Unaudited

(Amounts in Thousands)

(2) Reconciliation of Free Cash Flow:

 

 

 

 

FY 2021

 

 

FY 2020

 

A) Net cash provided by operating activities

 

$

22,703

 

 

 

8,247

 

B) Minus: Capital Expenditures

 

 

(2,041

)

 

 

(2,410

)

C) Plus: Proceeds from the sale of equipment

 

 

12

 

 

 

363

 

D) Minus: Investment in unconsolidated joint venture

 

 

(90

)

 

 

 

E) Plus: Proceeds from the sale of long-term investments (rabbi trust)

 

 

77

 

 

 

 

F) Minus: Purchase of long-term investments (rabbi trust)

 

 

(257

)

 

 

(479

)

G) Effects of exchange rate changes on cash and cash equivalents

 

 

95

 

 

 

(91

)

Free Cash Flow

 

$

20,499

 

 

 

5,630

 

 

CULP, INC.

STATEMENTS OF OPERATIONS BY SEGMENT

FOR THE THREE MONTHS ENDED NOVEMBER 1, 2020, AND NOVEMBER 3, 2019

Unaudited

(Amounts in Thousands)

 

 

 

 

 

THREE MONTHS ENDED

 

 

 

 

 

Amounts

 

 

 

 

 

 

Percent of Total Sales

 

 

 

 

 

November 1,

 

 

 

November 3,

 

 

% Over

 

 

November 1,

 

 

November 3,

 

Net Sales by Segment

 

 

 

2020

 

 

 

2019

 

 

(Under)

 

 

2020

 

 

2019

 

Mattress Fabrics

 

 

 

$

40,030

 

 

 

 

35,666

 

 

 

12.2

%

 

 

52.1

%

 

 

51.3

%

Upholstery Fabrics

 

 

 

 

36,821

 

 

 

 

33,884

 

 

 

8.7

%

 

 

47.9

%

 

 

48.7

%

Net Sales

 

 

 

$

76,851

 

 

 

 

69,550

 

 

 

10.5

%

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit from Continuing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operations by Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Margin

 

Mattress Fabrics

 

 

 

$

7,584

 

 

 

 

6,247

 

 

 

21.4

%

 

 

18.9

%

 

 

17.5

%

Upholstery Fabrics

 

 

 

 

6,677

 

 

 

 

7,279

 

 

 

(8.3

)%

 

 

18.1

%

 

 

21.5

%

Gross Profit from Continuing

Operations

 

 

 

$

14,261

 

 

 

 

13,526

 

 

 

5.4

%

 

 

18.6

%

 

 

19.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, General and Administrative Expenses by Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percent of Sales

 

Mattress Fabrics

 

 

 

$

3,202

 

 

 

 

2,953

 

 

 

8.4

%

 

 

8.0

%

 

 

8.3

%

Upholstery Fabrics

 

 

 

 

3,390

 

 

 

 

3,806

 

 

 

(10.9

)%

 

 

9.2

%

 

 

11.2

%

Unallocated Corporate expenses

 

 

 

 

3,151

 

 

 

 

2,358

 

 

 

33.6

%

 

 

4.1

%

 

 

3.4

%

Selling, General and Administrative Expenses

 

 

 

$

9,743

 

 

 

 

9,117

 

 

 

6.9

%

 

 

12.7

%

 

 

13.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations by Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Margin

 

Mattress Fabrics

 

 

 

$

4,382

 

 

 

 

3,294

 

 

 

33.0

%

 

 

10.9

%

 

 

9.2

%

Upholstery Fabrics

 

 

 

 

3,287

 

 

 

 

3,473

 

 

 

(5.4

)%

 

 

8.9

%

 

 

10.2

%

Unallocated corporate expenses

 

 

 

 

(3,151

)

 

 

 

(2,358

)

 

 

33.6

%

 

 

(4.1

)%

 

 

(3.4

)%

Income from Continuing Operations

 

 

 

$

4,518

 

 

 

