Culp Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brian Gordon - Water Tower Research - Analyst : Good morning, everyone, thank you for taking my questions. It's obviously been a tough quarter, but we know that the entire team has been really laser-focused on the restructuring and managing costs and it definitely shows in the results even with sales down. You know significantly. I do have several questions, though. They want to cover about the restructurings and in your comments. I know you touched on this a bit already, but when the restructuring was first announced in May that the bulk of the $8 million should be booked in the first quarter of 2025, but do you have any update on the timing, the expected timing of the cash and non-cash components of these charges?

Question: Brian Gordon - Water Tower Research - Analyst : Okay, thank you. On a similar note, do you have any update on the expected magnitude and timing of the cost savings over second half when we're thinking about how to model the savings should we be expecting something like a $2 million to $3 million improvement by Q4? And maybe how much should we expect for Q3?

Question: Brian Gordon - Water Tower Research - Analyst : Okay. Thank you. Kind of following on and maybe looking out a little bit longer term, you've said for mattress fabrics that your long-term goal of an operating income target of something like 9% to 10% in two, three years. When we think about the restructuring, how much of that longer-term target do you reach to this current restructuring activity? And how much do you think is going to depend on the anticipated revenue growth?

Question: Brian Gordon - Water Tower Research - Analyst : Okay, thank you. Understood. Obviously, a big part of the restructuring is moving to a more agile sourcing model for mattress fabrics. And part of that is consolidating production in the stokes Dale facility and creating a center of excellence there. But when we think about what you're doing in terms of closing Quebec and moving the some of that equipment to North Carolina? How should we think like what percentage of the equipment in North Carolina, please go into or paying QuTbec is going to be moved to North Carolina versus how much is going to be sold and where are you guys in that process? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 28, 2024 / 3:00PM, CULP.N - Q4 2024 Culp Inc Earnings Call

Question: Brian Gordon - Water Tower Research - Analyst : Okay. Thank you. That's all very helpful. And I certainly want to be respectful to other callers might have a question I drive time, though to ask maybe a few questions about demand in the current environment?

Question: Brian Gordon - Water Tower Research - Analyst : Definitely, when you talked about the guidance in terms of like a modest sequential improvements or is that low single digits? Is that how we should be thinking about that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 28, 2024 / 3:00PM, CULP.N - Q4 2024 Culp Inc Earnings Call

Question: Brian Gordon - Water Tower Research - Analyst : Okay. And thank you. One of the things that you both noted in her comments and releases that hospitality and contractors of the 38% of sales for upholstery and how much of that is going to win new business versus maybe weakness in the residential furniture side?

Question: Brian Gordon - Water Tower Research - Analyst : Great, great. Thank you. Anecdotally, there were some evidence that in the Memorial Day weekend was a positive for mattress sales, even though May as a -- whole May have been flat. What have you been hearing from your customers on the demand side?

Question: Brian Gordon - Water Tower Research - Analyst : Thank you. Obviously, new product introductions have been really important from a margin perspective, especially given the compression inflation and higher costs we've had in recent quarters. As investors kind of thinking about the business. First of all, where are you in terms of like a pricing REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 28, 2024 / 3:00PM, CULP.N - Q4 2024 Culp Inc Earnings Call of the new products versus your targets? And when we're thinking about like a fiscal year '25 revenues and beyond, what percentage of your sales are going to come from these kind of new placements and new innovative products?

Question: Brian Gordon - Water Tower Research - Analyst : Okay. Okay. Thank you. One final question, if I may. There's also been reports about both freight surcharges and potentially anticipate delays with shipping, especially coming out of Asia. Any comments on how this, you know potentially is going to affect you guys in fiscal '25?

Question: Brian Gordon - Water Tower Research - Analyst : Thank you. And thank you everyone for the very generous time that you've allocated my questions. I'll let anyone else ask questions at this point that. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 28, 2024 / 3:00PM, CULP.N - Q4 2024 Culp Inc Earnings Call

Question: John Dasher - Pinnacle - Analyst : Hi, good morning. Thanks for taking my question. Most of my questions have been answered. I guess the one remaining is the $10 million to $12 million from proceeds of real estate and equipment. How does that break down in terms of mix? What percentage would be real estate and what percentage would be equipment roughly?

Question: John Dasher - Pinnacle - Analyst : I've just said, okay, some time in the $10 million to $12 million for real estate plus $2.5 million for equipment, correct?

Question: John Dasher - Pinnacle - Analyst : That right. And the $10 million to $12 million for the real estate, how did you get to that number? I mean, appraisals. But as you get to the number and at what point do you actually sell that real estate obviously marketed in advance, but at what point can you actually sell it ones the equipment is out?

Question: John Dasher - Pinnacle - Analyst : Okay. So the brokers actually marketing it now. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 28, 2024 / 3:00PM, CULP.N - Q4 2024 Culp Inc Earnings Call

Question: Brian Gordon - Water Tower Research - Analyst : Okay. Okay.

Question: John Dasher - Pinnacle - Analyst : Okay. Just to be clear, I mean, you've had appraisals done on the property.

Question: John Dasher - Pinnacle - Analyst : Okay. All right, great. I appreciate it. Good luck.