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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 28, 2025



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to _____

Commission File Number: 1-10542

UNIFI, INC.

(Exact name of registrant as specified in its charter)


New York		11-2165495
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

7201 West Friendly Avenue
Greensboro, North Carolina		27410
(Address of principal executive offices)		(Zip Code)

(336) 294-4410

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

      
Title of each class

     Trading Symbol(s)

     Name of each exchange on which registered

     Common Stock, par value $0.10 per share

     UFI

     New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of January 30, 2026, there were 18,581,051 shares of the registrant’s common stock, par value $0.10 per share, outstanding.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that relate to our plans, objectives, estimates, and goals. Statements expressing expectations regarding our future, or projections or estimates relating to products, sales, revenues, expenditures, costs, strategies, initiatives, or earnings, are typical of such statements and are made under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management’s beliefs, assumptions, and expectations about our future performance, considering the information currently available to management. The words “believe,” “may,” “could,” “will,” “should,” “would,” “anticipate,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek,” “strive,” and words of similar import, or the negative of such words, identify or signal the presence of forward-looking statements. These statements are not statements of historical fact; they involve risks and uncertainties that may cause our actual results, performance, or financial condition to differ materially from the expectations of future results, performance, or financial condition that we express or imply in any forward-looking statement. Factors that could contribute to such differences include, but are not limited to:

•

the competitive nature of the textile industry and the impact of global competition;

•

changes in the trade regulatory environment, governmental policies and legislation (e.g., tariffs) and sustained disruption of government operations;

•

the availability, sourcing, and pricing of raw materials;

•

general domestic and international economic and industry conditions in markets where the Company competes, including economic and political factors over which the Company has no control;

•

changes in consumer spending, customer preferences, fashion trends, and end-uses for the Company’s products;

•

the financial condition of the Company’s customers;

•

the loss of a significant customer or brand partner;

•

natural disasters, industrial accidents, power or water shortages, extreme weather conditions, and other disruptions at one of the Company’s facilities;

•

the disruption of operations, global demand, or financial performance as a result of catastrophic or extraordinary events, including, but not limited to, epidemics or pandemics;

•

the success of the Company’s strategic business initiatives;

•

the volatility of financial and credit markets, including the impacts of counterparty risk (e.g., deposit concentration and recent depositor sentiment and activity);

•

the ability to service indebtedness and fund capital expenditures and strategic business initiatives;

•

the availability of and access to credit on reasonable terms;

•

changes in foreign currency exchange, interest, and inflation rates;

•

fluctuations in production costs;

•

the ability to protect intellectual property;

•

the strength and reputation of the Company’s brands;

•

employee relations;

•

the ability to attract, retain, and motivate key employees;

•

the impact of climate change or environmental, health, and safety regulations;

•

the impact of tax laws, the judicial or administrative interpretations of tax laws, and/or changes in such laws or interpretations; and

•

other factors discussed in “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 29, 2025 or in the Company’s other periodic reports and information filed with the Securities and Exchange Commission (the “SEC”).

All such factors are difficult to predict, contain uncertainties that may materially affect actual results, and may be beyond our control. New factors emerge from time to time, and it is not possible for management to predict all such factors or to assess the impact of each such factor on the Company. Any forward-looking statement speaks only as of the date on which such statement is made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, except as may be required by federal securities laws.

In light of all of the above considerations, we reiterate that forward-looking statements are not guarantees of future performance, and we caution you not to rely on them as such.

