Unifi, Inc. (NYSE:UFI) Q2 2024 Earnings Conference Call February 1, 2024 10:30 AM ET Company Participants Albert Carey - Executive Chairman Edmund Ingle - CEO Andrew Eaker - Treasurer Conference Call Participants Anthony Lebiedzinski - Sidoti Operator Good morning, and thank you for attending Unifi's Second Quarter Fiscal 2024 Earnings Conference Call. Today's conference is being recorded and all lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a que ...

[PART I—FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the quarterly period ended October 1, 2023, including balance sheets, statements of operations, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$516,261 thousand** as of October 1, 2023, primarily due to reduced inventories and receivables, while total shareholders' equity declined Balance Sheet Highlights (in thousands) | Account | October 1, 2023 | July 2, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $51,515 | $46,960 | | Inventories | $136,092 | $150,810 | | Total current assets | $277,324 | $294,060 | | Total assets | $516,261 | $538,819 | | Total current liabilities | $68,711 | $71,995 | | Long-term debt | $128,890 | $128,604 | | Total liabilities | $211,232 | $215,209 | | Total shareholders' equity | $305,029 | $323,610 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported a net loss of **$13,270 thousand** for the three months ended October 1, 2023, driven by a 22.7% decrease in net sales and a shift to a gross loss Quarterly Statement of Operations (in thousands, except per share amounts) | Metric | For the Three Months Ended Oct 1, 2023 | For the Three Months Ended Oct 2, 2022 | | :--- | :--- | :--- | | Net sales | $138,844 | $179,519 | | Gross (loss) profit | $(575) | $6,563 | | Operating loss | $(12,029) | $(4,695) | | Net loss | $(13,270) | $(7,834) | | Diluted net loss per share | $(0.73) | $(0.44) | - Comprehensive loss for the quarter was **$18,800 thousand**, compared to **$13,700 thousand** in the prior-year period, exacerbated by foreign currency translation adjustments[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities generated **$7,119 thousand** in cash, a significant improvement from the prior-year period, primarily due to favorable working capital changes despite a higher net loss Cash Flow Summary (in thousands) | Activity | For the Three Months Ended Oct 1, 2023 | For the Three Months Ended Oct 2, 2022 | | :--- | :--- | :--- | | Net cash provided (used) by operating activities | $7,119 | $(5,892) | | Net cash used by investing activities | $(2,480) | $(11,420) | | Net cash provided by financing activities | $604 | $12,713 | | Net increase (decrease) in cash | $4,555 | $(6,090) | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies and financial data, including revenue disaggregation, long-term debt, and segment performance Net Sales by Product Type (in thousands) | Product/Service | For the Three Months Ended Oct 1, 2023 | For the Three Months Ended Oct 2, 2022 | | :--- | :--- | :--- | | REPREVE® Fiber | $42,461 | $49,179 | | All other products and services | $96,383 | $130,340 | | **Total Net Sales** | **$138,844** | **$179,519** | Segment Financials for Q1 FY2024 (in thousands) | Segment | Net Sales | Gross (Loss) Profit | | :--- | :--- | :--- | | Americas | $81,573 | $(7,380) | | Brazil | $29,909 | $2,167 | | Asia | $27,362 | $4,638 | - Total debt principal stood at **$141,487 thousand** as of October 1, 2023, primarily composed of an ABL Term Loan and ABL Revolver[40](index=40&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the adverse impact of the current economic environment and decreased textile demand on financial results, covering sales decline, gross loss, segment challenges, and liquidity management [Overview and Significant General Matters](index=16&type=section&id=Overview%20and%20Significant%20General%20Matters) The company's Q1 FY2024 performance was adversely impacted by decreased textile demand and inventory destocking, leading to strategic focus on non-apparel markets and innovation - The current economic environment, including inflation and inventory destocking, significantly decreased textile product demand, adversely impacting sales and profitability[88](index=88&type=chunk) - Strategic initiatives include expanding into non-apparel markets, advancing innovative solutions, and increasing REPREVE® brand awareness to drive revenue and profitability[87](index=87&type=chunk) [Review of Results of