Unifi(US:UFI)2025-11-05 21:01Financial Performance - Net sales for the three months ended September 28, 2025, were $135,674, a decrease of 7.9% compared to $147,372 for the same period in 2024[95] - Gross profit for the current period was $3,387, representing a gross margin of 2.5%, down from 6.4% in the prior period, indicating a decline of 64.2%[95] - The operating loss increased to $9,630, compared to a loss of $3,216 in the prior period, reflecting a 199.4% increase in losses[95] - Net loss for the current period was $11,357, an increase of 48.8% from a net loss of $7,632 in the prior period[95] - Adjusted EBITDA for the three months ended September 28, 2025, was $(2,544), compared to $3,299 in the prior period, indicating a significant decline in operational performance[96] - Consolidated net sales decreased by $11,698, or 7.9%, with sales volumes down 5.2% compared to the prior period, primarily due to lower sales volumes and pricing in the Asia and Brazil segments[102] - Gross profit fell to $3,387 from $9,458 in the prior period, driven by lower sales volumes, conversion margins, and production volatility due to tariff uncertainty[104] - Adjusted EBITDA and Adjusted EPS decreased primarily due to lower gross profit[115] Restructuring and Strategic Initiatives - The company expects to incur restructuring charges between $500,000 and $1,000,000 in the second quarter of fiscal 2026, primarily related to severance costs[88] - UNIFI's strategic initiatives include expanding its presence in non-apparel markets and advancing the development of innovative and sustainable solutions[83] - UNIFI's profit improvement plan includes reducing variable manufacturing costs and eliminating a meaningful percentage of salaried positions in the U.S.[88] - Restructuring costs of $1,068 were incurred due to the closure of the Madison, North Carolina facility, including $1,021 for equipment relocation and $47 for employee separation[107] Segment Performance - Net sales in the Americas Segment were $85,196, a decrease of 1.3% from $86,283, primarily due to a lower-priced sales mix[117] - Brazil Segment net sales dropped 16.2% to $28,761, impacted by lower selling prices and sales volumes, partially offset by favorable foreign currency translation effects[119] - Asia Segment net sales decreased by 18.9% to $21,717, primarily due to lower sales volumes and competitive pricing pressures[121] Debt and Liquidity - As of September 28, 2025, UNIFI had $120,345 in debt obligations, all guaranteed by domestic operating subsidiaries[126] - The company reported total debt obligations of $120,345 million, with net debt increasing to $99,790 million from $85,344 million as of June 29, 2025[134] - UNIFI's available liquidity is $40,874 million, which includes $20,336 million from domestic operations and $20,538 million from foreign operations[127] - Cash used by operations was $8,920 for the current period, with availability under the ABL Revolver and 2024 Facility at $36,233 and $586, respectively[125] - As of September 28, 2025, total cash and cash equivalents amounted to $20,555 million, with domestic operations holding $17 million and foreign operations holding $20,538 million[127] - The company maintains a compliance status with all financial covenants in the 2022 Credit Agreement and 2024 Facility, with availability under the 2024 Facility at $586 million[133] Working Capital and Capital Expenditures - Working capital increased to $168,317 million, up from $164,684 million as of June 29, 2025, with adjusted working capital rising to $159,273 million[135] - Capital expenditures for the current period were $2,029 million, aimed at enhancing future profitability through investments in machinery and equipment[141] - The increase in adjusted working capital was primarily due to reductions in accounts payable and other current liabilities, alongside increases in inventories and receivables[136] Foreign Operations - UNIFI's foreign operations hold approximately 30.8% of total consolidated assets outside the U.S., with total cash and cash equivalents held outside the U.S. amounting to $17,985 million[150] - The weighted average exchange rate for the Brazilian Real to USD was 5.45 for the current period, compared to 5.55 in the prior period[82]