Good morning, everyone. On the call today is Bill Jasper, Chairman and Chief Executive Officer; Roger Berrier, President and Chief Operating Officer; and Sean Goodman, Vice President and Chief Financial Officer. During this call, management will be referencing a webcast presentation that can be found at unifi.com. The presentation can be accessed by clicking the second quarter conference call link found on the Unifi homepage. Management advises 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. You are directed to the disclosures filed with the SEC in the Company's 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 working capital, 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. I will now turn the call over to Roger Berrier, who will provide you with an overview of the Company's markets, raw material trends and other business updates.

Thanks, Kelly, and good morning, everyone. The retail indicators impacting our core business once again showed year-over-year improvement with retail sales increases of 0.6% in apparel, despite the impact of warm weather on winter apparel and increases of 6% in furnishings and 6.5% in automotive. In 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 production of synthetic apparel in the North and Central American regions, which grew approximately 5% in calendar year 2015 versus cotton apparel production, which remained flat. Looking at the company’s results for the December quarter, the improvements we saw in our domestic polyester and nylon businesses were offset by the negative impact of the currency devaluation and tough economic conditions in Brazil, continued pressure from low price imports in our domestic business and a loss from our equity affiliate Parkdale America. Domestically, our core polyester texturing business performed well in the quarter as demand for our premier value added yarns remained strong and our synthetic apparel production in the North and Central American regions continues to increase at an estimated annual rate of 5%. Our portfolio of PVA products continues to grow between 10% and 15% per year and will represent approximately one-third of our sales revenues in fiscal 2016. The recent investments that we've made to increase capacity in the region have helped support the regional growth and has improved our ability to deliver on our mix enrichment strategy. The lower end of our commodity business continues to be challenged by some of the lowest import prices that we have seen in years. However, only about 10% to 15% of our business competes head to head with Asian imports. Prices for our raw materials declined in the December…

Thank you, Roger and good morning, everyone. Before discussing the details within our presentation, I would like to provide an overview of the financial impact of the performance of Parkdale America and devaluation of the Brazilian real relative to the U.S. dollar, as these two items noted by Roger had a significant impact on our results. Regarding Parkdale America, GAAP earnings per share for the quarter was impacted by Parkdale recording a loss resulting in a decrease in GAAP earnings per share of almost $0.15 compared to the prior period. Similarly, in the year-to-date period, GAAP earnings per share from Parkdale was lower by almost $0.20 compared to the prior period. Parkdale's performance has been adversely impacted by lower December sales volumes due to inventory adjustments in the supply chain, lower margins, higher depreciation expenses from recent expansions and lower EAP income, but that loss of Parkdale results included a bargain purchase gain of which the company's share was $1.5 million. Turning to the Brazilian operations within our international business segment, devaluation of the Brazilian real relative to the U.S. dollar adversely impacted our result. And for the quarterly comparison, Brazilian reserve currency devaluation drove declines in net sales of around $9 million, pretax income of approximately $800,000 and net income of approximately $600,000 or $0.03 per share. And for the year-to-date comparison, Brazil's currency devaluation drove declines in net sale of around $19 million and pretax income of approximately $1.6 million and net income of approximately $1.2 million or almost $0.07 per share. Outside of the impact of Parkdale and the currency devaluation in Brazil, our performance for the second quarter and the six month period was strong driven by the continued success of our premier value added products, growth in China and a solid performance of our regional…

Thanks, Sean and good morning, everyone. Before I begin my comments, I also would like to welcome Sean to the Unifi team. In having someone with Sean's experience, will make him a very valuable addition to the company as we start to strategically look at where we are going to take this company in the next five years to 10 years. I believe the company will look different in five years than it does today just as we looked much different today than we did five years ago and I'm very excited by the contributions I know Sean will make to this effort. Overall, results for the quarter continue to highlight the continued strength of our domestic business and our growth in China. Sales volumes for polyester and nylon grew in the North American region, volume and revenue from our PVA products continue to grow and we had a very good quarter in China both in terms of revenue and earnings. However, these positives as we noted were masked by the impact by the devaluation of Brazilian real and lower polyester raw material pricing had on our revenues as well as the year-over-year earnings decline from Parkdale. Although, our year-over-year results for the quarter were negatively impacted by a small loss from Parkdale America, we anticipate the red ink will be temporary as Parkdale's earnings were partially impacted by a business slowdown in December related to an inventory correction in the supply chain. We expect Parkdale will return to profitability this current quarter. It's important to note that our equity share in Parkdale America has contributed positive annual net income to the company over the past five fiscal years. We are fortunate to have a 34% equity stake in one of the most efficient and well run cotton spinners in…

Thank you [Operator Instructions]. Our first question comes from the line of Marco Rodriguez, Stonegate Capital. Your line is open.

Good morning, guys. Thank you for taking my questions. I was wondering, if you could talk a little bit more about first, obviously you are talking about continued strong growth there and I wonder, if you could kind of help us understand a little bit more, if we are taking a look at that one specific client that has transitioned over there, how was the rest of the business performing in terms of a growth perspective, if you can kind of a little bit about that?

