Another significant jump in Unifi Inc.’s income-tax provision contributed to a 90.7% plunge in fourth-quarter net income to $1 million.
Unifi reported Wednesday it had a $3.95 million tax provision for the fourth quarter, which ended June 30. By comparison, it had an $807,000 tax benefit in the fourth quarter of fiscal 2018.
The yarn manufacturer, based in Greensboro, has about 1,000 production employees in Yadkinville and more than 250 in Rockingham County.
The corporate tax-rate cut that went into effect Jan. 1, 2018, has had a ripple effect for U.S. corporations with significant international sales, including Hanesbrands Inc., Herbalife Ltd., Kontoor Brands and Unifi.
The tax reform included taxes being put on some foreign earnings of U.S.-based companies that had not been taxed before. Companies have spent fiscal years 2018 and 2019 adjusting to the income-tax changes.
Diluted earnings were 5 cents a share, compared with 58 cents a year ago. The year-ago period had a 19-cent gain from the tax benefit.
The average earnings forecast was 4 cents by one analyst surveyed by Zacks Investment Research. Analysts typically do not include one-time gains and charges in their forecasts.
The company reported a 1% decrease in net sales to $179.5 million, as well as a 2.4% increase in cost of sales at $161.1 million.
Unifi reported an $842,000 revenue gain from its Parkdale America LLC affiliate.
For the full year, Unifi reported net income of $2.45 million, down from $31.7 million in fiscal 2018.
Net sales were up 4.4% to $708.8 million, while cost of sales climbed 8.4% to $642.5 million. It had an income-tax provision of $7.55 million, compared with a $1.49 million tax benefit in fiscal 2018.
“Despite the persistent headwinds we faced throughout fiscal 2019, we achieved our fourth-quarter volume and profitability expectations, made progress towards revitalizing our position in the Americas, and exited fiscal 2019 with momentum,” Tom Caudle, Unifi’s president and chief executive, said in a statement.
On June 20, Unifi said the Yadkinville plant will undergo a major equipment transition by adding new yarn texturing machinery made by a Switzerland technology group. Unifi did not project a net gain of jobs from the new equipment.
“There will be an implementation timetable established based on availability of the equipment and installation timeline,” Caudle said. “We would expect first production in late 2020.”
Unifi said its premium value-added yarns, led by recycled yarn Repreve, represented 51% of its revenue in the fourth quarter.
Unifi’s fourth-quarter sales breakdown of its yarn product mix included an 8.5% decrease in polyester to $89.1 million, a 20.1% increase in international sales to just under $67.5 million and a 17.6% decrease in nylon to just under $22 million. Unifi has split its international revenue reporting into two categories, Brazil and Asia.
Unifi provided its initial fiscal 2020 financial guidance of mid-single-digit percentage growth for net sales, operating income in a range of $22 million to $27 million, and capital expenditures of $25 million.
The report was again an unusually busy one for Unifi.
On June 26, the U.S. Commerce Department applied preliminary anti-dumping duties to certain Chinese and Indian polyester textured yarns. Unifi and Nan Ya Plastics Corp. America of Lake City, S.C., filed anti-dumping petitions in October.
Commerce responded to the influx by applying a 32% to 460% preliminary anti-dumping duty on Chinese polyester textured yarns deemed to represent “unfairly subsidized imports.” The polyester textured yarns from India were subject to a 7% to 20.4% preliminary anti-dumping duty.
Unifi said final determinations of how much it would receive in anti-dumping payments would be determined by year’s end. The anti-dumping fees are collected by U.S. Customs and Border Protection.
Unifi reported selling, general and administrative expenses fell 18.5% in the fourth quarter to $12 million. Although the manufacturer has not provided details on which expenses were reduced, it recorded $1.35 million in severance expenses during the fourth quarter.