Culp’s 1st Quarter 2021 “Materially Affected” by COVID-19

In its first fiscal quarter of 2021, which ended Aug. 2, Culp Inc. reported a net loss from continuing operations of $2.7 million, compared with income of $1.8 million in the first quarter of fiscal 2020. Pretax income from continuing operations was $1.5 million, compared with pretax income from continuing operations of $3.5 million for the prior-year period.

First-quarter net sales for the High Point, North Carolina-based textile maker were $64.5 million, down 8.8% year over year. Mattress fabric sales were $36.1 million, down 7.1%, and upholstery sales were $28.4 million, a decline of 11%.

In its filing, the company noted its results were “materially affected by the coronavirus pandemic.” It also said its first fiscal quarter of 2021 included 13 weeks, compared with 14 weeks in the first quarter of fiscal 2020. 

Culp provided limited guidance due to the economic impact of COVID-19. It expects sales and operating income in fiscal second quarter to improve significantly, but not to outperform the prior-year quarter, which was especially strong in the upholstery segment.  

First-quarter cash flow from operations and free cash flow were $10.6 million and $10 million, respectively, compared with cash flow from operations and free cash flow of $2 million and $1 million, respectively, for the prior-year period.

Results

Culp’s 1st Quarter

Net loss from continuing operations

$2.7 million

Pretax income
from continuing
operations

$1.5 million

Cash flow from
operations

$10.6 million

Net sales

$64.5 million

Mattress fabric sales

-7.1%

Upholstery sales

-11%

“We are pleased that both our mattress fabrics and upholstery fabrics segments saw better-than-expected increases in orders and shipments during the quarter,” said Iv Culp, president and chief executive officer. “We are especially pleased with the substantial sequential improvement compared with the end of the fiscal fourth quarter, going from a significant pretax loss to profitability. We believe these trends are primarily being driven by a surge in consumer focus on the home environment and overall comfort.”  

“Although the ongoing impact and duration of the COVID-19 pandemic remain unknown, we are cautiously optimistic, based on current demand trends, that business will continue its solid return in the second quarter of fiscal 2021,” Culp said. “Our balance sheet remains strong, as evidenced by our significantly improved liquidity as compared to prepandemic levels at the end of the fiscal 2020 third quarter. We are also pleased to have maintained our quarterly dividend throughout this period of disruption.”

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