Unifi, Inc. New · NYSE:UFI
Unifi, Inc. New — Unifi — Non-Deal Roadshow (September 2010)
45 slides from Unifi, Inc. New's roadshow presentation, Sep 20, 2010
Slide 1: Investor Meetings September 2010
INVESTOR MEETINGS September 2010
Slide 2: Cautionary Statement
Cautionary Statement 2 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
Slide 3: Participants
Participants Bill Jasper Chief Executive Officer Ron Smith Chief Financial Officer Roger Berrier Executive VP of Sales, Marketing & Asian Operations 3
Slide 4: Industry/Business
Industry/Business 4
Slide 5: Growing Global Textile Fibers Market
Growing Global Textile Fibers Market 5 ___________________________ Source: PCI Fibers Global consumption of textile fibers grows based on population and affluence Global Textile Markets Approximately 157 billion pounds of textile fibers sold annually 3%+ annual growth in global textile fibers projec
Slide 6: U.S. Textile & Apparel Industry
U.S. Textile & Apparel Industry 6 ___________________________ Source: NCTO , Textile World, and Fiber Economic Bureau Remains a large and important component of the U.S. economy Approximately a $63 billion industry in 2009 and projected to grow by 6% in 2010 Investment of $8.7 billion in PP&E from 2
Slide 7: U.S. Polyester and Nylon Market Trends
U.S. Polyester and Nylon Market Trends 7 ___________________________ Source: Fiber Economic Bureau, OTEXA U.S. Polyester and Nylon Market Rebound starting in the second half of 2009 due to demand recovery in most end-use market segments U.S. Polyester and Nylon Filament Yarn Consumption
Slide 8: Unifi Supply Chain Overview
Retailer Product Manufacturer Fabric Producer Synthetic Fiber Manufacturer POY Manufacturer Unifi Supply Chain Overview 8 Para-xylene (PX) Purified Terephthalic Acid (PTA) Mono ethylene Glycol (MEG) Polyester Raw Materials Hexamethylene- dianmine-HMDA Adipic Acid (AA) Cyclohexane Propylene Ammonia N
Slide 9: Polyester Raw Material Price Trends
Raw materials represent 60% to 65% of total costs RM price gap between U.S. and Asia narrowed since middle of 2009 FY 08 dynamics - Crude oil price spike and MEG capacity curtailment FY 09 dynamics - Deep economic recession, crude oil decline and weak demand FY 10 dynamics - Tight PTA & MEG supply,
Slide 10: Nylon Raw Material Price Trends
Nylon Raw Material Price Trends 10 ___________________________ Source: PCI Fibers, Unifi internal estimates Upward pressure seen in all nylon ingredients in last 4 quarters due to improved world-wide demand, re-tightening of supply, higher crude values and producers' improving margins
Slide 11: Company Overview
Company Overview 11
Slide 12: Texturing Process and Value-added Processes
Texturing Machines Texturing Units Value-added Processes POY Manufacture Textured Yarns After the POY is processed, the resulting textured yarn has bulk, crimp, strength and consistent dyeability It is now ready to be processed into fabric or used in other processes Package Dyeing Covering Twisting
Slide 13: Unifi's Global Operations
Unifi's Global Operations 13 Manufacturing & Office Business Unit / Office Joint Venture U.S.A. El Salvador Colombia Brazil China Israel (JV) Canada Consolidated Sales by Asset Location ($617 million in FY '10) U.S. 74% Other 5% Brazil 21%
Slide 14: U.S.A. Product Segmentation - FY 2010
U.S.A. Product Segmentation - FY 2010 Diverse product offering sells into the apparel, hosiery, furnishings, automotive and industrial markets Compliant sales account for approximately 56% of the company's total sales Large majority of U.S. customers are domestic weavers and knitters Most free trade
Slide 15: U.S. Customer & Channel Segmentation - FY 2010
U.S. Customer & Channel Segmentation - FY 2010 Fiber/yarn demanded by a wide variety of customers Approximately 650 polyester customers and approximately 200 nylon customers served from U.S. operations Top 5 U.S. customers include Polyester - Milliken, Polartec, Glen Raven, International Textile Gro