Operations](index=18&type=section&id=Review%20of%20Results%20of%20Operations) Consolidated net sales fell **22.7%** to **$138,844 thousand**, resulting in a gross loss due to lower volumes and average selling prices, with the Americas segment most impacted Consolidated Operations Overview (in thousands) | Metric | Q1 FY2024 | Q1 FY2023 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $138,844 | $179,519 | (22.7)% | | Gross (loss) profit | $(575) | $6,563 | (108.8)% | | Operating loss | $(12,029) | $(4,695) | 156.2% | | Net loss | $(13,270) | $(7,834) | 69.4% | - The decrease in net sales was attributed to lower volumes in the Americas and Asia segments due to weak global apparel demand and inventory destocking, along with a **17.5%** decrease in consolidated weighted average sales prices[102](index=102&type=chunk)[103](index=103&type=chunk) - Adjusted EBITDA turned negative to **$(4,800) thousand** from **$2,300 thousand** in the prior-year quarter, primarily due to the significant decline in gross profit[99](index=99&type=chunk)[113](index=113&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity with **$95,679 thousand** in total liquidity as of October 1, 2023, while net debt decreased and operating cash flow improved significantly Liquidity Summary (in thousands) | Component | October 1, 2023 | | :--- | :--- | | Cash and cash equivalents | $51,515 | | Borrowings available under financing arrangements | $44,164 | | **Total Liquidity** | **$95,679** | Net Debt Reconciliation (in thousands) | Component | October 1, 2023 | July 2, 2023 | | :--- | :--- | :--- | | Debt principal | $141,487 | $140,899 | | Less: cash and cash equivalents | $(51,515) | $(46,960) | | **Net Debt** | **$89,972** | **$93,939** | - Net cash provided by operating activities increased to **$7,119 thousand** from a use of **$5,892 thousand** in the prior year, primarily due to reduced working capital needs associated with declining business activity[136](index=136&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) UNIFI is exposed to market risks from interest rates, foreign currency exchange rates, and raw material costs, with significant foreign currency exposure from its international operations - The company is exposed to interest rate risk on its **$129,800 thousand** ABL Facility borrowings, where a **50-basis point** increase would raise annual interest expense by approximately **$700 thousand**[145](index=145&type=chunk) - Significant foreign currency exchange rate risk exists, as **31.0%** of consolidated assets and **99.1%** of cash are held by non-U.S. subsidiaries[146](index=146&type=chunk) - The company is also exposed to geopolitical risks, including changes in international trade laws and raw material cost fluctuations[147](index=147&type=chunk)[148](index=148&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of October 1, 2023, with no material changes in internal control over financial reporting during the quarter - The principal executive officer and interim principal financial officer concluded that the company's disclosure controls and procedures are effective as of October 1, 2023[149](index=149&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter[150](index=150&type=chunk) [PART II—OTHER INFORMATION](index=26&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, none of which are expected to have a material adverse effect on its financial position or results - The company is party to various lawsuits and claims arising in the ordinary course of business, none of which are expected to have a material adverse effect[152](index=152&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the reporting period - Not applicable[153](index=153&type=chunk) [Exhibits](index=26&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents - Exhibits filed include the Director Compensation Policy, CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and Inline XBRL data files[154](index=154&type=chunk)

Unifi, Inc. (NYSE:UFI) Q1 2024 Earnings Conference Call November 2, 2023 ET Company Participants Albert Carey - Executive Chairman Edmund Ingle - CEO A.J. Eaker - Treasurer Conference Call Participants Anthony Lebiedzinski - Sidoti A.J. Eaker Good morning, everyone. Thank you for attending Unifi's First Quarter Fiscal 2024 Earnings Conference Call. We do apologize for the technical difficulties and the late start, but we will be quick and I hope to answer your questions as quickly as possible. Today's confe ...