UNIFI, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE THREE MONTHS AND SIX MONTHS ENDED DECEMBER 28, 2025

TABLE OF CONTENTS


PART I—FINANCIAL INFORMATION
		Page

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets as of December 28, 2025 and June 29, 2025	1

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months and Six Months Ended December 28, 2025 and December 29, 2024	2

	Condensed Consolidated Statements of Shareholders’ Equity for the Three Months and Six Months Ended December 28, 2025 and December 29, 2024	3

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 28, 2025 and December 29, 2024	4

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 5.	Other Information	30

Item 6.	Exhibits	31

	Signatures	32

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share amounts)


	December 28, 2025			June 29, 2025
ASSETS
Cash and cash equivalents	$	30,192		$	22,664
Receivables, net		57,970			75,383
Inventories		103,085			122,929
Income taxes receivable		1,232			5,429
Other current assets		6,609			9,222
Total current assets		199,088			235,627
Property, plant and equipment, net		166,207			172,923
Operating lease assets		7,575			7,879
Deferred income taxes		5,121			5,535
Other non-current assets		4,922			4,904
Total assets	$	382,913		$	426,868

LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	21,888		$	37,468
Income taxes payable		300			49
Current operating lease liabilities		2,524			2,368
Current portion of long-term debt		12,708			12,159
Other current liabilities		12,439			18,899
Total current liabilities		49,859			70,943
Long-term debt		92,601			95,727
Non-current operating lease liabilities		5,143			5,614
Deferred income taxes		1,173			1,224
Other long-term liabilities		4,139			3,889
Total liabilities		152,915			177,397

Commitments and contingencies

Common stock, $0.10 par value (500,000,000 shares authorized; 18,578,213 and 18,360,663 shares issued and outstanding as of December 28, 2025 and June 29, 2025, respectively)		1,858			1,836
Capital in excess of par value		75,442			74,095
Retained earnings		217,986			239,049
Accumulated other comprehensive loss		(65,288	)		(65,509	)
Total shareholders’ equity		229,998			249,471
Total liabilities and shareholders’ equity	$	382,913		$	426,868

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share amounts)


	For the Three Months Ended						For the Six Months Ended
	December 28, 2025			December 29, 2024			December 28, 2025			December 29, 2024
Net sales	$	121,368		$	138,880		$	257,042		$	286,252
Cost of sales		117,757			138,346			250,044			276,260
Gross profit		3,611			534			6,998			9,992
Selling, general and administrative expenses		9,713			12,921			21,661			24,763
Provision (benefit) for bad debts		119			(96	)		50			216
Restructuring costs, net		785			—			1,853			—
Gain on sale of assets		—			(4,296	)		—			(4,296	)
Other operating expense (income), net		273			(431	)		343			89
Operating loss		(7,279	)		(7,564	)		(16,909	)		(10,780	)
Interest income		(473	)		(177	)		(848	)		(434	)
Interest expense		1,802			2,398			3,805			4,905
Equity in loss of unconsolidated affiliate		146			262			49			251
Loss before income taxes		(8,754	)		(10,047	)		(19,915	)		(15,502	)
Provision for income taxes		952			1,345			1,148			3,522
Net loss	$	(9,706	)	$	(11,392	)	$	(21,063	)	$	(19,024	)

Net loss per common share:
Basic	$	(0.53	)	$	(0.62	)	$	(1.15	)	$	(1.04	)
Diluted	$	(0.53	)	$	(0.62	)	$	(1.15	)	$	(1.04	)

Comprehensive loss:


	For the Three Months Ended						For the Six Months Ended
	December 28, 2025			December 29, 2024			December 28, 2025			December 29, 2024
Net loss	$	(9,706	)	$	(11,392	)	$	(21,063	)	$	(19,024	)
Other comprehensive (loss) income:
Foreign currency translation adjustments		(1,958	)		(12,206	)		221			(8,718	)
Other comprehensive (loss) income		(1,958	)		(12,206	)		221			(8,718	)
Comprehensive loss	$	(11,664	)	$	(23,598	)	$	(20,842	)	$	(27,742	)

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(In thousands)


	Shares			Common Stock			Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at September 28, 2025		18,361		$	1,836		$	74,896		$	227,692		$	(63,330	)	$	241,094
Conversion of equity units		284			28			(28	)		—			—			—
Stock-based compensation		—			—			807			—			—			807
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions		(67	)		(6	)		(233	)		—			—			(239	)
Other comprehensive loss, net of tax		—			—			—			—			(1,958	)		(1,958	)
Net loss		—			—			—			(9,706	)		—			(9,706	)
Balance at December 28, 2025		18,578		$	1,858		$	75,442		$	217,986		$	(65,288	)	$	229,998