This is Roger. I’ll expand a little bit on that question for you. We have been anticipating and working with multiple customers with our PVA platform and programs in China. And as we have been working with one significant customer for about two years, we had an agreement that as they started at program in the U.S. they would move that program over to China. We have been anticipating that move for about six to nine months and has started to really kick in, some in the first quarter but really in the second quarter. So that was part of our projection and plan. We made reference or I made the comment that we were above expectations and that’s because of some other programs that we have been working on in addition to that one customer. We have had several other programs that we have been working on to come across the finish line and we are excited about. So couple those two together we exceeded expectations in China for the first six months.

Got you. And then in terms of the growth on PVA, I am not sure if I missed this on the call. But what was your total sales in the quarter for PVA if you can kind of give a percentage and how does that kind of compare to last year's quarter and the September quarter?

Yes. So we stayed consistent with around a third of our sales revenue tracking on the PVA. And last year it was around 30%, so I think we have grown from roughly 30% to 33% and that’s been consistent through this fiscal year. Not only just the quarter but year-to-date.

Got you, understood there. And then another kind a housekeeping item here on the Brazilian impact on the real devaluation, what is the average exchange rate you guys saw in the quarter and then if you could also provide what percentage of the international sales were Brazilian?

This is Bill, I can answer that. I think the average exchange rate we had during the quarter was about 3.85 real to dollar. And the international percentage of our sales -- is that in these numbers?

It's in the slide -- this is Sean, it's in the slide presentation on Page 13. It breaks down in other segments so you can see the international segment there.

So the percentage is…

Yes. You can see the total sales and then it's broken down between polyester, nylon and international. So you will see that on Page 13 of the presentation.

Right. Let me rephrase gentlemen. What I was trying to figure out was, of that international revenue which is just at $25 million what was Brazil's total piece of that pie if you will?

Yes. I mean we haven't broken out Brazil and China in that international segment in our reporting segments.

But I think it's safe to say Brazil is quite a bit larger than China.

Got you. Okay and then just keeping on the topic of Brazil, you made some comments in regard to obviously there is some negative impact on the low end of the commodity side from competitors and that your expectation is some of the smaller players out there will be leaving here and you expect to kind of gain some market share. Can you talk a little bit about those dynamics there? And what you are kind of seeing at the competitive level compared to these people? And then how do you kind of think through the timeline when that multi-share starts to accrue you guys and how you expect that to impact your revenue growth around the international business going forward?

I guess that to kind of put that simply is, about two-thirds of our business there is product that we texture ourselves and that typically goes into more high value, more competitive or areas where we have competitive advantage. The other third of our business we typically buy DTY or textured yarn imported and then we resell it. That's typically a part of our business that's put under pressure by low end commodity imports where other people will be importing it also. Looking at our competitors, many of our competitors do texturing also, but they typically sell into the low end in the market, so that's really where we're expecting to see some competitors have issues because they're typically not making very much money under the best of conditions and we think under these conditions, we're going to start seeing some of that come out. And I would say reasonably and expect to see some of that in the next three months to six months and we're certainly positioned to take some of that share.

Got it. And I will ask a question and I'll jump back in the queue. You talked a little bit about gross margins doing fairly well here in your expectation, is that that kind of continues in the Q3, but if I heard you correctly, you'll need to make some pricing adjustments in Q4. First-off, did I hear that correctly? And also number two, if you can kind of provide some color in terms of your expectations on the price give back that you expect in Q4?

Yes. This is Roger, we did indicate that our raw materials, looks like they're going to continue to decline in the third quarter and going into the fourth quarter. From a market competitive standpoint, we will adjust prices during the third quarter and currently continue to evaluate the raw material, our market position and what our price positions are. So as we are looking at raw materials, we are having to adjust some prices and that will start during the third quarter.

And so are you expecting a sequential increase in gross margins or relatively flat, assuming your guidance or your expectations?

Well, around the commodity business, I would say it's similar to flat. The improvements in gross margins that we've been seeing is coming from the growth of our PVA business and the emphasis that we put on our investments with the recycling center and getting those up and running in that capacity and growing that PVA percentage from 30% to 33%, as we continue that that's certainly lifting the gross margin.

I think, this is Bill, I think another way to look at it possibly is when we have raw materials moving like they have over the last few quarters, we tend to see ups and downs in our gross profit driven by that and delays in passing either increases or decreases through, I think. But if you look at it over a longer period of time, our expectation would be that you're going to continue to see growth in our gross margins because of the growth of our PVA products versus some of the lower end products. So I think it's hard to look at it quarter-over-quarter some times, but if you look at the general trend I think you'll find in the past and I think you're going to find going into future that our gross margins are going to continue to grow on a long-term basis because of the growth of PVA.

Got it. Thanks a lot guys. I appreciate it.

