0000723603false00007236032023-06-282023-06-28

 

 

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): June 28, 2023

 

 

Culp, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

North Carolina			1-12597	56-1001967
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
1823 Eastchester Drive
High Point, North Carolina				27265
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 336 889-5161

 

(Former Name or Former Address, if Changed Since 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:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐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:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.05 per share		CULP		The 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 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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. ☐

 

 

 

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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, projections, or trends for our future operations, strategic initiatives and plans, production levels, new product launches, sales, profit margins, profitability, operating income, capital expenditures, working capital levels, cost savings, 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 dividends, share repurchases, liquidity, uses of cash and cash requirements, borrowing capacity, investments, potential acquisitions, future economic or industry trends, public health epidemics, or future developments. There can be no assurance that we will realize these expectations or meet our 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, including changes in U.S. trade enforcement priorities, 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 or 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 asset impairments, including impairments of property, plant, and equipment, inventory, or intanbile assets, as well as the impact of valuation allowances applied against our net deferred income tax assets, could affect our financial results. Increases in freight costs, labor costs, and raw material prices, including increases in market prices for petrochemical products, can also significantly affect the prices we pay for shipping, labor, and raw materials, respectively, and in turn, increase our operating costs and decrease our profitability. Finally, disruption in our customers’ supply chains for non-fabric components may cause declines in new orders and/or delayed shipping of existing orders while our customers wait for other components, which could adversely affect our financial results. 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 most recent Form 10-K and Form 10-Q 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. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations and financial results.

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Item 2.02 – Results of Operations and Financial Condition

On June 28, 2023, we issued a news release to announce our financial results for our fourth quarter and fiscal year ended April 30, 2023. A copy of the news release is attached hereto as Exhibit 99.1.

The information set forth in this Item 2.02 of this Current Report, and in Exhibit 99.1, 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.

The news release contains adjusted income statement information for the three-month and twelve-month periods ending April 30, 2023, which discloses adjusted loss from operations, a non-GAAP performance measure that eliminates items which are not expected to occur on a recurring or regular basis. These include, for the periods presented, restructuring expense associated with the consolidation of certain leased facilities located in Ouanaminthe, Haiti, during the third and fourth quarters of fiscal 2023, as well as restructuring expense and restructuring-related charges associated with the exit of the company's cut and sew upholstery fabrics operation located in Shanghai, China, during the second quarter of fiscal 2023. The company has included this adjusted information in order to show operational performance excluding the effects of items not expected to occur on a recurring or 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. Management uses adjusted income statement information in evaluating the financial performance of our overall operations and business segments. We note, however, that this adjusted income statement information should not be viewed in isolation or as a substitute for loss from operations calculated in accordance with GAAP.

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 and payments on vendor-financed capital expenditures, plus any proceeds from sale of property, plant, and equipment, plus proceeds from note receivable, 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 foreign currency exchange rate changes on cash and cash equivalents, in each case to the extent any such amount is incurred during the period presented. 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, additions to cash and investments, or other corporate purposes. 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 possible 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 income tax expense (benefit), net interest income, and restructuring expense and restructuring related charges, as well as depreciation and amortization expense, and stock-based compensation expense. This measure also excludes other non-recurring charges and credits associated with our business, if and to the extent any such amount is incurred during the period presented. 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 upon capital structure and debt level, tax

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provisions, and non-cash items such as depreciation, amortization and stock-based compensation expense that do not require immediate uses of cash.

The news release contains disclosures about return on capital for both the entire company and for individual business segments. We define return on capital as adjusted operating income (loss) (measured on a trailing twelve-month basis) divided by average capital employed (excluding intangible assets related to acquisitions at the divisional level only). Adjusted operating income (loss) excludes certain charges or credits that are not expected to occur on a recurring or regular basis, if applicable for the period presented. Average capital employed is calculated over rolling five fiscal periods, depending on which quarter is being presented. Details of these calculations and a reconciliation to information from our GAAP financial statements are set forth in the news release. We believe return on capital is an accepted measure of earnings efficiency in relation to capital employed, but it is a non-GAAP performance measure that is not defined or calculated in the same manner by all companies. This measure should not be considered in isolation or as an alternative to net income or other performance measures, but we believe it provides useful information to investors by comparing the adjusted operating income we produce to the net asset base used to generate that income. Also, adjusted operating income on a trailing twelve-months basis does not necessarily indicate results that would be expected for the full fiscal year or for the following twelve months. We note that, particularly for return on capital measured at the segment level, not all assets and expenses are allocated to our operating segments, and there are assets and expenses at the corporate (unallocated) level that may provide support to a segment’s operations and yet are not included in the assets and expenses used to calculate that segment’s return on capital. Thus, the average return on capital for the company’s segments will generally be different from the company’s overall return on capital. Management uses return on capital to evaluate the company’s earnings efficiency and the relative performance of its segments.

Item 9.01 (d) – Exhibits

 

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EXHIBIT INDEX

 

Exhibit Number		Exhibit
99.1		News Release dated June 28, 2023
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

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, hereunto duly authorized.

 

		CULP, INC. (Registrant)
		By:	/s/ Kenneth R. Bowling
			Chief Financial Officer
			(principal financial officer)
		By:	/s/ Thomas B. Gallagher, Jr.
			Vice President of Finance
			(principal accounting officer)

 

 

Dated: June 28, 2023

 

 

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Exhibit 99.1

 

 

 

 

 

Investor Contact:		Kenneth R. Bowling		Media Contact:		Teresa A. Huffman
		Chief Financial Officer				Chief Human Resources Officer
		336-881-5630				336-889-5161

 

 

CULP ANNOUNCES RESULTS FOR FOURTH QUARTER AND FISCAL 2023, ENDS YEAR

WITH QUARTERLY SALES AND OPERATING IMPROVEMENT AND HIGHER CASH POSITION

 

 

HIGH POINT, N.C. (June 28, 2023) ─ Culp, Inc. (NYSE: CULP) (together with its consolidated subsidiaries, “CULP”) today reported financial and operating results for the fourth quarter and fiscal year ended April 30, 2023.

