Item 7. Management’s Discussion and Analysis o f Financial Condition and Results of Operations
The 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 consolidated financial statements. Management’s discussion and analysis should be read in conjunction with the remainder of this report, with the understanding that forward-looking statements may be present. A reference to a “note” refers to the accompanying notes to consolidated financial statements.
Strategic Priorities
We believe UNIFI’s underlying performance during recent fiscal years reflects the strength of our global initiative to deliver differentiated solutions to customers and brand partners throughout the world. Our supply chain has been developed and enhanced in multiple regions around the globe, allowing us to deliver a diverse range of fibers and polymers to key customers in the markets we serve, especially apparel. These textile products are supported by quality assurance, product development, product and fabric certifications, hangtags, co-marketing, and technical and customer service teams across UNIFI’s operating subsidiaries. We have developed this successful operating platform by improving operational and business processes and deriving value from sustainability-based initiatives, including polyester and nylon recycling.
We believe that further commercial expansion will require a continued stream of new technology and innovation that generates products with meaningful consumer benefits. Along with our recycled platform, UNIFI has significant yarn technologies that provide optimal performance characteristics for today’s marketplace, including water repellency, flame retardation, soil release, enhanced color-fastness achieved with less water use, and protection from ultra-violet rays, among other attributes. To achieve further growth, UNIFI remains focused on innovation, bringing to market the next wave of fibers and polymers for tomorrow’s applications. As we invest and grow, sustainability remains at our core. We believe that increasing the awareness for recycled solutions in applications across fibers and polymers and furthering sustainability-based initiatives with like-minded brand partners will be key to our future success. We also believe that our manufacturing processes and our technical knowledge and capabilities will allow us to grow market share and develop new textile programs with new and existing customers. Ultimately, we believe that combining leading-edge innovation with our prominent, high-quality brand and agile regional business model will allow for underlying sales and growth.
Significant Developments and Trends
Key drivers of our recent financial results include:
During fiscal 2020, our financial results began to improve following more stable import and raw material cost environments. However, the COVID-19 pandemic had a significant unfavorable impact to product demand and our annual profitability suffered accordingly. Near the end of fiscal 2020, we divested a minority interest investment and significantly improved our liquidity position, supporting business preservation and the ability to capture long-term growth opportunities.
Throughout fiscal 2021, our businesses experienced sequential improvement alongside global demand and economic recovery, and we capitalized on profitable opportunities that fueled strong consolidated results.
Throughout fiscal 2022, we experienced adverse pressure from rising input costs and a weakening of labor productivity, primarily in our domestic operations.
Throughout fiscal 2023, we experienced a downturn in global textile demand as brands and retailers began to destock their inventory levels.
Throughout fiscal 2024, global textile demand remained weak, particularly in the Americas and Asia Segments with reduced overall order levels.
Throughout fiscal 2025, inflationary pressures and uncertainty over global trade policies resulted in volatility and customer-demand headwinds, particularly in the Americas and Asia Segments. Looking ahead, we believe our operations remain well-positioned to capture long-term growth opportunities and we are working to mitigate any potential recessionary impacts.
Once global economic pressures subside, we believe incremental revenue for the Americas Segment will be generated from our anti-dumping petitions and efforts around fair trade of textile yarn, and continued demand for innovative and sustainable products. The Asia Segment continues to focus on demand for recycled products and serves as a significant component of future growth. The Brazil Segment has returned to more normalized levels of performance and is expected to maintain healthy volumes and margins. As the Asia market improves, the volume of low-cost Asian imports into Brazil is expected to decrease.
The following developments and trends occurred or were occurring in fiscal 2025:
Demand levels for the majority of our business lines in the Americas and Asia Segments were below expectations, as a result of lower global demand amid consumer and macroeconomic uncertainty including most recently the tariffs and retaliatory tariffs.
Our REPREVE family of products continued to gain momentum with brands, retailers, and mill partners who value sustainability and UNIFI’s ability to produce leading-edge products with in-demand technologies.
The Americas Segment experienced lower than anticipated manufacturing utilization and production levels, despite stable raw material costs during fiscal 2025. In response to these challenges, we initiated a plan to transition the Madison, North Carolina manufacturing operations to other production facilities in North and Central America.
The Brazil Segment incurred selling price pressures from low-cost imports for most of the fiscal year, but sales volumes and margins remained strong.
The Asia Segment's sales volumes slowed in fiscal 2025, along with continued margin pressure, due to customer-demand headwinds and recent volatility from uncertainty related to tariffs; however, there remains healthy demand for REPREVE, generating continued portfolio expansion.
Fluctuations in Raw Material Costs and Foreign Currency Exchange Rates
Raw material costs represent a significant portion of UNIFI’s product costs. The prices for the principal raw materials used by UNIFI continually fluctuate, and it is difficult or impossible to predict trends or upcoming developments.
For the majority of our portfolio, we were able to implement selling price adjustments throughout fiscal 2022 in response to rising inputs costs. Despite the responsive selling price increases, we still experienced meaningful gross profit pressure during fiscal 2022 and 2023, primarily from the U.S. labor shortage and speed at which input costs increased. In fiscal 2024, we experienced stable raw material prices for most of the fiscal year, although lower REPREVE sales to apparel markets impacted our profitability. In fiscal 2025, the Americas and Asia Segments experienced lower input and freight costs, but the demand volatility and uncertainty persisted. The Brazil Segment had increased raw material costs for the majority of the fiscal year coupled with pricing pressure from low-cost imports limiting its ability to recover all of the higher costs.
The continuing volatility in global crude oil prices is likely to impact UNIFI’s polyester and nylon raw material costs. While it is not possible to predict the timing or amount of the impact or whether the recent fluctuations in crude oil prices will stabilize, increase, or decrease, UNIFI monitors these dynamic factors closely. In addition, UNIFI attempts to pass on to its customers increases in raw material costs but due to market pressures, this is not always possible. When price increases can be implemented, there is typically a time lag that adversely affects UNIFI and its margins during one or more quarters. Certain customers are subject to an index-based pricing model in which UNIFI’s prices are adjusted based on the change in the cost of certain raw materials in the prior quarter. Pricing adjustments for other customers must be negotiated independently. In ordinary market conditions in which raw material cost increases have stabilized and sales volumes are consistent with traditional levels, UNIFI has historically been successful in implementing price adjustments within one or two fiscal quarters of the raw material price increase for all of its customers.
UNIFI is also impacted by significant fluctuations in the value of the BRL and the Chinese Renminbi (the “RMB”), the local currencies for our operations in Brazil and China, respectively. Appreciation of the BRL and the RMB improves our net sales and gross profit metrics when the results of our subsidiaries are translated into USDs at comparatively favorable rates. However, such strengthening may cause adverse impacts to the value of USDs held in these foreign jurisdictions. UNIFI expects continued volatility in the value of the BRL and the RMB to impact our key performance metrics and actual financial results, although the magnitude of the impact is dependent upon the significance of the volatility, and it is not possible to predict the timing or amount of the impact.
The BRL to USD weighted average exchange rate was 5.71, 5.01, and 5.17 for fiscal 2025, 2024, and 2023, respectively. The RMB to USD weighted average exchange rate was 7.21, 7.22, and 6.94 for fiscal 2025, 2024, and 2023, respectively.
