Culp Announces Results and Strengthened Liquidity for First Quarter Fiscal 2021, Announces Quarterly Dividend
Fiscal 2021 First Quarter Financial Summary(1)
-
Net sales were
$64.5 million , down 8.8 percent over the prior-year period, with mattress fabric sales down 7.1 percent and upholstery fabric sales down 11.0 percent compared with the first quarter of last year. -
Pre-tax income from continuing operations was
$1.5 million , compared with pre-tax income from continuing operations of$3.5 million for the prior-year period. -
Net loss from continuing operations was
$(2.7) million , or$(0.22) per diluted share, compared with net income from continuing operations of$1.8 million , or$0.14 per diluted share, for the prior-year period. -
Adjusted net income from continuing operations (non-GAAP) was
$1.0 million , or$0.08 per diluted share(2). Adjusted net income from continuing operations for the prior-year period was$2.0 million , or$0.16 per diluted share(3). (See reconciliation table on page 11.) -
The company’s financial position reflected total cash and investments of
$47.4 million and no outstanding borrowings as ofAugust 2, 2020 . This compares with a net cash position of$38.7 million as of the end of the fourth quarter of fiscal 2020. (See summary of cash and investments table on page 7.) -
Cash flow from operations and free cash flow were
$10.6 million and$10.0 million , respectively, compared with cash flow from operations and free cash flow of$2.0 million and$1.0 million , respectively, for the prior-year period. (See reconciliation table on page 9.) -
The company announced a quarterly cash dividend of
10.5 cents per share, payable in October.
__________________________ | |
(1)
|
During the fourth quarter of fiscal 2020, the company sold its majority ownership interest in eLuxury, LLC, resulting in the elimination of its home accessories segment. Accordingly, the financial results for this segment are excluded from the reported financial performance of the company’s continuing operations and are presented as a discontinued operation in the company’s consolidated financial statements. |
|
|
(2)
|
This excludes a |
|
|
(3) |
This excludes a |
Financial Outlook
- Due to the continued economic impact of the COVID-19 pandemic and the lack of visibility as to its duration, the company is providing only limited financial guidance for fiscal 2021 at this time.
- Although subject to unforeseen changes that may arise as the pandemic and its economic impact continue to unfold, the company is encouraged by improving business conditions. The company expects sales and operating income for the second quarter of fiscal 2021 to be materially improved as compared to the first quarter, but not reaching the performance achieved in the second quarter of last year, which was an especially strong quarter for the upholstery fabrics segment.
Commenting on the results,
“We are pleased that both our mattress fabrics and upholstery fabrics segments saw better-than-expected increases in orders and shipments during the quarter, particularly during the last eight weeks. We are especially pleased with the substantial sequential improvement compared with the end of the fourth quarter, going from a significant pre-tax loss to profitability. We believe these trends are primarily being driven by a surge in consumer focus on the home environment and overall comfort, leading to an increased proportion of discretionary spending moving to home furnishings.
“Although the ongoing impact and duration of the COVID-19 pandemic remain unknown, we are cautiously optimistic, based on current demand trends, that business will continue its solid return in the second quarter of fiscal 2021. We are confident that our product-driven strategy, strong management team, and solid financial position will enable us to overcome the near-term headwinds and capture market share as we continue to demonstrate the resilience and strategic advantage of our global platform and stable supply chain. Our balance sheet remains strong, as evidenced by our significantly improved liquidity as compared to pre-pandemic levels at the end of the fiscal 2020 third quarter. We are also pleased to have maintained our quarterly dividend throughout this period of disruption, and we are excited about the continued sequential improvement in our business we expect for the second quarter of fiscal 2021,” added Culp.
Segment Update
Mattress Fabrics Segment
Sales for this segment were
“While we were energized by the sequential growth in sales and improving business conditions for the quarter, our operating performance was negatively affected by manufacturing inefficiencies associated with the dramatic ramp up in operations, as well as significant inventory reductions. Despite these challenges, we believe business conditions are stabilizing and will result in improved profitability going forward, barring additional disruption related to the pandemic. To support our future growth plan, we are investing in additional equipment to expand our capacity in
Upholstery Fabrics Segment
Sales for this segment were
“The unprecedented disruption from the COVID-19 pandemic continued to affect our sales and operating results for the first quarter of fiscal 2021,” said
“We were pleased with the improvement throughout the quarter as demand increased in most of our businesses, including our residential upholstery business which features our popular lines of LiveSmart® and LiveSmart Evolve™ performance fabrics, as well as the
Balance Sheet
“As the ongoing impact of the COVID-19 pandemic remains uncertain, maintaining a strong financial position remains one of Culp’s top priorities for fiscal 2021,” added
Dividends and Share Repurchases
The company announced that its Board of Directors has approved the payment of the company’s quarterly cash dividend of
The company did not repurchase any shares during the first quarter of fiscal 2021, leaving
About the Company
This release 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 events and results to differ materially from such statements. Further, forward looking statements are intended to speak only as of the date on which they are made, and we disclaim any duty to update such statements to reflect any changes in management’s expectations or any change in the assumptions or circumstances on which such statements are based, whether due to new information, future events, or otherwise. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often but not always characterized by qualifying words such as “expect,” “believe,” “anticipate,” “estimate,” “intend,” “plan,” “project,” and their derivatives, and include but are not limited to statements about expectations for our future operations, production levels, new product launches, sales, profit margins, profitability, operating income, capital expenditures, working capital levels, income taxes, SG&A or other expenses, pre-tax income, earnings, cash flow, and other performance or liquidity measures, as well as any statements regarding potential acquisitions, future economic or industry trends, public health epidemics, or future developments. There can be no assurance that the company will realize these expectations, meet its guidance, or that these beliefs will prove correct.
Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, consumer confidence, trends in disposable income, and general economic conditions. Decreases in these economic indicators could have a negative effect on our business and prospects. Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect us adversely. The future performance of our business depends in part on our success in conducting and finalizing acquisition negotiations and integrating acquired businesses into our existing operations. Changes in consumer tastes or preferences toward products not produced by us could erode demand for our products. Changes in tariffs or trade policy, or changes in the value of the
CONSOLIDATED STATEMENTS OF NET (LOSS) INCOME
FOR THREE MONTHS ENDED Unaudited (Amounts in Thousands, Except for Per Share Data)
|
||||||||||||||||||||||
|
|
|
THREE MONTHS ENDED |
|
||||||||||||||||||
|
|
|
Amount |
|
|
|
|
Percent of Sales |
|
|||||||||||||
|
|
|
(4) |
|
|
|
(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
% Over |
|
|
|
|
|
|
|
|||||
|
|
|
2020 |
|
|
|
2019 |
|
|
(Under) |
|
|
2020 |
|
|
2019 |
|
|||||
Net sales |
|
|
$ |
64,464 |
|
|
|
|
70,719 |
|
|
|
(8.8 |
)% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of sales |
|
|
|
(54,563 |
) |
|
|
|
(58,307 |
) |
|
|
(6.4 |
)% |
|
|
84.6 |
% |
|
|
82.4 |
% |
Gross profit from continuing operations |
|
|
|
9,901 |
|
|
|
|
12,412 |
|
|
|
(20.2 |
)% |
|
|
15.4 |
% |
|
|
17.6 |
% |
Selling, general and administrative expenses |
|
|
|
(8,018 |
) |
|
|
|
(9,149 |
) |
|
|
(12.4 |
)% |
|
|
12.4 |
% |
|
|
12.9 |
% |
Restructuring credit |
|
|
|
— |
|
|
|
|
35 |
|
|
|
(100.0 |
)% |
|
|
— |
|
|
|
0.0 |
% |
Income from continuing operations |
|
|
|
1,883 |
|
|
|
|
3,298 |
|
|
|
(42.9 |
)% |
|
|
2.9 |
% |
|
|
4.7 |
% |
Interest expense |
|
|
|
(51 |
) |
|
|
|
— |
|
|
|
100.0 |
% |
|
|
0.1 |
% |
|
|
0.0 |
% |
Interest income |
|
|
|
58 |
|
|
|
|
260 |
|
|
|
(77.7 |
)% |
|
|
0.1 |
% |
|
|
0.4 |
% |
Other expense |
|
|
|
(366 |
) |
|
|
|
(95 |
) |
|
|
285.3 |
% |
|
|
0.6 |
% |
|
|
0.1 |
% |
Income before income taxes from continuing operations |
|
|
|
1,524 |
|
|
|
|
3,463 |
|
|
|
(56.0 |
)% |
|
|
2.4 |
% |
|
|
4.9 |
% |
Income tax expense (1) |
|
|
|
(4,324 |
) |
|
|
|
(1,692 |
) |
|
|
155.6 |
% |
|
|
283.7 |
% |
|
|
48.9 |
% |
Income from investment in unconsolidated joint venture |
|
|
|
67 |
|
|
|
|
13 |
|
|
|
415.4 |
% |
|
|
0.1 |
% |
|
|
0.0 |
% |
Net (loss) income from continuing operations |
|
|
|
(2,733 |
) |
|
|
|
1,784 |
|
|
N.M. |
|
|
|
(4.2 |
)% |
|
|
2.5 |
% |
|
Loss before income taxes from discontinued operation (2) |
|
|
|
— |
|
|
|
|
(621 |
) |
|
|
(100.0 |
)% |
|
|
— |
|
|
|
(0.9 |
)% |
Income tax benefit (2) (3) |
|
|
|
— |
|
|
|
|
11 |
|
|
|
(100.0 |
)% |
|
|
— |
|
|
|
1.8 |
% |
Net loss from discontinued operation (2) |
|
|
|
— |
|
|
|
|
(610 |
) |
|
|
(100.0 |
)% |
|
|
— |
|
|
|
(0.9 |
)% |
Net (loss) income |
|
|
$ |
(2,733 |
) |
|
|
|
1,174 |
|
|
N.M. |
|
|
|
(4.2 |
)% |
|
|
1.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income from continuing operations per share - basic |
|
|
$ |
(0.22 |
) |
|
|
$ |
0.14 |
|
|
N.M. |
|
|
|
|
|
|
|
|
|
|
Net (loss) income from continuing operations per share - diluted |
|
|
$ |
(0.22 |
