Unifi, Inc. New

Good morning and thank you for attending Unify's first quarter fiscal 2025 earnings conference call. Today's conference is being recorded and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. Speakers for today's call include Al Carey, Executive Chairman, Eddie Ingle, Chief Executive Officer, and AJ Eaker, Chief Financial Officer. During this call, Management will be referencing a webcast presentation that can be found in your investor relations section of Unify.com. Please familiarize yourself with page two of that slide deck for cautionary statements and non-GAAP measures. I will now turn the call over to Al Carey.

Thank you, and thank you, everyone, for joining our call today. Those of you who have followed our quarterly earnings over the last two years know that the macroeconomic headwinds have been stubborn. not just for us but for our entire industry. And until recently, high levels of apparel inventory have been quite a problem, and then slow consumer sales have held down our revenues and our profits. Now, that has continued in Q1 and even very recently, but we believe that trend is now improving when we begin our new calendar year of 2025. We're finally seeing some green shoots. in the form of customer orders and in interest for our new innovation. And while it's not all the way back to what we want to see yet, we are going to see substantial improvements for half two of our fiscal year or the first half of the calendar year. The Q1 revenues that you'll hear more about in the next few minutes are about as expected. They were up 6% over a year ago. And our EBITDA was also about as expected at $3.3 million, and it's significantly over last year, as last year was a very depressed level. So you can expect half two will step up in both revenues and in EBITDA well above the first half of this fiscal year. Now, the improved outlook is coming from four areas. The first one is the reprieve innovation. It's being enthusiastically received by customers around the world. especially textile take-back in our product called Thermaloop. These products will begin to show up in our sales initially in Q4. The second area that's given us some reason for optimism is we've got traction in our beyond apparel business segment, especially in home and carpet segment and military and packaging. You know, this has taken a little longer than expected because the approval processes for new businesses like this are quite extreme, but we now have traction and we're seeing orders come in. The third area is our Brazil business has momentum, and we made an investment in Brazil some time ago on EVO coolers, and it's given us the capacity that was needed so that we could gain market share. So that continues. And the fourth and the final area I'd say we're optimistic about is cost reductions for North America. And we believe there's more to do in this area. So we'll see an improvement in the profitability of North America as we move into the second half of the fiscal year. So I'm proud of the team, mostly because we didn't slow up our efforts during this difficult time on innovation and on beyond apparel and on cost management. So if there's ever been a case where you don't let a Prices go to waste. This is the situation we have here at Unify. I think we're now set up to be a better company beginning soon, calendar year 2025, continuing to the future, and I think that sets us up for being able to produce shareholder value. So with that quick summary, let me turn the presentation over now right to Eddie Engel.

