UNIFI®, Makers of REPREVE®, Announces First Quarter Fiscal 2024 Results
Disciplined cost control measures and reduced capital expenditures aided cash generation
Business remains well positioned for apparel demand recovery
First Quarter Fiscal 2024 Overview
-
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. -
Debt principal was
$141.5 million and Net Debt was$90.0 million atOctober 1, 2023 , compared to$140.9 million of debt principal and Net Debt of$93.9 million atJuly 2, 2023 . -
Net sales were
$138.8 million , a decrease of 22.7% from the first quarter of fiscal 2023, primarily due to weak apparel demand from brands and retailers. -
Revenues from REPREVE Fiber products were
$42.5 million and represented 31% of net sales, a sequential-quarter and year-over-year increase as a percentage of net sales. -
Gross loss was
$0.6 million , gross margin was (0.4)%, and each was adversely impacted by lower apparel demand. -
Net loss was
$13.3 million , or ($0.73 ) per share. Adjusted EBITDA was($4.8) million .
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. |
Ingle continued, "We are encouraged by several opportunities to further diversify the business beyond apparel and leverage the market share gains in
First Quarter Fiscal 2024 Compared to First Quarter Fiscal 2023
Net sales decreased to
Gross loss was
Operating loss was
Operating activities provided cash of
Second Quarter Fiscal 2024 Outlook
Ingle concluded, "While the pace of recovery across our business and the apparel industry has been slower than we anticipated, we are encouraged by the progress made with our beyond apparel strategic initiatives. The conversations we are having with customers are promising and we anticipate that calendar 2024 will bring an improved demand environment. As the leading global supplier of sustainable fibers, we remain optimistic about our long-term growth prospects, underscored by our team’s ability to drive innovation, grow the REPREVE brand, and increase market share."
First Quarter Fiscal 2024 Earnings Conference Call
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About
Financial Statements, Business Segment Information and Reconciliations of Reported Results to Adjusted Results to Follow
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts) |
||||||||
|
|
For the Three Months Ended |
|
|||||
|
|
|
|
|
|
|
||
Net sales |
|
$ |
138,844 |
|
|
$ |
179,519 |
|
Cost of sales |
|
|
139,419 |
|
|
|
172,956 |
|
Gross (loss) profit |
|
|
(575 |
) |
|
|
6,563 |
|
Selling, general and administrative expenses |
|
|
11,609 |
|
|
|
11,773 |
|
(Benefit) provision for bad debts |
|
|
(209 |
) |
|
|
174 |
|
Other operating expense (income), net |
|
|
54 |
|
|
|
(689 |
) |
Operating loss |
|
|
(12,029 |
) |
|
|
(4,695 |
) |
Interest income |
|
|
(581 |
) |
|
|
(547 |
) |
Interest expense |
|
|
2,485 |
|
|
|
1,247 |
|
Equity in earnings of unconsolidated affiliates |
|
|
(200 |
) |
|
|
(295 |
) |
Loss before income taxes |
|
|
(13,733 |
) |
|
|
(5,100 |
) |
(Benefit) provision for income taxes |
|
|
(463 |
) |
|
|
2,734 |
|
Net loss |
|
$ |
(13,270 |
) |
|
$ |
(7,834 |
) |
|
|
|
|
|
|
|
||
Net loss per common share: |
|
|||||||
Basic |
|
$ |
(0.73 |
) |
|
$ |
(0.44 |
) |
