Core Insights - The consumer discretionary sector has several oversold stocks, presenting potential buying opportunities for undervalued companies [1][2] Group 1: Oversold Stocks - Portillos Inc (NASDAQ: PTLO) has an RSI of 29.9, with a stock price decline of approximately 22% over the past month, reaching a 52-week low of $4.64 [8] - Unifi Inc (NYSE: UFI) has an RSI of 29.7, with a stock price drop of around 20% in the last month, hitting a 52-week low of $3.58 [8] - Brinker International Inc (NYSE: EAT) has an RSI of 29.3, despite reporting strong quarterly earnings, its stock fell about 18% over the past month, with a 52-week low of $100.30 [8]

Group 1 - The article does not provide any specific content or key points related to a company or industry [1]

Financial Performance - Net sales for the three months ended September 28, 2025, were $135,674, a decrease of 7.9% compared to $147,372 for the same period in 2024[95] - Gross profit for the current period was $3,387, representing a gross margin of 2.5%, down from 6.4% in the prior period, indicating a decline of 64.2%[95] - The operating loss increased to $9,630, compared to a loss of $3,216 in the prior period, reflecting a 199.4% increase in losses[95] - Net loss for the current period was $11,357, an increase of 48.8% from a net loss of $7,632 in the prior period[95] - Adjusted EBITDA for the three months ended September 28, 2025, was $(2,544), compared to $3,299 in the prior period, indicating a significant decline in operational performance[96] - Consolidated net sales decreased by $11,698, or 7.9%, with sales volumes down 5.2% compared to the prior period, primarily due to lower sales volumes and pricing in the Asia and Brazil segments[102] - Gross profit fell to $3,387 from $9,458 in the prior period, driven by lower sales volumes, conversion margins, and production volatility due to tariff uncertainty[104] - Adjusted EBITDA and Adjusted EPS decreased primarily due to lower gross profit[115] Restructuring and Strategic Initiatives - The company expects to incur restructuring charges between $500,000 and $1,000,000 in the second quarter of fiscal 2026, primarily related to severance costs[88] - UNIFI's strategic initiatives include expanding its presence in non-apparel markets and advancing the development of innovative and sustainable solutions[83] - UNIFI's profit improvement plan includes reducing variable manufacturing costs and eliminating a meaningful percentage of salaried positions in the U.S.[88] - Restructuring costs of $1,068 were incurred due to the closure of the Madison, North Carolina facility, including $1,021 for equipment relocation and $47 for employee separation[107] Segment Performance - Net sales in the Americas Segment were $85,196, a decrease of 1.3% from $86,283, primarily due to a lower-priced sales mix[117] - Brazil Segment net sales dropped 16.2% to $28,761, impacted by lower selling prices and sales volumes, partially offset by favorable foreign currency translation effects[119] - Asia Segment net sales decreased by 18.9% to $21,717, primarily due to lower sales volumes and competitive pricing pressures[121] Debt and Liquidity - As of September 28, 2025, UNIFI had $120,345 in debt obligations, all guaranteed by domestic operating subsidiaries[126] - The company reported total debt obligations of $120,345 million, with net debt increasing to $99,790 million from $85,344 million as of June 29, 2025[134] - UNIFI's available liquidity is $40,874 million, which includes $20,336 million from domestic operations and $20,538 million from foreign operations[127] - Cash used by operations was $8,920 for the current period, with availability under the ABL Revolver and 2024 Facility at $36,233 and $586, respectively[125] - As of September 28, 2025, total cash and cash equivalents amounted to $20,555 million, with domestic operations holding $17 million and foreign operations holding $20,538 million[127] - The company maintains a compliance status with all financial covenants in the 2022 Credit Agreement and 2024 Facility, with availability under the 2024 Facility at $586 million[133] Working Capital and Capital Expenditures - Working capital increased to $168,317 million, up from $164,684 million as of June 29, 2025, with adjusted working capital rising to $159,273 million[135] - Capital expenditures for the current period were $2,029 million, aimed at enhancing future profitability through investments in machinery and equipment[141] - The increase in adjusted working capital was primarily due to reductions in accounts payable and other current liabilities, alongside increases in inventories and receivables[136] Foreign Operations - UNIFI's foreign operations hold approximately 30.8% of total consolidated assets outside the U.S., with total cash and cash equivalents held outside the U.S. amounting to $17,985 million[150] - The weighted average exchange rate for the Brazilian Real to USD was 5.45 for the current period, compared to 5.55 in the prior period[82]

