UFI - Earnings call transcript Q4 2022

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Operator

Good morning. My name is Briana, and I will be your conference operator today. At this time, I would like to welcome everyone to Unifi's Fourth Quarter Fiscal 2020 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. now call will host, to I A.J. Instructions] turn over the your [Operator of Vice Finance. Eaker, President

begin call. may You your

A.J. Eaker

Thank you, Brenda, and good morning, everyone.

On Executive Chairman; and is Al Chief today Financial Officer; Chief Craig the Executive Creator, Eddie call Ingle, Officer. Carey,

securities included and these about cautionary During that X presentation can laws. today's webcast within from that the involve or deck of are difficult in Relations certain are guarantees Actual of the These be referencing Please certain unifi.com. statements projections which our current Investor that our forecasted the slide implied this in website, the by be management not statements. based operates. in risks turn and materially will call, Unifi that on you Management differ forward-looking cautions be predict. meaning section results the a may markets statements statements what federal to Management and/or will performance advises expectations, outcomes found to expressed, future call estimates for is statements. are Page these of statements of

directed XX-K are that on adjusted various the call. You certain that impact SEC discussed this with measures, be adjusted as non-GAAP EPS, may capital please results. advised regarding these Also, factors debt working be XX-Q may Forms financial disclosures on Unifi's EBITDA, net the such to and filed adjusted and

we accepted principles. reporting the audience business fiscal organizational segments I our Slide best changes. under Lastly, Accordingly, our geographic of Unifi its fourth Brazil the and reporting and that U.S. the Asia quarter the that performed and Americas, of approach now determined segments. 'XX, annual composition changed and X evaluation to to is the direct management your accounting with In generally attention represent segment remind Unify align segment recent X

Carey. quarterly call updated I XX. methodology Al may turn over Slides will the now historical the financial using segment annual information XX to You find and on and

Albert Carey

and minutes thanks then turn going at A.J., and the Craig, you, of this we're thank morning. to the who's take our and of the start tell the joining our viewing Eddie business to call how new to details Well, couple everybody performance to we're you a full it of I'll over QX for I'm XXXX of just year. through you fiscal how fiscal And take ended. year going to our

One So, lockdowns had We being with million year to growth pricing. a I'll bit ago, to our cover very than $XXX that's revenue later us XX% many, that and many by year X sales had success continues fiscal about our Asia the that's up rest of the allowed performance best fourth of That's and has was start be performance QX. a the is little ability performance company on. for what cost due increases to which quarter. also We a but revenue, this the growth good expected. total XX% the is the years, most down a highlights. the better achieved our despite with in little REPREVE $XXX That business Craig customers The above talk QX push COVID that with quarter. And million. to XX%. sales QX took above had in we means will

line. top the that's So

that then us happened raw were for give which in that small of required the cover didn't in to about QX, downsides us what which material the middle to line bottom which we but have to we been the line, talking our is have EBITDA with no were was quarter, right of which we the And liked time from much the pricing react. came China in at June, in lockdown, is COVID spike forecast, better, would we the On had million $XX.X thing.

So surprises of bottom X those that respectable a profit took we line. essentially, very picture, have we if were those had And we the growth, a strong profit would you a took if revenue that out we and had actually strong line performance. beyond very top had our control,

QX. So let me move to

All of the community there that comments inventory from have are levels high us of heard retail out have the up. and built about

got volume from so It will theme in One couple in XX a how or what dilemma people. also their result other this I've much XX difficult are in our asking customers. and the a I retailers with a seen a all. our reductions or have the And we volume development, will I of inventory, materials and of will going consumers on They've our a much started customer customers of ago, North are other the ours we this more we all development a and definitely on is as result seen we good this give with brands forecast. quarter. dealing call get August. And seeing definitely it. moving about frequently and guidance quarter be common marketplace last. there on, slowdown sales raw was them One There's in still you make decline -- decline quote of issue in I six to those could through about in uncertainty. as -- second that's that we kind unclear But it And the mills, of move and all surveyed weeks And Day. threads as inflation on. fast-moving apparel updating of a forecast that's that me of on. apparel seen how the had some lot first that's Memorial a think spoke to be began we'll we probably going precise first food don't And it's that whatever our went have One it of said, some cost we're we to. in But captures it kind this very We on see America downturn of retailers. going volume of too of that a the you because And long have covered for little now bit it gasoline heard of necessities. quarter ship to