) |
|
|
$ |
0.14 |
|
|
N.M. |
|
|
|
|
|
|
|
|
|
|
Net loss from discontinued operation per share - basic |
|
|
$ |
— |
|
|
|
$ |
(0.05 |
) |
|
|
(100.0 |
)% |
|
|
|
|
|
|
|
|
Net loss from discontinued operation per share - diluted |
|
|
$ |
— |
|
|
|
$ |
(0.05 |
) |
|
|
(100.0 |
)% |
|
|
|
|
|
|
|
|
Net (loss) income per share - basic |
|
|
$ |
(0.22 |
) |
|
|
$ |
0.09 |
|
|
N.M. |
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share - diluted |
|
|
$ |
(0.22 |
) |
|
|
$ |
0.09 |
|
|
N.M. |
|
|
|
|
|
|
|
|
|
|
Average shares outstanding-basic |
|
|
|
12,287 |
|
|
|
|
12,399 |
|
|
|
(0.9 |
)% |
|
|
|
|
|
|
|
|
Average shares outstanding-diluted |
|
|
|
12,287 |
|
|
|
|
12,410 |
|
|
|
(1.0 |
)% |
|
|
|
|
|
|
|
|
Notes |
|
(1) |
Percent of sales column for income tax expense is calculated as a % of income before income taxes from continuing operations. |
(2) |
Effective |
(3) |
Percent of sales column for income tax benefit is calculated as a % of loss before income taxes from discontinued operations. |
(4) |
See page 11 for our Reconciliation of Selected Income Statement Information to Adjusted Results for the three-month periods ending |
CONSOLIDATED BALANCE SHEETS
Unaudited (Amounts in Thousands)
|
||||||||||||||||||||
|
|
Amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
(Condensed) |
|
|
(Condensed) |
|
|
|
|
|
|
|
|
|
|
(Condensed) |
|
|||
|
|
|
|
|
|
|
|
Increase (Decrease) |
|
|
* |
|
||||||||
|
|
2020 |
|
|
2019 |
|
|
Dollars |
|
|
Percent |
|
|
2020 |
|
|||||
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
39,986 |
|
|
|
44,236 |
|
|
|
(4,250 |
) |
|
|
(9.6 |
)% |
|
|
69,790 |
|
Short-term investments - Held-To-Maturity |
|
|
5,092 |
|
|
|
— |
|
|
|
5,092 |
|
|
|
100.0 |
% |
|
|
4,271 |
|
Short-term investments - Available for Sale |
|
|
983 |
|
|
|
— |
|
|
|
983 |
|
|
|
100.0 |
% |
|
|
923 |
|
Accounts receivable |
|
|
29,893 |
|
|
|
23,661 |
|
|
|
6,232 |
|
|
|
26.3 |
% |
|
|
25,093 |
|
Inventories |
|
|
40,402 |
|
|
|
47,593 |
|
|
|
(7,191 |
) |
|
|
(15.1 |
)% |
|
|
47,907 |
|
Current income taxes receivable |
|
|
782 |
|
|
|
776 |
|
|
|
6 |
|
|
|
0.8 |
% |
|
|
1,585 |
|
Current assets - Discontinued operation |
|
|
— |
|
|
|
3,557 |
|
|
|
(3,557 |
) |
|
|
(100.0 |
)% |
|
|
— |
|
Other current assets |
|
|
3,547 |
|
|
|
2,617 |
|
|
|
930 |
|
|
|
35.5 |
% |
|
|
2,116 |
|
Total current assets |
|
|
120,685 |
|
|
|
122,440 |
|
|
|
(1,755 |
) |
|
|
(1.4 |
)% |
|
|
151,685 |
|
Property, plant & equipment, net |
|
|
42,051 |
|
|
|
45,475 |
|
|
|
(3,424 |
) |
|
|
(7.5 |
)% |
|
|
43,147 |
|
|
|
|
— |
|
|
|
13,569 |
|
|
|
(13,569 |
) |
|
|
(100.0 |
)% |
|
|
— |
|
Intangible assets |
|
|
3,286 |
|
|
|
3,805 |
|
|
|
(519 |
) |
|
|
(13.6 |
)% |
|
|
3,380 |
|
Long-term investments - Rabbi Trust |
|
|
7,916 |
|
|
|
7,347 |
|
|
|
569 |
|
|
|
7.7 |
% |
|
|
7,834 |
|
Long-term investments - Held-To-Maturity |
|
|
1,314 |
|
|
|
— |
|
|
|
1,314 |
|
|
|
100.0 |
% |
|
|
2,076 |
|
Right of use asset |
|
|
6,443 |
|
|
|
5,488 |
|
|
|
955 |
|
|
|
17.4 |
% |
|
|
3,903 |
|
Noncurrent income taxes receivable |
|
|
— |
|
|
|
733 |
|
|
|
(733 |
) |
|
|
(100.0 |
)% |
|
|
— |
|
Deferred income taxes |
|
|
593 |
|
|
|
486 |
|
|
|
107 |
|
|
|
22.0 |
% |
|
|
793 |
|
