UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
July 24, 2013
UNIFI, INC.
(Exact name of registrant as specified in its charter)
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New York |
1-10542 |
11-2165495 | ||
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7201 West Friendly Avenue Greensboro, North Carolina (Address of Principal Executive Offices) |
27410 (Zip Code) | ||||
Registrant’s telephone number, including area code: (336) 294-4410
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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[ ] |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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[ ] |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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[ ] |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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[ ] |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On July 24, 2013, Unifi, Inc. (the “Registrant”) issued a press release announcing its preliminary operating results for its fourth quarter and fiscal year ended June 30, 2013, which press release is filed as Exhibit 99.1 and is incorporated herein by reference.
ITEM 7.01. REGULATION FD DISCLOSURE.
On July 25, 2013, the Registrant will host a conference call to discuss its preliminary operating results for its fourth quarter and fiscal year ended June 30, 2013. The slide package prepared for use by executive management for this conference call is furnished herewith as Exhibit 99.2. All of the information in the conference call is presented as of July 25, 2013, and the Registrant does not assume any obligation to update such information in the future.
The information included in the preceding paragraph, as well as the exhibit referenced therein, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
ITEM 8.01. OTHER EVENTS.
On July 24, 2013, the Registrant issued a press release announcing its preliminary operating results for its fourth quarter and fiscal year ended June 30, 2013, a copy of which press release is filed as Exhibit 99.1 and is incorporated herein by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
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EXHIBIT NO. |
DESCRIPTION OF EXHIBIT |
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99.1 |
Press Release dated July 24, 2013 with respect to the Registrant’s preliminary operating results for its fourth quarter and fiscal year ended June 30, 2013. |
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99.2 |
Slide Package prepared for use in connection with the Registrant’s conference call to be held on July 25, 2013. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| UNIFI, INC. | |||
| By: | /s/ Ronald L. Smith | ||
| Ronald L. Smith | |||
| Chief Financial Officer | |||
Dated: July 25, 2013
INDEX TO EXHIBITS
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EXHIBIT NO. |
DESCRIPTION OF EXHIBIT |
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99.1 |
Press Release dated July 24, 2013 with respect to the Registrant’s preliminary operating results for its fourth quarter and fiscal year ended June 30, 2013. |
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99.2 |
Slide Package prepared for use in connection with the Registrant’s conference call to be held on July 25, 2013. |
Exhibit 99.1
For more information, contact:
Ronald L. Smith
Chief Financial Officer
(336) 316-5545
Unifi Announces Fourth Quarter and Year End Results
GREENSBORO, N.C., July 24, 2013 – Unifi, Inc. (NYSE: UFI) today released preliminary operating results for its fourth quarter and fiscal year ended June 30, 2013. The Company’s reported net sales increased $12.8 million or 6.8% to $200.7 million for the quarter ended June 30, 2013, which consisted of 14 fiscal weeks, compared to net sales of $187.9 million for the quarter ended June 24, 2012, which consisted of 13 fiscal weeks. Net income for the June 2013 quarter was $10.5 million, or $0.54 per share, compared to net income of $11.3 million, or $0.56 per share, for the June 2012 quarter, as a 320 basis point improvement in gross margin was offset by lower earnings of unconsolidated affiliates and higher income tax expense.
Highlights for the June 2013 quarter included:
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● |
Adjusted EBITDA for the June 2013 quarter improved to $18.3 million compared to $14.1 million in the June 2012 quarter; |
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Gross margin improved significantly as a result of higher conversion margins and lower manufacturing costs driven by the Company’s mix enrichment and continuous improvement strategies; |
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Strong shipping volumes continued, as growth in U.S. retail demand benefitted the Company’s yarn operations in North America and China; and |
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The Company amended its $150 million bank credit facility to provide additional liquidity and improve its long-term operating flexibility. |
The Company’s reported net sales increased $8.9 million or 1.3% to $714.0 million for the fiscal year ended June 30, 2013, compared to net sales of $705.1 million for the fiscal year ended June 24, 2012. For the 2013 fiscal year, net income was $16.6 million, or $0.84 per share, compared to net income of $11.5 million, or $0.57 per share, for the prior fiscal year and adjusted EBITDA was $52.7 million compared to adjusted EBITDA of $39.8 million for the prior fiscal year.
-continued-
Unifi Announces Fourth Quarter and Year End Results – page 2
Operating margins for the 2013 fiscal year were positively impacted by a 250 basis point improvement in gross margin and an $11.6 million decrease in interest expense related to the Company’s recently completed deleveraging strategy. These improvements were partially offset by an $8.3 million decrease in earnings from the Company’s unconsolidated affiliates and a $15.3 million increase in income taxes.
