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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 September 28, 2025

OR

☐ | 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 November 3, 2025, there were 18,360,663 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 ENDED SEPTEMBER 28, 2025

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION
|  |  |  | Page
Item 1. |  | Financial Statements |  | 1
|  | Condensed Consolidated Balance Sheets as of September 28, 2025 and June 29, 2025 |  | 1
|  | Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended September 28, 2025 and September 29, 2024 |  | 2
|  | Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended September 28, 2025 and September 29, 2024 |  | 3
|  | Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 28, 2025 and September 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 |  | 23
Item 4. |  | Controls and Procedures |  | 24
PART II—OTHER INFORMATION
Item 1. |  | Legal Proceedings |  | 25
Item 1A. |  | Risk Factors |  | 25
Item 5. |  | Other Information |  | 25
Item 6. |  | Exhibits |  | 26
|  | Signatures |  | 27

PART I—FINAN CIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED BA LANCE SHEETS

(Unaudited)

(In thousands, except share and per share amounts)

|  | September 28, 2025 |  |  | June 29, 2025 |
ASSETS |  |  |  |  |  |
Cash and cash equivalents |  | $ | 20,555 |  |  | $ | 22,664 |
Receivables, net |  |  | 76,856 |  |  |  | 75,383 |
Inventories |  |  | 124,405 |  |  |  | 122,929 |
Income taxes receivable |  |  | 4,090 |  |  |  | 5,429 |
Other current assets |  |  | 7,456 |  |  |  | 9,222 |
Total current assets |  |  | 233,362 |  |  |  | 235,627 |
Property, plant and equipment, net |  |  | 172,094 |  |  |  | 172,923 |
Operating lease assets |  |  | 8,150 |  |  |  | 7,879 |
Deferred income taxes |  |  | 5,945 |  |  |  | 5,535 |
Other non-current assets |  |  | 5,078 |  |  |  | 4,904 |
Total assets |  | $ | 424,629 |  |  | $ | 426,868 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |
Accounts payable |  | $ | 33,558 |  |  | $ | 37,468 |
Income taxes payable |  |  | 325 |  |  |  | 49 |
Current operating lease liabilities |  |  | 2,556 |  |  |  | 2,368 |
Current portion of long-term debt |  |  | 12,720 |  |  |  | 12,159 |
Other current liabilities |  |  | 15,886 |  |  |  | 18,899 |
Total current liabilities |  |  | 65,045 |  |  |  | 70,943 |
Long-term debt |  |  | 107,516 |  |  |  | 95,727 |
Non-current operating lease liabilities |  |  | 5,686 |  |  |  | 5,614 |
Deferred income taxes |  |  | 1,172 |  |  |  | 1,224 |
Other long-term liabilities |  |  | 4,116 |  |  |  | 3,889 |
Total liabilities |  |  | 183,535 |  |  |  | 177,397 |
Commitments and contingencies |  |  |  |  |  |
Common stock, $0.10 par value (500,000,000 shares authorized; 18,360,663 and 18,360,663 shares issued and outstanding as of September 28, 2025 and June 29, 2025, respectively) |  |  | 1,836 |  |  |  | 1,836 |
Capital in excess of par value |  |  | 74,896 |  |  |  | 74,095 |
Retained earnings |  |  | 227,692 |  |  |  | 239,049 |
Accumulated other comprehensive loss |  |  | (63,330 | ) |  |  | (65,509 | )
Total shareholders’ equity |  |  | 241,094 |  |  |  | 249,471 |
Total liabilities and shareholders’ equity |  | $ | 424,629 |  |  | $ | 426,868 |

See accompanying notes to condensed consolidated financial statements.

