Unifi (NYSE: UFI) cuts quarterly net loss as sales decline 11%
Unifi, Inc. reports narrower losses on lower sales. For the quarter ended March 29, 2026, net sales were $130.0 million, down from $146.6 million a year earlier, as volumes and pricing declined, especially in the Americas and Asia segments.
The company posted a net loss of $2.3 million versus $16.8 million previously, helped by cost-saving initiatives and better manufacturing utilization that lifted gross profit to $9.1 million from a small loss. For the nine months, sales fell to $387.1 million from $432.8 million and net loss improved to $23.4 million from $35.8 million.
Operating cash flow turned positive at $24.4 million for the nine months, compared with a $20.0 million use of cash in the prior-year period, aided by inventory reductions. Cash and cash equivalents were $26.6 million and total debt was $94.9 million, including $60.1 million on the ABL Term Loan and $22.0 million on the 2024 Facility.
Positive
- None.
Negative
- None.
Key Figures
Key Terms
Adjusted EBITDA financial
Segment Profit financial
ABL Revolver financial
Fiscal 2026 Profit Improvement Plan financial
REPREVE Fiber technical
One Big Beautiful Bill Act of 2025 regulatory
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One) |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to _____
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of |
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incorporation or organization) |
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Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 1, 2026, there were
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that relate to our plans, objectives, estimates, and goals. Statements expressing expectations regarding our future, or projections or estimates relating to products, sales, revenues, expenditures, costs, strategies, initiatives, or earnings, are typical of such statements and are made under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management’s beliefs, assumptions, and expectations about our future performance, considering the information currently available to management. The words “believe,” “may,” “could,” “will,” “should,” “would,” “anticipate,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek,” “strive,” and words of similar import, or the negative of such words, identify or signal the presence of forward-looking statements. These statements are not statements of historical fact; they involve risks and uncertainties that may cause our actual results, performance, or financial condition to differ materially from the expectations of future results, performance, or financial condition that we express or imply in any forward-looking statement. Factors that could contribute to such differences include, but are not limited to:
All such factors are difficult to predict, contain uncertainties that may materially affect actual results, and may be beyond our control. New factors emerge from time to time, and it is not possible for management to predict all such factors or to assess the impact of each such factor on the Company. Any forward-looking statement speaks only as of the date on which such statement is made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, except as may be required by federal securities laws.
In light of all of the above considerations, we reiterate that forward-looking statements are not guarantees of future performance, and we caution you not to rely on them as such.
UNIFI, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS AND NINE MONTHS ENDED MARCH 29, 2026
TABLE OF CONTENTS
PART I—FINANCIAL INFORMATION |
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Item 1. |
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Financial Statements |
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Condensed Consolidated Balance Sheets as of March 29, 2026 and June 29, 2025 |
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Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three Months and Nine Months Ended March 29, 2026 and March 30, 2025 |
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Condensed Consolidated Statements of Shareholders’ Equity for the Three Months and Nine Months Ended March 29, 2026 and March 30, 2025 |
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Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 29, 2026 and March 30, 2025 |
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Notes to Condensed Consolidated Financial Statements |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. |
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Controls and Procedures |
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PART II—OTHER INFORMATION |
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Item 1. |
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Legal Proceedings |
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Item 1A. |
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Risk Factors |
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Item 5. |
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Other Information |
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Item 6. |
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Exhibits |
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31 |
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Signatures |
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32 |
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
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March 29, 2026 |
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June 29, 2025 |
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ASSETS |
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Cash and cash equivalents |
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$ |
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$ |
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Receivables, net |
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Inventories |
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Income taxes receivable |
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Other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease assets |
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Deferred income taxes |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Accounts payable |
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$ |
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$ |
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Income taxes payable |
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Current operating lease liabilities |
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Current portion of long-term debt |
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Other current liabilities |
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Total current liabilities |
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Long-term debt |
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Non-current operating lease liabilities |
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Deferred income taxes |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies |
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Common stock, $ |
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Capital in excess of par value |
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Retained earnings |
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Accumulated other comprehensive loss |
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( |
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( |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands, except per share amounts)
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For the Three Months Ended |
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For the Nine Months Ended |
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March 29, 2026 |
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March 30, 2025 |
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March 29, 2026 |
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March 30, 2025 |
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Net sales |
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$ |
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$ |
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$ |
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$ |
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Cost of sales |
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Gross profit (loss) |
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( |
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Selling, general and administrative expenses |
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Benefit for bad debts |
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( |
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( |
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( |
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( |
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Restructuring costs, net |
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— |
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Gain on sale of assets |
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— |
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— |
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( |
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Other operating (income) expense, net |
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( |
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( |
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Operating loss |
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( |
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( |
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( |
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( |
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Interest income |
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( |
) |
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( |
) |
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( |
) |
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( |
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Interest expense |
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Equity in loss of unconsolidated affiliate |
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Loss before income taxes |
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( |
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( |
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( |
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( |
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Provision for income taxes |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Net loss per common share: |
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Basic |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Diluted |
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$ |
( |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Comprehensive income (loss):
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For the Three Months Ended |
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For the Nine Months Ended |
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March 29, 2026 |
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March 30, 2025 |
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March 29, 2026 |
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March 30, 2025 |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments |
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( |
) |
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Other comprehensive income (loss) |
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( |
) |
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Comprehensive income (loss) |
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$ |
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$ |
( |
) |
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$ |
( |
) |
|
$ |
( |
) |
|
See accompanying notes to condensed consolidated financial statements.
