Slide 1: Second Quarter Fiscal 2023 Summary Financial Information
CULP, INC. NYSE: CULP Second Quarter Fiscal 2023 Summary Financial Information December 7, 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 adjusted income statement information for the three-month and six-month periods ending October 30, 2022, which discloses adjusted loss from operations, a non-GAAP performance measure that eliminates items which are not expected to occur
Slide 4: About Non-GAAP Financial Information (2)
ABOUT NON-GAAP FINANCIAL INFORMATION (2) This presentation contains disclosures about our Adjusted EBITDA, which is a non-GAAP performance measure that reflects net (loss) income excluding income tax expense (benefit), net interest income, restructuring expense and restructuring related charges, and
Slide 5: Second Quarter Fiscal 2023 Financial Summary
SECOND QUARTER FISCAL 2023 FINANCIAL SUMMARY Net sales were $58.4 million, down 21.7 percent compared with the prior-year period, with mattress fabrics sales down 35.8 percent and upholstery fabrics sales down 4.5 percent compared with the second quarter of last year. Loss from operations was $(
Slide 6: Second Quarter Fiscal 2023 Financial Summary (Cont'd)
SECOND QUARTER FISCAL 2023 FINANCIAL SUMMARY (CONT’D) The company’s financial position reflected a solid balance sheet, with total cash and investments of $19.1 million and no outstanding borrowings as of the end of the second quarter. Cash flow from operations and free cash flow were $6.2 milli
Slide 7: Second Quarter 2023 Highlights
SECOND QUARTER 2023 HIGHLIGHTS ($ in millions) Change GAAP Q2 FY23 Q2 FY22 $ % Sales 58.4 74.6 (16.2) (21.7%) Operating income / (loss) (11.9) 1.6 (13.6) NM Operating income margin (20.4)% 2.2% NM Pre-tax income / (loss) (11.0) 1.3 (12.3) NM Pre-tax margin (18.9)% 1.7% NM Net income (loss) (12.2) 0.
Slide 8: Second Quarter 2023 Highlights
SECOND QUARTER 2023 HIGHLIGHTS ($ in millions) As Reported October 30, October 30, Adjustments 2022 Adjusted 2022 Results ** Loss from Operations (11.9) 0.7 (11.2) Operating Income Margin -20.4% NM -19.2% Notes * Please see the Reconciliation of Selected Income Statement Information to Adjusted Resu
Slide 9: Second Quarter 2023 YTD Highlights
SECOND QUARTER 2023 YTD HIGHLIGHTS ($ in millions) Change GAAP FY23 YTD FY22 YTD $ % Sales 121.0 157.6 (36.6) (23.2%) Operating income (16.7) 5.0 (21.6) NM Operating income margin (13.8)% 3.1% NM Pre-tax income (15.8) 4.5 (20.3) NM Pre-tax margin (13.1)% 2.8% NM Net income (loss) (17.9) 3.1 (21.0) N
Slide 10: Second Quarter 2023 YTD Highlights
SECOND QUARTER 2023 YTD HIGHLIGHTS ($ in millions) As Reported October 30, 2022 October 30, Adjustments Adjusted Results 2022 ** Loss from Operations (16.7) 0.7 (16.0) Operating Income Margin -13.8% NM -13.2% Notes * Please see the Reconciliation of Selected Income Statement Information to Adjusted
Slide 11: Q2 Sales & Operating Income Bridges
Q2 SALES & OPERATING INCOME BRIDGES ($ in millions) Change Sales Change $ % $ % Q2 2022 74.6 Mattress fabrics decrease -14.7 -35.8% Upholstery fabrics decrease -1.5 -4.5% Q2 2023 58.4 -21.7% Change Operating Income $ % Q2 2022 1.6 Mattress fabrics decrease -12.1 NM Upholstery fabrics decrease -0.8 N
Slide 12: Q2 YTD Sales & Operating Income Bridges
Q2 YTD SALES & OPERATING INCOME BRIDGES ($ in millions) Change Sales Change $ $ % % Q2 YTD 2022 157.6 Mattress fabrics decrease -28.3 -33.8% Upholstery fabrics increase -8.3 -11.2% Q2 YTD 2023 121.0 -23.2% Change Operating Income $ % Q2 YTD 2022 5.0 Mattress fabrics decrease -18.7 -276.6% Upholstery
Slide 13: Q2 Mattress Fabrics Highlights
Q2 MATTRESS FABRICS HIGHLIGHTS ($ in millions) Change Q2 FY23 Q2 FY22 $ % Sales 26.2 40.9 -14.7 -35.8% Operating Income / (Loss) (9.0) 3.1 -12.1 NM Operating Income Margin -34.3% 7.7% NM Depreciation 1.5 1.6 0.0 -2.0% 14
Slide 14: Q2 YTD Mattress Fabrics Highlights
Q2 YTD MATTRESS FABRICS HIGHLIGHTS ($ in millions) Change Q2 FY23 Q2 FY22 Change $ % YTD YTD $ % Sales 55.6 83.9 -28.3 -33.8% Operating Income (11.9) 6.8 -18.7 -276.6% Operating Income Margin -21.4% 8.0% NM Depreciation 3.1 3.1 0.0 0.6% 15
Slide 15: Q2 Mattress Fabrics Key Points
Q2 MATTRESS FABRICS KEY POINTS Sales were down 35.8% compared to same period last year, and down 10.7% sequentially from the first quarter of 2023. Sales were affected by a slowdown in consumer demand in the domestic mattress industry and mattress manufacturers still working through an excess of
