CULP Culp Inc

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 05, 2025

 

 

Culp, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

North Carolina			1-12597	56-1001967
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
410 W. Engish Rd 5th Floor
High Point, North Carolina				27262
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 336 889-5161

 

1823 Eastchester Drive

High Point, North Carolina, 27265

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.05 per share		CULP		The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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This report and the exhibits attached hereto contain “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties that may cause actual events and results to differ materially from such statements. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often but not always characterized by qualifying words such as “expect,” “believe,” “will,” “may,” “should,” “could,” “potential,” “continue,” “target,” “predict”, “seek,” “anticipate,” “estimate,” “intend,” “plan,” “project,” and their derivatives, and include but are not limited to statements about expectations, projections, or trends for our future operations, strategic initiatives and plans, restructuring actions, production levels, new product launches, sales, profit margins, profitability, operating (loss) income, capital expenditures, working capital levels, cost savings (including, without limitation, anticipated cost savings from restructuring actions), income taxes, SG&A or other expenses, pre-tax (loss) income, earnings, cash flow, and other performance or liquidity measures, as well as any statements regarding dividends, share repurchases, liquidity, use of cash and cash requirements, ending cash balances and cash positions, borrowing capacity, investments, potential acquisitions, cash and non-cash restructuring and restructuring-related charges, expenses, and/or credits, net proceeds from restructuring related asset dispositions, future economic or industry trends, public health epidemics, or future developments. There can be no assurance that we will realize these expectations or meet our guidance, or that these beliefs will prove correct.

 

Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, demand for home furnishings products, consumer confidence, trends in disposable income, and general economic conditions. Decreases in these economic indicators could have a negative effect on our business and prospects. Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect us adversely. The future performance of our business depends in part on our success in conducting and finalizing acquisition negotiations and integrating acquired businesses into our existing operations. Changes in consumer tastes or preferences toward products not produced by us could erode demand for our products. Changes in tariffs or trade policy, including changes in U.S. trade enforcement priorities, or changes in the value of the U.S. dollar versus other currencies, could affect our financial results because a significant portion of our operations are located outside the United States. Strengthening of the U.S. dollar against other currencies could make our products less competitive on the basis of price in markets outside the United States, and strengthening of currency in China can have a negative impact on our sales of products produced there. In addition, because our foreign operations use the U.S. dollar as their functional currency, changes in the exchange rate between the local currency of those operations and the U.S dollar can affect our reported profits from those foreign operations. Also, economic or political instability in international areas could affect our operations or sources of goods in those areas, as well as demand for our products in international markets. The impact of public health epidemics on employees, customers, suppliers, and the global economy, such as the recent coronavirus pandemic, could also adversely affect our operations and financial performance. In addition, the impact of potential asset impairments, including impairments of property, plant, and equipment, inventory, or intangible assets, as well as the impact of valuation allowances applied against our net deferred income tax assets, could affect our financial results. Increases in freight costs, labor costs, and raw material prices, including increases in market prices for petrochemical products, can also significantly affect the prices we pay for shipping, labor, and raw materials, respectively, and in turn, increase our operating costs and decrease our profitability. Also, our success in diversifying our supply chain with reliable partners to effectively service our global platform could affect our operations and adversely affect our financial results. Finally, the future performance of our business also depends on our ability to successfully restructure our mattress fabric operations and return the segment to profitability. Further information about these factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A “Risk Factors” in our most recent Form 10-K and Form 10-Q reports filed with the Securities and Exchange Commission.

 

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Many of these factors are macroeconomic in nature and are, therefore, beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this report and the exhibits attached hereto as anticipated, believed, estimated, expected, intended, planned or projected. The forward-looking statements included in this report and the exhibits attached hereto are made only as of the date of of this report. Unless required by United States federal securities laws, we neither intend nor assume any obligation to update these forward-looking statements for any reason after the date of this report to conform these statements to actual results or to changes in our expectations. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations or financial results.

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Item 2.02 – Results of Operations and Financial Condition

On March 5, 2025, we issued a news release to announce our financial results for our third quarter ended January 26, 2025. A copy of the news release is attached hereto as Exhibit 99.1.

The information set forth in this Item 2.02 of this Current Report, and in Exhibit 99.1, is intended to be “furnished” under Item 2.02 of Form 8-K. Such information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

The news release contains adjusted income statement information for the three and nine month periods ending January 26, 2025, and January 28, 2024, respectively, which disclose adjusted loss from operations, a non-U.S. GAAP performance measure that eliminates items which are not expected to occur on a recurring or regular basis. For the three and nine month periods ending January 26, 2025, these items include, as applicable for the period presented, restructuring related charges and restructuring expense associated with the gradual discontinuation of the mattress fabrics manufacturing operations in Quebec, Canada, the process of selling the facility located in Quebec, Canada, and the relocation of certain equipment from Quebec, Canada, to Stokesdale, North Carolina; restructuring expense associated with consolidation of the mattress fabrics sewn cover operation in Haiti from two buildings into one building; restructuring expense associated with moving equipment from our upholstery fabrics operation located in Knoxville, Tennessee to our upholstery fabrics distribution center located in Burlington, N.C.; and restructuring expense associated with the rationalization of the upholstery fabrics finishing operation located in Shanghai, China. For the three and nine month period ending January 28, 2024, these items include, as applicable for the period presented, restructuring-related credits, restructuring related charges, and restructuring expense associated with the discontinued production of cut and sewn upholstery kits in Ouanaminthe, Haiti. The company has included this adjusted information in order to show operational performance excluding the effects of items not expected to occur on a recurring or regular basis. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. Management believes this presentation aids in the comparison of financial results among comparable financial periods. Management uses adjusted income statement information in evaluating the financial performance of our overall operations and business segments. Also, adjusted income statement information is used as a performance measure in our incentive-based executive compensation program. We note, however, that this adjusted income statement information should not be viewed in isolation or as a substitute for loss from operations calculated in accordance with U.S. GAAP.

The news release contains disclosures about our net debt, which is a non-U.S. GAAP liquidity measure that we define as cash and cash equivalents (which we sometimes refer to as “cash”) plus investments that are available to fund operations minus the total amount of outstanding borrowings under our lines of credit or other debt instruments. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. We believe this non-GAAP measure is useful to investors as it provides a way to compare our cash or debt position across periods on a consistent basis, regardless of the impact of financing activities. Net debt should not be viewed in isolation by investors and should not be used as a substitute for GAAP measures of liquidity.

The news release contains disclosures about free cash flow, a non-U.S. GAAP liquidity measure that we define as net cash (used in) provided by operating activities, less cash capital expenditures and any payments on vendor-financed capital expenditures, plus any proceeds from sale of property, plant, and equipment, plus proceeds from note receivable, plus proceeds from the sale of investments associated with our rabbi trust, less the purchase of investments associated with our rabbi trust, and plus or minus the effects of foreign currency exchange rate changes on cash and cash equivalents, in each case to the extent any such amount is incurred during the period presented. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. Management believes the disclosure of free cash flow provides useful information to investors because it measures our available cash flow for potential debt repayment, stock repurchases, dividends, additions to cash and investments, or other corporate purposes. We note, however, that not all of the company’s free cash flow is available for discretionary spending, as we may have mandatory debt payments and other cash requirements that must be deducted from our cash available for future use. In operating our business, management uses free cash flow to make decisions about what commitments of cash to make for operations, such as capital expenditures (and possible financing arrangements for these expenditures), purchases of inventory or supplies, SG&A expenditure levels, compensation, and other commitments of cash, while still allowing for adequate cash to meet known future commitments for cash, such as debt repayment, and also for making decisions about dividend payments and share repurchases.

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The news release contains disclosures about our Adjusted EBITDA, which is a non-U.S. GAAP performance measure that reflects net (loss) income excluding income tax expense (benefit), net interest income, and restructuring expense or credit and restructuring related charges or credits, as well as depreciation and amortization expense, and stock-based compensation expense. This measure also excludes other non-recurring charges and credits associated with our business, if and to the extent any such amount is incurred during the period presented. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. We believe presentation of Adjusted EBITDA is useful to investors because earnings before interest income and expense, income taxes, depreciation and amortization, and similar performance measures that exclude certain charges from earnings, are often used by investors and financial analysts in evaluating and comparing companies in our industry. We note, however, that such measures are not defined uniformly by various companies, with differing expenses being excluded from net income to calculate these performance measures. For this reason, Adjusted EBITDA should not be viewed in isolation by investors and should not be used as a substitute for net income (loss) calculated in accordance with GAAP, nor should it be used for direct comparisons with similarly titled performance measures reported by other companies. Use of Adjusted EBITDA as an analytical tool has limitations in that this measure does not reflect all expenses that are necessary to fund and operate our business, including funds required to pay taxes, service our debt, and fund capital expenditures, among others. Management uses Adjusted EBITDA to help it analyze the company’s earnings and operating performance, by excluding the effects of expenses that depend upon capital structure and debt level, tax provisions, and non-cash items such as depreciation, amortization and stock-based compensation expense that do not require immediate uses of cash.

The news release contains disclosures about return on capital employed for both the entire company and for individual business segments. We define return on capital employed as adjusted operating income (loss) (measured on a trailing twelve-month basis) divided by average capital employed (excluding intangible assets related to acquisitions at the divisional level only). Adjusted operating income (loss) excludes certain charges or credits that are not expected to occur on a recurring or regular basis, if applicable for the period presented. Average capital employed is calculated over rolling five fiscal periods, depending on which quarter is being presented. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. We believe return on capital employed is an accepted measure of earnings efficiency in relation to capital employed, but it is a non-U.S. GAAP performance measure that is not defined or calculated in the same manner by all companies. This measure should not be considered in isolation or as an alternative to net income (loss) or other performance measures, but we believe it provides useful information to investors by comparing the adjusted operating income (loss) we produce to the net asset base used to generate that income (loss). Also, adjusted operating income (loss) on a trailing twelve-months basis does not necessarily indicate results that would be expected for the full fiscal year or for the following twelve months. We note that, particularly for return on capital employed measured at the segment level, not all assets and expenses are allocated to our operating segments, and there are assets and expenses at the corporate (unallocated) level that may provide support to a segment’s operations and yet are not included in the assets and expenses used to calculate that segment’s return on capital. Thus, the average return on capital employed for the company’s segments will generally be different from the company’s overall return on capital employed. Management uses return on capital employed to evaluate the company’s earnings efficiency and the relative performance of its segments.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(d) Election of Directors

On March 5, 2025, the Board of Directors (the "Board") of Culp, Inc. (the "Company") adopted resolutions expanding the size of the Board from seven to eight and elected William L. Tyson as a director to fill the vacancy created by the expansion in the size of the Board, effective immediately. Mr. Tyson brings to the Company over 30 years of experience in investment banking and capital markets, and has served in executive leadership and strategic growth roles for some of the largest banks and financial institutions in the country.

