What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-05 compared with 2025-05-07 · 107 added, 298 removed, 251 unchanged (62% of the section changed)

2 unchanged sentences

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

A reference to the “current period” refers to the three-month period ended March 30, 2025, while a reference to the “prior period” refers to the three-month period ended March 31, 2024.

A reference to the “current nine-month period” refers to the nine-month period ended March 30, 2025, while a reference to the “prior nine-month period” refers to the nine-month period ended March 31, 2024.

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

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 ended March 30, 2025 and March 31, 2024, and, to the extent applicable, any material changes from the information discussed in the 2024 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 September 28, 2025 and September 29, 2024, and, to the extent applicable, any material changes from the information discussed in the 2025 Form 10-K or other important intervening developments or information.

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

3 unchanged sentences

For the Three Months Ended

For the Nine Months Ended

March 30, 2025

March 31, 2024

March 30, 2025

March 31, 2024

September 28, 2025

September 29, 2024

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

5 unchanged sentences

Current Economic Environment

The challenging environment for textile production and demand has adversely impacted our consolidated sales and profitability.

In addition, the following pressures have been present or recently introduced:

(i) the impact of inflation on consumer spending, (ii) elevated interest rates for consumers and customers, including the impact on the carrying costs of customer inventories, (iii) the volatility of trade and regulatory matters in light of recent executive and legislative branch changes and (iv) the uncertainty over global trade policies and the financial impact of related tariffs and retaliatory tariffs.

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

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

This volatility in demand resulted from customers buying ahead of tariffs becoming effective for certain countries and difficulty in predicting final tariff assessments.

A tariff structure that disproportionately impacts one country or region over another may result in a shift in manufacturing or flow of goods particularly as it relates to textile production across Asia and Central America.

2 unchanged sentences

UNIFI will continue to monitor these and other aspects of the current environment, leverage our global business model as necessary, and work closely with stakeholders to ensure business continuity and liquidity.

Fortunately, UNIFI has been expanding its supply chain and business model across multiple geographies over the last several years.

Particularly, (i) our feedstock supply spans multiple markets, (ii) our commercial position in the Central American market remains key to servicing compliant business for USMCA and CAFTA-DR programs, and (iii) we have expanded our asset light model beyond China.

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

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

UNIFI has been expanding its supply chain and business model across multiple geographies over the last several years.

Particularly, (i) our feedstock supply spans multiple domestic and foreign markets, (ii) our commercial position in the Central American market remains key to servicing compliant business for USMCA and CAFTA-DR programs, and (iii) we have expanded our asset light model beyond China, most recently with the addition of Unifi Textiles India in October 2024.

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

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

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

1 unchanged sentence

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

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

The threat of an economic slowdown 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, gross profit, and operating cash flows.

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.

Fiscal 2026 Profit Improvement Plan

UNIFI has implemented additional cost savings initiatives that include reducing variable manufacturing costs across labor, spend, and support functions, while also eliminating a meaningful percentage of salaried positions in the U.S.

("Fiscal 2026 Profit Improvement Plan").

Accordingly, UNIFI expects to incur restructuring charges in the second quarter of fiscal 2026 of between $500 and $1,000, primarily relating to severance costs.

Key Performance Indicators and Non-GAAP Financial Measures

30 unchanged sentences

Review of Results of Operations

Three Months Ended March 30, 2025 Compared to Three Months Ended March 31, 2024

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

Consolidated Overview

4 unchanged sentences

For the Three Months Ended

March 30, 2025

March 31, 2024

September 28, 2025

September 29, 2024

Cost of sales

Gross (loss) profit

(Benefit) provision for bad debts

3 unchanged sentences

Interest expense, net

Equity in loss of unconsolidated affiliates

Equity in earnings of unconsolidated affiliate

Loss before income taxes

4 unchanged sentences

For the Three Months Ended

March 30, 2025

March 31, 2024

September 28, 2025

September 29, 2024

Interest expense, net

5 unchanged sentences

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

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

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

(2) In the first quarter of fiscal 2026, UNIFI incurred various transition costs totaling $1,068 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs (including asset impairments and disposals) of $1,021, and (ii) employee separation costs of $47.

