Unifi, Inc. (UFI) Misses Q2 EPS by 14c, Revenues Miss; Offers FY20 Revenue Outlook Below Consensus

Unifi, Inc. (NYSE: UFI) reported Q2 EPS of $0.02, $0.14 worse than the analyst estimate of $0.16. Revenue for the quarter came in at $169.5 million versus the consensus estimate of $174.57 million.

Second Quarter Fiscal 2020 Overview

• Net sales of $169.5 million increased 1.1% from the second quarter of fiscal 2019 net sales of $167.7 million.
• Revenues from premium value-added products represented 57% of consolidated net sales.
• Selling, general and administrative expenses ("SG&A") decreased $2.3 million compared to the second quarter of fiscal 2019, demonstrating results from previously communicated cost reduction efforts.
• Operating income was $2.6 million, compared to an operating loss of $0.8 million in the second quarter of fiscal 2019.
• Net income of $0.4 million and diluted earnings per share ("EPS") of $0.02 were negatively impacted by $1.6 million of lower pre-tax earnings from Parkdale America, LLC ("PAL"); comparable amounts from the second quarter of fiscal 2019 were net income of $1.2 million and EPS of $0.06.
• Operating cash flows for the six months ended December 29, 2019 improved to $28.6 million, continuing the positive momentum from the first quarter of fiscal 2020.

"We ended the second quarter with important news from the U.S. International Trade Commission, as antidumping and countervailing duty rates were recently finalized and published, setting the stage for a more balanced U.S. market for polyester textured yarn," said Tom Caudle, President & Chief Operating Officer of Unifi. "We achieved significant improvement in operating results over the prior year period. Results were impacted by softer-than-expected U.S. demand in certain categories, along with global market pricing pressures. We are pleased with our ability to generate operating cash flows with a leaner cost structure. We now look forward to growing market share, driving innovation across our product portfolio, and leveraging our unmatched supply chain for further global growth."

GUIDANCE:

Unifi, Inc. sees FY2020 revenue of $700-715 million, versus the consensus of $735.93 million.

For fiscal 2020, the Company has revised its guidance to reflect a softer-than-expected recovery. The Company now expects:

• Sales volumes to grow between 10% and 13% from fiscal 2019 levels;
• Net sales between $700.0 million and $715.0 million;
• Operating income between $20.0 million and $23.0 million;
• Adjusted EBITDA between $44.0 million and $47.0 million;
• Capital expenditures of approximately $23.0 million; and
• An effective tax rate not to exceed 23%.

Mr. Caudle concluded, "Our international operations have faced some significant pricing pressures in fiscal 2020, and global competition remains aggressive. While we are confident in our ability to generate significant improvement over fiscal 2019, including sequential gross profit improvement, recapture market share in the U.S., and drive strong cash flows, our full-year fiscal 2020 guidance has been updated to reflect global competitive pricing pressures and lower revenue expectations for Nylon. Nevertheless, our outlook continues to project substantial improvement from fiscal 2019 for operating income, net income, and Adjusted EBITDA."

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

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