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Culp fiscal year sales, profits up

HIGH POINT - Despite mixed results in the fourth quarter, fabric supplier Culp Inc. said its fiscal year ended April 28 was "one of the best years in the company's history" with sales up 5.6% and net income climbing 37.8%.
     In the fourth quarter, sales were down 7% to $70.4 million against a strong period a year ago but earnings rose 8.2% to $3.7 million. Mattress fabric sales for the quarter were down 6% to $40.8 million, while upholstery fabric sales declined 8.4% to $29.6 million.
     For the year, mattress segment sales grew 5.8% to $154 million and upholstery fabric was up 5.4% to $114.8 million.
     "(Company Chairman) Rob Culp and I are very pleased to report one of the best years in the company's history," President and CEO Frank Saxon said in a statement. He said pretax profits were up 43% to $20.3 million, the highest level since 1998.
     "Both of our businesses performed well. Notably, we improved our return on capital from 22% to 29%, the highest level since the company went public in 1983, and generated $13.1 million in free cash flow, up from $6.6 million for the previous year. Looking ahead, we expect another solid year of free cash flow in fiscal 2014."
     Saxon said much of the improvement stems from the company's progress in "product innovation and creativity.... We compete in a product and fashion-driven business that is always changing. As a result, our ability to sustain excellence in creating innovative fabrics season after season is a key driver to our long-term success."
     Culp also announced it was bumping up its quarterly dividend by one-third, to 4 cents per share for the first quarter of the current fiscal year.
     Iv Culp, president of the company's mattress fabrics division, said fiscal 2013 brought the highest sales in the division's history.
     "These results reflect our focus on product innovation and the ability to maximize the efficiencies and flexibility of our manufacturing platform," he said, adding that the high end mattress segment continues to show the strongest growth. Culp added that the company is making progress with its latest venture, Culp- Lava, producing and marketing mattress covers.
     Saxon said the upholstery fabric segment did well with new products in fiscal 2013 and also benefited from less volatility, with more stable raw materials prices and less currency fluctuation than in the previous year.
     About 90% of Culp's fabric sales come from its China plant, which he said is "100% owned and scalable."
     Looking ahead, Saxon said he expect sales in the current quarter in the range of 3% lower to 2% higher than a year ago, with pre-tax income expected to be in the $4.9 million to $5.6 million range, compared with $5.4 million a year earlier.

Culp Inc.

Earnings per share are fully diluted, and all figures in parentheses are losses or declines.

Quarter ended 4/28

2013
2012

Change

Sales

$70,375,000

$75,711,000

(7.0%)

Operating income

6,076,000

5,667,000

7.2%

Net income

3,702,000

3,423,000

8.2%

Earnings per share

0.30

0.27

11.1%

Year ended 4/28

2013

2012

Change

Sales

$268,814,000

$254,443,000

5.6%

Operating income

21,085,000

14,706,000

43.4%

Net income

18,317,000

13,296,000

37.8%

Earnings per share

1.47

1.03

42.7%

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