INVESTOR PRESENTATION March 2023 CAUTIONARY STATEMENTS Factors that could contribute to such differences include, but are not limited to: the competitive nature of the textile industry and the impact of global competition; changes in the trade regulatory environment and governmental policies and legislation; the availability, sourcing and pricing of raw materials; general domestic and international economic and industry conditions in markets where the Company competes, including economic and political facto ...

[PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) UNIFI's unaudited condensed consolidated financial statements, including balance sheets, operations, comprehensive income, equity, and cash flows, are presented with detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | Jan 1, 2023 (in thousands) | Jul 3, 2022 (in thousands) | Change | | :-------------------------- | :------------------------- | :------------------------- | :----- | | Total Assets | $528,233 | $588,718 | (10.3%) | | Total Liabilities | $193,354 | $227,269 | (14.9%) | | Total Shareholders' Equity | $334,879 | $361,449 | (7.3%) | | Cash and cash equivalents | $50,781 | $53,290 | (4.7%) | | Receivables, net | $64,980 | $106,565 | (39.0%) | | Inventories | $147,253 | $173,295 | (15.0%) | | Accounts payable | $33,784 | $73,544 | (54.0%) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric (Three Months) | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | Change | | :-------------------- | :------------------------- | :-------------------------- | :----- | | Net sales | $136,212 | $201,410 | (32.4%) | | Gross (loss) profit | $(8,000) | $16,890 | (147.4%) | | Operating (loss) income | $(19,818) | $4,591 | nm | | Net (loss) income | $(18,037) | $929 | nm | | Basic EPS | $(1.00) | $0.05 | nm | | Metric (Six Months) | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | Change | | :------------------ | :------------------------- | :-------------------------- | :----- | | Net sales | $315,731 | $397,402 | (20.6%) | | Gross (loss) profit | $(1,437) | $42,987 | (103.3%) | | Operating (loss) income | $(24,513) | $17,842 | nm | | Net (loss) income | $(25,871) | $9,609 | nm | | Basic EPS | $(1.44) | $0.52 | nm | [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income) | Metric (Three Months) | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | | :-------------------- | :------------------------- | :-------------------------- | | Net (loss) income | $(18,037) | $929 | | Foreign currency translation adjustments | $3,447 | $(1,162) | | Comprehensive (loss) income | $(14,590) | $(26) | | Metric (Six Months) | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | | :------------------ | :------------------------- | :-------------------------- | | Net (loss) income | $(25,871) | $9,609 | | Foreign currency translation adjustments | $(2,461) | $(8,088) | | Comprehensive (loss) income | $(28,332) | $1,984 | [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) | Metric | Jan 1, 2023 (in thousands) | Jul 3, 2022 (in thousands) | Change | | :-------------------------- | :------------------------- | :------------------------- | :----- | | Total Shareholders' Equity | $334,879 | $361,449 | (7.3%) | | Retained Earnings | $327,265 | $353,136 | (7.3%) | | Accumulated Other Comprehensive Loss | $(62,066) | $(59,605) | (4.1%) | - Net loss for the six months ended January 1, 2023, was **$25,871 thousand**, contributing to the decrease in retained earnings[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric (Six Months) | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | Change | | :------------------------------------ | :------------------------- | :-------------------------- | :----- | | Net cash provided (used) by operating activities | $7,272 | $(3,950) | nm | | Net cash used by investing activities | $(24,526) | $(19,085) | (28.5%) | | Net cash provided (used) by financing activities | $15,396 | $(6,794) | nm | | Net decrease in cash and cash equivalents | $(2,509) | $(30,633) | 91.8% | | Cash and cash equivalents at end of period | $50,781 | $47,620 | 6.6% | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Background](index=9&type=section&id=1.%20Background) - UNIFI manufactures and sells innovative recycled and synthetic products (polyester and nylon) to direct customers (yarn manufacturers, knitters, weavers) and indirect customers (brand partners) for apparel, hosiery, home furnishings, automotive, industrial, and other markets[28](index=28&type=chunk) - The company has direct manufacturing operations in four countries and joint ventures in Israel and the U.S., with principal geographic markets in North America, Central America, South America, Asia, and Europe[29](index=29&type=chunk) [2. Basis of Presentation; Condensed Notes](index=9&type=section&id=2.%20Basis%20of%20Presentation%3B%20Condensed%20Notes) - Financial statements are unaudited and prepared under U.S. GAAP for interim reporting, with condensed disclosures[30](index=30&type=chunk) - Interim results are based on management estimates and assumptions and are not necessarily indicative of full-year performance[31](index=31&type=chunk) [3. Recent Accounting Pronouncements](index=9&type=section&id=3.%20Recent%20Accounting%20Pronouncements) - No newly issued or applicable accounting pronouncements are expected to materially impact UNIFI's consolidated financial statements[34](index=34&type=chunk) [4. Revenue](index=10&type=section&id=4.%20Revenue) | Revenue Type (Three Months) | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | Change | | :-------------------------- | :------------------------- | :-------------------------- | :----- | | Third-party manufacturer | $135,018 | $199,585 | (32.3%) | | Service | $1,194 | $1,825 | (34.6%) | | Net sales | $136,212 | $201,410 | (32.4%) | | Product Type (Three Months) | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | Change | | :-------------------------- | :------------------------- | :-------------------------- | :----- | | REPREVE® Fiber | $42,866 | $81,524 | (47.4%) | | All other products and services | $93,346 | $119,886 | (22.2%) | | Net sales | $136,212 | $201,410 | (32.4%) | - REPREVE® Fiber sales comprised **31% of consolidated net sales** for the current three-month period, down from 40% in the prior period, primarily due to lower volumes and net sales in the Asia Segment[116](index=116&type=chunk) [5. Long-Term Debt](index=10&type=section&id=5.%20Long-Term%20Debt) | Debt Type | Jan 1, 2023 (in thousands) | Jul 3, 2022 (in thousands) | Change | | :-------------------------- | :------------------------- | :------------------------- | :----- | | ABL Revolver | $3,400 | $41,300 | (91.8%) | | ABL Term Loan | $115,000 | $65,000 | 76.9% | | Total debt | $130,391 | $114,290 | 14.1% | - UNIFI entered into a new **$230 million senior secured credit facility** (2022 ABL Facility) on October 28, 2022, including a **$115 million revolving credit facility** and a term loan, maturing October 28, 2027[47](index=47&type=chunk) - A **$273 thousand loss on debt extinguishment** was recorded in the second quarter of fiscal 2023 in connection with the new credit agreement[49](index=49&type=chunk) [6. Income Taxes](index=11&type=section&id=6.