Unifi, Inc., a U.S.-based producer of recycled and synthetic yarns, saw sales in the second quarter of its fiscal year grow strongly, although rising labor and input costs squeezed profit margins. In the second quarter ended Dec. 26, sales increased by 23.7 percent from the year-earlier to $201.4 million, as revenues from Unifi’s Repreve fiber products grew to 40 percent of total sales from 38 percent in the second quarter of fiscal 2021.

Eddie Ingle, CEO of Unifi, said second-quarter sales beat the company’s expectations and were driven by continued strong international performance, “but labor and input cost headwinds for our domestic operations pressured overall profitability results.”

Gross profit in the quarter slipped to $16.9 million from $25.9 million, as the gross margin narrowed to 8.4 percent from 15.9 percent the year earlier, impacted by higher domestic labor and input costs. Operating income fell to $4.6 million from $13.1 million as net income declined to $0.9 million from $7.5 million. Adjusted Ebitda was $10.9 million versus $19.2 million in the second quarter of fiscal 2021, although adjusted Ebitda for the 12 months ended Dec. 26 rose to $67.1 million from $23.7 million for the 12 months ended Dec. 27, 2020.

For the full year, Unifi expects sales to rise to $800 million or more, representing an increase of at least 20 percent compared to the previous year. Adjusted Ebitda is forecast at $60.0-$62.0 million, with a larger portion of second-half fiscal profitability seen in the fourth quarter.