Unifi Inc. scored significant gains in net sales and earnings in its fiscal first quarter, with strong performance in each product and geographic segment.
In a Nutshell: Unifi Inc., a Greensboro, N.C.-based manufacturer of recycled and synthetic yarns, on Tuesday reported its highest quarterly net sales since 2013.
Unifi issued updated expectations for its fiscal second quarter through December and for fiscal 2022 assumed there are no further significant disruptions to global markets or interruptions to global supply chains, no supplier issues in China due to electrical power limitations and no further adverse impacts from Covid-19.
For the second quarter, net sales are forecast to range between $185 million and $190 million, and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to range between $14 million and $15 million.
For the year through June, sales volume and Repreve fiber sales growth are seen driving net sales to $750 million or more, which would represent an increase of 12 percent or more from the level achieved in fiscal 2021. Adjusted EBITDA is expected to range between $65 million and $67 million.
Unifi plans for capital expenditures of approximately $40 million to $44 million, as the company continues to invest in new yarn texturing machinery within its Americas facilities.
In connection with previously anticipated investments in new yarn texturing innovation and working capital to support future growth, the company said cash and cash equivalents decreased to $49.5 million at quarter’s end from $78.3 million on June 27, 2021.
The company also noted that on Oct. 19, the U.S. Department of Commerce announced final antidumping duty deposit rates on imports of polyester textured yarn from Indonesia, Malaysia, Thailand and Vietnam in a case in which Unifi is a petitioner. The U.S. International Trade Commission is expected to announce its final determination on Nov. 30.
Sales: Net sales for the first quarter ended Sept. 26 rose 38.5 percent to $196 million from $141.5 million in the same period a year ago and increased 6.3 percent from the fourth quarter of fiscal 2021.
Unifi said the increase was primarily driven by double-digit growth across all business segments in the quarter compared to the prior-year period, which was adversely impacted by the Covid-19 pandemic. The Asia segment experienced a 36 percent rise in revenue due to volume growth, while the Brazil segment captured a 49 percent year-over-year revenue increase from pricing and sales mix.
Polyester segment revenue was up 30 percent, mainly due to pricing adjustments associated with raw material cost increases, despite moderate headwinds from import competition and input availability. Repreve fiber products continued to meet growing demand for sustainable textiles, driving underlying portfolio momentum, the company noted.
Revenues from Repreve recycled fiber products represented 37 percent of net sales, an uptick of $20.3 million from the first quarter of fiscal 2021.
Earnings: Net income was $8.7 million, or 46 cents diluted earnings per share (EPS), compared to net income of $3.4 million, or 18 cents diluted EPS for the first quarter of fiscal 2021.
Operating income increased more than fourfold to $13.3 million from to $2.9 million for the same period in 2021. Adjusted EBITDA more than doubled to $19.8 million from $9.1 million. Adjusted EBITDA for the 12 fiscal months ended Sept. 26 was $75.4 million compared to $13.3 million for the 12 fiscal months ended Sept. 27, 2020.
Gross profit was $26.1 million compared to $14.6 million for the first quarter of fiscal 2021, while gross margin was 13.3 percent versus 10.3 percent for the year-earlier period.
Unifi said combining an agile global business model and focused execution continues to offer strong opportunities to drive future growth in both profitability and cash flow.
CEO’s Take: Eddie Ingle, CEO, said: “First quarter fiscal 2022 results surpassed our expectations as strong performance in each segment enabled us to achieve our highest quarterly net sales since the June 2013 quarter. Our first quarter results demonstrate the team’s ability to expand our opportunities, grow our customer base and adapt to a rapidly changing macro environment for our industry.”
“Strong performance in Brazil and Asia contributed to the favorable results, while the polyester and nylon segments continue to demonstrate recovery from the pandemic,” Ingle added. “Momentum for Repreve fiber products in Asia, Central America and the U.S. continues to be strong, and we remain focused on growing our innovative and sustainable product portfolio. While the global business setting is still dynamic, these strong results, along with the dedication of our employees and our diverse global strategy, provide us with a solid starting point to achieve our fiscal 2022 targets.”