Part I [Business Overview](index=5&type=section&id=Item%201.%20Business) UNIFI, Inc. manufactures recycled and synthetic polyester and nylon products globally, navigating 2025 fiscal year demand headwinds and operational adjustments in Americas and Asia, with strong performance in Brazil - UNIFI is a multinational company manufacturing and selling recycled and synthetic polyester and nylon products, primarily for the textile industry, serving end markets such as apparel, home, automotive, industrial, and medical[21](index=21&type=chunk) - The company operates three reporting segments: Americas, Brazil, and Asia, with direct manufacturing operations in four countries and a joint venture in the United States[22](index=22&type=chunk)[23](index=23&type=chunk)[26](index=26&type=chunk) - UNIFI is committed to strategic growth by accelerating innovation, high-quality manufacturing, expanding the REPREVE® brand, increasing market share in key textile regions, and penetrating new markets beyond apparel[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) - In fiscal year 2025, the Americas segment faced customer demand headwinds, pricing pressure, and lower-than-expected manufacturing utilization, leading to the closure and sale of the Madison, North Carolina plant to consolidate yarn manufacturing operations[27](index=27&type=chunk) - The Brazil segment performed well in fiscal year 2025, with stable demand and increased market share, despite import pricing pressure and unfavorable exchange rate impacts[28](index=28&type=chunk) - The Asia segment's performance declined in fiscal year 2025, primarily due to weak demand and changes in the REPREVE product sales mix, especially in apparel, and was adversely affected by tariff fluctuations[29](index=29&type=chunk) REPREVE® Fiber Sales as a Percentage of Consolidated Net Sales | Fiscal Year | REPREVE® Fiber Sales ($ Thousands) | % of Consolidated Net Sales | | :--- | :--- | :--- | | 2025 | 174,855 | 31% | | 2024 | 188,517 | 32% | | 2023 | 186,161 | 30% | Research and Development Expenses | Fiscal Year | R&D Expenses ($ Thousands) | | :--- | :--- | | 2025 | 8,750 | | 2024 | 9,599 | | 2023 | 10,871 | Consolidated Net Sales by Major End Market for Fiscal Year 2025 | End Market | % of Consolidated Net Sales | | :--- | :--- | | Apparel (including Hosiery and Footwear) | 58% | | Industrial (including Medical, Belting, Tapes, Filtration, Ropes, Protective Fabrics, Awnings) | 12% | | Home Furnishings (including Contract and Residential) | 12% | | Automotive | 6% | | All Other Markets | 12% | [Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces intense competition, reliance on key customers, volatile raw material and energy costs, brand reputation risks, and international operational challenges - The company faces intense competition from domestic and international yarn producers and foreign textile imports, often without long-term contracts, allowing customers to switch suppliers rapidly[95](index=95&type=chunk)[96](index=96&type=chunk) - A significant portion of the company's sales depends on demand from a few large brand partners, and losing these partners or failing to attract new customers would materially adversely affect the business[98](index=98&type=chunk) - Petroleum-based chemicals and recycled plastic bottles are primary raw materials, with prices and related energy costs subject to significant volatility, potentially increasing production costs with a time lag that could impact profits[99](index=99&type=chunk) - The company's future success partly depends on its ability to protect and maintain its trademarks and other intellectual property, and failure to effectively enforce these rights could lead to lost sales or reduced competitive advantage[102](index=102&type=chunk) - International operations in Brazil, China, Colombia, El Salvador, India, and Turkey face risks including political, tax, and economic uncertainties, trade barriers, currency fluctuations, and foreign exchange controls[103](index=103&type=chunk)[104](index=104&type=chunk) - Global economic conditions, consumer spending levels, fashion trends, changes in trade policies and tariffs, and the ability to attract and retain qualified employees can all adversely affect the company's business and financial results[113](index=113&type=chunk)[115](index=115&type=chunk)[117](index=117&type=chunk)[119](index=119&type=chunk) [Unresolved Staff Comments](index=19&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments in this report - There are no unresolved staff comments in this report[124](index=124&type=chunk) [Cybersecurity](index=19&type=section&id=Item%201C.%20Cybersecurity) The company maintains an enterprise cybersecurity program to detect, identify, classify, and mitigate threats, prioritizing high-risk issues to ensure system resilience - The company has established an enterprise cybersecurity program designed to detect, identify, classify, and mitigate cybersecurity and other data security threats, prioritizing mitigation efforts based on risk levels[125](index=125&type=chunk) - The cybersecurity program includes vulnerability management, access management, and user awareness training, with regular system updates, vulnerability scans, phishing tests, and security awareness training[126](index=126&type=chunk) - The company has experienced cybersecurity attacks, none of which had a material impact on operations, business, or financial condition, and maintains cyber liability insurance for potential losses[111](index=111&type=chunk)[127](index=127&type=chunk) - Daily management of cybersecurity risks is handled by the information technology security team, overseen by the Chief Information Officer (CIO) who reports to the Chief Executive Officer; the Audit Committee oversees risk assessment and management, including cybersecurity risks[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) [Properties](index=20&type=section&id=Item%202.%20Properties) As of June 29, 2025, UNIFI owns or leases various properties, including its headquarters and manufacturing, warehousing, and sales facilities across its Americas, Brazil, and Asia segments - As of June 29, 2025, UNIFI owns or leases several key properties, including its corporate headquarters and manufacturing, warehousing, and sales facilities for its Americas, Brazil, and Asia segments[132](index=132&type=chunk) - In fiscal year 2025, the company sold a warehouse in Yadkinville, North Carolina, and a manufacturing plant in Madison, North Carolina[132](index=132&type=chunk) - Management believes all operating properties are well-maintained, in good condition, and anticipate sufficient future capacity without bottlenecks[132](index=132&type=chunk) [Legal Proceedings](index=20&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings arising in the ordinary course of business, for which provisions are made when liabilities are probable and estimable - The company is occasionally involved in various lawsuits, claims, and other legal proceedings arising in the ordinary course of business[134](index=134&type=chunk) - The company accrues provisions when a liability is probable and the amount can be reasonably estimated[134](index=134&type=chunk) - Management believes that any such proceedings, individually or in aggregate, are not expected to have a material adverse effect on the company's operating results, financial condition, or cash flows[134](index=134&type=chunk) [Mine Safety Disclosures](index=20&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable - This item is not applicable[135](index=135&type=chunk) [Information About our Executive Officers](index=21&type=section&id=Information%20About%20our%20Executive%20Officers) This section details UNIFI's senior management, including CEO Edmund M. Ingle, Executive Chairman Albert P. Carey, and other executive vice presidents - Edmund M. Ingle has served as UNIFI's Chief Executive Officer and a board member since June 2020, with prior leadership roles at Indorama Ventures and UNIFI[137](index=137&type=chunk) - Albert P. Carey has been Executive Chairman since April 2019, following a 38-year career at PepsiCo, Inc. in various senior leadership positions[138](index=138&type=chunk) - Andrew J. Eaker has served as Executive Vice President and Chief Financial Officer since January 2024, Treasurer since December 2022, and held various financial leadership roles since joining UNIFI in 2014[139](index=139&type=chunk) - Hongjun Ning has served as Executive Vice President since July 2020 and President of Unifi Asia Pacific since June 2017[140](index=140&type=chunk) - Brian D. Moore has served as Executive Vice President and President of Unifi Manufacturing, Inc. since January 2024, with prior leadership roles at UNIFI, Scovill Fasteners Ltd., and Prym Fashion[141](index=141&type=chunk) - Meredith S. Boyd has served as Executive Vice President and Chief Product Officer since January 2024, previously holding roles such as Senior Vice President of Sustainability, Technology & Innovation at UNIFI[142](index=142&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) UNIFI's common stock trades on the NYSE under "UFI", with no dividends paid in the last two fiscal years, and a board-approved stock repurchase program with **$38,859 thousand** remaining for buybacks - UNIFI's common stock is listed on the New York Stock Exchange (NYSE) under the trading symbol “UFI”[3](index=3&type=chunk) - As of August 21, 2025, the company had **110** record holders and an estimated **4,550** beneficial owners of its common stock[145](index=145&type=chunk) - No dividends were paid in the past two fiscal years, and the company does not intend to pay cash dividends in the foreseeable future due to restrictions in existing debt obligations regarding dividend payments and stock repurchases[146](index=146&type=chunk) - The company's Board of Directors approved a stock repurchase program (2018 SRP) on October 31, 2018, authorizing the repurchase of up to **$50,000 thousand** of common stock[40](index=40&type=chunk)[147](index=147&type=chunk) 2018 SRP Stock Repurchase Program Overview (as of June 29, 2025) | Metric | Amount/Quantity | | :--- | :--- | | Total Shares Repurchased | 701 shares | | Average Repurchase Price | $15.90/share | | Fiscal Year 2025 Repurchases | 0 shares | | Remaining Amount Available for Repurchase | $38,859 Thousand | - The company will continue to evaluate opportunities to repurchase stock using operating cash flow or existing borrowings, while maintaining sufficient liquidity for operations and future strategic growth[41](index=41&type=chunk)[148](index=148&type=chunk) [Reserved](index=23&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no content [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses UNIFI's financial condition and operating results for fiscal years 2025, 2024, and 2023, highlighting strategic focus on innovation and sustainability, macroeconomic challenges, and liquidity enhancements - UNIFI's strategic focus is on providing differentiated solutions to global customers and brand partners through innovation and sustainability, having expanded its supply chain across multiple regions worldwide[158](index=158&type=chunk)[159](index=159&type=chunk) - In fiscal year 2025, the company faced demand volatility due to inflationary pressures and global trade policy uncertainties, particularly in the Americas and Asia segments[161](index=161&type=chunk) - The company responded to challenges through cost-saving measures, including integrating Americas yarn manufacturing operations and closing and selling the Madison plant[161](index=161&type=chunk) - Raw material costs and foreign currency exchange rate fluctuations continue to impact company performance, with efforts to mitigate effects through sales price adjustments, subject to time lags[162](index=162&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) - The company secured a new **$25,000 thousand** revolving credit facility (2024 Facility) in October 2024 and used asset sale proceeds to repay some debt, enhancing liquidity[231](index=231&type=chunk)[239](index=239&type=chunk)[241](index=241&type=chunk) [Strategic Priorities](index=24&type=section&id=7.1.%20Strategic%20Priorities) UNIFI aims for strategic growth by investing in innovation, expanding the REPREVE® brand, increasing market share, and penetrating new markets beyond apparel - UNIFI is committed to strategically investing in accelerating innovation and high-quality manufacturing processes, expanding the REPREVE® brand, increasing market share in key textile regions, and penetrating new markets beyond apparel[24](index=24&type=chunk)[26](index=26&type=chunk) - The company has developed and enhanced supply chains across multiple global regions, offering diversified fiber and polymer products, especially in the apparel market[24](index=24&type=chunk)[158](index=158&type=chunk) - UNIFI has built a successful operating platform by improving operational and business processes and deriving value from sustainability initiatives, including polyester and nylon recycling[24](index=24&type=chunk)[158](index=158&type=chunk) - The company focuses on innovation to bring next-generation fibers and polymers to market, believing that combining leading innovation, high-quality brands, and flexible regional business models will drive sales and profitability growth[25](index=25&type=chunk)[159](index=159&type=chunk) [Significant Developments and Trends](index=24&type=section&id=7.2.