%20Income%20Taxes) | Metric (Three Months) | Jan 1, 2023 | Dec 26, 2021 | | :-------------------- | :---------- | :----------- | | (Benefit) provision for income taxes | $(3,070) | $3,185 | | Effective tax rate | 14.5% | 77.4% | | Metric (Six Months) | Jan 1, 2023 | Dec 26, 2021 | | :------------------ | :---------- | :----------- | | (Benefit) provision for income taxes | $(336) | $7,598 | | Effective tax rate | 1.3% | 44.2% | - The effective tax rate for the current periods varied from the U.S. federal statutory rate primarily due to losses for which UNIFI does not expect to realize a future benefit and a discrete tax benefit related to the recovery of certain Brazilian income taxes paid in prior years[54](index=54&type=chunk) [7. Shareholders' Equity](index=11&type=section&id=7.%20Shareholders'%20Equity) - UNIFI has a **$50 million share repurchase program** (2018 SRP) approved on October 31, 2018, with **$38,859 thousand remaining** as of January 1, 2023[57](index=57&type=chunk)[59](index=59&type=chunk) - No shares were repurchased under the 2018 SRP in fiscal 2023 through January 1, 2023[59](index=59&type=chunk) [8. Stock-Based Compensation](index=12&type=section&id=8.%20Stock-Based%20Compensation) | 2020 Plan Share Availability (as of Jan 1, 2023) | Shares (in thousands) | | :----------------------------------------------- | :-------------------- | | Authorized under the 2020 Plan | 850 | | Awards granted to employees | (544) | | Awards granted to non-employee directors | (114) | | Available for issuance under the 2020 Plan | 196 | - The ESPP, approved in October 2021, reserved **100 thousand Company shares** and allows eligible employees to purchase shares at a **15% discount**[61](index=61&type=chunk) [9. Fair Value of Financial Instruments and Non-Financial Assets and Liabilities](index=12&type=section&id=9.%20Fair%20Value%20of%20Financial%20Instruments%20and%20Non-Financial%20Assets%20and%20Liabilities) - UNIFI uses derivative financial instruments to reduce exposure to foreign currency and interest rate fluctuations, but has had no outstanding derivative instruments since June 2022[63](index=63&type=chunk) - The fair values of debt obligations and other short-term financial instruments (cash, receivables, payables) approximate their carrying amounts[65](index=65&type=chunk) [10. Accumulated Other Comprehensive Loss](index=13&type=section&id=10.%20Accumulated%20Other%20Comprehensive%20Loss) | Metric | Jan 1, 2023 (in thousands) | Jul 3, 2022 (in thousands) | Change | | :-------------------------------- | :------------------------- | :------------------------- | :----- | | Accumulated Other Comprehensive Loss | $(62,066) | $(59,605) | (4.1%) | | Other comprehensive loss (six months) | $(2,461) | N/A | N/A | [11. Earnings Per Share](index=13&type=section&id=11.%20Earnings%20Per%20Share) | Metric (Three Months) | Jan 1, 2023 | Dec 26, 2021 | | :-------------------- | :---------- | :----------- | | Basic EPS | $(1.00) | $0.05 | | Diluted EPS | $(1.00) | $0.05 | | Metric (Six Months) | Jan 1, 2023 | Dec 26, 2021 | | :------------------ | :---------- | :----------- | | Basic EPS | $(1.44) | $0.52 | | Diluted EPS | $(1.44) | $0.51 | [12. Commitments and Contingencies](index=13&type=section&id=12.%20Commitments%20and%20Contingencies) - UNIFI's Brazilian employees are unionized; other subsidiaries are not covered by collective bargaining agreements[69](index=69&type=chunk) - UNIFI is involved in environmental remediation at the Kinston and Kentec sites in North Carolina. DuPont is responsible for Kinston, while UNIFI's subsidiary UK assumed sole remediator responsibility for Kentec in 2019, with no expected material costs[70](index=70&type=chunk) [13. Related Party Transactions](index=14&type=section&id=13.%20Related%20Party%20Transactions) | Related Party Payables (Salem Leasing) | Jan 1, 2023 (in thousands) | Jul 3, 2022 (in thousands) | Change | | :------------------------------------- | :------------------------- | :------------------------- | :----- | | Accounts payable | $333 | $432 | (22.8%) | | Operating lease obligations | $651 | $811 | (19.7%) | | Finance lease obligations | $4,311 | $4,933 | (12.6%) | | Total related party payables | $5,295 | $6,176 | (14.2%) | | Transaction Type (Salem Leasing) | Jan 1, 2023 (3 months, in thousands) | Dec 26, 2021 (3 months, in thousands) | Jan 1, 2023 (6 months, in thousands) | Dec 26, 2021 (6 months, in thousands) | | :------------------------------- | :--------------------------------- | :--------------------------------- | :--------------------------------- | :--------------------------------- | | Payments for transportation equipment costs and finance lease debt service | $1,184 | $1,059 | $2,383 | $2,087 | [14. Business Segment Information](index=14&type=section&id=14.%20Business%20Segment%20Information) - UNIFI realigned its operating segments in Q4 fiscal 2022 into Americas, Brazil, and Asia, with comparative prior period disclosures updated[75](index=75&type=chunk) - Segment operating performance is evaluated based on Segment Profit, defined as segment gross (loss) profit plus segment depreciation expense[77](index=77&type=chunk) - The Americas Segment includes operations in the U.S., El Salvador, and Colombia, selling synthetic and recycled textile products primarily in North and Central America. The Brazil Segment focuses on polyester-based products in Brazil. The Asia Segment sources and sells textile products primarily in Asia and Europe, with sales offices in China, Turkey, and Hong Kong[79](index=79&type=chunk) [15. Investments in Unconsolidated Affiliates](index=15&type=section&id=15.%20Investments%20in%20Unconsolidated%20Affiliates) - UNIFI has equity investments in unconsolidated affiliates, U.N.F. Industries, Ltd. (Israel) and UNF America LLC (U.S.), which are treated as equity investments despite UNIFI being the primary beneficiary and purchasing substantially all their output[82](index=82&type=chunk)[88](index=88&type=chunk) | Raw Material Purchases from Affiliates (Six Months) | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | Change | | :------------------------------------------------ | :------------------------- | :-------------------------- | :----- | | UNFA | $12,791 | $12,582 | 1.7% | | UNF | $37 | $146 | (74.6%) | | Total | $12,828 | $12,728 | 0.8% | [16. Supplemental Cash Flow Information](index=16&type=section&id=16.%20Supplemental%20Cash%20Flow%20Information) | Cash Payments (Six Months) | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | | :------------------------- | :------------------------- | :-------------------------- | | Interest, net | $2,739 | $1,280 | | Income tax payments, net | $4,064 | $9,520 | - Non-cash financing activities included a **$52.5 million transfer of revolving credit facility borrowings** to the term loan in October 2022[93](index=93&type=chunk) [17. Other Financial Data](index=17&type=section&id=17.