Investment in unconsolidated joint venture |
|
|
1,759 |
|
|
|
1,520 |
|
|
|
239 |
|
|
|
15.7 |
% |
|
|
1,602 |
|
Long-term note receivable affiliated with discontinued operation |
|
|
— |
|
|
|
1,800 |
|
|
|
(1,800 |
) |
|
|
(100.0 |
)% |
|
|
— |
|
Noncurrent assets - Discontinued operation |
|
|
— |
|
|
|
23,058 |
|
|
|
(23,058 |
) |
|
|
(100.0 |
)% |
|
|
— |
|
Other assets |
|
|
540 |
|
|
|
526 |
|
|
|
14 |
|
|
|
2.7 |
% |
|
|
664 |
|
Total assets |
|
$ |
184,587 |
|
|
|
226,247 |
|
|
|
(41,660 |
) |
|
|
(18.4 |
)% |
|
|
215,084 |
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Line of credit - |
|
$ |
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,015 |
|
Paycheck Protection Program Loan |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,606 |
|
Accounts payable - trade |
|
|
25,746 |
|
|
|
21,855 |
|
|
|
3,891 |
|
|
|
17.8 |
% |
|
|
23,002 |
|
Accounts payable - capital expenditures |
|
|
333 |
|
|
|
50 |
|
|
|
283 |
|
|
|
566.0 |
% |
|
|
107 |
|
Operating lease liability - current |
|
|
2,387 |
|
|
|
2,270 |
|
|
|
117 |
|
|
|
5.2 |
% |
|
|
1,805 |
|
Deferred revenue |
|
|
685 |
|
|
|
684 |
|
|
|
1 |
|
|
|
0.1 |
% |
|
|
502 |
|
Accrued expenses |
|
|
7,852 |
|
|
|
8,104 |
|
|
|
(252 |
) |
|
|
(3.1 |
)% |
|
|
5,687 |
|
Accrued restructuring costs |
|
|
— |
|
|
|
42 |
|
|
|
(42 |
) |
|
|
(100.0 |
)% |
|
|
— |
|
Current liabilities - Discontinued operation |
|
|
— |
|
|
|
1,431 |
|
|
|
(1,431 |
) |
|
|
(100.0 |
)% |
|
|
— |
|
Income taxes payable - current |
|
|
613 |
|
|
|
1,116 |
|
|
|
(503 |
) |
|
|
(45.1 |
)% |
|
|
395 |
|
Total current liabilities |
|
|
37,616 |
|
|
|
35,552 |
|
|
|
2,064 |
|
|
|
5.8 |
% |
|
|
40,119 |
|
Line of credit - |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
29,750 |
|
Accrued expenses - long-term |
|
|
117 |
|
|
|
333 |
|
|
|
(216 |
) |
|
|
(64.9 |
)% |
|
|
167 |
|
Operating lease liability - long-term |
|
|
4,214 |
|
|
|
3,081 |
|
|
|
1,133 |
|
|
|
36.8 |
% |
|
|
2,016 |
|
Contingent consideration affiliated with discontinued operation |
|
|
— |
|
|
|
5,931 |
|
|
|
(5,931 |
) |
|
|
(100.0 |
)% |
|
|
— |
|
Income taxes payable - long-term |
|
|
3,591 |
|
|
|
3,640 |
|
|
|
(49 |
) |
|
|
(1.3 |
)% |
|
|
3,796 |
|
Deferred income taxes |
|
|
5,311 |
|
|
|
2,543 |
|
|
|
2,768 |
|
|
|
108.8 |
% |
|
|
1,818 |
|
Deferred compensation |
|
|
7,869 |
|
|
|
7,232 |
|
|
|
637 |
|
|
|
8.8 |
% |
|
|
7,720 |
|
Noncurrent liabilities - Discontinued operation |
|
|
— |
|
|
|
3,599 |
|
|
|
(3,599 |
) |
|
|
(100.0 |
)% |
|
|
— |
|
Total liabilities |
|
|
58,718 |
|
|
|
61,911 |
|
|
|
(3,193 |
) |
|
|
(5.2 |
)% |
|
|
85,386 |
|
Shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity attributable to |
|
|
125,869 |
|
|
|
160,146 |
|
|
|
(34,277 |
) |
|
|
(21.4 |
)% |
|
|
129,698 |
|
Non-controlling interest - Discontinued Operation |
|
|
- |
|
|
|
4,190 |
|
|
|
(4,190 |
) |
|
|
(100.0 |
)% |
|
|
— |
|
|
|
|
125,869 |
|
|
|
164,336 |
|
|
|
(38,467 |
) |
|
|
(23.4 |
)% |
|
|
129,698 |
|
Total liabilities and shareholders' equity |
|
$ |
184,587 |
|
|
|
226,247 |
|
|
|
(41,660 |
) |
|
|
(18.4 |
)% |
|
|
215,084 |
|
Shares outstanding |
|
|
12,292 |
|
|
|
12,405 |
|
|
|
(113 |
) |
|
|
(0.9 |
)% |
|
|
12,285 |
|
* Derived from audited financial statements.
