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Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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Equity Bottom-Up

<ul><li>We are cutting estimates on Culp, responding to weak demand, and bracing for a restructuring in 4QFY24.</li><li>Culp’s 3QFY24 earnings report, issued Wednesday after the close, highlighted improved revenue and operating results, Y/Y and sequentially.</li><li>Consolidated sales were $60.4 million, up 15% Y/Y and 3% sequentially, aided by a calendar shift in the Chinese New Year from 3Q to 4Q.</li></ul>

We are cutting estimates on Culp, responding to weak demand, and bracing for a restructuring in 4QFY24.Culp’s 3QFY24 earnings report, issued Wednesday after the close, highlighted improved revenue and operating results, Y/Y and sequentially.Consolidated sales were $60.4 million, up 15% Y/Y and 3% sequentially, aided by a calendar shift in the Chinese New Year from 3Q to 4Q.

Culp, Inc. - Lower Near-Term Expectations; Culp Likely to Restructure

<ul><li>After the close on Wednesday, Culp reported a 3QFY24 operating loss of $1.7 million, which was better than our estimate of a loss of $2.2 million.</li><li>Consolidated sales were $60.4 million, roughly in line with our $60 million published estimate.</li><li>Culp continues to battle weak demand in both of its Culp Home Fashions (CHF, aka mattress fabrics) and Culp Upholstery Fabrics (CUF) segments.</li></ul>

After the close on Wednesday, Culp reported a 3QFY24 operating loss of $1.7 million, which was better than our estimate of a loss of $2.2 million.Consolidated sales were $60.4 million, roughly in line with our $60 million published estimate.Culp continues to battle weak demand in both of its Culp Home Fashions (CHF, aka mattress fabrics) and Culp Upholstery Fabrics (CUF) segments.

Culp, Inc. - 3QFY24 Operating Income Beats Lowered Estimates

<ul><li>Culp reports 3QFY24 results after the close on Wednesday, March 6. An investor conference call is scheduled for 11:00 am ET on Thursday, March 7.</li><li>Culp revised its guidance for the second half of 2023 in January in conjunction with the WTR Furniture/Furnishings Virtual Conference.</li><li>Recovery in the mattress segment had been slower than previously expected.</li></ul>

Culp reports 3QFY24 results after the close on Wednesday, March 6. An investor conference call is scheduled for 11:00 am ET on Thursday, March 7.Culp revised its guidance for the second half of 2023 in January in conjunction with the WTR Furniture/Furnishings Virtual Conference.Recovery in the mattress segment had been slower than previously expected.

Culp, Inc. - 3Q Results: Update on Culp Progress Out Wednesday After Close

Thematic (Sector/Industry)

<ul><li>After a quiet week in the sector, three earnings reports will get the attention of investors in the furniture/furnishings space this week.</li><li>Culp Inc. will report its 3QFY24 results after the close on Wednesday, March 6 and host an investor call at 11:00 am on Thursday, March 7.</li><li>We expect EPS of a loss of $0.22 on revenue of $60 million. Consensus is EPS of a loss of $0.19 on revenue of $59.5 million.</li></ul>

After a quiet week in the sector, three earnings reports will get the attention of investors in the furniture/furnishings space this week.Culp Inc. will report its 3QFY24 results after the close on Wednesday, March 6 and host an investor call at 11:00 am on Thursday, March 7.We expect EPS of a loss of $0.22 on revenue of $60 million. Consensus is EPS of a loss of $0.19 on revenue of $59.5 million.

Furniture/Furnishings Weekly - Focus on Three Earnings Reports This Week

<ul><li>January 2024 retail sales in the furniture and furnishings stores looked ugly, down 9.8% versus January 2023.</li><li>Sequentially, the data shows sales continue to scrape along the bottom.</li><li>Furniture and furnishings retail sales rose ~1.8% versus December and were the highest since July. </li></ul>

January 2024 retail sales in the furniture and furnishings stores looked ugly, down 9.8% versus January 2023.Sequentially, the data shows sales continue to scrape along the bottom.Furniture and furnishings retail sales rose ~1.8% versus December and were the highest since July. 

Furniture/Furnishings Weekly - Furniture/Furnishings Retail Scraping Along the Bottom

United States

Culp, Inc. manufactures and markets upholstery fabrics and mattress tickings for use in furniture and bedding industries. The Company's fabrics are used in the production of residential and commercial furniture and bedding products, including sofas, recliners, chairs, loveseats, sectionals, sofa-beds, office seating, panel systems, and mattress sets.

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Culp Inc (CULP US)

Culp, Inc. - Lower Near-Term Expectations; Culp Likely to Restructure

Culp’s 3QFY24 earnings report, issued Wednesday after the close, highlighted improved revenue and operating results, Y/Y and sequentially.

Water Tower Research

Culp, Inc. - 3QFY24 Operating Income Beats Lowered Estimates

After the close on Wednesday, Culp reported a 3QFY24 operating loss of $1.7 million, which was better than our estimate of a loss of $2.2 million.

Water Tower Research

Culp, Inc. - 3Q Results: Update on Culp Progress Out Wednesday After Close

Culp reports 3QFY24 results after the close on Wednesday, March 6. An investor conference call is scheduled for 11:00 am ET on Thursday, March 7.

Water Tower Research

Furniture/Furnishings Weekly - Focus on Three Earnings Reports This Week

After a quiet week in the sector, three earnings reports will get the attention of investors in the furniture/furnishings space this week.

Water Tower Research

Furniture/Furnishings Weekly - Furniture/Furnishings Retail Scraping Along the Bottom

January 2024 retail sales in the furniture and furnishings stores looked ugly, down 9.8% versus January 2023. Sequentially, the data shows sales...

Water Tower Research

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