Culp, Inc. (CFI) has reported a 30.54 percent jump in profit for the quarter ended Jan. 29, 2017. The company has earned $6.35 million, or $0.51 a share in the quarter, compared with $4.86 million, or $0.39 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $5.83 million, or $0.47 a share compared with $5.90 million or $0.47 a share, a year ago.
Revenue during the quarter went down marginally by 2.93 percent to $76.17 million from $78.47 million in the previous year period. Gross margin for the quarter expanded 89 basis points over the previous year period to 22 percent. Total expenses were 90.90 percent of quarterly revenues, up from 90.79 percent for the same period last year. That has resulted in a contraction of 10 basis points in operating margin to 9.10 percent.
Operating income for the quarter was $6.94 million, compared with $7.23 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $9.70 million compared with $9.51 million in the prior year period. At the same time, adjusted EBITDA margin improved 62 basis points in the quarter to 12.74 percent from 12.12 percent in the last year period.
Commenting on the results, Frank Saxon, president and chief executive officer of Culp, Inc., said, "As expected, our overall sales for the third quarter of fiscal 2017 were slightly lower than a year ago, reflecting an uncertain economic environment and soft consumer demand trends for home furnishings. We are pleased that our mattress fabric sales showed year-over-year improvement, in spite of a more challenging marketplace. However, our upholstery fabric sales were affected by the timing of the Chinese New Year holiday that started in January as opposed to February last year. For both businesses, we have remained focused on our top strategic priorities ��" to drive product innovation and creativity and provide a diverse product mix that meets the changing demands of our customers. Our efficient and flexible manufacturing platform supports this strategy, and we continue to make the right investments to enhance our operating efficiencies and take advantage of new growth opportunities. We are especially pleased with the year to date operating performance in our mattress fabrics business in spite of significant disruptions related to ongoing major transformational projects. Importantly, we have also maintained a strong financial position, with excellent cash flow from operations and free cash flow and high returns on capital through the first nine months of fiscal 2017."
Operating cash flow improves significantly
Culp, Inc. has generated cash of $24.24 million from operating activities during the nine month period, up 52.66 percent or $8.36 million, when compared with the last year period. The company has spent $40.28 million cash to meet investing activities during the nine month period as against cash outgo of $3.22 million in the last year period. It has incurred net capital expenditure of $9.17 million on net basis during the nine month period, up 23.03 percent or $1.72 million from year ago period.
The company has spent $6.11 million cash to carry out financing activities during the nine month period as against cash outgo of $10.96 million in the last year period.
Cash and cash equivalents stood at $15.66 million as on Jan. 29, 2017, down 50.62 percent or $16.05 million from $31.71 million on Jan. 31, 2016.
Working capital drops significantly
Culp, Inc. has witnessed a decline in the working capital over the last year. It stood at $51.54 million as at Jan. 29, 2017, down 30.64 percent or $22.77 million from $74.30 million on Jan. 31, 2016. Current ratio was at 2.36 as on Jan. 29, 2017, down from 2.89 on Jan. 31, 2016.
Cash conversion cycle (CCC) has decreased to 22 days for the quarter from 60 days for the last year period. Days sales outstanding went down to 28 days for the quarter compared with 29 days for the same period last year.
Days inventory outstanding has decreased to 35 days for the quarter compared with 70 days for the previous year period. At the same time, days payable outstanding went up to 41 days for the quarter from 39 for the same period last year.
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