Item 1. Financial Statements
Item 1. Financial Statements
CONDENSED CONSOLIDATED BA LANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
March 30, 2025
June 30, 2024
ASSETS
Cash and cash equivalents
$
16,255
$
26,805
Receivables, net
80,551
79,165
Inventories
131,501
131,181
Income taxes receivable
7,402
164
Other current assets
9,821
11,618
Total current assets
245,530
248,933
Property, plant and equipment, net
181,701
193,723
Operating lease assets
8,342
8,245
Deferred income taxes
4,758
5,392
Other non-current assets
6,209
12,951
Total assets
$
446,540
$
469,244
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable
$
43,564
$
43,622
Income taxes payable
885
754
Current operating lease liabilities
2,381
2,251
Current portion of long-term debt
11,924
12,277
Other current liabilities
19,851
17,662
Total current liabilities
78,605
76,566
Long-term debt
127,894
117,793
Non-current operating lease liabilities
6,059
6,124
Deferred income taxes
1,869
1,869
Other long-term liabilities
3,727
3,507
Total liabilities
218,154
205,859
Commitments and contingencies
Common stock, $ 0.10 par value ( 500,000,000 shares authorized; 18,359,591 and 18,251,545
shares issued and outstanding as of March 30, 2025 and June 30, 2024, respectively)
1,836
1,825
Capital in excess of par value
73,284
70,952
Retained earnings
223,579
259,397
Accumulated other comprehensive loss
( 70,313
)
( 68,789
)
Total shareholders’ equity
228,386
263,385
Total liabilities and shareholders’ equity
$
446,540
$
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 Nine Months Ended
March 30, 2025
March 31, 2024
March 30, 2025
March 31, 2024
Net sales
$
146,557
$
148,996
$
432,809
$
424,757
Cost of sales
147,002
144,232
423,262
418,932
Gross (loss) profit
( 445
)
4,764
9,547
5,825
Selling, general and administrative expenses
12,295
11,372
37,058
35,389
(Benefit) provision for bad debts
( 255
)
179
( 39
)
1,259
Gain on sale of assets
—
—
( 4,296
)
—
Restructuring costs
1,320
—
1,320
5,101
Other operating expense, net
55
139
144
674
Operating loss
( 13,860
)
( 6,926
)
( 24,640
)
( 36,598
)
Interest income
( 198
)
( 432
)
( 632
)
( 1,710
)
Interest expense
2,417
2,407
7,322
7,505
Equity in loss of unconsolidated affiliates
216
604
467
311
Loss before income taxes
( 16,295
)
( 9,505
)
( 31,797
)
( 42,704
)
Provision for income taxes
499
790
4,021
707
Net loss
$
( 16,794
)
$
( 10,295
)
$
( 35,818
)
$
( 43,411
)
Net loss per common share:
Basic
$
( 0.92
)
$
( 0.57
)
$
( 1.96
)
$
( 2.40
)
Diluted
$
( 0.92
)
$
( 0.57
)
$
( 1.96
)
$
( 2.40
)
Comprehensive loss:
For the Three Months Ended
For the Nine Months Ended
March 30, 2025
March 31, 2024
March 30, 2025
March 31, 2024
Net loss
$
( 16,794
)
$
( 10,295
)
$
( 35,818
)
$
( 43,411
)
Other comprehensive income (loss):
Foreign currency translation adjustments
7,194
( 3,667
)
( 1,524
)
( 4,181
)
Other comprehensive income (loss), net
7,194
( 3,667
)
( 1,524
)
( 4,181
)
Comprehensive loss
$
( 9,600
)
$
( 13,962
)
$
( 37,342
)
$
( 47,592
)
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 December 29, 2024
18,345
$
1,835
$
72,490
$
240,373
$
( 77,507
)
$
237,191
Options exercised
7
—
31
—
—
31
Conversion of equity units
11
2
( 2
)
—
—
—
Stock-based compensation
—
—
784
—
—
784
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions
( 3
)
( 1
)
( 19
)
—
—
( 20
)
Other comprehensive income, net of tax
—
—
—
—
7,194
7,194
Net loss
—
—
—
( 16,794
)
—
( 16,794
)
Balance at March 30, 2025
18,360
$
1,836
$
73,284
$
223,579
$
( 70,313
)
$
228,386
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
12
1
66
—
—
67
Conversion of equity units
124
13
( 13
)
—
—
—
Stock-based compensation
—
—
2,442
—
—
2,442
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions
( 28
)
( 3
)
( 163
)
—
—
( 166
)
Other comprehensive loss, net of tax
—
—
—
—
( 1,524
)
( 1,524
)
Net loss
—
—
—
( 35,818
)
—
( 35,818
)
Balance at March 30, 2025
18,360
$
1,836
$
73,284
$
223,579
$
( 70,313
)
$
228,386
Shares
Common Stock
Capital in Excess of Par Value
Retained Earnings
Accumulated Other Comprehensive Loss
Total Shareholders’ Equity
Balance at December 31, 2023
18,150
$
1,815
$
70,254
$
273,676
$
( 54,405
)
$
291,340
Options exercised
7
1
38
—
—
39
Conversion of equity units
95
9
( 9
)
—
—
—
Stock-based compensation
—
—
407
—
—
407
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions
( 2
)
—
( 15
)
—
—
( 15
)
Other comprehensive loss, net of tax
—
—
—
—
( 3,667
)
( 3,667
)
Net loss
—
—
—
( 10,295
)
—
( 10,295
)
Balance at March 31, 2024
18,250
$
1,825
$
70,675
$
263,381
$
( 58,072
)
$
277,809
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
12
1
77
—
—
78
Conversion of equity units
161
16
( 16
)
—
—
—
Stock-based compensation
7
1
1,788
—
—
1,789
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions
( 11
)
( 1
)
( 75
)
—
—
( 76
)
Other comprehensive loss, net of tax
—
—
—
—
( 4,181
)
( 4,181
)
Net loss
—
—
—
( 43,411
)
—
( 43,411
)
Balance at March 31, 2024
18,250
$
1,825
$
70,675
$
263,381
$
( 58,072
)
$
277,809
See accompanying notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEME NTS OF CASH FLOWS
(Unaudited)
(In thousands)
For the Nine Months Ended
March 30, 2025
March 31, 2024
Cash and cash equivalents at beginning of period
$
26,805
$
46,960
Operating activities:
Net loss
( 35,818
)
( 43,411
)
Adjustments to reconcile net loss to net cash (used) provided by operating activities:
Equity in loss of unconsolidated affiliates
467
311
Distribution received from unconsolidated affiliate
—
1,000
Depreciation and amortization expense
19,200
20,780
Non-cash compensation expense
2,442
1,798
Gain on sale of assets
( 4,296
)
—
Deferred income taxes
563
( 2,403
)
Other, net
1,525
( 93
)
Changes in assets and liabilities:
Receivables, net
( 1,757
)
4,225
Inventories
( 753
)
15,174
Other current assets
( 1,966
)
2,217
Income taxes
( 7,106
)
( 685
)
Accounts payable and other current liabilities
2,020
3,577
Other, net
5,485
( 1,330
)
Net cash (used) provided by operating activities
( 19,994
)
1,160
Investing activities:
Capital expenditures
( 7,915
)
( 8,566
)
Proceeds from the sale of assets
8,094
490
Net cash provided (used) by investing activities
179
( 8,076
)
Financing activities:
Proceeds from ABL Revolver
167,150
109,700
Payments on ABL Revolver
( 148,150
)
( 112,800
)
Payments on ABL Term Loan
( 6,900
)
( 6,900
)
Payments on finance lease obligations
( 2,397
)
( 2,230
)
Other, net
( 428
)
( 6
)
Net cash provided (used) by financing activities
9,275
( 12,236
)
Effect of exchange rate changes on cash and cash equivalents
( 10
)
( 146
)
Net decrease in cash and cash equivalents
( 10,550
)
( 19,298
)
Cash and cash equivalents at end of period
$
16,255
$
27,662
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 March 30, 2025. Unifi, Inc.’s remaining material operating subsidiaries’ fiscal quarters ended on March 31, 2025. There were no significant transactions or events that occurred between Unifi, Inc.’s fiscal quarter end and such wholly owned subsidiaries’ fiscal quarters end. The three-month periods ended March 30, 2025 and March 31, 2024 both consisted of 13 weeks. The nine-month periods ended March 30, 2025 and March 31, 2024 both consisted of 39 weeks.
3. Recent Accounting Pronouncements
Issued and Pending Adoption
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 disclosure but does not expect this standard will have a material impact on its consolidated financial statements.