"Conversion margins for the June 2013 quarter improved, as raw material prices decreased, allowing us to recover margins lost during the run-up of raw material prices in the March 2013 quarter,” said Bill Jasper, Chairman and CEO of Unifi. “We are very pleased with the overall progress of our mix enrichment program and rigorous continuous improvement efforts. While we do not expect to consistently maintain the exceptional margins from the June 2013 quarter, we do expect our future financial performance to benefit from our continued investment in our premier value-added capabilities; continued growth of regional, synthetic apparel production; longer-term moderation of raw materials prices; and the continued recovery of our operations in Brazil and China.”
During the 2013 fiscal year, the Company utilized the $50.5 million of cash generated from operating activities and distributions from equity affiliates to repurchase 1.1 million shares of the Company’s common stock for $19.3 million and repay $23.8 million of outstanding debt. As of June 30, 2013, cash-on-hand was $8.8 million and total debt was $97.8 million.
"Due to our financial strength and positive operating results, we were able to successfully amend our $150 million bank credit facility during the June 2013 quarter," said Ron Smith, Chief Financial Officer of Unifi. “The amendment extends the maturity of the entire facility to May 2018; improves our liquidity by resetting the borrowings under the Term Loan to $50 million and eliminating scheduled quarterly principal payments; reduces the borrowing rate of the Term Loan; and removes share repurchases and certain optional debt prepayments from our fixed charge coverage ratio calculation. Accordingly, we believe the amendment provides additional stability to our long-term capital structure and significantly improves our flexibility and ability to execute on our strategic plans."
-continued-
Unifi Announces Fourth Quarter and Year End Results – page 3
Roger Berrier, President and Chief Operating Officer of Unifi, added: “Fiscal 2013 was another successful year for our premier value-added yarns, particularly Repreve, our flagship product. As we near 100% capacity utilization of our Repreve Recycling Center in Yadkinville, N.C., the Company has recently announced plans to expand both our capacity and flexibility to produce Repreve and our other premier value-added yarns. The expanded capacity will help keep us on track to drive growth of our premier value-added product portfolio, which is a cornerstone of our overall mix enrichment strategy.”
The Company will provide additional commentary regarding its fourth quarter and year end results during its earnings conference call on July 25, 2013, at 8:30 a.m. Eastern Time. The call will be webcast live at http://investor.unifi.com/ and will be available for replay approximately two hours after the live event and archived for at least twelve months. Additional supporting materials and information related to the call, as well as the Company's financial results for the June 2013 quarter will also be available at http://investor.unifi.com/.
Unifi, Inc. (NYSE: UFI) is a diversified producer and processor of multi-filament polyester and nylon textured yarns and related raw materials. The Company adds value to the supply chain and enhances consumer demand for its products through the development and introduction of branded yarns that provide unique performance, comfort and aesthetic advantages. Key Unifi brands include, but are not limited to: AIO® - all-in-one performance yarns, SORBTEK®, A.M.Y.®, MYNX® UV, REPREVE®, REFLEXX®, MICROVISTA® and SATURA®. Unifi's yarns and brands are readily found in home furnishings, apparel, legwear, and sewing thread, as well as industrial, automotive, military, and medical applications. For more information about Unifi, visit www.unifi.com, or to learn more about REPREVE®, visit www.repreve.com.
