Good morning, everyone, and welcome to Unifi's first quarter conference call. Leading today's call is A.J. Eaker, Vice President, Finance and Investor Relations. A.J.?

Thank you, operator, and good morning, everyone. On the call today is Kevin Hall, Chairman and Chief Executive Officer; Tom Caudle, President and Chief Operating Officer; and Jeff Ackerman, Executive Vice President and Chief Financial Officer. During this call, management will be referencing a webcast presentation that can be found at unifi.com and by clicking the first quarter conference call link. Management advises you that certain statements included in today's call will be forward-looking statements within the meaning of the federal securities laws. Management cautions that these statements are based on current expectations, estimates and/or projections about the markets in which Unifi 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, forecast or implied by these statements. You are directed to the disclosures filed with the SEC on Unifi's Forms 10-Q and 10-K 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 may be discussed on this call, and non-GAAP reconciliations can be found in the schedule to the webcast presentation. I will now turn the call over to Kevin Hall.

Thanks, A.J., and good morning, everyone, and thank you for joining us today. The first quarter of fiscal 2019 saw revenue growth of more than 10% year-over-year. This marked the sixth consecutive quarter of year-over-year top line growth for Unifi. While sales growth is ahead of our expectations, we experienced another sudden jump in raw material costs globally, which has impacted our profitability in the short term, most notably regional polyester, which was down more than 20% in gross profit. To put this cost increase in context, we have seen sustained rise in our raw material costs globally for the past 4 quarters, and we have been chasing these price increases for some time now. When costs stabilize, we are optimistic that our revenue growth will translate to earnings growth as well. Global PVA sales were up 10% year-over-year or 14% on a currency-neutral basis and represented approximately 43% of consolidated net sales during the quarter. Our strategic focus on our PVA portfolio is driving overall sales growth across the globe, and we believe building a platform for long-term success. Part of our success within the PVA portfolio has been driven by our increased engagements with the design teams and sustainability leaders of our brand and mill partners as well as our own branding efforts, such as participation at recent industry trade shows like the Outdoor Retailer and Intertextile events in Shanghai. With sustainability at the core of our growth efforts, we are really excited about what can be accomplished with the circular economy or a closed-loop method for creating stronger end-to-end recycling partnerships. Many of our circular economy solutions revolve around collecting bottles recycled at specific locations, converting those bottles into performance fibers and ultimately transforming those bottles into exciting products that relate to the community, where the bottles…

Thank you, Kevin, and good morning, everyone. As Kevin noted, our margin and profitability performance this period was lower than anticipated. However, we understand the drivers and are taking action to mitigate these current headwinds. Like Kevin, I'm proud of the sales we saw this quarter, underlying momentum continues. And while we did benefit $8.3 million from an additional fiscal week domestically, our international operations were unfavorably impacted by foreign exchange headwinds to the tune of $6.7 million. With sales outperformance as a backdrop, I will move on to our profitability walk through. My discussion will begin on Slide 3 of the webcast presentation, where you can see a high-level overview of these results. Net sales were $181.6 million, which was a 10.6% increase from first quarter 2018. The top line growth was primarily driven by volume increases related to global PVA growth and domestically by an additional week in the quarter, partially offset by foreign currency translation. Gross profit was suppressed by raw material cost increases, as Kevin discussed. Disproportionate growth on lower margin products and integration costs for the recently acquired Dyed business. Within operating expenses, SG&A came in as expected and the increases were primarily due to investments made in fiscal 2018 to support expansion of the company's commercial capabilities in the form of increased customer engagement, marketing efforts and our innovation pipeline. Also in the first quarter, we realized a net foreign currency transaction gain versus a loss in the first fiscal quarter of 2018. The decline in net income related to equity affiliates resulted from a $2.9 million difference in pretax earnings from Parkdale. In the prior year, Parkdale experienced a more favorable price to cost relationship on sales, contrasted against the current period, where they continued to chase raw material costs with pricing actions.…

As a reminder, we will be hosting an Investor Day, November 15 in New York. The event will provide a platform for a deep dive into our business and the global environment in which we operate. We will further detail our strategic growth plan and will include presenters from across our organization. It will be a great day, and I look forward to seeing many of you there. With that, we'll open the lines up for your questions. Operator?

