Good day, welcome to Q3 2023 Unifi Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press Star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press the star one again. For operator's assistance throughout the call, press star zero. Finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome A.J. Eaker, Vice President of Finance and Treasurer, to begin the conference. A.J., over to you. Thank you, Connie, and good morning, everyone. On the call today is Al Carey, Executive Chairman, Eddie Ingle, Chief Executive Officer, and Craig Creaturo, Chief Financial Officer. During this call, management will be referencing a webcast presentation that can be found in the investor relations section of our website, Unifi.com. Please turn to page two of that slide deck for our cautionary statements. Management advises you that certain statements included in today's call will be forward-looking statements within the meaning of the Federal securities laws. Management cautions that these statements are based on current expectations, estimates and/or projections about the markets in which Unifi operates. These statements are not guarantees of future performance and involve certain risks that are difficult to predict. Actual outcomes and results may differ materially from what is expressed, forecasted, or implied by these statements. You are directed to the disclosures filed with the SEC on Unifi's Forms 10-Q and 10-K regarding various factors that may impact these results. Please be advised that certain non-GAAP financial measures such as Adjusted EBITDA, Adjusted EPS, Adjusted Working Capital and net debt may be discussed on this call. I will now turn it over to Al Carey. Well, thank you, A.J., and thanks to all of you joining the call this morning. I'm gonna start with a few comments about the Q3 trends, then I'll turn it right over to Eddie Ingle, our CEO. If you remember back at the end of Q2, we said that we believed that we got the worst behind us at that time, we believe that's true. The U.S. sales have improved, that's compared to the previous quarter. Additionally, we made some improvements in our cost containment activities such as SG&A and plant labor and raw materials. This has allowed us to have an improvement in our U.S. gross margins compared to the prior quarter as well. It was interesting, though, to look at the timeframe of January through March at retail, and we were able to look at about 16 categories that are sold at retail, everything from apparel to food to electronics. No doubt, apparel unit sales are declining January through March, but no more than most of the categories. All of them are declining mid-single digits. If you add to that, the fact that inventory levels are still high in apparel, they are improved, but they're still high. We see that there's apparently less deep discounting during the same timeframe. If you add these three factors together, it explains why the apparel business has not come back more robustly than what we're seeing right now. It also explains for us why our Asian business has not opened up bigger because most of our Asian sales, as most of you may know, are shipped into U.S. retailers and U.S. brands. All of that being said, it's realistic to assume though that there'll be a gradual improvement in sales trends going forward. I'd also like to mention that as the business opens back up, REPREVE sales should pick up even faster at our large customers because they are very definitely still focused on their sustainability goals. We have very favorable discussions with our customers about the future expansion of REPREVE. You just don't see it in the numbers today, but we will at some point in the near future. Finally, I'd say our teams have done a very good job at preserving cash, and our balance sheet is solid. If I had to say how we feel about the quarter, I'd say solid progress, still headwinds for the apparel markets, and we expect a gradual improvement going into the next few quarters. I'll turn it over to Eddie at this point. Thanks, Al. Good morning, everyone. Our third quarter results showed significant sequential improvement in both our sales and profitability, which we believe signals some apparel production recovery as retailers and customers continue to work through their inventory destocking. We are optimistic that this improvement is an indication that the worst of the demand disruptions and various industry headwinds that Al indicated earlier, that have hindered our performance over the last several quarters are definitely behind us. Now, as demand levels normalize, we have confidence that we are well-positioned to carry this positive momentum forward, and we'll continue to see overall improvement across the business in the quarters ahead. This is a testament to the resilience of all our employees around the world. I wanna thank them for their commitment to a very difficult operating environment over the past year. Moving to slide 3 of the presentation for an overview of the quarter. Our net sales in the third quarter were $156.7 million, marking a 15.1% sequential increase compared to the second quarter, as we experienced some normalization from the recent suppressed demand levels. As Al noted, the sequential recovery was most evident in the Americas segment. Our improved profitability and margin profile can be attributed to the combined impact of leaner and more efficient manufacturing with a higher level of volume driving better fixed cost absorption. We remain in a healthy pricing position as it relates to the input costs moving into the fourth quarter, which allows for some predictability and stability. While we continue to emerge from a challenging operating environment, we remain diligent in our efforts to control