Item 1. Financial Statements
Item 1. Financial Statements
CONDENSED CONSOLIDATED BA LANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
December 29, 2024
June 30, 2024
ASSETS
Cash and cash equivalents
$
18,669
$
26,805
Receivables, net
68,934
79,165
Inventories
132,910
131,181
Income taxes receivable
1,179
164
Other current assets
9,457
11,618
Total current assets
231,149
248,933
Property, plant and equipment, net
183,344
193,723
Operating lease assets
8,900
8,245
Deferred income taxes
4,437
5,392
Other non-current assets
11,829
12,951
Total assets
$
439,659
$
469,244
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable
$
35,795
$
43,622
Income taxes payable
921
754
Current operating lease liabilities
2,415
2,251
Current portion of long-term debt
12,025
12,277
Other current liabilities
16,054
17,662
Total current liabilities
67,210
76,566
Long-term debt
122,979
117,793
Non-current operating lease liabilities
6,597
6,124
Deferred income taxes
1,869
1,869
Other long-term liabilities
3,813
3,507
Total liabilities
202,468
205,859
Commitments and contingencies
Common stock, $ 0.10 par value ( 500,000,000 shares authorized; 18,345,484 and 18,251,545
shares issued and outstanding as of December 29, 2024 and June 30, 2024, respectively)
1,835
1,825
Capital in excess of par value
72,490
70,952
Retained earnings
240,373
259,397
Accumulated other comprehensive loss
( 77,507
)
( 68,789
)
Total shareholders’ equity
237,191
263,385
Total liabilities and shareholders’ equity
$
439,659
$
469,244
See accompanying notes to condensed consolidated financial statements.
1
CONDENSED CONSOLIDATED STATE MENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except per share amounts)
For the Three Months Ended
For the Six Months Ended
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Net sales
$
138,880
$
136,917
$
286,252
$
275,761
Cost of sales
138,346
135,281
276,260
274,700
Gross profit
534
1,636
9,992
1,061
Selling, general and administrative expenses
12,921
12,408
24,763
24,017
(Benefit) provision for bad debts
( 96
)
1,289
216
1,080
Gain on sale of assets
( 4,296
)
—
( 4,296
)
—
Restructuring costs
—
5,101
—
5,101
Other operating (income) expense, net
( 431
)
481
89
535
Operating loss
( 7,564
)
( 17,643
)
( 10,780
)
( 29,672
)
Interest income
( 177
)
( 697
)
( 434
)
( 1,278
)
Interest expense
2,398
2,613
4,905
5,098
Equity in loss (earnings) of unconsolidated affiliates
262
( 93
)
251
( 293
)
Loss before income taxes
( 10,047
)
( 19,466
)
( 15,502
)
( 33,199
)
Provision (benefit) for income taxes
1,345
380
3,522
( 83
)
Net loss
$
( 11,392
)
$
( 19,846
)
$
( 19,024
)
$
( 33,116
)
Net loss per common share:
Basic
$
( 0.62
)
$
( 1.10
)
$
( 1.04
)
$
( 1.83
)
Diluted
$
( 0.62
)
$
( 1.10
)
$
( 1.04
)
$
( 1.83
)
Comprehensive loss:
For the Three Months Ended
For the Six Months Ended
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Net loss
$
( 11,392
)
$
( 19,846
)
$
( 19,024
)
$
( 33,116
)
Other comprehensive (loss) income:
Foreign currency translation adjustments
( 12,206
)
5,026
( 8,718
)
( 514
)
Other comprehensive (loss) income, net
( 12,206
)
5,026
( 8,718
)
( 514
)
Comprehensive loss
$
( 23,598
)
$
( 14,820
)
$
( 27,742
)
$
( 33,630
)
See accompanying notes to condensed consolidated financial statements.