###
Financial Statements to Follow
Unifi Announces Fourth Quarter and Year End Results – page 4
CONSOLIDATED BALANCE SHEETS (Unaudited)
(amounts in thousands, except share and per share amounts)
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June 30, 2013 |
June 24, 2012 |
|||||||
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ASSETS |
||||||||
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Cash and cash equivalents |
$ | 8,755 | $ | 10,886 | ||||
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Receivables, net |
98,392 | 99,236 | ||||||
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Inventories |
110,667 | 112,750 | ||||||
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Income taxes receivable |
1,388 | 596 | ||||||
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Deferred income taxes |
1,715 | 7,807 | ||||||
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Other current assets |
5,913 | 6,722 | ||||||
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Total current assets |
226,830 | 237,997 | ||||||
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Property, plant and equipment, net |
115,164 | 127,090 | ||||||
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Deferred income taxes |
2,196 | 1,290 | ||||||
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Intangible assets, net |
7,772 | 9,771 | ||||||
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Investments in unconsolidated affiliates |
93,261 | 95,763 | ||||||
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Other non-current assets |
10,243 | 10,322 | ||||||
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Total assets |
$ | 455,466 | $ | 482,233 | ||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
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Accounts payable |
$ | 45,544 | $ | 48,541 | ||||
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Accrued expenses |
18,485 | 14,281 | ||||||
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Income taxes payable |
851 | 1,332 | ||||||
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Current portion of long-term debt |
65 | 7,237 | ||||||
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Total current liabilities |
64,945 | 71,391 | ||||||
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Long-term debt |
97,688 | 114,315 | ||||||
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Other long-term liabilities |
5,053 | 4,953 | ||||||
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Deferred income taxes |
1,300 | 794 | ||||||
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Total liabilities |
168,986 | 191,453 | ||||||
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Commitments and contingencies |
||||||||
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Common stock, $0.10 par (500,000,000 shares authorized, 19,205,209 and 20,090,094 shares outstanding) |
1,921 | 2,009 | ||||||
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Capital in excess of par value |
36,375 | 34,723 | ||||||
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Retained earnings |
252,112 | 252,763 | ||||||
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Accumulated other comprehensive income |
(5,500 | ) | 28 | |||||
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Total Unifi, Inc. shareholders’ equity |
284,908 | 289,523 | ||||||
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Non-controlling interest |
1,572 | 1,257 | ||||||
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Total shareholders’ equity |
286,480 | 290,780 | ||||||
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Total liabilities and shareholders’ equity |
$ | 455,466 | $ | 482,233 | ||||
-continued-
Unifi Announces Fourth Quarter and Year End Results – page 5
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(amounts in thousands, except per share amounts)
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For the Three Months Ended |
For the Fiscal Years Ended |
|||||||||||||||
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June 30, 2013 |
June 24, 2012 |
June 30, 2013 |
June 24, 2012 |
|||||||||||||
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Net sales |
$ | 200,742 | $ | 187,926 | $ | 713,962 | $ | 705,086 | ||||||||
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Cost of sales |
175,030 | 169,832 | 640,858 | 650,690 | ||||||||||||
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Gross profit |
25,712 | 18,094 | 73,104 | 54,396 | ||||||||||||
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Selling, general and administrative expenses |
13,445 | 10,977 | 47,386 | 43,482 | ||||||||||||
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(Benefit) provision for bad debts |
(411 | ) | (207 | ) | (154 | ) | 211 | |||||||||
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Other operating expense, net |
1,414 | 953 | 3,191 | 2,071 | ||||||||||||
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Operating income |
11,264 | 6,371 | 22,681 | 8,632 | ||||||||||||
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Interest income |
(190 | ) | (208 | ) | (698 | ) | (1,921 | ) | ||||||||
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Interest expense |
448 | 3,282 | 4,489 | 16,073 | ||||||||||||
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Loss on extinguishment of debt |
— | 2,741 | 1,102 | 3,203 | ||||||||||||
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Loss on previously held equity interest |
— | — | — | 3,656 | ||||||||||||
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Other non-operating expense (income) |
122 | — | 218 | (1,488 | ) | |||||||||||
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Equity in earnings of unconsolidated affiliates |
(4,732 | ) | (5,574 | ) | (11,444 | ) | (19,740 | ) | ||||||||
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Income before income taxes |
15,616 | 6,130 | 29,014 | 8,849 | ||||||||||||
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Provision (benefit) for income taxes |
5,385 | (4,919 | ) | 13,344 | (1,979 | ) | ||||||||||
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Net income including non-controlling interest |
10,231 | 11,049 | 15,670 | 10,828 | ||||||||||||
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Less: net (loss) attributable to non-controlling interest |
(285 | ) | (229 | ) | (965 | ) | (663 | ) | ||||||||
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Net income attributable to Unifi, Inc. |
$ | 10,516 | $ | 11,278 | $ | 16,635 | $ | 11,491 | ||||||||
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Net income attributable to Unifi, Inc. per common share: |
||||||||||||||||
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Basic |
$ | 0.54 | $ | 0.56 | $ | 0.84 | $ | 0.57 | ||||||||
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Diluted |
$ | 0.52 | $ | 0.55 | $ | 0.80 | $ | 0.56 | ||||||||
-continued-
Unifi Announces Fourth Quarter and Year End Results – page 6
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(amounts in thousands)
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For The Years Ended |
||||||||
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June 30, 2013 |
June 24, 2012 |
|||||||
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Cash and cash equivalents at beginning of year |
$ | 10,886 | $ | 27,490 | ||||
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Operating activities: |
||||||||
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Net income including non-controlling interest |
15,670 | 10,828 | ||||||