Thank you. [Operator Instructions] Our next question comes from the line of Chris McGinnis with Sidoti & Company. Your line is open.

Good morning. Thanks for taking the questions and nice quarter. So I guess just to maybe just touch on Parkdale a little bit, I know you made some comments. But did you see a dramatic change in business kind of -- I know this happens every once in a while, you have a weak quarter, we found it a little bit more about the business itself. Maybe could you just walk us through, maybe this confidence that comes back or maybe what level you still feel comfortable on an annual basis that could generate for you?

This is Bill. I think basically and first of all this is the first red ink quarter we've had for Parkdale in an awful long time and I think that a big part of that was there was some inventory adjusting in the supply chain, so their volumes fell off quite a bit in December. Looking forward, it's difficult to say. Certainly we expect they're going to return to profitability or whether it's the same profitability they had in previous quarters, it's hard to say, but I'm very confident that they are the lowest cost producer of cotton yarns in this region. There is continued growth in this region of apparel production, so I would anticipate they're going to hold their share if not grow it a little bit and continue to do well. But I'm reluctant to give any kind of guidance on Parkdale because I'm not that close to their business, but certainly the projections they've been giving us show that they're returning to profitability. And I've got very little concern about their business going forward.

Can you maybe just walk with the price of raw materials coming down, has that changed? Any kind of conversations you're having with your customers in terms of using the REPREVE or the PVA, maybe to the virgin, does that make sense to you?

Yes. This is Roger and we talked a little bit about that in New York at our Annual Investor Day. Certainly we monitor the price of virgin and also with the REPREVE; one thing you keep in mind is REPREVE is fed from industrial waste and also from bottle collection and bottles. So the price of those input ingredients has also decreased. Now they haven't decreased at the same rate as virgin so it has opened up the spread a little more. But we still feel confident that if you look at our REPREVE placements, you look at our REPREVE partners we are able to compete with that small premium of REPREVE versus virgin and continue to drive in growth. We have not seen anything yet that would give us caution or give us any pause to what we see the future of REPREVE being.

And has the competitive landscape changed at all with the China devaluing here, does that concerned you at all maybe in the near term? Then talk a little bit about the competitive landscape, I am just wondering, if you could maybe just share your insights or how you are feeling about kind of the near term aspect for that?

Well, it's two-fold. I mean if you look at the exchange rate in China and certainly they are focused on commodities. And they are producing just a lot of commodity product and they are looking all over the world. It's not just the U.S., but it's Brazil, it's Europe. China moved that production all over the world, but it's all commodity type products. When you look at sort of our strategy what we implemented four or five years ago and sort of getting into the innovation and the specialty and certainly our PVA products. All of our business in China is focused on the PVA products, the specialty products, keeps us somewhat insulated from that commodity sector. So while a lot of people are struggling in China today, our business is actually growing because we are playing in that niche market. We are bringing value and premium product to help brands and retailers differentiate. So one of the things that brands and retailers continue to ask for and strive for is, how do they differentiate themselves from their competitor. And they look to Unifi for innovative yarns and develop new fabrics and develop new garments and so we are part of that solution provider. And that’s sort of the way we positioned ourselves and we have been rewarded with some nice programs and the pipeline is still very full in our opinion.

Sure that’s great. And maybe if you...

I guess one thing I’ll add, I think Roger made a really good point in his discussion points earlier that, when you look at our business only about 15% of our business actually competes with the low end commodity yarns that are coming into the U.S. I think if you look five years ago that was probably 25% to 30% and my expectation is as we move forward that 15% is going to become less and less also. So I mean part of our strategy is to become less dependent on any yarns that have to complete with these imported Chinese commodity yarns, because they are I mean so credit for us from time to time.

Sure, now it makes sense. Thanks for that color. Lastly I guess just quickly on the guidance of the high 60s in EBITDA, with the forecast for next quarter seems like Q4 is going to be a lot stronger. Can you maybe just walk us through what you are thinking to reach the full year guidance? And was there -- is there something in the back half of the year that is a little bit stronger than what you have been seeing, I guess?

Yes, Chris, it is Bill. If you look at the last few years our third quarter tends to be very good quarter. Our fourth quarter tends to be the best quarter of our fiscal year and it certainly was last year and the year before we have the same expectation this year. It tends to be when our volumes are the strongest and we don’t view that being any different this year. So yes, I think if you do the math, you are looking at probably around $19 million or $20 million for the fourth quarter. I am not giving guidance here right now but I am just doing the same math you are doing. And that's kind of consistent with what we have done the last couple of years.

Okay.

Maybe we will [shut it].

Right. That was what I was getting to. Pretty decent expectation actually for the quarter. Thank you very much for the time today and again nice quarter.

Thank you and I am showing no further questions at this time. I would like to turn the call back to the Bill Jasper for closing remarks.

Thank you, operator. And thank you all for listening into our call. We are certainly still very optimistic about the second half of this year and very pleased with the way things are going. Thank you.

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