EX-99.2 3 g23132exv99w2.htm EX-99.2 exv99w2
Unifi, Inc.
Third Qtr. Conf. Call
April 29, 2010
Unifi, Inc.
Third Quarter Ended
March 28, 2010
Conference Call

 

 

Unifi, Inc.
Third Qtr. Conf. Call
April 29, 2010
Cautionary Statement
Certain statements included herein contain forward-looking statements within the meaning of federal securities laws about Unifi, Inc.’s (the “Company”) financial condition and results of operations 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 or forecasted in, or implied by, such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s judgment only as of the date hereof. The Company undertakes no obligation to update publicly any of these forward-looking statements to reflect new information, future events or otherwise.
Factors that may cause actual outcome and results to differ materially from those expressed in, or implied by, these 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, alliances 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, outcomes of pending or threatened legal proceedings, changes in currency exchange rates, interest and inflation rates, changes in consumer spending, customer preferences, fashion trends and end-uses, regulations governing tax laws, other governmental and authoritative bodies’ policies and legislation, and the ability to sell excess assets. In addition to these representative 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.
Third Qtr. Conf. Call
April 29, 2010
Income Statement Highlights
(Amounts in thousands)
(Unaudited)
                 
    For the Quarters Ended
    March 28, 2010   March 29, 2009
Net sales from continuing operations
   $ 154,687     $ 119,094  
Depreciation and amortization expense
     6,485       6,984  
Selling, general and administrative expense
     11,252       9,507  
Interest expense
     5,697       5,879  
Income (loss) from continuing operations before income taxes
     2,708       (33,052 )
Income (loss) from continuing operations
     771       (32,951 )
Net income (loss)
     771       (32,996 )

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Unifi, Inc.
Third Qtr. Conf. Call
April 29, 2010
Income Statement Highlights
(Amounts in thousands)
(Unaudited)
                 
    For the Nine-Months Ended
    March 28, 2010   March 29, 2009
Net sales from continuing operations
   $ 439,793     $ 413,830  
Depreciation and amortization expense
     19,829       24,375  
Selling, general and administrative expense
     34,568       29,356  
Interest expense
     16,412       17,592  
Income (loss) from continuing operations before income taxes
     10,809       (40,409 )
Income (loss) from continuing operations
     5,213       (42,807 )
Net income (loss)
     5,213       (42,740 )

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Unifi, Inc.
Third Qtr. Conf. Call
April 29, 2010
Volume and Pricing Highlights
(Amounts in thousands, except percentages)
(Unaudited)
                                 
    Quarter over quarter   Year over year
    March 2010 vs. March 2009   March 2010 vs. March 2009
    Volume   Price   Volume   Price
Polyester
     29.5 %     2.3 %     13.6 %     -7.4 %
Nylon
     38.6 %     -13.4 %     5.7 %     0.6 %
 
                                
Consolidated
     30.6 %     -0.7 %     12.6 %     -6.4 %
 
                                
 
    Quarter over trailing quarter
    March 2010 vs. December 2009
    Volume   Price
Polyester
     7.1 %     0.9 %
Nylon
     29.1 %     -18.3 %
 
                
Consolidated
     9.6 %     -0.8 %
 
                

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Unifi, Inc.
Third Qtr. Conf. Call
April 29, 2010
Balance Sheet Highlights
(Amounts in thousands, except days in receivables/payables)
(Unaudited)
                                 
    March     December     September     June  
    2010     2009     2009     2009  
Cash
   $ 52,496     $ 54,442     $ 55,700     $ 42,659  
 
                                
Restricted Cash-Domestic
     —       —       —       —  
Restricted Cash-Foreign Deposits
     1,818       3,609       5,843       6,930  
 
                        
Total Restricted Cash
     1,818       3,609       5,843       6,930  
 
                        
Total Cash
   $ 54,314     $ 58,051     $ 61,543     $ 49,589  
 
                        
 
                                
Short-Term Debt
   $ 2,187     $ 3,977     $ 6,212     $ 6,845  
Long-Term Debt
     179,010       179,391       179,391       180,344  
 
