Culp earnings jump 32% on 13% sales gain in quarter
Larry Thomas -- Furniture Today, November 28, 2012
HIGH POINT — Culp Inc., a supplier of upholstery fabric and mattress ticking, reported a double-digit sales increase for the quarter ended Oct. 28 as both of its business segments turned in strong performances.
Net income also increased sharply due to improved operating efficiencies.
Sales for the period - the second quarter of Culp's fiscal year - totaled $65.6 million. That's a 13% increase from $58 million in last year's second fiscal quarter.
The company said mattress ticking sales were up 12.6% to $39.7 million and upholstery fabric sales rose 13.6% to $25.9 million.
Net income totaled $8.27 million or 67 cents per share, up more than 32% from $6.25 million or 49 cents per share in the same quarter last year. The most recent quarter included an income tax benefit of $3.7 million, and last year's second fiscal quarter included a tax benefit of $3.4 million.
"We are pleased with our results for the second quarter, which built upon the sales momentum and product successes that we experienced during the first quarter," said Frank Saxon, president and CEO. "Demand trends have been reasonably solid in both businesses and we are encouraged by the continued favorable customer response to our exciting designs and wide range of innovative products."
Saxon said about 88% of upholstery fabric sales came from its China operations, but said its U.S. factory has been helped by improved demand for velvets and woven textured fabrics.
"Our U.S. operation has continued to gain traction with improved sales and profitability compared with this time last year," he said.
The company said its mattress ticking business is benefiting from growing consumer demand for better bedding, which in turn, boosts demand for higher-quality ticking.
"The mattress industry is continuing to evolve into a more decorative business, and many of our customers are upgrading their fabric choices to achieve a more fashionable look," said Iv Culp, president of the mattress fabrics division.
For the six months ended Oct. 28, companywide sales rose 13.9% to $134.7 million, while net income rose more than 46% to $11.8 million or 94 cents per share.
The most recent six months included a $1.9 million income tax benefit, while the same period the previous fiscal year included a $2.2 million tax benefit.
The company said it had no cash income tax expense in the U.S. during the most recent quarter, and does not expect to have any "for a number of years" because the company had about $60 million in net operating loss carryforwards at the beginning of the fiscal year that can be used to offset U.S. taxes.
The company also announced it will pay a special cash dividend of 50 cents per share in December, and will move up its regular quarterly dividend payment of 3 cents per share from January to December.
Both payments will be made Dec. 28 to stockholders of record on Dec. 19.