Diluted |
|
$ |
(0.73 |
) |
|
$ |
(0.44 |
) |
|
|
|
|
|
|
|
||
Weighted average common shares outstanding: |
|
|||||||
Basic |
|
|
18,084 |
|
|
|
18,001 |
|
Diluted |
|
|
18,084 |
|
|
|
18,001 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) |
||||||||
|
|
|
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
51,515 |
|
|
$ |
46,960 |
|
Receivables, net |
|
|
78,706 |
|
|
|
83,725 |
|
Inventories |
|
|
136,092 |
|
|
|
150,810 |
|
Income taxes receivable |
|
|
1,592 |
|
|
|
238 |
|
Other current assets |
|
|
9,419 |
|
|
|
12,327 |
|
Total current assets |
|
|
277,324 |
|
|
|
294,060 |
|
Property, plant and equipment, net |
|
|
212,634 |
|
|
|
218,521 |
|
Operating lease assets |
|
|
7,576 |
|
|
|
7,791 |
|
Deferred income taxes |
|
|
4,094 |
|
|
|
3,939 |
|
Other non-current assets |
|
|
14,633 |
|
|
|
14,508 |
|
Total assets |
|
$ |
516,261 |
|
|
$ |
538,819 |
|
|
|
|
|
|
|
|
||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
37,064 |
|
|
$ |
44,455 |
|
Income taxes payable |
|
|
996 |
|
|
|
789 |
|
Current operating lease liabilities |
|
|
1,885 |
|
|
|
1,813 |
|
Current portion of long-term debt |
|
|
12,323 |
|
|
|
12,006 |
|
Other current liabilities |
|
|
16,443 |
|
|
|
12,932 |
|
Total current liabilities |
|
|
68,711 |
|
|
|
71,995 |
|
Long-term debt |
|
|
128,890 |
|
|
|
128,604 |
|
Non-current operating lease liabilities |
|
|
5,842 |
|
|
|
6,146 |
|
Deferred income taxes |
|
|
2,999 |
|
|
|
3,364 |
|
Other long-term liabilities |
|
|
4,790 |
|
|
|
5,100 |
|
Total liabilities |
|
|
211,232 |
|
|
|
215,209 |
|
|
|
|
|
|
|
|
||
Commitments and contingencies |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Common stock |
|
|
1,808 |
|
|
|
1,808 |
|
Capital in excess of par value |
|
|
69,130 |
|
|
|
68,901 |
|
Retained earnings |
|
|
293,522 |
|
|
|
306,792 |
|
Accumulated other comprehensive loss |
|
|
(59,431 |
) |
|
|
(53,891 |
) |
Total shareholders’ equity |
|
|
305,029 |
|
|
|
323,610 |
|
Total liabilities and shareholders’ equity |
|
$ |
516,261 |
|
|
$ |
538,819 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) |
||||||||
|
|
For the Three Months Ended |
|
|||||
|
|
|
|
|
|
|
||
Cash and cash equivalents at beginning of period |
|
$ |
46,960 |
|
|
$ |
53,290 |
|
Operating activities: |
|
|
|
|
|
|
||
Net loss |
|
|
(13,270 |
) |
|
|
(7,834 |
) |
Adjustments to reconcile net loss to net cash provided (used) by operating activities: |
|
|
|
|
|
|
||
Equity in earnings of unconsolidated affiliates |
|
|
(200 |
) |
|
|
(295 |
) |
Depreciation and amortization expense |
|
|
7,026 |
|
|
|
6,740 |
|
Non-cash compensation expense |
|
|
212 |
|
|
|
633 |
|
Deferred income taxes |
|
|
(679 |
) |
|
|
(373 |
) |
Other, net |
|
|
(62 |
) |
|
|
324 |
|
Changes in assets and liabilities |
|
|
14,092 |
|
|
|
(5,087 |
) |
Net cash provided (used) by operating activities |
|
|
7,119 |
|
|
|
(5,892 |
) |
|
|
|
|
|
|
|
||
Investing activities: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
(2,937 |
) |
|
|
(11,198 |
) |
Other, net |
|
|
457 |
|
|
|
(222 |
) |
Net cash used by investing activities |
|
|
(2,480 |
) |
|
|
(11,420 |
) |
|
|
|
|
|
|
|
||
Financing activities: |
|
|
|
|
|
|
||
Proceeds from long-term debt |
|
|
31,100 |