%20Other%20Financial%20Data) | Metric | Jan 1, 2023 (in thousands) | Jul 3, 2022 (in thousands) | Change | | :-------------------------------- | :------------------------- | :------------------------- | :----- | | Net customer receivables | $59,288 | $97,605 | (39.2%) | | Total inventories | $147,253 | $173,295 | (15.0%) | | Total property, plant and equipment, net | $226,279 | $216,338 | 4.6% | | Total other non-current assets | $13,222 | $8,788 | 50.5% | | Total other current liabilities | $11,345 | $19,806 | (42.7%) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses UNIFI's financial performance and condition, detailing results for the three and six months ended January 1, 2023, segment performance, and liquidity [Overview and Significant General Matters](index=18&type=section&id=Overview%20and%20Significant%20General%20Matters) - UNIFI's strategic initiatives include growing market share, expanding REPREVE® products into non-apparel markets, advancing sustainable solutions, and increasing REPREVE® brand awareness[100](index=100&type=chunk) - The current economic environment, characterized by decreased textile product demand, inflation, rising interest rates, the Russia-Ukraine conflict, global input cost volatility, and supply chain disruption, has adversely impacted consolidated sales and profitability in fiscal 2023[101](index=101&type=chunk) [Current Economic Environment](index=18&type=section&id=Current%20Economic%20Environment) - Lower global demand, inventory destocking by brands and retailers, inflation, rising interest rates, and the Russia-Ukraine conflict have negatively impacted UNIFI's sales and profitability[101](index=101&type=chunk) [Input Costs and Global Production Volatility](index=18&type=section&id=Input%20Costs%20and%20Global%20Production%20Volatility) - Despite improvements in input and freight costs and a more stable labor pool, global demand volatility and uncertainty continue due to recession threats, potentially impacting sales and gross profit[102](index=102&type=chunk) - Future selling price adjustments due to inflationary costs could affect the ability to retain customers and compete for new programs[102](index=102&type=chunk) [Key Performance Indicators and Non-GAAP Financial Measures](index=18&type=section&id=Key%20Performance%20Indicators%20and%20Non-GAAP%20Financial%20Measures) - UNIFI uses key performance indicators such as sales volume, revenue, gross profit, net income, diluted EPS, Segment Profit, unit conversion margin, working capital, EBITDA, and various adjusted non-GAAP financial measures[103](index=103&type=chunk)[108](index=108&type=chunk) - Non-GAAP financial measures like Adjusted EBITDA, Adjusted Net (Loss) Income, Adjusted EPS, Adjusted Working Capital, and Net Debt are used to better reflect underlying operations and performance, aiding in consistent comparisons and planning[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) [Review of Results of Operations (Three Months Ended January 1, 2023 Compared to Three Months Ended December 26, 2021)](index=20&type=section&id=Review%20of%20Results%20of%20Operations%20(Three%20Months%20Ended%20January%201%2C%202023%20Compared%20to%20Three%20Months%20Ended%20December%2026%2C%202021)) [Consolidated Overview (Three Months)](index=20&type=section&id=Consolidated%20Overview%20(Three%20Months)) | Metric | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | % Change | | :-------------------------- | :------------------------- | :-------------------------- | :------- | | Net sales | $136,212 | $201,410 | (32.4%) | | Cost of sales | $144,212 | $184,520 | (21.8%) | | Gross (loss) profit | $(8,000) | $16,890 | (147.4%) | | Operating (loss) income | $(19,818) | $4,591 | nm | | Net (loss) income | $(18,037) | $929 | nm | - Consolidated net sales decreased by **32.4%** due to lower volumes in the Americas and Asia Segments, driven by lower global demand and inventory de-stocking, partially offset by higher selling prices[115](index=115&type=chunk) - Gross profit decreased by **147.4%** to a loss of **$8.0 million**, primarily due to declining net sales and weak fixed cost absorption in the Americas Segment[117](index=117&type=chunk) | Non-GAAP Metric | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | | :---------------- | :------------------------- | :-------------------------- | | EBITDA | $(13,039) | $10,921 | | Adjusted EBITDA | $(13,039) | $10,921 | [Segment Overview (Three Months)](index=22&type=section&id=Segment%20Overview%20(Three%20Months)) - Americas Segment gross profit decreased due to weaker global demand, weak fixed cost absorption from lower production, and higher priced raw material inventory[124](index=124&type=chunk) - Brazil Segment gross profit decreased due to high-priced raw material inventory and decreasing market prices from lower cost import competition[124](index=124&type=chunk) - Asia Segment gross profit decreased due to lower sales volumes from weaker global demand and pandemic-related lockdowns[124](index=124&type=chunk) [Americas Segment (Three Months)](index=22&type=section&id=Americas%20Segment%20(Three%20Months)) | Metric | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | % Change | | :---------------- | :------------------------- | :-------------------------- | :------- | | Net sales | $85,242 | $114,697 | (25.7%) | | Gross (loss) profit | $(13,084) | $853 | nm | | Segment (Loss) Profit | $(7,542) | $5,998 | nm | - The decrease in Segment (Loss) Profit was primarily attributable to lower production volumes driving weaker fixed cost absorption in connection with lower sales volumes[130](index=130&type=chunk) [Brazil Segment (Three Months)](index=23&type=section&id=Brazil%20Segment%20(Three%20Months)) | Metric | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | % Change | | :---------------- | :------------------------- | :-------------------------- | :------- | | Net sales | $25,687 | $27,601 | (6.9%) | | Gross profit | $1,330 | $7,526 | (82.3%) | | Segment Profit | $1,721 | $7,803 | (77.9%) | - The decrease in Segment Profit was primarily attributable to an overall decrease in gross margin mainly due to pressure on selling prices from low-priced import competition and higher raw material costs[133](index=133&type=chunk) [Asia Segment (Three Months)](index=23&type=section&id=Asia%20Segment%20(Three%20Months)) | Metric | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | % Change | | :---------------- | :------------------------- | :-------------------------- | :------- | | Net sales | $25,283 | $59,112 | (57.2%) | | Gross profit | $3,754 | $8,511 | (55.9%) | | Segment Profit | $3,754 | $8,511 | (55.9%) | - The decrease in net sales was primarily attributable to weaker global demand and pandemic-related lockdowns driving lower sales volumes[134](index=134&type=chunk) [Review of Results of Operations (Six Months Ended January 1, 2023 Compared to Six Months Ended December 26, 2021)](index=24&type=section&id=Review%20of%20Results%20of%20Operations%20(Six%20Months%20Ended%20January%201%2C%202023%20Compared%20to%20Six%20Months%20Ended%20December%2026%2C%202021)) [Consolidated Overview (Six Months)](index=24&type=section&id=Consolidated%20Overview%20(Six%20Months)) | Metric | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | % Change | | :-------------------------- | :------------------------- | :-------------------------- | :------- | | Net sales | $315,731 | $397,402 | (20.6%) | | Cost of sales | $317,168 | $354,415 | (10.5%) | | Gross (loss) profit | $(1,437) | $42,987 | (103.3%) | | Operating (loss) income | $(24,513) | $17,842 | nm | | Net (loss) income | $(25,871) | $9,609 | nm | - Consolidated net sales decreased by **20.6%** due to lower volumes in the Americas and Asia Segments, driven by lower global demand and inventory de-stocking, partially offset by higher selling prices[142](index=142&type=chunk) - Gross (loss) profit decreased by **103.3%** to a loss of **$1.4 million**, primarily due to declining net sales and weak fixed cost absorption in the Americas Segment[145](index=145&type=chunk) | Non-GAAP Metric | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | | :---------------- | :------------------------- | :-------------------------- | | EBITDA | $(10,742) | $30,760 | | Adjusted EBITDA | $(10,742) | $30,760 | [Segment Overview (Six Months)](index=26&type=section&id=Segment%20Overview%20(Six%20Months)) - Americas Segment gross profit decreased due to weaker global demand and weak fixed cost absorption from lower production[149](index=149&type=chunk) - Brazil Segment gross profit decreased primarily due to high priced raw material inventory and decreasing market prices from lower cost import competition[149](index=149&type=chunk) - Asia Segment gross profit decreased primarily due to lower sales volumes in connection with weaker global demand and pandemic-related lockdowns in Asia[149](index=149&type=chunk) [Americas Segment (Six Months)](index=26&type=section&id=Americas%20Segment%20(Six%20Months)) | Metric | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | % Change | | :---------------- | :------------------------- | :-------------------------- | :------- | | Net sales | $192,886 | $225,523 | (14.5%) | | Gross (loss) profit | $(17,953) | $10,039 | nm | | Segment (Loss) Profit | $(6,931) | $20,259 | (134.2%) | - The decrease in Segment (Loss) Profit was primarily attributable to lower production volumes driving weaker fixed cost absorption along with lower sales volumes[158](index=158&type=chunk) [Brazil Segment (Six Months)](index=27&type=section&id=Brazil%20Segment%20(Six%20Months)) | Metric | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | % Change | | :---------------- | :------------------------- | :-------------------------- | :------- | | Net sales | $64,566 | $61,339 | 5.3% | | Gross profit | $8,117 | $17,466 | (53.5%) | | Segment Profit | $8,978 | $18,126 | (50.5%) | - The decrease in Segment Profit was primarily attributable to an overall decrease in gross margin mainly due to pressure on selling prices from low-priced import competition and higher raw material costs[160](index=160&type=chunk) [Asia Segment (Six Months)](index=27&type=section&id=Asia%20Segment%20(Six%20Months)) | Metric | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | % Change | | :---------------- | :------------------------- | :-------------------------- | :------- | | Net sales | $58,279 | $110,540 | (47.3%) | | Gross profit | $8,399 | $15,482 | (45.7%) | | Segment Profit | $8,399 | $15,482 | (45.7%) | - The decrease in net sales was primarily attributable to weaker global demand and pandemic-related lockdowns driving lower sales volumes[162](index=162&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) - UNIFI's primary capital requirements are for working capital, capital expenditures, debt service, and share repurchases, funded by cash from operations and ABL Revolver borrowings[165](index=165&type=chunk) | Metric (as of Jan 1, 2023) | Domestic (in thousands) | Foreign (in thousands) | Total (in thousands) | | :------------------------- | :---------------------- | :--------------------- | :------------------- | | Cash and cash equivalents | $19 | $50,762 | $50,781 | | Borrowings available under financing arrangements | $64,694 | $0 | $64,694 | | Liquidity | $64,713 | $50,762 | $115,475 | | Working capital | $88,370 | $130,975 | $219,345 | | Total debt obligations | $130,391 | $0 | $130,391 | - As of January 1, 2023, **99% of UNIFI's cash and cash equivalents** were held by foreign subsidiaries, but the company employs strategies to ensure worldwide cash availability[166](index=166&type=chunk) [Liquidity Considerations](index=28&type=section&id=Liquidity%20Considerations) - UNIFI's cash and liquidity positions are sufficient to sustain operations and meet growth needs, supported by the 2022 Credit Agreement[169](index=169&type=chunk) - Further macroeconomic degradation could require limiting capital expenditures and discretionary activities or utilizing additional credit[169](index=169&type=chunk) - UNIFI has not taken advantage of rent/debt deferrals or relied on supply chain financing since the COVID-19 pandemic[169](index=169&type=chunk) [Liquidity Summary](index=29&type=section&id=Liquidity%20Summary) - UNIFI believes its existing cash, operating cash flows, and credit facility will meet foreseeable liquidity requirements for domestic and foreign operations[174](index=174&type=chunk) - As of January 1, 2023, UNIFI was in compliance with all financial covenants of the 2022 Credit Agreement, with **$64,694 thousand in excess availability** under the ABL Revolver[176](index=176&type=chunk) [Net Debt (Non-GAAP Financial Measure)](index=29&type=section&id=Net%20Debt%20(Non-GAAP%20Financial%20Measure)) | Metric | Jan 1, 2023 (in thousands) | Jul 3, 2022 (in thousands) | Change | | :-------------------------- | :------------------------- | :------------------------- | :----- | | Debt principal | $130,391 | $114,290 | 14.1% | | Less: cash and cash equivalents | $(50,781) | $(53,290) | 4.7% | | Net Debt | $79,610 | $61,000 | 30.5% | - Net Debt remained relatively unchanged from October 2, 2022, to January 1, 2023[175](index=175&type=chunk) [Working Capital and Adjusted Working Capital (Non-GAAP Financial Measures)](index=30&type=section&id=Working%20Capital%20and%20Adjusted%20Working%20Capital%20(Non-GAAP%20Financial%20Measures)) | Metric | Jan 1, 2023 (in thousands) | Jul 3, 2022 (in thousands) | Change | | :-------------------------- | :------------------------- | :------------------------- | :----- | | Working capital | $219,345 | $243,474 | (9.9%) | | Adjusted Working Capital | $180,307 | $205,466 | (12.3%) | - The decrease in working capital was primarily due to decreases in receivables (due to lower sales and banker's acceptance notes), inventories (due to lower raw material purchases), and other current assets, offset by a decrease in accounts payable[178](index=178&type=chunk) [Operating Cash Flows](index=30&type=section&id=Operating%20Cash%20Flows) | Metric (Six Months) | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | Change | | :------------------------------------ | :------------------------- | :-------------------------- | :----- | | Net cash provided (used) by operating activities | $7,272 | $(3,950) | nm | - The increase in operating cash flows was primarily due to reducing working capital associated with a decline in overall business activity, which was primarily offset by significantly weaker earnings[180](index=180&type=chunk) [Investing Cash Flows](index=30&type=section&id=Investing%20Cash%20Flows) - Investing