Slide 1: Culp, Inc. First Quarter Fiscal 2023 Summary Financial Information
CULP, INC. NYSE: CULP First Quarter Fiscal 2023 Summary Financial Information August 31, 2022 1
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation contains “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934).
Slide 3: About Non-GAAP Financial Information
ABOUT NON-GAAP FINANCIAL INFORMATION This presentation contains disclosures about free cash flow, a non-GAAP liquidity measure that we define as net cash provided by (used in) operating activities, less cash capital expenditures and payments on vendor-financed capital expenditures, plus any proceeds
Slide 4: About Non-GAAP Financial Information (2)
ABOUT NON-GAAP FINANCIAL INFORMATION (2) This presentation contains disclosures about return on capital for both the entire company and for individual business segments. We define return on capital as adjusted operating income (loss) (measured on a trailing twelve-month basis and excluding certain n
Slide 5: First Quarter Fiscal 2023 Financial Summary
FIRST QUARTER FISCAL 2023 FINANCIAL SUMMARY Net sales were $62.6 million, down 24.6 percent over the prior-year period, with mattress fabrics sales down 31.8 percent and upholstery fabrics sales down 16.9 percent compared with the first quarter of last year. Loss from operations was $(4.7) milli
Slide 6: First Quarter 2023 Highlights
FIRST QUARTER 2023 HIGHLIGHTS ($ in millions) Change GAAP Q1 FY23 Q1 FY22 $ % Sales 62.6 83.0 (20.4) (24.6%) Operating income / (loss) (4.7) 3.3 (8.1) (242.8%) Operating income margin (7.6)% 4.0% NM Pre-tax income / (loss) (4.8) 3.2 (8.0) (252.2%) Pre-tax margin (7.7)% 3.8% NM Net income (loss) (5.7
Slide 7: Q1 Sales & Operating Income Bridges
Q1 SALES & OPERATING INCOME BRIDGES ($ in millions) Change Sales Change $ $% % Q1 2022 83.0 Mattress fabrics decrease -13.7 -31.8% Upholstery fabrics decrease -6.8 -16.9% Q1 2023 62.6 -24.6% Change Operating Income $ % Q1 2022 3.3 Mattress fabrics decrease -6.5 -180.9% Upholstery fabrics decrease -1
Slide 8: Q1 Mattress Fabrics Highlights
Q1 MATTRESS FABRICS HIGHLIGHTS ($ in millions) Change $ Change % Q1 FY23 Q1 FY22 $ % Sales 29.4 43.1 -13.7 -31.8% Operating Income / (Loss) (2.9) 3.6 -6.5 -180.9% Operating Income Margin -9.9% 8.4% NM Depreciation 1.6 1.5 0.0 3.1% 8
Slide 9: Q1 Mattress Fabrics Key Points
Q1 MATTRESS FABRICS KEY POINTS Sales were down 31.8% compared to same period last year, but only down 1.4% sequentially from the fourth quarter of 2022. Sales were affected by a slowdown in consumer demand in the domestic mattress industry, and by mattress manufacturers and retailers still worki
Slide 10: Q1 Upholstery Fabrics Highlights
Q1 UPHOLSTERY FABRICS HIGHLIGHTS ($ in millions) Change Q1 FY23 Q1 FY22 $ % Sales 33.2 40.0 -6.8 -16.9% Operating Income 0.5 2.3 -1.7 -76.1% Operating Income Margin 1.6% 5.7% (400) bp Depreciation 0.2 0.2 0.0 -1.5% 10
Slide 11: Q1 Upholstery Fabrics Key Points
Q1 UPHOLSTERY FABRICS KEY POINTS Sales were down 16.9% compared to an exceptionally strong prior-year period. Sale were up 22.4% sequentially over the fourth quarter of 2022, which was adversely affected by COVID-related shutdowns in China. Sales for the residential fabric business were affected
Slide 12: Free Cash Flow
FREE CASH FLOW* ($ in millions) Q1 FY23 Q1 FY22 Net income -5.7 2.3 Depreciation, amortization, & stock-based compensation 2.1 2.1 Deferred taxes, other -0.2 -0.3 Gross cash flow -3.8 4.1 Cash flow from working capital and changes in other 9.1 -2.5 assets/liabilities Cash flow from operations 5.3 1.