Financial Data and Key Metrics Changes - Consolidated net sales for the quarter were $135.7 million, down 8% year-over-year, primarily driven by trade-related uncertainty and short-term demand volatility across each business segment [20][24] - Gross profit was lower at $3.4 million, with a gross margin of 2.5% [20] - The Americas segment saw net sales decline by 1.3% compared to the prior year, with gross profit decreasing by $300,000 [21] - The Asia segment experienced a 19% decline in net sales and a 16% decline in gross profit, although gross margin improved by 40 basis points [22] Business Line Data and Key Metrics Changes - In the Americas, reduced sales volumes were attributed to trade uncertainty and productivity shortfalls from ongoing consolidation efforts [13] - The Brazil segment faced import pricing pressures and lower sales volumes, but demand fundamentals remain strong [14] - The Asia segment's sales continued to be weak due to prolonged trade negotiations [14] Market Data and Key Metrics Changes - Apparel sales growth remains solid at a 5% increase year-over-year, with inventory levels declining significantly [3] - In Brazil, demand stability is noted, but there are concerns about dumping pressures from Asia-based companies [10] - The tariff and trade situation has negatively impacted all business segments in the short term, but may provide greater support for the Americas segment in the long term [11] Company Strategy and Development Direction - The company has resized its cost model to align with lower revenue levels, implementing cost reductions and headcount reductions to improve cash flow and EBITDA [5][12] - There is a focus on expanding beyond apparel products, including military segments, carpet, resin sales, and packaging, which are expected to contribute to revenue growth [6][18] - The company is actively working with retailers to leverage U.S. yarn in Central America to reclaim tariffs, enhancing competitiveness [9][33] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a challenging quarter due to external factors like tariffs and internal transitions, but expresses optimism for revenue momentum beginning in early 2026 [8][24] - The company expects to see improved profitability and cash flow as cost-saving measures take effect and demand recovers [24][26] - Management anticipates that the global trade situation will gain clarity by the end of calendar 2025, which should help improve top-line performance [25] Other Important Information - Reprieve fiber represented 29% of sales, down 1 percentage point from the previous year, but there is optimism for growth in Reprieve polyester resin sales [15] - Recent product launches under the AMI platform and collaborations with brands like Marmot and Lafuma are expected to enhance market presence [16][17] - The company continues to see positive momentum in beyond apparel initiatives, particularly in military and packaging applications [18] Q&A Session Summary Question: Can you provide more details about the volatility in demand and production, particularly in the Americas? - Management noted significant volatility in demand, with a rapid adjustment in production levels in response to lower-than-expected revenues [30] Question: What are customers saying about the operating environment and the upcoming holiday season? - Customers are cautious with inventory management, preparing for year-end inventories, but expect better performance in Q3 due to seasonal factors [32] Question: Can you expand on the green shoots seen with Reprieve? - There is renewed interest in Reprieve products, with expectations for growth in Asia and the Americas as ordering patterns improve [37] Question: What is the extent of the price increases mentioned? - Specific price increases were not disclosed, but they are responsive to costs and tariffs, aimed at maintaining value for customers [38] Question: What revenue is currently derived from beyond apparel initiatives? - The company expects to see significant growth in beyond apparel initiatives, estimating around $20 million in revenue by the end of calendar 2026 [40] Question: Are there any other key beyond apparel initiatives? - The automotive sector is also seen as a potential growth area, although there is caution due to industry changes [42]

Financial Performance - Q1 Fiscal 2026 - Revenue was $135.7 million, a decrease of 7.9% compared to Q1 Fiscal 2025[14, 31] - Adjusted EPS was $(0.56), a decrease of 33% compared to Q1 Fiscal 2025[14] - Adjusted EBITDA was $(2.5) million, a decrease of 177% compared to Q1 Fiscal 2025[14] - REPREVE® Fiber sales accounted for 29% of net sales, a decrease of 100 bps compared to Q1 Fiscal 2025[14] - Gross profit was $3.4 million, a decrease of 64.2% compared to Q1 Fiscal 2025[31] - Gross margin was 2.5%, a decrease of 390 bps compared to Q1 Fiscal 2025[31] Segment Performance - Q1 Fiscal 2026 - Americas net sales were $85.2 million, a decrease of 1.3% year-over-year, with a gross loss of $(1.7) million[35] - Brazil net sales were $28.8 million, a decrease of 16.2% year-over-year, with a gross profit of $2.7 million[39] - Asia net sales were $21.7 million, a decrease of 18.9% year-over-year, with a gross profit of $2.4 million[43] Strategic Outlook - The company expects improved free cash flow through the remainder of fiscal 2026 due to cost actions and working capital reductions[47] - The company anticipates revenue improvement in calendar 2026, supported by a clearer global trade situation[51]