 

Fiscal 2023 Fourth Quarter Financial Summary

 

 

Fiscal 2023 Full Year Financial Summary

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

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June 28, 2023

 

Financial Outlook

 

Commenting on the results, Iv Culp, president and chief executive officer of Culp, Inc., said, “Our sales and operating results for the fourth quarter were better than expected, with solid improvement despite ongoing demand softness in the domestic mattress and residential home furnishings industries. The strong sequential improvement in our mattress fabrics segment was driven primarily by the roll out of new customer programs during the period, which were priced in line with current costs and are expected to grow this segment's market position in fiscal 2024. The mattress fabrics business also began to benefit from some improvement in operational efficiencies and cost reduction initiatives across our locations. For the upholstery fabrics segment, demand remained solid in our hospitality/contract business, and our residential fabrics business improved due to a seasonal pick up following third-quarter shutdowns for the Chinese New Year holiday, as well as a non-recurring payment relating to newly negotiated terms with a customer.

 

"We are especially pleased with our continued focus on cash generation and working capital management, including inventory reductions, throughout the quarter. We ended the year with a higher cash position than the prior year, with $21.0 million in cash and no outstanding borrowings. We also generated cash flow from operations of $7.8 million and free cash flow of $6.9 million for fiscal 2023, a significant improvement compared to the prior fiscal year.

 

"We continue to diligently manage the aspects of our business we can control, taking necessary steps to withstand current market challenges and position our business for renewed growth. In our mattress fabrics segment, we are executing on our comprehensive business transformation plan, laying the foundation for steady, sequential improvement in this business with new leadership and a restructured management team. While the pace of this improvement could be affected by recovery in the overall macroeconomic environment, we believe we are gaining market share with new program rollouts, and we are optimistic about additional program launches expected during calendar 2023. In our upholstery fabrics segment, the residential home furnishings industry remains under pressure due to shifting consumer spending trends and inflation affecting overall consumer spending. However, for fiscal 2024, we expect to benefit from improved inventory management, a solid hospitality/contract fabric business, improvement in our Read Window business, and a rationalized cut and sew platform.

 

"Fiscal 2023 was a difficult year, but we navigated the challenges and maintained our balance sheet strength. Our strong balance sheet allows us to focus on investing in our global manufacturing platform and growing profitable sales. We are especially thankful for the hard work and perseverance of our associates around the world in executing our product-driven strategy and meeting the needs of our customers this year. While we expect demand softness in the mattress and residential home furnishings industries will continue, our market position is strong, and we are diligently focused on achieving sustainable improvement and returning to profitability in fiscal 2024. We are well positioned for the long term, and our innovative product offerings, creative designs, and global manufacturing and sourcing platform will support us into the future, especially when market conditions improve,” added Culp.

 

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

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June 28, 2023

 

 

Segment Update

 

Mattress Fabrics Segment (“CHF”) Summary

 

 

 

 

 

Upholstery Fabrics Segment (“CUF”) Summary

 

 

 

 

 

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

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June 28, 2023

 

Balance Sheet and Cash Flow

 

 

 

 

 

Dividends and Share Repurchases

 

To preserve liquidity and support future growth opportunities, the company’s Board of Directors suspended the company’s quarterly cash dividend on its common stock in June of 2022.

 

The company did not repurchase any shares during fiscal 2023, leaving approximately $3.2 million available under the current share repurchase program as of April 30, 2023. Despite the current share repurchase authorization, the company does not expect to repurchase any shares during the first quarter of fiscal 2024.

 

Conference Call

 

Culp, Inc. will hold a conference call to discuss financial results for the fourth quarter and fiscal 2023 year on June 29, 2023, at 11:00 a.m. Eastern Time. A live webcast of this call can be accessed on the “Upcoming Events” section on the investor relations page of the company’s website, www.culp.com. A replay of the webcast will be available for 30 days under the “Past Events” section on the investor relations page of the company’s website, beginning at 2:00 p.m. Eastern Time on June 29, 2023.

 

About the Company

 

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 manufacturing and sourcing capabilities located in the United States, Canada, China, Haiti, Turkey, and Vietnam.

 

Forward Looking Statements

 

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

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June 28, 2023

 

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, projections, or trends for our future operations, strategic initiatives and plans, production levels, new product launches, sales, profit margins, profitability, operating income, capital expenditures, working capital levels, cost savings, 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 dividends, share repurchases, liquidity, use of cash and cash requirements, borrowing capacity, investments, potential acquisitions, future economic or industry trends, public health epidemics, or future developments. There can be no assurance that we will realize these expectations or meet our 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, including changes in U.S. trade enforcement priorities, 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 or 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 asset impairments, including impairments of property, plant, and equipment, inventory, or intangible assets, as well as the impact of valuation allowances applied against our net deferred income tax assets, could affect our financial results. Increases in freight costs, labor costs, and raw material prices, including increases in market prices for petrochemical products, can also significantly affect the prices we pay for shipping, labor, and raw materials, respectively, and in turn, increase our operating costs and decrease our profitability. Finally, disruption in our customers’ supply chains for non-fabric components may cause declines in new orders and/or delayed shipping of existing orders while our customers wait for other components, which could adversely affect our financial results. 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 most recent Form 10-K and Form 10-Q 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. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations and financial results.

 

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

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June 28, 2023

 

CULP, INC.

