Fabric supplier Culp's sales climb 5.5% in fourth quarter
Earnings grow 10.3% to $6 million
Gary Evans -- Furniture Today, June 17, 2011
In addition, the company announced a program to buy back $5 million of its outstanding shares.
Sales for the company's mattress fabric segment were up 5.3% and the upholstery fabric segment was up 5.7%
Net income for the quarter rose to 10.3% to $6 million or 45 cents per share, from $5.4 million or 41 cents per share a year ago. The most recent quarter included a $1.3 million income tax benefit and the previous year's quarter included a $436,000 tax benefit.
The company said it finished its fiscal year with sales of $216.8 million, an increase of 5% over the prior year. Mattress fabric sales were up 6.6% while upholstery fabric was up 3.1%.
Net income was for the year was $16.2 million or $1.22 per diluted share, up from with $13.2 million. The latest year included a $1.1 million income tax benefit, while fiscal 2010 included income tax expense of $1.1 million.
The company said its financial position strengthened considerably during fiscal 2011 with cash and cash equivalents and short-term investments totaling $30.9 million at year end, exceeding total debt of $11.5 million. The company increased its total cash and short term investment position by $9.6 million during the year, while investing significantly in capital expenditures of $6.4 million and building working capital of $3.6 million to support higher sales.
"We are pleased with our fourth quarter performance, concluding a year of sound growth and progress for Culp," said CEO Frank Saxon. "These results are especially noteworthy in light of the economic headwinds and significant raw material cost and selling pressures we faced during the year."
While these factors contributed to slight decreases in operating margins for the year, Saxon said the company is encouraged that both mattress and upholstery fabrics divisions increased sales and contributed to higher pre-tax income for the company.
"Overall, our solid performance reflects the benefits of a lean and agile global operating platform and a strong competitive position in both businesses," he said.
The company said it expects to buy back about 5% of its 13.3 million shares outstanding in its repurchase program, which Saxon said is another sign of "the company's strong financial position and confidence of our long-term prospects."
Another highlight during the year was the launch of upholstery fabric sales through Culp Europe, a new sales and distribution subsidiary established in Poland.
Despite negative trends such as persistently high unemployment, a weak housing market and consumer credit and leverage concerns, Saxon said the company is encouraged by sales trends in both its segments especially bedding, and expects sales for the first quarter to be 1% to 5% higher than the previous year's quarter.