Unifi Inc 10-Q for FY2027 Q1
Unifi Inc (UFI)
About this 10-Q
Unifi Inc filed this 10-Q on November 4, 2026, covering the quarter ended September 27, 2026 (FY2027 Q1).
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One) |
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
|
|
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)
|
||
(State or other jurisdiction of |
|
(I.R.S. Employer |
incorporation or organization) |
|
Identification No.) |
|
|
|
|
|
|
|
||
(Address of principal executive offices) |
|
(Zip Code) |
(
(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 |
☐ |
☒ |
|
|
|
|
|
Non-accelerated filer |
☐ |
Smaller reporting company |
|
|
|
|
|
|
|
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 October 30, 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 ENDED SEPTEMBER 27, 2026
TABLE OF CONTENTS
|
|
|
|
Page |
|
|
|
|
|
Item 1. |
|
|
1 |
|
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheets as of September 27, 2026 and June 28, 2026 |
|
1 |
|
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
|
|
5 |
|
|
|
|
|
|
Item 2. |
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
15 |
|
|
|
|
|
Item 3. |
|
|
24 |
|
|
|
|
|
|
Item 4. |
|
|
25 |
|
|
||||
|
|
|
|
|
Item 1. |
|
|
26 |
|
|
|
|
|
|
Item 1A. |
|
|
26 |
|
|
|
|
|
|
Item 5. |
|
|
26 |
|
|
|
|
|
|
Item 6. |
|
|
27 |
|
|
|
|
|
|
|
|
|
28 |
|
|
|
|
|
|
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
|
|
September 27, 2026 |
|
|
June 28, 2026 |
|
||
ASSETS |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Receivables, net |
|
|
|
|
|
|
||
Inventories |
|
|
|
|
|
|
||
Income taxes receivable |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Property, plant and equipment, net |
|
|
|
|
|
|
||
Operating lease assets |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Other non-current assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Income taxes payable |
|
|
|
|
|
|
||
Current operating lease liabilities |
|
|
|
|
|
|
||
Current portion of long-term debt |
|
|
|
|
|
|
||
Other current liabilities |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Long-term debt |
|
|
|
|
|
|
||
Non-current operating lease liabilities |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Other long-term liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
||
Common stock, $ |
|
|
|
|
|
|
||
Capital in excess of par value |
|
|
|
|
|
|
||
Retained earnings |
|
|
|
|
|
|
||
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Total shareholders’ equity |
|
|
|
|
|
|
||
Total liabilities and shareholders’ equity |
|
$ |
|
|
$ |
|
||
See accompanying notes to condensed consolidated financial statements.
1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except per share amounts)
|
|
For the Three Months Ended |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
||
Net sales |
|
$ |
|
|
$ |
|
||
Cost of sales |
|
|
|
|
|
|
||
Gross profit |
|
|
|
|
|
|
||
Selling, general and administrative expenses |
|
|
|
|
|
|
||
Provision (benefit) for bad debts |
|
|
|
|
|
( |
) |
|
Restructuring costs, net |
|
|
|
|
|
|
||
Other operating expense, net |
|
|
|
|
|
|
||
Operating loss |
|
|
( |
) |
|
|
( |
) |
Interest income |
|
|
( |
) |
|
|
( |
) |
Interest expense |
|
|
|
|
|
|
||
Equity in earnings of unconsolidated affiliate |
|
|
( |
) |
|
|
( |
) |
Loss before income taxes |
|
|
( |
) |
|
|
( |
) |
Provision for income taxes |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
||
Net loss per common share: |
|
|||||||
Basic |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted |
|
$ |
( |
) |
|
$ |
( |
) |
Comprehensive loss:
|
|
For the Three Months Ended |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income: |
|
|
|
|
|
|
||
Foreign currency translation adjustments |
|
|
|
|
|
|
||
Other comprehensive income |
|
|
|
|
|
|
||
Comprehensive loss |
|
$ |
( |
) |
|
$ |
( |
) |
See accompanying notes to condensed consolidated financial statements.
2
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
(In thousands)
|
|
Shares |
|
|
Common Stock |
|
|
Capital in Excess of Par Value |
|
|
Retained Earnings |
|
|
Accumulated Other Comprehensive Loss |
|
|
Total Shareholders’ Equity |
|
||||||
Balance at June 28, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Conversion of equity units |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Other comprehensive income, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at September 27, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
Shares |
|
|
Common Stock |
|
|
Capital in Excess of Par Value |
|
|
Retained Earnings |
|
|
Accumulated Other Comprehensive Loss |
|
|
Total Shareholders’ Equity |
|
||||||
Balance at June 29, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Other comprehensive income, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at September 28, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
See accompanying notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
|
For the Three Months Ended |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
||
Cash and cash equivalents at beginning of period |
|
$ |
|
|
$ |
|
||
Operating activities: |
|
|
|
|
|
|
||
Net loss |
|
|
( |
) |
|
|
( |
) |
Adjustments to reconcile net loss to net cash provided (used) by operating activities: |
|
|
|
|
|
|
||
Equity in earnings of unconsolidated affiliate |
|
|
( |
) |
|
|
( |
) |
Depreciation and amortization expense |
|
|
|
|
|
|
||
Non-cash compensation expense |
|
|
|
|
|
|
||
Loss on foreign currency transaction, net |
|
|
|
|
|
|
||
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 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 28, 2026 (the “2026 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 September 27, 2026. Unifi, Inc.’s remaining material operating subsidiaries’ fiscal quarters ended on September 30, 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 September 27, 2026 and September 28, 2025 both consisted of 13 weeks.
