Yankee Candle lowers debt by $31.7 million in second quarter

By Jennifer Lanning Drey

Portland, Ore., Aug. 13 - Yankee Candle Co., Inc. reduced total debt by $31.7 million in the second quarter, ending the period with total debt of $1.1 billion at July 4, Bruce Hartman, chief financial officer of the company, said Thursday during Yankee Candle's second-quarter earnings conference call.

"Maintaining or improving our current liquidity position remains one of our highest priorities," he said.

The second-quarter reduction in total debt was the result of the company making an excess cash flow payment related to its 2008 results as required by its credit facility, Hartman said.

Yankee Candle was in compliance with all of its financial covenants at the end of the second quarter and expects to remain in compliance with its covenants through the balance of 2009, he said.

The company had $6.6 million of cash and $88.4 million available under its revolving credit facility at July 4.

Second-quarter cash from operations decreased to $2.5 million, as compared with $14.3 million in the same period of 2008. The decrease was mostly due to the timing of interest payments and cash payments for restructuring activities, Hartman said.

Adjusted EBITDA was $17.4 million for the second quarter, compared with $18.4 million in the same period of 2008. The adjusted EBITDA results exceeded the company's internal projections for the quarter but demonstrated the continued impacts of the macroeconomic environment, Harlan Kent, the company's chief operating officer, said during the call.

Revenues down 3.6%

The company's revenues were also hurt by macroeconomic factors, including weak retail traffic, depressed consumer spending, the loss of customer Linens 'n Things to bankruptcy and tighter inventory management on the part of its customers.

Yankee Candle reported second-quarter sales from continuing operations of $119.3 million, which were down 3.6% from the comparable prior-year period.

As a result of the current environment and its belief that consumer spending is likely to remain challenged, Yankee Candle will remain focused on strategic initiatives, including driving profitable revenue, continuing with cost and efficiency initiatives and managing cash flows to reduce net debt, Craig Rydin, the company's chief executive officer, said during the call.

The company remains on track to deliver at least $10 million to $15 million of cost savings, which it outlined earlier this year, he said.

Yankee Candle is a South Deerfield, Mass., scented candle company.

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