Unisync's Q1 Fiscal 2025: A Tale of Operational Resilience and Strategic Initiatives

Unisync Corp. ("Unisync") (TSX: "UNI") (OTC: "USYNF") recently announced its financial results for the first quarter ended December 31, 2024, showcasing a resilient operating performance amidst challenging market conditions. The company operates through two business units: Unisync Group Limited ("UGL") and 92% owned Peerless Garments LP ("Peerless"). UGL is a leading customer-focused provider of corporate apparel, serving many leading Canadian and American iconic brands, while Peerless specializes in the production and distribution of highly technical protective garments, military operational clothing, and accessories for various government departments and agencies.

Revenue for the three months ended December 31, 2024, was $21.4 million, down $1.6 million or 7.0% from the same period last year. This decrease was primarily due to a decrease in revenue in the UGL segment, which experienced a gross profit decrease of $0.5 million from $3.1 million in the same period last year to $2.6 million or 13% of segment revenues. The decrease in gross profit was mainly due to unrealized foreign exchange losses of $1.4 million on US$ denominated liabilities, which occurred as a result of the appreciation of the United States dollar relative to the Canadian dollar from 1.35 as at Sept 30, 2024 to 1.44 as at December 31, 2024.



Despite these headwinds, Unisync's UGL segment continued to benefit from positive contract pricing adjustments and relocating offshore production from factories with higher labor costs and/or import duty subject to those that offered lower labor costs and/or duty-free status. These initiatives yielded improved margins in the current quarter and are expected to continue to positively impact future margins for UGL as these reduced input costs get reflected in the weighted average cost of inventory. In addition, restructuring initiatives carried out in the last fiscal year have resulted in operational efficiencies that lowered staffing levels and administrative costs.



The Peerless segment revenues were consistent with the same period in the prior year, with a slight decrease of $0.1 million to $2.4 million. The segment experienced a decrease in gross profit of $0.1 million mainly on account of mix of product sales with lower margins.

Depreciation and amortization of $1.3 million was marginally lower than the $1.4 million reported for the same period in the prior year. At $3.0 million, consolidated general and administrative expenses were lower by $0.7 million or 19% from the same quarter last year due to overhead reductions associated with the consolidation of operations that began in September 2023.

As a result of the $1.4 million unrealized foreign exchange loss in the quarter, the Company reported a net loss before tax of $1.0 million in the three months ended December 31, 2024, compared to a loss of $1.1 million in the same quarter last year. EBITDA in the quarter before adjusting for non-operating unrealized foreign exchange losses, was $1.3 million versus $1.2 million for the same quarter last year. Adjusting for unrealized foreign exchange losses, net Income before tax for the quarter was $0.4 million and Adjusted EBITDA was $2.7 million.

In conclusion, Unisync's Q1 Fiscal 2025 operating performance demonstrated the company's resilience in the face of challenging market conditions. Through strategic initiatives such as positive contract pricing adjustments, relocating offshore production, and restructuring, Unisync was able to mitigate the impact of unrealized foreign exchange losses and maintain a strong operating performance. As the company continues to execute on its long-term growth strategy, investors can expect to see further improvements in margins and profitability.