What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-06 compared with 2026-02-04 · 205 added, 175 removed, 376 unchanged (50% of the section changed)

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A reference to a “note” in this section refers to the accompanying notes to condensed consolidated financial statements.

A reference to the “current period” refers to the three-month period ended December 28, 2025, while a reference to the “prior period” refers to the three-month period ended December 29, 2024.

A reference to the “current six-month period” refers to the six-month period ended December 28, 2025, while a reference to the “prior six-month period” refers to the six-month period ended December 29, 2024.

A reference to the “current period” refers to the three-month period ended March 29, 2026, while a reference to the “prior period” refers to the three-month period ended March 30, 2025.

A reference to the “current nine-month period” refers to the nine-month period ended March 29, 2026, while a reference to the “prior nine-month period” refers to the nine-month period ended March 30, 2025.

Such references may be accompanied by certain phrases for added clarity.

The current period and the prior period each consisted of 13 weeks.

The current six-month period and the prior six-month period each consisted of 26 weeks.

Our discussions in this Item 2 focus on our results during, or as of, the three months ended December 28, 2025 and December 29, 2024, and, to the extent applicable, any material changes from the information discussed in the 2025 Form 10-K or other important intervening developments or information.

The current nine-month period and the prior nine-month period each consisted of 39 weeks.

Our discussions in this Item 2 focus on our results during, or as of, the three months ended March 29, 2026 and March 30, 2025, and, to the extent applicable, any material changes from the information discussed in the 2025 Form 10-K or other important intervening developments or information.

These discussions should be read in conjunction with the 2025 Form 10-K for more detailed and background information about our business, operations, and financial condition.

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For the Three Months Ended

For the Six Months Ended

December 28, 2025

December 29, 2024

December 28, 2025

December 29, 2024

For the Nine Months Ended

March 29, 2026

March 30, 2025

March 29, 2026

March 30, 2025

All amounts, except per share amounts, are presented in thousands (000s), except as otherwise noted.

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Current Economic Environment

Beyond the specific demand challenges within the textile industry, our business has been adversely impacted by:

Beyond the specific demand challenges within the textile industry as described in the Form 10-K, our business has been adversely impacted by:

(i) the impact of inflation, including tariffs, on consumer spending, (ii) elevated interest rates for consumers and customers, including the impact on the carrying costs of customer inventories, and (iii) the volatility in customer order patterns resulting from trade and regulatory matters (including tariffs).

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Each of these initiatives affords us diversity in this dynamic trade environment and greater flexibility in servicing our customer base.

Specific to other ongoing geopolitical tensions, we recognize the disruption to global markets and supply chains caused by the conflicts in Ukraine and the Middle East, however we have not been directly impacted.

Additionally, we are closely monitoring developments in Latin America and the Caribbean following recent U.S.

military action in Venezuela.

It is too early to determine how this situation may evolve or what implications it could have for UNIFI, but no direct impacts have occurred in fiscal 2026.

We will continue to assess developments and react as appropriate.

Indirectly, we recognize that additional or prolonged impacts to the petroleum or other global markets could cause further inflationary pressures to our global raw material costs or additional unforeseen adverse impacts.

Specific to other ongoing geopolitical tensions, we recognize the disruption to global markets and supply chains caused by the conflicts in Ukraine and the Middle East, particularly in Iran.

Escalating geopolitical tensions involving Iran have contributed to volatility in petroleum markets.

In early March 2026, disruptions to certain supply routes associated with this conflict resulted in a sharp increase in crude oil and related feedstock prices.

As a result of higher raw material costs stemming from disruptions in the Middle East, the Company implemented responsive price increases and surcharges that began in April 2026 and are expected to continue while petrochemical-related inflation remains elevated.

We recognize that additional or prolonged impacts to the petroleum or other global markets could cause further inflationary pressures to our global raw material costs or additional unforeseen adverse impacts.

Input Costs and Global Production Volatility

Despite lower input and freight costs and a marginally more stable labor pool recently, global demand volatility and uncertainty continued into fiscal 2026.

The threat of an economic slowdown and global tensions continue to create uncertainty.

Despite a marginally more stable labor pool recently, global demand volatility and uncertainty continues.

The threat of an economic slowdown and global tensions continue to create uncertainty, more specifically the conflict in Iran contributed to rising freight and raw material costs beginning in March 2026.

Such existing challenges and future uncertainty, particularly for rising input costs, labor productivity, and global demand, could worsen and/or continue for prolonged periods, materially impacting our consolidated sales, gross profit, and operating cash flows.

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Fiscal 2026 Profit Improvement Plan

During October 2025, UNIFI implemented additional cost-saving initiatives that include reducing variable manufacturing costs across labor, spend, and support functions, while also eliminating salaried positions in the U.S.

During October 2025, UNIFI implemented additional cost-saving initiatives that included reducing variable manufacturing costs across labor, spend, and support functions, while also eliminating salaried positions in the U.S.

("Fiscal 2026 Profit Improvement Plan").

Accordingly, UNIFI recorded employee separation costs of $1,093 in connection with the Fiscal 2026 Profit Improvement Plan and a $308 gain from disposals of assets from the consolidation of Americas yarn manufacturing operations.

Accordingly, in the second quarter of fiscal 2026, UNIFI recorded employee separation costs of $1,093 in connection with the Fiscal 2026 Profit Improvement Plan and a $308 gain from disposals of assets from the consolidation of Americas yarn manufacturing operations.