3. Recent Accounting Pronouncements
Issued and Pending Adoption
In November 2024, the FASB issued Accounting Standards Update (“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.
Based on UNIFI’s review of ASUs issued since the filing of the 2026 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 |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
||
Third-party manufacturer |
|
$ |
|
|
$ |
|
||
Service |
|
|
|
|
|
|
||
Net sales |
|
$ |
|
|
$ |
|
||
|
|
For the Three Months Ended |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 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 |
|
September 27, 2026 |
|
September 27, 2026 |
|
|
June 28, 2026 |
|
|||||
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 |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
||
Provision for income taxes |
|
$ |
|
|
$ |
|
||
Effective tax rate |
|
|
( |
)% |
|
|
( |
)% |
Income Tax Expense
UNIFI’s provision for income taxes for the three months ended September 27, 2026 and September 28, 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 months ended September 27, 2026 varied from the U.S. federal statutory rate primarily due to (i) U.S. tax on Net CFC Tested Income (“NCTI”) and (ii) taxes associated with the repatriation of foreign earnings, including withholding taxes. The impact of these items on the effective tax rate was amplified by UNIFI's relatively low level of consolidated pre-tax loss.
The effective tax rate for the three months ended September 28, 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.
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. UNIFI regularly assesses the outcomes of both completed and ongoing examinations to ensure that its provision for income taxes is sufficient.
In July 2026, UNIFI received a notice from the Department of the Treasury, Internal Revenue Service (“IRS”) that its federal income tax return for the fiscal 2024 tax year had been selected for a routine examination by the Large Business and International (“LB&I”) Division. There have been no changes to reserves as a result of this examination notice.
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 |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 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:
|
|
September 27, 2026 |
|
|
June 28, 2026 |
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Finance lease obligations |
|
|
|
|
|
|
||
Total related party payables |
|
$ |
|
|
$ |
|
||
The following were the Company’s significant related party transactions:
|
|
|
|
For the Three Months Ended |
|
|||||
Affiliated Entity |
|
Transaction Type |
|
September 27, 2026 |
|
|
September 28, 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. As of September 27, 2026, $
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 , 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 September 27, 2026 |
|
|||||||||||||
|
|
Americas |
|
|
Brazil |
|
|
Asia |
|
|
Total |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Profit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
For the Three Months Ended September 28, 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 |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
||
Americas |
|
$ |
|
|
$ |
( |
) |
|
Brazil |
|
|
|
|
|
|
||
Asia |
|
|
|
|
|
|
||
Segment gross profit |
|
|
|
|
|
|
||
Selling, general and administrative expenses |
|
|
|
|
|
|
||
Provision (benefit) for bad debts |
|
|
|
|
|
( |
) |
|
Restructuring costs, net |
|
|
— |
|
|
|
|
|
Other operating expense, net |
|
|
|
|
|
|
||
Operating loss |
|
|
( |
) |
|
|
( |
) |
Interest income |
|
|
( |
) |
|
|
( |
) |
Interest expense |
|
|
|
|
|
|
||
Equity in earnings 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 |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 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 |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 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:
|
|
September 27, 2026 |
|
|
June 28, 2026 |
|
||
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 |
|
|||||
Net Sales |
|
September 27, 2026 |
|
|
September 28, 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 |
|
September 27, 2026 |
|
|
June 28, 2026 |
|
||
U.S. |
|
$ |
|
|
$ |
|
||
Brazil |
|
|
|
|
|
|
||
China |
|
|
|
|
|
|
||
Remaining Foreign Countries |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Long-lived assets are comprised of PP&E, net; operating lease assets; intangible assets, net; investment in unconsolidated affiliate; 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 |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
||
UNFA |
|
$ |
|
|
$ |
|
||
As of September 27, 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 September 27, 2026 and June 28, 2026, UNIFI’s investment in UNFA was $
14. Supplemental Cash Flow Information
Cash payments for interest and taxes consist of the following:
|
|
For the Three Months Ended |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
||
Interest, net of capitalized interest of $ |
|
$ |
|
|
$ |
|
||
Income tax 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 September 27, 2026 and June 28, 2026, $
During the three months ended September 27, 2026 and September 28, 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
During fiscal 2025, the Madison, North Carolina facility was sold as part of the plan to consolidate the Americas yarn manufacturing operations.
In fiscal 2026, UNIFI incurred transition costs related to the consolidation of Americas yarn manufacturing operations 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 Condensed Consolidated Statements of Operations.
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. (the “Fiscal 2026 Profit Improvement Plan”). However,
The restructuring expenses (benefits) incurred in all periods primarily impacted the Americas Segment.