	Shares			Common Stock			Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at June 29, 2025		18,361		$	1,836		$	74,095		$	239,049		$	(65,509	)	$	249,471
Conversion of equity units		284			28			(28	)		—			—			—
Stock-based compensation		—			—			1,608			—			—			1,608
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions		(67	)		(6	)		(233	)		—			—			(239	)
Other comprehensive income, net of tax		—			—			—			—			221			221
Net loss		—			—			—			(21,063	)		—			(21,063	)
Balance at December 28, 2025		18,578		$	1,858		$	75,442		$	217,986		$	(65,288	)	$	229,998


	Shares			Common Stock			Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at September 29, 2024		18,257		$	1,826		$	71,419		$	251,765		$	(65,301	)	$	259,709
Options exercised		—			—			3			—			—			3
Conversion of equity units		113			11			(11	)		—			—			—
Stock-based compensation		—			—			1,223			—			—			1,223
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions		(25	)		(2	)		(144	)		—			—			(146	)
Other comprehensive loss, net of tax		—			—			—			—			(12,206	)		(12,206	)
Net loss		—			—			—			(11,392	)		—			(11,392	)
Balance at December 29, 2024		18,345		$	1,835		$	72,490		$	240,373		$	(77,507	)	$	237,191


	Shares			Common Stock			Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at June 30, 2024		18,252		$	1,825		$	70,952		$	259,397		$	(68,789	)	$	263,385
Options exercised		5			1			35			—			—			36
Conversion of equity units		113			11			(11	)		—			—			—
Stock-based compensation		—			—			1,658			—			—			1,658
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions		(25	)		(2	)		(144	)		—			—			(146	)
Other comprehensive loss, net of tax		—			—			—			—			(8,718	)		(8,718	)
Net loss		—			—			—			(19,024	)		—			(19,024	)
Balance at December 29, 2024		18,345		$	1,835		$	72,490		$	240,373		$	(77,507	)	$	237,191

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	For the Six Months Ended
	December 28, 2025			December 29, 2024
Cash and cash equivalents at beginning of period	$	22,664		$	26,805
Operating activities:
Net loss		(21,063	)		(19,024	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Equity in loss of unconsolidated affiliate		49			251
Depreciation and amortization expense		11,925			12,881
Non-cash compensation expense		1,608			1,658
Gain on sale of assets		(308	)		(4,296	)
Deferred income taxes		333			628
Other, net		(132	)		216
Changes in assets and liabilities:
Receivables, net		17,540			8,228
Inventories		19,965			(4,841	)
Other current assets		2,632			(1,771	)
Income taxes		4,461			(845	)
Accounts payable and other current liabilities		(21,203	)		(8,155	)
Other, net		555			66
Net cash provided (used) by operating activities		16,362			(15,004	)

Investing activities:
Capital expenditures		(3,084	)		(4,944	)
Proceeds from the sale of assets		501			8,094
Net cash (used) provided by investing activities		(2,583	)		3,150

Financing activities:
Proceeds from ABL Revolver		65,400			101,451
Payments on ABL Revolver		(65,600	)		(90,351	)
Payments on ABL Term Loan		(4,600	)		(4,600	)
Payments on finance lease obligations		(1,507	)		(1,596	)
Other, net		(240	)		(306	)
Net cash (used) provided by financing activities		(6,547	)		4,598

Effect of exchange rate changes on cash and cash equivalents		296			(880	)
Net increase (decrease) in cash and cash equivalents		7,528			(8,136	)
Cash and cash equivalents at end of period	$	30,192		$	18,669

See accompanying notes to condensed consolidated financial statements.