SUMMARY OF CASH, INVESTMENTS, AND DEBT
Unaudited (Amounts in Thousands)
|
|||||||||||||
|
|
Amounts |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
2020 |
|
|
|
2019 |
|
|
2020* |
|
|||
Cash and Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
39,986 |
|
|
|
$ |
44,236 |
|
|
$ |
69,790 |
|
Short-term investments - Available for Sale |
|
|
983 |
|
|
|
|
— |
|
|
|
923 |
|
Short-term investments - Held-To-Maturity |
|
|
5,092 |
|
|
|
|
— |
|
|
|
4,271 |
|
Long-term investments - Held-To-Maturity |
|
|
1,314 |
|
|
|
|
— |
|
|
|
2,076 |
|
Total Cash and Investments |
|
$ |
47,375 |
|
|
|
$ |
44,236 |
|
|
$ |
77,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
Line of credit - |
|
$ |
— |
|
|
|
$ |
— |
|
|
$ |
1,015 |
|
Paycheck Protection Program Loan |
|
|
— |
|
|
|
|
— |
|
|
|
7,606 |
|
Line of credit - |
|
|
— |
|
|
|
|
— |
|
|
|
29,750 |
|
Total debt |
|
$ |
— |
|
|
|
$ |
— |
|
|
$ |
38,371 |
|
Net Cash Position |
|
$ |
47,375 |
|
|
|
$ |
44,236 |
|
|
$ |
38,689 |
|
* Derived from audited financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED Unaudited (Amounts in Thousands)
|
||||||||
|
|
THREE MONTHS ENDED |
|
|||||
|
|
Amounts |
|
|||||
|
|
|
|
|
|
|
||
|
|
2020 |
|
|
2019 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(2,733 |
) |
|
$ |
1,174 |
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
1,822 |
|
|
|
1,905 |
|
Amortization |
|
|
118 |
|
|
|
176 |
|
Stock-based compensation |
|
|
126 |
|
|
|
154 |
|
Deferred income taxes |
|
|
3,693 |
|
|
|
(662 |
) |
Gain on sale of property, plant, and equipment |
|
|
— |
|
|
|
(17 |
) |
Income from investment in unconsolidated joint venture |
|
|
(67 |
) |
|
|
(13 |
) |
Foreign currency exchange loss (gain) |
|
|
154 |
|
|
|
(47 |
) |
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(4,757 |
) |
|
|
(375 |
) |
Inventories |
|
|
7,592 |
|
|
|
(25 |
) |
Other current assets |
|
|
(1,254 |
) |
|
|
161 |
|
Other assets |
|
|
(24 |
) |
|
|
111 |
|
Accounts payable |
|
|
2,544 |
|
|
|
(1,468 |
) |
Deferred revenue |
|
|
183 |
|
|
|
285 |
|
Accrued expenses and deferred compensation |
|
|
2,377 |
|
|
|
222 |
|
Accrued restructuring costs |
|
|
— |
|
|
|
(82 |
) |
Income taxes |
|
|
807 |
|
|
|
524 |
|
Net cash provided by operating activities |
|
|
10,581 |
|
|
|
2,023 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(500 |
) |
|
|
(935 |
) |
Proceeds from the sale of property, plant, and equipment |
|
|
— |
|
|
|
209 |
|
Investment in unconsolidated joint venture |
|
|
(90 |
) |
|
|
— |
|
Proceeds from the sale of short-term investments (Held to Maturity) |
|
|
350 |
|
|
|
5,000 |
|
Purchase of short-term and long-term investments (Held to Maturity) |
|
|
(423 |
) |
|
|
— |
|
Purchase of short-term investments (Available for Sale) |
|
|
(34 |
) |
|
|
— |
|
Proceeds from the sale of long-term investments (Rabbi Trust) |
|
|
39 |
|
|
|
— |
|
Purchase of long-term investments (Rabbi Trust) |
|
|
(78 |
) |
|
|
(259 |
) |
Net cash (used in) provided by investing activities |
|
|
(736 |
) |
|
|
4,015 |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Payments associated with lines of credit |
|
|
(30,772 |
) |
|
|
— |
|
Payments associated with Paycheck Protection Program Loan |
|
|
(7,606 |
