{"url_path":"/sec/ufi/10-q/2026/item-2","section_key":"item-2","section_title":"Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-02-04","source_url":"https://www.sec.gov/Archives/edgar/data/100726/0001193125-26-037524-index.html","accession_number":"0001193125-26-037524","cik":"0000100726","ticker":"UFI","issuer_name":"UNIFI INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/100726/0001193125-26-037524-index.html","primary_entity_key":"0000100726","primary_entity_name":"UNIFI INC"},"word_count":8873,"has_tables":true,"body_markdown":"Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations\n\nThe following is management’s discussion and analysis of certain significant factors that have affected UNIFI’s operations, along with material changes in financial condition, during the periods included in the accompanying condensed consolidated financial statements. A reference to a “note” in this section refers to the accompanying notes to condensed consolidated financial statements. A reference to the “current period” refers to the three-month period ended December 28, 2025, while a reference to the “prior period” refers to the three-month period ended December 29, 2024. A reference to the “current six-month period” refers to the six-month period ended December 28, 2025, while a reference to the “prior six-month period” refers to the six-month period ended December 29, 2024. Such references may be accompanied by certain phrases for added clarity. The current period and the prior period each consisted of 13 weeks. The current six-month period and the prior six-month period each consisted of 26 weeks.\n\nOur discussions in this Item 2 focus on our results during, or as of, the three months ended December 28, 2025 and December 29, 2024, and, to the extent applicable, any material changes from the information discussed in the 2025 Form 10-K or other important intervening developments or information. 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.\n\nDiscussion of foreign currency translation is primarily associated with changes in the Brazilian Real (“BRL”) and changes in the Chinese Renminbi (“RMB”) versus the U.S. Dollar (“USD”). Weighted average exchange rates were as follows:\n\n \n\n \n\nFor the Three Months Ended\n\n \n\n \n\nFor the Six Months Ended\n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nDecember 29, 2024\n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nDecember 29, 2024\n\n \n\nBRL to USD\n\n \n\n5.39\n\n \n\n \n\n \n\n5.80\n\n \n\n \n\n \n\n5.42\n\n \n\n \n\n \n\n5.66\n\n \n\nRMB to USD\n\n \n\n7.09\n\n \n\n \n\n \n\n7.19\n\n \n\n \n\n \n\n7.12\n\n \n\n \n\n \n\n7.18\n\n \n\nAll amounts, except per share amounts, are presented in thousands (000s), except as otherwise noted.\n\nOverview and Significant General Matters\n\nUNIFI focuses on delivering products and solutions to direct customers and brand partners throughout the world, leveraging our internal manufacturing capabilities and an enhanced global supply chain that delivers a diverse range of synthetic and recycled fibers and polymers. Our strategic initiatives include (i) leveraging our competitive advantages to grow market share in each of the major geographies we serve, (ii) expanding our presence in non-apparel markets with additional REPREVE® products, (iii) advancing the development and commercialization of innovative and sustainable solutions, and (iv) increasing brand awareness for REPREVE®. We have increased our focus on sales opportunities beyond traditional apparel customers and continue to drive innovation throughout our portfolio to further diversify the business and enhance gross profit. We believe our strategic initiatives will increase revenue and profitability and generate improved cash flows from operations.\n\nCurrent Economic Environment\n\nBeyond 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. Such lower tariff countries or regions may be situated outside of UNIFI’s existing global supply chain. If UNIFI is unable to move production based on these shifts in regional demand, we may lose sales and experience an adverse effect on our financial condition, results of operations, or cash flows. 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.\n\nUNIFI 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 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.\n\nSpecific to other ongoing geopolitical tensions, we recognize the disruption to global markets and supply chains caused by the conflicts in Ukraine and the Middle East, however we have not been directly impacted. Additionally, we are closely monitoring developments in Latin America and the Caribbean following recent U.S. military action in Venezuela. It is too early to determine how this situation may evolve or what implications it could have for UNIFI, but no direct impacts have occurred in fiscal 2026. We will continue to assess developments and react as appropriate. Indirectly, we recognize that additional or prolonged impacts to the petroleum or other global markets could cause further inflationary pressures to our global raw material costs or additional unforeseen adverse impacts.\n\nInput Costs and Global Production Volatility\n\nDespite lower input and freight costs and a marginally more stable labor pool recently, global demand volatility and uncertainty continued into fiscal 2026. The threat of an economic slowdown and global tensions continue to create uncertainty. 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.\n\n \n\n14\n\n \n\nFiscal 2026 Profit Improvement Plan\n\nDuring October 2025, UNIFI implemented additional cost-saving initiatives that include reducing variable manufacturing costs across labor, spend, and support functions, while also eliminating salaried positions in the U.S. (\"Fiscal 2026 Profit Improvement Plan\"). Accordingly, UNIFI recorded employee separation costs of $1,093 in connection with the Fiscal 2026 Profit Improvement Plan and a $308 gain from disposals of assets from the consolidation of Americas yarn manufacturing operations.\n\nKey Performance Indicators and Non-GAAP Financial Measures\n\nUNIFI continuously reviews performance indicators to measure its success. These performance indicators form the basis of management’s discussion and analysis included below:\n\n•\nsales volume and revenue for UNIFI and for each reportable segment;\n\n•\ngross (loss) profit and gross margin for UNIFI and for each reportable segment;\n\n•\nnet loss and diluted EPS;\n\n•\nSegment (Loss) Profit, which equals segment gross (loss) profit plus segment depreciation expense;\n\n•\nunit conversion margin, which represents unit net sales price less unit raw material costs, for UNIFI and for each reportable segment;\n\n•\nworking capital, which represents current assets less current liabilities;\n\n•\nEarnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), which represents net loss before net interest expense, income tax expense, and depreciation and amortization expense;\n\n•\nAdjusted EBITDA, which represents EBITDA adjusted to exclude, from time to time, certain other adjustments necessary to understand and compare the underlying results of UNIFI;\n\n•\nAdjusted Net Loss, which represents net loss calculated under GAAP, adjusted to exclude certain amounts which management believes do not reflect the ongoing operations and performance of UNIFI and/or for which exclusion may be necessary to understand and compare the underlying results of UNIFI;\n\n•\nAdjusted EPS, which represents Adjusted Net Loss divided by UNIFI’s diluted weighted average common shares outstanding;\n\n•\nAdjusted Working Capital, which equals receivables plus inventories and other current assets, less accounts payable and other current liabilities; and\n\n•\nNet Debt, which represents debt principal less cash and cash equivalents.