What changed in this filing

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Item 1. Financial Statements

2023-11-08 compared with 2023-05-10 · 230 added, 608 removed, 540 unchanged (61% of the section changed)

2 unchanged sentences

(In thousands, except share and per share amounts)

April 2, 2023

October 1, 2023

Cash and cash equivalents

22 unchanged sentences

18,084,522 and 18,081,538

shares issued and outstanding as of April 2, 2023 and July 3, 2022, respectively)

shares issued and outstanding as of October 1, 2023 and July 2, 2023, respectively)

Capital in excess of par value

4 unchanged sentences

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATE MENTS OF OPERATIONS

CONDENSED CONSOLIDATED STATE MENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except per share amounts)

For the Three Months Ended

For the Nine Months Ended

April 2, 2023

March 27, 2022

April 2, 2023

March 27, 2022

October 1, 2023

October 2, 2022

Cost of sales

Gross (loss) profit

Selling, general and administrative expenses

Benefit for bad debts

(Benefit) provision for bad debts

Other operating expense (income), net

Operating (loss) income

Operating loss

Interest income

1 unchanged sentence

Equity in earnings of unconsolidated affiliates

Recovery of non-income taxes, net

(Loss) income before income taxes

Provision for income taxes

Net (loss) income

Net (loss) income per common share:

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

Loss before income taxes

(Benefit) provision for income taxes

Net loss per common share:

Comprehensive loss:

For the Three Months Ended

For the Nine Months Ended

April 2, 2023

March 27, 2022

April 2, 2023

March 27, 2022

Net (loss) income

Other comprehensive income:

October 1, 2023

October 2, 2022

Other comprehensive loss:

Foreign currency translation adjustments

Changes in interest rate swaps, net of tax of

nil, $ 105 , nil and $ 248 , respectively

Other comprehensive income, net

Comprehensive (loss) income

Other comprehensive loss, net

Comprehensive loss

See accompanying notes to condensed consolidated financial statements.

5 unchanged sentences

Total Shareholders’

Balance at January 1, 2023

Options exercised

Conversion of equity units

Stock-based compensation

Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions

Other comprehensive income, net of tax

Balance at April 2, 2023

Capital in Excess of Par Value

Retained Earnings

Accumulated Other Comprehensive Loss

Total Shareholders’

Balance at July 2, 2023

3 unchanged sentences

Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions

Other comprehensive income, net of tax

Balance at April 2, 2023

Capital in Excess of Par Value

Retained Earnings

Accumulated Other Comprehensive Loss

Total Shareholders’

Balance at December 26, 2021

Options exercised

Conversion of equity units

Stock-based compensation

Common stock repurchased and retired under publicly announced program

Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions

Other comprehensive income, net of tax

Balance at March 27, 2022

Other comprehensive loss, net of tax

Balance at October 1, 2023

Capital in Excess of Par Value

2 unchanged sentences

Total Shareholders’

Balance at June 27, 2021

Balance at July 3, 2022

Options exercised

1 unchanged sentence

Stock-based compensation

Common stock repurchased and retired under publicly announced program

Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions

Other comprehensive income, net of tax

Balance at March 27, 2022

Other comprehensive loss, net of tax

Balance at October 2, 2022

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

(In thousands)

For the Nine Months Ended

April 2, 2023

March 27, 2022

For the Three Months Ended

October 1, 2023

October 2, 2022

Cash and cash equivalents at beginning of period

Operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided (used) by operating activities:

Adjustments to reconcile net loss to net cash provided (used) by operating activities:

Equity in earnings of unconsolidated affiliates

Distribution received from unconsolidated affiliate

Depreciation and amortization expense

Non-cash compensation expense

Recovery of income taxes

Deferred income taxes

13 unchanged sentences

Payments on finance lease obligations

Common stock repurchased and retired under publicly announced program

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at end of period

5 unchanged sentences

“us,”

or “our”), is a multinational company that manufactures and sells innovative recycled and synthetic products, made from polyester and nylon, primarily to other yarn manufacturers and knitters and weavers (UNIFI’s “direct customers”) that produce yarn and/or fabric for the apparel, hosiery, home furnishings, automotive, industrial, and other end-use markets (UNIFI’s “indirect customers”).

or “our”), is a multinational company that manufactures and sells innovative recycled and synthetic products, made from polyester and nylon, primarily to other yarn manufacturers and knitters and weavers (UNIFI’s “direct customers”) that produce yarn and/or fabric for the apparel, hosiery, home furnishings, automotive, industrial, medical, and other end-use markets (UNIFI’s “indirect customers”).

We sometimes refer to these indirect customers as “brand partners.”

Polyester products include partially oriented yarn (“POY”), textured, solution and package dyed, twisted, beamed, and draw wound yarns, and each is available in virgin or recycled varieties.

Polyester products include partially oriented yarn (“POY”) and textured, solution and package dyed, twisted, beamed, and draw wound yarns, and each is available in virgin or recycled varieties.

Recycled solutions, made from both pre-consumer and post-consumer waste, include plastic bottle flake (“Flake”), polyester polymer beads (“Chip”), and staple fiber.

1 unchanged sentence

UNIFI maintains one of the textile industry’s most comprehensive product offerings that includes a range of specialized, value-added, and commodity solutions, with principal geographic markets in North America, Central America, South America, Asia, and Europe.

UNIFI has direct manufacturing operations in four countries and participates in joint ventures with operations in Israel and the United States (“U.S.”).

UNIFI has direct manufacturing operations in four countries and participates in joint ventures with operations in Israel and the United States (the “U.S.”).

Basis of Presentation;

10 unchanged sentences

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

The fiscal quarter for each of Unifi, Inc., its primary domestic operating subsidiaries and its subsidiary in El Salvador ended on April 2, 2023.

The fiscal quarter for each of Unifi, Inc., its primary domestic operating subsidiaries and its subsidiary in El Salvador ended on October 1, 2023.

Unifi, Inc.’s remaining material operating subsidiaries’

fiscal quarter ended on March 31, 2023.

fiscal quarter ended on September 30, 2023.

There were no significant transactions or events that occurred between Unifi, Inc.’s fiscal quarter end and such wholly owned subsidiaries’

fiscal quarter end.

The three-month periods ended April 2, 2023 and March 27, 2022 both consisted of 13 weeks.

The nine-month periods ended April 2, 2023 and March 27, 2022 both consisted of 39 weeks.

The three-month periods ended October 1, 2023 and October 2, 2022 both consisted of 13 weeks.

Recent Accounting Pronouncements

2 unchanged sentences

The following tables present net sales disaggregated by (i) classification of customer type and (ii) REPREVE ® Fiber sales:

Third-Party Manufacturer

For the Three Months Ended

For the Nine Months Ended

April 2, 2023

March 27, 2022

April 2, 2023

March 27, 2022

October 1, 2023

October 2, 2022

Third-party manufacturer

For the Three Months Ended

For the Nine Months Ended

April 2, 2023

March 27, 2022

April 2, 2023

March 27, 2022

October 1, 2023

October 2, 2022

REPREVE ® Fiber

All other products and services

Third-Party Manufacturer

Third-party manufacturer revenue is primarily generated through sales to direct customers.

12 unchanged sentences

Debt Obligations

The following table and narrative presents the detail of UNIFI’s debt obligations.

Capitalized terms not otherwise defined within this Note shall have the meanings attributed to them in the Amended and Restated Credit Agreement, dated as of March 26, 2015 (together with amendments, the "Prior Credit Agreement"), or the Second Amended and Restated Credit Agreement, dated as of October 28, 2022 (the "2022 Credit Agreement").

The following table and narrative presents the detail of UNIFI’s debt obl igations.

Capitalized terms not otherwise defined within this Note shall have the meanings attributed to them in the Second Amended and Restated Credit Agreement, dated as of October 28, 2022 (the "2022 Credit Agreement").

Weighted Average

2 unchanged sentences

Maturity Date

April 2, 2023

October 1, 2023

ABL Term Loan

5 unchanged sentences

Total long-term debt

(1) Scheduled maturity dates for finance lease obligations range from March 2025 to November 2027 .

(1) Scheduled maturity dates for finance lease obligations range from Marc h 2025 to September 2028 .

(2) Refer to the discussion below under “

1 unchanged sentence

for further information.

entered into the Sixth Amendment to Amended and Restated Credit Agreement (the “Sixth Amendment”) on September 2, 2022.

The Sixth Amendment modified the Trigger Level of the Prior Credit Agreement, which relates to, among other things, the requirement to maintain a certain Fixed Charge Coverage Ratio, with such Trigger Level occurring when Excess Availability falls below (a) for the period beginning on September 2, 2022 through and including the date that is 60 days after such date, $ 16,500 and (b) at all other times, the greatest of (i) $ 10,000 , (ii) 20 % of the Maximum Revolver Amount, and (iii) 12.5 % of the sum of the Maximum Revolver Amount plus the outstanding principal amount of the Term Loan.