Now this in and have this be we're you to good the and the offer on and initiatives this recover the with to that some news number could in it some will presentation volume, from could we perspective profits of on later when speak about Q&A. provide working lost capitalize opportunity, Eddie the we an and on opportunity lower a

on longer the term. just me comment Let one make

on the beyond long of COVID to this that we've of is strategy getting the team this focusing our on focus challenges, in tail a causes be the execution is While had company few focused top down presented not minute That Day. slow at going February to our most ago, XXXX. the delivery issues is goals important the described a we the in are thing. of Investor And I our short-term

good that of up In key think make strategy. progress initiatives on some we're fact, that I very the making

of with customers. REPREVE continues all, momentum First our

as think second it's some You'll EvoCooler the see spot the performing a productivity with material do in in you'll raw in then encouraged bright, We've labor. of us. making I be We're we've made to yet, of expectations. -- lower we've spent the very that got will And Asia's now mix and able is and are half to think because of REPREVE. not coming that's year, improvements a new and in our above but Also, I the And scale, future getting we show quarter, technology progress this on up China a those good -- it. outlook money we're cost result labor. with the at technology. done I'm Brazil remains decrease but

about to some are they're long-term I an see caused challenges challenges, view. effect on as those going this has tail the goes positives. the don't pandemic short-term having We're the some So of on. the but -- long very year diminish future. definitely certainly the of optimistic the

So more right it me the Eddie and it I'll details. with of to Craig now, that, Eddie. take And let through over turn turn you to to

Edmund Ingle

morning, Al, and good Thanks, everyone.

operating expectations, are fourth with we and to consistent the the pleased performance challenging results Our lasting of was delivered we and environment. quarter our despite volatile presence a relative

adversity confidence and been of no Unified of overcome, the perseverance last or I to this we've on stronger of them obsces challenges we've and people. conquer publicly Unifi because very today back that the year. shortage with in year, the new looking a what that on accomplished say for company So, There thank year. and has I fiscal our to proud the can I'm want other for team their everyone work is And hard

the to quarter, compared XX% to for directly sales, brings of of million the the experienced from to discuss performance So Slide we our the materials unprecedented materials, fiscal of virgin June into roughly we they above specifically In March pressures year, U.S. persisted short-term with the the and which fiscal a quarter, during at the increases XXXX cost year fiscal In million, net Central will inflationary we raw raw $XXX period. let's throughout level XX% enter sales In tune overall net U.S. us X, year. and last the in increase high an America, up the $XXX XXXX. month total impact as to a was polyester in on they XX% recorded we in the witnessed ago. moving our This of presentation QX levels.

as is, until discussed are our -- of Now, the this significant of lag fiscal we've impacted normal negatively catch past, cost us during affect will first there and in with XXXX the changes, month we June quarter year when such XXXX. and up the in a customer pricing. there input results

materials, margin associated more bale U.S. we historic our mitigate July reminder, of And opportunity we inputs to on with in further adjustments and products. But seeing as and bottles August yield levels profile and a the quarter. important pay are the levels. addition, price these relief May in some and April our we raw the the the to in bale pressures mentioned, have for implemented most an In cost price to prices cost recycling saw reach bottle to margin impact normal December PE as the are U.S. in return Al the process XXXX in

X Turning discuss to to Slide REPREVE.

momentum We co-branding. and continue to customer see new positive products, adoptions for

were brands quarter customer to the our In alone. tags prehang out fact, sent million were during XX fourth

in any lockdowns fourth by China pre was are segments. that our percentage As products of segment can significant the the this be our expected, impacted Asia the and highest from given sales quarter, of our over the XX% negatively pre of were from the fact revenue

