Culp Announces First Quarter Fiscal 2027 Results

Plan Execution Drives Above-Market Sales Growth and Improved Profitability

Significantly Enhanced Balance Sheet from Over 70% Net Debt Reduction

HIGH POINT, N.C., September 09, 2026--(BUSINESS WIRE)--Culp, Inc. (NASDAQ: CULP), a leading provider of fabrics for bedding and upholstery fabrics for residential, commercial, and hospitality furniture and other applications, today reported financial and operating results for its first fiscal quarter ended August 2, 2026.

Fiscal 2027 First Quarter Financial Highlights

• Year-over-year sales growth of 6.5%, while also overcoming one less selling week in the quarter, with consolidated net sales of $54.0 million compared to $50.7 million in the prior-year period and double-digit sales growth of 13.2% in the bedding segment.

• Consolidated gross profit was $15.4 million, or 28.5% of sales, compared with $7.2 million, or 14.3% of sales, in the prior-year period. Excluding the impact of IEEPA tariff recoveries in the quarter associated with previously incurred costs, adjusted gross profit was $8.4 million, or 15.6% of sales, an approximately 17% increase from the prior-year period driven primarily by higher sales and operational improvements (see reconciliation table on page 10).

• Operating income of $6.7 million, or 12.4% of sales, compared to the prior year period's operating income of $1.6 million, or 3.2% of sales. Excluding the impacts of the above-referenced tariff-related recoveries, adjusted operating loss was $271 thousand compared to the prior-year period's adjusted operating loss of $1.9 million (see reconciliation table on page 10).

• Net income of $6.0 million, or $.47 per diluted share, compared to a net loss of $231 thousand, or $(.02) per diluted share, in the prior-year period.

  • Adjusted EBITDA of $566 thousand, which does not include the benefit of tariff recoveries, compared to negative $(938) thousand in the prior-year period (see reconciliation table on page 11), reflecting much improved operating performance during the quarter.

• An over 70% reduction in net debt, to $3.1 million, compared to net debt at 2026 fiscal year end of $10.9 million (see reconciliation table on page 9), with the Company maintaining $10.2 million in total cash, $13.3 million in total debt, and total liquidity of $29.4 million at first quarter end.

• Cash flow from operations increased to $8.1 million compared to cash used in operations of ($695) thousand in the prior year period, and free cash flow increased to $7.8 million from negative $(874) thousand in the prior-year period. Adjusted for capital expenditures of $314 thousand and other items, free cash flow increased to $8.0 million from $311 thousand in the prior year period (see reconciliation table on page 9).

Management Commentary

Iv Culp, President and Chief Executive Officer, commented, "We are pleased with our first quarter results, namely our ability to increase sales and margins and to exceed our profitability expectations irrespective of the one-time tariff recoveries. We look at our first quarter results as more proof-of-concept that all of our work to integrate, restructure and optimize our platform is generating growth and profitability even in challenging conditions like those we continue to see across home furnishings. This is a clear testament to the CULP team's successful execution of our strategic plans over the last two years.

"Our bedding business grew its topline by over 13% in a low-unit market environment and with one less shipping week this quarter compared to last year. We believe our bedding sales trend is significantly exceeding industry norms and provides a good indication that our commercial strategies should provide continued revenue growth, especially once we see the industry replacement cycle that many believe is overdue. Our enhanced U.S. operations combined with flexible nearshore and offshore options are elevating our already strong customer relationships and driving our success in this business.

"We are also encouraged to see sales in our upholstery business nearly comp the prior-year quarter despite a shorter selling period, and we are pleased with placement rates within our largest upholstery end market, residential furniture. In addition, we saw growth on the hospitality and contract side of our upholstery business and are excited about the potential to further grow those verticals.

"Our emphasis on the balance sheet and cash flow management was well reflected in our first quarter results. Through the success of our inventory reduction initiatives and management systems, together with our use of the tariff-proceeds received during the quarter, we reduced net debt down to $3 million from $11 million at the end of last fiscal year, and we are focused on moving to a net cash position.

"Overall, we are optimistic about the momentum we see across our business entering the second quarter and believe our lower cost structure and global footprint position us for continued success in this low-demand environment and accelerating profitability as conditions improve."

Financial Outlook

Due to macro-economic uncertainty and the fluid global trade and tariff environment, the Company is providing only limited forward guidance at this time, with such guidance based on information available at the time of this press release and reflecting certain assumptions by management regarding the Company's business, market and industry conditions.

• The Company expects consistent sequential sales volumes in the second quarter, with some growth over the prior-year quarter, and to continue to outpace bedding industry revenue trends in what it anticipates to remain a pressured demand environment for home furnishings.

• The Company expects the operational benefits of its recent integration and platform optimization initiatives, along with recent pricing and strategic actions, to drive break-even operating income for the second quarter, which would be a significant improvement from the comparable prior-year period in what remains a challenging market environment. The Company also expects accelerating adjusted EBITDA results for the second quarter.

• The Company will continue to prioritize debt reduction and free cash flow generation, and expects to continue improving its net debt position throughout the second quarter while maintaining some strategic borrowings under its China credit facilities to both maintain flexibility and leverage preferred interest rates.