\n\nEBITDA, Adjusted EBITDA, Adjusted Net Loss, Adjusted EPS, Adjusted Working Capital, and Net Debt (collectively, the “non-GAAP financial measures”) are not determined in accordance with GAAP and should not be considered a substitute for performance measures determined in accordance with GAAP. The calculations of the non-GAAP financial measures are subjective, based on management’s belief as to which items should be included or excluded in order to provide the most reasonable and comparable view of the underlying operating performance of the business. We may, from time to time, modify the amounts used to determine our non-GAAP financial measures. When applicable, management’s discussion and analysis includes specific consideration for items that comprise the reconciliations of its non-GAAP financial measures. We believe that these non-GAAP financial measures better reflect UNIFI’s underlying operations and performance and that their use, as operating performance measures, provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets, among otherwise comparable companies.\n\nManagement uses Adjusted EBITDA (i) as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis, as it removes the impact of items (a) directly related to our asset base (primarily depreciation and amortization) and/or (b) that we would not expect to occur as a part of our normal business on a regular basis; (ii) for planning purposes, including the preparation of our annual operating budget; (iii) as a valuation measure for evaluating our operating performance and our capacity to incur and service debt, fund capital expenditures, and expand our business; and (iv) as one measure in determining the value of other acquisitions and dispositions. Adjusted EBITDA is a key performance metric utilized in the determination of variable compensation. We also believe Adjusted EBITDA is an appropriate supplemental measure of debt service capacity because it serves as a high-level proxy for cash generated from operations and is relevant to our fixed charge coverage ratio.\n\nManagement uses Adjusted Net Loss and Adjusted EPS (i) as measurements of net operating performance because they assist us in comparing such performance on a consistent basis, as they remove the impact of (a) items that we would not expect to occur as a part of our normal business on a regular basis and (b) components of the provision for income taxes that we would not expect to occur as a part of our underlying taxable operations; (ii) for planning purposes, including the preparation of our annual operating budget; and (iii) as measures in determining the value of other acquisitions and dispositions.\n\nManagement uses Adjusted Working Capital as an indicator of UNIFI’s production efficiency and ability to manage inventories and receivables.\n\nManagement uses Net Debt as a liquidity and leverage metric to determine how much debt would remain if all cash and cash equivalents were used to pay down debt principal.\n\n \n\n15\n\n \n\nReview of Results of Operations\n\nThree Months Ended December 28, 2025 Compared to Three Months Ended December 29, 2024\n\nConsolidated Overview\n\nThe below tables provide:\n\n•\nthe components of net loss and the percentage increase or decrease over the prior period amounts, and\n\n•\na reconciliation from net loss to EBITDA and Adjusted EBITDA.\n\nFollowing the tables is a discussion and analysis of the significant components of net loss.\n\nNet Loss\n\n \n\n \n\n \n\nFor the Three Months Ended\n\n \n\n \n\n \n\n \n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nDecember 29, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n%\nChange\n\n \n\nNet sales\n\n \n\n$\n\n121,368\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n$\n\n138,880\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n(12.6\n\n)\n\nCost of sales\n\n \n\n \n\n117,757\n\n \n\n \n\n \n\n97.0\n\n \n\n \n\n \n\n138,346\n\n \n\n \n\n \n\n99.6\n\n \n\n \n\n \n\n(14.9\n\n)\n\nGross profit\n\n \n\n \n\n3,611\n\n \n\n \n\n \n\n3.0\n\n \n\n \n\n \n\n534\n\n \n\n \n\n \n\n0.4\n\n \n\n \n\nnm\n\n \n\nSG&A\n\n \n\n \n\n9,713\n\n \n\n \n\n \n\n8.0\n\n \n\n \n\n \n\n12,921\n\n \n\n \n\n \n\n9.3\n\n \n\n \n\n \n\n(24.8\n\n)\n\nProvision (benefit) for bad debts\n\n \n\n \n\n119\n\n \n\n \n\n \n\n0.1\n\n \n\n \n\n \n\n(96\n\n)\n\n \n\n \n\n(0.1\n\n)\n\n \n\nnm\n\n \n\nRestructuring costs, net\n\n \n\n \n\n785\n\n \n\n \n\n \n\n0.7\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\nnm\n\n \n\nGain on sale of assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(4,296\n\n)\n\n \n\n \n\n(3.1\n\n)\n\n \n\nnm\n\n \n\nOther operating expense (income), net\n\n \n\n \n\n273\n\n \n\n \n\n \n\n0.2\n\n \n\n \n\n \n\n(431\n\n)\n\n \n\n \n\n(0.3\n\n)\n\n \n\n \n\n(163.3\n\n)\n\nOperating loss\n\n \n\n \n\n(7,279\n\n)\n\n \n\n \n\n(6.0\n\n)\n\n \n\n \n\n(7,564\n\n)\n\n \n\n \n\n(5.4\n\n)\n\n \n\n \n\n(3.8\n\n)\n\nInterest expense, net\n\n \n\n \n\n1,329\n\n \n\n \n\n \n\n1.1\n\n \n\n \n\n \n\n2,221\n\n \n\n \n\n \n\n1.6\n\n \n\n \n\n \n\n(40.2\n\n)\n\nEquity in loss of unconsolidated affiliate\n\n \n\n \n\n146\n\n \n\n \n\n \n\n0.1\n\n \n\n \n\n \n\n262\n\n \n\n \n\n \n\n0.2\n\n \n\n \n\n \n\n(44.3\n\n)\n\nLoss before income taxes\n\n \n\n \n\n(8,754\n\n)\n\n \n\n \n\n(7.2\n\n)\n\n \n\n \n\n(10,047\n\n)\n\n \n\n \n\n(7.2\n\n)\n\n \n\n \n\n(12.9\n\n)\n\nProvision for income taxes\n\n \n\n \n\n952\n\n \n\n \n\n \n\n0.8\n\n \n\n \n\n \n\n1,345\n\n \n\n \n\n \n\n1.0\n\n \n\n \n\n \n\n(29.2\n\n)\n\nNet loss\n\n \n\n$\n\n(9,706\n\n)\n\n \n\n \n\n(8.0\n\n)\n\n \n\n$\n\n(11,392\n\n)\n\n \n\n \n\n(8.2\n\n)\n\n \n\n \n\n(14.8\n\n)\n\n \n\nnm = not meaningful\n\nEBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)\n\nThe reconciliations of the amounts reported under GAAP for Net loss to EBITDA and Adjusted EBITDA were as follows:\n\n \n\n \n\nFor the Three Months Ended\n\n \n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nDecember 29, 2024\n\n \n\nNet loss\n\n \n\n$\n\n(9,706\n\n)\n\n \n\n$\n\n(11,392\n\n)\n\nInterest expense, net\n\n \n\n \n\n1,329\n\n \n\n \n\n \n\n2,221\n\n \n\nProvision for income taxes\n\n \n\n \n\n952\n\n \n\n \n\n \n\n1,345\n\n \n\nDepreciation and amortization expense (1)\n\n \n\n \n\n5,891\n\n \n\n \n\n \n\n6,283\n\n \n\nEBITDA\n\n \n\n \n\n(1,534\n\n)\n\n \n\n \n\n(1,543\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nRestructuring costs, net (2)\n\n \n\n \n\n785\n\n \n\n \n\n \n\n—\n\n \n\nGain on sale of warehouse (3)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(4,296\n\n)\n\nAdjusted EBITDA\n\n \n\n$\n\n(749\n\n)\n\n \n\n$\n\n(5,839\n\n)\n\n \n\n(1)\nWithin 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.\n\n(2)\nIn the second quarter of fiscal 2026, UNIFI recorded employee separation costs of $1,093 in connection with the Fiscal 2026 Profit Improvement Plan and a $308 gain from disposals of assets from the consolidation of Americas yarn manufacturing operations.\n\n(3)\nIn the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina.\n\n \n\n16\n\n \n\nAdjusted Net Loss and Adjusted EPS (Non-GAAP Financial Measures)\n\nThe tables below set forth reconciliations of (i) Loss before income taxes (“Pre-tax Loss”), (ii) Provision for income taxes (“Tax Impact”), (iii) Net Loss to Adjusted Net Loss, and (iv) Diluted EPS to Adjusted EPS.