Unifi Inc. earned $2.0 million, or 3 cents a share, in the second fiscal quarter ended Dec. 27, 2009, rebounding from a net loss of $9.1 million or 15 cents, for the prior year quarter. Net sales for the quarter increased $16.5 million or 13.1% to $142.3 million, and reflect the combined impact of improvements in retail sales across the company’s primary end-use segments and increases in market share.
The company is also reporting adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) of $13.3 million for the current quarter compared to $2.1 million of Adjusted EBITDA for the prior year quarter. Quarter over prior year quarter highlights include the following:
- Gross profit increased $15 million and gross margin improved to 12.2%;
- Adjusted EBITDA improved by $11.2 million;
- The company’s share of earnings from its equity affiliates improved by $1.4 million; and
- UTSC, the company’s wholly-owned subsidiary in China, reached profitability in the quarter.
For the first half of the 2010 fiscal year, Unifi is reporting net income of $4.4 million or 7 cents per share compared to a net loss of $9.7 million or 16 cents per share for the prior year period. Although net sales for the first half of the fiscal year decreased $9.6 million or 3.3% to $285.1 million, Adjusted EBITDA increased to $28.4 million compared to $16.0 million for the first six months of fiscal 2009. Results for the quarter and the first half of the fiscal year were positively impacted by a $1 million reduction in the company’s bad debt provision.
“I am very pleased with our overall results for the first half of the fiscal year, in which we maintained profitability and generated $12 million more Adjusted EBITDA compared to the prior year period, as we have adapted our business model to the post-recession reality,” said Bill Jasper, president and CEO of Unifi. “With the gradual improvement of the economy, we are encouraged by the demand levels we are seeing and the resurgence in the number of development programs using our premium value-added yarns, particularly our REPREVE(R) recycled product. In addition, progress continues on our Central American operation, and we expect to begin shipping locally-produced yarn in Central America during the June quarter.”
Cash-on-hand at the end of the December quarter was $54.4 million, which represents a decrease of $1.3 million from the end of the September quarter, but an increase of $42 million over the last twelve months. Total cash and cash equivalents at the end of the December quarter, including restricted cash, were $58.1 million and total long-term debt was $183.4 million.
Ron Smith, Chief Financial Officer for Unifi, said, “compared to a year ago, the Company’s substantial margin improvement was driven by significantly better volumes, resulting in higher utilization rates, as well as the Company’s continuous improvement efforts focused on quality, operating efficiencies and cost structures. We do see an upward trend in polyester raw material costs over the next two quarters, which may put some pressure on margins, but we are optimistic as a result of the improving demand and our ability to recover such cost increases over the long-run.”
UNIFI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In Thousands Except Per Share Data)
For the
For the Year-To-Date
Quarters Periods
Ended Ended
--------- ------------
Dec. 27 Dec. 28 Dec. 27 Dec. 28
2009 2008 2009 2008
------ ------ ------ ------
Summary of Operations:
Net sales $142,255 $125,727 $285,106 $294,736
Cost of sales 124,919 123,415 248,364 278,999
Write down of
long-lived
assets - - 100 -
Selling, general &
administrative
expenses 12,152 9,304 23,316 19,849
Provision
(benefit) for
bad debts (564) 501 12 1,059
Other operating
(income) expense,
net (109) (5,212) (196) (5,773)
Non-operating
(income)
expense:
Interest income (834) (680) (1,580) (1,593)
Interest expense 5,223 5,748 10,715 11,713
Gain on
extinguishment
of debt - - (54) -
Equity in earnings of
unconsolidated
affiliates (1,609) (162) (3,672) (3,644)
Write down of investment
in unconsolidated
affiliate - 1,483 - 1,483
--- ----- --- -----
Income (loss) from
continuing operations
before
income taxes 3,077 (8,670) 8,101 (7,357)
Provision for
income taxes 1,124 614 3,659 2,499
----- --- ----- -----
Income (loss) from
continuing
operations 1,953 (9,284) 4,442 (9,856)
Income from discontinued
operations, net of tax - 216 - 112
--- --- --- ---
Net income (loss) $1,953 $(9,068) $4,442 $(9,744)
====== ======= ====== =======
Earnings (loss) per share
from continuing operations
and net income:
Income (loss) per
common share -
basic $0.03 $(0.15) $0.07 $(0.16)
===== ====== ===== ======
Income (loss) per
common share -
diluted $0.03 $(0.15) $0.07 $(0.16)
===== ====== ===== ======
Weighted average
shares outstanding -
basic 61,498 62,030 61,778 61,582
Weighted average
shares outstanding -
diluted 61,784 62,030 61,921 61,582
