Unifi Inc.
05/06/2026 | Press release | Distributed by Public on 05/06/2026 08:17
Quarterly Report for Quarter Ending March 29, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following is management's discussion and analysis of certain significant factors that have affected UNIFI's operations, along with material changes in financial condition, during the periods included in the accompanying condensed consolidated financial statements. A reference to a "note" in this section refers to the accompanying notes to condensed consolidated financial statements. A reference to the "current period" refers to the three-month period ended March 29, 2026, while a reference to the "prior period" refers to the three-month period ended March 30, 2025. A reference to the "current nine-month period" refers to the nine-month period ended March 29, 2026, while a reference to the "prior nine-month period" refers to the nine-month period ended March 30, 2025. Such references may be accompanied by certain phrases for added clarity. The current period and the prior period each consisted of 13 weeks. The current nine-month period and the prior nine-month period each consisted of 39 weeks.
Our discussions in this Item 2 focus on our results during, or as of, the three months ended March 29, 2026 and March 30, 2025, and, to the extent applicable, any material changes from the information discussed in the 2025 Form 10-K or other important intervening developments or information. These discussions should be read in conjunction with the 2025 Form 10-K for more detailed and background information about our business, operations, and financial condition.
Discussion of foreign currency translation is primarily associated with changes in the Brazilian Real ("BRL") and changes in the Chinese Renminbi ("RMB") versus the U.S. Dollar ("USD"). Weighted average exchange rates were as follows:
|
For the Three Months Ended |
For the Nine Months Ended |
||||||||||||||
|
March 29, 2026 |
March 30, 2025 |
March 29, 2026 |
March 30, 2025 |
||||||||||||
|
BRL to USD |
5.25 |
5.84 |
5.36 |
5.72 |
|||||||||||
|
RMB to USD |
6.92 |
7.27 |
7.05 |
7.21 |
|||||||||||
All amounts, except per share amounts, are presented in thousands (000s), except as otherwise noted.
Overview and Significant General Matters
UNIFI focuses on delivering products and solutions to direct customers and brand partners throughout the world, leveraging our internal manufacturing capabilities and an enhanced global supply chain that delivers a diverse range of synthetic and recycled fibers and polymers. Our strategic initiatives include (i) leveraging our competitive advantages to grow market share in each of the major geographies we serve, (ii) expanding our presence in non-apparel markets with additional REPREVE® products, (iii) advancing the development and commercialization of innovative and sustainable solutions, and (iv) increasing brand awareness for REPREVE®. We have increased our focus on sales opportunities beyond traditional apparel customers and continue to drive innovation throughout our portfolio to further diversify the business and enhance gross profit. We believe our strategic initiatives will increase revenue and profitability and generate improved cash flows from operations.
Current Economic Environment
Beyond the specific demand challenges within the textile industry as described in the Form 10-K, our business has been adversely impacted by: (i) the impact of inflation, including tariffs, on consumer spending, (ii) elevated interest rates for consumers and customers, including the impact on the carrying costs of customer inventories, and (iii) the volatility in customer order patterns resulting from trade and regulatory matters (including tariffs). This volatility in demand resulted from customers buying ahead of tariffs becoming effective for certain countries and difficulty in predicting final tariff assessments. A tariff structure that disproportionately impacts one country or region over another may result in a shift in manufacturing or flow of goods particularly as it relates to textile production across Asia and Central America. Such lower tariff countries or regions may be situated outside of UNIFI's existing global supply chain. If UNIFI is unable to move production based on these shifts in regional demand, we may lose sales and experience an adverse effect on our financial condition, results of operations, or cash flows. UNIFI will continue to monitor these and other aspects of the current environment, leverage our global business model as necessary, and work closely with stakeholders to ensure business continuity and liquidity.
UNIFI has been expanding its supply chain and business model across multiple geographies over the last several years. Particularly, (i) our feedstock supply spans multiple domestic and foreign markets, (ii) our commercial position in the Central American market remains key to servicing compliant business for USMCA and CAFTA-DR programs, and (iii) we have expanded our asset light model beyond China with the addition of Unifi Textiles India in October 2024. Each of these initiatives affords us diversity in this dynamic trade environment and greater flexibility in servicing our customer base.
Specific to other ongoing geopolitical tensions, we recognize the disruption to global markets and supply chains caused by the conflicts in Ukraine and the Middle East, particularly in Iran. Escalating geopolitical tensions involving Iran have contributed to volatility in petroleum markets. In early March 2026, disruptions to certain supply routes associated with this conflict resulted in a sharp increase in crude oil and related feedstock prices. As a result of higher raw material costs stemming from disruptions in the Middle East, the Company implemented responsive price increases and surcharges that began in April 2026 and are expected to continue while petrochemical-related inflation remains elevated. We recognize that additional or prolonged impacts to the petroleum or other global markets could cause further inflationary pressures to our global raw material costs or additional unforeseen adverse impacts.
Input Costs and Global Production Volatility
Despite a marginally more stable labor pool recently, global demand volatility and uncertainty continues. The threat of an economic slowdown and global tensions continue to create uncertainty, more specifically the conflict in Iran contributed to rising freight and raw material costs beginning in March 2026. Such existing challenges and future uncertainty, particularly for rising input costs, labor productivity, and global demand, could worsen and/or continue for prolonged periods, materially impacting our consolidated sales, gross profit, and operating cash flows. Also, the need for future selling price adjustments in connection with inflationary costs could impact our ability to retain current customer programs and compete successfully for new programs in certain regions.
Fiscal 2026 Profit Improvement Plan
During October 2025, UNIFI implemented additional cost-saving initiatives that included reducing variable manufacturing costs across labor, spend, and support functions, while also eliminating salaried positions in the U.S. ("Fiscal 2026 Profit Improvement Plan"). Accordingly, in the second quarter of fiscal 2026, UNIFI recorded employee separation costs of $1,093 in connection with the Fiscal 2026 Profit Improvement Plan and a $308 gain from disposals of assets from the consolidation of Americas yarn manufacturing operations.
Key Performance Indicators and Non-GAAP Financial Measures
UNIFI continuously reviews performance indicators to measure its success. These performance indicators form the basis of management's discussion and analysis included below:
•
sales volume and revenue for UNIFI and for each reportable segment;
•
gross (loss) profit and gross margin for UNIFI and for each reportable segment;
•
net loss and diluted EPS;
•
Segment (Loss) Profit, which equals segment gross (loss) profit plus segment depreciation expense;
•
unit conversion margin, which represents unit net sales price less unit raw material costs, for UNIFI and for each reportable segment;
•
working capital, which represents current assets less current liabilities;
•
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), which represents net loss before net interest expense, income tax expense, and depreciation and amortization expense;
•
Adjusted EBITDA, which represents EBITDA adjusted to exclude, from time to time, certain other adjustments necessary to understand and compare the underlying results of UNIFI;
•
Adjusted Net Loss, which represents net loss calculated under GAAP, adjusted to exclude certain amounts which management believes do not reflect the ongoing operations and performance of UNIFI and/or for which exclusion may be necessary to understand and compare the underlying results of UNIFI;
•
Adjusted EPS, which represents Adjusted Net Loss divided by UNIFI's diluted weighted average common shares outstanding;
•
Adjusted Working Capital, which equals receivables plus inventories and other current assets, less accounts payable and other current liabilities; and
•
Net Debt, which represents debt principal less cash and cash equivalents.
EBITDA, Adjusted EBITDA, Adjusted Net Loss, Adjusted EPS, Adjusted Working Capital, and Net Debt (collectively, the "non-GAAP financial measures") are not determined in accordance with GAAP and should not be considered a substitute for performance measures determined in accordance with GAAP. The calculations of the non-GAAP financial measures are subjective, based on management's belief as to which items should be included or excluded in order to provide the most reasonable and comparable view of the underlying operating performance of the business. We may, from time to time, modify the amounts used to determine our non-GAAP financial measures. When applicable, management's discussion and analysis includes specific consideration for items that comprise the reconciliations of its non-GAAP financial measures. We believe that these non-GAAP financial measures better reflect UNIFI's underlying operations and performance and that their use, as operating performance measures, provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets, among otherwise comparable companies.
