Unifi Inc (UFI, Financial), a global innovator in recycled and synthetic yarns, released its first quarter fiscal 2024 results on November 1, 2023. The company reported a decrease in net sales by 22.7% from the first quarter of fiscal 2023, primarily due to weak apparel demand from brands and retailers. Despite the decrease in sales, the company managed to reduce its net debt from $93.9 million to $90.0 million, thanks to disciplined cost control measures and reduced capital expenditures.
Financial Performance
Unifi Inc (UFI, Financial) reported net sales of $138.8 million, a decrease of 22.7% from the first quarter of fiscal 2023. The company attributed this decrease primarily to weak apparel demand from brands and retailers. Despite the decrease in sales, the company's operating activities provided cash of $7.1 million and, primarily in combination with lower capital expenditure levels, generated a $4.6 million increase in cash.
The company's debt principal was $141.5 million and Net Debt was $90.0 million at October 1, 2023, compared to $140.9 million of debt principal and Net Debt of $93.9 million at July 2, 2023. The company reported a gross loss of $0.6 million, gross margin was (0.4)%, and each was adversely impacted by lower apparel demand. The net loss was $13.3 million, or ($0.73) per share. Adjusted EBITDA was ($4.8) million.
Company's Outlook
Despite the challenging environment, Unifi Inc (UFI, Financial) remains optimistic about its future. The company expects its second quarter fiscal 2024 net sales, Adjusted EBITDA, and capital expenditures to be generally consistent with first quarter fiscal 2024 results. The company is also encouraged by several opportunities to further diversify the business beyond apparel and leverage the market share gains in North America that it expects to see in the next few quarters.
Key Financial Tables
The company's net sales decreased to $138.8 million, from $179.5 million, primarily due to weak fiber demand for apparel driving a less favorable sales mix and lower average selling prices. The gross loss was $0.6 million compared to a gross profit of $6.6 million. The operating loss was $12.0 million compared to $4.7 million, following the decrease in gross profit. The net loss was $13.3 million compared to $7.8 million.
Operating activities provided cash of $7.1 million compared to using ($5.9) million. Accordingly, diligent cost, working capital, and spend management allowed a reduction in Net Debt to $90.0 million on October 1, 2023 from $93.9 million on July 2, 2023.
Explore the complete 8-K earnings release (here) from Unifi Inc for further details.