Slide 16: Q2 Upholstery Fabrics Highlights
Q2 UPHOLSTERY FABRICS HIGHLIGHTS ($ in millions) Change Q2 FY23 Q2 FY22 $ % Sales 32.2 33.7 -1.5 -4.5% Operating Income 0.3 1.0 -0.8 -74.5% Operating Income Margin 0.8% 3.1% (220) bp Depreciation 0.2 0.2 0.0 2.6% 17
Slide 17: Q2 YTD Upholstery Fabrics Highlights
Q2 YTD UPHOLSTERY FABRICS HIGHLIGHTS ($ in millions) Q2 FY23 Q2 FY22 Change YTD YTD $ % Sales 65.4 73.7 -8.3 -11.2% Operating Income 0.8 3.3 -2.5 -75.6% Operating Income Margin 1.2% 4.5% (320) bp Depreciation 0.4 0.4 0.0 0.3% 18
Slide 18: Q2 Upholstery Fabrics Key Points
Q2 UPHOLSTERY FABRICS KEY POINTS Sales were down 4.5% compared with the prior-year period and down 3.3% sequentially over the first quarter of 2023. Sales for residential fabric business remained pressured by slowdown in new retail business for residential home furnishings industry and furniture
Slide 19: Free Cash Flow
FREE CASH FLOW* ($ in millions) Q2 FY23 Q2 FY22 YTD YTD Net income -17.9 3.1 Depreciation, amortization, & stock-based compensation 4.3 4.4 Non-cash inventory charges, Deferred taxes, other** 4.8 0.4 Gross cash flow -8.8 8.0 Cash flow from working capital and changes in other 15.0 -9.3 assets/liabil
Slide 20: Return on Capital
RETURN ON CAPITAL* ($ in millions) October 30, October 31, 2022 2021 Return on capital: Mattress fabrics -18.2% 17.0% Upholstery fabrics 15.2% 61.9% Unallocated corporate N/A N/A Consolidated -19.5% 11.8% Ending Capital Employed: Mattress fabrics $68.5 $78.6 Upholstery fabrics $18.8 $17.3 Unallocate
Slide 21: Operating Working Capital
OPERATING WORKING CAPITAL ($ in millions) October 30, October 31, 2022 2021 Accounts receivable, net 22.4 32.3 Inventories, net 52.2 63.8 Accounts payable (24.3) (40.5) Accounts payable – capital (0.2) (0.2) expenditures Operating working capital 50.2 55.4 Percent of sales* 20.7% 17.6% Days sales ou
Slide 22: 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 January 30, May 1, July 31, October 30, October 30, 2022 2022 2022 2022 2022 Net loss* $ (289) $ (6,023) $ (5,699) $ (12,173) $ (24,184) Income tax expense 1,28
Slide 23: Net Cash, Investments, and Equity
NET CASH, INVESTMENTS, AND EQUITY ($ amounts in millions (other than $ per share amounts), share amounts in thousands) Q2 FY23 Q2 FY22 Cash and cash equivalents $19.1 $17.0 Short-term investments (Available for Sale) $0.0 $9.7 Short-term investments (Held-to-Maturity) $0.0 $1.6 Long-term investments
Slide 24: Culp, Inc.
CULP, INC. NYSE:CULP www.culp.com Investor Contact: Ken Bowling, Chief Financial Officer 336-881-5630 25
Slide 25: Q2 YTD Reconciliation of Selected Income Statement Information to Adjusted Results
Q2 YTD RECONCILIATION OF SELECTED INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS 26
Slide 26: Q2 YTD Reconciliation of Selected Income Statement Information to Adjusted Results
Q2 YTD RECONCILIATION OF SELECTED INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS 27
Slide 27: Reconciliation of Free Cash Flow
RECONCILIATION OF FREE CASH FLOW RECONCILIATION OF FREE CASH FLOW FOR THE SIX MONTHS ENDED OCTOBER 31, 2022, AND OCTOBER 30, 2021 Unaudited (Amounts in Thousands) FY 2023 FY 2022 A) Net cash provided by (used in) operating activities $ 6,167 $ (1,328) B) Minus: Capital Expenditures (1,051) (3,901) C
Slide 28: Return on Capital Employed by Segment, Twelve Months Ended October 30, 2022
CULP, INC. RETURN ON CAPITAL EMPLOYED BY SEGMENT FOR THE TWELVE MONTHS ENDED OCTOBER 30, 2022 Unaudited (Amounts in Thousands) Adjusted Operating (Loss) Income Twelve Months Average Return on Ended Capital Avg. Capital October 30, 2022 (1) Employed (3) Employed (2) Mattress Fabrics $ (14,460) $ 79,3
Slide 29: Return on Capital Employed by Segment, Twelve Months Ended October 31, 2021
CULP, INC. RETURN ON CAPITAL EMPLOYED BY SEGMENT FOR THE TWELVE MONTHS ENDED OCTOBER 31, 2021 Unaudited (Amounts in Thousands) Adjusted Operating Income (Loss) Twelve Months Average Return on Ended Capital Avg. Capital October 31, 2021 (1) Employed (3) Employed (2) Mattress Fabrics $ 12,321 $ 72,390
Slide 30: Consolidated Statements of Adjusted Operating Income (Loss)
CULP, INC. CONSOLIDATED STATEMENTS OF ADJUSTED OPERATING INCOME (LOSS) FOR THE TWELVE MONTHS ENDED OCTOBER 30, 2022, AND OCTOBER 31, 2021 Unaudited (Amounts in Thousands) Quarter Ended Trailing 12 Months 1/30/2022 5/1/2022 7/31/2022 10/30/2022 10/30/2022 Mattress Fabrics $ 364 $ ( 2,901) $ ( 2,921)