XXXX, For fiscal of we for XX% our sales. pre-fiber accounted

and On the a sustainable more Champions we bottles transformed world. demonstrated fifth of brand, XX that brand front, recycled partners Awards, partners which to or a presented that May, million that textile to through fibers. awards partners recognize The million and or celebrated of have more have annual Textil supporting our have the plastic retail bottles more performance in commitment and marketing plastic the XX XX retail Sustainability use true transformed REPREVE were recycled XX

and than have transformed than Target billion reached Nike bottles, this major Additionally, X Tecomektal while each and PoloTech Group both more having Walmart plastic billion recycled transformed a year, milestone bottles. more X

tour key visits both mobile & with Walmart. our retailers on and of efforts Next, Fitch focused Abercrombie

Walmart's Vice in activation apparel. call the President at bottle June, to open annual Walmart's X-day we Our merchandise, billion presented which general Arkansas event Senior their award Bentonville, during during headquarters in took over place

college success partnership the XX for a entity as serve the advocates bowlgames we that X-year both have for building pro season, of that football. the on signed APRESPACXX season Now an partnership, with

and X service activation public We executive around partner to and kicked comprehensive of hosted our choice We REPREVE promote announcements venue bound group sporting from from this where partnership mobile bowl includes shirts directors given REPREVE things, bowl positive panel the sustainability campaign, University. Bob will circularity. conference our sustainability game be signage other and at initiatives. including each among prominence at partnership a a Boben their annual consisting the a we to bold working to games of and tour media social a end include brand April, founding a off events. university group And calendar working expect of in exposure given

initiative which once our we our the in is more come year XXXX. on to get of So season, fiscal first bold that past middle

to We on channels. also strengthening digital our focus partnerships brand across and continue social media

social executed Yoga, Beyond we Lovesac, Iglo, Sanuk Volcom. quarter, with Pito, the and the Choka, partnerships Manduca, Sac During media

partners amplify us support to brand the continue enable will REPREVE that We to story. our

review the So turning a of now to consolidated back business.

was goes for on factors obviously $XX our adjusted Craig details This within from of more the impacted our macroeconomic financials, have earlier. our was by fiscal into forecast year EBITDA we but Before range the discussed it April, was the million.

align can expect do market our And proactively continue team you be it will our To to catches pricing sum helping and and CFO, call momentum see and materials, overall that, with raw until ease drive conditions. positioned with time, conditions inflationary clearly we well to With pass Craig. As our drive sustain up pricing up, customer able momentum. to the value. It's we growing that us our brand to We global our margins. our and are expand I now over believe approach. business to our will long-term

Craig Creaturo

and Thank share our we quarter everyone. had you, a to with expectations just fiscal challenges. of morning, was good and that a The ending Eddie, was year completed good its consistent

Demand with our combined helped Eddie and that Al team has through focused regional us goals. remain our focus and management our the Our our strong, products external sustainable on footprint, described. remains manage long-term factors on for products

responsive maintained positive implemented selling against recent our business level, high a global from challenges. we changes as step adjustments momentum quarter the at made price we and Looking underlying

I the effective rate expand to tax Before the on like and results, we discuss EPS. would segment

U.S. tax worldwide mentioned, the specifically tax and distort pressure Eddie As China not as on foreign low we rate jurisdictions. operations operate Brazil the locations our are our effective in,

for some However, Brazil paid from cleared recent developments excess to in us Supreme years. taxes income prior recapture the Court path the

in adjustment from changes we Accordingly, EBITDA as EPS. the will an taxes taxes reflected the certain tax regarding and developments benefits quarter income current while EPS, these prior in tax Brazil period, non-income adjustment period the to are an benefited from reflected decision Court were as the to paid that a income recent Supreme to You relate year but recall Brazil. most ago non-income

Let's turn X to the of presentation. webcast Slide

we to segment to to will begin our fiscal reportable unify focused in recycled polyester on that we developments Americas, benefit regional nylon, which businesses Asia. as of are management to Here, approach and Unify we synthetic In we transition as both the valuable service business to the legacy review we a purely and performance. needs Brazil referred a will segmentation models products in our and Americas, following XXXX geographic continue textile continue our and and of customers. our the the diverse from previously be in

segment, robust the that of proud Americas China. we In volume the and fiscal the the challenged year from level quarter highlighted our nearly in much increase XX.X% the Brazil prior of pricing a exceeding completed we the For region ongoing have continues revenue year. volumes Asia, strong prior note occurred demonstrates just and throughout during pandemic a team Brazil, accomplish the are in what efforts of quarter. XX%. demonstrates In the year that revenues by performance, -- stems normalized by communicated to sales lockdowns this improvement pandemic lockdowns in were the We previously

