Good morning, and thank you for attending Unifi, Inc.'s second quarter fiscal 2025 earnings conference call. Today's conference is being recorded, and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. Speakers for today's call include Al Carey, Executive Chairman, Eddie Ingle, Chief Executive Officer, and A.J. Eaker, Chief Financial Officer. During this call, management will be referencing a webcast presentation that can be found in the slide deck for cautionary statements and non-GAAP measures. I will now turn the call over to Al Carey. Please go ahead.

Thank you very much. Thanks for joining everyone for our call today on the second quarter of fiscal 2025. I'm going to provide a few of the key headlines regarding our quarter and our second half of fiscal year outlook. And then, as usual, Eddie Ingle and A.J. Eaker will provide the actual performance in more detail and talk about the actions that we're taking at Unifi, Inc. Let me start by telling you that the Q2 revenues were very similar to the previous few quarters and a little less than we had projected. This continuation of sluggish sales has been with us and the entire textile industry for some time in both North America and in Asia. But I will tell you that we are finally seeing some positive signs. Beginning in January, I'd say for the last six weeks, we have seen an improvement in our revenue trends, and our customers are more optimistic about demand and improved inventories coming out of the holiday season. I believe they would describe the holiday season as solid. This should allow us to show up with a stronger second half performance in our overall numbers versus the first half, which is what we had talked about a while back. During this quarter, we made a decision, a very important decision, to close one of our three plants in the U.S. However, we will lose no sales. The production will transition to other facilities that we have that have capacity in North America. This move is going to improve our fixed cost utilization, which has been a challenge. It's also going to improve our profitability for North America. We will then sell the plant, allowing us to reduce our debt. Now we're encouraged by the momentum on two top line revenue ideas. One we've talked about for quite some time, which is the beyond apparel efforts that we've been pursuing for about a year. Those efforts are beginning to pay off as we start to enter two new areas for Unifi, Inc. with sales of carpet and the military segment. Both of these sales are made possible by our 'made in America' approach. These sales are beginning right now this month, and another positive is our addition of our circularity and our textile take-back innovation that we discussed in the last two calls is now beginning to gain some traction with our customers. We are likely to see some sales in Q4 this fiscal year and more of a thrust in fiscal 2026. We're going to be very busy over the next five to six months with closing a plant, moving equipment, and getting our whole organization focused, and these activities will show up as a stronger performance in the second half and into the next fiscal year. So with that overview, let me now turn it over to Eddie Ingle, our CEO, to give you the big details of what's going on in the quarter and in the future. Eddie?

