GREENSBORO - UNIFI, Inc. (NYSE: UFI) (together with its consolidated subsidiaries, 'UNIFI'), makers of REPREVE and one of the world's leading innovators in recycled and synthetic yarns, today released operating results for the second fiscal quarter ended December 31, 2023.
Second Quarter Fiscal 2024 Overview
Net sales were $136.9 million, an increase of 0.5% from the second quarter of fiscal 2023, driven by higher sales volumes that were muted by lower pricing in response to lower raw material costs.
Revenues from REPREVE Fiber products were $45.7 million and represented 33% of net sales.
Gross profit was $1.6 million and gross margin was 1.2%, representing sequential-quarter and year-over-year improvements through existing cost saving initiatives, successful execution of renewed commercial efforts, and stabilized input costs.
Net loss was $19.8 million, or ($1.10) per share, compared to net loss of $18.0 million. Adjusted Net Loss was $14.7 million, which excludes $5.1 million of restructuring costs, compared to Adjusted Net Loss of $21.8 million for the second quarter of fiscal 2023, which excluded $3.8 million of income tax recoveries in Brazil.
Adjusted EBITDA, which also excludes $5.1 million of restructuring costs, was ($5.5) million, compared to ($13.0) million for the second quarter of fiscal 2023.
Company continued and expanded cost efficiency measures to streamline operations and reduce expenses across the business.
Company recently announced the promotion of key executive leaders to complement the Company's Profitability Improvement Plan implemented in December 2023, which is focused on streamlining operations and reducing costs.
Adjusted Net Loss, Adjusted EBITDA and Net Debt are non-GAAP financial measures. The schedules included in this press release reconcile each non-GAAP financial measure to its most directly comparable GAAP financial measure.
Eddie Ingle, Chief Executive Officer of UNIFI, Inc., stated, 'Our second quarter fiscal 2024 results were in line with our expectations and reflect sequential improvement in our underlying gross profit performance, despite the negative impact from the ongoing challenges in the apparel industry and its supply chains. The recent strategic actions aimed at further reducing ongoing costs, optimizing our operations, and enhancing profitability will strengthen our position for the anticipated recovery in apparel demand in calendar 2024.'
Ingle continued, 'Our focus remains on maintaining a disciplined approach to cost management and leveraging operational efficiencies in the short-term environment, but we will continue to invest prudently to support long-term growth and innovation for greater revenues and accretive margins. We are excited about the opportunities across the globe that expand our beyond apparel initiatives and build on our REPREVE Fiber business.'
Second Quarter Fiscal 2024 Compared to Second Quarter Fiscal 2023
Net sales of $136.9 million were relatively unchanged compared to $136.2 million, primarily due to lower average selling prices resulting from lower raw material costs. The Americas Segment experienced modest volume improvement, although sales levels remain below historical averages as a result of weakened demand for fiber in the apparel sector. The Brazil Segment maintained its increased market share with strong sales volumes while facing ongoing pricing pressures from competitive imports. The Asia Segment continued to experience weak apparel demand levels but attained a diverse sales mix.
Gross profit of $1.6 million improved significantly compared to ($8.0) million. Americas Segment gross profit increased $6.3 million, primarily driven by variable cost management efforts and more stable raw material costs. Brazil Segment gross profit improved $1.8 million from higher sales volumes, which were partially offset by unfavorable import pricing dynamics. The Asia Segment continued to demonstrate portfolio strength with a rich mix of REPREVE products, achieving a gross profit increase of $1.5 million and 250 basis points of incremental gross margin.
Operating loss was $17.6 million compared to $19.8 million, aligning with the improvement in gross profit, partially offset by $5.1 million of restructuring costs and $1.3 million of bad debt expense. Net loss was $19.8 million compared to $18.0 million. Adjusted EPS was ($0.81) and Adjusted EBITDA was ($5.5) million, which exclude the $5.1 million of restructuring costs, comprised of $2.7 million related to the dissolution of an unprofitable joint venture and $2.4 million of severance costs.
Fiscal 2024 Outlook
UNIFI expects the following third quarter fiscal 2024 results: Net sales between $149.0 million and $154.0 million; Adjusted EBITDA between ($2.0) million and $1.0 million; Capital expenditures between $4.0 million and $5.0 million and Continued volatility in the effective tax rate.