\n\n \n\n \n\nFor the Three Months Ended December 28, 2025\n\n \n\n \n\nFor the Three Months Ended December 29, 2024\n\n \n\n \n\n \n\nPre-tax Loss\n\n \n\n \n\nTax Impact\n\n \n\n \n\nNet Loss\n\n \n\n \n\nDiluted EPS\n\n \n\n \n\nPre-tax Loss\n\n \n\n \n\nTax Impact\n\n \n\n \n\nNet Loss\n\n \n\n \n\nDiluted EPS\n\n \n\nGAAP results\n\n \n\n$\n\n(8,754\n\n)\n\n \n\n$\n\n(952\n\n)\n\n \n\n$\n\n(9,706\n\n)\n\n \n\n$\n\n(0.53\n\n)\n\n \n\n$\n\n(10,047\n\n)\n\n \n\n$\n\n(1,345\n\n)\n\n \n\n$\n\n(11,392\n\n)\n\n \n\n$\n\n(0.62\n\n)\n\nRestructuring costs, net (1)\n\n \n\n \n\n785\n\n \n\n \n\n \n\n(11\n\n)\n\n \n\n \n\n774\n\n \n\n \n\n \n\n0.05\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nGain on sale of warehouse (2)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(4,296\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(4,296\n\n)\n\n \n\n \n\n(0.24\n\n)\n\nAdjusted results\n\n \n\n$\n\n(7,969\n\n)\n\n \n\n$\n\n(963\n\n)\n\n \n\n$\n\n(8,932\n\n)\n\n \n\n$\n\n(0.48\n\n)\n\n \n\n$\n\n(14,343\n\n)\n\n \n\n$\n\n(1,345\n\n)\n\n \n\n$\n\n(15,688\n\n)\n\n \n\n$\n\n(0.86\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nWeighted average common shares outstanding\n\n \n\n \n\n \n\n18,421\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n18,288\n\n \n\n \n\n \n\n(1)\nIn the second quarter of fiscal 2026, UNIFI recorded employee separation costs of $1,093 in connection with the Fiscal 2026 Profit Improvement Plan and a $308 gain from disposals of assets from the consolidation of Americas yarn manufacturing operations. The associated tax impact was estimated to be $11 related to employee separation costs in the Asia Segment.\n\n(2)\nIn 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.\n\nNet Sales\n\nConsolidated net sales for the current period decreased by $17,512, or 12.6%, and consolidated sales volumes decreased 9.8% as customer inventories being reduced led to lower demand for UNIFI, compared to the prior period. Net sales in the current period were lower primarily due to (i) lower sales volumes in the Asia Segment, (ii) lower-priced sales mix in the Americas Segment, partially offset by improved sales volumes, and (iii) lower sales volumes and prices in the Brazil Segment. Overall sales remain depressed, particularly in the Americas and Asia Segments as a result of continued volatility from uncertainty over global trade policies and competition from lower-priced products.\n\nConsolidated weighted average sales prices decreased 2.8%. The decrease in sales prices was primarily attributable to sales mix and lower average selling prices in the Americas and Brazil Segments.\n\nREPREVE® Fiber products for the current period comprised 28%, or $34,264, of consolidated net sales, compared to 31%, or $43,272, for the prior period.\n\nGross Profit\n\nGross profit for the current period increased to $3,611 from $534 in the prior period. Gross profit increased primarily due to (i) variable cost-saving initiatives and (ii) improved utilization in certain manufacturing areas, partially offset by (a) lower sales volumes and (b) production volatility and limited demand visibility due to the tariff uncertainty in the Americas Segment. Gross profit continues to be unfavorably impacted by demand volatility in the Americas Segment and import pricing pressures in the Brazil Segment.\n\n•\nFor the Americas Segment, gross profit increased primarily due to variable cost-saving initiatives, partially offset by (a) demand and production volatility stemming from tariff uncertainty and inventory management efforts from customers and (b) a weaker sales mix.\n\n•\nFor the Brazil Segment, gross profit decreased primarily due to (i) lower sales volumes and (ii) competitive pricing pressures.\n\n•\nFor the Asia Segment, gross profit decreased primarily due to lower sales volumes, partially offset by higher-priced sales mix.\n\nSG&A\n\nSG&A decreased from the prior period to the current period, primarily due to the actions taken as part of the Fiscal 2026 Profit Improvement Plan.\n\nProvision (Benefit) for Bad Debts\n\nThe current period and prior period provision reflect no material activity.\n\nRestructuring Costs, Net\n\nDuring October 2025, UNIFI implemented additional cost-saving 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. During the three-months ended December 28, 2025, UNIFI incurred employee separation costs of $1,093 related to the Fiscal 2026 Profit Improvement Plan. Additionally, UNIFI recognized a gain of $308 during the current period from disposals of assets in conjunction with the consolidation of Americas yarn manufacturing operations.\n\nGain on Sale of Assets\n\nIn 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.\n\n17\n\n \n\nOther Operating Expense (Income), Net\n\nOther operating expense, net for the current period and the prior period included foreign currency transaction losses (gains) of $325 and $(221), respectively, with no other meaningful activity.\n\nInterest Expense, Net\n\nInterest expense, net decreased in connection with lower average debt principal and lower average interest rates.\n\nEquity in Loss of Unconsolidated Affiliate\n\nThere was no material activity for the current period or the prior period.\n\nIncome Taxes\n\nProvision for income taxes and the effective tax rate were as follows:\n\n \n\n \n\nFor the Three Months Ended\n\n \n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nDecember 29, 2024\n\n \n\nProvision for income taxes\n\n \n\n$\n\n952\n\n \n\n \n\n$\n\n1,345\n\n \n\nEffective tax rate\n\n \n\n \n\n(10.9\n\n)%\n\n \n\n \n\n(13.4\n\n)%\n\n \n\nThe effective tax rate is subject to variation due to a number of factors, including variability in pre-tax book income; the mix of income by jurisdiction; changes in deferred tax valuation allowances; and changes in statutes, audit settlement, regulations, and case law. Additionally, the impacts of discrete and other rate impacting items are more pronounced when loss before income taxes is lower.\n\nThe increase in the effective tax rate from the prior period to the current period is primarily attributable to lower foreign earnings in the current period.\n\nNet Loss\n\nThe improvement in net loss was primarily attributable to (i) increased gross profit, (ii) lower SG&A expenses, (iii) lower interest expense, net and (iv) lower income tax expense, partially offset by (a) restructuring costs, net incurred in the current period and (b) a gain on sale of assets in the prior period.\n\n \n\nAdjusted EBITDA and Adjusted EPS (Non-GAAP Financial Measures)\n\nAdjusted EBITDA and Adjusted EPS increased primarily due to higher gross profit and lower SG&A expenses.\n\nSegment Overview\n\nFollowing is a discussion and analysis of the revenue and profitability performance of UNIFI’s reportable segments for the current period.\n\nAmericas Segment\n\nThe components of Segment Profit (Loss), each component as a percentage of net sales, and the percentage increase or decrease over the prior period amounts for the Americas Segment, were as follows:\n\n \n\n \n\nFor the Three Months Ended\n\n \n\n \n\n \n\n \n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nDecember 29, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n%\nChange\n\n \n\nNet sales\n\n \n\n$\n\n77,233\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n$\n\n83,095\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n(7.1\n\n)\n\nCost of sales\n\n \n\n \n\n77,632\n\n \n\n \n\n \n\n100.5\n\n \n\n \n\n \n\n89,635\n\n \n\n \n\n \n\n107.9\n\n \n\n \n\n \n\n(13.4\n\n)\n\nGross loss\n\n \n\n \n\n(399\n\n)\n\n \n\n \n\n(0.5\n\n)\n\n \n\n \n\n(6,540\n\n)\n\n \n\n \n\n(7.9\n\n)\n\n \n\n \n\n(93.9\n\n)\n\nDepreciation expense\n\n \n\n \n\n4,945\n\n \n\n \n\n \n\n6.4\n\n \n\n \n\n \n\n5,334\n\n \n\n \n\n \n\n6.4\n\n \n\n \n\n \n\n(7.3\n\n)\n\nSegment Profit (Loss)\n\n \n\n$\n\n4,546\n\n \n\n \n\n \n\n5.9\n\n \n\n \n\n$\n\n(1,206\n\n)\n\n \n\n \n\n(1.5\n\n)\n\n \n\nnm\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSegment net sales as a percentage of\n   consolidated amounts\n\n \n\n \n\n63.6\n\n%\n\n \n\n \n\n \n\n \n\n \n\n59.8\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\nSegment Profit (Loss) as a percentage of\n   consolidated amounts\n\n \n\n \n\n49.0\n\n%\n\n \n\n \n\n \n\n \n\n \n\n(18.6\n\n)%\n\n \n\n \n\n \n\n \n\n \n\n \n\nnm = not meaningful\n\n18\n\n \n\nThe change in net sales for the Americas Segment was as follows:\n\nNet sales for the prior period\n\n \n\n$\n\n83,095\n\n \n\nChange in average selling price and sales mix\n\n \n\n \n\n(9,543\n\n)\n\nIncrease in sales volumes\n\n \n\n \n\n3,681\n\n \n\nNet sales for the current period\n\n \n\n$\n\n77,233\n\n \n\nThe decrease in net sales for the Americas Segment from the prior period to the current period was primarily attributable to lower fiber sales volumes and higher Flake sales volumes, driving a decrease in average selling price.