Thanks, Al. As Al just mentioned, our results for the quarter were slightly below our outlook due to lower than expected sales that impacted our business in both the Americas and Asia. Despite this short-term setback, we continue to remain optimistic about the remainder of calendar year 2025 and beyond as we are already beginning to see an increase in customer orders and interest for some of our recently announced beyond apparel initiatives and REPREVE fiber products. I'm going to touch on in greater detail shortly. Before I go into the details of our results for the quarter, I would first like to discuss our recent efforts to optimize our Americas business. As many of you are aware, we announced earlier this week that we have taken steps to consolidate our manufacturing operations with the closing and future sale of our Madison, North Carolina manufacturing facility. The closing of the Madison facility is an important strategic decision that will allow Unifi, Inc. to become a stronger and more efficient company as we exit the current calendar year. By consolidating this facility, we will improve our cost structure and operational performance without any customer disruption or loss of current production capacity. A.J. will provide greater details on the financial implications of the sale of the facility later on in the call. But this proactive step optimizes our business and makes Unifi, Inc. a leaner and more profitable organization. This decision to close Madison was a particularly difficult decision for me personally, as it was a place where I gained a lot of valuable experience as a general manager early on in my career. I'd like to acknowledge the work that the employees put into making this facility a valuable contributor to the profitability of Unifi, Inc.'s business over the years. I thank them for their contribution. Before I go over the results of the business segments, I'd like to briefly discuss the recent tariff announcements that were put in place last weekend on Canada. The situation is still very fluid, and Mexico and Canada have already delayed the tariffs by 30 days and opened a dialogue with the U.S. government. The impact of these tariffs on our business remains uncertain, as our customers are still assessing how it may affect their businesses. We will continue to keep you updated in the coming quarters as the potential impact of the tariffs becomes clearer. Transitioning now to an overview of the quarter on slide four. During the second quarter of fiscal 2025, we reported $138.9 million in consolidated net sales, which was slightly up compared to the prior year in Brazil due to an improvement in the Americas business and consistently robust sales volumes. Now to dive deeper into each of the business segments, in the Americas segment, we saw a slight increase in net sales during the quarter compared to the previous year due to increased activity in Central America. However, our financial results were impacted by two September hurricanes in the southeast U.S., which dampened some demand and continued inflationary pressures. With that said, we anticipate that we will see an improvement in our Americas segment during the second half of the fiscal year due to the traction we're gaining in our beyond apparel initiatives in the corporate markets and military applications. In addition, we continue to see growth in our business in America, which is very encouraging. Even with the normal slowdown from the Christmas holiday, our Brazil segment continued to perform well, thanks to increased demand for textured polyester and favorable pricing dynamics. Brazil has been our best-performing segment for the past year, and we expect this trend to continue for the remainder of the fiscal year. In our Asia segment, we've continued to experience headwinds due to unfavorable economic conditions and pricing pressures in China. Given the seasonal impact from the Chinese New Year, we anticipate seeing similar results in our third quarter for the region, but these should improve as we move into the fourth quarter of fiscal 2025. Turning now to slide five for an update on REPREVE. During the second quarter, REPREVE represented 31.31% of sales, a slight decrease compared to the previous year. This decrease in REPREVE sales was largely driven by macroeconomic pressures in China. But with that said, we anticipate that we will begin to see improvement in our REPREVE fiber business during the second half of the year and in fiscal 2026 as our recently announced REPREVE take-back filament yarn and ThermoLube products begin to gain traction with our customers. Moving next to slide six to highlight some of our recent marketing efforts. We witnessed the versatility of REPREVE through exciting co-branding initiatives this quarter. For example, Madelbusier, a hair care brand, used REPREVE regen in its eco blue bottle, which received the prestigious 2024 Global Green Beauty Award. Sabaton Mastresses and Antiva, which is footwear, continued to promote their use of REPREVE on product pages. Costco highlighted REPREVE branding in-store across several brands, including Puma and Kenneth Cole in both the U.S. and Canada. Additionally, during the quarter, we forged key partnerships with Guess Europe, The North Face, and New Balance. Guess Europe featured our marketing and communications director in their Guess eco video series, showcasing their long-standing commitment to using REPREVE. The North Face launched their 868 collection with an event in London emphasizing its end-of-life recyclability through Unifi, Inc.'s textile take-back process. Finally, New Balance partnered with us to recycle unused race shirts into REPREVE cycled polyester, which is used to produce this year's New Year's cities GTS marathon t-shirts. You could say that was circularity in motion. On slide seven, a highlight of our leadership in product innovation, Unifi, Inc. was recently announced the winner of the 2024 Just Style Excellence Award for Product Launches in the area of circularity. Unifi, Inc. received this award in recognition of the successful launch of ThermoLube, one of our latest innovative products. ThermoLube provides customers with an insulation material made from textile waste using our proprietary textile take-back process. Before I wrap up, I'd like to provide some additional updates on the beyond apparel initiatives for both corporate market and military and protective apparel applications that we discussed during our first quarter call. These initiatives have been performing well, and we have already begun to see initial sales revenue from these two programs. We will see additional revenue benefits from these two initiatives beyond apparel during the second half of this fiscal year. We look forward to providing additional updates on these growing segments of our business over the coming quarters. With that, I'd like to pass the call over to A.J. to discuss our financial results for the quarter.

