iFabric Q2 Earnings Call Highlights

iFabric (TSE:IFA) reported record first-half revenue and EBITDA as the company cited continued momentum in replenishment programs, stronger balance-sheet capacity and expanding retail opportunities for its functional apparel and textile technologies.

Chief Financial Officer Hilton Price said second-quarter revenue reached C$9.6 million, up 65% from C$5.8 million in the prior-year period. He noted that the reported figure included a C$650,000 reduction related to advertising support provided to customers, as required under IFRS. On an invoiced basis, Price said revenue was approximately C$10.3 million.

For the first six months, revenue rose 188% to a record C$37.1 million from C$12.9 million a year earlier. First-half EBITDA was C$5.8 million, compared with break-even results in the prior-year period.

Advertising Support Affected Reported Margins

Second-quarter gross margin was 30%, compared with 37% a year earlier. Price said the full seven-percentage-point decline reflected the C$650,000 advertising-support deduction, which was tied to the Intelligent Fabrics business.

Management said it intends to reduce direct advertising support paid to retailers where possible and instead conduct more marketing campaigns internally. The company has hired specialists for that effort, according to Price, who said management believes it can deploy marketing spending more efficiently than retailers in some cases.

Price said iFabric’s target blended gross margin is about 35%. Intimate Apparel margins generally run near 49% to 50%, while Intelligent Fabrics margins are generally around 30% because the segment serves major retailers with higher-volume, lower-margin programs. The ultimate margin depends on product mix, management said.

Selling and administrative expenses increased by about C$800,000 year over year in the quarter. Price attributed most of the increase to variable costs including royalties and commissions associated with higher revenue, while also noting increased travel and staffing. He said management does not expect material growth in core general and administrative costs, although the company expects to add employees as it grows.

Tariff Recovery and Capital Raise Bolster Financial Position

Price said iFabric recognized C$925,000 in sundry income during the quarter related to recovery of U.S. tariffs, net of processing costs. U.S. Customs has fully processed the recovery, he said, and the company had received C$710,000 in cash as of the call, with approximately C$250,000 expected in the following quarter.

The company completed a capital raise in June that generated roughly C$21 million in net proceeds. iFabric ended the quarter with C$25 million in cash after repaying its credit line and reported working capital of approximately C$45.1 million.

With available trade and bank credit lines of about C$14 million to C$15 million, Price said he believes the company can grow revenue “well north of C$100 million” without requiring additional capital or debt.

Management said it remains focused on investing in intellectual property and product development. Price said those investments could provide greater long-term value than distributing capital, though he added that a dividend could be considered within the next two years if the company maintains sufficient cash resources.

Scrubs Programs Remain a Major Growth Focus

Chief Operating Officer Giancarlo Beevis said scrubs remain a central growth opportunity, particularly with Walmart and Target. At Walmart, iFabric continues to wait for store space to become available as the retailer works through inventory from its incumbent supplier. Beevis said management still expects iFabric to become a meaningful part of Walmart’s scrubs business by fall 2027.

Management’s objectives at Walmart include adding shelf space, increasing SKU counts, entering additional stores and potentially supplying more than one brand. Price said iFabric expects to be the only supplier with clinically proven antibacterial technology in the program.

Beevis said the scrubs program is a year-round replenishment business, with shipments occurring every week. iFabric holds between 12 and 16 weeks of Walmart inventory in its warehouses, he said.

At Target, iFabric launched scrubs in approximately 400 stores after Target selected the company as its supplier following a process involving major North American scrub suppliers, Beevis said. Target had not previously sold scrubs, according to management. The rollout occurred over roughly four to five weeks, with selected locations including areas near major medical systems and medical schools where possible.

Management said the Target program is performing well and is continuing into the following year. iFabric handled some marketing for the launch itself, targeting consumers likely to be interested in scrubs rather than relying exclusively on broad retailer advertising, Beevis said.

• Walmart scrubs currently include eight SKUs in 1,400 stores, with management identifying potential to expand the offering and store count over time.
• Target’s scrubs rollout began a few months before the call and management said the program is positioned for expansion.
• Hospital-network opportunities remain in early stages, with iFabric continuing to work with MemorialCare Medical Group, where it conducted a clinical trial.

International Expansion and Product Pipeline

Management said its near-term priority remains North America, where it sees significant opportunities with existing retail partners. Still, Beevis said international expansion is on the company’s agenda, including through retailers that operate globally.

The company has launched Protx2 products with Marks & Spencer and recently announced an expansion of its swimwear program into five European countries. Beevis said iFabric has also held discussions with Walmart de México y Centroamérica. He said scrubs could be a key international product category, although expansion in other categories may become more meaningful in the latter half of 2027.

Beyond scrubs, Beevis said the Nudish brand is performing well at Target and Kohl’s. iFabric plans to expand Nudish beyond solution bras and accessories into performance underwear, bras, sleepwear and loungewear.

The company also said its Roots footwear program at Costco has completed its first run and is being finalized for the following year, while the Roots swimwear program is continuing. Management did not provide revenue breakdowns for either program.

For functional bedding, Beevis said iFabric expects products developed with The Lad Collective to reach the market in 2027. He said initial retailer feedback has been positive and that the company is working within retailer calendars to establish a launch timeline.

Management also highlighted longer-term research involving its Protx2 and DreamSkin technologies in wound-care applications. Beevis said the combined technology could be intended to help reduce bacterial exposure while supporting skin healing. He said such products may be targeted for late 2027 or early 2028 and would require regulatory work, though not necessarily another clinical trial.

Seasonality Shapes Quarterly Results

Price emphasized that iFabric’s business includes both seasonal programs and replenishment programs. Seasonal categories such as swimwear and footwear typically ship in the first and fourth quarters and sell through in two to three months, while replenishment programs including scrubs, underwear and much of the Intimate Apparel portfolio operate throughout the year.

The second quarter was primarily driven by replenishment activity and did not include meaningful set programs, according to Price. He said the 65% year-over-year revenue increase during the period indicated strong momentum despite that mix.

Looking ahead, management expects the third quarter to remain largely replenishment-oriented, though some seasonal programs could begin shipping late in the period. Beevis said the third quarter should improve from the prior year, while any programs that do not ship in the third quarter would instead contribute to a larger fourth quarter.

Chief Executive Officer Hylton Karon urged investors to compare each quarter with the corresponding quarter of the prior year, rather than sequentially, due to the company’s seasonality. “When you put the 12 months together,” Karon said, “that’s where you’re really going to see quite impressive growth.”

About iFabric (TSE:IFA)

iFabric Corp. is a Canadian-based textile technology company focused on the development and commercialization of proprietary chemical solutions that enhance the performance, functionality, and safety of fabrics and other materials. Through its Intelligent Fabric Technologies (North America) division, the Company provides antimicrobial, water-repellent, and other performance-enhancing treatments used across healthcare, apparel, and consumer applications. iFabric’s platform is supported by proprietary formulations, global manufacturing integration, and, in certain applications, clinical validation in real-world environments.