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Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities: |
||||||||
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Equity in earnings of unconsolidated affiliates |
(11,444 | ) | (19,740 | ) | ||||
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Dividends received from unconsolidated affiliates |
14,940 | 10,616 | ||||||
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Depreciation and amortization expense |
24,584 | 27,135 | ||||||
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Loss on extinguishment of debt |
1,102 | 3,203 | ||||||
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Loss on previously held equity interest |
— | 3,656 | ||||||
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Non-cash compensation expense, net |
2,287 | 2,382 | ||||||
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Excess tax benefit on stock-based compensation plans |
(762 | ) | — | |||||
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Deferred income taxes |
6,010 | (6,933 | ) | |||||
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Other |
690 | 523 | ||||||
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Changes in assets and liabilities, excluding effects of foreign currency adjustments: |
||||||||
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Receivables, net |
(858 | ) | (4,496 | ) | ||||
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Inventories |
(394 | ) | 13,140 | |||||
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Other current assets and income taxes receivable |
(452 | ) | (1,650 | ) | ||||
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Accounts payable and accrued expenses |
(498 | ) | 3,698 | |||||
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Income taxes payable |
(366 | ) | 947 | |||||
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Net cash provided by operating activities |
50,509 | 43,309 | ||||||
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Investing activities: |
||||||||
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Capital expenditures |
(8,809 | ) | (6,354 | ) | ||||
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Investments in unconsolidated affiliates |
— | (360 | ) | |||||
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Other investments |
(1,743 | ) | — | |||||
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Proceeds from other investments |
694 | — | ||||||
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Acquisition, net of cash acquired |
— | (356 | ) | |||||
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Proceeds from sale of assets |
430 | 507 | ||||||
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Other |
(343 | ) | (295 | ) | ||||
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Net cash used in investing activities |
(9,771 | ) | (6,858 | ) | ||||
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Financing activities: |
||||||||
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Payments of notes payable |
— | (134,010 | ) | |||||
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Proceeds from revolving credit facilities |
116,700 | 160,600 | ||||||
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Payments on revolving credit facilities |
(115,200 | ) | (144,200 | ) | ||||
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Proceeds from issuance of term loans |
— | 80,000 | ||||||
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Payments on term loans |
(28,330 | ) | (9,769 | ) | ||||
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Payments of debt financing fees |
(309 | ) | (3,127 | ) | ||||
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Proceeds from related party term loan |
1,250 | — | ||||||
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Repurchase and retirement of common stock |
(19,315 | ) | — | |||||
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Contributions from non-controlling interest |
1,280 | 920 | ||||||
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Excess tax benefit on stock-based compensation plans |
762 | — | ||||||
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Other |
1,229 | (248 | ) | |||||
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Net cash used in financing activities |
(41,933 | ) | (49,834 | ) | ||||
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Effect of exchange rate changes on cash and cash equivalents |
(936 | ) | (3,221 | ) | ||||
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Net decrease in cash and cash equivalents |
(2,131 | ) | (16,604 | ) | ||||
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Cash and cash equivalents at end of year |
$ | 8,755 | $ | 10,886 | ||||
-continued-
Unifi Announces Fourth Quarter and Year End Results – page 7
RECONCILIATIONS OF NET INCOME ATTRIBUTABLE TO UNIFI, INC. TO ADJUSTED EBITDA (Unaudited)
(amounts in thousands)
The reconciliations of Net income attributable to Unifi, Inc. to EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA are as follows:
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For the Three Months Ended |
For the Fiscal Years Ended |
|||||||||||||||
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June 24, 2013 |
June 24, 2012 |
June 30, 2013 |
June 24, 2012 |
|||||||||||||
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Net income attributable to Unifi, Inc. |
$ | 10,516 | $ | 11,278 | $ | 16,635 | $ | 11,491 | ||||||||
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Provision (benefit) for income taxes |
5,385 | (4,919 | ) | 13,344 | (1,979 | ) | ||||||||||
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Interest expense, net |
258 | 3,074 | 3,791 | 14,152 | ||||||||||||
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Depreciation and amortization expense |
5,142 | 6,533 | 23,860 | 26,225 | ||||||||||||
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EBITDA |
21,301 | 15,966 | 57,630 | 49,889 | ||||||||||||
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Non-cash compensation expense, net |
391 | 378 | 2,287 | 2,382 | ||||||||||||
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Loss on extinguishment of debt |
— | 2,741 | 1,102 | 3,203 | ||||||||||||
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Loss on previously held equity interest |
— | — | — | 3,656 | ||||||||||||
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Operating expenses for Repreve Renewables |
374 | 309 | 1,293 | 911 | ||||||||||||
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Restructuring charges and startup costs |
1,135 | (84 | ) | 1,285 | 209 | |||||||||||
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Other |
(170 | ) | 334 | 497 | (710 | ) | ||||||||||
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Adjusted EBITDA Including Equity Affiliates |
23,031 | 19,644 | 64,094 | 59,540 | ||||||||||||
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Equity in earnings of unconsolidated affiliates |
(4,732 | ) | (5,574 | ) | (11,444 | ) | (19,740 | ) | ||||||||
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Adjusted EBITDA |
$ | 18,299 | $ | 14,070 | $ | 52,650 | $ | 39,800 | ||||||||
-continued-
Unifi Announces Fourth Quarter and Year End Results – page 8
NON-GAAP FINANCIAL MEASURES
Included in this presentation are certain non-GAAP financial measures designed to complement the financial information presented in accordance with generally accepted accounting principles in the United States of America ("GAAP") because management believes such measures are useful to investors.
EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA
EBITDA represents net income or loss attributable to Unifi, Inc. before income tax expense, net interest expense, and depreciation and amortization expense (excluding interest portion of amortization). Adjusted EBITDA Including Equity Affiliates represents EBITDA adjusted to exclude non-cash compensation expense net of distributions, gains or losses on extinguishment of debt, loss on previously held equity interest, operating expenses for Repreve Renewables, restructuring charges and startup costs, and certain other adjustments. Such other adjustments include gains or losses on sales or disposals of property, plant and equipment, currency and derivative gains or losses, certain employee healthcare expenses, and other operating or non-operating income or expense items necessary to understand the underlying results of the Company. Adjusted EBITDA represents Adjusted EBITDA Including Equity Affiliates adjusted to exclude equity in earnings and losses of unconsolidated affiliates. We present Adjusted EBITDA as a supplemental measure of our operating performance. We also present Adjusted EBITDA because we believe such measure is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.
EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA are alternative views of performance used by management, and we believe that investors' understanding of our performance is enhanced by disclosing these performance measures. Our management uses Adjusted EBITDA: (i) as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of (a) items directly related to our asset base (primarily depreciation and amortization) and (b) items that we would not expect to occur as a part of our normal operating business; (ii) for planning purposes, including the preparation of our annual operating budget; (iii) as a valuation measure for evaluating our operating performance and our capacity to incur and service debt, fund capital expenditures and expand our business; and (iv) as one measure in determining the value of other acquisitions and dispositions. Adjusted EBITDA is also a key performance metric utilized in the determination of variable compensation.
We believe that the use of EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA as operating performance measures provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets, among otherwise comparable companies. We also believe Adjusted EBITDA is an appropriate supplemental measure of debt service capacity, because cash expenditures on interest are, by definition, available to pay interest, and tax expense is inversely correlated to interest expense because tax expense decreases as deductible interest expense increases; and depreciation and amortization are non-cash charges. Equity in earnings and losses of unconsolidated affiliates is excluded because such earnings or losses do not reflect our operating performance. The other items excluded from Adjusted EBITDA are excluded in order to better reflect the performance of our continuing operations.
In evaluating EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to the adjustments in this presentation. Our presentation of EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, operating income or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity.
-continued-
Unifi Announces Fourth Quarter and Year End Results – page 9
NON-GAAP FINANCIAL MEASURES
(continued)
Each of our Adjusted EBITDA and Adjusted EBITDA Including Equity Affiliates measures has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
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it does not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments; |
|
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it does not reflect changes in, or cash requirements for, our working capital needs; |
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it does not reflect the interest expense or the cash requirements necessary to service interest or to make principal payments on our debt; |
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although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and our Adjusted EBITDA (or our Adjusted EBITDA Including Equity Affiliates) measure does not reflect any cash requirements for such replacements; |
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it is not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows; |
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it does not reflect the impact of earnings or charges resulting from matters we consider not indicative of our on-going operations; |
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it does not reflect limitations on or costs related to transferring earnings from our subsidiaries to us; and |
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other companies in our industry may calculate this measure differently than we do, which may limit its usefulness as a comparative measure. |
Because of these limitations, neither Adjusted EBITDA nor Adjusted EBITDA Including Equity Affiliates should be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations, including those under our outstanding debt obligations. You should compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as supplemental information.
-continued-
Unifi Announces Fourth Quarter and Year End Results – page 10
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Certain statements included herein contain forward-looking statements within the meaning of federal securities laws about the financial condition and results of operations of Unifi, Inc. (the "Company") that are based on management's current expectations, estimates and projections about the markets in which the Company operates, as well as management's beliefs and assumptions. Words such as "expects," "anticipates," "believes," "estimates," variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed in, or implied by, such forward-looking statements. Moreover, such forward-looking statements reflect management's judgment only as of the date hereof, and the Company undertakes no obligation to update publicly any of these forward-looking statements to reflect new information, future events or otherwise. For these and other reasons, readers should use caution in considering forward-looking statements, and should not place undue reliance on any of them.