2
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
(In thousands)
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Shares |
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Common Stock |
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Capital in Excess of Par Value |
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Retained Earnings |
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Accumulated Other Comprehensive Loss |
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Total Shareholders’ Equity |
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Balance at December 28, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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|||||
Conversion of equity units |
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( |
) |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions |
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( |
) |
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( |
) |
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( |
) |
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— |
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— |
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( |
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Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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|
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— |
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|
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( |
) |
|
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— |
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( |
) |
Balance at March 29, 2026 |
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|
|
|
$ |
|
|
$ |
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$ |
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|
$ |
( |
) |
|
$ |
|
|||||
|
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Shares |
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Common Stock |
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Capital in Excess of Par Value |
|
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Retained Earnings |
|
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Accumulated Other Comprehensive Loss |
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Total Shareholders’ Equity |
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||||||
Balance at June 29, 2025 |
|
|
|
|
$ |
|
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$ |
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$ |
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|
$ |
( |
) |
|
$ |
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|||||
Conversion of equity units |
|
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|
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( |
) |
|
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
|
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— |
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Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions |
|
|
( |
) |
|
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( |
) |
|
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( |
) |
|
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— |
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— |
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( |
) |
Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
|
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— |
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( |
) |
Balance at March 29, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
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|
$ |
( |
) |
|
$ |
|
|||||
|
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Shares |
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Common Stock |
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Capital in Excess of Par Value |
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Retained Earnings |
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Accumulated Other Comprehensive Loss |
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Total Shareholders’ Equity |
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||||||
Balance at December 29, 2024 |
|
|
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$ |
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$ |
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$ |
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$ |
( |
) |
|
$ |
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|||||
Options exercised |
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— |
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— |
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— |
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|||
Conversion of equity units |
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( |
) |
|
|
— |
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— |
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— |
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||
Stock-based compensation |
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— |
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— |
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— |
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— |
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||
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
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( |
) |
Other comprehensive income, net of tax |
|
|
— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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|
|
( |
) |
|
|
— |
|
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|
( |
) |
Balance at March 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
Shares |
|
|
Common Stock |
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Capital in Excess of Par Value |
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Retained Earnings |
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Accumulated Other Comprehensive Loss |
|
|
Total Shareholders’ Equity |
|
||||||
Balance at June 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Options exercised |
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|
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— |
|
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|
— |
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|
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|
||||
Conversion of equity units |
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|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
