UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 2, 2020
Culp, Inc.
(Exact Name of Registrant as Specified in its Charter)
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North Carolina |
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1-12597 |
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56-1001967 |
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(State or Other Jurisdiction |
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(Commission File Number) |
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(I.R.S. Employer |
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of Incorporation) |
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Identification No.) |
1823 Eastchester Drive
High Point, North Carolina 27265
(Address of Principal Executive Offices)
(Zip Code)
(336) 889-5161
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former name or address, if changed from last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol |
Name of Exchange on which Registered |
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Common stock, par value $0.05 per share |
CULP |
New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
This report and the exhibit attached hereto contain “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 U.S. dollar versus other currencies, could affect our financial results because a significant portion of our operations are located outside the United States. Strengthening of the U.S. dollar against other currencies could make our products less competitive on the basis of price in markets outside the United States, and strengthening of currencies in Canada and China can have a negative impact on our sales of products produced in those places. Also, economic and political instability in international areas could affect our operations or sources of goods in those areas, as well as demand for our products in international markets. The impact of public health epidemics on employees, customers, suppliers, and the global economy, such as the global coronavirus pandemic currently affecting countries around the world, could also adversely affect our operations and financial performance. In addition, the impact of potential goodwill or intangible asset impairments or valuation allowances could affect our financial results. Finally, increases in market prices for petrochemical products can significantly affect the prices we pay for raw materials, and in turn, increase our operating costs and decrease our profitability. Further information about these factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A “Risk Factors” in our Form 10-K filed with the Securities and Exchange Commission on July 17, 2020 for the fiscal year ended May 3, 2020, and our subsequent periodic reports filed with the Securities and Exchange Commission. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur.
Item 2.02 – Results of Operations and Financial Condition
The information set forth in this Item 2.02 of this Current Report, and in Exhibits 99, is intended to be “furnished” under Item 2.02 of Form 8-K. Such information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
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On September 2, 2020, we issued a news release to announce our financial results for our first quarter ended August 2, 2020. The news release is attached hereto as Exhibit 99.
The news release contains adjusted income statement information, which discloses adjusted net income and adjusted earnings per share, non-GAAP performance measures that eliminate a non-cash income tax charge in connection with the recordation of a full valuation allowance against the Company’s U.S. net deferred income tax assets, as well as a non-cash income tax benefit resulting from the re-establishment of certain U.S. Federal net operating loss carryforwards in connection with the recently enacted final regulations regarding the Global Intangible Low Taxed Income (“GILTI”) tax provisions of the Tax Cuts and Jobs Act of 2017. The company has included this adjusted information in order to show operational performance excluding the effects of this non-cash income tax charge and non-cash income tax benefit, which are not expected to occur on a regular basis. Details of these calculations and a reconciliation to information from our GAAP financial statements are set forth in the news release. Management believes this presentation aids in the comparison of financial results among comparable financial periods. We note, however, that this adjusted income statement information should not be viewed in isolation or as a substitute for net income or earnings per share calculated in accordance with GAAP. In addition, the calculation of the company’s income taxes involves numerous estimates and assumptions, which we have made in good faith.
The news release contains disclosures about free cash flow, a non-GAAP liquidity measure that we define as net cash provided by (used in) operating activities, less cash capital expenditures, plus any proceeds from sale of property, plant, and equipment, less investment in unconsolidated joint venture, plus proceeds from life insurance policies (if any), less premium payments on life insurance policies (if any), less payments on vendor-financed capital expenditures, plus proceeds from the sale of long-term investments associated with our rabbi trust, less the purchase of long-term investments associated with our rabbi trust, and plus or minus the effects of exchange rate changes on cash and cash equivalents. Details of these calculations and a reconciliation to information from our GAAP financial statements are set forth in the news release. Management believes the disclosure of free cash flow provides useful information to investors because it measures our available cash flow for potential debt repayment, stock repurchases, dividends, and additions to cash and investments. We note, however, that not all of the company’s free cash flow is available for discretionary spending, as we may have mandatory debt payments and other cash requirements that must be deducted from our cash available for future use. In operating our business, management uses free cash flow to make decisions about what commitments of cash to make for operations, such as capital expenditures (and financing arrangements for these expenditures), purchases of inventory or supplies, SG&A expenditure levels, compensation, and other commitments of cash, while still allowing for adequate cash to meet known future commitments for cash, such as debt repayment, and also for making decisions about dividend payments and share repurchases.