Notes to Condensed Consolidated Financial Statements (Continued)

On October 28, 2022, Unifi, Inc.

and certain of its subsidiaries entered into the 2022 Credit Agreement with a syndicate of lenders.

The 2022 Credit Agreement provides for a $ 230,000 senior secured credit facility (the “2022 ABL Facility”), including a $ 115,000 revolving credit facility and a term loan ("2022 ABL Term Loan") that can be reset up to a maximum amount of $ 115,000 , once per fiscal year, if certain conditions are met.

The 2022 ABL Facility has a maturity date of October 28, 2027 .

The 2022 ABL Term Loan requires quarterly principal payments of $ 2,300 that began on February 1, 2023.

Borrowings under the 2022 ABL Facility bear interest at SOFR plus 0.10% plus an applicable margin of 1.25 % to 1.75 %, or the Base Rate (as defined in the 2022 Credit Agreement) plus an applicable margin of 0.25 % to 0.75 %, with interest paid most commonly on a monthly basis.

Prior to entering the 2022 Credit Agreement, Unifi, Inc.

and certain of its subsidiaries maintained the Prior Credit Agreement that established a $ 200,000 senior secured credit facility (the “Prior ABL Facility”), including a $ 100,000 revolving credit facility and a term loan that could be reset up to a maximum amount of $ 100,000 , once per fiscal year, if certain conditions were met.

The Prior ABL Facility had a maturity date of December 18, 2023 .

Prior ABL Facility borrowings bore interest at LIBOR plus an applicable margin of 1.25 % to 1.75 %, or the Base Rate plus an applicable margin of 0.25 % to 0.75 %, with interest paid on a monthly basis.

In connection with the 2022 Credit Agreement, UNIFI recorded a $ 273 loss on debt extinguishment to interest expense in the second quarter of fiscal 2023.

ABL Facility and Amendments

There have been no changes to the 2022 Credit Agreement following the filing of the 2023 Form 10-K.

Construction Financing

In May 2021, UNIFI entered into an agreement with a third party lender that provides for construction-period financing for certain texturing machinery included in our capital allocation plans.

UNIFI records project costs to construction in progress and the corresponding liability to construction financing (within long-term debt).

The agreement provides for monthly, interest-only payments during the construction period at a rate of SOFR plus 1.25 %, and contains terms customary for a financing of this type.

Each borrowing under the agreement provides for 60 monthly payments, which will commence upon the completion of the construction period.

In connection with this construction financing arrangement, UNIFI has borrowed a total of $ 9,755 and transitioned $ 5,672 of completed asset costs to finance lease obligations as of April 2, 2023.

The provision for income taxes and effective tax rate were as follows:

In connection with the construction financing arrangement, UNIFI has borrowed a total of $ 9,755 and transitioned $ 9,755 of completed asset costs to finance lease obligations as of October 1, 2023.

Notes to Condensed Consolidated Financial Statements (Continued)

The (benefit) provision for income taxes and effective tax rate were as follows:

For the Three Months Ended

For the Nine Months Ended

April 2, 2023

March 27, 2022

April 2, 2023

March 27, 2022

Provision for income taxes

October 1, 2023

October 2, 2022

(Benefit) provision for income taxes

Effective tax rate

Income Tax Expense

UNIFI’s provision for income taxes for the nine months ended April 2, 2023 and March 27, 2022 was calculated by applying the estimated annual effective tax rate to year-to-date pre-tax book income and adjusting for discrete items that occurred during the period.

The effective tax rates for the three months and nine months ended April 2, 2023 varied from the U.S.

federal statutory rate primarily due to losses for which UNIFI does not expect to realize a future tax benefit and a discrete tax benefit related to the recovery of certain Brazilian income taxes paid in prior years.

The effective tax rates for the three months and nine months ended March 27, 2022 were higher than the U.S.

federal statutory rate primarily due to an increase in the valuation allowance for deferred tax assets, earnings taxed at higher rates in foreign jurisdictions, and deferred tax on unremitted earnings.

UNIFI’s (benefit) provision for income taxes for the three months ended October 1, 2023 and October 2, 2022 was calculated by applying the estimated annual effective tax rate to year-to-date pre-tax book income and adjusting for discrete items that occurred during the period.

The effective tax rate for the three months ended October 1, 2023 varied from the U.S.

federal statutory rate primarily due to the U.S.-generated losses for which UNIFI does not expect to realize a future tax benefit.

During the three months ended October 1, 2023, the Internal Revenue Service (the “IRS”) audit of fiscal years 2014 through 2019 was concluded with a net refund of $ 1,248 which is yet to be received.

The impact from the audit adjustments to the prior periods was insignificant.

The effective tax rate for the three months ended October 2, 2022 was lower than the U.S.

federal statutory rate primarily due to an increase in the valuation allowance for deferred tax assets and current U.S.

tax on global intangible low-tax income (“GILTI”).

Unrecognized Tax Benefits

1 unchanged sentence

Certain returns that remain open to examination have utilized carryforward tax attributes generated in prior tax years, including net operating losses, which could potentially be revised upon examination.

Following the conclusion of the IRS audit, UNIFI adjusted the uncertain tax positions for fiscal years 2014 through 2019 that were effectively settled.

The impact from releasing the netted uncertain tax position liabilities was insignificant.

Shareholders’

On October 31, 2018, UNIFI announced that its Board of Directors (the “Board”) approved a share repurchase program (the “2018 SRP”) under which UNIFI is authorized to acquire up to $ 50,000 of its common stock.

Under the 2018 SRP, purchases may be made from time to time in the open market at prevailing market prices, through private transactions or block trades.

The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements, and other factors.

On October 31, 2018, UNIFI announced that the Company's Board of Directors (the “Board”) approved a share repurchase program (the “2018 SRP”) under which UNIFI is authorized to acquire up to $ 50,000 of its common stock.

The share repurchase authorization is discretionary and has no expiration date.

Repurchases, if any, are expected to be financed through cash generated from operations and borrowings under the ABL Revolver and are subject to applicable limitations and restrictions as set forth in the ABL Facility.

UNIFI may discontinue repurchases at any time that management determines additional purchases are not beneficial or advisable.

Notes to Condensed Consolidated Financial Statements (Continued)

The following table summarizes UNIFI’s repurchases and retirements of its common stock under the 2018 SRP for the fiscal periods noted:

Repurchased as

Part of Publicly

Announced Plans

Average Price

Paid per Share

Approximate Dollar

Value that May

Yet Be Repurchased

Under Publicly

Announced Plans

Fiscal 2023 (through April 2, 2023)

Repurchased shares are retired and have the status of authorized and unissued shares.

The cost of the repurchased shares is recorded as a reduction to common stock to the extent of the par value of the shares acquired and the remainder is allocated between capital in excess of par value and retained earnings, on a pro rata basis.

No shares have been repurchased in fiscal 2023 and 2024 and $ 38,859 remains available for repurchase.

Stock-Based Compensation

On October 29, 2020 , UNIFI’s shareholders approved the Unifi, Inc.

On October 31, 2023 , UNIFI’s shareholders approved a First Amendment (the "First Amendment") to the Unifi, Inc.

Second Amended and Restated 2013 Incentive Compensation Plan (the “2020 Plan”).

The 2020 Plan set the number of shares available for future issuance pursuant to awards granted under the 2020 Plan to 850 .

The 2020 Plan set the initial number of shares available for future issuance ("share reserve") pursuant to awards granted under the 2020 Plan to 850 .

The First Amendment increased the remaining share reserve by 1,100 .

No additional awards can be granted under prior plans;

however, awards outstanding under a respective prior plan remain subject to that plan’s provisions.

The following table provides the number of awards remaining available for future issuance under the 2020 Plan as of April 2, 2023:

Authorized under the 2020 Plan

Awards expired, forfeited or otherwise terminated unexercised

Awards granted to employees

Awards granted to non-employee directors

Available for issuance under the 2020 Plan

On October 27, 2021, UNIFI’s shareholders approved the Unifi, Inc.

Employee Stock Purchase Plan (the “ESPP”) as described in Unifi, Inc.’s Definitive Proxy Statement on Schedule 14A filed with the SEC on September 2, 2021.

The ESPP reserved 100 Company shares, is intended to be a qualified plan under applicable tax law, and allows eligible employees to purchase Company shares at a 15 % discount from market value.

ESPP activity is reflected as options exercised in the condensed consolidated statements of shareholders’

Fair Value of Financial Instruments and Non-Financial Assets and Liabilities

Financial Instruments

For the nine months ended April 2, 2023 and March 27, 2022, there were no significant changes to UNIFI’s assets and liabilities measured at fair value, and there were no transfers into or out of the levels of the fair value hierarchy.