CONSOLIDATED STATEMENTS OF NET LOSS

FOR THREE MONTHS ENDED APRIL 30, 2023, AND MAY 1, 2022

Unaudited

(Amounts in Thousands, Except for Per Share Data)

 

		THREE MONTHS ENDED
		Amount												Percent of Sales
		(3)
		April 30,				May 1,				% Over				April 30,				May 1,
		2023				2022				(Under)				2023				2022
Net sales		$	61,426			$	56,940				7.9	%			100.0	%			100.0	%
Cost of sales			(54,538	)			(53,183	)			2.5	%			88.8	%			93.4	%
Gross profit			6,888				3,757				83.3	%			11.2	%			6.6	%
Selling, general and administrative    expenses			(10,845	)			(9,140	)			18.7	%			17.7	%			16.1	%
Restructuring expense (2) (3)			(70	)			—				100.0	%			0.1	%			—
Loss from operations			(4,027	)			(5,383	)			(25.2	)%			(6.6	)%			(9.5	)%
Interest expense			—				(17	)			(100.0	)%			—				(0.0	)%
Interest income			239				26				819.2	%			0.4	%			0.0	%
Other expense			(95	)			(396	)			(76.0	)%			(0.2	)%			0.7	%
Loss before income taxes			(3,883	)			(5,770	)			(32.7	)%			(6.3	)%			(10.1	)%
Income tax expense (1)			(798	)			(253	)			215.4	%			(20.6	)%			(4.4	)%
Net loss		$	(4,681	)		$	(6,023	)			(22.3	)%			(7.6	)%			(10.6	)%
Net loss per share - basic		$	(0.38	)		$	(0.49	)			(22.9	)%
Net loss per share - diluted		$	(0.38	)		$	(0.49	)			(22.9	)%
Average shares outstanding-basic			12,316				12,222				0.8	%
Average shares outstanding-diluted			12,316				12,222				0.8	%

Notes

 

(1) Percent of sales column for income tax expense is calculated as a % of loss before income taxes.

 

(2) Restructuring expense of $70,000 for the three-months ending April 30, 2023, represents employee termination benefits of $39,000 and other associated costs of $31,000 that related to the consolidation of certain leased facilities located in Ouanaminthe, Haiti.

 

(3) See page 13 for our Reconciliation of Selected Income Statement Information to Adjusted Results for the three-months ending April 30, 2023.

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

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June 28, 2023

 

CULP, INC.

CONSOLIDATED STATEMENTS OF NET LOSS

FOR TWELVE MONTHS ENDED APRIL 30, 2023, AND MAY 1, 2022

Unaudited

(Amounts in Thousands, Except for Per Share Data)

 

		TWELVE MONTHS ENDED
		Amount												Percent of Sales
		(4)
		April 30,				May 1,				% Over				April 30,				May 1,
		2023				2022				(Under)				2023				2022
Net sales		$	234,934			$	294,839				(20.3	)%			100.0	%			100.0	%
Cost of sales (2)			(224,038	)			(258,746	)			(13.4	)%			95.4	%			87.8	%
Gross profit			10,896				36,093				(69.8	)%			4.6	%			12.2	%
Selling, general and administrative    expenses			(37,978	)			(35,415	)			7.2	%			16.2	%			12.0	%
Restructuring expense (3) (4)			(1,396	)			—				100.0	%			0.6	%			—
(Loss) income from operations			(28,478	)			678			N.M.					(12.1	)%			0.2	%
Interest expense			—				(17	)			(100.0	)%			—				(0.0	)%
Interest income			531				373				42.4	%			0.2	%			0.1	%
Other expense			(443	)			(1,359	)			(67.4	)%			0.2	%			0.5	%
Loss before income taxes			(28,390	)			(325	)		N.M.					(12.1	)%			(0.1	)%
Income tax expense (1)			(3,130	)			(2,886	)			8.5	%			(11.0	)%			(888.0	)%
Net loss		$	(31,520	)		$	(3,211	)		N.M.					(13.4	)%			(1.1	)%
Net loss per share - basic		$	(2.57	)		$	(0.26	)		N.M.
Net loss per share - diluted		$	(2.57	)		$	(0.26	)		N..M
Average shares outstanding-basic			12,283				12,242				0.3	%
Average shares outstanding-diluted			12,283				12,242				0.3	%

 

Notes

 

(1) Percent of sales column for income tax expense is calculated as a % of loss before income taxes.

 

(2) Cost of sales for the twelve-months ending April 30, 2023, includes restructuring related charges totaling $98,000 which pertained to a loss on disposal and markdowns of inventory related to the exit of our cut and sew upholstery fabrics operation located in Shanghai, China that occurred during the second quarter of fiscal 2023.

 

(3) Restructuring expense of $1.4 million for the twelve-months ending April 30, 2023, relates to both our restructuring activities for our cut and sew upholstery fabrics operations located in Shanghai, China, which occurred during the second quarter of fiscal 2023, and located in Ouanaminthe, Haiti, which occurred during the third and fourth quarters of fiscal 2023. Restructuring expense represents employee termination benefits of $507,000, lease termination costs of $481,000, impairment losses totaling $357,000 that relate to leasehold improvements and equipment, and $51,000 for other associated costs.

 

(4) See page 14 for our Reconciliation of Selected Income Statement Information to Adjusted Results for the twelve-months ending April 30, 2023.

 

 

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

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June 28, 2023

 

CONSOLIDATED BALANCE SHEETS

APRIL 30 2023 AND MAY 1, 2022

Unaudited

(Amounts in Thousands)