The news release contains disclosures about our Adjusted EBITDA, which is a non-GAAP performance measure that reflects net (loss) income excluding loss before income taxes from discontinued operations, income tax expense (benefit) from continuing operations, and net interest income, as well as depreciation expense from continuing operations, amortization expense, and stock-based compensation expense. This measure also excludes asset impairment charges from continuing operations, restructuring and related charges and credits, as well as other non-recurring charges and credits associated with our business. Details of these calculations and a reconciliation to information from our GAAP financial statements are set forth in the news release. We believe presentation of Adjusted EBITDA is useful to investors because earnings before interest income and expense, income taxes, depreciation and amortization, and similar performance measures that exclude certain charges from earnings, are often used by investors and financial analysts in evaluating and comparing companies in our industry. We note, however, that such measures are not defined uniformly by various companies, with differing expenses being excluded from net income to calculate these performance measures. For this reason, Adjusted EBITDA should not be viewed in isolation by investors and should not be used as a substitute for net income calculated in accordance with GAAP, nor should it be used for direct comparisons with similarly titled performance measures reported by other companies. Use of Adjusted EBITDA as an analytical tool has limitations in that this measure does not reflect all expenses that are necessary to fund and operate our business, including funds required to pay taxes, service our debt, and fund capital expenditures, among others. Management uses Adjusted EBITDA to help it analyze the company’s earnings and operating performance, by excluding the effects of expenses that depend
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upon capital structure and debt level, tax provisions, and non-cash items such as depreciation, amortization and stock-based compensation expense that do not require immediate uses of cash.
Item 9.01 (d) - Exhibits
99 News Release dated September 2, 2020
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Exhibit Number |
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Exhibit |
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99 |
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5
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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CULP, INC. (Registrant) |
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By: |
/s/ Kenneth R. Bowling |
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Chief Financial Officer |
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(principal financial officer) |
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By: |
/s/ Thomas B. Gallagher, Jr. |
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Corporate Controller |
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(principal accounting officer) |
Dated: September 2, 2020
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Exhibit 99
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Investor Contact: |
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Kenneth R. Bowling |
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Media Contact: |
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Teresa A. Huffman |
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Chief Financial Officer |
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Senior Vice President, Human Resources |
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336-881-5630 |
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336-889-5161 |
CULP ANNOUNCES RESULTS AND STRENGTHENED LIQUIDITY
FOR FIRST QUARTER FISCAL 2021, ANNOUNCES QUARTERLY DIVIDEND
HIGH POINT, N.C. (September 2, 2020) ─ Culp, Inc. (NYSE: CULP) today reported financial and operating results for the first quarter ended August 2, 2020, which were materially affected by the coronavirus (“COVID-19”) pandemic. Additionally, the first quarter of fiscal 2021 included 13 weeks compared with 14 weeks for the first quarter of fiscal 2020.
