Repreve has recycled over 14 billion plastic bottles to date. © Unifi

Unifi, one of the leading innovators in recycled and synthetic yarns, has released operating results for the first quarter of fiscal 2020 ended on 29 September 2019. Net income of US$ 3.7 million exhibited substantial growth from the first quarter of fiscal 2019, despite a larger loss from PAL in the first quarter of fiscal 2020. Sales volumes increased by 16% compared to the first quarter of fiscal 2019, led by Repreve-branded products.

“Underlying sales growth was led by our Repreve-branded products, as our strategy and portfolio in Asia continue to be validated, helping us to achieve our revenue expectations for the first quarter of fiscal 2020," said Tom Caudle, President and COO of Unifi. “Profitability was aided by our previously communicated step-down in SG&A, along with a more favorable raw material cost environment in the U.S.  While we recognize that the current business environment in the U.S. is challenging and our Brazil Segment was impacted by elevated raw material costs, we are pleased with our operating cash flows and earnings in the first fiscal quarter and look to carry that momentum into the remainder of fiscal 2020.”

“Consistent with the timeline we have previously communicated, before the end of calendar 2019, we expect finalization of our October 2018 trade petitions and look forward to providing further updates in due time.”

Results

Net sales in the first quarter of fiscal 2020 were US$ 179.9 million, compared to US$ 181.6 million.  The first quarter of fiscal 2020 consisted of 13 weeks of domestic operations, compared to 14 weeks of domestic operations in the first quarter of fiscal 2019. Sales volumes grew 16%, led by Asia, which lowered consolidated average selling prices.

Gross profit decreased to US$ 17.4 million, from US$ 20.0 million, primarily attributable to competitive pricing pressures that were most pronounced in Brazil and Asia, along with a higher proportion of sales in Asia.

Operating income increased to US$ 6.3 million, from US$ 5.7 million, primarily due to lower expenses stemming from SG&A reductions that began in the second half of fiscal 2019. Net income was US$ 3.7 million, compared to US$ 1.8 million, and EPS was US$ 0.20, compared to US$ 0.10. Adjusted EBITDA was US$ 12.3 million, compared to US$ 11.9 million.

Fiscal 2020 outlook

For fiscal 2020, the company reaffirmed its previously announced expectations:

• High-single-digit percentage growth from fiscal 2019 for sales volumes
• Mid-single-digit percentage growth from fiscal 2019 for net sales
• Operating income between US$ 22 million and US$ 27 million, over 100% growth from 2019
• Adjusted EBITDA between US$ 47 million and US$ 52 million, over 25% growth from 2019
• Capital expenditures of approximately US$ 25 million
• An effective tax rate not to exceed 25%

“With the assumption that raw material costs remain stable for the remainder of fiscal 2020, we are reaffirming our fiscal 2020 outlook. We continue to project growth from fiscal 2019 that includes continued top-line expansion, a doubling of operating income, substantial improvement in our effective tax rate and a significant increase in net income and Adjusted EBITDA,” concluded Mr Caudle.

www.unifi.com