		Amounts
		(Condensed)				(Condensed)
		April 30,				* May 1,				Increase (Decrease)
		2023				2022				Dollars				Percent
Current assets
Cash and cash equivalents		$	20,964				14,550				6,414				44.1	%
Short-term investments - Rabbi Trust			1,404				—				1,404				100.0	%
Accounts receivable			24,778				22,226				2,552				11.5	%
Inventories			45,080				66,557				(21,477	)			(32.3	)%
Note receivable			219				—				219				100.0	%
Current income taxes receivable			—				857				(857	)			(100.0	)%
Other current assets			3,071				2,986				85				2.8	%
Total current assets			95,516				107,176				(11,660	)			(10.9	)%
Property, plant & equipment, net			36,111				41,702				(5,591	)			(13.4	)%
Right of use assets			8,191				15,577				(7,386	)			(47.4	)%
Intangible assets			2,252				2,628				(376	)			(14.3	)%
Long-term investments - Rabbi Trust			7,067				9,357				(2,290	)			(24.5	)%
Note receivable			1,726				—				1,726				100.0	%
Deferred income taxes			480				528				(48	)			(9.1	)%
Other assets			840				595				245				41.2	%
Total assets		$	152,183				177,563				(25,380	)			(14.3	)%
Current liabilities
Accounts payable - trade		$	29,442				20,099				9,343				46.5	%
Accounts payable - capital expenditures			56				473				(417	)			(88.2	)%
Operating lease liability - current			2,640				3,219				(579	)			(18.0	)%
Deferred compensation			1,404				—				1,404				100.0	%
Deferred revenue			1,192				520				672				129.2	%
Accrued expenses			8,533				7,832				701				9.0	%
Income taxes payable - current			753				413				340				82.3	%
Total current liabilities			44,020				32,556				11,464				35.2	%
Operating lease liability - long-term			3,612				7,062				(3,450	)			(48.9	)%
Income taxes payable - long-term			2,675				3,097				(422	)			(13.6	)%
Deferred income taxes			5,954				6,004				(50	)			(0.8	)%
Deferred compensation			6,842				9,343				(2,501	)			(26.8	)%
Total liabilities			63,103				58,062				5,041				8.7	%
Shareholders' equity			89,080				119,501				(30,421	)			(25.5	)%
Total liabilities and shareholders'    equity		$	152,183				177,563				(25,380	)			(14.3	)%
Shares outstanding			12,327				12,229				98				0.8	%

* Derived from audited financial statements.

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

Page 9

June 28, 2023

 

CULP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE TWELVE MONTHS ENDED APRIL 30, 2023, AND MAY 1, 2022

Unaudited

(Amounts in Thousands)

 

		TWELVE MONTHS ENDED
		Amounts
		April 30,				May 1,
		2023				2022
Cash flows from operating activities:
Net loss		$	(31,520	)		$	(3,211	)
Adjustments to reconcile net loss to net cash provided by    (used in) operating activities:
Depreciation			6,845				6,994
Non-cash inventory charges (2) (3)			5,819				1,927
Amortization			438				559
Stock-based compensation			1,145				1,133
Deferred income taxes			(2	)			691
Realized loss from the sale of investments			—				450
Gain on sale of equipment			(314	)			—
Non-cash restructuring expense			791				—
Foreign currency exchange (gain) loss			(537	)			16
Changes in assets and liabilities:
Accounts receivable			(2,642	)			15,416
Inventories			15,370				(12,714	)
Other current assets			(297	)			946
Other assets			86				(1,386	)
Accounts payable			10,274				(22,131	)
Deferred revenue			672				(20	)
Accrued expenses and deferred compensation			853				(5,204	)
Income taxes			823				(907	)
Net cash provided by (used in) operating activities			7,804				(17,441	)
Cash flows from investing activities:
Capital expenditures			(2,108	)			(5,695	)
Proceeds from the sale of equipment			468				—
Proceeds from note receivable			15				—
Proceeds from the sale and maturity of investments (Held to Maturity)			—				13,486
Purchase of investments (Held to Maturity)			—				(9,751	)
Purchase of short-term investments (Available for Sale)			—				(4,391	)
Proceeds from the sale of short-term investments (Available for Sale)			—				9,879
Proceeds from the sale of long-term investments (rabbi trust)			2,058				56
Purchase of long-term investments (rabbi trust)			(1,185	)			(1,088	)
Net cash (used in) provided by investing activities			(752	)			2,496
Cash flows from financing activities:
Payments associated with lines of credit			—				(9,000	)
Proceeds associated with lines of credit			—				9,000
Dividends paid			—				(5,511	)
Common stock repurchased			—				(1,752	)
Common stock surrendered for withholding taxes payable			(33	)			(50	)
Payments of debt issuance costs			(403	)			(110	)
Net cash used in financing activities			(436	)			(7,423	)
Effect of exchange rate changes on cash and cash equivalents			(202	)			(91	)
Increase (decrease) in cash and cash equivalents			6,414				(22,459	)
Cash and cash equivalents at beginning of year			14,550				37,009
Cash and cash equivalents at end of year		$	20,964			$	14,550
Free Cash Flow (1)		$	6,850			$	(24,259	)

 

(1) See next page for Reconciliation of Free Cash Flow for the twelve-month periods ending April 30, 2023, and May 1, 2022, respectively.

 

(2) The non-cash inventory charge of $5.8 million for the twelve-months ending April 30, 2023, represents a $2.9 million impairment charge associated with our mattress fabrics segment, $2.8 million related to markdowns of inventory estimated based on our policy for aged inventory, and $98,000 for the loss on disposal and markdowns of inventory related to the exit of our cut and sew upholstery fabrics operation located in Shanghai, China.

 

(3) The non-cash inventory charge of $1.9 million for the twelve-months ending May 1, 2022, represents markdowns of inventory estimated based on our policy for aged inventory.

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

Page 10

June 28, 2023

 

 

Reconciliation of Free Cash Flow:

 

		FY 2023				FY 2022
A) Net cash provided by (used in) operating activities		$	7,804			$	(17,441	)
B) Minus: Capital Expenditures			(2,108	)			(5,695	)
C) Plus: Proceeds from the sale of equipment			468				—
D) Plus: Proceeds from note receivable			15				—
E) Plus: Proceeds from the sale of long-term investments (rabbi trust)			2,058				56
F) Minus: Purchase of long-term investments (rabbi trust)			(1,185	)			(1,088	)
G) Effects of exchange rate changes on cash and cash equivalents			(202	)			(91	)
Free Cash Flow		$	6,850			$	(24,259	)

 

 

 

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

Page 11

June 28, 2023

 

CULP, INC.

