Financial Data and Key Metrics Changes - Consolidated net sales for Q2 were $53.2 million, a sequential improvement from $50.7 million in Q1, but a decline from $55.7 million in the prior year period [26] - Consolidated gross profit for the quarter was $5.8 million, or 10.9% of sales, compared to $6 million, or 10.8% of sales in the prior year [26] - SG&A expense for the quarter was $8.7 million, reflecting a 7% improvement compared to the prior year [27] - Loss from operations was $3.5 million, an improvement from a loss of $5.4 million in the prior year [27] - Adjusted EBITDA was negative $1 million, an improvement from negative $1.1 million in the prior year [28] Business Line Data and Key Metrics Changes - Bedding segment sales for Q2 were $30.8 million, up approximately 10% sequentially and over 2% year-over-year [30] - Gross profit in the bedding segment was $3.1 million, or 10.1% of sales, a 200 basis points improvement from the prior year [31] - Upholstery segment sales for Q2 were $22.4 million, flat sequentially but down approximately 12% year-over-year [31] - Gross profit in the upholstery segment was $3.6 million, or 16.1% of sales, down from $4.3 million, or 16.9% of sales in the prior year [31] Market Data and Key Metrics Changes - The home furnishings industry continues to face significant challenges, with low consumer confidence and high levels of unsold homes impacting sales [7][20] - The bedding market is showing signs of stabilization, with expectations for an increase in unit activity driven by historical product replacement cycles [19][20] - Upholstery business remains impacted by weak consumer sentiment and housing market conditions, particularly affecting lower and middle-income segments [21][22] Company Strategy and Development Direction - The company is focused on winning market share and adjusting its cost structure to achieve profitability in the current market cycle [8] - A comprehensive restructuring project has been completed, expected to yield approximately $11 million in annualized cost savings [14][18] - The integration of the bedding and upholstery divisions aims to create a unified Culp-branded business, enhancing operational efficiency [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging demand environment for home furnishings but expects steady consolidated sales performance in the near term [36] - The company anticipates continued improvement in operating loss and near break-even to positive Adjusted EBITDA for Q3 [36] - Management remains cautious about the timing of market recovery but is positioning the company to capitalize on future demand increases [45][46] Other Important Information - The company has a net debt position of $7.6 million and continues to manage liquidity and capital expenditures aggressively [32][34] - The company is owed approximately $4.7 million from the sale of its Canada facility, expected to be received in Q3 [36] Q&A Session Summary Question: What is the realization status of the cost savings? - Management indicated that significant savings are being realized, with most expected to be fully realized by Q4 [41][44] Question: What will be the incremental margin on the next point of sales growth? - Management confirmed that there is built-up leverage to capitalize on any increase in sales, with fixed costs in place to retain a significant portion of incremental dollars [47][48] Question: What is the status of the new tariffs in Turkey and Haiti? - Management explained that recent tariff changes have created challenges, but the company is well-positioned to navigate these issues [49][50]

SECOND QUARTER FY26: SUPPLEMENTAL INFORMATION 2 BUSINESS OVERVIEW & STRATEGIC ACTIONS CULP, INC. (NYSE: CULP) December 2025 FORWARD-LOOKING STATEMENTS This presentation contains "forward-looking statements" within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties that may cause actual ...

HIGH POINT, N.C.--(BUSINESS WIRE)--Culp, Inc. (NYSE: CULP), a leading provider of fabrics for bedding and upholstery fabrics for residential, commercial, and hospitality furniture and other applications, today reported financial and operating results for its second fiscal quarter ended November 2, 2025. Iv Culp, President and Chief Executive Officer, commented, "We continue to make aggressive adjustments to our cost structure in this challenging macro demand environment that seems to be acutely affecting ho ...

