Unifi Inc (UFI) 2024 Q2 法說會逐字稿

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. (Operator Instructions)

早安，感謝您參加 Unifi 2024 財年第二季財報電話會議。今天的會議正在錄製中，所有線路均已靜音，以防止任何背景噪音。（操作員說明）

Speakers for today's call include Al Carey, Executive Chairman; Eddie Ingle, Chief Executive Officer; AJ 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 2 of that slide deck for cautionary statements and non-GAAP measures.

今天電話會議的發言人包括執行主席 Al Carey；埃迪·英格爾，首席執行官； AJ 埃克，財務長。在本次電話會議中，管理層將參考 unifi.com 投資者關係部分中的網路廣播簡報。請熟悉該投影片第 2 頁的警告聲明和非 GAAP 措施。

I will now turn the call over to Al Carey. Al?

我現在將把電話轉給阿爾·凱裡。艾爾？

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.

謝謝。大家早安，感謝您今天早上加入我們的電話會議。在這次電話會議開始時，我想向大家介紹我們正在採取的一些行動，這些行動旨在提高公司的長期業績，並使我們能夠發揮我們認為擁有的潛力。

I'm not going to speak about the Q2 results as Eddie and AJ 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 what we told you and where we told you it would be during our last earnings call. We continued to experience the softness in the apparel category and the high inventory levels in that supply chain.

我不會談論第二季的結果，因為艾迪和 AJ 將在幾分鐘內向您介紹這些結果。關於第二季度，我唯一要說的是，我們在上次財報電話會議上告訴您的內容以及我們告訴您的內容是正確的。我們繼續經歷服裝類別的疲軟和供應鏈的高庫存水準。

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.

然而，有跡象表明我們的銷售額正在逐步回升，並且隨著 2024 財年的結餘，即接下來的六個月，這種情況應該會持續下去。該行業在年底的服裝銷售表現強勁。庫存似乎已基本恢復到新冠疫情爆發前的水準。

Now for the last 12 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 in our volumes. But as you have heard before, don't waste a 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.

過去 12 到 18 個月是一段非常困難的時期。我們已經研究過——我們必須處理影響我們產量中服裝類別的宏觀問題。但正如您之前所聽到的，不要浪費危機，我們不會這樣做。在過去的 12 個月裡，我們發現了我們業務中的一些弱點。我們認為，如果採取正確的行動，我們可以將這些轉化為成長機會。這正是我們所做的，而且實際上已經在進行中。

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.

我們深入研究了我們的組織結構以及與之相關的流程和成本。我們正在削減大量成本並提高我們在北美的營運效率。

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 AJ's comments, but we've made good progress on this so far.

現在，我們的目的是從這個盈利能力改善計劃中拿出大部分節省的資金，並重新分配其中一些資金來提高我們北美業務的盈利能力，投資於REPREVE 的產品創新，並通過進一步滲透來減少對服裝類別的依賴。Eddie 和 AJ 的評論中將進一步討論這些優先事項，但到目前為止，我們已經在這方面取得了良好進展。

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.

我們大概在 11 月、12 月左右開始了第二季的工作。我們已經在人員編制方面採取了實質行動。此生產力和獲利能力改善計畫中採取的大部分行動應在第三季末完成，其中一些行動很可能會在第四季完成。

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.

我們預計結果將主要反映在即將到來的新財年，甚至可能反映到第四季。我想補充的另一件事是：我們組織中有幾位年輕的領導者，由於這些變化，他們將被提升到公司的關鍵職位。他們與艾迪一起負責制定這些計劃。現在他們將負責這些計劃的執行，這讓我們所有人對我們所追求的目標充滿信心。

So let me turn it over to Eddie Ingle right now, our CEO, who will take you through details on all of this.

現在讓我將其交給我們的執行長 Eddie Ingle，他將帶您了解所有這一切的詳細資訊。

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.

謝謝阿爾，大家早安。正如艾爾所提到的，我將談論第二季的財務業績，該業績符合我們的預期，但受到我們在服裝業及其供應鏈中持續看到的持續去庫存挑戰的負面影響。然而，我們仍然樂觀地認為，我們將在 2024 年開始看到需求正常化。

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. 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.

