Unifi announces second quarter results
Unifi Inc. released preliminary operating results for its second fiscal quarter ended December 28, 2008.
Net sales for the current quarter were $125.7 million, which represents a $57.7 million decrease from net sales of $183.4 million for the prior year December quarter. Net sales were negatively impacted by the reduced demand for the Company's products caused by sharp declines in consumer spending and compounded by the related effect of excess inventory across the respective supply chains.
In addition, the prior year quarter contained approximately $7 million of sales from its commodity POY facility in Kinston N.C., which ceased operations during that quarter.
For the December quarter, loss from continuing operations before taxes was $8.7 million and net loss was $9.1 million or $0.15 per share, which compares to a loss from continuing operations before taxes of $13.6 million and a net loss of $7.7 million or $0.13 per share in the prior December quarter. The prior year quarter included the negative impact of $6.3 million in restructuring and severance charges and $2.2 million of impairment charges.
The decrease in current quarter results was predominately driven by the decreased demand and higher priced raw material purchased from the first fiscal quarter working its way through the Company's inventory.
"Retail sales in our primary end-use segments: apparel, home furnishings and automotive, were all down dramatically in the quarter, resulting in a significant buildup of inventory throughout the supply chain," said Ron Smith, Chief Financial Officer for Unifi.
"In response, brands and retailers cancelled orders and fabric mills curtailed production suddenly during the fourth quarter, which dramatically reduced demand for our products. Based on current retail sales estimates, we expect it to take an additional four to six months for this built-up inventory to completely work through the supply chain."
"Accordingly, we anticipate continued pressure on our sales throughout the second half of the fiscal year. We do, however, expect conversion margins and cost to improve during the second half of the fiscal year, and we anticipate continued strength in our sales to the CAFTA region as more apparel production is shifted there from Asia to reduce the overall sourcing cycle."
Net loss for the first half of fiscal 2009 was $9.7 million or $0.16 per share compared to a net loss of $16.9 million or $0.28 per share for the same prior year period. Net sales for the first half of fiscal 2009 were $294.7 million compared to net sales of $353.9 million for the prior year period, which included approximately $19 million of sales from our now closed Kinston N.C. facility.
Cash-on-hand at the end of the December 2008 quarter was $12.6 million, a decrease of $7.8 million from the cash-on-hand at the end of the September 2008 quarter, as $6.8 million in proceeds from asset sales were offset by working capital uses, the semi-annual note interest payment and the currency effect on cash in Brazil. Total cash and cash equivalents at the end of December, including restricted cash, were $32.4 million compared to $47.7 million at the end of September. At the end of December, long-term debt was reduced to $193.7 million from $196.5 million as of the end of September.