A summary of the restructuring activities consists of the following:
|
|
For the Three Months Ended |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
||
Facility closure and equipment relocation costs |
|
$ |
|
|
$ |
|
||
Employee separation costs |
|
|
|
|
|
|
||
Restructuring costs, net |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Beginning Liability |
|
|
|
|
|
|
||
Restructuring costs, net |
|
|
|
|
|
|
||
Cash payments |
|
|
|
|
|
( |
) |
|
Loss on disposals of assets |
|
|
|
|
|
( |
) |
|
Ending Liability |
|
$ |
|
|
$ |
|
||
Transition Costs
On August 16, 2026, UNIFI entered into a purchase agreement for the sale of two non-strategic real estate assets in Yadkinville, North Carolina. During the three months ended September 27, 2026, UNIFI incurred various transition costs totaling $
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.
|
|
September 27, 2026 |
|
|
June 28, 2026 |
|
||
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: |
|
|
|
|
|
|
||
Vendor deposits |
|
$ |
|
|
$ |
|
||
Prepaid expenses and other |
|
|
|
|
|
|
||
Value-added taxes receivable |
|
|
|
|
|
|
||
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 |
|
$ |
|
|
$ |
|
||
Utilities |
|
|
|
|
|
|
||
Incentive compensation |
|
|
|
|
|
|
||
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
17. Subsequent Event
UNIFI previously announced it had entered into an agreement to sell two non-strategic real estate assets in Yadkinville, North Carolina for a cash purchase price of $
14
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 September 27, 2026, while a reference to the “prior period” refers to the three-month period ended September 28, 2025. Such references may be accompanied by certain phrases for added clarity. The current period and the prior period each consisted of 13 weeks.
Our discussions in this Item 2 focus on our results during, or as of, the three months ended September 27, 2026 and September 28, 2025, and, to the extent applicable, any material changes from the information discussed in the 2026 Form 10-K or other important intervening developments or information. These discussions should be read in conjunction with the 2026 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 |
|
|||||
|
September 27, 2026 |
|
|
September 28, 2025 |
|
||
BRL to USD |
|
5.14 |
|
|
|
5.45 |
|
RMB to USD |
|
6.74 |
|
|
|
7.16 |
|
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
Our business continues to be adversely impacted by: (i) the effects 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, (iii) the volatility in customer order patterns, and (iv) freight disruptions or delays in the Eastern Hemisphere. 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.
As discussed in the 2026 Form 10-K, escalating geopolitical tensions involving the Middle East, particularly Iran, continue to contribute to volatility in petroleum markets impacting freight and raw material costs. The Company implemented responsive price increases and surcharges that began in April 2026 and are expected to continue while petrochemical-related inflation remains elevated and volatile. 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, inconsistent customer ordering patterns or additional unforeseen adverse impacts.
Such existing challenges and future uncertainty, including 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.
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 expanded our asset-light model beyond China with the addition of Unifi Textiles India. Each of these initiatives affords us diversity in this dynamic trade environment and greater flexibility in servicing our customer base.
15
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. (the “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.
16
Three Months Ended September 27, 2026 Compared to Three Months Ended September 28, 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 |
|
|
|
|
||||||||||||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
|
|
|
|||||||||||
|
|
|
|
|
% of |
|
|
|
|
|
% of |
|
|
% |
|
|||||
Net sales |
|
$ |
127,920 |
|
|
|
100.0 |
|
|
$ |
135,674 |
|
|
|
100.0 |
|
|
|
(5.7 |
) |
Cost of sales |
|
|
115,439 |
|
|
|
90.2 |
|
|
|
132,287 |
|
|
|
97.5 |
|
|
|
(12.7 |
) |
Gross profit |
|
|
12,481 |
|
|
|
9.8 |
|
|
|
3,387 |
|
|
|
2.5 |
|
|
nm |
|
|
Selling, general and administrative expenses |
|
|
11,462 |
|
|
|
9.0 |
|
|
|
11,948 |
|
|
|
8.8 |
|
|
|
(4.1 |
) |
Provision (benefit) for bad debts |
|
|
568 |
|
|
|
0.4 |
|
|
|
(69 |
) |
|
|
(0.1 |
) |
|
nm |
|
|
Restructuring costs, net |
|
|
— |
|
|
|
— |
|
|
|
1,068 |
|
|
|
0.8 |
|
|
|
(100.0 |
) |
Other operating expense, net |
|
|
475 |
|
|
|
0.4 |
|
|
|
70 |
|
|
|
0.1 |
|
|
nm |
|
|
Operating loss |
|
|
(24 |
) |
|
|
— |
|
|
|
(9,630 |
) |
|
|
(7.1 |
) |
|
|
(99.8 |
) |
Interest expense, net |
|
|
979 |
|
|
|
0.8 |
|
|
|
1,628 |
|
|
|
1.2 |
|
|
|
(39.9 |
) |
Equity in earnings of unconsolidated affiliate |
|
|
(20 |
) |
|
|
— |
|
|
|
(97 |
) |
|
|
(0.1 |
) |
|
|
(79.4 |
) |
Loss before income taxes |
|
|
(983 |
) |
|
|
(0.8 |
) |
|
|
(11,161 |
) |
|
|
(8.2 |
) |
|
|
(91.2 |
) |
Provision for income taxes |
|
|
1,037 |
|
|
|
0.8 |
|
|
|
196 |
|
|
|
0.2 |
|
|
nm |
|
|
Net loss |
|
$ |
(2,020 |
) |
|
|
(1.6 |
) |
|
$ |
(11,357 |
) |
|
|
(8.4 |
) |
|
|
(82.2 |
) |