Key Performance Indicators and Non-GAAP Financial Measures

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Review of Results of Operations

Three Months Ended December 28, 2025 Compared to Three Months Ended December 29, 2024

Three Months Ended March 29, 2026 Compared to Three Months Ended March 30, 2025

Consolidated Overview

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For the Three Months Ended

December 28, 2025

December 29, 2024

March 29, 2026

March 30, 2025

Cost of sales

Provision (benefit) for bad debts

Gross profit (loss)

Benefit for bad debts

Restructuring costs, net

Gain on sale of assets

Other operating expense (income), net

Other operating (income) expense, net

Operating loss

7 unchanged sentences

For the Three Months Ended

December 28, 2025

December 29, 2024

March 29, 2026

March 30, 2025

Interest expense, net

1 unchanged sentence

Depreciation and amortization expense (1)

Restructuring costs, net (2)

Gain on sale of warehouse (3)

Transition costs (2)

Gain on foreign currency transaction, net (3)

Adjusted EBITDA

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However, within the accompanying Condensed Consolidated Statements of Cash Flows, amortization of debt issuance costs is reflected in depreciation and amortization expense.

(2) In the second quarter of fiscal 2026, UNIFI recorded employee separation costs of $1,093 in connection with the Fiscal 2026 Profit Improvement Plan and a $308 gain from disposals of assets from the consolidation of Americas yarn manufacturing operations.

(3) In the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina.

(2) In the third quarter of fiscal 2025, UNIFI incurred various transition costs totaling $2,900 in connection with the consolidation of its yarn manufacturing operations, including (i) facility closure and equipment relocation costs of $1,088, (ii) inventory write-downs of $1,000, (iii) excess manufacturing costs of $580, and (iv) employee separation or retention costs of $232.

The facility closure, equipment relocation, employee separation and retention costs were all recorded within Restructuring costs and the inventory write-downs and excess manufacturing costs were recorded within Cost of sales in the Condensed Consolidated Statements of Operations.

(3) In the third quarter of fiscal 2026, UNIFI recorded a foreign currency gain of $1,775.

In December 2025, Brazil declared dividends against the majority of its retained earnings in connection with certain tax law changes related to future dividends.

Foreign currency transaction gains (losses) are recorded to reflect changes in the exchange rate of the Brazilian Real to the U.S.

Dollar while the dividend payable is outstanding.

Adjusted Net Loss and Adjusted EPS (Non-GAAP Financial Measures)

The tables below set forth reconciliations of (i) Loss before income taxes (“Pre-tax Loss”), (ii) Provision for income taxes (“Tax Impact”), (iii) Net Loss to Adjusted Net Loss, and (iv) Diluted EPS to Adjusted EPS.

For the Three Months Ended December 28, 2025

For the Three Months Ended December 29, 2024

Restructuring costs, net (1)

Gain on sale of warehouse (2)

For the Three Months Ended March 29, 2026

For the Three Months Ended March 30, 2025

Transition costs (1)

Gain on foreign currency transaction, net (2)

Adjusted results

Weighted average common shares outstanding

(1) In the second quarter of fiscal 2026, UNIFI recorded employee separation costs of $1,093 in connection with the Fiscal 2026 Profit Improvement Plan and a $308 gain from disposals of assets from the consolidation of Americas yarn manufacturing operations.

The associated tax impact was estimated to be $11 related to employee separation costs in the Asia Segment.

(2) In the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina.

The associated tax impact was estimated to be $0 due to a valuation allowance against net operating losses and capital losses in the U.S.

Consolidated net sales for the current period decreased by $17,512, or 12.6%, and consolidated sales volumes decreased 9.8% as customer inventories being reduced led to lower demand for UNIFI, compared to the prior period.

Net sales in the current period were lower primarily due to (i) lower sales volumes in the Asia Segment, (ii) lower-priced sales mix in the Americas Segment, partially offset by improved sales volumes, and (iii) lower sales volumes and prices in the Brazil Segment.

Overall sales remain depressed, particularly in the Americas and Asia Segments as a result of continued volatility from uncertainty over global trade policies and competition from lower-priced products.

(1) In the third quarter of fiscal 2025, UNIFI incurred various transition costs totaling $2,900 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs of $1,088, (ii) inventory write-downs of $1,000, (iii) excess manufacturing costs of $580, and (iv) employee separation or retention costs of $232.

The associated tax impact was estimated to be $0 due to a valuation allowance against net operating losses in the U.S.

(2) In the third quarter of fiscal 2026, UNIFI recorded a foreign currency gain of $1,775.

In December 2025, Brazil declared dividends against the majority of its retained earnings in connection with certain tax law changes related to future dividends.

Foreign currency transaction gains (losses) are recorded to reflect changes in the exchange rate of the Brazilian Real to the U.S.

Dollar while the dividend payable is outstanding.

The associated tax impact was estimated to be $272, based on the estimated annual tax rate for the period.

Consolidated net sales for the current period decreased by $16,520, or 11.3%, and consolidated sales volumes decreased 7.7% as customers reduced inventories, which led to lower demand for UNIFI products, compared to the prior period.

Net sales in the current period were lower primarily due to (i) lower sales volumes and lower-priced sales mix in the Asia Segment and (ii) lower sales volumes in the Americas Segment.

These were partially offset by higher sales volumes in the Brazil Segment, partially offset by import pricing pressures.