For the three months ended October 1, 2023 and October 2, 2022, there were no significant changes to UNIFI’s assets and liabilities measured at fair value, and there were no transfers into or out of the levels of the fair value hierarchy.

UNIFI believes that there have been no significant changes to its credit risk profile or the interest rates available to UNIFI for debt issuances with similar terms and average maturities, and UNIFI estimates that the fair values of its debt obligations approximate the carrying amounts.

1 unchanged sentence

The financial statement carrying amounts of these items approximate the fair values due to their short-term nature.

Notes to Condensed Consolidated Financial Statements (Continued)

Grantor Trust

The UNIFI, Inc.

Deferred Compensation Plan (the “DCP”), established in fiscal 2022, is an unfunded non-qualified deferred compensation plan in which certain key employees are eligible to participate.

The fair values of the investment assets held by the grantor trust established in connection with the DCP were approxima tely $ 2,586 and $ 2,196 as of April 2, 2023 and July 3, 2022, respectively, and are classified as trading securities within Other non-current assets.

Deferred Compensation Plan (the “DCP”), established in fiscal 2022, is an unfunded non-qualified deferred compensation plan in which certain key emplo yees are eligible to participate.

The fair values of the investment assets held by the grantor trust established in connection with the DCP were approximately $ 2,463 and $ 2,496 as of October 1, 2023 and July 2, 2023, respectively, and are classified as trading securities within Other non-current assets.

The grantor trust assets have readily-available market values and are classified as Level 1 trading securities in the fair value hierarchy.

Trading gains and losses associated with these investments are recorded to Other operating (income) expense, net.

The associated DCP liability is recorded within Other long-term liabilities, and any increase or decrease in the liability is also recorded in Other operating (income) expense, net.

During the nine months ended April 2, 2023, we rec orded net gains on investments held by the trust of $ 78 .

Derivative Instruments

UNIFI uses derivative financial instruments such as interest rate swaps to reduce its ongoing business exposures to fluctuations in interest rates.

UNIFI does not enter into derivative contracts for speculative purposes.

Since June 2022, UNIFI has had no outstanding derivative instruments.

Notes to Condensed Consolidated Financial Statements (Continued)

Accumulated Other Comprehensive Loss

The components of and the changes in accumulated other comprehensive loss, net of tax, as applicable, consist of the following:

Comprehensive

Balance at July 3, 2022

Other comprehensive income

Balance at April 2, 2023

A summary of the after-tax effects of the components of other comprehensive loss, net for the three-month and nine-month periods ended April 2, 2023 and March 27, 2022 is included in the accompanying condensed consolidated statements of comprehensive (loss) income.

The associated DCP liability is recorded within Other long-term liabilities, and any increase or decrease in the liability is also recorded in Other operating expense (income), net.

During the three months ended October 1, 2023 and October 2, 2022, we rec orded net losses on investments held by the trust of $ 33 and $ 49 , respectively.

Earnings Per Share

1 unchanged sentence

For the Three Months Ended

For the Nine Months Ended

April 2, 2023

March 27, 2022

April 2, 2023

March 27, 2022

Net (loss) income

October 1, 2023

October 2, 2022

Basic weighted average shares

10 unchanged sentences

While employees of UNIFI’s Brazilian operations are unionized, none of the labor force employed by UNIFI’s domestic or other foreign subsidiaries is currently covered by a collective bargaining agreement.

Environmental

On September 30, 2004, Unifi Kinston, LLC (“UK”), a subsidiary of Unifi, Inc., completed its acquisition of polyester filament manufacturing assets located in Kinston, North Carolina (“Kinston”) from Invista S.a.r.l.

(“INVISTA”).

The land for the Kinston site was leased pursuant to a 99 -year ground lease (the “Ground Lease”) with E.I.

DuPont de Nemours (“DuPont”).

Since 1993, DuPont has been investigating and cleaning up the Kinston site under the supervision of the U.S.

Environmental Protection Agency and the North Carolina Department of Environmental Quality (“DEQ”) pursuant to the Resource Conservation and Recovery Act Corrective Action program.

The program requires DuPont to identify all potential areas of environmental concern (“AOCs”), assess the extent of containment at the identified AOCs and remediate the AOCs to comply with applicable regulatory standards.

Effective March 20, 2008, UK entered into a lease termination agreement associated with conveyance of certain assets at the Kinston site to DuPont.

This agreement terminated the Ground Lease and relieved UK of any future responsibility for environmental remediation, other than participation with DuPont, if so called upon, with regard to UK’s period of operation of the Kinston site, which was from 2004 to 2008.

At this time, UNIFI has no basis to determine if or when it will have any responsibility or obligation with respect to the AOCs or the extent of any potential liability for the same.

UK continues to own property (the “Kentec site”) acquired in the 2004 transaction with INVISTA that has contamination from DuPont’s prior operations and is monitored by DEQ.

The Kentec site has been remediated by DuPont, and DuPont has received authority from DEQ to discontinue further remediation, other than natural attenuation.

Prior to transfer of responsibility to UK, DuPont and UK had a duty to monitor and report the environmental status of the Kentec site to DEQ.

Effective April 10, 2019, UK assumed sole remediator responsibility of the Kentec site pursuant to its contractual obligations with INVISTA and received $ 180 of net monitoring and reporting costs due from DuPont.

In connection with monitoring, UK expects to sample and report to DEQ annually.

At this time, UNIFI does not expect any active site remediation will be required but expects that any costs associated with active site remediation, if ever required, would likely be immaterial.

Notes to Condensed Consolidated Financial Statements (Continued)

Related Party Transactions

There were no related party receivables as of April 2, 2023 or July 3, 2022.

Related party balances and transactions are not material to the condensed consolidated financial statements and, accordingly, are not presented separately from other financial statement captions.

There were no related party receivables as of October 1, 2023 or July 2, 2023.

Related party payables for Salem Leasing Corporation consisted of the following:

April 2, 2023

October 1, 2023

Accounts payable

4 unchanged sentences

For the Three Months Ended

For the Nine Months Ended

Affiliated Entity

Transaction Type

April 2, 2023

March 27, 2022

April 2, 2023

March 27, 2022

October 1, 2023

October 2, 2022

Salem Leasing Corporation

Payments for transportation equipment costs and finance lease debt service

Notes to Condensed Consolidated Financial Statements (Continued)

Business Segment Information

1 unchanged sentence

Characteristics of UNIFI which were relied upon in making the determination of reportable segments include the nature of the products sold, the internal organizational structure, the trade policies in the geographic regions in which UNIFI operates, and the information that is regularly reviewed by the CODM for the purpose of assessing performance and allocating resources.

In the fourth fiscal quarter of fiscal 2022, UNIFI realigned its operating and reportable segments to correspond with changes to its operating model, management structure, and organizational responsibilities, reflecting the manner in which business performance is evaluated, resources are allocated, and financial statement users can best understand the results of operations.

Accordingly, UNIFI is now reporting the Americas Segment, Brazil Segment, and Asia Segment.

The Americas Segment represents the combination of the previously reported Polyester Segment, Nylon Segment, and All Other category.

There are no changes to the composition of the historical Brazil Segment and Asia Segment.

Comparative prior period disclosures have been updated to conform to the new presentation.

UNIFI has three reportable segments.

UNIFI's three reportable segments are organized as follows:

The operations within the Americas Segment exhibit similar long-term economic characteristics and primarily sell into an economic trading zone covered by the USMCA and CAFTA-DR to similar customers utilizing similar methods of distribution.

4 unchanged sentences

The operations within the Asia Segment exhibit similar long-term economic characteristics and sell to similar customers utilizing similar methods of distribution primarily in Asia and Europe.

The Asia Segment primarily sources synthetic and recycled textile products from third-party suppliers and sells to other yarn manufacturers, knitters, and weavers that produce fabric for the apparel, automotive, home furnishings, industrial, and other end-use markets principally in Asia.

The Asia Segment primarily sources synthetic and recycled textile products from third-party suppliers and sells to yarn manufacturers, knitters, and weavers that produce fabric for the apparel, automotive, home furnishings, industrial, and other end-use markets principally in Asia.

The Asia Segment includes sales offices in China, Turkey, and Hong Kong.