Management uses Adjusted EBITDA (i) as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis, as it removes the impact of items (a) directly related to our asset base (primarily depreciation and amortization) and/or (b) that we would not expect to occur as a part of our normal business on a regular basis; (ii) for planning purposes, including the preparation of our annual operating budget; (iii) as a valuation measure for evaluating our operating performance and our capacity to incur and service debt, fund capital expenditures, and expand our business; and (iv) as one measure in determining the value of other acquisitions and dispositions. Adjusted EBITDA is a key performance metric utilized in the determination of variable compensation. We also believe Adjusted EBITDA is an appropriate supplemental measure of debt service capacity because it serves as a high-level proxy for cash generated from operations and is relevant to our fixed charge coverage ratio.
Management uses Adjusted Net Loss and Adjusted EPS (i) as measurements of net operating performance because they assist us in comparing such performance on a consistent basis, as they remove the impact of (a) items that we would not expect to occur as a part of our normal business on a regular basis and (b) components of the provision for income taxes that we would not expect to occur as a part of our underlying taxable operations; (ii) for planning purposes, including the preparation of our annual operating budget; and (iii) as measures in determining the value of other acquisitions and dispositions.
Management uses Adjusted Working Capital as an indicator of UNIFI's production efficiency and ability to manage inventories and receivables.
Management uses Net Debt as a liquidity and leverage metric to determine how much debt would remain if all cash and cash equivalents were used to pay down debt principal.
Review of Results of Operations
Three Months Ended March 29, 2026 Compared to Three Months Ended March 30, 2025
Consolidated Overview
The below tables provide:
•
the components of net loss and the percentage increase or decrease over the prior period amounts, and
•
a reconciliation from net loss to EBITDA and Adjusted EBITDA.
Following the tables is a discussion and analysis of the significant components of net loss.
Net Loss
|
For the Three Months Ended |
||||||||||||||||||||
|
March 29, 2026 |
March 30, 2025 |
|||||||||||||||||||
|
% of |
% of |
% |
||||||||||||||||||
|
Net sales |
$ |
130,037 |
100.0 |
$ |
146,557 |
100.0 |
(11.3 |
) |
||||||||||||
|
Cost of sales |
120,920 |
93.0 |
147,002 |
100.3 |
(17.7 |
) |
||||||||||||||
|
Gross profit (loss) |
9,117 |
7.0 |
(445 |
) |
(0.3 |
) |
nm |
|||||||||||||
|
SG&A |
11,188 |
8.6 |
12,295 |
8.4 |
(9.0 |
) |
||||||||||||||
|
Benefit for bad debts |
(294 |
) |
(0.2 |
) |
(255 |
) |
(0.2 |
) |
15.3 |
|||||||||||
|
Restructuring costs, net |
- |
- |
1,320 |
0.9 |
nm |
|||||||||||||||
|
Other operating (income) expense, net |
(1,660 |
) |
(1.3 |
) |
55 |
- |
nm |
|||||||||||||
|
Operating loss |
(117 |
) |
(0.1 |
) |
(13,860 |
) |
(9.4 |
) |
(99.2 |
) |
||||||||||
|
Interest expense, net |
1,113 |
0.9 |
2,219 |
1.5 |
(49.8 |
) |
||||||||||||||
|
Equity in loss of unconsolidated affiliate |
240 |
0.2 |
216 |
0.2 |
11.1 |
|||||||||||||||
|
Loss before income taxes |
(1,470 |
) |
(1.2 |
) |
(16,295 |
) |
(11.1 |
) |
(91.0 |
) |
||||||||||
|
Provision for income taxes |
836 |
0.6 |
499 |
0.4 |
67.5 |
|||||||||||||||
|
Net loss |
$ |
(2,306 |
) |
(1.8 |
) |
$ |
(16,794 |
) |
(11.5 |
) |
(86.3 |
) |
||||||||
nm = not meaningful
EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)
The reconciliations of the amounts reported under GAAP for Net loss to EBITDA and Adjusted EBITDA were as follows:
|
For the Three Months Ended |
||||||||
|
March 29, 2026 |
March 30, 2025 |
|||||||
|
Net loss |
$ |
(2,306 |
) |
$ |
(16,794 |
) |
||
|
Interest expense, net |
1,113 |
2,219 |
||||||
|
Provision for income taxes |
836 |
499 |
||||||
|
Depreciation and amortization expense (1) |
6,114 |
6,259 |
||||||
|
EBITDA |
5,757 |
(7,817 |
) |
|||||
|
Transition costs (2) |
- |
2,900 |
||||||
|
Gain on foreign currency transaction, net (3) |
(1,775 |
) |
- |
|||||
|
Adjusted EBITDA |
$ |
3,982 |
$ |
(4,917 |
) |
|||
(1)
Within this reconciliation, depreciation and amortization expense excludes the amortization of debt issuance costs, which are reflected in interest expense, net. However, within the accompanying Condensed Consolidated Statements of Cash Flows, amortization of debt issuance costs is reflected in depreciation and amortization expense.
(2)
In the third quarter of fiscal 2025, UNIFI incurred various transition costs totaling $2,900 in connection with the consolidation of its yarn manufacturing operations, including (i) facility closure and equipment relocation costs of $1,088, (ii) inventory write-downs of $1,000, (iii) excess manufacturing costs of $580, and (iv) employee separation or retention costs of $232. The facility closure, equipment relocation, employee separation and retention costs were all recorded within Restructuring costs and the inventory write-downs and excess manufacturing costs were recorded within Cost of sales in the Condensed Consolidated Statements of Operations.
(3)
In the third quarter of fiscal 2026, UNIFI recorded a foreign currency gain of $1,775. In December 2025, Brazil declared dividends against the majority of its retained earnings in connection with certain tax law changes related to future dividends. Foreign currency transaction gains (losses) are recorded to reflect changes in the exchange rate of the Brazilian Real to the U.S. Dollar while the dividend payable is outstanding.
Adjusted Net Loss and Adjusted EPS (Non-GAAP Financial Measures)
The tables below set forth reconciliations of (i) Loss before income taxes ("Pre-tax Loss"), (ii) Provision for income taxes ("Tax Impact"), (iii) Net Loss to Adjusted Net Loss, and (iv) Diluted EPS to Adjusted EPS.
|
For the Three Months Ended March 29, 2026 |
For the Three Months Ended March 30, 2025 |
|||||||||||||||||||||||||||||||
|
Pre-tax Loss |
Tax Impact |
Net Loss |
Diluted EPS |
Pre-tax Loss |
Tax Impact |
Net Loss |
Diluted EPS |
|||||||||||||||||||||||||
|
GAAP results |
$ |
(1,470 |
) |
$ |
(836 |
) |
$ |
(2,306 |
) |
$ |
(0.12 |
) |
$ |
(16,295 |
) |
$ |
(499 |
) |
$ |
(16,794 |
) |
$ |
(0.92 |
) |
||||||||
|
Transition costs (1) |
- |
- |
- |
- |
2,900 |
- |
2,900 |
0.16 |
||||||||||||||||||||||||
|
Gain on foreign currency transaction, net (2) |
(1,775 |
) |
272 |
(1,503 |
) |
(0.08 |
) |
- |
- |
- |
- |
|||||||||||||||||||||
|
Adjusted results |
$ |
(3,245 |
) |
$ |
(564 |
) |
$ |
(3,809 |
) |
$ |
(0.20 |
) |
$ |
(13,395 |
) |
$ |
(499 |
) |
$ |
(13,894 |
) |
$ |
(0.76 |
) |
||||||||
|
Weighted average common shares outstanding |
18,584 |
18,352 |
||||||||||||||||||||||||||||||
(1)
In the third quarter of fiscal 2025, UNIFI incurred various transition costs totaling $2,900 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs of $1,088, (ii) inventory write-downs of $1,000, (iii) excess manufacturing costs of $580, and (iv) employee separation or retention costs of $232. The facility closure, equipment relocation, employee separation and retention costs were all recorded within Restructuring costs and the inventory write-downs and excess manufacturing costs were recorded within Cost of sales in the Condensed Consolidated Statements of Operations. The associated tax impact was estimated to be $0 due to a valuation allowance against net operating losses in the U.S.