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Background

Unifi, Inc., a New York corporation formed in 1969 (together with its subsidiaries, “UNIFI,” the “Company,” “we,” “us,” or “our”), is a multinational company that manufactures and sells innovative recycled and synthetic products, made from polyester and nylon, primarily to other yarn manufacturers and knitters and weavers (UNIFI’s “direct customers”) that produce yarn and/or fabric for the apparel, hosiery, home furnishings, automotive, industrial, medical, and other end-use markets (UNIFI’s “indirect customers”). We sometimes refer to these indirect customers as “brand partners.” Polyester products include partially oriented yarn (“POY”) and textured, solution and package dyed, twisted, beamed, and draw wound yarns, and each is available in virgin or recycled varieties. Recycled solutions, made from both pre-consumer and post-consumer waste, include plastic bottle flake (“Flake”), polyester polymer beads (“Chip”), and staple fiber. Nylon products include virgin or recycled textured, solution dyed, and spandex covered yarns.

UNIFI maintains one of the textile industry’s most comprehensive product offerings that includes a range of specialized, value-added, and commodity solutions, with principal geographic markets in North America, Central America, South America, Asia, and Europe. UNIFI has direct manufacturing operations in four countries and participates in a joint venture with operations in the United States (the “U.S.”).

2. Basis of Presentation; Condensed Notes

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. As contemplated by the instructions of the SEC to Form 10-Q, the following notes have been condensed and, therefore, do not contain all disclosures required in connection with annual financial statements. Reference should be made to UNIFI’s year-end audited consolidated financial statements and related notes thereto contained in its Annual Report on Form 10-K for the fiscal year ended June 29, 2025 (the “2025 Form 10-K”).

The financial information included in this report has been prepared by UNIFI, without audit. In the opinion of management, all adjustments, which consist of normal, recurring adjustments, considered necessary for a fair statement of the results for interim periods have been included. Nevertheless, the results shown for interim periods are not necessarily indicative of results to be expected for the full year. The preparation of financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the amounts reported and certain financial statement disclosures. Actual results may vary from these estimates.

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

The fiscal quarter for each of Unifi, Inc., its primary domestic operating subsidiaries and its subsidiary in El Salvador ended on December 28, 2025. Unifi, Inc.’s remaining material operating subsidiaries’ fiscal quarters ended on December 31, 2025. There were no significant transactions or events that occurred between Unifi, Inc.’s fiscal quarter end and such wholly owned subsidiaries’ fiscal quarters end. The three-month periods ended December 28, 2025 and December 29, 2024 both consisted of 13 weeks. The six-month periods ended December 28, 2025 and December 29, 2024 both consisted of 26 weeks.

3. Recent Accounting Pronouncements

Issued and Pending Adoption

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU No. 2024-03 does not change or remove existing expense disclosure requirements 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 Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU No. 2023-09 modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (iii) income tax expense or benefit from continuing operations (separated by federal, state, and foreign). The ASU also requires entities to disclose their income tax payments to international, federal, state, and local jurisdictions, among other changes. The ASU is effective for UNIFI's fiscal 2026, with early adoption permitted, and should be applied on a prospective basis, but retrospective application is permitted. UNIFI is currently evaluating the impact on the Company’s disclosures but does not expect this standard will have a material impact on its consolidated financial position, results of operations, or cash flows.

Based on UNIFI’s review of ASUs issued since the filing of the 2025 Form 10-K, there have been no other newly issued or newly applicable accounting pronouncements that have had, or are expected to have, a material impact on UNIFI’s consolidated financial statements.

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

4. Revenue

The following tables present net sales disaggregated by (i) classification of customer type and (ii) REPREVE® Fiber sales:

Third-Party Manufacturer


	For the Three Months Ended				For the Six Months Ended
	December 28, 2025		December 29, 2024		December 28, 2025		December 29, 2024
Third-party manufacturer	$	120,582	$	137,873	$	255,317	$	284,092
Service		786		1,007		1,725		2,160
Net sales	$	121,368	$	138,880	$	257,042	$	286,252


	For the Three Months Ended				For the Six Months Ended
	December 28, 2025		December 29, 2024		December 28, 2025		December 29, 2024
REPREVE® Fiber	$	34,264	$	43,272	$	73,536	$	88,014
All other products and services		87,104		95,608		183,506		198,238
Net sales	$	121,368	$	138,880	$	257,042	$	286,252

Third-party manufacturer revenue is primarily generated through sales to direct customers. Such sales represent satisfaction of UNIFI’s performance obligations required by the associated revenue contracts. Each of UNIFI’s reportable segments derives revenue from sales to third-party manufacturers.