%20Significant%20Developments%20and%20Trends) UNIFI has navigated varied market conditions, from COVID-19 impacts and global recovery to recent demand weakness, inventory destocking, and strategic operational adjustments - In fiscal year 2020, the COVID-19 pandemic significantly and adversely impacted product demand and annual profitability, but the company substantially improved liquidity by divesting a minority equity investment[161](index=161&type=chunk) - In fiscal year 2021, the company's business gradually improved with global demand and economic recovery, capitalizing on profitable opportunities to drive strong consolidated results[161](index=161&type=chunk) - Fiscal years 2023 and 2024 saw continued weak global textile demand, with brands and retailers destocking inventory, leading to reduced order volumes in the Americas and Asia segments[161](index=161&type=chunk) - In fiscal year 2025, inflationary pressures and global trade policy uncertainties resulted in demand volatility and customer demand headwinds, particularly in the Americas and Asia segments[161](index=161&type=chunk) - The REPREVE product line continues to gain traction with brands, retailers, and mill partners, driving expansion of the product portfolio[167](index=167&type=chunk) - Lower-than-expected manufacturing utilization and production levels in the Americas segment led the company to initiate plans to transfer Madison plant manufacturing operations to other North and Central American production facilities[167](index=167&type=chunk) - The Brazil segment faced pricing pressure from lower-cost imported products in fiscal year 2025, yet maintained strong sales volumes and margins[167](index=167&type=chunk) Weighted Average Exchange Rates for Brazilian Real (BRL) and Chinese Yuan (RMB) to US Dollar (USD) | Fiscal Year | BRL to USD | RMB to USD | | :--- | :--- | :--- | | 2025 | 5.71 | 7.21 | | 2024 | 5.01 | 7.22 | | 2023 | 5.17 | 6.94 | [Key Performance Indicators and Non-GAAP Financial Measures](index=26&type=section&id=7.3.%20Key%20Performance%20Indicators%20and%20Non-GAAP%20Financial%20Measures) UNIFI utilizes various KPIs and non-GAAP financial measures, including sales volume, gross profit, net income, segment profit, EBITDA, and net debt, to assess operational performance and financial health - UNIFI uses key performance indicators such as sales volume and revenue, gross profit (loss) and gross margin, net (loss) income and earnings (loss) per share (EPS) to measure its success[174](index=174&type=chunk) - Non-GAAP financial measures include EBITDA, Adjusted EBITDA, Adjusted Net (Loss) Income, Adjusted EPS, Adjusted Working Capital, and Net Debt[174](index=174&type=chunk) - Management believes these non-GAAP measures better reflect UNIFI's underlying operations and performance, providing a view of operating results unaffected by differences in capital structure, capital investment cycles, and asset age[169](index=169&type=chunk) - Adjusted EBITDA is used to measure operating performance, for planning, evaluating operational performance and debt service capacity, and as a key metric for determining variable compensation[170](index=170&type=chunk) - Adjusted Net (Loss) Income and Adjusted EPS are used to measure net operating performance, excluding non-recurring items and tax impacts[171](index=171&type=chunk) - Adjusted Working Capital indicates production efficiency and inventory/receivables management, while Net Debt measures liquidity and leverage[172](index=172&type=chunk) [Review of Results of Operations for Fiscal 2025, 2024 and 2023](index=27&type=section&id=7.4.%20Review%20of%20Results%20of%20Operations%20for%20Fiscal%202025%2C%202024%20and%202023) UNIFI's consolidated operating results for fiscal year 2025 show a slight net sales decrease but a significantly narrowed net loss due to asset sale gains, offset by lower gross profit and higher restructuring costs Consolidated Operating Results Overview ($ Thousands) | Metric | Fiscal Year 2025 | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | :--- | | Net Sales | 571,344 | 582,209 | 623,527 | | Cost of Sales | 562,926 | 565,593 | 609,286 | | Gross Profit | 8,418 | 16,616 | 14,241 | | Selling, General & Administrative Expenses (SG&A) | 49,005 | 46,632 | 47,345 | | Operating Loss | (9,520) | (37,421) | (40,871) | | Net Loss | (20,348) | (47,395) | (46,344) | EBITDA and Adjusted EBITDA ($ Thousands) | Metric | Fiscal Year 2025 | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | :--- | | Net Loss | (20,348) | (47,395) | (46,344) | | EBITDA | 15,067 | (10,298) | (12,955) | | Adjusted EBITDA | (11,551) | (5,197) | (4,085) | Adjusted Net Loss and Adjusted EPS | Metric | Fiscal Year 2025 | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | :--- | | GAAP Net Loss ($ Thousands) | (20,348) | (47,395) | (46,344) | | Adjusted Net Loss ($ Thousands) | (47,859) | (42,294) | (41,273) | | GAAP Diluted EPS | (1.11) | (2.61) | (2.57) | | Adjusted EPS | (2.61) | (2.33) | (2.29) | - Fiscal year 2025 net sales decreased by **1.9%** year-over-year, primarily due to lower sales in the Asia segment, partially offset by improved sales volume and pricing in the Brazil segment, which was then offset by unfavorable exchange rate impacts[189](index=189&type=chunk) - Gross profit for fiscal year 2025 decreased to **$8,418 thousand** from **$16,616 thousand** in fiscal year 2024, mainly due to a decline in overall conversion margins and lower utilization and productivity from the integration of Americas yarn manufacturing operations[195](index=195&type=chunk) - SG&A expenses increased in fiscal year 2025, primarily due to higher compensation-related expenses and professional service fees, partially offset by reduced depreciation and amortization expenses[199](index=199&type=chunk) - Net loss for fiscal year 2025 was **$20,348 thousand** (diluted loss per share of **$1.11**), an improvement from **$47,395 thousand** (diluted loss per share of **$2.61**) in fiscal year 2024, primarily driven by gains on asset sales, partially offset by lower gross profit and increased restructuring costs[213](index=213&type=chunk) - Adjusted EBITDA for fiscal year 2025 decreased to **($11,551) thousand** from **($5,197) thousand** in fiscal year 2024, mainly due to lower gross profit and higher SG&A expenses, partially offset by an improvement in bad debt expense[215](index=215&type=chunk) [Segment Overview](index=32&type=section&id=7.5.%20Segment%20Overview) UNIFI's Americas segment saw profit decline due to integration costs, while Brazil achieved sales and profit growth, and Asia experienced reduced sales and profit from demand weakness and tariffs Net Sales by Segment ($ Thousands) | Segment | Fiscal Year 2025 | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | :--- | | Americas | 347,931 | 344,256 | 389,662 | | Brazil | 118,726 | 117,783 | 119,062 | | Asia | 104,687 | 120,170 | 114,803 | | **Total** | **571,344** | **582,209** | **623,527** | Segment Profit ($ Thousands) | Segment | Fiscal Year 2025 | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | :--- | | Americas | 786 | 4,524 | 7,385 | | Brazil | 18,798 | 18,012 | 14,197 | | Asia | 12,665 | 19,501 | 16,738 | | **Total** | **32,249** | **42,037** | **38,320** | - The Americas segment's net sales increased by **1.1%** year-over-year in fiscal year 2025, primarily due to higher sales volume, partially offset by a lower-priced sales mix[218](index=218&type=chunk) - The Americas segment's profit decreased by **82.6%** in fiscal year 2025, mainly due to lower-than-expected manufacturing utilization, inconsistent productivity, and transition costs related to yarn manufacturing operations integration[220](index=220&type=chunk) - The Brazil segment's net sales increased by **0.8%** year-over-year in fiscal year 2025, primarily due to higher average selling prices from increased raw material costs and higher sales volume from increased market share, partially offset by unfavorable exchange rate impacts from a weaker Brazilian Real against the U.S. Dollar[222](index=222&type=chunk) - The Brazil segment's profit increased by **4.4%** year-over-year in fiscal year 2025, primarily due to higher conversion margins and increased sales volume, but was impacted by unfavorable exchange rates[224](index=224&type=chunk) - The Asia segment's net sales decreased by **12.9%** year-over-year in fiscal year 2025, primarily due to changes in the REPREVE product sales mix and an overall decrease in sales volume (affected by customer demand headwinds and tariff fluctuations), partially offset by favorable exchange rate impacts from a stronger Chinese Yuan against the U.S. Dollar[226](index=226&type=chunk) - The Asia segment's profit decreased by **35.1%** in fiscal year 2025, primarily due to lower gross margins from changes in the REPREVE product sales mix and reduced sales volume from customer demand headwinds and tariff fluctuations[228](index=228&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=7.6.%20Liquidity%20and%20Capital%20Resources) UNIFI's liquidity is supported by operating cash flow and credit facilities, with a new **$25,000 thousand** revolving credit line secured in 2024 and debt reduction from asset sales - UNIFI's primary capital needs are for working capital, capital expenditures, and debt service, with main capital sources being operating cash flow and borrowings under the 2022 ABL Revolving Credit Facility and the 2024 Facility[230](index=230&type=chunk) - On October 25, 2024, UNIFI entered into a new **$25,000 thousand** revolving credit facility (2024 Facility), secured by related party collateral, and borrowed **$22,000 thousand** in fiscal year 2025 to reduce existing ABL revolving credit balances[231](index=231&type=chunk)[251](index=251&type=chunk) Liquidity, Working Capital, and Total Debt Overview (as of June 29, 2025, $ Thousands) | Metric | Domestic | Foreign | Total | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 21 | 22,643 | 22,664 | | Available Borrowing Capacity | 47,087 | — | 47,087 | | Available Liquidity | 30,608 | 22,643 | 53,251 | | Working Capital | 53,224 | 111,460 | 164,684 | | Total Debt Obligations | 108,008 | — | 108,008 | - In fiscal year 2025, cash flow from operating activities was an outflow of **$21,311 thousand**, cash flow from investing activities was an inflow of **$41,065 thousand**, and cash flow from financing activities was an outflow of **$24,421 thousand**[269](index=269&type=chunk)[272](index=272&type=chunk) Debt Obligations Details (as of June 29, 2025, $ Thousands) | Debt Type | Weighted Average Interest Rate | Principal Amount as of June 29, 2025 | | :--- | :--- | :--- | | ABL Revolving Credit | 6.6% | 11,000 | | 2024 Facility | 5.2% | 22,000 | | ABL Term Loan | 6.4% | 67,000 | | Finance Lease Obligations | 5.1% | 8,008 | | **Total Debt** | | **108,008** | Net Debt ($ Thousands) | Metric | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Principal Amount of Debt | 108,008 | 130,299 | | Less: Cash and Cash Equivalents | 22,664 | 26,805 | | **Net Debt** | **85,344** | **103,494** | - In fiscal year 2025, UNIFI invested **$10,488 thousand** in capital projects, primarily for machinery modifications related to yarn manufacturing operations integration, Americas production capacity and technology enhancements, and routine maintenance[261](index=261&type=chunk) - The company anticipates investing between **$8,000 thousand** and **$12,000 thousand** in capital projects for fiscal year 2026, primarily for routine annual maintenance capital expenditures[263](index=263&type=chunk) [Contractual Obligations](index=40&type=section&id=7.7.%20Contractual%20Obligations) UNIFI's contractual obligations include legally binding purchase and service agreements, with non-capital purchase orders totaling approximately **$13,218 thousand** expected to settle in fiscal year 2026 - Purchase obligations are enforceable and legally binding agreements covering fixed or minimum purchase volumes, price terms, and transaction timing, primarily related to ordinary operations and service contracts, ranging from approximately **$1,000 thousand** to **$10,000 thousand** annually[279](index=279&type=chunk) - As of the end of fiscal year 2025, non-capital purchase orders totaled approximately **$13,218 thousand**, expected to settle in fiscal year 2026, primarily for raw material purchases, manufacturing consumables, outsourced services, and third-party finished goods purchases[279](index=279&type=chunk) - The company does not engage in off-balance sheet arrangements and only enters into significant contracts or hedges risks in the ordinary course of business[275](index=275&type=chunk) [Recent Accounting Pronouncements](index=40&type=section&id=7.8.%20Recent%20Accounting%20Pronouncements) UNIFI is evaluating the impact of recent FASB accounting standards, including ASU 2024-03 on income statement expense disaggregation and ASU 2023-09 on income tax disclosures, while having adopted ASU 2023-07 - In November 2024, the FASB issued ASU 2024-03, requiring disaggregation of income statement expense categories, including inventory purchases, employee compensation, depreciation, amortization, and selling expenses, effective for fiscal year 2028[276](index=276&type=chunk)[406](index=406&type=chunk) - In December 2023, the FASB issued ASU 2023-09, improving income tax disclosure requirements, including specific categories in the rate reconciliation table, pre-tax income (loss) disaggregated by domestic and foreign, and income tax expense or benefit disaggregated by federal, state, and foreign, effective for fiscal year 2026[277](index=277&type=chunk)[407](index=407&type=chunk) - UNIFI adopted ASU 2023-07 in the current fiscal year, which expanded reportable segment disclosures but did not have a material impact on the consolidated financial statements[280](index=280&type=chunk)[409](index=409&type=chunk) [Off-Balance Sheet Arrangements](index=41&type=section&id=7.9.