Key Performance Indicators and Non-GAAP Financial Measures
UNIFI continuously reviews performance indicators to measure its success. These performance indicators form the basis of management’s discussion and analysis included below:
sales volume and revenue for UNIFI and for each reportable segment;
gross profit (loss) and gross margin for UNIFI and for each reportable segment;
net (loss) income and (loss) earnings per share ("EPS");
Segment (Loss) Profit, which equals segment gross (loss) profit plus segment depreciation expense;
unit conversion margin, which represents unit net sales price less unit raw material costs, for UNIFI and for each reportable segment;
working capital, which represents current assets less current liabilities;
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), which represents net (loss) earnings before net interest expense, income tax expense and depreciation and amortization expense;
Adjusted EBITDA, which represents EBITDA adjusted to exclude, from time to time, certain other adjustments necessary to understand and compare the underlying results of UNIFI;
Adjusted Net (Loss) Income, which represents net loss calculated under GAAP, adjusted to exclude certain amounts which management believes do not reflect the ongoing operations and performance of UNIFI and/or for which exclusion may be necessary to understand and compare the underlying results of UNIFI;
Adjusted EPS, which represents Adjusted Net (Loss) Income divided by UNIFI’s weighted average common shares outstanding;
Adjusted Working Capital, which equals receivables plus inventories and other current assets, less accounts payable and other current liabilities; and
Net Debt, which represents debt principal less cash and cash equivalents.
EBITDA, Adjusted EBITDA, Adjusted Net (Loss) Income, Adjusted EPS, Adjusted Working Capital, and Net Debt (collectively, the “non-GAAP financial measures”) are not determined in accordance with GAAP and should not be considered a substitute for performance measures determined in accordance with GAAP. 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.
Management 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.
Management uses Adjusted Net (Loss) Income and Adjusted EPS (i) as measurements of net operating performance because they assist us in comparing such performance on a consistent basis, as they remove the impact of (a) items that we would not expect to occur as a part of our normal business on a regular basis and (b) components of the provision for income taxes that we would not expect to occur as a part of our underlying taxable operations; (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.
Management uses Adjusted Working Capital as an indicator of UNIFI’s production efficiency and ability to manage inventories and receivables.
Management 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.
See “Non-GAAP Reconciliations” below for reconciliations of each non-GAAP metrics to the most directly comparable GAAP metric.
Review of Results of Operations for Fiscal 2025, 2024 and 2023
UNIFI’s fiscal 2025, 2024 and 2023 each consisted of 52 weeks, with no impacts to net sales, gross profit, and selling, general, and administrative ("SG&A") expenses due to extra weeks.
Consolidated Overview
The below tables provide:
the components of net loss and the percentage increase or decrease over the prior fiscal year amounts,
a reconciliation from net loss to EBITDA and Adjusted EBITDA, and
a reconciliation from net loss to Adjusted Net Loss and Adjusted EPS.
Following the tables is a discussion and analysis of the significant components of net loss.
Net Loss
Fiscal 2025
% Change
Fiscal 2024
% Change
Fiscal 2023
Net sales
Cost of sales
Gross profit
(Benefit) provision for bad debts
Restructuring costs
(Gain) loss on sales and disposals of assets
Other operating expense, net
Operating loss
Interest expense, net
Loss (earnings) from unconsolidated affiliates
Loss before income taxes
Provision for income taxes
Net loss
nm – not meaningful
Non-GAAP Reconciliations
EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)
The reconciliations of the amounts reported under GAAP for Net Loss to EBITDA and Adjusted EBITDA are as follows.
Fiscal 2025
Fiscal 2024
Fiscal 2023
Net loss
Interest expense, net
Provision for income taxes
Depreciation and amortization expense (1)
EBITDA
Transition costs (2)
Gain on sales of assets (3)
Restructuring costs (4)
Asset abandonment (5)
Contract modification costs (6)
Adjusted EBITDA
Within this reconciliation, depreciation and amortization expense excludes the amortization of debt issuance costs, which are reflected in interest expense, net. Within the accompanying consolidated statements of cash flows, amortization of debt issuance costs is reflected in depreciation and amortization expense. In fiscal 2025, 2024 and 2023, interest expense, net includes $136, $0 and $273, respectively, of loss on debt extinguishment.
In fiscal 2025, UNIFI incurred various transition costs totaling $13,485 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs (including asset impairments and disposals) of $5,896, (ii) inventory write-downs of $2,923, (iii) excess fixed manufacturing costs of $1,638, (iv) employee separation or retention costs of $1,580, and (v) forfeitures of deposits for texturing machinery of $1,448. The facility closure, equipment relocation, employee separation and retention costs, and forfeitures of deposits were all recorded within Restructuring costs and the inventory write-downs and excess fixed manufacturing costs were recorded within Cost of sales in the Condensed Consolidated Statements of Operations.
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. In the fourth quarter of fiscal 2025, UNIFI recorded a gain of $35,807 related to the sale of a manufacturing facility in Madison, North Carolina.
In 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.
In fiscal 2023, UNIFI abandoned certain specialized machinery in the Americas and recorded an impairment charge. The impairment charge was recorded to reflect the lack of future positive cash flows associated with the machinery, following multiple years of investment recovery since its fiscal 2017 installation.
In fiscal 2023, UNIFI amended certain existing contracts related to future purchases of texturing machinery by delaying the scheduled receipt and installation of such equipment for approximately 18 months. UNIFI paid the associated vendor $623 to establish the 18-month delay.
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”), Provision for Income Taxes (“Tax Impact”) and Net Loss to Adjusted Net Loss and (ii) Diluted EPS to Adjusted EPS.
Fiscal 2025
Pre-tax Loss
Tax Impact
Net Loss
Diluted EPS
GAAP results
Transition costs (1)
Gain on sales of assets (2)
Recovery of income taxes (3)
Adjusted results
Weighted average common shares outstanding
Fiscal 2024
Pre-tax Loss
Tax Impact
Net Loss
Diluted EPS
GAAP results
Restructuring costs (4)
Adjusted results
Weighted average common shares outstanding
Fiscal 2023
Pre-tax Loss
Tax Impact
Net Loss
Diluted EPS
GAAP results
Asset abandonment (5)
Contract modification costs (6)
Recovery of income taxes (7)
Adjusted results
Weighted average common shares outstanding
In fiscal 2025, UNIFI incurred various transition costs totaling $13,485 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs (including asset impairments and disposals) of $5,896, (ii) inventory write-downs of $2,923, (iii) excess fixed manufacturing costs of $1,638, (iv) employee separation or retention costs of $1,580, and (v) forfeitures of deposits for texturing machinery of $1,448. The facility closure, equipment relocation, employee separation and retention costs, and forfeitures of deposits were all recorded within Restructuring costs and the inventory write-downs and excess fixed manufacturing costs were recorded within Cost of sales 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.
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. In the fourth quarter of fiscal 2025, UNIFI recorded a gain of $35,807 related to the sale of a manufacturing facility in Madison, 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.
In fiscal 2025, following a favorable preliminary court injunction, UNIFI recorded a recovery of income taxes in connection with ICMS deductibility for Brazil's federal income tax return relating to the income taxes paid in prior fiscal years.
In 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.
In fiscal 2023, UNIFI abandoned certain specialized machinery in the Americas and recorded an impairment charge. The associated tax impact was estimated to be $0 due to a valuation allowance against net operating losses in the U.S.
In fiscal 2023, UNIFI amended certain existing contracts related to future purchases of texturing machinery by delaying the scheduled receipt and installation of such equipment in the U.S. and El Salvador for 18 months. UNIFI paid the associated vendor $623 to establish the 18-month delay. The associated tax impact was estimated to be $0 due to (i) a valuation allowance against net operating losses in the U.S. and (ii) UNIFI's effective tax rate in El Salvador.
In fiscal 2023, UNIFI recorded a recovery of income taxes in connection with filing amended tax returns in Brazil relating to certain income taxes paid in prior fiscal years following favorable legal rulings in fiscal 2023.
Net Sales
Fiscal 2025 vs. Fiscal 2024
Consolidated net sales for fiscal 2025 decreased by $10,865, or 1.9%, and consolidated sales volumes increased 0.2%, compared to fiscal 2024. Net sales in fiscal 2025 were lower primarily due to lower sales in the Asia Segment which were partially offset by improved sales volumes and prices in the Brazil Segment. However, most of Brazil's improvement was offset by unfavorable foreign currency translation effects. Despite some volume improvements, overall sales remain depressed, particularly in the Americas and Asia Segments as a result of continued customer-demand headwinds and volatility from uncertainty over global trade policies.
