CULP INCCULP

CULP INC Segments Disclosure

10-KFiled Jul 11, 20259 min read

19. SEGMENT INFORMATION

Overall

Our operations are classified into two reportable segments: mattress fabrics and upholstery fabrics. The mattress fabrics segment manufactures, sources, and sells fabrics and mattress covers primarily to bedding manufacturers. The upholstery fabrics segment develops, manufactures, sources, and sells fabrics primarily to residential, commercial, and hospitality furniture manufacturers. In addition, the upholstery fabrics segment includes Read, a wholly-owned subsidiary with operations located in Knoxville, Tennessee and our facility located in Burlington, North Carolina, which provide window treatments and sourcing of upholstery fabrics and other products, as well as related measuring and installation to customers in the hospitality and commercial markets. Read also supplies soft goods such as decorative top sheets, coverlets, duvet covers, bed skirts, bolsters, and pillows.

Our Chief Operating Decision Maker ("CODM") is our Chief Executive Officer ("CEO"), who regularly reviews the financial results of the company on a consolidated and business segment basis for the purpose of evaluating financial and operating performance, allocation of resources to the individual segments noted above, and determining executive compensation. Accordingly, our CODM reviews certain

financial metrics that include net sales and (loss) income from operations before unallocated corporate expenses and other items that are not expected to occur on a regular basis (i.e., restructuring activities), as well as: (i) cost of sales, (ii) gross profit, (iii) selling, general, and administrative expenses, including unallocated corporate expenses, (iv) assets used in operations, which generally include accounts receivable, inventory, property, plant, and equipment, right of use assets, and assets held for sale; and (v) capital spending.

Cost of sales for each segment includes costs to develop, manufacture, or source our products, including costs such as raw material and finished goods purchases, direct and indirect labor, overhead, and incoming freight charges. Unallocated corporate expenses primarily represent compensation and benefits for certain executives and their support staff, all costs associated with being a public company, amortization of intangible assets, and other miscellaneous expenses. Intangible assets are not included in segment assets, as these assets are not used by the Chief Operating Decision Maker to evaluate the respective segment’s operating performance, allocate resources to individual segments, or determine executive compensation.

Net Sales Geographic Concentration

Net sales denominated in U.S. dollars accounted for 92%, 92%, and 91% of total consolidated net sales in fiscal 2025, 2024, and 2023, respectively. International sales accounted for 33%, 32%, and 29% of net sales during fiscal 2025, 2024, and 2023, respectively, and are summarized by geographic area as follows:

 

(dollars in thousands)

 

2025

 

 

2024

 

 

2023

 

north america (excluding USA) (1)

 

$

32,912

 

 

$

29,357

 

 

$

29,756

 

far east and asia (2)

 

 

30,586

 

 

 

36,334

 

 

 

31,339

 

all other areas

 

 

6,026

 

 

 

6,011

 

 

 

8,032

 

 

 

$

69,524

 

 

$

71,702

 

 

$

69,127

 

 

(1)
Of this amount, $28.8 million, $25.1 million, and $24.9 million are attributable to shipments to Mexico in fiscal 2025, 2024, and 2023, respectively.
(2)
Of this amount $16.0 million, $18.3 million, and $20.0 million are attributable to shipments within China in fiscal 2025, 2024, and 2023, respectively.

Sales attributed to individual countries are based upon the location to which the company ships its products for delivery to customers.

Customer Concentration

One customer within the upholstery fabrics segment represented 11%, 12%, and 15% of consolidated net sales during fiscal 2025, 2024, and 2023, respectively. No customers within the upholstery fabrics segment accounted for greater than 10% of consolidated accounts receivable, net as of April 27, 2025, and April 28, 2024.

One customer within the mattress fabrics segment represented 11% of consolidated net sales during fiscal 2025. No customers within the mattress fabrics segment represented greater than 10% of consolidated net sales during fiscal 2024 or 2023. No customers within the mattress fabrics segment accounted for greater than 10% of consolidated accounts receivable, net as of April 27, 2025, and April 28, 2024.