STATEMENTS OF OPERATIONS BY SEGMENT

FOR THE THREE MONTHS ENDED APRIL 30, 2023, AND MAY 1, 2022

Unaudited

(Amounts in Thousands)

		THREE MONTHS ENDED
		Amounts												Percent of Total Sales
		April 30,				May 1,				% Over				April 30,				May 1,
Net Sales by Segment		2023				2022				(Under)				2023				2022
Mattress Fabrics		$	30,696			$	29,779				3.1	%			50.0	%			52.3	%
Upholstery Fabrics			30,730				27,161				13.1	%			50.0	%			47.7	%
Net Sales		$	61,426			$	56,940				7.9	%			100.0	%			100.0	%
Gross Profit														Gross Margin
Mattress Fabrics		$	591			$	355				66.5	%			1.9	%			1.2	%
Upholstery Fabrics			6,297				3,402				85.1	%			20.5	%			12.5	%
Gross Profit		$	6,888			$	3,757				83.3	%			11.2	%			6.6	%
Selling, General and Administrative    Expenses by Segment														Percent of Sales
Mattress Fabrics		$	3,121			$	3,255				(4.1	)%			10.2	%			10.9	%
Upholstery Fabrics			4,686				3,519				33.2	%			15.2	%			13.0	%
Unallocated Corporate expenses			3,038				2,366				28.4	%			4.9	%			4.2	%
Selling, General and Administrative    Expenses		$	10,845			$	9,140				18.7	%			17.7	%			16.1	%
(Loss) Income from Operations    by Segment														Operating Margin
Mattress Fabrics		$	(2,530	)		$	(2,901	)			(12.8	)%			(8.2	)%			(9.7	)%
Upholstery Fabrics			1,611				(116	)		N.M.					5.2	%			(0.4	)%
Unallocated corporate expenses			(3,038	)			(2,366	)			28.4	%			(4.9	)%			(4.2	)%
Total Segment Loss from Operations			(3,957	)			(5,383	)			(26.5	)%			(6.4	)%			(9.5	)%
Restructuring Expense (1)			(70	)			—				100.0	%			(0.1	)%			—
Loss from Operations		$	(4,027	)		$	(5,383	)			(25.2	)%			(6.6	)%			(9.5	)%
Depreciation Expense by Segment
Mattress Fabrics		$	1,426			$	1,587				(10.1	)%
Upholstery Fabrics			193				204				(5.4	)%
Depreciation Expense		$	1,619			$	1,791				(9.6	)%

 

 

Notes

 

(1) See page 13 for our Reconciliation of Selected Income Statement Information to Adjusted Results for the three-months ending April 30, 2023.

 

 

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

Page 12

June 28, 2023

 

CULP, INC.

STATEMENTS OF OPERATIONS BY SEGMENT

FOR THE TWELVE MONTHS ENDED APRIL 30, 2023, AND MAY 1, 2022

Unaudited

(Amounts in Thousands)

		TWELVE MONTHS ENDED
		Amounts												Percent of Total Sales
		April 30,				May 1,				% Over				April 30,				May 1,
Net Sales by Segment		2023				2022				(Under)				2023				2022
Mattress Fabrics		$	110,995			$	152,159				(27.1	)%			47.2	%			51.6	%
Upholstery Fabrics			123,939				142,680				(13.1	)%			52.8	%			48.4	%
Net Sales		$	234,934			$	294,839				(20.3	)%			100.0	%			100.0	%
Gross (Loss) Profit														Gross Profit Margin
Mattress Fabrics		$	(6,739	)		$	16,458				(140.9	)%			(6.1	)%			10.8	%
Upholstery Fabrics			17,733				19,635				(9.7	)%			14.3	%			13.8	%
Total Segment Gross Profit			10,994				36,093				(69.5	)%			4.7	%			12.2	%
Restructuring Related Charge (3)			(98	)			—				100.0	%			(0.0	)%			—
Gross Profit		$	10,896			$	36,093				(69.8	)%			4.6	%			12.2	%
Selling, General and Administrative    Expenses by Segment														Percent of Sales
Mattress Fabrics		$	11,942			$	12,246				(2.5	)%			10.8	%			8.0	%
Upholstery Fabrics			15,739				14,009				12.3	%			12.7	%			9.8	%
Unallocated Corporate expenses			10,297				9,160				12.4	%			4.4	%			3.1	%
Selling, General and Administrative    Expenses		$	37,978			$	35,415				7.2	%			16.2	%			12.0	%
(Loss) Income from Operations    by Segment														Operating Margin
Mattress Fabrics		$	(18,681	)		$	4,212			N.M.					(16.8	)%			2.8	%
Upholstery Fabrics			1,994				5,626				(64.6	)%			1.6	%			3.9	%
Unallocated corporate expenses			(10,297	)			(9,160	)			12.4	%			(4.4	)%			(3.1	)%
Total Segment (Loss) Income from          Operations			(26,984	)			678			N.M.					(11.5	)%			0.2	%
Restructuring Expense (3)			(1,396	)			—				100.0	%			(0.6	)%			—
Restructuring Related Charge (3)			(98	)			—				100.0	%			(0.0	)%			—
(Loss) Income from Operations		$	(28,478	)			678			N.M.					(12.1	)%			0.2	%
Return on Capital (1)
Mattress Fabrics			(25.8	)%			5.3	%		N.M.
Upholstery Fabrics			11.2	%			29.7	%			(62.3	)%
Unallocated Corporate		N.M.				N.M.				N.M.
Consolidated			(28.7	)%			0.7	%		N.M.
Capital Employed (1) (2)
Mattress Fabrics		$	64,107			$	84,040				(23.7	)%
Upholstery Fabrics			9,489				25,209				(62.4	)%
Unallocated Corporate			3,197				3,817				(16.2	)%
Consolidated		$	76,793			$	113,066				(32.1	)%
Depreciation Expense by Segment
Mattress Fabrics		$	6,050			$	6,200				(2.4	)%
Upholstery Fabrics			795				794				0.1	%
Depreciation Expense		$	6,845			$	6,994				(2.1	)%

 

Notes

 

(1) See return on capital pages at the back of this presentation.

