WORLDTEX FOURTH-QUARTER LOSS DEEPENS, DESPITE GAIN IN SALES
NEW YORK — Hurt by onetime charges and weakness in its core businesses, Worldtex Inc. reported wider fourth-quarter losses, despite a slight increase in sales.
The company said it would close one of the three covered-yarn manufacturing plants in Hickory, N.C., where its headquarters are.
For the three months ended Dec. 31, the company reported an $11.5 million loss, which compares with a $7.7 million loss in the prior-year quarter.
The extraordinary charges include a $2.8 million charge related to the plant closing; a $4 million reserve related to the bankruptcy of Fruit of the Loom, which is a large customer, and $900,000 related to shutting Canadian operations.
Sales were $64.4 million, up 1.6 percent from $63.5 million.
The company reported earnings before interest, taxation, depreciation and amortization of $5.6 million, down 14 percent from $6.5 million.
In a statement, chairman and chief executive Barry D. Setzer said, “While we recorded growth in our revenues for the year, a significant change in product mix, startup costs and lower production in the last half of the year compressed profit margins.”
On the narrow-elastics front — a business the company has tried to build in the past two years — Worldtex reported an 8 percent decline in sales from continuing operations.
That excludes results from a manufacturing facility purchased from FTL in the closing days of 1998.
The purchase of the FTL plant caused the overall increase in sales for the quarter.
Total narrow-elastics sales were $24 million, or 37 percent of net revenue, below the 40 percent target the company had set for that business.
Covered-yarn sales were $40.4 million, off 8.2 percent. The company said that weakness in its European operations was largely responsible for that drop, though U.S. sales were down as well.
Setzer noted that the results had “affected our compliance with loan covenants and FTL’s bankruptcy has negatively impacted domestic liquidity. We are currently negotiating new domestic credit facilities.”
He added that he expected to have new credit commitments in place “in the near future.”
For the year, Worldtex reported a $10.1 million net loss, compared with a $5.9 million loss. Sales were $285.8 million, up 10.5 percent from $258.5 million.