Unifi, Inc. New

Ladies and gentlemen, thank you for standing by, and welcome to the Unify third quarter conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. We ask that you limit to one question and one follow-up question at a time. Please pause. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Mr. A.J. Ecker, Vice President of Finance. Thank you. Please go ahead, sir.

Thank you, operator, and good morning, everyone. On the call today is Al Carey, Executive Chairman, Tom Cottle, President and Chief Operating Officer, and Craig Creosore, Executive Vice President and Chief Financial Officer. During this call, management will be referencing a webcast presentation that can be found at unifi.com and by clicking the third quarter conference call link. Management advises you that certain statements included in today's call will be forward-looking statements within the meaning of the federal securities laws. options that these statements are based on current expectations, estimates, and or projections about the markets in which Unify operates. These statements are not guaranteed the future performance and involve certain risks that are difficult to predict. Actual outcomes and results may differ materially from what is expressed, forecasted, or implied by these statements. You are directed to the disclosures filed with the SEC on Unify's forms 10Q and 10K regarding various factors that may impact these results. Also, please be advised that certain non-GAAP financial measures such as adjusted EBITDA, adjusted net income, adjusted EPS, adjusted working capital, and net debt may be discussed on this call. Lastly, please be advised that in consideration of COVID-19 safety measures, the speakers today are utilizing multiple telephone lines. Efficiency for this call may be impacted. I will now turn the call over to Al Carey.

Well, good morning, everybody, and thanks for joining our call today. I'm going to open up with a few comments about our performance. and then I'm going to turn it over to Tom and Craig who will give you more of the specifics of our performance and then afterwards we're going to entertain some questions and I'm going to imagine it's going to take a little longer than normal due to this unusual time that we're operating in right now. So on Q3, I'd say that Q3 was a good one for us and Craig will point this out in the next few minutes as he presents. We delivered at or above our forecast on most of our important financial metrics, and we generated a significant improvement over last year's Q3 performance. But there were two highlights from the quarter that I'd like to mention. One was that we were pleased to see our U.S. polyester textured yarn sales return to year-over-year growth, and it's been a long time coming. It indicates that these... Trade anti-dumping actions are finally showing up in the marketplace for us. I know we've spoken to you about this numerous times, but after December, when those anti-dumping regs were finally put in place, we began seeing a positive improvement to our U.S. sales. And then the other thing we were very excited about was Asia has performed well for six or nine months for us, but when they started the year in January, they were doing terrific. February came with the COVID-19 virus in China. We didn't anticipate much of a comeback in March, but I would say that it was a remarkable comeback for our team in March. I really think our asset-light model in Asia served us well, and I think it's going to be an advantage moving forward. But all that being said, as we hit the last two weeks of the quarter, we saw a drop-off in sales, and that was directly attributed to the retail apparel stores being closed. and also automotive plants. Those are the two segments where we do a disproportionate amount of our business. We're staying close to every single customer. I can tell you that we're ready to begin shipping when they're ready to take the shipments. When they are ready to reopen the stores, we will be ready to serve them. However, forecasting volume and how fast it's going to come back will be tricky. If I were to bet, I'd say that production will come back ahead of consumer demand. That's what happened in China. So it's likely to be a little uneven for a while. So what we've turned our primary attention to, our top priority for this time frame is going to be managing cash and working capital very carefully. We also have some new actions on cost reductions that's going to allow us to be more profitable when we come out the other end of this. So Craig will take you through these actions. I'm confident that we'll be in a good place at the end of I'd also like to tell you a little bit about another key event during the quarter, and that was we were able to conclude a search for the right leader to take the helm at Unifi. That leader is Eddie Ingle. We announced that last week. is going to join us, but he had 30 years of experience in many key leadership roles at Unify. And most recently, he was the CEO of Endorama's global recycling business. So we're all delighted to have Eddie back at Unify. And our leadership team and also the employees, they were unanimously excited about hearing about Eddie's return. So it's a very positive thing for our company. And he'll start on July 1st, which is the beginning of our new fiscal year. The bittersweet news is that we also announced the planned retirement of our president and COO, Tom Cottle, after what I'd call an exemplary 40-year career at Unify. Now, the good news is that Tom's not going to leave us until June of next year, so you're going to hear from him in a few minutes. He's going to be leading, over the next 12 months, he'll be leading some key strategic initiatives for our business, and I describe these initiatives as the ones that only Tom Cottle could get done He'll also be here to help Eddie in the transition coming back to Unify, which you'll hear from Tom in a few minutes. Going forward, here's what we expect from ourselves. I believe Unify can regain the top-line momentum that we saw in Q3 once this virus gradually diminishes. Then coming out of this timeframe, I think our strengths are going to be that we have a very flexible global supply chain that's going to serve our customers well. I like the fact we have an asset-light model in Asia and Europe. And then we have the ability to potentially fully utilize our assets in North America thanks to the anti-dumping pickup and our innovation. We will be the most prominent producer of environmentally sustainable yarns that have tracing capabilities like no others have. And I believe that ESG is only going to become more important after the COVID-19 reduces. and I think that will bode well for the reprieve growth going forward. On the financial side, I'm confident in our cash position and our liquidity which will get us to the other end of this COVID-19 crisis successfully and my expectations are that we're going to be a better overall company going forward. Just a word about our people. I wanted to mention that before I get off. I think we're fortunate to have had a very, very small number of incidents of our 3,000 employees who have experienced the virus. None have been seriously ill and thank God, none have passed away. And other companies are not as fortunate as we have been. I gotta tell you, in my 45 years of business experience, I've never seen a team that's more resilient as this one from top to bottom. They certainly don't flinch in a crisis. And I look at this leadership team that we have in place right now and while it's taken a year to get it right, It's a great blend of experienced veterans and also young people who have lots of potential. And I think the newest additions, which are CFO Craig Kreator and also now Eddie Ingle, who will be our new CEO, are going to lift our expectations even higher. And I've got to tell you, as the chairman, I feel very good about the leadership team that we've got in place. So with that, Let me turn it over to Tom Cottle, President and COO, and he's going to take you through some of the specifics of our performance in Q3. Tom, take it away.