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Good morning, and thank you for attending Unifi's Second Quarter Fiscal 2024 Earnings Conference Call. Today's conference is being recorded and all lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Speakers for today's call include Al Carey, Executive Chairman; Eddie Ingle, Chief Executive Officer; A.J. Eaker, Chief Financial Officer. During this call, management will be referencing a webcast presentation that can be found in the Investor Relations section of unifi.com. Please familiarize yourself with Page 3 of that slide deck for cautionary statements and non-GAAP measures. I will now turn the call over to Al Carey. Al?

Thank you. Good morning, everyone, and thanks for joining our call this morning. I'd like to begin this call by telling you a little bit about some actions that we're taking to improve the long-term performance of the company and allow us to reach the potential that we believe that we've got. I'm not going to speak about the Q2 results, as Eddie and A.J. are going to take you through those in just a few minutes. The only thing I'd say about this quarter two is that it's right about where we told you it would be during our last earnings call. We continue to experience the softness in the apparel category and the high inventory levels in that supply chain. However, there are signs of a gradual pickup in our sales, and that should continue as we go through the balance of fiscal 2024. So, for the next six months. The industry has had a solid end of the year apparel sales, inventories appear to be pretty much back to pre-COVID levels. Now for the last 12 months to 18 months, it's been a very difficult period. We've looked at -- we've had to deal with the macro issues that are affecting the apparel category and our volumes. But as you have heard before, don't waste the crisis, and we're not going to. We found some weaknesses in our business as we've gone through the last 12 months, and we think that we can turn those into opportunities for growth if we take the right actions. And that's exactly what we've done, and it's actually already underway. We did a deep dive with our organizational structure and the processes and the costs that are associated with those, and we are taking out significant costs and improving our operational efficiencies in North America. Now our intention is to take a large portion of those savings from this profitability improvement plan and reallocate some of those to improve the profitability of our North American operations, to invest in product innovation for REPREVE and to become less dependent on the apparel category by further penetrating other end-use markets. More to come on those priorities in both Eddie's and A.J.'s comments, but we've made good progress on this so far. We began the effort in Q2 probably around November/December. We've taken substantial actions already on the headcount front, and most of these actions that were taken in this productivity and profitability improvement plan should be completed by the end of Q3. A few actions trickling into Q4, most likely. We expect that the results will be reflected mostly in the new fiscal year coming, but even a little bit into Q4, perhaps. One other thing I'd like to add, we've had several young leaders in our organization that will be elevated to key roles in the company as a result of these changes. They were responsible along with Eddie for developing these plans and now they will be responsible for the execution of those plans, which gives us all a lot of confidence in what we're going after. So let me turn it over to Eddie Ingle, right now, our CEO, who will take you through the details on all of this.