2
CONDENSED CONSOLIDATED STATEM ENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
(In thousands)
Shares
Common Stock
Capital in Excess of Par Value
Retained Earnings
Accumulated Other Comprehensive Loss
Total Shareholders’ Equity
Balance at September 29, 2024
18,257
$
1,826
$
71,419
$
251,765
$
( 65,301
)
$
259,709
Options exercised
—
—
3
—
—
3
Conversion of equity units
113
11
( 11
)
—
—
—
Stock-based compensation
—
—
1,223
—
—
1,223
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions
( 25
)
( 2
)
( 144
)
—
—
( 146
)
Other comprehensive loss, net of tax
—
—
—
—
( 12,206
)
( 12,206
)
Net loss
—
—
—
( 11,392
)
—
( 11,392
)
Balance at December 29, 2024
18,345
$
1,835
$
72,490
$
240,373
$
( 77,507
)
$
237,191
Shares
Common Stock
Capital in Excess of Par Value
Retained Earnings
Accumulated Other Comprehensive Loss
Total Shareholders’ Equity
Balance at June 30, 2024
18,252
$
1,825
$
70,952
$
259,397
$
( 68,789
)
$
263,385
Options exercised
5
1
35
—
—
36
Conversion of equity units
113
11
( 11
)
—
—
—
Stock-based compensation
—
—
1,658
—
—
1,658
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions
( 25
)
( 2
)
( 144
)
—
—
( 146
)
Other comprehensive loss, net of tax
—
—
—
—
( 8,718
)
( 8,718
)
Net loss
—
—
—
( 19,024
)
—
( 19,024
)
Balance at December 29, 2024
18,345
$
1,835
$
72,490
$
240,373
$
( 77,507
)
$
237,191
Shares
Common Stock
Capital in Excess of Par Value
Retained Earnings
Accumulated Other Comprehensive Loss
Total Shareholders’ Equity
Balance at October 1, 2023
18,085
$
1,808
$
69,130
$
293,522
$
( 59,431
)
$
305,029
Options exercised
2
—
18
—
—
18
Conversion of equity units
65
7
( 7
)
—
—
—
Stock-based compensation
7
1
1,172
—
—
1,173
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions
( 9
)
( 1
)
( 59
)
—
—
( 60
)
Other comprehensive income, net of tax
—
—
—
—
5,026
5,026
Net loss
—
—
—
( 19,846
)
—
( 19,846
)
Balance at December 31, 2023
18,150
$
1,815
$
70,254
$
273,676
$
( 54,405
)
$
291,340
Shares
Common Stock
Capital in Excess of Par Value
Retained Earnings
Accumulated Other Comprehensive Loss
Total Shareholders’ Equity
Balance at July 2, 2023
18,081
$
1,808
$
68,901
$
306,792
$
( 53,891
)
$
323,610
Options exercised
5
—
39
—
—
39
Conversion of equity units
66
7
( 7
)
—
—
—
Stock-based compensation
7
1
1,381
—
—
1,382
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions
( 9
)
( 1
)
( 60
)
—
—
( 61
)
Other comprehensive loss, net of tax
—
—
—
—
( 514
)
( 514
)
Net loss
—
—
—
( 33,116
)
—
( 33,116
)
Balance at December 31, 2023
18,150
$
1,815
$
70,254
$
273,676
$
( 54,405
)
$
291,340
See accompanying notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEME NTS OF CASH FLOWS
(Unaudited)
(In thousands)
For the Six Months Ended
December 29, 2024
December 31, 2023
Cash and cash equivalents at beginning of period
$
26,805
$
46,960
Operating activities:
Net loss
( 19,024
)
( 33,116
)
Adjustments to reconcile net loss to net cash (used) provided by operating activities:
Equity in loss (earnings) of unconsolidated affiliates
251
( 293
)
Depreciation and amortization expense
12,881
13,988
Non-cash compensation expense
1,658
1,387
Gain on sale of assets
( 4,296
)
—
Deferred income taxes
628
( 1,714
)
Other, net
216
( 120
)
Changes in assets and liabilities:
Receivables, net
8,228
14,367
Inventories
( 4,841
)
15,081
Other current assets
( 1,771
)
( 402
)
Income taxes
( 845
)
( 727
)
Accounts payable and other current liabilities
( 8,155
)
( 4,763
)
Other, net
66
( 1,171
)
Net cash (used) provided by operating activities
( 15,004
)
2,517
Investing activities:
Capital expenditures
( 4,944
)
( 5,982
)
Proceeds from the sale of assets
8,094
488
Net cash provided (used) by investing activities
3,150
( 5,494
)
Financing activities:
Proceeds from ABL Revolver
101,451
80,600
Payments on ABL Revolver
( 90,351
)
( 82,700
)
Payments on ABL Term Loan
( 4,600
)
( 4,600
)
Payments on finance lease obligations
( 1,596
)
( 1,440
)
Other, net
( 306
)
( 27
)
Net cash provided (used) by financing activities
4,598
( 8,167
)
Effect of exchange rate changes on cash and cash equivalents
( 880
)
163
Net decrease in cash and cash equivalents
( 8,136
)
( 10,981
)
Cash and cash equivalents at end of period
$
18,669
$
35,979
See accompanying notes to condensed consolidated financial statements.
