Culp Announces Broad Restructuring Plan Primarily Focused on Mattress Fabrics Segment, Also Updates Financial Outlook for the Fourth Quarter of Fiscal 2024 - Seite 2

“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 $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.