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

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

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

For the Three Months Ended March 30, 2025

For the Three Months Ended March 31, 2024

For the Three Months Ended September 28, 2025

For the Three Months Ended September 29, 2024

Transition costs (1)

1 unchanged sentence

Weighted average common shares outstanding

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

(1) In the first quarter of fiscal 2026, UNIFI incurred various transition costs totaling $1,068 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs (including asset impairments and disposals) of $1,021, and (ii) employee separation costs of $47.

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

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

Consolidated net sales for the current period decreased by $2,439, or 1.6%, and consolidated sales volumes decreased by 0.9%, compared to the prior period.

Net sales in the current period were lower primarily due to lower sales volumes and a weaker sales mix in Asia, partially offset by improved sales volumes in the Americas Segment, along with favorable pricing and market share gains in Brazil.

Despite these sales volume improvements, volumes remain depressed, particularly in the Americas and Asia Segments as a result of continued weak global demand.

Consolidated net sales for the current period decreased by $11,698, or 7.9%, and consolidated sales volumes decreased 5.2%, compared to the prior period.

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

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

Consolidated weighted average sales prices decreased 2.7%.

The decrease in sales prices was primarily attributable to a weaker sales mix in the Asia Segment, together with unfavorable foreign currency translation effects from the weakening of the BRL versus the USD within our Brazil Segment.

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

REPREVE ® Fiber products for the current period comprised 29%, or $39,272, of consolidated net sales, compared to 30%, or $44,742, for the prior period.

Gross (Loss) Profit

Gross profit for the current period decreased by $5,209 compared to the prior period.

Gross profit decreased primarily due to (i) lower conversion margins in the Americas Segment and (ii) softer sales and profitability in the Asia Segment.

These were partially offset by (a) increased sales volumes and (b) improved productivity.

However, gross profit continues to be unfavorably impacted by weak fixed cost absorption in the Americas Segment, where utilization and productivity remain below historical averages.

Ongoing cost savings measures led to UNIFI announcing the consolidation of yarn manufacturing operations in the Americas Segment with the planned closure of the Madison, North Carolina facility.

UNIFI incurred $1,580 of transition costs during the period, recorded in Cost of sales, related to (i) inventory write-downs of $1,000 and (ii) excess manufacturing costs of $580.

• For the Americas Segment, gross profit decreased primarily due to decreased productivity related to the consolidation of yarn manufacturing operations.

• For the Brazil Segment, gross profit decreased primarily due to (i) an unfavorable foreign currency translation impact and (ii) lower conversion margins.

• For the Asia Segment, gross profit decreased primarily due to unfavorable changes in customer-specific programs from a weak demand environment.

Gross profit for the current period decreased to $3,387 from $9,458 in the prior period.

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

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

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

• For the Americas Segment, gross profit decreased primarily due to (i) demand and production volatility stemming from tariff uncertainty and (ii) lower conversion margins from a lower-priced sales mix, partially offset by variable cost saving initiatives.

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

• For the Asia Segment, gross profit decreased primarily due to (i) lower sales volumes and (ii) lower conversion margins from an unfavorable change in sales mix.

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

Actions from the Fiscal 2026 Profit Improvement Plan are expected to reduce SG&A in future fiscal quarters.

(Benefit) Provision for Bad Debts

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

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

Restructuring Costs

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

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

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

There were no Restructuring costs for the prior period.

Other Operating Expense, Net

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

Other operating expense, net for the current period and the prior period include foreign currency transaction losses of $50 and $489, respectively, with no other meaningful activity.

Interest Expense, Net

Interest expense, net increased primarily due to lower interest income in the current period, associated with lower global cash balances.

Equity in Loss of Unconsolidated Affiliates

Interest expense, net decreased in connection with lower average debt principal and lower average interest rates.

Equity in Earnings of Unconsolidated Affiliate

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

1 unchanged sentence

For the Three Months Ended

March 30, 2025

March 31, 2024

September 28, 2025

September 29, 2024

Provision for income taxes

5 unchanged sentences

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

The increase in the effective tax rate from the prior period to the current period is primarily attributable to lower foreign earnings and higher losses in the U.S.

The decrease in net loss was primarily attributable to (i) lower gross profit and (ii) restructuring costs in the current period, partially offset by (a) lower bad debt expense and (b) lower income tax expense.

