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Broder Bros posts second quarter results
09 Aug '10
5 min read
Business Outlook
As noted earlier in this earnings release, the STARS data confirmed that the Company regained lost market share. Inventory quality was strong and fulfillment remained exceptional during the first and second quarters 2010. The Company's three-part guarantee has been instrumental in regaining confidence among 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.
Third quarter 2010 results will include the impact of an approximate 5% price increase in cost and selling prices, primarily in commodity products, which took effect July 5, 2010. The price increases were announced in the second quarter 2010 and likely had some favorable impact on the units sold by shifting demand from the third quarter 2010 to the second quarter 2010.
The increased demand during the second quarter 2010 also led to T-shirt shortages during the period. Insufficient T-shirt supply to meet market demand continued into the third quarter 2010. Yarn shortages at suppliers and T-shirt shortages during the second half of 2010 will likely result in market growth less than the 11% experienced in the second quarter 2010.
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 $129.4 million at June 26, 2010 compared to $100.8 million at December 26, 2009 and $127.7 million at June 27, 2009. The increase in revolver debt from December 2009 was mainly due to increases in inventory and accounts receivable. Borrowing base availability at June 26, 2010, December 26, 2009 and June 27, 2009 was $21.9 million, $31.5 million and $26.6 million, respectively.
Broder Bros., Co. is one of the nation's largest distributors of trade, private label, and retail apparel brands to the imprinting, embroidery and promotional product industries, serving customers since 1919. It currently has eight distribution centers across the U.S. and has the capability to deliver to approximately 80 percent of the U.S. population in one day. Via its three divisions, the Company distributes industryleading brands Anvil, Fruit of the Loom, Gildan, Hanes and Jerzees as well as retail brands Adidas Golf and Champion.
As noted earlier in this earnings release, the STARS data confirmed that the Company regained lost market share. Inventory quality was strong and fulfillment remained exceptional during the first and second quarters 2010. The Company's three-part guarantee has been instrumental in regaining confidence among 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.
Third quarter 2010 results will include the impact of an approximate 5% price increase in cost and selling prices, primarily in commodity products, which took effect July 5, 2010. The price increases were announced in the second quarter 2010 and likely had some favorable impact on the units sold by shifting demand from the third quarter 2010 to the second quarter 2010.
The increased demand during the second quarter 2010 also led to T-shirt shortages during the period. Insufficient T-shirt supply to meet market demand continued into the third quarter 2010. Yarn shortages at suppliers and T-shirt shortages during the second half of 2010 will likely result in market growth less than the 11% experienced in the second quarter 2010.
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 $129.4 million at June 26, 2010 compared to $100.8 million at December 26, 2009 and $127.7 million at June 27, 2009. The increase in revolver debt from December 2009 was mainly due to increases in inventory and accounts receivable. Borrowing base availability at June 26, 2010, December 26, 2009 and June 27, 2009 was $21.9 million, $31.5 million and $26.6 million, respectively.
Broder Bros., Co. is one of the nation's largest distributors of trade, private label, and retail apparel brands to the imprinting, embroidery and promotional product industries, serving customers since 1919. It currently has eight distribution centers across the U.S. and has the capability to deliver to approximately 80 percent of the U.S. population in one day. Via its three divisions, the Company distributes industryleading brands Anvil, Fruit of the Loom, Gildan, Hanes and Jerzees as well as retail brands Adidas Golf and Champion.
Broder Bros Co
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