(2)
In the third quarter of fiscal 2026, UNIFI recorded a foreign currency gain of $1,775. In December 2025, Brazil declared dividends against the majority of its retained earnings in connection with certain tax law changes related to future dividends. Foreign currency transaction gains (losses) are recorded to reflect changes in the exchange rate of the Brazilian Real to the U.S. Dollar while the dividend payable is outstanding. The associated tax impact was estimated to be $272, based on the estimated annual tax rate for the period.
Net Sales
Consolidated net sales for the current period decreased by $16,520, or 11.3%, and consolidated sales volumes decreased 7.7% as customers reduced inventories, which led to lower demand for UNIFI products, compared to the prior period. Net sales in the current period were lower primarily due to (i) lower sales volumes and lower-priced sales mix in the Asia Segment and (ii) lower sales volumes in the Americas Segment. These were partially offset by higher sales volumes in the Brazil Segment, partially offset by import pricing pressures. Overall sales remain depressed, particularly in the Americas and Asia Segments as a result of uncertainty over ongoing geopolitical events, global trade policies, and competition from lower-priced products.
Consolidated weighted average sales prices decreased 3.6%. The decrease in sales prices was primarily attributable to sales mix and lower average selling prices in the Americas and Brazil Segments.
REPREVE® Fiber products for the current period comprised 29%, or $38,249, of consolidated net sales, compared to 31%, or $44,699, for the prior period.
Gross Profit (Loss)
Gross profit for the current period increased to $9,117 from $(445) in the prior period. Gross profit increased primarily due to (i) variable cost-saving initiatives and (ii) improved utilization in certain manufacturing areas, partially offset by lower sales volumes due to volatility primarily from the ongoing geopolitical events. Gross profit was unfavorably impacted by demand volatility in the Americas Segment and import pricing pressures in the Brazil Segment.
•
Americas Segment gross profit increased primarily due to variable cost-saving initiatives and improved manufacturing utilization, partially offset by (a) demand volatility stemming from geopolitical events and inventory management efforts by customers and (b) a weaker sales mix.
•
Brazil Segment gross profit decreased primarily due to competitive import pricing pressures, partially offset by higher sales volumes.
•
Asia Segment gross profit decreased primarily due to lower sales volumes and a lower-priced sales mix.
SG&A
SG&A decreased from the prior period to the current period, primarily due to the actions taken as part of the Fiscal 2026 Profit Improvement Plan.
Benefit for Bad Debts
The current period and prior period provision reflect no material activity.
Restructuring Costs, Net
On February 3, 2025, UNIFI announced the closing of its Madison, North Carolina facility and the transition of those manufacturing operations to other UNIFI production facilities in North and Central America. As a result, UNIFI incurred restructuring costs of $1,320 in the prior period which consisted of (i) equipment relocation and facility closure costs of $1,088 and (ii) employee separation or retention costs of $232.
Other Operating (Income) Expense, Net
Other operating (income) expense, net for the current period and the prior period included foreign currency transaction gains of $1,704 and $50, respectively, with no other meaningful activity. In December 2025, Brazil declared dividends against the majority of its retained earnings in connection with certain tax law changes related to future dividends. Foreign currency transaction gains (losses) are recorded to reflect changes in the exchange rate of the Brazilian Real to the U.S. Dollar while the dividend payable is outstanding.
Interest Expense, Net
Interest expense, net decreased in connection with lower average debt principal and lower average interest rates.
Equity in Loss of Unconsolidated Affiliate
There was no material activity for the current period or the prior period.
Income Taxes
Provision for income taxes and the effective tax rate were as follows:
|
For the Three Months Ended |
||||||||
|
March 29, 2026 |
March 30, 2025 |
|||||||
|
Provision for income taxes |
$ |
836 |
$ |
499 |
||||
|
Effective tax rate |
(56.9 |
)% |
(3.1 |
)% |
||||
The decrease in the effective tax rate from the prior period to the current period is primarily attributable to higher foreign earnings in the current period.
The effective tax rate is subject to variation due to a number of factors, including variability in pre-tax book income; the mix of income by jurisdiction; changes in deferred tax valuation allowances; and changes in statutes, audit settlement, regulations, and case law. Additionally, the impacts of discrete and other rate impacting items are more pronounced when loss before income taxes is lower.
Net Loss
The improvement in net loss was primarily attributable to (i) increased gross profit, (ii) lower SG&A expenses, (iii) lower interest expense, net, (iv) lower income tax expense and (v) lower restructuring costs, net.
Adjusted EBITDA and Adjusted EPS (Non-GAAP Financial Measures)
Adjusted EBITDA and Adjusted EPS increased primarily due to higher gross profit and lower SG&A expenses.
Segment Overview
Following is a discussion and analysis of the revenue and profitability performance of UNIFI's reportable segments for the current period.
Americas Segment
The components of Segment Profit (Loss), each component as a percentage of net sales, and the percentage increase or decrease over the prior period amounts for the Americas Segment, were as follows:
|
For the Three Months Ended |
||||||||||||||||||||
|
March 29, 2026 |
March 30, 2025 |
|||||||||||||||||||
|
% of |
% of |
% |
||||||||||||||||||
|
Net sales |
$ |
78,343 |
100.0 |
$ |
93,544 |
100.0 |
(16.3 |
) |
||||||||||||
|
Cost of sales |
74,720 |
95.4 |
100,501 |
107.4 |
(25.7 |
) |
||||||||||||||
|
Gross profit (loss) |
3,623 |
4.6 |
(6,957 |
) |
(7.4 |
) |
(152.1 |
) |
||||||||||||
|
Depreciation expense |
4,942 |
6.3 |
5,251 |
5.6 |
(5.9 |
) |
||||||||||||||
|
Segment Profit (Loss) |
$ |
8,565 |
10.9 |
$ |
(1,706 |
) |
(1.8 |
) |
nm |
|||||||||||
|
Segment net sales as a percentage of |
60.2 |
% |
63.8 |
% |
||||||||||||||||
|
Segment Profit (Loss) as a percentage of |
57.1 |
% |
(30.9 |
)% |
||||||||||||||||
nm = not meaningful
The change in net sales for the Americas Segment was as follows:
|
Net sales for the prior period |
$ |
93,544 |
||
|
Decrease in sales volumes |
(14,722 |
) |
||
|
Change in average selling price and sales mix |
(479 |
) |
||
|
Net sales for the current period |
$ |
78,343 |
The decrease in net sales for the Americas Segment from the prior period to the current period was primarily attributable to (i) lower sales volumes and (ii) a lower-priced sales mix.
The change in Segment (Loss) Profit for the Americas Segment was as follows:
|
Segment Loss for the prior period |
$ |
(1,706 |
) |
|
|
Increase in underlying unit margins |
10,271 |
|||
|
Segment Profit for the current period |
$ |
8,565 |
The increase in Segment Profit for the Americas Segment from the prior period to the current period was primarily attributable to cost-saving initiatives and productivity improvements, including reductions in manufacturing costs from the consolidation of Americas yarn manufacturing operations and the Fiscal 2026 Profit Improvement Plan.