Consolidated weighted average sales prices decreased 2.1%. The decrease in sales prices was primarily attributable to sales mix and lower average selling prices in the Asia Segment, together with unfavorable foreign currency translation effects from the weakening of the BRL versus the USD within our Brazil Segment.
REPREVE Fiber products for fiscal 2025 comprised 31%, or $174,855, of consolidated net sales, compared to 32%, or $188,517, for fiscal 2024.
Fiscal 2024 vs. Fiscal 2023
Consolidated net sales for fiscal 2024 decreased by $41,318, or 6.6%, and consolidated sales volumes increased 8.2%, compared to fiscal 2023. Despite sales volume improvements in each of the reportable segments, volumes remain depressed, particularly in the Americas and Asia Segments as a result of continued customer-demand headwinds.
Consolidated weighted average sales prices decreased 14.8% which drove the decrease in net sales. The decrease in sales prices was primarily attributable to (i) lower selling prices in response to lower raw material input costs and (ii) a greater mix of Chip and Flake sales, both particularly in the Americas Segment, together with (iii) competitive pricing pressures in Brazil.
REPREVE Fiber products for fiscal 2024 comprised 32%, or $188,517, of consolidated net sales, up from 30%, or $186,161, for fiscal 2023.
Gross Profit
Fiscal 2025 vs. Fiscal 2024
Gross profit for fiscal 2025 decreased to $8,418 from $16,616 in fiscal 2024. Gross profit decreased primarily due to (i) lower overall conversion margins and (ii) low utilization and decreased productivity related to the consolidation of yarn manufacturing operations in the Americas Segment. This was partially offset by (a) increased sales volumes, (b) variable cost saving initiatives, and (c) improved productivity in certain manufacturing areas. Gross profit continues to be unfavorably impacted by weak manufacturing utilization in the Americas Segment, where utilization and productivity remain below expected levels.
For the Americas Segment, gross profit decreased primarily due to (i) low manufacturing utilization and (ii) decreased productivity related to the consolidation of yarn manufacturing operations, partially offset by (a) slightly higher sales volumes, (b) higher conversion margins, and (c) variable cost management efforts. Additionally, $4,561 of transition costs were incurred during fiscal 2025, recorded in Cost of sales, related to (i) inventory write-downs of $2,923, and (ii) excess fixed manufacturing costs of $1,638.
For the Brazil Segment, gross profit increased primarily due to (i) higher selling prices and (ii) higher sales volumes from market share gains, which were partially offset by (a) increased raw material costs and (b) an unfavorable foreign currency translation impact. However, low-cost import competition unfavorably impacted sales prices during the fiscal year.
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 in a volatile and weak demand environment.
Fiscal 2024 vs. Fiscal 2023
Gross profit for fiscal 2024 increased by $2,375, or 16.7%, compared to fiscal 2023. Gross profit increased primarily due to (i) increased sales volumes, (ii) variable cost saving initiatives, (iii) improved productivity, and (iv) more stable raw material costs. These were partially offset by (a) higher manufacturing costs and (b) lower conversion margins. However, gross profit continues to be unfavorably impacted by low manufacturing utilization in the Americas Segment, where utilization and productivity remain below expected levels due to depressed demand.
For the Americas Segment, gross profit declined primarily due to (i) higher manufacturing costs and (ii) lower conversion margins. These were partially offset by (i) higher sales volumes, (ii) variable cost management efforts, and (ii) a more stable raw material cost environment.
For the Brazil Segment, gross profit increased primarily due to higher sales volumes from market share gains and favorable foreign currency translation effects, partially offset by decreasing market prices in Brazil due to low-cost import competition.
For the Asia Segment, gross profit increased primarily due to (i) a strong sales mix and (ii) higher sales volumes compared to fiscal 2023, despite continued macro-driven customer-demand headwinds.
SG&A Expenses
The changes in SG&A expenses were as follows:
SG&A for fiscal 2023
Net decrease in marketing expenses
Net decrease in amortization expenses
Net increase in professional fees
Other net increases
SG&A for fiscal 2024
SG&A for fiscal 2024
Net increase in compensation-related expenses
Net increase in professional fees
Other net increases
Net decrease in depreciation and amortization expenses
SG&A for fiscal 2025
Fiscal 2025 vs. Fiscal 2024
SG&A expenses increased from fiscal 2024, primarily due to higher compensation-related expenses and professional fee expenses, partially offset by decreases in depreciation and amortization expenses.
Fiscal 2024 vs. Fiscal 2023
SG&A expenses decreased from fiscal 2023, primarily due to lower marketing, compensation, and amortization expenses.
(Benefit) Provision for Bad Debts
Fiscal 2025 vs. Fiscal 2024
The (benefit) provision for bad debts changed to a benefit of $166 in fiscal 2025 from a provision of $1,571 in fiscal 2024 as the current year reflects a partial recovery of a provision recorded in fiscal 2024 for a specifically identified customer balance originating in the U.S. fiber market.
Fiscal 2024 vs. Fiscal 2023
The provision (benefit) for bad debts changed to a provision of $1,571 in fiscal 2024 from a benefit of $89 in fiscal 2023 due to the provision recorded for a specifically identified customer balance originating in the U.S. fiber market.
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 transition costs of $8,924 in fiscal 2025 which consisted of (i) equipment relocation and facility closure costs (including asset impairments and disposals) of $5,896, (ii) employee separation or retention costs of $1,580 and (iii) $1,448 in forfeitures of deposits for texturing machinery.
Restructuring costs for fiscal 2024 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.
Gain (Loss) on Sales and Disposals 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. In the fourth quarter of fiscal 2025, UNIFI recorded a gain of $35,807 related to the sale of its manufacturing facility in Madison, North Carolina. There was no meaningful activity in fiscal 2024 or 2023.
Other Operating Expense, Net
Fiscal 2025 vs. Fiscal 2024 vs. Fiscal 2023
There was no meaningful activity in fiscal 2025. Other operating expense, net was $733 in fiscal 2024 and $7,856 in fiscal 2023, which include foreign currency transaction gains and losses. Fiscal 2023 also includes (i) $8,247 of impairment related to the abandonment of certain machinery constructed in fiscal 2017 and (ii) $623 paid to a vendor to facilitate an 18-month delay for equipment purchases.
Interest Expense, Net
Fiscal 2025 vs. Fiscal 2024
Interest expense, net increased from fiscal 2024. The increase was attributable to higher average borrowings on the revolving credit facilities for most of fiscal 2025 and lower global cash balances in fiscal 2025. Fiscal 2025 also included a $136 loss on debt extinguishment.
Fiscal 2024 vs. Fiscal 2023
Interest expense, net increased from fiscal 2023. The increase was attributable to higher average borrowings on the revolving credit facility combined with higher average interest rates in fiscal 2024. Fiscal 2023 also includes a $273 loss on debt extinguishment.
Loss (Earnings) from Unconsolidated Affiliates
There was no material activity for fiscal 2025, 2024, and 2023.
Provision for Income Taxes
The change in consolidated income taxes is as follows:
Fiscal 2025
Fiscal 2024
Fiscal 2023
Loss before income taxes
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 and taxable income; the mix of income by jurisdiction; changes in deferred tax valuation allowances; and changes in audit adjustments, statutes, regulations, and case law. Additionally, the effects of discrete and other rate impacting items are more pronounced when income before income taxes is lower.
Fiscal 2025 vs. Fiscal 2024
The decrease in the effective tax rate from fiscal 2024 to fiscal 2025 was primarily attributable to (i) lower losses in the U.S. current year and (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 in prior period.
Fiscal 2024 vs. Fiscal 2023
The decrease in the effective tax rate from fiscal 2023 was primarily attributable to a discrete tax benefit recognized in fiscal 2023 related to the recovery of certain Brazilian income taxes paid in prior years.
