Culp sales run relatively flat in first quarter

BRIEFLY
Culp first quarter
Net sales $70.1 million
Mattress fabric sales $38.2 million
Upholstery fabric sales $32 million

Fabric supplier Culp Inc., based in High Point, N.C., reported that net sales for its fiscal 2014 first quarter ended July 28 were $70.1 million, up 1.4% over the first quarter of fiscal 2013.

Mattress fabric sales were relatively flat at $38.2 million, compared to $38 million in the prior-year quarter. Upholstery fabric sales were $32 million, up 2.4% over the same period a year ago.

Pretax income—the highest first-quarter level in company history, according to a Culp news release—was $5.5 million, up 3% compared to pretax income in the first quarter of 2013.

“We are pleased with our first-quarter performance, marking an excellent start to fiscal 2014,” said Frank Saxon, president and chief executive officer. “These results reflect strong operating performance in both of our businesses. We continue to experience favorable customer response to our designs and wide range of products and we are excited about the progress we are making in product innovation and creativity. These efforts, which are our top strategic priority, are making significant contributions to our sales and profit performance with an increasing percentage of our sales coming from recent product introductions.”

Culp’s consistent financial performance, higher cash flow and sound balance sheet have enabled it “to reward our shareholders with an increase in our quarterly cash dividend,” Saxon added. “Looking ahead, we continue to expect another strong year of free cash flow for fiscal 2014.”

Adjusted net income was $4.7 million, or $0.38 per diluted share, compared with adjusted new income of $4.3 million, or $0.34 per diluted share, in the prior-year period.

Net income was $3.2 million, or $0.26 per diluted share, compared with net income of $3.5 million, or $0.28 per diluted share, in the first fiscal quarter of 2013.

The company said its financial position remains strong with cash and cash equivalents and short-term investments of $27.6 million and total debt of $7.2 million. The company paid a cash dividend of $0.04 per share, representing a 33% increase in quarterly cash dividend payments versus the first quarter of fiscal 2013.

“Our mattress fabrics business had a solid performance for the first quarter of fiscal 2014,” said Iv Culp, president of Culp’s mattress fabrics division. “We are pleased with our consistent sales, especially when compared with unusually strong sales for the first quarter of last year. We have continued to be on par with the industry during a more challenging business environment than we experienced a year ago. These results reflect our ability to keep pace with changing customer demand across all price points and fabric styles in the mattress industry.”

Culp continued to make progress during the first quarter with Culp-Lava, a new business venture established to produce and market mattress covers, said Culp. “We are pleased with the sales contribution this quarter, as we have now completed most of the specialized training and development work necessary for production at our new Stokesdale, N.C., manufacturing facility.”

Looking ahead, the company expects a normal seasonal slowdown in the second fiscal quarter, “which will influence our sales and operating efficiencies,” Culp added. “We also do not expect overall industry demand to be as robust as it was during the second quarter last year.”

The company projects overall sales in its second fiscal quarter to range from flat to 4% higher. It expects pretax income to be between $4.1 million and $4.7 million. Pretax income in the second fiscal quarter of 2013 was $4.5 million.

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