Culp, Inc. (CULP) Reports Q1 EPS of $0.40; Company Signs Letter of Intent for China Mattress Fabrics Acquisition

Culp, Inc. (NYSE: CULP) reported Q1 EPS of $0.40, versus $0.43 reported last year. Revenue for the quarter came in at $79.5 million, versus $80.7 million reported last year.

Financial Outlook

The projection for the second quarter of fiscal 2018 is for overall sales to be comparable to the same period last year. Pre-tax income is expected to be in the range of $5.4 million to $6.1 million. Pre-tax income for the second quarter of fiscal 2017 was $7.2 million.
The company’s performance for the second half of fiscal 2018 is currently expected to be more in line with the results achieved during the second half of last fiscal year, excluding any impact from acquisitions.

Proposed Mattress Fabrics China Acquisition

“We have identified an attractive acquisition candidate in the mattress fabrics business in China and have executed a non-binding letter of intent to acquire that company,” added Culp. “The business to be acquired has annual revenues of approximately $12.0 million and pre-tax income of approximately $2.5 million. Other terms are not being disclosed at this time. We currently expect to fund the acquisition with cash and investments on hand without incurring any additional debt, with closing expected to occur within 90 days.

“We are excited about this opportunity as the proposed acquisition is expected to establish a beachhead for our mattress fabrics business in Asia, with sales growth potential to non-North American markets. It will also serve as a low-cost source for mattress fabrics being sold to North American bedding customers. Additionally, we believe this new platform provides opportunities for synergies with our current upholstery fabrics operations located at Culp China, which would include a substantial cut and sew operation that can serve both traditional bedding customers and the growing internet bedding market,” noted Culp.

The company cautioned, however, that the current letter of intent is non-binding and remains subject to completion of due diligence, negotiation of a definitive purchase agreement, and other approvals, without which the acquisition will not occur.

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

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