Fiscal 2021 First Quarter Financial Summary(1)
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▪ |
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. |
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▪ |
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. |
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▪ |
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. |
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▪ |
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.) |
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▪ |
The company announced a quarterly cash dividend of 10.5 cents per share, payable in October. |
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(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. |
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(2) |
This excludes a $3.7 million net income tax charge, which consists of a $7.2 million non-cash income tax charge to record a full valuation allowance against the company’s U.S. net deferred income tax assets, partially offset by a $3.5 million non-cash income tax benefit resulting from the re-establishing of certain U.S. Federal net operating loss carryforwards in connection with the U.S. Treasury regulations enacted during the first quarter of fiscal 2021 regarding the Global Intangible Low Taxed Income (“GILTI”) tax provisions of the Tax Cuts and Jobs Act of 2017. |
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(3) |
This excludes a $229,000 income tax charge, which represents the company’s estimated GILTI tax incurred through the first quarter of fiscal 2020. |
CULP Announces Results and Strengthened Liquidity for First Quarter Fiscal 2021
Page 2
September 2, 2020
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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. |
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▪ |
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, Iv Culp, president and chief executive officer of Culp, Inc., said, “As we continue to navigate our way through these uncertain times, we remain focused on the health and safety of our employees, customers, suppliers, and the communities that we serve. I am incredibly thankful for our team’s hard work, agility, and commitment to safety, and I am proud of our leadership team for adapting and effectively managing through this challenging environment.
“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 $36.1 million for the first quarter, down 7.1 percent compared with sales of $38.9 million in the first quarter of fiscal 2020, which included an extra week. Excluding this extra week, sales for the first quarter of fiscal 2021 were comparable (based on average sales per week) to sales for the first quarter of fiscal 2020.
Sandy Brown, president of Culp’s mattress fabrics division, stated, “While our mattress fabrics sales and operating performance for the first quarter of fiscal 2021 were affected by the ongoing disruption from the COVID-19 pandemic, we were pleased with the solid improvement during the quarter as business conditions began to normalize. The beginning of the quarter was materially affected by the virus, but we experienced a greater than anticipated increase in demand beginning in mid-May as government restrictions were lifted and customers and retail stores resumed operations. This increase continued throughout the quarter across all product offerings, including our CLASS mattress cover business, approximating pre-pandemic levels at quarter end. We returned all our previously furloughed workers and rapidly expanded our production schedules to meet this growing demand. As a result, sales increased by approximately 60 percent from the fourth quarter of fiscal 2020 to the first quarter of fiscal 2021.
“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
CULP Announces Results and Strengthened Liquidity for First Quarter Fiscal 2021
Page 3
September 2, 2020
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 North America. We believe the strength and flexibility of our global manufacturing and sourcing operations in the U.S., Canada, Haiti, Asia, and Turkey have us well positioned to execute our strategy and support the current environment surrounding the changing demands of our customers,” added Brown.
Upholstery Fabrics Segment
Sales for this segment were $28.4 million for the first quarter, down 11.0 percent compared with sales of $31.9 million in the first quarter of fiscal 2020, which included an extra week. Excluding this extra week, sales for the first quarter of fiscal 2021 were down approximately 4.0 percent (based on average sales per week) compared with the first quarter of fiscal 2020.
“The unprecedented disruption from the COVID-19 pandemic continued to affect our sales and operating results for the first quarter of fiscal 2021,” said Boyd Chumbley, president of Culp’s upholstery fabrics division. “We began the quarter slowly, with a gradual increase in orders and shipments beginning in mid-May as customers and retail stores started to reopen, followed by a swift upturn during the month of June and further acceleration to end the quarter. We returned all our previously furloughed workers to meet this rapid increase in demand, and our strong platform in Asia, including our cut and sew capabilities in Vietnam and our stable supply chain, has allowed us to respond quickly and meet the needs of our customers.
“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 Read Window Products portion of our hospitality business. We have benefited from our ability to continue representing our products for customers through our innovative virtual showcase presentations, and our strong product placements with customers prior to the COVID-19 outbreak have also advanced our recovery as business conditions improve,” added Chumbley.
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 Ken Bowling, executive vice president and chief financial officer of Culp, Inc. “As of August 2, 2020, we reported $47.4 million in total cash and investments and no outstanding borrowings, up from our $38.7 million net cash position as of the end of the fourth quarter of fiscal 2020. During the first quarter, we incurred $500,000 in capital expenditures and spent $1.3 million on regular dividends. We also generated cash flow from operations of $10.6 million and free cash flow from operations of $10.0 million for the quarter, compared with cash flow from operations of $2.0 million and free cash flow of 1.0 million for the prior-year period. (See reconciliation table on page 9.)