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 |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
||
Net loss |
|
$ |
(2,020 |
) |
|
$ |
(11,357 |
) |
Interest expense, net |
|
|
979 |
|
|
|
1,628 |
|
Provision for income taxes |
|
|
1,037 |
|
|
|
196 |
|
Depreciation and amortization expense (1) |
|
|
5,703 |
|
|
|
5,921 |
|
EBITDA |
|
|
5,699 |
|
|
|
(3,612 |
) |
|
|
|
|
|
|
|
||
Loss on foreign currency transaction, net (2) |
|
|
91 |
|
|
|
— |
|
Transition costs (3) |
|
|
265 |
|
|
|
— |
|
Restructuring costs, net (4) |
|
|
— |
|
|
|
1,068 |
|
Adjusted EBITDA |
|
$ |
6,055 |
|
|
$ |
(2,544 |
) |
17
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 September 27, 2026 |
|
|
For the Three Months Ended September 28, 2025 |
|
||||||||||||||||||||||||||
|
|
Pre-tax Loss |
|
|
Tax Impact |
|
|
Net Loss |
|
|
Diluted EPS |
|
|
Pre-tax Loss |
|
|
Tax Impact |
|
|
Net Loss |
|
|
Diluted EPS |
|
||||||||
GAAP results |
|
$ |
(983 |
) |
|
$ |
(1,037 |
) |
|
$ |
(2,020 |
) |
|
$ |
(0.11 |
) |
|
$ |
(11,161 |
) |
|
$ |
(196 |
) |
|
$ |
(11,357 |
) |
|
$ |
(0.62 |
) |
Loss on foreign currency transaction, net (1) |
|
|
91 |
|
|
|
(16 |
) |
|
|
75 |
|
|
|
0.01 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Transition costs (2) |
|
|
265 |
|
|
|
— |
|
|
|
265 |
|
|
|
0.01 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Restructuring costs, net (3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,068 |
|
|
|
— |
|
|
|
1,068 |
|
|
|
0.06 |
|
Adjusted results |
|
$ |
(627 |
) |
|
$ |
(1,053 |
) |
|
$ |
(1,680 |
) |
|
$ |
(0.09 |
) |
|
$ |
(10,093 |
) |
|
$ |
(196 |
) |
|
$ |
(10,289 |
) |
|
$ |
(0.56 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding |
|
|
|
18,588 |
|
|
|
|
|
|
|
|
|
|
|
|
18,361 |
|
||||||||||||||
Net Sales
Consolidated net sales for the current period decreased by $7,754, or 5.7%, and consolidated sales volumes decreased 12.0%, compared to the prior period. Net sales in the current period were lower primarily due to (i) lower sales volumes in the Asia Segment and (ii) lower sales volumes and lower-priced sales mix due to a higher proportion of Flake and Chip sales in the Americas Segment, although mitigated through responsive price increases and surcharges, partially offset by higher sales in the Brazil Segment due to favorable pricing dynamics and improved sales mix. 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 increased 6.3%. The increase in sales prices was primarily attributable to sales mix and higher average selling prices in the Brazil and Asia Segments.
REPREVE® Fiber products for the current period comprised 29%, or $36,448, of consolidated net sales, compared to 29%, or $39,272, for the prior period.
Gross Profit
Gross profit for the current period increased to $12,481 from $3,387 in the prior period. Gross profit increased primarily due to (i) variable cost-saving initiatives, (ii) higher overall conversion margins, and (iii) improved utilization in certain manufacturing areas. This increase was partially offset by (a) lower sales volumes and (b) 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.
18
Selling, General and Administrative Expenses (“SG&A”)
SG&A decreased from the prior period to the current period, primarily due to the actions from the Fiscal 2026 Profit Improvement Plan.
Provision (Benefit) for Bad Debts
The provision (benefit) for bad debts increased for a specifically identified customer balance originating in the U.S. fiber market.
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 transition costs of $1,068 in the prior 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. There were no Restructuring costs in the current period.
Other Operating Expense, Net
Other operating expense, net for the current period and the prior period primarily include foreign currency transaction losses of $337 and $50, respectively, and $265 of transition costs in the current period in connection with the purchase agreement entered into on August 16, 2026 for the sale of two non-strategic real estate assets in Yadkinville, North Carolina. 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 Earnings 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 |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
||
Provision for income taxes |
|
$ |
1,037 |
|
|
$ |
196 |
|
Effective tax rate |
|
|
(105.5 |
)% |
|
|
(1.8 |
)% |
The decrease in the effective tax rate from the prior period to the current period is primarily attributable to (i) U.S. tax on Net CFC Tested Income (“NCTI”) and (ii) taxes associated with the repatriation of foreign earnings, including withholding taxes. Furthermore, the impact of these items on the effective tax rate was amplified by UNIFI's relatively low level of consolidated pre-tax loss during 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 and (ii) lower SG&A expenses due to overall cost-saving initiatives, including reductions in manufacturing costs from the consolidation of Americas yarn manufacturing operations and the Fiscal 2026 Profit Improvement Plan, together with (iii) lower interest expense, net, and (iv) restructuring costs in the prior period, partially offset by higher income tax expense.
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, and (iii) lower interest expense, partially offset by higher income tax expense.