4
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Background
Unifi, Inc., a New York corporation formed in 1969 (together with its subsidiaries, “UNIFI,” the “Company,” “we,” “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, 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”) 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. Nylon products include virgin or recycled textured, solution dyed, and spandex covered yarns.
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 a joint venture with operations in the United States (the “U.S.”).
2. Basis of Presentation; Condensed Notes
The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. As contemplated by the instructions of the SEC to Form 10-Q, the following notes have been condensed and, therefore, do not contain all disclosures required in connection with annual financial statements. Reference should be made to UNIFI’s year-end audited consolidated financial statements and related notes thereto contained in its Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (the “2024 Form 10-K”).
The financial information included in this report has been prepared by UNIFI, without audit. In the opinion of management, all adjustments, which consist of normal, recurring adjustments, considered necessary for a fair statement of the results for interim periods have been included. Nevertheless, the results shown for interim periods are not necessarily indicative of results to be expected for the full year. The preparation of financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the amounts reported and certain financial statement disclosures. Actual results may vary from these estimates.
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 December 29, 2024. Unifi, Inc.’s remaining material operating subsidiaries’ fiscal quarter ended on December 31, 2024. 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 December 29, 2024 and December 31, 2023 both consisted of 13 weeks. The six-month periods ended December 29, 2024 and December 31, 2023 both consisted of 26 weeks.
3. Recent Accounting Pronouncements
Issued and Pending Adoption
In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . ASU No. 2023-09 modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (iii) income tax expense or benefit from continuing operations (separated by federal, state, and foreign). The ASU also requires entities to disclose their income tax payments to international, federal, state, and local jurisdictions, among other changes. The ASU is effective for UNIFI's fiscal 2026, with early adoption permitted, and should be applied on a prospective basis, but retrospective application is permitted. UNIFI is currently evaluating the impact on the Company’s disclosures but does not expect this standard will have a material impact on its consolidated financial position, results of operations, or cash flows.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . ASU No. 2023-07 expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The ASU is effective this fiscal year for annual reporting and in the first quarter of fiscal 2026 for interim reporting, with early adoption permitted. UNIFI has not adopted this standard. UNIFI is currently evaluating the impact on the Company’s disclosures but does not expect this standard will have a material impact on its consolidated financial position, results of operations, or cash flows.
Based on UNIFI’s review of ASUs issued since the filing of the 2024 Form 10-K, there have been no other newly issued or newly applicable accounting pronouncements that have had, or are expected to have, a material impact on UNIFI’s consolidated financial statements.
5
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
4. Revenue
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 Six Months Ended
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Third-party manufacturer
$
137,873
$
135,841
$
284,092
$
273,461
Service
1,007
1,076
2,160
2,300
Net sales
$
138,880
$
136,917
$
286,252
$
275,761
For the Three Months Ended
For the Six Months Ended
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
REPREVE ® Fiber
$
43,272
$
45,725
$
88,014
$
88,186
All other products and services
95,608
91,192
198,238
187,575
Net sales
$
138,880
$
136,917
$
286,252
$
275,761
Third-party manufacturer revenue is primarily generated through sales to direct customers. Such sales represent satisfaction of UNIFI’s performance obligations required by the associated revenue contracts. Each of UNIFI’s reportable segments derives revenue from sales to third-party manufacturers.
Service Revenue
Service revenue is primarily generated, as services are rendered, through fulfillment of toll manufacturing of textile products or transportation services governed by written agreements. Such toll manufacturing and transportation services represent satisfaction of UNIFI’s performance obligations required by the associated revenue contracts.
REPREVE ® Fiber
REPREVE ® Fiber represents UNIFI's collection of fiber products on our recycled platform, with or without added technologies.