Dividends and Share Repurchases
The company announced that its Board of Directors has approved the payment of the company’s quarterly cash dividend of 10.5 cents per share. The dividend is to be paid on or about October 15, 2020, to shareholders of record as of October 8, 2020. Importantly, the company has maintained and increased its annual dividend for eight consecutive fiscal years. The Board will continue to evaluate the appropriateness of the current dividend rate considering economic conditions and the company’s performance in upcoming quarters.
The company did not repurchase any shares during the first quarter of fiscal 2021, leaving $5.0 million available under the $5.0 million share repurchase program approved by the Board in March 2020. As previously disclosed, the company has temporarily suspended its share repurchases given the economic uncertainty related to COVID-19.
CULP Announces Results and Strengthened Liquidity for First Quarter Fiscal 2021
Page 4
September 2, 2020
Culp, Inc. is one of the world's largest marketers of mattress fabrics for bedding and upholstery fabrics for residential and commercial furniture. The company markets a variety of fabrics to its global customer base of leading bedding and furniture companies, including fabrics produced at Culp’s manufacturing facilities and fabrics sourced through other suppliers. Culp has operations located in the United States, Canada, China, and Haiti.
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 U.S. dollar versus other currencies, could affect our financial results because a significant portion of our operations are located outside the United States. Strengthening of the U.S. dollar against other currencies could make our products less competitive on the basis of price in markets outside the United States, and strengthening of currencies in Canada and China can have a negative impact on our sales of products produced in those places. Also, economic and political instability in international areas could affect our operations or sources of goods in those areas, as well as demand for our products in international markets. The impact of public health epidemics on employees, customers, suppliers, and the global economy, such as the global coronavirus pandemic currently affecting countries around the world, could also adversely affect our operations and financial performance. In addition, the impact of potential goodwill or intangible asset impairments could affect our financial results. Finally, increases in market prices for petrochemical products can significantly affect the prices we pay for raw materials, and in turn, increase our operating costs and decrease our profitability. Further information about these factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A “Risk Factors” in our Form 10-K filed with the Securities and Exchange Commission on July 17, 2020, for the fiscal year ended May 3, 2020, and our subsequent periodic reports filed with the Securities and Exchange Commission. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur.
CULP Announces Results and Strengthened Liquidity for First Quarter Fiscal 2021
Page 5
September 2, 2020
CONSOLIDATED STATEMENTS OF NET (LOSS) INCOME
FOR THREE MONTHS ENDED AUGUST 2, 2020, AND AUGUST 4, 2019
Unaudited
(Amounts in Thousands, Except for Per Share Data)
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THREE MONTHS ENDED |
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Amount |
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Percent of Sales |
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(4) |
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(4) |
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August 2, |
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August 4, |
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% Over |
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August 2, |
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August 4, |
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2020 |
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2019 |
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(Under) |
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2020 |
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2019 |
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Net sales |
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$ |
64,464 |
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70,719 |
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(8.8 |
)% |
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100.0 |
% |
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100.0 |
% |
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Cost of sales |
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(54,563 |
) |
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(58,307 |
) |
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(6.4 |
)% |
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84.6 |
% |
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82.4 |
% |
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Gross profit from continuing operations |
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9,901 |
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12,412 |
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(20.2 |
)% |
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15.4 |
% |
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17.6 |
% |
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Selling, general and administrative expenses |
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(8,018 |
) |
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(9,149 |
) |
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(12.4 |
)% |
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12.4 |
% |
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12.9 |
% |
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Restructuring credit |
