Culp(CULP) - 2025 Q1 - Quarterly Results

Financial Performance - Consolidated net sales for Q1 fiscal 2025 were $56.5 million, a 14.2% sequential increase, with upholstery fabrics sales up 19.7% and mattress fabrics sales up 9.0%[2] - The upholstery fabrics segment achieved an operating income of $1.7 million, reflecting a 28.9% year-over-year increase and a 75.6% sequential increase, with an operating margin of 6.0%[2] - The company reported a GAAP consolidated loss from operations of $(6.9) million, which included $2.7 million in restructuring expenses[2] - Mattress fabrics segment sales were $28.1 million, down 3.9% year-over-year but up 9.0% sequentially, driven by higher order levels[12] - Upholstery fabrics segment sales were $28.5 million, up 3.7% year-over-year and up 19.7% sequentially, with hospitality/contract business accounting for approximately 33% of total sales[14] - Net sales for the three months ended July 28, 2024, were $56.537 million, a decrease of 0.2% compared to $56.662 million for the same period in 2023[24] - Gross profit decreased by 28.4% to $5.076 million, representing 9.0% of net sales, down from 12.5% in the prior year[24] - Net loss for the quarter was $7.261 million, up 117.3% from a net loss of $3.342 million in the same quarter of 2023[24] - Net loss per share (basic and diluted) was $(0.58), compared to $(0.27) in the prior year, reflecting a 114.8% increase in loss per share[24] - Loss from operations was $6.851 million, a 122.3% increase from the loss of $3.082 million in the prior year[24] Restructuring and Cost Management - The company expects Q2 fiscal 2025 consolidated net sales to be flat sequentially and aims to return to near break-even adjusted EBITDA in Q2 and positive adjusted operating income in Q3[3] - The restructuring plan is expected to generate $10.0 to $11.0 million in annualized savings and operating improvements by the end of the calendar year[8] - Total restructuring costs for fiscal 2025 are projected at $5.1 million, with $3.0 million expected as cash expenditures[9] - The company is undergoing restructuring in its mattress fabric operations, which includes the discontinuation of operations in Quebec, Canada, and consolidation of facilities in Haiti[25] - Restructuring expenses increased significantly by 678.4% to $2.631 million, compared to $338,000 in the same period last year[24] - The company reported a restructuring-related charge of $116,000 for losses on the disposal of obsolete inventory during the quarter[36] - The company incurred restructuring expenses of $615,000 for the quarter ended July 28, 2024, compared to $711,000 in the previous quarter[39] Cash and Liquidity - Cash position remained stable at $13.5 million, with a net cash position of $9.5 million after only a $560,000 decrease since the end of fiscal 2024[2] - As of July 28, 2024, the company had approximately $32.7 million in liquidity, consisting of $13.5 million in cash and $19.2 million in borrowing availability[16] - The company reported a net cash position of $9,455 as of July 28, 2024, down from $16,812 on July 30, 2023[29] - Cash and cash equivalents decreased by $3,340, or 19.9%, from $16,812 on July 30, 2023, to $13,472 on July 28, 2024[28] Assets and Liabilities - Total current assets decreased by $5,386, or 6.1%, from $88,064 on July 30, 2023, to $82,678 on July 28, 2024[28] - Total liabilities increased by $3,230, or 5.7%, from $56,785 on July 30, 2023, to $60,015 on July 28, 2024[28] - Total assets decreased by $13,763, or 9.6%, from $142,902 on July 30, 2023, to $129,139 on July 28, 2024[28] - Total assets as of July 28, 2024, were $129,139,000, with total liabilities of $60,015,000[42] Economic and Market Factors - Economic factors such as interest rates, consumer confidence, and inflation are expected to impact future performance[22] - The company faces risks related to foreign operations, including currency fluctuations and political instability, which could affect financial results[22] Segment Performance - Mattress Fabrics segment reported a gross loss of $326,000, a decline of 116.3% from a gross profit of $1,994,000 in the prior year[32] - Total segment gross profit decreased by 28.5% to $5,192,000 from $7,264,000 year-over-year[32] - The mattress fabrics segment's return on capital employed was -14.6%, compared to -25.4% in the previous year[33] - The Upholstery Fabrics segment achieved an adjusted operating income of $6,170,000, with a return on average capital employed of 70.5%[41] - The Mattress Fabrics segment experienced an operating loss of $17,159,000, resulting in a return on average capital employed of (25.4)%[45] - The Upholstery Fabrics segment generated an operating income of $2,781,000, achieving a return on average capital employed of 18.2%[45]