%20Off-Balance%20Sheet%20Arrangements) UNIFI has not entered into any off-balance sheet arrangements that have or are reasonably likely to have a material effect on its financial condition, results of operations, liquidity, or capital expenditures - UNIFI has not entered into any off-balance sheet arrangements that have or are reasonably likely to have a material effect on its financial condition, results of operations, liquidity, or capital expenditures[281](index=281&type=chunk) [Critical Accounting Policies](index=41&type=section&id=7.10.%20Critical%20Accounting%20Policies) UNIFI's critical accounting policies include inventory net realizable value adjustments, based on historical recovery rates, inventory aging, expected net realizable value of specific products, and current economic conditions - Inventory net realizable value adjustment is one of UNIFI's critical accounting policies, established based on various factors including historical recovery rates, inventory aging, expected net realizable value of specific products, and current economic conditions[283](index=283&type=chunk) - The company establishes specific reserves based on judgments regarding inventory obsolescence and whether inventory costs exceed net realizable value, using current and historical knowledge to reasonably estimate markdown percentages and expected selling prices[283](index=283&type=chunk) - Management believes that differences between actual demand or selling prices and forecasts are not likely to have a material impact on the company's financial condition or results of operations[283](index=283&type=chunk) Inventory Net Realizable Value Adjustment ($ Thousands) | Fiscal Year | Adjustment Amount | | :--- | :--- | | June 29, 2025 | (3,964) | | June 30, 2024 | (3,813) | | July 2, 2023 | (5,625) | [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) UNIFI faces market risks from interest rate changes, foreign currency fluctuations, and raw material costs, but does not use derivative financial instruments for trading purposes - UNIFI faces market risks related to changes in interest rates, foreign currency exchange rate fluctuations, and raw material and commodity costs, but does not engage in derivative financial instruments for trading purposes[285](index=285&type=chunk)[287](index=287&type=chunk)[290](index=290&type=chunk) - As of June 29, 2025, the company had **$100,000 thousand** in variable-rate debt, and a sensitivity analysis indicates that a **50 basis point** increase in interest rates would increase annual interest expense by approximately **$500 thousand**[286](index=286&type=chunk) - Foreign currency exchange rate risk primarily stems from fluctuations in the Brazilian Real (BRL) and Chinese Yuan (RMB), and the company does not use derivative instruments to hedge its net investments in foreign operations[288](index=288&type=chunk) Foreign Currency Exchange Rate Risk Overview (as of June 29, 2025) | Metric | Amount/Percentage | | :--- | :--- | | % of Total Assets from Non-USD Functional Currency Subsidiaries Outside the U.S. | 32% | | Total Cash and Cash Equivalents Outside the U.S. | $20,534 Thousand | | Of which: USD Denominated | $11,813 Thousand | | Of which: RMB Denominated | $665 Thousand | | Of which: BRL Denominated | $7,360 Thousand | | Of which: Other Foreign Currency Denominated | $696 Thousand | | % of Total Cash and Cash Equivalents Outside the U.S. | 91% | - Raw material and energy costs, primarily from petroleum-based chemicals, are highly volatile, and the company manages this through sales price adjustments, though with a time lag[290](index=290&type=chunk) - The company faces risks related to cash deposits and financial institutions, but management believes its cash deposits are primarily held in large foreign banks, with the ability to repatriate cash to the U.S[292](index=292&type=chunk) [Financial Statements and Supplementary Data](index=43&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The company's consolidated financial statements and related notes begin on page F-i of this report - The company's consolidated financial statements and related notes begin on page F-i of this report[294](index=294&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=43&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There are no changes in or disagreements with accountants on accounting and financial disclosure in this report - There are no changes in or disagreements with accountants on accounting and financial disclosure in this report[295](index=295&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of June 29, 2025, UNIFI management concluded that its disclosure controls and procedures and internal control over financial reporting are effective, with KPMG LLP issuing an unqualified opinion - As of June 29, 2025, UNIFI management, including the Chief Executive Officer and Chief Financial Officer, assessed and concluded that the company's disclosure controls and procedures are effective[296](index=296&type=chunk) - Management is responsible for establishing and maintaining adequate internal control over financial reporting and assessed its effectiveness, concluding that as of June 29, 2025, internal control over financial reporting was effective, meeting COSO framework criteria[297](index=297&type=chunk)[299](index=299&type=chunk) - KPMG LLP, an independent registered public accounting firm, issued an unqualified opinion on the effectiveness of UNIFI's internal control over financial reporting as of June 29, 2025[300](index=300&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended June 29, 2025[301](index=301&type=chunk) [Other Information](index=43&type=section&id=Item%209B.%20Other%20Information) No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by company directors or officers during the quarter ended June 29, 2025 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by company directors or officers during the quarter ended June 29, 2025[302](index=302&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=43&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable - This item is not applicable[303](index=303&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=44&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is provided by reference to the company's 2025 Annual Meeting of Shareholders proxy statement, including adopted codes of ethics and insider trading policies - Information about the company's executive officers is disclosed under the "Information About our Executive Officers" heading in Part I of this report[305](index=305&type=chunk) - The company has adopted a Code of Ethics for Senior Financial and Executive Officers, applicable to the CEO, CFO, Chief Accounting Officer, and those performing similar functions, available on the company's website[306](index=306&type=chunk) - The company has adopted an Insider Trading Policy designed to promote compliance with insider trading laws, regulations, and listing standards[308](index=308&type=chunk) - The company's non-employee directors include Emma S. Battle, Francis S. Blake, Albert P. Carey, Kenneth G. Langone, Suzanne M. Present, Rhonda L. Ramlo, and Eva T. Zlotnicka[307](index=307&type=chunk) [Executive Compensation](index=44&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's proxy statement under various related headings - Executive compensation information is provided by reference to relevant headings in the company's proxy statement[309](index=309&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=44&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of certain beneficial owners and management and related stockholder matters is incorporated by reference from the company's proxy statement - Security ownership information is provided by reference to relevant headings in the company's proxy statement[310](index=310&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=44&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the company's proxy statement under various corporate governance headings - Related transactions and director independence information is provided by reference to relevant headings in the company's proxy statement[311](index=311&type=chunk) [Principal Accountant Fees and Services](index=44&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's proxy statement under the "Approval of Appointment of Independent Registered Public Accounting Firm" heading - Principal accountant fees and services information is provided by reference to relevant headings in the company's proxy statement[312](index=312&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=45&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists UNIFI's financial statements, schedules, and various exhibits, including corporate charters, credit agreements, incentive plans, and other governance documents - Financial statements are filed as part of this report, and schedules are not applicable[315](index=315&type=chunk)[317](index=317&type=chunk) - The exhibit list includes corporate charters, credit agreements, incentive plans, employment agreements, sales and service agreements, and other corporate governance documents[318](index=318&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk)[321](index=321&type=chunk) - Some exhibits are incorporated by reference, such as the Second Amended and Restated Credit Agreement dated October 28, 2022, and its subsequent amendments[318](index=318&type=chunk) [Form 10-K Summary](index=49&type=section&id=Item%2016.%20Form%2010-K%20Summary) There is no Form 10-K summary in this report - There is no Form 10-K summary in this report[323](index=323&type=chunk) [SIGNATURES](index=50&type=section&id=SIGNATURES) This report is duly signed by authorized registrants, including the CEO and CFO, on August 26, 2025, in accordance with the Securities Exchange Act of 1934 - This report has been duly signed on behalf of the registrant by its authorized signatories in accordance with the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934[326](index=326&type=chunk) - Signatories include CEO Edmund M. Ingle and Executive Vice President and CFO Andrew J. Eaker, along with several members of the Board of Directors[327](index=327&type=chunk)[329](index=329&type=chunk) - The report was signed on August 26, 2025[327](index=327&type=chunk)[329](index=329&type=chunk) [CONSOLIDATED FINANCIAL STATEMENTS](index=51&type=section&id=CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents UNIFI, Inc.'s consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, shareholders' equity, and cash flows, with accompanying notes - This section contains the consolidated financial statements of UNIFI, Inc. and its subsidiaries, including the Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Comprehensive Loss, Consolidated Statements of Shareholders' Equity, and Consolidated Statements of Cash Flows[331](index=331&type=chunk) - KPMG LLP, an independent registered public accounting firm, has issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting[333](index=333&type=chunk)[334](index=334&type=chunk)[343](index=343&type=chunk)[344](index=344&type=chunk) [Reports of Independent Registered Public Accounting Firm](index=52&type=section&id=Reports%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on UNIFI, Inc.'s consolidated financial statements and internal control over financial reporting as of June 29, 2025, highlighting inventory net realizable value as a key audit matter - KPMG LLP issued an unqualified opinion on UNIFI, Inc.'s consolidated financial statements as of June 29, 2025, and June 30, 2024, stating they are presented fairly in all material respects in conformity with U.S. GAAP[333](index=333&type=chunk) - KPMG LLP also issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of June 29, 2025[334](index=334&type=chunk)[343](index=343&type=chunk) - The evaluation of net realizable value for raw materials and finished goods inventory was identified as a critical audit matter, involving complex judgments in assessing recovery rates and historical experience[338](index=338&type=chunk)[339](index=339&type=chunk) [Consolidated Balance Sheets](index=55&type=section&id=Consolidated%20Balance%20Sheets) As of June 29, 2025, UNIFI's total assets were **$426,868 thousand**, with **$22,664 thousand** in cash and cash equivalents, **$122,929 thousand** in inventory, and **$95,727 thousand** in long-term debt Consolidated Balance Sheets Overview (as of June 29, 2025, and June 30, 2024, $ Thousands) | Metric | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and Cash Equivalents | 22,664 | 26,805 | | Accounts Receivable, Net | 75,383 | 79,165 | | Inventories | 122,929 | 131,181 | | Total Current Assets | 235,627 | 248,933 | | Property, Plant, and Equipment, Net | 172,923 | 193,723 | | Total Assets | 426,868 | 469,244 | | **Liabilities and Shareholders' Equity** | | | | Accounts Payable | 37,468 | 43,622 | | Total Current Liabilities | 70,943 | 76,566 | | Long-Term Debt | 95,727 | 117,793 | | Total Liabilities | 177,397 | 205,859 | | Total Shareholders' Equity | 249,471 | 263,385 | | Total Liabilities and Shareholders' Equity | 426,868 | 469,244 | [Consolidated Statements of Operations](index=56&type=section&id=Consolidated%20Statements%20of%20Operations) UNIFI reported net sales of **$571,344 thousand** and a net loss of **$20,348 thousand** (diluted loss per share of **$1.11**) for fiscal year 2025, an improvement from fiscal year 2024 Consolidated Statements of Operations Overview (as of June 29, 2025, June 30, 2024, and July 2, 2023, $ Thousands, except per share amounts) | Metric | Fiscal Year 2025 | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | :--- | | Net Sales | 571,344 | 582,209 | 623,527 | | Cost of Sales | 562,926 | 565,593 | 609,286 | | Gross Profit | 8,418 | 16,616 | 14,241 | | Selling, General & Administrative Expenses | 49,005 | 46,632 | 47,345 | | Operating Loss | (9,520) | (37,421) | (40,871) | | Net Loss | (20,348) | (47,395) | (46,344) | | Basic Net Loss Per Share | (1.11) | (2.61) | (2.57) | | Diluted Net Loss Per Share | (1.11) | (2.61) | (2.57) | [Consolidated Statements of Comprehensive Loss](index=57&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) UNIFI's net loss for fiscal year 2025 was **$20,348 thousand**, with other comprehensive income of **$3,280 thousand** from foreign currency translation adjustments, resulting in a comprehensive loss of **$17,068 thousand** Consolidated Statements of Comprehensive Loss Overview (as of June 29, 2025, June 30, 2024, and July 2, 2023, $ Thousands) | Metric | Fiscal Year 2025 | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | :--- | | Net Loss | (20,348) | (47,395) | (46,344) | | Other Comprehensive Income (Loss): Foreign Currency Translation Adjustments | 3,280 | (14,898) | 5,714 | | Comprehensive Loss | (17,068) | (62,293) | (40,630) | [Consolidated Statements of Shareholders' Equity](index=58&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity) As of June 29, 2025, UNIFI's total shareholders' equity was **$249,471 thousand**, a decrease from **$263,385 thousand** in 2024, primarily due to the net loss, partially offset by foreign currency translation adjustments Consolidated Statements of Shareholders' Equity Overview (as of June 29, 2025, June 30, 2024, and July 2, 2023, $ Thousands) | Metric | June 29, 2025 | June 30, 2024 | July 2, 2023 | | :--- | :--- | :--- | :--- | | Common Stock | 1,836 | 1,825 | 1,808 | | Capital in Excess of Par Value | 74,095 | 70,952 | 68,901 | | Retained Earnings | 239,049 | 259,397 | 306,792 | | Accumulated Other Comprehensive Loss | (65,509) | (68,789) | (53,891) | | **Total Shareholders' Equity** | **249,471** | **263,385** | **323,610** | - In fiscal year 2025, net loss was **$20,348 thousand**, with a comprehensive income of **$3,280 thousand** from foreign currency translation adjustments[359](index=359&type=chunk) - Activities such as stock option exercises, stock compensation, and conversion of equity units impacted shareholders' equity[359](index=359&type=chunk) [Consolidated Statements of Cash Flows](index=59&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) UNIFI's fiscal year 2025 saw a **$21,311 thousand** cash outflow from operations, a **$41,065 thousand** inflow from investing activities (driven by asset sales), and a **$24,421 thousand** outflow from financing activities Consolidated Statements of Cash Flows Overview (as of June 29, 2025, June 30, 2024, and July 2, 2023, $ Thousands) | Cash Flow Type | Fiscal Year 2025 | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | :--- | | Net Cash (Used in) Provided by Operating Activities | (21,311) | 2,092 | 4,740 | | Net Cash Provided by (Used in) Investing Activities | 41,065 | (10,670) | (36,225) | | Net Cash (Used in) Provided by Financing Activities | (24,421) | (10,607) | 25,938 | | Effect of Exchange Rate Changes | 526 | (970) | (783) | | Net Decrease in Cash and Cash Equivalents | (4,141) | (20,155) | (6,330) | | Cash and Cash Equivalents at End of Period | 22,664 | 26,805 | 46,960 | - In fiscal year 2025, cash flow from operating activities was an outflow of **$21,311 thousand**, primarily influenced by net loss and changes in working capital[270](index=270&type=chunk)[362](index=362&type=chunk) - Cash flow from investing activities in fiscal year 2025 was an inflow of **$41,065 thousand**, mainly driven by proceeds from asset sales (**$51,553 thousand**), offsetting capital expenditures (**$10,488 thousand**)[272](index=272&type=chunk)[362](index=362&type=chunk) - Cash flow from financing activities in fiscal year 2025 was an outflow of **$24,421 thousand**, primarily for net payments on the 2022 ABL Facility debt (**$20,900 thousand**) and finance lease obligations (**$3,093 thousand**)[272](index=272&type=chunk)[362](index=362&type=chunk) [Notes to Consolidated Financial Statements](index=60&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes to UNIFI's consolidated financial statements, covering company background, significant accounting policies, recent pronouncements, leases, revenue recognition, and various balance sheet and income statement items [1. Background](index=60&type=section&id=1.%20Background) UNIFI, Inc., founded in 1969, is a multinational company producing recycled and synthetic polyester and nylon products for the global textile industry, with fiscal years ending around June 30th - UNIFI, Inc., founded in 1969, is a multinational company primarily manufacturing and selling recycled and synthetic polyester and nylon products, serving the global textile industry[365](index=365&type=chunk) - The company's products include POY, textured yarn, dyed yarn, and offers recycling solutions such as plastic bottle flake and polyester polymer chip[365](index=365&type=chunk) - UNIFI's fiscal year ends on the Sunday closest to June 30th each year, with fiscal years 2025, 2024, and 2023 each consisting of 52 weeks[368](index=368&type=chunk) - All amounts, except per share amounts, are presented in thousands of U.S. dollars[367](index=367&type=chunk) [2. Summary of Significant Accounting Policies](index=60&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) UNIFI adheres to U.S. GAAP, consolidating controlled entities and making estimates for financial statement amounts, with key policies covering cash, receivables, inventory, property, intangible assets, income taxes, and revenue recognition - UNIFI adheres to U.S. Generally Accepted Accounting Principles (GAAP), consolidating subsidiaries where it holds a controlling financial interest[370](index=370&type=chunk)[371](index=371&type=chunk) - Cash equivalents are defined as highly liquid short-term investments with original maturities of three months or less[373](index=373&type=chunk) - Accounts receivable are presented net of allowances for expected lifetime credit losses and quality claims[375](index=375&type=chunk) - Inventory is measured at the lower of cost or net realizable value, with most inventory costs determined using the first-in, first-out (FIFO) method[376](index=376&type=chunk) - Property, plant, and equipment are stated at historical cost less accumulated depreciation, primarily using the straight-line method, across asset classes including land improvements, buildings, machinery and equipment, computer software and office equipment, and transportation equipment[378](index=378&type=chunk) - Finite-lived intangible assets, such as customer lists, non-compete agreements, and trademarks, are amortized over their estimated useful lives[386](index=386&type=chunk) - Income taxes are accounted for using the asset and liability method, with deferred tax assets and liabilities determined based on financial statement and tax basis differences and enacted tax rates[391](index=391&type=chunk) - Stock-based compensation expense is based on the grant-date fair value and amortized over the applicable vesting period[393](index=393&type=chunk) - Revenue is recognized when performance obligations under customer contracts are satisfied, primarily upon shipment or delivery of goods to the customer[397](index=397&type=chunk) Research and Development Expenses ($ Thousands) | Fiscal Year | R&D Expenses | | :--- | :--- | | 2025 | 8,750 | | 2024 | 9,599 | | 2023 | 10,871 | Advertising Expenses ($ Thousands) | Fiscal Year | Advertising Expenses | | :--- | :--- | | 2025 | 2,783 | | 2024 | 3,091 | | 2023 | 4,003 | [3. Recent Accounting Pronouncements](index=64&type=section&id=3.%20Recent%20Accounting%20Pronouncements) UNIFI is evaluating the impact of recent FASB accounting standards, including ASU 2024-03 on income statement expense disaggregation and ASU 2023-09 on income tax disclosures, while having adopted ASU 2023-07 - In November 2024, the FASB issued ASU 2024-03, requiring disaggregation of income statement expense categories, including inventory purchases, employee compensation, depreciation, amortization, and selling expenses, effective for fiscal year 2028[406](index=406&type=chunk) - In December 2023, the FASB issued ASU 2023-09, improving income tax disclosure requirements, including specific categories in the rate reconciliation table, pre-tax income (loss) disaggregated by domestic and foreign, and income tax expense or benefit disaggregated by federal, state, and foreign, effective for fiscal year 2026[407](index=407&type=chunk) - UNIFI adopted ASU 2023-07 in the current fiscal year, which expanded reportable segment disclosures but did not have a material impact on the consolidated financial statements[409](index=409&type=chunk) [4. Leases](index=64&type=section&id=4.%20Leases) UNIFI leases various assets with terms from 1 to 15 years, adopting short-term lease exemptions and non-lease component practical expedients, reporting **$18,638 thousand** in lease assets and **$15,990 thousand** in lease liabilities as of June 29, 2025 - UNIFI leases sales and administrative office space, warehousing and distribution centers, manufacturing space, transportation equipment, manufacturing equipment, and other information technology and office equipment, with lease terms ranging from 1 to 15 years[410](index=410&type=chunk) - The company has adopted the short-term lease accounting policy exemption and the practical expedient not to separate lease and non-lease components within the transportation equipment asset class[412](index=412&type=chunk) Lease Assets and Liabilities (as of June 29, 2025, and June 30, 2024, $ Thousands) | Classification | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Lease Assets | 18,638 | 18,940 | | Total Lease Liabilities | 15,990 | 17,774 | Total Lease Costs (Fiscal Years 2025 and 2024, $ Thousands) | Lease Cost Type | Fiscal Year 2025 | Fiscal Year 2024 | | :--- | :--- | :--- | | Operating Lease Costs | 2,730 | 2,547 | | Variable Lease Costs | 643 | 617 | | Finance Lease Costs (Amortization and Interest) | 2,203 | 2,417 | | Short-Term Lease Costs | 1,397 | 1,155 | | **Total Lease Costs** | **6,973** | **6,736** | Weighted Average Remaining Lease Term and Discount Rate (as of June 29, 2025, and June 30, 2024) | Metric | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Operating Leases Weighted Average Remaining Lease Term (Years) | 4.5 | 4.9 | | Finance Leases Weighted Average Remaining Lease Term (Years) | 3.3 | 3.2 | | Operating Leases Weighted Average Discount Rate (Percentage) | 5.1% | 4.9% | | Finance Leases Weighted Average Discount Rate (Percentage) | 5.2% | 5.2% | [5. Revenue Recognition](index=66&type=section&id=5.%20Revenue%20Recognition) UNIFI recognizes revenue primarily from product sales to third-party manufacturers and service provision, with REPREVE® Fiber being a key product line, and variable consideration estimated using the expected value method Net Sales by Customer Type ($ Thousands) | Customer Type | Fiscal Year 2025 | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | :--- | | Third-Party Manufacturers | 567,158 | 577,636 | 618,391 | | Services | 4,186 | 4,573 | 5,136 | | **Net Sales** | **571,344** | **582,209** | **623,527** | REPREVE® Fiber Sales ($ Thousands) | Product Type | Fiscal Year 2025 | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | :--- | | REPREVE® Fiber | 174,855 | 188,517 | 186,161 | | All Other Products and Services | 396,489 | 393,692 | 437,366 | | **Net Sales** | **571,344** | **582,209** | **623,527** | - Revenue is recognized when performance obligations under customer contracts are satisfied, primarily upon shipment or delivery of goods to the customer[397](index=397&type=chunk) - REPREVE® Fiber is UNIFI's line of fiber products on its recycling platform[421](index=421&type=chunk) - The company uses the expected value method to estimate all variable consideration, such as volume-based incentives and product claims, which are treated as deductions from revenue[422](index=422&type=chunk) [6. Receivables, Net](index=66&type=section&id=6.