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TheStreet Open House

Culp Announces Results For Third Quarter Fiscal 2014

Stocks in this article: CFI

Culp, Inc. (NYSE: CFI) today reported financial and operating results for the third quarter and nine months ended January 26, 2014.

Fiscal 2014 Third Quarter Highlights:

  • Net sales were $72.4 million, up 13.6 percent, with mattress fabric sales up 8.5 percent and upholstery fabric sales up 20.1 percent, as compared with the same quarter last year. This reflects the highest sales level for the third quarter in ten years.
  • Pre-tax income was $4.6 million, compared with $4.5 million in the third quarter of fiscal 2013. The $4.6 million reflects the highest pre-tax income level for the third quarter in over 15 years.
  • Adjusted net income (non-GAAP) was $3.9 million, or $0.31 per diluted share, for the current quarter, compared with $3.9 million, or $0.32 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 6).
  • Net income (GAAP) was $8.4 million, or $0.68 per diluted share, compared with net income of $2.8 million, or $0.23 per diluted share, in the prior year period. Net income for the third quarter of fiscal 2014 included an income tax benefit $3.8 million, while net income for the third quarter of fiscal 2013 included an income tax expense of $1.7 million.
  • The company’s financial position remained strong with cash and cash equivalents and short term investments of $30.4 million and total debt of $5.0 million as of January 26, 2014.
  • The company paid a regular quarterly cash dividend of $0.05 per share, which compares with a $0.03 per share regular cash dividend in the prior year period.

Fiscal 2014 Year to Date Highlights

  • Year to date sales were $213.1 million, up 7.4 percent from the same period a year ago, with mattress fabrics segment sales up 3.4 percent and upholstery fabrics segment sales up 12.7 percent over the same period a year ago.
  • Pre-tax income was $14.9 million, up from $14.4 million for the same period last year.
  • Adjusted net income (non-GAAP) was $12.6 million, or $1.02 per diluted share, compared with $12.3 million, or $0.99 per diluted share, for the prior year period.Net income (GAAP) was $14.7 million, or $1.19 per diluted share, compared with net income of $14.6 million, or $1.17 per diluted share, for the same period a year ago. Year to date net income for both periods was affected by substantial income tax benefits booked in the third quarter of fiscal 2014 and the second quarter of fiscal 2013.
  • Consolidated return on capital was 27 percent, compared with 28 percent for the same period a year ago.
  • Free cash flow was $8.0 million, compared with $8.5 million for the same period a year ago. The company expects free cash flow for fiscal 2014 to be comparable to the $13.1 million achieved in fiscal 2013.
  • The projection for fourth quarter fiscal 2014 is for overall sales to be 3 percent to 7 percent higher compared with the previous year’s fourth quarter. Pre-tax income for the fourth quarter of fiscal 2014 is expected to be in the range of $5.0 million to $5.9 million. Pre-tax income for the fourth quarter of fiscal 2013 was $5.9 million.
  • The projection for the full year is for overall sales to be up approximately 5 percent, which represents the fifth consecutive year for sales growth.
  • Pre-tax income for the full year is expected to be $19.9 million to $20.8 million, compared with $20.3 million in fiscal 2013. The prior year pre-tax income of $20.3 million was the highest level in fifteen years.

Overview

For the third quarter ended January 26, 2014, net sales were $72.4 million, a 13.6 percent increase compared with $63.7 million a year ago. The company reported net income of $8.4 million, or $0.68 per diluted share, for the third quarter of fiscal 2014, compared with net income of $2.8 million, or $0.23 per diluted share, for the third quarter of fiscal 2013. Net income for the third quarter of fiscal 2014 included an income tax benefit of $3.8 million, which includes a $5.4 million income tax benefit to recognize U.S. foreign tax credits net of the income tax effects of the undistributed earnings associated with the company’s China operation, as determined on a U.S. income tax and financial reporting basis. Net income for the third quarter of fiscal 2013 included an income tax expense of $1.7 million.

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