costs and manage our capital. We've implemented several cost containment measures to help protect our margins and maximize our efficiency through the current environment. This includes a focus on lean, flexible labor force with our manufacturing resources in the U.S. and Brazil. These efforts are aided by the additional EvoCooler machines in place, which are yielding the benefits of increased efficiency and productivity, faster speeds, lower energy use, and increased flexibility. Additional cost containment measures that we've taken include tight SG&A management with a focus on large scale sales opportunities, minimal backfilling in both manufacturing and administrative roles, and diligence around working capital and inventory. I want to reiterate that this belt-tightening in no way hinders our ability to drive our commercial efforts, as inquiries around our sustainable solutions remain at very high levels. While the inventory and demand normalization process plays out, our resources remain flexible, and we are well positioned to meet increased demand levels as we move through the calendar year. Moving to slide 4, I'd like to take a moment to discuss REPREVE fiber. During the third quarter, REPREVE sales were $49.6 million or 32% of all sales, compared to $42.9 million and 31% of sales in the preceding quarter. A healthy increase despite the negative impacts of demand disruptions in Asia. This positive momentum in a still very challenged environment speaks to the strength and demand of the REPREVE brand, and we are fully confident in REPREVE maintaining a positive sales growth trend as we move through towards a more normal and stabilized environment in both Asia and the rest of the world. Now shifting to marketing. We continue to elevate our flagship brand, REPREVE, through a mix of B2B and B2C initiatives. We believe our strategy is working as we secured 69 media placements, resulting in almost 500 million reported impressions during the third quarter. Over the past few quarters, we have referenced both our elevated creative direction and focus on brand partnerships, especially across social media. This continued in Q3 with partnerships with Dagne Dover, J.Lindeberg, Tom Tailor, Arizona Love, Volcom, and TOMS Shoes, among other brands which resonate with consumers. We drove further awareness and engagement through a very targeted ad spend, and we are currently incubating an influencer seeding program which will further drive engagement. In addition to that, we continue to leverage our mobile tour to engage with consumers and customers alike. As a continuation of our partnership with ASICS, we hosted a 2-day mobile tour activation at the ASICS-sponsored L.A. Marathon. On the customer front, we recently conducted headquarter mobile tour stops with Boardriders, Guess?, and Disney. These mobile tour stops provide us with the opportunity to engage with customers in a unique way as we walk employees from across their organizations through the REPREVE process. Q3 was also busy from a trade show perspective. In addition to exhibiting at trade shows focused on apparel marketing, including Outdoor Retailer Snow Show in Salt Lake City and The Materials Show in Portland, we exhibited at the Plastics Recycling Conference in National Harbor in Washington, D.C., and at the World of Concrete in Las Vegas. The latter two support our strategic initiative to expand beyond apparel. Internationally, we were thrilled to see strong traffic at our presence at the Intertextile Shanghai Trade Conference, which had been rescheduled due to COVID-19. In February, we announced the launch of our 2022 sustainability report. Through a strategic mix of diligent media relations, we garnered 8 pieces of notable media coverage from the likes of The Wall Street Journal, the Sourcing Journal, Just Style, Environment+Energy Leader, and more. These efforts have garnered over 32 million impressions across business and trade media. Starting off Q4, we celebrated Earth Month with our sixth annual REPREVE Champions of Sustainability awards, which recognize leaders in sustainable production and retail. The global award honor the transformation of single-use plastic bottles into new consumer products, saving them from the waste stream. We kicked off this celebration with a media launch in New York last week. Just this week, Textile Take Back, which launched in Q2, was named a Fast Company World Changing Ideas honorable mention in the category of sustainability and energy. We are honored to be recognized for the innovative way we are tackling material waste. Now, before I hand it over to Craig, I just want to reaffirm we are very excited about the opportunities for REPREVE and the continued growth of the brand. Thank you. Craig? Thank you, Eddie. Good morning, everyone. The quarter we just completed exhibited the continued impact of reduced demand by retailers and brands throughout the apparel supply chains. Like the rest of the team, I am very pleased to see the beginning stages of demand recovery and production activity during the just completed quarter, and we look forward to seeing more progress on this recovery in future periods. We believe the initial demand rebound supports the overall demand for our products, allowing our management team to focus on managing operating costs and working capital to remain nimble as we continue to pursue our strategic initiatives. Let's turn to slide 5 of the webcast presentation and review segment performance. Here we will start with a discussion of the year-over-year changes, followed by a review of the sequential quarter recovery. For the Americas segment, revenues decreased 14.9%, driven by lower sales volumes. The price and mix impact demonstrate a higher proportion of