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Culp earns $5.4M in fiscal '08

By Gary Evans -- Furniture Today, June 22, 2008

HIGH POINT — Powered by strong mattress fabric sales, Culp Inc. said last week it closed out fiscal 2008 with a 1.4% gain in sales and reversed the previous year’s losses.

For the year ended April 27, the company reported sales of $254 million and net income was $5.4 million or 42 cents per share, compared with a loss of $1.3 million or 11 cents per share for fiscal 2007.

For the fourth quarter, the company said sales were down 12.6% from a year earlier to $64 million. Net income was $2.1 million or 16 cents per share versus a net loss of $40,000 in the 2007 quarter. Restructuring and related charges amounted to $186,000 after taxes in the 2008 quarter and $1.8 million in the 2007 period.

For the full year, sales of mattress fabrics were up 28% to $138.1 million and upholstery fabrics were down 19% to $116 million, the company said. Both mattress and upholstery sales were down in the fourth quarter, by 9% and 16% respectively.

President and CEO Frank Saxon said the uncertain economy, housing crisis and high energy costs “continued to influence consumer demand for furniture, and, to a lesser extent, bedding products. In spite of this environment, fiscal 2008 was an outstanding year for Culp, both in terms of our financial performance and the improvement in our competitive position.”

Other 2008 highlights:

Debt was reduced 48% to $21.4 million in fiscal 2008 from $40.8 million the previous year, reducing the debt-to-capital ratio to 20%.
The company successfully integrated the acquisition of ITG’s mattress fabrics business, adding about $35 million in sales with minimal additions to staffing and fixed assets.
Culp started a $5 million capital project to install mattress fabric weaving and finishing equipment, designed to provide more capacity for faster delivery and improved productivity.
The upholstery business remained profitable and generated significant cash flow in the face of challenging industry conditions.
The company successfully executed a multi-year restructuring of its upholstery fabrics business.

Saxon said the company expects its first quarter 2009 sales to be down about 10% to 15%. Mattress fabrics are projected to be off 3% to 7% — primarily due to the discontinuation of certain ITG products and softening demand — while upholstery fabric sales are likely to fall 20% to 25%, mainly because of lower sales of U.S.-made fabrics.

Net income in the quarter is expected to be 8 to 12 cents per share, excluding restructuring and related charges, he said.

Culp Inc.
Earnings per share are fully diluted, and all figures in parentheses are losses or declines.
(a) Includes pretax restructuring expense of $127,000 in the 2008 quarter, $1.8 million in the 2007 quarter, $886,000 in the 2008 year and $3.5 million in the 2007 year. Also includes income tax benefit of $647,000 in the 2008 quarter, $145,000 in the 2007 quarter, $542,000 in the 2008 year and $1.7 million in the 2007 year.
Quarter ended 4/27	2008	2007	Change
Sales	$63,998,000	$73,196,000	(12.6%)
Operating income	2,207,000	2,653,000	(16.8%)
Net income (a)	2,077,000	(40,000)	—
Earnings per share	0.16	0.00
Year ended 4/27	2008	2007	Change
Sales	$254,046,000	$250,533,000	1.4%
Operating income	9,186,000	4,175,000	120.0%
Net income (a)	5,385,000	(1,316,000)	—
Earnings per share	0.42	(0.11)	—

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