Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

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.

Equity Research Firm

Equity Bottom-Up

<ul><li>Culp posted another tough quarter (1), as industry conditions remain challenged.</li><li>The firm posted an adjusted EPS loss of $0.28, $0.10 below our estimate and $0.09 below the prior year on weaker-than-expected earnings.</li><li>As we said in our update after the release, this shortfall may have been unexpected, but it’s certainly not surprising to anyone who has been following the space. </li></ul>

Culp posted another tough quarter (1), as industry conditions remain challenged.The firm posted an adjusted EPS loss of $0.28, $0.10 below our estimate and $0.09 below the prior year on weaker-than-expected earnings.As we said in our update after the release, this shortfall may have been unexpected, but it’s certainly not surprising to anyone who has been following the space. 

Culp, Inc. - Revising Revenue/EPS Estimates

<ul><li>Persistent macro headwinds during 2QFY25 affected revenue and earnings as management continues to execute against its restructuring plan to restore profitability at lower revenue thresholds.</li><li>Adjusted EPS of ($0.28) was $0.10 lower than our estimate and $0.09 lower than the prior year, mainly on lower-than-expected revenue in upholstery as tough industry conditions persist.</li><li>The weak revenue picture in upholstery was unexpected, but not surprising; it remains tough out there.</li></ul>

Persistent macro headwinds during 2QFY25 affected revenue and earnings as management continues to execute against its restructuring plan to restore profitability at lower revenue thresholds.Adjusted EPS of ($0.28) was $0.10 lower than our estimate and $0.09 lower than the prior year, mainly on lower-than-expected revenue in upholstery as tough industry conditions persist.The weak revenue picture in upholstery was unexpected, but not surprising; it remains tough out there.

Culp, Inc. - 2QFY25 Adjusted EPS Of ($0.28) As Macro Headwinds Persist

<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

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Culp Inc (CULP US)

Culp, Inc. - Revising Revenue/EPS Estimates

The firm posted an adjusted EPS loss of $0.28, $0.10 below our estimate and $0.09 below the prior year on weaker-than-expected earnings.

Water Tower Research

Culp, Inc. - 2QFY25 Adjusted EPS Of ($0.28) As Macro Headwinds Persist

Persistent macro headwinds during 2QFY25 affected revenue and earnings as management continues to execute against its restructuring plan to restore...

Water Tower Research

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

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)