Slide 16: Leading Market Position - 2009/2010
Regional leader in the processing of multi-filament polyester and nylon yarns U.S. Nylon Covered Yarn Production Share U.S. Nylon Textured Yarn Consumption Share U.S. Polyester Textured Yarn Consumption Share ___________________________ Source: Unifi internal estimates U.S. Dyed Yarn Production Shar
Slide 17: Market Segmentation
= ONIFI. Market Segmentation
Slide 18: Unifi Sales Segmentation
Diverse product segmentation = diverse customer base Import competition varies by market segment Regional trade requirement key to volume stability for apparel and hosiery segments Continued growth opportunity for PVA products U.S. Sales Revenue by Product Segment Unifi Sales Segmentation 18 _______
Slide 19: Apparel Segment
Apparel Segment 19 U.S. Apparel Retail Sales & Inventory Days ___________________________ Source: U.S. Dept. of Commerce, OTEXA, O'Rourke Group Partners, Unifi internal estimates Consumer spending on apparel sharply improved over last two quarters Retail inventory levels (days in inventory) at lowes
Slide 20: U.S.A. Source of Synthetic Apparel Supply
U.S.A. Source of Synthetic Apparel Supply 20 ___________________________ Source: U.S. Dept. of Commerce, OTEXA, O'Rourke Group Partners, Unifi internal estimates Regional market share has stabilized and is expected to remain flat or increase in 2011 Regional break-out of 19% share consists of 4% U.S
Slide 21: Importance of Regional Trade - Synthetic Apparel
Regional Trade (NAFTA / CAFTA / ATPA) U.S. and regional trading partners provide competitive advantages High-quality for critical end-uses Product innovation Compressed supply chain/quick turns Competitive pricing Duty-free movement among participants Requires garment to be fully formed in region Co
Slide 22: Hosiery and Socks Segment
Hosiery and Socks Segment 22 ___________________________ Source: U.S. Dept. of Commerce, OTEXA, O'Rourke Group Partners, Unifi internal estimates U.S.A. Sheer Hosiery Supply by Source U.S.A. Socks Supply by Source Strong regional (NAFTA, CAFTA, ATPA) supply base vital to this segment Beneficial supp
Slide 23: Furnishings Segment
Furnishings Segment 23 U.S. Furnishings Retail Sales & Inventory Days Import Penetration by End-Use ___________________________ Source: Dept of Commerce; Mann, Armistead & Epperson, Ltd. Market dominated by U.S. domestic sources Furnishings sales dependent upon housing market Heavily influenced by c
Slide 24: Industrial and Automotive Segment
Industrial and Automotive Segment Industrial and Automotive Segment 24 Industrial Segment Categories North American Auto Production ___________________________ Source: Dept of Commerce; Mann, Autonews, Federal Reserve Source: Dept of Commerce; Mann, Autonews, Federal Reserve Source: Dept of Commerce
Slide 25: Business Focus
ONIFI. Business Focus 25
Slide 26: Our Focus for FY 2011 and Beyond
Our Focus for FY 2011 and Beyond Operating Environment Stabilization in the North American region Opportunities for incremental growth in global markets Strategy Sustain and continuously improve corporate profitability Statistical Process Control and Lean Manufacturing ($3 to $5 million of improveme
Slide 27: Formation of UCA in El Salvador; CAFTA Market Dynamics
Formation of UCA (Unifi Central America) in El Salvador Synthetic Apparel Imports from CAFTA CAFTA Market Dynamics CAFTA Market Dynamics 27 ___________________________ Source: U.S. Dept. of Commerce, OTEXA, O'Rourke Group Partners, Unifi internal estimates Apparel Sourcing Outlook - Retailer / Brand
Slide 28: Brazil Market Dynamics
Brazil Market Dynamics Polyester Textile Filament Market Trends Skilled and experienced local management team Improved demand at retail from economic recovery driving return to growth in fiber markets Market currently serviced by domestic production and imports Proven market leader in local market F
Slide 29: China Market Dynamics