%20Receivables%2C%20Net) As of June 29, 2025, UNIFI's net receivables totaled **$75,383 thousand**, a decrease from **$79,165 thousand** in 2024, reflecting customer receivables, bad debt, quality claims, and other receivables Net Receivables Composition (as of June 29, 2025, and June 30, 2024, $ Thousands) | Item | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Customer Accounts Receivable | 76,594 | 80,050 | | Allowance for Doubtful Accounts | (2,451) | (2,713) | | Allowance for Quality Claims | (912) | (745) | | Net Customer Accounts Receivable | 73,231 | 76,592 | | Bank Acceptances | 1,334 | 1,326 | | Other Receivables | 818 | 1,247 | | **Total Receivables, Net** | **75,383** | **79,165** | Changes in Allowance for Doubtful Accounts and Quality Claims ( $ Thousands) | Item | Allowance for Doubtful Accounts | Allowance for Quality Claims | | :--- | :--- | :--- | | Balance as of July 3, 2022 | (1,498) | (860) | | Balance as of July 2, 2023 | (1,362) | (682) | | Balance as of June 30, 2024 | (2,713) | (745) | | Balance as of June 29, 2025 | (2,451) | (912) | - In fiscal year 2025, the bad debt (benefit) expense changed from **$1,571 thousand** in fiscal year 2024 to a benefit of **$166 thousand**, reflecting partial recovery of specific customer balances for which reserves were recorded in fiscal year 2024[201](index=201&type=chunk)[426](index=426&type=chunk) [7. Inventories](index=67&type=section&id=7.%20Inventories) As of June 29, 2025, UNIFI's total inventory was **$122,929 thousand**, a decrease from **$131,181 thousand** in 2024, comprising raw materials, supplies, work-in-process, and finished goods, net of net realizable value adjustments Inventory Composition (as of June 29, 2025, and June 30, 2024, $ Thousands) | Item | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Raw Materials | 48,752 | 49,391 | | Supplies | 11,779 | 12,160 | | Work-in-Process | 5,246 | 8,994 | | Finished Goods | 61,116 | 64,449 | | Total Inventory | 126,893 | 134,994 | | Net Realizable Value Adjustment | (3,964) | (3,813) | | **Total Inventories** | **122,929** | **131,181** | - Most of the company's inventory costs are determined using the first-in, first-out (FIFO) method, with some foreign inventories and minor supplies using the average cost method[427](index=427&type=chunk) [8. Other Current Assets](index=67&type=section&id=8.%20Other%20Current%20Assets) As of June 29, 2025, UNIFI's other current assets totaled **$9,222 thousand**, a decrease from **$11,618 thousand** in 2024, primarily including prepaid expenses, vendor deposits, VAT receivables, and contract assets Other Current Assets Composition (as of June 29, 2025, and June 30, 2024, $ Thousands) | Item | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Prepaid Expenses and Other | 3,475 | 2,133 | | Vendor Deposits | 2,775 | 2,633 | | VAT Receivables | 2,365 | 2,510 | | Contract Assets | 607 | 561 | | Assets Held for Sale | — | 3,781 | | **Total Other Current Assets** | **9,222** | **11,618** | - Assets held for sale (a warehouse in Yadkinville, North Carolina) reported in fiscal year 2024 were sold in fiscal year 2025 for total proceeds of **$8,084 thousand**[428](index=428&type=chunk) [9. Property, Plant, and Equipment, Net](index=68&type=section&id=9.%20Property%2C%20Plant%2C%20and%20Equipment%2C%20Net) As of June 29, 2025, UNIFI's net property, plant, and equipment was **$172,923 thousand**, a decrease from **$193,723 thousand** in 2024, primarily due to the sale of its Madison, North Carolina manufacturing facility Property, Plant, and Equipment, Net Composition (as of June 29, 2025, and June 30, 2024, $ Thousands) | Item | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Land | 1,039 | 1,897 | | Land Improvements | 10,425 | 16,409 | | Buildings and Improvements | 126,720 | 162,414 | | Finance Lease Assets | 19,756 | 18,030 | | Machinery and Equipment | 593,771 | 650,901 | | Computers, Software, and Office Equipment | 25,400 | 25,464 | | Transportation Equipment | 10,789 | 10,710 | | Construction in Progress | 2,153 | 3,319 | | Total Assets | 790,053 | 889,144 | | Less: Accumulated Depreciation | (608,133) | (688,086) | | Less: Accumulated Amortization – Finance Leases | (8,997) | (7,335) | | **Property, Plant, and Equipment, Net** | **172,923** | **193,723** | - In fiscal year 2025, UNIFI sold its Madison, North Carolina manufacturing facility and related machinery and equipment, generating net proceeds of **$43,322 thousand** and recording a gain of **$35,807 thousand**[430](index=430&type=chunk) Depreciation and Amortization Expenses and Repair and Maintenance Expenses ($ Thousands) | Expense Type | Fiscal Year 2025 | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | :--- | | Depreciation and Amortization Expenses | 24,956 | 26,985 | 25,729 | | Repair and Maintenance Expenses | 20,138 | 19,985 | 17,999 | - In fiscal year 2023, UNIFI recorded an impairment charge of **$8,247 thousand** for the abandonment of certain specialized machinery and equipment[431](index=431&type=chunk) [10. Other Non-Current Assets](index=68&type=section&id=10.%20Other%20Non-Current%20Assets) As of June 29, 2025, UNIFI's other non-current assets significantly decreased to **$4,904 thousand** from **$12,951 thousand** in 2024, primarily due to reclassification of tax recoveries and forfeiture of a deposit Other Non-Current Assets Composition (as of June 29, 2025, and June 30, 2024, $ Thousands) | Item | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Grantor Trust | 2,310 | 2,942 | | Investments in Affiliates | 1,151 | 1,603 | | Intangible Assets, Net | 573 | 682 | | Tax Recoveries | — | 5,543 | | Other | 870 | 2,181 | | **Total Other Non-Current Assets** | **4,904** | **12,951** | - In fiscal year 2025, tax recoveries in Brazil were reclassified from other non-current assets to income tax receivable, as the tax benefit is expected to be realized within 12 months[446](index=446&type=chunk) - In the fourth quarter of fiscal year 2025, UNIFI terminated a contract for future purchases of texturing machinery, resulting in the forfeiture of a **$1,448 thousand** deposit, recorded as restructuring costs[447](index=447&type=chunk) - UNIFI dissolved its interest in U.N.F. Industries Ltd. in December 2023, incurring **$2,750 thousand** in contract termination costs[437](index=437&type=chunk) Intangible Asset Amortization Expense ($ Thousands) | Expense Type | Fiscal Year 2025 | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | :--- | | Customer Lists | 109 | 417 | 957 | | Non-Compete Agreements | — | 108 | 312 | | Trademarks | — | 3 | 21 | | **Total Amortization Expense** | **109** | **528** | **1,290** | [11. Other Current Liabilities](index=70&type=section&id=11.%20Other%20Current%20Liabilities) As of June 29, 2025, UNIFI's other current liabilities increased to **$18,899 thousand** from **$17,662 thousand** in 2024, primarily comprising wages and benefits, incentive compensation, utilities, deferred revenue, and property taxes Other Current Liabilities Composition (as of June 29, 2025, and June 30, 2024, $ Thousands) | Item | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Wages and Benefits | 6,815 | 7,140 | | Incentive Compensation | 5,652 | 1,450 | | Utilities | 2,236 | 2,861 | | Deferred Revenue | 1,236 | 1,504 | | Property Taxes and Other | 2,960 | 4,707 | | **Total Other Current Liabilities** | **18,899** | **17,662** | [12. Long-Term Debt](index=71&type=section&id=12.%20Long-Term%20Debt) As of June 29, 2025, UNIFI's total debt obligations decreased to **$108,008 thousand** from **$130,299 thousand** in 2024, including ABL revolving credit, the 2024 Facility, ABL term loan, and finance lease obligations Debt Obligations Details (as of June 29, 2025, and June 30, 2024, $ Thousands) | Debt Type | Principal Amount as of June 29, 2025 | Principal Amount as of June 30, 2024 | | :--- | :--- | :--- | | ABL Revolving Credit | 11,000 | 19,700 | | 2024 Facility | 22,000 | — | | ABL Term Loan | 67,000 | 101,200 | | Finance Lease Obligations | 8,008 | 9,399 | | **Total Debt** | **108,008** | **130,299** | - On October 25, 2024, UNIFI entered into a new **$25,000 thousand** revolving credit facility (2024 Facility), secured by related party collateral, and borrowed **$22,000 thousand** in fiscal year 2025 to reduce existing ABL revolving credit balances[459](index=459&type=chunk) - The 2022 ABL Facility matures on October 28, 2027, and requires quarterly principal payments of **$2,300 thousand**[451](index=451&type=chunk) - The 2022 ABL Facilit

Unifi, Inc. (NYSE:UFI) Q4 2025 Earnings Conference Call August 21, 2025 9:00 AM ET Company Participants Albert P. Carey - Executive Chairman Andrew J. Eaker - CFO, Executive VP & Treasurer Edmund M. Ingle - CEO & Director Conference Call Participants Anthony Chester Lebiedzinski - Sidoti & Company, LLC Operator Good morning, and thank you for attending Unifi's Fourth Quarter and Fiscal 2025 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions] Speakers for today's call incl ...

Financial Data and Key Metrics Changes - Consolidated net sales for Q4 2025 were $138.5 million, down 12% year-over-year due to trade uncertainties and reduced sales volumes [10][80] - Gross profit was negatively impacted by softer sales and transition costs, totaling approximately $10.6 million during the period [25][80] - The Americas segment saw a 6.6% decline in net sales compared to the prior year, primarily due to lower sales volumes and productivity shortfalls [80] - The Asia segment experienced a 28% decline in net sales and a 340 basis points decrease in gross margin year-over-year [80] Business Line Data and Key Metrics Changes - The Reprieve fiber represented 30% of sales in Q4, down four percentage points from the previous year due to trade policy uncertainty [18][73] - The Brazil segment maintained stable demand and strong volumes but faced margin headwinds from unfavorable pricing dynamics and foreign currency translation impacts [71][80] - Transition costs in the Americas segment were attributed to the consolidation of U.S. yarn manufacturing operations [80] Market Data and Key Metrics Changes - In the Americas, many brands paused production growth in Central America due to tariff uncertainties, impacting order patterns [12][66] - In Asia, brands are reassessing their supply chains in light of tariff negotiations, particularly affecting India and China [13][67] - Brazil's sales are insulated from recent tariffs, but the market faces challenges from dumping activities and foreign exchange volatility [14][68] Company Strategy and Development Direction - The company has ceased operations at its Madison, North Carolina facility, which was a significant cause of profit misses, and has sold the facility for $45 million [4][27] - The transition to the Yatkinville facility has increased production capability by 40%, although it has caused some inefficiencies during the transition [5][59] - The company is focusing on sustainability and circularity innovations, such as the Reprieve Take Back and Thermal Insulation products, which are expected to drive future growth [6][74] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the impacts of tariffs are likely to be neutral to slightly positive in the long term as order patterns improve [6][11] - There is a belief in pent-up demand in the market, particularly as trade policies become clearer, which is expected to benefit the company in the near future [12][66] - The company anticipates improved performance in fiscal 2026, with cost savings and demand normalization expected to drive growth [30][31] Other Important Information - The sale of the Madison facility is expected to generate over $20 million in annual operating cost savings once transition efforts are complete [15][84] - The company is forecasting under $12 million in capital expenditures for fiscal 2026, focusing on critical investments [27][83] - Management highlighted ongoing efforts to optimize operations and drive greater efficiency across the business [68][79] Q&A Session Summary Question: Impact of transitory demand disruptions on sales - Management indicated a 20% disruption in Asia due to trade uncertainties, expecting demand to grow in Q1 and Q2 as tariff clarity improves [38][39] Question: Timing of pent-up demand orders - Increased orders are already being seen in August, with expectations for further growth in September [42] Question: Exciting new product launches - The Fortisyn nylon yarn is particularly promising, with expectations for significant demand in the second half of the fiscal year [43][44] Question: Competitive positioning improvements - Most improvements are seen in the Americas due to plant consolidation, with Brazil also benefiting from increased volumes [46][47] Question: Update on Beyond Apparel initiative - The Beyond Apparel initiative is focused on military, packaging, and automotive markets, with expectations for substantial revenue increases in the second half of the fiscal year [49][51]

Financial Performance - Q4 Fiscal 2025 - Consolidated revenue decreased to $138.5 million, a 12.0% decrease compared to Q4 Fiscal 2024[15] - Adjusted EPS was ($0.56), a 155% decrease compared to the prior year[15] - Adjusted EBITDA was ($4.1) million, a 169% decrease compared to the prior year[15] - REPREVE® Fiber sales accounted for 30% of net sales, a decrease of 400 bps[15] - Gross loss was ($1.1) million, a 110.5% decrease compared to the prior year, with a gross margin of (0.8)%, a decrease of 770 bps[29] Segment Performance - Q4 Fiscal 2025 - Americas net sales decreased by 6.6% to $85.0 million, with a gross loss of ($5.3) million and a gross margin of (6.3)%[33] - Brazil net sales decreased by 10.6% to $28.8 million, with a gross profit of $1.3 million and a gross margin of 4.6%[36] - Asia net sales decreased by 27.7% to $24.7 million, with a gross profit of $2.9 million and a gross margin of 11.7%[40] Capital Structure and Outlook - The company expects Q1 FY26 net sales and Adjusted EBITDA to improve sequentially from Q4 FY25[48] - Recent asset sale reduced debt principal by $43 million and is expected to drive future annual savings of $3 million for interest and $20 million for manufacturing costs[44]

