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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 2, 2025 Commission File No. 1-12597 CULP, INC. (Exact name of registrant as specified in its charter) NORTH CAROLINA 56-1001967 (State or other jurisdiction of incorporation or other organization) 410 W. English Road 5th Floor High Point, North Carolina 27262 (Address of principal executive offices) ( ...

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Financial Data and Key Metrics Changes - Consolidated net sales for Q2 were $53.2 million, a sequential improvement from $50.7 million in Q1, but a decline from $55.7 million in the prior year period [26] - Consolidated gross profit was $5.8 million, or 10.9% of sales, compared to $6 million, or 10.8% of sales in the prior year [26] - Adjusted consolidated gross profit was $6.7 million, or 12.6% of sales, compared to $6.8 million, or 12.1% of sales in the prior year [26] - SG&A expense was $8.7 million, reflecting a 7% improvement compared to the prior year [27] - Loss from operations was $3.5 million, an improvement from a loss of $5.4 million in the prior year [27] Business Line Data and Key Metrics Changes - Bedding segment sales for Q2 were $30.8 million, up approximately 10% sequentially and over 2% year-over-year [30] - Gross profit in the bedding segment was $3.1 million, or 10.1% of sales, a 200 basis points improvement from the prior year [31] - Upholstery segment sales for Q2 were $22.4 million, flat sequentially but down approximately 12% year-over-year [31] - Gross profit in the upholstery segment was $3.6 million, or 16.1% of sales, down from $4.3 million, or 16.9% of sales in the prior year [31] Market Data and Key Metrics Changes - The home furnishings industry continues to face significant challenges, with low consumer confidence and high levels of unsold homes impacting sales [7][8] - The bedding market shows signs of stabilization, with expectations for an increase in unit activity driven by historical product replacement cycles [19][20] - Upholstery sales were impacted by weak consumer sentiment and housing market conditions, particularly affecting lower and middle-income segments [21] Company Strategy and Development Direction - The company is focused on winning market share and adjusting its cost structure to achieve profitability in the current market cycle [8] - A comprehensive restructuring project has been completed, expected to yield approximately $11 million in annualized cost savings [14][18] - The integration of the bedding and upholstery divisions aims to create a unified Culp-branded business, enhancing operational efficiency [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging demand environment for home furnishings but expects steady consolidated sales performance in the third quarter [36] - The company anticipates improving gross profit and lower SG&A, leading to significant improvement in operating loss and near break-even to positive Adjusted EBITDA for Q3 [36] - Management remains cautious about the timing of market recovery but is positioning the company to capitalize on future demand increases [46][47] Other Important Information - The company has a net debt position of $7.6 million and continues to manage liquidity and capital expenditures aggressively [32][34] - Cash flow from operations was -$1.2 million for the first six months, an improvement from -$2.6 million in the prior year [33] Q&A Session Summary Question: What is the realization status of the $20 million cost savings? - Management indicated that significant savings are being realized, particularly from the Canada facility closure and recent price adjustments, with most benefits expected by Q4 [41][42][44] Question: What is the incremental margin on the next point of sales growth? - Management confirmed that there is built-up leverage to capitalize on any increase in sales, with fixed costs in place allowing for significant contribution margin from incremental sales [48][49] Question: What is the status of the new tariffs in Turkey and Haiti? - Management explained that recent tariff changes have created challenges, but the company is well-positioned to navigate these issues and expects to implement mitigation strategies within 60 days [50][51][53]

