Culp(US:CULP)2024-09-06 13:33Financial Performance - Net sales for the three months ended July 28, 2024, were $56,537,000, a slight decrease of 0.22% compared to $56,662,000 for the same period in 2023[4] - Gross profit decreased to $5,076,000, down 28.3% from $7,085,000 year-over-year[4] - The net loss for the three months ended July 28, 2024, was $7,261,000, compared to a net loss of $3,342,000 for the same period in 2023, representing a 117.3% increase in losses[4] - The company reported a comprehensive loss of $7,181,000 for the three months ended July 28, 2024, compared to $3,285,000 for the same period in 2023[6] - The company incurred a total loss from operations of $6.85 million for the three months ended July 28, 2024, compared to a loss of $3.08 million for the same period in 2023[83] - The company reported a basic net loss per share of $0.55 for the three months ended July 28, 2024, compared to a loss of $0.25 for the same period in 2023[78] Assets and Liabilities - Total current assets decreased to $82,678,000 from $88,064,000, a decline of 6.4% year-over-year[9] - Total liabilities increased to $60,015,000 from $56,785,000, reflecting a rise of 4.3%[9] - Cash and cash equivalents at the end of the period were $13,472,000, down from $16,812,000, a decrease of 19.3%[11] - As of July 30, 2023, total shareholders' equity decreased to $86,117,000 from $89,080,000 as of April 30, 2023, reflecting a net loss of $3,342,000 during the period[14] - Total segment assets decreased to $95.85 million as of July 28, 2024, from $105.09 million as of July 30, 2023[86] Inventory and Receivables - The company reported a decrease in raw materials inventory from $8,408,000 as of July 30, 2023, to $7,076,000 as of July 28, 2024[28] - Accounts receivable decreased by $964,000, or 8.7%, as of July 28, 2024, reflecting faster cash collections and a decrease in net sales[152] - Inventory increased by $699,000, or 2.8%, compared to July 30, 2023, due to increased finished goods inventory during the transition to a strategic sourcing model[154] - Inventory decreased by $2.8 million, or 14.8%, compared to July 30, 2023, reflecting management's ability to maintain appropriate inventory levels[169] Restructuring and Expenses - Restructuring expenses for the quarter were $2,631,000, significantly higher than $338,000 in the prior year[4] - The company expects restructuring charges of approximately $5.1 million in fiscal 2025, with $3.0 million expected to be cash expenditures[47] - Estimated restructuring charges for the mattress fabrics segment include $1.7 million for relocating equipment and $1.2 million for employee termination benefits[48] - The company incurred restructuring expenses of $517,000 for the three months ending July 30, 2023, including employee termination benefits and impairment losses[57] - Restructuring expenses for Q1 fiscal 2025 were $2.6 million, a significant increase of 678.4% from $338,000 in Q1 fiscal 2024[133] - The company closed its upholstery fabrics finishing operation in Shanghai, resulting in restructuring charges of $218,000 during the first quarter of fiscal 2025[56] Cash Flow and Financing - Cash and cash equivalents decreased to $13.47 million as of July 28, 2024, from $16.81 million as of July 30, 2023[86] - The company has $3.2 million available for additional repurchases of common stock as of July 28, 2024, with no shares repurchased during the three-month periods ending July 28, 2024, and July 30, 2023[123] - The ABL Facility provides a maximum principal amount of $35.0 million, with available borrowings totaling $19.2 million as of July 28, 2024[66] - The company has outstanding borrowings of $4.0 million under a line of credit associated with operations in China as of July 28, 2024[199] Taxation - The effective income tax rate for the three-month period ending July 28, 2024, was (3.4%), significantly lower than (26.5%) for the same period in 2023[12] - The company had gross unrecognized income tax benefits of $1.3 million as of July 28, 2024, which could favorably affect future income tax expense[101] - The company projects annual cash income tax payments of approximately $2.0 million associated with operations in China, while no cash income taxes are expected in the U.S. during fiscal 2025 due to existing net operating loss carryforwards of $69.6 million[188] Segment Performance - The mattress fabrics segment experienced a cumulative operating loss of $28.8 million since Q2 fiscal 2023, attributed to factors such as inflation and shifting consumer demand[37] - The mattress fabrics segment reported a net sales of $28.08 million, down from $29.22 million year-over-year, resulting in a gross loss of $326,000 compared to a gross profit of $1.99 million in the prior year[83] - The upholstery fabrics segment achieved net sales of $28.46 million, an increase from $27.44 million, with a gross profit of $5.52 million, up from $5.27 million[83] - Net sales for the upholstery fabrics segment increased by 3.7% to $28.5 million for the three months ended July 28, 2024, compared to $27.4 million in the prior year[159] Accounting Policies - As of July 28, 2024, there were no changes in significant accounting policies from the annual report for the year ended April 28, 2024[202] - The company refers to Note 2 of the consolidated financial statements for recently adopted and issued accounting pronouncements[202] - The financial results and accounting policies remain consistent with those reported in the previous annual report[202] - The company continues to monitor and apply critical accounting policies as necessary[202]