Brazil Segment
The components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior period amounts for the Brazil Segment, were as follows:
|
For the Three Months Ended |
||||||||||||||||||||
|
March 29, 2026 |
March 30, 2025 |
|||||||||||||||||||
|
% of |
% of |
% |
||||||||||||||||||
|
Net sales |
$ |
29,112 |
100.0 |
$ |
28,124 |
100.0 |
3.5 |
|||||||||||||
|
Cost of sales |
26,361 |
90.6 |
25,136 |
89.4 |
4.9 |
|||||||||||||||
|
Gross profit |
2,751 |
9.4 |
2,988 |
10.6 |
(7.9 |
) |
||||||||||||||
|
Depreciation expense |
929 |
3.2 |
701 |
2.5 |
32.5 |
|||||||||||||||
|
Segment Profit |
$ |
3,680 |
12.6 |
$ |
3,689 |
13.1 |
(0.2 |
) |
||||||||||||
|
Segment net sales as a percentage of |
22.4 |
% |
19.2 |
% |
||||||||||||||||
|
Segment Profit as a percentage of |
24.5 |
% |
66.8 |
% |
||||||||||||||||
The change in net sales for the Brazil Segment was as follows:
|
Net sales for the prior period |
$ |
28,124 |
||
|
Favorable foreign currency translation effects |
3,151 |
|||
|
Increase in sales volumes |
943 |
|||
|
Decrease in average selling price and change in sales mix |
(3,106 |
) |
||
|
Net sales for the current period |
$ |
29,112 |
The increase in net sales for the Brazil Segment from the prior period to the current period was primarily attributable to (i) favorable foreign currency translation effects from the strengthening of the BRL versus the USD and (ii) higher sales volumes, partially offset by lower selling prices associated with competitive import pricing pressures.
The change in Segment Profit for the Brazil Segment was as follows:
|
Segment Profit for the prior period |
$ |
3,689 |
||
|
Decrease in underlying unit margins |
(549 |
) |
||
|
Favorable foreign currency translation effects |
416 |
|||
|
Increase in sales volumes |
124 |
|||
|
Segment Profit for the current period |
$ |
3,680 |
Segment Profit for the Brazil Segment was flat from the prior period to the current period as lower conversion margins primarily due to sales mix and pricing pressures were mostly offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD and an increase in sales volumes. We continue to prioritize innovation and differentiation to improve our portfolio and competitive position in Brazil.
Asia Segment
The components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior period amounts for the Asia Segment, were as follows:
|
For the Three Months Ended |
||||||||||||||||||||
|
March 29, 2026 |
March 30, 2025 |
|||||||||||||||||||
|
% of |
% of |
% |
||||||||||||||||||
|
Net sales |
$ |
22,582 |
100.0 |
$ |
24,889 |
100.0 |
(9.3 |
) |
||||||||||||
|
Cost of sales |
19,839 |
87.9 |
21,365 |
85.9 |
(7.1 |
) |
||||||||||||||
|
Gross profit |
2,743 |
12.1 |
3,524 |
14.1 |
(22.2 |
) |
||||||||||||||
|
Depreciation expense |
15 |
0.1 |
13 |
0.1 |
15.4 |
|||||||||||||||
|
Segment Profit |
$ |
2,758 |
12.2 |
$ |
3,537 |
14.2 |
(22.0 |
) |
||||||||||||
|
Segment net sales as a percentage of |
17.4 |
% |
17.0 |
% |
||||||||||||||||
|
Segment Profit as a percentage of |
18.4 |
% |
64.1 |
% |
||||||||||||||||
The change in net sales for the Asia Segment was as follows:
|
Net sales for the prior period |
$ |
24,889 |
||
|
Change in average selling price and sales mix |
(2,485 |
) |
||
|
Decrease in sales volumes |
(999 |
) |
||
|
Favorable foreign currency translation effects |
1,177 |
|||
|
Net sales for the current period |
$ |
22,582 |
The decrease in net sales for the Asia Segment from the prior period to current period was primarily attributable to (i) a change in sales mix of REPREVE products and (ii) an overall decrease in sales volumes due to geopolitical events, competitive pricing pressures and the continued volatility introduced by tariffs, partially offset by favorable foreign currency translation effects from the strengthening of the RMB versus the USD.
The change in Segment Profit for the Asia Segment was as follows:
|
Segment Profit for the prior period |
$ |
3,537 |
||
|
Change in underlying unit margins and sales mix |
(818 |
) |
||
|
Decrease in sales volumes |
(143 |
) |
||
|
Favorable foreign currency translation effects |
182 |
|||
|
Segment Profit for the current period |
$ |
2,758 |
The decrease in Segment Profit for the Asia Segment from the prior period to the current period was primarily attributable to (i) a change in sales mix of REPREVE products and (ii) lower sales volumes discussed above, partially offset by favorable foreign currency translation effects from the strengthening of the RMB versus the USD.
Nine Months Ended March 29, 2026 Compared to Nine Months Ended March 30, 2025
Consolidated Overview
The below tables provide:
•
the components of net loss and the percentage increase or decrease over the prior nine-month period amounts, and
•
a reconciliation from net loss to EBITDA and Adjusted EBITDA.
Following the tables is a discussion and analysis of the significant components of net loss.
Net Loss
|
For the Nine Months Ended |
||||||||||||||||||||
|
March 29, 2026 |
March 30, 2025 |
|||||||||||||||||||
|
% of |
% of |
% |
||||||||||||||||||
|
Net sales |
$ |
387,079 |
100.0 |
$ |
432,809 |
100.0 |
(10.6 |
) |
||||||||||||
|
Cost of sales |
370,964 |
95.8 |
423,262 |
97.8 |
(12.4 |
) |
||||||||||||||
|
Gross profit |
16,115 |
4.2 |
9,547 |
2.2 |
68.8 |
|||||||||||||||
|
SG&A |
32,849 |
8.5 |
37,058 |
8.6 |
(11.4 |
) |
||||||||||||||
|
Benefit for bad debts |
(244 |
) |
(0.1 |
) |
(39 |
) |
- |
nm |
||||||||||||
|
Restructuring costs, net |
1,853 |
0.5 |
1,320 |
0.3 |
40.4 |
|||||||||||||||
|
Gain on sale of assets |
- |
- |
(4,296 |
) |
(1.0 |
) |
nm |
|||||||||||||
|
Other operating (income) expense, net |
(1,317 |
) |
(0.3 |
) |
144 |
- |
nm |
|||||||||||||
|
Operating loss |
(17,026 |
) |
(4.4 |
) |
(24,640 |
) |
(5.7 |
) |
(30.9 |
) |
||||||||||
|
Interest expense, net |
4,070 |
1.0 |
6,690 |
1.6 |
(39.2 |
) |
||||||||||||||
|
Equity in loss of unconsolidated affiliate |
289 |
0.1 |
467 |
0.1 |
(38.1 |
) |
||||||||||||||
|
Loss before income taxes |
(21,385 |
) |
(5.5 |
) |
(31,797 |
) |
(7.4 |
) |
(32.7 |
) |
||||||||||
|
Provision for income taxes |
1,984 |
0.5 |
4,021 |
0.9 |
(50.7 |
) |
||||||||||||||
|
Net loss |
$ |
(23,369 |
) |
(6.0 |
) |
$ |
(35,818 |
) |
(8.3 |
) |
(34.8 |
) |
||||||||
nm = not meaningful
EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)
The reconciliations of the amounts reported under GAAP for Net loss to EBITDA and Adjusted EBITDA were as follows:
|
For the Nine Months Ended |
||||||||
|
March 29, 2026 |
March 30, 2025 |
|||||||
|
Net loss |
$ |
(23,369 |
) |
$ |
(35,818 |
) |
||
|
Interest expense, net |
4,070 |
6,690 |
||||||
|
Provision for income taxes |
1,984 |
4,021 |
||||||
|
Depreciation and amortization expense (1) |
17,926 |
19,046 |
||||||
|
EBITDA |
611 |
(6,061 |
) |
|||||
|
Restructuring costs, net (2) |
785 |
- |
||||||
|
Transition costs (3) |
1,068 |
2,900 |
||||||
|
Gain on foreign currency transaction, net (4) |
(1,775 |
) |
- |
|||||
|
Gain on sale of assets (5) |
- |
(4,296 |
) |
|||||
|
Adjusted EBITDA |
$ |
689 |
$ |
(7,457 |
) |
|||
(1)
Within this reconciliation, depreciation and amortization expense excludes the amortization of debt issuance costs, which are reflected in interest expense, net. However, within the accompanying Condensed Consolidated Statements of Cash Flows, amortization of debt issuance costs is reflected in depreciation and amortization expense.