Financial Data and Key Metrics Changes - Net sales for Q1 FY 2026 were $50.7 million, down from $56.5 million in the prior year, primarily due to market softness and tariff-related shipment pauses [21] - Gross profit increased to $7.2 million (14.3% of sales) from $5.1 million (9% of sales) year-over-year, reflecting a 530 basis point improvement driven by restructuring benefits [21] - Operating income for the quarter was $1.6 million, compared to a loss of $6.9 million in the prior year [21] - Net loss was $231,000 ($0.02 per diluted share), significantly improved from a net loss of $7.3 million ($0.58 per diluted share) in the prior year [22] Business Line Data and Key Metrics Changes - Bedding segment sales were $28 million, flat compared to the previous year, with gross profit improving to $2.9 million (10.5% of sales) from a loss of $326,000 (-1.2% of sales) [24] - Upholstery segment sales decreased by approximately 20% to $22.6 million from $28.5 million, with gross profit at $4.3 million (18.9% of sales), down from $5.5 million (19.4% of sales) [25][26] Market Data and Key Metrics Changes - The home furnishings industry remains in a down cycle, but analysts suggest that mattress demand may be close to bottoming out, with potential for recovery driven by product replacement and household formation [8][9] - The upholstery segment faced challenges due to high tariffs on imports from China, which temporarily halted shipments and impacted sales [11][12] Company Strategy and Development Direction - The company is focused on restructuring and integration initiatives to improve operating efficiency and profitability, with expectations for sequential sales growth throughout FY 2026 [31] - Project Blaze aims to unify operations and share resources across divisions, enhancing overall operational efficiency [16] - The company is strategically positioned to capitalize on market recovery by maintaining capacity and leveraging competitive advantages in supply chain management [19][44] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the ongoing challenges from tariffs and market conditions but expresses confidence in the company's ability to navigate these issues and improve profitability [9][31] - The company anticipates sequential growth in sales and adjusted EBITDA results moving towards breakeven or slightly positive for Q2 FY 2026 [31] - Management emphasizes the importance of maintaining flexibility in operations to adapt to changing market demands [43] Other Important Information - The effective income tax rate for Q1 FY 2026 was 120.3%, influenced by the gain on the sale of the Canadian manufacturing facility [23] - The company reported $11.1 million in cash and $18.1 million in outstanding debt, maintaining a net debt position of $7.1 million [26][28] Q&A Session Summary Question: Are all known tariff impacts accounted for in your initiatives? - Management believes they can take tariffs off the immediate worry list, having adjusted pricing and operations to manage the current environment effectively [35] Question: What is the pricing elasticity in the current market? - Management acknowledges the competitive nature of the business but is working to pass through necessary price increases to cover tariffs and improve margins [37] Question: How far along is the realization of the $18 million in initiatives? - Management indicates that the $10-$11 million from the previous year's restructuring is fully implemented, while other initiatives will impact the back half of FY 2026 [38][39] Question: How does the current market dip compare to past downturns? - Management notes that while down cycles are common, the current period has been prolonged, but they remain confident in a market recovery [40][42] Question: Will the company be able to meet demand if it turns? - Management asserts that they have not limited capacity and can grow as needed, leveraging existing resources to meet potential demand increases [43][44] Question: What is the estimated market value of real estate and the future use of NOLs? - The net book value of the real estate is approximately $12 million, with an estimated market value of $40-$45 million, while NOLs will provide future tax benefits once profitability is achieved [45][46]

Company Overview - Culp, Inc is a major North American marketer of mattress and upholstery fabrics with global manufacturing in the US, China, Haiti, and Vietnam[6] - Culp's fiscal year 2025 revenue was $213.2 million[7] - The bedding segment accounts for 53% of Culp's fiscal 2025 revenue, while the upholstery segment accounts for 47%[8] Market Position and Strategy - Culp holds a 20-25% market share in the $500-600 million domestic mattress fabric and cover market[10] - Culp holds an 8-10% market share in the $1.5-$2.5 billion domestic upholstery fabric market[13] - Restructuring actions completed in fiscal year 2025 are projected to yield $10 to $11 million in annualized cost savings and efficiency gains[21] - Additional integration actions in fiscal year 2026 are expected to generate ~$6 million in total annualized additional benefits[32] - Pricing initiatives in fiscal year 26 are expected to generate ~$2.5 million annualized margin improvement in bedding segment[32] Liquidity and Financial Health - As of August 3, 2025, Culp's total liquidity was $28.7 million, including cash and availability from credit lines[15] - Estimated proceeds from a Canadian real estate sale will add $3 million to liquidity, bringing the total to $31.7 million[15] - Culp has U S Federal NOL carryforwards totaling ~$88.1 million as of April 27, 2025[16] Market Outlook - The mattress industry may be nearing the end of a period of low demand[35] - UBS forecasts 4% growth in mattress industry sales in 2026 and 8% growth in 2027[40]