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Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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<ul><li>We are revising our FY25 and outyear revenue and EPS estimates following CULP’s 1Q25 earnings release and new guidance.</li><li>As previously reviewed (1), CULP posted adjusted EPS of ($0.41) in 1QFY25 versus ($0.27) in the prior year, which was approximately in line with our expectations given the firm’s restructuring initiatives (focused primarily in mattress) and continuing challenging industry conditions.</li><li>Management has provided some guidance, suggesting 2QFY25 sales will be flat, with adjusted EBITDA approaching break-even. </li></ul>

We are revising our FY25 and outyear revenue and EPS estimates following CULP’s 1Q25 earnings release and new guidance.As previously reviewed (1), CULP posted adjusted EPS of ($0.41) in 1QFY25 versus ($0.27) in the prior year, which was approximately in line with our expectations given the firm’s restructuring initiatives (focused primarily in mattress) and continuing challenging industry conditions.Management has provided some guidance, suggesting 2QFY25 sales will be flat, with adjusted EBITDA approaching break-even. 

Culp, Inc. - New FY25 and Outyear Revenue and EPS Estimates

<ul><li>Amidst weak demand and ongoing macro headwinds, Culp posted a solid quarter as it executes on its restructuring plan.</li><li>Culp posted 1QFY25 adjusted EPS of ($0.41), roughly in line with our estimate of ($0.38), versus ($0.27) in 1QFY24, on better-than-expected sales growth and operating margins in upholstery, offset by manufacturing inefficiencies in mattress resulting from the company’s global restructuring initiatives.</li><li>Culp had not previously provided formal earnings guidance for the quarter, so we take this performance as roughly in line with expectations given the challenging macro environment in residential furniture and management’s discussion of the restructuring in May.</li></ul>

Amidst weak demand and ongoing macro headwinds, Culp posted a solid quarter as it executes on its restructuring plan.Culp posted 1QFY25 adjusted EPS of ($0.41), roughly in line with our estimate of ($0.38), versus ($0.27) in 1QFY24, on better-than-expected sales growth and operating margins in upholstery, offset by manufacturing inefficiencies in mattress resulting from the company’s global restructuring initiatives.Culp had not previously provided formal earnings guidance for the quarter, so we take this performance as roughly in line with expectations given the challenging macro environment in residential furniture and management’s discussion of the restructuring in May.

Culp, Inc. - 1QFY25 Adj. EPS ($0.41) Vs. Prior Year ($0.27) As Mattress Restructuring Gains Traction

<ul>
<li>Home furnishings demand remains challenged.</li>
<li>As Culp’s FY24 drew to a close, sales declined in both of its segments (mattress fabrics -16.1% to $25.8 million and upholstery fabrics -22.6% to $23.8 million).</li>
<li>Weak housing markets (home sales are a traditional driver of furniture ‘spend’), ‘exhausted’ consumers (many had refurbished their homes during the pandemic lockdowns), weather, and economic uncertainty all played a role, with little evidence of a near-term catalyst for improvement.</li>
</ul>


Home furnishings demand remains challenged.
As Culp’s FY24 drew to a close, sales declined in both of its segments (mattress fabrics -16.1% to $25.8 million and upholstery fabrics -22.6% to $23.8 million).
Weak housing markets (home sales are a traditional driver of furniture ‘spend’), ‘exhausted’ consumers (many had refurbished their homes during the pandemic lockdowns), weather, and economic uncertainty all played a role, with little evidence of a near-term catalyst for improvement.


Culp, Inc. - FY25 to Be a Year of Transformation

External reports (aggregated public sources), Value Investors Club

Value Investors Club

External reports (aggregated public sources)

<ul><li>CULP, an industry leader in the textile manufacturing sector, has experienced difficulties due to a housing sales slowdown</li><li>Stock price trading below tangible book value offers potential opportunity for investors</li><li>Strong balance sheet, history of adapting to challenges, and future growth potential make CULP a promising investment option for risk-tolerant investors</li></ul><p><em>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.</em></p>

CULP, an industry leader in the textile manufacturing sector, has experienced difficulties due to a housing sales slowdownStock price trading below tangible book value offers potential opportunity for investorsStrong balance sheet, history of adapting to challenges, and future growth potential make CULP a promising investment option for risk-tolerant investorsThis content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

<ul><li>We are cutting estimates on Culp, responding to weak demand, and bracing for a restructuring in 4QFY24.</li><li>Culp’s 3QFY24 earnings report, issued Wednesday after the close, highlighted improved revenue and operating results, Y/Y and sequentially.</li><li>Consolidated sales were $60.4 million, up 15% Y/Y and 3% sequentially, aided by a calendar shift in the Chinese New Year from 3Q to 4Q.</li></ul>

We are cutting estimates on Culp, responding to weak demand, and bracing for a restructuring in 4QFY24.Culp’s 3QFY24 earnings report, issued Wednesday after the close, highlighted improved revenue and operating results, Y/Y and sequentially.Consolidated sales were $60.4 million, up 15% Y/Y and 3% sequentially, aided by a calendar shift in the Chinese New Year from 3Q to 4Q.

Culp, Inc. - Lower Near-Term Expectations; Culp Likely to Restructure

United States

Culp, Inc. manufactures and markets upholstery fabrics and mattress tickings for use in furniture and bedding industries. The Company's fabrics are used in the production of residential and commercial furniture and bedding products, including sofas, recliners, chairs, loveseats, sectionals, sofa-beds, office seating, panel systems, and mattress sets.

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Culp Inc (CULP US)

Culp, Inc. - New FY25 and Outyear Revenue and EPS Estimates

Management has provided some guidance, suggesting 2QFY25 sales will be flat, with adjusted EBITDA approaching break-even.

Water Tower Research

Culp, Inc. - 1QFY25 Adj. EPS ($0.41) Vs. Prior Year ($0.27) As Mattress Restructuring Gains Traction

Culp had not previously provided formal earnings guidance for the quarter, so we take this performance as roughly in line with expectations given...

Water Tower Research

Culp, Inc. - FY25 to Be a Year of Transformation

As Culp’s FY24 drew to a close, sales declined in both of its segments (mattress fabrics -16.1% to $25.8 million and upholstery fabrics -22.6% to...

Water Tower Research

Culp Inc (CULP) - Sunday, Feb 4, 2024

Strong balance sheet, history of adapting to challenges, and future growth potential make CULP a promising investment option for risk-tolerant...

Value Investors Club

Culp, Inc. - Lower Near-Term Expectations; Culp Likely to Restructure

Culp’s 3QFY24 earnings report, issued Wednesday after the close, highlighted improved revenue and operating results, Y/Y and sequentially.

Water Tower Research

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