Hurt by order delays from apparel companies and difficult currency exchanges, yarn manufacturer Unifi Inc. reported net income for the first quarter ended Sept. 15 declined 97 percent to $286,000 from $10.2 million a year earlier.
Net sales for the period fell 2 percent to $171 million from $175 million. Adjusted earnings before interest, taxes, depreciation and amortization for the quarter were $8.1 million compared with $18.4 million in the year-ago period. Earnings per basic share decreased to 1 cent from 51 cents in the fiscal first quarter of 2010.
Unifi produces and processes multifilament polyester and nylon textured yarns and related raw materials.
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Key Unifi brands include AIO and Sorbtek performance yarns, A.M.Y. antimicrobial yarns, MYNX UV protective yarns, Repreve recycled polyester yarns, Reflexx stretch yarns, Microvista microfiber yarns and Satura solution-dyed yarns. Unifi’s yarns and brands are used in a range of sectors, including apparel, legwear, sewing thread and home furnishings.
The company said demand for its domestically produced polyester and nylon products softened during the quarter as customers put off purchases ahead of the holiday selling season in order to manage inventory levels. On a global basis, prices for Unifi’s primary raw materials remained near their 30-year highs for the second consecutive quarter, and in its Brazilian operation, the strength of the real against the dollar created a challenging operating environment for local production.
“We believe raw materials prices reached their peak levels during the quarter…during a period of tight supply across the polyester supply chain,” said Bill Jasper, chairman and chief executive officer of Unifi, based in Greensboro, N.C. “We expect these prices to decline over the next few quarters, as the supply issues correct themselves and new capacity begins to come online. We also expect the destocking of the retail supply chain inventory to be completed by the end of the company’s third fiscal quarter, with volume improvements beginning after the first of the calendar year.”
Cash-on-hand as of Sept. 25 was $19.8 million and borrowings under the firm’s revolving credit facility were $39.9 million. During the quarter, the company redeemed $10 million of its 11.5 percent senior secured notes due 2014, with $123.7 million of senior secured notes remained outstanding.