(2)
In the second quarter of fiscal 2026, UNIFI recorded employee separation costs of $1,093 in connection with the Fiscal 2026 Profit Improvement Plan and a $308 gain from disposals of assets from the consolidation of Americas yarn manufacturing operations.
(3)
In the first quarter of fiscal 2026, UNIFI incurred various transition costs totaling $1,068 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs (including asset impairments and disposals) of $1,021, and (ii) employee separation costs of $47. The facility closure, equipment relocation, and employee separation costs were all recorded within Restructuring costs, net in the Condensed Consolidated Statements of Operations. In the third quarter of fiscal 2025, UNIFI incurred various transition costs totaling $2,900 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs of $1,088, (ii) inventory write-downs of $1,000, (iii) excess manufacturing costs of $580, and (iv) employee separation or retention costs of $232. The facility closure, equipment relocation, employee separation and retention costs were all recorded within Restructuring costs and the inventory write-downs and excess manufacturing costs were recorded within Cost of sales in the Condensed Consolidated Statements of Operations.
(4)
In the third quarter of fiscal 2026, UNIFI recorded a foreign currency gain of $1,775. In December 2025, Brazil declared dividends against the majority of its retained earnings in connection with certain tax law changes related to future dividends. Foreign currency transaction gains (losses) are recorded to reflect changes in the exchange rate of the Brazilian Real to the U.S. Dollar while the dividend payable is outstanding.
(5)
In the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina.
Adjusted Net Loss and Adjusted EPS (Non-GAAP Financial Measures)
The tables below set forth reconciliations of (i) Loss before income taxes ("Pre-tax Loss"), (ii) Provision for income taxes ("Tax Impact"), (iii) Net Loss to Adjusted Net Loss, and (iv) Diluted EPS to Adjusted EPS.
|
For the Nine Months Ended March 29, 2026 |
For the Nine Months Ended March 30, 2025 |
|||||||||||||||||||||||||||||||
|
Pre-tax Loss |
Tax Impact |
Net Loss |
Diluted EPS |
Pre-tax Loss |
Tax Impact |
Net Loss |
Diluted EPS |
|||||||||||||||||||||||||
|
GAAP results |
$ |
(21,385 |
) |
$ |
(1,984 |
) |
$ |
(23,369 |
) |
$ |
(1.27 |
) |
$ |
(31,797 |
) |
$ |
(4,021 |
) |
$ |
(35,818 |
) |
$ |
(1.96 |
) |
||||||||
|
Restructuring costs, net (1) |
785 |
(11 |
) |
774 |
0.04 |
- |
- |
- |
- |
|||||||||||||||||||||||
|
Transition costs (2) |
1,068 |
- |
1,068 |
0.06 |
2,900 |
- |
2,900 |
0.16 |
||||||||||||||||||||||||
|
Gain on foreign currency transaction, net (3) |
(1,775 |
) |
272 |
(1,503 |
) |
(0.08 |
) |
- |
- |
- |
- |
|||||||||||||||||||||
|
Gain on sale of assets (4) |
- |
- |
- |
- |
(4,296 |
) |
- |
(4,296 |
) |
(0.23 |
) |
|||||||||||||||||||||
|
Adjusted results |
$ |
(21,307 |
) |
$ |
(1,723 |
) |
$ |
(23,030 |
) |
$ |
(1.25 |
) |
$ |
(33,193 |
) |
$ |
(4,021 |
) |
$ |
(37,214 |
) |
$ |
(2.03 |
) |
||||||||
|
Weighted average common shares outstanding |
18,455 |
18,299 |
||||||||||||||||||||||||||||||
(1)
In the second quarter of fiscal 2026, UNIFI recorded employee separation costs of $1,093 in connection with the Fiscal 2026 Profit Improvement Plan and a $308 gain from disposals of assets from the consolidation of Americas yarn manufacturing operations. The associated tax impact was estimated to be $11 related to employee separation costs in the Asia Segment.
(2)
In the first quarter of fiscal 2026, UNIFI incurred various transition costs totaling $1,068 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs (including asset impairments and disposals) of $1,021, and (ii) employee separation costs of $47. The facility closure, equipment relocation, and employee separation costs were all recorded within Restructuring costs in the Condensed Consolidated Statements of Operations. The associated tax impact was estimated to be $0 due to a valuation allowance against net operating losses in the U.S. In the third quarter of fiscal 2025, UNIFI incurred various transition costs totaling $2,900 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs of $1,088, (ii) inventory write-downs of $1,000, (iii) excess manufacturing costs of $580, and (iv) employee separation or retention costs of $232. The facility closure, equipment relocation, employee separation and retention costs were all recorded within Restructuring costs and the inventory write-downs and excess manufacturing costs were recorded within Cost of sales in the Condensed Consolidated Statements of Operations. The associated tax impact was estimated to be $0 due to a valuation allowance against net operating losses in the U.S.
(3)
In the third quarter of fiscal 2026, UNIFI recorded a foreign currency gain of $1,775. In December 2025, Brazil declared dividends against the majority of its retained earnings in connection with certain tax law changes related to future dividends. Foreign currency transaction gains (losses) are recorded to reflect changes in the exchange rate of the Brazilian Real to the U.S. Dollar while the dividend payable is outstanding. The associated tax impact was estimated to be $272, based on the estimated annual tax rate for the period.
(4)
In the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina. The associated tax impact was estimated to be $0 due to a valuation allowance against net operating losses and capital losses in the U.S.
Net Sales
Consolidated net sales for the current nine-month period decreased by $45,730, or 10.6%, and consolidated sales volumes decreased 7.5%, compared to the prior nine-month period. Net sales in the current nine-month period were lower primarily due to (i) lower sales volumes in the Asia Segment, (ii) lower sales volumes and lower-priced sales mix in the Americas Segment, and (iii) lower sales volumes and prices in the Brazil Segment. Overall sales remain depressed, particularly in the Americas and Asia Segments as a result of continued volatility from uncertainty over ongoing geopolitical events, global trade policies, and competition from lower-priced products.
Consolidated weighted average sales prices decreased 3.1%. The decrease in sales prices was primarily attributable to sales mix and lower average selling prices in the Americas and Brazil Segments.
REPREVE® Fiber products for the current nine-month period comprised 29%, or $111,784, of consolidated net sales, compared to 31%, or $132,713, for the prior nine-month period.
Gross Profit
Gross profit for the current nine-month period increased to $16,115 from $9,547 in the prior nine-month period. Gross profit increased primarily due to (i) variable cost-saving initiatives and (ii) improved utilization in certain manufacturing areas. This increase was partially offset by (a) lower sales volumes, (b) lower overall conversion margins and (c) production volatility from an inability to forecast demand due to the uncertainty caused by geopolitical events and tariffs impacting the Americas Segment. Gross profit continues to be unfavorably impacted by demand volatility in the Americas Segment and import pricing pressures in the Brazil Segment.