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||
Stock-based compensation |
|
|
— |
|
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|
— |
|
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|
|
|
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— |
|
|
|
— |
|
|
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||
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
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( |
) |
Other comprehensive loss, net of tax |
|
|
— |
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— |
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— |
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— |
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( |
) |
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( |
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Net loss |
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— |
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— |
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— |
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|
|
( |
) |
|
|
— |
|
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|
( |
) |
Balance at March 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
See accompanying notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
|
For the Nine Months Ended |
|
|||||
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
||
Cash and cash equivalents at beginning of period |
|
$ |
|
|
$ |
|
||
Operating activities: |
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|
|
|
|
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Net loss |
|
|
( |
) |
|
|
( |
) |
Adjustments to reconcile net loss to net cash provided (used) by operating activities: |
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Equity in loss of unconsolidated affiliate |
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Depreciation and amortization expense |
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Non-cash compensation expense |
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Gain on foreign currency transaction, net |
|
|
( |
) |
|
|
— |
|
Gain on sale of assets |
|
|
( |
) |
|
|
( |
) |
Deferred income taxes |
|
|
|
|
|
|
||
Other, net |
|
|
|
|
|
|
||
Changes in assets and liabilities: |
|
|
|
|
|
|
||
Receivables, net |
|
|
|
|
|
( |
) |
|
Inventories |
|
|
|
|
|
( |
) |
|
Other current assets |
|
|
|
|
|
( |
) |
|
Income taxes |
|
|
|
|
|
( |
) |
|
Accounts payable and other current liabilities |
|
|
( |
) |
|
|
|
|
Other, net |
|
|
|
|
|
|
||
Net cash provided (used) by operating activities |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
||
Investing activities: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Proceeds from the sale of assets |
|
|
|
|
|
|
||
Net cash (used) provided by investing activities |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
||
Financing activities: |
|
|
|
|
|
|
||
Proceeds from ABL Revolver |
|
|
|
|
|
|
||
Payments on ABL Revolver |
|
|
( |
) |
|
|
( |
) |
Payments on ABL Term Loan |
|
|
( |
) |
|
|
( |
) |
Payments on finance lease obligations |
|
|
( |
) |
|
|
( |
) |
Other, net |
|
|
( |
) |
|
|
( |
) |
Net cash (used) provided by financing activities |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
||
Effect of exchange rate changes on cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Net increase (decrease) in cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
See accompanying notes to condensed consolidated financial statements.
4
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Background
Unifi, Inc., a New York corporation formed in 1969 (together with its subsidiaries, “UNIFI,” the “Company,” “we,” “us,” or “our”), is a multinational company that manufactures and sells innovative recycled and synthetic products, made from polyester and nylon, primarily to other yarn manufacturers and knitters and weavers (UNIFI’s “direct customers”) that produce yarn and/or fabric for the apparel, hosiery, home furnishings, automotive, industrial, medical, and other end-use markets (UNIFI’s “indirect customers”). We sometimes refer to these indirect customers as “brand partners.” Polyester products include partially oriented yarn (“POY”) and textured, solution and package dyed, twisted, beamed, and draw wound yarns, and each is available in virgin or recycled varieties. Recycled solutions, made from both pre-consumer and post-consumer waste, include plastic bottle flake (“Flake”), polyester polymer beads (“Chip”), and staple fiber. Nylon products include virgin or recycled textured, solution dyed, and spandex covered yarns.
UNIFI maintains one of the textile industry’s most comprehensive product offerings that includes a range of specialized, value-added, and commodity solutions, with principal geographic markets in North America, Central America, South America, Asia, and Europe. UNIFI has direct manufacturing operations in
2. Basis of Presentation; Condensed Notes
The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. As contemplated by the instructions of the SEC to Form 10-Q, the following notes have been condensed and, therefore, do not contain all disclosures required in connection with annual financial statements. Reference should be made to UNIFI’s year-end audited consolidated financial statements and related notes thereto contained in its Annual Report on Form 10-K for the fiscal year ended June 29, 2025 (the “2025 Form 10-K”).
The financial information included in this report has been prepared by UNIFI, without audit. In the opinion of management, all adjustments, which consist of normal, recurring adjustments, considered necessary for a fair statement of the results for interim periods have been included. Nevertheless, the results shown for interim periods are not necessarily indicative of results to be expected for the full year. The preparation of financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the amounts reported and certain financial statement disclosures. Actual results may vary from these estimates.
All amounts, except per share amounts, are presented in thousands (000s), except as otherwise noted.
The fiscal quarter for each of Unifi, Inc., its primary domestic operating subsidiaries and its subsidiary in El Salvador ended on March 29, 2026. Unifi, Inc.’s remaining material operating subsidiaries’ fiscal quarters ended on March 31, 2026. There were no significant transactions or events that occurred between Unifi, Inc.’s fiscal quarter end and such wholly owned subsidiaries’ fiscal quarters end. The three-month periods ended March 29, 2026 and March 30, 2025 both consisted of 13 weeks. The nine-month periods ended March 29, 2026 and March 30, 2025 both consisted of 39 weeks.