Thanks, Al. And as Al just mentioned, our results, For the first quarter, we're in line with our expectations, exhibiting our continued progress towards repositioning our business for future growth. However, some of our customers were recently impacted by Hurricane Helene in late September, which resulted in their operations being curtailed for a short period of time. While Unified US operations were fortunate enough to not experience any material impact from the hurricane, this curtailment in operations from some of our customers did result, unfortunately, in a portion of sales being pushed out into the second quarter. The devastation from the hurricane is heartbreaking and we are all hoping for a fast recovery for all those who were impacted in our local communities here in North Carolina and elsewhere. With that said, I will now provide an overview of the quarter and some other operational highlights on slide four. During the first quarter of fiscal 2025, we reported $147.4 million in consolidated net sales, which is up 6% year-over-year and down 6% sequentially compared to the fourth quarter as a result of typical seasonality. Our improvement in net sales on a year-over-year basis was largely driven by our Brazil segment, which has continued to deliver strong results. Our America's cost reset efforts, as Al mentioned, are continuing to progress as planned, which is helping us offset some inflationary impacts. Some of those savings are already evident in our year-over-year SG&A spend. We are also continuing to see the benefits of our sales transformation, which is demonstrated by the significant year-over-year improvement in gross profit during the quarter. We recently took a few steps to strengthen the balance sheet, which AJ will provide more details on shortly. These efforts will allow us to continue to strategically invest into exciting new product initiatives that will not only help us grow our business globally, but also enhance our financial performance. I'll now provide a brief update on each of our business segments. In the Americas segment, our performance was relatively in line with our expectations. However, we did experience a modest slowdown in the region due to a combination of seasonality and, as we mentioned earlier, the recent impacts from the weather event. With that said, we do believe our Americas segment is poised to benefit from some upcoming beyond the power initiatives that I will touch on in greater detail shortly. Our Brazil segment was the strongest performing segment for the third quarter in a row. This continued strength is the result of both our ability to take price in the region and benefit from the market share that we have been able to capture in the past few quarters, which has resulted in stronger sales volumes. In our Asia segment, we saw a slowdown in performance in the region due to the struggling economy in China and some pricing pressure that is impacting sales volume. However, we are hopeful that the recent Chinese government stimulus policies will help revive the economy and drive a stronger performance in the region in the long run. Turning now to slide five for an update on reprieve. During the first quarter, reprieve represented 30% of sales, a slight decrease when compared to the previous quarter. This decrease in reprieve sales was largely driven by the slowdown in our Asia business that I just noted. However, we do expect to see stability in our reprieve fiber business as we progress through fiscal 2025, especially in the second half of the year, as we begin to recognize some revenue and volume benefits from our new products. Turning now to slide six. In terms of new products, we recently announced the launch of two innovative offerings, a reprieve take-back white filament yarn and Thermaloop, the world's first insulation powered by our textile take-back process. The response that we have seen from our customers and brands and the media has been overwhelmingly positive, validating the market's strong demand for scalable, global textile-to-textile recycling solutions that are ready today. These new products were prominently featured at the Intertextile Shanghai Trade Show in late August, which resulted in numerous productive meetings with direct customers, brands, and retailers. To further highlight the future opportunity for these two new innovative products, we plan to share several exciting product placements for both products in the near future. We are pleased with the early success we've seen so far with these new launches and the market reaction to these circular offerings. It is reaffirmed that our focus on product innovation and the circular storytelling to the market is the right place to put our resources. As I've said many times over in the past few years, and it bears repeating, our job is to help direct customers, brands, retailers meet their sustainability goals which in general are centered around the reduction of greenhouse gas emissions and the reduced consumption of fossil fuels. By adopting these new products, which are built on a platform of textile-to-textile recycling, it will help them reach their goals faster. In terms of media impact, the launch has generated significant coverage with 23 media pieces reaching over 80 million impressions, and we secured interviews with key publications, which allowed us to offer deeper insight into the uniqueness of these products. This level of exposure further strengthens our position as a leader in sustainable innovation. Over and above these product launches, throughout the quarter, Reprieve has secured additional media coverage, reaching over 1 billion impressions. Another highlight from the quarter was the strong performance of our co-branded product basements, which shows the growing market recognition of Reprieve. Burt's Bees Baby launched their Reprieve-powered Polar Bee Fleece products across their website, their social media, and on product packaging. Callaway Golf, Huckberry, and Saucony also featured co-branded mentions, with Huckberry highlighting our Reprieve Truth Temp 365, and Saucony Socks spotlighted our Spoltek moisture management technology. Additionally, People Magazine, the New York Post, and Women's Wear Daily covered Reprieve's use in the leading fashion brands like Zagney Dover and Reprieve Our Ocean in Tiffany & Co. This breadth of coverage underscores our role as a trusted brand and technology partner for many of the world's top brands and retailers who rely on us for both performance and sustainability solutions. Before I wrap up this section of the call, I'd like to discuss some of the exciting initiatives and developments we have underway for our Beyond Apparel business. The first initiative is relative to flowing, specifically carpet, where we are beginning to see an increase in business opportunities. The second initiative is related to the military market, where our offerings will support a variety of different military applications that will be margin accreted. We plan to provide additional information on both of these programs in the near future once we are able to officially announce the full details. Lastly, our flake and chip offerings, our resin business, and our beyond apparel business also grew nicely during the first quarter. We are excited about the improvements we have been able to make in our beyond apparel business, and these recent initiatives will help offset some of the weaknesses we are seeing in our traditional apparel business. With that, I would now like to pass the call over to AJ to discuss our financial results for the quarter.