Financial Data and Key Metrics Changes - Consolidated net sales for Q2 were $53.2 million, a sequential improvement from $50.7 million in Q1, but a decline from $55.7 million in the prior year period [26] - Consolidated gross profit for the quarter was $5.8 million, or 10.9% of sales, compared to $6 million, or 10.8% of sales in the prior year [26] - SG&A expense for the quarter was $8.7 million, reflecting a 7% improvement compared to the prior year [27] - Loss from operations was $3.5 million, an improvement from a loss of $5.4 million in the prior year [27] - Adjusted EBITDA was negative $1 million, an improvement from negative $1.1 million in the prior year [28] Business Line Data and Key Metrics Changes - Bedding segment sales for Q2 were $30.8 million, up approximately 10% sequentially and over 2% year-over-year [30] - Gross profit in the bedding segment was $3.1 million, or 10.1% of sales, a 200 basis points improvement from the prior year [31] - Upholstery segment sales for Q2 were $22.4 million, flat sequentially but down approximately 12% year-over-year [31] - Gross profit in the upholstery segment was $3.6 million, or 16.1% of sales, down from $4.3 million, or 16.9% of sales in the prior year [31] Market Data and Key Metrics Changes - The home furnishings industry continues to face significant challenges, with low consumer confidence and high levels of unsold homes impacting sales [7][20] - The bedding market is showing signs of stabilization, with expectations for an increase in unit activity driven by historical product replacement cycles [19][20] - Upholstery business remains impacted by weak consumer sentiment and housing market conditions, particularly affecting lower and middle-income segments [21][22] Company Strategy and Development Direction - The company is focused on winning market share and adjusting its cost structure to achieve profitability in the current market cycle [8] - A comprehensive restructuring project has been completed, expected to yield approximately $11 million in annualized cost savings [14][18] - The integration of the bedding and upholstery divisions aims to create a unified Culp-branded business, enhancing operational efficiency [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging demand environment for home furnishings but expects steady consolidated sales performance in the near term [36] - The company anticipates continued improvement in operating loss and near break-even to positive Adjusted EBITDA for Q3 [36] - Management remains cautious about the timing of market recovery but is positioning the company to capitalize on future demand increases [45][46] Other Important Information - The company has a net debt position of $7.6 million and continues to manage liquidity and capital expenditures aggressively [32][34] - The company is owed approximately $4.7 million from the sale of its Canada facility, expected to be received in Q3 [36] Q&A Session Summary Question: What is the realization status of the cost savings? - Management indicated that significant savings are being realized, with most expected to be fully realized by Q4 [41][44] Question: What will be the incremental margin on the next point of sales growth? - Management confirmed that there is built-up leverage to capitalize on any increase in sales, with fixed costs in place to retain a significant portion of incremental dollars [47][48] Question: What is the status of the new tariffs in Turkey and Haiti? - Management explained that recent tariff changes have created challenges, but the company is well-positioned to navigate these issues [49][50]

Financial Data and Key Metrics Changes - Consolidated net sales for Q2 were $53.2 million, a sequential improvement from $50.7 million in Q1, but a decline from $55.7 million in the prior year period [25] - Consolidated gross profit for the quarter was $5.8 million, or 10.9% of sales, compared to $6 million, or 10.8% of sales in the prior year [25] - SG&A expense for the quarter was $8.7 million, reflecting a 7% improvement compared to the prior year [26] - Loss from operations was $3.5 million for the quarter, an improvement from a loss of $5.4 million in the prior year [26] Business Line Data and Key Metrics Changes - Bedding segment sales for Q2 were $30.8 million, up approximately 10% sequentially and over 2% year-over-year [29] - Gross profit in the bedding segment was $3.1 million, or 10.1% of sales, a 200 basis points improvement from the prior year [30] - Upholstery segment sales for Q2 were $22.4 million, flat sequentially but down approximately 12% year-over-year [30] - Gross profit in the upholstery segment was $3.6 million, or 16.1% of sales, down from $4.3 million, or 16.9% of sales in the prior year [30] Market Data and Key Metrics Changes - The home furnishings industry continues to face significant challenges, with low consumer confidence and high levels of unsold homes impacting sales [6][19] - The bedding market is showing signs of stabilization, with expectations for an increase in unit activity driven by historical product replacement cycles [18][19] - Upholstery business remains impacted by weak consumer sentiment and housing market conditions, particularly affecting lower and middle-income segments [20][21] Company Strategy and Development Direction - The company is focused on winning market share and adjusting its cost structure to achieve profitability in the current market cycle [7] - A comprehensive restructuring project has been completed, expected to yield approximately $11 million in annualized cost savings [12][17] - The integration of the bedding and upholstery divisions aims to create a unified Culp-branded business, enhancing operational efficiency [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging demand environment for home furnishings but remains optimistic about the potential for recovery [34] - The company expects steady consolidated sales performance in Q3 and throughout the remainder of fiscal 2026, with higher expectations for the bedding segment [34] - Management emphasizes the importance of maintaining liquidity and managing capital expenditures to prioritize free cash flow [36] Other Important Information - The company has a net debt position of $7.6 million as of the end of Q2, with total cash of $10.7 million [31] - Capital expenditures were only $218,000 for the year-to-date period, reflecting a strategic focus on maintenance projects [33] Q&A Session Summary Question: What is the status of cost savings realization? - Management indicated that significant cost savings are being realized, with the majority expected to be reflected in Q4 [38][40] Question: What is the expected contribution margin from incremental sales growth? - Management stated that there is substantial built-up leverage to capitalize on any increase in sales, with fixed costs in place to retain a significant portion of incremental dollars [42] Question: Can you provide details on the new tariffs? - Management explained that recent tariff changes from Turkey and Haiti have created challenges, but the company is well-positioned to navigate these issues [43][46]

