Other highlights for the first quarter of fiscal year 2016 included:
- Gross profit improved to
$21.0 million , or 12.9% of net sales, from$20.5 million , or 11.6% of net sales, for the prior year comparable quarter; -
Adjusted EBITDA of
$15.4 million , an improvement from$14.0 million for the prior year first quarter; and -
The repurchase of 179,026 shares of common stock for
$5.4 million under our stock repurchase program.
Net sales were
'We continue to see improvements in the areas of our business that we are supporting through strategic capital expenditures,' said
Cash and cash equivalents were
The Company will provide additional commentary regarding its first quarter results and other developments during its earnings conference call on
Financial Statements and Reconciliations to Adjusted Results to Follow
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | ||||||
(amounts in thousands, except share and per share amounts) | ||||||
September 27, 2015 | June 28, 2015 | |||||
ASSETS | ||||||
Cash and cash equivalents | $ | 9,954 | $ | 10,013 | ||
Receivables, net | 84,960 | 83,863 | ||||
Inventories | 112,778 | 111,615 | ||||
Income taxes receivable | 201 | 1,451 | ||||
Deferred income taxes | 2,153 | 2,383 | ||||
Other current assets | 3,597 | 6,022 | ||||
Total current assets | 213,643 | 215,347 | ||||
Property, plant and equipment, net | 149,275 | 136,222 | ||||
Deferred income taxes | 914 | 1,539 | ||||
Intangible assets, net | 4,963 | 5,388 | ||||
Investments in unconsolidated affiliates | 114,448 | 113,901 | ||||
Other non-current assets | 4,054 | 3,975 | ||||
Total assets | $ | 487,297 | $ | 476,372 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Accounts payable | $ | 42,398 | $ | 45,023 | ||
Accrued expenses | 13,648 | 16,640 | ||||
Income taxes payable | 1,437 | 676 | ||||
Current portion of long-term debt | 14,515 | 12,385 | ||||
Total current liabilities | 71,998 | 74,724 | ||||
Long-term debt | 113,710 | 91,725 | ||||
Other long-term liabilities | 10,443 | 10,740 | ||||
Deferred income taxes | 89 | 90 | ||||
Total liabilities | 196,240 | 177,279 | ||||
Commitments and contingencies | ||||||
Common stock, $0.10 par value (500,000,000 shares authorized, | ||||||
17,833,722 and 18,007,749 shares outstanding) | 1,783 | 1,801 | ||||
Capital in excess of par value | 44,373 | 44,261 | ||||
Retained earnings | 281,378 | 278,331 | ||||
Accumulated other comprehensive loss | (38,317) | (26,899) | ||||
Total Unifi, Inc. shareholders' equity | 289,217 | 297,494 | ||||
Non-controlling interest | 1,840 | 1,599 | ||||
Total shareholders' equity | 291,057 | 299,093 | ||||
Total liabilities and shareholders' equity | $ | 487,297 | $ | 476,372 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | ||||||
(amounts in thousands, except per share amounts) | ||||||
For The Three Months Ended | ||||||
September 27, 2015 | September 28, 2014 | |||||
Net sales | $ | 162,165 | $ | 175,561 | ||
Cost of sales | 141,181 | 155,111 | ||||
Gross profit | 20,984 | 20,450 | ||||
Selling, general and administrative expenses | 10,830 | 11,649 | ||||
Provision for bad debts | 613 | 584 | ||||
Other operating (income) expense, net | (146) | 600 | ||||
Operating income | 9,687 | 7,617 | ||||
Interest income | (163) | (317) | ||||
Interest expense | 984 | 819 | ||||
Equity in earnings of unconsolidated affiliates | (2,860) | (3,721) | ||||
Income before income taxes | 11,726 | 10,836 | ||||
Provision for income taxes | 3,940 | 4,161 | ||||
Net income including non-controlling interest | 7,786 | 6,675 | ||||
Less: net (loss) attributable to non-controlling interest | (239) | (402) | ||||
Net income attributable to Unifi, Inc | $ | 8,025 | $ | 7,077 | ||
Net income attributable to Unifi, Inc. per common share: | ||||||
Basic | $ | 0.45 | $ | 0.39 | ||
Diluted | $ | 0.43 | $ | 0.37 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||
(amounts in thousands) | ||||||
For The Three Months Ended | ||||||
September 27, 2015 | September 28, 2014 | |||||
Cash and cash equivalents at beginning of year | $ | 10,013 | $ | 15,907 | ||
Operating activities: | ||||||
Net income including non-controlling interest | 7,786 | 6,675 | ||||
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities: | ||||||
Equity in earnings of unconsolidated affiliates | (2,860) | (3,721) | ||||
Distributions received from unconsolidated affiliates | 1,947 | — | ||||
Depreciation and amortization expense | 4,383 | 4,492 | ||||
Non-cash compensation expense | 284 | 625 | ||||
Deferred income taxes | 498 | (912) | ||||
Other, net | 170 | 134 | ||||
Changes in assets and liabilities: | ||||||
Receivables, net | (4,276) | (667) | ||||
