Net sales increased $5.0 million, or 3.1 per cent, to $165.9 million, compared to $160.9 million for the third quarter of fiscal 2017, and increased $4.6 million, or 2.9 per cent, when excluding the impact of foreign currency translation. For the reported period, revenues from premium value-added ("PVA") products grew 17 per cent compared to the third quarter of fiscal 2017, and represented approximately 44 per cent of consolidated net sales.
The company's operating income was recorded at $1.6 million, compared to $9.1 million for the third quarter of fiscal 2017, impacted by a decline in gross profit, an increase in selling, general and administrative expenses, and foreign currency losses.
"As we previously announced, our performance during the third quarter was below our expectations," said Kevin Hall, chairman and CEO of Unifi. "We were unable to counterbalance large headwinds that significantly weighed on short-term profitability. Persistently rising raw material costs, the difficult domestic landscape, sales mix challenges and foreign currency losses were the primary drivers of the disappointing bottom-line performance. In a heightened raw material cost environment, our pricing actions tend to lag behind the cost increases, but we believe we can correct this imbalance as raw material prices stabilise."
Adjusted EBITDA was $7.3 million for the third quarter of fiscal 2018, compared to $14.4 million for the third quarter of fiscal 2017. The decrease in Adjusted EBITDA resulted primarily from the combination of rising raw material costs, domestic volume and sales mix challenges, and foreign currency losses that could not be offset quickly enough with higher selling prices and cost mitigation measures.
The company continues to expect sales volume growth driving revenue growth in the low-to-mid single digit percentage range for the year. However, many of the challenges that impacted the third quarter's profitability remain ongoing. Thus, while fourth quarter profitability is expected to improve over third quarter results, the company expects fiscal 2018 operating income and adjusted EBITDA to be well below fiscal 2017 results. Capital expenditures are expected to total $28 million, which is $2 million below the prior outlook, and the ongoing effective tax rate is still expected to be in the mid-20 per cent range.
"We remain committed in our efforts to expand our commercial capabilities as cost effectively as possible, while continuing to secure our position as the sustainability partner of choice, with a constant focus on recycling and innovation. We are focused on driving both top-line and bottom-line growth over the long-term, which will help us deliver on our goal of maximizing long-term shareholder value," Hall concluded. (RR)
Fibre2Fashion News Desk – India
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