Slide 13: Return on Capital
RETURN ON CAPITAL* ($ in millions) July 31, August 1, 2022 2021 Return on capital: Mattress fabrics -2.9% 19.5% Upholstery fabrics 19.6% 75.9% Unallocated corporate N/A N/A Consolidated -7.1% 15.5% Ending Capital Employed: Mattress fabrics $78.9 $75.5 Upholstery fabrics $20.3 $15.2 Unallocated corpo
Slide 14: Operating Working Capital
OPERATING WORKING CAPITAL ($ in millions) July 31, August 1, 2022 2021 Accounts receivable, net 24.8 35.0 Inventories, net 63.7 58.6 Accounts payable (29.1) (45.3) Accounts payable – capital (0.3) (0.0) expenditures Operating working capital 59.1 48.3 Percent of sales* 23.61% 14.54% Days sales outst
Slide 15: Reconciliation of Net Income to Adjusted EBITDA
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA ($ in thousands) Quarter Quarter Quarter Quarter Trailing Ended Ended Ended Ended 12 Months October 31, January 30, May 1, July 31, July 31, 2021 2022 2022 2022 2022 Net incom e (loss) $ 851 $ (289) $ (6,023) $ (5,699) $ (11,160) Incom e tax expense 44
Slide 16: Net Cash, Investments, and Equity
NET CASH, INVESTMENTS, AND EQUITY ($ amounts in millions (other than $ per share amounts), share amounts in thousands) Q1 FY23 Q1 FY21 Cash and cash equivalents $18.9 $26.1 Short-term investments (Available for Sale) $0.0 $9.7 Short-term investments (Held-to-Maturity) $0.0 $1.7 Long-term investments
Slide 17: Culp, Inc.
CULP, INC. NYSE:CULP www.culp.com Investor Contact: Ken Bowling, Chief Financial Officer 336-881-5630 17
Slide 18: Reconciliation of Free Cash Flow
RECONCILIATION OF FREE CASH FLOW RECONCILIATION OF FREE CASH FLOW FOR THE THREE MONTHS ENDED JULY 31, 2022, AND AUGUST 1, 2021 Unaudited (Amounts in Thousands) FY 2023 FY 2022 A) Net cash (used in) provided by operating activities $ 5,309 $ 1,571 B) Minus: Capital Expenditures (711) (1,953) C) Plus:
Slide 19: Return on Capital Employed by Segment, Twelve Months Ended July 31, 2022
CULP, INC. RETURN ON CAPITAL EMPLOYED BY SEGMENT FOR THE TWELVE MONTHS ENDED JULY 31, 2022 Unaudited (Amounts in Thousands) Adjusted Operating (Loss) Income Twelve Months Average Return on Ended Capital Avg. Capital July 31, 2022 (1) Employed (3) Employed (2) Mattress Fabrics $ (2,319) $ 80,780 (2.9
Slide 20: Return on Capital Employed by Segment, Twelve Months Ended August 1, 2021
CULP, INC. RETURN ON CAPITAL EMPLOYED BY SEGMENT FOR THE TWELVE MONTHS ENDED AUGUST 1, 2021 Unaudited (Amounts in Thousands) Adjusted Operating Income (Loss) Twelve Months Average Return on Ended Capital Avg . Capital August 1, 2021 (1) Employed ( 3 ) Employed ( 2 ) Mattress Fabrics $ 13,564 $ 69,59
Slide 21: Consolidated Statements of Adjusted Operating Income (Loss)
CULP, INC. CONSOLIDATED STATEMENTS OF ADJUSTED OPERATING INCOME (LOSS) FOR THE TWELVE MONTHS ENDED JULY 31, 2022, AND AUGUST 1, 2021 Unaudited (Amounts in Thousands) Quarter Ended Trailing 12 Months 10/31/2021 1/30/2022 5/1/2022 7/31/2022 7/31/2022 Mattress Fabrics $ 3,139 $ 364 $ (2,901) $ (2,921)