19
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, 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 |
|
|
|
|
||||||||||||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
|
|
|
|||||||||||
|
|
|
|
|
% of |
|
|
|
|
|
% of |
|
|
% |
|
|||||
Net sales |
|
$ |
76,962 |
|
|
|
100.0 |
|
|
$ |
85,196 |
|
|
|
100.0 |
|
|
|
(9.7 |
) |
Cost of sales |
|
|
72,230 |
|
|
|
93.9 |
|
|
|
86,908 |
|
|
|
102.0 |
|
|
|
(16.9 |
) |
Gross profit (loss) |
|
|
4,732 |
|
|
|
6.1 |
|
|
|
(1,712 |
) |
|
|
(2.0 |
) |
|
nm |
|
|
Depreciation expense |
|
|
4,595 |
|
|
|
6.0 |
|
|
|
4,877 |
|
|
|
5.7 |
|
|
|
(5.8 |
) |
Segment Profit |
|
$ |
9,327 |
|
|
|
12.1 |
|
|
$ |
3,165 |
|
|
|
3.7 |
|
|
|
194.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment net sales as a percentage of |
|
|
60.2 |
% |
|
|
|
|
|
62.8 |
% |
|
|
|
|
|
|
|||
Segment Profit as a percentage of |
|
|
51.9 |
% |
|
|
|
|
|
34.9 |
% |
|
|
|
|
|
|
|||
nm = not meaningful
The change in net sales for the Americas Segment was as follows:
Net sales for the prior period |
|
$ |
85,196 |
|
Decrease in sales volumes |
|
|
(6,489 |
) |
Change in average selling price and sales mix |
|
|
(1,745 |
) |
Net sales for the current period |
|
$ |
76,962 |
|
The decrease in net sales for the Americas Segment from the prior period to the current period was primarily attributable to lower sales volumes as discussed above and a lower-priced sales mix.
The change in Segment Profit for the Americas Segment was as follows:
Segment Profit for the prior period |
|
$ |
3,165 |
|
Change in underlying unit margins and sales mix |
|
|
6,373 |
|
Decrease in sales volumes |
|
|
(211 |
) |
Segment Profit for the current period |
|
$ |
9,327 |
|
The increase in Segment Profit for the Americas Segment from the prior period to the current 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 period amounts for the Brazil Segment, were as follows:
|
|
For the Three Months Ended |
|
|
|
|
||||||||||||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
|
|
|
|||||||||||
|
|
|
|
|
% of |
|
|
|
|
|
% of |
|
|
% |
|
|||||
Net sales |
|
$ |
32,912 |
|
|
|
100.0 |
|
|
$ |
28,761 |
|
|
|
100.0 |
|
|
|
14.4 |
|
Cost of sales |
|
|
27,776 |
|
|
|
84.4 |
|
|
|
26,100 |
|
|
|
90.7 |
|
|
|
6.4 |
|
Gross profit |
|
|
5,136 |
|
|
|
15.6 |
|
|
|
2,661 |
|
|
|
9.3 |
|
|
|
93.0 |
|
Depreciation expense |
|
|
869 |
|
|
|
2.6 |
|
|
|
783 |
|
|
|
2.7 |
|
|
|
11.0 |
|
Segment Profit |
|
$ |
6,005 |
|
|
|
18.2 |
|
|
$ |
3,444 |
|
|
|
12.0 |
|
|
|
74.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment net sales as a percentage of |
|
|
25.7 |
% |
|
|
|
|
|
21.2 |
% |
|
|
|
|
|
|
|||
Segment Profit as a percentage of |
|
|
33.4 |
% |
|
|
|
|
|
38.0 |
% |
|
|
|
|
|
|
|||
20
The change in net sales for the Brazil Segment was as follows:
Net sales for the prior period |
|
$ |
28,761 |
|
Change in average selling price and change in sales mix |
|
|
3,086 |
|
Favorable foreign currency translation effects |
|
|
1,751 |
|
Decrease in sales volumes |
|
|
(686 |
) |
Net sales for the current period |
|
$ |
32,912 |
|
The increase in net sales for the Brazil Segment from the prior period to the current period was primarily attributable to (i) higher selling prices due to favorable pricing dynamics and sales mix and (ii) favorable foreign currency translation effects from the strengthening of the BRL versus the USD, partially offset by lower sales volumes as discussed above.
The change in Segment Profit for the Brazil Segment was as follows:
Segment Profit for the prior period |
|
$ |
3,444 |
|
Increase in underlying unit margins |
|
|
2,430 |
|
Favorable foreign currency translation effects |
|
|
213 |
|
Decrease in sales volumes |
|
|
(82 |
) |
Segment Profit for the current period |
|
$ |
6,005 |
|
The increase in Segment Profit for the Brazil Segment from the prior period to the current period was primarily attributable to (i) higher conversion margins primarily due to sales mix despite import pricing pressures and (ii) favorable foreign currency translation effects from the strengthening of the BRL versus the USD, partially offset by a decrease in sales volumes discussed above. We continue to prioritize innovation and differentiation to improve our portfolio and competitive position in Brazil.