 

(2) The capital employed balances are as of April 30, 2023, and May 1, 2022, respectively.

 

(3) See page 14 for our Reconciliation of Selected Income Statement Information to Adjusted Results for the twelve-months ending April 30, 2023.

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

Page 13

June 28, 2023

 

CULP, INC.

RECONCILIATION OF SELECTED INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS

FOR THREE MONTHS ENDED APRIL 30, 2023

Unaudited

(Amounts in Thousands)

 

		As Reported								April 30, 2023
		April 30,								Adjusted
		2023				Adjustments				Results
Net sales		$	61,426				—			$	61,426
Cost of sales			(54,538	)			—				(54,538	)
Gross profit			6,888				—				6,888
Selling, general and administrative    expenses			(10,845	)			—				(10,845	)
Restructuring expense (1)			(70	)		70					—
Loss from operations		$	(4,027	)			70			$	(3,957	)

 

Notes

 

(1) Restructuring expense of $70,000 for the three-months ending April 30, 2023, represents employee termination benefits of $39,000 and other associated costs of $31,000 that related to the consolidation of certain leased facilities located in Ouanaminthe, Haiti.

 

 

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

Page 14

June 28, 2023

 

CULP, INC.

RECONCILIATION OF SELECTED INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS

FOR TWELVE MONTHS ENDED APRIL 30, 2023

Unaudited

(Amounts in Thousands)

 

		As Reported								April 30, 2023
		April 30,								Adjusted
		2023				Adjustments				Results
Net sales		$	234,934				—			$	234,934
Cost of sales (1)			(224,038	)		98					(223,940	)
Gross profit			10,896				98				10,994
Selling, general and administrative    expenses			(37,978	)			—				(37,978	)
Restructuring expense (2)			(1,396	)			1,396				—
Loss from operations		$	(28,478	)			1,494			$	(26,984	)

 

Notes

 

(1) Cost of sales for the twelve-months ending April 30, 2023, includes restructuring related charges totaling $98,000 which pertained to a loss on disposal and markdowns of inventory related to the exit of our cut and sew upholstery fabrics operation located in Shanghai, China that occurred during the second quarter of fiscal 2023.

 

(2) Restructuring expense of $1.4 million for the twelve-months ending April 30, 2023, relates to both our restructuring activities for our cut and sew upholstery fabrics operations located in Shanghai, China, which occurred during the second quarter of fiscal 2023, and located in Ouanaminthe, Haiti, which occurred during the third and fourth quarters of fiscal 2023. Restructuring expense represents employee termination benefits of $507,000, lease termination costs of $481,000, impairment losses totaling $357,000 that relate to leasehold improvements and equipment, and $51,000 for other associated costs.

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

Page 15

June 28, 2023

 

CULP, INC.

CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA

FOR THE TWELVE MONTHS ENDED APRIL 30, 2023, AND MAY 1, 2022

Unaudited

(Amounts in Thousands)

 

		Quarter Ended				Quarter Ended				Quarter Ended				Quarter Ended				Trailing 12 Months
		July 31,				October 30,				January 29,				April 30,				April 30,
		2022				2022				2023				2023				2023
Net loss (1)		$	(5,698	)		$	(12,173	)		$	(8,968	)		$	(4,681	)		$	(31,520	)
Income tax expense			896				1,150				286				798				3,130
Interest income, net			(17	)			(79	)			(196	)			(239	)			(531	)
Depreciation expense			1,768				1,719				1,739				1,619				6,845
Restructuring expense			—				615				711				70				1,396
Restructuring related charge			—				98				—				—				98
Amortization expense			105				109				109				115				438
Stock based compensation			252				313				322				258				1,145
Adjusted EBITDA (1)		$	(2,694	)		$	(8,248	)		$	(5,997	)		$	(2,060	)		$	(18,999	)
% Net Sales			(4.3	)%			(14.1	)%			(11.4	)%			(3.4	)%			(8.1	)%
		Quarter Ended				Quarter Ended				Quarter Ended				Quarter Ended				Trailing 12 Months
		August 1,				October 31,				January 30,				May 1,				May 1,
		2021				2021				2022				2022				2022
Net income (loss)		$	2,250			$	851			$	(289	)		$	(6,023	)		$	(3,211	)
Income tax expense			905				444				1,284				253				2,886
Interest income, net			(74	)			(59	)			(214	)			(9	)			(356	)
Depreciation expense			1,726				1,745				1,732				1,791				6,994
Amortization expense			121				146				150				142				559
Stock based compensation			274				435				171				253				1,133
Adjusted EBITDA		$	5,202			$	3,562			$	2,834			$	(3,593	)		$	8,005
% Net Sales			6.3	%			4.8	%			3.5	%			(6.3	)%			2.7	%
% Over (Under)			(151.8	)%			(331.6	)%			(311.6	)%			(42.7	)%			(337.3	)%

 

(1) Net loss and adjusted EBITDA for the quarter ended October 30, 2022, and the twelve month period ended April 30, 2023, includes a non-cash charge totaling $5.2 million, which represents a $2.9 million impairment charge associated with our mattress fabrics segment and $2.3 million related to markdowns of inventory estimated based on our policy for aged inventory.

 

 

 

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

Page 16

June 28, 2023

 

CULP, INC.

