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Broder Bros posts second quarter results
09
Aug '10
Broder Bros., Co. announced results for its second quarter ended June 26, 2010.

Second Quarter 2010 Results Compared to Prior Year

Second quarter 2010 net sales were $211.6 million compared to $177.7 million for the second quarter 2009. Income from operations for the second quarter 2010 was $9.1 million compared to $1.0 million for the second quarter 2009. Net income for the second quarter 2010 was $6.0 million compared to $5.8 million for the second quarter 2009, which included the gain on troubled debt restructuring.

For the second quarter 2010, the Company reported earnings before interest, taxes, depreciation and amortization ("EBITDA") of $12.7 million compared to EBITDA of $5.4 million for the second quarter 2009. A reconciliation of EBITDA to net income (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 $12.4 million for the second quarter 2010 compared to EBITDA of $5.8 million for the second quarter 2009. The improvement in EBITDA was driven by higher unit volumes and higher gross margins.

Second quarter 2010 gross profit was $38.3 million compared to $30.2 million for the second quarter 2009. The increase in gross profit was due to a 21.6% growth in unit volumes combined with a 4% increase in gross profit per unit. Second quarter 2010 gross margin was 18.1% compared to 17.0% in the second quarter 2009.

The Company regained lost market share during the second quarter 2010. As reported by STARS, the market grew 11% in units sold. Approximately half of the increase in the Company's unit volume for the second quarter 2010 was due to the growth in the market. The remainder of the increase in the Company's unit volume was due to the Company's three-part guarantee instituted in July 2009 as well as sales and marketing efforts to grow revenues and gross profit. The three-part guarantee consists of promises that the Company would be in stock in key styles and colors, that it would fulfill orders accurately and that the Company would not be undersold.

Highlighted Charges
The reversal of restructuring charges during the second quarter 2010 was the result of the Company entering into a sublease at its former Philadelphia, PA distribution center, net of $0.1 million of interest accretion on restructuring charges for closed facilities. Restructuring charges recorded during the first quarter 2010 consisted of interest accretion on restructuring charges for closed facilities and other highlighted charges consisted of severance.

Restructuring charges recorded during the second quarter 2009 consisted of interest accretion on restructuring charges for closed facilities. Restructuring charges recorded during the first quarter 2009 consisted mainly of severance costs due to the March 2009 headcount reductions. Other highlighted charges recorded during the first quarter 2009 consisted of $0.4 million in inventory management consulting charges and $0.1 million in consulting fees related to the exchange offer.

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