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

The increase in net loss was primarily attributable to (i) decreased gross profit and (ii) restructuring costs incurred in the current period, partially offset by (a) lower interest expense, net, and (b) lower income tax expense.

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

Adjusted EBITDA and Adjusted EPS were lower compared to the prior period primarily due to lower gross profit, partially offset by lower bad debt expense.

Adjusted EBITDA and Adjusted EPS decreased primarily due to lower gross profit.

Segment Overview

1 unchanged sentence

Americas Segment

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:

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:

For the Three Months Ended

March 30, 2025

March 31, 2024

September 28, 2025

September 29, 2024

Cost of sales

Depreciation expense

Segment (Loss) Profit

Segment Profit

Segment net sales as a percentage of

consolidated amounts

Segment (Loss) Profit as a percentage of

Segment Profit as a percentage of

consolidated amounts

1 unchanged sentence

Net sales for the prior period

Increase in sales volumes

Change in average selling price and sales mix

Increase in sales volumes

Net sales for the current period

The increase in net sales for the Americas Segment from the prior period to the current period was primarily attributable to higher sales volumes and ongoing growth in the Central America business.

Both periods were unfavorably impacted by the continued weak global textile demand environment.

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

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

Both periods were unfavorably impacted by the continued volatile global textile demand environment resulting from tariff uncertainty.

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

Segment Profit for the prior period

Decrease in underlying unit margins

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 decreased productivity related to the consolidation of yarn manufacturing operations.

Change in underlying unit margins and sales mix

Increase 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 productivity, partially offset by higher sales volumes.

Brazil Segment

1 unchanged sentence

For the Three Months Ended

March 30, 2025

March 31, 2024

September 28, 2025

September 29, 2024

Cost of sales

7 unchanged sentences

Net sales for the prior period

Unfavorable foreign currency translation effects

Increase in average selling price and change in sales mix

Change in average selling price and change in sales mix

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 unfavorable foreign currency translation effects from the weakening of the BRL versus the USD, partially offset by higher average selling prices due to increasing raw material costs.

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

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

Segment Profit for the prior period

Unfavorable foreign currency translation effects

Decrease in underlying unit margins

Decrease in sales volumes

Favorable foreign currency translation effects

Segment Profit for the current period

The decrease in Segment Profit for the Brazil Segment from the prior period to the current period was primarily attributable to (i) unfavorable foreign currency translation effects and (ii) lower conversion margins.

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

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

1 unchanged sentence

For the Three Months Ended

March 30, 2025

March 31, 2024

September 28, 2025

September 29, 2024

Cost of sales

9 unchanged sentences

Change in average selling price and sales mix

Unfavorable foreign currency translation effects

Favorable foreign currency translation effects

Net sales for the current period

The decrease in net sales for the Asia Segment from the prior period to the current period was primarily attributable to the changes in sales volumes related to customer-specific programs due to continued weak global demand, particularly for apparel.

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

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

Segment Profit for the prior period

Change in underlying unit margins and sales mix

Decrease in sales volumes

Unfavorable foreign currency translation effects

Segment Profit for the current period

The decrease in Segment Profit for the Asia Segment from the prior period to the current period was primarily attributable to (i) a lower gross margin rate associated with a change in sales mix of REPREVE products and (ii) a decline in sales volumes.

Nine Months Ended March 30, 2025 Compared to Nine Months Ended March 31, 2024

Consolidated Overview

The below tables provide:

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

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

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

For the Nine Months Ended

March 30, 2025

March 31, 2024

Cost of sales

(Benefit) provision for bad debts

Gain on sale of assets

Restructuring costs

Other operating expense, net

Operating loss

Interest expense, net

Equity in loss of unconsolidated affiliates

Loss before income taxes

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 to EBITDA and Adjusted EBITDA were as follows:

For the Nine Months Ended

March 30, 2025

March 31, 2024

Interest expense, net

Provision for income taxes

Depreciation and amortization expense (1)

Transition costs (2)

Gain on sale of assets (3)

Restructuring costs (4)

Adjusted EBITDA

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

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

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

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

(4) In the second quarter of fiscal 2024, UNIFI incurred severance costs of $2,351 in connection with the Profitability Improvement Plan in the U.S.

and a loss of $2,750 related to the dissolution of a nylon joint venture.