3. Recent Accounting Pronouncements
Issued and Pending Adoption
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU No. 2024-03 does not change or remove existing expense disclosure requirements but requires disaggregated disclosures about certain expense categories and captions, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization and selling expenses. This ASU will become effective for UNIFI's fiscal 2028 and in the first quarter of fiscal 2029 for interim reporting, with retrospective application permitted. UNIFI is currently evaluating the impact on the Company's disclosures on its consolidated financial statements.
In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU No. 2023-09 modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (iii) income tax expense or benefit from continuing operations (separated by federal, state, and foreign). The ASU also requires entities to disclose their income tax payments to international, federal, state, and local jurisdictions, among other changes. The ASU is effective for UNIFI's fiscal 2026, with early adoption permitted, and should be applied on a prospective basis, but retrospective application is permitted. UNIFI is currently evaluating the impact on the Company’s disclosures but does not expect this standard will have a material impact on its consolidated financial position, results of operations, or cash flows.
Based on UNIFI’s review of ASUs issued since the filing of the 2025 Form 10-K, there have been no other newly issued or newly applicable accounting pronouncements that have had, or are expected to have, a material impact on UNIFI’s consolidated financial statements.
5
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
4. Revenue
The following tables present net sales disaggregated by (i) classification of customer type and (ii) REPREVE® Fiber sales:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
||||
Third-party manufacturer |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Service |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
||||
REPREVE® Fiber |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
All other products and services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Third-Party Manufacturer
Third-party manufacturer revenue is primarily generated through sales to direct customers. Such sales represent satisfaction of UNIFI’s performance obligations required by the associated revenue contracts. Each of UNIFI’s reportable segments derives revenue from sales to third-party manufacturers.
Service Revenue
Service revenue is primarily generated, as services are rendered, through fulfillment of toll manufacturing of textile products or transportation services governed by written agreements. Such toll manufacturing and transportation services represent satisfaction of UNIFI’s performance obligations required by the associated revenue contracts.
REPREVE® Fiber
REPREVE® Fiber represents UNIFI's collection of fiber products on our recycled platform, with or without added technologies.
5. Long-Term Debt
Debt Obligations
|
|
|
|
Weighted Average |
|
|
|
||||||||
|
|
Scheduled |
|
Interest Rate as of |
|
Principal Amounts as of |
|
||||||||
|
|
Maturity Date |
|
March 29, 2026 |
|
March 29, 2026 |
|
|
June 29, 2025 |
|
|||||
ABL Revolver |
|
|
|
% |
|
|
$ |
|
|
$ |
|
||||
2024 Facility |
|
|
|
% |
|
|
|
|
|
|
|
||||
ABL Term Loan |
|
|
|
% |
|
|
|
|
|
|
|
||||
Finance lease obligations |
|
(1) |
|
|
% |
|
|
|
|
|
|
|
|||
Total debt |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Current portion of ABL Term Loan |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Current portion of finance lease obligations |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Unamortized debt issuance costs |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Total long-term debt |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||
6
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
ABL Facility and Amendments
On September 5, 2024, UNIFI, Inc. and certain of its subsidiaries entered into a First Amendment to the 2022 Credit Agreement (the “First Amendment”) with a syndicate of lenders. The First Amendment primarily (i) permits the sale of a Company-owned real estate asset (consisting of an industrial warehouse building and land acreage) located in Yadkinville, North Carolina with application of the net proceeds to reduce the outstanding ABL Revolver balance, in lieu of the prescribed mandatory prepayment to the ABL Term Loan; (ii) reduces the Maximum Revolver Amount from $
On October 25, 2024, UNIFI entered into a new credit agreement with Wells Fargo Bank, National Association for a $
On April 10, 2025, UNIFI entered into a Second Amendment to the 2022 Credit Agreement (the “Second Amendment”). The Second Amendment primarily (i) permits the Company to enter into the purchase agreement related to, and consummate the sale of, the Company's Madison, North Carolina property, (ii) permits the Company to allocate a portion of the net proceeds from the sale to repay outstanding revolving loans under the 2022 Credit Agreement, after the application of the greater of $
6. Income Taxes
The provision for income taxes and effective tax rate 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 |
|
||||
Provision for income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Effective tax rate |
|
|
( |
)% |
|
|
( |
)% |
|
|
( |
)% |
|
|
( |
)% |
Income Tax Expense
UNIFI’s provision for income taxes for the nine months ended March 29, 2026 and March 30, 2025 was calculated by applying the estimated annual effective tax rate to year-to-date pre-tax book income and adjusting for discrete items that occurred during the period.