4 unchanged sentences

Selected financial information is presented below:

For the Three Months Ended April 2, 2023

Cost of sales

Segment depreciation expense

Segment Profit

Notes to Condensed Consolidated Financial Statements (Continued)

For the Three Months Ended March 27, 2022

Cost of sales

Segment depreciation expense

Segment Profit

For the Nine Months Ended April 2, 2023

For the Three Months Ended October 1, 2023

Cost of sales

1 unchanged sentence

Segment depreciation expense

Segment Profit

For the Nine Months Ended March 27, 2022

Segment (Loss) Profit

For the Three Months Ended October 2, 2022

Cost of sales

Gross (loss) profit

Segment depreciation expense

Segment Profit

The reconciliations of segment gross profit to consolidated (loss) income before income taxes are as follows:

The reconciliations of segment gross (loss) profit to consolidated loss before income taxes are as follows:

For the Three Months Ended

For the Nine Months Ended

April 2, 2023

March 27, 2022

April 2, 2023

March 27, 2022

Segment gross profit

October 1, 2023

October 2, 2022

Segment gross (loss) profit

Selling, general and administrative expenses

Benefit for bad debts

(Benefit) provision for bad debts

Other operating expense (income), net

Operating (loss) income

Operating loss

Interest income

1 unchanged sentence

Equity in earnings of unconsolidated affiliates

Recovery of non-income taxes, net

(Loss) income before income taxes

Loss before income taxes

There have been no material changes in segment assets during fiscal 2024.

Notes to Condensed Consolidated Financial Statements (Continued)

Investments in Unconsolidated Affiliates

13 unchanged sentences

The supply agreement has no stated minimum purchase quantities and pricing is typically negotiated every six months, based on market rates.

As of April 2, 2023, UNIFI’s open purchase orders related to this supply agreement were $ 5,044 .

Notes to Condensed Consolidated Financial Statements (Continued)

As of October 1, 2023, UNIFI’s open purchase orders related to this supply agreement w ere $ 2,265 .

UNIFI’s raw material purchases under this supply agreement consisted of the following:

For the Three Months Ended

For the Nine Months Ended

April 2, 2023

March 27, 2022

April 2, 2023

March 27, 2022

As of April 2, 2023 and July 3, 2022, UNIFI had combined accounts payable due to UNF and UNFA of $ 4,621 and $ 5,565 , respectively.

UNIFI has determined that UNF and UNFA are variable interest entities and that UNIFI is the primary beneficiary of these entities, based on the terms of the supply agreement discussed above.

October 1, 2023

October 2, 2022

As of October 1, 2023 and July 2, 2023, UNIFI had combined accounts payable due to UNF and UNFA of $ 2,238 and $ 3,440 , respectively.

UNIFI has determined that UNF and UNFA are variable interest entities and has also determined that UNIFI is the primary beneficiary of these entities, based on the terms of the supply agreement.

As a result, these entities should be consolidated with UNIFI’s financial results.

As (i) UNIFI purchases substantially all of the output from the two entities, (ii) the two entities’

As (i) UNIFI purchases substantially all of the output from the two entities and all intercompany sales would be eliminated in consolidation, (ii) the two entities’

balance sheets constitute 5 % or less of UNIFI’s current assets and total assets, and (iii) such balances are not expected to comprise a larger portion in the future, UNIFI has not included the accounts of UNF and UNFA in its consolidated financial statements and instead is accounting for these entities as equity investments.

As of April 2, 2023, UNIFI’s combined investments in UNF and UNFA were $ 2,504 .

The financial results of UNF and UNFA are included in UNIFI’s consolidated financial statements with a one-month lag, using the equity method of accounting and with intercompany profits eliminated in accordance with UNIFI’s accounting policy.

As of October 1, 2023, UNIFI’s combined investments in UNF and UNFA were $ 3,213 .

The financial results of UNF and UNFA are included in UNIFI’s consolidated financial statements with a one-month lag, using the equity method of accountin g and with intercompany profits eliminated in accordance with UNIFI’s accounting policy.

Other than the supply agreement discussed above, UNIFI does not provide any other commitments or guarantees related to either UNF or UNFA.

Condensed balance sheet and income statement information for UNIFI’s unconsolidated affiliates (including reciprocal balances) are presented in the tables below.

April 2, 2023

October 1, 2023

Current assets

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For the Three Months Ended

For the Nine Months Ended

April 2, 2023

March 27, 2022

April 2, 2023

March 27, 2022

(Loss) income from operations

Net (loss) income

October 1, 2023

October 2, 2022

Income from operations

Depreciation and amortization

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Cash payments for interest and taxes consist of the following:

For the Nine Months Ended

April 2, 2023

March 27, 2022

For the Three Months Ended

October 1, 2023

October 2, 2022

Interest, net of capitalized interest of $ 62 and $ 87 , respectively

Income tax payments, net

Notes to Condensed Consolidated Financial Statements (Continued)

Cash payments for taxes shown above consist primarily of income and withholding tax payments made by UNIFI in both U.S.

and foreign jurisdictions, net of refunds.

The nine months ended March 27, 2022 includes an income tax payment of $ 3,749 related to the recovery of non-income taxes in Brazil.

Non-Cash Investing and Financing Activities

As of April 2, 2023 and July 3, 2022, $ 1,332 and $ 2,456 , respectively, were included in accounts payable for unpaid capital expenditures.

As of March 27, 2022 and June 27, 2021, $ 1,981 and $ 2,080 , respectively, were included in accounts payable for unpaid capital expenditures.

During the nine months ended April 2, 2023 and March 27, 2022, UNIFI recorded non-cash activity relating to finance leases of $ 3,179 and $ 1,764 respectively.

In connection with the commencement of the 2022 Credit Agreement in October 2022, $ 52,500 of borrowings outstanding on the revolving credit facility were transferred to the term loan, such that revolver borrowings were reduced by $ 52,500 and term loan borrowings were increased by $ 52,500 with no flow of cash.

As of October 1, 2023 and Jul y 2, 2023, $ 1,084 and $ 1,137 , r espectively, were included in accounts payable for unpaid capital expenditures.

As of October 2, 2022 and July 3, 2022, $ 1,449 and $ 2,456 , respectively, were included in accounts payable for unpaid capital expenditures.

During the three months ended October 1, 2023 and October 2, 2022, UNIFI recorded non-cash activity relating to finance leases of $ 1,633 and $ 729 respectively.

Notes to Condensed Consolidated Financial Statements (Continued)

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Select balance sheet information is presented in the following table.

April 2, 2023

October 1, 2023

Receivables, net:

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Other current assets:

Prepaid expenses and other

Vendor deposits

Value-added taxes receivable

Prepaid expenses and other

Recovery of non-income taxes, net

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Recovery of taxes

Grantor trust

Investments in unconsolidated affiliates

Grantor trust

Intangible assets, net

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A reference to the “current period”

refers to the three-month period ended April 2, 2023, while a reference to the “prior period”

refers to the three-month period ended March 27, 2022.

A reference to the “current nine-month period”

refers to the nine-month period ended April 2, 2023, while a reference to the “prior nine-month period”

refers to the nine-month period ended March 27, 2022.

refers to the three-month period ended October 1, 2023, while a reference to the “prior period”

refers to the three-month period ended October 2, 2022.

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 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 and nine months ended April 2, 2023 and March 27, 2022, and, to the extent applicable, any material changes from the information discussed in the 2022 Form 10-K or other important intervening developments or information.

Our discussions in this Item 2 focus on our results during, or as of, the three months ended October 1, 2023 and October 2, 2022, and, to the extent applicable, any material changes from the information discussed in the 2023 Form 10-K or other important intervening developments or information.

These discussions should be read in conjunction with the 2023 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 Nine Months Ended

April 2, 2023

March 27, 2022

April 2, 2023

March 27, 2022

October 1, 2023

October 2, 2022

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

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Our strategic initiatives include (i) leveraging our competitive advantages to grow market share in each of the major geographies we serve, (ii) expanding our presence in non-apparel markets with additional REPREVE ® products, (iii) advancing the development and commercialization of innovative and sustainable solutions, and (iv) increasing brand awareness for REPREVE ® .

Due to the recent volatility of the apparel market, we have increased our focus on sales opportunities beyond traditional apparel customers, and we continue to drive innovation throughout our portfolio to further diversify the business and enhance gross profit.

We believe our strategic initiatives will increase revenue and profitability and generate improved cash flows from operations.

Current Economic Environment

The current economic environment and significant decrease in textile product demand has adversely impacted our consolidated sales and profitability in fiscal 2023.

In addition to the current unfavorable economic environment and the inventory destocking measures taken by brands and retailers, the following pressures have continued from fiscal 2022 into fiscal 2023:

(i) the impact of inflation on consumer spending, (ii) rising interest rates, (iii) the Russia-Ukraine conflict, and (iv) supply chain volatility.

The current economic environment and significant decrease in textile product demand adversely impacted our consolidated sales and profitability in fiscal 2023 and the first quarter of fiscal 2024.

In addition to the current unfavorable economic environment and the inventory destocking measures taken by brands and retailers, the following pressures have been present:

(i) the impact of inflation on consumer spending, (ii) rising interest rates for consumers and customers, including the impact on the carrying costs of customer inventories, (iii) the Russia-Ukraine conflict, (iv) the recent conflict in the Middle East and the potential impacts to petroleum pricing and geopolitics, and (v) supply chain volatility.