正如 Al 所提到的，我們將繼續採取積極主動的行動來控製成本並提高營運效率，以鞏固公司的地位並改善績效。這些行動的初步影響已開始在業務的基本業績中顯現出來，因為我們在第二季的毛利業績方面取得了有意義的改善。

If you turn to slide 3 for an overview of the period, we recorded $136.9 million net sales during the second quarter were 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 performance, while at the same time, maintaining the ability to meet the needs of our customers.

如果你翻到投影片 3 來了解這段期間的概況，我們發現第二季的淨銷售額為 1.369 億美元，與 2023 財年第二季的 1.362 億美元基本持平。銷量的增加在很大程度上被平均價格的下降所抵消，這主要是由於原材料成本的下降。隨著全球服裝庫存去庫存接近尾聲，我們的基本績效已經穩定，這使我們能夠就如何定位業務以獲得最佳業績做出更多戰略決策，同時保持滿足客戶需求的能力。

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.

在美洲市場，儘管銷售水平仍低於歷史平均水平，但銷量略有改善。這主要歸因於服裝需求持續疲軟。在美洲，我們預計 2024 年將繼續佔據份額，並受益於我們在先前的電話會議中提到的該地區主要競爭對手之一的退出。

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.

在巴西，我們的業績持續改善，儘管我們強勁的銷售和增加的毛利被競爭性進口產品持續不利的定價動態所部分抵消。在亞洲，雖然我們繼續面臨服裝需求的挑戰，但豐富多樣的銷售組合對我們的業績產生了積極影響。

Come 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 spent the last year taking proactive strategic actions aimed at reducing ongoing costs and optimizing operations to enhance profitability.

在營運方面，我們繼續評估我們的費用結構，並積極主動地尋找提高整個業務效率和績效的機會。去年，我們採取了積極主動的策略行動，旨在降低持續成本並優化營運以提高獲利能力。

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 cumulative profitability benefit moving forward, which will put us in a stronger position to leverage the anticipated recovery in apparel demand in calendar 2024.

考慮到當前的環境，我們透過昨晚宣布的新的盈利能力改善計劃進一步支持了這些舉措。該計劃預計將在未來提供超過 2000 萬美元的累計盈利收益，這將使我們處於更有利的地位，以利用 2024 年服裝需求的預期復甦。

The first part of this plan is focused on realigning our resources, reducing our headcounts and resetting costs primarily in the US. 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.

該計劃的第一部分重點是重新調整我們的資源、減少員工數量並重新調整成本（主要在美國）。這使我們能夠顯著降低生產和管理職能的可變營運費用。這些行動將在截至 2024 年 3 月的本季完成。因此，我們預計從 2025 財年開始，按運行率計算，每季費用將減少約 250 萬美元。

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.

雖然該計劃的執行需要做出非常困難的決定，但我們相信這些變化將導致公司未來盈利能力和營運狀況的大幅改善。我們相信 Unifi 是未來成長和創新的堅實基礎。

And the second part of our plan is aimed at expanding our gross margins through the transformation of our sales process. And the approach we've taken includes streamlining processes, enhancing inventory management, and realigning resources to boost efficiencies.

我們計劃的第二部分旨在透過銷售流程的轉型來擴大我們的毛利率。我們採取的方法包括簡化流程、加強庫存管理以及重新調整資源以提高效率。

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.

一旦完成，我們預計毛利每年將增加 600 萬美元，這將在今年剩餘時間內逐步實現。正如艾爾所提到的，我們計劃對這些成本節約進行策略性投資，並將利潤增加到我們的業務領域，從而帶來額外的收入和提高利潤的機會。此次再投資不僅將增強我們的傳統服飾市場滲透率，還將幫助我們探索和利用新的細分市場。

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.

創新仍然是我們策略的核心，利用我們在新市場的創新能力對於釋放我們的成長潛力至關重要。我們將繼續分配資源並進行投資，以開發新的創新產品，以在新的類別中擴展我們的品牌，特別是在我們已建立的REPREVE 平台以及新興的服裝計劃領域，我們相信這兩個領域都具有巨大的成長機會。

In tandem with our operating realignment, we have made a number of strategic appointments across our leadership team to drive further growth and focus and innovation at Unify. 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.

