Culp sales, profits climb in fiscal 2013

BRIEFLY
Fourth-quarter snapshot
Net sales$70.4 million
Net income$3.7 million
Full-year snapshot
Net sales$268.8 million
Net income$18.3 million

Fabric supplier Culp Inc., which has headquarters in High Point, N.C., has announced that net sales for its fiscal fourth quarter were $70.4 million, down 7% over the same fiscal quarter in 2012. Mattress fabric sales were down 5.9%, and upholstery fabric sales were down 8.6%, compared with an exceptionally strong fiscal fourth quarter last year, the company said. Culp’s fiscal fourth quarter ended April 28, 2013.

Culp reported pretax income of $5.9 million, compared with $5.5 million in the prior-year quarter. Adjusted net income was $5 million or $0.41 per diluted share, compared with $4.5 million or $0.35 per diluted share for the prior year period.

Net income was $3.7 million or $0.30 per diluted share, compared with net income of $3.4 million or $0.27 per diluted share in the fourth quarter of 2012.

Culp announced it will pay a quarterly cash dividend of $0.04 per share starting in the first quarter of fiscal 2014.

For fiscal 2013, net sales were $268.8 million, up 5.6% compared with fiscal 2012. Mattress fabric sales were $154 million, up 5.8% and upholstery fabric sales were $114.8 million, up 5.4 percent over the prior year.

Pretax income was $20.3 million, up 43% over fiscal 2012—and the highest level in 15 years, the company said. Adjusted net income was $17.4 million or $1.40 per diluted share, compared with $11.6 million or $0.90 per diluted share for the prior year.

Net income for 2013 was $18.3 million or $1.47 per diluted share, compared with $13.3 million or $1.03 per diluted share in fiscal 2012. Net income for 2013 included a $2 million income tax expense, compared with a $902,000 income tax expense in fiscal 2012.

Culp reported that return on capital was 29%, the highest level since the company went public in 1983, compared with 22% in fiscal 2012.

Culp said its financial position remained strong in fiscal 2013 with a total cash position of $28.8 million at year-end and total debt of $7.2 million.

The company projects sales for the first quarter of fiscal 2014 to be from 3% lower to 2% higher, compared with the first quarter of the previous year. Pretax income for the first quarter of fiscal 2014 is expected to be in the range of $4.9 million to $5.6 million. Pre-tax income for the first quarter of fiscal 2013 was $5.4 million.

“Rob Culp and I are very pleased to report one of the best years in the company’s history,” said Frank Saxon, Culp Inc. president and chief executive officer. “Both of our businesses performed well. Looking ahead, we expect another solid year of free cash flow in fiscal 2014. In addition, with our strong free cash flow, we were also very pleased to have returned $12.6 million to shareholders this past year through dividends and share repurchases. We are especially excited about the outstanding progress we are making in product innovation and creativity. These efforts have made a significant contribution to our sales and profit performance for the year, with an increasing percentage of our sales coming from new product introductions. We compete in a product and fashion-driven business that is always changing. As a result, our ability to sustain excellence in creating innovative fabrics season after season is a key driver to our long-term success.”

Commenting on the mattress fabric segment, Iv Culp, division president, said, “Overall, we demonstrated a very consistent performance throughout the year with improved sales and higher profitability over fiscal 2012. The higher-end mattress segment has continued to demonstrate the strongest growth, as consumer trends indicate a greater number of purchases of better bedding with more of a tailored and upholstery-type look. We are also making meaningful progress with respect to our latest business venture, Culp-Lava, which further extends our vertical market reach with the capability to produce and market mattress covers. We are pleased with the favorable operating synergies and sales contribution to date from our Stokesdale, N.C., manufacturing facility, as we have focused on the specialized training and development necessary to establish this new venture. As we continue to gradually add capacity, we believe Culp is well positioned to capitalize on meeting demand for the fast growing specialty bedding sector of the mattress industry.”

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