UNIFI will continue to monitor these and other aspects of the current economic environment and work closely with stakeholders to ensure business continuity and liquidity.

We recognize the disruption to global markets and supply chains caused by (i) Russia’s invasion of Ukraine and (ii) the recent conflict in the Middle East.

While we currently have a raw material supplier based in Israel for which the recent supply levels have been insignificant, we have not been directly impacted by either conflict.

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

Input Costs and Global Production Volatility

In addition to the escalation of input costs in fiscal 2022, UNIFI experienced inefficiencies in the global supply chain in connection with (i) freight costs and logistics slowdowns in foreign markets;

(ii) a tighter labor pool in the U.S.;

and (iii) suppressed productivity from our business partners resulting from pandemic-related lockdowns in certain regions, particularly Asia.

Despite lowered input and freight costs and a marginally more stable labor pool during fiscal 2023, the global demand volatility and uncertainty that began in late fiscal 2022 has continued throughout fiscal 2023, as the threat of recession and global tensions continue to create uncertainty.

The 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 and gross profit.

Despite lowered input and freight costs and a marginally more stable labor pool during fiscal 2023 and 2024, the global demand volatility and uncertainty that existed in fiscal 2023 continued into fiscal 2024.

The threat of recession and global tensions continue to create uncertainty.

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 and gross profit.

Also, the need for future selling price adjustments in connection with inflationary costs could impact our ability to retain current customer programs and compete successfully for new programs in certain regions.

Cash Deposits and Financial Institution Risk

During the current period, certain regional bank crises and failures generated additional uncertainty and volatility in the financial and credit markets.

During fiscal 2023, certain regional bank crises and failures generated additional uncertainty and volatility in the financial and credit markets.

UNIFI currently holds the vast majority of its cash deposits with large foreign banks in our associated operating regions, and management maintains the ability to repatriate cash to the U.S.

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Accordingly, UNIFI has not modified its mix of financial institutions holding cash deposits, but UNIFI will continue to monitor the environment and current events to ensure any increase in concentration or credit risk is appropriately and timely addressed.

If any of the financial institutions within our 2022 Credit Agreement or construction financing arrangement (“lending counterparties”) are unable to perform on their commitments, our liquidity could be impacted.

If any of our lending counterparties are unable to perform on their commitments, our liquidity could be impacted.

We actively monitor all lending counterparties, and none have indicated that they may be unable to perform on their commitments.

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sales volume and revenue for UNIFI and for each reportable segment;

gross profit and gross margin for UNIFI and for each reportable segment;

net (loss) income and diluted EPS;

gross (loss) profit and gross margin for UNIFI and for each reportable segment;

net loss and diluted EPS;

Segment (Loss) Profit, which equals segment gross (loss) profit plus segment depreciation expense;

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working capital, which represents current assets less current liabilities;

Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), which represents net (loss) income before net interest expense, income tax expense and depreciation and amortization expense;

Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), which represents net loss before net interest expense, income tax expense, and depreciation and amortization expense;

Adjusted EBITDA, which represents EBITDA adjusted to exclude, from time to time, certain other adjustments necessary to understand and compare the underlying results of UNIFI;

Adjusted Net (Loss) Income, which represents net (loss) income calculated under GAAP, adjusted to exclude certain amounts which management believes do not reflect the ongoing operations and performance of UNIFI and/or for which exclusion may be necessary to understand and compare the underlying results of UNIFI;

Adjusted EPS, which represents Adjusted Net (Loss) Income divided by UNIFI’s diluted weighted average common shares outstanding;

Adjusted Net Loss, which represents net loss calculated under GAAP, adjusted to exclude certain amounts which management believes do not reflect the ongoing operations and performance of UNIFI and/or for which exclusion may be necessary to understand and compare the underlying results of UNIFI;

Adjusted EPS, which represents Adjusted Net Loss divided by UNIFI’s diluted weighted average common shares outstanding;

Adjusted Working Capital, which equals receivables plus inventories and other current assets, less accounts payable and other current liabilities;

Net Debt, which represents debt principal less cash and cash equivalents.

EBITDA, Adjusted EBITDA, Adjusted Net (Loss) Income, Adjusted EPS, Adjusted Working Capital, and Net Debt (collectively, the “non-GAAP financial measures”) are not determined in accordance with GAAP and should not be considered a substitute for performance measures determined in accordance with GAAP.

EBITDA, Adjusted EBITDA, Adjusted Net Loss, Adjusted EPS, Adjusted Working Capital, and Net Debt (collectively, the “non-GAAP financial measures”) are not determined in accordance with GAAP and should not be considered a substitute for performance measures determined in accordance with GAAP.

The calculations of the non-GAAP financial measures are subjective, based on management’s belief as to which items should be included or excluded in order to provide the most reasonable and comparable view of the underlying operating performance of the business.

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We also believe Adjusted EBITDA is an appropriate supplemental measure of debt service capacity because it serves as a high-level proxy for cash generated from operations and is relevant to our fixed charge coverage ratio.

Management uses Adjusted Net (Loss) Income and Adjusted EPS (i) as measurements of net operating performance because they assist us in comparing such performance on a consistent basis, as they remove the impact of (a) items that we would not expect to occur as a part of our normal business on a regular basis and (b) components of the provision for income taxes that we would not expect to occur as a part of our underlying taxable operations;

Management uses Adjusted Net Loss and Adjusted EPS (i) as measurements of net operating performance because they assist us in comparing such performance on a consistent basis, as they remove the impact of (a) items that we would not expect to occur as a part of our normal business on a regular basis and (b) components of the provision for income taxes that we would not expect to occur as a part of our underlying taxable operations;

(ii) for planning purposes, including the preparation of our annual operating budget;

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Review of Results of Operations

Three Months Ended April 2, 2023 Compared to Three Months Ended March 27, 2022

Three Months Ended October 1, 2023 Compared to Three Months Ended October 2, 2022

Consolidated Overview

The below tables provide:

the components of net (loss) income and the percentage increase or decrease over the prior period amounts,

a reconciliation from net (loss) income to EBITDA and Adjusted EBITDA, and

a reconciliation from net (loss) income to Adjusted Net (Loss) Income and Adjusted EPS.

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

Net (loss) income

the components of net loss and the percentage increase or decrease over the prior period amounts,

a reconciliation from net loss to EBITDA and Adjusted EBITDA, and

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

For the Three Months Ended

April 2, 2023

March 27, 2022

October 1, 2023

October 2, 2022

Cost of sales

Benefit for bad debts

Gross (loss) profit

(Benefit) provision for bad debts

Other operating expense (income), net

Operating (loss) income

Operating loss

Interest expense, net

Equity in earnings of unconsolidated affiliates

Recovery of non-income taxes, net

(Loss) income before income taxes

Provision for income taxes

Net (loss) income

Loss before income taxes

(Benefit) provision for income taxes

nm = not meaningful

EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)

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

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

For the Three Months Ended

April 2, 2023

March 27, 2022

Net (loss) income

October 1, 2023

October 2, 2022

Interest expense, net

Provision for income taxes

(Benefit) provision for income taxes

Depreciation and amortization expense (1)

Contract modification costs (2)

Recovery of non-income taxes, net (3)

Other adjustments (2)

Adjusted EBITDA

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Within the accompanying condensed consolidated statements of cash flows, amortization of debt issuance costs is reflected in depreciation and amortization expense.

(2) In the third quarter of fiscal 2023, UNIFI amended certain existing contracts related to future purchases of texturing machinery by delaying the scheduled receipt and installation of such equipment in the U.S.

and El Salvador for 18 months.

UNIFI paid the associated vendor $623 to facilitate the 18-month delay.

(3) In fiscal 2021, UNIFI recognized an estimated benefit for the recovery of non-income taxes in Brazil.

During the quarter ended March 27, 2022, UNIFI reduced the estimated benefit based on additional clarity and review of the recovery process.

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

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

For the Three Months Ended April 2, 2023

For the Three Months Ended March 27, 2022

Pre-tax Income

Contract modification costs (1)

Recovery of non-income taxes, net (2)

Adjusted results

Weighted average common shares outstanding

(1) In the third quarter of fiscal 2023, UNIFI amended certain existing contracts related to future purchases of texturing machinery by delaying the scheduled receipt and installation of such equipment in the U.S.

and El Salvador for 18 months.

UNIFI paid the associated vendor $623 to facilitate the 18-month delay.

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

and (ii) UNIFI's effective tax rate in El Salvador.

(2) In fiscal 2021, UNIFI recognized an estimated benefit for the recovery of non-income taxes in Brazil.

During the quarter ended March 27, 2022, UNIFI reduced the estimated benefit based on additional clarity and review of the recovery process.

(2) For the periods presented, there were no other adjustments necessary to reconcile Net loss to Adjusted EBITDA.