Mr. Tyson served as head of Mergers & Acquisitions within the Investment Banking Group of Fifth Third Capital Markets from 2021 until his retirement in December 2024. In that role, Mr. Tyson was responsible for the strategic direction of the M&A and Investment Banking platform within the Capital Markets division of Fifth Third Bank as well as for driving Fifth Third Bank's capital markets non-organic growth strategy. Mr. Tyson previously served as Executive Vice President, Co-head of Capital Markets for Fifth Third Bank from 2017 to 2021 and as Senior Vice President, Co-head of Capital Markets from 2016 to 2017. Mr. Tyson served as Senior Managing Director and

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Co-head of Investment Banking and in various other leadership roles over the course of his approximately 18-year tenure with BB&T Capital Markets (and its predecessor, Scott & Stringfellow). Prior to that, Mr. Tyson headed Wheat First Butcher Singer's Furnishings, Consumer and Industrial Growth Industry Practices and served as a Vice President with Wachovia Corporation.

The Board has appointed Mr. Tyson to serve as a member of the Board's Audit, Corporate Governance and Nominating, and Compensation Committees. The Board affirmatively determined that Mr. Tyson is independent under the Company's Corporate Governance Guidelines and all applicable rules of the New York Stock Exchange and the U.S. Securities and Exchange Commission ("SEC"), including with respect to his Compensation Committee and Audit Committee membership. There are no family relationships between Mr. Tyson and any other director or executive officer of the Company nor are there any transactions between Mr. Tyson or any member of his immediate family and the Company of any of its subsidiaries that would be reportable as a related party transaction under the rules of the SEC. Further, there is no arrangement or understanding between Mr. Tyson and any other persons or entities pursuant to which Mr. Tyson was appointed as a director of the Company.

Mr. Tyson will receive compensation as a director of the Company consistent with that paid to other non-employee directors of the Company. As such, Mr. Tyson is entitled to receive an annual cash retainer of $55,000. In addition, non-employee directors of the Company are entitled to receive an annual equity grant of time-based restricted stock units under the Company's Amended and Restated Equity Incentive Plan with a grant date fair value of $55,000. The restricted stock units will vest on the next annual meeting of shareholders of the Company following the grant of units, subject to Mr. Tyson's continued service on the Board.

A copy of the Company's press release relating to Mr. Tyson's election is being furnished as Exhibit 99.2 to this Current Report on Form 8-K. Exhibit 99.2 shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act, as amended.

Item 7.01 Regulation FD Disclosure

On March 5, 2025, we posted a restructuring presentation to our website at https://culpinc.gcs-web.com/ (the "Restructuring Presentation"). A copy of the Restructuring Presentation is furnished as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated into this Item 7.01 by reference. We expect to use the Restructuring Presentation from time to time, in whole or in part, and possibly with modifications, in connection with presentations to investors, analysts, and others.

The information contained in the Restructuring Presentation is summary information that should be considered within the context of the company's filings with the Securities and Exchange Commission ("SEC") and other public announcements the company may make by press release or otherwise from time to time. The Restructuring Presentation speaks only as of the date of this Current Report on Form 8-K. We undertake no duty or obligation to publicly update or revise the information contained in the Restructuring Presentation, including, without limitation, any targets, estimates, goals, or other forward-looking statements, although we may do so from time to time. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases, or through other public disclosure.

The Restructuring Presentation contains statements intended as "forward-looking statements" that are subject to the cautionary statements about forward-looking statements set forth on page 2 of the Restructuring Presentation. By furnishing the information contained in this Current Report on Form 8-K, including Exhibit 99.3, we make no admission as to the materiality of any such information.

The information in this Current Report on Form 8-K, including Exhibit 99.3, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference to such filing.

Item 9.01 (d) – Exhibits

 

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EXHIBIT INDEX

 

Exhibit Number		Exhibit
99.1		News Release dated March 5, 2025
99.2		News Release dated March 5, 2025 - Culp Elects New Member to Board of Directors
99.3		Restructuring Presentation
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

		CULP, INC. (Registrant)
		By:	/s/ Kenneth R. Bowling
			Chief Financial Officer
			(principal financial officer)

 

 

Dated March 5, 2025

 

 

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CULP ANNOUNCES RESULTS FOR THIRD QUARTER FISCAL 2025, HIGHLIGHTED

BY CONTINUED IMPROVEMENT IN MATTRESS FABRICS OPERATING

PERFORMANCE AND EXECUTION ON RESTRUCTURING INITIATIVES

 

 

HIGH POINT, N.C. (March 5, 2025) ─ Culp, Inc. (NYSE: CULP) (together with its consolidated subsidiaries, “CULP” or the "company") today reported financial and operating results for the third quarter ended January 26, 2025.

 

Fiscal 2025 Third Quarter Financial Highlights

 

- Down 6.1 percent compared sequentially to last quarter, with mattress fabrics sales down

4.8 percent and upholstery fabrics sales down 7.8 percent

 

 

 

- Non-GAAP loss from operations of $(1.6) million (see reconciliation table on page 15)

- Sequential reduction in consolidated operating loss despite lower sales, driven primarily by

positive impact of mattress fabrics restructuring, including improved operating efficiencies,

lower fixed costs, and lower SG&A

 

 

 

- Currently expect to receive approximately $6.0 million to $8.0 million in cash proceeds (net

of all taxes and commissions) from the real estate sale

 

 

Commenting on CULP's third quarter performance, Iv Culp, President and Chief Executive Officer, said, “Despite continued macro industry weakness, we achieved further sequential improvement in our operating results for the quarter, driven largely by the positive effects of our mattress fabrics restructuring activity. We also continue to see increasing potential to grow our market share, particularly with new business opportunities for mattress fabrics and sewn mattress covers. We remain very confident in the future of our two business segments, especially considering the competitive advantages generated from a more streamlined cost structure with an agile manufacturing and sourcing platform and our market-leading design and innovation capabilities, ultimately supported by an eventual market recovery.

 

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"Our mattress fabrics segment continued to reduce its operating loss, building on the prior quarter improvement, and we also achieved near break-even consolidated adjusted EBITDA for the quarter, even with lower sequential sales. We are pleased that our restructuring initiatives within the mattress fabrics segment are mostly finished. The team has worked hard to execute on our plans and they are beginning to generate the savings and efficiency improvements we anticipated.

 

"Additionally, we entered into an agreement for the sale of our Canadian mattress fabrics facility during the quarter, and we are working to close this transaction in the upcoming months. Assuming completion, we intend to use the cash proceeds to pay off outstanding borrowings and further bolster our liquidity.

 

"Our consolidated sales for the third quarter were down sequentially, largely due to ongoing weakness in the home furnishings industry and, as expected, specific pressure on residential upholstery fabric sales that was exacerbated by some unique inventory adjustments from a large customer. Sales were also pressured in both segments by fewer shipping days due to holiday closures and weather-related disruptions during the quarter. However, we noted stronger demand in our upholstery fabrics hospitality/contract business, with both year-over-year and sequential increases in sales for the third quarter. Despite the tough residential demand environment, we remain pleased with this segment's continuing profitability, supported by our asset-light and flexible global platform.

 

"Looking ahead at the various and ongoing macro-economic headwinds, including increasing tariff uncertainty, as well as industry consolidation, we believe we are well positioned in both businesses with strong customer relationships and a variety of agile manufacturing and sourcing options. We are confident that our actions to optimize the cost platform in our mattress fabrics segment will enable us to return to profitability post-restructuring, even at currently depressed demand levels.

 

"Moreover, we took new and additional cost saving actions in the third quarter related to labor and professional fees that we expect will generate annual savings of approximately $1.0 million. We are also targeting further strategic actions to synergize and create more cost and operating efficiencies across our businesses going forward. Our management team continues to diligently focus on controlling what we can control and taking the critical steps to position our business for profitability as we head into fiscal 2026," added Culp.

 

Restructuring Update

 

The restructuring plan announced on May 1, 2024, primarily focused on the company's mattress fabrics segment, was substantially complete as of the end of the third quarter. The company still expects to generate $10.0 - $11.0 million in annualized savings and operating improvements following the restructuring, with most of the benefits beginning to be realized during the fourth quarter of fiscal 2025.

 

Based on completed restructuring activities, along with remaining restructuring estimates primarily related to limited ongoing building maintenance in Canada, the company now expects to incur total restructuring and restructuring-related costs and charges of $8.5 million in fiscal 2025, of which $5.3 million is now expected to be cash expenditures. The company still expects to fund close to $1.8 million of the cash costs with proceeds from the sale of excess manufacturing equipment and proceeds from a building lease termination in Haiti.

 

These restructuring and restructuring-related costs and charges exclude any gain on the sale of owned real estate in Canada, the amount and precise timing of which is currently unknown, which would ultimately reduce the total amount of charges incurred. The company has entered into a conditional agreement for the sale of the Canadian real estate, contingent on the satisfaction of certain due diligence and closing conditions. Assuming completion of the transaction, the company currently anticipates receiving approximately $6.0 to $8.0 million in cash proceeds (net of all taxes and commissions).

 

Third Quarter Fiscal 2025 Results versus Third Quarter Fiscal 2024 Results

 

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Business Segment Highlights

 

Mattress Fabrics Segment (“CHF”)

 

 

 

 

Upholstery Fabrics Segment (“CUF”)

 

 

 

 

 

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Balance Sheet, Cash Flow, and Liquidity

 

 

 

 

 

Financial Outlook

 

- Consolidated net sales for the fourth quarter expected to show some growth year-over-year

(and expected to remain flat sequentially), with an expected increase in the mattress fabrics

segment, offset by ongoing pressure on residential upholstery fabric sales due to weak

industry demand and impact from the timing of the Chinese new year holiday (which this

year falls entirely in the fourth quarter).

