This article first appeared on GuruFocus .
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Net Sales:$48 million, down from $52.3 million in the prior year period.
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Consolidated Gross Profit:$5.3 million, or 11.1% of sales, compared to $6.3 million, or 12.1% of sales, in the prior year period.
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Loss from Operations:$3.7 million, compared to a loss of $3.9 million in the prior year period.
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Adjusted Loss from Operations:$3.1 million, compared to a loss of $1.6 million in the prior year period.
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Net Loss:$3.4 million, or $0.27 per diluted share, compared to a net loss of $4.1 million, or $0.33 per diluted share, in the prior year period.
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Adjusted EBITDA:Negative $2.2 million, compared to negative $457,000 in the prior year period.
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Effective Income Tax Rate:Negative 9.3%, compared to negative 12.1% in the prior year period.
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Bedding Segment Sales:$27.3 million, down approximately 5% from the prior year period.
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Bedding Segment Gross Profit:$2 million, or 7.2% of sales, compared to $2.7 million, or 9.6% of sales, in the prior year period.
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Upholstery Segment Sales:$20.7 million, down approximately 12% from the prior year period.
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Upholstery Segment Gross Profit:$3.4 million, or 16.3% of sales, compared to $4.2 million, or 17.9% of sales, in the prior year period.
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Total Cash:$9.7 million.
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Outstanding Debt:$18.5 million.
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Net Debt Position:$8.8 million.
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Cash Flow from Operations:Negative $2.3 million for the first nine months of the fiscal year.
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Free Cash Flow:Negative $1 million, improved from negative $10.1 million in the prior year period.
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Capital Expenditures:$442,000 for the first nine months, down from $2.4 million in the prior year period.
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Liquidity:$27.7 million, consisting of $9.7 million in cash and $18 million in borrowing availability.
Release Date: March 12, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Culp Inc ( NASDAQ:CULP ) has successfully completed a comprehensive restructuring and integration initiative, resulting in over $20 million in annualized cost savings and enhancements.
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The company has a revamped global platform that offers flexible sourcing options across multiple geographies, which is seen as a strategic advantage in the current volatile trade environment.
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Culp Inc ( NASDAQ:CULP ) is experiencing growth in high-margin areas such as mattress covers and upholstery kits, with double-digit growth in the latter.
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The company has a strong market position and is gaining market share in its core bedding and upholstery markets, despite challenging industry conditions.
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Culp Inc ( NASDAQ:CULP ) has a robust liquidity position with $27.7 million in liquidity, including cash and borrowing availability, and a valuable manufacturing campus with an estimated market value of $40 million to $45 million.
Negative Points
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Culp Inc ( NASDAQ:CULP ) faced a challenging demand environment in the third quarter, with net sales declining to $48 million from $52.3 million in the prior year period.
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The company reported a loss from operations of $3.7 million, with an adjusted loss from operations of $3.1 million, indicating ongoing profitability challenges.
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Severe weather in the southeastern US negatively impacted the company's shipping and sales momentum, particularly in the bedding segment.
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Culp Inc ( NASDAQ:CULP ) is dealing with excess inventory resulting from restructuring efforts, which has led to markdowns affecting profitability.
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The company is facing uncertainty regarding the timeline and process for potential tariff refunds, which could impact financial results and cash flow.
Q & A Highlights
Q: Can you expand on the green shoots you're seeing in the bedding side and the programs with major customers? A: Robert Culp, President and CEO, explained that despite the challenging market, Culp was on a good pace in the third quarter for bedding, outpacing the industry until severe weather impacted shipping. They are optimistic about opportunities in mattress covers and are building blocks to increase market share.
Q: Could you provide more details on the potential refunds tied to IEPA and Haiti tariffs? A: Robert Culp stated that they are due refunds on Haiti tariffs due to the renewal of the Haiti Hope Act, which will provide some fourth-quarter cash. For IEPA tariffs, they expect $6 to $7 million in refunds, pending the timeline and mechanism of the refund process.
Q: Given the streamlining and restructuring, what is your breakeven revenue run rate now? A: Kenneth Bowling, CFO, mentioned that they are at a break-even level around $50 million per quarter. They have a cost structure to support this and are focused on leveraging higher sales for profitability.
Q: What are the next steps for the tariff recovery process? A: Robert Culp explained that they have filed protests and a lawsuit, and are ready to process refunds. They are waiting for the Court of International Trade and administration's decisions on the timeline and procedures for refunds.
Q: How do you plan to work off the excess inventory, and will inventory markdowns recur? A: Kenneth Bowling stated they are focused on selling excess inventory at a good margin and have set aggressive goals to reduce inventory over the next two quarters. They aim to improve inventory turnover and minimize markdown impacts in the future.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
