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Unifi Announces Second Quarter Results

GREENSBORO, N.C., Feb. 4 /PRNewswire-FirstCall/ -- Unifi, Inc. (NYSE: UFI) today released preliminary results for its second fiscal quarter ended December 27, 2009.

The Company is reporting net income of $2.0 million or $0.03 per share for the second quarter of fiscal 2010 compared to a net loss of $9.1 million or $0.15 per share 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, the Company is reporting net income of $4.4 million or $0.07 per share compared to a net loss of $9.7 million or $0.16 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® 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. (NYSE: UFI) is a diversified producer and processor of multi-filament polyester and nylon textured yarns and related raw materials.  The Company adds value to the supply chain and enhances consumer demand for its products through the development and introduction of branded yarns that provide unique performance, comfort and aesthetic advantages.  Key Unifi brands include, but are not limited to: AIO® - all-in-one performance yarns, SORBTEK®, A.M.Y.®, MYNX® UV, REPREVE®, REFLEXX®, MICROVISTA® and SATURA®.  Unifi's yarns and brands are readily found in home furnishings, apparel, legwear, and sewing thread, as well as industrial, automotive, military, and medical applications.  For more information about Unifi, visit www.unifi.com, or to learn more about REPREVE®, visit www.repreve.com.

Financial Statements to Follow

    
    
    
    
    UNIFI, INC.                                                             
    CONSOLIDATED BALANCE SHEETS                                             
    (Amounts in Thousands)                                                  
                                                                            
                                                                            
                                                                            
                                                       Dec. 27,      June 28,
                                                         2009          2009
                                                       -------       -------
                                                     (Unaudited)            
    Assets                                                                  
    Cash and cash equivalents                          $54,442       $42,659
    Receivables, net                                    69,354        77,810
    Inventories                                        103,012        89,665
    Deferred income taxes                                1,294         1,223
    Assets held for sale                                     -         1,350
    Restricted cash                                      3,609         6,477
    Other current assets                                 5,887         5,464
                                                         -----         -----
        Total current assets                           237,598       224,648
                                                                            
    Property, plant and equipment, net                 156,524       160,643
    Investments in unconsolidated affiliates            62,959        60,051
    Restricted cash                                          -           453
    Intangible assets, net                              15,821        17,603
    Other noncurrent assets                             13,035        13,534
                                                        ------        ------
                                                      $485,937      $476,932
                                                      ========      ========
    Liabilities and Shareholders' Equity                                    
    Accounts payable                                   $27,619       $26,050
    Accrued expenses                                    15,871        15,269
    Income taxes payable                                   445           676
    Current maturities of long-term debt                                    
       and other current liabilities                     3,977         6,845
                                                         -----         -----
         Total current liabilities                      47,912        48,840
                                                                            
    Long-term debt and other liabilities               181,703       182,707
    Deferred income taxes                                  371           416
    Shareholders' equity                               255,951       244,969
                                                       -------       -------
                                                      $485,937      $476,932
                                                      ========      ========
    
    
    
    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 
    
    
    
    UNIFI, INC.                                                               
    CONSOLIDATED STATEMENTS OF CASH FLOWS                                     
    (Unaudited) (Amounts in Thousands)                                        
                                                                 For the      
                                                                Six-Months    
                                                                   Ended      
                                                                -----------   
                                                              Dec. 27 Dec. 28
                                                               2009     2008  
                                                              ------   ------ 
                                                                              
    Cash and cash equivalents at beginning of year           $42,659  $20,248 
    Operating activities:                                                     
      Net income (loss)                                        4,442   (9,744)
      Adjustments to reconcile net income (loss) to 
           net cash provided by (used in) continuing 
           operating activities:                         
           Income from discontinued operations                     -     (112)
           Earnings of unconsolidated affiliates, net of                      
            distributions                                     (2,062)  (1,579)
           Depreciation                                       11,563   15,832 
           Amortization                                        2,334    2,137 
           Stock-based compensation expense                    1,273      622 
           Deferred compensation expense (recovery), net         343      (69)
           Net gain on asset sales                               (57)  (5,910)
           Gain on extinguishment of debt                        (54)       - 
           Write down of long-lived assets                       100        - 
           Write down of investment in unconsolidated                         
            affiliate                                              -    1,483 
           Deferred income tax                                   (19)      35 
           Provision for bad debts                                12    1,059 
           Other                                                 301      256 
           Change in assets and liabilities, excluding effects of             
              acquisitions and foreign currency adjustments      565  (11,962)
                                                                 ---  ------- 
                   Net cash provided by (used in) 
                    continuing operating activities           18,741   (7,952)
                                                              ------   ------ 
                                                                              