|
|
|
67,949 |
|
Payments on long-term debt |
|
|
(30,513 |
) |
|
|
(55,236 |
) |
Other, net |
|
|
17 |
|
|
|
— |
|
Net cash provided by financing activities |
|
|
604 |
|
|
|
12,713 |
|
|
|
|
|
|
|
|
||
Effect of exchange rate changes on cash and cash equivalents |
|
|
(688 |
) |
|
|
(1,491 |
) |
Net increase (decrease) in cash and cash equivalents |
|
|
4,555 |
|
|
|
(6,090 |
) |
Cash and cash equivalents at end of period |
|
$ |
51,515 |
|
|
$ |
47,200 |
|
BUSINESS SEGMENT INFORMATION |
||||||||
(Unaudited) |
||||||||
(In thousands) |
||||||||
Net sales and gross (loss) profit details for each reportable segment of |
||||||||
|
|
For the Three Months Ended |
|
|||||
|
|
|
|
|
|
|
||
|
|
$ |
81,573 |
|
|
$ |
107,644 |
|
|
|
|
29,909 |
|
|
|
38,879 |
|
|
|
|
27,362 |
|
|
|
32,996 |
|
Consolidated net sales |
|
$ |
138,844 |
|
|
$ |
179,519 |
|
|
|
For the Three Months Ended |
|
|||||
|
|
|
|
|
|
|
||
|
|
$ |
(7,380 |
) |
|
$ |
(4,869 |
) |
|
|
|
2,167 |
|
|
|
6,787 |
|
|
|
|
4,638 |
|
|
|
4,645 |
|
Consolidated gross (loss) profit |
|
$ |
(575 |
) |
|
$ |
6,563 |
|
RECONCILIATIONS OF REPORTED RESULTS TO ADJUSTED RESULTS (Unaudited) (In thousands) |
||||||||
EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)
The reconciliations of the amounts reported under |
||||||||
|
|
For the Three Months Ended |
|
|||||
|
|
|
|
|
|
|
||
Net loss |
|
$ |
(13,270 |
) |
|
$ |
(7,834 |
) |
Interest expense, net |
|
|
1,904 |
|
|
|
700 |
|
(Benefit) provision for income taxes |
|
|
(463 |
) |
|
|
2,734 |
|
Depreciation and amortization expense (1) |
|
|
6,988 |
|
|
|
6,697 |
|
EBITDA |
|
|
(4,841 |
) |
|
|
2,297 |
|
|
|
|
|
|
|
|
||
Other adjustments (2) |
|
|
— |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
(4,841 |
) |
|
$ |
2,297 |
|
(1) |
Within this reconciliation, depreciation and amortization expense excludes the amortization of debt issuance costs, which are reflected in interest expense, net. Within the condensed consolidated statements of cash flows, amortization of debt issuance costs is reflected in depreciation and amortization expense. |
|
(2) |
For the periods presented, there were no other adjustments necessary to reconcile Net loss to Adjusted EBITDA. |
Net Debt (Non-GAAP Financial Measure)
Reconciliations of Net Debt are as follows: |
||||||||
|
|
|
|
|
|
|
||
Long-term debt |
|
$ |
128,890 |
|
|
$ |
128,604 |
|
Current portion of long-term debt |
|
|
12,323 |
|
|
|
12,006 |
|
Unamortized debt issuance costs |
|
|
274 |
|
|
|
289 |
|
Debt principal |
|
|
141,487 |
|
|
|
140,899 |
|
Less: cash and cash equivalents |
|
|
51,515 |
|
|
|
46,960 |
|
Net Debt |
|
$ |
89,972 |
|
|
$ |
93,939 |
|
Cash and cash equivalents |
At |
REPREVE Fiber |
REPREVE Fiber represents UNIFI’s collection of fiber products on its recycled platform, with or without added technologies. |
Non-GAAP Financial Measures
Certain non-GAAP financial measures included herein are designed to complement the financial information presented in accordance with GAAP. These non-GAAP financial measures include Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), Adjusted EBITDA, Adjusted Net (Loss) Income, Adjusted EPS, and Net Debt (together, the “non-GAAP financial measures”).