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 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . ASU No. 2024-03 does not change or remove existing expense disclosure requirement but requires disaggregated disclosures about certain expense categories and captions, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization and selling expenses. This ASU will become effective for UNIFI's fiscal 2028 and in the first quarter of fiscal 2029 for interim reporting, with retrospective application permitted. UNIFI is currently evaluating the impact on the Company's disclosures on its consolidated financial statements.
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 Nine Months Ended
March 30, 2025
March 31, 2024
March 30, 2025
March 31, 2024
Third-party manufacturer
$
145,519
$
147,857
$
429,611
$
421,318
Service
1,038
1,139
3,198
3,439
Net sales
$
146,557
$
148,996
$
432,809
$
424,757
For the Three Months Ended
For the Nine Months Ended
March 30, 2025
March 31, 2024
March 30, 2025
March 31, 2024
REPREVE ® Fiber
$
44,699
$
46,754
$
132,713
$
134,940
All other products and services
101,858
102,242
300,096
289,817
Net sales
$
146,557
$
148,996
$
432,809
$
424,757
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
March 30, 2025
March 30, 2025
June 30, 2024
ABL Revolver
October 2027
6.6
%
$
16,700
$
19,700
2024 Facility
October 2027
5.2
%
22,000
—
ABL Term Loan
October 2027
6.4
%
94,300
101,200
Finance lease obligations
(1)
5.3
%
7,002
9,399
Total debt
140,002
130,299
Current ABL Term Loan
( 9,200
)
( 9,200
)
Current portion of finance lease obligations
( 2,724
)
( 3,077
)
Unamortized debt issuance costs
( 184
)
( 229
)
Total long-term debt
$
127,894
$
117,793
(1) Scheduled maturity dates for finance lease obligations range from June 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.
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.
On April 10, 2025, UNIFI entered into a Second Amendment to the 2022 Credit Agreement (the “Second Amendment”). The Second Amendment primarily (i) permits the Company to enter into the purchase agreement related to, and consummate the sale of, the Madison, North Carolina property, (ii) permits the Company to allocate a portion of the net proceeds from the sale to repay outstanding revolving loans under the 2022 Credit Agreement, after the application of the greater of $ 25,000 or 50 % of such net proceeds toward outstanding term loans, and (iii) requires the consent of all lenders, rather than the Required Lenders (as defined in the 2022 Credit Agreement), in order to reset the maximum amount of the term loans available under the 2022 Credit Agreement.
6. Income Taxes
The provision for income taxes and effective tax rate were as follows:
For the Three Months Ended
For the Nine Months Ended
March 30, 2025
March 31, 2024
March 30, 2025
March 31, 2024
Provision for income taxes
$
499
$
790
$
4,021
$
707
Effective tax rate
( 3.1
)%
( 8.3
)%
( 12.6
)%
( 1.7
)%
Income Tax Expense
UNIFI’s provision for income taxes for the nine months ended March 30, 2025 and March 31, 2024 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 nine months ended March 30, 2025 and March 31, 2024 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 nine months ended March 31, 2024, 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 March 31, 2024, 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 nine months ended March 31, 2024, 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 March 30, 2025 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
262
Less: Awards granted to employees
( 1,781
)
Less: Awards granted to non-employee directors
( 276
)
Available for issuance under the 2020 Plan
155
9. Earnings Per Share
The components of the calculation of earnings per share (“EPS”) are as follows:
For the Three Months Ended
For the Nine Months Ended
March 30, 2025
March 31, 2024
March 30, 2025
March 31, 2024
Net loss
$
( 16,794
)
$
( 10,295
)
$
( 35,818
)
$
( 43,411
)
Basic weighted average shares
18,352
18,169
18,299
18,121
Net potential common share equivalents
—
—
—
—
Diluted weighted average shares
18,352
18,169
18,299
18,121
Excluded from the calculation of common share equivalents:
Anti-dilutive common share equivalents
909
561
909
574
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 March 30, 2025 and June 30, 2024.
Related party payables for Salem Leasing Corporation consisted of the following:
March 30, 2025
June 30, 2024
Accounts payable
$
357
$
464
Operating lease obligations
158
301
Finance lease obligations
1,395
2,374
Total related party payables
$
1,910
$
3,139
The following were the Company’s significant related party transactions:
For the Three Months Ended
For the Nine Months Ended
Affiliated Entity
Transaction Type
March 30, 2025
March 31, 2024
March 30, 2025
March 31, 2024
Salem Leasing Corporation
Payments for transportation equipment costs and finance lease debt service
$
1,028
$
1,066
$
3,307
$
3,503
8
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
As discussed in Note 5, "Long-Term Debt", UNIFI entered into the 2024 Facility in October 2024 which was collateralized by personal assets of a board member. During the three-month period ended March 30, 2025, UNIFI borrowed $ 22,000 on the 2024 Facility and used the proceeds to reduce the outstanding ABL Revolver balance .