•
Americas Segment gross profit increased primarily due to overall cost-saving initiatives, including reductions in manufacturing costs from the consolidation of Americas yarn manufacturing operations and the Fiscal 2026 Profit Improvement Plan, partially offset by demand and production volatility stemming from geopolitical events and tariff uncertainty.
•
Brazil Segment gross profit decreased primarily due to (i) lower sales volumes and (ii) competitive import pricing pressures.
•
Asia Segment gross profit decreased primarily due to lower sales volumes.
SG&A
SG&A decreased from the prior nine-month period to the current nine-month period, primarily due to the actions from the Fiscal 2026 Profit Improvement Plan.
Benefit for Bad Debts
The current nine-month period and prior nine-month period provision reflect no material activity.
Restructuring Costs, Net
During October 2025, UNIFI implemented additional cost-saving initiatives that include reducing variable manufacturing costs across labor, spend, and support functions, while also eliminating a meaningful percentage of salaried positions in the U.S. During the three-months ended December 28, 2025, UNIFI incurred employee separation costs of $1,093 related to the Fiscal 2026 Profit Improvement Plan. Additionally, UNIFI recognized a gain of $308 during the current period from disposals of assets in conjunction with the consolidation of Americas yarn manufacturing operations.
On February 3, 2025, UNIFI announced the closing of its Madison, North Carolina facility and the transition of those manufacturing operations to other UNIFI production facilities in North and Central America. As a result, UNIFI incurred transition costs of $1,068 in the current nine-month period which consisted of (i) equipment relocation and facility closure costs (including asset impairments and disposals) of $1,021 and (ii) employee separation costs of $47. For the prior nine-month period, UNIFI incurred restructuring costs of $1,320 which consisted of (i) equipment relocation and facility closure costs of $1,088 and (ii) employee separation or retention costs of $232.
Gain on Sale of Assets
In the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina.
Other Operating (Income) Expense, Net
Other operating (income) expense, net for the current nine-month period and the prior nine-month period include foreign currency transaction (gains) losses of $(1,330) and $218, respectively, with no other meaningful activity. In December 2025, Brazil declared dividends against the majority of its retained earnings in connection with certain tax law changes related to future dividends. Foreign currency transaction gains (losses) are recorded to reflect changes in the exchange rate of the Brazilian Real to the U.S. Dollar while the dividend payable is outstanding.
Interest Expense, Net
Interest expense, net decreased in connection with lower average debt principal and lower average interest rates.
Equity in Loss of Unconsolidated Affiliate
There was no material activity for the current nine-month period or the prior nine-month period.
Income Taxes
Provision for income taxes and the effective tax rate were as follows:
|
For the Nine Months Ended |
||||||||
|
March 29, 2026 |
March 30, 2025 |
|||||||
|
Provision for income taxes |
$ |
1,984 |
$ |
4,021 |
||||
|
Effective tax rate |
(9.3 |
)% |
(12.6 |
)% |
||||
The increase in the effective tax rate from the prior nine-month period to the current nine-month period is primarily attributable to lower foreign earnings in the current nine-month period.
The effective tax rate is subject to variation due to a number of factors, including variability in pre-tax book income; the mix of income by jurisdiction; changes in deferred tax valuation allowances; and changes in statutes, audit settlement, regulations, and case law. Additionally, the impacts of discrete and other rate impacting items are more pronounced when loss before income taxes is lower.
Net Loss
The decrease in net loss was primarily attributable to (i) increased gross profit and (ii) lower SG&A expenses, (iii) lower interest expense, net, and (iv) lower income tax expense, partially offset by a gain on sale of assets in the prior nine-month period.
Adjusted EBITDA and Adjusted EPS (Non-GAAP Financial Measures)
Adjusted EBITDA increased primarily due to (i) higher gross profit and (ii) lower SG&A expenses. Adjusted EPS improved primarily due to (i) higher gross profit, (ii) lower SG&A, (iii) lower interest expense and (iv) income tax expense.
Segment Overview
Following is a discussion and analysis of the revenue and profitability performance of UNIFI's reportable segments for the current nine-month period.
Americas Segment
The components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior nine-month period amounts for the Americas Segment, were as follows:
|
For the Nine Months Ended |
||||||||||||||||||||
|
March 29, 2026 |
March 30, 2025 |
|||||||||||||||||||
|
% of |
% of |
% |
||||||||||||||||||
|
Net sales |
$ |
240,772 |
100.0 |
$ |
262,922 |
100.0 |
(8.4 |
) |
||||||||||||
|
Cost of sales |
239,260 |
99.4 |
277,797 |
105.7 |
(13.9 |
) |
||||||||||||||
|
Gross profit (loss) |
1,512 |
0.6 |
(14,875 |
) |
(5.7 |
) |
(110.2 |
) |
||||||||||||
|
Depreciation expense |
14,764 |
6.2 |
15,995 |
6.1 |
(7.7 |
) |
||||||||||||||
|
Segment Profit |
$ |
16,276 |
6.8 |
$ |
1,120 |
0.4 |
nm |
|||||||||||||
|
Segment net sales as a percentage of |
62.2 |
% |
60.7 |
% |
||||||||||||||||
|
Segment Profit as a percentage of |
48.8 |
% |
4.1 |
% |
||||||||||||||||
nm = not meaningful
The change in net sales for the Americas Segment was as follows:
|
Net sales for the prior nine-month period |
$ |
262,922 |
||
|
Change in average selling price and sales mix |
(12,587 |
) |
||
|
Decrease in sales volumes |
(9,563 |
) |
||
|
Net sales for the current nine-month period |
$ |
240,772 |
The decrease in net sales for the Americas Segment from the prior nine-month period to the current nine-month period was primarily attributable to a lower-priced sales mix and lower sales volumes as discussed above.
The change in Segment Profit for the Americas Segment was as follows:
|
Segment Profit for the prior nine-month period |
$ |
1,120 |
||
|
Change in underlying unit margins and sales mix |
15,198 |
|||
|
Decrease in sales volumes |
(42 |
) |
||
|
Segment Profit for the current nine-month period |
$ |
16,276 |
The increase in Segment Profit for the Americas Segment from the prior nine-month period to the current nine-month period was primarily attributable to overall cost-saving initiatives, including reductions in manufacturing costs from the consolidation of Americas yarn manufacturing operations and the Fiscal 2026 Profit Improvement Plan.
Brazil Segment
The components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior nine-month period amounts for the Brazil Segment, were as follows:
|
For the Nine Months Ended |
||||||||||||||||||||
|
March 29, 2026 |
March 30, 2025 |
|||||||||||||||||||
|
% of |
% of |
% |
||||||||||||||||||
|
Net sales |
$ |
81,201 |
100.0 |
$ |
89,916 |
100.0 |
(9.7 |
) |
||||||||||||
|
Cost of sales |
74,733 |
92.0 |
75,205 |
83.6 |
(0.6 |
) |
||||||||||||||
|
Gross profit |
6,468 |
8.0 |
14,711 |
16.4 |
(56.0 |
) |
||||||||||||||
|
Depreciation expense |
2,412 |
2.9 |
2,044 |
2.2 |
18.0 |
|||||||||||||||
|
Segment Profit |
$ |
8,880 |
10.9 |
$ |
16,755 |
18.6 |
(47.0 |
) |
||||||||||||
|
Segment net sales as a percentage of |
21.0 |
% |
20.8 |
% |
||||||||||||||||
|
Segment Profit as a percentage of |
26.6 |
% |
60.6 |
% |
||||||||||||||||
The change in net sales for the Brazil Segment was as follows:
|
Net sales for the prior nine-month period |
$ |
89,916 |
||
|
Change in average selling price and change in sales mix |
(10,253 |
) |
||
|
Decrease in sales volumes |
(4,356 |
) |
||
|
Favorable foreign currency translation effects |
5,894 |
|||
|
Net sales for the current nine-month period |
$ |
81,201 |
The decrease in net sales for the Brazil Segment from the prior nine-month period to the current nine-month period was primarily attributable to (i) lower selling prices associated with competitive import pricing pressures and (ii) lower sales volumes due to market conditions, partially offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD.