    Investing activities:                                                     
      Capital expenditures                                    (4,965)  (7,829)
      Investment in joint venture                               (550)       - 
      Acquisition of intangible asset                              -     (500)
      Change in restricted cash                                4,158   10,118 
      Proceeds from sale of capital assets                     1,358    6,950 
      Other                                                      (79)       - 
                                                                 ---      --- 
                   Net cash (used in) provided by investing                   
                    activities                                   (78)   8,739 
                                                                 ---    ----- 
                                                                              
    Financing activities:                                                     
      Payments of long-term debt                              (4,594) (20,578)
      Borrowings of long-term debt                                 -   14,600 
      Proceeds from stock option exercises                         -    3,830 
      Purchase and retirement of Company stock                (4,995)       - 
      Other                                                        -       37 
                                                                 ---       -- 
                   Net cash used in financing activities      (9,589)  (2,111)
                                                              ------   ------ 
                                                                              
    Cash flows of discontinued operations:                                    
       Operating cash flow                                         -     (162)
                                                                              
                                                                 ---     ---- 
                   Net cash used in discontinued operations        -     (162)
                                                                 ---     ---- 
                                                                              
                                                                              
    Effect of exchange rate changes on cash and cash                          
     equivalents                                               2,709   (6,143)
                                                               -----   ------ 
                                                                              
    Net increase (decrease) in cash and cash equivalents      11,783   (7,629)
                                                              ------   ------ 
                                                                              
    Cash and cash equivalents at end of period               $54,442  $12,619 
                                                             =======  ======= 
    
    
    
                          Adjusted EBITDA Reconciliation 
                                to Net Income (Loss)
                              (Amounts in thousands)
                                   (Unaudited)
    
                                         Quarters       Year-To-Date   
                                          Ended            Ended      
                                      Dec.     Dec.     Dec.     Dec.  
                                      2009     2008     2009     2008 
                                      ----     ----     ----     ---- 
                                                                      
    Net income (loss)               $1,953  $(9,068)  $4,442  $(9,744)
                                                                      
    Income from discontinued                                          
     operations, net of tax              -     (216)       -     (112)
                                                                      
    Provision for income taxes       1,124      614    3,659    2,499 
                                                                      
    Interest expense, net            4,389    5,068    9,135   10,120 
                                                                      
    Depreciation and                                                  
     amortization expense            6,648    7,633   13,344   17,391 
                                                                      
    Equity in earnings of                                             
     unconsolidated affiliates      (1,609)    (162)  (3,672)  (3,644)
                                                                      
    Non-cash compensation,                                            
     net of distributions              846      353    1,616      554 
                                                                      
    (Gain) loss on sales of PP&E        37   (5,594)     (57)  (5,909)
                                                                      
    Currency and hedging                                              
     (gains) losses                   (133)     (94)    (120)      (8)
                                                                      
    Write down of long-lived                                          
     assets and                                                       
     unconsolidated affiliate            -    1,483      100    1,483 
                                                                      
    Gain on extinguishment of debt       -        -      (54)       - 
                                                                      
    Asset consolidation and                                           
     optimization expense                -    2,128        -    3,368 
                                                                      
    Kinston shutdown expenses            -        -        -       30 
                                                                      
                                   -------   ------  -------  ------- 
    Adjusted EBITDA                $13,255   $2,145  $28,393  $16,028 
                                   =======   ======  =======  ======= 
    
    

NON-GAAP FINANCIAL MEASURES

Non-GAAP Financial Measures

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