[Operator Instructions] And our first question comes from Daniel Moore of CJS Securities.

I was writing as fast as possible. Jeff, I think you said poly -- in the poly segment, mix was a 90 basis point headwind, can we just maybe break out more generally of -- across the business of the 320 basis point decline in gross margin impact of rising input costs versus mix versus some of the integration costs?

Yes. So again, polyester is our largest business as you look around the globe. So the raw material costs have that impact. And so as we said for the Polyester segment, it was about 180 basis points there, and then mix was about 90 basis points. I would say that for Nylon, the impact was primarily on mix. And then, if you looked at our International business, that again was really mix. So we continued to see strong growth in Asia. We're pleased with that. We're pleased really with how Nylon came in and -- as well as Polyester, so volume growth across the board. For Asia, they continue to see strong filament sales, but even stronger growth in the polymers and staple fiber, which carry a little bit lower margin.

Helpful. And then kind of looking forward the guidance. I believe it implies a little bit of a leveling off, if not improving of the price input cost relationship. Just talk about trends you're seeing in PET pricing and signs that may give you confidence and the ability to hit the lower end of the prior guidance range.

Yes. So as we've been watching what has been happening in the market for the PET costs globally, what we've seen is and looking back historically, we feel like this is at a relatively high level on a historical basis. So pretty much at -- I won't say it's all-time high because it has been higher. But given just where it is, we feel like it's pretty much at a high level. Now if oil goes to $100 a barrel, then of course it could rise again. But at this point just based on historically, the ranges in which PET have us move, we feel like this is at the high end and we're anticipating it just stabilizing from here.

Dan, this is Kevin. I'll put a little bit of background from the commercial side of it too. I think as you look across the retail landscape right now, folks are anticipating a good holiday season. As I talked to a lot of the folks that are with different brand and retail partners we call on, that -- their words are that consumer hasn't given them any indication why they shouldn't anticipate that. And so they really wanted to be prepared this year for holiday. And in general, they moved holiday in pretty strong, shelves are stocked pretty well, and they don't want to be out of stock at traditional retail this year. They want to really capture that. So I think all those things play very positively. What it did was it put a real pickup in demand in our September period versus what we had seen historically and that really moved the cost higher. And -- so good news demand was there, bad news is the cost really spiked in September, which was frustrating because we had really just gotten to a place where we were catching up with it and now we've got to move again. But to Jeff's point, we think that this will start to stabilize a little bit. We can't predict commodity prices, so we got to put a caveat on this, which is they can always go up from here, but they appear less likely at this point to move up because of just a big strong move that we've had.

So most of the price increases up until recently more supply driven, but you're saying this is a little bit of a demand spike as well?

There was both in there, yes.

Got it. And lastly for me. Just Parkdale JV, good color and appreciate it. May be just to remind us of variability to raise prices to offset input cost inflation, do you expect profitability to remain challenged in Q2 and the balance of the year? Obviously, it's tough to forecast cotton prices, but just help us understand. You've given color in the past on how quickly you can pass along prices in your business, similar color for Parkdale would be helpful.

Yes, I'll touch on that first and then Jeff can add into. So it's interesting on Parkdale because what -- in their business, they lock in on like a longer season basis. So this was kind of a worst case for them where they locked in at a price, and as the season went on, the cost went higher through the season. So if you think locking the pricing in spring and as you're making for the holiday season, the costs just continue to go up on you. And then it came back down right towards the end of the seasonal period. So they had a little bubble in there that they had already priced their seasonal operating -- operations. So it was tough for them to digest that. But we've been in conversations with them, they are looking to take pricing, and they -- as I said before, they are a well-run organization. It's just they are experiencing some of the same commodity issues. I just think they had an even more of an interesting move within their seasonal build pattern this year. Jeff, I don't know if you have anything else you want to add.

No. There is a lot of similarity there in terms of how they get impacted by their raw material costs and their ability to price. So a lot of similarity there.

Thank you, and that concludes our question-and-answer session. Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.