Unifi reported net sales increased 6.8 percent in the fourth quarter ended June 30, to $200.7 million.

The latest quarter lasted 13 weeks versus 14 weeks in the year-ago period.

Net income for the June 2013 quarter was $10.5 million, or $0.54 per share, compared to net income of $11.3 million, or $0.56 per share, for the June 2012 quarter, as a 320 basis point improvement in gross margin was offset by lower earnings of unconsolidated affiliates and higher income tax expense.

Highlights for the June 2013 quarter included:

  • Adjusted EBITDA for the June 2013 quarter improved to $18.3 million compared to $14.1 million in the June 2012 quarter;
  • Gross margin improved significantly as a result of higher conversion margins and lower manufacturing costs driven by the Company's mix enrichment and continuous improvement strategies;
  • Strong shipping volumes continued, as growth in U.S. retail demand benefitted the Company's yarn operations in North America and China; and
  • The Company amended its $150 million bank credit facility to provide additional liquidity and improve its long-term operating flexibility.

The Company's reported net sales increased $8.9 million or 1.3 percent to $714.0 million for the fiscal year ended June 30, 2013, compared to net sales of $705.1 million for the fiscal year ended June 24, 2012.  For the 2013 fiscal year, net income was $16.6 million, or $0.84 per share, compared to net income of $11.5 million, or $0.57 per share, for the prior fiscal year and adjusted EBITDA was $52.7 million compared to adjusted EBITDA of $39.8 million for the prior fiscal year.

Operating margins for the 2013 fiscal year were positively impacted by a 250 basis point improvement in gross margin and an $11.6 million decrease in interest expense related to the Company's recently completed deleveraging strategy.  These improvements were partially offset by an $8.3 million decrease in earnings from the Company's unconsolidated affiliates and a $15.3 million increase in income taxes.

“Conversion margins for the June 2013 quarter improved, as raw material prices decreased, allowing us to recover margins lost during the run-up of raw material prices in the March 2013 quarter,” said Bill Jasper, Chairman and CEO of Unifi.  “We are very pleased with the overall progress of our mix enrichment program and rigorous continuous improvement efforts.  While we do not expect to consistently maintain the exceptional margins from the June 2013 quarter, we do expect our future financial performance to benefit from our continued investment in our premier value-added capabilities; continued growth of regional, synthetic apparel production; longer-term moderation of raw materials prices; and the continued recovery of our operations in Brazil and China.”

During the 2013 fiscal year, the Company utilized the $50.5 million of cash generated from operating activities and distributions from equity affiliates to repurchase 1.1 million shares of the Company's common stock for $19.3 million and repay $23.8 million of outstanding debt.  As of June 30, 2013, cash-on-hand was $8.8 million and total debt was $97.8 million.

“Due to our financial strength and positive operating results, we were able to successfully amend our $150 million bank credit facility during the June 2013 quarter,” said Ron Smith, Chief Financial Officer of Unifi.  “The amendment extends the maturity of the entire facility to May 2018; improves our liquidity by resetting the borrowings under the Term Loan to $50 million and eliminating scheduled quarterly principal payments; reduces the borrowing rate of the Term Loan; and removes share repurchases and certain optional debt prepayments from our fixed charge coverage ratio calculation.  Accordingly, we believe the amendment provides additional stability to our long-term capital structure and significantly improves our flexibility and ability to execute on our strategic plans.”

Roger Berrier, President and Chief Operating Officer of Unifi, added: “Fiscal 2013 was another successful year for our premier value-added yarns, particularly Repreve, our flagship product.  As we near 100 percent capacity utilization of our Repreve Recycling Center in Yadkinville, N.C., the Company has recently announced plans to expand both our capacity and flexibility to produce Repreve and our other premier value-added yarns.  The expanded capacity will help keep us on track to drive growth of our premier value-added product portfolio, which is a cornerstone of our overall mix enrichment strategy.”