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Fibres/​Yarns/​Fabrics

Unifi reports income decline in 2017

For fiscal 2018, the company anticipates volume growth, assuming a stable raw material pricing environment.

1st August 2017

Innovation in Textiles
 |  Greensboro, NC

Clothing/​Footwear, Sports/​Outdoor

Net sales were US$ 171.3 million for the fourth quarter of fiscal 2017, compared to net sales of US$ 163.9 million for the fourth quarter of fiscal 2016. Sales growth was led by operations in Asia and Brazil, partially offset by challenging domestic market conditions. For fiscal 2017, net sales were US$ 647.3 million, compared to net sales of US$ 643.6 million for the fiscal year ended June 26, 2016. PVA portfolio performance in Asia and Brazil provided growth against difficult domestic market conditions.

Global opportunity

"The fourth quarter of fiscal 2017 continued to demonstrate the global opportunity of our growing portfolio of PVA products. We are pleased that the strength of our international operations allowed us to overcome ongoing headwinds in the domestic retail and apparel markets," said Kevin Hall, CEO of Unifi. Kevin Hall was named as CEO and elected as a member of the Board of Directors, effective in May 2017.

"In my first two months at Unifi, I've had the opportunity to better understand the breadth and talent of our organisation. As a result, I've grown even more confident in Unifi's long-term potential and the growth opportunities for Repreve and our other PVA products, which will be driven by our strong technological and operational expertise, as well as by our exciting partnerships with many of the world's leading brands and retailers."

Fourth quarter results

Operating income was US$ 13.0 million in the fourth quarter of fiscal 2017, compared to US$ 13.9 million in the fourth quarter of fiscal 2016. Net income for the fiscal 2017 quarter benefitted from a lower effective tax rate, but was unfavourably impacted by higher administrative expenses.

Adjusted EBITDA was US$ 18.8 million for the fourth quarter of fiscal 2017, compared to US$ 20.6 million for the fourth quarter of fiscal 2016. Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are non-GAAP financial measures. Net debt (debt principal less cash and cash equivalents) was US$ 94.0 million at 25 June 2017, compared to US$ 106.4 million at 26 June 2016.

Fiscal results

Operating income increased to US$ 43.8 million in fiscal 2017 compared to US$ 42.2 million in fiscal 2016. Lower bad debt and other operating expenses were partially offset by higher administrative expenses, which reflect investments aimed at increasing top-line growth, specifically through strategic planning, talent acquisition and commercial expansion.

Net income for fiscal 2017 was favourably impacted by a lower effective tax rate, but adversely impacted by a loss of approximately US$ 1.7 million associated with a non-core divestiture and an approximately US$ 2.2 million decline in earnings from Parkdale America, LLC ("PAL"). After-tax earnings from PAL declined from approximately US$ 4.0 million in fiscal 2016 to approximately US$ 1.8 million in fiscal 2017.

Fiscal 2018 outlook

For fiscal 2018, the company anticipates volume growth, assuming a stable raw material pricing environment, revenue growth in the low-single digit percentage range, operating income and earnings growth in the mid-single digit percentage range, excluding PAL, and capital expenditures of approximately USUS$ 35 million.

"While we enter fiscal 2018 with a somewhat soft domestic environment in the retail and apparel markets, our global performance remains quite strong,” said Mr Hall. Further, we expect PVA sales to exceed 40% of our consolidated portfolio in fiscal 2018 as Repreve and our branded products continue to gain acceptance and broader awareness. As a result, we believe we will see improved contributions from our strategic investments, such as our Repreve Bottle Processing Center and the Repreve Recycling Center. Therefore, we expect to see growth in both revenue and earnings during fiscal 2018."

www.repreve.com

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