China Market Dynamics Chinese Polyester Market Chinese polyester production represents 63% of global market in 2009/2010 Textile filament average annual growth was 9 to 10% from 2005 till 2009 Projected growth rates for 2010 to 2015 is estimated at 4 to 5% Specialty and PVA yarn segment accounts for
Slide 30: Premier Value Added Products
Premier Value Added Products 30
Slide 31: Branded / PVA Product Success
Sales Revenue - U.S. PVA Gross Profit versus PVA Development Expenditure PVA portfolio represents 12% of U.S. sales and 15% of consolidated sales in fiscal 2010 Products utilized in apparel, contract, home furnishings, military, socks and hospitality Steady investment in R&D and commercialization of
Slide 32: Our PVA Brands
Our PVA Brands Sustainability... REP®EVE — satura Performance... BID AMY. Sorte tnnipir erpemacriat seen atez myn sotyge ocr Touch & Texture... augusta MicroVista > UNIFI. 32
Slide 33: Our PVA Downstream Partners
Our PVA Downstream Partners 33
Slide 34: Sustainability
Sustainability Sustainability 34 Repreve Global Volume Growth ___________________________ Source: Unifi internal estimates Backward Integration Backward Integration Kevin Plank, the Founder and CEO of Under Armour referred to the brand's new collection of recycled polyester products as "one of the m
Slide 35: REPREVE
REPREVE REPREVE REPREVE 35 ___________________________ Source: Unifi internal estimates Brand Principles Making REPREVE From Recycled Materials - The Authentic 100% Recycled Fiber of Choice Making Recycled Fibers Certifiably Sustainable - U TRUST(tm) Verification program with Fiberprint (tm) Technol
Slide 36: Financial Overview
ONIFi. Financial Overview 36
Slide 37: Summary of Selected Financial Data
Summary of Selected Financial Data ($ in millions) Consolidated Operating Results Overview 37 ___________________________ FY 11 Projections based on management's publicly disclosed guidance on the July 29th 2010 Earnings Conference call and the update to such guidance provided herein $713 $554 $617
Slide 38: Parkdale America, LLC
Parkdale America, LLC ___________________________ Includes the results of the Hanesbrands transaction, which closed on October 28, 2009. PAL Adjusted EBITDA equals the sum or Income from Operations and Depreciation and Amortization as provided in our June 27t, 2010 10-K 3. EAP assistance programs wa
Slide 39: Long-term Capital Structure
Long-term Capital Structure No on-going maintenance covenants Limited ability to make restricted payments Restrictions on use of proceeds from asset sales Restricted Cash Excess Proceeds Incurrence of additional indebtedness covenant of 2 to 1 times fixed charge coverage No call 4 years - optional r
Slide 40: Capital Strategy = Optimizing Cost of Capital
Summary of Selected Financial Data Capital Strategy = Optimizing Cost of Capital 40 Fiscal 2011 = Transition year $15 million of strategic capital expenditures Incremental investment in global growth markets Funding working capital needs from recovery Initial move to lower interest burden = $15 mill
Slide 41: Summary and Review
Summary and Review Stable operating environment with incremental growth opportunities Focus on continuous improvement and mix enrichment Expansion opportunities in global growth markets Central America, China and Brazil Re-investing in Premier Value Added products Continued improvement of Balance Sh
Slide 42: Questions
OINIFT. Questions
Slide 43: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 43 (Dollars in thousands) FY 2007 FY 2008 FY 2009 FY 2010 Net income (loss) (115,792) $ (16,151) $ (48,996) $ 10,685 $ Income from discontinued operations, net of tax (1,465) (3,226) (65) - - Provision (benefit) for income taxes (21,769) (10,949) 4,301 7,686 Interest e
Slide 44: Non-GAAP Financial Measures
Non-GAAP Financial Measures 44 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 b
Slide 45: Continued Non-GAAP Financial Measures
Continued Non-GAAP Financial Measures 45 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, f