Good day, ladies and gentlemen, and welcome to the Unifi First Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to James Otterberg. You may begin.

Thank you, Michelle, and good morning, everyone. Joining me for the call today is Bill Jasper, our Chairman and Chief Executive Officer; and Roger Berrier, our President and Chief Operating Officer. During this call, we will be referencing a webcast presentation that can be found at unifi.com. The presentation can be accessed by clicking the first quarter conference call link found on our homepage. Before we begin, I need to first advice you that certain statements included on today's call will be forward-looking statements within the meaning of federal securities laws. Management cautions that these statements are based on current expectations, estimates and/or projections about the markets in which the company 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. I direct you to the disclosures filed with the SEC and our Form 10-Qs and Form 10-Ks regarding various factors that may impact these results. Also, please be advised that certain non-GAAP financial measures such as adjusted EBITDA, adjusted net income, and adjusted EPS will be discussed on this call and non-GAAP reconciliations can be found in the schedules to the webcast presentation. In the current presentation and for all periods presented, adjusted EBITDA now includes the company’s portion of income or loss before income taxes for REPREVE Renewables, LLC and the Company's nylon joint ventures. Before we get to the financial details for the quarter, I'd like to turn the call over to Roger, who will provide you with an overview of the Company's markets, raw material trends and other business updates.

Thanks, James, and good morning, everyone. The retail indicators impacting our core business showed year-over-year improvement with retail sales increases of 3.3% in apparel, 5% in furnishings and 6% in automotive. And looking at the Apparel segment, demand for the Company’s products continues to be driven by the fact that category growth has been coming from the increased consumption of synthetic apparel versus cotton apparel. Looking at the company’s domestic operations for the September quarter, we continue to see growth in our textured polyester volume, particularly in our premier value-added products as brands and retailers continue to look to our PVA products to help them deliver the comfort, performance and sustainability benefits that consumers are seeking. This increase in demand for our textured polyester and PVA products is also being driven by the ongoing growth in the NAFTA and CAFTA regions, which continue to have an estimated average annual growth rate of around 5%. In fact, the eight drawn texturing machines that we recently added to our locations in the Yadkinville, Madison and El Salvador to support the growing demand for synthetic yarns in the CAFTA region are already running that capacity. Based on the anticipated growth for synthetic apparel on the NAFTA and CAFTA regions, the company is exploring adding additional polyester texturing capacity of approximately 10% over the next 18 months to support customers that choose to source their products in the region. These investments in increased capacity will also allow us to support the company’s mixed enrichment strategies in the region. We are also improving our ability to better service customers and handle increasingly complex product mix. The increases in domestic polyester volume associated with our mix enrichment strategies and PVA products in the September quarter, were offset by declines in volume at the lower end of…

Thank you, Roger. I will begin the review of our preliminary financial results for the September quarter on Page 3 of the presentation with income statement highlights. For the three months ended September 27, 2015, the company is reporting preliminary basic EPS of $0.45 on pre-tax income of $11.7 million, an increase of $0.06 in basic EPS compared to the prior period. Pre-tax income is $900,000 higher than the $10.8 million of pre-tax income generated during the prior year first quarter. This increase in our quarterly pre-tax income is primarily attributable to improved gross profit of $500,000 driven primarily by increased volumes and margin gains for PVA products across all segments and lower SG&A expenses of $800,000, all achieved despite lower earnings from Parkdale America of $1.4 million. For the current quarter, we are reporting preliminary basic EPS of $0.45 per share against $0.39 per share for the prior year quarter, higher due to our improved operating income and a decline in our effective tax rate of almost 5% from 38.4% to 33.6%, partially offset by the lower earnings from Parkdale America. The decline in average basic shares outstanding to 17.9 million shares from the prior year quarter’s 18.3 million shares is due to purchases made under the company’s previously announced stock repurchase program. Turning to Slide number 4, we will review our net sales, and gross profit highlights by for the first quarter. Although net sales decreased $13.4 million from the prior year quarter, the company continues to see strong sales volumes for textured polyester in the region and continued growth for PVA products in both the US and China. The decrease in sales dollars is primarily attributable to $11 million for the devaluation of the Brazilian real, $5 million to $6 million for lower average pricing driven by…

Thanks, James, and good morning, everyone. Coming off of our most profitable year since fiscal year 2000 I am pleased that our earnings momentum continued into the 2016 fiscal year. While revenues were down year-over-year, driven primarily by the devaluation of the Brazilian real and lower polyester raw material pricing, our polyester volumes grew in our core North American region. In addition, the volume and revenue from PVA products also grew significantly. Despite the lower revenue and weakness in both Brazilian and Chinese markets, during the September quarter, the company’s gross margin grew by 130 basis points, net income improved by nearly $1 million and adjusted EBITDA improved by $1.4 million versus the prior fiscal year quarter. I am also pleased with the progress we are making on the capital projects that are being implemented to support the growth of both our PVA products and synthetic apparel in NAFTA CAFTA regions. As Roger mentioned, the new texturing machines that we recently added to support the growing demand for synthetic yarns in the CAFTA region, are already running at full capacity and helping us to serve our customers sourcing from the region as brands and retailers continue to look to increase or move programs to the region, we believe our decision to increase polyester texturing capacity in our US and Central American operations sends the message that Unifi is committed to the region and that we will make the necessary investments to service customers who choose to source their products in the western hemisphere. Because polyester texturing operations in North America are running at high capacity utilization, additional capacity expansion is planned as we expect NAFTA and CAFTA apparel production will continue to grow. Overall, however, we see fiscal 2016 as a transitional year for the company as the benefits from…

[Operator Instructions] We have a question from Chris McGinnis of Sidoti & Company. Your line is open.