Fiscal 2027 First Quarter Business Segment Highlights

Bedding

• Sales in this segment were $31.8 million for the first quarter, up 13.2% compared with the prior-year period despite there being one less week in the first quarter.

• Gross profit (excluding the impact of the tariff-related recoveries) in the bedding segment was $4.3 million, or 13.6% of sales, a significant improvement from the prior-year period's gross profit of $2.9 million, or 10.5% of sales, driven primarily by higher revenue and enhanced operating efficiencies.

Upholstery

• Sales in this segment were $22.2 million for the first quarter, generally flat to prior-year period sales of $22.7 million despite the shorter selling period.

• Gross profit (excluding the impact of the tariff-related recoveries) was $4.1 million, or 18.6% of sales, compared to $4.3 million, or 18.9% of sales, in the prior-year period, reflecting consistent operating margins.

Conference Call

Culp, Inc. will hold a conference call to discuss financial results for the first quarter of its fiscal year 2027 on Thursday, September 10, 2026, at 9:00 a.m. Eastern Time. A live webcast of this call can be accessed on the "Upcoming Events" section on the "Investor Relations" page of the Company's website, www.culp.com. A replay of the webcast will be available for 30 days under the "Past Events" section on the "Investor Relations" page of the Company's website.

About the Company

Culp, Inc. is one of the largest marketers of mattress fabrics for bedding and upholstery fabrics for residential, commercial, and hospitality furniture and other applications in North America. The Company markets a variety of fabrics to its global customer base of leading bedding and furniture companies, including fabrics produced at Culp's manufacturing facilities and fabrics sourced through other suppliers. Culp has manufacturing and sourcing capabilities located in the United States, China, Haiti, Turkey, and Vietnam.

Forward Looking Statements

This release 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 Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties that may cause actual events and results to differ materially from such statements. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often but not always characterized by qualifying words such as "expect," "believe," "will," "may," "should," "could," "potential," "continue," "target," "predict," "seek," "anticipate," "estimate," "intend," "plan," "project," and their derivatives, and include but are not limited to statements about expectations, projections, or trends for our future operations, expectations with respect to tariffs, strategic initiatives and plans, restructuring and integration actions, production levels, new product launches, sales, profit margins, profitability, operating (loss) income, capital expenditures, working capital levels, cost savings (including, without limitation, anticipated cost savings from restructuring and integration actions), income taxes, SG&A or other expenses, pre-tax (loss) income, earnings, cash flow, and other performance or liquidity measures, as well as any statements regarding dividends, share repurchases, liquidity, use of cash and cash requirements, ending cash balances and cash positions, borrowing capacity, investments, potential acquisitions, cash and non-cash restructuring and restructuring-related charges, expenses, and/or credits, net proceeds from restructuring related asset dispositions, future economic or industry trends, public health epidemics, or other future developments. There can be no assurance that we will realize these expectations or meet our guidance, or that these beliefs will prove correct.

Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, demand for home furnishings products, consumer confidence, trends in disposable income, and general economic conditions. Decreases in these economic indicators could have a negative effect on our business and prospects. Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect us adversely. Changes in consumer tastes or preferences toward products not produced by us could erode demand for our products. Changes in tariffs or trade policy, including changes in U.S. trade enforcement priorities, or changes in the value of the U.S. dollar versus other currencies, could affect our financial results because a significant portion of our operations are located outside the United States. Relatedly, litigation is ongoing as to whether businesses that paid tariffs that were invalidated by the U.S. Supreme Court in February 2026 may receive or retain refunds for those tariffs, which could be significant. Also, economic or political instability in international areas could affect our operations or sources of goods in those areas, as well as demand for our products in international markets. The future performance of our business depends in part on our success in conducting and finalizing acquisition negotiations and integrating acquired businesses into our existing operations. The impact of public health emergencies or epidemics on employees, customers, suppliers, and the global economy could also adversely affect our operations and financial performance. In addition, the impact of potential asset impairments, including impairments of property, plant, and equipment, inventory, or intangible assets, as well as the impact of valuation allowances applied against our net deferred income tax assets, could affect our financial results. Increases in freight costs, labor costs, and raw material prices, including increases in market prices for petrochemical products, can also significantly affect the prices we pay for shipping, labor, and raw materials, respectively, and in turn, increase our operating costs and decrease our profitability. Also, our success in diversifying our supply chain with reliable partners to effectively service our global platform could affect our operations and adversely affect our financial results. Finally, the future performance of our business also depends on our ability to successfully restructure our bedding operations, integrate our bedding and upholstery segments and realize the expected benefits of that integration effort, which may not meet our expectations. Further information about these factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A "Risk Factors" in our most recent Form 10-K report filed with the Securities and Exchange Commission.

Many of these factors are macroeconomic in nature and are, therefore, beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this release as anticipated, believed, estimated, expected, intended, planned or projected. The forward-looking statements included in this release are made only as of the date of this release. Unless required by United States federal securities laws, we neither intend nor assume any obligation to update these forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in our expectations. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations or financial results.