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UNIFI INC (UFI)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 FY2024 net sales were $157.5M, up 6% sequentially and 4% YoY; gross margin improved to 6.9% (third consecutive quarterly improvement), and Adjusted EBITDA turned positive to $5.9M; GAAP EPS was $(0.22) .
  • REPREVE Fiber revenue rose to $53.6M (34% of sales) from $46.8M (31%) in Q3, reflecting momentum in Central America and moderating recovery in Asia .
  • FY2025 outlook: net sales to grow >10% YoY, with significant increases in gross profit, margin, and Adjusted EBITDA; Q1 FY2025 guidance: net sales $147–$153M, Adjusted EBITDA $1–$3M, capex $3–$4M; effective tax rate volatility to persist .
  • Stock reaction catalyst: sequential margin recovery, positive FY2025 profitability trajectory, and new circular REPREVE products (white filament yarn and ThermaLoop insulation) that target higher-margin “beyond apparel” use cases; note Q4 net sales were modestly below the prior $160–$165M guidance range while Adjusted EBITDA met the $4–$6M guide .

What Went Well and What Went Wrong

What Went Well

  • REPREVE mix expansion and segment strength: REPREVE contribution rose to 34% of sales; Brazil delivered strong pricing, full utilization, and market share gains; Asia net sales grew 21% QoQ .
  • Cost reset and margin expansion: third straight quarter of gross profit improvement; consolidated gross margin expanded to 6.9%; EBITDA positive; management cites durable efficiencies despite some inflation headwinds .
  • Innovation pipeline and “beyond apparel”: launch of circular white filament yarn and ThermaLoop insulation, with expected revenue starting in H2 FY2025 (filament) and FY2026 (ThermaLoop); management emphasized stronger margin profile than base apparel .

What Went Wrong

  • Americas remained soft: net sales were flat sequentially and down 4% YoY; customers pushed out orders; Americas segment gross profit only breakeven .
  • Q4 net sales missed prior guidance range: delivered $157.5M vs the Q3 guide of $160–$165M, though Adjusted EBITDA landed within the $4–$6M range at $5.9M .
  • Ongoing tax-rate volatility and cautious macro: management flagged continued volatility in effective tax rate and sluggish consumer trends; raw material/freight costs in Brazil rising, partly offset by pricing .

Financial Results

Consolidated Performance vs Prior Year, Prior Quarter, and Guidance

MetricQ4 FY2023Q3 FY2024Q4 FY2024
Net Sales ($USD Millions)$151.1 $149.0 $157.5
GAAP EPS ($USD)$(0.85) $(0.57) $(0.22)
Adjusted EPS ($USD)$(0.39) $(0.57) $(0.22)
Gross Margin (%)4.0% 3.2% 6.9%

Segment Breakdown

Segment MetricQ4 FY2023Q3 FY2024Q4 FY2024
Americas Net Sales ($M)$94.8 $91.1 $91.0
Americas Gross Profit ($M)$0.1 $(3.5) $0.0
Brazil Net Sales ($M)$27.1 $29.6 $32.2
Brazil Gross Profit ($M)$1.7 $3.8 $5.6
Asia Net Sales ($M)$29.1 $28.3 $34.2
Asia Gross Profit ($M)$4.2 $4.4 $5.2

KPIs and Cash/Leverage

KPIQ2 FY2024Q3 FY2024Q4 FY2024
REPREVE Revenue ($M)$45.7 $46.8 $53.6
REPREVE % of Net Sales33% 31% 34%
Adjusted EBITDA ($M)$(5.5) $(0.8) $5.9
Net Debt ($M)$96.8 $101.0 $103.5
Cash & Equivalents ($M)$36.0 $27.7 $26.8

Guidance vs Actual (Q4 FY2024)