Asia Segment
The components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior period amounts for the Asia Segment, were as follows:
|
|
For the Three Months Ended |
|
|
|
|
||||||||||||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
|
|
|
|||||||||||
|
|
|
|
|
% of |
|
|
|
|
|
% of |
|
|
% |
|
|||||
Net sales |
|
$ |
18,046 |
|
|
|
100.0 |
|
|
$ |
21,717 |
|
|
|
100.0 |
|
|
|
(16.9 |
) |
Cost of sales |
|
|
15,433 |
|
|
|
85.5 |
|
|
|
19,279 |
|
|
|
88.8 |
|
|
|
(19.9 |
) |
Gross profit |
|
|
2,613 |
|
|
|
14.5 |
|
|
|
2,438 |
|
|
|
11.2 |
|
|
|
7.2 |
|
Depreciation expense |
|
|
18 |
|
|
|
0.1 |
|
|
|
14 |
|
|
|
0.1 |
|
|
|
28.6 |
|
Segment Profit |
|
$ |
2,631 |
|
|
|
14.6 |
|
|
$ |
2,452 |
|
|
|
11.3 |
|
|
|
7.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment net sales as a percentage of |
|
|
14.1 |
% |
|
|
|
|
|
16.0 |
% |
|
|
|
|
|
|
|||
Segment Profit as a percentage of |
|
|
14.6 |
% |
|
|
|
|
|
27.1 |
% |
|
|
|
|
|
|
|||
The change in net sales for the Asia Segment was as follows:
Net sales for the prior period |
|
$ |
21,717 |
|
Decrease in sales volumes |
|
|
(7,571 |
) |
Change in average selling price and sales mix |
|
|
2,554 |
|
Favorable foreign currency translation effects |
|
|
1,346 |
|
Net sales for the current period |
|
$ |
18,046 |
|
The decrease in net sales for the Asia Segment from the prior period to the current period was primarily attributable to an overall decrease in sales volumes due to competitive pricing pressures and the continued volatility stemming from geopolitical events and tariffs, partially offset by (a) a change in sales mix of REPREVE products and (b) 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 |
|
$ |
2,452 |
|
Change in underlying unit margins and sales mix |
|
|
882 |
|
Favorable foreign currency translation effects |
|
|
151 |
|
Decrease in sales volumes |
|
|
(854 |
) |
Segment Profit for the current period |
|
$ |
2,631 |
|
The increase in Segment Profit for the Asia Segment from the prior period to the current period was primarily attributable to improved margins due to a change in sales mix of REPREVE products, mainly offset by a decline in sales volumes as discussed above.
21
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. As of September 27, 2026, $22,000 was outstanding on the 2024 Facility.
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 period, cash provided by operations was $3,677 and, at September 27, 2026, availability under the ABL Revolver and 2024 Facility was $42,086 and $525, respectively.
As of September 27, 2026, all of UNIFI’s $90,900 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 September 27, 2026 for domestic operations compared to foreign operations:
|
|
Domestic |
|
|
Foreign |
|
|
Total |
|
|||
Cash and cash equivalents |
|
$ |
37 |
|
|
$ |
26,054 |
|
|
$ |
26,091 |
|
Potential borrowings available under financing arrangements |
|
|
42,611 |
|
|
|
— |
|
|
|
42,611 |
|
Trigger level under ABL Revolver |
|
|
(16,500 |
) |
|
|
— |
|
|
|
(16,500 |
) |
Available Liquidity |
|
$ |
26,148 |
|
|
$ |
26,054 |
|
|
$ |
52,202 |
|
|
|
|
|
|
|
|
|
|
|
|||
Working capital |
|
$ |
42,165 |
|
|
$ |
108,589 |
|
|
$ |
150,754 |
|
Total debt obligations |
|
$ |
90,900 |
|
|
$ |
— |
|
|
$ |
90,900 |
|
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.
On October 28, 2026, UNIFI completed the sale of two non-strategic real estate assets in Yadkinville, North Carolina for a cash purchase price of $60,000, and the net proceeds from the transaction were used to repay all of the ABL Term Loan outstanding under the 2022 Credit Agreement.
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 believe that our current liquidity position, particularly following the last three quarters in fiscal 2026 and the first quarter in fiscal 2027 in which we generated cash from operating activities, is sufficient to fund our operations and expected business growth. Should global demand or economic activity weaken further, or input availability become more constrained for an extended period, 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 September 27, 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. The net proceeds from the completion of the non-strategic real estate sale on October 28, 2026 were used to repay all of the ABL Term Loan outstanding under the 2022 Credit Agreement.
22
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 Brazil are in a position to obtain local country financing arrangements due to its operating results.
Net Debt (Non-GAAP Financial Measure)
The reconciliations for Net Debt are as follows:
|
|
September 27, 2026 |
|
|
June 28, 2026 |
|
||
Long-term debt |
|
$ |
78,756 |
|
|
$ |
79,998 |
|
Current portion of long-term debt |
|
|
12,087 |
|
|
|
12,371 |
|
Unamortized debt issuance costs |
|
|
57 |
|
|
|
70 |
|
Debt principal |
|
|
90,900 |
|
|
|
92,439 |
|
Less: cash and cash equivalents |
|
|
26,091 |
|
|
|
25,072 |
|
Net Debt |
|
$ |
64,809 |
|
|
$ |
67,367 |
|
The decrease in Net Debt primarily reflects the generation of operating cash flows during fiscal 2027, aided by reduced levels of 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:
|
|
September 27, 2026 |
|
|
June 28, 2026 |
|
||
Cash and cash equivalents |
|
$ |
26,091 |
|
|
$ |
25,072 |
|
Receivables, net |
|
|
73,543 |
|
|
|
76,666 |
|
Inventories |
|
|
109,245 |
|
|
|
101,067 |
|
Income taxes receivable |
|
|
753 |
|
|
|
905 |
|
Other current assets |
|
|
9,052 |
|
|
|
7,743 |
|
Accounts payable |
|
|
(37,500 |
) |
|
|
(31,151 |
) |
Other current liabilities |
|
|
(15,169 |
) |
|
|
(17,249 |
) |
Income taxes payable |
|
|
(1,295 |
) |
|
|
(656 |
) |
Current operating lease liabilities |
|
|
(1,879 |
) |
|
|
(2,128 |
) |
Current portion of long-term debt |
|
|
(12,087 |
) |
|
|
(12,371 |
) |
Working capital |
|
$ |
150,754 |
|
|
$ |
147,898 |
|
|
|
|
|
|
|
|
||
Less: Cash and cash equivalents |
|
|
(26,091 |
) |
|
|
(25,072 |
) |
Less: Income taxes receivable |
|
|
(753 |
) |
|
|
(905 |
) |
Less: Income taxes payable |
|
|
1,295 |
|
|
|
656 |
|
Less: Current operating lease liabilities |
|
|
1,879 |
|
|
|
2,128 |
|
Less: Current portion of long-term debt |
|
|
12,087 |
|
|
|
12,371 |
|
Adjusted Working Capital |
|
$ |
139,171 |
|
|
$ |
137,076 |
|
Adjusted Working Capital increased $2,095 from June 28, 2026 to September 27, 2026.
