Slide 1: Investor Presentation March 2023
Investor Presentation March 2023 CULP 1 Exhibit 99.1
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: The Culp Story – Repositioning for Renewed Growth
The Culp Story – Repositioning for Renewed Growth 1 Building on a strong foundation 2 Transforming our Mattress Fabrics segment 3 Accelerating execution in our Upholstery segment 4 Maintaining disciplined capital allocation 5 Clear road map to renewed growth 3 CULP
Slide 4: Culp Today – Two Market Leading Businesses
Culp Today – Two Market Leading Businesses Revenue Breakdown FY 2022 48% 52% Upholstery Fabrics Mattress Fabrics Market leader Assets in N. America Strong N. American supply chain Market leader Asset light Primarily Asian supply chain Manufacturing + Sourcing Key Metrics US, Canada, Haiti, China, Vi
Slide 5: Understanding the Current Macro Situation – Moving Towards a Normal Market Environment
Understanding the Current Macro Situation – Moving Towards a “Normal” Market Environment Pre-Covid Favorable long term growth dynamics in both segments Covid Impact Accelerated demand for home products Current Post-Covid Situation Slow demand – result of Covid “pull forward” & inflation Supply chain
Slide 6: Why We are Confident in the Long-Term Future of Culp
Why We are Confident in the Long-Term Future of Culp Proven record of navigating changing business conditions 1 Positioned in healthy growing markets 2 Powerful innovative engine 3 Strong balance sheet 4 Multiple repositioning initiatives underway to strengthen Culp 5 6 CULP
Slide 7: Culp – Record of Adapting Well to Changing Business Conditions
Culp – Record of Adapting Well to Changing Business Conditions and Customer Preferences Repositioning for renewed growth 2022+ Continued expansion / acquisitions 2010-2020 Reinvented business – shifted Upholstery Fabrics to China 2000-2010 Entered Mattress Fabrics business 1976 Company Founded for U
Slide 8: Positioned in Healthy Growing Markets
Positioned in Healthy Growing Markets Raymond James, ISPA, US ITC - See Appendix for details Statista 2023 - See Appendix for details Based on management estimates and ISPA 2022 research https://www.propertymanagement.com/high-rent-and-job-losses-forced-1-in-8-millennials-to-move-back-in-with-their-
Slide 9: Our Powerful Innovation Engine – A Key Differentiator
Our Powerful Innovation Engine – A Key Differentiator Driving Market Share Gains Consumer focused research Identify trends, preferences Cleanable performance fabrics Sustainability Cooling Customized mapping High tech, digital 3D modeling Speed to market Ecosystem of global platforms Express deliver
Slide 10: Culp – THE Industry Innovator
Culp – THE Industry Innovator CONFIDENCE REASON #3 Upholstery Fabrics Segment FIRST to introduce suede upholstery fabrics to commercial residential market, followed by faux leather looks; FIRST with stain-resistant performance fabrics at mid-market price points, including iClean® and LiveSmart® bran
Slide 11: Case Study: Culp Delivers Innovative Performance Fabrics
Case Study: Culp Delivers Innovative Performance Fabrics CONFIDENCE REASON #3 Situation Consumer Preference Desire for cleanable fabric to withstand everyday living; additional desire for environmentally-friendly products Challenge Create child-friendly, pet-friendly, and stain resistant product at
Slide 12: Strong Balance Sheet and Cash Flow
Strong Balance Sheet and Cash Flow CONFIDENCE REASON #4 Strong Balance Sheet Cash Returned to Shareholders2 (Since June 2011) Cash Flow from Operations and Free Cash Flow3 (FY 2016 – FY 2023 YTD) Cash/ Investments Debt $79.5M As of the end of the third quarter of fiscal 2023 Includes regular quarter
Slide 13: Multiple Initiatives Underway to Emerge Stronger when Markets Normalize
Multiple Initiatives Underway to Emerge Stronger when Markets Normalize FY 2024 FY 2025+ FY 2023 Repositioning Initiatives Stabilization / Early Recovery Renewed Growth Multiple Initiatives Underway CONFIDENCE REASON #5 CULP 13
Slide 14: The Culp Story – Repositioning for Renewed Growth
The Culp Story – Repositioning for Renewed Growth 1 Building on a strong foundation 2 Transforming our Mattress Fabrics segment 3 Accelerating execution in our Upholstery segment 4 Maintaining disciplined capital allocation 5 Clear road map to renewed growth CULP 14
Slide 15: Mattresses: Leading Market Share in a Consolidated Industry