Overall sales remain depressed, particularly in the Americas and Asia Segments as a result of uncertainty over ongoing geopolitical events, global trade policies, and competition from lower-priced products.

Consolidated weighted average sales prices decreased 3.6%.

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REPREVE ® Fiber products for the current period comprised 29%, or $38,249, of consolidated net sales, compared to 31%, or $44,699, for the prior period.

Gross Profit (Loss)

Gross profit for the current period increased to $9,117 from $(445) in the prior period.

Gross profit increased primarily due to (i) variable cost-saving initiatives and (ii) improved utilization in certain manufacturing areas, partially offset by (a) lower sales volumes and (b) production volatility and limited demand visibility due to the tariff uncertainty in the Americas Segment.

Gross profit continues to be unfavorably impacted by demand volatility in the Americas Segment and import pricing pressures in the Brazil Segment.

• For the Americas Segment, gross profit increased primarily due to variable cost-saving initiatives, partially offset by (a) demand and production volatility stemming from tariff uncertainty and inventory management efforts from customers and (b) a weaker sales mix.

• For the Brazil Segment, gross profit decreased primarily due to (i) lower sales volumes and (ii) competitive pricing pressures.

• For the Asia Segment, gross profit decreased primarily due to lower sales volumes, partially offset by higher-priced sales mix.

Gross profit increased primarily due to (i) variable cost-saving initiatives and (ii) improved utilization in certain manufacturing areas, partially offset by lower sales volumes due to volatility primarily from the ongoing geopolitical events.

Gross profit was unfavorably impacted by demand volatility in the Americas Segment and import pricing pressures in the Brazil Segment.

• Americas Segment gross profit increased primarily due to variable cost-saving initiatives and improved manufacturing utilization, partially offset by (a) demand volatility stemming from geopolitical events and inventory management efforts by customers and (b) a weaker sales mix.

• Brazil Segment gross profit decreased primarily due to competitive import pricing pressures, partially offset by higher sales volumes.

• Asia Segment gross profit decreased primarily due to lower sales volumes and a lower-priced sales mix.

SG&A decreased from the prior period to the current period, primarily due to the actions taken as part of the Fiscal 2026 Profit Improvement Plan.

Provision (Benefit) for Bad Debts

Benefit for Bad Debts

The current period and prior period provision reflect no material activity.

Restructuring Costs, Net

During the three-months ended December 28, 2025, UNIFI incurred employee separation costs of $1,093 related to the Fiscal 2026 Profit Improvement Plan.

Additionally, UNIFI recognized a gain of $308 during the current period from disposals of assets in conjunction with the consolidation of Americas yarn manufacturing operations.

Gain on Sale of Assets

In the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina.

Other Operating Expense (Income), Net

Other operating expense, net for the current period and the prior period included foreign currency transaction losses (gains) of $325 and $(221), respectively, with no other meaningful activity.

On February 3, 2025, UNIFI announced the closing of its Madison, North Carolina facility and the transition of those manufacturing operations to other UNIFI production facilities in North and Central America.

As a result, UNIFI incurred restructuring costs of $1,320 in the prior period which consisted of (i) equipment relocation and facility closure costs of $1,088 and (ii) employee separation or retention costs of $232.

Other Operating (Income) Expense, Net

Other operating (income) expense, net for the current period and the prior period included foreign currency transaction gains of $1,704 and $50, respectively, with no other meaningful activity.

In December 2025, Brazil declared dividends against the majority of its retained earnings in connection with certain tax law changes related to future dividends.

Foreign currency transaction gains (losses) are recorded to reflect changes in the exchange rate of the Brazilian Real to the U.S.

Dollar while the dividend payable is outstanding.

Interest Expense, Net

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For the Three Months Ended

December 28, 2025

December 29, 2024

March 29, 2026

March 30, 2025

Provision for income taxes

Effective tax rate

The decrease in the effective tax rate from the prior period to the current period is primarily attributable to higher foreign earnings in the current period.

The effective tax rate is subject to variation due to a number of factors, including variability in pre-tax book income;

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Additionally, the impacts of discrete and other rate impacting items are more pronounced when loss before income taxes is lower.

The increase in the effective tax rate from the prior period to the current period is primarily attributable to lower foreign earnings in the current period.

The improvement in net loss was primarily attributable to (i) increased gross profit, (ii) lower SG&A expenses, (iii) lower interest expense, net and (iv) lower income tax expense, partially offset by (a) restructuring costs, net incurred in the current period and (b) a gain on sale of assets in the prior period.

The improvement in net loss was primarily attributable to (i) increased gross profit, (ii) lower SG&A expenses, (iii) lower interest expense, net, (iv) lower income tax expense and (v) lower restructuring costs, net.

Adjusted EBITDA and Adjusted EPS (Non-GAAP Financial Measures)

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For the Three Months Ended

December 28, 2025

December 29, 2024

March 29, 2026

March 30, 2025

Cost of sales

Gross profit (loss)

Depreciation expense

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Net sales for the prior period

Decrease in sales volumes

Change in average selling price and sales mix

Increase in sales volumes

Net sales for the current period

The decrease in net sales for the Americas Segment from the prior period to the current period was primarily attributable to lower fiber sales volumes and higher Flake sales volumes, driving a decrease in average selling price.

The decrease in net sales for the Americas Segment from the prior period to the current period was primarily attributable to (i) lower sales volumes and (ii) a lower-priced sales mix.