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

For the current and the prior period, there were no adjustments necessary to reconcile Net loss to Adjusted Net Loss or Adjusted EPS.

Consolidated net sales for the current period decreased by $40,675, or 22.7%, and consolidated sales volumes decreased 5.2%, compared to the prior period.

Consolidated weighted average sales prices increased 0.4%, an insignificant change.

REPREVE ® Fiber products for the current period comprised 32%, or $49,619, of consolidated net sales, down from 36%, or $71,930, for the prior period.

The lower volumes and net sales in the Asia Segment, which has the highest proportion of REPREVE ® Fiber sales as a percentage of segment net sales, was the main driver for the lower REPREVE ® Fiber sales.

Gross profit for the current period decreased by $9,491, or 49.6%, compared to the prior period.

Gross profit decreased as a result of the decline in net sales, combined with weak fixed cost absorption for the Americas Segment, where utilization and productivity are materially impactful to gross profit.

Although raw material costs for the Americas Segment have decreased meaningfully in fiscal 2023, the associated benefit was muted by low production levels and weak demand.

For the Americas Segment, gross profit decreased due to weaker global demand in connection with the inventory destocking efforts of major brands and retailers and weak fixed cost absorption in connection with lower production.

The decreases occurred primarily due to lower volumes in the Americas and Asia Segments as a result of lower global demand in connection with the apparel demand weakness and inventory destocking efforts of major brands and retailers.

Consolidated weighted average sales prices decreased 17.5%, primarily attributable to lower selling prices in response to lower input costs, along with (a) competitive pricing pressures in Brazil and (b) a greater mix of Chip and Flake product sales in the Americas Segment.

REPREVE ® Fiber products for the current period comprised 31%, or $42,461, of consolidated net sales, compared to 27%, or $49,179, for the prior period.

Gross (Loss) Profit

Gross (loss) profit for the current period worsened by $7,138, or 108.8%, compared to the prior period.

Gross (loss) profit decreased as a result of the decline in net sales, combined with weak fixed cost absorption for the Americas Segment, where utilization and productivity are materially impactful to gross profit.

Although raw material costs for the Americas Segment were stable in fiscal 2024, low production levels and weak demand were significantly adverse.

For the Americas Segment, gross loss increased due to weaker global demand and weak fixed cost absorption in connection with lower production.

For the Brazil Segment, gross profit decreased primarily due to decreasing market prices in Brazil due to low-cost import competition.

For the Asia Segment, gross profit decreased primarily due to lower sales volumes in connection with weaker global demand in connection with the inventory destocking efforts of major brands and retailers.

SG&A for the current period decreased compared to the prior period, primarily due to (i) lower incentive compensation for the current period and (ii) lower discretionary expenses, including marketing and advertising.

Benefit for Bad Debts

For the Asia Segment, gross profit decreased primarily due to lower sales volumes in connection with weaker global demand.

SG&A did not change meaningfully from the prior period to the current period, nor did the change include any significant offsetting impacts.

(Benefit) Provision for Bad Debts

The current period and prior period bad debt changes reflect no material activity.

Other Operating Expense (Income), Net

The current period and prior period include foreign currency transaction losses (gains) of $174 and $(895), respectively.

The current period also includes $623 paid to a vendor to facilitate an 18-month delay for contracted equipment purchases.

The current period and prior period include foreign currency transaction gains of $33 and $725, respectively, with no other meaningful activity.

Interest Expense, Net

Interest expense, net increased in connection with higher debt principal following continued capital investments and higher interest rates.

Interest expense, net increased in connection with higher debt principal and higher interest rates.

Equity in Earnings of Unconsolidated Affiliates

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

Recovery of Non-income Taxes, Net

In fiscal 2021, UNIFI recognized an estimated benefit from the expected recovery of non-income taxes in Brazil.

During the prior period, UNIFI reduced the estimate by $815 based on additional clarity and precedent surrounding the recovery process.

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

(Benefit) provision for income taxes and the effective tax rate were as follows:

For the Three Months Ended

April 2, 2023

March 27, 2022

Provision for income taxes

October 1, 2023

October 2, 2022

(Benefit) provision for income taxes

Effective tax rate

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

The decrease in the effective tax rate from the prior period to the current period is primarily attributable to lower income for foreign subsidiaries, in combination with the impact of further losses in the U.S.

and the associated valuation allowance for deferred tax assets.

Net (Loss) Income

The decrease in net (loss) income was primarily attributable to the decrease in gross profit and the associated adverse impact of lower U.S.

earnings on the effective tax rate, partially offset by lower SG&A in the current period.

The increase in the effective tax rate from the prior period to the current period is primarily attributable to an increase in valuation allowance for deferred tax assets generated in the current period.

The increase in the effective tax rate is then offset by a decrease in valuation allowance on deferred tax asset balances adjusted by the IRS audit of tax years 2014 through 2019, which was concluded during the current period.

The increase in net loss was primarily attributable to lower gross profit.

Adjusted EBITDA (Non-GAAP Financial Measure)

Adjusted EBITDA decreased primarily in connection with lower gross profit, partially offset by lower SG&A in the current period.

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

Adjusted Net (Loss) Income and Adjusted EPS decreased from the prior period to the current period, commensurate with the decrease in net (loss) income.

Adjusted EBITDA decreased primarily in connection with lower gross profit.

Segment Overview

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Americas Segment

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

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

For the Three Months Ended

April 2, 2023

March 27, 2022

October 1, 2023

October 2, 2022

Cost of sales

Depreciation expense

Segment Profit

Segment (Loss) Profit

Segment net sales as a percentage of

consolidated amounts

Segment Profit as a percentage of

Segment (Loss) Profit as a percentage of

consolidated amounts

1 unchanged sentence

Net sales for the prior period

Decrease in sales volumes

Net change in average selling price and sales mix

Decrease in sales volumes

Net sales for the current period

The change in net sales for the Americas Segment from the prior period to the current period was primarily attributable to lower sales volumes following weaker global textile demand.

Net change in average selling price and sales mix reflects a larger proportion of lower-priced Flake and Chip sales in the current period.

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

The change in net sales for the Americas Segment from the prior period to the current period was primarily attributable to (i) the net change in average selling price and sales mix that reflects both (a) lower input costs and (b) a larger proportion of lower-priced Flake and Chip sales in the current period and (ii) lower fiber sales volumes following weaker global textile demand.

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

Segment Profit for the prior period

1 unchanged sentence

Decrease in sales volumes

Segment Profit for the current period

The decrease in Segment Profit for the Americas Segment from the prior period to the current period was primarily attributable to lower production volumes driving weaker fixed cost absorption in connection with lower sales volumes.

Segment Loss for the current period

The decrease in Segment (Loss) Profit for the Americas Segment from the prior period to the current period was primarily attributable to lower production volumes of fiber products in connection with the lower fiber sales volumes described above.

As fiber products carry a higher selling price and allocation of production costs versus Flake and Chip, lower fiber production drives weaker fixed cost absorption and adversely impacts gross profit and gross margin.

Brazil Segment

1 unchanged sentence

For the Three Months Ended

April 2, 2023

March 27, 2022

October 1, 2023

October 2, 2022

Cost of sales

8 unchanged sentences

Decrease in average selling price

Increase in sales volumes

Decrease in sales volumes

Favorable foreign currency translation effects

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 pricing pressure from import competition, partially offset by higher sales volumes in connection with market share gains.

The decrease in net sales for the Brazil Segment from the prior period to the current period was primarily attributable to selling price pressures from low-priced imports, partially offset by favorable foreign currency translation effects.

The Brazil Segment has undertaken aggressive pricing (i) against low-priced competitive imports and (ii) in the pursuit of greater market share.

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

1 unchanged sentence

Decrease in underlying unit margins

Increase in sales volumes

Decrease in sales volumes

Favorable foreign currency translation effects

1 unchanged sentence

The decrease in Segment Profit for the Brazil Segment from the prior period to the current period was primarily attributable to an overall decrease in gross margin mainly due to pressure on selling prices from low-priced import competition.

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 period amounts for the Asia Segment, were as follows:

For the Three Months Ended

April 2, 2023

March 27, 2022

October 1, 2023

October 2, 2022

Cost of sales

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Net sales for the current period

The decrease in net sales for the Asia Segment from the prior period to the current period was primarily attributable to weaker global demand in connection with the inventory destocking efforts of major brands and retailers driving lower sales volumes, partially offset by a strong sales mix.

The decrease in net sales for the Asia Segment from the prior period to the current period was primarily attributable to (i) weak global demand and inventory destocking by brands and retailers, particularly for apparel, and (ii) unfavorable foreign currency translation effects due to the weakening of the RMB versus the USD.

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

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Segment Profit for the current period

The decrease in Segment Profit for the Asia Segment from the prior period to the current period follows the decline in net sales and sales volumes discussed above, as the comparable gross margin rate for the Asia Segment improved with a strong sales mix.