activities primarily included **$23,950 thousand in capital expenditures** for the six months ended January 1, 2023[181](index=181&type=chunk) - Capital expenditures were mainly for eAFK Evo texturing machinery, production capabilities and technology enhancements in the Americas, and routine annual maintenance[182](index=182&type=chunk) [Financing Cash Flows](index=31&type=section&id=Financing%20Cash%20Flows) - Financing activities primarily included scheduled payments against the ABL Term Loan and finance leases, proceeds and payments on the ABL Revolver, and proceeds from construction financing[184](index=184&type=chunk) | Metric (Six Months) | Jan 1, 2023 (in thousands) | Dec 26, 2021 (in thousands) | | :------------------------------------ | :------------------------- | :-------------------------- | | Net cash provided (used) by financing activities | $15,396 | $(6,794) | [Share Repurchase Program](index=31&type=section&id=Share%20Repurchase%20Program) - No share repurchases were completed in fiscal 2023 through January 1, 2023[185](index=185&type=chunk) [Contractual Obligations](index=31&type=section&id=Contractual%20Obligations) - No material changes in scheduled maturities of contractual obligations since the 2022 Form 10-K, after accounting for the 2022 Credit Agreement[187](index=187&type=chunk) [Off-Balance Sheet Arrangements](index=31&type=section&id=Off-Balance%20Sheet%20Arrangements) - UNIFI is not a party to any off-balance sheet arrangements likely to have a material adverse effect on its financial condition, results of operations, liquidity, or capital expenditures[188](index=188&type=chunk) [Critical Accounting Policies](index=31&type=section&id=Critical%20Accounting%20Policies) - No changes to UNIFI's critical accounting policies in fiscal 2023[189](index=189&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) UNIFI faces market risks from interest rates, foreign currency, and raw material costs, avoiding speculative derivative use - UNIFI is exposed to market risks from interest rates, foreign currency exchange rates, and raw material/commodity costs[190](index=190&type=chunk) - UNIFI does not enter into derivative financial instruments for trading purposes[190](index=190&type=chunk) [Interest Rate Risk](index=31&type=section&id=Interest%20Rate%20Risk) - UNIFI had **$118,400 thousand in ABL Facility borrowings** as of January 1, 2023, exposing it to interest rate risk[191](index=191&type=chunk) - A **50-basis point interest rate increase** would lead to an approximate **$600 thousand increase in annual interest expense**[191](index=191&type=chunk) [Foreign Currency Exchange Rate Risk](index=31&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) | Metric (as of Jan 1, 2023) | Amount/Percentage | | :------------------------------------------------------------------------------------------------ | :---------------- | | Percentage of total consolidated assets held by foreign subsidiaries (non-USD functional currency) | 30.6% | | Total cash and cash equivalents held outside the U.S. | $48,576 | | Percentage of total cash and cash equivalents held outside the U.S. | 95.7% | | Cash and cash equivalents held outside U.S. denominated in RMB | $27,648 | | Cash and cash equivalents held outside U.S. denominated in BRL | $9,879 | - UNIFI had no outstanding foreign currency forward contracts as of January 1, 2023[193](index=193&type=chunk) [Raw Material and Commodity Cost Risks](index=31&type=section&id=Raw%20Material%20and%20Commodity%20Cost%20Risks) - Raw material costs declined in fiscal 2023 due to global demand deterioration, and UNIFI implemented responsive selling price adjustments[196](index=196&type=chunk) - Input costs remain volatile, and unexpected increases or worsening textile demand could adversely impact UNIFI's results of operations and cash flows[196](index=196&type=chunk) [Other Risks](index=32&type=section&id=Other%20Risks) - UNIFI is exposed to political risks, including changes in international trade laws and regulations (quotas, tariffs, tax laws), with unpredictable impacts[197](index=197&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management affirmed effective disclosure controls and procedures as of January 1, 2023, with no material changes in internal control - UNIFI's disclosure controls and procedures were deemed effective as of January 1, 2023[198](index=198&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended January 1, 2023[199](index=199&type=chunk) [PART II—OTHER INFORMATION](index=33&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) UNIFI is involved in ordinary course legal proceedings, with no anticipated material adverse effects on financial condition or operations - UNIFI is a party to various lawsuits and claims in the ordinary course of business[201](index=201&type=chunk) - The company does not believe any current legal proceedings would have a material adverse effect on its financial condition, results of operations, or cash flows[201](index=201&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section is not applicable to the current report - This item is not applicable[202](index=202&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) Various exhibits, including corporate governance documents, executive certifications, and Inline XBRL documents, are listed - The exhibits include Restated Certificate of Incorporation, Amended and Restated By-laws, certifications of Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents[203](index=203&type=chunk) [Signatures](index=34&type=section&id=Signatures) The report was signed by Craig A. Creaturo, Executive Vice President & Chief Financial Officer, on February 8, 2023 - The report was signed by Craig A. Creaturo, Executive Vice President & Chief Financial Officer, on February 8, 2023[207](index=207&type=chunk)

Financial Data and Key Metrics Changes - Net sales for Q2 2023 were $136.2 million, down 32% compared to Q2 2022, leading to stranded fixed costs that negatively impacted profitability [9][10][15] - Consolidated gross profit decreased from $16.9 million to negative $8.0 million, with gross margin declining from 8.4% to negative 5.9% [16] Business Line Data and Key Metrics Changes - The Americas segment saw revenues decrease by 25.7% due to significantly lower sales volumes, while Brazil experienced an 8.1% increase in sales volume, offset by lower average selling prices [15][16] - REPREVE fiber products accounted for 31% of net sales, significantly impacted by lower sales in Asia, but expected to rebound as the operating environment normalizes [12] Market Data and Key Metrics Changes - Demand disruption in the US caused by inventory destocking from retailers led to a slowdown in global apparel production, affecting overall sales [8][9] - In Asia, operations maintained a strong margin profile despite lower demand, with expectations for recovery following the Lunar New Year [11][19] Company Strategy and Development Direction - The company is focusing on cost reductions, managing inventories aggressively, and has successfully generated cash despite a challenging environment [6][10] - There is optimism regarding future growth opportunities, particularly