Employee Workforce Concentration

Hourly employees associated with the mattress fabrics operation located in Quebec, Canada were represented by a local unaffiliated union with a collective bargaining agreement that was set to expire on February 1, 2026. On April 29, 2024 (first quarter of fiscal 2025), our board of directors made a decision to gradually discontinue this operation with the intention to ultimately sell the related building and land. As a result, as of April 27, 2025, there were only six hourly employees remaining to ready the building and land for sale, which such sale to a third party occurred during the first quarter of fiscal 2026. As a result of this sale, the remaining hourly employees were terminated. All hourly employees were provided compensation and benefits in accordance with the collective bargaining agreement noted above.

Financial Information

Statements of operations for our business segments are as follows:

 

(dollars in thousands)

 

2025

 

 

2024

 

 

2023

 

net sales by segment:

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

113,906

 

 

$

116,370

 

 

$

110,995

 

upholstery fabrics

 

 

99,331

 

 

 

108,963

 

 

 

123,939

 

net sales

 

$

213,237

 

 

$

225,333

 

 

$

234,934

 

cost of sales by segment:

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

105,970

 

 

$

110,081

 

 

$

117,734

 

upholstery fabrics

 

 

80,579

 

 

 

87,273

 

 

 

106,206

 

total segment cost of sales

 

 

186,549

 

 

 

197,354

 

 

 

223,940

 

      restructuring related charge (1) (3) (5)

 

 

1,621

 

 

 

40

 

 

 

98

 

cost of sales

 

$

188,170

 

 

$

197,394

 

 

$

224,038

 

gross profit:

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

7,936

 

 

$

6,289

 

 

$

(6,739

)

upholstery fabrics

 

 

18,752

 

 

 

21,690

 

 

 

17,733

 

total segment gross profit

 

 

26,688

 

 

 

27,979

 

 

 

10,994

 

restructuring related charge (1) (3) (5)

 

 

(1,621

)

 

 

(40

)

 

 

(98

)

gross profit

 

$

25,067

 

 

$

27,939

 

 

$

10,896

 

selling, general, and administrative expenses by segment:

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

13,171

 

 

$

13,134

 

 

$

11,942

 

upholstery fabrics

 

 

14,695

 

 

 

15,903

 

 

 

15,739

 

unallocated corporate

 

 

7,839

 

 

 

9,574

 

 

 

10,297

 

selling, general, and administrative expenses

 

$

35,705

 

 

$

38,611

 

 

$

37,978

 

(loss) income from operations by segment:

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

(5,235

)

 

$

(6,845

)

 

$

(18,681

)

upholstery fabrics

 

 

4,057

 

 

 

5,787

 

 

 

1,994

 

unallocated corporate expenses

 

 

(7,839

)

 

 

(9,574

)

 

 

(10,297

)

total segment loss from operations

 

 

(9,017

)

 

 

(10,632

)

 

 

(26,984

)

     restructuring related charge (1) (3) (5)

 

 

(1,621

)

 

 

(40

)

 

 

(98

)

     restructuring expense (2) (4) (6)

 

 

(7,739

)

 

 

(636

)

 

 

(1,396

)

loss from operations

 

$

(18,377

)

 

$

(11,308

)

 

$

(28,478

)

interest expense

 

 

(231

)

 

 

(11

)

 

 

—

 

interest income

 

 

915

 

 

 

1,174

 

 

 

531

 

other expense

 

 

(1,018

)

 

 

(625

)

 

 

(443

)

loss before income taxes

 

$

(18,711

)

 

$

(10,770

)

 