The change in Segment Profit for the Brazil Segment was as follows:
|
Segment Profit for the prior nine-month period |
$ |
16,755 |
||
|
Decrease in underlying unit margins |
(7,966 |
) |
||
|
Decrease in sales volumes |
(802 |
) |
||
|
Favorable foreign currency translation effects |
893 |
|||
|
Segment Profit for the current nine-month period |
$ |
8,880 |
The decrease in Segment Profit for the Brazil Segment from the prior nine-month period to the current nine-month period was primarily attributable to (i) lower conversion margins primarily due to sales mix and import pricing pressures and (ii) a decrease in sales volumes discussed above, partially offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD. We continue to prioritize innovation and differentiation to improve our portfolio and competitive position in Brazil.
Asia Segment
The components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior nine-month period amounts for the Asia Segment, were as follows:
|
For the Nine Months Ended |
||||||||||||||||||||
|
March 29, 2026 |
March 30, 2025 |
|||||||||||||||||||
|
% of |
% of |
% |
||||||||||||||||||
|
Net sales |
$ |
65,106 |
100.0 |
$ |
79,971 |
100.0 |
(18.6 |
) |
||||||||||||
|
Cost of sales |
56,971 |
87.5 |
70,260 |
87.9 |
(18.9 |
) |
||||||||||||||
|
Gross profit |
8,135 |
12.5 |
9,711 |
12.1 |
(16.2 |
) |
||||||||||||||
|
Depreciation expense |
42 |
0.1 |
44 |
0.1 |
(4.5 |
) |
||||||||||||||
|
Segment Profit |
$ |
8,177 |
12.6 |
$ |
9,755 |
12.2 |
(16.2 |
) |
||||||||||||
|
Segment net sales as a percentage of |
16.8 |
% |
18.5 |
% |
||||||||||||||||
|
Segment Profit as a percentage of |
24.5 |
% |
35.3 |
% |
||||||||||||||||
The change in net sales for the Asia Segment was as follows:
|
Net sales for the prior nine-month period |
$ |
79,971 |
||
|
Decrease in sales volumes |
(13,970 |
) |
||
|
Change in average selling price and sales mix |
(2,501 |
) |
||
|
Favorable foreign currency translation effects |
1,606 |
|||
|
Net sales for the current nine-month period |
$ |
65,106 |
The decrease in net sales for the Asia Segment from the prior nine-month period to current nine-month period was primarily attributable to (i) an overall decrease in sales volumes due to competitive pricing pressures and the continued volatility stemming from geopolitical events and tariffs and (ii) a change in sales mix of REPREVE products, partially offset by favorable foreign currency translation effects from the strengthening of the RMB versus the USD.
The change in Segment Profit for the Asia Segment was as follows:
|
Segment Profit for the prior nine-month period |
$ |
9,755 |
||
|
Decrease in sales volumes |
(1,711 |
) |
||
|
Change in underlying unit margins and sales mix |
(106 |
) |
||
|
Favorable foreign currency translation effects |
239 |
|||
|
Segment Profit for the current nine-month period |
$ |
8,177 |
The decrease in Segment Profit for the Asia Segment from the prior nine-month period to the current nine-month period was primarily attributable to a decline in sales volumes as discussed above.
Liquidity and Capital Resources
Note 5, "Long-Term Debt" to the condensed consolidated financial statements includes the detail of UNIFI's debt obligations and terms and conditions thereof. Further discussion and analysis of liquidity and capital resources follow.
On October 25, 2024, UNIFI entered into a new credit agreement with Wells Fargo Bank, National Association for a $25,000 revolving credit facility (the "2024 Facility"). The maturity date of the 2024 Facility is the earlier of (i) October 28, 2027 and (ii) the termination or refinancing of the 2022 Credit Agreement. The 2024 Facility is deemed unsecured financing for UNIFI, but is collateralized by certain assets pledged by related party Kenneth G. Langone, one of the members of UNIFI's Board of Directors. Borrowings under the 2024 Facility bear interest at a rate of SOFR plus 0.90%. The 2024 Facility contains no additional financial covenants beyond those already in effect for the 2022 Credit Agreement and is subject to a monthly unused line fee of 0.25% on available borrowing capacity. In the third quarter of fiscal 2025, UNIFI borrowed $22,000 against the 2024 Facility and used the proceeds to reduce the outstanding ABL Revolver balance. There was no impact to debt principal from these transactions.
UNIFI's primary capital requirements are for working capital, capital expenditures, and debt service. UNIFI's primary sources of capital are cash generated from operations and borrowings available under the 2022 Credit Agreement and the 2024 Facility. For the current nine-month period, cash provided by operations was $24,393 and, at March 29, 2026, availability under the ABL Revolver and 2024 Facility was $44,921 and $949, respectively.
As of March 29, 2026, all of UNIFI's $94,939 of debt obligations were guaranteed by certain of its domestic operating subsidiaries, while nearly all of UNIFI's cash and cash equivalents were held by its foreign subsidiaries. Cash and cash equivalents held by foreign subsidiaries may not be presently available to fund UNIFI's domestic capital requirements, including its domestic debt obligations. UNIFI employs a variety of strategies to ensure that its worldwide cash is available in the locations where it is needed.
The following table presents a summary of cash and cash equivalents, borrowings available under financing arrangements, liquidity, working capital, and total debt obligations as of March 29, 2026 for domestic operations compared to foreign operations:
|
Domestic |
Foreign |
Total |
||||||||||
|
Cash and cash equivalents |
$ |
44 |
$ |
26,517 |
$ |
26,561 |
||||||
|
Potential borrowings available under financing arrangements |
45,870 |
- |
45,870 |
|||||||||
|
Trigger level under ABL Revolver |
(16,500 |
) |
- |
(16,500 |
) |
|||||||
|
Available Liquidity |
$ |
29,414 |
$ |
26,517 |
$ |
55,931 |
||||||
|
Working capital |
$ |
42,651 |
$ |
101,671 |
$ |
144,322 |
||||||
|
Total debt obligations |
$ |
94,939 |
$ |
- |
$ |
94,939 |
||||||
Borrowings available under financing arrangements are generally collateralized by receivables and inventory owned in the U.S., plus cash equivalents pledged by Mr. Langone, and generally constrained by the fixed charge coverage ratio and trigger level prescribed in the 2022 Credit Agreement. Accordingly, "Available Liquidity" includes consideration for the trigger level that currently constrains our borrowing ability until a fixed charge coverage ratio of 1.05 to 1.00 is achieved. UNIFI's primary cash requirements, in addition to normal course operating activities (e.g., working capital and payroll), primarily include (i) capital expenditures that generally have commitments of up to 12 months, (ii) contractual obligations that support normal course ongoing operations and production, (iii) operating leases and finance leases, (iv) debt service, and (v) share repurchases.
Liquidity Considerations
Following the establishment of the 2024 Facility, UNIFI believes its global cash and liquidity positions are sufficient to sustain its operations and to meet its growth needs for the foreseeable future. Additionally, UNIFI considers opportunities to repatriate existing cash to reduce debt and preserve or enhance liquidity. However, further degradation in the macroeconomic environment could introduce additional liquidity risk and require UNIFI to limit cash outflows for discretionary activities while further utilizing available and additional forms of credit.
We feel that our current liquidity position, particularly following the two quarters ended December 28, 2025 and March 29, 2026 in which we generated cash from operating activities, is sufficient to fund our operations and expected business growth. Should global demand, economic activity, or input availability decline considerably for an even longer period of time, UNIFI maintains the ability to (i) seek additional credit or financing arrangements and/or (ii) re-implement cost reduction initiatives to preserve cash and secure the longevity of the business and operations. Management continues to (i) explore cost savings opportunities and (ii) prioritize repayment of debt in the current operating environment.