The increase in Adjusted Working Capital was primarily attributable to the increases in (i) inventories due to higher units on hand and (ii) other current assets primarily due to higher vendor deposits, together with a decrease in other current liabilities due primarily to the payment of incentive compensation earned in fiscal 2026. These were partially offset by reductions in receivables, net due to lower sales and the timing of cash receipts and increases in accounts payable primarily due to higher inventory purchases.
23
Operating Cash Flows
The significant components of net cash provided (used) by operating activities are summarized below.
|
|
For the Three Months Ended |
|
|||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
||
Net loss |
|
$ |
(2,020 |
) |
|
$ |
(11,357 |
) |
Equity in earnings of unconsolidated affiliate |
|
|
(20 |
) |
|
|
(97 |
) |
Depreciation and amortization expense |
|
|
5,759 |
|
|
|
5,977 |
|
Non-cash compensation expense |
|
|
780 |
|
|
|
801 |
|
Loss on foreign currency transaction, net |
|
|
91 |
|
|
|
— |
|
Deferred income taxes |
|
|
29 |
|
|
|
(372 |
) |
Subtotal |
|
|
4,619 |
|
|
|
(5,048 |
) |
|
|
|
|
|
|
|
||
Receivables, net |
|
|
3,211 |
|
|
|
(900 |
) |
Inventories |
|
|
(8,250 |
) |
|
|
(678 |
) |
Accounts payable and other current liabilities |
|
|
4,516 |
|
|
|
(6,184 |
) |
Other changes |
|
|
(419 |
) |
|
|
3,890 |
|
Net cash provided (used) by operating activities |
|
$ |
3,677 |
|
|
$ |
(8,920 |
) |
The change in operating cash flows was primarily due to the improvement in gross profit and, to a lesser extent, changes in working capital balances during the current period compared to the prior period.
For the prior period, the increase in accounts receivable was largely driven by the timing of cash receipts. The decrease in accounts payable and other current liabilities was largely due to lower production activity, variable cost savings initiatives, and satisfaction of incentive compensation liabilities. The increase in inventories was not meaningful. Other changes comprise mostly jurisdictional tax liabilities.
Investing Cash Flows
Investing activities primarily include $1,198 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 and proceeds from the ABL Revolver.
Share Repurchase Program
As described in Note 7, “Shareholders’ Equity,” no share repurchases have been completed in fiscal 2027.
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.
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 2026 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 2026 Form 10-K. There have been no changes to UNIFI’s critical accounting policies in fiscal 2027.
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 September 27, 2026, UNIFI had borrowings under the 2022 ABL Term Facility and 2024 Facility that totaled $83,100. UNIFI’s sensitivity analysis indicates that a 50-basis point interest rate increase as of September 27, 2026 would result in an increase in annual interest expense of approximately $400.
24
Foreign Currency Exchange Rate Risk
A complete discussion of foreign currency exchange rate risk is included in the 2026 Form 10-K and is supplemented by the following disclosures.
As of September 27, 2026, UNIFI had no outstanding foreign currency forward contracts. As of September 27, 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 |
|
|
34.8 |
% |
|
|
|
|
|
Cash and cash equivalents held outside the U.S.: |
|
|
|
|
Denominated in USD |
|
$ |
13,731 |
|
Denominated in RMB |
|
|
552 |
|
Denominated in BRL |
|
|
10,205 |
|
Denominated in other foreign currencies |
|
|
550 |
|
Total cash and cash equivalents held outside the U.S. |
|
$ |
25,038 |
|
Percentage of total cash and cash equivalents held outside the U.S. |
|
|
96.0 |
% |
|
|
|
|
|
Cash and cash equivalents held inside the U.S. in USD by foreign subsidiaries |
|
$ |
1,016 |
|
Raw Material and Commodity Cost Risks
A complete discussion of raw material and commodity cost risks is included in the 2026 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 September 27, 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 September 27, 2026 that have materially affected, or are reasonably likely to materially affect, UNIFI’s internal control over financial reporting.
25
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 2026 Form 10-K.
Item 5. Other Information
Insider Trading Arrangements
During the quarter ended September 27, 2026, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act)
26
Item 6. Exhibits
Exhibit No. |
|
Description |
|
|
|
3.1 |
|
|
|
|
|
3.2 |
|
|
|
|
|
3.3 |
|
|
|
|
|
4.1+ |
|
|
|
|
|
10.1† |
|
|
|
|
|
31.1+ |
|
|
|
|
|
31.2+ |
|
|
|
|
|
32++ |
|
|
|
|
|
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.
† Certain portions of this exhibit have been redacted in accordance with Item 601(b)(10) of Regulation S-K.