Nine Months Ended April 2, 2023 Compared to Nine Months Ended March 27, 2022

Consolidated Overview

The below tables provide:

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

a reconciliation from net (loss) income to EBITDA and Adjusted EBITDA, and

a reconciliation from net (loss) income to Adjusted Net (Loss) Income and Adjusted EPS.

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

Net (loss) income

For the Nine Months Ended

April 2, 2023

March 27, 2022

Cost of sales

Benefit for bad debts

Other operating income, net

Operating (loss) income

Interest expense, net

Equity in earnings of unconsolidated affiliates

Recovery of non-income taxes, net

(Loss) income before income taxes

Provision for income taxes

Net (loss) income

nm = not meaningful

EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)

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

For the Nine Months Ended

April 2, 2023

March 27, 2022

Net (loss) income

Interest expense, net

Provision for income taxes

Depreciation and amortization expense (1)

Contract modification costs (2)

Recovery of non-income taxes, net (3)

Adjusted EBITDA

(1) Within this reconciliation, depreciation and amortization expense excludes the amortization of debt issuance costs, which are reflected in interest expense, net.

Within the accompanying condensed consolidated statements of cash flows, amortization of debt issuance costs is reflected in depreciation and amortization expense.

In fiscal 2023, interest expense, net includes $273 of loss on debt extinguishment.

(2) In the third quarter of fiscal 2023, UNIFI amended certain existing contracts related to future texturing machinery purchases by delaying the scheduled receipt and installation of such equipment in the U.S.

and El Salvador for 18 months.

UNIFI paid the associated vendor $623 to facilitate the 18-month delay.

(3) In fiscal 2021, UNIFI recognized an estimated benefit for the recovery of non-income taxes in Brazil.

During the quarter ended March 27, 2022, UNIFI reduced the estimated benefit based on additional clarity and review of the recovery process.

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

For the Nine Months Ended April 2, 2023

For the Nine Months Ended March 27, 2022

Pre-tax Income

Contract modification costs (1)

Recovery of income taxes (3)

Recovery of non-income taxes, net (2)

Adjusted results

Weighted average common shares outstanding

and El Salvador for 18 months.

UNIFI paid the associated vendor $623 to facilitate the 18-month delay.

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

and (ii) UNIFI's effective tax rate in El Salvador.

(2) In fiscal 2021, UNIFI recognized an estimated benefit for the recovery of non-income taxes in Brazil.

During the quarter ended March 27, 2022, UNIFI reduced the estimated benefit based on additional clarity and review of the recovery process.

(3) In the second quarter of fiscal 2023, UNIFI recorded a recovery of income taxes in connection with filing amended tax returns in Brazil relating to certain income taxes paid in prior fiscal years.

Consolidated net sales for the current nine-month period decreased by $125,713, or 21.0%, and consolidated sales volumes decreased 26.6%, compared to the prior nine-month period.

The decreases occurred primarily due to lower volumes in the Americas and Asia Segments as a result of lower global demand in connection with the inventory destocking efforts of major brands and retailers in addition to pandemic-related lockdowns in Asia, partially offset by higher selling prices in response to higher raw material and input costs.

Consolidated weighted average sales prices increased 5.6%, primarily attributable to higher selling prices in response to higher input costs.

REPREVE ® Fiber products for the current nine-month period comprised 30%, or $141,664, of consolidated net sales, down from 38%, or $225,360, for the prior nine-month period.

Gross profit for the current nine-month period decreased by $53,915, or 86.8%, compared to the prior nine-month period.

Gross profit decreased as a result of the decline in net sales combined with weak fixed cost absorption for the Americas Segment, where utilization and productivity are materially impactful to gross profit.

Although raw material costs for the Americas Segment decreased meaningfully in the current nine-month period, the associated benefit was muted by low production levels, weak demand, and higher priced raw material inventory purchased in the fourth fiscal quarter of 2022.

For the Americas Segment, gross profit decreased due to weaker global demand, weak fixed cost absorption in connection with lower production, and overall higher raw material cost levels in beginning inventory, despite a decrease in raw material costs during fiscal 2023.

For the Brazil Segment, gross profit decreased primarily due to the combination of high priced raw material inventory purchased in the fourth fiscal quarter of 2022 and decreasing market prices in Brazil due to low-cost import competition.

For the Asia Segment, gross profit decreased primarily due to lower sales volumes in connection with weaker global demand and pandemic-related lockdowns in Asia.

SG&A for the current nine-month period decreased compared to the prior nine-month period, primarily due to (i) lower incentive compensation for the current nine-month period and (ii) lower discretionary expenses, including marketing and advertising.

Benefit for Bad Debts

The current nine-month period and prior nine-month period bad debt changes reflect no material activity.

Other Operating Income, Net

The current nine-month period and prior nine-month period include foreign currency transaction gains of $629 and $365, respectively, in addition to $346 of severance costs in the prior nine-month period.

The current nine-month period also includes $623 paid to a vendor to facilitate an 18-month delay for equipment purchases.

Interest Expense, Net

Interest expense, net increased in connection with higher debt principal following continued capital investments and higher interest rates during the current nine-month period.

Interest expense, net for the current nine-month period also includes $273 of loss on debt extinguishment.

Equity in Earnings of Unconsolidated Affiliates

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

Recovery of Non-income Taxes, Net

In fiscal 2021, UNIFI recognized an estimated benefit from the expected recovery of non-income taxes in Brazil.

During the prior nine-month period, UNIFI reduced the estimate by $815 based on additional clarity and precedent surrounding the recovery process.

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

For the Nine Months Ended

April 2, 2023

March 27, 2022

Provision for income taxes

Effective tax rate

The effective tax rate is subject to variation due to a number of factors, including:

variability in pre-tax book income;

the mix of income by jurisdiction;

changes in deferred tax valuation allowances;

and changes in statutes, regulations, and case law.

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

The decrease in the effective tax rate from the prior nine-month period to the current nine-month period is primarily attributable to lower income for foreign subsidiaries, in combination with the impact of further losses in the U.S.

and the associated valuation allowance for deferred tax assets in the current period.

Additionally, a discrete tax benefit was recognized in the second quarter of fiscal 2023 related to the recovery of certain Brazilian income taxes paid in prior years.

Net (Loss) Income

The decrease in net (loss) income was primarily attributable to the decrease in gross profit and the associated adverse impact of lower U.S.

earnings on the effective tax rate.

Adjusted EBITDA (Non-GAAP Financial Measure)

Adjusted EBITDA decreased primarily in connection with lower gross profit.

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

Adjusted Net (Loss) Income and Adjusted EPS decreased from the prior nine-month period to the current nine-month period, commensurate with the decrease in net (loss) income.

Segment Overview

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 nine-month period amounts for the Americas Segment, were as follows:

For the Nine Months Ended

April 2, 2023

March 27, 2022

Cost of sales

Gross (loss) profit

Depreciation expense

Segment Profit

Segment net sales as a percentage of

consolidated amounts

Segment Profit as a percentage of

consolidated amounts

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

Net sales for the prior nine-month period

Decrease in sales volumes

Net change in average selling price and sales mix

Net sales for the current nine-month period

The change in net sales for the Americas Segment from the prior nine-month period to the current nine-month period was primarily attributable to lower sales volumes following weaker global textile demand, partially offset by higher average selling prices in response to higher input costs.

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

Segment Profit for the prior nine-month period

Change in underlying margins and sales mix from excess capacity

Decrease in sales volumes

Segment Profit for the current nine-month period

The decrease in Segment Profit for the Americas Segment from the prior nine-month period to the current nine-month period was primarily attributable to lower production volumes driving weaker fixed cost absorption in connection with lower sales volumes.

Brazil Segment

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

April 2, 2023

March 27, 2022

Cost of sales

Depreciation expense

Segment Profit

Segment net sales as a percentage of

consolidated amounts

Segment Profit as a percentage of

consolidated amounts

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

Net sales for the prior nine-month period

Increase in sales volumes

Favorable foreign currency translation effects

Decrease in average selling price and change in sales mix

Net sales for the current nine-month period

The increase in net sales for the Brazil Segment from the prior nine-month period to the current nine-month period was primarily attributable to higher sales volumes and favorable foreign currency translation effects, partially offset by the expected decrease in average selling price following the exceptional pricing levels experienced during the pandemic recovery in fiscal 2022.

The Brazil Segment has undertaken aggressive pricing (i) against low-priced competitive imports and (ii) in the pursuit of greater market share.

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

Segment Profit for the prior nine-month period

Decrease in underlying margins

Increase in sales volumes

Favorable foreign currency translation effects

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 an overall decrease in gross margin mainly due to the decrease in selling prices discussed above and the impact of higher raw material costs in beginning inventory.