Net Loss
Fiscal 2025 vs. Fiscal 2024
Net loss for fiscal 2025 was $20,348, or $1.11 per diluted share, compared to $47,395, or $2.61 per diluted share, for fiscal 2024. The improvement in net loss was primarily attributable to gains on the sales of assets, partially offset by (a) lower gross profit and (b) higher restructuring costs.
Fiscal 2024 vs. Fiscal 2023
Net loss for fiscal 2024 was $47,395, or $2.61 per diluted share, compared to $46,344, or $2.57 per diluted share, for fiscal 2023. The increase in net loss was primarily attributable to (i) higher bad debt expense, (ii) restructuring costs, (iii) interest expense, net and (iv) lower earnings from unconsolidated affiliates, mostly offset by higher gross profit and lower other operating expense, net. Fiscal 2023 Other operating expense, net included (a) $8,247 of impairment related to the abandonment of certain machinery constructed in fiscal 2017 and (b) $623 paid to a vendor to facilitate an 18-month delay for equipment purchases.
Adjusted EBITDA (Non-GAAP Financial Measure)
Adjusted EBITDA decreased from $(5,197) for fiscal 2024 to $(11,551) for fiscal 2025, primarily due to lower gross profit together with increases in SG&A expenses, partially offset by the improvement in bad debt expense.
Adjusted EBITDA decreased from $(4,085) for fiscal 2023 to $(5,197) for fiscal 2024, primarily due to higher bad debt expense, lower earnings from unconsolidated affiliates, and other operating expenses, net.
Adjusted Net Loss (Non-GAAP Financial Measure)
Adjusted Net Loss increased from $(42,294) for fiscal 2024 to $(47,859) for fiscal 2025, primarily due to lower gross profit together with increases in SG&A expenses, partially offset by the improvement in bad debt expense.
Adjusted Net Loss increased from $(41,273) for fiscal 2023 to $(42,294) for fiscal 2024, primarily due to higher bad debt expense, lower earnings from unconsolidated affiliates, and a decrease in other operating expenses, net.
Segment Overview
Following is a discussion and analysis of the revenue and profitability performance of UNIFI’s reportable segments for fiscal 2025, 2024, and 2023.
Americas Segment
The components of Segment Profit and the percentage increase or decrease over the prior period amounts for the Americas Segment are as follows:
Fiscal 2025
% Change
Fiscal 2024
% Change
Fiscal 2023
Net sales
Cost of sales
Gross loss
Depreciation expense
Segment Profit
Gross margin
Segment margin
Segment net sales as a percentage
of consolidated amount
Segment Profit as a
percentage of consolidated amount
The changes in net sales for the Americas Segment are as follows:
Net sales for fiscal 2023
Net change in average selling price and sales mix
Increase in sales volumes
Net sales for fiscal 2024
Net sales for fiscal 2024
Net change in average selling price and sales mix
Increase in sales volumes
Net sales for fiscal 2025
The increase in net sales for the Americas Segment from fiscal 2024 to fiscal 2025 was primarily attributable to higher sales volumes, partially offset by a lower-priced sales mix. Both periods were unfavorably impacted by customer-demand headwinds and the volatile global textile demand environment.
The decrease in net sales for the Americas Segment from fiscal 2023 to fiscal 2024 was primarily attributable to the net change in average selling price and sales mix that included lower raw material input costs, partially offset by an increase in sales volumes. Both periods were unfavorably impacted by customer-demand headwinds and the volatile global textile demand environment.
The changes in Segment Profit for the Americas Segment are as follows:
Segment Profit for fiscal 2023
Change in underlying margins and sales mix
Increase in sales volumes
Segment Profit for fiscal 2024
Segment Profit for fiscal 2024
Change in underlying margins and sales mix
Segment Profit for fiscal 2025
The decrease in Segment Profit for the Americas Segment from fiscal 2024 to fiscal 2025 was primarily attributable to lower than anticipated manufacturing utilization and inconsistent productivity, along with transition costs related to the consolidation of yarn manufacturing operations.
The decrease in Segment Profit for the Americas Segment from fiscal 2023 to fiscal 2024 was primarily attributable to (i) higher manufacturing costs and (ii) lower conversion margins. Segment Profit for the Americas Segment continues to be negatively impacted by a lower proportion of fiber sales volumes. As fiber products carry a higher selling price and allocation of production costs versus Chip and Flake, lower fiber production drives weaker manufacturing utilization and adversely impacts gross profit and gross margin. These negative impacts were partially offset by variable cost management efforts, more stable raw material costs and an increase in sales volumes in fiscal 2024.
Brazil Segment
The components of Segment Profit and the percentage increase or decrease over the prior period amounts for the Brazil Segment are as follows:
Fiscal 2025
% Change
Fiscal 2024
% Change
Fiscal 2023
Net sales
Cost of sales
Gross profit
Depreciation expense
Segment Profit
Gross margin
Segment margin
Segment net sales as a percentage
of consolidated amount
Segment Profit as a percentage
of consolidated amount
The changes in net sales for the Brazil Segment are as follows:
Net sales for fiscal 2023
Decrease in average selling price and change in sales mix
Increase in sales volumes
Favorable foreign currency translation effects
Net sales for fiscal 2024
Net sales for fiscal 2024
Increase in average selling price and change in sales mix
Increase in sales volumes
Unfavorable foreign currency translation effects
Net sales for fiscal 2025
The increase in net sales for the Brazil Segment from fiscal 2024 to fiscal 2025 was primarily attributable to (i) higher average selling prices in response to increasing raw material costs and (ii) an improvement in sales volumes from market share gains, mostly offset by unfavorable foreign currency translation effects from the weakening of the BRL versus the USD.
The decrease in net sales for the Brazil Segment from fiscal 2023 to fiscal 2024 was primarily attributable to lower average selling prices due to pressure from low-priced import competition, partially offset by (i) an improvement in sales volumes from market share gains and (ii) favorable foreign currency translation effects from the strengthening of the BRL versus the USD.
The changes in Segment Profit for the Brazil Segment are as follows:
Segment Profit for fiscal 2023
Increase in sales volumes
Increase in underlying unit margins
Favorable foreign currency translation effects
Segment Profit for fiscal 2024
Segment Profit for fiscal 2024
Increase in underlying unit margins
Increase in sales volumes
Unfavorable foreign currency translation effects
Segment Profit for fiscal 2025
The increase in Segment Profit for the Brazil Segment from fiscal 2024 to fiscal 2025 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 increase in Segment Profit for the Brazil Segment from fiscal 2023 to fiscal 2024 was primarily attributable to (i) increases in sales volumes as discussed above, (ii) improved conversion margins, and (ii) favorable foreign currency translation effects.
Asia Segment
The components of Segment Profit and the percentage increase or decrease over the prior period amounts for the Asia Segment are as follows:
Fiscal 2025
% Change
Fiscal 2024
% Change
Fiscal 2023
Net sales
Cost of sales
Gross profit
Depreciation expense
Segment Profit
Gross margin
Segment margin
Segment net sales as a percentage
of consolidated amount
Segment Profit as a percentage
of consolidated amount
The changes in net sales for the Asia Segment are as follows:
Net sales for fiscal 2023
Increase in sales volumes
Unfavorable foreign currency translation effects
Change in average selling price and sales mix
Net sales for fiscal 2024
Net sales for fiscal 2024
Change in average selling price and sales mix
Decrease in sales volumes
Favorable foreign currency translation effects
Net sales for fiscal 2025
The decrease in net sales for the Asia Segment from fiscal 2024 to fiscal 2025 was primarily attributable to (i) a change in sales mix of REPREVE products and (ii) an overall decrease in sales volumes due to the continued customer-demand headwinds, particularly for apparel, and volatility introduced by recent tariffs partially offset by favorable foreign currency translation effects due to the strengthening of the RMB versus the USD.
The increase in net sales for the Asia Segment from fiscal 2023 to fiscal 2024 was primarily attributable to improved sales volumes despite continued macro-driven customer-demand headwinds and inventory destocking by brands and retailers, particularly for apparel. This was partially offset by (i) unfavorable foreign currency translation effects due to the weakening of the RMB versus the USD and (ii) the changes in average selling prices and sales mix.
