Broder Bros reports Q4 & fiscal year 2010 results
Broder Bros Co announced results for its fourth quarter and fiscal year ended December 25, 2010. The results included in this earnings release are consistent with the preliminary results included in the Company's Current Report issued on March 8, 2011.
Fourth Quarter 2010 Results Compared to Fourth Quarter 2009 Results
Fourth quarter 2010 net sales were $215.7 million compared to $182.8 million for the fourth quarter 2009. Income from operations for the fourth quarter 2010 was $12.5 million compared to a loss of ($0.2) million for the fourth quarter 2009. Net income for the fourth quarter 2010 was $10.1 million compared to a net loss of ($2.9) million for the fourth quarter 2009.
For the fourth quarter 2010, the Company reported earnings before interest, taxes, depreciation and amortization ("EBITDA") of $16.0 million compared to EBITDA of $3.7 million for the fourth quarter 2009. A reconciliation of EBITDA to net income (loss) is set forth at the end of this earnings release.
Results include the impact of certain restructuring and other highlighted charges discussed below. Excluding these highlighted charges, EBITDA was $15.8 million for the fourth quarter 2010 compared to $5.5 million for the fourth quarter 2009. The improvement in EBITDA was driven by higher gross margins and higher unit volumes.
Fourth quarter 2010 gross profit was $40.9 million compared to $30.9 million for the fourth quarter 2009. Fourth quarter 2010 gross margin was 19.0% compared to 16.9% in the fourth quarter 2009. The increase in gross profit was attributable to an increase in units sold, sales of products in the fourth quarter 2010 which the Company had purchased when their costs were lower, and management's continued focus on improved pricing and purchasing activities, net of an increase in inventory reserves.
The Company regained lost market share during the fourth quarter 2010. S.T.A.R.S. reported that the U.S. imprintable activewear market grew 7% in units sold during the fourth quarter 2010. The Company's units sold grew by approximately 14% during the period.
Fourth quarter 2010 gross profit included an $8.0 million benefit resulting from cotton prices increases. The Company's major suppliers announced three cost increases during 2010. The Company increased its selling prices in response to each of the cost increases imposed by manufacturers and achieved higher gross margins during the fourth quarter 2010 relative to the fourth quarter 2009 as the Company sold through inventory with pre-price increase costs.
During the fourth quarter 2010, the Company increased its inventory reserves by $6.5 million due to the anticipated reduction in selling prices for some of the Company's private label products that were discontinued as of December 2010 and in prior years. The selling price reductions will permit the Company to increase the rate of sales on these slower-moving, discontinued styles during 2011.