Thanks, Al, and good morning, everyone. As Al mentioned, I'm going to talk about the second quarter fiscal results, which were in line with our expectations, but were negatively impacted by the ongoing inventory destocking challenges that we continue to see in the apparel industry and its supply chains. However, we remain optimistic that we will begin to see demand normalization in calendar year 2024. As Al mentioned, we are continuing to take proactive actions to control costs and improve efficiency of our operations in order to strengthen the company's position and improve results. The initial impact of these actions are beginning to show in the underlying performance of the business as we delivered meaningful improvement in gross profit performance in the second quarter. If you turn to Slide 3 for an overview of the period. We recorded $136.9 million in net sales during the second quarter, really essentially flat compared to $136.2 million in the second quarter of fiscal 2023. Higher sales volumes were largely offset by lower average prices due primarily to lower raw material costs. Our underlying performance has stabilized as the global apparel inventory destocking should be nearing its end, allowing us to make more strategic decisions in how we position the business for optimal [Technical Difficulty] needs of our customers. In the Americas segment, we saw modest improvements in volume, though sales levels remain below our historical averages. And this can be mainly attributed to continued weakness in apparel demand. In the Americas, we expect to continue to take share in calendar 2024 and benefit from the exits of one of our primary competitors in the region, that we've mentioned in prior calls. In Brazil, we continue to see improved performance. Though our strong sales volumes and increased gross profit were partially offset by the continued unfavorable pricing dynamics from competitive imports. In Asia, while we continue to face challenges with the apparel demand, our results were positively impacted by a rich and diverse sales mix. Going to operations. We continue to evaluate our expense structure and have been proactive in identifying opportunities to generate efficiencies and improve performance across the business. We have spent the last year taking proactive, strategic actions aimed at reducing ongoing costs and optimizing operations to enhance profitability. In recognition of the current environment, we further bolstered those initiatives through the new profitability improvement plan we announced last night. This plan is expected to provide over $20 million in a cumulative profitability benefit moving forward, which will put us in a stronger position to leverage the anticipated recovery in apparel demand in calendar 2024. The first part of this plan focused on realigning our resources, reducing our headcounts and resetting costs, primarily in the U.S. This has allowed us to significantly lower our variable operating expense across both production and administrative functions. These actions will be completed in this quarter ending March 2024. And as a result, we anticipate a reduction in expenses by approximately $2.5 million per quarter on a run rate basis beginning in fiscal 2025. While the execution of this plan came with very difficult decisions, we are confident that these changes will lead to a substantial improvement in profitability and operating profile of the business going forward. We believe Unifi is a robust foundation for future growth and innovation. And the second part of our plan is aimed at expanding our gross margins due to the transformation of our sales process. The approach we've taken includes streamlining processes, enhancing inventory management and realigning resources to boost efficiencies. Once completed, we expect to see a $6 million annual improvement in our gross profits, which will phase in throughout the rest of the calendar year. We plan to strategically invest these cost savings, as Al had mentioned, and increase profits into the areas of our business that promise additional revenue and margin enhancing opportunities. This reinvestment will not just bolster our traditional apparel market penetration, but will also enable us to explore and capitalize on new market segments. Innovation remains at the core of our strategy and leveraging our innovation capabilities in new markets is essential to unlocking our growth potential. We will continue to allocate resources and make investments to develop new and innovative products that expand our brand in new categories, particularly in the areas of our established REPREVE platform, as well as our emerging beyond apparel initiatives, both of which we believe have significant growth opportunities. In tandem with our operating realignment, we have made a number of strategic appointments across our leadership team to drive further growth and focus on innovation at Unifi, and I'm very proud to make these announcements as leadership development has been a priority for our team and the promotion of these leaders onto our executive team is well deserved. So, these series of important decisions to streamline operations and realign leadership team to maximize our growth and profitability profile going forward. We are fortunate to have A.J.'s financial expertise and sophisticated accounting and business acumen. He brings a robust knowledge of our operation and financial processes and has been a critical driver of our strategy over the last few years. These skill sets, coupled with his abilities as the leader of our finance team, separated him throughout the search process is clearly the best candidate. Next, Meredith Boyd has appointed -- been appointed the Executive Vice President and Chief Product Officer. Meredith joined Unifi in 2007, has held progressively senior roles throughout our organization, including our manufacturing operations, brand sales and business development where she had direct customer and industry interactions, and in product development, where she was integral to our innovation initiatives. For the last three years, Meredith has served as our Senior Vice President of Sustainability, Technology and Innovation. Her contributions in that capacity has been pivotal to our international growth and the expansion of the REPREVE brand and value-added product technologies. We will leverage Meredith's proven success and international impact by having her lead all innovation, plant technology, marketing and business development. We expect this organizational change to be critical to promote our global growth initiatives. Brian Moore will take on the role of Executive Vice President and President of Manufacturing, Inc. Brian started his career at Unifi back in 1993 and moved to Asia for Unifi in the early 2000s. For about 15 years, Brian gained additional experience in the private equity world, returning to Unifi at the beginning of 2020. Most recently, he has served as the Senior Vice President of Direct Sales and Operations. Brian's extensive experience and successful leadership in sales and operations are invaluable to our Americas footprint. Greg Sigmon, our General Counsel and Corporate Secretary, has also been promoted to Executive Vice President and will continue to consume more and strategic leadership responsibilities, including the management of our government affairs and sustainability functions. This refreshed leadership team is central to our growth strategy, and each has exemplified a commitment to innovation and market leadership over their tenure with the company. On behalf of the board, I'd like to congratulate each leader. Turning to Slide 4 to discuss REPREVE and marketing. During the second quarter, REPREVE represented 33% of sales, marking a sequential quarter and year-over-year increase as a percentage of net sales. Sales of REPREVE have been adversely affected by the current economic challenges in China and a general downturn in apparel production. We expect a rebound in REPREVE sales once China sees improvement in economic conditions and apparel demand. We remain fully confident in the demand for sustainable fibers and REPREVE brands position as a leader in the industry. Now on the marketing front, our focus remains on elevating our flagship brand, REPREVE. We're thrilled to announce that this week, REPREVE will once again have a presence at the WM Phoenix Open. The brand team up with WM and Peter Millar to convert water bottles like those collected last year's events into a special edition Peter Millar 2024 WM Phoenix open apparel collection that will debut at the upcoming events, and we are honored to be part of such an exciting collaboration at a nationally covered event. I will now pass the call over to A.J. to discuss the financial results.