Inventories | (6,298) | (3,209) | ||||
Other current assets and income taxes receivable | 1,788 | 508 | ||||
Accounts payable and accrued expenses | (3,474) | (5,346) | ||||
Income taxes payable | 839 | 1,523 | ||||
Net cash provided by operating activities | 787 | 102 | ||||
Investing activities: | ||||||
Capital expenditures | (15,875) | (7,383) | ||||
Proceeds from sale of assets | 2,088 | 22 | ||||
Other, net | (347) | (16) | ||||
Net cash used in investing activities | (14,134) | (7,377) | ||||
Financing activities: | ||||||
Proceeds from revolving credit facilities | 53,200 | 45,600 | ||||
Payments on revolving credit facilities | (30,200) | (55,300) | ||||
Proceeds from term loan | — | 22,000 | ||||
Payment on term loan | (2,250) | — | ||||
Payments on capital lease obligations | (924) | (208) | ||||
Common stock repurchased and retired under publicly announced programs | (5,439) | (4,160) | ||||
Proceeds from stock option exercises | 60 | — | ||||
Contributions from non-controlling interest | 480 | 720 | ||||
Other | (471) | (461) | ||||
Net cash provided by financing activities | 14,456 | 8,191 | ||||
Effect of exchange rate changes on cash and cash equivalents | (1,168) | (1,031) | ||||
Net decrease in cash and cash equivalents | (59) | (115) | ||||
Cash and cash equivalents at end of period | $ | 9,954 | $ | 15,792 |
RECONCILIATIONS OF REPORTED RESULTS TO ADJUSTED RESULTS (Unaudited) | ||||||
(amounts in thousands) | ||||||
The reconciliations of the amounts reported under U.S. generally accepted accounting principles ('GAAP') for Net income attributable to Unifi, Inc. to EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA are as follows: | ||||||
For the Three Months Ended | ||||||
September 27, 2015 | September 28, 2014 | |||||
Net income attributable to Unifi, Inc | $ | 8,025 | $ | 7,077 | ||
Interest expense, net | 821 | 502 | ||||
Provision for income taxes | 3,940 | 4,161 | ||||
Depreciation and amortization expense | 4,241 | 4,341 | ||||
EBITDA | 17,027 | 16,081 | ||||
Non-cash compensation expense | 284 | 625 | ||||
Other | 35 | 745 | ||||
Adjusted EBITDA Including Equity Affiliates | 17,346 | 17,451 | ||||
Equity in earnings of Parkdale America, LLC | (1,965) | (3,404) | ||||
Adjusted EBITDA (1) | $ | 15,381 | $ | 14,047 | ||
(1) Adjusted EBITDA, for the periods shown, includes the Company's portion of income (loss) before income taxes for Repreve Renewables, LLC and equity in earnings of the Company's nylon joint ventures. |
RECONCILIATIONS OF REPORTED RESULTS TO ADJUSTED RESULTS (Unaudited) (Continued) | ||||||||||||||||||||||
(amounts in thousands, except per share amounts) | ||||||||||||||||||||||
The reconciliations of Income before income taxes, Net income attributable to Unifi, Inc. ('Net Income') and Basic Earnings Per | ||||||||||||||||||||||
For the Three Months Ended September 27, 2015 | For the Three Months Ended September 28, 2014 | |||||||||||||||||||||
Income Before | Net Income | Basic EPS | Income Before | Net Income | Basic EPS | |||||||||||||||||
GAAP results | $ | 11,726 | $ | 8,025 | $ | 0.45 | $ | 10,836 | $ | 7,077 | $ | 0.39 | ||||||||||
Bargain purchase gain for an equity affiliate | — | — | — | (1,122) | (690) | (0.03) | ||||||||||||||||
Change in specific tax valuation allowances | — | — | — | — | 294 | 0.01 | ||||||||||||||||
Change in uncertain tax positions | — | 72 | — | — | 23 | — | ||||||||||||||||
Net (gain) loss on sale or disposal of assets | (64) | (39) | — | 141 | 52 | — | ||||||||||||||||
Adjusted results (1) (2) | $ | 11,662 | $ | 8,058 | $ | 0.45 | $ | 9,855 | $ | 6,756 | $ | 0.37 | ||||||||||
(1) Adjusted Net Income represents Net income attributable to Unifi, Inc. calculated under GAAP, adjusted for the approximate after-tax impact of certain events or transactions referenced in the reconciliation which management believes do not reflect the ongoing operations and performance of the Company. | ||||||||||||||||||||||
(2) Adjusted EPS represents Adjusted Net Income divided by the Company's basic weighted average common shares outstanding. | ||||||||||||||||||||||
NON-GAAP FINANCIAL MEASURES
Certain non-GAAP financial measures included herein are designed to complement the financial information presented in accordance with generally accepted accounting principles in
EBITDA represents Net income or loss attributable to
Adjusted Net Income excludes certain amounts which management believes do not reflect the ongoing operations and performance of the Company. Adjusted Net Income represents Net income attributable to
Adjusted EPS represents Adjusted Net Income divided by the Company's basic weighted average common shares outstanding.
