Culp 2Q sales fall, but pre-charge income jumps
By Furniture Today Staff -- Furniture Today, December 8, 2002
High Point — Fabric major Culp said its sales dropped 13.3% in its fiscal second quarter, but net income, excluding restructuring charges, nearly doubled to $2.3 million.
The company attributed the sales decline to continued weakness in the furniture and bedding industries, as well as its decision to reduce or eliminate less profitable products.
Sales for the quarter ended Oct. 27 totaled $83.6 million, down from $96.4 million in the comparable quarter a year ago. Net income of $2.3 million or 19 cents per share before the one-time charges was up from $1.2 million, or 11 cents per share, a year earlier.
"In an especially challenging business environment, these results clearly reflect the benefits of the actions we have taken to improve the efficiency of our operations," said Robert Culp III, chief executive officer.
He noted that the quarter's gross profit margin jumped 1.5 percentage points to 17.8%, and said the company had $35 million in cash at the end of the quarter, up from $25.1 million at the end of the first quarter.
Including restructuring charges, the company recorded a net loss of $6.6 million, or 57 cents per share. The one-time charges stemmed primarily from discontinuing its unprofitable printed flock business and the closing of a plant in Chattanooga, Tenn., announced earlier.
"We believe these (restructuring) actions will significantly improve gross margins while allowing us to continue to meet foreseeable customer demand, all on a substantially lower cost base," said Culp.
Culp said he's comfortable with analysts' earnings estimates of 11 cents to 15 cents per share for the third quarter, excluding restructuring and other one-time charges.
| Culp Inc. | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 10/27 | 2002 | 2001 | Change |
| (a) Includes a $13.4 million pretax restructuring charge in both periods and income tax benefits of $4.3 million in the 2002 quarter and $3.8 million in the 2002 six months. The 2002 six months also includes a $24.2 million extraordinary charge, the cumulative effect of an accounting change. (b) Based on average shares outstanding of 11.5 million in the 2002 quarter, 11.3 million in the 2001 quarter, 11.4 million in the 2002 six months and 11.2 million in the 2001 six months. |
|||
| Sales | $83,573,000 | $96,400,000 | (13.3% |
| Operating income | 4,262,000 | 3,992,000 | 6.8% |
| Net income(a) | (6,590,000) | 857,000 | — |
| Earnings per share (b) | (0.57) | 0.08 | — |
| 6 months ended 10/27 | 2002 | 2001 | Change |
| Sales | $169,461,000 | $182,863,000 | (7.3%) |
| Operating income | 7,679,000 | 3,546,000 | 116.6% |
| Net income | (a)(29,826,000) | (c)(2,025,000) | — |
| Earnings per share (b) | (2.61) | (0.18) | — |
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