) |
|
|
— |
|
Proceeds from subordinated loan payable associated with the noncontrolling interest of discontinued operation |
|
|
— |
|
|
|
250 |
|
Cash paid for acquisition of business |
|
|
— |
|
|
|
(763 |
) |
Dividends paid |
|
|
(1,291 |
) |
|
|
(1,241 |
) |
Common stock surrendered for withholding taxes payable |
|
|
— |
|
|
|
(44 |
) |
Capital contribution associated with the noncontrolling interest of discontinued operation |
|
|
— |
|
|
|
40 |
|
Payments of debt issuance costs |
|
|
(15 |
) |
|
|
— |
|
Net cash used in financing activities |
|
|
(39,684 |
) |
|
|
(1,758 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
35 |
|
|
|
(52 |
) |
(Decrease) increase in cash and cash equivalents |
|
|
(29,804 |
) |
|
|
4,228 |
|
Cash and cash equivalents at beginning of year |
|
|
69,790 |
|
|
|
40,008 |
|
Cash and cash equivalents at end of period |
|
$ |
39,986 |
|
|
$ |
44,236 |
|
Free Cash Flow (1) |
|
$ |
9,987 |
|
|
$ |
986 |
|
RECONCILIATION OF FREE CASH FLOW
FOR THE THREE MONTHS ENDED Unaudited (Amounts in thousands)
|
|||||||||
(1) Free Cash Flow reconciliation is as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
FY 2021 |
|
|
FY 2020 |
|
||
A) Net cash provided by operating activities |
|
$ |
10,581 |
|
|
|
2,023 |
|
|
B) Minus: Capital Expenditures |
|
|
(500 |
) |
|
|
(935 |
) |
|
C) Plus: Proceeds from the sale of property, plant, and equipment |
|
|
— |
|
|
|
209 |
|
|
D) Minus: Investment in unconsolidated joint venture |
|
|
(90 |
) |
|
|
— |
|
|
E) Plus: Proceeds from the sale of long-term investments (Rabbi Trust) |
|
|
39 |
|
|
|
— |
|
|
F) Minus: Purchase of long-term investments (Rabbi Trust) |
|
|
(78 |
) |
|
|
(259 |
) |
|
G) Effects of exchange rate changes on cash and cash equivalents |
|
|
35 |
|
|
|
(52 |
) |
|
Free Cash Flow |
|
$ |
9,987 |
|
|
|
986 |
|
|
|
|
|
|
|
|
|
|
|
|
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED Unaudited (Amounts in thousands)
|
|||||||||||||||||||||||
|
|
|
|
THREE MONTHS ENDED |
|
||||||||||||||||||
|
|
|
|
Amounts |
|
|
|
|
|
|
Percent of Total Sales |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
% Over |
|
|
|
|
|
|
|
|||||
|
|
|
|
2020 |
|
|
|
2019 |
|
|
(Under) |
|
|
2020 |
|
|
2019 |
|
|||||
Mattress Fabrics |
|
|
|
$ |
36,103 |
|
|
|
|
38,859 |
|
|
|
(7.1 |
)% |
|
|
56.0 |
% |
|
|
54.9 |
% |
Upholstery Fabrics |
|
|
|
|
28,361 |
|
|
|
|
31,860 |
|
|
|
(11.0 |
)% |
|
|
44.0 |
% |
|
|
45.1 |
% |
|
|
|
|
$ |
64,464 |
|
|
|
|
70,719 |
|
|
|
(8.8 |
)% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit from Continuing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operations by Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit Margin |
|
|||||
Mattress Fabrics |
|
|
|
$ |
4,608 |
|
|
|
|
5,691 |
|
|
|
(19.0 |
)% |
|
|
12.8 |
% |
|
|
14.6 |
% |
Upholstery Fabrics |
|
|
|
|
5,293 |
|
|
|
|
6,721 |
|
|
|
(21.2 |
)% |
|
|
18.7 |
% |
|
|
21.1 |
% |
Gross Profit From Continuing Operations |
|
|
|
$ |
9,901 |
|
|
|
|
12,412 |
|
|
|
(20.2 |
)% |
|
|
15.4 |
% |
|
|
17.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, General and Administrative Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Sales |
|
|||||
Mattress Fabrics |
|
|
|
$ |
2,763 |
|
|
|
|
3,071 |
|
|
|
(10.0 |