The changes in Segment Profit for the Asia Segment are as follows:
Segment Profit for fiscal 2023
Increase in sales volumes
Change in underlying margins and sales mix
Unfavorable foreign currency translation effects
Segment Profit for fiscal 2024
Segment Profit for fiscal 2024
Change in underlying margins and sales mix
Decrease in sales volumes
Favorable foreign currency translation effects
Segment Profit for fiscal 2025
The decrease in Segment Profit for the Asia Segment from fiscal 2024 to fiscal 2025 was primarily attributable to a decline in gross margin associated with (i) a change in sales mix of REPREVE products and (ii) lower sales volumes due to customer-demand headwinds and volatility introduced by recent tariffs.
The increase in Segment Profit for the Asia Segment from fiscal 2023 to fiscal 2024 was attributable to (i) the increase in sales volumes discussed above and (ii) an improved gross margin rate associated with a strong sales mix of REPREVE products, partially offset by unfavorable foreign currency translation effects.
Liquidity and Capital Resources
UNIFI’s primary capital requirements are for working capital, capital expenditures, debt service. UNIFI’s primary sources of capital are cash generated from operations, borrowings available under the 2022 ABL Revolver (as defined below) of the 2022 ABL Facility (as defined below) and the 2024 Facility (as defined below).
On October 25, 2024, UNIFI entered into a new credit agreement with Wells Fargo Bank, National Association for a $25,000 revolving credit facility (the "2024 Facility"). The maturity date of the 2024 Facility is the earlier of (i) October 28, 2027 and (ii) the termination or refinancing of the 2022 Credit Agreement. The 2024 Facility is deemed unsecured financing for UNIFI, but is collateralized by certain assets pledged by related party Kenneth G. Langone, one of the members of UNIFI's Board of Directors. Borrowings under the 2024 Facility bear interest at a rate of SOFR plus 0.90%. The 2024 Facility contains no additional financial covenants beyond those already in effect for the 2022 Credit Agreement and is subject to a monthly unused line fee of 0.25% on available borrowing capacity. In 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.
As of June 29, 2025, all of UNIFI’s $108,008 of debt obligations were guaranteed by certain of its domestic operating subsidiaries, and 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 June 29, 2025 for domestic operations compared to foreign operations:
Domestic
Foreign
Total
Cash and cash equivalents
Potential borrowings available under financing arrangements
Trigger level under ABL Revolver
Available liquidity
Working capital
Total debt obligations
For fiscal 2025, cash used from operations was $21,311 and, at June 29, 2025, excess availability under the 2022 ABL Revolver and the 2024 Facility was $46,526 and $561, respectively. Our liquidity position (calculated in the table above) and asset base remains elevated and is expected to be adequate to allow UNIFI to manage through the current macro-economic environment and to respond quickly to demand recovery.
UNIFI considers $42,505 of its unremitted foreign earnings to be permanently reinvested to fund working capital requirements and operations abroad, and has therefore not recognized a deferred tax liability for the estimated future taxes that would be incurred upon repatriation. If these earnings were distributed in the form of dividends or otherwise, or if the shares of the relevant foreign subsidiaries were sold or otherwise transferred, UNIFI could be subject to additional tax liabilities of approximately $11,193.
Liquidity Considerations
Inflationary pressures and demand uncertainty throughout fiscal 2023, 2024, and 2025 created risks to UNIFI's liquidity.
Following the establishment of the 2022 Credit Agreement and the reduction in net debt from the sale of the Madison manufacturing facility, UNIFI’s cash and liquidity positions are considered sufficient to sustain its operations and meet its growth needs. However, further degradation in the macroeconomic environment could introduce additional liquidity risk and require UNIFI to limit cash outflows for discretionary activities while further utilizing available and additional forms of credit.
Short-term global demand appears somewhat uncertain and any adverse events or circumstances could place critical pressure on (i) our liquidity position; and/or (ii) our ability to fund our operations, capital expenditures, and expected business growth. Should global demand, economic activity, or input availability decline considerably for a prolonged period of time (for example, in connection with the Russia-Ukraine or Middle East conflicts or the macro-economic factors leading to inflation and a potential recession), UNIFI maintains the ability to (i) seek additional credit or financing arrangements and/or (ii) re-implement cost reduction initiatives to preserve cash and secure the longevity of the business and operations.
Additionally, UNIFI considers opportunities to repatriate existing cash to reduce debt and preserve or enhance liquidity. In fiscal 2023, 2024, and 2025, we repatriated approximately $19,000, $32,000, and $15,000, respectively, from our operations in Asia and Brazil to the U.S. and, after remitting the appropriate withholding taxes, utilized the cash to reduce our outstanding revolver borrowings, thereby increasing the availability. Management regularly evaluates such repatriations and believes that it has the ability to take additional, similar actions from time to time, as circumstances warrant.
In the fourth quarter of fiscal 2025, UNIFI sold its Madison, North Carolina facility, as well as certain machinery and equipment located thereon, for a cash purchase price of $45,000. The sale of this facility was part of a plan announced in February 2025 to consolidate the Americas Segment yarn manufacturing operations and transition the associated manufacturing operations to other production facilities in North and Central America.
Recognizing the continuing weak demand environment, in fiscal 2023, UNIFI negotiated a contract modification with an equipment vendor from which significant capital expenditures had occurred and were planned to continue through September 2024. The contract modification was executed at a cost to UNIFI of $623 and allowed UNIFI to delay the associated equipment purchases and installation activities for 18 months, deferring approximately $25,000 of capital expenditures. In fiscal 2024, UNIFI extended this delay by an additional 12 months at no cost to the Company. In the fourth quarter of fiscal 2025, UNIFI terminated the overall contract in exchange for the forfeiture of $1,448 in deposits. These actions allow for (i) improved short- and mid-term liquidity in light of the current subdued levels of sales and facility utilization and (ii) a better matching of future capital expenditures with the consolidation of UNIFI's yarn manufacturing operations.
During fiscal 2026, we expect the majority of our capital will be deployed to support further working capital needs in response to the demand environment and product sales. However, given the current global economic risks, we are prepared to act swiftly and diligently to ensure the vitality of the business. Our recent actions, specifically the transition of our Madison operations to other production facilities within North and Central America, will improve our operational efficiency as a result of the cost savings that will be realized. Furthermore, the sale of the Madison manufacturing facility allowed us to repay a portion of the principal balance of the term loan and revolving credit facility outstanding under the 2022 Credit Agreement lowering our future debt service costs.
Debt Obligations
The following table presents details for UNIFI’s debt obligations:
Weighted Average
Scheduled
Interest Rate as of
Principal Amounts as of
Maturity Date
June 29, 2025
June 29, 2025
June 30, 2024
ABL Revolver
October 2027
2024 Facility
October 2027
ABL Term Loan
October 2027
Finance lease obligations
Total debt
Current ABL Term Loan
Current portion of finance lease obligations
Unamortized debt issuance costs
Total long-term debt
Scheduled maturity dates for finance lease obligations range from November 2026 to August 2032, as further outlined in Note 4, “Leases,” to the accompanying consolidated financial statements.
2022 ABL Facility and Amendments
On October 28, 2022, Unifi, Inc. and certain of its subsidiaries entered into a Second Amended and Restated Credit Agreement (the “2022 Credit Agreement”) with a syndicate of lenders. The 2022 Credit Agreement provided for a $230,000 senior secured credit facility (the “2022 ABL Facility”), including a $115,000 revolving credit facility (the "2022 ABL Revolver") and a term loan (the "2022 ABL Term Loan") that can be reset up to a maximum amount of $115,000, once per fiscal year, if certain conditions are met. The 2022 ABL Facility has a maturity date of October 28, 2027. The 2022 ABL Term Loan requires quarterly principal payments of $2,300 that began on February 1, 2023. Borrowings under the 2022 ABL Facility bear interest at the Secured Overnight Financing Rate ("SOFR") plus 0.10% plus an applicable margin of 2.0%, or the Base Rate (as defined in the 2022 Credit Agreement) plus an applicable margin of 1.0%, with interest paid most commonly on a monthly basis.
