Unifi Inc. reported earnings more than doubled in the first quarter ended September 26 as sales grew 38.5 percent. The producer of recycled and synthetic yarns raised its outlook for the year.

First Quarter Fiscal 2022 Overview

  • Net sales were $196.0 million, representing an increase of 38.5 percent from the first quarter of fiscal 2021 and an increase of 6.3 percent from the fourth quarter of fiscal 2021.
  • Revenues from Repreve Fiber products represented 37 percent of net sales, which was an increase of $20.3 million from the first quarter of fiscal 2021.
  • 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 compared to 10.3 percent for the first quarter of fiscal 2021.
  • Operating income was $13.3 million compared to $2.9 million for the first quarter of fiscal 2021.
  • Net income was $8.7 million, or $0.46 diluted earnings per share (“EPS”), compared to net income of $3.4 million, or $0.18 diluted EPS for the first quarter of fiscal 2021.
  • Adjusted EBITDA more than doubled to $19.8 million compared to $9.1 million in the first quarter of fiscal 2021.
  • Adjusted EBITDA for the 12 fiscal months ended September 26, 2021 was $75.4 million compared to $13.3 million for the 12 fiscal months ended September 27, 2020.

Eddie Ingle, CEO, Unifi, 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. Momentum for REPREVE® Fiber products in Asia, Central America, and the U.S. continue 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.”

First Quarter Fiscal 2022 Compared to First Quarter Fiscal 2021
Net sales in the first quarter of fiscal 2022 were $196.0 million, compared to $141.5 million in the same period a year ago. The increase was primarily driven by double-digit growth across all business segments in the first quarter of fiscal 2022 compared to the prior year’s first quarter, which was adversely impacted by the pandemic. The Asia Segment experienced a 36 percent increase 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 increased 30 percent, primarily due to pricing adjustments associated with raw material cost increases, notwithstanding moderate headwinds experienced from import competition and input availability. Repreve Fiber products continue to meet the ever-growing demand for sustainable textiles, driving underlying portfolio momentum.

Gross profit increased 79 percent to $26.1 million, from $14.6 million in the first quarter of fiscal 2021. In addition to recovery from the adverse impacts of the pandemic on the first quarter of fiscal 2021, the increase in gross profit was mainly due to an improved sales mix and pricing for both the Polyester Segment and the Brazil Segment, along with sales growth for the Asia Segment.

Operating income increased substantially to $13.3 million compared to $2.9 million in the first quarter of fiscal 2021, primarily due to the increase in gross profit. Net income was $8.7 million, or diluted EPS of $0.46, compared to $3.4 million, or $0.18 per share. Adjusted EBITDA was $19.8 million, compared to $9.1 million. Combining an agile global business model and focused execution continues to offer strong opportunities to drive future growth in both profitability and cash flow.

Debt principal was $84.3 million on September 26, 2021 compared to $86.9 million on June 27, 2021. In connection with previously anticipated investments in new yarn texturing innovation and working capital to support future growth, cash and cash equivalents decreased to $49.5 million on September 26, 2021, from $78.3 million on June 27, 2021. Accordingly, Net Debt1 was $34.8 million on September 26, 2021 versus $8.6 million on June 27, 2021.

Outlook
The following are the company’s expectations for the fiscal quarter ending December 2021 (Q2 2022) and fiscal 2022, assuming 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.

Q2 2022

  • Net sales to range between $185.0 million and $190.0 million; and
  • Adjusted EBITDA to range between $14.0 million and $15.0 million.

Fiscal 2022

  • Sales volume and Repreve Fiber sales growth 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 to range between $65.0 million and $67.0 million;
  • An effective tax rate between 35 percent and 40 percent, assuming no significant changes in existing tax legislation; and
  • Capital expenditures of approximately $40.0 million to $44.0 million, as the company continues its plan to invest in new yarn texturing machinery within its Americas facilities. Such capital expenditure levels will be funded by cash-on-hand and available financing arrangements and are inclusive of approximately $10.0 million to $12.0 million of routine annual maintenance.

Ingle concluded, “I’d like to thank all of our employees around the globe for their continued dedication and strong execution, specifically their proactive navigation of temporary supply chain disruptions, input shortages and cost volatility, and labor availability. Given our regional focus and global commercial model, I remain confident that we will maintain a high level of performance to mitigate short-term headwinds, especially as we continue our focus on sustainable growth for Unifi and delivering long-term value for our shareholders.”

Photo courtesy Unifi/Repreve