Service Revenue

Service revenue is primarily generated, as services are rendered, through fulfillment of toll manufacturing of textile products or transportation services governed by written agreements. Such toll manufacturing and transportation services represent satisfaction of UNIFI’s performance obligations required by the associated revenue contracts.

REPREVE® Fiber

REPREVE® Fiber represents UNIFI's collection of fiber products on our recycled platform, with or without added technologies.

5. Long-Term Debt

Debt Obligations

The following table and narrative presents the detail of UNIFI’s debt obligations. Capitalized terms not otherwise defined within this Note shall have the meanings attributed to them in the Second Amended and Restated Credit Agreement, dated as of October 28, 2022 (the “2022 Credit Agreement”) as amended.


		Weighted Average
	Scheduled	Interest Rate as of			Principal Amounts as of
	Maturity Date	December 28, 2025			December 28, 2025			June 29, 2025
ABL Revolver	October 2027		6.1	%	$	10,800		$	11,000
2024 Facility	October 2027		4.6	%		22,000			22,000
ABL Term Loan	October 2027		6.1	%		62,400			67,000
Finance lease obligations	(1)		4.8	%		10,205			8,008
Total debt						105,405			108,008
Current portion of ABL Term Loan						(9,200	)		(9,200	)
Current portion of finance lease obligations						(3,508	)		(2,959	)
Unamortized debt issuance costs						(96	)		(122	)
Total long-term debt					$	92,601		$	95,727

(1)

Scheduled maturity dates for finance lease obligations range from November 2026 to October 2032.

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

ABL Facility and Amendments

On September 5, 2024, UNIFI, Inc. and certain of its subsidiaries entered into a First Amendment to the 2022 Credit Agreement (the “First Amendment”) with a syndicate of lenders. The First Amendment primarily (i) permits the sale of a Company-owned real estate asset (consisting of an industrial warehouse building and land acreage) located in Yadkinville, North Carolina with application of the net proceeds to reduce the outstanding ABL Revolver balance, in lieu of the prescribed mandatory prepayment to the ABL Term Loan; (ii) reduces the Maximum Revolver Amount from $115,000 to $80,000; (iii) modifies the definition of the Trigger Level as of any date of determination to the greater of (a) $16,500 and (b) 10% of the sum of (i) the Maximum Revolver Amount plus (ii) the outstanding principal amount of the ABL Term Loan on such date of determination; (iv) increases the range of the Applicable Margin on (a) SOFR-based loans to a new range of 1.50% to 2.00% and (b) Base Rate-based loans to a new range of 0.50% to 1.00%, with such new ranges of Applicable Margin rates becoming immediately effective and continuing until the Company achieves a Fixed Charge Coverage Ratio of 1.05 to 1.00 or better; (v) for a Term Loan Reset, establishes an additional requirement to obtain lender approval; and (vi) modifies certain terms and conditions of the 2022 Credit Agreement including, but not limited to, Swing Loans, Letter of Credit sublimits, and costs related to normal course collateral valuations for the ABL Facility.

On October 25, 2024, UNIFI entered into a new credit agreement with Wells Fargo Bank, National Association for a $25,000 revolving credit facility (the “2024 Facility”). The maturity date of the 2024 Facility is the earlier of (i) October 28, 2027 and (ii) the termination or refinancing of the 2022 Credit Agreement. The 2024 Facility is deemed unsecured financing for UNIFI, but is collateralized by certain assets pledged by related party Kenneth G. Langone, one of the members of UNIFI's Board of Directors. Borrowings under the 2024 Facility bear interest at a rate of SOFR plus 0.90%. The 2024 Facility contains no additional financial covenants beyond those already in effect for the 2022 Credit Agreement and is subject to a monthly unused line fee of 0.25% on available borrowing capacity. On January 2, 2025, UNIFI borrowed $22,000 against the 2024 Facility and used the proceeds to reduce the outstanding ABL Revolver balance. There was no impact to debt principal from these transactions.