SECOND QUARTER FY26: SUPPLEMENTAL INFORMATION 2 BUSINESS OVERVIEW & STRATEGIC ACTIONS CULP, INC. (NYSE: CULP) December 2025 FORWARD-LOOKING STATEMENTS This presentation 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 ...

Core Viewpoint - Culp, Inc. reported a quarterly loss of $0.3 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.18, marking a significant earnings surprise of -66.67% [1] Financial Performance - The company posted revenues of $53.2 million for the quarter ended October 2025, slightly surpassing the Zacks Consensus Estimate by 0.17%, but down from $55.67 million in the same quarter last year [2] - Over the last four quarters, Culp has exceeded consensus EPS estimates two times and topped revenue estimates only once [2] Stock Performance - Culp shares have declined approximately 34.2% year-to-date, contrasting with the S&P 500's gain of 16.3% [3] Future Outlook - The company's earnings outlook will be crucial for investors, particularly in light of recent earnings reports and future earnings expectations [4] - Current consensus EPS estimate for the upcoming quarter is -$0.07 on revenues of $54.01 million, and for the current fiscal year, it is -$0.52 on revenues of $213.09 million [7] Industry Context - The Textile - Home Furnishing industry, to which Culp belongs, is currently ranked in the top 8% of over 250 Zacks industries, indicating a favorable industry outlook [8]

HIGH POINT, N.C.--(BUSINESS WIRE)--Culp, Inc. (NYSE: CULP), a leading provider of fabrics for bedding and upholstery fabrics for residential, commercial, and hospitality furniture and other applications, today reported financial and operating results for its second fiscal quarter ended November 2, 2025. Iv Culp, President and Chief Executive Officer, commented, "We continue to make aggressive adjustments to our cost structure in this challenging macro demand environment that seems to be acutely affecting ho ...

