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Water Tower Research

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.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>Mattress sales and companies tied to the mattress supply chain showed weakness in sales results reported last week.</li><li>After market close on Thursday, supplier Leggett &amp; Platt (LEG) reported 4QFY23 adjusted EPS of $0.26.</li><li>On January 16, management disclosed a massive restructuring plan, causing analysts’ estimates to change before the “print”. </li></ul>

Mattress sales and companies tied to the mattress supply chain showed weakness in sales results reported last week.After market close on Thursday, supplier Leggett &amp; Platt (LEG) reported 4QFY23 adjusted EPS of $0.26.On January 16, management disclosed a massive restructuring plan, causing analysts’ estimates to change before the “print”. 

Furniture/Furnishings Weekly - Earnings from LEG, FLXS, and TPX

<ul><li>In a quiet week for company news and earnings in the furniture/furnishings space, some economic statistics provided a lift to the outlook for consumers.</li><li>Monthly jobs data trounced expectations. The Bureau of Labor Statistics reported 353,000 net new jobs in January, double the expected 176,500.</li><li>The January statistics follow a strong December of 333,000. </li></ul>

In a quiet week for company news and earnings in the furniture/furnishings space, some economic statistics provided a lift to the outlook for consumers.Monthly jobs data trounced expectations. The Bureau of Labor Statistics reported 353,000 net new jobs in January, double the expected 176,500.The January statistics follow a strong December of 333,000. 

Furniture/Furnishings Weekly - Jobs Data Encouraging for Consumer; Kudos to Steelcase

<ul><li>For its 4QFY23 (November), Bassett Furniture Industries, Inc. reported a GAAP EPS loss of $0.47 on sales of $94.7 million.</li><li>GAAP EPS included a goodwill impairment of $0.63. Excluding the impairment, operating EPS was $0.15, ahead of an expected loss of $0.06.</li><li>Revenue beat analysts’ expectations of $90 million.</li></ul>

For its 4QFY23 (November), Bassett Furniture Industries, Inc. reported a GAAP EPS loss of $0.47 on sales of $94.7 million.GAAP EPS included a goodwill impairment of $0.63. Excluding the impairment, operating EPS was $0.15, ahead of an expected loss of $0.06.Revenue beat analysts’ expectations of $90 million.

Furniture/Furnishings Weekly - Bassett Adjusted Results Top Expectations

<ul><li>Economic headlines had two items affecting furniture/furnishings: one good, one not.</li><li>The Positive: The University of Michigan Consumer Sentiment gauge (as distinguished from Consumer Confidence reported below) surged 29% over two months.</li><li>The mid-January reading jumped 13% to 79, the highest since early 2021.</li></ul>

Economic headlines had two items affecting furniture/furnishings: one good, one not.The Positive: The University of Michigan Consumer Sentiment gauge (as distinguished from Consumer Confidence reported below) surged 29% over two months.The mid-January reading jumped 13% to 79, the highest since early 2021.

Furniture/Furnishings Weekly - Conflicting News Items Dominate Headlines for the Sector

Equity Bottom-Up

<ul><li>Following Culp’s presentation at the WTR Furniture/Furnishings Virtual Conference, we are updating our 3Q estimates.</li><li>CEO Robert Culp IV warned that 3Q operating income will fall short of previous expectations. </li><li>The 3Q operating loss will approach $2.2 million, in line with the 2Q operating loss.</li></ul>

Following Culp’s presentation at the WTR Furniture/Furnishings Virtual Conference, we are updating our 3Q estimates.CEO Robert Culp IV warned that 3Q operating income will fall short of previous expectations. The 3Q operating loss will approach $2.2 million, in line with the 2Q operating loss.

Culp, Inc. - Updating 3Q Estimate Following WTR Conference Comment

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)

Furniture/Furnishings Weekly - Earnings from LEG, FLXS, and TPX

After market close on Thursday, supplier Leggett & Platt (LEG) reported 4QFY23 adjusted EPS of $0.26. On January 16, management disclosed a massive...

Water Tower Research

Furniture/Furnishings Weekly - Jobs Data Encouraging for Consumer; Kudos to Steelcase

In a quiet week for company news and earnings in the furniture/furnishings space, some economic statistics provided a lift to the outlook for...

Water Tower Research

Furniture/Furnishings Weekly - Bassett Adjusted Results Top Expectations

GAAP EPS included a goodwill impairment of $0.63. Excluding the impairment, operating EPS was $0.15, ahead of an expected loss of $0.06.

Water Tower Research

Furniture/Furnishings Weekly - Conflicting News Items Dominate Headlines for the Sector

The Positive: The University of Michigan Consumer Sentiment gauge (as distinguished from Consumer Confidence reported below) surged 29% over two...

Water Tower Research

Culp, Inc. - Updating 3Q Estimate Following WTR Conference Comment

CEO Robert Culp IV warned that 3Q operating income will fall short of previous expectations. The 3Q operating loss will approach $2.2 million, in...

Water Tower Research

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