                        
Total Debt
     181,197       183,368       185,603       187,189  
 
                        
Net Debt
   $ 126,883     $ 125,317     $ 124,060     $ 137,600  
 
                        
 
                                
Equity
   $ 255,273     $ 255,951     $ 256,508     $ 224,969  
 
                                
Net Working Capital (1)
   $ 134,306     $ 128,872     $ 126,363     $ 126,151  
Days in receivables
     50       45       51       51  
Days in payables
     22       20       25       19  
 
(1)   Includes only Accounts Receivable, Inventories, Accounts Payable, and Accrued Expenses; excludes discontinued operations

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Unifi, Inc.
Third Qtr. Conf. Call
April 29, 2010
Equity Affiliates Highlights
(Amounts in thousands, except percentages)
(Unaudited)
                                 
    Quarter Ended March 28, 2010     Year-To-Date March 28, 2010  
    Earnings (Loss)     Distributions     Earnings (Loss)     Distributions  
Parkdale America (34%)
   $ 1,994     $ —     $ 6,070     $ 1,611  
Other
     197       —       515       —  
Intercompany Eliminations
     (16 )     —       (738 )     —  
 
                        
Total
   $ 2,175     $ —     $ 5,847     $ 1,611  
 
                        

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Unifi, Inc.
Third Qtr. Conf. Call
April 29, 2010
Adjusted EBITDA Reconciliation
to Net Income
(Amounts in thousands)
(Unaudited)
                                 
    /----------------------Quarters Ended----------------------\   Year-To-Date  
    September     December     March     March  
    2009     2009     2010     2010  
Net income
   $ 2,489     $ 1,953     $ 771     $ 5,213  
Provision for income taxes
     2,535       1,124       1,937       5,596  
Interest expense, net
     4,746       4,389       4,922       14,057  
Depreciation and amortization expense
     6,696       6,648       6,485       19,829  
Equity in earnings of unconsolidated affiliates
     (2,063 )     (1,609 )     (2,175 )     (5,847 )
Non-cash compensation, net of distributions
     770       846       683       2,299  
(Gain) loss on sales or disposals of PP&E
     (94 )     37       1,010       953  
Currency and hedging (gains) losses
     13       (133 )     61       (59 )
Write down of long-lived assets
     100       —       —       100  
Gain on extinguishment of debt
     (54 )     —       —       (54 )
Restructuring charges
     —       —       254       254  
Gain from sale of nitrogen credits
     —       —       (1,400 )     (1,400 )
UCA startup costs
     —       —       167       167  
 
                        
Adjusted EBITDA
   $ 15,138     $ 13,255     $ 12,715     $ 41,108  
 
                        

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Unifi, Inc.
Third Qtr. Conf. Call
April 29, 2010
Non-GAAP
Financial Measures
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 because management believes such measures are useful to investors.
     Adjusted EBITDA
     Adjusted EBITDA represents net income or loss before income tax expense, interest expense, net, depreciation and amortization expense, adjusted to exclude equity in earnings and losses of unconsolidated affiliates, write down of long-lived assets, non-cash compensation expense net of distributions, gains or losses on sales or disposals of property, plant and equipment, currency and hedging gains and losses, gain on extinguishment of debt, restructuring charges, gain from the sale of nitrogen credits and UCA startup costs. We present Adjusted EBITDA as a supplemental measure of our operating performance and ability to service debt. 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 and in measuring the ability of “high-yield” issuers to meet debt service obligations.
Adjusted EBITDA is an alternative view of performance used by management and we believe that investors’ understanding of our performance is enhanced by disclosing this performance measure. 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) unusual items that we would not expect to occur as a part of our normal business on a regular basis; (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 Adjusted EBITDA as an operating performance measure 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 goes down as deductible interest expense goes up; 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 Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative 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.

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Unifi, Inc.
Third Qtr. Conf. Call
April 29, 2010
Non-GAAP
Financial Measures — continued
Our Adjusted EBITDA measure 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 significant interest expense or the cash requirements necessary to service interest or 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 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 ongoing 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, limiting its usefulness as a comparative measure.
     Because of these limitations, Adjusted EBITDA should not 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 the notes. You should compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally.

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