在我們進行營運調整的同時，我們對領導團隊進行了多項策略任命，以推動 Unify 的進一步成長、重點關注和創新。我非常自豪地宣布這些消息，因為領導力發展一直是我們團隊的首要任務，而將這些領導者提升到我們的執行團隊是當之無愧的。

So these series of important decisions to streamline operations and realigned leadership team to maximize our growth and profitability profile going forward, we are fortunate to have AJ's financial expertise and sophisticated accounting and business acumen. He brings a robust knowledge of our operational 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 a leader of our finance team, separated him throughout the search process as clearly the best candidate.

因此，這一系列重要決策旨在簡化營運並重新調整領導團隊，以最大限度地提高我們未來的成長和獲利能力，我們很幸運擁有 AJ 的財務專業知識以及成熟的會計和商業頭腦。他對我們的營運和財務流程有著豐富的了解，並且在過去幾年中一直是我們策略的關鍵推動者。這些技能，再加上他作為我們財務團隊領導者的能力，使他在整個搜尋過程中明顯成為最佳候選人。

Next, Meredith Boyd has been appointed Executive Vice President and Chief Product Officer. Meredith has joined Unifi in 2007 and has held progressively senior roles throughout our organization, including our manufacturing operations from sales and business development, where she had direct customer and industry interactions and in product development where she was integral to our innovation initiatives.

接下來，梅雷迪思·博伊德 (Meredith Boyd) 被任命為執行副總裁兼首席產品長。Meredith 於2007 年加入Unifi，並在整個組織中逐漸擔任高級職務，包括銷售和業務開發的製造業務，她在這些業務中與客戶和行業進行直接互動，在產品開發中，她是我們創新計劃不可或缺的一部分。

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 proven success and international impact by having her lead all innovation, plan technology, marketing, and business development. We expect this organizational change to be critical to promote our global growth initiatives.

在過去的三年裡，梅雷迪思一直擔任我們的永續發展、技術和創新高級副總裁。她在此方面的貢獻對於我們的國際成長以及 REPREVE 品牌和增值產品技術的擴展至關重要。我們將讓 Meredith 領導所有創新、規劃技術、行銷和業務開發，以充分利用 Meredith 已取得的成功和國際影響力。我們預計這項組織變革對於促進我們的全球成長計畫至關重要。

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 Operation. Brian has extensive experience and successful leadership in sales and operations are invaluable to our Americas footprint.

Brian Moore 將擔任製造公司執行副總裁兼總裁。大約 15 年來，Brian 在私募股權領域累積了更多經驗，並於 2020 年初重返 Unifi。最近，他擔任直接銷售和營運高級副總裁。Brian 在銷售和營運方面擁有豐富的經驗和成功的領導力，這對我們在美洲的足跡至關重要。

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 essential to our growth strategy and each has exemplified a commitment to innovation and market leadership over their tenures with the company. On behalf of the Board, I'd like to congratulate each leader.

我們的總法律顧問兼公司秘書 Greg Sigmon 也已晉升為執行副總裁，並將繼續承擔更多戰略領導職責，包括管理我們的政府事務和永續發展職能。這個新的領導團隊對於我們的成長策略至關重要，每個人都在公司任職期間體現了對創新和市場領導力的承諾。我謹代表董事會向各位領導者表示祝賀。

Turning to slide 4 to discuss REPREVE in 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's brand position as a leader in the industry.

轉向幻燈片 4，討論行銷中的 REPREVE。第二季度，REPREVE 佔銷售額的 33%，佔淨銷售額的百分比較上季和年比都有所成長。REPREVE 的銷售受到當前中國經濟挑戰和服裝生產普遍下滑的不利影響。我們預計，一旦中國經濟狀況和服裝需求有所改善，REPREVE 的銷售就會出現反彈。我們對永續纖維的需求以及 REPREVE 作為行業領導者的品牌地位充滿信心。

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 teamed 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 event. And we are honored to be part of such an exciting collaboration at a nationally covered event.