 

- Currently expect continued sequential improvement in adjusted EBITDA (excluding

restructuring and related charges), with further improvement in mattress fabrics profitability

in the fourth quarter; and a foundation for a return to consolidated operating income in

fiscal 2026.

 

Conference Call

 

Culp, Inc. will hold a conference call to discuss financial results for the fiscal 2025 third quarter on Thursday, March 6, 2025, at 9:00 a.m. Eastern Time. A live webcast of this call can be accessed on the “Upcoming Events” section on the investor relations page of the company’s website, www.culp.com. A replay of the webcast will be available for 30 days under the “Past Events” section on the investor relations page of the company’s website, beginning at 2:00 p.m. Eastern Time on March 6, 2025.

 

Investor Relations Contact

 

Ken Bowling, Executive Vice President, Chief Financial Officer, and Treasurer:

(336) 881-5630

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krbowling@culp.com

 

About the Company

 

Culp, Inc. is one of the largest marketers of mattress fabrics for bedding and upholstery fabrics for residential and commercial furniture in North America. The company markets a variety of fabrics to its global customer base of leading bedding and furniture companies, including fabrics produced at Culp’s manufacturing facilities and fabrics sourced through other suppliers. Culp has manufacturing and sourcing capabilities located in the United States, China, Haiti, Turkey, and Vietnam.

 

Forward Looking Statements

 

This release contains “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties that may cause actual events and results to differ materially from such statements. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often but not always characterized by qualifying words such as “expect,” “believe,” “will,” “may,” “should,” “could,” “potential,” “continue,” “target,” “predict”, “seek,” “anticipate,” “estimate,” “intend,” “plan,” “project,” and their derivatives, and include but are not limited to statements about expectations, projections, or trends for our future operations, strategic initiatives and plans, restructuring actions, production levels, new product launches, sales, profit margins, profitability, operating (loss) income, capital expenditures, working capital levels, cost savings (including, without limitation, anticipated cost savings from restructuring actions), income taxes, SG&A or other expenses, pre-tax (loss) income, earnings, cash flow, and other performance or liquidity measures, as well as any statements regarding dividends, share repurchases, liquidity, use of cash and cash requirements, ending cash balances and cash positions, borrowing capacity, investments, potential acquisitions, cash and non-cash restructuring and restructuring-related charges, expenses, and/or credits, net proceeds from restructuring related asset dispositions, future economic or industry trends, public health epidemics, or future developments. There can be no assurance that we will realize these expectations or meet our guidance, or that these beliefs will prove correct.

 

Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, demand for home furnishings products, consumer confidence, trends in disposable income, and general economic conditions. Decreases in these economic indicators could have a negative effect on our business and prospects. Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect us adversely. The future performance of our business depends in part on our success in conducting and finalizing acquisition negotiations and integrating acquired businesses into our existing operations. Changes in consumer tastes or preferences toward products not produced by us could erode demand for our products. Changes in tariffs or trade policy, including changes in U.S. trade enforcement priorities, or changes in the value of the U.S. dollar versus other currencies, could affect our financial results because a significant portion of our operations are located outside the United States. Strengthening of the U.S. dollar against other currencies could make our products less competitive on the basis of price in markets outside the United States, and strengthening of currency in China can have a negative impact on our sales of products produced there. In addition, because our foreign operations use the U.S. dollar as their functional currency, changes in the exchange rate between the local currency of those operations and the U.S dollar can affect our reported profits from those foreign operations. Also, economic or political instability in international areas could affect our operations or sources of goods in those areas, as well as demand for our products in international markets. The impact of public health epidemics on employees, customers, suppliers, and the global economy, such as the recent coronavirus pandemic, could also adversely affect our operations and financial performance. In addition, the impact of potential asset impairments, including impairments of property, plant, and equipment, inventory, or intangible assets, as well as the impact of valuation allowances applied against our net deferred income tax assets, could affect our financial results. Increases in freight costs, labor costs, and raw material prices, including increases in market prices for petrochemical products, can also significantly affect the prices we pay for shipping, labor, and raw materials, respectively, and in turn, increase our operating costs and decrease our profitability. Also, our success in diversifying our supply chain with reliable partners to effectively service our global platform could affect our operations and adversely affect our financial results. Finally, the future

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performance of our business also depends on our ability to successfully restructure our mattress fabric operations and return the segment to profitability. Further information about these factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A “Risk Factors” in our most recent Form 10-K and Form 10-Q reports filed with the Securities and Exchange Commission.

 

Many of these factors are macroeconomic in nature and are, therefore, beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this release as anticipated, believed, estimated, expected, intended, planned or projected. The forward-looking statements included in this release are made only as of the date of this report. Unless required by United States federal securities laws, we neither intend nor assume any obligation to update these forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in our expectations. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations or financial results.

 

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CULP, INC.

CONSOLIDATED STATEMENTS OF NET LOSS

FOR THE THREE MONTHS ENDED JANUARY 26, 2025, AND JANUARY 28, 2024

Unaudited

(Amounts in Thousands, Except for Per Share Data)

 

		THREE MONTHS ENDED
		Amount												Percent of Sales
		(1)				(1)
		January 26,				January 28,				% Over				January 26,				January 28,
		2025				2024				(Under)				2025				2024
Net sales		$	52,253			$	60,418				(13.5	)%			100.0	%			100.0	%
Cost of sales (1)			(45,906	)			(52,715	)			(12.9	)%			87.9	%			87.3	%
Gross profit			6,347				7,703				(17.6	)%			12.1	%			12.7	%
Selling, general and administrative    expenses			(8,579	)			(9,493	)			(9.6	)%			16.4	%			15.7	%
Restructuring (expense) credit (2)			(1,655	)			50			N.M					3.2	%			(0.1	)%
Loss from operations			(3,887	)			(1,740	)			123.4	%			(7.4	)%			(2.9	)%
Interest expense			(63	)			—				100.0	%			0.1	%			—
Interest income			255				284				(10.2	)%			0.5	%			0.5	%
Other income (expense)			15				(705	)			(102.1	)%			0.0	%			(1.2	)%
Loss before income taxes			(3,680	)			(2,161	)			70.3	%			(7.0	)%			(3.6	)%
Income tax expense (3)			(446	)			(1,027	)			(56.6	)%			(12.1	)%			(47.5	)%
Net loss		$	(4,126	)		$	(3,188	)			29.4	%			(7.9	)%			(5.3	)%
Net loss per share - basic		$	(0.33	)		$	(0.26	)			26.9	%
Net loss per share - diluted		$	(0.33	)		$	(0.26	)			26.9	%
Average shares outstanding-basic			12,559				12,470				0.7	%
Average shares outstanding-diluted			12,559				12,470				0.7	%

 

 

Notes

 

(1) See page 15 for a Reconciliation of Selected Income Statement Information to Adjusted Results for the three months ending January 26, 2025, and January 28, 2024.

 

(2) See page 17 for a Summary of Restructuring Expense (Credit) for the three months ending January 26, 2025, and January 28, 2024.

 

(3) Percent of sales column for income tax expense is calculated as a percent of loss before income taxes.

---

CULP, INC.

CONSOLIDATED STATEMENTS OF NET LOSS

FOR THE NINE MONTHS ENDED JANUARY 26, 2025, AND JANUARY 28, 2024

Unaudited

(Amounts in Thousands, Except for Per Share Data)

 

 

		NINE MONTHS ENDED
		Amount												Percent of Sales
		(1)				(1)
		January 26,				January 28,				% Over				January 26,				January 28,
		2025				2024				(Under)				2025				2024
Net sales		$	164,464			$	175,804				(6.5	)%			100.0	%			100.0	%
Cost of sales (1)			(147,050	)			(153,067	)			(3.9	)%			89.4	%			87.1	%
Gross profit			17,414				22,737				(23.4	)%			10.6	%			12.9	%
Selling, general and administrative    expenses			(27,235	)			(29,366	)			(7.3	)%			16.6	%			16.7	%
Restructuring expense (2)			(6,317	)			(432	)		N.M.					3.8	%			0.2	%
Loss from operations			(16,138	)			(7,061	)			128.6	%			(9.8	)%			(4.0	)%
Interest expense			(121	)			—				100.0	%			0.1	%			—
Interest income			761				911				(16.5	)%			0.5	%			0.5	%
Other expense			(898	)			(560	)			60.4	%			0.5	%			0.3	%
Loss before income taxes			(16,396	)			(6,710	)			144.4	%			(10.0	)%			(3.8	)%
Income tax expense (3)			(635	)			(2,244	)			(71.7	)%			(3.9	)%			(33.4	)%
Net loss		$	(17,031	)		$	(8,954	)			90.2	%			(10.4	)%			(5.1	)%
Net loss per share - basic		$	(1.36	)		$	(0.72	)			88.9	%
Net loss per share - diluted		$	(1.36	)		$	(0.72	)			88.9	%
Average shares outstanding-basic			12,514				12,419				0.8	%
Average shares outstanding-diluted			12,514				12,419				0.8	%

 

 

Notes

 

(1) See page 16 for a Reconciliation of Selected Income Statement Information to Adjusted Results for the nine months ending January 26, 2025, and January 28, 2024.

 

(2) See page 18 for a Summary of Restructuring Expense (Credit) for the nine months ending January 26, 2025, and January 28, 2024.

 

(3) Percent of sales column for income tax expense is calculated as a percent of loss before income taxes.

