Yarn & Fiber

2021-08-05

Unifi announces robust fourth quarter and fiscal 2021 results

Unifi, Inc. (NYSE: UFI), one of the world’s leading innovators in recycled and synthetic yarns, today released operating results for the fourth fiscal quarter and fiscal year ended June 27, 2021.

Fourth Quarter Fiscal 2021 Overview

• Net sales were $184.4 million, representing an increase of 114% from the fourth quarter of fiscal 2020 and an increase of 3% from the third quarter of fiscal 2021.

• Revenues from REPREVE® Fiber products represented 38% of consolidated net sales, compared to 28% for the fourth quarter of fiscal 2020.

• Gross profit was $27.4 million, while gross margin was 14.9%, as focused execution helped offset pressure from higher input costs.

• Net income of $13.4 million, or $0.70 of diluted earnings per share (“EPS”), compared to a net loss of $20.2 million, or $1.10 loss per share for the fourth quarter of fiscal 2020. Adjusted EPS1 was $0.37, and excludes the benefit of a recovery of non-income taxes in Brazil, compared to $1.05 loss per share, on an adjusted basis, for the fourth quarter of fiscal 2020.

• Adjusted EBITDA1 was $20.4 million, compared to negative $14.0 million in the fourth quarter of fiscal 2020.

• Operating cash flows were $11.0 million, a decrease of $9.6 million from the fourth quarter of fiscal 2020, primarily due to the impact of working capital changes associated with increasing raw material costs and comparable business activity levels.

• On June 27, 2021, debt principal was $86.9 million and cash and cash equivalents were $78.3 million, resulting in Net Debt1 of $8.6 million, a decrease from $23.6 million on June 28, 2020.

Eddie Ingle, Chief Executive Officer of Unifi, said, “Our fourth quarter fiscal 2021 results demonstrated the resilience of our global business model and the value that our innovative solutions bring to our global customer base. We delivered strong performance across all segments during the period, driven by our team’s commitment to meeting the needs of our customers in what remains a dynamic business environment. I am proud of everything that we have collectively accomplished despite the challenges of the last several quarters. The fourth quarter was underpinned by record sales performance in Asia and strong pricing by our Brazil Segment, which achieved a robust gross margin despite pandemic restrictions in April 2021. The Polyester Segment also benefited from further demand recovery, and momentum for REPREVE® Fiber products remains strong as our team continues growing our innovative and sustainable product portfolio. These fourth quarter results, along with our initiatives in each region of our global model, will serve as a solid foundation to build continued momentum in fiscal 2022 and will help position us for future long-term profitable growth.”

1 Adjusted EPS, 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.

Fourth Quarter Fiscal 2021 Compared to Fourth Quarter Fiscal 2020

Net sales in the fourth quarter of fiscal 2021 were $184.4 million, compared to $86.1 million in the same period last year. The increase was primarily driven by robust sales performance in the fourth quarter of fiscal 2021 as compared to the prior year’s fourth quarter, which was adversely impacted by the COVID-19 pandemic. The Asia Segment achieved its highest quarterly sales volume, the Brazil Segment maintained the strong pricing levels in place throughout much of fiscal 2021, and the Polyester Segment experienced recovery alongside U.S. product demand. REPREVE® Fiber products continued to meet the ever-growing demand for sustainable textiles, driving underlying portfolio momentum.

Gross profit increased to $27.4 million, from a loss of $9.5 million. In addition to recovery from the significant adverse impacts of the COVID-19 pandemic on the fourth quarter of fiscal 2020, the increase in gross profit was mainly due to improved sales mix and pricing for the Polyester Segment and the exceptional performance of the Brazil Segment resulting from a better competitive position and higher pricing.

Operating income for the fourth quarter of fiscal 2021 was $14.0 million, compared to an operating loss of $20.9 million, primarily due to the increase in gross profit. The Company’s regional strength and focused execution is further demonstrated when comparing these results to the $5.3 million of operating income in the fourth quarter of fiscal 2019.

