Posted September 8, 2014

 

HIGH POINT, N.C. – For the first quarter ended August 3, net sales at Culp, Inc. were $76.1 million, compared with $70.1 million a year ago.

 

The company reported net income of $3.3 million, or $0.27 per diluted share, for the first quarter of fiscal 2015, compared with net income of $3.2 million, or $0.26 per diluted share, for the first quarter of fiscal 2014. The first quarter of fiscal 2015 had 14 weeks compared with 13 weeks for the first quarter of fiscal 2014.
 

"Overall, our first fiscal quarter performance was in line with our expectations, marking a solid start to fiscal 2015,” said Frank Saxon, president and CEO. “We continue to experience favorable customer response to our creative designs and wide range of innovative products. Our focused effort on product excellence has been the key driver of our growth, and we will continue to pursue this same strategy in fiscal 2015. Importantly, we have a scalable and flexible manufacturing platform that supports our ability to compete in a fashion-driven business that is always changing. We also have the financial strength to make the strategic investments to support our continued growth as reflected in our plan to significantly increase capital expenditures for fiscal 2015."

 

Mattress Fabrics Segment

 

Mattress fabrics sales for the first quarter were $42.8 million, up 12.2 percent compared with $38.2 million for the first quarter of fiscal 2014.

 

"We are pleased with our continued growth in mattress fabrics sales and our ability to keep pace with changing customer demand across all price points and fabric styles in the mattress industry," said Iv Culp, president of Culp's mattress fabrics division. "Our outstanding designs and innovative product offerings are resonating with customers, many of whom are looking for a much more fashionable and decorative look in mattress fabrics and covers. We are well positioned to capitalize on this trend with our extensive manufacturing platform, technical expertise and reactive capacity.

 

Upholstery Fabrics Segment

 

Sales for this segment were $33.2 million for the first quarter, a 3.9 percent improvement compared with sales of $32.0 million in the first quarter of fiscal 2014.

 

"We are pleased with our upholstery fabrics sales performance for the first quarter of fiscal 2015, especially when compared with the exceptionally high level of sales for the first quarter of last fiscal year," noted Boyd Chumbley, executive vice president of Culp's upholstery fabrics division. "Notably, we increased our sales of cut and sewn kits compared with a year ago, reflecting increased demand for this product category.

 

Balance Sheet

"Maintaining a strong financial position and generating free cash flow will continue to be top priorities for fiscal 2015," Saxon said. "During the first quarter, we achieved $1.4 million of free cash flow, after investing $5 million in capital expenditures, working capital and long term investments. As of August 3, 2014, we reported $31.0 million in cash and cash equivalents and short-term investments compared with $27.6 million a year ago. Total debt was $5.0 million at the end of the quarter, which includes long-term debt plus current maturities of long-term debt and our line of credit.”

 

Outlook

 

Commenting on the outlook for the second quarter of fiscal 2015, Saxon said, "We expect overall sales to be 1 percent to 5 percent higher as compared with the second quarter of last year. We expect sales in our mattress fabrics segment to be 2 percent to 5 percent higher compared with the same period a year ago.

 

"In our upholstery fabrics segment, we expect sales to be flat to slightly higher as compared to the same period last year,” he continued. “We believe the upholstery fabric segment's operating income and margin will be slightly lower than the second quarter of fiscal 2014 due primarily to margin pressure relating to Culp Europe.”