- EBITDA represents Net (loss) income before net interest expense, income tax expense, and depreciation and amortization expense.
-
Adjusted EBITDA represents EBITDA adjusted to exclude, from time to time, certain adjustments necessary to understand and compare the underlying results of
UNIFI . -
Adjusted Net (Loss) Income represents Net (loss) income calculated under GAAP adjusted to exclude certain amounts. Management believes the excluded amounts do not reflect the ongoing operations and performance of
UNIFI and/or exclusion may be necessary to understand and compare the underlying results ofUNIFI . - Adjusted EPS represents Adjusted Net (Loss) Income divided by UNIFI’s weighted average common shares outstanding.
- Net Debt represents debt principal less cash and cash equivalents.
The non-GAAP financial measures are not determined in accordance with GAAP and should not be considered a substitute for performance measures determined in accordance with GAAP. The calculations of the non-GAAP financial measures are subjective, based on management’s belief as to which items should be included or excluded in order to provide the most reasonable and comparable view of the underlying operating performance of the business. We may, from time to time, modify the amounts used to determine our non-GAAP financial measures.
We believe that these non-GAAP financial measures better reflect UNIFI’s underlying operations and performance and that their use, as operating performance measures, provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets, among otherwise comparable companies.
Management uses Adjusted EBITDA (i) as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis, as it removes the impact of (a) items directly related to our asset base (primarily depreciation and amortization) and (b) items that we would not expect to occur as a part of our normal business on a regular basis; (ii) for planning purposes, including the preparation of our annual operating budget; (iii) as a valuation measure for evaluating our operating performance and our capacity to incur and service debt, fund capital expenditures, and expand our business; and (iv) as one measure in determining the value of other acquisitions and dispositions. Adjusted EBITDA is a key performance metric utilized in the determination of variable compensation. We also believe Adjusted EBITDA is an appropriate supplemental measure of debt service capacity, because it serves as a high-level proxy for cash generated from operations.
Management uses Adjusted Net (Loss) Income and Adjusted EPS (i) as measurements of net operating performance because they assist us in comparing such performance on a consistent basis, as they remove the impact of (a) items that we would not expect to occur as a part of our normal business on a regular basis and (b) components of the provision for income taxes that we would not expect to occur as a part of our underlying taxable operations; (ii) for planning purposes, including the preparation of our annual operating budget; and (iii) as measures in determining the value of other acquisitions and dispositions.
Management uses Net Debt as a liquidity and leverage metric to determine how much debt would remain if all cash and cash equivalents were used to pay down debt principal.
In evaluating non-GAAP financial measures, investors should be aware that, in the future, we may incur expenses similar to the adjustments included herein. Our presentation of non-GAAP financial measures should not be construed as indicating that our future results will be unaffected by unusual or non-recurring items. Each of our non-GAAP financial measures has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for analysis of our results or liquidity measures as reported under GAAP. Some of these limitations are (i) it is not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows; (ii) it does not reflect the impact of earnings or charges resulting from matters we consider not indicative of our ongoing operations; (iii) it does not reflect changes in, or cash requirements for, our working capital needs; (iv) it does not reflect the cash requirements necessary to make payments on our debt; (v) it does not reflect our future requirements for capital expenditures or contractual commitments; (vi) it does not reflect limitations on or costs related to transferring earnings from our subsidiaries to us; and (vii) other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure.
Because of these limitations, these non-GAAP financial measures should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations, including those under our outstanding debt obligations. Investors should compensate for these limitations by relying primarily on our GAAP results and using these measures only as supplemental information.
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
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
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
-end-
View source version on businesswire.com: https://www.businesswire.com/news/home/20231101282593/en/
312-445-2870
UFI@alpha-ir.com
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