Textile supplier Culp Inc. reported net sales of $80.7 million in the second quarter of fiscal 2018, which ended Oct. 29, 2017. The sales are a 7.1% increase, compared with the same quarter in 2017.
Mattress fabric sales were $48.6 million, up 6.8% compared with the second quarter of fiscal 2017. Upholstery fabric sales were $32.1 million for the second quarter of fiscal 2018, an increase of 7.7%.
“Overall, our second-quarter sales were higher than expected, and we are pleased with the solid top-line performance for both upholstery fabrics and mattress fabrics,” said Frank Saxon, Culp president and chief executive officer. “We have just completed a major transition period in our mattress fabrics business, and we expect to realize greater operating efficiencies from these changes going forward. Importantly, we have the financial strength to continue to make the strategic investments to enhance our operations, including potential acquisitions that support our growth objectives.”
Pretax income for the second quarter of fiscal 2018 was $6.2 million, compared with $7.2 million in the same period of fiscal 2017. The $6.2 million included approximately $400,000 of nonrecurring legal and other professional expenses.
Net income for the latest quarter was $4 million, or $0.32 per diluted share, compared with net income of $4.5 million, or $0.36 per diluted share, in the prior-year period.
Culp’s financial position in the quarter reflects total cash and investments of $49.1 million and no outstanding debt, despite its $7.5 million in capital expenditures and $4.6 million in dividend payments during the first six months of this fiscal year.
The company announced a 12.5% increase in its quarterly cash dividend from $0.08 to $0.09 per share, or $0.36 per share on an annualized basis, commencing in the third quarter of fiscal 2018.
This is an important milestone for Culp, according to Saxon, as $0.36 per share is three times the level of the company’s dividends when they were reinstated in July 2012.
“Our financial performance and strong balance sheet have enabled us to take this action, which is consistent with our capital allocation strategy and confirms our commitment to generate value for our shareholders,” Saxon said.
Commenting on the performance of the mattress fabric segment, Iv Culp, division president, said: “We are pleased with the solid growth in mattress fabrics sales for the second quarter. Notably, we continued to execute our strategy in an uncertain market environment, and Culp again outperformed reported mattress industry growth trends. Our strategic focus on design creativity and innovation and our ability to provide a diverse product offering across all price points, including mattress fabrics and sewn covers, have been the key drivers of our sales performance. Sales for the second quarter of fiscal 2018 also reflected aggressive marketing of some new product rollouts.”
All of Culp’s knitting and other fabric-forming equipment has been put into service in its expanded facility in Stokesdale, North Carolina, Culp said. Its U.S. mattress cover operation, CLASS, is fully operational in its new location, also in North Carolina.
“We have also finished the installation of new equipment in our Canada operation, and we are now focused on further refinement of our overall inspection and quality processes to support our continuous improvement initiatives,” Culp said.
Culp Inc.’s projection for the third quarter of fiscal 2018 is for overall sales to be slightly higher than the previous year’s third quarter. Pretax income for the third quarter of fiscal 2018 is expected to be in the range of $6.8 million to $7.4 million. Pretax income for the third quarter of fiscal 2017 was $7 million.