Culp, Inc. (NYSE: CULP) reported Q1 EPS of $0.08, $0.05 better than the analyst estimate of $0.03. Revenue for the quarter came in at $64.45 million versus the consensus estimate of $59.06 million.

Fiscal 2021 First Quarter Financial Summary(1)

• Net sales were $64.5 million, down 8.8 percent over the prior-year period, with mattress fabric sales down 7.1 percent and upholstery fabric sales down 11.0 percent compared with the first quarter of last year.
• Pre-tax income from continuing operations was $1.5 million, compared with pre-tax income from continuing operations of $3.5 million for the prior-year period.
• Net loss from continuing operations was $(2.7) million, or $(0.22) per diluted share, compared with net income from continuing operations of $1.8 million, or $0.14 per diluted share, for the prior-year period.
• Adjusted net income from continuing operations (non-GAAP) was $1.0 million, or $0.08 per diluted share(2). Adjusted net income from continuing operations for the prior-year period was $2.0 million, or $0.16 per diluted share(3). (See reconciliation table on page 11.)
• The company’s financial position reflected total cash and investments of $47.4 million and no outstanding borrowings as of August 2, 2020. This compares with a net cash position of $38.7 million as of the end of the fourth quarter of fiscal 2020. (See summary of cash and investments table on page 7.)
• Cash flow from operations and free cash flow were $10.6 million and $10.0 million, respectively, compared with cash flow from operations and free cash flow of $2.0 million and $1.0 million, respectively, for the prior-year period. (See reconciliation table on page 9.)
• The company announced a quarterly cash dividend of 10.5 cents per share, payable in October.

Financial Outlook

• Due to the continued economic impact of the COVID-19 pandemic and the lack of visibility as to its duration, the company is providing only limited financial guidance for fiscal 2021 at this time.
• Although subject to unforeseen changes that may arise as the pandemic and its economic impact continue to unfold, the company is encouraged by improving business conditions. The company expects sales and operating income for the second quarter of fiscal 2021 to be materially improved as compared to the first quarter, but not reaching the performance achieved in the second quarter of last year, which was an especially strong quarter for the upholstery fabrics segment.

Commenting on the results, Iv Culp, president and chief executive officer of Culp, Inc., said, “As we continue to navigate our way through these uncertain times, we remain focused on the health and safety of our employees, customers, suppliers, and the communities that we serve. I am incredibly thankful for our team’s hard work, agility, and commitment to safety, and I am proud of our leadership team for adapting and effectively managing through this challenging environment.

“We are pleased that both our mattress fabrics and upholstery fabrics segments saw better-than-expected increases in orders and shipments during the quarter, particularly during the last eight weeks. We are especially pleased with the substantial sequential improvement compared with the end of the fourth quarter, going from a significant pre-tax loss to profitability. We believe these trends are primarily being driven by a surge in consumer focus on the home environment and overall comfort, leading to an increased proportion of discretionary spending moving to home furnishings.

“Although the ongoing impact and duration of the COVID-19 pandemic remain unknown, we are cautiously optimistic, based on current demand trends, that business will continue its solid return in the second quarter of fiscal 2021. We are confident that our product-driven strategy, strong management team, and solid financial position will enable us to overcome the near-term headwinds and capture market share as we continue to demonstrate the resilience and strategic advantage of our global platform and stable supply chain. Our balance sheet remains strong, as evidenced by our significantly improved liquidity as compared to pre-pandemic levels at the end of the fiscal 2020 third quarter. We are also pleased to have maintained our quarterly dividend throughout this period of disruption, and we are excited about the continued sequential improvement in our business we expect for the second quarter of fiscal 2021,” added Culp.

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