The change in Segment (Loss) Profit for the Americas Segment was as follows:

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For the Three Months Ended

December 28, 2025

December 29, 2024

March 29, 2026

March 30, 2025

Cost of sales

7 unchanged sentences

Net sales for the prior period

Decrease in average selling price and change in sales mix

Decrease in sales volumes

Favorable foreign currency translation effects

Increase in sales volumes

Decrease in average selling price and change in sales mix

Net sales for the current period

The decrease in net sales for the Brazil Segment from the prior period to the current period was primarily attributable to (i) lower selling prices associated with competitive pricing pressures and (ii) lower sales volumes due to market conditions, partially offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD.

The increase in net sales for the Brazil Segment from the prior period to the current period was primarily attributable to (i) favorable foreign currency translation effects from the strengthening of the BRL versus the USD and (ii) higher sales volumes, partially offset by lower selling prices associated with competitive import pricing pressures.

The change in Segment Profit for the Brazil Segment was as follows:

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Decrease in underlying unit margins

Decrease in sales volumes

Favorable foreign currency translation effects

Increase in sales volumes

Segment Profit for the current period

The decrease in Segment Profit for the Brazil Segment from the prior period to the current period was primarily attributable to (i) lower conversion margins primarily due to sales mix and pricing pressures and (ii) a decrease in sales volumes discussed above, partially offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD.

Segment Profit for the Brazil Segment was flat from the prior period to the current period as lower conversion margins primarily due to sales mix and pricing pressures were mostly offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD and an increase in sales volumes.

We continue to prioritize innovation and differentiation to improve our portfolio and competitive position in Brazil.

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For the Three Months Ended

December 28, 2025

December 29, 2024

March 29, 2026

March 30, 2025

Cost of sales

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Net sales for the prior period

Decrease in sales volumes

Change in average selling price and sales mix

Decrease in sales volumes

Favorable foreign currency translation effects

Net sales for the current period

The decrease in net sales for the Asia Segment from the prior period to current period was primarily attributable to an overall decrease in sales volumes due to competitive pricing pressures and the continued volatility introduced by recent tariffs, partially offset by a change in sales mix of REPREVE products.

The decrease in net sales for the Asia Segment from the prior period to current period was primarily attributable to (i) a change in sales mix of REPREVE products and (ii) an overall decrease in sales volumes due to geopolitical events, competitive pricing pressures and the continued volatility introduced by tariffs, partially offset by favorable foreign currency translation effects from the strengthening of the RMB versus the USD.

The change in Segment Profit for the Asia Segment was as follows:

Segment Profit for the prior period

Decrease in sales volumes

Change in underlying unit margins and sales mix

Decrease in sales volumes

Favorable foreign currency translation effects

Segment Profit for the current period

The decrease in Segment Profit for the Asia Segment from the prior period to the current period was primarily attributable to lower sales volumes discussed above, partially offset by a change in sales mix of REPREVE products.

Six Months Ended December 28, 2025 Compared to Six Months Ended December 29, 2024

The decrease in Segment Profit for the Asia Segment from the prior period to the current period was primarily attributable to (i) a change in sales mix of REPREVE products and (ii) lower sales volumes discussed above, partially offset by favorable foreign currency translation effects from the strengthening of the RMB versus the USD.

Nine Months Ended March 29, 2026 Compared to Nine Months Ended March 30, 2025

Consolidated Overview

The below tables provide:

• the components of net loss and the percentage increase or decrease over the prior six-month period amounts, and

• the components of net loss and the percentage increase or decrease over the prior nine-month period amounts, and

• a reconciliation from net loss to EBITDA and Adjusted EBITDA.

Following the tables is a discussion and analysis of the significant components of net loss.

For the Six Months Ended

December 28, 2025

December 29, 2024

For the Nine Months Ended

March 29, 2026

March 30, 2025

Cost of sales

Provision for bad debts

Benefit for bad debts

Restructuring costs, net

Gain on sale of assets

Other operating expense, net

Other operating (income) expense, net

Operating loss

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The reconciliations of the amounts reported under GAAP for Net loss to EBITDA and Adjusted EBITDA were as follows:

For the Six Months Ended

December 28, 2025

December 29, 2024

For the Nine Months Ended

March 29, 2026

March 30, 2025

Interest expense, net

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Transition costs (3)

Gain on sale of warehouse (4)

Gain on foreign currency transaction, net (4)

Gain on sale of assets (5)

Adjusted EBITDA

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The facility closure, equipment relocation, and employee separation costs were all recorded within Restructuring costs, net in the Condensed Consolidated Statements of Operations.

In the third quarter of fiscal 2025, UNIFI incurred various transition costs totaling $2,900 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs of $1,088, (ii) inventory write-downs of $1,000, (iii) excess manufacturing costs of $580, and (iv) employee separation or retention costs of $232.

(4) In the third quarter of fiscal 2026, UNIFI recorded a foreign currency gain of $1,775.

In December 2025, Brazil declared dividends against the majority of its retained earnings in connection with certain tax law changes related to future dividends.

Foreign currency transaction gains (losses) are recorded to reflect changes in the exchange rate of the Brazilian Real to the U.S.

Dollar while the dividend payable is outstanding.

(5) In the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina.