Exhibit 99.2 1 CONFERENCE CALL PRESENTATION First Quarter Ended October 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 ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) UNIFI manufactures recycled and synthetic products, facing significant fiscal 2023 downturns due to weak textile demand and inventory destocking - UNIFI manufactures and sells innovative recycled and synthetic products from polyester and nylon to customers in the apparel, hosiery, home furnishings, automotive, and industrial markets[20](index=20&type=chunk) - The company operates through three reportable segments: Americas, Brazil, and Asia, with direct manufacturing in four countries and participation in joint ventures in Israel and the U.S[21](index=21&type=chunk)[22](index=22&type=chunk)[25](index=25&type=chunk) - Fiscal 2023 financial performance was adversely impacted by a significant decrease in textile product demand, inventory destocking by brands and retailers, inflation, and rising interest rates[28](index=28&type=chunk) REPREVE® Fiber Sales Performance (FY2021-2023) | Fiscal Year | REPREVE® Fiber Sales (Thousands of USD) | % of Consolidated Net Sales | | :--- | :--- | :--- | | 2023 | $186,161 | 30% | | 2022 | $293,080 | 36% | | 2021 | $245,832 | 37% | - The decline in REPREVE® Fiber sales in fiscal 2023 was primarily driven by weak global demand and lower sales volume in the Asia Segment[44](index=44&type=chunk) - UNIFI successfully petitioned for antidumping and countervailing duties on polyester textured yarn imports from China, India, Indonesia, Malaysia, Thailand, and Vietnam to normalize competition in the U.S. market[72](index=72&type=chunk)[73](index=73&type=chunk)[75](index=75&type=chunk) Fiscal 2023 Consolidated Net Sales by End Market | End Market | % of Consolidated Net Sales | | :--- | :--- | | Apparel (including hosiery and footwear) | ~65% | | Industrial | ~11% | | Furnishings | ~9% | | Automotive | ~4% | | All other markets | ~11% | [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company faces strategic, financial, operational, and general risks, including intense competition, raw material price volatility, foreign currency exposure, and supply chain disruptions - Strategic risks include intense competition from domestic and foreign producers, dependency on a limited number of large brand partners, and significant price volatility of raw materials[122](index=122&type=chunk)[124](index=124&type=chunk)[126](index=126&type=chunk) - Financial risks are associated with significant foreign operations, including currency exchange rate fluctuations (BRL, RMB), trade barriers, and changes in tax laws[131](index=131&type=chunk)[132](index=132&type=chunk)[134](index=134&type=chunk) - Operational risks involve dependence on a limited number of suppliers for key raw materials (like POY and Chip), potential disruptions at manufacturing facilities, and cybersecurity threats[137](index=137&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - General risks include unfavorable changes in trade policies (as a significant portion of Americas sales are 'Compliant Yarns'), the challenge of attracting and retaining qualified employees, and disruptions from catastrophic events like the COVID-19 pandemic[146](index=146&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) [Unresolved Staff Comments](index=20&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) None - There are no unresolved staff comments[153](index=153&type=chunk) [Properties](index=20&type=section&id=Item%202.%20Properties) UNIFI's properties include headquarters, domestic manufacturing sites in North Carolina, and foreign facilities in El Salvador, Colombia, and Brazil, with Americas segment operating below capacity in fiscal 2023 - The company's corporate headquarters are located in Greensboro, North Carolina. Major domestic manufacturing and warehouse facilities are in Yadkinville, Reidsville, and Madison, NC[154](index=154&type=chunk) - Foreign properties include manufacturing facilities in El Salvador (leased), Colombia (owned), and Brazil (owned), along with various sales offices and warehouses[154](index=154&type=chunk) - In fiscal 2023, the Americas Segment manufacturing facilities operated below capacity, primarily due to a decline in demand throughout the apparel supply chains[154](index=154&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 have a material adverse effect on its financial position - The company is involved in various lawsuits and claims arising in the ordinary course of business, none of which are expected to be materially adverse[155](index=155&type=chunk) [Mine Safety Disclosures](index=20&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - This item is not applicable to the company[156](index=156&type=chunk) [Information about our Executive Officers](index=21&type=section&id=Information%20about%20our%20Executive%20Officers) This section lists key executive officers, including the CEO and Executive Chairman, noting the resignation of the EVP & CFO - Key executive officers include Edmund M. Ingle (CEO), Albert P. Carey (Executive Chairman), and Craig A. Creaturo (EVP & CFO)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk) - Craig A. Creaturo, the Executive Vice President & Chief Financial Officer, resigned from the company effective August 25, 2023[160](index=160&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 NYSE, with no dividends paid or planned, and no