Culp Announces Broad Restructuring Plan Primarily Focused on Mattress Fabrics Segment, Also Updates Financial Outlook for the Fourth Quarter of Fiscal 2024
-
Expect to achieve
$10.0 -$11.0 million in annualized savings and operating improvements with restructuring initiatives - Expect a return to break even operating results at current industry demand levels post restructuring
-
Cash restructuring charges (estimated at
$2.5 million ) expected to be funded with proceeds from equipment sales -
Anticipate receiving at least
$10.0 to$12.0 million in cash proceeds (net of all taxes and commissions) from sale of real estate associated with restructuring plan
-
Consolidating the company’s North American mattress fabrics operations, including a phased wind-down and closure of the company’s manufacturing plant in
Quebec, Canada , and moving knitting and finishing capacity from this plant to the company’s facility inStokesdale, North Carolina ; -
Improving efficiency and through-put by optimizing volume and equipment in the company’s mattress fabrics operation in
Stokesdale, North Carolina , to reduce costs and improve quality; - Transitioning the mattress fabrics segment’s weaving operation to a strategic sourcing model through the company’s long standing supply partners, enhancing competitiveness and value for customers;
-
Consolidating the company’s
Haiti sewn mattress cover operation (which is located on theDominican Republic /Haiti border) into one building and significantly reducing operating expenses at that location; -
Restructuring the company’s upholstery fabrics finishing operation in
China to align with current demand and continuing to leverage strategic supply relationships; and -
Reducing unallocated corporate and shared services expenses with targeted annualized savings of
$1.5 million .
The implementation of these restructuring actions will begin immediately and is expected to be mostly completed by the end of the calendar year.
“Overall, these restructuring actions will reduce the number of associates in our mattress fabrics segment by approximately 240 people, representing around 35 percent of the segment’s total workforce. By taking these steps, we believe we can substantially reduce our fixed costs without materially impacting our top-line sales and without sacrificing our ability to support our customers, grow our business, and maintain our competitive advantage. We also believe these steps will enable us to optimize resources, improve quality, leverage our strong global strategic partnerships, bolster our balance sheet, and ensure a solid foundation for accelerated growth. We are diligently focused on returning our business to profitability, while growing our innovative product portfolio to enhance customer and shareholder value.
“Although these are very difficult decisions, they are necessary steps for CULP to ensure a sustainable business model and return to profitability in this lower demand environment. We sincerely regret the impact on our affected employees, but we remain confident in the company’s future,” added Culp.
Financial Impact
In total, the restructuring plan is expected to generate
The company expects to incur restructuring and restructuring-related costs and charges of approximately
Updated Financial Outlook for the Fourth Quarter of Fiscal 2024
In addition, the company is updating its previously stated financial outlook for the fourth quarter of fiscal 2024. Due to further weakness in industry demand, the company’s consolidated net sales for the fourth quarter are now expected to be approximately 19.0 percent lower as compared to the fourth quarter of fiscal 2023. The company also now expects a consolidated operating loss (loss from operations) for the fourth quarter of fiscal 2024 in the range of
About the Company
Forward Looking Statements
This release contains “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties that may cause actual events and results to differ materially from such statements. Further, forward looking statements are intended to speak only as of the date on which they are made, and we disclaim any duty to update such statements to reflect any changes in management’s expectations or any change in the assumptions or circumstances on which such statements are based, whether due to new information, future events, or otherwise. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often but not always characterized by qualifying words such as “expect,” “believe,” “anticipate,” “estimate,” “intend,” “plan,” “project,” and their derivatives, and include but are not limited to statements about expectations, projections, or trends for our future operations, strategic initiatives and plans, production levels, new product launches, sales, profit margins, profitability, operating income, capital expenditures, working capital levels, cost savings, income taxes, SG&A or other expenses, pre-tax income, earnings, cash flow, and other performance or liquidity measures, as well as any statements regarding dividends, share repurchases, liquidity, use of cash and cash requirements, borrowing capacity, investments, potential acquisitions, future economic or industry trends, public health epidemics, or future developments. There can be no assurance that we will realize these expectations or meet our guidance, or that these beliefs will prove correct.
Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, consumer confidence, trends in disposable income, and general economic conditions. Decreases in these economic indicators could have a negative effect on our business and prospects. Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect us adversely. The future performance of our business depends in part on our success in conducting and finalizing acquisition negotiations and integrating acquired businesses into our existing operations. Changes in consumer tastes or preferences toward products not produced by us could erode demand for our products. Changes in tariffs or trade policy, including changes in
View source version on businesswire.com: https://www.businesswire.com/news/home/20240501335295/en/
Investor Relations Contact
(336) 881-5630
krbowling@culp.com
Source: