Culp(US:CULP)2025-03-05 21:24Financial Performance - Consolidated net sales for Q3 fiscal 2025 were $52.3 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) million in the prior quarter[3][12]. - Adjusted EBITDA was close to break-even at negative $(123,000), a sequential improvement of approximately $1.1 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, 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, 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, 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, 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, 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 $28.6 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, 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, 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, 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 $10.0 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, compared to a credit of $50,000 in the same period last year[26]. - The company incurred a restructuring expense of $6.317 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, primarily affected by operating losses and non-recurring cash restructuring charges[19]. - The company anticipates receiving approximately $6.0 million to $8.0 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) in the prior year[43]. - Cash and cash equivalents dropped significantly by 58.1% to $5,279,000 from $12,585,000 year-over-year[36]. Balance Sheet and Assets - Total current assets decreased by 4.2% to $85,286,000 compared to $89,058,000 in the previous year[36]. - Total liabilities increased by 11.0% to $67,905,000 from $61,202,000 year-over-year[36]. - Shareholders' equity decreased by 26.2% to $59,650,000 compared to $80,796,000 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 $12,585,000 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].