Culp(US:CULP)2025-12-10 21:20Financial Performance - Consolidated net sales for Q2 fiscal 2026 were $53.2 million, a sequential increase from $50.7 million in Q1 but a decline from $55.7 million in the prior-year period[4] - The net loss for the quarter was $(4.3) million, or $(0.34) per diluted share, an improvement from a net loss of $(5.6) million, or $(0.45) per diluted share in the prior-year period[4] - Net sales for the three months ended November 2, 2025, were $53,202, a decrease of 4.4% compared to $55,674 for the same period in 2024[20] - The net loss for the six months ended November 2, 2025, was $4,537, a significant improvement of 64.8% compared to a net loss of $12,905 for the same period in 2024[21] - Net sales for the six months ended November 2, 2025, were $103,893, a decrease of 7.4% compared to $112,211 for the same period in 2024[27] - The company reported a total net loss of $20,958 million for the trailing twelve months ended November 2, 2025[47] Profitability Metrics - Adjusted consolidated gross profit was $6.7 million, or 12.6% of sales, compared to $6.8 million, or 12.1% of sales in the prior-year period, driven by cost and efficiency gains[4] - Gross profit for the three months ended November 2, 2025, was $5,782, down 3.5% from $5,990 in the prior year, resulting in a gross margin of 10.9%[20] - Gross profit for the six months ended November 2, 2025, was $13,010, representing a 17.6% increase from $11,066 in the prior year[27] - The gross margin for the bedding segment improved significantly to 10.3% from 3.6% year-over-year, while the upholstery segment's gross margin decreased to 17.5% from 18.2%[27] - Adjusted EBITDA for the quarter ended January 26, 2025, was $(457) million, reflecting a significant decrease from $(200) million in the same quarter of the previous year[47] - Adjusted EBITDA as a percentage of net sales was (2.9)% for the trailing twelve months ended November 2, 2025, compared to (3.3)% for the previous year[48] Expenses and Cost Management - Selling, general and administrative (SG&A) expenses were $8.7 million, or 16.4% of sales, showing a 7% improvement from $9.4 million, or 16.8% of sales in the prior-year period[4] - Selling, general and administrative expenses decreased by 4.3% to $17,858 for the six months ended November 2, 2025, compared to $18,655 in the prior year[21] - The company expects to achieve over $20 million in annualized cost savings and enhancements by entering fiscal 2027 due to ongoing restructuring initiatives[5] - The company experienced a restructuring expense of $1,655 million for the quarter ended January 26, 2025, compared to a restructuring credit of $(50) million for the quarter ended January 28, 2024[47] Cash Flow and Liquidity - Cash flow from operations was negative $(1.2) million for the six months ended November 2, 2025, an improvement from negative $(2.6) million in the prior-year period[13] - As of November 2, 2025, the company maintained $10.7 million in cash and $18.3 million in outstanding debt under its credit facilities[13] - Cash and cash equivalents increased to $10,728 as of November 2, 2025, from $10,531 at the end of October 27, 2024[23] - The company reported a net (debt) cash position of $(7,554) as of November 2, 2025, compared to a net cash position of $6,457 a year earlier[30] - Adjusted free cash flow for the six months ended November 2, 2025, was $10, compared to $(3,423) for the same period in 2024[31] Segment Performance - The restructured bedding segment achieved sales of $30.8 million, up approximately 10% sequentially and over 2% year-over-year, with gross profit of $3.1 million, or 10.1% of sales, a 27% improvement from the prior year[13] - Upholstery segment sales were $22.4 million, flat sequentially but down approximately 12% year-over-year, with gross profit of $3.6 million, or 16.1% of sales, down from $4.3 million, or 16.9% of sales in the prior year[13] - Bedding segment net sales increased by 1.1% to $58,809, while upholstery segment net sales decreased by 16.6% to $45,084[27] Debt and Interest - Total debt increased to $(18,282) as of November 2, 2025, from $(4,074) a year earlier, indicating a significant rise in borrowing[30] - Interest expense surged by 563.3% to $199 for the three months ended November 2, 2025, compared to $30 in the same period of 2024[20] - Interest income, net, was $(338) million for the six months ended November 2, 2025, compared to $(449) million for the same period in the previous year[47] Restructuring and Operational Changes - The company reported a restructuring credit of $3,010 for the six months ended November 2, 2025, compared to an expense of $4,662 in the same period of 2024[21] - The restructuring related charge for the six months ended November 2, 2025, was $(931), reflecting ongoing efforts to consolidate operations[27] - The restructuring credit for the six months ended November 2, 2025, included a gain from the sale of a manufacturing facility totaling $4.0 million[41] Foreign Currency and Other Losses - The company reported a foreign currency exchange loss of $136 million for the trailing twelve months ended November 2, 2025[47] - The company modified its presentation of adjusted EBITDA to exclude non-cash foreign currency exchange gains/losses starting from the quarter ended November 2, 2025, to enhance investor insight into operational performance[47]