1 unchanged sentence

For the Six Months Ended December 28, 2025

For the Six Months Ended December 29, 2024

For the Nine Months Ended March 29, 2026

For the Nine Months Ended March 30, 2025

Restructuring costs, net (1)

Transition costs (2)

Gain on sale of warehouse (3)

Gain on foreign currency transaction, net (3)

Gain on sale of assets (4)

Adjusted results

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The associated tax impact was estimated to be $0 due to a valuation allowance against net operating losses in the U.S.

(3) In the third quarter of fiscal 2026, UNIFI recorded a foreign currency gain of $1,775.

In December 2025, Brazil declared dividends against the majority of its retained earnings in connection with certain tax law changes related to future dividends.

Foreign currency transaction gains (losses) are recorded to reflect changes in the exchange rate of the Brazilian Real to the U.S.

Dollar while the dividend payable is outstanding.

The associated tax impact was estimated to be $272, based on the estimated annual tax rate for the period.

(4) In the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina.

The associated tax impact was estimated to be $0 due to a valuation allowance against net operating losses and capital losses in the U.S.

Consolidated net sales for the current six-month period decreased by $29,210, or 10.2%, and consolidated sales volumes decreased 7.5%, compared to the prior six-month period.

Net sales in the current six-month period were lower primarily due to (i) lower sales volumes in the Asia Segment, (ii) lower-priced sales mix in the Americas Segment, and (iii) lower sales volumes and prices in the Brazil Segment.

Consolidated net sales for the current nine-month period decreased by $45,730, or 10.6%, and consolidated sales volumes decreased 7.5%, compared to the prior nine-month period.

Net sales in the current nine-month period were lower primarily due to (i) lower sales volumes in the Asia Segment, (ii) lower sales volumes and lower-priced sales mix in the Americas Segment, and (iii) lower sales volumes and prices in the Brazil Segment.

Overall sales remain depressed, particularly in the Americas and Asia Segments as a result of continued volatility from uncertainty over ongoing geopolitical events, global trade policies, and competition from lower-priced products.

Consolidated weighted average sales prices decreased 3.1%.

The decrease in sales prices was primarily attributable to sales mix and lower average selling prices in the Americas and Brazil Segments.

REPREVE ® Fiber products for the current six-month period comprised 29%, or $73,536, of consolidated net sales, compared to 31%, or $88,014, for the prior six-month period.

Gross profit for the current six-month period decreased to $6,998 from $9,992 in the prior six-month period.

Gross profit decreased primarily due to (i) lower sales volumes, (ii) lower overall conversion margins and (iii) production volatility from an inability to forecast demand due to the tariff uncertainty in the Americas Segment.

The decrease was partially offset by (a) variable cost-saving initiatives and (b) improved utilization in certain manufacturing areas.

REPREVE ® Fiber products for the current nine-month period comprised 29%, or $111,784, of consolidated net sales, compared to 31%, or $132,713, for the prior nine-month period.

Gross profit for the current nine-month period increased to $16,115 from $9,547 in the prior nine-month period.

Gross profit increased primarily due to (i) variable cost-saving initiatives and (ii) improved utilization in certain manufacturing areas.

This increase was partially offset by (a) lower sales volumes, (b) lower overall conversion margins and (c) production volatility from an inability to forecast demand due to the uncertainty caused by geopolitical events and tariffs impacting the Americas Segment.

Gross profit continues to be unfavorably impacted by demand volatility in the Americas Segment and import pricing pressures in the Brazil Segment.

• For the Americas Segment, gross profit increased primarily due to overall cost-saving initiatives, including reductions in manufacturing costs from the Americas yarn manufacturing consolidation and the Fiscal 2026 Profit Improvement Plan, partially offset by (a) demand and production volatility stemming from tariff uncertainty and (b) lower conversion margins from a lower-priced sales mix.

• For the Brazil Segment, gross profit decreased primarily due to (i) lower sales volumes and (ii) competitive pricing pressures.

• For the Asia Segment, gross profit decreased primarily due to lower sales volumes.

SG&A decreased from the prior six-month period to the current six-month period, primarily due to the actions from the Fiscal 2026 Profit Improvement Plan.

Provision for Bad Debts

The current six-month period and prior six-month period provision reflect no material activity.

• Americas Segment gross profit increased primarily due to overall cost-saving initiatives, including reductions in manufacturing costs from the consolidation of Americas yarn manufacturing operations and the Fiscal 2026 Profit Improvement Plan, partially offset by demand and production volatility stemming from geopolitical events and tariff uncertainty.

• Brazil Segment gross profit decreased primarily due to (i) lower sales volumes and (ii) competitive import pricing pressures.

• Asia Segment gross profit decreased primarily due to lower sales volumes.

SG&A decreased from the prior nine-month period to the current nine-month period, primarily due to the actions from the Fiscal 2026 Profit Improvement Plan.

Benefit for Bad Debts

The current nine-month period and prior nine-month period provision reflect no material activity.

Restructuring Costs, Net

As a result, UNIFI incurred transition costs of $1,068 in the current six-month period which consisted of (i) equipment relocation and facility closure costs (including asset impairments and disposals) of $1,021 and (ii) employee separation costs of $47.

There were no Restructuring costs for the prior six-month period.

1 unchanged sentence

Additionally, UNIFI recognized a gain of $308 during the current period from disposals of assets in conjunction with the consolidation of Americas yarn manufacturing operations.

