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Unifi moves into profit in second quarter
With the improving economy, the company has maintained profitability in its overall first half fiscal 2010 results, seen renewed interest in its premium brands such as its recycled Repreve and expects to begin shipping locally-produced yarn in Central America in the coming months. Second quarter 2010 The company reported net income of $2.0 million for the second quarter of fiscal 2010 compared to a net loss of $9.1 million for the prior year quarter. Net sales for the quarter increased $16.5 million or 13.1% to $142.3 million, which the company says reflects the combined impact of improvements in retail sales across its primary end-use segments and increases in market share. Unifi also reported 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 UTSC, the Company's wholly-owned subsidiary in China, reached profitability in the quarter First half 2010 For the first half of the 2010 fiscal year, the company reported net income of $4.4 million compared to a net loss of $9.7 million 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. CEO’s comment "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 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. CFO’s comment 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."
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