share repurchases in fiscal 2023 despite remaining authorization - UNIFI's common stock is traded on the New York Stock Exchange under the symbol 'UFI'[165](index=165&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[166](index=166&type=chunk) - As of July 2, 2023, **$38.9 million** remained available for repurchase under the 2018 Share Repurchase Program. No shares were repurchased during fiscal 2023[168](index=168&type=chunk)[52](index=52&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) Fiscal 2023 saw a **23.6% decline in net sales** to **$623.5 million** and a **net loss of $46.3 million**, driven by weak demand and inventory destocking, though operating cash flow remained positive Consolidated Financial Performance (FY2023 vs. FY2022) | Metric | Fiscal 2023 (Thousands of USD) | Fiscal 2022 (Thousands of USD) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $623,527 | $815,758 | (23.6)% | | Gross Profit | $14,241 | $80,485 | (82.3)% | | Operating (Loss) Income | ($40,871) | $28,599 | nm | | Net (Loss) Income | ($46,344) | $15,171 | nm | | Diluted (Loss) EPS | ($2.57) | $0.80 | nm | Adjusted EBITDA Reconciliation (Thousands of USD) | | Fiscal 2023 (Thousands of USD) | Fiscal 2022 (Thousands of USD) | | :--- | :--- | :--- | | Net (loss) income | $ (46,344) | $ 15,171 | | Interest, Taxes, D&A | 33,389 | 39,204 | | EBITDA | (12,955) | 54,375 | | Asset abandonment & other adjustments | 8,870 | 815 | | **Adjusted EBITDA** | **$ (4,085)** | **$ 55,190** | - The decrease in net sales was primarily due to a **25.3% decrease in consolidated sales volumes**, driven by lower global demand and inventory destocking by major brands and retailers[206](index=206&type=chunk) - Gross profit declined significantly due to weak fixed cost absorption in the Americas Segment, the impact of high-priced raw material inventory, and competitive pricing pressures[211](index=211&type=chunk)[215](index=215&type=chunk) - The company delayed approximately **$25 million** of capital expenditures for 18 months to improve short- and mid-term liquidity in response to the weak demand environment[48](index=48&type=chunk)[257](index=257&type=chunk) - Net cash provided by operating activities increased to **$4.7 million** in FY2023 from **$0.4 million** in FY2022, primarily due to a reduction in working capital (inventories and receivables) which offset the significant net loss[290](index=290&type=chunk)[291](index=291&type=chunk) [Segment Overview](index=32&type=section&id=Item%207.%20Segment%20Overview) All three segments experienced significant downturns in fiscal 2023, with Americas facing a gross loss, Brazil impacted by import prices, and Asia severely hit by weak global demand Segment Performance (FY2023 vs. FY2022) | Segment | Net Sales FY2023 (Millions of USD) | % Change vs FY22 | Segment Profit FY2023 (Millions of USD) | % Change vs FY22 | | :--- | :--- | :--- | :--- | :--- | | Americas | $389.7 | (19.3)% | $7.4 | (83.8)% | | Brazil | $119.1 | (5.6)% | $14.2 | (50.4)% | | Asia | $114.8 | (44.4)% | $16.7 | (42.0)% | - The Americas Segment's decline was primarily due to lower production volumes driving weaker fixed cost absorption, resulting in a gross loss of **$14.7 million**[237](index=237&type=chunk)[239](index=239&type=chunk) - The Brazil Segment's profitability decreased due to lower selling prices to compete with low-priced imports and the impact of higher raw material costs in beginning inventory[241](index=241&type=chunk)[243](index=243&type=chunk) - The Asia Segment's significant drop in sales and profit was attributed to weaker global demand and pandemic-related lockdowns driving lower sales volumes[245](index=245&type=chunk)[247](index=247&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Item%207.%20Liquidity%20and%20Capital%20Resources) UNIFI maintained **$102.7 million** in liquidity as of July 2, 2023, with total debt increasing to **$140.9 million**, while actively managing capital expenditures and repatriating funds Liquidity Position as of July 2, 2023 (Thousands of USD) | Component | Amount (Thousands of USD) | | :--- | :--- | | Cash and cash equivalents | $46,960 | | Borrowings available under financing arrangements | $55,735 | | **Total Liquidity** | **$102,695** | Debt Position (Thousands of USD) | | July 2, 2023 (Thousands of USD) | July 3, 2022 (Thousands of USD) | | :--- | :--- | :--- | | Debt principal | $140,899 | $114,290 | | Less: cash and cash equivalents | (46,960) | (53,290) | | **Net Debt** | **$93,939** | **$61,000** | - Capital expenditures were **$36.4 million** in fiscal 2023. The company expects to invest a reduced amount, between **$14 million** and **$16 million**, in fiscal 2024[280](index=280&type=chunk)[283](index=283&type=chunk) - In fiscal 2023, the company repatriated approximately **$19 thousand** from its operations in Asia to the U.S. to reduce outstanding revolver borrowings and increase availability[256](index=256&type=chunk) [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 including interest rate volatility on variable-rate debt, significant foreign currency exposure, and raw material cost fluctuations with a pricing adjustment lag - A **50-basis point** increase in the SOFR interest rate would result in an approximate **$700 thousand** increase in annual interest expense[306](index=306&type=chunk) - The company is exposed to foreign currency exchange rate risk, particularly with the Brazilian Real (BRL) and Chinese Renminbi (RMB). As of July 2, 2023, **98%** of the company's cash and cash equivalents were held by subsidiaries outside the U.S[308](index=308&type=chunk)[309](index=309&type=chunk) - Raw material costs are volatile and derived from petroleum-based chemicals. The company manages this risk by adjusting customer prices, but there is typically a time lag of one to two fiscal quarters, which can adversely affect margins[311](index=311&type=chunk) [Financial Statements and Supplementary Data](index=42&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements with an unqualified auditor's opinion, highlighting inventory net realizable value as a critical audit matter - The Report of Independent Registered Public Accounting Firm (KPMG LLP) provides an **unqualified opinion** on the consolidated financial statements and the effectiveness of internal control over financial reporting[358](index=358&type=chunk)[359](index=359&type=chunk) - A Critical Audit Matter was identified concerning the 'Evaluation of the net realizable value of raw material and finished goods inventories,' due to the complex judgment required to evaluate recovery rates[362](index=362&type=chunk)[364](index=364&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=42&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) None - There were no changes in or disagreements with accountants on accounting and financial disclosure[317](index=317&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective, with KPMG LLP issuing an unqualified opinion - Management concluded that the company's disclosure controls and procedures were effective as of the end of the fiscal year[319](index=319&type=chunk) - Management assessed internal control over financial reporting as effective, based on the COSO 2013 framework. The independent auditor, KPMG, also issued an **unqualified opinion** on the effectiveness of internal control[322](index=322&type=chunk)[323](index=323&type=chunk) [Other Information](index=43&type=section&id=Item%209B.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the fourth quarter of fiscal 2023 - During the three months ended July 2, 2023, no directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement[325](index=325&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 incorporated by reference from the 2023 proxy statement - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the definitive proxy statement[328](index=328&type=chunk) [Executive Compensation](index=44&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2023 proxy statement - Information regarding executive compensation is incorporated by reference from the definitive proxy statement[331](index=331&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 and related stockholder matters is incorporated by reference from the 2023 proxy statement - Information regarding security ownership and related matters is incorporated by reference from the definitive proxy statement[332](index=332&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 2023 proxy statement - Information regarding related transactions and director independence is incorporated by reference from the definitive proxy statement[333](index=333&type=chunk) [Principal Accountant Fees and Services](index=44&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the 2023 proxy statement - Information regarding principal accountant fees and services is incorporated by reference from the definitive proxy statement[334](index=334&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=45&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists filed financial statements and a comprehensive array of exhibits, including corporate governance documents, material contracts, and certifications - The financial statements listed in the Index to Consolidated Financial Statements are filed as part of this report[336](index=336&type=chunk) - A comprehensive list of exhibits is provided, including corporate governance documents, material contracts like the Second Amended and Restated Credit Agreement, and management compensation plans[340](index=340&type=chunk)[341](index=341&type=chunk) [Form 10-K Summary](index=49&type=section&id=Item%2016.%20Form%2010-K%20Summary) None - No Form 10-K summary is provided[347](index=347&type=chunk)

Unifi, Inc. (NYSE:UFI) Q4 2023 Results Conference Call August 24, 2023 8:30 AM ET Company Participants Al Carey - Executive Chairman Eddie Ingle - CEO Craig Creaturo - CFO A.J. Eaker - Treasurer Conference Call Participants Anthony Lebiedzinski - Sidoti & Company Chris Reynolds - Neuberger Berman Operator Good morning, and thank you for attending Unifi's Fourth Quarter Fiscal 2023 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions] Speakers for today's call include Al ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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 April 2, 2023 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.R. ...

Unifi, Inc. (NYSE:UFI) Q3 2023 Results Conference Call May 4, 2023 8:30 AM ET Company Participants A.J. Eaker - VP, Finance and Treasurer Al Carey - Executive Chairman Eddie Ingle - CEO Craig Creaturo - CFO Conference Call Participants Anthony Lebiedzinski - Sidoti& Company Operator Good day, and welcome to Q3 2023 Unifi Earnings Conference Call. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. Thank you. I’d now like to welcome A.J. Eaker, Vice ...

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)