MetricPrior Guidance (from Q3)Actual Q4 FY2024Outcome
Net Sales ($M)$160–$165 $157.5 Missed (below range)
Adjusted EBITDA ($M)$4–$6 $5.9 Met (within range)
CapEx ($M)$4–$5 Not disclosed (quarterly) — FY capex $11.2 N/A (quarter)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($M)Q1 FY2025N/A$147–$153 New
Adjusted EBITDA ($M)Q1 FY2025N/A$1–$3 New
CapEx ($M)Q1 FY2025N/A$3–$4 New
Effective Tax RateQ1 FY2025N/AContinued volatility New
Net Sales GrowthFY2025N/A>10% YoY New
Gross Profit/Margin/Adj EBITDAFY2025N/ASignificant increase vs FY2024 New
CapEx ($M)FY2025N/A$10–$12 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Apparel destocking and demand normalizationInventory destocking nearing end; normalization expected in CY2024 Customers cautious; expect uptick from October; gradual 1H FY2025, stronger 2H Improving gradually
Cost reset and margin disciplineProfitability Improvement Plan ($10–$15M annual cost reduction; sales transformation +$6M) Third consecutive gross profit improvement; EBITDA positive; efficiencies sustained Structural margin recovery
Regional dynamicsQ2: Americas weak; Brazil solid; Asia mixed Americas flat/slow; Brazil strong (price, share, utilization); Asia improving volumes Brazil/Asia strengthening; Americas lagging
Raw materials/freightPricing pressures noted; stable inputs cited Brazil freight/container costs up; pricing opportunity; other regions flat Mixed cost backdrop
REPREVE/product innovationREPREVE 33% of sales; co-branding momentum REPREVE 34% of sales; launch of white filament yarn and ThermaLoop insulation Positive mix/innovation momentum
Beyond apparel initiativesPursuing new yarn sales beyond apparel Gaining traction with new customers; higher margins; commercialization expected FY2026 with some earlier Building pipeline
Regulatory & sustainabilitySustainability snapshot/goals EU pending textile recycled-content rules align with Textile Takeback strategy Potential tailwind

Management Commentary

  • “We are pleased to close our fiscal 2024 with growing momentum... our financial performance over the last few quarters has shown consistent top-line growth, and we reported our third consecutive quarter of gross profit improvement.” — Eddie Ingle, CEO .
  • “Our EBITDA was $5.9 million... attributed mostly to these quarter 2 and quarter 3 cost reductions... most of those cost reductions are now fully in place.” — Al Carey, Executive Chairman .
  • “During the fourth quarter, REPREVE represented 34% of sales... we believe we will see additional improvements in our REPREVE Fiber business as we progress through fiscal 2025.” — Eddie Ingle, CEO .
  • “CapEx spend continues to be focused on maintenance levels... with fiscal 2024 coming in at $11 million, a multiyear low.” — A.J. Eaker, CFO .
  • “We believe we will begin to see revenue... from our new filament yarn in the second half of fiscal 2025 and... growth benefits from ThermaLoop throughout fiscal 2026.” — Eddie Ingle, CEO .

Q&A Highlights

  • Brazil sustainability: Management expects Brazil to run full throughout FY2025; margins may compress as input costs normalize, but EBITDA to improve YoY .
  • Cost dynamics: Freight/container costs rising in Brazil; raw materials largely flat in other regions .
  • Demand timing: Top customers signaling slower July–September (seasonal) with expected improvement from October; Central America already improving .
  • New products scale/margins: Management expects meaningful production orders in late FY2025 and visibility in FY2026; margins on new products are “double” base business in many cases .
  • Beyond apparel traction: Commercial orders underway; revenue impacts expected to be outlined in next call; higher margins than base apparel .

Estimates Context

  • S&P Global consensus for Q4 FY2024 EPS/revenue/EBITDA was unavailable in our session due to data access limits; therefore, estimate comparisons cannot be provided for this quarter (Wall Street consensus via S&P Global unavailable) [GetEstimates error].
  • We note company-issued Q4 guidance was $160–$165M net sales and $4–$6M Adjusted EBITDA; actuals came in at $157.5M and $5.9M, respectively, implying a modest revenue shortfall with EBITDA within expectations .

Key Takeaways for Investors

  • Sequential recovery with cleaner execution: Three consecutive quarters of gross profit improvement and a Q4 EBITDA inflection support FY2025 profitability momentum; focus on disciplined capex and working capital should underpin FCF stabilization .
  • Mix tailwind from REPREVE and innovations: REPREVE mix rose to 34% with new circular products slated to begin contributing in H2 FY2025/FY2026, offering margin-accretive growth beyond apparel .
  • Regional dispersion: Brazil and Asia are leading the recovery; Americas remains the swing factor—watch order timing and competitive dynamics into Q1/Q2 FY2025 for confirmation of a broader demand normalization .
  • Near-term setup: Q1 FY2025 guide implies continued progress but seasonally softer quarter; monitor execution on pricing, utilization, and cost control to sustain margin gains despite tax-rate volatility .
  • Medium-term thesis: If >10% FY2025 top-line growth materializes alongside structural cost resets and higher-margin product mix, the earnings power could reset higher; new product adoption and regulatory sustainability tailwinds are incremental positives .
  • Risk checks: Freight and raw-material cost variability (especially in Brazil), cautious consumer, and timing of customer replenishment remain key risks to near-term topline trajectory .
  • Actionable: Track quarterly REPREVE mix, segment margins, and commercialization milestones for white filament/ThermaLoop; a beat on Q1 FY2025 Adjusted EBITDA and confirmation of Americas demand normalization would be a positive catalyst .