Mattresses: Leading Market Share in a Consolidated Industry THE MATTRESS SEGMENT TODAY Strengths Leading Share in Large Market One of largest producer of mattress fabrics in N. America Global manufacturing and sourcing U.S., Canada, Asia, Haiti, Turkey Innovative design capitalizing on: Sleep trends
Slide 16: Leading Products for Well-Known Brands
Leading Products for Well-Known Brands Leading Products Well-Known Customers DESIGN SERVICES FABRIC FORMATION CUT + SEW FINISHED GOODS CULP 16
Slide 17: Creating a High-Performance Organization
Creating a High-Performance Organization Leadership Strengthened Organization Collaborative Goals and Accountability Clear Pricing Leading Marketing Strategy Targeted Operations Efficient Initiatives Focused The New Mattress Segment We Are Building CULP 17
Slide 18: Transforming the Mattress Segment
Transforming the Mattress Segment Key Initiatives Underway to Transform the Mattress Segment Restructured leadership team Drive operating efficiencies reposition U.S. Cut & Sew ~$2.0M savings consolidate Haiti operations ~$0.75M savings New commercial approach including customer, product, and de
Slide 19: Targeting Top 90%+ Customers and SKUs That Drive the Business
Targeting Top 90%+ Customers and SKUs – That Drive the Business * Based on FY23 Current Sales Run Rates (includes Closeout Customers) A CLOSER LOOK Sales by Customers* Sales by Products 100 customers 110 customers ~600 Sku’s 90% 10% ~1,600 Sku’s 98% 2% Sales Sales CULP 19
Slide 20: Mattress Segment: We Expect Strong Recovery as Market Normalizes
Mattress Segment: We Expect Strong Recovery as Market “Normalizes” 1 Sales ($M) and Margin Operating Margin % 15.4% 7.5% 2.8% -17.4%1 9-10% GOING FORWARD 1. For the trailing twelve-month period ending as of the end of the third quarter of fiscal 2023 $191 $158 $152 $110 FY2017 Cyclical Peak FY2021 F
Slide 21: The Culp Story – Repositioning for Renewed Growth
The Culp Story – Repositioning for Renewed Growth 1 Building on a strong foundation 2 Transforming our Mattress Fabrics segment 3 Accelerating execution in our Upholstery segment 4 Maintaining disciplined capital allocation 5 Clear road map to renewed growth CULP 21
Slide 22: Upholstery Fabrics: Market Leader
Upholstery Fabrics: Market Leader THE UPHOLSTERY FABRICS SEGMENT TODAY Strengths Leading Share Leading position in fragmented market Asset light – flexible global platform Innovative performance products 1. Management estimates for domestic upholstery fabric market Culp Top 5 player1 Market Size $1.
Slide 23: Innovative Products for Top Customers
Innovative Products for Top Customers Innovative Products Top Customers Focused on higher margin / growth segments performance products ~40% of total hospitality target at ~25% of total CULP 23
Slide 24: Key Initiatives Underway to Improve Performance of Upholstery Fabrics Segment
Key Initiatives Underway to Improve Performance of Upholstery Fabrics Segment Accelerating Segment Performance Drive operating efficiencies China Cut & Sew platform restructuring ~$900k savings restructuring Haiti operations ~$1M savings Grow innovative products LiveSmart® performance brand Live
Slide 25: Upholstery Fabrics Segment: Expect Improved Results
Upholstery Fabrics Segment: Expect Improved Results Sales ($M) and Margin Operating Margin % 9.3% 8.4% 3.9% 0.2%1 7-8% GOING FORWARD 1 1. For the trailing twelve-month period ending as of the end of the third quarter of fiscal 2023 $118 $142 $143 $120 ~$145 FY2017 Cyclical Peak FY2021 FY2022 FY2023
Slide 26: The Culp Story – Repositioning for Renewed Growth
The Culp Story – Repositioning for Renewed Growth 1 Building on a strong foundation 2 Transforming our Mattress Fabrics segment 3 Accelerating execution in our Upholstery segment 4 Maintaining disciplined capital allocation 5 Clear road map to renewed growth CULP 26
Slide 27: Consistent Capital Allocation Priorities
Consistent Capital Allocation Priorities 1 Maintain Strong Balance Sheet Minimal or no debt 2 3 Invest for Growth Return Capital to Shareholders – with excess cash Prudentially suspended dividend June, 2022 Invest in working capital, cap ex, organic growth Selective, non-capital intensive acquisitio
Slide 28: The Culp Story – Repositioning for Renewed Growth
The Culp Story – Repositioning for Renewed Growth 1 Building on a strong foundation 2 Transforming our Mattress Fabrics segment 3 Accelerating execution in our Upholstery segment 4 Maintaining disciplined capital allocation 5 Clear road map to renewed growth CULP 28