The effective tax rate for the three and nine months ended March 29, 2026 and March 30, 2025 varied from the U.S. federal statutory rate primarily due to the U.S. generated losses for which UNIFI does not expect to realize a future tax benefit.
On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 (the “Act”), making significant changes to the U.S. corporate income tax system. Based on current analysis of the Act, UNIFI does not expect these tax law changes to have a material impact on its financial statements given the current valuation allowance; however, UNIFI will continue to evaluate their impact as further information becomes available. UNIFI has reflected the impact of the enacted provisions in the three and nine months ended March 29, 2026.
Unrecognized Tax Benefits
UNIFI regularly assesses the outcomes of both completed and ongoing examinations to ensure that its provision for income taxes is sufficient. Certain returns that remain open to examination have utilized carryforward tax attributes generated in prior tax years, including net operating losses, which could potentially be revised upon examination.
7. Shareholders’ Equity
On October 31, 2018, UNIFI announced that the Company's Board of Directors approved a share repurchase program (the “2018 SRP”) under which UNIFI is authorized to acquire up to $
7
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
8. Stock-Based Compensation
On
9. Earnings Per Share
The components of the calculation of earnings per share (“EPS”) are as follows:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Basic weighted average shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net potential common share equivalents |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Diluted weighted average shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Excluded from the calculation of common share equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Anti-dilutive common share equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Excluded from the calculation of diluted shares: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unvested stock options that vest upon achievement of certain market conditions |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
The calculation of EPS is based on the weighted average number of Unifi, Inc.’s common shares outstanding for the applicable period. The calculation of diluted EPS presents the effect of all potential dilutive common shares that were outstanding during the respective period, unless the effect of doing so is anti-dilutive.
10. Commitments and Contingencies
Collective Bargaining Agreements
While employees of UNIFI’s Brazilian operations are unionized, none of the labor force employed by UNIFI’s domestic or other foreign subsidiaries is currently covered by a collective bargaining agreement.
11. Related Party Transactions
Related party balances and transactions are not material to the condensed consolidated financial statements and, accordingly, are not presented separately from other financial statement captions.
There were
Related party payables for Salem Leasing Corporation consisted of the following:
|
|
March 29, 2026 |
|
|
June 29, 2025 |
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Operating lease obligations |
|
|
|
|
|
|
||
Finance lease obligations |
|
|
|
|
|
|
||
Total related party payables |
|
$ |
|
|
$ |
|
||
The following were the Company’s significant related party transactions:
|
|
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
Affiliated Entity |
|
Transaction Type |
|
March 29, 2026 |
|
|
March 30, 2025 |
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
||||
Salem Leasing Corporation |
|
Payments for transportation equipment costs and finance lease debt service |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As discussed in Note 5, “Long-Term Debt”, UNIFI entered into the 2024 Facility in October 2024 which was collateralized by personal assets of a board member. On January 2, 2025, UNIFI borrowed $
8
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
12. Business Segment Information
UNIFI defines operating segments as components of the organization for which discrete financial information is available and operating results are evaluated on a regular basis by UNIFI’s chief executive officer, who is the chief operating decision maker (the “CODM”), in order to assess performance and allocate resources. Characteristics of UNIFI which were relied upon in making the determination of reportable segments include the nature of the products sold, the internal organizational structure, the trade policies in the geographic regions in which UNIFI operates, and the information that is regularly reviewed by the CODM for the purpose of assessing performance and allocating resources.
UNIFI's
The accounting policies for the segments are consistent with UNIFI’s accounting policies. Intersegment sales are omitted from segment disclosures, as they are (i) insignificant to UNIFI’s segments and eliminated from consolidated reporting and (ii) excluded from segment evaluations performed by the CODM.