 

 

---

 

CONSOLIDATED BALANCE SHEETS

JANUARY 26, 2025, JANUARY 28, 2024, AND APRIL 28, 2024

Unaudited

(Amounts in Thousands)

 

		Amounts
		(Condensed)				(Condensed)												(Condensed)
		January 26,				January 28,				Increase (Decrease)								* April 28,
		2025				2024				Dollars				Percent				2024
Current assets
Cash and cash equivalents		$	5,279			$	12,585				(7,306	)			(58.1	)%		$	10,012
Short-term investments - rabbi trust			1,753				937				816				87.1	%			903
Accounts receivable, net			23,159				23,686				(527	)			(2.2	)%			21,138
Inventories			48,599				46,877				1,722				3.7	%			44,843
Short-term notes receivable			526				260				266				102.3	%			264
Current income taxes receivable			1,137				476				661				138.9	%			350
Assets held for sale			2,214				—				2,214				100.0	%			—
Other current assets			2,619				4,237				(1,618	)			(38.2	)%			3,371
Total current assets			85,286				89,058				(3,772	)			(4.2	)%			80,881
Property, plant & equipment, net			25,939				34,021				(8,082	)			(23.8	)%			33,182
Right of use assets			6,103				6,952				(849	)			(12.2	)%			6,203
Intangible assets			1,594				1,970				(376	)			(19.1	)%			1,876
Long-term investments - rabbi trust			6,250				7,083				(833	)			(11.8	)%			7,102
Long-term notes receivable			1,254				1,530				(276	)			(18.0	)%			1,462
Deferred income taxes			490				531				(41	)			(7.7	)%			518
Other assets			639				853				(214	)			(25.1	)%			830
Total assets		$	127,555			$	141,998				(14,443	)			(10.2	)%		$	132,054
Current liabilities
Lines of credit			5,384				—				5,384				100.0	%			—
Accounts payable - trade			32,717				29,793				2,924				9.8	%			25,607
Accounts payable - capital expenditures			439				19				420			N.M.					343
Operating lease liability - current			2,025				2,524				(499	)			(19.8	)%			2,061
Deferred compensation - current			1,753				937				816				87.1	%			903
Deferred revenue			697				1,798				(1,101	)			(61.2	)%			1,495
Accrued expenses			6,079				7,300				(1,221	)			(16.7	)%			6,726
Accrued restructuring			723				—				723				100.0	%			—
Income taxes payable - current			828				1,070				(242	)			(22.6	)%			972
Total current liabilities			50,645				43,441				7,204				16.6	%			38,107
Operating lease liability - long-term			3,127				2,656				471				17.7	%			2,422
Income taxes payable - long-term			1,400				2,072				(672	)			(32.4	)%			2,088
Deferred income taxes			6,582				6,177				405				6.6	%			6,379
Deferred compensation - long-term			6,151				6,856				(705	)			(10.3	)%			6,929
Total liabilities			67,905				61,202				6,703				11.0	%			55,925
Shareholders' equity			59,650				80,796				(21,146	)			(26.2	)%			76,129
Total liabilities and shareholders'    equity		$	127,555			$	141,998				(14,443	)			(10.2	)%		$	132,054
Shares outstanding			12,559				12,470				89				0.7	%			12,470

 

* Derived from audited financial statements.

 

 

 

 

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CULP, INC.

SUMMARY OF CASH AND DEBT

JANUARY 26, 2025, JANUARY 28, 2024, AND APRIL 28, 2024

Unaudited

(Amounts in Thousands)

 

 

 

		Amounts
		January 26,				January 28,				April 28,
		2025				2024				2024*
Cash:
Cash and cash equivalents		$	5,279			$	12,585			$	10,012
Less Debt:
Lines of credit			5,384				—				—
Net (debt) cash position		$	(105	)		$	12,585			$	10,012

 

 

* Derived from audited financial statements.

 

 

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CULP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED JANUARY 26, 2025, AND JANUARY 28, 2024

Unaudited

(Amounts in Thousands)

 

		NINE MONTHS ENDED
		Amounts
		January 26,				January 28,
		2025				2024
Cash flows from operating activities:
Net loss		$	(17,031	)		$	(8,954	)
Adjustments to reconcile net loss to net cash used in    operating activities:
Depreciation			4,288				4,897
Non-cash inventory credit			(1,022	)			(1,978	)
Amortization			301				291
Stock-based compensation			522				747
Deferred income taxes			231				172
Gain on sale of equipment			(27	)			(284	)
Non-cash restructuring expense			2,143				330
Foreign currency exchange gain			(97	)			(347	)
Changes in assets and liabilities:
Accounts receivable			(2,029	)			1,040
Inventories			(2,730	)			—
Other current assets			737				(1,190	)
Other assets			98				(107	)
Accounts payable - trade			7,184				963
Deferred revenue			(798	)			606
Accrued restructuring			753				—
Accrued expenses and deferred compensation			(335	)			(1,437	)
Income taxes			(1,613	)			(719	)
Net cash used in operating activities			(9,425	)			(5,970	)
Cash flows from investing activities:
Capital expenditures			(2,440	)			(3,249	)
Proceeds from the sale of equipment			1,450				363
Proceeds from note receivable			270				240
Proceeds from the sale of investments (rabbi trust)			699				1,224
Purchase of investments (rabbi trust)			(599	)			(704	)
Net cash used in investing activities			(620	)			(2,126	)
Cash flows from financing activities:
Proceeds from lines of credit			7,898				—
Payments on lines of credit			(2,500	)			—
Common stock surrendered for withholding taxes payable			(68	)			(146	)
Net cash provided by (used in) financing activities			5,330				(146	)
Effect of foreign currency exchange rate changes on cash and cash equivalents			(18	)			(137	)
Decrease in cash and cash equivalents			(4,733	)			(8,379	)
Cash and cash equivalents at beginning of year			10,012				20,964
Cash and cash equivalents at end of period		$	5,279			$	12,585
Free Cash Flow (1)		$	(10,063	)		$	(8,233	)

 

(1) See next page for Reconciliation of Free Cash Flow for the nine months ending January 26, 2025, and January 28, 2024.

 

 

 

 

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CULP, INC.

RECONCILIATION OF FREE CASH FLOW

FOR THE NINE MONTHS ENDED JANUARY 26, 2025, AND JANUARY 28, 2024

Unaudited

(Amounts in Thousands)

 

		NINE MONTHS ENDED
		Amounts
		January 26,				January 28,
		2025				2024
A) Net cash used in operating activities		$	(9,425	)		$	(5,970	)
B) Minus: Capital expenditures			(2,440	)			(3,249	)
C) Plus: Proceeds from the sale of equipment			1,450				363
D) Plus: Proceeds from note receivable			270				240
E) Plus: Proceeds from the sale of investments (rabbi trust)			699				1,224
F) Minus: Purchase of investments (rabbi trust)			(599	)			(704	)
G) Effects of foreign currency exchange rate changes on cash and cash equivalents			(18	)			(137	)
Free Cash Flow		$	(10,063	)		$	(8,233	)

 

 

 

 

 

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CULP, INC.

STATEMENTS OF OPERATIONS BY SEGMENT

FOR THE THREE MONTHS ENDED JANUARY 26, 2025, AND JANUARY 28, 2024

Unaudited

(Amounts in Thousands)

 

		THREE MONTHS ENDED
		Amounts												Percent of Total Sales
		January 26,				January 28,				% Over				January 26,				January 28,
Net Sales by Segment		2025				2024				(Under)				2025				2024
Mattress Fabrics		$	28,642			$	30,021				(4.6	)%			54.8	%			49.7	%
Upholstery Fabrics			23,611				30,397				(22.3	)%			45.2	%			50.3	%
Net Sales		$	52,253			$	60,418				(13.5	)%			100.0	%			100.0	%
Gross Profit														Gross Margin
Mattress Fabrics		$	2,743			$	1,520				80.5	%			9.6	%			5.1	%
Upholstery Fabrics			4,228				6,122				(30.9	)%			17.9	%			20.1	%
Total Segment Gross Profit			6,971				7,642				(8.8	)%			13.3	%			12.6	%
Restructuring Related (Charge) Credit (1)			(624	)			61				(1123.0	)%			(1.2	)%			0.1	%
Gross Profit		$	6,347			$	7,703				(17.6	)%			12.1	%			12.7	%
Selling, General and Administrative    Expenses by Segment														Percent of Sales
Mattress Fabrics		$	3,176			$	3,102				2.4	%			11.1	%			10.3	%
Upholstery Fabrics			3,549				4,030				(11.9	)%			15.0	%			13.3	%
Unallocated Corporate Expenses			1,854				2,361				(21.5	)%			3.5	%			3.9	%
Selling, General and Administrative    Expenses		$	8,579			$	9,493				(9.6	)%			16.4	%			15.7	%
(Loss) Income from Operations    by Segment														Operating Margin
Mattress Fabrics		$	(433	)		$	(1,582	)			(72.6	)%			(1.5	)%			(5.3	)%
Upholstery Fabrics		$	679			$	2,092				(67.5	)%			2.9	%			6.9	%
Unallocated Corporate Expenses		$	(1,854	)		$	(2,361	)			(21.5	)%			(3.5	)%			(3.9	)%
Total Segment Loss from          Operations			(1,608	)			(1,851	)			(13.1	)%			(3.1	)%			(3.1	)%
Restructuring Related (Charge) Credit (1)			(624	)			61			N.M					(1.2	)%			0.1	%
Restructuring (Expense) Credit (2)			(1,655	)			50			N.M					(3.2	)%			0.1	%
Loss from Operations		$	(3,887	)		$	(1,740	)			123.4	%			(7.4	)%			(2.9	)%
Depreciation Expense by Segment
Mattress Fabrics		$	1,082			$	1,492				(27.5	)%
Upholstery Fabrics			131				154				(14.9	)%
Depreciation Expense		$	1,213			$	1,646				(26.3	)%

 

Notes

 

(1) See page 15 for a Reconciliation of Selected Income Statement Information to Adjusted Results for the three months ending January 26, 2025, and January 28, 2024.

 

(2) See page 17 for a Summary of Restructuring Expense (Credit) for the three months ending January 26, 2025, and January 28, 2024.

 

 

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CULP, INC.

