Driven by strong international business and its premium branded yarns, Unifi Inc. saw net income rise 17.5 percent to $9.4 million for the first quarter ended Sept. 25 compared to $8 million for the first quarter a year earlier.
Net sales dipped 1.4 percent to $160 million in the quarter compared to net sales of $162.2 million for the first quarter of fiscal 2016. Consolidated volumes, as measured in pounds sold, increased 11 percent, driven by strong premium value-added products performance in Asia and Brazil that offset weaker sales in the domestic market. Net sales were adversely impacted by a decline in raw material prices, Unifi said.
“I am pleased to report strong first-quarter results, which reflect the success of our strategy of providing the highest-quality innovative and sustainable products for our customers around the world,” said Tom Caudle, president of Unifi, based in Greensboro, N.C. “We are especially pleased with the performance of our international operations in Asia and Brazil, where we experienced growth that offset soft market conditions in our domestic business. The opening of the Repreve Bottle Processing Center marked the completion of a significant leg of our capital allocation program. By investing for the future, we will be capable of producing 75 million pounds of plastic bottle flake annually, enhancing our support of Repreve.”
Repreve is the company’s group of eco-friendly yarns made from recycled materials that has seen strong growth and is being used by a range of brands. The bottle processing center involves a $28 million investment and will help the company achieve as goal of vertical integration for its Repreve recycled product line, adding flexibility, expanding production capabilities and supporting volume growth.
Unifi said Repreve and its other PVA yarns drove solid operating results. Operating income grew 30 percent in the first quarter to $12.6 million, compared to $9.7 million in the year-ago period. Operating margin improved by 190 basis points to 7.9 percent in the quarter 6 percent in the first quarter of fiscal 2016.
Adjusted earnings before interest, taxes, depreciation and amortization increased 18.5 percent to $17.9 million from $15.1 million year-to-year. Net debt was $110 million in the period compared to $106.4 million at the end of the previous quarter. Unifi attributed the increase to capital allocation priorities consistent with its expectations that include enhancing manufacturing operations for continued PVA portfolio growth and expanding its international business.
Unifi extensive polyester and nylon product offerings include branded yarns such as Repreve, Sorbtek, Reflexx and AIO found in the products of major brands in the apparel, hosiery, automotive, home furnishings, industrial and other end-use markets.