\n\nThe change in Segment (Loss) Profit for the Americas Segment was as follows:\n\nSegment Loss for the prior period\n\n \n\n$\n\n(1,206\n\n)\n\nIncrease in underlying unit margins\n\n \n\n \n\n5,752\n\n \n\nSegment Profit for the current period\n\n \n\n$\n\n4,546\n\n \n\nThe increase in Segment Profit for the Americas Segment from the prior period to the current period was primarily attributable to cost-saving initiatives and productivity improvements, including reductions in manufacturing costs from the consolidation of Americas yarn manufacturing operations and the Fiscal 2026 Profit Improvement Plan.\n\nBrazil Segment\n\nThe components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior period amounts for the Brazil Segment, were as follows:\n\n \n\n \n\nFor the Three Months Ended\n\n \n\n \n\n \n\n \n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nDecember 29, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n%\nChange\n\n \n\nNet sales\n\n \n\n$\n\n23,328\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n$\n\n27,482\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n(15.1\n\n)\n\nCost of sales\n\n \n\n \n\n22,272\n\n \n\n \n\n \n\n95.5\n\n \n\n \n\n \n\n23,696\n\n \n\n \n\n \n\n86.2\n\n \n\n \n\n \n\n(6.0\n\n)\n\nGross profit\n\n \n\n \n\n1,056\n\n \n\n \n\n \n\n4.5\n\n \n\n \n\n \n\n3,786\n\n \n\n \n\n \n\n13.8\n\n \n\n \n\n \n\n(72.1\n\n)\n\nDepreciation expense\n\n \n\n \n\n700\n\n \n\n \n\n \n\n3.0\n\n \n\n \n\n \n\n602\n\n \n\n \n\n \n\n2.2\n\n \n\n \n\n \n\n16.3\n\n \n\nSegment Profit\n\n \n\n$\n\n1,756\n\n \n\n \n\n \n\n7.5\n\n \n\n \n\n$\n\n4,388\n\n \n\n \n\n \n\n16.0\n\n \n\n \n\n \n\n(60.0\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSegment net sales as a percentage of\n   consolidated amounts\n\n \n\n \n\n19.2\n\n%\n\n \n\n \n\n \n\n \n\n \n\n19.8\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\nSegment Profit as a percentage of\n   consolidated amounts\n\n \n\n \n\n18.9\n\n%\n\n \n\n \n\n \n\n \n\n \n\n67.7\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\nThe change in net sales for the Brazil Segment was as follows:\n\nNet sales for the prior period\n\n \n\n$\n\n27,482\n\n \n\nDecrease in average selling price and change in sales mix\n\n \n\n \n\n(3,578\n\n)\n\nDecrease in sales volumes\n\n \n\n \n\n(2,685\n\n)\n\nFavorable foreign currency translation effects\n\n \n\n \n\n2,109\n\n \n\nNet sales for the current period\n\n \n\n$\n\n23,328\n\n \n\nThe decrease in net sales for the Brazil Segment from the prior period to the current period was primarily attributable to (i) lower selling prices associated with competitive pricing pressures and (ii) lower sales volumes due to market conditions, partially offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD.\n\nThe change in Segment Profit for the Brazil Segment was as follows:\n\nSegment Profit for the prior period\n\n \n\n$\n\n4,388\n\n \n\nDecrease in underlying unit margins\n\n \n\n \n\n(2,523\n\n)\n\nDecrease in sales volumes\n\n \n\n \n\n(427\n\n)\n\nFavorable foreign currency translation effects\n\n \n\n \n\n318\n\n \n\nSegment Profit for the current period\n\n \n\n$\n\n1,756\n\n \n\nThe decrease in Segment Profit for the Brazil Segment from the prior period to the current period was primarily attributable to (i) lower conversion margins primarily due to sales mix and pricing pressures and (ii) a decrease in sales volumes discussed above, partially offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD. We continue to prioritize innovation and differentiation to improve our portfolio and competitive position in Brazil.\n\n19\n\n \n\nAsia Segment\n\nThe components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior period amounts for the Asia Segment, were as follows:\n\n \n\n \n\nFor the Three Months Ended\n\n \n\n \n\n \n\n \n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nDecember 29, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n%\nChange\n\n \n\nNet sales\n\n \n\n$\n\n20,807\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n$\n\n28,303\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n(26.5\n\n)\n\nCost of sales\n\n \n\n \n\n17,853\n\n \n\n \n\n \n\n85.8\n\n \n\n \n\n \n\n25,015\n\n \n\n \n\n \n\n88.3\n\n \n\n \n\n \n\n(28.6\n\n)\n\nGross profit\n\n \n\n \n\n2,954\n\n \n\n \n\n \n\n14.2\n\n \n\n \n\n \n\n3,288\n\n \n\n \n\n \n\n11.7\n\n \n\n \n\n \n\n(10.2\n\n)\n\nDepreciation expense\n\n \n\n \n\n13\n\n \n\n \n\n \n\n0.1\n\n \n\n \n\n \n\n14\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(7.1\n\n)\n\nSegment Profit\n\n \n\n$\n\n2,967\n\n \n\n \n\n \n\n14.3\n\n \n\n \n\n$\n\n3,302\n\n \n\n \n\n \n\n11.7\n\n \n\n \n\n \n\n(10.1\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSegment net sales as a percentage of\n   consolidated amounts\n\n \n\n \n\n17.1\n\n%\n\n \n\n \n\n \n\n \n\n \n\n20.4\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\nSegment Profit as a percentage of\n   consolidated amounts\n\n \n\n \n\n32.0\n\n%\n\n \n\n \n\n \n\n \n\n \n\n50.9\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\nThe change in net sales for the Asia Segment was as follows:\n\nNet sales for the prior period\n\n \n\n$\n\n28,303\n\n \n\nDecrease in sales volumes\n\n \n\n \n\n(8,966\n\n)\n\nChange in average selling price and sales mix\n\n \n\n \n\n1,068\n\n \n\nFavorable foreign currency translation effects\n\n \n\n \n\n402\n\n \n\nNet sales for the current period\n\n \n\n$\n\n20,807\n\n \n\nThe decrease in net sales for the Asia Segment from the prior period to current period was primarily attributable to an overall decrease in sales volumes due to competitive pricing pressures and the continued volatility introduced by recent tariffs, partially offset by a change in sales mix of REPREVE products.\n\nThe change in Segment Profit for the Asia Segment was as follows:\n\nSegment Profit for the prior period\n\n \n\n$\n\n3,302\n\n \n\nDecrease in sales volumes\n\n \n\n \n\n(1,049\n\n)\n\nChange in underlying unit margins and sales mix\n\n \n\n \n\n659\n\n \n\nFavorable foreign currency translation effects\n\n \n\n \n\n55\n\n \n\nSegment Profit for the current period\n\n \n\n$\n\n2,967\n\n \n\nThe decrease in Segment Profit for the Asia Segment from the prior period to the current period was primarily attributable to lower sales volumes discussed above, partially offset by a change in sales mix of REPREVE products.\n\n \n\n20\n\n \n\nSix Months Ended December 28, 2025 Compared to Six Months Ended December 29, 2024\n\nConsolidated Overview\n\nThe below tables provide:\n\n•\nthe components of net loss and the percentage increase or decrease over the prior six-month period amounts, and\n\n•\na reconciliation from net loss to EBITDA and Adjusted EBITDA.\n\nFollowing the tables is a discussion and analysis of the significant components of net loss.