Culp (CULP) Q2 2025 earnings summary

Executive summary

• Net sales for Q2 FY25 were $55.7M, down 5.2% year-over-year, with sequential improvement in mattress fabrics and continued profitability in upholstery fabrics despite industry headwinds.

• Net loss for Q2 was $5.6M ($0.45 per diluted share), compared to $2.4M ($0.19 per share) last year, driven by lower demand and $2.8M in restructuring charges.

• Major restructuring underway: closure of Canadian/Quebec facility, consolidation of North American mattress fabrics, and cost reductions in Haiti and China, with most benefits expected in Q4 FY25.

• Restructuring led to a 70.7% sequential reduction in mattress fabrics operating loss; upholstery segment remained profitable but faced residential demand softness.

• Six-month net sales declined 2.8% to $112.2M, with a net loss of $12.9M, reflecting ongoing industry softness and restructuring activities.

Financial highlights

• Q2 gross profit was $6.0M, with gross margin at 10.8%, down from 13.5% last year.

• Operating loss for Q2 was $5.4M, including $2.8M in restructuring charges; adjusted operating loss was $2.6M.

• Adjusted EBITDA for the trailing 12 months was $(6.7)M.

• Cash and equivalents at quarter-end were $10.5M, with $4.1M in debt under the China credit line.

• Free cash flow for the first six months was $(3.4)M, improved from $(5.6)M last year.

Outlook and guidance

• Q3 consolidated net sales expected to be flat to slightly down sequentially, with continued pressure on residential upholstery sales.

• Positive adjusted EBITDA (excluding restructuring) anticipated for the second half of FY25; return to adjusted operating income expected in Q4 FY25.

• Most restructuring benefits to be realized in Q4 FY25, with annualized savings of $10–$11M projected post-restructuring.