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Unifi Reports Upbeat Q1 Results Despite Brazilian Real Devaluation

Unifi Repreve

Improving margins in its Chinese subsidiary and an increase in polyester volume helped yarn producer Unifi Inc. post a profit for the first quarter of fiscal 2016.

The Greensboro, North Carolina-based company said Wednesday that in spite of lower earnings from its Parkdale America affiliate and the fallout from the Brazilian real devaluation, it achieved net income of $8.0 million, or $0.45 per basic share, up 13.3 percent from $7.1 million, or $0.39 per basic share, in the year-ago period.

Gross profit improved to $21.0 million, or 12.9% of net sales, from $20.5 million, or 11.6%, while the company cited the repurchase of nearly 180,000 shares of common stock at $5.4 million as another highlight.

But while net sales were down from $175.5 million to $162.2 million for the quarter, operating income increased by more than $2 million, owing to the strong performance of Unifi’s regional texturing business and such value-added products as its Repreve fiber, which is made from recycling used plastic bottles.

“We continue to see improvements in the areas of our business that we are supporting through strategic capital expenditures,” said Roger Berrier, president and chief operating officer of Unifi. “The company is supporting the growth of its premier value-added products with several capital investments, including the expansion of our existing Repreve Recycling Center and the construction of a plastic bottle processing plant scheduled to start up in May 2016.”

He added, “We will also explore opportunities to meet increased demand in the NAFTA (North American Free Trade Agreement) and CAFTA (Central America Free Trade Agreement) regions over the next 18 months. The region continues to grow at an average annual rate of approximately 5 percent and presents opportunities for us to grow our texturing operations.”

Exiting the quarter ended Sept. 27, the company had cash and cash equivalents of $10.0 million—flat compared to June 28. Net debt (which is total debt minus cash and cash equivalents) for the period was $118.3 million, compared to $94.1 million for the previous quarter.

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“I am pleased with the company’s operating results in the September quarter, indicative of the earnings momentum that continued into this fiscal year. Our commitment to mix enrichment, along with an ongoing focus on driving operational excellence throughout the organization, will help achieve further improvements in our domestic and international businesses over the next several quarters,” said Bill Jasper, chairman and CEO of Unifi. “We are committed to further expanding the global availability of our premier value-added products, profitably growing our business and driving improvement in shareholder value.”