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

For the Nine Months Ended March 30, 2025

For the Nine Months Ended March 31, 2024

Transition costs (1)

Gain on sale of assets (2)

Restructuring costs (3)

Adjusted results

Weighted average common shares outstanding

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

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

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

(3) In the second quarter of fiscal 2024, UNIFI incurred severance costs of $2,351 in connection with the Profitability Improvement Plan in the U.S.

and a loss of $2,750 related to the dissolution of a nylon joint venture.

Consolidated net sales for the current nine-month period increased by $8,052, or 1.9%, and consolidated sales volumes increased 4.2%, compared to the prior nine-month period.

Net sales in the current nine-month period were higher primarily due to improved sales volumes in each of the reportable segments, along with favorable pricing in Brazil.

Despite some volume improvements, overall sales remain depressed, particularly in the Americas and Asia Segments as a result of continued weak global demand.

Consolidated weighted average sales prices decreased 2.3% which partially offset the volume increase.

The decrease in sales prices was primarily attributable to sales mix and lower average selling prices in the Asia and Americas Segments, together with unfavorable foreign currency translation effects from the weakening of the BRL versus the USD within our Brazil Segment.

REPREVE ® Fiber products for the current nine-month period comprised 31%, or $132,713, of consolidated net sales, compared to 32%, or $134,940, for the prior nine-month period.

Gross profit for the current nine-month period increased to $9,547 from $5,825 in the prior nine-month period.

Gross profit increased primarily due to (i) increased sales volumes, (ii) variable cost saving initiatives, (iii) improved productivity in certain manufacturing areas, and (iv) higher conversion margins.

However, gross profit continues to be unfavorably impacted by weak manufacturing fixed cost absorption in the Americas Segment, where utilization and productivity remain below historical averages.

Ongoing cost savings measures led to UNIFI announcing the consolidation of yarn manufacturing operations in the Americas Segment with the planned closure of the Madison, North Carolina facility.

UNIFI incurred $1,580 of transition costs during the period, recorded in Cost of sales, related to (i) inventory write-downs of $1,000, and (ii) excess manufacturing costs of $580.

• For the Americas Segment, gross profit increased primarily due to (i) higher sales volumes, (ii) higher conversion margins, and (iii) variable cost management efforts.

• For the Brazil Segment, gross profit increased primarily due to (i) higher selling prices, (ii) higher sales volumes from market share gains, and (iii) higher conversion margins, which were partially offset by an unfavorable foreign currency translation impact.

• For the Asia Segment, gross profit decreased primarily due to lower conversion margins from an unfavorable change in sales mix in a weak demand environment.

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

(Benefit) Provision for Bad Debts

The current nine-month period benefit reflects no material activity, while the prior nine-month period provision reflected an increase for a specifically identified customer balance originating in the U.S.

fiber market.

Gain on Sale of Assets

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

Restructuring Costs

Restructuring costs for the prior nine-month period consisted of (i) a loss of $2,750 for the dissolution of a nylon joint venture and (ii) severance charges of $2,351 in connection with the Profitability Improvement Plan in the U.S.

Other Operating Expense, Net

Other operating expense, net for the current nine-month period and the prior nine-month period include foreign currency transaction losses of $218 and $395, respectively, with no other meaningful activity.

Interest Expense, Net

Interest expense, net increased primarily due to lower interest income in the current nine-month period, associated with lower global cash balances.

Equity in Loss of Unconsolidated Affiliates

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

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

For the Nine Months Ended

March 30, 2025

March 31, 2024

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, audit settlement, regulations, and case law.

Additionally, the impacts of discrete and other rate impacting items are more pronounced when 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 (i) lower losses in the U.S.

and lower foreign earnings in the current nine-month period, as well as (ii) a decrease in valuation allowances and release of interest and penalty reserves for uncertain tax benefits as a result of concluding an IRS audit during the prior nine-month period.

The improvement in net loss was primarily attributable to (i) increased gross profit, (ii) lower bad debt expense, (iii) a gain on sale of assets, and (iv) lower restructuring costs in the current nine-month period compared to the prior nine-month period, partially offset by (a) higher interest expense, net, and (b) higher income tax expense.