1

CONDENSED CONSOLIDATED STATE MENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share amounts)

|  | For the Three Months Ended |
|  | September 28, 2025 |  |  | September 29, 2024 |
Net sales |  | $ | 135,674 |  |  | $ | 147,372 |
Cost of sales |  |  | 132,287 |  |  |  | 137,914 |
Gross profit |  |  | 3,387 |  |  |  | 9,458 |
Selling, general and administrative expenses |  |  | 11,948 |  |  |  | 11,842 |
(Benefit) provision for bad debts |  |  | (69 | ) |  |  | 312 |
Restructuring costs |  |  | 1,068 |  |  |  | — |
Other operating expense, net |  |  | 70 |  |  |  | 520 |
Operating loss |  |  | (9,630 | ) |  |  | (3,216 | )
Interest income |  |  | (375 | ) |  |  | (257 | )
Interest expense |  |  | 2,003 |  |  |  | 2,507 |
Equity in earnings of unconsolidated affiliate |  |  | (97 | ) |  |  | (11 | )
Loss before income taxes |  |  | (11,161 | ) |  |  | (5,455 | )
Provision for income taxes |  |  | 196 |  |  |  | 2,177 |
Net loss |  | $ | (11,357 | ) |  | $ | (7,632 | )
Net loss per common share: |
Basic |  | $ | (0.62 | ) |  | $ | (0.42 | )
Diluted |  | $ | (0.62 | ) |  | $ | (0.42 | )

Comprehensive loss:

|  | For the Three Months Ended |
|  | September 28, 2025 |  |  | September 29, 2024 |
Net loss |  | $ | (11,357 | ) |  | $ | (7,632 | )
Other comprehensive income: |  |  |  |  |  |
Foreign currency translation adjustments |  |  | 2,179 |  |  |  | 3,488 |
Other comprehensive income |  |  | 2,179 |  |  |  | 3,488 |
Comprehensive loss |  | $ | (9,178 | ) |  | $ | (4,144 | )

See accompanying notes to condensed consolidated financial statements.

2

CONDENSED CONSOLIDATED STATEM ENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(In thousands)

|  | Shares |  |  | Common Stock |  |  | Capital in Excess of Par Value |  |  | Retained Earnings |  |  | Accumulated Other Comprehensive Loss |  |  | Total Shareholders’ Equity |
Balance at June 29, 2025 |  |  | 18,361 |  |  | $ | 1,836 |  |  | $ | 74,095 |  |  | $ | 239,049 |  |  | $ | (65,509 | ) |  | $ | 249,471 |
Stock-based compensation |  |  | — |  |  |  | — |  |  |  | 801 |  |  |  | — |  |  |  | — |  |  |  | 801 |
Other comprehensive income, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,179 |  |  |  | 2,179 |
Net loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (11,357 | ) |  |  | — |  |  |  | (11,357 | )
Balance at September 28, 2025 |  |  | 18,361 |  |  | $ | 1,836 |  |  | $ | 74,896 |  |  | $ | 227,692 |  |  | $ | (63,330 | ) |  | $ | 241,094 |

|  | 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 |  |  |  | 32 |  |  |  | — |  |  |  | — |  |  |  | 33 |
Stock-based compensation |  |  | — |  |  |  | — |  |  |  | 435 |  |  |  | — |  |  |  | — |  |  |  | 435 |
Other comprehensive income, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,488 |  |  |  | 3,488 |
Net loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (7,632 | ) |  |  | — |  |  |  | (7,632 | )
Balance at September 29, 2024 |  |  | 18,257 |  |  | $ | 1,826 |  |  | $ | 71,419 |  |  | $ | 251,765 |  |  | $ | (65,301 | ) |  | $ | 259,709 |

See accompanying notes to condensed consolidated financial statements.

3

CONDENSED CONSOLIDATED STATEME NTS OF CASH FLOWS

(Unaudited)

(In thousands)