chip and flake sales commensurate with our beyond apparel initiatives. In Brazil, higher volumes from the pursuit of market share were offset by low average selling prices in connection with the anticipated pressure from Asian imports that we mentioned in the most recent earnings call. For our Asia segment, sales volumes were challenged by the overall apparel weakness, especially in the Asian countries we service outside of China, while pricing and mix remained strong. Accordingly, consolidated net sales were $156.7 million, impacted by the near-term apparel production weakness. Turning to slide 6 for the year-over-year gross profit overview. Consolidated gross profit decreased from $19.1 million to $9.7 million, with gross margin declining from 9.5% to 6.2%. The gross profit declines in the Americas segment and Asia segment were both attributable to the apparel demand disruption, while gross profit from the Brazil segment was impacted by selling price pressures brought on by Asian imports. Moving to slide 7, we'll review the sequential quarter net sales comparison. Consolidated net sales increased from $136.2 million to $156.7 million or 15.1%. All three segments demonstrated sequential volume increases, most notably in the Americas, and all were impacted positively by the modest rebound in apparel production that Eddie mentioned earlier. Along with the volume increases, we saw stability in pricing in the Americas and in Asia. On slide 8, I'll highlight the significant improvement in gross profit for all segments, and especially the Americas segment. Eddie outlined our efficiency initiatives, and those are very much on display, with the Americas gross profit increasing significantly following the 18% increase in volume. We are pleased with the gross margin rate in Asia during this calmer demand environment. While Brazil's margin remains below its typical range, it is expected to recover within the next couple quarters. Outlined on slide 9 are balance sheet highlights and capital allocation priorities. I would remind everyone that we refinanced our asset-based lending facility in October 2022 with a higher borrowing capacity and continued favorable rate structure. It's helpful to remind our audience that the leverage ratio drives our interest rate pricing but is not a covenant for compliance purposes. The fixed charge coverage ratio only springs into consideration if our available borrowings fall below an established trigger level, as I'll describe. At the April 2, 2023 quarter end, our trigger level was $22.8 million and our available borrowings were $69 million. Thus, $46 million could be borrowed before the trigger level became applicable. Accordingly, we have great flexibility and runway on our new credit facility. We ended the third quarter with $10.2 million borrowed against our ABL revolver and $112.7 million borrowed against our term loan, following the initial $2.3 million quarterly principal payment made during the third quarter. To further update on our capital priorities, and in order to help preserve our liquidity in a demand-suppressed environment, we negotiated an 18-month pause of the remaining EvoCooler installations beyond fiscal year 2023 in the U.S. and El Salvador. With the pause commencing at a time when we paid approximately 75% of the total $100 million capital outlay, we now expect the capital project to reach completion in calendar 2025. The Brazil installations continue as planned, with all machines set to be in place during this calendar 2023. I will now pass the call back to Eddie to make some final comments. Eddie? Thank you, Craig Creaturo. Before we turn the call over to our Q&A session, I'll turn to slide 10 and provide an outlook for the 4th quarter and an update to our longer-term financial goals. For the remainder of calendar 2023, we expect the operating environment and textile demand trends for the apparel market to continue to recover at a modest pace. As this recovery unfolds and our cost control measures show benefits, we expect continued improvement in our sales and profitability to take hold in fiscal 2024. Our outlook for the 4th quarter includes sales and profitability performance that is generally consistent with the just completed 3rd quarter, along with the continued volatility in the effective tax rate. Capital expenditures should also trend downwards in connection with the pause of the eAFK EvoCooler machinery purchases. Let's talk quickly through the financial goals we laid out in our Investor Day back in February of 2022. Due to the unanticipated significant disruptions to our business such as the fluctuating China COVID policies, conflict in Ukraine, inflation and elevated interest rates, and the inventory destocking situation, we are revising the timeline to achieving our initial goals past 2025. Our goals of $1.1 billion in revenue with 50% of the mix coming from REPREVE fiber sales and $110 million in adjusted EBITDA are still realistic and attainable targets as the long-term drivers of our business has not changed. We will, however, need to work through the immediate and near-term lingering economic issues, so we are moving these goals to long-term targets. As our markets and the economy heal, we'll reconsider putting a timetable to these critical milestones, and they will continue to guide our strategy and focus on long-term goals moving forward. One trend has not changed despite all the headwinds, is the demand for sustainable products and specifically the reuse of plastic water bottles. With this, we still expect to reach our target of recycling 50 billion bottles by December 2025, despite the change to our financial targets. We look forward to the quarters ahead when more normalized volumes and macroeconomic factors