\n\nNet Loss\n\n \n\n \n\nFor the Six Months Ended\n\n \n\n \n\n \n\n \n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nDecember 29, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n%\nChange\n\n \n\nNet sales\n\n \n\n$\n\n257,042\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n$\n\n286,252\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n(10.2\n\n)\n\nCost of sales\n\n \n\n \n\n250,044\n\n \n\n \n\n \n\n97.3\n\n \n\n \n\n \n\n276,260\n\n \n\n \n\n \n\n96.5\n\n \n\n \n\n \n\n(9.5\n\n)\n\nGross profit\n\n \n\n \n\n6,998\n\n \n\n \n\n \n\n2.7\n\n \n\n \n\n \n\n9,992\n\n \n\n \n\n \n\n3.5\n\n \n\n \n\n \n\n(30.0\n\n)\n\nSG&A\n\n \n\n \n\n21,661\n\n \n\n \n\n \n\n8.4\n\n \n\n \n\n \n\n24,763\n\n \n\n \n\n \n\n8.7\n\n \n\n \n\n \n\n(12.5\n\n)\n\nProvision for bad debts\n\n \n\n \n\n50\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n216\n\n \n\n \n\n \n\n0.1\n\n \n\n \n\n \n\n(76.9\n\n)\n\nRestructuring costs, net\n\n \n\n \n\n1,853\n\n \n\n \n\n \n\n0.7\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\nnm\n\n \n\nGain on sale of assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(4,296\n\n)\n\n \n\n \n\n(1.5\n\n)\n\n \n\nnm\n\n \n\nOther operating expense, net\n\n \n\n \n\n343\n\n \n\n \n\n \n\n0.2\n\n \n\n \n\n \n\n89\n\n \n\n \n\n \n\n—\n\n \n\n \n\nnm\n\n \n\nOperating loss\n\n \n\n \n\n(16,909\n\n)\n\n \n\n \n\n(6.6\n\n)\n\n \n\n \n\n(10,780\n\n)\n\n \n\n \n\n(3.8\n\n)\n\n \n\n \n\n56.9\n\n \n\nInterest expense, net\n\n \n\n \n\n2,957\n\n \n\n \n\n \n\n1.2\n\n \n\n \n\n \n\n4,471\n\n \n\n \n\n \n\n1.5\n\n \n\n \n\n \n\n(33.9\n\n)\n\nEquity in loss of unconsolidated affiliate\n\n \n\n \n\n49\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n251\n\n \n\n \n\n \n\n0.1\n\n \n\n \n\n \n\n(80.5\n\n)\n\nLoss before income taxes\n\n \n\n \n\n(19,915\n\n)\n\n \n\n \n\n(7.8\n\n)\n\n \n\n \n\n(15,502\n\n)\n\n \n\n \n\n(5.4\n\n)\n\n \n\n \n\n28.5\n\n \n\nProvision for income taxes\n\n \n\n \n\n1,148\n\n \n\n \n\n \n\n0.4\n\n \n\n \n\n \n\n3,522\n\n \n\n \n\n \n\n1.2\n\n \n\n \n\n \n\n(67.4\n\n)\n\nNet loss\n\n \n\n$\n\n(21,063\n\n)\n\n \n\n \n\n(8.2\n\n)\n\n \n\n$\n\n(19,024\n\n)\n\n \n\n \n\n(6.6\n\n)\n\n \n\n \n\n10.7\n\n \n\n \n\nnm = not meaningful\n\nEBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)\n\nThe reconciliations of the amounts reported under GAAP for Net loss to EBITDA and Adjusted EBITDA were as follows:\n\n \n\n \n\nFor the Six Months Ended\n\n \n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nDecember 29, 2024\n\n \n\nNet loss\n\n \n\n$\n\n(21,063\n\n)\n\n \n\n$\n\n(19,024\n\n)\n\nInterest expense, net\n\n \n\n \n\n2,957\n\n \n\n \n\n \n\n4,471\n\n \n\nProvision for income taxes\n\n \n\n \n\n1,148\n\n \n\n \n\n \n\n3,522\n\n \n\nDepreciation and amortization expense (1)\n\n \n\n \n\n11,812\n\n \n\n \n\n \n\n12,787\n\n \n\nEBITDA\n\n \n\n \n\n(5,146\n\n)\n\n \n\n \n\n1,756\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nRestructuring costs, net (2)\n\n \n\n \n\n785\n\n \n\n \n\n \n\n—\n\n \n\nTransition costs (3)\n\n \n\n \n\n1,068\n\n \n\n \n\n \n\n—\n\n \n\nGain on sale of warehouse (4)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(4,296\n\n)\n\nAdjusted EBITDA\n\n \n\n$\n\n(3,293\n\n)\n\n \n\n$\n\n(2,540\n\n)\n\n \n\n(1)\nWithin 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.\n\n(2)\nIn the second quarter of fiscal 2026, UNIFI recorded employee separation costs of $1,093 in connection with the Fiscal 2026 Profit Improvement Plan and a $308 gain from disposals of assets from the consolidation of Americas yarn manufacturing operations.\n\n(3)\nIn 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, net in the Condensed Consolidated Statements of Operations.\n\n(4)\nIn the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina.\n\n21\n\n \n\nAdjusted Net Loss and Adjusted EPS (Non-GAAP Financial Measures)\n\nThe tables below set forth reconciliations of (i) Loss before income taxes (“Pre-tax Loss”), (ii) Provision for income taxes (“Tax Impact”), (iii) Net Loss to Adjusted Net Loss, and (iv) Diluted EPS to Adjusted EPS.\n\n \n\n \n\nFor the Six Months Ended December 28, 2025\n\n \n\n \n\nFor the Six Months Ended December 29, 2024\n\n \n\n \n\n \n\nPre-tax Loss\n\n \n\n \n\nTax Impact\n\n \n\n \n\nNet Loss\n\n \n\n \n\nDiluted EPS\n\n \n\n \n\nPre-tax Loss\n\n \n\n \n\nTax Impact\n\n \n\n \n\nNet Loss\n\n \n\n \n\nDiluted EPS\n\n \n\nGAAP results\n\n \n\n$\n\n(19,915\n\n)\n\n \n\n$\n\n(1,148\n\n)\n\n \n\n$\n\n(21,063\n\n)\n\n \n\n$\n\n(1.15\n\n)\n\n \n\n$\n\n(15,502\n\n)\n\n \n\n$\n\n(3,522\n\n)\n\n \n\n$\n\n(19,024\n\n)\n\n \n\n$\n\n(1.04\n\n)\n\nRestructuring costs, net (1)\n\n \n\n \n\n785\n\n \n\n \n\n \n\n(11\n\n)\n\n \n\n \n\n774\n\n \n\n \n\n \n\n0.04\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nTransition costs (2)\n\n \n\n \n\n1,068\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,068\n\n \n\n \n\n \n\n0.06\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nGain on sale of warehouse (3)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(4,296\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(4,296\n\n)\n\n \n\n \n\n(0.24\n\n)\n\nAdjusted results\n\n \n\n$\n\n(18,062\n\n)\n\n \n\n$\n\n(1,159\n\n)\n\n \n\n$\n\n(19,221\n\n)\n\n \n\n$\n\n(1.05\n\n)\n\n \n\n$\n\n(19,798\n\n)\n\n \n\n$\n\n(3,522\n\n)\n\n \n\n$\n\n(23,320\n\n)\n\n \n\n$\n\n(1.28\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nWeighted average common shares outstanding\n\n \n\n \n\n \n\n18,391\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n18,272\n\n \n\n \n\n(1)\nIn the second quarter of fiscal 2026, UNIFI recorded employee separation costs of $1,093 in connection with the Fiscal 2026 Profit Improvement Plan and a $308 gain from disposals of assets from the consolidation of Americas yarn manufacturing operations. The associated tax impact was estimated to be $11 related to employee separation costs in the Asia Segment.\n\n(2)\nIn 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.\n\n(3)\nIn 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.\n\nNet Sales\n\nConsolidated net sales for the current six-month period decreased by $29,210, or 10.2%, and consolidated sales volumes decreased 7.5%, compared to the prior six-month period. Net sales in the current six-month period were lower primarily due to (i) lower sales volumes in the Asia Segment, (ii) lower-priced sales mix in the Americas Segment, and (iii) lower sales volumes and prices in the Brazil Segment. 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.\n\nConsolidated weighted average sales prices decreased 2.7%. The decrease in sales prices was primarily attributable to sales mix and lower average selling prices in the Americas and Brazil Segments.\n\nREPREVE® Fiber products for the current six-month period comprised 29%, or $73,536, of consolidated net sales, compared to 31%, or $88,014, for the prior six-month period.\n\nGross Profit\n\nGross profit for the current six-month period decreased to $6,998 from $9,992 in the prior six-month period. Gross profit decreased primarily due to (i) lower sales volumes, (ii) lower overall conversion margins and (iii) production volatility from an inability to forecast demand due to the tariff uncertainty in the Americas Segment. The decrease was partially offset by (a) variable cost-saving initiatives and (b) improved utilization in certain manufacturing areas. Gross profit continues to be unfavorably impacted by demand volatility in the Americas Segment and import pricing pressures in the Brazil Segment.\n\n•\nFor the Americas Segment, gross profit increased primarily due to overall cost-saving initiatives, including reductions in manufacturing costs from the Americas yarn manufacturing consolidation and the Fiscal 2026 Profit Improvement Plan, partially offset by (a) demand and production volatility stemming from tariff uncertainty and (b) lower conversion margins from a lower-priced sales mix.\n\n•\nFor the Brazil Segment, gross profit decreased primarily due to (i) lower sales volumes and (ii) competitive pricing pressures.\n\n•\nFor the Asia Segment, gross profit decreased primarily due to lower sales volumes.\n\nSG&A\n\nSG&A decreased from the prior six-month period to the current six-month period, primarily due to the actions from the Fiscal 2026 Profit Improvement Plan.\n\nProvision for Bad Debts\n\nThe current six-month period and prior six-month period provision reflect no material activity.\n\n22\n\n \n\nRestructuring Costs, Net\n\nOn 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 transition costs of $1,068 in the current six-month period which consisted of (i) equipment relocation and facility closure costs (including asset impairments and disposals) of $1,021 and (ii) employee separation costs of $47. There were no Restructuring costs for the prior six-month period.