On April 10, 2025, UNIFI entered into a Second Amendment to the 2022 Credit Agreement (the “Second Amendment”). The Second Amendment primarily (i) permits the Company to enter into the purchase agreement related to, and consummate the sale of, the Company's Madison, North Carolina property, (ii) permits the Company to allocate a portion of the net proceeds from the sale to repay outstanding revolving loans under the 2022 Credit Agreement, after the application of the greater of $25,000 or 50% of such net proceeds toward outstanding term loans, and (iii) requires the consent of all lenders, rather than the Required Lenders (as defined in the 2022 Credit Agreement), in order to reset the maximum amount of the term loans available under the 2022 Credit Agreement.

6. Income Taxes

The provision for income taxes and effective tax rate were as follows:


	For the Three Months Ended						For the Six Months Ended
	December 28, 2025			December 29, 2024			December 28, 2025			December 29, 2024
Provision for income taxes	$	952		$	1,345		$	1,148		$	3,522
Effective tax rate		(10.9	)%		(13.4	)%		(5.8	)%		(22.7	)%

Income Tax Expense

UNIFI’s provision for income taxes for the six months ended December 28, 2025 and December 29, 2024 was calculated by applying the estimated annual effective tax rate to year-to-date pre-tax book income and adjusting for discrete items that occurred during the period.

The effective tax rate for the three and six months ended December 28, 2025 and December 29, 2024 varied from the U.S. federal statutory rate primarily due to the U.S. generated losses for which UNIFI does not expect to realize a future tax benefit.

On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 (the “Act”), making significant changes to the U.S. corporate income tax system. Based on current analysis of the Act, UNIFI does not expect these tax law changes to have a material impact on its financial statements given the current valuation allowance; however, UNIFI will continue to evaluate their impact as further information becomes available. UNIFI has reflected the impact of the enacted provisions in the three and six months ended December 28, 2025.

Unrecognized Tax Benefits

UNIFI regularly assesses the outcomes of both completed and ongoing examinations to ensure that its provision for income taxes is sufficient. Certain returns that remain open to examination have utilized carryforward tax attributes generated in prior tax years, including net operating losses, which could potentially be revised upon examination.

7. Shareholders’ Equity

On October 31, 2018, UNIFI announced that the Company's Board of Directors approved a share repurchase program (the “2018 SRP”) under which UNIFI is authorized to acquire up to $50,000 of its common stock. The share repurchase authorization is discretionary and has no expiration date. No shares have been repurchased in fiscal 2025 and 2026 and $38,859 remains available for repurchase.

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

8. Stock-Based Compensation

On October 28, 2025, UNIFI's shareholders approved a Second Amendment (the “Second Amendment”) to the Unifi, Inc. Second Amended and Restated 2013 Incentive Compensation Plan (the “2020 Plan”). The 2020 Plan set the initial number of shares available for future issuance (the “share reserve”) pursuant to awards granted under the 2020 Plan to 850. In October 2023, the 2020 Plan was amended to increase the share reserve by 1,100 shares and the Second Amendment added an additional 1,240 shares to the share reserve. No additional awards can be granted under prior plans; however, awards outstanding under a respective prior plan remain subject to that plan’s provisions.

9. Earnings Per Share

The components of the calculation of earnings per share (“EPS”) are as follows:


	For the Three Months Ended						For the Six Months Ended
	December 28, 2025			December 29, 2024			December 28, 2025			December 29, 2024
Net loss	$	(9,706	)	$	(11,392	)	$	(21,063	)	$	(19,024	)
Basic weighted average shares		18,421			18,288			18,391			18,272
Net potential common share equivalents		—			—			—			—
Diluted weighted average shares		18,421			18,288			18,391			18,272
Excluded from the calculation of common share equivalents:
Anti-dilutive common share equivalents		646			1,144			647			1,144
Excluded from the calculation of diluted shares:
Unvested stock options that vest upon achievement of certain market conditions		—			333			—			333

The calculation of EPS is based on the weighted average number of Unifi, Inc.’s common shares outstanding for the applicable period. The calculation of diluted EPS presents the effect of all potential dilutive common shares that were outstanding during the respective period, unless the effect of doing so is anti-dilutive.