|  | For the Three Months Ended |
|  | September 28, 2025 |  |  | September 29, 2024 |
Cash and cash equivalents at beginning of period |  | $ | 22,664 |  |  | $ | 26,805 |
Operating activities: |  |  |  |  |  |
Net loss |  |  | (11,357 | ) |  |  | (7,632 | )
Adjustments to reconcile net loss to net cash used by operating activities: |  |  |  |  |  |
Equity in earnings of unconsolidated affiliate |  |  | (97 | ) |  |  | (11 | )
Depreciation and amortization expense |  |  | 5,977 |  |  |  | 6,547 |
Non-cash compensation expense |  |  | 801 |  |  |  | 435 |
Deferred income taxes |  |  | (372 | ) |  |  | 344 |
Other, net |  |  | 182 |  |  |  | 80 |
Changes in assets and liabilities: |  |  |  |  |  |
Receivables, net |  |  | (900 | ) |  |  | 2,221 |
Inventories |  |  | (678 | ) |  |  | (12,851 | )
Other current assets |  |  | 1,835 |  |  |  | (1,091 | )
Income taxes |  |  | 1,767 |  |  |  | (462 | )
Accounts payable and other current liabilities |  |  | (6,184 | ) |  |  | (460 | )
Other, net |  |  | 106 |  |  |  | 46 |
Net cash used by operating activities |  |  | (8,920 | ) |  |  | (12,834 | )
Investing activities: |  |  |  |  |  |
Capital expenditures |  |  | (2,029 | ) |  |  | (2,018 | )
Proceeds from the sale of assets |  |  | 23 |  |  |  | — |
Net cash used by investing activities |  |  | (2,006 | ) |  |  | (2,018 | )
Financing activities: |  |  |  |  |  |
Proceeds from ABL Revolver |  |  | 51,900 |  |  |  | 47,500 |
Payments on ABL Revolver |  |  | (40,300 | ) |  |  | (43,000 | )
Payments on ABL Term Loan |  |  | (2,300 | ) |  |  | (2,300 | )
Payments on finance lease obligations |  |  | (668 | ) |  |  | (808 | )
Other, net |  |  | — |  |  |  | (162 | )
Net cash provided by financing activities |  |  | 8,632 |  |  |  | 1,230 |
Effect of exchange rate changes on cash and cash equivalents |  |  | 185 |  |  |  | 520 |
Net decrease in cash and cash equivalents |  |  | (2,109 | ) |  |  | (13,102 | )
Cash and cash equivalents at end of period |  | $ | 20,555 |  |  | $ | 13,703 |

See accompanying notes to condensed consolidated financial statements.

4

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Background

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

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

2. Basis of Presentation; Condensed Notes

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. As contemplated by the instructions of the SEC to Form 10-Q, the following notes have been condensed and, therefore, do not contain all disclosures required in connection with annual financial statements. Reference should be made to UNIFI’s year-end audited consolidated financial statements and related notes thereto contained in its Annual Report on Form 10-K for the fiscal year ended June 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 September 28, 2025. Unifi, Inc.’s remaining material operating subsidiaries’ fiscal quarters ended on September 30, 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 September 28, 2025 and September 29, 2024 both consisted of 13 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.

5

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

4. Revenue

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

Third-Party Manufacturer

|  | For the Three Months Ended |
|  | September 28, 2025 |  |  | September 29, 2024 |
Third-party manufacturer |  | $ | 134,735 |  |  | $ | 146,219 |
Service |  |  | 939 |  |  |  | 1,153 |
Net sales |  | $ | 135,674 |  |  | $ | 147,372 |

|  | For the Three Months Ended |
|  | September 28, 2025 |  |  | September 29, 2024 |
REPREVE® Fiber |  | $ | 39,272 |  |  | $ | 44,742 |
All other products and services |  |  | 96,402 |  |  |  | 102,630 |
Net sales |  | $ | 135,674 |  |  | $ | 147,372 |

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 obl igations. Capitalized terms not otherwise defined within this Note shall have the meanings attributed to them in the Second Amended and Restated Credit Agreement, dated as of October 28, 2022 (the “2022 Credit Agreement”) as amended.

|  |  |  | Weighted Average |  |  |
|  | Scheduled |  | Interest Rate as of |  | Principal Amounts as of |
|  | Maturity Date |  | September 28, 2025 |  | September 28, 2025 |  |  | June 29, 2025 |
ABL Revolver |  | October 2027 |  |  | 7.0 | % |  |  | $ | 22,600 |  |  | $ | 11,000 |
2024 Facility |  | October 2027 |  |  | 5.0 | % |  |  |  | 22,000 |  |  |  | 22,000 |
ABL Term Loan |  | October 2027 |  |  | 6.4 | % |  |  |  | 64,700 |  |  |  | 67,000 |
Finance lease obligations |  | (1) |  |  | 4.8 | % |  |  |  | 11,045 |  |  |  | 8,008 |
Total debt |  |  |  |  |  |  |  |  | 120,345 |  |  |  | 108,008 |
Current portion of ABL Term Loan |  |  |  |  |  |  |  |  | (9,200 | ) |  |  | (9,200 | )
Current portion of finance lease obligations |  |  |  |  |  |  |  |  | (3,520 | ) |  |  | (2,959 | )
Unamortized debt issuance costs |  |  |  |  |  |  |  |  | (109 | ) |  |  | (122 | )
Total long-term debt |  |  |  |  |  |  |  | $ | 107,516 |  |  | $ | 95,727 |

(1)
Scheduled maturity dates for finance lease obligations range from November 2026 to October 2032.

6

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

ABL Facility and Amendments

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

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

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

6. Income Taxes

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

|  | For the Three Months Ended |
|  | September 28, 2025 |  |  | September 29, 2024 |
Provision for income taxes |  | $ | 196 |  |  | $ | 2,177 |
Effective tax rate |  |  | (1.8 | )% |  |  | (39.9 | )%

Income Tax Expense

UNIFI’s provision for income taxes for the three months ended September 28, 2025 and September 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 months ended September 28, 2025 and September 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 (“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 months ended September 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.

7

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 (“share reserve”) pursuant to awards granted under the 2020 Plan to 850. In October 2023, the 2020 Plan was amended to increase the 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 |
|  | September 28, 2025 |  |  | September 29, 2024 |
Net loss |  | $ | (11,357 | ) |  | $ | (7,632 | )
Basic weighted average shares |  |  | 18,361 |  |  |  | 18,255 |
Net potential common share equivalents |  |  | — |  |  |  | — |
Diluted weighted average shares |  |  | 18,361 |  |  |  | 18,255 |
Excluded from the calculation of common share equivalents: |  |  |  |  |  |
Anti-dilutive common share equivalents |  |  | 651 |  |  |  | 478 |
Excluded from the calculation of diluted shares: |  |  |  |  |  |
Unvested stock options that vest upon achievement of certain market conditions |  |  | — |  |  |  | 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 September 28, 2025 and June 29, 2025.

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

|  | September 28, 2025 |  |  | June 29, 2025 |
Accounts payable |  | $ | 144 |  |  | $ | 293 |
Operating lease obligations |  |  | 68 |  |  |  | 113 |
Finance lease obligations |  |  | 6,404 |  |  |  | 2,665 |
Total related party payables |  | $ | 6,616 |  |  | $ | 3,071 |

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

|  |  |  | For the Three Months Ended |
Affiliated Entity |  | Transaction Type |  | September 28, 2025 |  |  | September 29, 2024 |
Salem Leasing Corporation |  | Payments for transportation equipment costs and finance lease debt service |  | $ | 1,135 |  |  | $ | 1,161 |

As discussed in Note 5, “Long-Term Debt”, UNIFI entered into the 2024 Facility in October 2024 which was collateralized by personal assets of a board member. During the three-month period ended September 29, 2024, UNIFI borrowed $22,000 on the 2024 Facility and used the proceeds to reduce the outstanding ABL Revolver balance.

8

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 September 28, 2025 |
|  | Americas |  |  | Brazil |  |  | Asia |  |  | Total |
Net sales |  | $ | 85,196 |  |  | $ | 28,761 |  |  | $ | 21,717 |  |  | $ | 135,674 |
Cost of sales |  |  | 86,908 |  |  |  | 26,100 |  |  |  | 19,279 |  |  |  | 132,287 |
Gross (loss) profit |  |  | (1,712 | ) |  |  | 2,661 |  |  |  | 2,438 |  |  |  | 3,387 |
Segment depreciation expense |  |  | 4,877 |  |  |  | 783 |  |  |  | 14 |  |  |  | 5,674 |
Segment Profit |  | $ | 3,165 |  |  | $ | 3,444 |  |  | $ | 2,452 |  |  | $ | 9,061 |

|  | For the Three Months Ended September 29, 2024 |
|  | Americas |  |  | Brazil |  |  | Asia |  |  | Total |
Net sales |  | $ | 86,283 |  |  | $ | 34,310 |  |  | $ | 26,779 |  |  | $ | 147,372 |
Cost of sales |  |  | 87,661 |  |  |  | 26,373 |  |  |  | 23,880 |  |  |  | 137,914 |
Gross (loss) profit |  |  | (1,378 | ) |  |  | 7,937 |  |  |  | 2,899 |  |  |  | 9,458 |
Segment depreciation expense |  |  | 5,410 |  |  |  | 741 |  |  |  | 17 |  |  |  | 6,168 |
Segment Profit |  | $ | 4,032 |  |  | $ | 8,678 |  |  | $ | 2,916 |  |  | $ | 15,626 |

