Unifi experienced a significant decline in commodity-based, partially oriented yarn (POY) during the companys fiscal second quarter, which ended in December. These lower volumes in September and October were caused by higher commodity prices, which slowed demand and impacted the companys financial performance significantly. However, as the quarter ended, raw material pricing improved, and volumes were back up to full capacity in November. The company anticipates operating at more normal run rates going forward.
Net sales for quarter were $156.9 million, down 17.9% from last year. Total volume declined approximately 21.5%, but was offset by a 3.6% improvement in pricing. Gross margin was 1.7%, down 320 basis points from 4.9% for the prior years quarter. SG&A expenses remained essentially flat quarter-over-quarter at $10.5 million, but increased as a percentage of sales to 6.6% compared to 5.5% last year. Unifi reported a net loss of $16.5 million or 32 cents per share, expanding from a net loss of $3.8 million or 7 cents per share last year.
Unifi is working at integrating the acquisition of Dillon Yarn and expects the transaction to add between $18 million and $19 million in additional EBITDA to the Unifi base. The companys other new business development project, its joint venture in China, is also on its way to profitability. However, it is currently generating losses and the company expects this to continue until June when volumes should generate enough cash to break even.