yarns robust the interest underlying customer continued support performance our the revenue to in those for local ability However, sustainable demand circumstances. allowed given and

the weaker our The for the in Turning gross attributed Americas call. were to headwinds profit X percentage decline segment's conference overview. mentioned to profit Slide gross and quarterly expected during were last import margin gross that cost

than in proportionate our to temporarily adjustments a impact In as be unfavorable a it inflationary recent XXX points, the and pricing we segment XXXX history, segment sequential have in of lockdown cost rate maintained spite in headwinds pricing lower would time quarter the a the proportion most QX, profile quarter, Asia their high gross $XXX as level their margin the the short-term alleviate. achieved annual expected basis, million a make input In fiscal revenue the margin XXXX, the most In XX%. gross to normalization In to gross for nicely included quarter an in gross segment lockdowns. million profit growth. increase Asia addition our the able the revenue gross dynamics percentage surpass a of for being sales we improved for expect the strong by costs were products, completed and with Asia of spite not year challenges, Brazil, performance in customers. the to profit continued Americas pandemic-related at of lower to respectively. margin The the should some recent the strong that and of percentage these the because $X.X start Brazil's noted first of to albeit on addition, the just and region. quarter they during basis REPREVE segment margin of results due fiscal fourth In to occurred late exceeded sales to Without expected,

to priorities. million of quarter Moving $XX against to fourth we and/or July repurchases growth. invest allocation, an on availability X, to share with business in with provides and of expect We X, on which continue strong Under prospects. ended remain capital Slide as maintain balance organic and capital ABL balance approach allocation $XX.X balanced million which revolver, and sheet to a update sheet to borrowed XXXX. our the an innovation opportunistic our our had drive M&A the

slide, this and in share spent during with to XXXX repurchased program million recent in previously over under repurchase announced described fiscal the press on repurchase XXX,XXX noted quarter. XX,XXX the As releases, as shares $X.X completed have we we just shares

activity, that for last make through us some current back of under comments. I program. take now the pass repurchases available the will slide presentation to $XX.X final Following and remains Eddie the to million the call

Edmund Ingle

the our to Q&A of Thank our XXXX. session, turn outlook And for over call fiscal to we Slide you, before let's Craig. discuss to and the X turn expectations presentation

throughout As we to headwinds expect overcome and and norms XXXX we more a to Day these resiliency volumes as our said, in in globally significant laid our representing on achieve more we recent fiscal ready this That being with X% in call, year. to net and to the we Even revenues. we confident In global us. fiscal sustainability, guidance reach revenues have some the we to are growing and XXXX million, or in getting. ability focus continued quarter of fiscal we macroeconomic gradual in remain performance downturns to XXXX. ramp which million we Nevertheless, the increase year each be XXXX, for fiscal market it REPREVE of with XXXX pleased an importantly, $XXX $XXX recognition believe fiscal address. against are we back Investor been inflationary some alluded showed we our of and challenges behind have revenue quarter, REPREVE goals issued has our out the February until the to fiscal compared more very to, And expect from historical XXXX, put also our our sales

We between also expect business to with gross million, inputs. and metrics margins $XX adjusted million EBITDA normal $XX of second in achieve half terms material reflecting and raw the more

Our range CapEx in outlook should to the million. million fall $XX $XX of

will and by apparel caused mentioned expectations of over which as in profitability Our the are XXXX be excess a next with demand publicly segments. all in result the brands our when second We Americas XXXX. expected is softness performance remain enter large to the pullback strong their fiscal first sales calendar this year, the the and in softness stronger remainder of throughout some which The of a retailers earlier demand in calendar by of half -- inventories, include XXXX. declared forecasted expected of Brazil we some our by demand fiscal half is

calendar $X.X during sales to ability in achieve we a goals our remain half Slide While out billion enhance Investor ago. is the our and targets well REPREVE XX the rest placed XXXX. expected ultimately continue Day to big our presentation several are profitability headwind this our our will our mix Asia gave with margins by profile. picture and in confident effects of of of closes XXXX. the and and path of revenue over comprise lockdowns to on grapple the We to months in reviews hit the will

opportunistically We retailers initiatives of the will act on and maintain the we our positioned strong partner brands across choice focused balance on sustainability and remain globe. as sheet to growth to well being

line-up now the questions. open for Thank will We you.