27
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: November 4, 2026 |
|
By: |
/s/ ANDREW J. EAKER |
|
|
|
Andrew J. Eaker |
|
|
|
Executive Vice President & Chief Financial Officer Treasurer |
|
|
|
(Principal Financial Officer and Principal Accounting Officer) |
28
Exhibit 4.1
FOURTH AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”), dated as of October 28, 2026, and effective as of the Fourth Amendment Effective Date, is by and among UNIFI MANUFACTURING, INC., a North Carolina corporation (“Unifi Manufacturing”), UNIFI, INC., a New York corporation (“Parent”; Unifi Manufacturing and Parent, each, a “Borrower” and, collectively, the “Borrowers”), UNIFI SALES & DISTRIBUTION, INC., a North Carolina corporation (“Guarantor”) (the Borrowers and Guarantor, each, a “Loan Party” and, collectively, the “Loan Parties”), the Lenders (as such term is defined below) party hereto, and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, “Agent”).
W I T N E S S E T H:
WHEREAS, reference is made to that certain Second Amended and Restated Credit Agreement dated as of October 28, 2022, by and among the Borrowers, the lenders from time to time party thereto (each, a “Lender” and, collectively, the “Lenders”), the Persons party thereto, and the Agent (as amended by that certain First Amendment to Second Amended and Restated Credit Agreement dated as of September 5, 2024, that certain Second Amendment to Second Amended and Restated Credit Agreement dated as of April 10, 2025, that certain Third Amendment to Second Amended and Restated Credit Agreement dated as of May 19, 2025, and as the same may have been further amended, restated, supplemented, or otherwise modified from time to time before the date hereof, the “Credit Agreement”); and
WHEREAS, the Borrowers have requested that the Agent and the Lenders agree to certain amendments to the Credit Agreement as set forth in this Agreement, and the Agent and the Lenders party hereto have agreed to such amendments to the Credit Agreement, subject to the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and of the Loans and other extensions of credit heretofore, now or hereafter made to, or for the benefit of, the Borrowers by the Lenders, the Borrowers, the Agent, and the Lenders party hereto agree as follows:
2
3
4
5
6
7
[Continued on following page.]
8
IN WITNESS WHEREOF, each of the parties hereto has caused its duly authorized officers to execute and deliver a counterpart of this Agreement as of the date first above written.
BORROWERS: |
UNIFI MANUFACTURING, INC. |
|
|
|
|
|
|
|
By: /s/ ANDREW J. EAKER |
|
|
|
Name: Andrew J. Eaker |
|
|
|
Title: Executive Vice President & Chief Financial Officer |
|
|
|
|
|
|
|
UNIFI, INC. |
|
|
|
|
|
|
|
By: /s/ ANDREW J. EAKER |
|
|
|
Name: Andrew J. Eaker |
|
|
|
Title: Executive Vice President & Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
GUARANTOR: |
UNIFI SALES & DISTRIBUTION, INC. |
|
|
|
|
|
|
|
By: /s/ ANDREW J. EAKER |
|
|
|
Name: Andrew J. Eaker |
|
|
|
Title: Executive Vice President & Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
[UNIFI—FOURTH AMENDMENT TO SECOND A&R CREDIT AGREEMENT]
AGENT & LENDERS: |
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent and as a Lender |
|
|
|
|
|
|
|
|
|
|
|
By: /s/ Susan C. Carr |
|
|
|
Name: Susan C. Carr |
|
|
|
Title: Authorized Signatory |
|
|
|
|
|
|
|
|
|
|
[UNIFI—FOURTH AMENDMENT TO SECOND A&R CREDIT AGREEMENT]
|
|
|
|
|
|
|
|
|
BANK OF AMERICA, as a Lender |
|
|
|
|
|
|
|
|
|
|
|
By: /s/ TOM BUDA |
|
|
|
Name: Tom Buda |
|
|
|
Title: SVP |
|
|
|
|
|
|
|
|
|
|
[UNIFI—FOURTH AMENDMENT TO SECOND A&R CREDIT AGREEMENT]
|
|
|
|
|
|
|
|
|
FIRST NATIONAL BANK, as a Lender |
|
|
|
|
|
|
|
|
|
|
|
By: /s/ WILLIAM GIDDES |
|
|
|
Name: William Giddes |
|
|
|
Title: Vice President |
|
|
|
|
|
|
|
|
|
|
[UNIFI—FOURTH AMENDMENT TO SECOND A&R CREDIT AGREEMENT]
EXHIBIT A
FUNDS FLOW
[See attached.]
Exhibit 31.1
CERTIFICATION
I, Edmund M. Ingle, certify that:
Date: |
November 4, 2026 |
|
|
/s/ EDMUND M. INGLE |
|
|
|
|
Edmund M. Ingle |
|
|
|
|
Chief Executive Officer |
|
|
|
|
(Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION
I, Andrew J. Eaker, certify that:
Date: |
November 4, 2026 |
|
/s/ ANDREW J. EAKER |
|
|
|
Andrew J. Eaker |
|
|
|
Executive Vice President & Chief Financial Officer |
|
|
|
Treasurer |
|
|
|
(Principal Financial Officer and Principal Accounting Officer) |
Exhibit 32
CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Chief Executive Officer and Chief Financial Officer of Unifi, Inc. (the “Company”), do hereby certify that:
Date: |
November 4, 2026 |
|
|
/s/ EDMUND M. INGLE |
|
|
|
|
Edmund M. Ingle |
|
|
|
|
Chief Executive Officer |
|
|
|
|
(Principal Executive Officer) |
|
|
|
|
/s/ ANDREW J. EAKER |
|
|
|
|
Andrew J. Eaker |
|
|
|
|
Executive Vice President & Chief Financial Officer |
|
|
|
|
Treasurer |
|
|
|
|
(Principal Financial Officer and Principal Accounting Officer) |