Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Unifi Inc (UFI, Financial) reported a 6% year-over-year increase in consolidated net sales for the first quarter of fiscal 2025.
- The company's REPREVE innovation is gaining positive reception globally, with new products like Thermo Loop expected to boost sales.
- The Brazil segment showed strong performance with a 15% year-over-year increase in net sales, driven by market share gains and favorable pricing.
- Unifi Inc (UFI) is seeing traction in its beyond apparel business, particularly in home, carpet, military, and packaging segments.
- Cost reduction efforts in North America are expected to improve profitability in the second half of the fiscal year.
Negative Points
- The Asia segment experienced a slowdown due to economic struggles in China and pricing pressures, impacting sales volume.
- REPREVE sales decreased slightly due to the slowdown in the Asia business.
- The Americas segment faced a modest slowdown due to seasonality and impacts from Hurricane Helene.
- Unifi Inc (UFI) expects a challenging second quarter with projected net sales between $140 million and $145 million, and adjusted EBITDA ranging from negative $4 million to negative $2 million.
- The company is still in the early stages of its cost reduction and sales transformation efforts, indicating ongoing challenges in achieving efficiency savings.
Q & A Highlights
Q: Can you quantify the sales impact from the severe weather in the Americas segment?
A: A.J. Eaker, CFO, stated that the impact was approximately 1% on a consolidated basis and around 2% specific to the Americas segment. Some impacts have lingered into the second quarter as well.
Q: How sustainable are the strong margins in the Brazil segment?
A: Eddie Ingle, CEO, noted that while Q1 was exceptional, Q2 is typically weaker due to seasonality. However, they expect to return to normal margins and gross profit levels in the second half, supported by strong volume and market share gains.
Q: Do you expect the Asia segment to return to historical gross margin levels?
A: A.J. Eaker, CFO, expressed confidence in Asia's long-term growth potential and its ability to contribute positively to consolidated margins, despite current challenges.
Q: How do margins in the beyond apparel markets compare to traditional segments?
A: Eddie Ingle, CEO, mentioned that margins in the beyond apparel markets are about 30% better due to innovative products and replacing underperforming products.
Q: What are your plans for marketing new products like textile takeback and Thermo Loop?
A: Eddie Ingle, CEO, explained that they are investing in promotion through social media, trade shows, and direct brand engagement to educate and showcase the products, with support from major brands.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
