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Culp Announces Results For Second Quarter Fiscal 2013

Stocks in this article: CFI

Culp, Inc. (NYSE: CFI) today reported financial and operating results for the second quarter and six months ended October 28, 2012.

Fiscal 2013 Second Quarter Highlights:

  • Net sales were $65.6 million, up 13.0 percent, with mattress fabric sales up 12.6 percent and upholstery fabric sales up 13.6 percent, as compared with the same quarter last year.
  • Pre-tax income was $4.5 million, up from $2.9 million in the second quarter of fiscal 2012.
  • Adjusted net income (non-GAAP) was $3.9 million, or $0.31 per diluted share, for the current quarter, compared with $2.3 million, or $0.18 per diluted share, for the prior year period. (Adjusted net income is calculated using estimated cash income tax expense. See the reconciliation to net income on page 7).
  • Net income (GAAP) was $8.3 million, or $0.67 per diluted share, compared with net income of $6.3 million, or $0.49 per diluted share, in the prior year period. Net income for the second quarter of fiscal 2013 included an income tax benefit of $3.7 million, while net income for the second quarter of fiscal 2012 included an income tax benefit of $3.4 million.
  • The company’s financial position remained strong with a total cash position of $28.7 million and total debt of $7.7 million as of October 28, 2012, even after spending $4.6 million on stock repurchases and making a $2.6 million principal and interest payment during the quarter.
  • The company repurchased 455,299 shares during the quarter for a total of $4.6 million.
  • The company announced today the payment of a special cash dividend of $0.50 per share, and the acceleration of payment of the scheduled January 2013 quarterly cash dividend of $0.03 per share, both payable in December 2012.

Fiscal 2013 Year to Date Highlights

  • Year to date sales were $134.7 million, up 13.9 percent from the same period a year ago, with mattress fabrics segment sales up 15.2 percent and upholstery fabrics segment sales up 12.2 percent over the same period a year ago.
  • Year to date pre-tax income was $9.9 million, up from $5.8 million for the same period last year.
  • Year to date adjusted net income (non-GAAP) was $8.4 million, or $0.67 per diluted share, compared with $4.8 million, or $0.37 per diluted share, for the prior year period.
  • Net income (GAAP) was $11.8 million, or $0.94 per diluted share, compared with net income of $8.1 million, or $0.62 per diluted share, for the same period a year ago. Year to date net income included a $1.9 million income tax benefit, while net income for the previous year included a $2.2 million income tax benefit.
  • Return on capital was 29 percent, up from 19 percent for the same period a year ago.
  • Cash flow from operations was $7.7 million, up from $2.6 million for the same period a year ago.
  • As of October 28, 2012, the company has repurchased 1,127,054 shares, or 8.5 percent of its outstanding shares, since June 2011, for a total of $10.4 million at an average price of $9.23 per share.
  • The projection for third quarter fiscal 2013 is for overall sales to be 4 to 9 percent higher as compared to the previous year’s third quarter. Pre-tax income for the third quarter of fiscal 2013 is expected to be in the range of $4.0 million to $4.5 million. Pre-tax income for the third quarter of fiscal 2012 was $2.9 million.

Overview

For the second quarter ended October 28, 2012, net sales were $65.6 million, a 13.0 percent increase compared with $58.0 million a year ago. The company reported net income of $8.3 million, or $0.67 per diluted share, for the second quarter of fiscal 2013, compared with net income of $6.3 million, or $0.49 per diluted share, for the second quarter of fiscal 2012. Net income for the second quarter of 2013 included an income tax benefit of $3.7 million, while net income for the previous year period included an income tax benefit of $3.4 million. The income tax benefit for the second quarter of fiscal 2013 includes a benefit of $5.6 million, of which $12.2 million was for the non-cash reversal of primarily all of the remaining valuation allowance associated with the company’s net deferred tax assets in the U.S., partially offset by a non-cash income tax charge of $6.6 million associated with the sourced earnings from the company’s subsidiaries in Canada and China. The income tax benefit for the second quarter of fiscal 2012 included a $4.4 million non-cash reversal of a portion of a valuation allowance against net deferred tax assets in the U.S.

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