Factors that may cause actual outcome and results to differ materially from those expressed in, or implied by, our forward-looking statements include, but are not necessarily limited to, availability, sourcing and pricing of raw materials; the success of our subsidiaries; pressures on sales prices and volumes due to competition and economic conditions; reliance on and financial viability of significant customers; operating performance of joint ventures and other equity investments; technological advancements; employee relations; changes in construction spending, capital expenditures and long-term investments (including those related to unforeseen acquisition opportunities); continued availability of financial resources through financing arrangements and operations; market price of the Company’s stock; restrictions imposed by the Company’s credit facility; outcomes of pending or threatened legal proceedings; negotiation of new or modifications of existing contracts for asset management and for property and equipment construction and acquisition; regulations governing tax laws; other governmental and authoritative bodies' policies and legislation; and proceeds received from the sale of assets held for disposal. In addition to these illustrative factors, forward-looking statements could be impacted by general domestic and international economic and industry conditions in the markets where the Company competes, such as changes in currency exchange rates, interest and inflation rates, recession and other economic and political factors over which the Company has no control. Other risks and uncertainties may be described from time to time in the Company's other reports and filings with the Securities and Exchange Commission.
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Unifi, Inc. For the Fourth Quarter and Fiscal Year Ended June 30, 2013 Conference Call
Slide Presentation
Exhibit 99.2
Cautionary Statement
Unifi, Inc.
Fourth Qtr. Conf. Call
July 25, 2013
(Unaudited)
Certain statements included herein contain forward-looking statements within the meaning of federal securities laws about the financial condition and results of operations of Unifi, Inc. (the "Company") that are based on management's current expectations, estimates and projections about the markets in which the Company operates, as well as management's beliefs and assumptions. Words such as "expects," "anticipates," "believes," "estimates," variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed in, or implied by, such forward-looking statements. Moreover, such forward-looking statements reflect management's judgment only as of the date hereof, and the Company undertakes no obligation to update publicly any of these forward-looking statements to reflect new information, future events or otherwise. For these and other reasons, readers should use caution in considering forward-looking statements, and should not place undue reliance on any of them. Factors that may cause actual outcome and results to differ materially from those expressed in, or implied by, our forward-looking statements include, but are not necessarily limited to, availability, sourcing and pricing of raw materials; the success of our subsidiaries; pressures on sales prices and volumes due to competition and economic conditions; reliance on and financial viability of significant customers; operating performance of joint ventures and other equity investments; technological advancements; employee relations; changes in construction spending, capital expenditures and long-term investments (including those related to unforeseen acquisition opportunities); continued availability of financial resources through financing arrangements and operations; market price of the Company’s stock; restrictions imposed by the Company’s credit facility; outcomes of pending or threatened legal proceedings; negotiation of new or modifications of existing contracts for asset management and for property and equipment construction and acquisition; regulations governing tax laws; other governmental and authoritative bodies' policies and legislation; and proceeds received from the sale of assets held for disposal. In addition to these illustrative factors, forward-looking statements could be impacted by general domestic and international economic and industry conditions in the markets where the Company competes, such as changes in currency exchange rates, interest and inflation rates, recession and other economic and political factors over which the Company has no control. Other risks and uncertainties may be described from time to time in the Company's other reports and filings with the Securities and Exchange Commission.
Net Sales and Gross Profit Highlights
(Amounts in Thousands, Except Percentages)
Unifi, Inc.
Fourth Qtr. Conf. Call
July 25, 2013
(Unaudited)
Quarter over Quarter Year Over Year
June 30, 2013 vs. June 24, 2012 June 30, 2013 vs. June 24, 2012
Volume Price Volume Price
Net Sales:
Polyester 6.7% 0.7% 2.5% (1.3%)
Nylon 10.0% (4.6%) 3.9% (3.3%)
International 6.4% 0.6% 8.5% (6.4%)
Consolidated 6.9% (0.1%) 4.2% (2.9%)
For the Three Months Ended For the Fiscal Years Ended
June 30, 2013 June 24, 2012 June 30, 2013 June 24, 2012
Gross Profit:
Polyester $13,485 $7,863 $35,162 $19,673
Nylon 6,284 4,677 18,052 16,956
International 5,943 5,554 19,890 17,767
Consolidated $25,712 $18,094 $73,104 $54,396
Income Statement Highlights (Amounts in Thousands, Except Percentages and Per Share Amounts)
Unifi, Inc.
