Culp, Inc. (NYSE:CULP) Q2 2020 Earnings Conference Call - Final Transcript

Dec 06, 2019 • 11:00 am ET


Culp, Inc. (NYSE:CULP) Q2 2020 Earnings Conference Call - Final Transcript


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Franklin N. Saxon

responsibility for corporate shared services. I look forward to working with years as we transition into the new positions.

I will now begin the call with some brief comments and Ken will then 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 the third quarter outlook, and then we'll be happy to take your questions. We are pleased with our performance for the second quarter of this fiscal year. While we had a modest drop in overall sales compared with the prior year period, we had improved operating performance in both our mattress fabrics and upholstery fabric businesses. We believe the domestic mattress industry is working to stabilize from the disruption related to low cost mattress imports from China and the continuing variability in the market is evident in recent industry sales reports. We are monitoring the development and the demand trends among our legacy mattress customers and the rapidly growing role packed or boxed bidding segment with our broad product mix and flexible manufacturing platform, we've been able to respond to these changing demand trends. Additionally, while our upholstery fabrics business has been affected by ongoing trade disputes and international tariffs, we were pleased with our ability to make supply chain adjustments to address these challenges and meet the needs of our customers.

We also continue to refine our strategies for Culp Home Fashions our finished products business and we believe we are making some good progress in positioning this business of sequential improvement. We remain focused on leveraging this new online sales channel to expand our market reach with new products and customers. In each of our businesses, we are maintaining our product driven emphasis with an unwavering commitment to product innovation and creative designs. With the support of our global platform, we are confident we can sustain our strong competitive advantage and respond to the changing demand trends of our diverse customer base. Importantly, we have the financial strength to pursue our growth plans and to continue returning funds to shareholders. We are proud to announce another dividend increase commencing in the third quarter, marking our 7th consecutive year of increasing the annual dividend. I'll now turn the call over to Ken who will review the financial results for the quarter.

Kenneth R. Bowling

Thanks, Frank. As mentioned earlier on the call, we have posed to slide presentations to our Investor Relations website they cover key performance measures. We've also posted our capital allocation strategy. Here are the financial highlights for the second quarter. Net sales were $73.6 million, down 5.7% compared with the prior year period. On a pre-tax basis, the Company reported income of $4.1 million compared with pre-tax income of $4.3 million for the second quarter of last year. The financial results for the second quarter of last fiscal year included a net benefit of $543,000 in restructuring-related charges and credits and other non-recurring items we mostly to the closure of