Unifi Inc., the Greensboro, N.C.-based yarn manufacturer, reported Wednesday that net income for the third quarter ended March 30 more than triple to $4.7 million, or 25 cents a share, compared with net income of $1.4 million, or 7 cents a share, for the prior year quarter, reflecting improved operating results in its domestic business and lower domestic depreciation expenses.
These gains were partially offset by lower earnings from the company’s equity affiliates and higher domestic income tax expense.
Net sales increased 5.1 percent to $176.9 million for the quarter compared with net sales of $168.3 million for the prior year quarter. Unifi said sales were positively impacted by greater contributions from its domestic premier and value-added yarns, and the timing of the holiday shutdown period compared to the prior quarter, but were partially offset by currency translation rate changes for Brazil.
“The operating performance in our domestic business remained strong in the March quarter, both in our value-added product segments and commodity business,” said Roger Berrier, president and chief operating officer of Unifi. “We also remain encouraged by the stability of synthetic apparel produced in the CAFTA region and by the growth during the March quarter. As brands and retailers continue to focus on this region for additional sourcing opportunities, we will continue to add incremental capacity.”
Adjusted earnings before interest, taxes, depreciation and amortization improved to $12.6 million for the quarter from $8.4 million for same period a year earlier. Income before income taxes increased to $8.9 million for the quarter from $3.7 million for the prior year quarter, while equity in earnings of unconsolidated affiliates decreased $1.2 million.
Cash-on-hand as of March 30 was $13.2 million, an increase of $4.4 million from June 30, 2013. Net debt at the end of the March was $85.4 million, compared to $89.0 million at June 30. The Company had $62.7 million available under its revolving credit facility as of March 30, compared to $36.1 million as of June 30.
For the first nine months of the fiscal year, net income was $20.1 million, or $1.05 a share, compared to net income of $6.1 million, or 30 cents a share, for the prior year period, as gross profit margins increased during the current period as a result of the strength in the company’s domestic business. Net sales decreased 1.4 percent to $506.2 million for the year-to-date period compared to net sales of $513.2 million for the prior year, as increases to the firm’s domestic business were offset by declines in its international operations.
Subsequent to the quarter’s closing, Unifi’s board authorized a new program for the company to repurchase up to an additional $50 million of common stock.
Bill Jasper, chairman and chief executive officer of Unifi, said, “I am pleased with the operating results from our domestic operations in the March quarter and with our ability to improve the overall liquidity of the company. The recent amendment to our credit agreement increases our borrowing capacity by $18 million, which we can use to fund our strategic initiatives, including possible growth oriented capital expenditures. Our strong balance sheet, coupled with the board’s decision to authorize the repurchase of up to an additional $50 million of stock, positions us to continue to maximize shareholder value as we conclude the 2014 fiscal year and enter into the next.”
Unifi maintains one of the textile industry’s most comprehensive polyester and nylon product offerings. In addition to its flagship Repreve products of eco-friendly yarns made from recycled materials, Unifi’s yarns are readily found in the products of major brands in the apparel, hosiery, automotive, home furnishings and industrial markets.