Variable Consideration
For all variable consideration, where appropriate, UNIFI estimates the amount using the expected value method, which takes into consideration historical experience, current contractual requirements, specific known market events, and forecasted customer buying and payment patterns. Overall, these reserves reflect UNIFI’s best estimates of the amount of consideration to which the customer is entitled based on the terms of the contracts. Variable consideration has been immaterial to UNIFI’s financial statements for all periods presented.
5. Long-Term Debt
Debt Obligations
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") as amended.
Weighted Average
Scheduled
Interest Rate as of
Principal Amounts as of
Maturity Date
December 29, 2024
December 29, 2024
June 30, 2024
ABL Revolver
October 2027
8.5
%
$
30,800
$
19,700
ABL Term Loan
October 2027
6.7
%
96,600
101,200
Finance lease obligations
(1)
5.2
%
7,803
9,399
Total debt
135,203
130,299
Current ABL Term Loan
( 9,200
)
( 9,200
)
Current portion of finance lease obligations
( 2,825
)
( 3,077
)
Unamortized debt issuance costs
( 199
)
( 229
)
Total long-term debt
$
122,979
$
117,793
(1) Scheduled maturity dates for finance lease obligations range from Marc h 2025 to September 2028 .
6
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
ABL Facility and Amendments
On September 5, 2024, UNIFI, Inc. and certain of its subsidiaries entered into a First Amendment to the 2022 Credit Agreement (the “First Amendment”) with a syndicate of lenders. The First Amendment primarily (i) permits the sale of a Company-owned real estate asset (consisting of an industrial warehouse building and land acreage) located in Yadkinville, North Carolina with application of the net proceeds to reduce the outstanding ABL Revolver balance, in lieu of the prescribed mandatory prepayment to the ABL Term Loan; (ii) reduces the Maximum Revolver Amount from $ 115,000 to $ 80,000 ; (iii) modifies the definition of the Trigger Level as of any date of determination to the greater of (a) $ 16,500 and (b) 10 % of the sum of (i) the Maximum Revolver Amount plus (ii) the outstanding principal amount of the ABL Term Loan on such date of determination; (iv) increases the range of the Applicable Margin on (a) SOFR-based loans to a new range of 1.50 % to 2.00 % and (b) Base Rate-based loans to a new range of 0.50 % to 1.00 %, with such new ranges of Applicable Margin rates becoming immediately effective and continuing until the Company achieves a Fixed Charge Coverage Ratio of 1.05 to 1.00 or better; (v) for a Term Loan Reset, establishes an additional requirement to obtain lender approval; and (vi) modifies certain terms and conditions of the 2022 Credit Agreement including, but not limited to, Swing Loans, Letter of Credit sublimits, and costs related to normal course collateral valuations for the ABL Facility.
On October 25, 2024, UNIFI entered into a new credit agreement with Wells Fargo Bank, National Association for a $ 25,000 revolving credit facility (the "2024 Facility"). The maturity date of the 2024 Facility is the earlier of (i) October 28, 2027 and (ii) the termination or refinancing of the 2022 Credit Agreement. The 2024 Facility is deemed unsecured financing for UNIFI, but is collateralized by certain assets pledged by related party Kenneth G. Langone, one of the members of UNIFI's Board of Directors. Borrowings under the 2024 Facility bear interest at a rate of SOFR plus 0.90 %. The 2024 Facility contains no additional financial covenants beyond those already in effect for the 2022 Credit Agreement and is subject to a monthly unused line fee of 0.25 % on available borrowing capacity. As of December 29, 2024, no amounts had been borrowed against the 2024 Facility.
On January 2, 2025, UNIFI borrowed $ 22,000 against the 2024 Facility and used the proceeds to reduce the outstanding ABL Revolver balance. There was no impact to debt principal from these transactions.
6. Income Taxes
The provision (benefit) for income taxes and effective tax rate were as follows:
For the Three Months Ended
For the Six Months Ended
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Provision (benefit) for income taxes
$
1,345
$
380
$
3,522
$
( 83
)
Effective tax rate
( 13.4
)%
( 2.0
)%
( 22.7
)%
0.3
%
Income Tax Expense
UNIFI’s provision (benefit) for income taxes for the six months ended December 29, 2024 and December 31, 2023 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 and six months ended December 29, 2024 and December 31, 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 six months ended December 31, 2023, the Internal Revenue Service (the “IRS”) audit of fiscal years 2014 through 2019 was concluded with a net refund of $ 1,275 , which has been received along with $ 457 of interest on overpayments. The impact from the audit adjustments to the prior periods was insignificant.