Selected financial information is presented below:
|
|
For the Three Months Ended March 29, 2026 |
|
|||||||||||||
|
|
Americas |
|
|
Brazil |
|
|
Asia |
|
|
Total |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Profit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
For the Three Months Ended March 30, 2025 |
|
|||||||||||||
|
|
Americas |
|
|
Brazil |
|
|
Asia |
|
|
Total |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross (loss) profit |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Segment depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment (Loss) Profit |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
For the Nine Months Ended March 29, 2026 |
|
|||||||||||||
|
|
Americas |
|
|
Brazil |
|
|
Asia |
|
|
Total |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Profit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
For the Nine Months Ended March 30, 2025 |
|
|||||||||||||
|
|
Americas |
|
|
Brazil |
|
|
Asia |
|
|
Total |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross (loss) profit |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Segment depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Profit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
9
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
The reconciliations of segment gross profit to consolidated loss before income taxes are as follows:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
||||
Americas |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Brazil |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment gross profit (loss) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Benefit for bad debts |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Restructuring costs, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain on sale of assets |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
Other operating (income) expense, net |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Operating loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest income |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity in loss of unconsolidated affiliate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss before income taxes |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The reconciliations of segment depreciation and amortization expense to consolidated depreciation and amortization expense are as follows:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
||||
Americas |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Brazil |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other depreciation and amortization expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The reconciliations of segment capital expenditures to consolidated capital expenditures are as follows:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
||||
Americas |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Brazil |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other capital expenditures |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Capital expenditures |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The reconciliations of segment total assets to consolidated total assets are as follows:
|
|
March 29, 2026 |
|
|
June 29, 2025 |
|
||
Americas |
|
$ |
|
|
$ |
|
||
Brazil |
|
|
|
|
|
|
||
Asia |
|
|
|
|
|
|
||
Segment total assets |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
|
||
Other PP&E |
|
|
|
|
|
|
||
Other operating lease assets |
|
|
|
|
|
|
||
Other non-current assets |
|
|
|
|
|
|
||
Investment in unconsolidated affiliate |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
10
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Geographic Data
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
Net Sales |
|
March 29, 2026 |
|
|
March 30, 2025 |
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
||||
U.S. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Brazil |
|
|
|
|
|
|
|
|
|
|
|
|
||||
China |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Remaining Foreign Countries |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Export sales from UNIFI’s U.S. operations to external customers |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The net sales amounts are based on the operating locations from where the items were produced or distributed.
Long-Lived Assets |
|
March 29, 2026 |
|
|
June 29, 2025 |
|
||
U.S. |
|
$ |
|
|
$ |
|
||
Brazil |
|
|
|
|
|
|
||
China |
|
|
|
|
|
|
||
Remaining Foreign Countries |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Long-lived assets are comprised of PP&E, net; operating lease assets; intangible assets, net; investments in unconsolidated affiliates; and other non-current assets.
13. Investment in Unconsolidated Affiliate
Included within Other non-current assets is UNIFI’s investment in unconsolidated affiliate: UNF America LLC (“UNFA”).
UNIFI’s raw material purchases under its supply agreement with UNFA consisted of the following:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
||||
UNFA |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As of March 29, 2026, UNIFI’s open purchase orders related to this supply agreement were $
Other than the supply agreement discussed above, UNIFI does not provide any other commitments or guarantees related to UNFA. As of March 29, 2026 and June 29, 2025, UNIFI’s investment in UNFA was $
14. Supplemental Cash Flow Information
Cash payments for interest and taxes consist of the following:
|
|
For the Nine Months Ended |
|
|||||
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
||
Interest, net of capitalized interest of $ |
|
$ |
|
|
$ |
|
||
Income tax (refunds) payments, net |
|
|
( |
) |
|
|
|
|
Cash payments for taxes shown above consist primarily of income and withholding tax payments made by UNIFI in both U.S. and foreign jurisdictions, net of refunds.
Non-Cash Investing and Financing Activities
As of March 29, 2026 and June 29, 2025, $
During the nine-months ended March 29, 2026 and March 30, 2025, UNIFI recorded non-cash activity relating to finance leases of $
11
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
15. Restructuring Costs, Net
On February 3, 2025, UNIFI announced the pending closure of its manufacturing facility in Madison, North Carolina, and a plan to transition the associated manufacturing operations to other production facilities in North and Central America. In the fourth quarter of fiscal 2025, UNIFI sold the Madison, North Carolina facility, as well as certain machinery and equipment located thereon, for a cash purchase price of $
Beginning in the prior year quarter ending March 30, 2025 through the second quarter of this fiscal year, UNIFI incurred transition costs related to the consolidation of Americas yarn manufacturing operations discussed above for facility closure and equipment relocation costs including asset impairments and disposals net of any salvage proceeds and employee separation costs that were recorded within Restructuring costs, net in the Consolidated Statements of Operations.
