Culp sales up in fiscal third quarter

Culp Inc., a textile supplier with headquarters in High Point, N.C., announced that net sales for its fiscal third quarter of 2012 were $60.5 million, a 17% increase over the third quarter of fiscal 2011. The company’s fiscal third quarter ended Jan. 29.

Mattress fabric sales rose 24% and upholstery fabric sales were up 9% over the same period a year ago.

Net income declined 25% to $1.8 million, or $0.14 per diluted share, from $2.4 million the prior-year quarter.

Pretax income was $2.9 million, or 4.8% of sales, compared with $2.9 million, or 5.6% of sales, for the third quarter of fiscal 2011.

“We are very pleased with the continued momentum in our sales for the third quarter of fiscal 2012,” said Frank Saxon, Culp chief executive officer. “This positive trend reflects both improved industry demand and the success of our sales and marketing initiatives, along with the benefits of our innovative designs and lean global manufacturing platform. Both of our businesses had a strong sales performance in what is typically a slower quarterly period due to scheduled holiday plant shutdowns. Overall, our operating margins have continued to be affected by higher raw material costs and a stronger Chinese currency compared with the same quarter a year ago.”

Culp said its financial position remains strong, with cash, cash equivalents and short-term investments totaling $23.6 million and total debt of $10.1 million as of Jan. 29—even with stock repurchases of $5.4 million, capital expenditures of $3.7 million and debt repayments of $2.4 million.
As of Feb. 27, the company had repurchased 624,459 shares of Culp common stock for $5.4 million, or 4.7% of shares outstanding at the beginning of its share repurchase program announced in June 2011.

Ticking sales for the third quarter were $34.7 million, compared with $28 million for the third quarter of fiscal 2011.

“Our mattress fabrics business delivered an outstanding sales performance in the third quarter,” said Iv Culp, president of Culp’s mattress fabrics division. “Demand for mattress fabrics was better than expected and the results clearly demonstrate our ability to respond to customers with expanded production capacity and a flexible manufacturing platform. The mattress industry is evolving into a more decorative business with growing consumer demand for better bedding and a higher quality mattress fabric. Culp has been at the forefront of meeting this demand with an innovative and diverse line of products in every major category, supported by exceptional customer service.”

Sales of upholstery fabrics were $25.7 million, a 9% increase compared with $23.7 million in the third quarter of fiscal 2011. Sales of China-produced fabrics, which include sales of Culp Europe, were $22.6 million in the third quarter of fiscal 2012, up 9.2% over the prior-year period. Sales of U.S.-produced fabrics were $3.1 million, up 5.5% from the third quarter of fiscal 2011.

The company projects that its overall sales in the fourth quarter of fiscal 2012 will increase 8% to 13% with pretax income expected in the range of $4.5 million to $5.4 million.

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