Broder Bros., Co. posted record second quarter results for its quarter ended June 25, increased its Fiscal 2011 EBITDA guidance and announced that it has begun a series of initiatives in an effort to increase the liquidity in the companys common stock, commencing with a registration statement on Form 10 filed with the Securities and Exchange Commission on August 2, 2011.
Second quarter 2011 net sales were $227.1 million compared to $211.6 million for the second quarter 2010. Income from operations for the second quarter 2011 was $23.3 million compared to $9.1 million for the second quarter 2010. Net income for the second quarter 2011 was $16.0 million, or $1.54 per diluted share, compared to $5.0 million, or $0.50 per diluted share, for the second quarter 2010.
For the second quarter 2011, the company reported earnings before interest, taxes, depreciation and amortization (EBITDA) of $25.9 million compared to EBITDA of $12.7 million for the second quarter 2010. A reconciliation of EBITDA to net income (loss) is set forth at the end of this earnings release.
Results include the impact of certain restructuring and other highlighted charges discussed below. Excluding these highlighted charges, EBITDA was $23.8 million for the second quarter 2011 compared to $12.4 million for the second quarter 2010. The improvement in EBITDA was driven by higher gross margins and reduced operating expenses.
Second quarter 2011 gross profit was $48.4 million compared to $38.3 million for the second quarter 2010. Second quarter 2011 gross margin was 21.3 percent compared to 18.1 percent one year prior. The increase in gross profit was attributable to managements continued focus on improved pricing and purchasing activities.
The companys major suppliers announced price increases in January 2011 and again in late March 2011 or early April 2011 following three price increases announced from July 2010 through December 2010. Second quarter 2011 gross profit included no benefit resulting from apparel price increases. The company increased its selling prices in response to each of the price increases from manufacturers. However, due to competitive factors, the company did not raise selling prices on a per unit basis more than the companys costs rose.
According to data provided by CREST, the U.S. imprintable activewear market shrank 9% in units sold during the second quarter 2011. The companys units sold shrank by 11 percent during the period when using the comparable period used by CREST, which was April 1, 2011 through June 30, 2011. The companys second quarter 2011 began March 27, 2011 and ended June 25, 2011.
The credit to restructuring charges during the second quarter 2011 was due to a gain of approximately $2.2 million on the purchase of a leased facility in Wadesboro, NC. The net purchase price of the facility was less than the present value of the remaining lease payments due under the lease, which was set to expire in March 2014. The company will reduce its expected future cash outflows related to this facility by more than $2 million.
The reversal of restructuring charges recorded during the second quarter 2010 was the result of the company executing a new sublease at our former Philadelphia, PA distribution center, net of $0.2 million of interest accretion.
