Unifi Inc. (UFI, Financial) filed Quarterly Report for the period ended 2010-12-26.
Unifi Inc has a market cap of $342.6 million; its shares were traded at around $17.08 with a P/E ratio of 19.1 and P/S ratio of 0.5. Hedge Fund Gurus that owns UFI: Jim Simons of Renaissance Technologies LLC. Mutual Fund and Other Gurus that owns UFI: Chuck Royce of Royce& Associates.
In the near term, the Company believes that fiscal year 2011 will represent a critical transition year from a cash flow perspective. In addition to normal capital expenditures, the Company is investing approximately $14.0 million in strategic capital expenditures to improve its cost flexibility and capability to produce PVA products. In addition, the Company expects to invest approximately $11.0 million in new working capital to support (i) the higher sales volumes as retail sales continue to recover; (ii) additional production capacity in El Salvador; and (iii) backward integration into recycled polyester polymer bead (“Chip”) which is the feedstock used in its Repreve ® products.
Consolidated net sales for the second quarter of fiscal year 2011 were $160.8 million, an increase of $18.5 million, or 13%, as compared to the same quarter in the prior year. This improvement was driven by increased market share and improving market conditions in substantially all key segments. Sales volumes increased 11.5% in the second quarter of fiscal year 2011 as compared to the second quarter of fiscal year 2010, primarily driven by gains in the Company s domestic business as well as improvements derived from the Company s Brazilian, Chinese and Central American operations. Net sales of the Company s PVA products increased by 36% in the current quarter over the prior year second quarter, with the average selling price per pound decreasing by 1.0% primarily driven by a change in sales mix. PVA sales volumes improved by 37% when comparing the same periods. These improvements in PVA sales dollars and volumes are a leading factor in the Company s overall improved sales results.
Consolidated gross profit increased $1.7 million to $19.1 million for the second quarter of fiscal year 2011 as compared to the prior year second quarter. This increase in gross profit was primarily attributable to improved conversion (net sales less raw material cost) of $5.3 million offset by increased consolidated manufacturing costs of $3.6 million for the December 2010 fiscal quarter when compared to the December 2009 fiscal quarter. However, consolidated manufacturing costs decreased by 1.1% on a per unit basis due to the increase in sales volumes. Consolidated variable manufacturing costs increased by $1.5 million and consolidated fixed manufacturing costs increased $2.1 million.
The Company s adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“adjusted EBITDA”) for the year-to-date period of fiscal year 2011 was $34.1 million, which is an improvement of $5.7 million over the same period of fiscal year 2010, as described in more detail below. The increase in adjusted EBITDA over the prior year period is due in part to improved gross profit in the domestic operations as a result of increased sales volumes, a higher proportion of PVA sales, and increased selling prices, which allowed the Company to regain conversion margin lost as a result of rising raw material prices during the latter half of fiscal year 2010 and cover raw material price increases experienced in the second quarter of fiscal year 2011. The Company s positive results were due to a combination of continuous efforts to improve its manufacturing processes and expanding its market share.
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Unifi Inc has a market cap of $342.6 million; its shares were traded at around $17.08 with a P/E ratio of 19.1 and P/S ratio of 0.5. Hedge Fund Gurus that owns UFI: Jim Simons of Renaissance Technologies LLC. Mutual Fund and Other Gurus that owns UFI: Chuck Royce of Royce& Associates.
Highlight of Business Operations:
On December 28, 2010, the Company announced its commencement of a cash tender offer for any and all of the Company s 11.5% senior secured notes due May 15, 2014 (the “2014 notes”) for a total consideration of 106.0% of the principal amount of the 2014 notes validly tendered, conditioned upon the receipt of at least $140.0 million from a new debt financing on terms satisfactory to the Company. Subsequently, on January 11, 2011, the Company announced its termination of the cash tender offer due to the condition of the debt capital markets which made the estimated cost savings generated from a new debt financing insufficient to offset the estimated costs of conducting such a transaction. Concurrently, the Company announced that it was calling for the redemption of $30.0 million of the 2014 notes at a redemption price of 105.75% of the principal amount of the redeemed notes to be effective on February 16, 2011. The Company plans to finance this redemption through a combination of internally generated cash and borrowings under the Company s senior secured asset-based revolving credit facility. The Company plans to utilize its liquidity to continue to redeem its 2014 notes incrementally through a combination of internally generated cash and limited borrowings using its senior secured asset-based revolving credit facility while maintaining a continuous revolver balance. The Company plans to hedge a substantial amount of the interest rate risk on its revolver balance to ensure its interest savings on the 2014 note repurchases. As a result of the utilization of cash on hand to reduce outstanding debt and the lower rate under the revolving credit facility, the Company expects a significant reduction of its annual fixed carrying cost between the commencement of this debt reduction strategy and the final repayment of the 2014 notes. See “Long-term Debt” included in “Liquidity and Capital Resources” section below for a detailed discussion of the interest rates and covenants related to the Company s revolving credit facility.In the near term, the Company believes that fiscal year 2011 will represent a critical transition year from a cash flow perspective. In addition to normal capital expenditures, the Company is investing approximately $14.0 million in strategic capital expenditures to improve its cost flexibility and capability to produce PVA products. In addition, the Company expects to invest approximately $11.0 million in new working capital to support (i) the higher sales volumes as retail sales continue to recover; (ii) additional production capacity in El Salvador; and (iii) backward integration into recycled polyester polymer bead (“Chip”) which is the feedstock used in its Repreve ® products.
Consolidated net sales for the second quarter of fiscal year 2011 were $160.8 million, an increase of $18.5 million, or 13%, as compared to the same quarter in the prior year. This improvement was driven by increased market share and improving market conditions in substantially all key segments. Sales volumes increased 11.5% in the second quarter of fiscal year 2011 as compared to the second quarter of fiscal year 2010, primarily driven by gains in the Company s domestic business as well as improvements derived from the Company s Brazilian, Chinese and Central American operations. Net sales of the Company s PVA products increased by 36% in the current quarter over the prior year second quarter, with the average selling price per pound decreasing by 1.0% primarily driven by a change in sales mix. PVA sales volumes improved by 37% when comparing the same periods. These improvements in PVA sales dollars and volumes are a leading factor in the Company s overall improved sales results.
Consolidated gross profit increased $1.7 million to $19.1 million for the second quarter of fiscal year 2011 as compared to the prior year second quarter. This increase in gross profit was primarily attributable to improved conversion (net sales less raw material cost) of $5.3 million offset by increased consolidated manufacturing costs of $3.6 million for the December 2010 fiscal quarter when compared to the December 2009 fiscal quarter. However, consolidated manufacturing costs decreased by 1.1% on a per unit basis due to the increase in sales volumes. Consolidated variable manufacturing costs increased by $1.5 million and consolidated fixed manufacturing costs increased $2.1 million.
The Company s adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“adjusted EBITDA”) for the year-to-date period of fiscal year 2011 was $34.1 million, which is an improvement of $5.7 million over the same period of fiscal year 2010, as described in more detail below. The increase in adjusted EBITDA over the prior year period is due in part to improved gross profit in the domestic operations as a result of increased sales volumes, a higher proportion of PVA sales, and increased selling prices, which allowed the Company to regain conversion margin lost as a result of rising raw material prices during the latter half of fiscal year 2010 and cover raw material price increases experienced in the second quarter of fiscal year 2011. The Company s positive results were due to a combination of continuous efforts to improve its manufacturing processes and expanding its market share.
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