Thank you, Eddie. Before I discuss the financial results, I'd like to recognize the promotions and achievements of Brian, Greg and Meredith. I look forward to working closely with these esteemed leaders, and our entire global team, as we chart a path for a more profitable and successful Unifi. The results this quarter were better than our Q1, despite including the usual scheduled seasonal shutdowns, and we continue to operate in a weak demand environment. In addition to the operating results that we'll cover on the next several slides, we recorded the following unfavorable impacts: $1.3 million of bad debt provision to recognize financial difficulties for our customer in our U.S. market, $5.1 million in restructuring costs, which includes $2.7 million related to the dissolution of an unprofitable joint venture and $2.4 million of severance costs. Beginning with Slide 5, we have provided a year-over-year comparison on net sales and gross profit for each second quarter. Consolidated net sales were flat as the decline in pricing, which has started to stabilize in the current fiscal year, was primarily impacted by lower raw material costs year-over-year. Volume remained seasonally strong for the Brazil segment, although Chinese imports continue to pressure selling prices. The Asia segment continues to maintain a strong pricing and margin profile from growth in the REPREVE brand and several key customer programs, which is helping to offset the impact on net sales from the volume weakness. From a gross profit perspective, on Slide 6, the lower raw material costs and variable cost management efforts provided for overall improved profitability. However, the seasonally lower volume and weak apparel demand environment in the Americas, combined with the selling price pressures in Brazil continued to unfavorably impact gross profit. Turning to Slide 7 for a sequential sales comparison. We achieved a similar volume level compared to the first quarter despite the impact of domestic holidays. Sales volume in dollars were generally flat, although, seasonally impacted by the normal holiday period for the Americas and Brazil segments. Slide 8 displays an increase in gross profit on a sequential quarter basis as variable cost management benefited the Americas and Brazil segments. I'll now make a few comments on our balance sheet and liquidity position from Slide 9 before passing the call back to Eddie for his closing commentary. During the quarter, we continued to focus on working capital management and cost controls, as you've heard from Eddie earlier, and net debt increased by $6.8 million from the previous quarter and $2.8 million from the prior year-end, primarily due to the working capital needs of the business and the continued weak demand environment. Our CapEx spend of $3 million in the second quarter mirrored the outflows in the first quarter as we await anticipated recovery in apparel industry demand before those levels are lifted. You will recall that we began an 18 month pause on our texturing machinery purchases beginning in March 2023, and in December 2023, we extended this pause for an additional 12 months. We continue to remain confident that our business is well positioned for realizing profitable growth opportunities when the apparel industry and its supply chains normalize, especially with the recent actions outlined by Al and Eddie earlier. I will now pass the call back to Eddie to take us through the last slides of the presentation and make some final comments.

