Unifi has second quarter to forget
January 26, 2004-- Home Textiles Today,
With the woes of the U.S. textiles industry backing up along the supply chain, yarn-producer Unifi Inc. recorded a steep drop in second-quarter sales and a sharply widening loss of $9.2 million, more than four times the size of a year-ago deficit of $2.2 million.
Sales at the big producer of textured polyester and nylon yarns tumbled by 9 percent, to $183.7 million from $201.9 million, a shortfall of more than $18 million.
As sales headed south, margins came under pressure, contracting to 2 percent from 7.4 percent a year ago, a drop of 540 basis points, or 5.4 percentage points. Gross margin dollars dropped off by 75.5 percent, to $3.7 million from $14.9 million.
Supplying some of the margin pressure, a pre-tax benefit from fiber producer DuPont — included in the margin — was reduced by 10.3 percent, to $7 million from $7.8 million during the year-before quarter.
When measured as a percentage of sharply falling sales, operating costs climbed by 50 basis points, or one-half of a percentage point, to 7 percent from 6.5 percent a year ago. But the company has continued to cut away at costs, and measured in absolute dollars, expenses were whittled down by 2.7 percent, to $12.8 million from $13.1 million last year, generating a cash savings of $340,000.
Pressured downward by the falling sales and the severe margin contraction, Unifi swung to an operating loss, recording an operating deficit of $9.1 million, compared with a year-ago operating profit of $1.8 million.
On the plus side, Unifi pared down inventories and interest expense.
|Qtr. 12/28 (x000)||2003||2002||% chg|
a-Second-quarter results include $1.1 million in miscellaneous expenses, compared with $649,000 last year; a $146,000 loss from unconsolidated affiliates vs. a $2.6 million in earnings a year ago; $1.1 million in minority interest income vs. $758,000 in expenses a year ago; and a $4.2 million income-tax benefit, compared with $1.6 million in the same period last year. Results in the year-before quarter include $1.6 million in arbitration costs.
b-Six-month results include $1.9 million in miscellaneous expenses, compared with $70,000 in miscellaneous income last year; $111,000 in earnings from unconsolidated affiliates, compared with $6.2 million last year; $2.1 million in minority interest income, compared with $3.6 million in minority interest expense during the same period in 2002; and an income-tax benefit of $6.0 million, compared with a $456,000 tax payment last year. Results in the year-ago six month-period include $2.8 million in arbitration costs.
|Oper. income (EBIT)||(9,126)||1,919||--|
|Per share (diluted)||(0.18)||(0.04)||—|
|Average gross margin||2.0%||7.4%||—|
|Six months||2003||2002||% chg|
|Oper. income (EBIT)||(11,909)||12,590||—|
|Per share (diluted)||(0.26)||0.04||—|
|Average gross margin||3.9%||9.0%||—|
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