 

4,409

 

 

 

2.5

%

 

 

5.9

%

 

 

6.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation Expense by Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mattress Fabrics

 

 

 

$

1,501

 

 

 

 

1,701

 

 

 

(11.8

)%

 

 

 

 

 

 

 

 

Upholstery Fabrics

 

 

 

 

215

 

 

 

 

192

 

 

 

12.0

%

 

 

 

 

 

 

 

 

Discontinued Operation

 

 

 

 

-

 

 

 

 

95

 

 

 

(100.0

)%

 

 

 

 

 

 

 

 

Depreciation Expense

 

 

 

$

1,716

 

 

 

 

1,988

 

 

 

(13.7

)%

 

 

 

 

 

 

 

 

 

CULP, INC.

STATEMENTS OF OPERATIONS BY SEGMENT

FOR THE SIX MONTHS ENDED NOVEMBER 1, 2020, AND NOVEMBER 3, 2019

Unaudited

(Amounts in Thousands)

 

 

 

 

 

SIX MONTHS ENDED

 

 

 

 

 

Amounts

 

 

 

 

 

 

Percent of Total Sales

 

 

 

 

 

November 1,

 

 

 

November 3,

 

 

% Over

 

 

November 1,

 

 

November 3,

 

Net Sales by Segment

 

 

 

2020

 

 

 

2019

 

 

(Under)

 

 

2020

 

 

2019

 

Mattress Fabrics

 

 

 

$

76,133

 

 

 

 

74,525

 

 

 

2.2

%

 

 

53.9

%

 

 

53.1

%

Upholstery Fabrics

 

 

 

 

65,182

 

 

 

 

65,744

 

 

 

(0.9

)%

 

 

46.1

%

 

 

46.9

%

Net Sales

 

 

 

$

141,315

 

 

 

 

140,269

 

 

 

0.7

%

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit from Continuing

Operations by Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Margin

 

Mattress Fabrics

 

 

 

$

12,191

 

 

 

 

11,938

 

 

 

2.1

%

 

 

16.0

%

 

 

16.0

%

Upholstery Fabrics

 

 

 

 

11,971

 

 

 

 

14,000

 

 

 

(14.5

)%

 

 

18.4

%

 

 

21.3

%

Gross Profit from

Continuing Operations

 

 

 

$

24,162

 

 

 

 

25,938

 

 

 

(6.8

)%

 

 

17.1

%

 

 

18.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, General, and Administrative

Expenses by Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percent of Total Sales

 

Mattress Fabrics

 

 

 

$

5,964

 

 

 

 

6,025

 

 

 

(1.0

)%

 

 

7.8

%

 

 

8.1

%

Upholstery Fabrics

 

 

 

 

6,570

 

 

 

 

7,652

 

 

 

(14.1

)%

 

 

10.1

%

 

 

11.6

%

Unallocated Corporate expenses

 

 

 

 

5,227

 

 

 

 

4,589

 

 

 

13.9

%

 

 

3.7

%

 

 

3.3

%

Selling, General, and Administrative Expenses

 

 

 

$

17,761

 

 

 

$

18,266

 

 

 

(2.8

)%

 

 

12.6

%

 

 

13.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income from Continuing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (Loss)

 

Operations by Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Margin

 

Mattress Fabrics

 

 

 

$

6,227

 

 

 

 

5,913

 

 

 

5.3

%

 

 

8.2

%

 

 

7.9

%

Upholstery Fabrics

 

 

 

 

5,401

 

 

 

 

6,348

 

 

 

(14.9

)%

 

 

8.3

%

 

 

9.7

%

Unallocated corporate expenses

 

 

 

 

(5,227

)

 

 

 

(4,589

)

 

 

13.9

%

 

 

(3.7

)%

 

 

(3.3

)%

Subtotal

 

 

 

$

6,401

 

 

 

 

7,672

 

 

 

(16.6

)%

 

 

4.5

%

 

 

5.5

%

Restructuring credit

 

 