Operator

with Instructions] first Daniel question Securities. [Operator CJS Moore from Your comes

Daniel Moore

Maybe the line. start with top guidance,

performance guidance, how got each front, the just guide sense than a follow-up growth basis Just can to the least in on and about of price and fiscal of of of in should directionally mid-single-digit if about we not give your segment revenue at point margin by terms segments embedded implied the three or embedded gross cadence? a I've expectations expectations 'XX. in think for the us And exact two. the And talk you margin the volume margin

Edmund Ingle

Dan. I'll the revenue question take Thanks, and volumes. first around

under as volumes but and around month expectations, retailers just We be have In relates revenues will think by Brazil. amount pressure. started, about our As our And to take is Asia turn business but the Brazil, that our that as at April a revenue talk We're any perspective we revenues all had we it do gone supply still month are at pick on and of it's question our returning in throughout in the call, I a seeing particularly and that both in talked in in of outside up interesting volume a pullback we the May volumes and up it's July we to they still and June. Craig improvement, slowdown In of the cover have is we that And a normal some at challenges China. lockdowns I to see are in to because had good and the for to particularly do don't August while China, segment. mentioned, has, that we that think from still out that pricing and our issues business coming the inventory margin in and know over volumes revenues U.S., and it we We expectations perspective, right brands. have levels. the fair that I'll is going chain space. today now experiencing because

Craig Creaturo

Sure.

at the seeing its in year, early a for very as on we the the saw part -- of on as add the of we're look quite exact in the a call, for those this input the is us FY which And reversal if our of we will we to toughest revenue especially June in costs And increase just segment now segments, Americas that, you end of for projections laid quarter. sudden our have period a 'XX. I'll our sudden comments have of quarter. tail lot Dan, costs. noted So first Definitely out opposite

some will inventory And like that to down things be into so types writing where parallel And will more be even also quarter. doing that, those first hits probably Americas. taking we demand softest. of levels maybe the during second after of and back will for the normalized But we will that quarter with feel we profitability the do get

as Brazil, to end year. the said, they of do as and as we we a far from revenue fiscal Eddie this a as that's here like continuing For year start conclusion feel perspective, had good the

pretty operations and well But noted in that half is to in we what so that of year. COVID consistent impact here and in we the of calendar lockdown first them through end the be alleviate the with of current very expect that steady continue for expect to is gate grow. 'XX, out of FY forecast Asia to this very back after that, will and our probably the we year 'XX. April, the get So fiscal beginning then the And Asia, our

the with the because that sales historical the Asian the seeing spite really of remained thing to the the the even one just is impact, lower of profile we're the very [indiscernible]. in very Now levels impact margin impacting impact, consistent sales business of positive, margin is note has

Daniel Moore

early, That's come And the virgin very they continue costs change to obviously, just It's down. pricing. to input prices, on helpful. rate maybe directionally. should but input of as still back tied -- on talk oil

we a bigger hold in margin about And would your embedded dynamic potentially maybe what's line about if the than supply in on bell-bottles generally. that's And the just of sort talked be benefit HX to more great. That see You pricing. ability could talk guide?

Edmund Ingle

Yes.

major polyester in what And of levels of one it very a quoted and June was for was someone said was in into X So was inputs rapid injury petrochemical the month the on of some Vericem that side, the unforeseen. just spike of happened June. it pricing historic

the we seeing June. our do pricing, we to the to we to ability saw inputs QX normal get our have But -- and pricing are in this and do we reduction work and inventory raised We mentioned, through We we those Craig beyond. in we July catch as move of what back up have margins, be have through, cost going we a price have to we'll on our always but focused the expand to in had very points just with see raised that as are the in margins and managing this.

the buying through. bell-bottle and bottles But since have side, in On and the to are Again, do inventories levels, to some bottles back more April work have high we being in levels. returned at opportunistic have the They that May, bale reached we very normal lower price. again, we

And of we're going seeing what should the price again, saw inventory over QX. more in of carefully in in sort QX, improved back that are to price to raw Brazil normal margins from QX, U.S. in we a being our higher the margin margin the as to are the them you were lower-priced REPREVE push U.S. All we be what system. used get Brazil, sell, any perspective, be in products we here as sort is our materials In for And to so we if specifically. significantly managing points very through.