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— |
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35 |
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(100.0 |
)% |
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— |
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0.0 |
% |
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Income from continuing operations |
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1,883 |
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3,298 |
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(42.9 |
)% |
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2.9 |
% |
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4.7 |
% |
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Interest expense |
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(51 |
) |
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— |
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100.0 |
% |
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0.1 |
% |
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0.0 |
% |
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Interest income |
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58 |
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260 |
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(77.7 |
)% |
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0.1 |
% |
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0.4 |
% |
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Other expense |
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(366 |
) |
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(95 |
) |
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285.3 |
% |
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0.6 |
% |
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0.1 |
% |
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Income before income taxes from continuing operations |
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1,524 |
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3,463 |
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(56.0 |
)% |
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2.4 |
% |
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4.9 |
% |
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Income tax expense (1) |
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(4,324 |
) |
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(1,692 |
) |
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155.6 |
% |
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283.7 |
% |
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48.9 |
% |
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Income from investment in unconsolidated joint venture |
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67 |
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13 |
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415.4 |
% |
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0.1 |
% |
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0.0 |
% |
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Net (loss) income from continuing operations |
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(2,733 |
) |
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1,784 |
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N.M. |
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(4.2 |
)% |
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2.5 |
% |
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Loss before income taxes from discontinued operation (2) |
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— |
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(621 |
) |
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(100.0 |
)% |
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— |
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(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 March 31, 2020, we sold our entire ownership of eLuxury, LLC to its noncontrolling interest holder, resulting in the elimination of the home accessories segment at such time. |
|
(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 August 2, 2020 and August 4, 2019, which includes certain adjustments to income tax expense from continuing operations. |
CULP Announces Results and Strengthened Liquidity for First Quarter Fiscal 2021
Page 6
September 2, 2020
CONSOLIDATED BALANCE SHEETS
AUGUST 2, 2020, AUGUST 4, 2019, AND MAY 3, 2020
Unaudited
(Amounts in Thousands)
|
|
|
Amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
(Condensed) |
|
|
(Condensed) |
|
|
|
|
|
|
|
|
|
|
(Condensed) |
|
|||
|
|
|
August 2, |
|
|
August 4, |
|
|
Increase (Decrease) |
|
|
* May 3, |
|
||||||||
|
|
|
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 |
|
|
Goodwill |
|
|
— |
|
|
|
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 - China operations |
|
$ |
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
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 - U.S. operations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
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 Culp Inc. |
|
|
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.
CULP Announces Results and Strengthened Liquidity for First Quarter Fiscal 2021
Page 7
September 2, 2020
SUMMARY OF CASH, INVESTMENTS, AND DEBT
AUGUST 2, 2020, AUGUST 4, 2019, AND MAY 3, 2020
Unaudited
(Amounts in Thousands)
|
|
|
Amounts |
|
|
|
|
|
||||||
|
|
|
August 2, |
|
|
|
August 4, |
|
|
May 3, |
|
|||
|
|
|
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 - China operations |
|
$ |
— |
|
|
|
$ |
— |
|
|
$ |
1,015 |
|
|
Paycheck Protection Program Loan |
|
|
— |
|
|
|
|
— |
|
|
|
7,606 |
|
|
Line of credit - U.S. operations |
|
|
— |
|
|
|
|
— |
|
|
|
29,750 |
|
|
Total debt |
|
$ |
— |
|
|
|
$ |
— |
|
|
$ |
38,371 |
|
|
Net Cash Position |
|
$ |
47,375 |
|
|
|
$ |
44,236 |
|
|
$ |
38,689 |
|
* Derived from audited financial statements.