Core Insights - Unifi reported a quarterly loss of $0.56 per share, which was better than the Zacks Consensus Estimate of a loss of $0.60, representing an earnings surprise of +6.67% [1] - The company generated revenues of $135.67 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.31%, but down from $147.37 million a year ago [2] - Unifi's stock has underperformed, losing about 30.7% since the beginning of the year compared to the S&P 500's gain of 16.5% [3] Financial Performance - Over the last four quarters, Unifi has surpassed consensus EPS estimates three times [2] - The current consensus EPS estimate for the upcoming quarter is -$0.22 on revenues of $147.32 million, and for the current fiscal year, it is -$0.45 on revenues of $606.28 million [7] Market Outlook - The estimate revisions trend for Unifi was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - The Zacks Industry Rank for Textile - Products is currently in the bottom 4% of over 250 Zacks industries, suggesting a challenging environment for stocks in this sector [8]

Financial Performance - Net sales for the first quarter of fiscal 2026 were $135.7 million, a decrease of 7.9% from $147.4 million in the first quarter of fiscal 2025[4][5] - Gross profit fell to $3.4 million with a gross margin of 2.5%, down from $9.5 million and 6.4% in the same quarter last year[4][6] - The net loss was $11.4 million, or $0.62 per diluted share, compared to a net loss of $7.6 million, or $0.42 per share, for the first quarter of fiscal 2025[4][7] - Adjusted EBITDA was $(2.5) million, a decline from $3.3 million in the first quarter of fiscal 2025[4][7] - The diluted earnings per share (EPS) for the three months ended September 28, 2025, was $(0.62), compared to $(0.42) for the same period in 2024[27] Revenue Breakdown - Revenues from REPREVE Fiber products were $39.3 million, representing 29% of net sales, compared to $44.7 million or 30% of net sales in the prior year[4] - The Americas segment reported net sales of $85.2 million, a slight decrease from $86.3 million in the prior year[22] Operational Changes - The company launched a restructuring program in October 2025 to enhance cost structure and improve profitability and cash flows[4] - The company incurred transition costs of $1,068 million related to the consolidation of its yarn manufacturing operations, which included facility closure and employee separation costs[25] - Management believes that the transition costs incurred will aid in the long-term consolidation and efficiency of operations[25] Future Outlook - UNIFI expects improved operating cash flows in the second quarter of fiscal 2026 due to working capital reductions and lower spending[9] - The company is focusing on minimizing operational and capital expenditures throughout fiscal 2026[9] - UNIFI plans to capitalize on investments in new innovations and circular textile solutions to strengthen its business[10] Debt and Cash Management - UNIFI's net debt as of September 28, 2025, was $99,790 million, an increase from $85,344 million as of June 29, 2025[28] - UNIFI's foreign operations held nearly all consolidated cash and cash equivalents as of September 28, 2025[29] Non-GAAP Measures - The company emphasizes the importance of non-GAAP financial measures, such as Adjusted EBITDA and Adjusted EPS, to provide a clearer view of its operating performance[31] Strategic Focus - UNIFI's strategic initiatives include focusing on the REPREVE Fiber product line, which is part of its recycled platform[30]

Core Points - Unifi, Inc. will host a conference call to discuss its first quarter fiscal 2026 financial results on November 5, 2025 [1] - The financial results and supporting materials will be available after market trading on the preceding day [1]

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

Core Insights - Unifi has experienced significant developments in Q4, which are expected to positively impact the business in fiscal 2026 [3]. Group 1: Operational Changes - The company has ceased operations at its Madison, North Carolina facility, which was a major contributor to past profit misses. The facility has been sold for a premium, and the proceeds have been utilized to pay down a substantial portion of the company's debt [4].