Culp (CULP) investor relations material

Executive summary

• Achieved Q4 sales growth both sequentially and year-over-year, with bedding segment delivering double-digit gains and operational streamlining driving nearly 40% sequential gross profit improvement.

• Completed major restructuring and integration initiatives, generating over $20 million in annualized savings and efficiencies.

• Full year consolidated net sales were $203.5 million, down 4.6% from the prior year, with bedding sales up 2.4% and upholstery sales down 12.5%.

• The company operates two main segments: bedding (57% of revenue) and upholstery (43% of revenue), both holding strong market positions.

• Upholstery segment faced demand headwinds but achieved sequential revenue growth and margin improvement, aided by integration and cost reduction.

Financial highlights

• Q4 net sales: $51.6 million, up 7.6% sequentially and 6% year-over-year; full year net sales: $203.5 million, down 4.6%.

• Q4 gross profit: $6.8 million (13.2% margin), up 30% sequentially but down from $7.7 million (15.7%) year-over-year due to prior-year inventory policy change.

• Q4 net loss: $2.2 million ($0.18/share), a 35% sequential improvement; full-year net loss: $10.2 million ($0.81/share), a 47% improvement year-over-year.

• Adjusted EBITDA for Q4: -$560,000, a 74% sequential improvement; full-year adjusted EBITDA: -$4.7 million.

• Inventory reduced to $47.5 million from $52.2 million in Q3.

Outlook and guidance

• Expect moderate sequential and year-over-year consolidated sales growth in Q1 FY27, despite continued demand challenges.

• Anticipate breakeven to positive adjusted EBITDA in Q1 FY27, excluding tariff refunds.

• Cost and efficiency benefits from restructuring expected to drive further gross profit and SG&A improvements.

• Anticipated annualized savings from all actions total $22.5 million, with additional margin improvements expected from pricing initiatives.

• Industry demand remains soft, but management expects gains as market conditions normalize.