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Oct 02, 2022
Unifi Q1 2023 Earnings Report
Unifi's Q1 2023 results were released, revealing a decrease in net sales and gross profit due to temporary demand disruptions and inventory destocking measures.
Key Takeaways
Unifi, Inc. reported a decrease in net sales by 8.4% to $179.5 million, and a decrease in gross profit to $6.6 million, which led to an operating loss of $4.7 million and a net loss of $7.8 million, or $0.44 per share. The company's performance was impacted by temporary demand disruptions in the Americas and Asia due to inventory destocking by apparel brands and retailers.
Net sales decreased by 8.4% to $179.5 million due to temporary demand disruption in the Americas and Asia.
REPREVE Fiber product sales represented 27% of net sales, amounting to $49.2 million.
Gross profit decreased to $6.6 million, with a gross margin of 3.7%.
Operating loss was $4.7 million, compared to an operating income of $13.3 million in the prior year.
Unifi
Unifi
Unifi Revenue by Geographic Location
Revenue by Geographic Location
Americas Revenue
CapyFin.comBrazil Revenue
CapyFin.comAsia Revenue
CapyFin.com Forward Guidance
The operating environment and textile demand trends for the apparel market are expected to remain suppressed for the remainder of calendar 2022. For the second quarter of fiscal 2023, UNIFI anticipates approximately 10% to 15% lower net sales than the first quarter of fiscal 2023, continued profitability pressures and performance resembling the first quarter of fiscal 2023, primarily attributable to weak cost absorption in the Americas Segment in connection with a seasonally-pressured period that includes annual customer shutdowns and holidays exacerbated by lower-than-normal sales and productivity levels driving consolidated Adjusted EBITDA between $(5.0) million and $0.0 million, continued volatility and unfavorability in the effective tax rate, and capital expenditures of approximately $10.0 million to $12.0 million, as UNIFI continues investing in new yarn texturing machinery within the U.S., El Salvador, and Brazil.
Positive Outlook
- High level of interest in REPREVE products from customers.
- Continued investment in marketing and building awareness of the REPREVE brand.
- Additional liquidity afforded by the amended credit facility.
- Expectation of revenue and profitability acceleration in the second half of fiscal 2023 as retail apparel inventory levels decline and demand normalizes.
- Continued efforts to control costs, drive efficiencies, and invest prudently in growth areas of the business.
Challenges Ahead
- Operating environment and textile demand trends for the apparel market are expected to remain suppressed for the remainder of calendar 2022.
- Future demand visibility has diminished due to changing forecasts from a number of customers.
- Anticipate approximately 10% to 15% lower net sales than the first quarter of fiscal 2023.
- Continued profitability pressures and performance resembling the first quarter of fiscal 2023.
- Continued volatility and unfavorability in the effective tax rate.
Revenue & Expenses
Visualization of income flow from segment revenue to net income