Slide 29: Expect Improved Outlook FY'24 and Beyond
Expect Improved Outlook FY’24 and Beyond Improved macro environment New products, normalized margins Impact of quality / efficiency improvements Lower raw material costs (60-70% of total costs) Potential Tailwinds CULP 29
Slide 30: Mattress Volumes Expected to Grow in 2024 and Beyond
Mattress Volumes Expected to Grow in 2024 and Beyond Mattress Units – Domestic Shipments (Millions) Source: For 2017 – 2021 data, ISPA; for 2022E – 2025E data, UBS Estimates 8% CAGR 28.8 30.4 30.4 33.3 32.8 28.9 28.9 31.2 33.7 2017 2018 2019 2020 2021 2022E 2023E 2024E 2025E CULP 30
Slide 31: Furniture and Bedding Sales Also Expected to Resume Growth
Furniture and Bedding Sales Also Expected to Resume Growth Furniture and Bedding Sales ($B) (Domestic and Imported) Source: Furniture Today and EASI (Easy Analytic Software Inc.) ~3.5% CAGR $108 $111 $115 $100 $120 $124 $147 2017 2018 2019 2020 2021 2022E 2023E 2024E 2025E 2026E 2027E CULP 31
Slide 32: Targeted Timeline to Renewed Growth
Targeted Timeline to Renewed Growth Repositioning Initiatives Stabilization / Early Recovery Renewed Growth FY 2023 FY 2024 FY 2025 and Beyond CULP 32
Slide 33: Culp Target Outlook: Solid Recovery as Market Returns to Normalized Growth
Culp Target Outlook: Solid Recovery as Market Returns to “Normalized” Growth 1 Sales ($M) and Margin Operating Margin % 9.7% 4.0% 0.2% -12.3% 4-6% >$300 1. For the trailing twelve-month period ending as of the end of the third quarter of fiscal 2023 1 $310 $300 $294 $230 FY2017 Cyclical Peak FY2021
Slide 34: How We Will Measure Progress Going Forward in FY24
How We Will Measure Progress Going Forward in FY24 Return to consolidated profitability, strengthening throughout the year Upholstery Fabrics consistently profitable with slow build throughout year Mattress Fabrics breakeven by mid part of FY24 to small profitability during back half Meaningful cons
Slide 35: The Culp Story – In Summary
The Culp Story – Repositioning for Renewed Growth IN SUMMARY 1 Building on a strong foundation 2 Transforming our Mattress Fabrics segment 3 Accelerating execution in our Upholstery segment 4 Maintaining disciplined capital allocation 5 Clear road map to renewed growth CULP 35
Slide 36: Appendix
C U [ Pp Appendix
Slide 37: Board of Directors
Board of Directors Top (from L to R): Fred Jackson, Jonathan Kelly, Perry Davis Bottom (from L to R): Sharon Decker, Frank Saxon, John Baugh, Kimberly Gatling, and Iv Culp CULP
Slide 38: Board of Directors (continued)
Board of Directors (continued) Director Bios John A. Baugh, CFA Mr. Baugh is the vice president of investor relations for PROG Holdings, Inc., a publicly traded fintech holding company that provides transparent and competitive payment options to consumers. Prior to joining PROG Holdings, he was a se
Slide 39: Board of Directors (continued)
Board of Directors (continued) Kimberly B. Gatling Ms. Gatling is a partner and the Chief Diversity and Inclusion Officer at the law firm of Fox Rothschild LLP (formerly Smith Moore Leatherwood LLP). Director since 2021 Member of Compensation Committee; CG&N Committee; and Audit Committee Fred A. Ja
Slide 40: Mattress Sales – Solid Long-Term Growth Trend
Mattress Sales – Solid Long-Term Growth Trend Domestic Wholesale Mattress Dollar Sales ($Millions) Recession -9% CAGR +6% CAGR Recovery 2001-2021 5.4% CAGR Source:ISPA, USITC, Raymond James Research $10,000 $8,000 $6,000 $4,000 $2,000 $0 2001 2002 2003 2004 2005 2006 2008 2009 2010 2011 2012 2013 20
Slide 41: Home Furnishing Sales – Solid Long-Term Growth Trend
Home Furnishing Sales – Solid Long-Term Growth Trend Source: Statista 2023 Annual U.S. Home Furnishing Retail Sales 2001-2021 ($ Billions) Recession -10% CAGR +4.3% CAGR Recovery 2001-2021 2.1% CAGR $70 $60 $50 $40 $30 $20 $10 $0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Slide 42: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY2021 FY2022 YTD FY2023 Net cash (used in) provided by operating activities $26,795 $32,981 $27,473 $13,873 $4,970 $21,478 ($17,441) 4,583 Minus: Capital Expenditures (11,475) (11,858) (8,005) (3,261) (4,585) (6,664) (5,695) (
Slide 43: About Non-GAAP Financial Information
ABOUT NON-GAAP FINANCIAL INFORMATION This document 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, plus any proceeds from sale of property, plant, and equipment, plus procee