Culp closes fiscal 2017 with healthy balance sheet, overall uptick in ticking sales

Supplier of mattress fabric, upholstery and sewn covers, Culp Inc., announced its fiscal 2017 results, which ended April 30.

Net income rose 32% to $22.3 million for the year, or $1.78 per diluted share, compared with $16.9 million, or $1.36 per diluted share, in fiscal 2016. (The High Point, North Carolina-based company changed its New York Stock Exchange ticker symbol from CFI to CULP, effective July 13.)

Pretax income was $29.7 million, the highest annual pretax income in Culp’s history, and a 6.4% increase compared with the previous record of $27.9 million in pretax income for fiscal 2016.

Net sales declined slightly, by 1.1%, to $309.5 million in fiscal 2017. Mattress fabric sales were up 2.4%, a record year, and upholstery fabric sales down 6.1% over the prior year, the company said.

“We are pleased to end fiscal 2017 with a strong financial position,” said Ken Bowling, Culp senior vice president and chief financial officer. “As of April 30, 2017, we reported $54.2 million in cash and cash equivalents, short-term investments and long-term investments held to maturity, a record level for Culp and up 29% from the previous year’s ending balance of $42.1 million, with no debt. This year-over-year increase in cash was achieved despite spending $14 million for capital expenditures, including vendor-financed payments and investment in Haiti, and returning $6.3 million to shareholders in regular and special dividends. Cash flow from operations for fiscal 2017 was $33 million, compared with $26.8 million in fiscal 2016. Free cash flow for the year was $18.3 million, compared with last year’s $15.2 million, representing a 20% year-over-year increase.”

Results in the company’s fourth fiscal quarter included net income of $6.2 million, compared with net income of $3.6 million in the prior-year period. Net sales were $77.4 million, with both mattress fabric sales and upholstery fabric sales relatively flat compared with the fourth quarter of fiscal 2016. Ticking sales were flat in the fourth quarter at $48.8 million.

According to Iv Culp, president of the mattress fabric division, results were “in line with expectations, reflecting consistent execution of our strategy during a period of disruption in the mattress industry and a soft retail sales environment. Overall, we were pleased to meet our objectives for the quarter.”

Early in fiscal 2018, the company expects to complete capital investments at its U.S. and Canadian production and distribution facilities, Culp said. This includes consolidation and expansion of North Carolina facilities and an investment in a new production facility in Haiti that is expected to be on line this fall.

Commenting on the results, Frank Saxon, Culp president and chief executive officer, said: “Our results for the fourth quarter were in line with expectations, capping off an outstanding performance for Culp in fiscal 2017, in spite of a more challenging retail environment for home furnishings. While our overall annual sales were slightly lower than the prior year, our mattress fabric segment had another record performance with total annual sales surpassing the previous year’s level. Notably, our pretax income for the year was the highest in the company’s history. Further, we achieved excellent cash flow from operations and free cash flow and continued high returns on capital for the year. Finally, we ended the year with no debt and $54.2 million in total cash and investments, which is the highest level achieved in the company’s history.”

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