Unifi announces Q3 results
Unifi Inc released preliminary operating results for its third fiscal quarter ended March 29, 2009.
Net sales for the current quarter were $119.1 million, which represents a $50.7 million decrease from net sales of $169.8 million for the prior year March quarter. Net sales were negatively impacted by the cumulative effect of year-over-year declines in retail sales since October 2008 caused by the global recession. Volume was further impacted by reduced production levels throughout the textile supply chain as excess inventory was depleted.
For the March quarter, net loss was $33.0 million or $0.53 per share, which compares to net income of $12 thousand in the prior March quarter. Results for the current quarter were negatively impacted by a non-cash charge of $18.6 million to write-off the carrying value of goodwill associated with the Company's acquisition of Dillon Yarns in 2007. The decrease in the current quarter was also related to the utilization of higher priced raw materials from the December quarter and the impact of unabsorbed converting costs associated with reduced production volume.
Cash-on-hand at the end of the March 2009 quarter was $23.5 million, which is an increase of $10.9 million from cash-on-hand at the end of the December 2008 quarter and is a result of aggressive working capital management both domestically and in Brazil. Total cash and cash equivalents at the end of March, including restricted cash, were $39.5 million compared to $32.4 million at the end of December. At the end of the March quarter, long-term debt was $192.0 million, and there were no borrowings under the Company's bank credit facility.
As previously announced on April 3rd, the Company successfully completed the tender offer for $8.8 million aggregate principal amount of its 11.5% senior secured notes due in 2014. Additionally, on March 31, 2009, the Company announced it closed on the sale and, subsequent to quarter end, received $9 million in proceeds related to its 50% ownership interest in Yihua Unifi Fibre Industry Co., Ltd., the Company's former joint venture in China with Sinopec Yizheng Chemical Fiber Co., Ltd.
"Retail sales in our primary end-use segments remained soft in the March quarter and the impact on our demand was compounded by the retail supply chain working through its excessive inventory levels," said Ron Smith, Chief Financial Officer for Unifi.
"Accordingly, the Company focused much of its efforts during the quarter on liquidity and cash generation, freeing up $25.5 million of working capital committed to inventory through decreased raw material purchases and production levels well below sales volumes. The Company was also able to begin recapturing lost conversion margin from 2008, as raw material prices returned to more normalized levels."
Net sales for the first nine months of fiscal 2009 were $413.8 million compared to net sales of $523.7 million for the prior year period. Net loss for the first nine months of fiscal 2009 was $42.7 million or $0.69 per share compared to a net loss of $16.9 million or $0.28 per share for the same prior year period.