Unifi, Inc. posted a loss of $676,000, or 1 penny per share, in its first quarter ended Sept. 28 compared to a deficit of $9.2 million, or 15 cents, a year ago. Increased sales of the company’s premium value-added yarns and other product mix enrichments contributed to year-over-year margin improvements and the prior year quarter was negatively impacted by approximately $11 million of restructuring and impairment costs.
Income from continuing operations before taxes was $1.3 million in the latest quarter versus a loss from continuing operations before taxes of $16.1 million a year ago.
Net sales for the current quarter were $169.0 million, which represents a slight decrease from net sales of $170.5 million for the prior year September quarter. Net sales were positively impacted by volume gains in Brazil and strength in the company’s nylon business, which continues to be driven by consumer and fashion preferences.
“During the quarter, volume started out ahead of plan but softened in September as the economy weakened,” said Ron Smith, chief financial officer for Unifi. “Our results for the quarter confirm that the Company’s strategies to focus on our core business and develop our portfolio of premium value-added products, while exploring growth opportunities in China and Brazil, are the correct ones for our business. We are reacting quickly and decisively to an uncertain market caused by the economic slow down and significant fluctuations in our raw material prices. This price volatility, combined with softening volumes, will have a negative impact on our conversion margin in the December quarter, but we expect to see improvement as we move into the second half of our fiscal year.”
Cash-on-hand at the end of September was $20.4 million, which increased slightly from the $20.2 million cash-on-hand at the end of June. Total cash and cash equivalents at the end of September, including restricted cash, were $47.7 million compared to $55.6 million at the end of June. Going forward, restricted cash now includes deposits in Brazil, which secure VAT tax incentive loans, as well as the domestic cash restricted primarily for capital expenditures in accordance with the company’s long-term borrowing agreements. At the end of September, long-term debt was reduced to $196.5 million from $201.8 million as the company repaid the remaining $3 million of outstanding borrowings under its revolver from the June quarter end.
Bill Jasper, president and CEO of Unifi, said, “The continuing decline in sales of existing homes, cars and light trucks began taking a toll on our volume in the home furnishings and automotive business segments during the quarter, and we expect the ongoing softness in the economy to make our December quarter a challenging one. However, we will face these challenges with a strong financial base and flexibility that we have not had in the past, including the ability to shift the supply of our raw materials to the most competitive sources and to adjust our mix more efficiently and effectively. We feel confident that the Company will emerge from the economic downturn stronger and with new opportunities based on the actions we have taken over the past year to enhance our overall financial strength.”