RETURN ON CAPITAL EMPLOYED BY SEGMENT

FOR THE TWELVE MONTHS ENDED APRIL 30, 2023

Unaudited

(Amounts in Thousands)

 

	Adjusted Operating     (Loss) Income
	Twelve Months Ended			Average Capital			Return on Avg. Capital
	April 30, 2023			Employed (2)			Employed (1)
Mattress Fabrics	$	(18,681	)	$	72,282			(25.8	)%
Upholstery Fabrics		1,994			17,853			11.2	%
Unallocated Corporate		(10,297	)		3,808		N.M.
Total	$	(26,984	)	$	93,943			(28.7	)%
Average Capital Employed	As of the three Months Ended April 30, 2023													As of the three Months Ended January 29, 2023													As of the three Months Ended October 30, 2022
	Mattress			Upholstery			Unallocated							Mattress			Upholstery			Unallocated							Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total				Fabrics			Fabrics			Corporate			Total				Fabrics			Fabrics			Corporate			Total
Total assets (3)	$	75,494			39,127			37,562			152,183			$	75,393			39,817			35,388			150,598			$	78,366			44,934			38,330			161,630
Total liabilities		(11,387	)		(29,638	)		(22,078	)		(63,103	)			(9,511	)		(24,367	)		(23,216	)		(57,094	)			(9,895	)		(26,108	)		(23,519	)		(59,522	)
Subtotal	$	64,107		$	9,489		$	15,484		$	89,080			$	65,882		$	15,450		$	12,172		$	93,504			$	68,471		$	18,826		$	14,811		$	102,108
Cash and cash equivalents		—			—			(20,964	)		(20,964	)			—			—			(16,725	)		(16,725	)			—			—			(19,137	)		(19,137	)
Short-term investments - Rabbi Trust		—			—			(1,404	)		(1,404	)			—			—			(2,420	)		(2,420	)			—			—			(2,237	)		(2,237	)
Current income taxes receivable		—			—			—			—				—			—			(238	)		(238	)			—			—			(510	)		(510	)
Long-term investments - Rabbi Trust		—			—			(7,067	)		(7,067	)			—			—			(7,725	)		(7,725	)			—			—			(7,526	)		(7,526	)
Deferred income taxes - non-current		—			—			(480	)		(480	)			—			—			(463	)		(463	)			—			—			(493	)		(493	)
Deferred compensation - current		—			—			1,404			1,404				—			—			2,420			2,420				—			—			2,237			2,237
Accrued restructuring		—			—			—			—				—			—			—			—				—			—			33			33
Income taxes payable - current		—			—			753			753				—			—			467			467				—			—			969			969
Income taxes payable - long-term		—			—			2,675			2,675				—			—			2,648			2,648				—			—			2,629			2,629
Deferred income taxes - non-current		—			—			5,954			5,954				—			—			6,089			6,089				—			—			5,700			5,700
Deferred compensation non-current		—			—			6,842			6,842				—			—			7,590			7,590				—			—			7,486			7,486
Total Capital Employed	$	64,107		$	9,489		$	3,197		$	76,793			$	65,882		$	15,450		$	3,815		$	85,147			$	68,471		$	18,826		$	3,962		$	91,259

 

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

Page 17

June 28, 2023

 

CULP, INC.

RETURN ON CAPITAL EMPLOYED BY SEGMENT - CONTINUED

FOR THE TWELVE MONTHS ENDED APRIL 30, 2023

Unaudited

(Amounts in Thousands)

 

	As of the three Months Ended July 31, 2022													As of the three Months Ended May 1, 2022
	Mattress			Upholstery			Unallocated							Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total				Fabrics			Fabrics			Corporate			Total
Total assets (3)	$	90,842			51,053			38,595			180,490			$	92,609			51,124			33,830			177,563
Total liabilities		(11,934	)		(30,762	)		(23,799	)		(66,495	)			(8,569	)		(25,915	)		(23,578	)		(58,062	)
Subtotal	$	78,908		$	20,291		$	14,796		$	113,995			$	84,040		$	25,209		$	10,252		$	119,501
Cash and cash equivalents		—			—			(18,874	)		(18,874	)			—			—			(14,550	)		(14,550	)
Current income taxes receivable		—			—			(798	)		(798	)			—			—			(857	)		(857	)
Long-term investments - Rabbi Trust		—			—			(9,567	)		(9,567	)			—			—			(9,357	)		(9,357	)
Deferred income taxes - non-current		—			—			(546	)		(546	)			—			—			(528	)		(528	)
Income taxes payable - current		—			—			587			587				—			—			413			413
Income taxes payable - long-term		—			—			3,118			3,118				—			—			3,097			3,097
Deferred income taxes - non-current		—			—			6,007			6,007				—			—			6,004			6,004
Deferred compensation		—			—			9,528			9,528				—			—			9,343			9,343
Total Capital Employed	$	78,908		$	20,291		$	4,251		$	103,450			$	84,040		$	25,209		$	3,817		$	113,066
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total
Average Capital Employed (2)	$	72,282		$	17,853		$	3,808		$	93,943

Notes

 

(1) Return on average capital employed represents the twelve months operating (loss) income as of April 30, 2023, divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term and long-term investments – Rabbi Trust, accrued restructuring, income taxes receivable and payable, noncurrent deferred income tax assets and liabilities, and current and non-current deferred compensation.

 

(2) Average capital employed was computed using the five quarterly periods ending April 30, 2023, January 29, 2023, October 30, 2022, July 31, 2022, and May 1, 2022.

 

(3) Intangible assets are included in unallocated corporate for all periods presented and therefore, have no effect on capital employed and return on capital employed for our mattress fabrics and upholstery fabrics segments.

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

Page 18

June 28, 2023

 

CULP INC.