As a result, UNIFI incurred transition costs of $1,068 in the current nine-month period which consisted of (i) equipment relocation and facility closure costs (including asset impairments and disposals) of $1,021 and (ii) employee separation costs of $47.

For the prior nine-month period, UNIFI incurred restructuring costs of $1,320 which consisted of (i) equipment relocation and facility closure costs of $1,088 and (ii) employee separation or retention costs of $232.

Gain on Sale of Assets

In the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina.

Other Operating Expense, Net

Other operating expense, net for the current six-month period and the prior six-month period include foreign currency transaction losses of $375 and $268, respectively, with no other meaningful activity.

Other Operating (Income) Expense, Net

Other operating (income) expense, net for the current nine-month period and the prior nine-month period include foreign currency transaction (gains) losses of $(1,330) and $218, respectively, with no other meaningful activity.

In December 2025, Brazil declared dividends against the majority of its retained earnings in connection with certain tax law changes related to future dividends.

Foreign currency transaction gains (losses) are recorded to reflect changes in the exchange rate of the Brazilian Real to the U.S.

Dollar while the dividend payable is outstanding.

Interest Expense, Net

1 unchanged sentence

Equity in Loss of Unconsolidated Affiliate

There was no material activity for the current six-month period or the prior six-month period.

There was no material activity for the current nine-month period or the prior nine-month period.

Provision for income taxes and the effective tax rate were as follows:

For the Six Months Ended

December 28, 2025

December 29, 2024

For the Nine Months Ended

March 29, 2026

March 30, 2025

Provision for income taxes

Effective tax rate

The increase in the effective tax rate from the prior nine-month period to the current nine-month period is primarily attributable to lower foreign earnings in the current nine-month period.

The effective tax rate is subject to variation due to a number of factors, including variability in pre-tax book income;

3 unchanged sentences

Additionally, the impacts of discrete and other rate impacting items are more pronounced when loss before income taxes is lower.

The increase in the effective tax rate from the prior six-month period to the current six-month period is primarily attributable to lower foreign earnings in the current six-month period.

The increase in net loss was primarily attributable to (i) decreased gross profit and (ii) restructuring costs, net incurred in the current six-month period and (iii) a gain on sale of assets in the prior six-month period, partially offset by (a) lower SG&A expenses, (b) lower interest expense, net, and (c) lower income tax expense.

The decrease in net loss was primarily attributable to (i) increased gross profit and (ii) lower SG&A expenses, (iii) lower interest expense, net, and (iv) lower income tax expense, partially offset by a gain on sale of assets in the prior nine-month period.

Adjusted EBITDA and Adjusted EPS (Non-GAAP Financial Measures)

Adjusted EBITDA decreased primarily due to lower gross profit, partially offset by lower SG&A.

Adjusted EPS improved primarily due to (i) lower interest expense and (ii) income tax expense.

Adjusted EBITDA increased primarily due to (i) higher gross profit and (ii) lower SG&A expenses.

Adjusted EPS improved primarily due to (i) higher gross profit, (ii) lower SG&A, (iii) lower interest expense and (iv) income tax expense.

Segment Overview

Following is a discussion and analysis of the revenue and profitability performance of UNIFI’s reportable segments for the current six-month period.

Following is a discussion and analysis of the revenue and profitability performance of UNIFI’s reportable segments for the current nine-month period.

Americas Segment

The components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior six-month period amounts for the Americas Segment, were as follows:

For the Six Months Ended

December 28, 2025

December 29, 2024

The components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior nine-month period amounts for the Americas Segment, were as follows:

For the Nine Months Ended

March 29, 2026

March 30, 2025

Cost of sales

Gross profit (loss)

Depreciation expense

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consolidated amounts

nm = not meaningful

The change in net sales for the Americas Segment was as follows:

Net sales for the prior six-month period

Net sales for the prior nine-month period

Change in average selling price and sales mix

Increase in sales volumes

Net sales for the current six-month period

The decrease in net sales for the Americas Segment from the prior six-month period to the current six-month period was primarily attributable to a lower-priced sales mix which was partially offset by higher sales volumes.

Decrease in sales volumes

Net sales for the current nine-month period

The decrease in net sales for the Americas Segment from the prior nine-month period to the current nine-month period was primarily attributable to a lower-priced sales mix and lower sales volumes as discussed above.

The change in Segment Profit for the Americas Segment was as follows:

Segment Profit for the prior six-month period

Segment Profit for the prior nine-month period

Change in underlying unit margins and sales mix

Increase in sales volumes

Segment Profit for the current six-month period

The increase in Segment Profit for the Americas Segment from the prior six-month period to the current six-month period was primarily attributable to overall cost-saving initiatives, including reductions in manufacturing costs from the consolidation of Americas yarn manufacturing operations and the Fiscal 2026 Profit Improvement Plan.

Decrease in sales volumes

Segment Profit for the current nine-month period

The increase in Segment Profit for the Americas Segment from the prior nine-month period to the current nine-month period was primarily attributable to overall cost-saving initiatives, including reductions in manufacturing costs from the consolidation of Americas yarn manufacturing operations and the Fiscal 2026 Profit Improvement Plan.