In connection with entering into the 2022 Credit Agreement, UNIFI recorded a $273 loss on debt extinguishment to interest expense in fiscal 2023 related to its prior debt instrument.
On September 5, 2024, UNIFI, Inc. and certain of its subsidiaries entered into a First Amendment to the 2022 Credit Agreement (the “First Amendment”) with a syndicate of lenders. The First Amendment primarily (i) permitted the sale of a Company-owned real estate asset (consisting of an industrial warehouse building and land acreage) located in Yadkinville, North Carolina with application of the net proceeds to reduce the outstanding ABL Revolver balance, in lieu of the prescribed mandatory prepayment to the ABL Term Loan; (ii) reduced the Maximum Revolver Amount from $115,000 to $80,000; (iii) modified the definition of the Trigger Level as of any date of determination to the greater of (a) $16,500 and (b) 10% of the sum of (i) the Maximum Revolver Amount plus (ii) the outstanding principal amount of the ABL Term Loan on such date of determination; (iv) increased the range of the Applicable Margin on (a) SOFR-based loans to a new range of 1.50% to 2.00% and (b) Base Rate-based loans to a new range of 0.50% to 1.00%, with such new ranges of Applicable Margin rates becoming immediately effective and continuing until the Company achieves a Fixed Charge Coverage Ratio of 1.05 to 1.00 or better; (v) for a Term Loan Reset, established an additional requirement to obtain lender approval; and (vi) modified certain terms and conditions of the 2022 Credit Agreement including, but not limited to, Swing Loans, Letter of Credit sublimits, and costs related to normal course collateral valuations for the ABL Facility.
On April 10, 2025, UNIFI entered into a Second Amendment to the 2022 Credit Agreement (the “Second Amendment”). The Second Amendment primarily (i) permitted the Company to enter into the purchase agreement related to, and consummate the sale of, the Madison, North Carolina property, (ii) permitted the Company to allocate a portion of the net proceeds from the sale to repay outstanding revolving loans under the 2022 Credit Agreement, after the application of the greater of $25,000 or 50% of such net proceeds toward outstanding term loans, and (iii) required the consent of all lenders, rather than the Required Lenders (as defined in the 2022 Credit Agreement), in order to reset the maximum amount of the term loans available under the 2022 Credit Agreement.
The 2022 ABL Facility is secured by a first-priority perfected security interest in substantially all owned property and assets (together with all proceeds and products) of Unifi, Inc., Unifi Manufacturing, Inc., and a certain subsidiary guarantor (collectively, the “Loan Parties”). It is also secured by a first-priority security interest in all (or 65% in the case of UNIFI’s first-tier controlled foreign subsidiary, as required by the lenders) of the stock of (or other ownership interests in) each of the Loan Parties (other than Unifi, Inc.) and certain subsidiaries of the Loan Parties, together with all proceeds and products thereof.
If excess availability under the 2022 ABL Revolver falls below the Trigger Level (as defined in the First Amendment), a financial covenant requiring the Loan Parties to maintain a fixed charge coverage ratio on a quarterly basis of at least 1.05 to 1.00 becomes effective. The Trigger Level as of June 29, 2025 was $16,500. In addition, the 2022 ABL Facility contains restrictions on particular payments and investments, including certain restrictions on the payment of dividends and share repurchases. Subject to specific provisions, the 2022 ABL Term Loan may be prepaid at par, in whole or in part, at any time before the maturity date, at UNIFI’s discretion.
The applicable margin is based on (i) the excess availability under the 2022 ABL Revolver and (ii) the consolidated leverage ratio, calculated as of the end of each fiscal quarter. UNIFI’s ability to borrow under the 2022 ABL Revolver is limited to a borrowing base equal to specified percentages of eligible accounts receivable and inventories and is subject to certain conditions and limitations. There is also a monthly unused line fee under the 2022 ABL Revolver of 0.25%.
As of June 29, 2025, UNIFI was in compliance with all financial covenants in the 2022 Credit Agreement; excess availability under the 2022 ABL Revolver was $46,526 and UNIFI had $0 of standby letters of credit. Management maintains the capability to improve the fixed charge coverage ratio utilizing existing foreign cash and cash equivalents.
UNIFI did not incur additional costs or administrative burdens during the transition from LIBOR to SOFR with the establishment of the 2022 Credit Agreement.
2024 Facility
On October 25, 2024, UNIFI entered into a new credit agreement with Wells Fargo Bank, National Association for a $25,000 revolving credit facility (the "2024 Facility"). The maturity date of the 2024 Facility is the earlier of (i) October 28, 2027 and (ii) the termination or refinancing of the 2022 Credit Agreement. The 2024 Facility is deemed unsecured financing for UNIFI, but is collateralized by certain assets pledged by related party Kenneth G. Langone, one of the members of UNIFI's Board of Directors. Borrowings under the 2024 Facility bear interest at a rate of SOFR plus 0.90%. The 2024 Facility contains no additional financial covenants beyond those already in effect for the 2022 Credit Agreement and is subject to a monthly unused line fee of 0.25% on available borrowing capacity. UNIFI borrowed $22,000 against the 2024 Facility during the third fiscal quarter and used the proceeds to reduce the outstanding ABL Revolver balance. There was no impact to debt principal from these transactions.
Finance Lease Obligations
During fiscal 2025, UNIFI entered into finance lease obligations totaling $1,716 for transportation equipment. The maturity dates of these obligations range from March 2028 to August 2032 with interest rates ranging from 4.2% to 5.4%.
During fiscal 2024, UNIFI entered into finance lease obligations totaling $1,633 for texturing machines. The maturity dates of these obligations occur during fiscal 2029 with interest rates between 6.6% and 6.9%.
Construction Financing
In May 2021, UNIFI entered into an agreement with a third party lender that provides for construction-period financing for certain texturing machinery included in our capital allocation plans. UNIFI records project costs to construction in progress and the corresponding liability to construction financing (within long-term debt). The agreement provides for monthly, interest-only payments during the construction period, at a rate of SOFR plus 1.25%, and contains terms customary for a financing of this type.
Each borrowing under the agreement provides for 60 monthly payments, which will commence upon the completion of the construction period with a fixed interest rate of approximately SOFR plus 1.0% to 1.2%. In connection with this construction financing arrangement, UNIFI has borrowed a total of $9,755 and transitioned $9,755 of completed asset costs to finance lease obligations as of June 29, 2025. No borrowings occurred during fiscal 2025.
Scheduled Debt Maturities
The following table presents the scheduled maturities of UNIFI’s outstanding debt obligations for the following five fiscal years and thereafter.
Fiscal 2026
Fiscal 2027
Fiscal 2028
Fiscal 2029
Fiscal 2030
Thereafter
ABL Revolver
2024 Facility
ABL Term Loan
Finance lease obligations
Total
Further discussion of the terms and conditions of the Credit Agreement and the Company’s existing indebtedness is outlined in Note 12, “Long-Term Debt,” to the accompanying consolidated financial statements.
Net Debt (Non-GAAP Financial Measure)
The reconciliations for Net Debt are as follows:
June 29, 2025
June 30, 2024
Long-term debt
Current portion of long-term debt
Unamortized debt issuance costs
Debt principal
Less: cash and cash equivalents
Net Debt
Working Capital and Adjusted Working Capital (Non-GAAP Financial Measure)
The following table presents the components of working capital and the reconciliation from working capital to Adjusted Working Capital:
June 29, 2025
June 30, 2024
Cash and cash equivalents
Receivables, net
Inventories
Income taxes receivable
Other current assets
Accounts payable
Other current liabilities
Income taxes payable
Current operating lease liabilities
Current portion of long-term debt
Working capital
Less: Cash and cash equivalents
Less: Income taxes receivable
Less: Income taxes payable
Less: Current operating lease liabilities
Less: Current portion of long-term debt
Adjusted Working Capital
Working capital decreased from $172,367 as of June 30, 2024 to $164,684 as of June 29, 2025, while Adjusted Working Capital decreased from $160,680 to $151,167, both primarily in connection with slower overall economic conditions and higher input costs. Working capital and Adjusted Working Capital are within the range of management’s expectations based on the composition of the underlying business and global structure.