STATEMENTS OF OPERATIONS BY SEGMENT

FOR THE NINE MONTHS ENDED JANUARY 26, 2025, AND JANUARY 28, 2024

Unaudited

(Amounts in Thousands)

 

		NINE MONTHS ENDED
		Amounts												Percent of Total Sales
		January 26,				January 28,				% Over				January 26,				January 28,
Net Sales by Segment		2025				2024				(Under)				2025				2024
Mattress Fabrics		$	86,792			$	90,619				(4.2	)%			52.8	%			51.5	%
Upholstery Fabrics			77,672				85,185				(8.8	)%			47.2	%			48.5	%
Net Sales		$	164,464			$	175,804				(6.5	)%			100.0	%			100.0	%
Gross Profit:														Gross Margin
Mattress Fabrics		$	4,862			$	5,997				(18.9	)%			5.6	%			6.6	%
Upholstery Fabrics			14,061				16,780				(16.2	)%			18.1	%			19.7	%
Total Segment Gross Profit			18,923				22,777				(16.9	)%			11.5	%			13.0	%
Restructuring Related Charge (1)			(1,509	)			(40	)		N.M.					(0.9	)%			(0.0	)%
Gross Profit		$	17,414			$	22,737				(23.4	)%			10.6	%			12.9	%
Selling, General and Administrative    Expenses by Segment														Percent of Sales
Mattress Fabrics		$	9,880			$	9,913				(0.3	)%			11.4	%			10.9	%
Upholstery Fabrics			11,056				11,969				(7.6	)%			14.2	%			14.1	%
Unallocated Corporate Expenses			6,299				7,484				(15.8	)%			3.8	%			4.3	%
Selling, General and Administrative    Expenses		$	27,235			$	29,366				(7.3	)%			16.6	%			16.7	%
(Loss) Income from Operations    by Segment														Operating Margin
Mattress Fabrics		$	(5,018	)		$	(3,916	)			28.1	%			(5.8	)%			(4.3	)%
Upholstery Fabrics		$	3,005				4,811				(37.5	)%			3.9	%			5.6	%
Unallocated Corporate Expenses		$	(6,299	)			(7,484	)			(15.8	)%			(3.8	)%			(4.3	)%
Total Segment Loss from          Operations			(8,312	)			(6,589	)			26.1	%			(5.1	)%			(3.7	)%
Restructuring Related Charge (1)			(1,509	)			(40	)		N.M.					(0.9	)%			(0.0	)%
Restructuring Expense (2)			(6,317	)			(432	)		N.M.					(3.8	)%			(0.2	)%
Loss from Operations		$	(16,138	)		$	(7,061	)			128.6	%			(9.8	)%			(4.0	)%
Return on Capital Employed (ttm) (3)
Mattress Fabrics			(13.7	)%			(10.1	)%			35.6	%
Upholstery Fabrics			50.7	%			58.9	%			(13.9	)%
Unallocated Corporate		N.M.				N.M.				N.M.
Consolidated			(17.5	)%			(13.5	)%			29.6	%
Capital Employed (3)
Mattress Fabrics		$	50,540			$	67,338				(24.9	)%
Upholstery Fabrics			12,616				5,884				114.4	%
Unallocated Corporate			4,406				3,074				43.3	%
Consolidated		$	67,562			$	76,296				(11.4	)%
Depreciation Expense by Segment
Mattress Fabrics (4)		$	5,166			$	4,422				16.8	%
Upholstery Fabrics			464				475				(2.3	)%
Depreciation Expense		$	5,630			$	4,897				15.0	%

 

Notes

 

(1) See page 16 for a Reconciliation of Selected Income Statement Information to Adjusted Results for the nine months ending January 26, 2025, and January 28, 2024.

 

(2) See page 18 for a Summary of Restructuring Expense (Credit) for the nine months ending January 26, 2025, and January 28, 2024.

 

(3) See pages 20 through 23 for calculation of Return on Capital Employed by Segment for the trailing twelve months ending January 26, 2025, and January 28, 2024, and a reconciliation to information from our U.S. GAAP financial statements. The capital employed balances are as of January 26, 2025, and January 28, 2024.

 

(4) During the nine-month period ending January 26, 2025, depreciation expense for the mattress fabrics segment included additional depreciation expense related to the shortening of useful lives of equipment associated with the gradual discontinuation of operations at our manufacturing facility located in Quebec, Canada. The amount of additional depreciation expense totaling $1.3 million was classified as restructuring expense in our Consolidated Statements of Net Loss.

---

CULP, INC.

RECONCILIATION OF SELECTED INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS

FOR THE THREE MONTHS ENDED JANUARY 26, 2025, AND JANUARY 28, 2024

Unaudited

(Amounts in Thousands)

 

		As Reported								Adjusted Results
		January 26,								January 26,
		2025				Adjustments				2025
Net sales		$	52,253				—			$	52,253
Cost of sales (1)			(45,906	)			624				(45,282	)
Gross profit			6,347				624				6,971
Selling, general and administrative    expenses			(8,579	)			—				(8,579	)
Restructuring expense (2)			(1,655	)			1,655				—
Loss from operations		$	(3,887	)			2,279			$	(1,608	)

 

Notes

 

(1) During the three months ending January 26, 2025, cost of sales included restructuring related charges totaling $624,000 for losses on the disposal, valuation, and markdowns of inventory related to the gradual discontinuation of operations at our manufacturing facility located in Quebec, Canada.

 

(2) See page 17 for a Summary of Restructuring Expense (Credit) for the three months ending January 26, 2025.

 

		As Reported								Adjusted Results
		January 28,								January 28,
		2024				Adjustments				2024
Net sales		$	60,418				—			$	60,418
Cost of sales (1)			(52,715	)			(61	)			(52,776	)
Gross profit			7,703				(61	)			7,642
Selling, general and administrative    expenses			(9,493	)			—				(9,493	)
Restructuring credit (2)			50				(50	)			—
Loss from operations		$	(1,740	)			(111	)		$	(1,851	)

 

 

Notes

(1) During the three months ending January 28, 2024, cost of sales included a restructuring related credit totaling $61,000 for a gain on disposal of inventory related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti.

 

(2) See page 17 for a Summary of Restructuring Expense (Credit) for the three months ending January 28, 2024.

 

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CULP, INC.

RECONCILIATION OF SELECTED INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS

FOR THE NINE MONTHS ENDED JANUARY 26, 2025, AND JANUARY 28, 2024

Unaudited

(Amounts in Thousands)

 

		As Reported								Adjusted Results
		January 26,								January 26,
		2025				Adjustments				2025
Net sales		$	164,464				—			$	164,464
Cost of sales (1)			(147,050	)			1,509				(145,541	)
Gross profit			17,414				1,509				18,923
Selling, general and administrative    expenses			(27,235	)			—				(27,235	)
Restructuring expense (2)			(6,317	)			6,317				—
Loss from operations		$	(16,138	)			7,826			$	(8,312	)

 

Notes

 

(1) During the nine months ending January 26, 2025, cost of sales included restructuring related charges totaling $1.5 million for losses on the disposal, valuation, and markdowns of inventory related to the gradual discontinuation of operations at our manufacturing facility located in Quebec, Canada.

 

(2) See page 18 for a Summary of Restructuring Expense (Credit) for the nine months ending January 26, 2025.

 

 

		As Reported								Adjusted Results
		January 28,								January 28,
		2024				Adjustments				2024
Net sales		$	175,804				—			$	175,804
Cost of sales (1)			(153,067	)			40				(153,027	)
Gross profit			22,737				40				22,777
Selling, general and administrative    expenses			(29,366	)			—				(29,366	)
Restructuring expense (2)			(432	)			432				—
Loss from operations		$	(7,061	)			472			$	(6,589	)

 

Notes

(1) During the nine months ending January 28, 2024, cost of sales included restructuring related charges totaling $40,000 for markdowns of inventory related to discontinuing production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti.

 

(2) See page 18 for a Summary of Restructuring Expense (Credit) for the nine months ending January 28, 2024.

 

---

CULP, INC.

SUMMARY OF RESTRUCTURING EXPENSE (CREDIT)

FOR THE THREE MONTHS ENDED JANUARY 26, 2025, AND JANUARY 28, 2024

Unaudited

(Amounts in Thousands)

 

 

 

The following summarizes restructuring expense (credit) for three-month period ending January 26, 2025:

		Upholstery				Mattress
Description		Fabrics				Fabrics				Total
Employee termination benefits		$	—			$	176			$	176
Impairment charges related to fixed assets			—				25				25
Gain on the sale of equipment			—				(58	)			(58	)
Facility consolidation and relocation expenses			8				962				970
Cost incurred to ready a closed facility for sale			—				413				413
Other associated costs			—				129				129
Total restructuring expense (1)		$	8			$	1,647			$	1,655

 

(1) During the three months ending January 26, 2025, restructuring expense of $1.7 million represents costs associated with (i) consolidating the company's North American mattress fabrics operations, including the gradual discontinuation of operations at the mattress fabrics manufacturing facility located in Quebec, Canada, and moving a portion of the knitting and finishing capacity from the company's manufacturing facility located in Quebec, Canada to the company's U.S. manufacturing facility located in Stokesdale, NC; (ii) consolidating two leased facilities related to the sewn mattress cover operation located in Ouanaminthe, Haiti, into one facility and reducing other operating expenses at this location; and (iii) moving equipment from our upholstery fabrics operation located in Knoxville, Tennessee to our upholstery fabrics distribution center located in Burlington, N.C.

 

 

The following summarizes restructuring expense (credit) for three-month period ending January 28, 2024:

 

		Upholstery
Description		Fabrics
Gain on the disposal of equipment			(50	)
Total restructuring credit (1)		$	(50	)

 

(1) During the three months ending January 28, 2024, the restructuring credit of $50,000 represents gains on the sale of equipment associated with the discontinuance production of cut and sewn upholstery kits at our facility located in Ouanaminthe, Haiti.

 

 

 

 

 

 

 

 

---

CULP, INC.

SUMMARY OF RESTRUCTURING EXPENSE (CREDIT)

FOR THE NINE MONTHS ENDED JANUARY 26, 2025, AND JANUARY 28, 2024

Unaudited

(Amounts in Thousands)

 

 

 

The following summarizes restructuring expense (credit) for nine-month period ending January 26, 2025:

		Upholstery				Mattress
Description		Fabrics				Fabrics				Total
Employee termination benefits		$	102			$	1,326			$	1,428
Accelerated depreciation			—				1,339				1,339
Impairment charges related to fixed assets			—				131				131
Gain on the sale of equipment			—				(173	)			(173	)
Lease termination costs			—				849				849
Facility consolidation and relocation expenses			53				2,063				2,116
Cost incurred to ready a closed facility for sale			—				428				428
Other associated costs			14				185				199
Total restructuring expense (1)		$	169			$	6,148			$	6,317

 

(1) During the nine months ending January 26, 2025, restructuring expense of $6.3 million represents costs associated with (i) consolidating the company's North American mattress fabrics operations, including the gradual discontinuation of operations at the mattress fabrics manufacturing facility located in Quebec, Canada, and moving a portion of the knitting and finishing capacity from the company's manufacturing facility located in Quebec, Canada to the company's U.S. manufacturing facility located in Stokesdale, NC; (ii) consolidating two leased facilities related to the sewn mattress cover operation located in Ouanaminthe, Haiti, into one facility and reducing other operating expenses at this location; and (iii) moving equipment from our upholstery fabrics operation located in Knoxville, Tennessee to our upholstery fabrics distribution center located in Burlington, N.C.