Brazil Segment

The components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior six-month period amounts for the Brazil Segment, were as follows:

For the Six Months Ended

December 28, 2025

December 29, 2024

The components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior nine-month period amounts for the Brazil Segment, were as follows:

For the Nine Months Ended

March 29, 2026

March 30, 2025

Cost of sales

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The change in net sales for the Brazil Segment was as follows:

Net sales for the prior six-month period

Net sales for the prior nine-month period

Change in average selling price and change in sales mix

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Favorable foreign currency translation effects

Net sales for the current six-month period

The decrease in net sales for the Brazil Segment from the prior six-month period to the current six-month period was primarily attributable to (i) lower selling prices associated with competitive pricing pressures and (ii) lower sales volumes due to market conditions, partially offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD.

Net sales for the current nine-month period

The decrease in net sales for the Brazil Segment from the prior nine-month period to the current nine-month period was primarily attributable to (i) lower selling prices associated with competitive import pricing pressures and (ii) lower sales volumes due to market conditions, partially offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD.

The change in Segment Profit for the Brazil Segment was as follows:

Segment Profit for the prior six-month period

Segment Profit for the prior nine-month period

Decrease in underlying unit margins

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Favorable foreign currency translation effects

Segment Profit for the current six-month period

The decrease in Segment Profit for the Brazil Segment from the prior six-month period to the current six-month period was primarily attributable to (i) lower conversion margins primarily due to sales mix and pricing pressures and (ii) a decrease in sales volumes discussed above, partially offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD.

Segment Profit for the current nine-month period

The decrease in Segment Profit for the Brazil Segment from the prior nine-month period to the current nine-month period was primarily attributable to (i) lower conversion margins primarily due to sales mix and import pricing pressures and (ii) a decrease in sales volumes discussed above, partially offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD.

We continue to prioritize innovation and differentiation to improve our portfolio and competitive position in Brazil.

The components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior six-month period amounts for the Asia Segment, were as follows:

For the Six Months Ended

December 28, 2025

December 29, 2024

The components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior nine-month period amounts for the Asia Segment, were as follows:

For the Nine Months Ended

March 29, 2026

March 30, 2025

Cost of sales

6 unchanged sentences

The change in net sales for the Asia Segment was as follows:

Net sales for the prior six-month period

Net sales for the prior nine-month period

Decrease in sales volumes

1 unchanged sentence

Favorable foreign currency translation effects

Net sales for the current six-month period

The decrease in net sales for the Asia Segment from the prior six-month period to current six-month period was primarily attributable to (i) an overall decrease in sales volumes due to competitive pricing pressures and the continued volatility introduced by recent tariffs and (ii) a change in sales mix of REPREVE products.

Net sales for the current nine-month period

The decrease in net sales for the Asia Segment from the prior nine-month period to current nine-month period was primarily attributable to (i) an overall decrease in sales volumes due to competitive pricing pressures and the continued volatility stemming from geopolitical events and tariffs and (ii) a change in sales mix of REPREVE products, partially offset by favorable foreign currency translation effects from the strengthening of the RMB versus the USD.

The change in Segment Profit for the Asia Segment was as follows:

Segment Profit for the prior six-month period

Segment Profit for the prior nine-month period

Decrease in sales volumes

Change in underlying unit margins and sales mix

Segment Profit for the current six-month period

The decrease in Segment Profit for the Asia Segment from the prior six-month period to the current six-month period was primarily attributable to a decline in sales volumes as discussed above.

Favorable foreign currency translation effects

Segment Profit for the current nine-month period

The decrease in Segment Profit for the Asia Segment from the prior nine-month period to the current nine-month period was primarily attributable to a decline in sales volumes as discussed above.

Liquidity and Capital Resources

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UNIFI’s primary sources of capital are cash generated from operations and borrowings available under the 2022 Credit Agreement and the 2024 Facility.

For the current six-month period, cash provided by operations was $16,362 and, at December 28, 2025, availability under the ABL Revolver and 2024 Facility was $34,329 and $583, respectively.

As of December 28, 2025, all of UNIFI’s $105,405 of debt obligations were guaranteed by certain of its domestic operating subsidiaries, while nearly all of UNIFI’s cash and cash equivalents were held by its foreign subsidiaries.

For the current nine-month period, cash provided by operations was $24,393 and, at March 29, 2026, availability under the ABL Revolver and 2024 Facility was $44,921 and $949, respectively.

As of March 29, 2026, all of UNIFI’s $94,939 of debt obligations were guaranteed by certain of its domestic operating subsidiaries, while nearly all of UNIFI’s cash and cash equivalents were held by its foreign subsidiaries.

Cash and cash equivalents held by foreign subsidiaries may not be presently available to fund UNIFI’s domestic capital requirements, including its domestic debt obligations.

UNIFI employs a variety of strategies to ensure that its worldwide cash is available in the locations where it is needed.

The following table presents a summary of cash and cash equivalents, borrowings available under financing arrangements, liquidity, working capital, and total debt obligations as of December 28, 2025 for domestic operations compared to foreign operations:

The following table presents a summary of cash and cash equivalents, borrowings available under financing arrangements, liquidity, working capital, and total debt obligations as of March 29, 2026 for domestic operations compared to foreign operations:

Cash and cash equivalents

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However, further degradation in the macroeconomic environment could introduce additional liquidity risk and require UNIFI to limit cash outflows for discretionary activities while further utilizing available and additional forms of credit.

We feel that our current liquidity position is sufficient to fund our operations and expected business growth.

We feel that our current liquidity position, particularly following the two quarters ended December 28, 2025 and March 29, 2026 in which we generated cash from operating activities, is sufficient to fund our operations and expected business growth.

