Fabric supplier Culp Inc. reported net income for its fiscal 2010 second quarter of $2.9 million, compared with a net loss of $40.9 million for the same period a year ago. The net loss for the second quarter of fiscal 2009 included charges of $31.2 million to establish a valuation allowance against net deferred tax assets and $11.8 million in restructuring charges for Culp’s upholstery business.
The High Point, N.C.–based company reported net sales for its second quarter were $49.7 million, a 5% decrease from the $52.3 million posted for the same quarter of 2009. The decrease is the smallest year–over–year decline since the third quarter of fiscal 2008, the company said.
Cash flow from operations for the second quarter of 2010 was $6.1 million. Culp attributed the stronger cash flow to the profitability in mattress fabrics, a profit turnaround in upholstery fabrics and improved working capital management.
Mattress fabric sales for the second quarter were $28.2 million, an increase of 1% over the same period a year ago, Culp said.
“Our improved performance in mattress fabrics reflects the benefits of the ongoing investments we have made,” said Frank Saxon, Culp president and chief executive officer. “During the second quarter, we completed the installation of additional equipment to further expand our knit capacity and improve our production capabilities for both knits and wovens. We have also initiated the purchase of state–of–the–art finishing equipment for our growing knit business to be installed during our third fiscal quarter. As a result, Culp will be fully vertically integrated.”
The company said its financial position continued to strengthen during the second quarter of fiscal 2010. Its ending cash balance of $19.6 million exceeded total debt of $16.4 million for the first time in more than 30 years.
“Our improved performance reflects the benefits of a leaner and more efficient operating platform and aggressive marketing initiatives,” Saxon said. “We are especially pleased with the turnaround in profitability for our upholstery fabrics business and continued solid profitability in our mattress fabrics segment.”