Unrecognized Tax Benefits
UNIFI regularly assesses the outcomes of both completed and ongoing examinations to ensure that its provision for income taxes is sufficient. 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 during the period ended December 31, 2023, 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.
During the three months ended December 31, 2023, UNIFI released $ 853 accrued for interest and penalties after receiving the final assessment from the IRS.
7. Shareholders’ Equity
On October 31, 2018, UNIFI announced that the Company's Board of Directors 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. No shares have been repurchased in fiscal 2024 and 2025 and $ 38,859 remains available for repurchase.
7
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
8. Stock-Based Compensation
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 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 information as of December 29, 2024 with respect to the number of securities remaining available for future issuance under the 2020 Plan, as amended:
Authorized under the 2020 Plan
850
Plus: Share reserve increase from the First Amendment
1,100
Plus: Awards expired, forfeited, or otherwise terminated unexercised
228
Less: Awards granted to employees
( 1,773
)
Less: Awards granted to non-employee directors
( 276
)
Available for issuance under the 2020 Plan
129
9. Earnings Per Share
The components of the calculation of earnings per share (“EPS”) are as follows:
For the Three Months Ended
For the Six Months Ended
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Net loss
$
( 11,392
)
$
( 19,846
)
$
( 19,024
)
$
( 33,116
)
Basic weighted average shares
18,288
18,110
18,272
18,097
Net potential common share equivalents
—
—
—
—
Diluted weighted average shares
18,288
18,110
18,272
18,097
Excluded from the calculation of common share equivalents:
Anti-dilutive common share equivalents
1,144
577
1,144
577
Excluded from the calculation of diluted shares:
Unvested stock options that vest upon achievement of certain market conditions
333
333
333
333
The calculation of EPS is based on the weighted average number of Unifi, Inc.’s common shares outstanding for the applicable period. The calculation of diluted EPS presents the effect of all potential dilutive common shares that were outstanding during the respective period, unless the effect of doing so is anti-dilutive.
10. Commitments and Contingencies
Collective Bargaining Agreements
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.
11. Related Party Transactions
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 December 29, 2024 and June 30, 2024.
Related party payables for Salem Leasing Corporation consisted of the following:
December 29, 2024
June 30, 2024
Accounts payable
$
372
$
464
Operating lease obligations
207
301
Finance lease obligations
1,706
2,374
Total related party payables
$
2,285
$
3,139
The following were the Company’s significant related party transactions:
For the Three Months Ended
For the Six Months Ended
Affiliated Entity
Transaction Type
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Salem Leasing Corporation
Payments for transportation equipment costs and finance lease debt service
$
1,118
$
1,228
$
2,279
$
2,437
As discussed in Note 5, "Long-Term Debt", UNIFI entered into the 2024 Facility in October 2024. There were no borrowings on the 2024 Facility during the three-month period ended December 29, 2024.
8
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
12. Business Segment Information
UNIFI defines operating segments as components of the organization for which discrete financial information is available and operating results are evaluated on a regular basis by UNIFI’s chief executive officer, who is the chief operating decision maker (the “CODM”), in order to assess performance and allocate resources. 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.
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 United States-Mexico-Canada Agreement and the Dominican Republic-Central America Free Trade Agreement to similar customers utilizing similar methods of distribution. These operations derive revenues primarily from manufacturing synthetic and recycled textile products with sales primarily to yarn manufacturers, knitters, and weavers that produce yarn and/or fabric for the apparel, hosiery, automotive, home furnishings, industrial, medical, and other end-use markets principally in North and Central America. The Americas Segment consists of sales and manufacturing operations in the U.S., El Salvador, and Colombia.
• The Brazil Segment primarily manufactures and sells polyester-based products to knitters and weavers that produce fabric for the apparel, automotive, home furnishings, industrial, and other end-use markets principally in Brazil. The Brazil Segment includes a manufacturing location and sales offices in Brazil.
• 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 yarn manufacturers, knitters, and weavers that produce fabric for the apparel, automotive, home furnishings, industrial, and other end-use markets principally in Asia and Europe. The Asia Segment includes sales offices in China, Turkey, and Hong Kong.
