Culp announces broad restructuring plan

Culp announced a major restructuring plan designed to reduce costs, improve asset utilization, and drive performance and profitable growth. This plan, which is being implemented primarily in the company’s mattress fabrics segment and, to a lesser extent, in its upholstery fabrics segment, includes the following strategic actions: 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 in Stokesdale, 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 the Dominican 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. In total, the restructuring plan is expected to generate $10.0 – $11.0 million in annualized cost savings and operating improvements when fully implemented by the end of the calendar year, with most of the resulting benefit realized during the second half of the fiscal year. The company expects to incur restructuring and restructuring-related costs and charges of approximately $8.0 million, of which $2.6 million are anticipated to be incurred in the first quarter of fiscal 2025, and the remainder are expected to be incurred over the course of fiscal 2025. This includes approximately $2.5 million in cash costs, the majority of which are anticipated to be incurred in the first half of fiscal 2025. The company expects to fund these cash costs with the sale of manufacturing equipment. These restructuring and restructuring-related costs and charges exclude any gain on the sale of real estate, the amount and timing of which is currently unknown but which will ultimately be recorded within restructuring expense and will reduce the amount of the restructuring charges incurred. The company currently anticipates receiving at least $10.0 to $12.0 million in cash proceeds (net of all taxes and commissions) from the sale of real estate under the restructuring plan. Assuming the completion of all of these restructuring actions and the sale of associated real estate by the end of fiscal 2025, the company currently projects its cash and cash equivalents as of the end of fiscal 2025 to be higher than its cash and cash equivalents as of the end of fiscal 2024.