現在在行銷方面，我們的重點仍然是提升我們的旗艦品牌 REPREVE。我們很高興地宣布，本週 REPREVE 將再次出現在 WM 鳳凰城公開賽上。該品牌與 WM 和 Peter Millar 合作，將去年賽事中收集的水瓶改造成特別版 Peter Millar 2024 WM Phoenix Open Apparel Collection，並將在即將舉行的活動中首次亮相。我們很榮幸能夠在全國範圍內的活動中參與如此令人興奮的合作。

I will now pass the call over to AJ to discuss the financial results.

我現在會把電話轉給 AJ，討論財務表現。

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 team leaders and our entire global team as we chart a path for a more profitable and successful Unifi.

謝謝你，艾迪。在討論財務表現之前，我想對布萊恩、格雷格和梅雷迪思的晉升和成就表示認可。我期待與這些受人尊敬的團隊領導者以及我們整個全球團隊密切合作，共同為 Unifi 制定更有利可圖、更成功的道路。

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 a customer in our US 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.

儘管包括通常安排的季節性停工，本季的業績仍好於第一季。我們繼續在需求疲軟的環境下運作。除了我們將在接下來的幾張投影片中介紹的經營業績之外，我們還記錄了以下不利影響： 130 萬美元的壞帳撥備，以承認美國市場客戶的財務困難； 510 萬美元的重組成本，其中包括與解散一家不盈利的合資企業相關的 270 萬美元和 240 萬美元的遣散費。

Beginning with slide 5, we have provided the 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. It was primarily impacted by lower raw material costs year over year.

從幻燈片 5 開始，我們提供了每個第二季淨銷售額和毛利的年比比較。由於定價下降，合併淨銷售量持平，本財年定價已開始穩定。這主要受到原材料成本較去年同期下降的影響。

Volume remains 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.

儘管中國進口繼續對售價構成壓力，但巴西市場的銷售仍保持季節性強勁。由於 REPREVE 品牌和幾個關鍵客戶計劃的成長，亞洲業務繼續保持強勁的定價和利潤狀況，這有助於抵消銷售疲軟對淨銷售額的影響。

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.

從投影片 6 的毛利角度來看，較低的原料成本和變動成本管理工作提高了整體獲利能力。然而，美洲季節性銷售下降和服裝需求疲軟，加上巴西的銷售價格壓力，持續對毛利產生不利影響。

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.

轉向幻燈片 7 進行連續銷售比較，儘管受到國內假期的影響，我們仍實現了與第一季相似的銷量水準。儘管受到美洲和巴西市場正常假期的季節性影響，但以美元計算的銷售量總體持平。

Slide 8 displays an increase in gross profit on a sequential quarter basis as variable cost management benefited the Americas and Brazil segment. 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.

投影片 8 顯示毛利環比成長，因為變動成本管理使美洲和巴西部門受益。現在，我將就幻燈片 9 中的資產負債表和流動性狀況發表一些評論，然後再將電話轉回埃迪以供其結束評論。

During the quarter, we continued to focus on working capital management and cost controls. As you've heard from Eddy earlier, 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.

本季度，我們繼續關注營運資金管理和成本控制。正如您早些時候從 Eddy 那裡聽到的，淨債務比上一季增加了 680 萬美元，比上年末增加了 280 萬美元，這主要是由於業務的營運資金需求和持續疲軟的需求環境。

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 repurchases 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.

我們第二季的資本支出為 300 萬美元，反映了第一季的資本支出，因為我們等待服裝業需求的預期復甦，然後再提升這些水準。您可能還記得，我們​​從 2023 年 3 月開始暫停加彈機械的回購，為期 18 個月。2023 年 12 月，我們將此暫停時間延長了 12 個月。我們仍然相信，當服裝業及其供應鏈正常化時，尤其是 Al 和 Eddie 早些時候概述的近期行動，我們的業務處於有利地位，能夠實現盈利增長機會。

I will now pass the call back to Eddie to take us through the last slides of the presentation and make some final comments.

