Culp, Inc. (CFI) Tops Q2 EPS by 2c, Offers Guidance

Culp, Inc. (NYSE: CFI) reported Q2 EPS of $0.33, $0.02 better than the analyst estimate of $0.31. Revenue for the quarter came in at $73.99 million versus the consensus estimate of $72.61 million.

Outlook

Commenting on the outlook for the third quarter of fiscal 2015, Saxon remarked, “We expect overall sales to be two percent to five percent higher as compared with the third quarter of last year.

“We expect sales in our mattress fabrics segment to be three percent to six percent higher compared with the same period a year ago. Operating income and margins in this segment are expected to be substantially higher than the same period a year ago due primarily to significant operational improvement in the Culp-Lava mattress cover business as compared to last year. We also expect to realize some initial benefit from our capital investment program late in the third quarter.

“In our upholstery fabrics segment, we expect sales to be flat to slightly lower than the previous year’s third quarter results. We believe the upholstery fabric segment’s operating income and margins will be slightly lower than the same quarter of last year. These projections compare to an exceptionally strong third quarter for upholstery fabrics in fiscal 2014 as demand was affected by customers anticipating longer lead times due to the Chinese New Year holiday occurring in late January. In 2015, the Chinese New Year holiday falls in mid-February, therefore potentially causing some demand to be pushed into our fourth fiscal quarter. Additionally, we are also experiencing higher operating costs associated with our Culp China operation.

“Considering these factors, the company expects to report pre-tax income for the third fiscal quarter of 2015 in the range of $5.0 million to $5.8 million. Pre-tax income for last year’s third quarter was $4.6 million.

“For the full fiscal year, we expect sales and pre-tax income to be higher than fiscal 2014, with an improvement in profitability expected in the second half of this fiscal year as compared with the first half of the year. Capital expenditures for fiscal 2015 are expected to be approximately $10 million, primarily related to expansion projects for mattress fabrics. Additionally, the company expects a strong year of free cash flow, even with a higher than normal level of capital expenditures.”

In closing, Saxon remarked, “We are pleased with our results to date for fiscal 2015, which reflect consistent growth in sales compared with the same period last year. We have many reasons to be optimistic about our future direction and ability to meet our growth objectives. Our outstanding design capabilities and innovative product offerings are resonating with customers in both businesses. We have the ability to leverage our scalable and global manufacturing platforms to deliver these products and to meet changing customer style preferences. We believe Culp is favorably positioned for continued growth in this environment with the financial strength to execute our strategic initiatives and reward our shareholders. Above all, we are committed to outstanding performance for our customers as a financially stable and trusted source for innovative fabrics.”

For earnings history and earnings-related data on Culp, Inc. (CFI) click here.

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