\n\nDuring October 2025, UNIFI implemented additional cost-saving 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. During the three-months ended December 28, 2025, UNIFI incurred employee separation costs of $1,093 related to the Fiscal 2026 Profit Improvement Plan. Additionally, UNIFI recognized a gain of $308 during the current period from disposals of assets in conjunction with the consolidation of Americas yarn manufacturing operations.\n\nGain on Sale of Assets\n\nIn 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.\n\nOther Operating Expense, Net\n\nOther operating expense, net for the current six-month period and the prior six-month period include foreign currency transaction losses of $375 and $268, respectively, with no other meaningful activity.\n\nInterest Expense, Net\n\nInterest expense, net decreased in connection with lower average debt principal and lower average interest rates.\n\nEquity in Loss of Unconsolidated Affiliate\n\nThere was no material activity for the current six-month period or the prior six-month period.\n\nIncome Taxes\n\nProvision for income taxes and the effective tax rate were as follows:\n\n \n\n \n\nFor the Six Months Ended\n\n \n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nDecember 29, 2024\n\n \n\nProvision for income taxes\n\n \n\n$\n\n1,148\n\n \n\n \n\n$\n\n3,522\n\n \n\nEffective tax rate\n\n \n\n \n\n(5.8\n\n)%\n\n \n\n \n\n(22.7\n\n)%\n\n \n\nThe effective tax rate is subject to variation due to a number of factors, including variability in pre-tax book income; the mix of income by jurisdiction; changes in deferred tax valuation allowances; and changes in statutes, audit settlement, regulations, and case law. Additionally, the impacts of discrete and other rate impacting items are more pronounced when loss before income taxes is lower.\n\nThe increase in the effective tax rate from the prior six-month period to the current six-month period is primarily attributable to lower foreign earnings in the current six-month period.\n\nNet Loss\n\nThe increase in net loss was primarily attributable to (i) decreased gross profit and (ii) restructuring costs, net incurred in the current six-month period and (iii) a gain on sale of assets in the prior six-month period, partially offset by (a) lower SG&A expenses, (b) lower interest expense, net, and (c) lower income tax expense.\n\n \n\nAdjusted EBITDA and Adjusted EPS (Non-GAAP Financial Measures)\n\nAdjusted EBITDA decreased primarily due to lower gross profit, partially offset by lower SG&A. Adjusted EPS improved primarily due to (i) lower interest expense and (ii) income tax expense.\n\n23\n\n \n\nSegment Overview\n\nFollowing is a discussion and analysis of the revenue and profitability performance of UNIFI’s reportable segments for the current six-month period.\n\nAmericas Segment\n\nThe components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior six-month period amounts for the Americas Segment, were as follows:\n\n \n\n \n\nFor the Six Months Ended\n\n \n\n \n\n \n\n \n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nDecember 29, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n%\nChange\n\n \n\nNet sales\n\n \n\n$\n\n162,429\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n$\n\n169,378\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n(4.1\n\n)\n\nCost of sales\n\n \n\n \n\n164,540\n\n \n\n \n\n \n\n101.3\n\n \n\n \n\n \n\n177,296\n\n \n\n \n\n \n\n104.7\n\n \n\n \n\n \n\n(7.2\n\n)\n\nGross loss\n\n \n\n \n\n(2,111\n\n)\n\n \n\n \n\n(1.3\n\n)\n\n \n\n \n\n(7,918\n\n)\n\n \n\n \n\n(4.7\n\n)\n\n \n\n \n\n(73.3\n\n)\n\nDepreciation expense\n\n \n\n \n\n9,822\n\n \n\n \n\n \n\n6.0\n\n \n\n \n\n \n\n10,744\n\n \n\n \n\n \n\n6.4\n\n \n\n \n\n \n\n(8.6\n\n)\n\nSegment Profit\n\n \n\n$\n\n7,711\n\n \n\n \n\n \n\n4.7\n\n \n\n \n\n$\n\n2,826\n\n \n\n \n\n \n\n1.7\n\n \n\n \n\n \n\n172.9\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSegment net sales as a percentage of\n  consolidated amounts\n\n \n\n \n\n63.2\n\n%\n\n \n\n \n\n \n\n \n\n \n\n59.2\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\nSegment Profit as a percentage of\n  consolidated amounts\n\n \n\n \n\n42.1\n\n%\n\n \n\n \n\n \n\n \n\n \n\n12.8\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\nThe change in net sales for the Americas Segment was as follows:\n\nNet sales for the prior six-month period\n\n \n\n$\n\n169,378\n\n \n\nChange in average selling price and sales mix\n\n \n\n \n\n(12,013\n\n)\n\nIncrease in sales volumes\n\n \n\n \n\n5,064\n\n \n\nNet sales for the current six-month period\n\n \n\n$\n\n162,429\n\n \n\nThe decrease in net sales for the Americas Segment from the prior six-month period to the current six-month period was primarily attributable to a lower-priced sales mix which was partially offset by higher sales volumes.\n\nThe change in Segment Profit for the Americas Segment was as follows:\n\nSegment Profit for the prior six-month period\n\n \n\n$\n\n2,826\n\n \n\nChange in underlying unit margins and sales mix\n\n \n\n \n\n4,800\n\n \n\nIncrease in sales volumes\n\n \n\n \n\n85\n\n \n\nSegment Profit for the current six-month period\n\n \n\n$\n\n7,711\n\n \n\nThe increase in Segment Profit for the Americas Segment from the prior six-month period to the current six-month period was primarily attributable to overall cost-saving initiatives, including reductions in manufacturing costs from the consolidation of Americas yarn manufacturing operations and the Fiscal 2026 Profit Improvement Plan.\n\nBrazil Segment\n\nThe components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior six-month period amounts for the Brazil Segment, were as follows:\n\n \n\n \n\nFor the Six Months Ended\n\n \n\n \n\n \n\n \n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nDecember 29, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n%\nChange\n\n \n\nNet sales\n\n \n\n$\n\n52,089\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n$\n\n61,792\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n(15.7\n\n)\n\nCost of sales\n\n \n\n \n\n48,372\n\n \n\n \n\n \n\n92.9\n\n \n\n \n\n \n\n50,069\n\n \n\n \n\n \n\n81.0\n\n \n\n \n\n \n\n(3.4\n\n)\n\nGross profit\n\n \n\n \n\n3,717\n\n \n\n \n\n \n\n7.1\n\n \n\n \n\n \n\n11,723\n\n \n\n \n\n \n\n19.0\n\n \n\n \n\n \n\n(68.3\n\n)\n\nDepreciation expense\n\n \n\n \n\n1,483\n\n \n\n \n\n \n\n2.9\n\n \n\n \n\n \n\n1,343\n\n \n\n \n\n \n\n2.1\n\n \n\n \n\n \n\n10.4\n\n \n\nSegment Profit\n\n \n\n$\n\n5,200\n\n \n\n \n\n \n\n10.0\n\n \n\n \n\n$\n\n13,066\n\n \n\n \n\n \n\n21.1\n\n \n\n \n\n \n\n(60.2\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSegment net sales as a percentage of\n  consolidated amounts\n\n \n\n \n\n20.3\n\n%\n\n \n\n \n\n \n\n \n\n \n\n21.6\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\nSegment Profit as a percentage of\n  consolidated amounts\n\n \n\n \n\n28.4\n\n%\n\n \n\n \n\n \n\n \n\n \n\n59.1\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n24\n\n \n\nThe change in net sales for the Brazil Segment was as follows:\n\nNet sales for the prior six-month period\n\n \n\n$\n\n61,792\n\n \n\nChange in average selling price and change in sales mix\n\n \n\n \n\n(7,165\n\n)\n\nDecrease in sales volumes\n\n \n\n \n\n(5,281\n\n)\n\nFavorable foreign currency translation effects\n\n \n\n \n\n2,743\n\n \n\nNet sales for the current six-month period\n\n \n\n$\n\n52,089\n\n \n\nThe decrease in net sales for the Brazil Segment from the prior six-month period to the current six-month period was primarily attributable to (i) lower selling prices associated with competitive pricing pressures and (ii) lower sales volumes due to market conditions, partially offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD.\n\nThe change in Segment Profit for the Brazil Segment was as follows:\n\nSegment Profit for the prior six-month period\n\n \n\n$\n\n13,066\n\n \n\nDecrease in underlying unit margins\n\n \n\n \n\n(7,234\n\n)\n\nDecrease in sales volumes\n\n \n\n \n\n(1,108\n\n)\n\nFavorable foreign currency translation effects\n\n \n\n \n\n476\n\n \n\nSegment Profit for the current six-month period\n\n \n\n$\n\n5,200\n\n \n\nThe decrease in Segment Profit for the Brazil Segment from the prior six-month period to the current six-month period was primarily attributable to (i) lower conversion margins primarily due to sales mix and pricing pressures and (ii) a decrease in sales volumes discussed above, partially offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD. We continue to prioritize innovation and differentiation to improve our portfolio and competitive position in Brazil.\n\nAsia Segment\n\nThe components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior six-month period amounts for the Asia Segment, were as follows:\n\n \n\n \n\nFor the Six Months Ended\n\n \n\n \n\n \n\n \n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nDecember 29, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n \n\n \n\n \n\n% of\nNet Sales\n\n \n\n \n\n%\nChange\n\n \n\nNet sales\n\n \n\n$\n\n42,524\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n$\n\n55,082\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n(22.8\n\n)\n\nCost of sales\n\n \n\n \n\n37,132\n\n \n\n \n\n \n\n87.3\n\n \n\n \n\n \n\n48,895\n\n \n\n \n\n \n\n88.8\n\n \n\n \n\n \n\n(24.1\n\n)\n\nGross profit\n\n \n\n \n\n5,392\n\n \n\n \n\n \n\n12.7\n\n \n\n \n\n \n\n6,187\n\n \n\n \n\n \n\n11.2\n\n \n\n \n\n \n\n(12.8\n\n)\n\nDepreciation expense\n\n \n\n \n\n27\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n31\n\n \n\n \n\n \n\n0.1\n\n \n\n \n\n \n\n(12.9\n\n)\n\nSegment Profit\n\n \n\n$\n\n5,419\n\n \n\n \n\n \n\n12.7\n\n \n\n \n\n$\n\n6,218\n\n \n\n \n\n \n\n11.3\n\n \n\n \n\n \n\n(12.8\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSegment net sales as a percentage of\n  consolidated amounts\n\n \n\n \n\n16.5\n\n%\n\n \n\n \n\n \n\n \n\n \n\n19.2\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\nSegment Profit as a percentage of\n  consolidated amounts\n\n \n\n \n\n29.6\n\n%\n\n \n\n \n\n \n\n \n\n \n\n28.1\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\nThe change in net sales for the Asia Segment was as follows:\n\nNet sales for the prior six-month period\n\n \n\n$\n\n55,082\n\n \n\nDecrease in sales volumes\n\n \n\n \n\n(12,736\n\n)\n\nChange in average selling price and sales mix\n\n \n\n \n\n(251\n\n)\n\nFavorable foreign currency translation effects\n\n \n\n \n\n429\n\n \n\nNet sales for the current six-month period\n\n \n\n$\n\n42,524\n\n \n\nThe decrease in net sales for the Asia Segment from the prior six-month period to current six-month period was primarily attributable to (i) an overall decrease in sales volumes due to competitive pricing pressures and the continued volatility introduced by recent tariffs and (ii) a change in sales mix of REPREVE products.\n\nThe change in Segment Profit for the Asia Segment was as follows:\n\nSegment Profit for the prior six-month period\n\n \n\n$\n\n6,218\n\n \n\nDecrease in sales volumes\n\n \n\n \n\n(1,440\n\n)\n\nChange in underlying unit margins and sales mix\n\n \n\n \n\n641\n\n \n\nSegment Profit for the current six-month period\n\n \n\n$\n\n5,419\n\n \n\nThe decrease in Segment Profit for the Asia Segment from the prior six-month period to the current six-month period was primarily attributable to a decline in sales volumes as discussed above.\n\n \n\n25\n\n \n\nLiquidity and Capital Resources\n\nNote 5, “Long-Term Debt” to the condensed consolidated financial statements includes the detail of UNIFI’s debt obligations and terms and conditions thereof. Further discussion and analysis of liquidity and capital resources follow.\n\nOn 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. In the third quarter of fiscal 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.\n\nUNIFI’s primary capital requirements are for working capital, capital expenditures, and debt service. UNIFI’s primary sources of capital are cash generated from operations and borrowings available under the 2022 Credit Agreement and the 2024 Facility. For the current six-month period, cash provided by operations was $16,362 and, at December 28, 2025, availability under the ABL Revolver and 2024 Facility was $34,329 and $583, respectively.\n\nAs of December 28, 2025, all of UNIFI’s $105,405 of debt obligations were guaranteed by certain of its domestic operating subsidiaries, while nearly all of UNIFI’s cash and cash equivalents were held by its foreign subsidiaries. Cash and cash equivalents held by foreign subsidiaries may not be presently available to fund UNIFI’s domestic capital requirements, including its domestic debt obligations. UNIFI employs a variety of strategies to ensure that its worldwide cash is available in the locations where it is needed.\n\nThe following table presents a summary of cash and cash equivalents, borrowings available under financing arrangements, liquidity, working capital, and total debt obligations as of December 28, 2025 for domestic operations compared to foreign operations:\n\n \n\n \n\nDomestic\n\n \n\n \n\nForeign\n\n \n\n \n\nTotal\n\n \n\nCash and cash equivalents\n\n \n\n$\n\n29\n\n \n\n \n\n$\n\n30,163\n\n \n\n \n\n$\n\n30,192\n\n \n\nPotential borrowings available under financing arrangements\n\n \n\n \n\n34,912\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n34,912\n\n \n\nTrigger level under ABL Revolver\n\n \n\n \n\n(16,500\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(16,500\n\n)\n\nAvailable Liquidity\n\n \n\n$\n\n18,441\n\n \n\n \n\n$\n\n30,163\n\n \n\n \n\n$\n\n48,604\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nWorking capital\n\n \n\n$\n\n51,585\n\n \n\n \n\n$\n\n97,644\n\n \n\n \n\n$\n\n149,229\n\n \n\nTotal debt obligations\n\n \n\n$\n\n105,405\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n105,405\n\n \n\nBorrowings available under financing arrangements are generally collateralized by receivables and inventory owned in the U.S., plus cash equivalents pledged by Mr. Langone, and generally constrained by the fixed charge coverage ratio and trigger level prescribed in the 2022 Credit Agreement. Accordingly, “Available Liquidity” includes consideration for the trigger level that currently constrains our borrowing ability until a fixed charge coverage ratio of 1.05 to 1.00 is achieved. 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.\n\nLiquidity Considerations\n\nFollowing the establishment of the 2024 Facility, UNIFI believes its global cash and liquidity positions are sufficient to sustain its operations and to meet its growth needs for the foreseeable future. Additionally, UNIFI considers opportunities to repatriate existing cash to reduce debt and preserve or enhance liquidity. 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.\n\nWe 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. Management continues to (i) explore cost savings opportunities and (ii) prioritize repayment of debt in the current operating environment.\n\nWhen business levels increase, we expect to use cash in support of working capital needs.\n\nThe following outlines the attributes relating to our credit facilities as of December 28, 2025:\n\n•\nUNIFI was in compliance with all applicable financial covenants in the 2022 Credit Agreement and 2024 Facility;\n\n•\navailability under the 2024 Facility was $583 as of December 28, 2025;\n\n•\navailability exceeding the Trigger Level (as defined in the 2022 Credit Agreement) under the ABL Revolver was $17,829;\n\n•\nthe Trigger Level under the ABL Revolver was $16,500; and\n\n•\n$0 of standby letters of credit were outstanding.\n\nIn addition to making payments in accordance with the scheduled maturities of debt required under its existing debt obligations, UNIFI may, from time to time, elect to repay additional amounts borrowed under the ABL Facility. Funds to make such repayments may come from the operating cash flows of the business or other sources and will depend upon UNIFI’s strategy, prevailing market conditions, liquidity requirements, contractual restrictions within the 2022 Credit Agreement, and other factors.