9

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

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

|  | For the Three Months Ended |
|  | September 28, 2025 |  |  | September 29, 2024 |
Americas |  | $ | (1,712 | ) |  | $ | (1,378 | )
Brazil |  |  | 2,661 |  |  |  | 7,937 |
Asia |  |  | 2,438 |  |  |  | 2,899 |
Segment gross profit |  |  | 3,387 |  |  |  | 9,458 |
Selling, general and administrative expenses |  |  | 11,948 |  |  |  | 11,842 |
(Benefit) provision for bad debts |  |  | (69 | ) |  |  | 312 |
Restructuring costs |  |  | 1,068 |  |  |  | — |
Other operating expense, net |  |  | 70 |  |  |  | 520 |
Operating loss |  |  | (9,630 | ) |  |  | (3,216 | )
Interest income |  |  | (375 | ) |  |  | (257 | )
Interest expense |  |  | 2,003 |  |  |  | 2,507 |
Equity in earnings of unconsolidated affiliate |  |  | (97 | ) |  |  | (11 | )
Loss before income taxes |  | $ | (11,161 | ) |  | $ | (5,455 | )

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

|  | For the Three Months Ended |
|  | September 28, 2025 |  |  | September 29, 2024 |
Americas |  | $ | 4,877 |  |  | $ | 5,410 |
Brazil |  |  | 783 |  |  |  | 741 |
Asia |  |  | 14 |  |  |  | 17 |
Segment depreciation expense |  |  | 5,674 |  |  |  | 6,168 |
Other depreciation and amortization expense |  |  | 303 |  |  |  | 379 |
Depreciation and amortization expense |  | $ | 5,977 |  |  | $ | 6,547 |

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

|  | For the Three Months Ended |
|  | September 28, 2025 |  |  | September 29, 2024 |
Americas |  | $ | 1,325 |  |  | $ | 1,736 |
Brazil |  |  | 677 |  |  |  | 195 |
Asia |  |  | 4 |  |  |  | 58 |
Segment capital expenditures |  |  | 2,006 |  |  |  | 1,989 |
Other capital expenditures |  |  | 23 |  |  |  | 29 |
Capital expenditures |  | $ | 2,029 |  |  | $ | 2,018 |

The reconciliations of segment total assets to consolidated total assets are as follows:

|  | September 28, 2025 |  |  | June 29, 2025 |
Americas |  | $ | 270,158 |  |  | $ | 271,230 |
Brazil |  |  | 96,941 |  |  |  | 99,477 |
Asia |  |  | 32,355 |  |  |  | 35,413 |
Segment total assets |  |  | 399,454 |  |  |  | 406,120 |
Other current assets |  |  | 3,382 |  |  |  | 2,911 |
Other PP&E |  |  | 15,262 |  |  |  | 11,887 |
Other operating lease assets |  |  | 787 |  |  |  | 937 |
Other non-current assets |  |  | 4,477 |  |  |  | 3,862 |
Investment in unconsolidated affiliate |  |  | 1,267 |  |  |  | 1,151 |
Total assets |  | $ | 424,629 |  |  | $ | 426,868 |

10

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Geographic Data

|  | For the Three Months Ended |
Net Sales |  | September 28, 2025 |  |  | September 29, 2024 |
U.S. |  | $ | 75,906 |  |  | $ | 77,630 |
Brazil |  |  | 28,761 |  |  |  | 34,310 |
China |  |  | 21,640 |  |  |  | 26,019 |
Remaining Foreign Countries |  |  | 9,367 |  |  |  | 9,413 |
Total |  | $ | 135,674 |  |  | $ | 147,372 |
Export sales from UNIFI’s U.S. operations to external customers |  | $ | 12,644 |  |  | $ | 19,835 |

The net sales amounts are based on the operating locations from where the items were produced or distributed.

Long-Lived Assets |  | September 28, 2025 |  |  | June 29, 2025 |
U.S. |  | $ | 145,084 |  |  | $ | 146,017 |
Brazil |  |  | 24,919 |  |  |  | 24,305 |
China |  |  | 1,532 |  |  |  | 1,458 |
Remaining Foreign Countries |  |  | 13,787 |  |  |  | 13,926 |
Total |  | $ | 185,322 |  |  | $ | 185,706 |

Long-lived assets are comprised of PP&E, net; operating lease assets; intangible assets, net; investments in unconsolidated affiliates; and other non-current assets.