When business levels increase, we expect to use cash in support of working capital needs.
The following outlines the attributes relating to our credit facilities as of March 29, 2026:
•
UNIFI was in compliance with all applicable financial covenants in the 2022 Credit Agreement and 2024 Facility;
•
availability under the 2024 Facility was $949 as of March 29, 2026;
•
availability exceeding the Trigger Level (as defined in the 2022 Credit Agreement) under the ABL Revolver was $28,421;
•
the Trigger Level under the ABL Revolver was $16,500; and
•
$0 of standby letters of credit were outstanding.
In addition to making payments in accordance with the scheduled maturities of debt required under its existing debt obligations, UNIFI may, from time to time, elect to repay additional amounts borrowed under the ABL Facility. Funds to make such repayments may come from the operating cash flows of the business or other sources and will depend upon UNIFI's strategy, prevailing market conditions, liquidity requirements, contractual restrictions within the 2022 Credit Agreement, and other factors.
Liquidity Summary
UNIFI has met its historical liquidity requirements for working capital, capital expenditures, debt service requirements, and other operating needs from its cash flows from operations and available borrowings. UNIFI believes that its existing cash balances, expected cash provided by operating activities, and credit facilities will enable UNIFI to meet its foreseeable liquidity requirements. For its foreign operations, UNIFI expects its existing cash balances, cash provided by operating activities, and available financing arrangements will provide the needed liquidity to fund the associated operating activities and investing activities, such as future capital expenditures. UNIFI believes its operations in Asia and Brazil are in a position to obtain local country financing arrangements due to the operating results of each subsidiary.
Net Debt (Non-GAAP Financial Measure)
The reconciliations for Net Debt are as follows:
|
March 29, 2026 |
June 29, 2025 |
|||||||
|
Long-term debt |
$ |
82,242 |
$ |
95,727 |
||||
|
Current portion of long-term debt |
12,614 |
12,159 |
||||||
|
Unamortized debt issuance costs |
83 |
122 |
||||||
|
Debt principal |
94,939 |
108,008 |
||||||
|
Less: cash and cash equivalents |
26,561 |
22,664 |
||||||
|
Net Debt |
$ |
68,378 |
$ |
85,344 |
||||
The decrease in Net Debt primarily reflects the generation of operating cash flows during fiscal 2026, aided by reduced levels of working capital and capital expenditures.
Working Capital and Adjusted Working Capital (Non-GAAP Financial Measure)
The following table presents the components of working capital and the reconciliation of working capital to Adjusted Working Capital:
|
March 29, 2026 |
June 29, 2025 |
|||||||
|
Cash and cash equivalents |
$ |
26,561 |
$ |
22,664 |
||||
|
Receivables, net |
73,629 |
75,383 |
||||||
|
Inventories |
103,931 |
122,929 |
||||||
|
Income taxes receivable |
947 |
5,429 |
||||||
|
Other current assets |
7,337 |
9,222 |
||||||
|
Accounts payable |
(36,211 |
) |
(37,468 |
) |
||||
|
Other current liabilities |
(16,308 |
) |
(18,899 |
) |
||||
|
Income taxes payable |
(661 |
) |
(49 |
) |
||||
|
Current operating lease liabilities |
(2,289 |
) |
(2,368 |
) |
||||
|
Current portion of long-term debt |
(12,614 |
) |
(12,159 |
) |
||||
|
Working capital |
$ |
144,322 |
$ |
164,684 |
||||
|
Less: Cash and cash equivalents |
(26,561 |
) |
(22,664 |
) |
||||
|
Less: Income taxes receivable |
(947 |
) |
(5,429 |
) |
||||
|
Less: Income taxes payable |
661 |
49 |
||||||
|
Less: Current operating lease liabilities |
2,289 |
2,368 |
||||||
|
Less: Current portion of long-term debt |
12,614 |
12,159 |
||||||
|
Adjusted Working Capital |
$ |
132,378 |
$ |
151,167 |
||||
Adjusted Working Capital decreased $18,789 from June 29, 2025 to March 29, 2026.
The decrease in Adjusted Working Capital was primarily attributable to the decreases in (i) inventories due to lower units on hand, (ii) receivables, net due to lower sales and the timing of cash receipts, and (iii) other current assets primarily due to lower vendor deposits and value-added taxes receivable. These were partially offset by reductions in (a) accounts payable primarily due to lower production activity to match customer demand and variable cost-saving initiatives and (b) other current liabilities due primarily to the payment of incentive compensation earned in fiscal 2025.
Operating Cash Flows
The significant components of net cash provided (used) by operating activities are summarized below.
|
For the Nine Months Ended |
||||||||
|
March 29, 2026 |
March 30, 2025 |
|||||||
|
Net loss |
$ |
(23,369 |
) |
$ |
(35,818 |
) |
||
|
Equity in loss of unconsolidated affiliate |
289 |
467 |
||||||
|
Depreciation and amortization expense |
18,100 |
19,200 |
||||||
|
Non-cash compensation expense |
2,431 |
2,442 |
||||||
|
Gain on foreign currency transaction, net |
(1,775 |
) |
- |
|||||
|
Gain on sale of assets |
(308 |
) |
(4,296 |
) |
||||
|
Deferred income taxes |
231 |
563 |
||||||
|
Subtotal |
(4,401 |
) |
(17,442 |
) |
||||
|
Receivables, net |
3,210 |
(1,757 |
) |
|||||
|
Inventories |
21,185 |
(753 |
) |
|||||
|
Accounts payable and other current liabilities |
(3,359 |
) |
2,020 |
|||||
|
Other changes |
7,758 |
(2,062 |
) |
|||||
|
Net cash provided (used) by operating activities |
$ |
24,393 |
$ |
(19,994 |
) |
|||
The change in operating cash flows was primarily due to the an improvement in gross profit and reduction of working capital balances during the current nine-month period compared to the prior nine-month period.
For the current nine-month period, the decrease in accounts receivable was largely driven by a decrease in sales and the timing of cash receipts. The decrease in inventories and accounts payable was driven by concerted efforts to reduce inventory levels in response to the lower demand environment. The decrease in other current liabilities was largely due to the payment of incentive compensation liabilities. Other changes comprise mostly decreases in income tax receivables and other current assets due to the utilization of tax credits, an income tax refund, and lower vendor deposits in Brazil.
For the prior nine-month period, the increases in accounts receivable and inventories were largely driven by the improvement in sales and timing of cash receipts. The increase in accounts payable and other current liabilities was largely due to increased accruals for employee compensation.
Investing Cash Flows
Investing activities primarily include $3,872 for capital expenditures. UNIFI expects future capital projects to primarily include routine maintenance requirements related to its existing machinery and equipment.
Financing Cash Flows
Financing activities primarily include principal payments on the ABL Term Loan and finance leases.
Share Repurchase Program
As described in Note 7, "Shareholders' Equity," no share repurchases have been completed in fiscal 2026.
Contractual Obligations
UNIFI incurs various financial obligations and commitments in the ordinary course of business. Financial obligations are considered to represent known future cash payments that UNIFI is required to make under existing contractual arrangements, such as debt and lease agreements.
Except for the $4,048 of new finance leases that commenced during the nine months ended March 29, 2026, there have been no material changes in the scheduled maturities of UNIFI's contractual obligations as disclosed under the heading "Contractual Obligations" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 2025 Form 10-K.
Off-Balance Sheet Arrangements
UNIFI is not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on UNIFI's financial condition, results of operations, liquidity, or capital expenditures.
Critical Accounting Policies
UNIFI's critical accounting policies are discussed in the 2025 Form 10-K. There have been no changes to UNIFI's critical accounting policies in fiscal 2026.
Unifi Inc. published this content on May 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 06, 2026 at 14:17 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]