現在，我將把電話轉回艾迪，讓他帶我們瀏覽簡報的最後幾張投影片，並做出一些最後的評論。

Thank you, AJ. I'd like to turn your attention to slide 10, before turning the call over to our Q&A session.

謝謝你，阿傑。在將電話轉入我們的問答環節之前，我想讓您注意投影片 10。

Despite the ongoing challenges in the apparel industry, we have taken and will continue to take the necessary strategic actions to adapt to the current environment and also position Unifi for long-term success.

儘管服裝業面臨持續的挑戰，我們已經並將繼續採取必要的策略行動來適應當前的環境，並為 Unifi 的長期成功奠定基礎。

Our focus remains steadfast on driving efficiency, enhancing profitability, and seizing the growth opportunities on the horizon, particularly in our 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.

我們的重點仍然是提高效率、提高盈利能力和抓住即將出現的成長機會，特別是在我們創新的 REPREVE 和服裝以外的計劃中。我們相信，我們有能力擴大全球市場份額，這已經在美洲實現，我們預計在 2024 年上半年將獲得有意義的銷售並抓住這一機會的很大一部分。

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.

我們資源的策略調整和領導團隊的新任命，加上服裝業即將復甦的預期，將使我們在未來保持實力和成長。隨著我們繼續實施成本節約措施並投資於具有高成長潛力的領域，我們對為利害關係人創造價值的能力充滿信心。

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.

現在轉向最後一張投影片11，我們對2024 財年第三季的預測如下：淨銷售額在1.49 億美元至1.54 億美元之間，調整後EBITDA 在負200 萬美元至100 萬美元之間，資本支出在400 萬美元至500 萬美元之間，以及預期有效稅率將持續波動。

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.

展望未來，我們仍然謹慎樂觀地認為我們的市場將在 2024 年反彈，並且我們預計季度收入和盈利將環比改善。我們對自己作為全球品牌和客戶首選合作夥伴的地位非常有信心。我們相信我們擁有正確的短期和長期策略來為利害關係人創造價值。

With that, we will now open the line for questions. Thank you.

現在，我們將開通提問熱線。謝謝。

(Operator Instructions) Anthony Lebiedzinski, Sidoti.

（操作員說明）Anthony Lebiedzinski，Sidoti。

Good morning, and thank you for taking the questions. So first, congratulations to AJ and others on their well-deserved promotions. So I guess, first question is 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. What's embedded in your third-quarter guidance from a volume and pricing perspective? And how should we think about these two issues on the longer-term basis?

早上好，感謝您提出問題。首先，恭喜 AJ 和其他人當之無愧的晉升。所以我想，第一個問題只是想更了解數量和定價動態。我知道你們談到了較低的材料成本對此的影響。但也許您可以更具體地說明第二季發生的事情。從銷售量和定價的角度來看，您的第三季指導包含哪些內容？我們該如何從長遠角度思考這兩個問題？

I'll take that, Anthony. Thanks for the call, and thanks for joining us today. Q2 was obviously impacted by this seasonality of the great Christmas holiday in both the Americas and in Brazil. And 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 environments as they seek to find opportunities and sell textured polyester outside of China.

我會接受的，安東尼。感謝您的來電，也感謝您今天加入我們。第二季顯然受到了美洲和巴西聖誕假期的季節性影響。我很高興地說，在巴西，我們看到了非常強勁的銷量，但正如我們在電話中提到的，定價受到中國環境的顯著影響，因為他們尋求機會並在中國境外銷售變形聚酯。

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.

我們預計巴西第三季的定價不會顯著改善，但我們確實預計會有所改善。隨著本季的進展並擺脫任何季節性影響，銷售量將繼續增強。

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 some of the brands really getting to the end of this destocking process which we're very excited about.

在亞洲，隨著本季的進展，我們確實看到了我們的產品組合的改善，這確實提高了該地區的平均價格。正如我們在電話中提到的那樣，銷售正在緩慢恢復，這主要是由一些品牌真正完成去庫存過程所推動的，我們對此感到非常興奮。

In the US, we have a dynamic pricing structure. We've been reacting to that 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. The raw materials have been stable.

