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Culp(CULP) - 2025 Q3 - Quarterly Results
CULPCulp(CULP)2025-03-05 21:24

Financial Performance - Consolidated net sales for Q3 fiscal 2025 were 52.3million,down6.152.3 million, down 6.1% sequentially and down 13.5% year-over-year[3][12]. - Net loss for the quarter was (4.1) million, an improvement from a net loss of (5.6)millioninthepriorquarter[3][12].−AdjustedEBITDAwasclosetobreak−evenatnegative(5.6) million in the prior quarter[3][12]. - Adjusted EBITDA was close to break-even at negative (123,000), a sequential improvement of approximately 1.1milliondespite1.1 million despite 3.4 million less in sales compared to the previous quarter[3][4]. - Net sales for the three months ended January 26, 2025, were 52,253,000,adecreaseof13.552,253,000, a decrease of 13.5% compared to 60,418,000 for the same period in 2024[26]. - Gross profit for the three months ended January 26, 2025, was 6,347,000,down17.66,347,000, down 17.6% from 7,703,000 in the prior year, resulting in a gross margin of 12.1%[26]. - The net loss for the three months ended January 26, 2025, was 4,126,000,representinga29.44,126,000, representing a 29.4% increase from a net loss of 3,188,000 in the same period last year[26]. - For the nine months ended January 26, 2025, net sales were 164,464,000,adeclineof6.5164,464,000, a decline of 6.5% from 175,804,000 in the prior year[30]. - The net loss for the nine months ended January 26, 2025, was 17,031,000,a90.217,031,000, a 90.2% increase compared to a net loss of 8,954,000 for the same period in 2024[30]. Segment Performance - Mattress fabrics segment achieved a 58.3% sequential reduction in operating loss, following a 70.7% reduction in the previous quarter[3][4]. - Sales for the mattress fabrics segment were 28.6million,down4.628.6 million, down 4.6% year-over-year, while upholstery fabrics segment sales were 23.6 million, down 22.3% year-over-year[15]. - Mattress Fabrics segment sales decreased by 4.6% to 28,642,000,whileUpholsteryFabricssegmentsalesfellby22.328,642,000, while Upholstery Fabrics segment sales fell by 22.3% to 23,611,000[44]. - Mattress Fabrics segment gross profit decreased by 18.9% to 4,862,000,whileUpholsteryFabricssegmentgrossprofitfellby16.24,862,000, while Upholstery Fabrics segment gross profit fell by 16.2% to 14,061,000[47]. - Upholstery fabrics segment achieved an operating income of 3,981,000,withanaveragecapitalemployedof3,981,000, with an average capital employed of 7,853,000, yielding a return of 50.7%[69]. Restructuring and Operational Changes - The company expects to generate 10.0millionto10.0 million to 11.0 million in annualized savings and operating improvements following the restructuring[9]. - The company is focusing on restructuring its mattress fabric operations to return the segment to profitability[23]. - Restructuring expenses for the three months ended January 26, 2025, amounted to 1,655,000,comparedtoacreditof1,655,000, compared to a credit of 50,000 in the same period last year[26]. - The company incurred a restructuring expense of 6.317millionduringtheninemonthsendingJanuary26,2025,primarilyduetoconsolidatingoperationsandfacilityclosures[63].−Restructuring−relatedchargesforthethirdquarteramountedto6.317 million during the nine months ending January 26, 2025, primarily due to consolidating operations and facility closures[63]. - Restructuring-related charges for the third quarter amounted to 624,000, impacting the cost of sales due to the discontinuation of operations at the Quebec manufacturing facility[51]. Cash Flow and Liquidity - Cash flow from operations for the first nine months of fiscal 2025 was negative (9.4)million,primarilyaffectedbyoperatinglossesandnon−recurringcashrestructuringcharges[19].−Thecompanyanticipatesreceivingapproximately(9.4) million, primarily affected by operating losses and non-recurring cash restructuring charges[19]. - The company anticipates receiving approximately 6.0 million to 8.0millionincashproceedsfromthesaleofCanadianrealestate,contingentonduediligenceandclosingconditions[11][19].−Thecompanyplanstousecashproceedsfromtherealestatesaletopayoffoutstandingborrowingsandbolsterliquidity[5][19].−FreecashflowfortheninemonthsendedJanuary26,2025,wasnegativeat8.0 million in cash proceeds from the sale of Canadian real estate, contingent on due diligence and closing conditions[11][19]. - The company plans to use cash proceeds from the real estate sale to pay off outstanding borrowings and bolster liquidity[5][19]. - Free cash flow for the nine months ended January 26, 2025, was negative at (10,063,000), worsening from (8,233,000)intheprioryear[43].−Cashandcashequivalentsdroppedsignificantlyby58.1(8,233,000) in the prior year[43]. - Cash and cash equivalents dropped significantly by 58.1% to 5,279,000 from 12,585,000year−over−year[36].BalanceSheetandAssets−Totalcurrentassetsdecreasedby4.212,585,000 year-over-year[36]. Balance Sheet and Assets - Total current assets decreased by 4.2% to 85,286,000 compared to 89,058,000inthepreviousyear[36].−Totalliabilitiesincreasedby11.089,058,000 in the previous year[36]. - Total liabilities increased by 11.0% to 67,905,000 from 61,202,000year−over−year[36].−Shareholders′equitydecreasedby26.261,202,000 year-over-year[36]. - Shareholders' equity decreased by 26.2% to 59,650,000 compared to 80,796,000inthepreviousyear[36].−Thecompanyhadanet(debt)cashpositionof80,796,000 in the previous year[36]. - The company had a net (debt) cash position of (105,000) as of January 26, 2025, compared to a net cash position of 12,585,000inthepreviousyear[39].−TotalassetsasofJanuary26,2025,amountedto12,585,000 in the previous year[39]. - Total assets as of January 26, 2025, amounted to 127,555,000, compared to $132,054,000 as of April 28, 2024[71]. Future Outlook - The company expects continued sequential improvement in adjusted EBITDA and a foundation for a return to consolidated operating income in fiscal 2026[19]. - The company is focusing on improving operational efficiency and exploring market expansion opportunities in the upcoming quarters[70]. - The company is focusing on improving operational efficiency and exploring new market opportunities to enhance future performance[76].