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, Hong Kong, and India.
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 March 30, 2025
Americas
Brazil
Asia
Total
Net sales
$
93,544
$
28,124
$
24,889
$
146,557
Cost of sales
100,501
25,136
21,365
147,002
Gross (loss) profit
( 6,957
)
2,988
3,524
( 445
)
Segment depreciation expense
5,251
701
13
5,965
Segment (Loss) Profit
$
( 1,706
)
$
3,689
$
3,537
$
5,520
For the Three Months Ended March 31, 2024
Americas
Brazil
Asia
Total
Net sales
$
91,130
$
29,573
$
28,293
$
148,996
Cost of sales
94,644
25,736
23,852
144,232
Gross (loss) profit
( 3,514
)
3,837
4,441
4,764
Segment depreciation expense
5,473
841
—
6,314
Segment Profit
$
1,959
$
4,678
$
4,441
$
11,078
For the Nine Months Ended March 30, 2025
Americas
Brazil
Asia
Total
Net sales
$
262,922
$
89,916
$
79,971
$
432,809
Cost of sales
277,797
75,205
70,260
423,262
Gross (loss) profit
( 14,875
)
14,711
9,711
9,547
Segment depreciation expense
15,995
2,044
44
18,083
Segment Profit
$
1,120
$
16,755
$
9,755
$
27,630
For the Nine Months Ended March 31, 2024
Americas
Brazil
Asia
Total
Net sales
$
253,252
$
85,543
$
85,962
$
424,757
Cost of sales
270,884
76,400
71,648
418,932
Gross (loss) profit
( 17,632
)
9,143
14,314
5,825
Segment depreciation expense
16,478
2,447
—
18,925
Segment (Loss) Profit
$
( 1,154
)
$
11,590
$
14,314
$
24,750
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 Nine Months Ended
March 30, 2025
March 31, 2024
March 30, 2025
March 31, 2024
Americas
$
( 6,957
)
$
( 3,514
)
$
( 14,875
)
$
( 17,632
)
Brazil
2,988
3,837
14,711
9,143
Asia
3,524
4,441
9,711
14,314
Segment gross (loss) profit
( 445
)
4,764
9,547
5,825
Selling, general and administrative expenses
12,295
11,372
37,058
35,389
(Benefit) provision for bad debts
( 255
)
179
( 39
)
1,259
Gain on sale of assets
—
—
( 4,296
)
—
Restructuring costs
1,320
—
1,320
5,101
Other operating expense, net
55
139
144
674
Operating loss
( 13,860
)
( 6,926
)
( 24,640
)
( 36,598
)
Interest income
( 198
)
( 432
)
( 632
)
( 1,710
)
Interest expense
2,417
2,407
7,322
7,505
Equity in loss of unconsolidated affiliates
216
604
467
311
Loss before income taxes
$
( 16,295
)
$
( 9,505
)
$
( 31,797
)
$
( 42,704
)
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 Nine Months Ended
March 30, 2025
March 31, 2024
March 30, 2025
March 31, 2024
UNFA
$
4,572
$
2,586
$
11,614
$
9,499
As of March 30, 2025, UNIFI’s open purchase orders related to this supply agreement, all with UNFA, w ere $ 922 . As of March 30, 2025 and June 30, 2024, UNIFI had accounts payable due t o UNFA of $ 2,380 and $ 2,197 , respectively.
Other than the supply agreement discussed above, UNIFI does not provide any other commitments or guarantees related to UNFA. As of March 30, 2025 and June 30, 2024, UNIFI’s investment in UNFA was $ 1,161 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 Nine Months Ended
March 30, 2025
March 31, 2024
Interest, net of capitalized interest of $ 115 and $ 153 , respectively
$
7,062
$
7,182
Income tax payments, net
5,191
4,103
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 March 30, 2025 and June 30, 2024, $ 524 and $ 879 , respectively, were included in accounts payable for unpaid capital expenditures. As of March 31, 2024 and July 2, 2023, $ 201 and $ 1,137 , respectively, were included in accounts payable for unpaid capital expenditures.