 

 

 

The following summarizes restructuring expense (credit) for nine-month period ending January 28, 2024:

		Upholstery
Description		Fabrics
Employee termination benefits		$	103
Impairment charges related to equipment			329
Total restructuring expense (1)		$	432

 

(1) During the nine months ending January 28, 2024, restructuring expense of $432,000 represents costs related to the discontinuance of production of cut and sewn upholstery kits at our facility located in Ouanaminthe, Haiti.

---

CULP, INC.

CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA

FOR THE TWELVE MONTHS ENDED JANUARY 26, 2025, AND JANUARY 28, 2024

Unaudited

(Amounts in Thousands)

 

		Quarter Ended				Quarter Ended				Quarter Ended				Quarter Ended				Trailing 12 Months
		April 28,				July 28,				October 27,				January 26,				January 26,
		2024				2024				2024				2025				2025
Net loss		$	(4,865	)		$	(7,261	)		$	(5,644	)		$	(4,126	)		$	(21,896	)
Income tax expense (benefit)			805				240				(50	)			446				1,441
Interest income, net			(252	)			(235	)			(214	)			(192	)			(893	)
Depreciation expense			1,623				1,581				1,496				1,211				5,911
Restructuring expense			204				2,631				2,031				1,655				6,521
Restructuring related charge			—				116				769				624				1,509
Amortization expense			99				99				101				101				400
Stock based compensation			168				176				188				158				690
Adjusted EBITDA		$	(2,218	)		$	(2,653	)		$	(1,323	)		$	(123	)		$	(6,317	)
% Net Sales			(4.5	)%			(4.7	)%			(2.4	)%			(0.2	)%			(3.0	)%
		Quarter Ended				Quarter Ended				Quarter Ended				Quarter Ended				Trailing 12 Months
		April 30,				July 30,				October 29,				January 28,				January 28,
		2023				2023				2023				2024				2024
Net loss		$	(4,681	)		$	(3,342	)		$	(2,424	)		$	(3,188	)		$	(13,635	)
Income tax expense			798				701				516				1,027				3,042
Interest income, net			(239	)			(345	)			(282	)			(284	)			(1,150	)
Depreciation expense			1,619				1,634				1,617				1,646				6,516
Restructuring expense (credit)			70				338				144				(50	)			502
Restructuring related charge (credit)			—				179				(78	)			(61	)			40
Amortization expense			115				96				97				98				406
Stock based compensation			258				322				163				262				1,005
Adjusted EBITDA		$	(2,060	)		$	(417	)		$	(247	)		$	(550	)		$	(3,274	)
% Net Sales			(3.4	)%			(0.7	)%			(0.4	)%			(0.9	)%			(1.4	)%
% Over (Under)			7.7	%			536.2	%			435.6	%			(77.6	)%			92.9	%

 

 

 

---

CULP, INC.

RETURN ON CAPITAL EMPLOYED BY SEGMENT

FOR THE TWELVE MONTHS ENDED JANUARY 26, 2025

Unaudited

(Amounts in Thousands)

 

	Adjusted Operating     (Loss) Income
	Twelve Months Ended			Average Capital			Return on Avg. Capital
	January 26, 2025 (1)			Employed (2)			Employed (3)
Mattress Fabrics	$	(7,948	)	$	58,172			(13.7	)%
Upholstery Fabrics		3,981			7,853			50.7	%
Unallocated Corporate		(8,389	)		4,453		N.M.
Consolidated	$	(12,356	)	$	70,478			(17.5	)%
Average Capital Employed	As of the Three Months Ended January 26, 2025													As of the Three Months Ended October 27, 2024													As of the Three Months Ended July 28, 2024
	Mattress			Upholstery			Unallocated							Mattress			Upholstery			Unallocated							Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total				Fabrics			Fabrics			Corporate			Total				Fabrics			Fabrics			Corporate			Total
Total assets (4)	$	70,877			33,697			22,981			127,555			$	69,261			31,385			28,341			128,987			$	66,713			31,763			30,663			129,139
Total liabilities		(20,337	)		(21,081	)		(26,487	)		(67,905	)			(14,948	)		(24,783	)		(25,633	)		(65,364	)			(10,303	)		(24,857	)		(24,855	)		(60,015	)
Subtotal	$	50,540		$	12,616			(3,506	)	$	59,650			$	54,313		$	6,602			2,708		$	63,623			$	56,410		$	6,906			5,808		$	69,124
Cash and cash equivalents		—			—			(5,279	)		(5,279	)			—			—			(10,531	)		(10,531	)			—			—			(13,472	)		(13,472	)
Short-term investments - Rabbi Trust		—			—			(1,753	)		(1,753	)			—			—			(919	)		(919	)			—			—			(954	)		(954	)
Current income taxes receivable		—			—			(1,137	)		(1,137	)			—			—			(979	)		(979	)			—			—			(532	)		(532	)
Long-term investments - Rabbi Trust		—			—			(6,250	)		(6,250	)			—			—			(7,105	)		(7,105	)			—			—			(7,089	)		(7,089	)
Deferred income taxes - non-current		—			—			(490	)		(490	)			—			—			(559	)		(559	)			—			—			(528	)		(528	)
Lines of credit		—			—			5,384			5,384				—			—			4,074			4,074				—			—			4,017			4,017
Deferred compensation - current		—			—			1,753			1,753				—			—			919			919				—			—			954			954
Accrued restructuring								723			723										863			863										633			633
Income taxes payable - current		—			—			828			828				—			—			1,165			1,165				—			—			759			759
Income taxes payable - long-term		—			—			1,400			1,400				—			—			1,378			1,378				—			—			2,180			2,180
Deferred income taxes - non-current		—			—			6,582			6,582				—			—			6,624			6,624				—			—			6,449			6,449
Deferred compensation non-current		—			—			6,151			6,151				—			—			6,975			6,975				—			—			6,946			6,946
Total Capital Employed	$	50,540		$	12,616		$	4,406		$	67,562			$	54,313		$	6,602		$	4,613		$	65,528			$	56,410		$	6,906		$	5,171		$	68,487

 

---

CULP, INC.

RETURN ON CAPITAL EMPLOYED BY SEGMENT - CONTINUED

FOR THE TWELVE MONTHS ENDED JANUARY 26, 2025

Unaudited

(Amounts in Thousands)

	As of the Three Months Ended April 28, 2024													As of the Three Months Ended January 28, 2024
	Mattress			Upholstery			Unallocated							Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total				Fabrics			Fabrics			Corporate			Total
Total assets (4)	$	72,060			32,629			27,365			132,054			$	75,572			38,085			28,341			141,998
Total liabilities		(9,803	)		(25,370	)		(20,752	)		(55,925	)			(8,234	)		(32,201	)		(20,767	)		(61,202	)
Subtotal	$	62,257		$	7,259			6,613		$	76,129			$	67,338		$	5,884		$	7,574		$	80,796
Cash and cash equivalents		—			—			(10,012	)		(10,012	)			—			—			(12,585	)		(12,585	)
Short-term investments - Rabbi Trust		—			—			(903	)		(903	)			—			—			(937	)		(937	)
Current income taxes receivable		—			—			(350	)		(350	)			—			—			(476	)		(476	)
Long-term investments - Rabbi Trust		—			—			(7,102	)		(7,102	)			—			—			(7,083	)		(7,083	)
Deferred income taxes - non-current		—			—			(518	)		(518	)			—			—			(531	)		(531	)
Deferred compensation - current		—			—			903			903				—			—			937			937
Income taxes payable - current		—			—			972			972				—			—			1,070			1,070
Income taxes payable - long-term		—			—			2,088			2,088				—			—			2,072			2,072
Deferred income taxes - non-current		—			—			6,379			6,379				—			—			6,177			6,177
Deferred compensation non-current		—			—			6,929			6,929				—			—			6,856			6,856
Total Capital Employed	$	62,257		$	7,259		$	4,999		$	74,515			$	67,338		$	5,884		$	3,074		$	76,296
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Consolidated
Average Capital Employed (2)	$	58,172		$	7,853		$	4,453		$	70,478

 

Notes

 

 

(1) See last page of this presentation for calculation.

 

(2) Average capital employed is calculated independently for each segment and on a consolidated basis using the five quarterly periods ending January 26, 2025, October 27, 2024, July 28, 2024, April 28, 2024, and January 28, 2024.

 

(3) Return on average capital employed represents the twelve months adjusted operating (loss) income as of January 26, 2025, divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term and long-term investments – rabbi trust, income taxes receivable and payable, accrued restructuring, lines of credit, non-current deferred income tax assets and liabilities, and current and non-current deferred compensation.

 

(4) Intangible assets are included in unallocated corporate for all periods presented and therefore, have no effect on capital employed and return on capital employed for our mattress fabrics and upholstery fabrics segments.

 

 

---

CULP INC.

