Textile major Culp Inc., with headquarters in High Point, North Carolina, reported financial and operating results for the second quarter of fiscal 2020, which ended Nov. 3, 2019. Total net sales declined 5.7%, compared with the prior-year quarter, to $72.6 million. Mattress fabrics sales ($35.5 million) were down 4.7%, upholstery fabrics sales ($33.9 million) declined 3.2% and home accessories sales ($3.3 million) dropped 31.5%.
Earnings per diluted share
Net cash position
Pretax income was $4.1 million, compared with $4.3 million in the second quarter of fiscal 2019. The second quarter pretax income included a net benefit of approximately $543,000 in restructuring and related charges and credits and other nonrecurring items, due mostly to the closure of the company’s production facility in Anderson, South Carolina. Excluding this net credit, pretax income for the second quarter of fiscal 2019 was $3.7 million.
Net income in second-quarter fiscal 2020 was $2.3 million, or $0.19 per diluted share, compared with net income of $2.9 million, or $0.23 per diluted share, in the prior-year period.
The company’s financial position reflected total cash and investments of $47.2 million and outstanding borrowings totaling $925,000, for a net cash position of $46.3 million.
Cash flow from operations and free cash flow for the first six months of fiscal 2020 were $8.2 million and $5.6 million, respectively, compared with cash flow from operations and free cash flow of $6.6 million and $3.6 million, respectively, for the prior-year period.
“We are pleased with our performance for the second quarter of fiscal 2020,” said Frank Saxon, Culp chair. “While we had a modest drop in overall sales compared with the prior-year period, we had an improved operating performance in both our mattress fabrics and upholstery fabrics businesses. … We also continued to refine our strategies for Culp Home Accessories, our finished products business, and we believe we are making progress in positioning this business for sequential improvement.
“With the support of our global platform, we are confident we can sustain our strong competitive advantage and respond to the changing demand trends of our diverse customer base. Importantly, we have the financial strength to pursue our growth plans and to continue returning funds to our shareholders.”
Commenting on ticking sales, Iv Culp, president and chief executive officer, said, “Our results … reflect changing market dynamics as the mattress industry attempts to recover from the turmoil surrounding the influx of Chinese imports and the subsequent anti-dumping measures.
“While demand is softer in our legacy mattress fabrics business, we experienced very favorable demand trends for mattress covers. As a result, CLASS, our sewn mattress cover business, delivered an exceptionally strong performance for the second quarter, and we are optimistic about additional opportunities with existing and new customers. Our robust supply platform for covers includes our production locations in the U.S., Haiti and Asia. … We also intend to expand the footprint of operations in Haiti and Asia during the second half of fiscal 2020, giving us further flexibility and capacity for serving the needs of our customers in the boxed bedding space.”
The company announced a 5% increase in its quarterly cash dividend to 10.5 cents per share, or 42 cents per share on an annualized basis, marking the seventh straight year of increasing the annual dividend.
The company expects overall sales for the third quarter of fiscal 2020 to be comparable to the same period in 2019 and forecasts that its overall performance in the second half of fiscal 2020 will be better than the results achieved during the second half of fiscal 2019.