UNIFI evaluates the operating performance of its segments based upon Segment (Loss) Profit, which represents segment gross (loss) profit plus segment depreciation expense. This measurement of segment profit or loss best aligns segment reporting with the current assessments and evaluations performed by, and information provided to, the CODM.
The accounting policies for the segments are consistent with UNIFI’s accounting policies. Intersegment sales are omitted from segment disclosures, as they are (i) insignificant to UNIFI’s segments and eliminated from consolidated reporting and (ii) excluded from segment evaluations performed by the CODM.
Selected financial information is presented below:
For the Three Months Ended December 29, 2024
Americas
Brazil
Asia
Total
Net sales
$
83,095
$
27,482
$
28,303
$
138,880
Cost of sales
89,635
23,696
25,015
138,346
Gross (loss) profit
( 6,540
)
3,786
3,288
534
Segment depreciation expense
5,334
602
14
5,950
Segment (Loss) Profit
$
( 1,206
)
$
4,388
$
3,302
$
6,484
For the Three Months Ended December 31, 2023
Americas
Brazil
Asia
Total
Net sales
$
80,549
$
26,061
$
30,307
$
136,917
Cost of sales
87,287
22,922
25,072
135,281
Gross (loss) profit
( 6,738
)
3,139
5,235
1,636
Segment depreciation expense
5,508
766
—
6,274
Segment (Loss) Profit
$
( 1,230
)
$
3,905
$
5,235
$
7,910
For the Six Months Ended December 29, 2024
Americas
Brazil
Asia
Total
Net sales
$
169,378
$
61,792
$
55,082
$
286,252
Cost of sales
177,296
50,069
48,895
276,260
Gross (loss) profit
( 7,918
)
11,723
6,187
9,992
Segment depreciation expense
10,744
1,343
31
12,118
Segment Profit
$
2,826
$
13,066
$
6,218
$
22,110
For the Six Months Ended December 31, 2023
Americas
Brazil
Asia
Total
Net sales
$
162,122
$
55,970
$
57,669
$
275,761
Cost of sales
176,240
50,664
47,796
274,700
Gross (loss) profit
( 14,118
)
5,306
9,873
1,061
Segment depreciation expense
11,005
1,606
—
12,611
Segment (Loss) Profit
$
( 3,113
)
$
6,912
$
9,873
$
13,672
9
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
The reconciliations of segment gross profit to consolidated loss before income taxes are as follows:
For the Three Months Ended
For the Six Months Ended
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Americas
$
( 6,540
)
$
( 6,738
)
$
( 7,918
)
$
( 14,118
)
Brazil
3,786
3,139
11,723
5,306
Asia
3,288
5,235
6,187
9,873
Segment gross profit
534
1,636
9,992
1,061
Selling, general and administrative expenses
12,921
12,408
24,763
24,017
(Benefit) provision for bad debts
( 96
)
1,289
216
1,080
Gain on sale of assets
( 4,296
)
—
( 4,296
)
—
Restructuring costs
—
5,101
—
5,101
Other operating (income) expense, net
( 431
)
481
89
535
Operating loss
( 7,564
)
( 17,643
)
( 10,780
)
( 29,672
)
Interest income
( 177
)
( 697
)
( 434
)
( 1,278
)
Interest expense
2,398
2,613
4,905
5,098
Equity in loss (earnings) of unconsolidated affiliates
262
( 93
)
251
( 293
)
Loss before income taxes
$
( 10,047
)
$
( 19,466
)
$
( 15,502
)
$
( 33,199
)
There have been no material changes in segment assets during fiscal 2025.
13. Investments in Unconsolidated Affiliates
Included within Other non-current assets are UNIFI’s investments in unconsolidated affiliates: U.N.F. Industries, Ltd. (“UNF”) and UNF America LLC (“UNFA”).
In December 2023, UNIFI dissolved its interest in UNF under an agreement whereby UNIFI agreed to pay the former joint venture partner $ 2,750 and recorded it as an associated contract termination cost within Restructuring costs on the Condensed Consolidated Statements of Operations and Comprehensive Loss. UNIFI made a payment to the former joint venture partner of $ 1,200 in the second quarter of fiscal 2024 and the remaining $ 1,550 was paid in the third quarter of fiscal 2024.