The decrease in receivables, net was primarily due to the overall decrease in sales and the timing of cash receipts. The decrease in inventories was primarily attributable to concerted efforts to reduce inventory levels in response to the depressed demand environment and in relation to the consolidation of yarn manufacturing operations with the closure of the Madison, North Carolina facility. The decrease in other current assets was primarily due to the fiscal 2025 sale of a warehouse in Yadkinville, North Carolina previously classified in assets held for sale in fiscal 2024. The decrease in accounts payable followed the decrease in inventories and production activity in fiscal 2025. The increase in other current liabilities primarily reflects the change in compensation-related accruals in fiscal 2025 and the timing of payroll and operating expense payments between the two period-ends. The increase in income taxes receivable was primarily due to a reclassification of Brazil’s income tax recovery from other non-current assets to income taxes receivable due to the expectation of realizing the tax benefit within 12 months. The change in income taxes payable, current operating lease liabilities, and current portion of long-term debt were insignificant.
Capital Projects
Maintenance capital expenditures are necessary to support UNIFI’s current operations, capacities, and capabilities and exclude expenses relating to repairs and costs that do not extend an asset’s useful life.
In fiscal 2025, UNIFI invested $10,488 in capital projects, primarily relating to (i) modifications of machinery with the consolidation of yarn manufacturing operations, (ii) further improvements in production capabilities and technological enhancements in the Americas, and (iii) routine annual maintenance capital expenditures.
In fiscal 2024, UNIFI invested $11,198 in capital projects, primarily relating to (i) further improvements in production capabilities and technological enhancements in the Americas, and (ii) routine annual maintenance capital expenditures.
In fiscal 2023, UNIFI invested $36,434 in capital projects, primarily relating to (i) texturing machinery, (ii) further improvements in production capabilities and technological enhancements in the Americas, and (iii) routine annual maintenance capital expenditures.
In fiscal 2026, UNIFI expects to invest between $8,000 and $12,000 in capital projects, primarily relating to routine annual maintenance capital expenditures. UNIFI will seek to ensure maintenance capital expenditures are sufficient to allow continued production at high efficiencies.
The total amount ultimately invested for fiscal 2026 could be more or less than the currently estimated amount depending on the timing and scale of contemplated initiatives and is expected to be funded primarily with cash provided by operating activities and other borrowings. 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.
Share Repurchase Program
On October 31, 2018, UNIFI announced that the Board approved the 2018 SRP under which UNIFI is authorized to acquire up to $50,000 of its common stock. Under the 2018 SRP, purchases may be made from time to time in the open market at prevailing market prices or through private transactions or block trades. The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements, and other factors. The share repurchase authorization is discretionary and has no expiration date.
As of June 29, 2025, UNIFI had repurchased 701 shares of its common stock at an average price of $15.90 per share, none of which occurred in fiscal 2024, leaving $38,859 available for repurchases under the 2018 SRP. UNIFI will continue to evaluate opportunities to use excess cash flows from operations or existing borrowings to repurchase additional stock, while maintaining sufficient liquidity to support its operational needs and to fund future strategic growth opportunities.
Liquidity Summary
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 facility will enable UNIFI to meet its foreseeable liquidity requirements. However, further degradation in the macroeconomic environment could introduce additional liquidity risk and require UNIFI to limit cash outflows while further utilizing available and additional forms of credit.
Cash (Used) Provided by Operating Activities
The significant components of net cash (used) provided by operating activities are summarized below. UNIFI analyzes net cash provided by operating activities utilizing the major components of the statements of cash flows prepared under the indirect method.
Fiscal 2025
Fiscal 2024
Fiscal 2023
Net loss
Depreciation and amortization expense
Equity in loss (earnings) of unconsolidated affiliates
Impairment for asset abandonment
Recovery of taxes, net
Non-cash compensation expense
(Gain) loss on sales and disposals of assets
Deferred income taxes
Subtotal
Distributions received from unconsolidated affiliates
Change in inventories
Other changes in assets and liabilities
Net cash (used) provided by operating activities
Fiscal 2025 Compared to Fiscal 2024
The decrease in operating cash flows from fiscal 2024 was primarily due to weaker underlying earnings together with less favorable impacts from changes in working capital than in the prior year and transition activities.
Fiscal 2024 Compared to Fiscal 2023
The decrease in operating cash flows was primarily due to weaker earnings in fiscal 2024 compared to fiscal 2023, partially offset by working capital improvements.
Cash (Used) Provided by Investing Activities and Financing Activities
Fiscal 2025
Significant investing activities included $10,488 for capital expenditures (as described above) and $51,553 of cash proceeds from the sales of a warehouse in Yadkinville, North Carolina and manufacturing facility in Madison, North Carolina. Significant financing activities included $20,900 of net payments against the 2022 ABL Facility (including $25,000 and $18,322 of payments towards the 2022 ABL Term Loan and Revolver, respectively, associated with the sale of the Madison, North Carolina facility in the fourth quarter) along with $3,093 of payments on finance lease obligations.
Fiscal 2024
Significant investing activities included $11,189 for capital expenditures (as described above). Significant financing activities included $7,600 of net payments against the 2022 ABL Facility, along with $3,001 of payments on finance lease obligations.
Fiscal 2023
Significant investing activities included $36,434 for capital expenditures (as described above). Significant financing activities included $22,200 of net borrowings against the 2022 ABL Facility, along with $2,123 of payments on finance lease obligations.
Contractual Obligations
In addition to management’s discussion and analysis surrounding our liquidity and capital resources, long-term debt, finance leases, operating leases, and the associated principal and interest components thereof, as of June 29, 2025, UNIFI’s contractual obligations consisted of the following additional concepts and considerations:
Purchase obligations are agreements that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Such obligations, predominantly related to ongoing operations and service contracts in support of normal course business, range from approximately $1,000 to $10,000 per annum and vary based on the renewal timing of specific commitments and the range of services received.
Non-capital purchase orders totaled approximately $13,218 at the end of fiscal 2025 and are expected to be settled in fiscal 2026. Such open purchase orders are in the ordinary course of business for the procurement of (i) raw materials used in the production of inventory, (ii) certain consumables and outsourced services used in UNIFI’s manufacturing processes, and (iii) selected finished goods for resale sourced from third-party suppliers.
Other balance sheet items are detailed within the notes to the consolidated financial statements, including, but not limited to, post-employment plan liabilities, unpaid invoice and contract amounts, and other balances and charges that primarily relate to normal course operations.
UNIFI does not engage in off-balance sheet arrangements and only enters into material contracts in the ordinary course of business and/or to hedge the associated risks (e.g., interest rate swaps).
Recent Accounting Pronouncements
Issued and Pending Adoption
In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . ASU No. 2024-03 does not change or remove existing expense disclosure requirement but requires disaggregated disclosures about certain expense categories and captions, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization, and selling expenses. This ASU will become effective for UNIFI's fiscal 2028 and in the first quarter of fiscal 2029 for interim reporting, with retrospective application permitted. UNIFI is currently evaluating the impact on the Company's disclosures on its consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . ASU No. 2023-09 modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (iii) income tax expense or benefit from continuing operations (separated by federal, state, and foreign). The ASU also requires entities to disclose their income tax payments to international, federal, state, and local jurisdictions, among other changes. The ASU is effective for UNIFI's fiscal 2026, with early adoption permitted, and should be applied on a prospective basis, but retrospective application is permitted. UNIFI is currently evaluating the impact on the Company’s disclosures but does not expect this standard will have a material impact on its consolidated financial position, results of operations, or cash flows.