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

Adjusted EBITDA and Adjusted EPS increased primarily due to (i) higher gross profit and (ii) lower bad debt expense.

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

For the Nine Months Ended

March 30, 2025

March 31, 2024

Cost of sales

Depreciation expense

Segment Profit (Loss)

Segment net sales as a percentage of

consolidated amounts

Segment Profit (Loss) 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

Increase in sales volumes

Change in average selling price and sales mix

Net sales for the current nine-month period

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

Both periods were unfavorably impacted by the continued weak global textile demand environment.

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

Segment Loss for the prior nine-month period

Change in underlying unit margins and sales mix

Change in sales volumes

Segment Profit for the current nine-month period

The increase in Segment Profit for the Americas Segment from the prior nine-month period to the current nine-month period was primarily attributable to higher margins due to improved variable cost management efforts, partially offset by weak manufacturing fixed cost absorption and decreased productivity related to the consolidation of yarn manufacturing operations.

Ongoing cost savings measures led to UNIFI announcing the consolidation of yarn manufacturing operations in the Americas Segment with the planned closure of the Madison, North Carolina facility.

UNIFI incurred $1,580 of transition costs during the period, recorded in Cost of sales, related to (i) inventory write-downs of $1,000 and (ii) excess manufacturing costs of $580.

Additionally, Segment Profit for the Americas Segment continues to be negatively impacted by a lower proportion of fiber sales volumes which are below historical averages due to depressed demand.

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

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

March 30, 2025

March 31, 2024

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 average selling price and change in sales mix

Increase in sales volumes

Unfavorable foreign currency translation effects

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 (i) higher average selling prices due to increasing raw material costs and (ii) an improvement in sales volumes from market share gains, partially offset by unfavorable foreign currency translation effects from the weakening of the BRL versus the USD.

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

Segment Profit for the prior nine-month period

Increase in underlying unit margins

Increase in sales volumes

Unfavorable foreign currency translation effects

Segment Profit for the current nine-month period

The increase in Segment Profit for the Brazil Segment from the prior nine-month period to the current nine-month period was primarily attributable to (i) higher conversion margins and (ii) an increase in sales volumes discussed above, partially offset by unfavorable foreign currency translation effects.

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

For the Nine Months Ended

March 30, 2025

March 31, 2024

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

Change in average selling price and sales mix

Increase in sales volumes

Favorable foreign currency translation effects

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 a change in sales mix of REPREVE products, partially offset by (i) an overall increase in sales volumes despite continued weak global demand, particularly for apparel and (ii) favorable foreign currency translation effects due to the strengthening of the RMB versus the USD.

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

Segment Profit for the prior nine-month period

Change in underlying unit margins and sales mix

Increase in sales volumes

Favorable foreign currency translation effects

Segment Profit for the current nine-month period

The decrease in Segment Profit for the Asia Segment from the prior nine-month period to the current nine-month period was attributable to a decline in gross margin rate associated with a change in sales mix of REPREVE products.

Segment Profit for the current period

The decrease in Segment Profit for the Asia Segment from the prior period to the current period was primarily attributable to a decline in gross margin associated with (i) lower sales volumes discussed above and (ii) a change in 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 the 2024 Facility.

For the current nine-month period, cash used by operations was $19,994 and, at March 30, 2025, availability under the ABL Revolver and 2024 Facility was $45,114 and $597, respectively.

As of March 30, 2025, all of UNIFI’s $140,002 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 used by operations was $8,920 and, at September 28, 2025, availability under the ABL Revolver and 2024 Facility was $36,233 and $586, respectively.

As of September 28, 2025, all of UNIFI’s $120,345 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 March 30, 2025 for domestic operations compared to foreign operations:

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

Cash and cash equivalents

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UNIFI’s primary cash requirements, in addition to normal course operating activities (e.g., working capital and payroll), primarily include (i) capital expenditures that generally have commitments of up to 12 months, (ii) contractual obligations that support normal course ongoing operations and production, (iii) operating leases and finance leases, (iv) debt service, and (v) share repurchases.

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 its Madison, North Carolina facility, as well as certain machinery and equipment located thereon, for 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.

Liquidity Considerations

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

We 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.