Good morning. Thanks for taking my question. You may have said this in the preamble, but can you just maybe, what is the exact growth of PVA on a percentage basis year-over-year?

For the 12 months ended June, PVA sales as a percent of the consolidated total were approximately 30%. For the three months ended this quarter September 2015, that same percentage was 33%.

Gotcha. I guess, maybe this is probably for Roger, but can you just maybe talk about how much of the portfolio right now is around the lower cost material with that risk low cost yarn is at risk?

You are speaking primarily out of the commodity business, Chris?

Yes, how much of that is the portfolio?

We look at the portfolio in many different ways and certainly we look at, as we speak to the CAFTA/NAFTA regulations, trade regulations, that calls for many of our yarns to be compliant and the compliant yarns that we send into the CAFTA/NAFTA is roughly 60% to 65% of our business. So around 30% of the yarns that we sell domestically do not require sort of a trade compliant program if you will, and so that part of the business is certainly, we compete with imported yarns in that part of the business.

Sure, all right. I guess, just on the modeling going forward, with the improvement in the margin profile of the international ops, should we kind of think that with the improvement from China, should the results there on a profit profile be kind of modeled forward?

It’s certainly our expectation that the operation in China continues to improve year-over-year as we talk about the international segment which includes Brazil and China. You have the consideration of our prior 10-Qs and 10-Ks and the effect of the real on the Brazilian portion. Brazil is a bigger portion of the sales of that segment than China and where the real is today, the changes in the local currency with the teams doing in Brazil, I think you have to consider that as you look at into the future as well.

And Chris, when we discuss our international segment, that is the reason we break out Brazil, China in some of commentary goes, both markets have their own dynamics. We certainly spoke of the challenging conditions in Brazil currently with the softer market, but also the commodities and we do sell commodities and specialty and PVA in Brazil where in China, we really focus on our PVA products. In China, we are not so much competing with any of the commodity sector in China.

Sure, yes, now I am just surprised by the strength of the profit margin from the business obviously the strongest I’ve seen in a number of years, so just thinking I guess that should be a continuation for the year I guess is what I was thinking at.

Yes, that’s fair Chris.

I guess, just how quickly with the REPREVE additional capacity, how quickly do you think you can go through that, that ramp up on that capacity?

And to make sure we understand Chris, you said for the upcoming REPREVE expand?

REPREVE, yes, yes.

And the recycle center and the bottle washing that Roger talked about earlier?

No, no, no, just on the expansion from $72 million to $100 million, how quickly, it seems obviously that the PVA and REPREVER growing pretty significantly, how quickly do you see it takes a ramp or to utilize that additional manufacturing capacity?

Yes, so Chris when we expanded from $50 million roughly or $45 million roughly to $70 million to $72 million, when we buy these machineries we have to buy on that scale. So we are buying, they have additional capacity that we grow into so to speak as we’ve talked about on previous calls. So as we are bumping into that $72 million capacity utilization of current assets, the next piece of equipment will take us to $100. We believe that that gives us a runway of 18 months to two years to continue to grow into that full capacity before we would have to consider a fifth line so to speak.

Great, and how much additional cost was – you talked about the 10% of manufacturing capacity addition over the next 18 months, how much will that add to that CapEx plans that you already have in place?

We are currently studying that, what I wanted to do is introduce the fact that, we are – the machines that were recently put in, we were able to put those in to existing buildings that we had in Yadkinville, El Salvador and Madison and those eight machines are already being utilized. Our customers are expressing a lot of interest and continuing to grow and so we are looking today at building requirements, used machinery versus new machinery. So we are really studying all that at the moment. So it will add some CapEx, but we are not at a point where we can share that yet. But we did want to share the fact that it is very positive response that we are getting from our customers and we look to continue growing.

Sure, great. And then a just a couple more. Just on Parkdale, do you expect a bigger distribution this year, at least your fiscal year 2016, so maybe just comment on, I guess, maybe what you are thinking for cash distribution?

We don’t have a specific number that we’ve been told or mind and we do have the same considerations that you do that Parkdale is nearing the end of its very large capital expansions. They continue to perform well and generate cash which certainly leaves, open the opportunity for higher distributions year-over-year.

What’s the – can you just give me an update on the fully diluted share count? I know you gave me the 17.8, but fully diluted?

It’s 17.8 million issued in outstanding at the end of the year and the diluted count is approximately 600,000 shares higher.

Great. I will go back in the queue for now. Thank you very much. Appreciating this and a nice quarter.

Chris, just to clarify your earlier question, I want to go back to the, sort of the CAFTA/NAFTA. Our CAFTA compliant yarns are around 60%, 65%, but within sort of the commodity sector of that 30%, lot of that goes into the automotive industry and within that, there is a lot of PVA that gives you lives. So when we breakdown sort of what we are really competing on a day-in, day-out basis with imports, it would be more in that 10% to 15%.

Great, that’s much better. Thank you very much. I appreciate that.

[Operator Instructions] I am showing no further questions at this time. I’d like to turn the call back over to Bill Jasper for any closing remarks.

Yes, thank you, operator. Actually, just one closing remark, just quick note, Alf Webster who has been on the Unifi board for many, many years has chosen to retire. And I just wanted to acknowledge Alf’s many, many years of service and his help to both the leadership team and the Board, he has been a tremendous asset and we wish him well in his retirement. And with that, we want to thank you all for being on the call and have a good day.

Ladies and gentleman, thank you participating in today's conference. This does conclude the program. And you may all disconnect. Everyone have a great day.