EBITDA, Adjusted EBITDA Including Equity Affiliates, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are alternative views of performance used by management, and we believe that investors' understanding of our performance is enhanced by disclosing these performance measures. We believe that the use of EBITDA, Adjusted EBITDA Including Equity Affiliates, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS as operating performance measures provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets, among otherwise comparable companies. The Company may, from time to time, change the items included within Adjusted EBITDA, Adjusted Net Income and Adjusted EPS.
Management uses Adjusted EBITDA: (i) as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis, as it removes the impact of (a) items directly related to our asset base (primarily depreciation and amortization) and (b) items that we would not expect to occur as a part of our normal business on a regular basis; (ii) for planning purposes, including the preparation of our annual operating budget; (iii) as a valuation measure for evaluating our operating performance and our capacity to incur and service debt, fund capital expenditures and expand our business; and (iv) as one measure in determining the value of other acquisitions and dispositions. Adjusted EBITDA is also a key performance metric utilized in the determination of variable compensation.
We also believe Adjusted EBITDA is an appropriate supplemental measure of debt service capacity, because cash expenditures on interest are, by definition, available to pay interest, and tax expense is inversely correlated to interest expense because tax expense decreases as deductible interest expense increases; and depreciation and amortization are non-cash charges. Equity in earnings of
In evaluating EBITDA, Adjusted EBITDA Including Equity Affiliates, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS, you should be aware that, in the future, we may incur expenses similar to the adjustments included herein. Our presentation of EBITDA, Adjusted EBITDA Including Equity Affiliates, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS should not be construed as indicating that our future results will be unaffected by unusual or non-recurring items. EBITDA, Adjusted EBITDA Including Equity Affiliates, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are not determined in accordance with GAAP and should not be considered as substitutes for net income, operating income, earnings per share or any other performance measures determined in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity.
Each of our EBITDA, Adjusted EBITDA Including Equity Affiliates, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS measures has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
- it is not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows;
- it does not reflect the impact of earnings or charges resulting from matters we consider not indicative of our ongoing operations;
- it does not reflect changes in, or cash requirements for, our working capital needs;
- it does not reflect the cash requirements necessary to make payments on our debt;
- it does not reflect our future requirements for capital expenditures or contractual commitments;
- it does not reflect limitations on or costs related to transferring earnings from our subsidiaries to us; and
- other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure.
Because of these limitations, EBITDA, Adjusted EBITDA Including Equity Affiliates, and Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations, including those under our outstanding debt obligations. You should compensate for these limitations by relying primarily on our GAAP results and using these measures only as supplemental information.
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Certain statements included herein contain forward-looking statements within the meaning of federal securities laws about the financial condition and results of operations of
Factors that could contribute to such differences include, but are not limited to: the competitive nature of the textile industry and the impact of worldwide competition; changes in the trade regulatory environment and governmental policies and legislation; the availability, sourcing and pricing of raw materials; general domestic and international economic and industry conditions in markets where the Company competes, such as recession and other economic and political factors over which the Company has no control; changes in consumer spending, customer preferences, fashion trends and end-uses; the financial condition of the Company's customers; the loss of a significant customer; the success of the Company's strategic business initiatives; the continuity of the Company's leadership; volatility of financial and credit markets; the ability to service indebtedness and fund capital expenditures and strategic initiatives; availability of and access to credit on reasonable terms; changes in currency exchange, interest and inflation rates; the ability to reduce production costs; the ability to protect intellectual property; employee relations; the impact of environmental, health and safety regulations; the operating performance of joint ventures and other equity investments; and the accurate financial reporting of information from equity method investees.
All such factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. New factors emerge from time to time, and it is not possible for management to predict all such factors or to assess the impact of each such factor on the Company. Any forward-looking statement speaks only as of the date on which such statement is made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, except as may be required by federal securities law. The above and other risks and uncertainties are described in the Company's most recent annual report on Form 10-K, and additional risks or uncertainties may be described from time to time in other reports filed by the Company with the
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SOURCE
James M. Otterberg, Chief Financial Officer, (336) 316-5424
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