in sustainable fibers, as demand for recycled materials increases [6][8] Management Comments on Operating Environment and Future Outlook - Management noted that the operating environment has been difficult, but there are signs of recovery with improved demand trends observed in January [5][19] - The company expects modest sequential operating improvement in Q3 2023, with a return to positive gross profit anticipated [19][23] Other Important Information - The company refinanced its credit facility, increasing borrowing capacity from $200 million to $230 million, providing liquidity during the current demand softness [17][18] - The company has $38.9 million available for share repurchases, with no repurchases conducted in fiscal 2023 so far [18] Q&A Session Summary Question: What kind of "modest" sequential increase in revenue and significant operating improvement looks like for fiscal Q3? - Management expects a return to positive gross profit and a decent increase in volumes across all segments, particularly in Brazil and Asia [21][23] Question: Any color on the magnitude of the impact from increased Asian competition? - Management indicated that Brazilian operations faced unusual pricing pressures from low-cost Asian imports, but expect margins to improve as higher-priced raw materials flow through [24] Question: What was the sort of volume versus pricing in the quarter? - Management noted that input costs are stabilizing, and they expect to hold pricing as volumes return [26][30] Question: Have you sold most of the high-cost inventory by now? - Management confirmed that inventory has flushed through in the US, while Brazil's longer supply chain means it will take more time [28] Question: Are you seeing any signs that things have picked up post-Lunar New Year? - Management reported positive signals in February, with increased demand for REPREVE and expectations for brands to place orders soon [29] Question: What is your confidence level regarding pricing in the current macro environment? - Management is being strategic with pricing, balancing between volumes and opportunities, and is optimistic about holding pricing as volumes recover [30][31]

Exhibit 99.2 1 CONFERENCE CALL PRESENTATION Second Quarter Ended January 1, 2023 (Unaudited Results) CAUTIONARY STATEMENTS Forward-Looking Statements Certain statements included herein contain "forward-looking statements" within the meaning of federal securities laws about the financial condition and results of operations of the Company that are based on management's beliefs, assumptions and expectations about our future economic performance, considering the information currently available to management. An ...

FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 2, 2022 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-10542 UNIFI, INC. (Exact name of registrant as specified in its charter) New York 11-2165495 (State or other jurisdiction of (I. ...

Financial Data and Key Metrics Changes - The company's net sales for Q1 2023 were $179.5 million, down 8% compared to Q1 2022, driven by lower volumes due to a stressed demand environment [13][14] - Consolidated gross profit decreased from $26.1 million to $6.6 million, with gross margin declining from 13.3% to 3.7% [27] - The Americas segment experienced a 2.9% decrease in revenues, while Brazil showed a double-digit volume growth of 16.6% [26] Business Line Data and Key Metrics Changes - REPREVE Fiber products comprised 27% of net sales for Q1 but were negatively impacted by demand disruptions [18] - The Americas segment faced significant margin pressure due to reduced demand, while Brazil maintained strong revenue performance [26][27] - Asia's sales volumes were challenged by COVID lockdowns and overall market demand pressures, although pricing and mix remained strong [26][27] Market Data and Key Metrics Changes - North American volume was down 20%, and Asia's volume decreased by 40% due to retail order slowdowns and COVID-related impacts [5][6] - Brazil's market is expected to face competitive imports, while Asia is awaiting signals from brands for renewed ordering patterns [17] Company Strategy and Development Direction - The company is focusing on four key initiatives: cost reduction in North America, enhancing the REPREVE brand, exploring new business segments beyond apparel, and renewing its credit facility [7][9][10] - The company aims to strengthen its long-term business and profitability despite short-term challenges [7][10] Management's Comments on Operating Environment and Future Outlook - Management indicated that the operating environment remains fluid, with expectations of a similar environment in Q2, but a recovery is anticipated in the second half of fiscal 2023 [35][36] - The company plans to shift guidance to a quarterly basis until visibility improves, expecting net sales to be 10% to 15% lower in Q2 compared to Q1 [36] Other Important Information - The company completed the refinancing of its asset-based lending facility, increasing borrowing capacity from $200 million to $230 million [29][30] - The effective tax rate for the quarter was negatively impacted by lower profitability levels in the U.S. [32] Q&A Session Summary Question: Can you provide more details on cost reduction actions and their nature? - Management indicated that cost reduction actions are predominantly temporary, with extended shutdowns planned during the holiday periods [40] Question: What gives confidence in maintaining market share in Asia despite revenue decline? - Management expressed confidence that brands will need to restock inventories, leading to a return in orders for REPREVE [42] Question: What covenants exist in the amended credit facility? - The covenants are similar to the previous facility, with a fixed charge coverage ratio covenant that is springing, ensuring compliance is manageable [43] Question: Are you confident in holding pricing amidst weak demand? - Management acknowledged pressure to manage prices down but emphasized efforts to maintain appropriate margins [45] Question: What is the outlook for CapEx spending plans? - Management confirmed that CapEx programs have been cut back, but spending on Evo texturing machines is ongoing [46] Question: Were there significant inventory write-downs in the quarter? - Management confirmed that write-downs did impact the business, but the primary issue was the lack of volume in the Americas [48] Question: Which new business segment is expected to have the quickest impact? - Management indicated that the home segment is expected to provide the quickest jump in impact compared to automotive and industrial segments [52]

1 CONFERENCE CALL PRESENTATION First Quarter Ended October 2, 2022 (Unaudited Results) CAUTIONARY STATEMENTS Forward-Looking Statements Certain statements included herein contain "forward-looking statements" within the meaning of federal securities laws about the financial condition and results of operations of the Company that are based on management's beliefs, assumptions and expectations about our future economic performance, considering the information currently available to management. An example of su ...