UNIFI’s raw material purchases under its supply agreement with UNFA consisted of the following:
For the Three Months Ended
For the Six Months Ended
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
UNFA
$
3,353
$
3,787
$
7,042
$
6,913
As of December 29, 2024, UNIFI’s open purchase orders related to this supply agreement, all with UNFA, w ere $ 624 . As of December 29, 2024 and June 30, 2024, UNIFI had accounts payable due to U NFA of $ 1,210 and $ 2,197 .
Other than the supply agreement discussed above, UNIFI does not provide any other commitments or guarantees related to UNFA. As of December 29, 2024 and June 30, 2024, UNIFI’s investment in UNFA was $ 1,478 and $ 1,603 , respectively. There have been no significant changes in the condensed balance sheet and income statement information for UNFA as previously disclosed in the 2024 Form 10-K.
14. Supplemental Cash Flow Information
Cash payments for interest and taxes consist of the following:
For the Six Months Ended
December 29, 2024
December 31, 2023
Interest, net of capitalized interest of $ 80 and $ 104 , respectively
$
4,781
$
4,740
Income tax payments, net
4,033
2,606
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.
Non-Cash Investing and Financing Activities
As of December 29, 2024 and June 30, 2024, $ 702 and $ 879 , respectively, were included in accounts payable for unpaid capital expenditures. As of December 31, 2023 and July 2, 2023, $ 621 and $ 1,137 , respectively, were included in accounts payable for unpaid capital expenditures.
During the six months ended December 29, 2024 and December 31, 2023, UNIFI recorded non-cash activity relating to finance lease s of $ 0 a nd $ 1,633 , respectively.
10
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
15. Other Financial Data
Select balance sheet information is presented in the following table.
December 29, 2024
June 30, 2024
Receivables, net:
Customer receivables
$
70,028
$
80,050
Allowance for uncollectible accounts
( 2,820
)
( 2,713
)
Reserves for quality claims
( 863
)
( 745
)
Net customer receivables
66,345
76,592
Banker's acceptance notes
1,444
1,326
Other receivables
1,145
1,247
Total receivables, net
$
68,934
$
79,165
Inventories:
Raw materials
$
50,577
$
49,391
Supplies
11,969
12,160
Work in process
7,515
8,994
Finished goods
66,436
64,449
Gross inventories
136,497
134,994
Net realizable value adjustment
( 3,587
)
( 3,813
)
Total inventories
$
132,910
$
131,181
Other current assets:
Vendor deposits
$
3,269
$
2,633
Value-added taxes receivable
3,055
2,510
Prepaid expenses and other
2,823
2,133
Contract assets
310
561
Assets held for sale (1)
—
3,781
Total other current assets
$
9,457
$
11,618
Property, plant and equipment, net:
Land
$
1,865
$
1,897
Land improvements
16,409
16,409
Buildings and improvements
161,591
162,414
Assets under finance leases
18,030
18,030
Machinery and equipment
649,035
650,901
Computers, software and office equipment
25,484
25,464
Transportation equipment
10,680
10,710
Construction in progress
4,212
3,319
Gross property, plant and equipment
887,306
889,144
Less: accumulated depreciation
( 695,679
)
( 688,086
)
Less: accumulated amortization – finance leases
( 8,283
)
( 7,335
)
Total property, plant and equipment, net
$
183,344
$
193,723
Other non-current assets:
Recovery of taxes
$
5,196
$
5,543
Grantor trust
2,167
2,942
Investments in unconsolidated affiliates
1,478
1,603
Intangible assets, net
627
682
Other
2,361
2,181
Total other non-current assets
$
11,829
$
12,951
Other current liabilities:
Payroll and fringe benefits
$
4,919
$
7,140
Incentive compensation
3,502
1,450
Utilities
2,185
2,861
Deferred revenue
1,174
1,504
Property taxes, interest and other
4,274
4,707
Total other current liabilities
$
16,054
$
17,662
Other long-term liabilities:
Nonqualified deferred compensation plan obligation
$
2,283
$
2,008
Uncertain tax positions
1,185
1,109
Other
345
390
Total other long-term liabilities
$
3,813
$
3,507
(1) On October 30, 2024, the property previously classified as held for sale was sold for $ 8,100 resulting in a net gain of $ 4,296 .
11
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.