Culp mattress fabric sales tick up in third quarter

Culp third-quarter snapshot
Net income $3.8 million
Net sales $81.3 million
Ticking sales $45.7 million
Upholstery sales $35.6 million

Textile supplier Culp Inc., with headquarters in High Point, North Carolina, reported net income (using generally accepted accounting principles) of $3.8 million for its fiscal 2015 third quarter, a 55% decrease as compared with GAAP net income of $8.4 million in the prior-year quarter. Net income in the third quarter was impacted by a $2.1 million income tax expense. The prior-year quarter included an income tax benefit of $3.8 million.

Non-GAAP adjusted net income for the third quarter of 2015 rose 28% to $5 million, or $0.40 per diluted share, as compared with $3.9 million, or $0.31 per diluted share, in the prior-year quarter.

Culp reported net sales for the quarter of $81.3 million, a 12.3% increase, as compared with net sales in the third quarter of 2014.

The company said its financial position is strong with cash, cash equivalents and short-term investments of $37.2 million, compared with $35.6 million at the end of fiscal 2014, even after spending $18.5 million in dividends, capital expenditures, debt payments and share repurchases through the first nine months of fiscal 2015. Total debt stands at $2.2 million.

“We continued to build upon our sales momentum this fiscal year. … These results demonstrate the benefits of our top strategic priority—to drive product innovation and creativity throughout our company,” said Frank Saxon, president and chief executive officer. “The positive response to our creative designs has resulted in higher sales to existing key customers as well as sales to new customers. … Our success to date in 2015 has positioned Culp for another outstanding year of solid sales growth, improving profitability and excellent free cash flow.”

Mattress fabric sales for the third quarter were $45.7 million, rising 18.5% as compared with $38.5 million in the prior-year quarter. Upholstery sales were $35.6 million, a 5.1% increase compared with sales of $33.8 million in the third quarter of fiscal 2014.

“Our mattress fabrics business had an outstanding sales performance,” said Iv Culp, president of the mattress fabrics division. “These results reflect higher-than-expected demand caused by a generally improved business environment, some market share gains and some advanced sales to major customers as they prepared to launch their flagship brands ahead of major bedding events. … We have also made steady progress in our operating performance during fiscal 2015, with significant improvement in the third quarter compared with the prior-year period. We are on schedule with the previously announced $9.5 million expansion plan to increase our production capacity, add finishing capabilities, and improve our overall efficiency and throughput.”

For the full fiscal year, the company anticipates an 11% increase in ticking sales, as well as substantially higher operating income and margins.