)% |
|
|
7.7 |
% |
|
|
7.9 |
% |
Upholstery Fabrics |
|
|
|
|
3,180 |
|
|
|
|
3,846 |
|
|
|
(17.3 |
)% |
|
|
11.2 |
% |
|
|
12.1 |
% |
Unallocated Corporate expenses |
|
|
|
|
2,075 |
|
|
|
|
2,232 |
|
|
|
(7.0 |
)% |
|
|
3.2 |
% |
|
|
3.2 |
% |
Selling, General and Administrative Expenses |
|
|
|
$ |
8,018 |
|
|
|
|
9,149 |
|
|
|
(12.4 |
)% |
|
|
12.4 |
% |
|
|
12.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|||||
by Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margin |
|
|||||
Mattress Fabrics |
|
|
|
$ |
1,845 |
|
|
|
|
2,620 |
|
|
|
(29.6 |
)% |
|
|
5.1 |
% |
|
|
6.7 |
% |
Upholstery Fabrics |
|
|
|
|
2,113 |
|
|
|
|
2,875 |
|
|
|
(26.5 |
)% |
|
|
7.5 |
% |
|
|
9.0 |
% |
Unallocated corporate expenses |
|
|
|
|
(2,075 |
) |
|
|
|
(2,232 |
) |
|
|
(7.0 |
)% |
|
|
(3.2 |
)% |
|
|
(3.2 |
)% |
Subtotal |
|
|
|
|
1,883 |
|
|
|
|
3,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring credit |
|
|
|
|
— |
|
|
|
|
35 |
|
|
|
(100.0 |
)% |
|
|
0.0 |
% |
|
|
0.0 |
% |
Income From Continuing Operations |
|
|
|
$ |
1,883 |
|
|
|
|
3,298 |
|
|
|
(42.9 |
)% |
|
|
2.9 |
% |
|
|
4.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation Expense by Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mattress Fabrics |
|
|
|
$ |
1,631 |
|
|
|
|
1,620 |
|
|
|
0.7 |
% |
|
|
|
|
|
|
|
|
Upholstery Fabrics |
|
|
|
|
191 |
|
|
|
|
190 |
|
|
|
0.5 |
% |
|
|
|
|
|
|
|
|
Discontinued Operation |
|
|
|
|
- |
|
|
|
|
95 |
|
|
|
(100.0 |
)% |
|
|
|
|
|
|
|
|
Depreciation Expense |
|
|
|
$ |
1,822 |
|
|
|
|
1,905 |
|
|
|
(4.4 |
)% |
|
|
|
|
|
|
|
|
RECONCILIATION OF SELECTED INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS
FOR THE THREE MONTHS ENDED
|
||||||||||||||||||||||||
|
|
THREE MONTHS ENDED (UNAUDITED) |
|
|||||||||||||||||||||
|
|
As |
|
|
|
|
|
|
|
|
|
As |
|
|
|
|
|
|
|
|
||||
|
|
Reported |
|
|
|
|
|
|
2020 |
|
|
Reported |
|
|
|
|
|
|
2019 |
|
||||
|
|
|
|
|
|
|
|
|
Adjusted |
|
|
|
|
|
|
|
|
|
Adjusted |
|
||||
|
|
2020 |
|
|
Adjustments |
|
|
Results |
|
|
2019 |
|
|
Adjustments |
|
|
Results |
|
||||||
Income before income taxes from continuing operations |
$ |
|
1,524 |
|
|
|
— |
|
|
|
1,524 |
|
$ |
|
3,463 |
|
|
|
— |
|
|
|
3,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (1) (2) |
|
|
(4,324 |
) |
|
|
3,691 |
|
|
|
(633 |
) |
|
|
(1,692 |
) |
|
|
229 |
|
|
|
(1,463 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from investment in unconsolidated joint venture |
|
67 |
|
|
|
— |
|
|
|
67 |
|
|
13 |
|
|
|
— |
|
|
|
13 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations |
$ |
|
(2,733 |
) |
|
|
3,691 |
|
|
|
958 |
|
$ |
|
1,784 |
|
|
|
229 |
|
|
|
2,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income from continuing operations per share - basic |
|
$ |
(0.22 |
) |
|
|
|
|
|
$ |
0.08 |
|
|
$ |
0.14 |
|
|
|
|
|
|
$ |
0.16 |
|
Net (loss) income from continuing operations per share - diluted |
|
$ |
(0.22 |
) |
|
|
|
|
|
$ |
0.08 |
|
|
$ |
0.14 |
|
|
|
|
|
|
$ |
0.16 |
|
Average shares outstanding-basic |
|
|
12,287 |
|
|
|
|
|
|
|
12,287 |
|
|
|
12,399 |
|
|
|
|
|
|
|
12,399 |
|
Average shares outstanding-diluted |
|
|
12,287 |
|
|
|
|
|
|
|
12,294 |
|
|
|
12,410 |
|
|
|
|
|
|
|
12,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