Fourth Qtr. Conf. Call
July 25, 2013
(Unaudited)
For the Three Months Ended
June 30, 2013 June 24, 2012
Net sales $200,742 100.0% $187,926 100.0%
Gross profit 25,712 12.8% 18,094 9.6%
Selling, general and administrative expenses 13,445 6.7% 10,977 5.8%
Operating income 11,264 5.6% 6,371 3.4%
Interest expense 448 3,282
Income before income taxes 15,616 7.8% 6,130 3.3%
Net income attributable to Unifi, Inc. 10,516 5.2% 11,278 6.0%
Earnings per share (basic) $0.54 $0.56
Weighted average shares outstanding 19,402 20,090
Income Statement Highlights (Amounts in Thousands, Except Percentages and Per Share Amounts)
Unifi, Inc.
Fourth Qtr. Conf. Call
July 25, 2013
(Unaudited)
For the Fiscal Years Ended
June 30, 2013 June 24, 2012
Net sales $713,962 100.0% $705,086 100.0%
Gross profit 73,104 10.2% 54,396 7.7%
Selling, general and administrative expenses 47,386 6.6% 43,482 6.2%
Operating income 22,681 3.2% 8,632 1.2%
Interest expense 4,489 16,073
Income before income taxes 29,014 4.1% 8,849 1.3%
Net income attributable to Unifi, Inc. 16,635 2.3% 11,491 1.6%
Earnings per share (basic) $0.84 $0.57
Weighted average shares outstanding 19,909 20,088
Equity Affiliates Highlights
(Amounts in thousands, Except Percentages)
Unifi, Inc.
Fourth Qtr. Conf. Call
July 25, 2013
(Unaudited)
For the Three Months Ended For the Fiscal Years Ended
June 30, 2013 June 24, 2012 June 30, 2013 June 24, 2012
Earnings:
Parkdale America (34%) $4,491 $5,146 $9,481 $19,360
Other 241 428 1,963 380
Total $4,732 $5,574 $11,444 $19,740
Distributions:
Parkdale America (34%) $3,409 $5,966 $13,440 $9,616
Other 1,000 500 1,500 1,000
Total $4,409 $6,466 $14,940 $10,616
Reconciliations of Net Income to Adjusted EBITDA (Amounts in Thousands)
Unifi, Inc.
Fourth Qtr. Conf. Call
July 25, 2013
(Unaudited)
For the Three Months Ended For the Fiscal Years Ended
June 30, 2013 June 24, 2012 June 30, 2013 June 24, 2012
Net income attributable to Unifi, Inc. $10,516 $11,278 $16,635 $11,491
Provision (benefit) for income taxes 5,385 (4,919) 13,344 (1,979)
Interest expense, net 258 3,074 3,791 14,152
Depreciation and amortization expense 5,142 6,533 23,860 26,225
EBITDA 21,301 15,966 57,630 49,889
Non-cash compensation expense, net 391 378 2,287 2,382
Loss on extinguishment of debt - 2,741 1,102 3,203
Loss on previously held equity interest - - - 3,656
Operating expenses for Repreve Renewables 374 309 1,293 911
Restructuring charges and startup costs 1,135 (84) 1,285 209
Other (170) 334 497 (710)
Adjusted EBITDA Including Equity Affiliates 23,031 19,644 64,094 59,540
Equity in earnings of unconsolidated affiliates (4,732) (5,574) (11,444) (19,740)
Adjusted EBITDA $18,299 $14,070 $52,650 $39,800
Working Capital Highlights (Amounts in Thousands)
Unifi, Inc.
Fourth Qtr. Conf. Call
July 25, 2013
(Unaudited)
June 30, March 24, June 24,
2013 2013 2012
Receivables, net $98,392 $97,219 $99,236
Inventory 110,667 108,749 112,750
Accounts payable (45,544) (53,561) (48,541)
Accrued expenses (18,383) (11,640) (13,883)
Adjusted Working Capital $145,132 $140,767 $149,562
Adjusted Working Capital $145,132 $140,767 $149,562
Cash 8,755 15,901 10,886
Other current assets 9,016 10,425 15,125
Accrued interest (102) (205) (398)
Other current liabilities (916) (8,130) (8,569)
Working Capital $161,885 $158,758 $166,606
Capital Structure (Amounts in Thousands)
Unifi, Inc.