Core Viewpoint - Unifi reported a quarterly loss of $0.56 per share, which was better than the Zacks Consensus Estimate of a loss of $0.80, representing an earnings surprise of +30.00% [1] Financial Performance - Unifi's revenues for the quarter ended June 2025 were $138.54 million, missing the Zacks Consensus Estimate by 3.46%, and down from $157.45 million year-over-year [2] - Over the last four quarters, Unifi has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - Unifi shares have declined approximately 28.2% since the beginning of the year, contrasting with the S&P 500's gain of 9% [3] - The current Zacks Rank for Unifi is 4 (Sell), indicating expected underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.57 on revenues of $147.41 million, and -$0.11 on revenues of $636.18 million for the current fiscal year [7] - The trend of estimate revisions for Unifi was unfavorable prior to the earnings release, which may impact future stock movements [5][6] Industry Context - The Textile - Products industry, to which Unifi belongs, is currently ranked in the bottom 6% of over 250 Zacks industries, suggesting a challenging environment [8]

[Company Announcement & Business Highlights](index=1&type=section&id=Company%20Announcement%20%26%20Business%20Highlights) Unifi's Q4 FY2025 results were below expectations due to weak customer order patterns, but the company made progress through asset sales and new product launches [Fourth Quarter Fiscal 2025 Overview](index=1&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Overview) Unifi's Q4 FY2025 performance was below expectations, impacted by tariffs and trade uncertainty, despite strategic asset sales and new product introduction [Key Financial and Operational Highlights](index=1&type=section&id=Key%20Financial%20and%20Operational%20Highlights) Q4 FY2025 saw a **12.0%** net sales decrease to **$138.5 million**, a **$15.5 million** net profit driven by asset sale gains, and the launch of Fortisyn™ Key Financial Data for Q4 FY2025 | Metric | Q4 FY2025 (Million USD) | Q4 FY2024 (Million USD) | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | 138.5 | 157.5 | -12.0% | | REPREVE® Product Sales | 42.1 | 53.6 | -21.4% | | REPREVE® as % of Net Sales | 30% | 34% | -4.0pp | | Gross Profit (Loss) | (1.1) | 10.8 | -110.2% | | Gross Margin | (0.8)% | 6.9% | -7.7pp | | Net Income (Loss) | 15.5 | (4.0) | 487.5% | | Diluted EPS | 0.82 | (0.22) | 472.7% | | Adjusted Net Loss | 10.6 | 4.0 | 165.0% | | Adjusted EBITDA | (4.1) | 5.9 | -169.5% | - Company completed the sale of its Madison (North Carolina) manufacturing facility, receiving **$45 million**, with **$25 million** used to reduce the term loan and **$18.3 million** for revolving loan reduction[3](index=3&type=chunk) - Company launched Fortisyn™, an abrasion-resistant yarn specifically designed for military and tactical gear[3](index=3&type=chunk) [Q4 FY2025 vs. Q4 FY2024 Performance Comparison](index=2&type=section&id=Q4%20FY2025%20vs.%20Q4%20FY2024%20Performance%20Comparison) Net sales declined due to weaker Asian and Brazilian markets, while operating profit increased significantly due to a manufacturing facility sale - Net sales decreased from **$157.5 million** to **$138.5 million**, primarily due to weaker sales mix and volume in the Asia segment, unfavorable foreign exchange impact in Brazil, and lower volume in the Americas segment[5](index=5&type=chunk) - Gross profit decreased from **$10.8 million** to **($1.1 million)**, with the Americas segment down **$5.3 million** (inflationary pressures and transition costs), Asia segment down **$2.3 million** (volume, sales mix, and pricing), and Brazil segment down **$4.3 million** (unfavorable foreign exchange translation effect)[6](index=6&type=chunk) - Operating profit increased from **($0.8 million)** to **$15.1 million**, primarily driven by the gain on the sale of a manufacturing facility, partially offset by transition costs[7](index=7&type=chunk) [Manufacturing Transition Update](index=2&type=section&id=Manufacturing%20Transition%20Update) Unifi completed the sale of its Madison facility in May 2025, expecting approximately **$20 million** in annual cost savings from manufacturing footprint reduction - Company completed the real estate sale of its Madison (North Carolina) manufacturing facility on May 20, 2025[8](index=8&type=chunk) - Manufacturing transition and restructuring costs are expected to continue into the first quarter of fiscal 2026[8](index=8&type=chunk) - Annual cost savings of approximately **$20 million** are anticipated from the reduced manufacturing footprint, primarily from headcount reductions and operational synergies[8](index=8&type=chunk) [First Quarter Fiscal 2026 Outlook](index=3&type=section&id=First%20Quarter%20Fiscal%202026%20Outlook) Unifi anticipates sequential improvement in Q1 FY2026 net sales and Adjusted EBITDA, driven by Americas segment cost savings, with ongoing restructuring costs - Net sales and Adjusted EBITDA for the first quarter of fiscal 2026 are expected to improve sequentially from the fourth quarter of fiscal 2025, primarily driven by cost savings in the Americas segment[12](index=12&type=chunk) - Restructuring and transition costs of **$1 million** to **$2 million** are expected to continue[12](index=12&type=chunk) - Company believes its proactive decisions have enhanced its competitive position, improved cash generation, and strengthened profitability, which will contribute to better future performance[9](index=9&type=chunk) [Fourth Quarter Fiscal 2025 Earnings Conference Call](index=3&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Earnings%20Conference%20Call) Unifi will host an earnings conference call on August 21, 2025, to discuss Q4 and full-year FY2025 results and other developments - The earnings conference call will be held on August 21, 2025, at 9:00 AM ET[11](index=11&type=chunk) - Webcast access is available via Unifi's website at http://investor.unifi.com[11](index=11&type=chunk) [Company and Product Information](index=4&type=section&id=Company%20and%20Product%20Information) This section provides an overview of UNIFI, Inc. as a global leader in sustainable synthetic textiles and its flagship REPREVE® brand [About UNIFI](index=4&type=section&id=About%20UNIFI) UNIFI is a global leader in fiber science and sustainable synthetic textiles, transforming waste into products with operations across multiple countries - UNIFI is a global leader in fiber science and sustainable synthetic textiles[13](index=13&type=chunk) - The company utilizes proprietary recycling technologies to transform industrial and post-consumer waste into sustainable products[13](index=13&type=chunk) - UNIFI has direct operations in the U.S., Colombia, El Salvador, and Brazil, with sales offices worldwide[13](index=13&type=chunk) [About REPREVE®](index=4&type=section&id=About%20REPREVE%C2%AE) REPREVE® is a leading brand of recycled performance fibers, converting over **40 billion** plastic bottles into fibers with advanced traceability - REPREVE® is the world's leading brand of recycled performance fibers and resins[14](index=14&type=chunk) - Utilizing proprietary recycling technologies, REPREVE® uses various waste sources including single-use plastic bottles, ocean plastic, textile waste, and recycled yarn[14](index=14&type=chunk) - REPREVE® has transformed over **40 billion** plastic bottles into recycled fibers, with traceability enabled by FiberPrint® technology and U-Trust® certification[14](index=14&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents Unifi's unaudited condensed consolidated statements of operations, balance sheets, and cash flows [CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section provides Unifi's unaudited condensed consolidated statements of operations for the three months and fiscal years ended June 29, 2025, and June 30, 2024 Condensed Consolidated Statements of Operations (Unaudited, in thousands of USD, except per share amounts) | Metric | June 29, 2025 (Three Months) | June 30, 2024 (Three Months) | June 29, 2025 (Fiscal Year) | June 30, 2024 (Fiscal Year) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $138,535 | $157,452 | $571,344 | $582,209 | | Cost of Sales | 139,664 | 146,661 | 562,926 | 565,593 | | Gross Profit (Loss) | (1,129) | 10,791 | 8,418 | 16,616 | | Selling, General and Administrative Expenses | 11,947 | 11,243 | 49,005 | 46,632 | | Operating Profit (Loss) | 15,120 | (823) | (9,520) | (37,421) | | Net Income (Loss) | $15,470 | $(3,984) | $(20,348) | $(47,395) | | Diluted Earnings Per Share | $0.82 | $(0.22) | $(1.11) | $(2.61) | [CONDENSED CONSOLIDATED BALANCE SHEETS](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section presents Unifi's unaudited condensed consolidated balance sheets, detailing assets, liabilities, and equity as of June 29, 2025, and June 30, 2024 Condensed Consolidated Balance Sheets (Unaudited, in thousands of USD) | Metric | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and Cash Equivalents | $22,664 | $26,805 | | Total Current Assets | 235,627 | 248,933 | | Property, Plant and Equipment, Net | 172,923 | 193,723 | | Total Assets | $426,868 | $469,244 | | **Liabilities and Stockholders' Equity** | | | | Total Current Liabilities | $70,943 | $76,566 | | Long-Term Debt | 95,727 | 117,793 | | Total Liabilities | 177,397 | 205,859 | | Total Stockholders' Equity | 249,471 | 263,385 | | Total Liabilities and Stockholders' Equity | $426,868 | $469,244 | [CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section provides Unifi's unaudited condensed consolidated statements of cash flows for the fiscal years ended June 29, 2025, and June 30, 2024 Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands of USD) | Metric | June 29, 2025 (Fiscal Year) | June 30, 2024 (Fiscal Year) | | :--- | :--- | :--- | | Cash and Cash Equivalents at Beginning of Year | $26,805 | $46,960 | | Net Cash Provided by (Used in) Operating Activities | (21,311) | 2,092 | | Net Cash Provided by (Used in) Investing Activities | 41,065 | (10,670) | | Net Cash Provided by (Used in) Financing Activities | (24,421) | (10,607) | | Effect of Exchange Rate Changes | 526 | (970) | | Net Decrease in Cash and Cash Equivalents | (4,141) | (20,155) | | Cash and Cash Equivalents at End of Year | $22,664 | $26,805 | [Business Segment Information](index=8&type=section&id=Business%20Segment%20Information) This section details Unifi's net sales and gross profit (loss) across its Americas, Brazil, and Asia reporting segments [Business Segment Information](index=8&type=section&id=Business%20Segment%20Information) This section provides detailed net sales and gross profit (loss) for Unifi's Americas, Brazil, and Asia segments for the three months and fiscal years presented Net Sales by Business Segment (Unaudited, in thousands of USD) | Segment | June 29, 2025 (Three Months) | June 30, 2024 (Three Months) | June 29, 2025 (Fiscal Year) | June 30, 2024 (Fiscal Year) | | :--- | :--- | :--- | :--- | :--- | | Americas | $85,009 | $91,004 | $347,931 | $344,256 | | Brazil | 28,810 | 32,240 | 118,726 | 117,783 | | Asia | 24,716 | 34,208 | 104,687 | 120,170 | | **Consolidated Net Sales** | **$138,535** | **$157,452** | **$571,344** | **$582,209** | Gross Profit (Loss) by Business Segment (Unaudited, in thousands of USD) | Segment | June 29, 2025 (Three Months) | June 30, 2024 (Three Months) | June 29, 2025 (Fiscal Year) | June 30, 2024 (Fiscal Year) | | :--- | :--- | :--- | :--- | :--- | | Americas | $(5,342) | $2 | $(20,217) | $(17,630) | | Brazil | 1,316 | 5,612 | 16,027 | 14,755 | | Asia | 2,897 | 5,177 | 12,608 | 19,491 | | **Consolidated Gross Profit (Loss)** | **$(1,129)** | **$10,791** | **$8,418** | **$16,616** | [Non-GAAP Financial Measures](index=8&type=section&id=Non-GAAP%20Financial%20Measures) This section reconciles Unifi's GAAP financial metrics to non-GAAP adjusted measures and explains their definitions and limitations [Reconciliations of Reported Results to Adjusted Results](index=8&type=section&id=Reconciliations%20of%20Reported%20Results%20to%20Adjusted%20Results) This section provides detailed reconciliations of Unifi's GAAP financial metrics to non-GAAP adjusted measures, including EBITDA, net loss, and net debt [EBITDA and Adjusted EBITDA](index=8&type=section&id=EBITDA%20and%20Adjusted%20EBITDA) This section reconciles GAAP net income (loss) to EBITDA and Adjusted EBITDA, detailing adjustments for transition costs and asset sale gains Reconciliation of EBITDA and Adjusted EBITDA (Unaudited, in thousands of USD) | Metric | June 29, 2025 (Three Months) | June 30, 2024 (Three Months) | June 29, 2025 (Fiscal Year) | June 30, 2024 (Fiscal Year) | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $15,470 | $(3,984) | $(20,348) | $(47,395) | | Interest Expense, Net | 1,942 | 1,931 | 8,632 | 7,726 | | Income Tax (Benefit) Provision | (2,302) | 1,151 | 1,719 | 1,858 | | Depreciation and Amortization Expense | 6,018 | 6,850 | 25,064 | 27,513 | | **EBITDA** | **21,128** | **5,948** | **15,067** | **(10,298)** | | Transition Costs | 10,585 | — | 13,485 | — | | Gain on Sale of Assets | (35,807) | — | (40,103) | — | | Restructuring Costs | — | — | — | 5,101 | | **Adjusted EBITDA** | **$(4,094)** | **$5,948** | **$(11,551)** | **$(5,197)** | - In FY2025, the company incurred **$10.585 million** (Q4) and **$13.485 million** (FY) in transition costs for integrating yarn manufacturing operations, including