Thank you, Eddie. Despite a difficult environment during the quarter, we continue to make great progress toward positioning our business for future growth and profitability. To ensure we track to our goals, our focus remains on keeping our variable expenses across both production and administrative functions low, which will help create both cost savings and increased profits that we will reinvest in the key areas of our business that will enhance our revenue performance and drive margin expansion, including beyond apparel initiatives and innovation. Transitioning to our financial results on slide eight, you'll see our consolidated financial highlights for the quarter. Consolidated net sales for the quarter were $138.9 million, up 1.4% year over year. The increase in net sales compared to the prior year was primarily driven by continued improvement efforts in the Americas and growth in Brazil but was offset by lower sales in Asia. Turning to slide nine. In the Americas segment, net sales were up 3% compared to the prior year, due to the traction from our recent sales growth initiatives, despite the unfavorable weather impacts to the Southeast U.S., causing a miss of a couple million sales dollars. Slide ten displays our Brazil segment highlights, which demonstrate our continued strength in that region with robust sales levels. Brazil's margin rate reflects both the positivity of improved value-added mix and the normalization of raw material costs and pricing dynamics. On slide eleven, our Asia segment saw net sales decline by approximately 7% year over year as the sales mix and pricing dynamics in the region remain difficult, particularly in China. I'll now briefly discuss our balance sheet on slide twelve. We're pleased to have reduced cash burn in the second quarter, with improvement on both a year-over-year and sequential basis. This is aided by our strict cost control measures and limited CapEx spending. Finally, I'll discuss our efforts to consolidate our U.S. manufacturing footprint. As Eddie mentioned, the Madison facility provided decades of profit generation and cash flow, and we're grateful to all of the Madison community and employees who have been a part of its historical success. The facility remains in excellent condition and will be operational for the next several months as we screen for an appropriate buyer of the real estate. The proceeds that we receive from the sale of the Madison facility will be prioritized against existing debt and will improve our financial position. During calendar 2025, we will incur expenses related to winddown, relocation, and separation. Our expectations around these transitional restructuring charges range from $5 million to $7.5 million. As a result of this transition, we expect to achieve overall organizational savings by increasing the utilization of our Yacineville facility and leveraging a more efficient operating footprint that would require fewer man-hours per square foot and yarn pounds produced. We will provide additional details on the progress of this transition and the savings benefits as we move through this process. Looking ahead, we'll consider additional steps to improve both the strength of our balance sheet and our financial performance to ensure that we remain well-positioned to pivot to growth. With that, I'll pass the call back to Eddie to take us through the last few slides of the presentation and make final comments.

Thank you, A.J. Let's now turn to slide thirteen to discuss our forecast for the third quarter of fiscal 2025. For the third quarter, we expect net sales and adjusted EBITDA to increase. We expect capital expenditures to be around $5 million to $6 million due to the transition of the production out of the Madison facility. Transitioning to slide fourteen, we will discuss our guidance for fiscal 2025. We're updating our outlook for fiscal 2025, which now includes net sales to be in line with fiscal 2024 as we expect our second half of fiscal 2025 to improve over the corresponding first half. Profitability metrics are expected to improve year over year while second half fiscal 2025 underlying profit generation will be partially offset by U.S. manufacturing transition costs. We expect capital expenditures to range between $14 million and $16 million, which includes the costs related to the transition activities. Moving on to slide fifteen, you will see our updated key strategic priorities that we are focused on for the remainder of fiscal 2025. We are always exploring opportunities to optimize our business, which is highlighted by the proactive manufacturing consolidation measures we discussed today. That will enhance our operating efficiency, lower fixed costs, improve profitability, and further strengthen our balance sheet. As we look ahead to the second half of fiscal 2025, our focus will continue to remain on investing in innovation products in both our REPREVE fiber platform and beyond apparel products that will help improve our product mix and grow our customer base. We believe that our commitment to implementing cost-saving initiatives and making strategic investments in innovation and high-growth opportunities has positioned us well to drive value for all of our stakeholders. With that, we would now like to open the line for questions. Thank you.

Thank you. At this time, I would like to remind everyone that in order to ask a question, press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your next question comes from the line of Anthony Lebedzinski from Sidoti and Company. Please go ahead.

Good morning, everyone, and thank you for taking the questions. It's certainly nice to see the sales and gross margin improvements in the Americas and Brazil segments. I know you guys talked about higher sales volumes in both of these and had good pricing in Brazil. So I'm just wondering, is the higher sales coming most from existing clients, or did you manage to pick up some new clients, or is it just a combination of both? I just wanted to get a better sense of the sales volume drivers in those two key segments.

Yeah. In the Brazil segment, thanks for the question, Anthony. In the Brazil segment, we are seeing it across the board with existing clients. The market for textured polyester continues to grow over the quarter. Outside the normal holiday period, we ran our plants pretty full, and we saw an increase in demand across all segments. I would say maybe in particular, there was a pilot segment that performed exceptionally strong, including the denim sector, which is a very big part of our business down there. As it relates to the U.S., I think the way I would describe that is Central America really was the stock performance as far as growth as we went through the year, through the quarter. We started at calendar 2024. It was very challenging, but we ended it on a high spot. We're seeing some activity with brands continuing to support Central America, and I think perhaps it might be in light of the pending tariffs that were taking place, but we're not exactly sure yet how the brands are reacting, but that seems to be the indicator for us in that area.

