Unifi Inc announced that it has revised its expectations for the financial results for the quarter ended December 2006. The Company previously forecasted $10-12 million EBITDA in its earnings call on October 26, 2006. The Company now expects actual results to be less than 50% of this forecast.
"The drop in volume, primarily in our partially oriented yarn, or POY business that occurred in the month of September has continued through October and November, despite the reduction in sales price to our customers," said Bill Lowe, Unifi's Chief Operating Officer and CFO.
"We are seeing a significant impact from the low POY volumes. Although raw material prices have declined since a high in September, we are still working off the higher priced inventory as this business unit is on the first-in-first-out method for inventory, which has had an additional negative effect on earnings, and the low volume has the additional effect of lengthening this process.”
“Our customers tell us that we have not lost market share in this period, but that the demand from retailers has slowed some business. Certain customers that built excessive inventory in the summer months also tell us that they are continuing to work those inventories down."
"December is typically a slow month because of the holidays, so we do not plan any long-term actions beyond those already planned from an operational point of view until actual sales volumes are clear in the month of January."
As of December 6, 2006, after paying interest on its bond interest obligation, the Company had approximately $16.9 million of cash-on-hand in the U.S. and total cash-on-hand from all operations of approximately $28.6 million.
The Company will update its annual full-year forecast during its earnings call on January 25, 2007.
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