Financial Performance - Consolidated net sales for Q2 fiscal 2026 were $53.2 million, a sequential increase from $50.7 million in Q1 but a decline from $55.7 million in the prior-year period[4] - The net loss for the quarter was $(4.3) million, or $(0.34) per diluted share, an improvement from a net loss of $(5.6) million, or $(0.45) per diluted share in the prior-year period[4] - Net sales for the three months ended November 2, 2025, were $53,202, a decrease of 4.4% compared to $55,674 for the same period in 2024[20] - The net loss for the six months ended November 2, 2025, was $4,537, a significant improvement of 64.8% compared to a net loss of $12,905 for the same period in 2024[21] - Net sales for the six months ended November 2, 2025, were $103,893, a decrease of 7.4% compared to $112,211 for the same period in 2024[27] - The company reported a total net loss of $20,958 million for the trailing twelve months ended November 2, 2025[47] Profitability Metrics - Adjusted consolidated gross profit was $6.7 million, or 12.6% of sales, compared to $6.8 million, or 12.1% of sales in the prior-year period, driven by cost and efficiency gains[4] - Gross profit for the three months ended November 2, 2025, was $5,782, down 3.5% from $5,990 in the prior year, resulting in a gross margin of 10.9%[20] - Gross profit for the six months ended November 2, 2025, was $13,010, representing a 17.6% increase from $11,066 in the prior year[27] - The gross margin for the bedding segment improved significantly to 10.3% from 3.6% year-over-year, while the upholstery segment's gross margin decreased to 17.5% from 18.2%[27] - Adjusted EBITDA for the quarter ended January 26, 2025, was $(457) million, reflecting a significant decrease from $(200) million in the same quarter of the previous year[47] - Adjusted EBITDA as a percentage of net sales was (2.9)% for the trailing twelve months ended November 2, 2025, compared to (3.3)% for the previous year[48] Expenses and Cost Management - Selling, general and administrative (SG&A) expenses were $8.7 million, or 16.4% of sales, showing a 7% improvement from $9.4 million, or 16.8% of sales in the prior-year period[4] - Selling, general and administrative expenses decreased by 4.3% to $17,858 for the six months ended November 2, 2025, compared to $18,655 in the prior year[21] - The company expects to achieve over $20 million in annualized cost savings and enhancements by entering fiscal 2027 due to ongoing restructuring initiatives[5] - The company experienced a restructuring expense of $1,655 million for the quarter ended January 26, 2025, compared to a restructuring credit of $(50) million for the quarter ended January 28, 2024[47] Cash Flow and Liquidity - Cash flow from operations was negative $(1.2) million for the six months ended November 2, 2025, an improvement from negative $(2.6) million in the prior-year period[13] - As of November 2, 2025, the company maintained $10.7 million in cash and $18.3 million in outstanding debt under its credit facilities[13] - Cash and cash equivalents increased to $10,728 as of November 2, 2025, from $10,531 at the end of October 27, 2024[23] - The company reported a net (debt) cash position of $(7,554) as of November 2, 2025, compared to a net cash position of $6,457 a year earlier[30] - Adjusted free cash flow for the six months ended November 2, 2025, was $10, compared to $(3,423) for the same period in 2024[31] Segment Performance - The restructured bedding segment achieved sales of $30.8 million, up approximately 10% sequentially and over 2% year-over-year, with gross profit of $3.1 million, or 10.1% of sales, a 27% improvement from the prior year[13] - Upholstery segment sales were $22.4 million, flat sequentially but down approximately 12% year-over-year, with gross profit of $3.6 million, or 16.1% of sales, down from $4.3 million, or 16.9% of sales in the prior year[13] - Bedding segment net sales increased by 1.1% to $58,809, while upholstery segment net sales decreased by 16.6% to $45,084[27] Debt and Interest - Total debt increased to $(18,282) as of November 2, 2025, from $(4,074) a year earlier, indicating a significant rise in borrowing[30] - Interest expense surged by 563.3% to $199 for the three months ended November 2, 2025, compared to $30 in the same period of 2024[20] - Interest income, net, was $(338) million for the six months ended November 2, 2025, compared to $(449) million for the same period in the previous year[47] Restructuring and Operational Changes - The company reported a restructuring credit of $3,010 for the six months ended November 2, 2025, compared to an expense of $4,662 in the same period of 2024[21] - The restructuring related charge for the six months ended November 2, 2025, was $(931), reflecting ongoing efforts to consolidate operations[27] - The restructuring credit for the six months ended November 2, 2025, included a gain from the sale of a manufacturing facility totaling $4.0 million[41] Foreign Currency and Other Losses - The company reported a foreign currency exchange loss of $136 million for the trailing twelve months ended November 2, 2025[47] - The company modified its presentation of adjusted EBITDA to exclude non-cash foreign currency exchange gains/losses starting from the quarter ended November 2, 2025, to enhance investor insight into operational performance[47]