在美國，我們有一個動態的定價結構。隨著原料的下降，我們一直在根據客戶的需求做出反應。我對第三季將發生的事情感到非常興奮，因為該競爭對手的所有庫存都應該在第二季末消除。我們的銷量應該會有所提升。定價仍將面臨壓力。原材料一直穩定。

So our margins, as we move through the quarter are expected to certainly improve slightly. But more importantly, our volume is going to improve as we move through the quarter.

因此，隨著本季度的進展，我們的利潤率預計肯定會略有改善。但更重要的是，隨著本季的進展，我們的銷售量將會有所改善。

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 your vertical markets you think will take longer to penetrate?

謝謝你提供這些細節，艾迪。所以我想，就你們宣布的成本改進計劃而言，你們已經談論了超越服裝領域一段時間了。因此，當您希望投資於利潤成長的成長機會時，我想也許這個計劃中有哪些新內容是之前計劃中沒有的，超越了服裝領域？也許您可以談談一些容易實現的機會，以及您認為哪些垂直市場需要更長的時間才能滲透？

Yeah. We have been talking about beyond apparel and even go back to our Investor Day two years ago, what I can't say -- we are not at liberty to disclose exactly the details, but we are very much focused on two segments here in the US: the automotive segment and the home, particularly in mattress. And we are seeing opportunities there that we expect to grow in the coming quarters.

是的。我們一直在談論服裝之外的話題，甚至可以追溯到兩年前的投資者日，我不能說的是——我們無權透露具體細節，但我們非常關注以下兩個細分市場：美國：汽車領域和家居領域，特別是床墊領域。我們看到了那裡的機會，預計在未來幾季將會成長。

Part of the changes that we made in the leadership was to create an organization that was very focused on innovation and growth in these beyond apparel areas. And as these new leaders get settled in the 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.

我們對領導階層所做的部分改變是創造一個非常注重服裝以外領域的創新和成長的組織。隨著這些新領導者逐漸適應這個角色，你將會聽到更多關於結果的資訊。但毫無疑問，這些新市場的創新以及 REPREVE 將成為我們的目標。

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 money available for these growth opportunities are going to be the fuel for these initiatives.

我們面臨的挑戰是控製成本，我們現在已經做到了這一點，並且得到了——利用這些額外的資金並為這些成長機會提供資金。因此，組織變革以及可用於這些成長機會的額外資金將成為這些措施的動力。

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 your facilities? Or was it kind of across the board or just more targeted cuts?

聽起來不錯。好的。然後，就成本重置和人員削減而言，主要是在公司辦公室還是在您的設施中？或者是全面的削減還是只是更有針對性的削減？

Hey, Anthony, it's AJ. Thanks for the comments earlier on the question. So the fee reductions that we took in terms of the cost reset are very central to the US. 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.

嘿，安東尼，我是 AJ。感謝您之前對問題的評論。因此，我們在成本重置方面採取的費用削減對美國來說非常重要。我們當然會對公司職責、公司辦公室以及我們的一些製造設施產生一些影響。其中絕大多數與工薪有關。

Understood. Okay. Thank you, AJ. Okay. And then just switching gears, so looking at Asia, so obviously that is a high REPREVE market. It's the market we 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?

明白了。好的。謝謝你，阿傑。好的。然後只是切換方式，看看亞洲，很明顯這是一個高 REPREVE 市場。這是我們 REPREVE 滲透率最高的市場。關於中國，人們談論了很多，因為新冠疫情後的復甦速度比許多人預期的要慢。只是想知道你們是否可以對中國發表評論。到目前為止你看到了什麼？您對未來有何期望？

As you said in several calls before, Anthony, in discussions with you, we see Asia as a -- for us, for our business, as a feeder to Western Europe and to the US brands. So the challenge we've had with the Asia environment is that it has caused Chinese market to try and to find other markets for the 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 somewhat separate from the difficult environment, economic environment that's still occurring in China.

