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Culp sales up 8.6%

By Gary Evans -- Furniture Today, March 2, 2008

High Point — Culp said sales for its third quarter ended Jan. 27 were up 8.6% from a year earlier to $60.5 million, powered by increases in sales of mattress ticking and non-U.S. produced upholstery fabric.

Net income was $903,000 or 7 cents per share for the quarter, compared with a net loss of $2.2 million or 19 cents per share in last year's fiscal third quarter.

Sales of mattress ticking jumped 27% to $30.9 million, reflecting Culp's acquisition of ITG's mattress fabrics business in January 2007. However, the company said the year-over-year sales gain in ticking was lower than in previous quarters since the acquisition because of the discontinuation of ITG products that didn't fit Culp's business model.

Mattress fabric sales represented 51% of the company's sales for the quarter, compared with 44% a year ago.

Upholstery fabric sales, including cut and sewn kits, were $29.6 million, down from $31.3 million in last year's third quarter. The company said total fabric yards sold declined by 12%, while average selling prices were about 5% higher than in third quarter 2007.

While sales of cut and sewn kits were up significantly over last year, the company said upholstery fabrics sales reflected a weak demand, affected by consumer preference for leather and suede furniture and other imported furniture and fabrics.

Sales of Culp fabrics made offshore were $20.2 million for the third quarter, up 17% over the prior year period, while sales of domestically produced fabrics were $9.4 million, down 33%.

"Culp's mattress fabrics business has continued to perform well throughout this fiscal year and has been a key driver in our growth," said Frank Saxon, CEO. "Over the past year, we have worked very hard to ensure the smooth integration of ITG's mattress fabrics business with minimal customer disruption. As a result, Culp has continued to enjoy excellent customer relationships and we have benefited from the additional sales volumes and more efficient production.

"As a final state of this integration process, we sold some excess inventory at reduced margins," Saxon added. "The results for the quarter were also affected by higher raw materials costs and increased Canadian operating costs due to the strengthening of the Canadian currency as compared with the same period last year. To offset these higher costs, we have implemented a price increase in our mattress fabrics segment, effective in March."

For the nine months ended Jan. 27, sales were up 7.2% from a year ago to $190 million. Net income was $3.3 million or 26 cents per share, compared with a loss of $1.3 million or 11 cents per share for the same period last year.

Excluding restructuring and related charges, net income for the first nine months of fiscal 2008 came to $5 million or 39 cents per diluted share, more than double the $2.1 million or 18 cents per diluted share posted a year earlier.

Culp Inc.
Earnings per share are fully diluted, and all figures in parentheses are losses or declines.
Quarter ended 1/27	2008	2007	Change
(a) Includes pretax restructuring expenses of $412,000 in the 2008 quarter, $1.3 million in the 2007 quarter, $759,000 in the 2008 nine months and $1.7 million in the 2007 nine months. Also includes income tax benefit of $260,000 in the 2008 quarter, $2.2 million in the 2007 quarter and $1.5 million in the 2007 nine months, and income tax expense of $105,000 in the 2008 nine months. (b) Based on average shares outstanding of 12.7 million in the 2008 quarter, 11.8 million in the 2007 quarter, 12.8 million in the 2008 nine months and 11.7 million in the 2007 nine months.
Sales	$60,482,000	$55,712,000	8.6%
Operating income	1,659,000	(1,683,000)	—
Net income (a)	903,000	(2,221,000)	—
Earnings per share (b)	0.07	(0.19)	—
9 months ended 1/27	2008	2007	Change
Sales	$190,048,000	$177,337,000	7.2%
Operating income	6,979,000	1,522,000	358.5%
Net income (a)	3,307,000	(1,276,000)	—
Earnings per share (b)	0.26	(0.11)	—

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Culp sales rise 8.6% in latest quarter

Feb 28, 2008

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