Thank you, A.J. I'd like to turn your attention to Slide 10 before turning the call over to our Q&A session. Despite the ongoing challenges in the apparel industry, we have taken, and we'll continue to take, the necessary strategic actions to adapt to the current environment and also position Unifi for long-term success. Our focus remains steadfast on driving efficiency, enhancing profitability and seizing the growth opportunities on the horizon, particularly in our innovation -- innovative REPREVE and beyond apparel initiatives. We believe we are positioned to expand our global market share, and this has already taken place in the Americas, and we expect to gain a meaningful volume and capture a significant portion of this opportunity as we move through the first half of calendar 2024. The strategic alignment of our resources and new appointments to the leadership team, combined with the anticipated recovery in the apparel industry on the horizon would put us in a position of strength and growth going forward. As we continue to implement cost-saving measures and invest in areas with high growth potential, we are confident in our ability to deliver value to our stakeholders. Now turning to the last Slide 11. Our forecast for the third quarter of fiscal 2024 is as follows: net sales between $149 million and $154 million, adjusted EBITDA between minus $2 million and $1 million, capital expenditures between $4 million and $5 million, and the effective tax rate is expected to demonstrate continued volatility. As we look ahead, we remain cautiously optimistic that our markets are positioned to rebound in calendar 2024, and we expect to deliver quarterly revenue and earnings improvement on a sequential basis. We are very confident in our position as a partner of choice to brands and customers across the globe, and we believe we have the right short and long-term strategy to drive value for our stakeholders. With that, we will now open the line for questions. Thank you.

Thank you. [Operator Instructions] Our first question comes from the line of Anthony Lebiedzinski from Sidoti. Please go ahead.

Good morning, and thank you for taking the questions. So, first, congratulations to A.J. and others on their well-deserved promotions. So, I guess, first question is, I just wanted to get a better understanding of the volume and pricing dynamics. I know you guys talked about the lower material costs impacting that. But, maybe, if you could just be a little bit more specific as to what happened in the second quarter. Kind of -- what's embedded in your third quarter guidance from a volume and pricing perspective? And how should we think about these two issues on a longer-term basis?

Yeah. I'll take that, Anthony. Thanks for the call and thanks for joining us today. Q2 was obviously impacted by the seasonality of the Christmas holiday in both the Americas and in Brazil. And we -- I'm pleased to say, in Brazil, we are seeing very strong volumes, but the pricing, as we mentioned on the call, is significantly impacted by the Chinese environment as they seek to find opportunities to sell textured polyester outside of China. So, we're not expecting to see pricing improve significantly in Q3 in Brazil, but we do expect it to improve somewhat, and the volumes will continue to get stronger as we move through the quarter and get away from any seasonal impact. In Asia, as we moved through the quarter, we did see an improvement in our mix, which really improved the average price in that region and the volumes are coming back slowly as we mentioned on the call. And it's driven primarily by the -- some of the brands really getting to the end of this destocking process, which we're very excited about. In the U.S., we have a dynamic pricing structure. We've been reacting to the needs of the customers as the raw materials have come down. And I am very excited about what will happen in Q3 because all of the inventories of that competitor that went out should be -- have been eliminated by the end of Q2 and our volumes should improve. Pricing will still be under pressure, but raw materials have been stable. So, our margins as we move through the quarter are expected to certainly improve slightly, but more importantly, our volume is going to be improved as we move through the quarter.

Thank you for those details, Eddie. So, I guess as far as your announcement about your cost improvement plan. So, you guys have talked about moving beyond apparel for a while. So, as you look to invest in margin accretive growth opportunities, I guess, maybe what's new here in this plan that wasn't in the prior plan as far as moving beyond apparel? Maybe you could talk about maybe some low-hanging fruit opportunities, and which vertical markets you think will take longer to penetrate?

Yeah. We have been talking about beyond apparel and even going back to our Investor Day, two years ago. What I can say, while we're not at liberty to disclose exact details, but we are very much focused on two segments here in the U.S., the automotive segment and the home, particularly in mattress. And we are seeing opportunities there that we expect to grow in the coming quarters. Part of the changes that we made in the leadership was to create an organization that was very focused on innovation and growth in the beyond apparel areas. And as these new leaders get settled in their role, you're going to be hearing more about the results of that. But certainly, the innovation, coupled with REPREVE, in these new markets are going to be the targets and are the targets. And the challenge we have is getting our costs right, which we have done now and getting -- taking those additional dollars and funding these growth opportunities. So, the organizational changes, along with additional monies available for these growth opportunities are going to be the fuel for these initiatives.