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

April 2, 2023

March 27, 2022

Cost of sales

Depreciation expense

Segment Profit

Segment net sales as a percentage of

consolidated amounts

Segment Profit as a percentage of

consolidated amounts

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

Net sales for the prior nine-month period

Net decrease in sales volumes

Unfavorable foreign currency translation effects

Change in average selling price and sales mix

Net sales for the current nine-month period

The decrease in net sales for the Asia Segment from the prior nine-month period to the current nine-month period was primarily attributable to weaker global demand and pandemic-related lockdowns driving lower sales volumes, partially offset by a strong sales mix.

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

Segment Profit for the prior nine-month period

Decrease in sales volumes

Unfavorable foreign currency translation effects

Change in underlying margins and sales mix

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 follows the decline in net sales and sales volumes discussed above, as the comparable gross margin rate for the Asia Segment improved due to a stronger sales mix.

The nominal change in Segment Profit for the Asia Segment from the prior period to the current period is attributable to the decline in net sales and sales volumes discussed above along with unfavorable foreign currency translation effects, offset by an improved gross margin rate associated with a strong sales mix of REPREVE products.

Liquidity and Capital Resources

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UNIFI’s primary sources of capital are cash generated from operations, borrowings available under the 2022 Credit Agreement, and asset financing arrangements.

For the current nine-month period, cash provided by operations was $8,349, and, at April 2, 2023, availability under the ABL Revolver was $69,114.

As of April 2, 2023, all of UNIFI’s $136,010 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 period, cash provided by operations was $7,119, and, at October 1, 2023, availability under the ABL Revolver was $44,164.

As of October 1, 2023, all of UNIFI’s $141,487 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 April 2, 2023 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 October 1, 2023 for domestic operations compared to foreign operations:

Cash and cash equivalents

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Liquidity Considerations

Following the COVID-19 pandemic, global demand recovery allowed for strong results and cash generation in fiscal 2021.

However, in fiscal 2022 and through the current nine-month period, inflation and demand uncertainty have introduced new pressures to liquidity.

Following the establishment of the 2022 Credit Agreement, UNIFI’s cash and liquidity positions are sufficient to sustain its operations and meet its growth needs.

Following the establishment of the 2022 Credit Agreement, UNIFI’s global cash and liquidity positions are sufficient to sustain its operations and meet its growth needs.

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.

Although global demand for the remainder of calendar 2023 is uncertain, we do not currently anticipate that any adverse events or circumstances will place critical pressure on our liquidity position or our ability to fund our operations and expected business growth.

Should global demand, economic activity, or input availability decline considerably for a prolonged 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.

Additionally, UNIFI considers opportunities to deploy existing cash to preserve or enhance liquidity.

In August 2022, we repatriated approximately $14,000 from our operations in Asia to the U.S.

via an existing intercompany note and, after remitting the appropriate withholding taxes, utilized the cash to reduce our outstanding revolver borrowings, thereby increasing the availability.

Management regularly evaluates such repatriations and maintains the ability to take additional, similar actions from time to time, as circumstances warrant.

Recognizing the continuing weak demand environment, in the third quarter of fiscal 2023, UNIFI negotiated a contract modification with an equipment vendor from which significant capital expenditures had occurred and were planned to continue.

The contract modification was executed at a cost to UNIFI of $623 and allows UNIFI to delay the associated equipment purchases and installation activities for 18 months, such that approximately $25,000 of capital expenditures originally expected over the March 2023 to September 2024 period are now expected to occur over the September 2024 to March 2026 period.

This action allows for improved short- and mid-term liquidity in light of the current subdued levels of sales and facility utilization and allows for a better matching of future capital expenditures with expected higher levels of future business activity.

As textile product demand recovers in the next several quarters, we expect to use cash in support of increasing working capital needs.

The following outlines the attributes relating to our credit facility as of April 2, 2023:

We do not currently anticipate that any adverse events or circumstances will place critical pressure on our liquidity position or our ability 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.

Management continues to (i) explore cost savings opportunities and (ii) prioritize repayment of debt in the current operating environment.

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

The following outlines the attributes relating to our credit facility as of October 1, 2023:

UNIFI was in compliance with all applicable financial covenants in the 2022 Credit Agreement;

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Domestically, UNIFI’s cash balances, cash provided by operating activities, and borrowings available under the ABL Revolver continue to be sufficient to fund UNIFI’s domestic operating activities as well as cash commitments for its investing and financing activities.

For its foreign operations, UNIFI expects its existing cash balances, cash provided by operating activities, and available foreign financing arrangements will provide the needed liquidity to fund the associated operating activities and investing activities, such as future capital expenditures.

UNIFI’s foreign operations in Asia and Brazil are in a position to obtain local country financing arrangements due to the operating results of each subsidiary.

For its foreign operations, UNIFI expects its existing cash balances, cash provided by operating activities, and available financing arrangements will provide the needed liquidity to fund the associated operating activities and investing activities, such as future capital expenditures.

UNIFI’s operations in Asia and Brazil are in a position to obtain local country financing arrangements due to the operating results of each subsidiary.

Net Debt (Non-GAAP Financial Measure)

The reconciliations for Net Debt are as follows:

April 2, 2023

October 1, 2023

Long-term debt

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cash and cash equivalents

The increase in Net Debt reflects the impact of the constrained demand environment and the anticipated capital expenditures deployed in fiscal 2023.

The decrease in Net Debt primarily reflects the generation of operating cash flows during fiscal 2024, aided by reduced levels of capital expenditures.

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

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

April 2, 2023

October 1, 2023

Cash and cash equivalents

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Adjusted Working Capital

When comparing from July 3, 2022 to April 2, 2023, working capital and Adjusted Working Capital decreased.

The decrease in receivables, net was primarily due to (i) a decrease in sales following lower global demand and (ii) a decrease in banker’s acceptance notes held by our Asia Segment.

The decrease in inventories was primarily attributable to a decline in raw material purchases and costs in the current nine-month period.

The decrease in other current assets was primarily due to utilization of the fiscal 2021 recovery of non-income taxes in Brazil and lower vendor deposits.

The decrease in accounts payable followed the decrease in inventories and production activity in the current nine-month period.

The decrease in other current liabilities primarily reflects lower business activities and the routine timing differences for payroll and other operating expenses.

The changes in current operating lease liabilities, current portion of long-term debt, income taxes receivable, and income taxes payable were insignificant.

Adjusted Working Capital decreased $18,765 from July 2, 2023 to October 1, 2023.

The decrease in receivables, net was primarily due to a decrease in sales and the timing of cash receipts.

The decrease in inventories was primarily attributable to lower weighted average costs in the current period and lower units on hand.

The decrease in other current assets was primarily due to lower vendor deposits, lower value-added taxes receivable, and the utilization of the fiscal 2021 recovery of non-income taxes in Brazil.

The decrease in accounts payable followed the decrease in inventories and production activity in the current period.

The increase in other current liabilities primarily reflects the routine timing differences for payroll and other operating expenses.

The change in income taxes receivable reflects the conclusion of an IRS audit.

The changes in current operating lease liabilities, current portion of long-term debt, and income taxes payable were insignificant.

Operating Cash Flows

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

For the Nine Months Ended

April 2, 2023

March 27, 2022

Net (loss) income

For the Three Months Ended

October 1, 2023

October 2, 2022

Equity in earnings of unconsolidated affiliates

Depreciation and amortization expense

Recovery of income taxes

Non-cash compensation expense

Deferred income taxes

Distribution received from unconsolidated affiliate

Receivables, net

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Net cash provided (used) by operating activities

The increase in operating cash flows was primarily due to reducing working capital associated with a decline in overall business activity in the current nine-month period, which was primarily offset by significantly weaker earnings.

The increase in operating cash flows was primarily due to reduced working capital associated with a decline in overall business activity in the current period, primarily offset by weaker earnings.

Investing Cash Flows

Investing activities primarily includes $2,937 for capital expenditures.

During the current nine-month period, UNIFI invested $32,461 in capital projects, primarily relating to (i) texturing machinery, (ii) further improvements in production capabilities and technology enhancements in the Americas, and (iii) routine annual maintenance capital expenditures.

Maintenance capital expenditures are necessary to support UNIFI’s current operations, capacities, and capabilities and exclude expenses relating to repairs and costs that do not extend an asset’s useful life.

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

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Financing Cash Flows

Financing activities primarily include (i) scheduled payments against outstanding indebtedness and (ii) proceeds from construction financing during the current nine-month period.

Financing activities primarily include net proceeds from the ABL Revolver.

Share Repurchase Program

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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.

After considering the changes generated by the 2022 Credit Agreement and the above discussion of delaying certain equipment purchases by 18 months, there have been no further material changes in the scheduled maturities of UNIFI’s contractual obligations as disclosed under the heading “Contractual Obligations”

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.

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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 1. Financial Statements