Fourth Qtr. Conf. Call
July 25, 2013
(Unaudited)
June 30, March 24, June 24,
2013 2013 2012
Cash $8,755 $15,901 $10,886
Revolver Availability, Net 36,105 34,199 37,122
Total Liquidity $44,860 $50,100 $48,008
ABL Revolver $52,500 $51,300 $51,000
ABL Term Loan 42,800 44,600 50,000
Term B Loan - - 20,515
Other 2,453 2,468 37
Total Debt $97,753 $98,368 $121,552
Cash 8,755 15,901 10,886
Net Debt $88,998 $82,467 $110,666
Key Dates
Unifi, Inc.
Fourth Qtr. Conf. Call
July 25, 2013
(Unaudited)
Form 10-K for the fiscal year ended June 30, 2013
Filing due on Friday, September 13, 2013
7th Annual Investor Update Meeting
Monday, September 16, 2013
Hilton New York Hotel, NY, NY
Contact: Rebecca Landas
(336) 316-5676
rlandas@unifi.com
Quiet period for the quarter ended September 29, 2013
Begins on Friday, September 27, 2013
Extends through our Earnings Release date
Expected to be Thursday, October 24, 2013
Non-GAAP Financial Measures
Unifi, Inc.
Fourth Qtr. Conf. Call
July 25, 2013
(Unaudited)
Included in this presentation are certain non-GAAP financial measures designed to complement the financial information presented in accordance with generally accepted accounting principles in the United States of America ("GAAP") because management believes such measures are useful to investors. EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA EBITDA represents net income or loss attributable to Unifi, Inc. before income tax expense, net interest expense, and depreciation and amortization expense (excluding interest portion of amortization). Adjusted EBITDA Including Equity Affiliates represents EBITDA adjusted to exclude non-cash compensation expense net of distributions, gains or losses on extinguishment of debt, loss on previously held equity interest, operating expenses for Repreve Renewables, restructuring charges and startup costs, and certain other adjustments. Such other adjustments include gains or losses on sales or disposals of property, plant and equipment, currency and derivative gains or losses, certain employee healthcare expenses, and other operating or non-operating income or expense items necessary to understand the underlying results of the Company. Adjusted EBITDA represents Adjusted EBITDA Including Equity Affiliates adjusted to exclude equity in earnings and losses of unconsolidated affiliates. We present Adjusted EBITDA as a supplemental measure of our operating performance. We also present Adjusted EBITDA because we believe such measure is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA are alternative views of performance used by management, and we believe that investors' understanding of our performance is enhanced by disclosing these performance measures. Our management uses Adjusted EBITDA: (i) as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of (a) items directly related to our asset base (primarily depreciation and amortization) and (b) items that we would not expect to occur as a part of our normal operating business; (ii) for planning purposes, including the preparation of our annual operating budget; (iii) as a valuation measure for evaluating our operating performance and our capacity to incur and service debt, fund capital expenditures and expand our business; and (iv) as one measure in determining the value of other acquisitions and dispositions. Adjusted EBITDA is also a key performance metric utilized in the determination of variable compensation. We believe that the use of EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA as operating performance measures provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets, among otherwise comparable companies. We also believe Adjusted EBITDA is an appropriate supplemental measure of debt service capacity, because cash expenditures on interest are, by definition, available to pay interest, and tax expense is inversely correlated to interest expense because tax expense decreases as deductible interest expense increases; and depreciation and amortization are non-cash charges. Equity in earnings and losses of unconsolidated affiliates is excluded because such earnings or losses do not reflect our operating performance. The other items excluded from Adjusted EBITDA are excluded in order to better reflect the performance of our continuing operations. In evaluating EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to the adjustments in this presentation. Our presentation of EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, operating income or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity.
Non-GAAP Financial Measures - continued
Unifi, Inc.
Fourth Qtr. Conf. Call
July 25, 2013
(Unaudited)
Each of our Adjusted EBITDA and Adjusted EBITDA Including Equity Affiliates measures has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
• it does not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments;
• it does not reflect changes in, or cash requirements for, our working capital needs;
• it does not reflect the interest expense or the cash requirements necessary to service interest or to make principal payments on our debt;
• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future,
and our Adjusted EBITDA (or our Adjusted EBITDA Including Equity Affiliates) measure does not reflect any cash requirements for such replacements;
• it is not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows;
• it does not reflect the impact of earnings or charges resulting from matters we consider not indicative of our on-going operations;
• it does not reflect limitations on or costs related to transferring earnings from our subsidiaries to us; and
• other companies in our industry may calculate this measure differently than we do, which may limit its usefulness as a comparative measure.
Because of these limitations, neither Adjusted EBITDA nor Adjusted EBITDA Including Equity Affiliates should be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations, including those under our outstanding debt obligations. You should compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as supplemental information.