Unifi’s Q1 Profit Highest in Seven Years

Unifi reported net income of $2.5 million or $0.04 per share for the first quarter of the 2010 fiscal year compared to a net loss of $6.3 million or $0.10 per share and a net loss of $676 thousand or $0.01 per share for the June 2009 and September 2008 quarters, respectively. 

The company is also reporting adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) of $15.1 million, which exceeds the company's revised guidance of $13 to $14 million and is a marked improvement in Adjusted EBITDA from the June 2009 and September 2008 quarters of $9.6 million and $13.9 million, respectively.  Results for the quarter were positively impacted by the following:

• A 570 basis point improvement in gross margin year-over-year, which reflects improvements made in both our conversion margins and our operating cost structure,
• Continued volume growth in the company's polyester business from inventory levels coming back into alignment with retail demand in  apparel and home furnishings,
• Market share gains in certain product categories both in the U.S. and Brazil.

Revenues for the first quarter increased 2.2% over the June 2009 quarter to $143 million, although they still remain $26 million below the September 2008 quarterly level of $169 million.

“We are pleased the operating results for the quarter exceeded targets and the company was able to achieve its highest quarterly net income in seven years despite the effects of a severe global recession,” said Bill Jasper, President and CEO of Unifi.  “Now that the negative impact of the inventory de-stocking across our supply chains seems to have abated, we are seeing the benefits of our unwavering focus on our core strategies.  These include our continuous improvement efforts to enhance margins, quality, and operating efficiencies, resulting in significantly improved operating performance, in spite of a 15 percent decline in year-over-year revenue.”

Cash-on-hand at the end of the September quarter was $55.7 million, which is an increase of $13.0 million from the end of the June quarter and an increase of $35 million over the last twelve months.  Total cash and cash equivalents at the end of the September quarter, including restricted cash, were $61.5 million.  Total long-term debt as of September 27, 2009 was $185.6 million, and net debt for the company was $124 million, representing a reduction of more than $32 million from September 2008.

Ron Smith, Chief Financial Officer for Unifi, said, “Although there was modest month-over-month improvements in retail sales of apparel and home furnishings, volumes into all of our major segments remain down year-over-year.  Accordingly, we expect continued recovery in our North American sales over the next several quarters, as consumer spending begins to return.  We also expect our aggressive cost and working capital improvements, profitable share gains and disciplined, tasked based process improvement efforts will create further benefits to our operating results.  As a result, we are reaffirming our Adjusted EBITDA estimate for the 2010 fiscal year to be near the higher end of the guidance provided in our June earnings call, which was $50 million.”