RETURN ON CAPITAL EMPLOYED BY SEGMENT

FOR THE TWELVE MONTHS ENDED JANUARY 28, 2024

Unaudited

(Amounts in Thousands)

 

	Adjusted Operating  (Loss) Income
	Twelve Months Ended			Average  Capital			Return on Avg. Capital
	January 28, 2024 (1)			Employed (2)			Employed (3)
Mattress Fabrics	$	(6,446	)	$	63,914			(10.1	)%
Upholstery Fabrics		6,422			10,901			58.9	%
Unallocated Corporate		(10,522	)		3,547		N.M.
Consolidated	$	(10,546	)	$	78,361			(13.5	)%
Average Capital Employed	As of the Three months ended January 28, 2024													As of the Three months ended October 29, 2023													As of the Three Months Ended July 30, 2023
	Mattress			Upholstery			Unallocated							Mattress			Upholstery			Unallocated							Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total				Fabrics			Fabrics			Corporate			Total				Fabrics			Fabrics			Corporate			Total
Total assets (4)	$	75,572			38,085			28,341			141,998			$	75,924			35,082			31,154			142,160			$	72,286			37,592			33,024			142,902
Total liabilities		(8,234	)		(32,201	)		(20,767	)		(61,202	)			(14,739	)		(23,758	)		(20,035	)		(58,532	)			(11,230	)		(25,235	)		(20,320	)		(56,785	)
Subtotal	$	67,338		$	5,884		$	7,574		$	80,796			$	61,185		$	11,324		$	11,119		$	83,628			$	61,056		$	12,357		$	12,704		$	86,117
Cash and cash equivalents		—			—			(12,585	)		(12,585	)			—			—			(15,214	)		(15,214	)			—			—			(16,812	)		(16,812	)
Short-term investments - Rabbi Trust		—			—			(937	)		(937	)			—			—			(937	)		(937	)			—			—			(791	)		(791	)
Current income taxes receivable		—			—			(476	)		(476	)			—			—			(340	)		(340	)			—			—			(202	)		(202	)
Long-term investments - Rabbi Trust		—			—			(7,083	)		(7,083	)			—			—			(6,995	)		(6,995	)			—			—			(7,204	)		(7,204	)
Deferred income taxes - non-current		—			—			(531	)		(531	)			—			—			(472	)		(472	)			—			—			(476	)		(476	)
Deferred compensation - current		—			—			937			937				—			—			937			937				—			—			791			791
Accrued restructuring		—			—			—			—				—			—			—			—				—			—			10			10
Income taxes payable - current		—			—			1,070			1,070				—			—			998			998				—			—			526			526
Income taxes payable - long-term		—			—			2,072			2,072				—			—			2,055			2,055				—			—			2,710			2,710
Deferred income taxes - non-current		—			—			6,177			6,177				—			—			5,663			5,663				—			—			5,864			5,864
Deferred compensation - long-term		—			—			6,856			6,856				—			—			6,748			6,748				—			—			6,966			6,966
Total Capital Employed	$	67,338		$	5,884		$	3,074		$	76,296			$	61,185		$	11,324		$	3,562		$	76,071			$	61,056		$	12,357		$	4,086		$	77,499

 

 

 

---

CULP INC.

RETURN ON CAPITAL EMPLOYED BY SEGMENT - CONTINUED

FOR THE TWELVE MONTHS ENDED JANUARY 28, 2024

Unaudited

(Amounts in Thousands)

 

	As of the Three Months Ended April 30, 2023													As of the Three Months Ended January 29, 2023
	Mattress			Upholstery			Unallocated							Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total				Fabrics			Fabrics			Corporate			Total
Total assets (4)	$	75,494			39,127			37,562			152,183			$	75,393			39,817			35,388			150,598
Total liabilities		(11,387	)		(29,638	)		(22,078	)		(63,103	)			(9,511	)		(24,367	)		(23,216	)		(57,094	)
Subtotal	$	64,107		$	9,489		$	15,484		$	89,080			$	65,882		$	15,450		$	12,172		$	93,504
Cash and cash equivalents		—			—			(20,964	)		(20,964	)			—			—			(16,725	)		(16,725	)
Short-term investments - Rabbi Trust		—			—			(1,404	)		(1,404	)			—			—			(2,420	)		(2,420	)
Current income taxes receivable		—			—			—			—				—			—			(238	)		(238	)
Long-term investments - Rabbi Trust		—			—			(7,067	)		(7,067	)			—			—			(7,725	)		(7,725	)
Deferred income taxes - non-current		—			—			(480	)		(480	)			—			—			(463	)		(463	)
Deferred compensation - current		—			—			1,404			1,404				—			—			2,420			2,420
Income taxes payable - current		—			—			753			753				—			—			467			467
Income taxes payable - long-term		—			—			2,675			2,675				—			—			2,648			2,648
Deferred income taxes - non-current		—			—			5,954			5,954				—			—			6,089			6,089
Deferred compensation - long-term		—			—			6,842			6,842				—			—			7,590			7,590
Total Capital Employed	$	64,107		$	9,489		$	3,197		$	76,793			$	65,882		$	15,450		$	3,815		$	85,147
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Consolidated
Average Capital Employed (2)	$	63,914		$	10,901		$	3,547		$	78,361

 

Notes

 

(1) See last page of this presentation for calculation.

 

(2) Average capital employed is calculated independently for each segment and on a consolidated basis using the five quarterly periods ending January 28, 2024, October 29, 2023, July 30, 2023, April 30, 2023, and January 29, 2023.

 

(3) Return on average capital employed represents the last twelve months adjusted operating (loss) income as of January 28, 2024, divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term and long-term investments – rabbi trust, income taxes receivable and payable, accrued restructuring,noncurrent deferred income tax assets and liabilities, and current and non-current deferred compensation.

 

(4) Intangible assets are included in unallocated corporate for all periods presented and therefore, have no effect on capital employed and return on capital employed for our mattress fabrics and upholstery fabrics segments.

 

 

---

CULP INC.

CONSOLIDATED STATEMENTS OF ADJUSTED OPERATING (LOSS) INCOME

FOR THE TWELVE MONTHS ENDED JANUARY 26, 2025, AND JANUARY 28, 2024

Unaudited

(Amounts in Thousands)

 

		Quarter Ended
																		Trailing 12
																		Months
		04/28/2024				07/28/2024				10/27/2024				01/26/2025				01/26/2025
Mattress Fabrics		$	(2,929	)		$	(3,549	)		$	(1,037	)		$	(433	)		$	(7,948	)
Upholstery Fabrics			975				1,712				615				679				3,981
Unallocated Corporate			(2,090	)			(2,267	)			(2,178	)			(1,854	)			(8,389	)
Adjusted operating loss		$	(4,044	)		$	(4,104	)		$	(2,600	)		$	(1,608	)		$	(12,356	)
		Quarter Ended
																		Trailing 12
																		Months
		4/30/2023				7/30/2023				10/29/2023				1/28/2024				1/28/2024
Mattress Fabrics		$	(2,530	)		$	(1,398	)		$	(936	)		$	(1,582	)		$	(6,446	)
Upholstery Fabrics			1,611				1,328				1,391				2,092				6,422
Unallocated Corporate			(3,038	)			(2,495	)			(2,628	)			(2,361	)			(10,522	)
Adjusted operating loss		$	(3,957	)		$	(2,565	)		$	(2,173	)		$	(1,851	)		$	(10,546	)
% Over (Under)			2.2	%			60.0	%			19.7	%			(13.1	)%			17.2	%

 

 

-END-

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CULP ELECTS NEW MEMBER TO BOARD OF DIRECTORS

 

 

 

HIGH POINT, N.C. (March 5, 2025) ─ Culp, Inc. (NYSE: CULP) (“CULP” or the “company”), a leading marketer of mattress fabrics for bedding and upholstery fabrics for residential and commercial furniture, today announced the election of William L. Tyson to its Board of Directors.

 

Mr. Tyson brings to the company over 30 years of experience across the investment banking and capital markets and has served in executive leadership and strategic development roles for some of the largest banks and financial institutions in the country. Mr. Tyson most recently served as head of Mergers & Acquisitions (M&A) within the Investment Banking Group of Fifth Third Capital Markets from 2021 until his retirement in December 2024, where he was responsible for the strategic direction of the M & A and Investment Banking platform within the Capital Markets division and for driving non-organic growth initiatives. Mr. Tyson also held the positions of Executive Vice President, Co-head of Capital Markets and Senior Vice President, Co-head of Capital Markets during his tenure with Fifth Third that began in 2016. Prior to that, he served as Senior Managing Director and Co-Head of Investment Banking and in various other senior leadership roles during an approximately 18-year tenure with BB&T Capital Markets (and its predecessor, Scott & Stringfellow). He previously headed Wheat First Butcher Singer’s Furnishings, Consumer and Industrial Growth Industry Practices and served as a Vice President with Wachovia Corporation.

 

During his career, Mr. Tyson advised on over 300 capital financing transactions across the public and private markets, including numerous transactions in the home furnishings and textile industries and several transactions involving the company. Mr. Tyson has also served on numerous professional boards and committees, including past service as president of the Virginia Athletics Foundation Board of Trustees and president of the McIntire School of Commerce Advisory Board.

 

Frank Saxon, Chairman of the company’s Board of Directors, commented, “Bill is a seasoned capital markets professional who knows our industry well. We are excited to bring his wealth of expertise and leadership experience to our Board of Directors and believe he will add valuable perspective as we continue to execute on our strategy, drive growth across our businesses, and enhance value for our stakeholders."

 

About the Company

 

Culp, Inc. is one of the largest marketers of mattress fabrics for bedding and upholstery fabrics for residential and commercial furniture in North America. The company markets a variety of fabrics to its global customer base of leading bedding and furniture companies, including fabrics produced at Culp’s manufacturing facilities and fabrics sourced through other suppliers. Culp has manufacturing and sourcing capabilities located in the United States, China, Haiti, Turkey, and Vietnam.