facility closure, equipment relocation, inventory write-downs, excess fixed manufacturing overhead, and employee severance/retention costs[26](index=26&type=chunk)[30](index=30&type=chunk) - In Q4 FY2025, the company recorded a **$35.807 million** gain from the sale of its Madison (North Carolina) manufacturing facility, totaling **$40.103 million** in asset sale gains for the fiscal year[26](index=26&type=chunk)[33](index=33&type=chunk) [Adjusted Net Loss and Adjusted EPS](index=9&type=section&id=Adjusted%20Net%20Loss%20and%20Adjusted%20EPS) This section reconciles GAAP net income (loss) and diluted EPS to adjusted net loss and adjusted EPS, including adjustments for specific items Reconciliation of Adjusted Net Loss and Adjusted EPS (Unaudited, in thousands of USD, except per share amounts) | Metric | June 29, 2025 (Three Months) | June 30, 2024 (Three Months) | June 29, 2025 (Fiscal Year) | June 30, 2024 (Fiscal Year) | | :--- | :--- | :--- | :--- | :--- | | GAAP Net Income (Loss) | $15,470 | $(3,984) | $(20,348) | $(47,395) | | Transition Costs | 10,585 | — | 13,485 | — | | Gain on Sale of Assets | (35,807) | — | (40,103) | — | | Income Tax Recovery | (893) | — | (893) | — | | Restructuring Costs | — | — | — | 5,101 | | **Adjusted Net Loss** | **$(10,645)** | **$(3,984)** | **$(47,859)** | **$(42,294)** | | GAAP Diluted EPS | $0.82 | $(0.22) | $(1.11) | $(2.61) | | Adjusted EPS | $(0.56) | $(0.22) | $(2.61) | $(2.33) | - In FY2025, the company recorded an income tax recovery following a favorable preliminary court injunction regarding ICMS deductibility in Brazil federal income tax filings[33](index=33&type=chunk) [Net Debt](index=9&type=section&id=Net%20Debt) This section provides a reconciliation of net debt, showing principal debt reduced by cash and cash equivalents as of the reporting dates Reconciliation of Net Debt (Unaudited, in thousands of USD) | Metric | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Long-Term Debt | $95,727 | $117,793 | | Current Portion of Long-Term Debt | 12,159 | 12,277 | | Unamortized Debt Issuance Costs | 122 | 229 | | **Principal Debt** | **108,008** | **130,299** | | Less: Cash and Cash Equivalents | 22,664 | 26,805 | | **Net Debt** | **$85,344** | **$103,494** | - As of June 29, 2025, and June 30, 2024, Unifi's foreign operations held almost all consolidated cash and cash equivalents[32](index=32&type=chunk) [Explanation of Non-GAAP Financial Measures](index=10&type=section&id=Explanation%20of%20Non-GAAP%20Financial%20Measures) This section defines Unifi's non-GAAP financial measures, explains management's rationale for their use, and highlights their inherent limitations - Non-GAAP financial measures include EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS, and Net Debt[34](index=34&type=chunk) - Management uses these non-GAAP metrics to better reflect the company's underlying operations and performance, and as tools for comparing operating performance, planning, valuation, and assessing debt service capacity[36](index=36&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - Non-GAAP financial measures are not determined under GAAP, should not be considered substitutes for GAAP performance measures, have limitations, and investors should primarily rely on GAAP results as supplementary information[35](index=35&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) [Forward-Looking Statements](index=11&type=section&id=Forward-Looking%20Statements) This section contains cautionary statements regarding forward-looking information, outlining risks and uncertainties that could impact actual financial results [Cautionary Statement on Forward-Looking Statements](index=11&type=section&id=Cautionary%20Statement%20on%20Forward-Looking%20Statements) This section warns that forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from expectations - Forward-looking statements involve risks and uncertainties that could cause actual results, performance, or financial condition to differ materially from expectations[44](index=44&type=chunk) - Factors that could cause differences include competition in the textile industry, changes in the trade regulatory environment, raw material supply and pricing, macroeconomic and industry conditions, changes in consumer spending, natural disasters, operational disruptions, the success of strategic business initiatives, financial market volatility, currency and interest rate fluctuations, production cost fluctuations, intellectual property protection, employee relations, and tax law impacts[45](index=45&type=chunk) - The company undertakes no obligation to update any forward-looking statements unless required by federal securities laws[46](index=46&type=chunk)

PART I—FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unifi reported a net loss of $35.8 million on $432.8 million net sales for the nine months ended March 30, 2025, reflecting asset decrease and liability increase [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 30, 2025, total assets decreased to $446.5 million, total liabilities increased to $218.2 million, and shareholders' equity declined to $228.4 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Total current assets** | $245,530 | $248,933 | | **Total assets** | **$446,540** | **$469,244** | | **Total current liabilities** | $78,605 | $76,566 | | **Long-term debt** | $127,894 | $117,793 | | **Total liabilities** | **$218,154** | **$205,859** | | **Total shareholders' equity** | **$228,386** | **$263,385** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Q3 FY25 net sales decreased to $146.6 million with a $0.4 million gross loss and $16.8 million net loss, while nine-month net sales increased to $432.8 million with a narrowed $35.8 million net loss Key Operational Results (in thousands, except per share amounts) | Metric | Q3 FY2025 | Q3 FY2024 | Nine Months FY2025 | Nine Months FY2024 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $146,557 | $148,996 | $432,809 | $424,757 | | **Gross (loss) profit** | $(445) | $4,764 | $9,547 | $5,825 | | **Operating loss** | $(13,860) | $(6,926) | $(24,640) | $(36,598) | | **Net loss** | $(16,794) | $(10,295) | $(35,818) | $(43,411) | | **Diluted net loss per share** | $(0.92) | $(0.57) | $(1.96) | $(2.40) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations was $20.0 million for the nine months ended March 30, 2025, with investing activities providing $0.2 million and financing activities providing $9.3 million, leading to a $10.6 million cash decrease Cash Flow Summary (in thousands) | Activity | Nine Months Ended March 30, 2025 | Nine Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net cash (used) provided by operating activities** | $(19,994) | $1,160 | | **Net cash provided (used) by investing activities** | $179 | $(8,076) | | **Net cash provided (used) by financing activities** | $9,275 | $(12,236) | | **Net decrease in cash and cash equivalents** | $(10,550) | $(19,298) | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, REPREVE® Fiber sales, increased debt, segment performance, and the Madison facility closure with associated costs and a $53.2 million sale agreement REPREVE® Fiber Net Sales (in thousands) | Period | REPREVE® Fiber Sales | % of Total Net Sales | | :--- | :--- | :--- | | **Three Months Ended March 30, 2025** | $44,699 | 30.5% | | **Three Months Ended March 31, 2024** | $46,754 | 31.4% | | **Nine Months Ended March 30, 2025** | $132,713 | 30.7% | | **Nine Months Ended March 31, 2024** | $134,940 | 31.8% | - On October 25, 2024, UNIFI entered into a new **$25,000** revolving credit facility, collateralized by personal assets of board member Kenneth G. Langone. In January 2025, UNIFI borrowed **$22,000** against this facility[46](index=46&type=chunk)[47](index=47&type=chunk) - On February 3, 2025, UNIFI announced the pending closure of its Madison, North Carolina facility. This resulted in **$1.32 million** of restructuring costs in Q3 FY25. The company estimates an additional **$6 to $8 million** in related costs[77](index=77&type=chunk)[78](index=78&type=chunk) - Subsequent to the quarter-end, on April 10, 2025, UNIFI entered an agreement to sell the Madison, NC facility and related equipment for a cash price of **$53,200**, with proceeds intended to repay debt[79](index=79&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses performance in a challenging textile market, noting Q3 FY25 sales decrease and Adjusted EBITDA loss, while nine-month sales rose with improved Adjusted EBITDA, supported by strategic initiatives and liquidity management - The company faces adverse impacts from a challenging environment for textile production and demand, including inflation, elevated interest rates, and volatility in trade and regulatory matters[87](index=87&type=chunk) - Strategic initiatives include growing market share, expanding REPREVE® products into non-apparel markets, commercializing innovative solutions, and increasing brand awareness[86](index=86&type=chunk) [Results of Operations - Three Months Ended March 30, 2025](index=20&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20March%2030%2C%202025) Q3 FY25 consolidated net sales decreased 1.6% to $146.6 million, resulting in a $0.4 million gross loss and a widened $16.8 million net loss, with Adjusted EBITDA at a $4.9 million loss Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Description | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | **Net loss** | **$(16,794)** | **$(10,295)** | | Interest expense, net | $2,219 | $1,975 | | Provision for income taxes | $499 | $790 | | Depreciation and amortization expense | $6,259 | $6,753 | | **EBITDA** | **$(7,817)** | **$(777)** | | Transition costs | $2,900 | — | | **Adjusted EBITDA** | **$(4,917)** | **$(777)** | - Gross profit decreased by **$5.2 million**, primarily due to lower conversion margins in the Americas, softer sales in Asia, and **$1.58 million** in transition costs related to the consolidation of yarn manufacturing operations[106](index=106&type=chunk) - The company incurred **$1.32 million** in restructuring costs related to the closure of its Madison, North Carolina facility[109](index=109&type=chunk) [Results of Operations - Nine Months Ended March 30, 2025](index=25&type=section&id=Results%20of%20Operations%20-%20Nine%20Months%20Ended%20March%2030%2C%202025) Nine-month net sales increased 1.9% to $432.8 million, gross profit grew to $9.5 million, and net loss narrowed to $35.8 million, with Adjusted EBITDA improving to a $7.5 million loss Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Description | Nine Months FY2025 | Nine Months FY2024 | | :--- | :--- | :--- | | **Net loss** | **$(35,818)** | **$(43,411)** | | Interest expense, net | $6,690 | $5,795 | | Provision for income taxes | $4,021 | $707 | | Depreciation and amortization expense | $19,046 | $20,663 | | **EBITDA** | **$(6,061)** | **$(16,246)** | | Transition costs | $2,900 | — | | Gain on sale of assets | $(4,296) | — | | Restructuring costs | — | $5,101 | | **Adjusted EBITDA** | **$(7,457)** | **$(11,145)** | - Gross profit increased due to higher sales volumes, cost-saving initiatives, and improved productivity, though it was unfavorably impacted by weak fixed cost absorption in the Americas segment[138](index=138&type=chunk) - A gain of **$4.3 million** was recorded from the sale of a warehouse in Yadkinville, North Carolina[143](index=143&type=chunk) [Segment Overview](index=22&type=section&id=Segment%20Overview) For the nine-month period, Americas segment returned to profitability with $1.1 million profit, Brazil segment profit increased 44.6% to $16.8 million, and Asia segment profit declined 31.8% to $9.8 million Segment (Loss) Profit (in thousands) | Segment | Nine Months FY2025 | Nine Months FY2024 | % Change | | :--- | :--- | :--- | :--- | | **Americas** | $1,120 | $(1,154) | 197.1% | | **Brazil** | $16,755 | $11,590 | 44.6% | | **Asia** | $9,755 | $14,314 | (31.8)% | - The Americas segment's profit improvement was driven by higher margins from better variable cost management, despite weak fixed cost absorption and transition costs from facility consolidation[154](index=154&type=chunk) - The Brazil segment's profit growth was attributable to higher conversion margins and increased sales volumes from market share gains, partially offset by unfavorable foreign currency effects[157](index=157&type=chunk) - The Asia segment's profit decline was caused by a lower gross margin rate associated with a change in the sales mix of REPREVE products[159](index=159&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by credit facilities, with available liquidity of $44.5 million as of March 30, 2025, and net debt increasing to $123.7 million, partially offset by a new credit facility and a subsequent asset sale agreement Net Debt Reconciliation (in thousands) | Description | March 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Debt principal | $140,002 | $130,299 | | Less: cash and cash equivalents | $16,255 | $26,805 | | **Net Debt** | **$123,747** | **$103,494** | - As of March 30, 2025, the company had **$45.1 million** in availability under its ABL Revolver and **$0.6 million** under its 2024 Facility[162](index=162&type=chunk) - Subsequent to quarter-end, UNIFI agreed to sell its Madison, NC facility for **$53.2 million**, with net proceeds to be used for debt repayment[165](index=165&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Unifi faces market risks from interest rate fluctuations, foreign currency exchange rates, and raw material costs, with a 50-basis point rate increase potentially raising annual interest expense by $0.7 million - A **50-basis point** increase in interest rates would result in an approximate **$700,000** increase in annual interest expense on the company's **$133.0 million** of ABL Facility borrowings[187](index=187&type=chunk) - As of March 30, 2025, **29.6%** of total consolidated assets were held by subsidiaries outside the U.S. with a functional currency other than the USD, indicating significant foreign currency exposure[188](index=188&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) As of March 30, 2025, Unifi's disclosure controls and procedures were deemed effective, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 30, 2025[191](index=191&type=chunk) - No changes occurred during the quarter ended March 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[192](index=192&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, none of which are expected to have a material adverse effect on its financial position, results, or cash flows - The company does not believe that any ongoing legal proceedings would be expected to have a material adverse effect on its results of operations, financial position, or cash flows[194](index=194&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since the Annual Report on Form 10-K for the fiscal year ended June 30, 2024 - No material changes in UNIFI's risk factors have occurred since the filing of the 2024 Form 10-K[195](index=195&type=chunk) [Other Information](index=36&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended March 30, 2025 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the third fiscal quarter[196](index=196&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including credit agreement amendments, CEO and CFO certifications, and XBRL data files