安東尼，正如您之前在幾次電話中所說，在與您的討論中，我們將亞洲視為我們、我們的業務、西歐和美國品牌的供應商。因此，我們在亞洲環境中遇到的挑戰是，它導致中國市場嘗試尋找變形聚酯的其他市場，這尤其影響了我們在巴西的業務。但隨著這些品牌和零售商已達到正常庫存水平，我們開始看到業務復甦。這與中國仍存在的困難環境、經濟環境有些不同。

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 looking at it. But we are hearing -- as you are -- things that the Chinese government are doing to try and to 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.

現在，隨著中國經濟的復甦和產能利用率的提高，他們將像往常一樣迅速修改其定價方法，這應該會改善巴西的情況，也應該會改善我們在中國的一些業務對中國。所以我們對中國仍然持觀望態度。我的意思是很多人都在看它。但正如你們一樣，我們正在聽到中國政府正在採取一些措施來嘗試振興那裡的經濟。這應該對我們以及產業目前或多或少完成的去庫存有所裨益。

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? Are we there yet or hope to be there in the next quarter?

明白你了。好的。我想，聽起來你們在庫存補貨方面是否已經看到了一些萌芽？我的意思是，顯然，我們已經處於長期的去庫存階段。那麼您是否看到了實際補貨的跡象？我們是否已經實現或希望在下個季度實現這一目標？

We are seeing signs. But I would tell you that is because of the interest rates or because the brands and 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 and retailers not to get back to having excess inventory. That is changing how they sell. But I would 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 -- the Chinese 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 rest of our fiscal year.

我們正在看到跡象。但我想告訴你，這是因為利率，或是因為品牌和零售商試圖做出一些改變。與我們過去通常看到的相比，現在有更多的小訂單、更頻繁的訂單。因此，我認為品牌和零售商都持謹慎態度，不要再次擁有過剩的庫存。這正在改變他們的銷售方式。但我想告訴你，在過去的幾個月裡，我們看到亞洲的業務隨著本季的發展而特別改善。所以我們不知道——中國農曆新年發生在二月份，但我們確實預計在進入三月和本財年剩餘時間時將繼續看到這種增長。

So it's like we said in the call, we're cautiously optimistic about the brands and retailers getting back to normal, but I think they are still a little cautious about what inventory they have and how they respond to the consumer demands. But we're going to be ready and we are ready to react and 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.

所以就像我們在電話中所說的那樣，我們對品牌和零售商恢復正常持謹慎樂觀態度，但我認為他們對自己擁有的庫存以及如何應對消費者需求仍然有點謹慎。但我們將做好準備，準備做出反應，無論他們採取什麼方式，無論他們是要加價還是非常謹慎。我們將為我們所看到的成長做好準備。

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

聽起來不錯。好的。對此進行快速跟進。因此，當您看到這些較小且更頻繁的訂單時，您如何處理這些訂單的定價？我只是確保你們得到你們應得的利潤。

As part of this sales transformation, we are continuing to match our pricing to the value we're giving. So we're changing our approach as a 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.

作為銷售轉型的一部分，我們將繼續將我們的定價與我們所提供的價值相匹配。因此，隨著市場需求發生變化，我們正在改變我們的方法，因為在過去，人們希望為較長的項目提供更穩定的定價。由於情況並非如此，我們正在做出反應，根據我們為該產品帶來的價值，我們的定價更有​​針對性。

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. (multiple speakers)

當我們進入接下來的兩個季度時，我們將從獲利角度和利潤角度看到這樣做的好處。（多個發言者）

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

我將再發表一項評論。在這項效率措施中，我們取消了近 20% 的訂單項目標記。其中大部分都是銷量非常低、運行時間短、利潤率低的訂單項目。這有效地將我們分開，積極的利潤率組合也對此做出了貢獻。所以其中一些物品已經永遠存在了。最後，AJ 和他的團隊追擊了。

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

嗯，謝謝你提供的額外細節。非常感謝，祝你一切順利。謝謝。

Ladies and gentlemen, as we have no further questions at this time, we will conclude today's conference call. We thank you for participating, and you may now disconnect.

女士們、先生們，由於我們目前沒有其他問題，我們將結束今天的電話會議。我們感謝您的參與，您現在可以斷開連接。