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Culp Announces Results For Second Quarter Fiscal 2011

Culp, Inc. (NYSE: CFI) today reported financial and operating results for the second quarter of fiscal 2011 ended October 31, 2010.

Fiscal 2011 Second Quarter Highlights
  • Net sales for the second quarter were $48.9 million, a two percent decline over the second quarter of fiscal 2010, with mattress fabrics segment sales even with the prior year period and upholstery fabric segment sales down five percent over the same period a year ago.
  • Pre-tax income for the second quarter was $3.2 million, or 6.5 percent of sales, compared with $3.5 million, or 7.0 percent of sales in the prior year period, an 8.6 percent decline.
  • Net income was $4.0 million, or $0.30 per diluted share, compared with net income of $2.9 million, or $0.22 per diluted share, for the second quarter of fiscal 2010. Net income for the second quarter of fiscal 2011 included an $801,000 income tax benefit, while net income for the previous year period included income tax expense of $625,000.

Fiscal 2011 Year to Date Highlights
  • Year to date sales were $104.8 million, up 10 percent from the same period a year ago.
  • Year to date pre-tax income was $7.5 million, or 7.1 percent of sales, compared with $5.5 million, or 5.8 percent of sales for the same period last year, an increase of 36 percent.
  • Year to date net income was $7.7 million, or $0.59 per diluted share, compared with net income of $4.8 million, or $0.37 per diluted share, for the same period a year ago. Year to date net income included a $270,000 income tax benefit, while net income for the previous year period included income tax expense of $740,000.
  • With year to date capital expenditures of $5.1 million, the company has completed a multi-year expansion in its mattress fabrics business, with capital expenditures totaling $25 million plus $20 million spent for two acquisitions.
  • The company’s financial position remained strong, with cash and cash equivalents and short term investments of $19.3 million and total debt of $11.6 million as of October 31, 2010.
  • The projection for third quarter fiscal 2011 is for overall sales to be down in the range of 5 to 10 percent. Mattress fabric sales are expected to be comparable to last year, and upholstery fabrics sales are expected to be down 10 to 20 percent compared with the third quarter of fiscal 2010. Pre-tax income for the third quarter of fiscal 2011 is expected to be in the range of $2.6 to $3.3 million. Pretax income for the third quarter of last year was $3.8 million.

Overview

For the quarter ended October 31, 2010, net sales were $48.9 million, a two percent decline compared with $49.7 million a year ago. The company reported net income of $4.0 million, or $0.30 per diluted share, for the second quarter of fiscal 2011, compared with net income of $2.9 million, or $0.22 per diluted share, for the second quarter of fiscal 2010. Net income for the second quarter of fiscal 2011 includes an $801,000 income tax benefit, while net income for the previous year included income tax expense of $625,000. The income tax benefit for the second quarter of fiscal 2011 is primarily due to the reversal of the non-cash valuation allowance against net deferred tax assets associated with the company’s China operations. On a pre-tax basis, the company reported income of $3.2 million compared with pre-tax income of $3.5 million for the second quarter of fiscal 2010.

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