Culp, Inc. (NYSE: CULP) reported Q2 EPS of $0.19, $0.05 better than the analyst estimate of $0.14. Revenue for the quarter came in at $76.9 million versus the consensus estimate of $68.78 million.

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 in connection with the pandemic, the company is encouraged by the ongoing execution of its product-driven strategy and continued strength in demand for home furnishing products, as well as its opportunities for market share growth. The company expects sales and operating income for the third quarter of fiscal 2021 to be comparable to the prior-year period, with the mattress fabrics segment continuing its strong rebound and the upholstery fabrics segment facing ongoing headwinds relating to foreign exchange rate fluctuations associated with its operations located in China, customer supply chain constraints, and sales mix. The company also expects sales and operating income for the fourth quarter of fiscal 2021 to be dramatically improved for both segments as compared to the fourth quarter of fiscal 2020.

Commenting on the results, Iv Culp, president and chief executive officer of Culp, Inc., said, “We are pleased with our strong performance for the second quarter of fiscal 2021, which reflects the tireless efforts of our associates around the world and the strength and resilience of our global platform. Our dedicated team has done an outstanding job in following the protocols we have put in place to operate safely, while also meeting the rapid surge in demand with the high level of service and product quality that our customers know and expect from us. As we continue to navigate our way through these uncertain times, our top priority remains the health and safety of our employees, customers, suppliers, and the communities we serve. We are incredibly proud of our team’s continued drive to deliver innovative products and satisfy the evolving needs of our customers, while also integrating enhanced safety practices and new ways of working virtually throughout our business.

“Overall, we are very pleased with the top line performance for both our mattress fabrics and upholstery fabrics segments. This faster-than-expected recovery indicates an increased consumer focus on the home environment, as well as our ability to service this increase in demand through our strong global platform and stable supply chain. We are also benefitting from market share gains as our innovative products are resonating well with both new and existing customers. Additionally, we delivered significant sequential improvement in operating income as compared to the first quarter, consistent with our expectations.

“We further strengthened our balance sheet with increased liquidity, as total cash and investments reached $56.5 million. Based on this strong financial performance, we are pleased to announce that our Board of Directors approved a five percent increase in our quarterly dividend, which marks the eighth consecutive year of increasing our annual dividend. This is consistent with our capital allocation strategy and our commitment to generate value for our shareholders.

“Looking ahead, our customers’ ability to meet their demand is being challenged by supply chain constraints related primarily to non-fabric components, as well as labor shortages, which could temporarily delay their scheduled delivery of fabric orders from both our mattress and upholstery fabrics segments. Additionally, the ongoing impact and duration of the COVID-19 pandemic remains unknown. We are prepared for a range of macroeconomic scenarios and are confident in our ability to weather these near-term headwinds. Barring additional shutdowns, we are optimistic, based on current industry demand trends and market share opportunities, that we will deliver strong results in the second half of fiscal 2021. We are well positioned for continued growth and look forward to the opportunities ahead for our business in fiscal 2021,” added Culp.

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