$

(28,390

)
(1)
During fiscal 2025, we incurred a restructuring related charge totaling $1.6 million, which pertained to losses on the disposal, valuation, and markdowns of inventory related to the closure of our manufacturing facility located in Quebec, Canada.
(2)
For fiscal 2025, restructuring expense of $7.7 million mostly relates to the mattress fabrics segment. The $7.7 million restructuring expense represents costs associated with: (i) consolidating the company's North American mattress fabrics operations, including the closure of the company's Property located in Quebec, Canada; (ii) consolidating two leased facilities related to the sewn mattress cover operation located in Ouanaminthe, Haiti, into one facility and reducing other operating expenses at this location; (iii) initial costs related to consolidating production and distribution activities from the upholstery fabrics distribution center located in Burlington, North Carolina to the mattress fabrics manufacturing and distribution center located in Stokesdale, North Carolina; and (v) other expenses incurred as part of the company's strategic plan to transform it's operating model as announced on April 24, 2025. See Note 10 located in the consolidated financial statements for further details regarding the restructuring activities announced on May 1, 2024 (first quarter of fiscal 2025) and April 24, 2025 (fourth quarter of fiscal 2025).
(3)
During fiscal 2024, we incurred a restructuring related charge of $40,000, which pertained to markdowns of inventory related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti.
(4)
For fiscal 2024, restructuring expense of $636,000 represents impairment charges related to equipment of $329,000 and employee termination benefits of $103,000 related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti. In addition, during the fourth quarter of fiscal 2024, restructuring expense of $204,000 was incurred for employee termination benefits related to the closure of the upholstery fabrics finishing operation located in Shanghai China.
(5)
During fiscal 2023, we incurred a restructuring related charge totaling $98,000, which pertained to loss on disposal and markdowns of inventory related to the exit of our cut and sewn upholstery fabrics operation located in Shanghai, China.
(6)
For fiscal 2023, restructuring expense of $1.4 million relates to both our restructuring activities for our cut and sewn upholstery fabrics operations located in Shanghai, China, which occurred during the second quarter of fiscal 2023, and those located in Ouanaminthe, Haiti, which occurred during the third and fourth quarters of fiscal 2023. Restructuring expense represents employee termination benefits of $507,000, lease termination costs of $481,000, impairment losses totaling $357,000 that relate to leasehold improvements and equipment, and $51,000 for other associated costs.

Balance sheet information for our business segments follow:

 

(dollars in thousands)

 

April 27,
2025

 

 

 

April 28,
2024

 

 

segment assets

 

 

 

 

 

 

 

 

mattress fabrics

 

 

 

 

 

 

 

 

accounts receivable

 

$

10,576

 

 

 

$

10,003

 

 

inventory

 

 

33,293

 

 

 

 

27,671

 

 

property, plant, and equipment (1) (2)

 

 

23,259

 

 

 

 

31,472

 

 

assets held for sale (3)

 

 

2,177

 

 

 

 

—

 

 

right of use assets (4) (5)

 

 

125

 

 

 

 

1,627

 

 

total mattress fabrics assets

 

 

69,430

 

 

 

 

70,773

 

 

 

 

 

 

 

 

 

 

upholstery fabrics

 

 

 

 

 

 

 

 

accounts receivable

 

 

11,268

 

 

 

 

11,135

 

 

inventory

 

 

16,016

 

 

 

 

17,172

 

 

property, plant, and equipment (6) (7)

 

 

1,010

 

 

 

 

1,125

 

 

right of use assets (8) (9)

 

 

2,678

 

 

 

 

1,952

 

 

total upholstery fabrics assets

 

 

30,972

 

 

 

 

31,384

 

 

total segment assets

 

 

100,402

 

 

 

 

102,157

 

 

 

 

 

 

 

 

 

 

non-segment assets

 

 

 

 

 

 

 

 

cash and cash equivalents

 

 

5,629

 

 

 

 

10,012

 

 

short-term investments – rabbi trust

 

 

1,325

 

 

 

 

903

 

 

short-term note receivable

 

 

280

 

 

 

 

264

 

 

current income taxes receivable

 

 

—

 

 

 

 

350

 

 

other current assets

 

 

2,970

 

 

 

 

3,371

 