Financial Data and Key Metrics Changes - Consolidated net sales for Q3 2025 were $146.6 million, down 2% year-over-year, primarily due to lower sales volumes in the Asia segment and unfavorable foreign currency impacts [17][25] - Gross margin in the Americas segment declined by 350 basis points, driven by inflationary pressures and transition costs related to the manufacturing footprint reduction [25][26] - The company anticipates significant savings of $20 million from the consolidation of manufacturing activities across North and Central America, expected to fully materialize in calendar 2026 [27][30] Business Line Data and Key Metrics Changes - In the Americas segment, net sales increased by 3% compared to the prior year, driven by sales growth initiatives and improved market conditions [25][26] - The Asia segment experienced a 12% decline in net sales, attributed to macroeconomic pressures and a less favorable sales mix [26][27] - REPREVE represented 31% of sales during the quarter, remaining stable compared to the previous year despite macroeconomic challenges in China [18][19] Market Data and Key Metrics Changes - Demand in North America is improving, particularly in Central America, where over 50% of business has been reprieved, indicating positive future prospects [6][7] - The Brazil segment continues to perform well due to a stable market for textured polyester, despite pricing pressures from imports [17][26] - The company is monitoring the tariff environment closely, with expectations of a potential 10% to 15% revenue decline in Asia if current tariffs remain in place [42][45] Company Strategy and Development Direction - The company is focused on rationalizing assets and improving profitability, including the closure of the Madison facility and the sale of the facility for $53.2 million to enhance the balance sheet [13][14] - Innovation remains a key focus, with traction in military wear and carpet products expected to drive revenue growth in the new fiscal year [9][10] - The company aims to leverage its asset-light model in Asia while exploring opportunities in markets beyond apparel, such as automotive and packaging [50][81] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to growth and solid economics in the new fiscal year, driven by ongoing initiatives and improved capacity utilization [11][14] - The global tariff situation remains fluid, but management believes it could lead to a net neutral to positive impact on the business over the next few years [17][42] - The company expects to generate positive free cash flow and improve investment opportunities as restructuring efforts yield results [30][32] Other Important Information - The company received several accolades for its sustainability efforts, including recognition from Fast Company and Newsweek, highlighting its commitment to innovation and circularity [21][22] - The Madison facility's closure is expected to be completed by mid-June, with no anticipated loss in revenues or disruptions in customer service [14][27] Q&A Session Summary Question: FX impact in Brazil - The foreign exchange headwind for the Brazil segment was approximately $4 million for the quarter and $11 million for the nine months [46] Question: Margins in Beyond Apparel markets - Margins for military wear and carpet products are at least twice as good as the base business [37][39] Question: Impact of de minimis rule exemption - The overall impact of de minimis and tariffs could lead to a downturn in business in Asia by 10% to 15% [42][45] Question: Cost savings from facility consolidation - Some cost savings are expected to materialize in the first quarter of fiscal 2026, but full run rate savings will not be realized until later in the calendar year [47][48] Question: Profitability disclosure for REPREVE - REPREVE is a material component of the Asia segment, accounting for over 80% of overall Asia segment sales [64][66] Question: Future asset sales - Currently, there are no other assets slated for sale, but the company continues to evaluate its balance sheet for additional opportunities [81]

Financial Data and Key Metrics Changes - Consolidated net sales for Q3 2025 were $146.6 million, down 2% year-over-year, primarily due to lower sales volumes in the Asia segment and unfavorable foreign currency impacts [18][26][48] - Gross margin in the Americas segment declined by 350 basis points, driven by inflationary pressures and transition costs related to the manufacturing footprint reduction [26][27] - The sale of the Madison facility for $53.2 million is expected to significantly improve the balance sheet and reduce outstanding debt [13][28] Business Line Data and Key Metrics Changes - In the Americas segment, net sales increased by 3% compared to the prior year, driven by sales growth initiatives and improved market conditions [18][26] - The Asia segment experienced a 12% decline in net sales, attributed to macroeconomic pressures and a less favorable sales mix [19][27] - REPREVE represented 31% of sales during the quarter, remaining stable compared to the previous year despite macroeconomic challenges in China [19][20] Market Data and Key Metrics Changes - Demand in North America is improving, particularly in Central America, where over 50% of business has been reprieved recently [6][7] - The Brazil segment continues to perform well due to a stable market for textured polyester, despite pricing pressures from imports [18][26] - The tariff situation remains fluid, with potential benefits for the Americas segment if tariffs on China remain in place [15][16] Company Strategy and Development Direction - The company is focused on optimizing its business and improving profitability through asset rationalization and cost savings initiatives [3][14] - Innovation efforts are being emphasized, particularly in military wear and carpet, which are expected to yield better margins than the base business [8][12] - The company aims to leverage its asset-light model in Asia while exploring opportunities in new markets beyond apparel, such as automotive and packaging [51][52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to growth and solid economics in the new fiscal year, driven by ongoing initiatives and improved capacity utilization [11][30] - The company is closely monitoring the tariff environment and expects it to have a net neutral to positive impact over the next few years [18][32] - Management anticipates significant savings from the consolidation of manufacturing activities, with a projected $20 million reduction in cost of sales [28][31] Other Important Information - The company has received several accolades for its sustainability efforts, including recognition from Fast Company and Newsweek [22] - The Madison facility is set to close in mid-June, with the transition expected to enhance liquidity and margin performance [14][28] Q&A Session Summary Question: FX impact in Brazil - The foreign exchange headwind for the Brazil segment was approximately $4 million for the quarter and $11 million for the nine months [47] Question: Margins in Beyond Apparel - Margins for military wear and carpet are at least twice as good as the base business [37] Question: Impact of de minimis rule exemption - The overall impact of de minimis and tariffs could lead to a downturn in Asia business by 10% to 15% [43][46] Question: Cost savings realization timeline - Some cost savings from facility consolidation are expected to materialize in the first quarter of fiscal 2026, but full run rate savings will not be realized until later in the calendar year [48][49] Question: Profitability disclosure for REPREVE - REPREVE constitutes over 80% of overall Asia segment sales, but detailed profitability metrics will not be disclosed at this time [66][68]

Financial Data and Key Metrics Changes - Consolidated net sales for Q3 2025 were $146.6 million, down 2% year-over-year, primarily due to lower sales volumes in the Asia segment and unfavorable foreign currency impacts [16][24]. - Gross margin in the Americas segment declined by 350 basis points, driven by inflationary pressures and transition costs related to the manufacturing footprint reduction [25]. - The sale of the Madison facility for $53.2 million is expected to significantly improve the balance sheet and reduce outstanding debt [12][27]. Business Line Data and Key Metrics Changes - In the Americas segment, net sales increased by 3% compared to the prior year, driven by the Beyond Apparel initiatives and positive momentum in Central America [24][17]. - The Asia segment experienced a 12% decline in net sales, attributed to macroeconomic pressures and a weaker sales mix [26][18]. - REPREVE represented 31% of sales during the quarter, remaining stable compared to the previous year despite macroeconomic challenges in China [18]. Market Data and Key Metrics Changes - Demand in North America is improving, particularly in Central America, where over 50% of business has been REPREVE [6][7]. - The Brazil segment continues to perform well due to a stable market for textured polyester, despite pricing pressures from imports [17]. - The impact of tariffs remains uncertain, but the company anticipates potential benefits in the Americas segment if tariffs on imports remain in place [14]. Company Strategy and Development Direction - The company is focused on rationalizing assets and improving profitability, including the closure of the Madison facility and consolidation of operations [3][4]. - Innovation efforts are being prioritized, particularly in military wear and carpet, which are expected to yield better margins than the base business [8][10]. - The company aims to leverage its asset-light model in Asia while exploring opportunities in new markets such as automotive and packaging [49][78]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to growth and solid economics in the new fiscal year, driven by ongoing initiatives and improved capacity utilization [10][30]. - The company is closely monitoring the tariff situation and believes it could lead to a net neutral to positive impact over the next few years [16][14]. - Management expects to see significant savings from the consolidation of manufacturing activities, with a projected $20 million reduction in cost of sales [27]. Other Important Information - The company has received several accolades for its sustainability efforts, including recognition from Fast Company and Newsweek [21]. - The Madison facility's sale is anticipated to close on May 15, with no significant contingencies expected [56]. Q&A Session Summary Question: What was the FX impact in Brazil? - The FX impact in Brazil was approximately $4 million for the quarter and $11 million for the nine months [44]. Question: What are the margins for the carpet and military markets? - Margins for these markets are at least twice as good as the base business [36]. Question: How will the de minimis rule exemption impact the business? - The overall impact could lead to a downturn in the Asia business by 10% to 15% [40][43]. Question: When will cost savings from facility consolidation be realized? - Some cost savings are expected in the first quarter of fiscal 2026, but full realization will take longer [45]. Question: What percentage of Asia revenue comes from China? - The company does not disclose the specific percentage of Asia revenue from China [72]. Question: Will there be additional disclosures on the profitability of REPREVE? - Current reporting structure will remain for the foreseeable future, but the Asia segment's margin is influenced significantly by REPREVE [62][63].