CULP Announces Results and Strengthened Liquidity for First Quarter Fiscal 2021
Page 8
September 2, 2020
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 2, 2020, AND AUGUST 4, 2019
Unaudited
(Amounts in Thousands)
|
|
|
THREE MONTHS ENDED |
|
|||||
|
|
|
Amounts |
|
|||||
|
|
|
August 2, |
|
|
August 4, |
|
||
|
|
|
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 |
|
CULP Announces Results and Strengthened Liquidity for First Quarter Fiscal 2021
Page 9
September 2, 2020
Reconciliation of Free Cash Flow
For the Three Months Ended August 2, 2020, and August 4, 2019
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CULP Announces Results and Strengthened Liquidity for First Quarter Fiscal 2021
Page 10
September 2, 2020
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED AUGUST 2, 2020, AND AUGUST 4, 2019
Unaudited
(Amounts in thousands)
|
|
|
|
|
THREE MONTHS ENDED |
|
||||||||||||||||||
|
|
|
|
|
Amounts |
|
|
|
|
|
|
Percent of Total Sales |
|
|||||||||||
|
|
|
|
|
August 2, |
|
|
|
August 4, |
|
|
% Over |
|
|
August 2, |
|
|
August 4, |
|
|||||
|
Net Sales by Segment |
|
|
|
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 |
% |
|
Net Sales |
|
|
|
$ |
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
by Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income 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 |
)% |
|
|
|
|
|
|
|
|
CULP Announces Results and Strengthened Liquidity for First Quarter Fiscal 2021
Page 11
September 2, 2020
RECONCILIATION OF SELECTED INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS
FOR THE THREE MONTHS ENDED AUGUST 2, 2020, AND AUGUST 4, 2019
|
|
|
THREE MONTHS ENDED (UNAUDITED) |
|
|||||||||||||||||||||
|
|
|
As |
|
|
|
|
|
|
August 2, |
|
|
As |
|
|
|
|
|
|
August 4, |
|
||||
|
|
|
Reported |
|
|
|
|
|
|
2020 |
|
|
Reported |
|
|
|
|
|
|
2019 |
|
||||
|
|
|
August 2, |
|
|
|
|
|
|
Adjusted |
|
|
August 4, |
|
|
|
|
|
|
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 $3.7 million adjustment represents a $7.2 million non-cash income tax charge to record a full valuation allowance against the company’s U.S. net deferred income tax assets, partially offset by a $3.5 million non-cash income tax benefit resulting from the re-establishment of certain U.S. Federal net operating loss carryforwards in connection with U.S. Treasury regulations enacted during our first quarter regarding Global Intangible Low Taxed Income (“GILTI”) tax provisions of the Tax Cuts and Jobs Act of 2017. |
|
(2) |
The $229,000 adjustment represents our estimated GILTI tax incurred through our first quarter of fiscal 2020. |
CULP Announces Results and Strengthened Liquidity for First Quarter Fiscal 2021
Page 12
September 2, 2020
CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA
FOR THE TWELVE MONTHS ENDED AUGUST 2, 2020, AND AUGUST 4, 2019
Unaudited
(Amounts in Thousands)
|
|
|
Quarter Ended |
|
|
Quarter Ended |
|
|
Quarter Ended |
|
|
Quarter Ended |
|
|
Trailing 12 Months |
|
|||||
|
|
|
November 3, |
|
|
February 2, |
|
|
May 3, |
|
|
August 2, |
|
|
August 2, |
|
|||||
|
|
|
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 |
|
|
% Net Sales |
|
|
9.5 |
% |
|
|
6.9 |
% |
|
|
(6.2 |
)% |
|
|
5.7 |
% |
|
|
4.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
Quarter Ended |
|
|
Quarter Ended |
|
|
Quarter Ended |
|
|
Trailing 12 Months |
|
|||||
|
|
|
October 28, |
|
|
January 27 |
|
|
April 28, |
|
|
August 4, |
|
|
August 4, |
|
|||||
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Net Sales |
|
|
8.3 |
% |
|
|
10.5 |
% |
|
|
6.2 |
% |
|
|
7.4 |
% |
|
|
8.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Over (Under) |
|
|
11.0 |
% |
|
|
(38.8 |
)% |
|
|
(171.2 |
)% |
|
|
(30.6 |
)% |
|
|
(47.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-END-