 

long-term note receivable

 

 

1,182

 

 

 

 

1,462

 

 

deferred income taxes

 

 

637

 

 

 

 

518

 

 

property, plant, and equipment (10)

 

 

567

 

 

 

 

585

 

 

right of use assets (11)

 

 

3,105

 

 

 

 

2,624

 

 

intangible assets

 

 

960

 

 

 

 

1,876

 

 

long-term investments - rabbi trust

 

 

5,722

 

 

 

 

7,102

 

 

other assets

 

 

591

 

 

 

 

830

 

 

total assets

 

$

123,370

 

 

 

$

132,054

 

 

 

(1)
The $23.3 million as of April 27, 2025, represents property, plant, and equipment of $22.3 million, and $955,000 located in the U.S. and Haiti, respectively.
(2)
The $31.5 million as of April 28, 2024, represents property, plant, and equipment of $21.5 million, $9.4 million, and $555,000 located in the U.S., Canada, and Haiti, respectively.
(3)
The $2.2 million as of April 27, 2025, represents assets held for sale located in Canada.
(4)
The $125,000 as of April 27, 2025, represents right of use assets located in Haiti.
(5)
The $1.6 million as of April 28, 2024, represents right of use assets of $1.1 million and $545,000 located in Haiti and Canada, respectively.
(6)
The $1.0 million as of April 27, 2025, represents property, plant, and equipment of $940,000 and $70,000 located in the U.S. and China, respectively.
(7)
The $1.1 million as of April 28, 2024, represents property, plant, and equipment of $1.0 million and $120,000 located in the U.S. and China, respectively.
(8)
The $2.7 million as of April 27, 2025, represents right of use assets of $1.7 million and $1.0 million located in China and the U.S., respectively.
(9)
The $2.0 million as of April 28, 2024, represents right of use assets of $1.3 million and $709,000 located in the U.S. and China, respectively
(10)
The $567,000 as of April 27, 2025, and $585,000 as of April 28, 2024, represent property, plant, and equipment associated with unallocated corporate departments and corporate departments shared by both the mattress fabrics and upholstery fabrics segments located in the U.S.
(11)
The $3.1 million as of April 27, 2025, and $2.6 million as of April 28, 2024, represent right of use assets associated with unallocated corporate departments and corporate departments shared by both the mattress fabrics and upholstery fabrics segments located in the U.S.

Capital expenditures and depreciation expense information for our business segments follow:

 

(dollars in thousands)

 

2025

 

 

2024

 

 

2023

 

capital expenditures (1):

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

1,550

 

 

$

3,474

 

 

$

1,125

 

upholstery fabrics

 

 

285

 

 

 

271

 

 

 

467

 

unallocated corporate

 

 

792

 

 

 

255

 

 

 

97

 

total capital expenditures

 

$

2,627

 

 

$

4,000

 

 

$

1,689

 

 

 

 

 

 

 

 

 

 

depreciation expense

 

 

 

 

 

 

 

 

 

mattress fabrics (2)

 

$

6,178

 

 

$

5,883

 

 

$

6,050

 

upholstery fabrics

 

 

601

 

 

 

638

 

 

 

795

 

total depreciation expense

 

$

6,779

 

 

$

6,521

 

 

$

6,845

 

 

(1)
Capital expenditure amounts are stated on an accrual basis. See Consolidated Statement of Cash Flows for capital expenditure amounts on a cash basis.

 

(2)
During fiscal 2025, depreciation expense for the mattress fabrics segment included additional depreciation expense related to the shortening of useful lives of equipment associated with the closure of operations at our manufacturing facility located in Quebec, Canada. The amount of additional depreciation expense totaling $1.3 million was classified as restructuring expense in our fiscal 2025 Consolidated Statement of Net Loss.

Historical Timeline

Fiscal YearFiled
2025Jul 11, 2025Showing above
2024Jul 12, 2024
2023Jul 14, 2023

About Segments Disclosures

Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.

Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.

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