During the nine-months ended March 30, 2025 and March 31, 2024, 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. Restructuring Costs
On February 3, 2025, UNIFI announced the pending closure of a facility in Madison, North Carolina, and a plan to transition the associated manufacturing operations to other production facilities in North and Central America, and began immediately marketing the property for sale. UNIFI expects to incur restructuring charges for equipment relocation or disposal costs, employee retention or separation costs, and other closure-related costs including asset impairment. UNIFI expects that the restructuring charges, other than any asset impairment, will consist of cash payments, which are anticipated to continue through the end of this calendar year.
In fiscal 2024, UNIFI initiated the Profitability Improvement Plan intended to lower operating expenses for both production and administrative activities.
The restructuring expenses incurred in all periods primarily impacted the Americas Segment.
A summary of the restructuring activities consists of the following:
For the Three Months Ended
For the Nine Months Ended
March 30, 2025
March 31, 2024
March 30, 2025
March 31, 2024
Facility closure and equipment relocation costs
$
1,088
$
—
$
1,088
$
—
Employee separation or retention costs
232
—
232
2,351
Dissolution of joint venture
—
—
—
2,750
Restructuring costs
1,320
—
1,320
5,101
Cash payments
1,094
—
1,094
3,699
Non-cash charges
—
—
—
—
Ending Liability
226
—
226
1,402
UNIFI estimates it will incur between $ 6,000 and $ 8,000 of additional restructuring costs over the next 3 to 6 months related to the closure of the Madison facility.
Subsequent to quarter-end, on April 10, 2025, UNIFI entered into a Real Estate Purchase and Sale Agreement ("the Purchase Agreement") related to the sale of the Madison, North Carolina facility, as well as certain machinery and equipment located thereon, f or a cash purchase price of $ 53,200 . The closing of the transaction is expected to occur on May 15, 2025, unless accelerated by Buyer pursuant to the terms of the Purchase Agreement. The net proceeds of the transaction will be used to repay a portion of the principal balance of term loans and revolving loans outstanding under the 2022 Credit Agreement.
11
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
16. Other Financial Data
Select balance sheet information is presented in the following table.
March 30, 2025
June 30, 2024
Receivables, net:
Customer receivables
$
81,707
$
80,050
Allowance for uncollectible accounts
( 2,593
)
( 2,713
)
Reserves for quality claims
( 888
)
( 745
)
Net customer receivables
78,226
76,592
Banker's acceptance notes
995
1,326
Other receivables
1,330
1,247
Total receivables, net
$
80,551
$
79,165
Inventories:
Raw materials
$
54,863
$
49,391
Supplies
12,151
12,160
Work in process
7,774
8,994
Finished goods
59,951
64,449
Gross inventories
134,739
134,994
Net realizable value adjustment
( 3,238
)
( 3,813
)
Total inventories
$
131,501
$
131,181
Other current assets:
Vendor deposits
$
3,849
$
2,633
Value-added taxes receivable
2,690
2,510
Prepaid expenses and other
2,622
2,133
Contract assets
660
561
Assets held for sale (1)
—
3,781
Total other current assets
$
9,821
$
11,618
Property, plant and equipment, net:
Land
$
1,891
$
1,897
Land improvements
16,409
16,409
Buildings and improvements
162,963
162,414
Assets under finance leases
18,030
18,030
Machinery and equipment
631,346
650,901
Computers, software and office equipment
25,956
25,464
Transportation equipment
10,719
10,710
Construction in progress
3,956
3,319
Gross property, plant and equipment
871,270
889,144
Less: accumulated depreciation
( 680,904
)
( 688,086
)
Less: accumulated amortization – finance leases
( 8,665
)
( 7,335
)
Total property, plant and equipment, net
$
181,701
$
193,723
Other non-current assets:
Grantor trust
$
2,132
$
2,942
Investments in unconsolidated affiliates
1,161
1,603
Intangible assets, net
600
682
Recovery of taxes
—
5,543
Other
2,316
2,181
Total other non-current assets
$
6,209
$
12,951
Other current liabilities:
Payroll and fringe benefits
$
8,113
$
7,140
Incentive compensation
5,213
1,450
Utilities
2,368
2,861
Deferred revenue
1,279
1,504
Property taxes, interest and other
2,878
4,707
Total other current liabilities
$
19,851
$
17,662
Other long-term liabilities:
Nonqualified deferred compensation plan obligation
$
2,153
$
2,008
Uncertain tax positions
1,236
1,109
Other
338
390
Total other long-term liabilities
$
3,727
$
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 .
12
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.