Okay. Sounds good. Okay. And then -- so, as far as the cost reset and headcount reductions, was that mostly in the corporate office or more in the -- in your facilities or was it kind of across the board or is it just more targeted cuts?

Hey, Anthony. It's A.J. Thanks for the comments earlier on the question -- so the reductions that we took in terms of the cost reset are very central to the U.S. We certainly have some of those impacts to corporate duties -- corporate office as well as some of our manufacturing facilities and the vast majority of those relate to salaried.

Understood. Thank you, A.J. Okay. And then, just switching gears. So, looking at Asia -- so obviously, that is a high REPREVE market -- it's the market you have the most REPREVE penetration. A lot has been talked about China as far as the post-COVID recovery being slower than a lot of people would have expected. Just wondering if you guys could comment on China. What are you seeing there so far? What's your expectation here going forward?

Yes. As we said in several calls before, Anthony - I know in discussions with you - we see Asia as a -- for us -- for our business as a feeder to Western Europe and to the U.S. brands. So, the challenge we've had with the Asia environment is that it has caused a Chinese market to try and find other markets for their textured polyester, which has impacted particularly our Brazil operation. But as these brands have -- and retailers have -- reached their normal inventory levels, we are beginning to see the business come back, and that is sort of somewhat separate from the difficult environment -- economic environment that's still occurring in China. Now as China economic -- economy recovers and their capacity utilization increases, they will very quickly, as they normally have done, modify their pricing methodology, and that should improve what happens in Brazil. And it also should improve some of the business that we have in China for China. So, we're still at wait and see for China. I mean, a lot of people are looking at it, but we are hearing, as you are, things that the Chinese government are doing to try and kickstart the economy there, and that should benefit us somewhat also as well as the destocking that has been more or less finalized now in the industry.

Got you. Okay. And it sounds like you guys are seeing, I guess, some green shoots in terms of inventory restocking or not yet? I mean, obviously, we've been in this prolonged period of destocking. So, are you seeing actually signs of actual restocking or are we there yet, or hope to be there in the next quarter?

We are seeing signs, but I will tell you that the -- whether it's because of the interest rates or because the brands retailers are trying to be a little different, there is a lot more smaller orders, more frequent orders, than we would normally see in the past. So, I think there's a cautiousness in the brands retailers not to get back to having excess inventory. That is changing how they sell. But I will tell you, over the last several months, we have seen the business, in Asia particularly, improve as they move through the quarter. So, we don't -- Chinese -- the Lunar New Year is happening in February, but we do expect to continue to see that growth as we move into the March and the following the rest of our fiscal year. So it's -- and like we said in the call, we're cautiously optimistic about the brands retailers getting back to normal, but I think they are still a little cautious about what inventories they have and how they respond to the consumer demand. But we're going to be ready, and we are ready, to react whatever way they do, whether they're going to spike it or just be very cautious. We'll be ready for the growth that we're seeing.

Sounds good. Okay. And just a quick follow-up on that. So, as you're seeing these smaller and more frequent orders, are you -- how are you dealing with pricing for those orders? Is it just making sure that you guys get the margin that you guys deserve to get?

Yes. There's -- as part of this sales transformation, we are continuing to match our pricing to the value we're giving. So, we are changing our -- as the market has changed in their demand -- because in the past, people would want to have more stable pricing for longer programs. Since that's not the case, we are reacting, and our pricing is much more targeted based on the value that we're bringing to that product. And as we move through the next two quarters, we're going to see the benefit of that from a profitability point of view and a margin perspective.

One of the things that…

Sounds good. I’ll…

This is Al.

Sure, go ahead.

And I just want to throw on one more comment. In this efficiency move, we've taken out close to 20% of the line items, and most of those are line items that were very low volume, low run times, low margin. And that effectively gets us a positive margin mix that's contributing there, too. So, some of these items that have been around forever, and finally, A.J. and his team went after it.

Well, thank you for that additional detail and thanks very much and best of luck going forward.

Thank you, Anthony.

Thank you, Anthony.