The restructuring expenses (benefits) incurred in all periods primarily impacted the Americas Segment.
A summary of the restructuring activities (benefits) consists of the following:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
|
March 29, 2026 |
|
|
March 30, 2025 |
|
||||
Facility closure and equipment relocation costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Employee separation costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restructuring costs, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Beginning Liability |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restructuring costs, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain on disposals of assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash payments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Ending Liability |
|
|
|
|
|
|
|
|
|
|
|
|
||||
12
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
16. Other Financial Data
Select balance sheet information is presented in the following table.
|
|
March 29, 2026 |
|
|
June 29, 2025 |
|
||
Receivables, net: |
|
|
|
|
|
|
||
Customer receivables |
|
$ |
|
|
$ |
|
||
Allowance for uncollectible accounts |
|
|
( |
) |
|
|
( |
) |
Reserves for quality claims |
|
|
( |
) |
|
|
( |
) |
Net customer receivables |
|
|
|
|
|
|
||
Banker's acceptance notes |
|
|
|
|
|
|
||
Other receivables |
|
|
|
|
|
|
||
Total receivables, net |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Inventories: |
|
|
|
|
|
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Supplies |
|
|
|
|
|
|
||
Work in process |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Gross inventories |
|
|
|
|
|
|
||
Net realizable value adjustment |
|
|
( |
) |
|
|
( |
) |
Total inventories |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Other current assets: |
|
|
|
|
|
|
||
Prepaid expenses and other |
|
$ |
|
|
$ |
|
||
Value-added taxes receivable |
|
|
|
|
|
|
||
Vendor deposits |
|
|
|
|
|
|
||
Contract assets |
|
|
|
|
|
|
||
Total other current assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Property, plant and equipment, net: |
|
|
|
|
|
|
||
Land |
|
$ |
|
|
$ |
|
||
Land improvements |
|
|
|
|
|
|
||
Buildings and improvements |
|
|
|
|
|
|
||
Assets under finance leases |
|
|
|
|
|
|
||
Machinery and equipment |
|
|
|
|
|
|
||
Computers, software and office equipment |
|
|
|
|
|
|
||
Transportation equipment |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
Gross property, plant and equipment |
|
|
|
|
|
|
||
Less: accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Less: accumulated amortization – finance leases |
|
|
( |
) |
|
|
( |
) |
Total property, plant and equipment, net |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Other non-current assets: |
|
|
|
|
|
|
||
Grantor trust |
|
$ |
|
|
$ |
|
||
Investment in unconsolidated affiliate |
|
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other non-current assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Other current liabilities: |
|
|
|
|
|
|
||
Payroll and fringe benefits |
|
$ |
|
|
$ |
|
||
Incentive compensation |
|
|
|
|
|
|
||
Utilities |
|
|
|
|
|
|
||
Deferred revenue |
|
|
|
|
|
|
||
Property taxes, interest and other |
|
|
|
|
|
|
||
Total other current liabilities |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Other long-term liabilities: |
|
|
|
|
|
|
||
Nonqualified deferred compensation plan obligation |
|
$ |
|
|
$ |
|
||
Uncertain tax positions |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other long-term liabilities |
|
$ |
|
|
$ |
|
||
13
Item 2. 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.
14
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:
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.
15
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:
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 |
) |
16
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 |
|
||||||||||||||
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.
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.
17
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
18
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.
19
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.
20
Nine Months Ended March 29, 2026 Compared to Nine Months Ended March 30, 2025
Consolidated Overview
The below tables provide:
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 |
) |
21
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 |
|
||||||||||||||
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.
22
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.
23
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 |
% |
|
|
|
|
|
|
|||
24
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.
25
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:
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.
26
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.
27
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.
28
Item 3. Quantitative and Qualitative Disclosures About Market Risk
UNIFI is exposed to market risks associated with changes in interest rates, fluctuations in foreign currency exchange rates, and raw material and commodity costs, which may adversely affect its financial position, results of operations, or cash flows. UNIFI does not enter into derivative financial instruments for trading purposes, nor is it a party to any leveraged financial instruments.
