Culp, Inc. (NYSE:CFI) Q4 2019 Earnings Conference Call - Final Transcript

Jun 13, 2019 • 11:00 am ET


Culp, Inc. (NYSE:CFI) Q4 2019 Earnings Conference Call - Final Transcript


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Franklin N. Saxon

for our mattress fabrics and sewn covers. Our upholstery fabric business was affected by the softer retail climate for furniture and uncertainty surrounding international tariffs and the associated geopolitical risk.

However, even with the lower sales for our Q4, we were pleased to have another year of overall higher annual sales for upholstery fabrics business. These results included the first full year contribution from Read Window Products, which we acquired late in fiscal 2018. In spite of the challenging market conditions throughout the year, we continue to execute our product driven strategy in each of our businesses, with a relentless focus on design, creativity, and product innovation. Our ability to deliver diverse product mix and reach new market segments has been a key differentiator for Culp in all of our marketplaces, and will remain our strategic focus going forward.

We will continue to diversify both our product and customer mix in mattress and upholstery fabrics, with unique opportunities to expand in the hospitality market. We also have the ability to extend our market reach through Culp Home Accessories, our finished products business offering bedding accessories and home goods direct to both consumers and businesses. We have a flexible global platform to support our business segments, with the ability to respond to changing demand as market conditions improve. And importantly, we have a strong balance sheet and the financial flexibility to pursue our growth strategy. We look forward to the opportunities ahead for Culp in fiscal 2020.

Additionally, we believe the May 29th, 2019 ruling by the US Department of Commerce imposing punitive anti-dumping duties on Chinese-made mattresses will provide relief for the domestic mattress industry in our current fiscal year and ultimately lead to improving conditions for our business.

I'll now turn the call over to Ken, who'll review the financial results for the quarter and year.

Kenneth R. Bowling

Thanks Frank. As mentioned earlier on the call, we have posted slide presentations to our Investor Relations website that cover key performance measures. We have also posted our capital allocation strategy.

Here are the financial highlights for the fourth quarter. Net sales were $71 million, down 9.2% compared with the prior year. On a pre-tax basis, the company reported income of $1.5 million, compared with pre-tax income of $6.5 million for the fourth quarter of last year. The financial results for this quarter included a non-recurring charge of $500,000 for the company's charitable contribution to the University of North Carolina at Chapel Hill, payable over a period of three years in honor of co-founder and former chairman, Robert G. Culp, III. Excluding this charge, pre-tax income for the fourth quarter of fiscal 2019 was $2.0 million.

Net loss attributable to Culp, Inc. shareholders was $1.4 million, or $0.11 per diluted share for the fourth quarter compared with net income of $12.7 million, or $1.00 per diluted share for the prior year period. Notably, this net loss was attributable to 199.7% tax rate for the quarter. Income tax for the fourth quarter of fiscal