The |
|
|
(2) |
The |
CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA
FOR THE TWELVE MONTHS ENDED Unaudited (Amounts in Thousands)
|
||||||||||||||||||||
|
|
Quarter Ended |
|
|
Quarter Ended |
|
|
Quarter Ended |
|
|
Quarter Ended |
|
|
Trailing 12 Months |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
2019 |
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|||||
Net income (loss) |
|
$ |
2,192 |
|
|
$ |
(4,207 |
) |
|
$ |
(27,825 |
) |
|
$ |
(2,733 |
) |
|
$ |
(32,573 |
) |
Loss before income taxes from discontinued operations |
|
|
441 |
|
|
|
7,824 |
|
|
|
8,698 |
|
|
|
- |
|
|
|
16,963 |
|
Income tax expense (benefit) from continuing operations |
|
|
1,930 |
|
|
|
(973 |
) |
|
|
704 |
|
|
|
4,324 |
|
|
|
5,985 |
|
Interest income, net |
|
|
(237 |
) |
|
|
(258 |
) |
|
|
(37 |
) |
|
|
(7 |
) |
|
|
(539 |
) |
Asset impairments from continuing operations |
|
|
— |
|
|
|
— |
|
|
|
13,712 |
|
|
|
— |
|
|
|
13,712 |
|
Restructuring credit and related charges |
|
|
— |
|
|
|
(35 |
) |
|
|
— |
|
|
|
— |
|
|
|
(35 |
) |
Depreciation expense - continuing operations |
|
|
1,893 |
|
|
|
1,891 |
|
|
|
1,882 |
|
|
|
1,822 |
|
|
|
7,488 |
|
Amortization expense - continuing operations |
|
|
102 |
|
|
|
102 |
|
|
|
117 |
|
|
|
118 |
|
|
|
439 |
|
Stock based compensation |
|
|
313 |
|
|
|
364 |
|
|
|
(199 |
) |
|
|
126 |
|
|
|
604 |
|
Adjusted EBITDA |
|
$ |
6,634 |
|
|
$ |
4,708 |
|
|
$ |
(2,948 |
) |
|
$ |
3,650 |
|
|
$ |
12,044 |
|
% |
|
|
9.5 |
% |
|
|
6.9 |
% |
|
|
(6.2 |
)% |
|
|
5.7 |
% |
|
|
4.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
Quarter Ended |
|
|
Quarter Ended |
|
|
Quarter Ended |
|
|
Trailing 12 Months |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
2018 |
|
|
2019 |
|
|
2019 |
|
|
2019 |
|
|
2019 |
|
|||||
Net income (loss) |
|
$ |
2,944 |
|
|
$ |
3,060 |
|
|
$ |
(1,511 |
) |
|
$ |
1,174 |
|
|
$ |
5,667 |
|
(Income) loss before income taxes from discontinued operations |
|
|
(37 |
) |
|
|
313 |
|
|
|
477 |
|
|
|
621 |
|
|
|
1,374 |
|
Income tax expense from continuing operations |
|
|
1,270 |
|
|
|
1,274 |
|
|
|
3,091 |
|
|
|
1,692 |
|
|
|
7,327 |
|
Interest income, net |
|
|
(141 |
) |
|
|
(259 |
) |
|
|
(221 |
) |
|
|
(260 |
) |
|
|
(881 |
) |
Restructuring credit and related charges |
|
|
(791 |
) |
|
|
340 |
|
|
|
— |
|
|
|
(35 |
) |
|
|
(486 |
) |
Other non-recurring charges |
|
|
249 |
|
|
|
429 |
|
|
|
500 |
|
|
|
— |
|
|
|
1,178 |
|
Depreciation expense - continuing operations |
|
|
1,949 |
|
|
|
1,934 |
|
|
|
1,933 |
|
|
|
1,810 |
|
|
|
7,626 |
|
Amortization expense - continuing operations |
|
|
140 |
|
|
|
126 |
|
|
|
113 |
|
|
|
101 |
|
|
|
480 |
|
Stock based compensation |
|
|
395 |
|
|
|
479 |
|
|
|
(243 |
) |
|
|
154 |
|
|
|
785 |
|
Adjusted EBITDA |
|
$ |
5,978 |
|
|
$ |
7,696 |
|
|
$ |
4,139 |
|
|
$ |
5,257 |
|
|
$ |
23,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% |
|
|
8.3 |
% |
|
|
10.5 |
% |
|
|
6.2 |
% |
|
|
7.4 |
% |
|
|
8.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Over (Under) |
|
|
11.0 |
% |
|
|
(38.8 |
)% |
|
|
(171.2 |
)% |
|
|
(30.6 |
)% |
|
|
(47.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200902005895/en/
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