Upon review of each ASU issued by the FASB through the date of this report, UNIFI identified no other newly issued accounting pronouncements that are expected to have a significant impact on UNIFI’s consolidated financial statements.
Recently Adopted
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . ASU No. 2023-07 expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. UNIFI adopted the ASU this fiscal year and the adoption did not have a material impact to UNIFI's consolidated financial statements.
Off-Balance Sheet Arrangements
UNIFI is not a party to any off-balance sheet arrangements that have had, or are reasonably likely to have, a current or future material effect on UNIFI’s financial condition, results of operations, liquidity, or capital expenditures.
Critical Accounting Policies
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The SEC has defined a company’s most critical accounting policies as those involving accounting estimates that require management to make assumptions about matters that are highly uncertain at the time and where different reasonable estimates or changes in the accounting estimate from quarter to quarter could materially impact the presentation of the financial statements. The following discussion provides further information about accounting policies critical to UNIFI and should be read in conjunction with Note 2, “Summary of Significant Accounting Policies,” to the accompanying consolidated financial statements.
Inventory Net Realizable Value Adjustment
The inventory net realizable value adjustment is established based on many factors, including: historical recovery rates, inventory age, expected net realizable value of specific products, and current economic conditions. Specific reserves are established based on a determination of the obsolescence of the inventory and whether the inventory cost exceeds net realizable value. Anticipating selling prices and evaluating the condition of the inventories require judgment and estimation, which may impact the resulting inventory valuation and gross margins. UNIFI uses current and historical knowledge to record reasonable estimates of its markdown percentages and expected sales prices. UNIFI believes it is unlikely that differences in actual demand or selling prices from those forecasted by management would have a material impact on UNIFI’s financial condition or results of operations. UNIFI has not made any material changes to the methodology used in establishing its inventory net realizable value adjustment during the past three fiscal years. A plus or minus 10% change in the inventory net realizable value adjustment would not have been material to UNIFI’s consolidated financial statements for the past three fiscal years.
June 29, 2025
June 30, 2024
July 2, 2023
Net realizable value adjustment
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk
UNIFI is exposed to market risks associated with changes in interest rates, and fluctuations in foreign currency exchange rates and raw material and commodity costs, which may adversely affect its financial position, results of operations or cash flows. UNIFI does not enter into derivative financial instruments for trading purposes, nor is it a party to any leveraged financial instruments.
Interest Rate Risk
UNIFI is exposed to interest rate risk through its borrowing activities. As of June 29, 2025, UNIFI had borrowings under the 2022 ABL Term Facility and 2024 Facility totaling $100,000. After considering UNIFI’s outstanding debt obligations with fixed rates of interest, UNIFI’s sensitivity analysis indicates that a 50-basis point interest rate increase as of June 29, 2025 would result in an increase in annual interest expense of approximately $500.
Foreign Currency Exchange Rate Risk
UNIFI conducts its business in various foreign countries and in various foreign currencies. Each of UNIFI’s subsidiaries may enter into transactions (sales, purchases, fixed purchase commitments, etc.) that are denominated in currencies other than the subsidiary’s functional currency and thereby expose UNIFI to foreign currency exchange rate risk. UNIFI may enter into foreign currency forward contracts to hedge this exposure. UNIFI may also enter into foreign currency forward contracts to hedge its exposure for certain equipment or inventory purchase commitments. As of June 29, 2025, UNIFI had no outstanding foreign currency forward contracts.
A significant portion of raw materials purchased by the Brazil Segment are denominated in USDs, requiring UNIFI to exchange BRL for USD. A significant portion of sales and asset balances for the Asia Segment are denominated in USDs. During recent fiscal years, UNIFI has been negatively impacted by fluctuations of the BRL and the RMB. Discussion and analysis surrounding the impact of fluctuations of the BRL and the RMB on UNIFI’s results of operations are included above in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” UNIFI does not enter into foreign currency derivatives to hedge its net investment in its foreign operations.
As of June 29, 2025, foreign currency exchange rate risk concepts included the following:
Approximate Amount or Percentage
Percentage of total consolidated assets held by UNIFI's subsidiaries outside the U.S. whose functional
currency is not the USD
Cash and cash equivalents held outside the U.S.:
Denominated in USD
Denominated in RMB
Denominated in BRL
Denominated in other foreign currencies
Total cash and cash equivalents held outside the U.S.
Percentage of total cash and cash equivalents held outside the U.S.
Cash and cash equivalents held inside the U.S. in USD by foreign subsidiaries
Raw Material and Commodity Cost Risks
A significant portion of UNIFI’s raw material and energy costs are derived from petroleum-based chemicals. The prices for petroleum and petroleum-related products and related energy costs are volatile and dependent on global supply and demand dynamics, including certain geo-political risks. A sudden rise in the price of petroleum and petroleum-based products could have a material impact on UNIFI’s profitability. UNIFI does not use financial instruments to hedge its exposure to changes in these costs as management has concluded that the overall cost of hedging petroleum exceeds the potential risk mitigation. The costs of the primary raw materials that UNIFI uses throughout all of its operations are generally based on USD pricing, and such materials are purchased at market or at fixed prices that are established with individual vendors as part of the purchasing process for quantities expected to be consumed in the ordinary course of business. UNIFI manages fluctuations in the cost of raw materials primarily by making corresponding adjustments to the prices charged to its customers. Certain customers are subject to an index-based pricing model in which UNIFI’s prices are adjusted based on the change in the cost of certain raw materials in the prior quarter. Pricing adjustments for other customers must be negotiated independently. UNIFI attempts to pass on to its customers increases in raw material costs, but due to market conditions, this is not always possible. When price increases can be implemented, there is typically a time that affects UNIFI’s margins during one or more quarters. In ordinary market conditions in which raw material price increases have and sales volumes are consistent with traditional levels, UNIFI has historically been in implementing price adjustments within one to two fiscal quarters of the raw material price increase for its index-priced customers and within two fiscal quarters of the raw material price increase for its non-index-priced customers.
During fiscal 2022 and 2023, our raw material costs were elevated. We were able to implement responsive selling price adjustments for the majority of our portfolio; however our underlying gross margin was pressured. In fiscal 2024 and 2025, while gross margins were still pressured, UNIFI experienced a more stable raw material pricing environment for most of the fiscal year. Nonetheless, such costs remain subject to the volatility described above and, should raw material costs increase unexpectedly, UNIFI’s results of operations and cash flows are likely to be adversely impacted. In any event, UNIFI monitors these dynamic factors closely.
Cash Deposits and Financial Institution Risk
During calendar 2023, certain regional bank crises and failures generated additional uncertainty and volatility in the financial and credit markets. UNIFI currently holds the vast majority of its cash deposits with large foreign banks in our associated operating regions, and management believes that it has the ability to repatriate cash to the U.S. Accordingly, UNIFI has not modified its mix of financial institutions holding cash deposits, but UNIFI continues to monitor the environment and current events to ensure any increase in concentration or credit risk is appropriately and timely addressed. Likewise, if any of our lending counterparties are unable to perform on their commitments, our liquidity could be adversely impacted and we may not be able to adequately fund our operations and pay our debts as they become due. We actively monitor all lending counterparties, and none have indicated that they may be unable to perform on their commitments. In addition, we periodically review our lending counterparties, considering the stability of the institutions and other aspects of the relationships. Based on our monitoring activities, we currently believe our lending counterparties will be to perform their commitments.
Other Risks
UNIFI is also exposed to political risk, including changing laws and regulations governing international trade, such as quotas, tariffs, and tax laws. The degree of impact and the frequency of these events cannot be predicted.
Item 8. Financial Statemen ts and Supplementary Data
Our consolidated financial statements and the related notes begin on page F-i herein.