Company Overview and Strategy - Unifi is targeting \$110 million in Adjusted EBITDA by fiscal year 2025[8] - Unifi aims to reach \$1100 million in revenue by fiscal year 2025[8] - Unifi's strategic plan includes reaching \$1100 million in revenue by Fiscal 2025[8] - Unifi's strategic plan includes achieving higher gross margins by Fiscal 2025[8] Financial Performance and Outlook - Fiscal year 2022 sales reached \$816 million[10] - The company anticipates net sales between \$855 million and \$885 million for fiscal year 2023[49] - Adjusted EBITDA is projected to be between \$48 million and \$57 million for fiscal year 2023[49] - REPREVE fiber sales accounted for \$293 million in fiscal year 2022[33] - REPREVE fiber constituted 36% of total sales in fiscal year 2022[33] Sustainability and REPREVE - Purpose-driven consumers became the largest segment (44%) of consumers across all product categories in 2022[17] - Unifi aims to transform 50 billion bottles by December 2025[16]

[PART I](index=5&type=section&id=PART%20I) [Business](index=5&type=section&id=Item%201.%20Business) Unifi, Inc. manufactures recycled and synthetic polyester and nylon products across Americas, Brazil, and Asia segments, focusing on its REPREVE® brand and efficiency investments - Unifi manufactures and sells recycled and synthetic products (polyester and nylon) to customers in the apparel, hosiery, home furnishings, automotive, and industrial markets[23](index=23&type=chunk) - The company operates through three reportable segments based on geography: Americas, Brazil, and Asia[25](index=25&type=chunk)[28](index=28&type=chunk) REPREVE® Fiber Sales Performance (FY2020-2022) | Fiscal Year | REPREVE® Fiber Sales ($ thousands) | % of Consolidated Sales | | :--- | :--- | :--- | | 2022 | $293,080 | 36% | | 2021 | $245,832 | 37% | | 2020 | $186,141 | 31% | - Fiscal 2022 performance was impacted by higher input costs, supply chain challenges, and general inflationary pressures; the company implemented selling price adjustments to protect margins[32](index=32&type=chunk)[33](index=33&type=chunk) - Unifi is investing approximately **$100 million** in new eAFK Evo texturing machinery to enhance efficiency, with expected capital expenditures of **$35-40 million** in fiscal 2023[54](index=54&type=chunk)[55](index=55&type=chunk) - The company actively pursued antidumping and countervailing duty cases against polyester textured yarn imports to normalize competition in the U.S. market[77](index=77&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) Unifi faces strategic, financial, and operational risks including intense competition, raw material price volatility, foreign currency exposure, and supply chain dependencies - The company faces intense competition from domestic and foreign yarn producers, who may have advantages like lower labor costs, government subsidies, and favorable exchange rates[127](index=127&type=chunk)[128](index=128&type=chunk) - A significant portion of sales depends on demand from a limited number of large brand partners, and the loss of any one could materially harm the business[129](index=129&type=chunk) - Volatility in petroleum-based raw material prices and energy costs can increase production costs, potentially affecting margins if not passed to customers in a timely manner[131](index=131&type=chunk) - Foreign operations in Brazil, China, Colombia, El Salvador, and Turkey expose the company to political, economic, tax, and currency exchange rate risks, particularly with the **Brazilian Real (BRL)**[136](index=136&type=chunk)[137](index=137&type=chunk) - The business is dependent on limited sources for certain raw materials like POY and Chip, where any supply interruption could increase costs or halt production[141](index=141&type=chunk) - Catastrophic events, including epidemics like the COVID-19 pandemic, can disrupt global economic activity, consumer spending, and supply chains, negatively impacting financial performance[153](index=153&type=chunk)[154](index=154&type=chunk) [Unresolved Staff Comments](index=20&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[158](index=158&type=chunk) [Properties](index=20&type=section&id=Item%202.%20Properties) Unifi owns its corporate headquarters and manufacturing facilities in North Carolina, with additional owned or leased international facilities, operating below capacity in fiscal 2022 - The company owns its corporate headquarters in Greensboro, NC, and multiple manufacturing and warehouse facilities in Yadkinville, Reidsville, and Madison, NC[159](index=159&type=chunk) - International properties include a leased manufacturing facility in El Salvador, an owned facility in Colombia, and an owned manufacturing facility in Brazil[159](index=159&type=chunk) - Manufacturing facilities in the Americas Segment operated below capacity for most of fiscal 2022, partly due to labor availability and productivity issues[159](index=159&type=chunk) [Legal Proceedings](index=20&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various ordinary course legal proceedings, none expected to materially affect its financial condition or operations - The company is party to various lawsuits and claims arising in the ordinary course of business, but none are expected to have a material adverse effect[160](index=160&type=chunk) [Mine Safety Disclosures](index=20&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[161](index=161&type=chunk) [Information about our Executive Officers](index=21&type=section&id=Information%20about%20our%20Executive%20Officers) This section provides biographical information for Unifi's key executive officers as of the report date - Edmund M. Ingle has served as Chief Executive Officer since June 2020[163](index=163&type=chunk) - Albert P. Carey has served as Executive Chairman of the Board since April 2019[164](index=164&type=chunk) - Craig A. Creaturo has served as Executive Vice President & Chief Financial Officer since September 2019[165](index=165&type=chunk) [PART II](index=22&type=section&id=PART%20II) [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 recently or planned due to debt restrictions, and **$38.9 million** remaining for share repurchases - Unifi's common stock is listed on the New York Stock Exchange (NYSE) under the symbol 'UFI'[170](index=170&type=chunk) - No dividends were paid in the last two fiscal years, and the company does not plan to pay cash dividends in the foreseeable future due to restrictions in its debt agreements[171](index=171&type=chunk) - As of July 3, 2022, **$38,859 thousand** remains available for repurchase under the **$50,000 thousand** share repurchase program authorized in 2018[173](index=173&type=chunk) [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) Unifi's fiscal 2022 net sales increased **22.2%** to **$815.8 million** due to higher prices, but gross profit and net income declined significantly due to input cost inflation and labor challenges [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Fiscal 2022 saw **22.2%** net sales growth to **$815.8 million** driven by pricing, but gross profit fell **13.9%** and net income **47.8%** due to input costs and labor issues Consolidated Financial Performance (FY2022 vs. FY2021) | Metric | Fiscal 2022 ($ thousands) | Fiscal 2021 ($ thousands) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | 815,758 | 667,592 | 22.2% | | Gross Profit | 80,485 | 93,494 | (13.9)% | | Operating Income | 28,599 | 38,611 | (25.9)% | | Net Income | 15,171 | 29,073 | (47.8)% | | Diluted EPS | $0.80 | $1.54 | (48.1)% | Adjusted EBITDA Reconciliation (Non-GAAP) | Metric | Fiscal 2022 ($ thousands) | Fiscal 2021 ($ thousands) | Fiscal 2020 ($ thousands) | | :--- | :--- | :--- | :--- | | Net income (loss) | 15,171 | 29,073 | (57,237) | | EBITDA | 54,375 | 74,360 | (28,802) | | **Adjusted EBITDA** | **55,190** | **64,643** | **16,553** | - The **22.2%** increase in consolidated net sales was driven by a **19.5%** increase in average selling prices, a response to rising raw material costs, and a **2.7%** increase in sales volumes[204](index=204&type=chunk)[205](index=205&type=chunk) - Gross profit decreased by **13.9%** primarily due to higher-than-expected input costs for raw materials, labor, and supplies, along with weaker labor productivity in the Americas Segment[208](index=208&type=chunk)[211](index=211&type=chunk) [Segment Overview](index=32&type=section&id=Segment%20Overview) Americas sales grew **24.9%** but profit fell **20.6%** due to costs; Brazil sales rose **31.4%** but profit declined **13.2%** as market normalized; Asia sales increased **11.8%** and profit **13.7%** driven by REPREVE® Americas Segment Performance (FY2022 vs. FY2021) | Metric | Fiscal 2022 ($ thousands) | Fiscal 2021 ($ thousands) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | 483,085 | 386,779 | 24.9% | | Segment Profit | 45,621 | 57,460 | (20.6)% | Brazil Segment Performance (FY2022 vs. FY2021) | Metric | Fiscal 2022 ($ thousands) | Fiscal 2021 ($ thousands) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | 126,066 | 95,976 | 31.4% | | Segment Profit | 28,641 | 33,010 | (13.2)% | Asia Segment Performance (FY2022 vs. FY2021) | Metric | Fiscal 2022 ($ thousands) | Fiscal 2021 ($ thousands) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | 206,607 | 184,837 | 11.8% | | Segment Profit | 28,876 | 25,393 | 13.7% | [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Unifi had **$104.7 million** in liquidity, with total debt at **$114.3 million**; operating cash flow significantly decreased to **$0.4 million** due to working capital increases, while **$39.6 million** was invested in capital projects Liquidity Position as of July 3, 2022 | Component ($ thousands) | Domestic | Foreign | Total | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 527 | 52,763 | 53,290 | | Borrowings available | 51,409 | — | 51,409 | | **Total Liquidity** | **51,936** | **52,763** | **104,699** | Debt Obligations as of July 3, 2022 | Obligation ($ thousands) | Principal Amount | | :--- | :--- | | ABL Revolver | 41,300 | | ABL Term Loan | 65,000 | | Finance lease obligations | 7,261 | | Construction financing | 729 | | **Total Debt** | **114,290** | - Net cash provided by operating activities decreased significantly to **$380 thousand** in FY2022 from **$36.7 million** in FY2021, primarily due to an increase in working capital associated with higher raw material costs and sales activity[292](index=292&type=chunk)[293](index=293&type=chunk) - Capital expenditures were **$39.6 million** in fiscal 2022, primarily for eAFK Evo texturing machinery and other production enhancements, with **$35 million to $40 million** planned for fiscal 2023[282](index=282&type=chunk)[286](index=286&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%207A.%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Unifi faces market risks from interest rates on variable-rate debt, significant foreign currency exposure to BRL and RMB, and volatile petroleum-based raw material costs, managed by pricing adjustments - The company is exposed to interest rate risk on its **$106.3 million** of variable-rate borrowings; a **50-basis point** increase in LIBOR would increase annual interest expense by less than **$600 thousand**[310](index=310&type=chunk) - Unifi has significant foreign currency exchange rate risk, particularly from the **Brazilian Real (BRL)** and **Chinese Renminbi (RMB)**, with **30.2%** of consolidated assets held by subsidiaries whose functional currency is not the USD[313](index=313&type=chunk)[314](index=314&type=chunk) - Raw material costs, derived from volatile petroleum-based chemicals, pose a significant risk, with time lags of one to two fiscal quarters in passing on cost increases to customers potentially affecting margins[315](index=315&type=chunk) [Financial Statements and Supplementary Data](index=43&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the consolidated financial statements and related notes, which begin on page F-i of the report - The company's consolidated financial statements and related notes begin on page F-i of the Annual Report[322](index=322&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) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[323](index=323&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%209A.%20Controls%20and%20Procedures) Unifi's management concluded that disclosure controls and internal control over financial reporting were effective as of July 3, 2022, with an unqualified audit opinion from KPMG LLP - Management, including the CEO and CFO, concluded that as of July 3, 2022, the company's disclosure controls and procedures were effective[324](index=324&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of July 3, 2022, an assessment audited by KPMG LLP which issued an unqualified opinion[327](index=327&type=chunk)[328](index=328&type=chunk) [Other Information](index=43&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[330](index=330&type=chunk) [PART III](index=44&type=section&id=PART%20III) [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 incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the company's 2022 Proxy Statement[332](index=332&type=chunk) [Executive Compensation](index=44&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the company's 2022 Proxy Statement[335](index=335&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 by beneficial owners and management, and equity compensation plans, is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the company's 2022 Proxy Statement[336](index=336&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 concerning related party transactions and director independence is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the company's 2022 Proxy Statement[337](index=337&type=chunk) [Principal Accountant Fees and Services](index=44&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding fees paid to and services provided by the principal accountant is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the company's 2022 Proxy Statement[338](index=338&type=chunk) [PART IV](index=45&type=section&id=PART%20IV) [Exhibits and Financial Statement Schedules](index=45&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements and exhibits filed with the report, noting that financial statement schedules are not applicable - The financial statements listed in the Index to Consolidated Financial Statements on page F-i are filed with this report[341](index=341&type=chunk) - Financial statement schedules are not applicable[343](index=343&type=chunk) [Form 10-K Summary](index=49&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company provides no summary for this item - None[350](index=350&type=chunk)

Unifi, Inc. (NYSE:UFI) Q4 2022 Earnings Conference Call August 11, 2022 8:30 AM ET Company Participants A.J. Eaker - Vice President of Finance & Investor Relations Albert Carey - Executive Chairman Edmund Ingle - Chief Executive Officer & Director Craig Creaturo - Executive Vice President & Chief Financial Officer Conference Call Participants Daniel Moore - CJS Securities Gus Richard - Northland Anthony Lebazynski - Sidoti Operator Good morning. My name is Briana, and I will be your conference operator toda ...