Daniel Moore

than we’ve on Makes different sense level tax is rate, but implied it touched a guide And what the you’ve then seen. the that No, on does.

I and bit a is have understand Asia, what in just involved, kind of it trying above what your a more driving expected. but little realize would color And just effective Brazil? to rate. still commentary maybe XX% on or So what’s there’s I tax mix rate tax that’s to XX%

Craig Creaturo

from FY down, be for projecting and Asia It now we're coming more Brazil. Dan, does profitability to Yes. come 'XX of the what to from

Asia, unfortunately, tax XX% profitability. to closer we're in the tax lower of the But serves to and our because XX%. headline able Brazil, U.S. not some attributes of use

kind to lower, overall expecting frame to were the reflection really, more tax rate year, rate of of what the do profitability of conversation is that So negative we're our Americas first a pushed to up. is we impact so being just effective be as to that the in expect going helping we of the why it's That's kind half the side. and

Daniel Moore

a two, back follow-up in Okay. I've queue. or jump but I'll got

Operator

comes next question Gus with Your from Richard Northland.

Gus Richard

you over wondering, costs, your that effect if prices of little bit about spikes, frequency of cycle think you change? you it margin the gross about profitability? it in little I'm this margin. gain evolves the a the on impact down, A bit Or of on net of input the of Yes. the going lose of price variation help price cycle forward. over the bit talk is your just on come to a just really as a can no gross how Is dependent has world little

Edmund Ingle

Yes, really REPREVE, seen in for Thanks, Chris, specifically petrochemicals. I'd answer QX has by inputs our just in and virgin in question. we've for your what and on the been our talking U.S. the unprecedented, that both saying here I'm

a through costs that side the our much also side, what a I historically. the we great focused increases, way doing believe the labor. been input sure have have on on and we up both on making than anything increases, would are that done normally so able we been to manufacturing sales pass have seen cost but we've the they wouldn't on been the happens. will proactive I inflation both have in Royal very have say more modifying on team job with prices we cost packaging do past these in And that deal these that

materials of these customer, a the saying some to in we U.S. back We the come very do giving raw better be do position So I down. we of we'll that the raw in will this about be our and benefit to, as close very will how we where would basically diligent focused by need materials out we on manage to be that. do but and margins

through and last happening very this as basically what today happened high-priced inventory is unusual. So the move in quarter very, is we

Albert Carey

been the have some think what sales us are big over the improve think our customer, team the they in REPREVE in a Eddie that And which the the allows of manage changed forward has going is where I profitability individually margins I had also mix to road. can past. we've to brought by that there down processes change

So the term. reason, both for go I also up in see that we margins longer our think

Gus Richard

And it. the to the lockdowns as in product? then the are last couple China, manufacture will over Or impact what – on is bit? of months lockdowns impacting used the is terms the of ability trajectory sort of lockdowns the been That’s the just be your very helpful. Got in a side? And sales the

Edmund Ingle

retailers. and get or manufacture It's to the to been brands Europe backed their it fabrics that And to weren't and lockdowns, able retailers ability what happening our retailers because whole these brands and to regional -- a need backed the impacted a as not make we really customers of sales have about yarn. to is also the products earlier, make system customers our It's and those garments as customer. up Western because the side talked in on addition, and brands as is U.S. Yes. able products up weren't

inventory that of pulling are back situation on have. because orders they they this So their

But a we model combination haven't a solar Asia. then also short of Craig reductions mentioned, lockdowns an as any and we because orders. term the So coming margin in in from of perspective, of it's seen have out resulting impact the inventory asset-light and

Gus Richard

template the REPREVE? trajectory for Bal talking and the raw I'm of for material other it then of of this recycled recycle and there it. wondering, a and very one And rates longer-term Is your me, thoughts probably a beginning on passed the the of availability for ought at last of But significant the sort July, single-use any to California to bottles. bill be is the question. states. plastic suppliers plastic Got And

Edmund Ingle

point. Yes, And good that's great question. a

other the communities market California, So responsibility quarter XX% which bottle puts in the recycled will to bottles collections. Pascal, we and few LiveAregon, to on in will increase a U.S. have force, the did increase similar companies putting as recycling somewhat. collecting pricing from it the passed they increase New year the this an rates Jersey escalation back onus much see We to a the EPR collections. bale the I on products California, municipalities that this have recycling responsibility, poor producer second increase Today, and recycled demand year. take positive because perspective, -- for years the that In extended part of emphasis also out, rates a the of guess, get what -- very content, drove calendar the for to to by quarter, content second certain which second will a

encourage term So, see collections. long to I to people as a increase it positive

in on U.S. needs But our will East or the to the all for bottles. East models that of is some Coast mitigate pressure on that predominantly West again, be collect we of the Coast. We are Coast the on going the and

Gus Richard

right? Got rates input would increased I would it. getting have cycle would I your cost. have reduce that Am thought it

Edmund Ingle

Yes. to happens That though the going bills build was started raw a phenomenon. even -- second of the get very Eventually, we are out, bill get a concerned came increase good. calendar auto off in view. more be people the more new they're market, these that's point to -- up. were very expect quarter, it inventory to wash will trying were collections there a that of far better was pricing we term, law futility materials. on passed What from and how They long the the will fairly meet bottles do XX% But it's strange about

Gus Richard

me. That's it. Got for it

Edmund Ingle

Thanks, Gus.

Operator

Your next question comes with from Anthony Lebazynski Sidoti.

Anthony Lebazynski

you. Thank

to And from other are could level you’re price improve more if profitability the looking the the you was would some increases? aside the and on wondered – then initiatives know second of give the you key what also expand about increases, that that us increases price guys U.S. be strengthen that of part July price in question as color and August. I So, in so I talked to perhaps and

Edmund Ingle

questions. those Thanks,

just As Anthony, again, we've in welcome previous said calls, to unified. curbing

have really was materials. with the the very, like We relative -- And before to our beyond significant almost was scale. month. last had August we up And as catch we months what July raw XX and from raising in been June been what in a did finally prices pricing to every very very seen it over XX months, we mentioned,

to So will this be. have, very initiatives where with we up to as we pricing that to. see pricing the inventory through to But feel materials, it I is to in I the is got to I The levelled deal we needs our move beyond of key do has like month. we comfortable raw with, we course, important have be -- August, the still which said, very main us. price points going that

on very our because got the side U.S., very, the purchases in a slowdown in manufacturing carefully We managing we've both volumes. are our

can. U.S. we significantly. So as we possible. here We're the pull inventory know our we our much reducing of out need expenses We're pulling to in some also really back where cost as SG&A

actually careful it's manufacturing more the Henri hours we in So And the and here amount because giving the of materials where we volume from view, pricing. to that we part our are raw teams that. And sure us course, in very least interestingly sense. looking costs U.S., of labor people we take our try of they're helping our big lead what that very employees. buying then very, in makes price And -- have for a our this about advantage train to opportunities it's then cash can material time need. very point And we and making us and a careful certain of hours, of it new points, downturn are are manage lastly, is

beyond the material So, they we're are cost the things doing just reductions. raw that

Anthony Lebazynski

it Got 'XX EBITDA gross much it, and SG&A that a that like assessment? as your overall can, guidance for is within the you're Is fair margins. And okay. pressure it's holding then, the you as really sounds on really so

Craig Creaturo

for anticipated X assessment. scenarios you really are of is of so Anthony, much each prices different for and guidance yes, think that correct of sales a the almost and reportable that's that Yes. definitely, But all that, about of EBITDA the around I several SG&A. manufacturing the operations very segments. fair not most -- centred kind We range for and

Anthony Lebazynski

as been Brazil, And then few for it. gross as quarters. in over What’s here place margins assumption have Got kind last of margins all long-term a the far reasonable Brazil? gross the