But one other comment, Anthony. This is Al. Some of these beyond apparel items, like military and the carpet, are just hitting now.

That's great to hear. So that sounds like you guys are seeing some green shoots, which is definitely reassuring. As far as the opportunity for carpet and the military, I'm sure you guys are working on others as well. But regarding what you see as the potential from those markets, and as far as timing, it sounds like you should pick up some business in the second half of this fiscal year, but could you provide some additional color as to how you see that in fiscal 2026?

I'd like to sort of turn it to calendar 2025. We did see at the tail end of our calendar 2024 in our Q2 fiscal 2025. We saw some activity. As we go through this next twelve months, we are expecting to see growth in both of these market segments on a sequential basis. We're actually installing some additional capacity in our fiscal Q4 to meet the growth that goes beyond the existing capacity in some of the technologies that we have. So as we move through this calendar 2025, you can expect us to give more details around revenues from these two businesses. More importantly, what we're seeing in these two product lines comes from the fact we're able to make products that are performing better than the incumbents, and that gives us comfort that the investments we're making over time and capital are going to pay off. We're quite confident—actually, we're very confident about that as we move through this calendar year. Thank you.

Thanks for that. Now switching to Asia. I know you said that you expect a similar performance in Q3 compared to what you've seen recently. Historically, that business has performed better both in sales and gross margin. When do you think it's reasonable to assume that that piece of your business gets back to more or less historical trends?

As we said on the call, this quarter is impacted by the Chinese New Year. As we go into Q4, we are expecting to see meaningful improvements in the revenues out of that business. The forecast for calendar 2025 is to see growth as we move throughout the year. Again, talking about tariffs in that section, the U.S. government and China have not resolved their differences in that space. However, the increased tariff of ten percent is not as impactful as it would have been for Mexico and Canada. So we're not expecting to see demand drop off. In fact, we're expecting demand to still increase as we benefit from our take-back innovation and our return loop products.

Understood. So, certainly it does seem like there is some potential movement. Now regarding the Madison, North Carolina facility closure, I'm not sure if you're prepared to give a specific number, but can you give a ballpark estimate of how much we could see as far as annual cost savings with Unifi, Inc. running fewer facilities in the U.S.?

Thanks, Anthony. Good question. Like I said, we had many good years out of the Madison facility, and we saw the utilization there fall significantly recently. So this decision was tough but important for our future. Bringing that facility offline will improve a lot of the fixed cost base that we have as well as overall labor man-hours. We'll be able to move a lot of production into our Yaggenville facility where we have more automation and a better facility to handle the overall volume and efficiency. We're not looking to disclose the actual number that we're targeting at this point, but we'll certainly provide that as we've gathered all the details and completed that consolidation. We expect some material savings from reducing the operations in that facility. Quick update on the overall facility itself as well. The tax value there is around $29 million, and the book value on that facility for us is around $9 million. We do expect this to be a favorable move for us from a balance sheet perspective.

That's very helpful. Well, as far as other facilities, I know you guys also sold a warehouse. Looking at your properties, do you think there could be additional opportunities to optimize the overall structure, or do you feel you're tapped out as far as opportunities in terms of your facilities?

This is certainly going to be a big move for us that will be very important over the next several months and take a lot of detailed time. We're focused heavily on this move right now. As I mentioned in the prepared remarks, we'll continue to look at opportunities. There's nothing specific to highlight at this point, but when we sold that warehouse, which was about 250,000 square feet with a decent amount of land, we achieved greater than $30 per square foot on that sale. We were quite pleased with that and hope to have a very positive sale for the Madison facility. Specific to your question, we'll keep looking at what makes sense, see how all of the consolidation efforts play out, look forward to those savings, and continue to find opportunities.

Gotcha. So as a follow-up on the Madison facility, what's the square footage of that property?

Sure. The building itself is in excellent condition, high ceilings, and is around 950,000 square feet. It also has a significant land buffer, and the land and surrounding areas are in great condition as well.

Got it. Well, that all sounds good. Thank you very much, and best of luck.

Great. Thanks so much, Anthony. Thank you, Anthony.

That ends our Q&A session, and we appreciate your participation. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.