Culp Reports Second Quarter Earnings Short of Estimates

12/1/17

Culp Inc., a marketer of mattress and upholstery fabrics, reported earnings Thursday afternoon that missed analyst expectations due to higher shipping costs from China.

The company announced second quarter earnings of $3.9 million, or 32 cents per share, short of Wall Streets estimate of 35 cents per share. Second quarter earnings decreased 11 percent from $4.4 million reported in the second quarter a year ago.

Net sales increased 6.6 percent to $80.6 million from $75.3 million year over year.

“We have maintained a strong financial position through the first half of fiscal 2018, even while spending $7.5 million on capital expenditures, which include vendor-financed payments, and returning $4.6 million to shareholders in regular and special dividends,” said Ken Bowling, senior vice president and chief financial officer, in a release.

Second quarter operating performance for Culp was affected by a disruption in the supply chain caused by a forced shutdown by the Chinese government of certain textile mills for environmental control. This disruption resulted in higher freight costs to ensure deliveries to customers.

The company expects sales in the third quarter to be slightly higher, with an increase in sales for both mattress and upholstery fabrics. Culp expects third quarter pre-tax income to be between $6.8 million to $7.4 million. Third quarter pre-tax income from a year ago was $7 million.

Culp also expects margins and operating income to increase year over year in the third quarter.

Shares began trading at $32.65 on Thursday and closed at $32.10, a 0.93 percent decrease.

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