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Broder Bros posts Q1 results
May '10
Broder Bros., Co. announced results for its first quarter ended March 27, 2010.

First Quarter 2010 Results Compared to Prior Year
First quarter 2010 net sales were $153.5 million compared to $151.7 million for the first quarter 2009. Loss from operations for the first quarter 2010 was ($3.3) million compared to ($6.9) million for the first quarter 2009. Net loss for the first quarter 2010 was ($6.0) million compared to ($14.8) million for the first quarter 2009.

For the first quarter 2010, the Company reported earnings before interest, taxes, depreciation and amortization (EBITDA) of $0.9 million compared to an EBITDA loss of ($2.3) million for the first quarter 2009. A reconciliation of EBITDA to net loss is set forth at the end of this press release.

Results include the impact of certain restructuring and other highlighted charges discussed below. Excluding these highlighted charges, EBITDA was $1.4 million for the first quarter 2010 compared to an EBITDA loss of ($1.2) million for the first quarter 2009. The improvement in EBITDA was driven by higher gross margins and higher unit volumes.

First quarter 2010 gross profit was $26.9 million compared to $25.0 million for the first quarter 2009. The increase in gross profit was due to higher unit volumes and improved gross margins. First quarter 2010 gross margin was 17.5% compared to 16.5% in the first quarter 2009. Consistent with management's expectations, the Company began to regain lost market share during the first quarter 2010. The Company's unit shipments were 4% better than the prior year compared to a 3% increase in overall industry unit shipments as reported by STARS.

Business Outlook
Inventory quality was strong and fulfillment remained exceptional during the first quarter 2010. The Company instituted its three-part guarantee to customers in the third quarter 2009. The Company promised that it would be in stock in key styles and colors, that it would fulfill orders accurately and that the Company would not be undersold. These guarantees continue to restore the confidence of the Company's customers. In addition, management's initiatives to rationalize pricing, improve selling effectiveness and improve marketing communications appear to be contributing to the Company's gross profit growth.

Liquidity Position
The Company relies primarily upon cash flow from operations and borrowings under its revolving credit facility to finance operations, capital expenditures and debt service requirements. Borrowings and availability under the revolving credit facility fluctuate due to seasonal demands. Historical borrowing levels have reached peaks during the middle of a given year and low points during the last quarter of the year. Borrowings under the revolving credit facility were $121.0 million at March 27, 2010 compared to $100.8 million at December 26, 2009 and $131.8 million at March 28, 2009. The increase in revolver debt was mainly due to increases in inventory and accounts receivable and a decrease in accounts payable. Borrowing base availability at March 27, 2010, December 26, 2009 and March 28, 2009 was $10.8 million, $31.5 million and $25.7 million, respectively.

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