10. Commitments and Contingencies

Collective Bargaining Agreements

While employees of UNIFI’s Brazilian operations are unionized, none of the labor force employed by UNIFI’s domestic or other foreign subsidiaries is currently covered by a collective bargaining agreement.

11. Related Party Transactions

Related party balances and transactions are not material to the condensed consolidated financial statements and, accordingly, are not presented separately from other financial statement captions.

There were no related party receivables as of December 28, 2025 and June 29, 2025.

Related party payables for Salem Leasing Corporation consisted of the following:


	December 28, 2025		June 29, 2025
Accounts payable	$	174	$	293
Operating lease obligations		30		113
Finance lease obligations		6,043		2,665
Total related party payables	$	6,247	$	3,071

The following were the Company’s significant related party transactions:


		For the Three Months Ended				For the Six Months Ended
Affiliated Entity	Transaction Type	December 28, 2025		December 29, 2024		December 28, 2025		December 29, 2024
Salem Leasing Corporation	Payments for transportation equipment costs and finance lease debt service	$	1,129	$	1,118	$	2,264	$	2,279

As discussed in Note 5, “Long-Term Debt”, UNIFI entered into the 2024 Facility in October 2024 which was collateralized by personal assets of a board member. On January 2, 2025, UNIFI borrowed $22,000 on the 2024 Facility and used the proceeds to reduce the outstanding ABL Revolver balance.

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

12. Business Segment Information

UNIFI defines operating segments as components of the organization for which discrete financial information is available and operating results are evaluated on a regular basis by UNIFI’s chief executive officer, who is the chief operating decision maker (the “CODM”), in order to assess performance and allocate resources. Characteristics of UNIFI which were relied upon in making the determination of reportable segments include the nature of the products sold, the internal organizational structure, the trade policies in the geographic regions in which UNIFI operates, and the information that is regularly reviewed by the CODM for the purpose of assessing performance and allocating resources.

UNIFI's three reportable segments are organized as follows:

•

The operations within the Americas Segment exhibit similar long-term economic characteristics and primarily sell into an economic trading zone covered by the United States-Mexico-Canada Agreement and the Dominican Republic-Central America Free Trade Agreement to similar customers utilizing similar methods of distribution. These operations derive revenues primarily from manufacturing synthetic and recycled textile products with sales primarily to yarn manufacturers, knitters, and weavers that produce yarn and/or fabric for the apparel, hosiery, automotive, home furnishings, industrial, medical, and other end-use markets principally in North and Central America. The Americas Segment consists of sales and manufacturing operations in the U.S., El Salvador, and Colombia.

•

The Brazil Segment primarily manufactures and sells polyester-based products to knitters and weavers that produce fabric for the apparel, automotive, home furnishings, industrial, and other end-use markets principally in Brazil. The Brazil Segment includes a manufacturing location and sales offices in Brazil.

•

The operations within the Asia Segment exhibit similar long-term economic characteristics and sell to similar customers utilizing similar methods of distribution primarily in Asia and Europe. The Asia Segment primarily sources synthetic and recycled textile products from third-party suppliers and sells to yarn manufacturers, knitters, and weavers that produce fabric for the apparel, automotive, home furnishings, industrial, and other end-use markets principally in Asia and Europe. The Asia Segment includes sales offices in China, Turkey, Hong Kong, and India.

UNIFI evaluates the operating performance of its segments based upon Segment (Loss) Profit, which represents segment gross (loss) profit plus segment depreciation expense. This measurement of segment profit or loss best aligns segment reporting with the current assessments and evaluations performed by, and information provided to, the CODM.

