Culp, Inc. (NYSE:CFI) Q2 2019 Earnings Conference Call Transcript

Nov 30, 2018 • 11:00 am ET

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Culp, Inc. (NYSE:CFI) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Culp's Second Quarter 2019 Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Ms. Dru Anderson. Please go ahead.

Executive
Dru Anderson

Good morning, and welcome to the Culp conference call to review the company's results for the second quarter of fiscal 2019.

(Forward-Looking Cautionary Statements) In addition, during this call, the company will be discussing non-GAAP financial measurements. A reconciliation of these non-GAAP financial measurements to the most directly comparable GAAP financial measurements is included as a schedule to the company's 8-K filed yesterday and posted on the company's website at culp.com.

A slide presentation with supporting summary financial information and additional performance charts are also available on the company's website as part of the webcast of today's call.

I will now turn the call over to Frank Saxon, Vice Chairman and Chief Executive Officer. Please go ahead, sir.

Executive
Frank Saxon

Good morning everyone and thank you for joining us today. I would like to welcome you to the Culp quarterly conference call with analysts and investors. With me on the call today is Ken Bowling, our CFO and Iv Culp, our COO and President of our Mattress Fabrics business. I'll begin the call with some brief comments and then Ken will review the financial results for the quarter. I'll then update you on the strategic actions in each of our segments. After that Ken will review our third quarter business outlook and then we'll be glad to answer your questions.

As expected our results for the second quarter reflect the ongoing challenges facing the bedding industry, related to the significant increase of low-priced imported mattresses from China. We believe the recent petition approved under U.S. Trade Laws to address this situation will ultimately be favorable for the domestic mattress industry. However, the high volume of imports continued to affect our major customers during the second quarter, which reduced demand for our mattress fabrics and mattress covers.

Our upholstery fabrics business had a solid performance for the second quarter with a meaningful contribution from Read Window Products, which was acquired in April of 2018. While we are experiencing considerable headwinds with respect to the mattress industry, we are optimistic that we will begin to see improvement in our quarterly results during the fourth quarter of this fiscal year, as preliminary duties are expected to be announced and put in place.

We will continue to execute on our product-driven strategy, as we expand our reach into new markets. We are excited about the potential growth opportunities for Read Window in the hospitality space. And for eLuxury, Culp's e-commerce business offering bedding accessories and home goods direct to consumers. Above all, we remain focused on offering creative designs and innovative products that meet the changing demands of our diverse customer base. Importantly, we have continued to generate strong free cash flow, especially during the second quarter and return funds to shareholders through another quarterly dividend