Interest Rate Risk
UNIFI is exposed to interest rate risk through its borrowing activities. As of March 29, 2026, UNIFI had borrowings under the 2022 ABL Term Facility and 2024 Facility that totaled $85,300. UNIFI’s sensitivity analysis indicates that a 50-basis point interest rate increase as of March 29, 2026 would result in an increase in annual interest expense of approximately $400.
Foreign Currency Exchange Rate Risk
A complete discussion of foreign currency exchange rate risk is included in the 2025 Form 10-K and is supplemented by the following disclosures.
As of March 29, 2026, UNIFI had no outstanding foreign currency forward contracts. As of March 29, 2026, foreign currency exchange rate risk positions included the following:
|
|
Approximate |
|
|
Percentage of total consolidated assets held by UNIFI's subsidiaries outside the U.S. whose functional currency |
|
|
33.7 |
% |
|
|
|
|
|
Cash and cash equivalents held outside the U.S.: |
|
|
|
|
Denominated in USD |
|
$ |
15,437 |
|
Denominated in RMB |
|
|
656 |
|
Denominated in BRL |
|
|
9,261 |
|
Denominated in other foreign currencies |
|
|
712 |
|
Total cash and cash equivalents held outside the U.S. |
|
$ |
26,066 |
|
Percentage of total cash and cash equivalents held outside the U.S. |
|
|
98.1 |
% |
|
|
|
|
|
Cash and cash equivalents held inside the U.S. in USD by foreign subsidiaries |
|
$ |
451 |
|
Raw Material and Commodity Cost Risks
A complete discussion of raw material and commodity cost risks is included in the 2025 Form 10-K.
Other Risks
UNIFI is also exposed to geopolitical risk, including changing laws and regulations governing international trade, such as quotas, tariffs, and tax laws. The degree of impact and the frequency of these events cannot be predicted.
Item 4. Controls and Procedures
As of March 29, 2026, an evaluation of the effectiveness of UNIFI’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) was performed under the supervision and with the participation of UNIFI’s management, including the principal executive officer and the principal financial officer. Based on that evaluation, UNIFI’s principal executive officer and principal financial officer concluded that UNIFI’s disclosure controls and procedures are effective to ensure that information required to be disclosed by UNIFI in its reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that information required to be disclosed by UNIFI in the reports UNIFI files or submits under the Exchange Act is accumulated and communicated to UNIFI’s management, including its principal executive officer and its principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
There were no changes in UNIFI’s internal control over financial reporting during the three months ended March 29, 2026 that have materially affected, or are reasonably likely to materially affect, UNIFI’s internal control over financial reporting.
29
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
We are from time to time a party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business. With respect to all such lawsuits, claims, and proceedings, we record reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. We do not believe that any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on our results of operations, financial position, or cash flows. We maintain liability insurance for certain risks that is subject to certain self-insurance limits.
Item 1A. Risk Factors
There have been no material changes in UNIFI’s risk factors from those included in “Item 1A. Risk Factors” in the 2025 Form 10-K.
Item 5. Other Information
Insider Trading Arrangements
During the quarter ended March 29, 2026, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act)
30
Item 6. Exhibits
Exhibit No. |
|
Description |
|
|
|
3.1 |
|
Restated Certificate of Incorporation of Unifi, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed October 31, 2016 (File No. 001-10542)). |
|
|
|
3.2 |
|
Amended and Restated By-laws of Unifi, Inc., as of October 26, 2016 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed October 31, 2016 (File No. 001-10542)). |
|
|
|
3.3 |
|
Declaration of Amendment to the Amended and Restated By-laws of Unifi, Inc. effective April 30, 2019 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed May 1, 2019 (File No. 001-10542)). |
|
|
|
31.1+ |
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
31.2+ |
|
Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32++ |
|
Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document. |
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
|
|
|
+ Filed herewith.
++ Furnished herewith.
31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
UNIFI, INC. |
|
|
|
(Registrant) |
|
|
|
|
|
Date: May 6, 2026 |
|
By: |
/s/ ANDREW J. EAKER |
|
|
|
Andrew J. Eaker |
|
|
|
Executive Vice President & Chief Financial Officer Treasurer |
|
|
|
(Principal Financial Officer and Principal Accounting Officer) |
32