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• Net Sales: $55.7 million, down 5.2% year-over-year.

• Operating Loss: $5.4 million, including $2.8 million in restructuring expenses.

• Adjusted Operating Loss: $2.6 million, improved sequentially from Q1.

• Net Loss: $5.6 million or $0.45 per diluted share.

• Mattress Fabric Segment Sales: $30.1 million, down 4.2% year-over-year, but up 7.1% sequentially.

• Mattress Fabric Segment Operating Loss: $1 million, improved from $3.5 million in Q1.

• Upholstery Fabric Segment Sales: $25.6 million, down 6.4% year-over-year.

• Upholstery Fabric Segment Income: $615,000, down from $1.4 million a year ago.

• Total Cash: $10.5 million.

• Outstanding Debt: $4.1 million under China credit line.

• Free Cash Flow: Negative $3.4 million for the first six months of the fiscal year.

• Capital Expenditures: $1.6 million for the first six months, projected $3.5 to $4 million for the fiscal year.

• Liquidity: $33.1 million, including cash and borrowing availability.

• Warning! GuruFocus has detected 3 Warning Signs with CULP.

Release Date: December 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Culp Inc (NYSE:CULP) reported a sequential improvement in sales and operating performance from its mattress fabric segment, with sales increasing by 7.1% compared to the first quarter of fiscal '25.

• The company is making significant progress with its restructuring plan, which is expected to be largely complete by the third quarter, aiming to return to profitability.

• Culp Inc (NYSE:CULP) is expanding its North American capacity with strong supply chain operations in Asia, including Vietnam and Turkey, enhancing its global manufacturing and sourcing capabilities.

• The hospitality contract fabric business, representing 35% of total sales, remained solid, with increased potential in commercial fabrics and window treatments.

• The restructuring plan is projected to generate $10 to $11 million in annualized cost and productivity savings, primarily from the mattress fabrics division.

Negative Points

• Culp Inc (NYSE:CULP) experienced a 5% decline in consolidated year-over-year revenue for the second quarter, with worsening conditions in the upholstery fabric segment.

• The residential upholstery fabrics business faced accelerated softness, leading to lower-than-expected sales performance.

• The restructuring process has caused inefficiencies, negatively impacting the mattress fabrics operating performance during the second quarter.

• The company reported a net loss of $5.6 million for the second quarter, compared to a net loss of $2.4 million in the prior year period.

• Culp Inc (NYSE:CULP) anticipates continued pressure on sales and significant restructuring activity, providing limited financial guidance for the upcoming quarters.