Should global demand, economic activity, or input availability decline considerably for an even longer period of time, UNIFI maintains the ability to (i) seek additional credit or financing arrangements and/or (ii) re-implement cost reduction initiatives to preserve cash and secure the longevity of the business and operations.

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When business levels increase, we expect to use cash in support of working capital needs.

The following outlines the attributes relating to our credit facilities as of December 28, 2025:

The following outlines the attributes relating to our credit facilities as of March 29, 2026:

• UNIFI was in compliance with all applicable financial covenants in the 2022 Credit Agreement and 2024 Facility;

• availability under the 2024 Facility was $583 as of December 28, 2025;

• availability under the 2024 Facility was $949 as of March 29, 2026;

• availability exceeding the Trigger Level (as defined in the 2022 Credit Agreement) under the ABL Revolver was $28,421;

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The reconciliations for Net Debt are as follows:

December 28, 2025

March 29, 2026

June 29, 2025

4 unchanged sentences

cash and cash equivalents

The decrease in Net Debt primarily reflects the generation of operating cash flows during fiscal 2026, aided by reduced levels of capital expenditures.

The decrease in Net Debt primarily reflects the generation of operating cash flows during fiscal 2026, aided by reduced levels of working capital and capital expenditures.

Working Capital and Adjusted Working Capital (Non-GAAP Financial Measure)

The following table presents the components of working capital and the reconciliation of working capital to Adjusted Working Capital:

December 28, 2025

March 29, 2026

June 29, 2025

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Adjusted Working Capital

Adjusted Working Capital decreased $17,830 from June 29, 2025 to December 28, 2025.

Adjusted Working Capital decreased $18,789 from June 29, 2025 to March 29, 2026.

The decrease in Adjusted Working Capital was primarily attributable to the decreases in (i) inventories due to lower units on hand, (ii) receivables, net due to lower sales and the timing of cash receipts, and (iii) other current assets primarily due to lower vendor deposits and value-added taxes receivable.

These were partially offset by reductions in (a) accounts payable primarily due to lower production activity and variable cost-saving initiatives and (b) other current liabilities due primarily to the payment of incentive compensation earned in fiscal 2025.

These were partially offset by reductions in (a) accounts payable primarily due to lower production activity to match customer demand and variable cost-saving initiatives and (b) other current liabilities due primarily to the payment of incentive compensation earned in fiscal 2025.

Operating Cash Flows

The significant components of net cash provided (used) by operating activities are summarized below.

For the Six Months Ended

December 28, 2025

December 29, 2024

For the Nine Months Ended

March 29, 2026

March 30, 2025

Equity in loss of unconsolidated affiliate

1 unchanged sentence

Non-cash compensation expense

Gain on foreign currency transaction, net

Gain on sale of assets

4 unchanged sentences

Net cash provided (used) by operating activities

The change in operating cash flows was primarily due to the reduction of working capital balances during the current six-month period compared to the prior six-month period.

For the current six-month period, the decreases in accounts receivable was largely driven by a decrease in sales and the timing of cash receipts.

The decrease in inventories was driven by concerted efforts to reduce inventory levels in response to the lower demand environment.

The decrease in accounts payable and other current liabilities was largely due to lower production activity, variable cost-saving initiatives, and the payment of incentive compensation liabilities.

The change in operating cash flows was primarily due to the an improvement in gross profit and reduction of working capital balances during the current nine-month period compared to the prior nine-month period.

For the current nine-month period, the decrease in accounts receivable was largely driven by a decrease in sales and the timing of cash receipts.

The decrease in inventories and accounts payable was driven by concerted efforts to reduce inventory levels in response to the lower demand environment.

The decrease in other current liabilities was largely due to the payment of incentive compensation liabilities.

Other changes comprise mostly decreases in income tax receivables and other current assets due to the utilization of tax credits, an income tax refund, and lower vendor deposits in Brazil.

For the prior six-month period, the decreases in accounts payable and other current liabilities was primarily due to seasonally lower production activity which included scheduled holiday shutdown periods.

Inventories increased primarily due to higher average unit costs.

Other changes comprised mostly of higher vendor deposits and recoverable value added taxes (following the increased value of inventories).

The decrease in accounts receivable was largely driven by the decrease in sales and timing of cash receipts.

For the prior nine-month period, the increases in accounts receivable and inventories were largely driven by the improvement in sales and timing of cash receipts.

The increase in accounts payable and other current liabilities was largely due to increased accruals for employee compensation.

Investing Cash Flows

Investing activities primarily include $3,872 for capital expenditures.

UNIFI expects recent and future capital projects to provide benefits to future profitability.

The additional assets from these capital projects consist primarily of machinery and equipment.

UNIFI expects future capital projects to primarily include routine maintenance requirements related to its existing machinery and equipment.

Financing Cash Flows

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Financial obligations are considered to represent known future cash payments that UNIFI is required to make under existing contractual arrangements, such as debt and lease agreements.

Except for the $3,705 of new finance leases that commenced during the six months ended December 28, 2025, there have been no material changes in the scheduled maturities of UNIFI’s contractual obligations as disclosed under the heading “Contractual Obligations” in “Item 7.

Except for the $4,048 of new finance leases that commenced during the nine months ended March 29, 2026, there have been no material changes in the scheduled maturities of UNIFI’s contractual obligations as disclosed under the heading “Contractual Obligations” in “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2025 Form 10-K.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis