UFI - Earnings call transcript Q1 2025

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Operator

Good morning, and thank you for attending Unifi's First Quarter Fiscal 2025 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions] Speakers for today's call include Albert Carey, Executive Chairman; Edmund Ingle, Chief Executive Officer; and Andrew Eaker, Chief Financial Officer.

During this call, management will be referencing a webcast presentation that can be found in the Investor Relations section of unifi.com. Please familiarize yourself with Page 2 of that slide deck for cautionary statements and non-GAAP measures. the to turn Carey. now will call Al over I

Albert Carey

levels the joining you, today. followed Thank not know over been thank headwinds for the our X problem, down us for and profits. consumer our have held macroeconomic high that earnings then revenues have our you, inventory and and have And until entire stubborn, who slow everyone, just apparel industry. call have years you Those quarterly last of been our our for recently, but of quite a sales

of QX Now new continued X And when way even half the has calendar fiscal yet, we we first not in all We're our that customer what but our want substantial some for see form of believe calendar begin of trend half to in year the it's orders innovation. improving improvements to the and we while for our now and seeing are very see XXXX. shoots finally is year. to in back recently, or of new that interest year green we the going

a expected. So were next few as in QX up hear the that were about X% revenues about minutes you'll more year over ago. They

about $X.X as significantly over last Our as last expected EBITDA million, was year depressed very year also at and level. it's was a

fiscal half this step both and revenues of well will the in half up you X first expect So can in EBITDA above year.

the improved coming Now areas. is X outlook from

to These innovation. takeback begin show our sales customers the textile around the will on in QX. The by in our first ThermaLoop. world, called one It's being up REPREVE received enthusiastically initially is product especially products

in we have packaging. approval businesses we've Apparel some optimism we're has extreme, is the but our are segment, and seeing taken like orders in military little traction carpet in. segment processes given now reason that's especially expected This for us than because this got area and quite second home Beyond a longer The and come and business for traction new

we is ago and made area that third and time in market has it's investment could momentum, was the needed EvoCooler, we an The given us share. capacity Brazil our some Brazil that so gain business on

And is say reductions and area for I'd So North cost final that in we about more believe to optimistic America. we're fourth the And continues. this area. do there's

we we'll So the as second in improvement year. of of America move the half see profitability North an the fiscal into

slow cost on on So difficult I'm of up mostly this proud and because didn't management. efforts innovation the on and Apparel time team, during we our Beyond

case waste, here a So you there's the ever Unifi. situation go let a where crisis don't to have been if this is at we

shareholder a produce we're beginning company now set to calendar into up be year future, for and us up being XXXX, think able I I think better continue sets that to soon, the value.

the me that with turn quick So let to now presentation over Eddie Ingle. summary,

Edmund Ingle

Al. repositioning Thanks, quarter the growth. exhibiting for for results And toward business our our our progress first expectations, future as with line were continued mentioned, our Al just in

for curtailed which our being of in short Hurricane a their Helene However, were some by of in customers late impacted September, resulted period time. recently operations

is The While did customers experience being of an now all our were some X. and said, portion out of result, in from quarter on elsewhere. are fast recovery for unfortunately, impacted local we North enough the other from a who will for of hoping provide those communities Unifi's this from operations sales any the I devastation and Slide With highlights Carolina here in and some overview heartbreaking, in operations that all the hurricane, fortunate not into a operational impact were the our quarter. to second U.S. in curtailment material pushed hurricane

sequentially is fiscal quarter During up to compared net fourth which in the seasonality. million of a typical down sales, reported X% result $XXX.X of consolidated as quarter and we XXXX, first X% the year-over-year

has a deliver in our on net largely year-over-year driven which segment, Brazil improvement by sales strong was to results. continued basis Our

us Our planned, Americas inflationary cost helping as some impacts. reset efforts, as Al offset continuing to mentioned, is are which progress

savings already year-over-year our evident SG&A in of Some spend. are those

will also to see benefits continuing provide of exciting transformation, was enhance the shortly. A.J. In each only expectations. is but the These Americas into globally, gross us that sales brief allow took line in also year-over-year in segments. help update to the relatively the our provide continue which our significant sheet, product segment, a will by are new will to steps profit business to financial We I'll our the grow now not efforts business on strategically with strengthen details more performance of balance during We us invest recently quarter. on improvement our which initiatives performance. few our demonstrated our a

that did on we due shortly. as initiatives weather the impacts from said, Americas touch believe and to do seasonality of greater earlier, modest will we recent poised segment However, a combination experience Beyond detail slowdown With from the in a I we in region benefit some is Apparel upcoming to our that the event. mentioned

segment been This from continued quarter that segment is a and region ability China In that to Brazil result we in capture market was Asia volume. we in the strength in the few due slowdown a which economy sales have take volumes. able sales row. saw struggling a the and past in is our the stronger Our pricing some has our to in strongest-performing benefit in quarters, for the third price segment, performance to of the impacting region pressure both resulted the in share

government that economy the region hopeful performance stronger in Chinese drive the a help run. in are the long will recent we and However, stimulus revive the policies

to for update REPREVE. an Slide X now on Turning

XX% the sales REPREVE was business This quarter, I to During that compared just the decrease REPREVE quarter. when Asia previous represented driven sales, in a first of decrease our by slowdown largely noted. in slight the

begin of revenue and fiscal through the especially to as half progress expect we to from we our in we our some in benefits fiber XXXX, do second REPREVE However, recognize as volume new products. year see stability business the

Turning X. to now Slide

ThermaLoop, share numerous of for been white takeback Takeback Filament have we terms X solutions Show new that of customers, the The new Yarn products with our recently Shanghai our new resulted at positive, validating first process. announced To response demand that textile scalable both ready overwhelmingly brands, offerings, textile-to-textile meetings seen and innovative REPREVE for the brands August, These for direct opportunities the to Inter-textile powered media the global exciting and innovative product placements market's customers we and the has products, our productive In which further recycling in insulation from retailers. in products, world's by featured these we today. were and launch the X the are future. products Trade in future prominently late several near highlight strong plan

offerings. launches are these reaction circular pleased the success circular have our that the on the to to is has put place We the with the our early these resources. to right market new storytelling and far and product focus so market reaffirmed we with It seen innovation

will gas these goals a products, meet fuels. greenhouse textile As them direct I've emissions in is around By past the built faster. new are to which on are of which recycling, said bears help and adopting of reach our and many reduced to reduction of times the brands it their over consumption it help and platform the general centered sustainability retailers goals, their fossil textile repeating, few customers, in job years,

offer a in X of terms has secured to these launches and of of level with coverage strengthens reaching above sustainable deeper quarter, which throughout XX pieces us XX media leader over publications, our reaching innovation. allowed additional impressions. insights and the coverage, the we Over with has as interviews impact, the This significant billion products. million In exposure launch key media into these position media uniqueness generated impressions, product over further secured REPREVE

which also Soltech strong highlighting from website, co-branded the technology. moisture launched HuckBerry, Polar of REPREVE. the market and Callaway highlight Temp performance of with Baby product co-branded recognition placement, the management Burt's Truth across XXX and quarter Bees REPREVE-powered REPREVE shows growing B mentions Another fleece and their packaging. our Golf, products was their social their featured our [indiscernible], media, CECONY on our HuckBerry product

use and for of many the This like of Ocean Clover retailers role brands Co. the breadth as Magazine, York brands for REPREVE fashion leading New & the PIFA a Dover world's solutions. Tiffany our and underscores REPREVE Additionally, and partner Post coverage and and sustainability in us Dagne technology Womenswear on trusted top Daily rely both and brand performance who

discuss Before call, like some of section of I'd underway developments initiatives to the apparel business. for our exciting we up Beyond have and I wrap this the

is initiative increase in where first an to are specifically see we carpet, flooring, opportunities. business beginning to The relative

be both able offerings officially the margin We to programs near The the on these second additional in military different of support will once variety will to related our military to details. a information plan applications are full we initiative future where that is market, accretive. the announce of provide

flake resin the our offering, business and nicely our quarter. Lastly, Beyond chip during Apparel first in grew business also our

We to A.J. are offset I the Apparel financial are of for to now With like Beyond business. business, discuss will and pass able quarter. make initiatives to our results excited call improvements some these about traditional we over have our the in weaknesses apparel that, been would to the we help recent our seeing the in

A.J. Eaker

help weather I impacted by Eddie. sincerely everyone all first and I would the families necessary soon to hope my and possible. relief as as like Thank express receives you, sympathy recent for the events,

and financial certain highlights we expansion, higher steps for low, versus sales now you'll our quarter Eddie across Our our dynamics, stronger and basis favorable are material for actively announced segments, that net quarter for see year-over-year, drive cost revenue we both touched The a fiscal to on. reinvest X, down and in expenses was savings profitability on take volumes our increased for profit the another and that initiatives. first and to quarter. step business plan we Beyond seasonally previously growth improvement sales $XXX.X just the net Unifi will pricing including was continue production quarter. financial variable were enhance the in Consolidated fourth administrative cost in help of key as able results. On will areas benefits the the and successfully sequentially beyond. and Transitioning initiatives the keep consolidated help the the direction REPREVE and To our on our quarter the margin and to from meet performance X% Slide product momentum, but this up right functions that sustain for financial business all focused Apparel expectations will to position to primarily X% both in our in our the million, which create due sales continued remaining year-over-year to XXXX were

were in sales basis, were mix X% X% net results Turning segment, impacts. On a down sequential to recent sequentially due and On down and basis, up the line our to seasonality were year-over-year In largely both a sales our Slide X. with expectations. the Americas year-over-year. weather a of

CapEx We quarter by our on Brazil was and displays are our activity. the improvement region our levels our continues around take ability see XX% to profit operations. from to share, keep discuss levels, to X% spend saw segment Asia growth briefly pricing sequential highlights, $XX market our and net led net dynamics XXXX, Slide This the X% year-over-year maintenance be gross higher a XX. difficult during basis driven and on sales Eddie sheet expect On our of in the our growing and on year-over-year, mentioned decline thanks year-over-year. XX, earlier. by production benefit teams for to Slide those the in cost-containment as experienced of fiscal segment X million efforts various Slide from conditions in pleased to which balance price that I'll we and region. diligence economic now sales focused

Board the careful to strengthening and received entered our cyclicality from Langone. balance lending that the we the will the has received effort that has following the favorable Ken understands facing Ken been would this for several Finally, come our investing. ensure quarters. needs over long-time be interest taking not both facility, we I'd a been date. of $XX of to financing rates, and we're our with it and burdensome to Collectively, facility. thanks partners, business sheet a growth, largest members appropriate we liquidity lending into supporter Unifi million third-party highlight terms support able with one and avoid We constraining an additional we XXXX but to help We support Unifi evaluate the have liquidity like our anticipate are where into also of lengthy provide the to last that that the time should

sheet, well-positioned pivot call financial fiscal now and comments. improvement the few that, with our With give Our and continued presentation last to is pass XXXX steps through confidence in coupled the to I'll business us to the balance that in make us performance, to beyond. Eddie the slides strengthen take growth the final back of some to

Edmund Ingle

Thank you, A.J.

Let's second adjusted $XXX are to XXXX. XX, EBITDA now quarter, result forecast second the period $XXX please, expecting of $X range Brazil. in and between turn environment net China in million million of and to the million to the economic More our and sales Americas specifically, $X the discuss we typical Slide fiscal a the of between quarter for negative million, negative current the and seasonality as holiday for

CapEx the eye a keep and million. $X will to on quarter Lastly, million capital for $X between we expenditures and believe continuing are in come disciplined

discuss to now fiscal XXXX. Slide Let's outlook transition XX our for to

We are And our this more conditions, return includes for to fiscal year-over-year. will of belief XXXX. outlook which normal top-line see reminder, growth XX% a we'll that as reiterating a our support

to results in that our streamline and business proactive decisions will XXXX. in also our profitability made to believe show control to fiscal We we up costs stronger the have continue continue

to softness increase and expect profit, global despite adjusted Additionally, gross continue the across significant margin, we markets, gross a EBITDA. in year-over-year

expenditures budgeted for remain and contained, keep we capital XXXX. capital to around Finally, expenditures $XX on to of track are see fiscal million we

to support Moving XX, key see the you our Slide on to pivot of areas focus, will which growth.

steps have product us to strengthening help have by both liquidity need to provide past sheet the momentum touched our proactive continued take quarters we to portfolio today, we our the over and we on the that sustain growth. to experienced have to few As balance support reinvest innovation we into with

lie our as This product with gives solutions our for we improved business confidence of We REPREVE such while us customers' opportunities innovative us, those growing are not highlighted that beyond earlier. Fiber needs initiatives creating ahead value to sustainable the also only also excited are for support of our with about that apparel but stakeholders results. an well-positioned our portfolio financial for

Operator? they Thank Unifi like thanks the now work to the would to to turn call With say again once that, that do their worldwide we for hard day. and I like for employees Lastly, would you. each dedicated every questions. open

Operator

Anthony Sidoti comes Lebiedzinski & Our first line from the of question with Company.

Anthony Lebiedzinski

different we'll few segments. first, a have I guess, So questions. I go through the

for So well. the And my impact there far storms Americas was far of like segment, out impacted sympathy think severe late for weather dollar a to as what guys as is the the called as obviously, the the maybe put sales far quarter? way a and of as you the you because impact as what I'd as you amount storms. the as But share in to also those

A.J. Eaker

September approximately Unfortunately, others linger for Sure, consolidated QX, segment. and and Thanks impact quarter the see therefore, those A.J. the impacts thanks around Carolina Anthony, We on was to specific it's X% the question, for Americas to the X% for the the quarter. some that do of basis into did and second the a North impacted. care

needs get in we're operations similar and trying the So a at as direct which up into customers point, impact back lingered this to and the have it second the chain damage to indirect seeing to we still where quarter, and sales this still some has ramp the to quarter they're for and impact supply be.

Anthony Lebiedzinski

the going to gross think So How very segment. forward? sooner those strong your And performance later. impressive should moving better margin, Obviously, XX%. we hopefully, on about sustain there, margins the gets especially ability that with then than to Brazil

Edmund Ingle

for there The But margin of question. full. quarter. from second the revenue QX our what of be at we profit us. normal generally I the will end And holiday strong. would to back gross margins that volume due of was an a a confident get running for both levels. to half, and that down and QX in exceptional quarter point very is We're the would view weakest Thanks still quarter are still say the considered is view the point we

put the year we down has place earlier, we in mentioned mentioned as capacity exited helpful, market largest calls, about there ago. since been Al on very a competitor, our earlier especially the As

Anthony Lebiedzinski

And margin it's margins here gross roughly Typically, as the back so future? mean, mid-teens in as expect segment, the of margin business. you at do the was point I then in far gross some types challenges been to a Asia XX%. the those about get understand I But China. to

A.J. Eaker

second we the programs margin out stronger couple certainly, see and this did the Anthony, pushed beyond. come segment the A the into quarter in were lower through of period. agent

the the continuing engine through to as results. long-term be course, in business. and continuing to consolidated perspective, accretive impacts there strongly midterm, contribute from Asia show Of entire our the see a margin unfortunate the and But certainly industry are growth and to certainly overall margin we to be to

long do them So certainly recent expect to term, return to some those levels. we of still

Albert Carey

which particular profitable I Anthony, very pushed line this be one it one out. very to There's line of product. can't had Al. is, mention profitable, is that

a that impact. had big So

Anthony Lebiedzinski

the it's nice Apparel. that gaining hear then traction And you're from to Beyond

You better for to us talked the segment? better lines give Apparel the Can a about as the you those markets how margins. margins much Beyond are having sense

A.J. Eaker

product primarily challenged say product replacing, reasons. are that perspective. was very because Yes, I from better but they of question. performance that a a our We're better, customers, performs significantly would that some we are fact the that an for for Thanks at in the X also innovative very, cases, providing

customer, to create allows So to our in I think we're able company. turn value to value which for offer the

our than normal we're say both product XX% And of gross on better margins these. would better margins. seeing maybe So I

Anthony Lebiedzinski

talked product and textile, And That's as far then Thermal Takebag, the good about, introductions the hear. you new as that to Loop.

to those? of as marketing some just of about whether more Do you the trade brand do kind or you've to behind think or as maybe well, appearances. should plan plan fiscal investment perspective? 'XX? like sounds just the And half How 'XX it's marketing, done back management more fiscal show you do as far it we So that do of or of

A.J. Eaker

Great these forms. the question. of landscape in Yes. that We promotion promotion in have comes know the we products. many And do to invest

These going is Europe Of Oregon. of the in did up X bigger has been. one ago, it Portland, course, coming products. received. also very But We're media was importance social see than trade another we well shows which weeks we in X to do now

where feel them get front fabrics so top in making making brands touch actual need will with to them them technical we're roadshow of they do we the that I we're can can brand see offering sustainability to a got of we're these So what feel people our this it. that to to and installation say we've product call that, on show and help the and get that really new that bringing and going people brands team help goals. we educate how their to marketing utilize sales they

are So of time part getting money spending brands. it's the this make happen. but to Part actually physically there investing and a going an is approach, We're recognize do this education. and not is crazy, some we out we X-pronged this of with

Albert Carey

is some Al. of Anthony, this

you as far? of about yes, many the strong, against of as yet capability kind are of reduction and you what as to we that. just you And with that great far so the terms of this Some as the then these when That's far products, profit guess, use as plan are will talk put to how in, They're for to maybe into me, them we're here baseball I inning cost shoulder is they come just decide about like, far companies we what what is brands. I'll savings? to the extreme. spend improvement And you thinking hear. lastly very will tell be and have done are can out efficiency efforts, as to very But get marketing their their money doing public. working the And big

A.J. Eaker

some very pleased the savings cost made on sales We're Anthony. the Sure, far so initiatives transformation. we've and of with of the progress some

one and single reinvigorate with those one business but increase efforts see continuing hold. Of course, all administrative halfway on transformation as sure to again, are take levels as outlined we've will costs many they of not Eddie need initiative. and ourselves the reduce be throughout on that through continuing We're stopping where call, based sales those efforts, to just our single we focus with to on are to volume expectations, and commercial focus outlined. continue and functions, to necessary plan make do that and a sales production We further that the those good

Albert Carey

analogy, would A.J., Anthony's what say you inning? baseball fourth

A.J. Eaker

sense Yes, or makes somewhere fourth around the right now. inning probably fifth

Anthony Lebiedzinski

Got you.

to go Assuming it extra innings. doesn't

Operator

you Ladies and call. that concludes joining. today's Thank gentlemen, all for

You may disconnect. now

Unifi (UFI) 31 Oct 242025 Q1 Earnings call transcript