\n\n26\n\n \n\nLiquidity Summary\n\nUNIFI has met its historical liquidity requirements for working capital, capital expenditures, debt service requirements, and other operating needs from its cash flows from operations and available borrowings. UNIFI believes that its existing cash balances, expected cash provided by operating activities, and credit facilities will enable UNIFI to meet its foreseeable liquidity requirements. For its foreign operations, UNIFI expects its existing cash balances, cash provided by operating activities, and available financing arrangements will provide the needed liquidity to fund the associated operating activities and investing activities, such as future capital expenditures. UNIFI believes its operations in Asia and Brazil are in a position to obtain local country financing arrangements due to the operating results of each subsidiary.\n\n \n\nNet Debt (Non-GAAP Financial Measure)\n\nThe reconciliations for Net Debt are as follows:\n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nJune 29, 2025\n\n \n\nLong-term debt\n\n \n\n$\n\n92,601\n\n \n\n \n\n$\n\n95,727\n\n \n\nCurrent portion of long-term debt\n\n \n\n \n\n12,708\n\n \n\n \n\n \n\n12,159\n\n \n\nUnamortized debt issuance costs\n\n \n\n \n\n96\n\n \n\n \n\n \n\n122\n\n \n\nDebt principal\n\n \n\n \n\n105,405\n\n \n\n \n\n \n\n108,008\n\n \n\nLess: cash and cash equivalents\n\n \n\n \n\n30,192\n\n \n\n \n\n \n\n22,664\n\n \n\nNet Debt\n\n \n\n$\n\n75,213\n\n \n\n \n\n$\n\n85,344\n\n \n\nThe decrease in Net Debt primarily reflects the generation of operating cash flows during fiscal 2026, aided by reduced levels of capital expenditures.\n\nWorking Capital and Adjusted Working Capital (Non-GAAP Financial Measure)\n\nThe following table presents the components of working capital and the reconciliation of working capital to Adjusted Working Capital:\n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nJune 29, 2025\n\n \n\nCash and cash equivalents\n\n \n\n$\n\n30,192\n\n \n\n \n\n$\n\n22,664\n\n \n\nReceivables, net\n\n \n\n \n\n57,970\n\n \n\n \n\n \n\n75,383\n\n \n\nInventories\n\n \n\n \n\n103,085\n\n \n\n \n\n \n\n122,929\n\n \n\nIncome taxes receivable\n\n \n\n \n\n1,232\n\n \n\n \n\n \n\n5,429\n\n \n\nOther current assets\n\n \n\n \n\n6,609\n\n \n\n \n\n \n\n9,222\n\n \n\nAccounts payable\n\n \n\n \n\n(21,888\n\n)\n\n \n\n \n\n(37,468\n\n)\n\nOther current liabilities\n\n \n\n \n\n(12,439\n\n)\n\n \n\n \n\n(18,899\n\n)\n\nIncome taxes payable\n\n \n\n \n\n(300\n\n)\n\n \n\n \n\n(49\n\n)\n\nCurrent operating lease liabilities\n\n \n\n \n\n(2,524\n\n)\n\n \n\n \n\n(2,368\n\n)\n\nCurrent portion of long-term debt\n\n \n\n \n\n(12,708\n\n)\n\n \n\n \n\n(12,159\n\n)\n\nWorking capital\n\n \n\n$\n\n149,229\n\n \n\n \n\n$\n\n164,684\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLess: Cash and cash equivalents\n\n \n\n \n\n(30,192\n\n)\n\n \n\n \n\n(22,664\n\n)\n\nLess: Income taxes receivable\n\n \n\n \n\n(1,232\n\n)\n\n \n\n \n\n(5,429\n\n)\n\nLess: Income taxes payable\n\n \n\n \n\n300\n\n \n\n \n\n \n\n49\n\n \n\nLess: Current operating lease liabilities\n\n \n\n \n\n2,524\n\n \n\n \n\n \n\n2,368\n\n \n\nLess: Current portion of long-term debt\n\n \n\n \n\n12,708\n\n \n\n \n\n \n\n12,159\n\n \n\nAdjusted Working Capital\n\n \n\n$\n\n133,337\n\n \n\n \n\n$\n\n151,167\n\n \n\nAdjusted Working Capital decreased $17,830 from June 29, 2025 to December 28, 2025.\n\nThe decrease in Adjusted Working Capital was primarily attributable to the decreases in (i) inventories due to lower units on hand, (ii) receivables, net due to lower sales and the timing of cash receipts, and (iii) other current assets primarily due to lower vendor deposits and value-added taxes receivable. These were partially offset by reductions in (a) accounts payable primarily due to lower production activity and variable cost-saving initiatives and (b) other current liabilities due primarily to the payment of incentive compensation earned in fiscal 2025.\n\n27\n\n \n\nOperating Cash Flows\n\nThe significant components of net cash provided (used) by operating activities are summarized below.\n\n \n\n \n\nFor the Six Months Ended\n\n \n\n \n\n \n\nDecember 28, 2025\n\n \n\n \n\nDecember 29, 2024\n\n \n\nNet loss\n\n \n\n$\n\n(21,063\n\n)\n\n \n\n$\n\n(19,024\n\n)\n\nEquity in loss of unconsolidated affiliate\n\n \n\n \n\n49\n\n \n\n \n\n \n\n251\n\n \n\nDepreciation and amortization expense\n\n \n\n \n\n11,925\n\n \n\n \n\n \n\n12,881\n\n \n\nNon-cash compensation expense\n\n \n\n \n\n1,608\n\n \n\n \n\n \n\n1,658\n\n \n\nGain on sale of assets\n\n \n\n \n\n(308\n\n)\n\n \n\n \n\n(4,296\n\n)\n\nDeferred income taxes\n\n \n\n \n\n333\n\n \n\n \n\n \n\n628\n\n \n\nSubtotal\n\n \n\n \n\n(7,456\n\n)\n\n \n\n \n\n(7,902\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nReceivables, net\n\n \n\n \n\n17,540\n\n \n\n \n\n \n\n8,228\n\n \n\nInventories\n\n \n\n \n\n19,965\n\n \n\n \n\n \n\n(4,841\n\n)\n\nAccounts payable and other current liabilities\n\n \n\n \n\n(21,203\n\n)\n\n \n\n \n\n(8,155\n\n)\n\nOther changes\n\n \n\n \n\n7,516\n\n \n\n \n\n \n\n(2,334\n\n)\n\nNet cash provided (used) by operating activities\n\n \n\n$\n\n16,362\n\n \n\n \n\n$\n\n(15,004\n\n)\n\nThe change in operating cash flows was primarily due to the reduction of working capital balances during the current six-month period compared to the prior six-month period.\n\nFor the current six-month period, the decreases in accounts receivable was largely driven by a decrease in sales and the timing of cash receipts. The decrease in inventories was driven by concerted efforts to reduce inventory levels in response to the lower demand environment. The decrease in accounts payable and other current liabilities was largely due to lower production activity, variable cost-saving initiatives, and the payment of incentive compensation liabilities. Other changes comprise mostly decreases in income tax receivables and other current assets due to the utilization of tax credits, an income tax refund, and lower vendor deposits in Brazil.\n\nFor the prior six-month period, the decreases in accounts payable and other current liabilities was primarily due to seasonally lower production activity which included scheduled holiday shutdown periods. Inventories increased primarily due to higher average unit costs. Other changes comprised mostly of higher vendor deposits and recoverable value added taxes (following the increased value of inventories). The decrease in accounts receivable was largely driven by the decrease in sales and timing of cash receipts.\n\nInvesting Cash Flows\n\nInvesting activities primarily include $3,084 for capital expenditures. UNIFI expects recent and future capital projects to provide benefits to future profitability. The additional assets from these capital projects consist primarily of machinery and equipment.\n\nFinancing Cash Flows\n\nFinancing activities primarily include principal payments on the ABL Term Loan and finance leases.\n\nShare Repurchase Program\n\nAs described in Note 7, “Shareholders’ Equity,” no share repurchases have been completed in fiscal 2026.\n\nContractual Obligations\n\nUNIFI incurs various financial obligations and commitments in the ordinary course of business. 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.\n\nExcept for the $3,705 of new finance leases that commenced during the six months ended December 28, 2025, there have been no material changes in the scheduled maturities of UNIFI’s contractual obligations as disclosed under the heading “Contractual Obligations” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2025 Form 10-K.\n\nOff-Balance Sheet Arrangements\n\nUNIFI is not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on UNIFI’s financial condition, results of operations, liquidity, or capital expenditures.\n\nCritical Accounting Policies\n\nUNIFI’s critical accounting policies are discussed in the 2025 Form 10-K. There have been no changes to UNIFI’s critical accounting policies in fiscal 2026.\n\n28"}