Culp sales up sharply in 2nd quarter

Textile supplier Culp Inc., with headquarters in High Point, N.C., reports that net sales for its fiscal second quarter of 2012 were $58 million, a 19% increase over the second quarter of fiscal 2011. Culp’s fiscal 2012 second quarter ended Oct. 30.

The company’s mattress fabric sales were up 24% and upholstery fabric sales rose 11% over the same period a year ago.

Pretax income was $2.9 million, or 4.9% of sales, compared with $3.2 million, or 6.5% percent of sales, in the prior-year period.

Net income was $6.3 million, or $0.49 per diluted share, compared with net income of $4 million, or $0.30 per diluted share, during the prior-year period. Net income included an income tax benefit of $3.4 million, while net income for the previous year included an $801,000 income tax benefit.

“We are pleased with the positive sales trend for the second quarter and through the first half of fiscal 2012,” said Frank Saxon, Culp president and chief executive officer. “Both of our businesses had impressive sales gains, in spite of an uncertain global economic environment, and we are well-positioned to build further on this sales momentum. These trends reflect the success of our various sales and marketing initiatives, along with the benefits of our excellent design capabilities and efficient manufacturing platform. Overall, our profitability is down somewhat compared with a year ago, primarily due to higher raw material costs in both businesses and the currency impact in the upholstery fabrics business.”

Culp’s financial position remains strong, the company said, with cash and cash equivalents and short-term investments of $24.3 million and total debt of $9.2 million as of Oct. 30—even with stock repurchases of $4.8 million, capital expenditures of $2.6 million and debt repayments of $2.3 million.

As of Nov. 25, the company repurchased 585,000 shares of Culp common stock for approximately $5.1 million, or 4.4% of the shares outstanding at the beginning of its repurchase program announced in June.

Mattress fabric sales for the second quarter were $35.2 million, compared with $28.3 million for the second quarter of fiscal 2011.

“Our mattress fabrics business delivered a strong sales performance in the second quarter, reflecting improved industry demand, and our sales and marketing initiatives,” said Iv Culp, president of Culp’s Mattress Fabrics Division. “Our ability to leverage recent investments in our production facilities, along with the expanded capacity, have enhanced our ability to serve our customers. We are well-positioned with a diverse product line that meets the current market demand in all product categories.”

Sales of upholstery fabrics were $22.8 million in the second quarter of fiscal 2012, an increase over the $20.5 million posted during the same period in 2011.

The company projects that its overall sales in the third quarter will increase 2% to 6%, with pretax income expected in the range of $1.9 million to $2.8 million.

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