13. Investment in Unconsolidated Affiliate

Included within Other non-current assets is UNIFI’s investment in unconsolidated affiliate: UNF America LLC (“UNFA”).

UNIFI’s raw material purchases under its supply agreement with UNFA consisted of the following:

|  | For the Three Months Ended |
|  | September 28, 2025 |  |  | September 29, 2024 |
UNFA |  | $ | 4,421 |  |  | $ | 3,689 |

As of September 28, 2025, UNIFI’s open purchase orders related to this supply agreement w ere $2,115. As of September 28, 2025 and June 29, 2025, UNIFI had accounts payable due t o UNFA of $2,035 and $1,368, respectively.

Other than the supply agreement discussed above, UNIFI does not provide any other commitments or guarantees related to UNFA. As of September 28, 2025 and June 29, 2025, UNIFI’s investment in UNFA was $1,267 and $1,151, respectively. There have been no significant changes in the condensed balance sheet and income statement information for UNFA as previously disclosed in the 2025 Form 10-K.

14. Supplemental Cash Flow Information

Cash payments for interest and taxes consist of the following:

|  | For the Three Months Ended |
|  | September 28, 2025 |  |  | September 29, 2024 |
Interest, net of capitalized interest of $4 and $38, respectively |  | $ | 1,845 |  |  | $ | 2,368 |
Income tax payments, net |  |  | 570 |  |  |  | 2,558 |

Cash payments for taxes shown above consist primarily of income and withholding tax payments made by UNIFI in both U.S. and foreign jurisdictions, net of refunds.

Non-Cash Investing and Financing Activities

As of September 28, 2025 and June 29, 2025, $417 and $676, respectively, were included in accounts payable for unpaid capital expenditures. As of September 29, 2024 and June 30, 2024, $772 and $879, respectively, were included in accounts payable for unpaid capital expenditures.

During the three-months ended September 28, 2025 and September 29, 2024, UNIFI recorded non-cash activity relating to finance lease s of $3,705 a nd $0, respectively.

11

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

15. Restructuring Costs

On February 3, 2025, UNIFI announced the pending closure of a manufacturing facility in Madison, North Carolina, and a plan to transition the associated manufacturing operations to other production facilities in North and Central America. In the fourth quarter of fiscal 2025, UNIFI sold the Madison, North Carolina facility, as well as certain machinery and equipment located thereon, for a cash purchase price of $45,000 ("Madison Sale"). The net proceeds of the Madison Sale were used to repay a portion of the principal balance of the term loan and revolving credit facility outstanding under the 2022 Credit Agreement.

As part of the Madison Sale, there is an amendment to the purchase agreement for the potential payment of deferred compensation to UNIFI in the amount of (i) $8,000, if certain energy supply conditions are met within two years of closing, (ii) $5,000, if the same conditions are not met within two years of closing but are met within three years of closing, and (iii) up to $5,000, if certain additional energy conditions beyond those referred to in (i) and (ii) are met within four years of closing. The maximum potential future payment to UNIFI is $13,000. No amounts related to the future occurrence of these events have been recorded in the Consolidated Financial Statements as of September 28, 2025.

During the three-months ended September 28, 2025, UNIFI incurred transition costs related to the consolidation of Americas yarn manufacturing operations discussed above for facility closure and equipment relocation costs including asset impairments and disposals and employee separation costs that were recorded within Restructuring costs in the Consolidated Statements of Operations. UNIFI expects that these restructuring charges, other than any asset impairment or losses from disposal, will consist of cash payments, which are anticipated to continue through the end of calendar year 2025.

The restructuring expenses incurred in all periods primarily impacted the Americas Segment.