Net income was $13.4 million, or EPS of $0.70, compared to a net loss of $20.2 million, or $1.10 per share. Certain non-income tax cases in Brazil concluded favorably, resulting in a significant credit for overpayment of non-income taxes in multiple prior years. The Company recorded the credit and associated interest of $9.7 million in the fourth quarter of fiscal 2021. Accordingly, on an adjusted basis, EPS was $0.37, compared to a loss of $1.05 per share. Adjusted EBITDA was $20.4 million, compared to negative $14.0 million.






Fiscal 2021 Compared to Fiscal 2020

Net sales were $667.6 million for fiscal 2021, compared to $606.5 million, primarily due to the global recovery from the COVID-19 outbreak that stifled both global economic activity and sales growth momentum in late fiscal 2020. Revenues from REPREVE® Fiber products represented 37% of consolidated net sales, compared to 31%. Gross margin was 14.0%, compared to 6.4%. Operating income was $38.6 million, compared to a loss of $8.8 million. Net income was $29.1 million, compared to a net loss of $57.2 million, which includes a $45.2 million impairment expense for the sale of a previously-held minority interest investment.

Debt principal was $86.9 million on June 27, 2021, compared to $98.9 million on June 28, 2020. Cash and cash equivalents increased to $78.3 million on June 27, 2021, up from $75.3 million on June 28, 2020, resulting in Net Debt of $8.6 million versus $23.6 million, respectively.

Outlook

Looking forward, the Company expects demand levels and trends across the business to remain healthy during fiscal 2022. The Company’s outlook for the September 2021 quarter includes the following expectations:

• Sales volumes to increase, with net sales improving sequentially from the June 2021 quarter by approximately 3% to 5%;

• Adjusted EBITDA to range from approximately $14.0 million to $16.0 million, reflecting continued underlying momentum, partially offset by current inflationary pressures, especially for recycled raw material inputs;

• An effective tax rate between 35% and 40%; and

• Capital expenditures of approximately $10.0 million to $11.0 million.

For fiscal 2022, a 53-week fiscal year ending on July 3, 2022, the Company expects to maintain much of the underlying business momentum that was captured and restored during fiscal 2021, while navigating the near-term inflationary pressures. Though the Asia Segment and the Polyester Segment are expected to generate modest profitability growth over fiscal 2021, the exceptional performance of the Brazil Segment is not expected to continue at the levels achieved in fiscal 2021. Accordingly, the Company expects the following:

• Sales volume and REPREVE® Fiber sales growth driving a net sales increase of 10% or more from the level achieved in fiscal 2021;

• Adjusted EBITDA to be broadly consistent with the fiscal 2021 level;

• An effective tax rate between 35% and 40%; and

• Capital expenditures of approximately $40.0 million to $45.0 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, “Following the pandemic, many customers began accelerating their commitment to recycled content products. In fact, we have seen REPREVE® hang tags with our co-branding partners increase 60% year-over-year. With consumer demand for sustainable product offerings more popular now than ever before, we continue to believe our innovative and sustainable solutions will be the growth engines that will allow us to meet the evolving needs of our customers. As we celebrate Unifi’s 50-year anniversary, I am proud of what our team has accomplished and how we have positioned our businesses. We remain confident in the growth potential of REPREVE® and our innovative portfolio and expect to reach an even more diverse array of end markets, as we continue to pursue long-term value for our shareholders.”

Fourth Quarter Fiscal 2021 Earnings Conference Call

The Company will provide additional commentary regarding its fourth quarter and fiscal 2021 results and other developments during its earnings conference call on August 5, 2021, at 8:30 a.m., Eastern Time. The call can be accessed via a live audio webcast on the Company’s website at http://investor.unifi.com. Additional supporting materials and information related to the call will also be available on the Company’s website.



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