 

Investor Relations Contact

 

Ken Bowling, Executive Vice President, Chief Financial Officer, and Treasurer:

(336) 881-5630

krbowling@culp.com

 

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Positioning for the Future Culp Restructuring Plan – March 2025 1 Exhibit 99.3

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Forward Looking Statements This presentation contains “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties that may cause actual events and results to differ materially from such statements. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often but not always characterized by qualifying words such as “expect,” “believe,” “will,” “may,” “should,” “could,” “potential,” “continue,” “target,” “predict”, “seek,” “anticipate,” “estimate,” “intend,” “plan,” “project,” and their derivatives, and include but are not limited to statements about expectations, projections, or trends for our future operations, strategic initiatives and plans, restructuring actions, production levels, new product launches, sales, profit margins, profitability, operating (loss) income, capital expenditures, working capital levels, cost savings (including, without limitation, anticipated cost savings from restructuring actions), income taxes, SG&A or other expenses, pre-tax (loss) income, earnings, cash flow, and other performance or liquidity measures, as well as any statements regarding dividends, share repurchases, liquidity, use of cash and cash requirements, ending cash balances and cash positions, borrowing capacity, investments, potential acquisitions, cash and non-cash restructuring and restructuring-related charges, expenses, and/or credits, net proceeds from restructuring related asset dispositions, future economic or industry trends, public health epidemics, or future developments. There can be no assurance that we will realize these expectations or meet our guidance, or that these beliefs will prove correct. Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, demand for home furnishings products, consumer confidence, trends in disposable income, and general economic conditions. Decreases in these economic indicators could have a negative effect on our business and prospects. Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect us adversely. The future performance of our business depends in part on our success in conducting and finalizing acquisition negotiations and integrating acquired businesses into our existing operations. Changes in consumer tastes or preferences toward products not produced by us could erode demand for our products. Changes in tariffs or trade policy, including changes in U.S. trade enforcement priorities, or changes in the value of the U.S. dollar versus other currencies, could affect our financial results because a significant portion of our operations are located outside the United States. Strengthening of the U.S. dollar against other currencies could make our products less competitive on the basis of price in markets outside the United States, and strengthening of currencies in China can have a negative impact on our sales of products produced in those places. In addition, because our foreign operations use the U.S. dollar as their functional currency, changes in the exchange rate between the local currency of those operations and the U.S dollar can affect our reported profits from those foreign operations. Also, economic or political instability in international areas could affect our operations or sources of goods in those areas, as well as demand for our products in international markets. The impact of public health epidemics on employees, customers, suppliers, and the global economy, such as the recent coronavirus pandemic, could also adversely affect our operations and financial performance. In addition, the impact of potential asset impairments, including impairments of property, plant, and equipment, inventory, or intangible assets, as well as the impact of valuation allowances applied against our net deferred income tax assets, could affect our financial results. Increases in freight costs, labor costs, and raw material prices, including increases in market prices for petrochemical products, can also significantly affect the prices we pay for shipping, labor, and raw materials, respectively, and in turn, increase our operating costs and decrease our profitability. Also, our success in diversifying our supply chain with reliable partners to effectively service our global platform could affect our operations and adversely affect our financial results. Finally, the future performance of our business also depends on our ability to successfully restructure our mattress fabric operations and return the segment to profitability. Further information about these factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A “Risk Factors” in our most recent Form 10-K and Form 10-Q reports filed with the Securities and Exchange Commission. Many of these factors are macroeconomic in nature and are, therefore, beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this presentation as anticipated, believed, estimated, expected, intended, planned or projected. The forward-looking statements included in this presentation are made only as of the date of this presentation. Unless required by United States federal securities laws, we neither intend nor assume any obligation to update these forward-looking statements for any reason after the date of this presentation to conform these statements to actual results or to changes in our expectations. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations or financial results. 2

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Financial and Business Implications of Restructuring Plan Consolidate CHF North American Fabric Operations Wind Down and Close Operations in Quebec, Canada Move Knitting and Finish Capacity to Stokesdale, NC Optimize Capacity and Overhead in North America in One Facility (NC) Transition Mattress Fabric Damask Weaving Operation to Sourcing Model Consolidate Haiti Cut & Sew Operations into One Facility Reduce CHF workforce by approximately 240 people (35% of segment total workforce) Restructure Upholstery Fabrics (CUF) Finishing Operation in China Reduce Unallocated Corporate and Shared Service Expenses Projected Cost Savings $10-11 million in annualized cost and productivity savings, primarily via mattress segment COGS $8.3 million total restructuring & related charges with $5.3 million cash charges primarily from: Severance Restructuring Relocation of Equipment Wind-Down of Canadian Operation Close to $1.0 million reduction in annualized unallocated corporate/shared services savings Projected Proceeds from Asset Sales & Other Anticipate $6-8 million of after-tax proceeds from sale of owned Canadian Faciality Received close to $2.0 million from sale of excess equipment and termination of Haiti building lease Offset against cash restructuring expense Restructuring Actions Restructuring Outcomes

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Second Half Fiscal 25 (November 2024 – April 2025) Fiscal Q2 25 (August – October 2024) Fiscal Q1 25 (May – July 2024) Steps and Timing of Restructuring: Measuring Success Major restructuring actions announced in early May Communicated phased closure of Canadian mattress fabrics facility to affected employees, customers, vendors, and Canadian regulatory authorities Initiated and completed negotiation of severance and stay bonus agreements Engaged broker to sell Canadian real estate Worked with supply partners on transition of damask SKUs Preliminary moving and optimizing Stokesdale facility floor space for relocation of Canadian knitting and finishing equipment Completed consolidation of Haiti operations into one building Completed restructuring of upholstery fabric(CUF) finishing operation in China Negotiated termination of Haiti building lease in early Q2 (expected to generate $250,000 cash during FY25 Q4) Market and show Canadian real estate Completed transition of Damask SKUs with supply partners Made continued progress with relocation of knitting and finishing equipment to Stokesdale Made early-stage operational improvements for plant and equipment consolidation  Discontinued production at Canadian mattress fabrics facility in November  Completed relocation of equipment to Stokesdale  Completed sale of excess equipment   Estimated completion for sale of Canadian real estate (timing dependent upon buyer interest / market conditions)   Further progress on operational improvements from plant and equipment consolidation

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Liquidity, Access to Capital to be Strengthened Cash and access to liquidity remains solid Utilizing some borrowing during fiscal 2025 to fund restructuring activity and worldwide working capital to grow the business ($5.4 million in borrowings outstanding under China credit line as of 1/26/2025) Funded close to $2.0 million of cash restructuring costs with proceeds from the sale of excess manufacturing equipment and proceeds from a building lease termination in Haiti Eventual proceeds from sale of Canadian facility enhances balance sheet Post-restructuring, cost actions to dramatically lower expected operating and cash burn at current low sales levels to ride out industry softness Restructuring and balance sheet actions allow for continued investment in the business to benefit consolidated company in market recovery *Hypothetical pro forma assuming sale of Canadian real estate based on estimated net proceeds of $7 million (current estimates are approximately $6.0 to $8.0 million, net of all taxes and commissions). Timing and amount of actual proceeds currently unknown and may differ from hypothetical. Balance Sheet Impact Total Liquidity As of 1/26/2025 (in millions) Cash $5.3 ABL Availability 23.2 China Credit Line Availability 0.0 Total Liquidity $28.5     Estimated Proceeds from Canadian Real Estate Sale* $7.0 Total Liquidity Including Future Real Estate Sale Proceeds* $35.5    

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Restructuring Puts CHF on Path to Segment Breakeven Hypothetical pro forma model of projected annualized savings on CHF profitability post-restructuring, assuming the same level of sales from fiscal 2024 (model is before any corporate allocation at segment level) Projected annualized cost and productivity savings of approximately $9.5 million (CHF only) Post restructuring, mattress fabrics segment expected to return to positive operating income sometime in the third quarter of fiscal 2025 * Reflects FY 2024 CHF results restated as a hypothetical pro forma with estimated cost and productivity savings from CHF restructuring actions included. This is a hypothetical model only – it is not intended as guidance/projections. Also, this model does not include any allocation of corporate costs at segment level. ** Estimated restructuring savings for CHF segment only.

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Mattress Fabrics: Current Industry Demand Near Previous Recession (2009) Bottom Levels Current level of domestic unit production of 18 million units near 2009 recession levels Unique factors affecting current cycle Post Covid stimulus, at home demand pull forward Supply chain challenges and cost pressures in addition to labor shortage Pressures on lower end consumer discretionary spending due to inflation

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Restructuring of Mattress Fabrics Segment Strengthened leadership team focused on profitable growth Leverage long history of success within the bedding industry Drive operating efficiencies: Optimize manufacturing and sourcing capabilities for customer reactivity and improved cost advantage Phased wind down and closure of fabric formation facility in Canada and consolidation of manufacturing and sourcing capabilities to USA, Turkey and Asia Consolidate cut and sew operations on Haiti / Dominican Republic border to one facility Diligent focus on production scheduling and quality management Invest in high ROI, quick payback capital projects to drive cost savings New commercial approach including: Strong focus on winning new market position as customer innovation cycle increases New product introductions priced in line with current costs to improve profit Restructured and energized sales team Customer, product, and design segmentation including a focused selling strategy and significant SKU rationalization, especially in damask weaving Establishment of an open line to balance custom design work with curated fabric offerings where volumes warrant Continued focus on new product placements and growing market position CHF Manufacturing & Sourcing Locations Post-Restructuring

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Profitable Upholstery Fabrics Segment With Key Initiatives Underway to Accelerate Performance Accelerating Segment Performance Leading position in a fragmented market Asset light model to maintain flexibility and product profit performance Growing innovative performance products LiveSmart® performance brand LiveSmart Evolve®, performance plus recycled fibers Nanobionic® wellness-focused technology Growing Hospitality segment Targeting >25% of normalized sales with higher margin Expanding capacity of roller shades within Read Window Products Drive operating efficiencies Cut & Sew platform restructuring completed in both Haiti and Asia Improved Read Window operations Lower inventory markdown expense

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What Gives CULP Confidence in Restructuring Plan / Recovery? Key Success Factors Experienced leadership team focused on profitable growth Successfully navigated significant restructuring of CUF beginning in early 2000’s Solid available liquidity Strong relationships with key customers and long-term suppliers Emphasis on design creativity and product innovation Strategic and optimized manufacturing and global sourcing platform responsive to tariff fluidity Market position improving with solid placements priced in line with current costs Solid sequential improvement in operating performance for CHF in fiscal 2025, in very difficult demand environment

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Restructuring Plan Driving Operating Improvement in a Challenging Sales Environment for the Industry Total Revenue and Total Gross Profit referenced in the table above constitute Culp, Inc.’s consolidated net sales and consolidated gross profit, respectively, for the fiscal year 2024 and fiscal year 2025 periods indicated.

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v3.25.0.1

Document And Entity Information	Mar. 05, 2025
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Mar. 05, 2025
Entity Registrant Name	Culp, Inc.
Entity Central Index Key	0000723603
Entity Emerging Growth Company	false
Entity File Number	1-12597
Entity Incorporation, State or Country Code	NC
Entity Tax Identification Number	56-1001967
Entity Address, Address Line One	410 W. Engish Rd 5th Floor
Entity Address, City or Town	High Point
Entity Address, State or Province	NC
Entity Address, Postal Zip Code	27262
City Area Code	336
Local Phone Number	889-5161
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, par value $0.05 per share
Trading Symbol	CULP
Security Exchange Name	NYSE
Former Address [Member]
Document Information [Line Items]
Entity Address, Address Line One	1823 Eastchester Drive
Entity Address, City or Town
Entity Address, Postal Zip Code	High Point, North Carolina, 27265

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