Unifi, Inc. (UFI) Q1 Revenues Beat

Unifi, Inc. (NYSE: UFI) reported Q1 EPS of $0.10, which may not compare to the analyst estimate of $0.27. Revenue for the quarter came in at $181.6 million versus the consensus estimate of $172.27 million.

GUIDANCE:

Fiscal 2019 contains 53 fiscal weeks, with the additional week included in the first fiscal quarter. The Company's second quarter gross profit will be unfavorably impacted by a surge in polyester raw material costs in September, which was driven by higher global demand and tighter supply for polyester feedstocks, and a seasonal shut-down period in December 2018, which will occur in the Company\'s second quarter rather than the third quarter as it did in the prior year. Therefore, the Company\'s expectations for net sales and capital expenditures remain unchanged, while the high end of the range of expectations for operating income and Adjusted EBITDA growth has been reduced. Consistent with these expectations, and having greater clarity on the effects of recent tax reform legislation, the Company has increased its effective tax rate outlook. However, the Company expects cash tax payments as a percentage of income before income taxes to be in the mid-30% range. In summary, the Company now anticipates the following:

• Mid-single-digit percentage growth for net sales;
• Mid-single-digit percentage growth for operating income and Adjusted EBITDA, assuming an improving price to raw material cost relationship;
• Capital expenditures of approximately $25.0 million; and
• An effective tax rate in the mid-40% range, subject to further adjustment in light of pending interpretations of the December 2017 federal tax reform legislation.

"Raw material costs have been rising over the last four quarters, and there was a dramatic jump in polyester costs in September that will place even more pressure on our second quarter profitability. While this rise is clearly a headwind, we anticipate a better relationship between pricing and cost in the second half of the year. This would benefit our third and fourth quarters, returning our profitability to the lower end of our original expectations," said Kevin Hall, Chairman and CEO of Unifi. "We will continue to address input cost pressures with responsive pricing actions, while focusing on increased sales of innovative solutions that we believe will provide us the portfolio differentiation necessary to achieve long-term growth. We look forward to providing more detail on our strategic growth plan for the next few years during our Investor Day on November 15."

For earnings history and earnings-related data on Unifi, Inc. (UFI) click here.

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