Unifi, Inc. (NYSE:UFI) Q2 2023 Earnings Call Transcript

Daniel Moore: Yes, thanks. One of my follow-ups was covered and you gave good detail. Obviously, CapEx is going to tick lower as we go through the balance of the year. Just any comments on what cash flow might look like for the back half, either for Q3 or the back half of the year in terms of the operating cash flow and free cash, either usage or generation as it relates to that liquidity position. Thanks.

Craig Creaturo: Yes. I think, Dan, we’ve been doing a lot of things to help put ourselves into a good cash position. In the release, we noted that we generated $7 million of operating cash in the first six months of this fiscal year. By comparison, we had used $4 million in that FY same six-month period in FY €˜23. So, we feel like we’ve done a lot of good things there. We did talk about the specifics about the things that we are doing here in the US, being careful on inventory purchases. We’ve got lower amounts of inventory. We’ve got lower price per pound as the pricing has moderated. We’ve taken the actions labor wise. And really specifically, we’ve allowed about a 10% reduction in our US workforce, and that’s really again, through attrition, through being slow to kind of evaluate, and make sure that we’re backfilling where we need it.

We’ve asked people to take on some additional responsibilities. And really, I think back to Al’s comments about really everybody stepping up and doing well, that is what we’re seeing. So, we’ve been able to do that, and that’s about 10% or around 200 people here domestically. So, those are some of the things that have set us up to be in a good spot. From a cash generation perspective, we’re actually thinking and anticipating that as the business comes back, we’ll have higher levels of sales, then we’ll have higher levels of accounts receivable, and we’ll need to start to build a little bit more inventory to be ready for that than we have. So, over the next couple of quarters, we know we’ll be utilizing or using some working capital to do that.

And again, we’ve got plenty of head room. Good things that we’ve done here recently are setting us up to be able to grow that business as it comes back. So, again, we’re also very fortunate, and I think as we touched on a little bit, both of our Brazil operation – both our Brazil operation and our Asia operation, are very self-sufficient. They don’t need or require cash from this region. So, that’s very helpful. Even in spite of some lower demands in both of those regions, both of them are doing fine financially. So, we are looking forward to seeing that business come back, and we know it’s going to take some working capital address to address that, but we’re prepared to do that.

Daniel Moore: Perfect. Thanks again.

Operator: And ladies and gentlemen, this concludes today’s conference call, and we thank you for your participation. You may now disconnect.