Craig Creaturo

X of quarters at the Really, correct. pandemic X, of second the pandemic you're wave ago. the Yes, or height the

some correct, amazing gross saw You're from margins Brazil. we

got little to I run costs than caution for pencil us through and where those, operated. bit faster think we they just gross they've not quite were did a That's we bit The to XX% for everybody had, business. some really additional quarter in a historically margins careful through that to anticipated. they XX% of not actually high

mid- towards XX% normal business. the has teens So to into gross well-run we up for the profitability, margins range do even their rate It's of margin. of think back kind gross more they'll upper the be texture into it's a of which in approaching things. -- They we customer -- base. benefiting lot really their great early the from They do stages a operations. of to are a a going the EVO also right equipment have that's starting It's see

that it's rebound a just that of kind So, that, here and maybe to longer-term bit a But quarter. kind I us already starting are nicely little of mid, for are that even the nicely model better things teens rebound give Brazil. of think this in than confidence they those and here some will high better

Anthony Lebazynski

best And it. of luck. Got

A.J. Eaker

Thanks, Anthony.

Operator

with Your next Securities. Moore question comes from CJS Daniel

Daniel Moore

term, more by given to to XX% your maybe over goals of X longer bridge back sort more XX% on would about Is margins just you levels the up of in normal assume puts the something margin I kind be late the what overall there. way how think is Following and levers implied with of XX key HX. range, the to kind XX% fiscal were and the or between last just bigger it, margins And the getting right of more is Brazil, thinking question think that XX%. the do all takes the to cetera? normal year we et drivers 'XX mentioned then question and or about normal XX%-plus

Craig Creaturo

Yes.

correct. think -- you're yes, Dan, I

I you are normal blend think something of that all in talking margins, say of when together, XX%. we correct. kind We're we and excess

products, have correct. more XX%, percentage the a the that term. Our for that have, getting margin those profile that increase saying of we're term. at margins, But there. margins, we term, second higher XX%, longer XX%, more as you half longer-term And is shorter us help that to toward we right better be model definitely gross will to back will In are about of transition part profitability talked range REPREVE XX% a kind and longer as marching that closer we

So...

Albert Carey

Craig, -- further cooler mix two longer impact? and biggest years. and probably is towards on REPREVE out And the the XX the move EBO

Craig Creaturo

Again, Eddie, like and would I from Yes. progress want that we have continue and make you that? pull say that will the those to there. of the input to biggest feel Asia as also grow. continued expect and to to do do impact level continue add they a to on products, We good well. definitely up pre highest

Edmund Ingle

Yes.

the gross the gross engaged margins, I to trying to or XX% presentation opportunities a levels segments that very think in we to globe. best in look of us for in to I apparel And that strategy dive said think we get are us have for some so doing being somebody deep the the margin other to -- for deal in had back our going were we understand something where of see is -- February, food. And that's help we us segments a higher important that lot the across that's we're and Unifi beyond area. been one that

Daniel Moore

Perfect.

I think sorry. -- I'm

Albert Carey

difference And Asia quite it's we and the of mix when REPREVE is a quite of margin. get carries bit a today versus along XX that to

Daniel Moore

any excited you more helpful. be are of you more look partnerships? of where And projects. are last provide realize helpful. That’s color I multiyear quarter was would be my and you auto Al. packaging, X you’re sustainability these when Any just might medical mind question my us some outside seeing X apparel. updating it, Eddie, getting those seeing read folks not dialogue longer-term Got or you at But or initiatives those about things footwear, on think growth I

Edmund Ingle

Yes.

effort know lot that to sometime putting the plus think do we will the is surface. really to time interesting. cars. us get allow program have that of we But to sort longer-term and is I you've quarter, And that XX of been that know going have mentioned, market, As segments will into those come take should this sometimes. exciting this be analysis into X mentioned. quite will beyond that you be will segments a a few apparel mean But further we across a we months those Anything transition I electrification into me, opportunities that digging faster of be is to mentioned, another complete drive several takes -- we've quarters. you come We that the initiative. these for and down to there personally, they the it

said I in think on think these calls, be, the but these automotive to the cars. also the that's see. the into to be visibility going more we as companies the in con terrain, going to are on drive textile I sustainable, And looking inputs not just we're probably shortest

Daniel Moore

you. Thank

Operator

joining. at concludes call. There this This time. conference further for questions you are today's Thank no

You may now disconnect.

Unifi (UFI) 11 Aug 222022 Q4 Earnings call transcript