RETURN ON CAPITAL EMPLOYED BY SEGMENT

FOR THE TWELVE MONTHS ENDED MAY 1, 2022

Unaudited

(Amounts in Thousands)

	Adjusted Operating  Income (Loss)
	Twelve Months Ended			Average  Capital			Return on Avg. Capital
	May 1, 2022			Employed (2)			Employed (1)
Mattress Fabrics	$	4,212		$	80,088			5.3	%
Upholstery Fabrics		5,626			18,911			29.7	%
Unallocated Corporate		(9,160	)		2,682		N.M.
Total	$	678		$	101,681			0.7	%
Average Capital Employed	As of the three Months Ended May 1, 2022													As of the three Months Ended January 30, 2022													As of the three Months Ended October 31, 2021
	Mattress			Upholstery			Unallocated							Mattress			Upholstery			Unallocated							Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total				Fabrics			Fabrics			Corporate			Total				Fabrics			Fabrics			Corporate			Total
Total assets (3)	$	92,609			51,124			33,830			177,563			$	103,370			67,272			40,925			211,567			$	97,390			55,862			56,073			209,325
Total liabilities		(8,569	)		(25,915	)		(23,578	)		(58,062	)			(16,540	)		(45,596	)		(22,697	)		(84,833	)			(18,818	)		(38,560	)		(23,493	)		(80,871	)
Subtotal	$	84,040		$	25,209		$	10,252		$	119,501			$	86,830		$	21,676		$	18,228		$	126,734			$	78,572		$	17,302		$	32,580		$	128,454
Cash and cash equivalents		—			—			(14,550	)		(14,550	)			—			—			(11,780	)		(11,780	)			—			—			(16,956	)		(16,956	)
Short-term investments -   Available-For-Sale		—			—			—			—				—			—			(438	)		(438	)			—			—			(9,709	)		(9,709	)
Short-term investments -   Held-To-Maturity		—			—			—			—				—			—			(1,315	)		(1,315	)			—			—			(1,564	)		(1,564	)
Current income taxes receivable		—			—			(857	)		(857	)			—			—			(367	)		(367	)			—			—			(613	)		(613	)
Long-term investments -   Held-To-Maturity		—			—			—			—				—			—			(8,677	)		(8,677	)			—			—			(8,353	)		(8,353	)
Long-term investments - Rabbi Trust		—			—			(9,357	)		(9,357	)			—			—			(9,223	)		(9,223	)			—			—			(9,036	)		(9,036	)
Deferred income taxes - non-current		—			—			(528	)		(528	)			—			—			(500	)		(500	)			—			—			(452	)		(452	)
Income taxes payable - current		—			—			413			413				—			—			240			240				—			—			646			646
Income taxes payable - long-term		—			—			3,097			3,097				—			—			3,099			3,099				—			—			3,099			3,099
Deferred income taxes - non-current		—			—			6,004			6,004				—			—			5,484			5,484				—			—			4,918			4,918
Deferred compensation		—			—			9,343			9,343				—			—			9,180			9,180				—			—			9,017			9,017
Total Capital Employed	$	84,040		$	25,209		$	3,817		$	113,066			$	86,830		$	21,676		$	3,931		$	112,437			$	78,572		$	17,302		$	3,577		$	99,451

 

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2023, Ends Year with Quarterly Sales and Operating Improvement and Higher Cash Position

Page 19

June 28, 2023

 

CULP INC.

RETURN ON CAPITAL EMPLOYED BY SEGMENT - CONTINUED

FOR THE TWELVE MONTHS ENDED MAY 1, 2022

Unaudited

(Amounts in Thousands)

 

	As of the three Months Ended August 1, 2021													As of the three Months Ended May 2, 2021
	Mattress			Upholstery			Unallocated							Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total				Fabrics			Fabrics			Corporate			Total
Total assets (3)	$	96,846			55,187			60,215			212,248			$	97,861			53,875			62,344			214,080
Total liabilities		(21,298	)		(39,983	)		(21,418	)		(82,699	)			(22,410	)		(38,709	)		(23,955	)		(85,074	)
Subtotal	$	75,548		$	15,204		$	38,797		$	129,549			$	75,451		$	15,166		$	38,389		$	129,006
Cash and cash equivalents		—			—			(26,061	)		(26,061	)			—			—			(37,009	)		(37,009	)
Short-term investments -    Available-For-Sale		—			—			(9,698	)		(9,698	)			—			—			(5,542	)		(5,542	)
Short-term investments -   Held-To-Maturity		—			—			(1,661	)		(1,661	)			—			—			(3,161	)		(3,161	)
Current income taxes receivable		—			—			(524	)		(524	)			—			—			—			—
Long-term investments -   Held-To-Maturity		—			—			(6,629	)		(6,629	)			—			—			(1,141	)		(1,141	)
Long-term investments - Rabbi Trust		—			—			(8,841	)		(8,841	)			—			—			(8,415	)		(8,415	)
Deferred income taxes - non-current		—			—			(455	)		(455	)			—			—			(545	)		(545	)
Income taxes payable - current		—			—			253			253				—			—			229			229
Income taxes payable - long-term		—			—			3,365			3,365				—			—			3,326			3,326
Deferred income taxes - non-current		—			—			4,917			4,917				—			—			5,330			5,330
Deferred compensation		—			—			8,795			8,795				—			—			8,365			8,365
Total Capital Employed	$	75,548		$	15,204		$	2,258		$	93,010			$	75,451		$	15,166		$	(174	)	$	90,443
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total
Average Capital Employed (2)	$	80,088		$	18,911		$	2,682		$	101,681

 

Notes

(1) Return on average capital employed represents the last twelve months operating income (loss) as of May 1, 2022, divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term investments Available-For-Sale, short-term and long-term investments Held-To-Maturity, long-term investments – Rabbi Trust, income taxes receivable and payable, noncurrent deferred income tax assets and liabilities, and deferred compensation.

(2) Average capital employed was computed using the five quarterly periods ending May 1, 2022, January 30, 2022, October 31, 2021, August 1, 2021, and May 2, 2021.

(3) Intangible assets and goodwill are included in unallocated corporate for all periods presented and therefore, have no effect on capital employed and return on capital employed for our mattress fabrics and upholstery fabrics segments.

 

 

-END-

 

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