Culp(CULP) - 2025 Q2 - Quarterly Results

Financial Performance - Consolidated net sales for Q2 FY2025 were $55.7 million, a decrease of 5.2% year-over-year, with mattress fabrics sales down 4.2% and upholstery fabrics sales down 6.4%[13]. - The upholstery fabrics segment reported sales of $25.6 million for Q2 FY2025, down 6.4% year-over-year and down 10.0% sequentially[21]. - Net sales for the three months ended October 27, 2024, were $55.674 million, a decrease of 5.2% compared to $58.725 million for the same period in 2023[36]. - For the six months ended October 27, 2024, net sales were $112.211 million, a decrease of 2.8% from $115.387 million in the prior year[39]. - Net sales for the second quarter of fiscal 2025 were $55.674 million, a decrease of 5.2% compared to $58.725 million in the same period last year[48]. Profitability and Losses - GAAP consolidated loss from operations was $(5.4) million, including $2.8 million in restructuring expenses, compared to a loss of $(2.2) million in the prior-year period[15]. - The company reported a net loss of $5.644 million for the three months ended October 27, 2024, compared to a net loss of $2.424 million for the same period in 2023, representing an increase in loss of 132.8%[36]. - The company incurred a loss from operations of $12.251 million for the six months ended October 27, 2024, compared to a loss of $5.321 million for the same period in 2023, reflecting a 130.2% increase in loss[39]. - The net loss per share for the three months ended October 27, 2024, was $0.45, compared to $0.19 for the same period in 2023, indicating a 136.8% increase in loss per share[36]. - CULP reported a net loss of $20,958,000 for the trailing 12 months ended October 27, 2024, compared to a net loss of $19,415,000 for the previous year, indicating a year-over-year increase in losses[57]. Restructuring Efforts - The restructuring plan is expected to generate $10.0 - $11.0 million in annualized savings and operating improvements post-implementation[10]. - Total restructuring costs for FY2025 are now estimated at $7.3 million, with $4.4 million expected to be cash expenditures[11]. - Restructuring expenses for the three months ended October 27, 2024, totaled $2.031 million, significantly higher than $144,000 in the same period last year[36]. - Restructuring expenses for the six months ended October 27, 2024, amounted to $4.662 million, compared to $482,000 in the same period last year[39]. - The company anticipates a return to profitability post-restructuring, with expectations for improved market conditions in the future[8]. Cash Flow and Liquidity - Cash flow from operations for the first six months of FY2025 was negative $(2.6) million, an improvement from negative $(4.5) million in the same period of FY2024[26]. - As of October 27, 2024, the company reported $10.5 million in cash and $4.1 million in outstanding debt, with total liquidity of approximately $33.1 million[28]. - Free cash flow for the six months ended October 27, 2024, was $(3,423,000), an improvement from $(5,604,000) in the same period last year[47]. - Net cash used in operating activities for the six months ended October 27, 2024, was $(2,633,000), an improvement from $(4,476,000) in the same period last year[46]. Asset and Liability Management - Total current assets decreased by 1.9% to $86,901,000 compared to $88,594,000 in the previous year[41]. - Total liabilities increased by 11.7% to $65,364,000 from $58,532,000 year-over-year[41]. - Shareholders' equity decreased by 23.9% to $63,623,000 from $83,628,000 in the previous year[41]. - Accounts payable - trade increased by 16.0% to $32,373,000 compared to $27,903,000 in the previous year[41]. - Inventories increased by 1.5% to $45,132,000 from $44,465,000 year-over-year[41]. Market Conditions and Future Outlook - The company highlighted the impact of macroeconomic factors such as inflation, interest rates, and foreign currency fluctuations on its financial performance and future operations[34]. - The company anticipates continued challenges in the market, with a focus on restructuring efforts to improve operational efficiency[50]. - The overall financial outlook remains cautious due to ongoing operational losses and market conditions[73]. - The company is focusing on market expansion and new product development to improve future performance[73].