will convey our underlying strength and hard work as we remain focused on sustainable growth for Unifi and delivering long-term value for our shareholders. We will now open the line for questions. At this time, I would like to remind everyone in order to ask a question, press star then the number 1 on your telephone keypad. We'll pause for a moment to compile the Q&A roster. Your first question comes from the line of Anthony Lebiedzinski. Anthony? Yes, yes. Good morning, and thank you for taking the questions. You know, certainly not nice to see some sequential improvement in the business and stabilization here at least, you know, near term. Eddie, I guess, you know, I'm just curious. When you talk to the key apparel retailers and brand partners, I know I heard a comment about the inventory levels still being high but off their peak levels. I mean, when you talk with them, I mean, what is their sense as to when do they expect their inventories to be in good shape? Yeah. Across the board, with the exception of one or two brands or retailers, there's still inventory at their possession, but also across the mills that supply them, there's inventory. The slowdown in the consumer demand has what sort of made this last longer than was expected. We're still hearing from these brands or retailers that they expect this inventory hang to last for another one to two quarters. Everybody is quite optimistic that by the end of calendar 2023, most of that destocking would have taken place, not just at the retail level, but also at the mill level. There's one other factor. One other factor I'd mention is, some of the retailers have mentioned to us that there's less deep discounting going on in the marketplace because they like to hang on to the pricing they've taken and seen improved margin. A little bit of that is slowing down volume as well. As you know, in retail, usually, that won't last long. Mostly, some customers will want to get back in there and gain market share, and that should change things. Yeah, they still have a fair amount of inventory. It's expected to be down, as Eddie said, soon. That's very helpful color. Can you comment on also the China reopening and its impact on the Asia segment? Obviously, there was sequential, you know, improvement, but I guess, you know, a little bit less of a recovery than what we would have expected. Just wanted to see if you could get some additional color on the Asia segment and really, you know, China more specifically, if you can. Yep. As you said, majority of our business in Asia is through our China business. It was surprising to us that the business didn't bounce back more aggressively after the Lunar New Year. It did come back, and we were encouraged by that. As I mentioned earlier, the inventory that still is hanging out there is impacting the demand. I also think on top of that, there's a general nervousness in the market about jumping back in and placing orders due to the nervousness around the consumer situation in the U.S. and Western Europe. I think it's nice for us to have seen this business come back. It's stronger today than it was right before the new year and, of course, during the January period. It still has some... It'll be some time before all of those inventories start translating into bigger orders for us. We are encouraged by the conversations we had. The Shanghai Textile Show was the first time that foreign buyers went to the show in Shanghai. A lot of interest in our REPREVE brand, a lot of interest in our textile take-back supply chain. We're encouraged by that. It's just going to take longer than expected. Understood. Okay. That's definitely helpful color there. Then can you also comment on the trends that you're seeing for your input costs? What is your expectation for that? Yeah. As I mentioned on the call, we have quite a stable environment right now when it comes to both our virgin and our recycled inputs. Mainly in the U.S., but even across the globe. Because of the downturn in demand in textiles in China, it has sort of kept a lid on any cost ends or the escalations that might have occurred due to the current oil prices. We're pleased to where we are in our raw material situation relative to our selling price, especially in the U.S. Understood. Okay. Thanks for that. I guess, you know, my last question is, obviously, you guys have done a nice job of controlling SG&A. You know, looking forward, you know, at some point, obviously, you know, the business will recover. As that business recovers, hopefully in fiscal 24, you know, how should we then think about the SG&A expenses on a go-forward basis? At the last three quarters, Anthony Lebiedzinski, we've averaged right on top of $12 million of SG&A per quarter. We'll probably see that go up a little bit here in the last quarter of FY 23. I think we realized that part of the value that Unifi adds is the relationship and the connections we have with the brand and with REPREVE, with those brand partners, and that is gonna be an area we continue to invest in. We think it will tick up. This year will be, you know, probably for the whole year under $50 million or so in SG&A, but it'll probably tick up a little bit from there. Not drastically, I don't think, especially during the first half of FY 2024, but we are planning on some further investments in that area, mostly on the marketing and advertising side of things. Got it. Okay. Thanks, Craig, appreciate it and best of luck. Thanks, Anthony. Thank you. If you would like to ask a question, press star one on your telephone keypad. There are no further questions. I would like to thank our speakers for today's presentation, and thank you all for joining us. This concludes today's conference. You may now disconnect.