 

 

 

 

 

 

35

 

 

 

(100.0

)%

 

 

0.0

%

 

 

0.0

%

Income from continuing operations

 

 

 

$

6,401

 

 

 

 

7,707

 

 

 

(16.9

)%

 

 

4.5

%

 

 

5.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation Expense by Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mattress Fabrics

 

 

 

$

3,132

 

 

 

 

3,321

 

 

 

(5.7

)%

 

 

 

 

 

 

 

 

Upholstery Fabrics

 

 

 

 

406

 

 

 

 

382

 

 

 

6.3

%

 

 

 

 

 

 

 

 

Discontinued Operation

 

 

 

 

 

 

 

 

190

 

 

 

(100.0

)%

 

 

 

 

 

 

 

 

Depreciation Expense

 

 

 

$

3,538

 

 

 

 

3,893

 

 

 

(9.1

)%

 

 

 

 

 

 

 

 

 

CULP, INC.

RECONCILIATION OF SELECTED INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS

FOR THE SIX MONTHS ENDED NOVEMBER 1, 2020, AND NOVEMBER 3, 2019

 

 

 

SIX MONTHS ENDED (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As Reported

 

 

 

 

 

 

November 1,

 

 

As Reported

 

 

 

 

 

 

November 3,

 

 

 

November 1,

 

 

 

 

 

 

Adjusted

 

 

November 3,

 

 

 

 

 

 

Adjusted

 

 

 

2020

 

 

Adjustments

 

 

Results

 

 

2019

 

 

Adjustments

 

 

Results

 

Income before income taxes from continuing operations

$

 

5,421

 

 

 

 

 

 

5,421

 

$

 

8,010

 

 

 

 

 

 

8,010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (1) (2)

 

 

(5,937

)

 

 

4,099

 

 

 

(1,838

)

 

 

(3,971

)

 

 

1,017

 

 

 

(2,954

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment in unconsolidated joint venture

 

167

 

 

 

 

 

 

167

 

 

 

(3

)

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income from continuing operations

$

 

(349

)

 

 

4,099

 

 

 

3,750

 

$

 

4,036

 

 

 

1,017

 

 

 

5,053

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income from continuing operations per share - basic

 

$

(0.03

)

 

 

 

 

 

$

0.31

 

 

$

0.33

 

 

 

 

 

 

$

0.41

 

Net (loss) income from continuing operations per share - diluted

 

$

(0.03

)

 

 

 

 

 

$

0.30

 

 

$

0.33

 

 

 

 

 

 

$

0.41

 

Average shares outstanding-basic

 

 

12,293

 

 

 

 

 

 

 

12,293

 

 

 

12,403

 

 

 

 

 

 

 

12,403

 

Average shares outstanding-diluted

 

 

12,293

 

 

 

 

 

 

 

12,305

 

 

 

12,413

 

 

 

 

 

 

 

12,413

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes

(1)

The $4.1 million adjustment represents a $7.6 million non-cash income tax charge to record a full valuation allowance against the company’s U.S. net deferred income tax assets, partially offset by a $3.5 million non-cash income tax benefit resulting from the re-establishment of certain U.S. Federal net operating loss carryforwards in connection with U.S. Treasury regulations enacted during our first quarter regarding Global Intangible Low Taxed Income (“GILTI”) tax provisions of the Tax Cuts and Jobs Act of 2017.

 

(2)

The $1.0 million adjustment represents our estimated GILTI tax incurred through our second quarter of fiscal 2020.

 

CULP, INC.

CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA

FOR THE TWELVE MONTHS ENDED NOVEMBER 1, 2020, AND NOVEMBER 3, 2019

Unaudited

(Amounts in Thousands)

 

 

 

Quarter

Ended

 

 

Quarter

Ended

 

 

Quarter

Ended

 

 

Quarter

Ended

 

 

Trailing

12 Months

 

 

 

February 2,

 

 

May 3,

 

 

August 2,

 

 

November 1,

 

 

November 1,

 

 

 

2020

 

 

2020

 

 

2020

 

 

2020

 

 

2020

 

Net (loss) income

 

$

(4,207

)

 

$

(27,825

)

 

$

(2,733

)

 

$

2,384

 

 

$

(32,381

)

Loss before income taxes from discontinued operation

 

 

7,824

 

 

 

8,698

 

 

 

-

 

 

 

-

 

 

 

16,522

 

Income tax (benefit) expense from continuing operations

 

 

(973

)

 

 

704

 

 

 

4,324

 

 

 

1,613

 

 

 

5,668

 

Interest income, net

 

 

(258

)

 

 

(37

)

 

 

(7

)

 

 

(59

)

 

 

(361

)

Asset impairments from continuing operations

 

 

 

 

 

13,712

 

 

 

 

 

 

 

 

 

13,712

 

Restructuring credit and related charges

 

 

(35

)

 

 

 

 

 

 

 

 

 

 

 

(35

)

Depreciation expense - continuing operations

 

 

1,891

 

 

 

1,882

 

 

 

1,822

 

 

 

1,716

 

 

 

7,311

 

Amortization expense - continuing operations

 

 

102

 

 

 

117

 

 

 

118

 

 

 

117

 

 

 

454

 

Stock based compensation

 

 

364

 

 

 

(199

)

 

 

126

 

 

 

348

 

 

 

639

 

Adjusted EBITDA

 

$

4,708

 

 

$

(2,948

)

 

$

3,650

 

 

$

6,119

 

 

$

11,529

 

% Net Sales

 

 

6.9

%

 

 

(6.2

)%

 

 

5.7

%

 

 

8.0

%

 

 

4.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter

Ended

 

 

Quarter

Ended

 

 

Quarter

Ended

 

 

Quarter

Ended

 

 

Trailing

12 Months

 

 

 

January 27

 

 

April 28,

 

 

August 4,

 

 

November 3,

 

 

November 3,

 

 

 

2019

 

 

2019

 

 

2019

 

 

2019

 

 

2019

 

Net income (loss)

 

$

3,060

 

 

$

(1,511

)

 

$

1,174

 

 

$

2,192

 

 

$

4,915

 

Loss before income taxes from discontinued operation

 

 

313

 

 

 

477

 

 

 

621

 

 

 

441

 

 

 

1,852

 

Income tax expense from continuing operations

 

 

1,274

 

 

 

3,091

 

 

 

1,692

 

 

 

2,279

 

 

 

8,336

 

Interest income, net

 

 

(259

)

 

 

(221

)

 

 

(260

)

 

 

(237

)

 

 

(977

)

Restructuring credit and related charges

 

 

340

 

 

 

 

 

 

(35

)

 

 

 

 

 

305

 

Other non-recurring charges

 

 

429

 

 

 

500

 

 

 

 

 

 

 

 

 

929

 

Depreciation expense - continuing operations

 

 

1,934

 

 

 

1,933

 

 

 

1,810

 

 

 

1,893

 

 

 

7,570

 

Amortization expense - continuing operations

 

 

126

 

 

 

113

 

 

 

101

 

 

 

102

 

 

 

442

 

Stock based compensation

 

 

479

 

 

 

(243

)

 

 

154

 

 

 

313

 

 

 

703

 

Adjusted EBITDA

 

$

7,696

 

 

$

4,139

 

 

$

5,257

 

 

$

6,983

 

 

$

24,075

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Net Sales

 

 

10.5

%

 

 

6.2

%

 

 

7.4

%

 

 

10.0

%

 

 

8.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Over (Under)

 

 

(38.8

)%

 

 

(171.2

)%

 

 

(30.6

)%

 

 

(12.4

)%

 

 

(52.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Contact:
Kenneth R. Bowling
Chief Financial Officer
336-881-5630

Media Contact:
Teresa A. Huffman
Senior Vice President, Human Resources
336-889-5161

Source: Culp, Inc.