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

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

1 unchanged sentence

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

The following outlines the attributes relating to our credit facilities as of March 30, 2025:

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

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

• availability under the 2024 Facility was $597 as of March 30, 2025;

• availability under the 2024 Facility was $586 as of September 28, 2025;

• availability exceeding the Trigger Level (as defined in the 2022 Credit Agreement) under the ABL Revolver was $19,733;

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UNIFI has met its historical liquidity requirements for working capital, capital expenditures, debt service requirements, and other operating needs from its cash flows from operations and available borrowings.

UNIFI believes that its existing cash balances, cash provided by operating activities, and credit facilities will enable UNIFI to meet its foreseeable liquidity requirements.

UNIFI believes that its existing cash balances, expected cash provided by operating activities, and credit facilities will enable UNIFI to meet its foreseeable liquidity requirements.

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.

2 unchanged sentences

The reconciliations for Net Debt are as follows:

March 30, 2025

September 28, 2025

June 29, 2025

4 unchanged sentences

cash and cash equivalents

The increase in Net Debt primarily reflects the use of operating cash during fiscal 2025 and capital expenditures during the current nine-month period.

The increase was partially offset by the application of proceeds to the ABL Revolver for the warehouse sale in October 2024.

The increase in Net Debt primarily reflects the use of operating cash and capital expenditures during the current period.

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

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

March 30, 2025

September 28, 2025

June 29, 2025

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Adjusted Working Capital

Adjusted Working Capital decreased $2,222 from June 30, 2024 to March 30, 2025.

The decrease in Adjusted Working Capital was primarily attributable to (i) a decrease in other current assets following an asset sale and (ii) an increase in employee compensation accruals within other current liabilities, which was partially offset by an increase in receivables, net primarily due to an increase in sales and the timing of cash receipts.

Adjusted Working Capital increased $8,106 from June 29, 2025 to September 28, 2025.

The increase in Adjusted Working Capital was primarily attributable to the reductions in (i) accounts payable primarily due to lower production activity and variable cost savings initiatives and (ii) other current liabilities due primarily to the payment of incentive compensation earned in fiscal 2025 together with increases in (a) inventories due to higher units on hand and (b) receivables, net due to the timing of cash receipts.

These were partially offset by a decrease in other current assets primarily prepaid expenses and vendor deposits.

Operating Cash Flows

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

For the Nine Months Ended

March 30, 2025

March 31, 2024

Equity in loss of unconsolidated affiliates

Distribution received from unconsolidated affiliate

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

For the Three Months Ended

September 28, 2025

September 29, 2024

Equity in earnings of unconsolidated affiliate

Depreciation and amortization expense

Non-cash compensation expense

Gain on sale of assets

Deferred income taxes

2 unchanged sentences

Other changes

Net cash (used) provided by operating activities

The decrease in operating cash flows was due to the relative changes in working capital including receivables, net, inventories, and accounts payable and other current liabilities, partially offset by an improvement in earnings in the current nine-month period compared to the prior nine-month period.

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

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

For the prior nine-month period, the decrease in inventories was primarily due to lower weighted average costs.

Net cash used by operating activities

The change in operating cash flows was due to the diligent reduction of inventory balances, partially offset by reductions in accounts payable and other current liabilities together with lower earnings from gross profit in current period compared to the prior period.

For the current period, the increases in accounts receivable was largely driven by the timing of cash receipts.

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

The increase in inventories was not meaningful.

Other changes comprise mostly jurisdictional tax liabilities.

For the prior period, the increase in inventories was primarily due to higher on hand units.

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

The increase in accounts payable and other current liabilities was largely due to the liabilities recorded for severance and employee compensation.

The increase in accounts payable and other current liabilities was not meaningful.

Investing Cash Flows

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

In March 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 by 18 months.

In December 2023, UNIFI extended this delay by an additional 12 months at no cost to the Company.

Financing Cash Flows

5 unchanged sentences

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.

There have been no material changes in the scheduled maturities of UNIFI’s contractual obligations as disclosed under the heading “Contractual Obligations” in “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2024 Form 10-K except for the $22,000 of borrowings on the 2024 Facility, which matures October 28, 2027.

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

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

Off-Balance Sheet Arrangements

4 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis