Fabric supplier Culp Inc., with headquarters in High Point, North Carolina, reported net sales of $85.3 million for the fiscal third quarter ending Jan. 28, an increase of 12% versus the same quarter in fiscal 2017.
For the latest quarter, pretax income was $7.5 million, up 7.5%, compared with the third quarter of fiscal 2017. Adjusted net income under generally accepted accounting principles, which includes the $5.9 million impact of the recently enacted Tax Cuts and Jobs Act, was a loss of $748,000, or $0.06 per diluted share, compared with net income of $6.3 million, or $0.51 per diluted share, for the third quarter of fiscal 2017.
There was a provisional charge of $5.9 million, or $0.48 per diluted share, related to the tax law, the company said. It includes a provisional $4.8 million charge for the mandatory repatriation of undistributed earnings and profits associated with the company’s foreign subsidiaries and a provisional $1.1 million net charge for the revaluation of the company’s U.S. deferred income taxes and reduction in the annual effective income tax rate. As provided in the tax law, the deemed repatriation tax will be paid over eight years.
Adjusted net income for the quarter (non-GAAP and excluding the impact of the tax law) was $5.2 million, or $0.42 per diluted share.
Mattress fabric sales for the third quarter were $49 million, up 6.8%, compared with the third quarter of fiscal 2017.
“We had a solid third-quarter financial and operating performance in mattress fabrics, with higher-than-expected sales,” said Iv Culp, president of Culp’s mattress fabrics division. “New product roll-outs of mattress covers and other new fabric programs were the key drivers of our strong sales performance.”
Sales for the upholstery fabric segment also were strong, totaling $36.3 million for a 19.9% increase over the same quarter of 2017.
“Our third quarter was highlighted by higher-than-expected sales, and we are pleased with the strong financial and operating performance for both of our operating segments,” said Frank Saxon, president and chief executive officer of Culp Inc. “For both businesses, we continued to drive product innovation and creativity and provide a diverse product mix that meets the changing demands of our customers. Importantly, we have also maintained a strong financial position in fiscal 2018, providing the flexibility to capitalize on new growth opportunities, including strategic acquisitions.”
The company’s financial position for the first nine months of this fiscal year reflected no outstanding debt and total cash and investments of $55.7 million, up from $48.9 million a year ago. The $55.7 million was achieved despite the company spending $10.4 million on capital expenditures and $5.7 million in dividends, the company said.
For the fourth quarter, the company expects overall sales and mattress fabric sales to be comparable with the fourth quarter of the previous fiscal year. For the entire fiscal year, it expects overall annual sales to be slightly higher than last year’s annual sales due to moderate gains in the upholstery fabric segment.
