Unifi(US:UFI)2022-04-28 16:15Financial Data and Key Metrics Changes - Q3 revenue reached $201 million, aligning with forecasts, and adjusted EBITDA was $12.2 million, slightly better than expected [7][8] - Full-year revenue is projected to exceed $800 million, marking a significant milestone for the company [7][8] - Consolidated net sales increased by 12.3% year-over-year from $178.9 million to $200.8 million, primarily driven by price adjustments [28][29] Business Line Data and Key Metrics Changes - REPREVE products accounted for 36% of net sales in Q3, up from 34% a year ago, reflecting growing demand for sustainable products [10][19] - The Polyester segment faced challenges due to U.S. labor shortages, impacting gross profit and margins [31][32] - In Brazil, year-over-year price levels increased by 19.1%, although lower volumes were noted due to a strong prior-year quarter [29][31] Market Data and Key Metrics Changes - Asia experienced growth in January and February, but March volumes stagnated due to COVID-related lockdowns in China [30][32] - The company anticipates a significant revenue shortfall in April due to ongoing restrictions in China, particularly in Shanghai [42][64] - Brazil's market remains strong, with expectations for volume growth despite some margin normalization [10][18] Company Strategy and Development Direction - The company is focused on sustainability, with REPREVE's growth expected to continue as customers aim to meet sustainability targets by 2025 [10][11][39] - Investments are being made across all regions of the Americas, including Central America, to capture greater market share [45] - The company aims to achieve $1.1 billion in revenue by 2025, with a target of 6% from REPREVE fiber sales [38][39] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macro headwinds such as inflation, labor shortages, and geopolitical issues but expressed confidence in the company's resilience [6][12] - The outlook for Q4 is cautious due to the impact of COVID lockdowns in Asia, but underlying demand remains strong [17][37] - The company expects full-year sales to reach $810 million or more, representing a 21% increase from the previous year [38] Other Important Information - The company ended Q3 with $18.5 million borrowed against its ABL Revolver, with $65 million available [35] - A total of $1 million was spent on share repurchases during Q3, with $45.8 million remaining for future repurchases [36] Q&A Session Summary Question: Impact of Asia on revenue and supply chain shifts - Management indicated uncertainty regarding the revenue impact from Asia, particularly due to lockdowns in China, but expects improvement in May and June [42][43] - Discussions are ongoing about potentially shifting supply chains to Central America [43] Question: Gross margin levels in Asia and Brazil - Gross margin levels for Brazil are expected to remain stable, while Asia's margins are anticipated to be lower due to reduced sales levels [52][53] Question: Labor shortages and margin improvements - Labor challenges persist but have improved compared to previous quarters, with ongoing investments in training and efficiency [55][56] - Management expects continued improvements in productivity over the next two quarters [70]