Additionally, UNIFI expects sequential improvement from the third quarter to the fourth quarter of fiscal 2024.
Ingle concluded, 'While the apparel industry recession has persisted longer than we anticipated, we believe we will see an improved competitive environment moving forward. As one of the strongest textile solutions providers in the world, we stand to expand our global market share and accelerate our financial performance as our industry returns to growth. Further, our recently announced cost reset and commercial improvements should amplify quarterly revenue and earnings on a sequential basis. Our potential in Asia and Brazil continues to shine, demonstrating the strength of our dynamic global business model. As the demand in the Americas normalizes and the industry stabilizes, the results of our recent efforts to strengthen the business will become even more evident as we close our fiscal 2024.'
Second Quarter Fiscal 2024 Earnings Conference Call
UNIFI will provide additional commentary regarding its second quarter 2024 results and other developments during its earnings conference call on February 1, 2024, at 8:30 a.m., Eastern Time. The call can be accessed via a live audio webcast on UNIFI's website at http://investor.UNIFI.com. Additional supporting materials and information related to the call will also be available on UNIFI's website.
About UNIFI
UNIFI, Inc. (NYSE: UFI) is a global textile solutions provider and one of the world's leading innovators in manufacturing synthetic and recycled performance fibers. Through REPREVE, one of UNIFI's proprietary technologies and the global leader in branded recycled performance fibers, UNIFI has transformed more than 40 billion plastic bottles into recycled fiber for new apparel, footwear, home goods, and other consumer products. UNIFI continually innovates technologies to meet consumer needs in moisture management, thermal regulation, antimicrobial protection, UV protection, stretch, water resistance, and enhanced softness. UNIFI collaborates with many of the world's most influential brands in the sports apparel, fashion, home, automotive, and other industries. For more information about UNIFI, visit www.UNIFI.com.
Cautionary Statement on Forward-Looking Statements
Certain statements included herein contain 'forward-looking statements' within the meaning of federal securities laws about the financial condition and results of operations of UNIFI that are based on management's beliefs, assumptions and expectations about our future economic performance, considering the information currently available to management. An example of such forward-looking statements include, among others, guidance pertaining to our financial outlook. The words 'believe,' 'may,' 'could,' 'will,' 'should,' 'would,' 'anticipate,' 'plan,' 'estimate,' 'project,' 'expect,' 'intend,' 'seek,' 'strive' and words of similar import, or the negative of such words, identify or signal the presence of forward-looking statements. These statements are not statements of historical fact, and they involve risks and uncertainties that may cause our actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition that we express or imply in any forward-looking statement.
Factors that could contribute to such differences include, but are not limited to: the competitive nature of the textile industry and the impact of global competition; changes in the trade regulatory environment and governmental policies and legislation; the availability, sourcing and pricing of raw materials; general domestic and international economic and industry conditions in markets where UNIFI competes, including economic and political factors over which UNIFI has no control; changes in consumer spending, customer preferences, fashion trends and end uses for products; the financial condition of UNIFI's customers; the loss of a significant customer or brand partner; natural disasters, industrial accidents, power or water shortages, extreme weather conditions and other disruptions at one of our facilities; the disruption of operations, global demand, or financial performance as a result of catastrophic or extraordinary events, including epidemics or pandemics such as the recent strain of coronavirus; the success of UNIFI's strategic business initiatives; the volatility of financial and credit markets; the ability to service indebtedness and fund capital expenditures and strategic business initiatives; the availability of and access to credit on reasonable terms; changes in foreign currency exchange, interest and inflation rates; fluctuations in production costs; the ability to protect intellectual property; the strength and reputation of our brands; employee relations; the ability to attract, retain and motivate key employees; the impact of climate change or environmental, health and safety regulations and the impact of tax laws, the judicial or administrative interpretations of tax laws and/or changes in such laws or interpretations.
All such factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. New factors emerge from time to time, and it is not possible for management to predict all such factors or to assess the impact of each such factor on UNIFI. Any forward-looking statement speaks only as of the date on which such statement is made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, except as may be required by federal securities laws. The above and other risks and uncertainties are described in UNIFI's most recent Annual Report on Form 10-K, and additional risks or uncertainties may be described from time to time in other reports filed by UNIFI with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.
Contact:
Tel: 312-445-2870
Email: UFI@alpha-ir.com
UNIFI, INC. 