The accounting policies for the segments are consistent with UNIFI’s accounting policies. Intersegment sales are omitted from segment disclosures, as they are (i) insignificant to UNIFI’s segments and eliminated from consolidated reporting and (ii) excluded from segment evaluations performed by the CODM.

Selected financial information is presented below:


	For the Three Months Ended December 28, 2025
	Americas			Brazil		Asia		Total
Net sales	$	77,233		$	23,328	$	20,807	$	121,368
Cost of sales		77,632			22,272		17,853		117,757
Gross (loss) profit		(399	)		1,056		2,954		3,611
Segment depreciation expense		4,945			700		13		5,658
Segment Profit	$	4,546		$	1,756	$	2,967	$	9,269


	For the Three Months Ended December 29, 2024
	Americas			Brazil		Asia		Total
Net sales	$	83,095		$	27,482	$	28,303	$	138,880
Cost of sales		89,635			23,696		25,015		138,346
Gross (loss) profit		(6,540	)		3,786		3,288		534
Segment depreciation expense		5,334			602		14		5,950
Segment (Loss) Profit	$	(1,206	)	$	4,388	$	3,302	$	6,484


	For the Six Months Ended December 28, 2025
	Americas			Brazil		Asia		Total
Net sales	$	162,429		$	52,089	$	42,524	$	257,042
Cost of sales		164,540			48,372		37,132		250,044
Gross (loss) profit		(2,111	)		3,717		5,392		6,998
Segment depreciation expense		9,822			1,483		27		11,332
Segment Profit	$	7,711		$	5,200	$	5,419	$	18,330


	For the Six Months Ended December 29, 2024
	Americas			Brazil		Asia		Total
Net sales	$	169,378		$	61,792	$	55,082	$	286,252
Cost of sales		177,296			50,069		48,895		276,260
Gross (loss) profit		(7,918	)		11,723		6,187		9,992
Segment depreciation expense		10,744			1,343		31		12,118
Segment Profit	$	2,826		$	13,066	$	6,218	$	22,110

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

The reconciliations of segment gross profit to consolidated loss before income taxes are as follows:


	For the Three Months Ended						For the Six Months Ended
	December 28, 2025			December 29, 2024			December 28, 2025			December 29, 2024
Americas	$	(399	)	$	(6,540	)	$	(2,111	)	$	(7,918	)
Brazil		1,056			3,786			3,717			11,723
Asia		2,954			3,288			5,392			6,187
Segment gross profit		3,611			534			6,998			9,992
Selling, general and administrative expenses		9,713			12,921			21,661			24,763
Provision (benefit) for bad debts		119			(96	)		50			216
Restructuring costs, net		785			—			1,853			—
Gain on sale of assets		—			(4,296	)		—			(4,296	)
Other operating expense (income), net		273			(431	)		343			89
Operating loss		(7,279	)		(7,564	)		(16,909	)		(10,780	)
Interest income		(473	)		(177	)		(848	)		(434	)
Interest expense		1,802			2,398			3,805			4,905
Equity in loss of unconsolidated affiliate		146			262			49			251
Loss before income taxes	$	(8,754	)	$	(10,047	)	$	(19,915	)	$	(15,502	)

The reconciliations of segment depreciation and amortization expense to consolidated depreciation and amortization expense are as follows:


	For the Three Months Ended				For the Six Months Ended
	December 28, 2025		December 29, 2024		December 28, 2025		December 29, 2024
Americas	$	4,945	$	5,334	$	9,822	$	10,744
Brazil		700		602		1,483		1,343
Asia		13		14		27		31
Segment depreciation expense		5,658		5,950		11,332		12,118
Other depreciation and amortization expense		290		384		593		763
Depreciation and amortization expense	$	5,948	$	6,334	$	11,925	$	12,881

The reconciliations of segment capital expenditures to consolidated capital expenditures are as follows:


	For the Three Months Ended				For the Six Months Ended
	December 28, 2025		December 29, 2024		December 28, 2025		December 29, 2024
Americas	$	643	$	2,452	$	1,968	$	4,188
Brazil		404		381		1,081		576
Asia		8		1

UNIFI INC 10-Q