A summary of the restructuring activities consists of the following:

|  | For the Three Months Ended |
|  | September 28, 2025 |
Facility closure and equipment relocation costs |  | $ | 1,021 |
Employee separation costs |  |  | 47 |
Restructuring costs |  |  | 1,068 |
Liability as of June 29, 2025 |  |  | 289 |
Restructuring costs |  |  | 1,068 |
Cash payments |  |  | (942 | )
Loss on disposals of assets |  |  | (193 | )
Liability as of September 28, 2025 |  |  | 222 |

UNIFI has implemented additional cost savings initiatives that include reducing variable manufacturing costs across labor, spend, and support functions, while also eliminating a meaningful percentage of salaried positions in the U.S. ("Fiscal 2026 Profit Improvement Plan"). Subsequent to the quarter ended September 28, 2025, UNIFI incurred severance costs of approximately $600 related to the Fiscal 2026 Profit Improvement Plan.

12

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

16. Other Financial Data

Select balance sheet information is presented in the following table.

|  | September 28, 2025 |  |  | June 29, 2025 |
Receivables, net: |  |  |  |  |  |
Customer receivables |  | $ | 77,471 |  |  | $ | 76,594 |
Allowance for uncollectible accounts |  |  | (2,389 | ) |  |  | (2,451 | )
Reserves for quality claims |  |  | (769 | ) |  |  | (912 | )
Net customer receivables |  |  | 74,313 |  |  |  | 73,231 |
Banker's acceptance notes |  |  | 1,330 |  |  |  | 1,334 |
Other receivables |  |  | 1,213 |  |  |  | 818 |
Total receivables, net |  | $ | 76,856 |  |  | $ | 75,383 |
Inventories: |  |  |  |  |  |
Raw materials |  | $ | 52,390 |  |  | $ | 48,752 |
Supplies |  |  | 12,495 |  |  |  | 11,779 |
Work in process |  |  | 5,089 |  |  |  | 5,246 |
Finished goods |  |  | 58,132 |  |  |  | 61,116 |
Gross inventories |  |  | 128,106 |  |  |  | 126,893 |
Net realizable value adjustment |  |  | (3,701 | ) |  |  | (3,964 | )
Total inventories |  | $ | 124,405 |  |  | $ | 122,929 |
Other current assets: |  |  |  |  |  |
Prepaid expenses and other |  | $ | 2,808 |  |  | $ | 3,475 |
Value-added taxes receivable |  |  | 2,446 |  |  |  | 2,365 |
Vendor deposits |  |  | 1,775 |  |  |  | 2,775 |
Contract assets |  |  | 427 |  |  |  | 607 |
Total other current assets |  | $ | 7,456 |  |  | $ | 9,222 |
Property, plant and equipment, net: |  |  |  |  |  |
Land |  | $ | 1,048 |  |  | $ | 1,039 |
Land improvements |  |  | 10,425 |  |  |  | 10,425 |
Buildings and improvements |  |  | 127,104 |  |  |  | 126,720 |
Assets under finance leases |  |  | 23,471 |  |  |  | 19,756 |
Machinery and equipment |  |  | 589,873 |  |  |  | 593,771 |
Computers, software and office equipment |  |  | 24,871 |  |  |  | 25,400 |
Transportation equipment |  |  | 10,512 |  |  |  | 10,789 |
Construction in progress |  |  | 1,358 |  |  |  | 2,153 |
Gross property, plant and equipment |  |  | 788,662 |  |  |  | 790,053 |
Less: accumulated depreciation |  |  | (607,138 | ) |  |  | (608,133 | )
Less: accumulated amortization – finance leases |  |  | (9,430 | ) |  |  | (8,997 | )
Total property, plant and equipment, net |  | $ | 172,094 |  |  | $ | 172,923 |
Other non-current assets: |  |  |  |  |  |
Grantor trust |  | $ | 2,445 |  |  | $ | 2,310 |
Investment in unconsolidated affiliate |  |  | 1,267 |  |  |  | 1,151 |
Intangible assets, net |  |  | 546 |  |  |  | 573 |
Other |  |  | 820 |  |  |  | 870 |
Total other non-current assets |  | $ | 5,078 |  |  | $ | 4,904 |
Other current liabilities: |  |  |  |  |  |
Payroll and fringe benefits |  | $ | 8,356 |  |  | $ | 6,815 |
Utilities |  |  | 1,959 |  |  |  | 2,236 |
Incentive compensation |  |  | 1,477 |  |  |  | 5,652 |
Deferred revenue |  |  | 766 |  |  |  | 1,236 |
Property taxes, interest and other |  |  | 3,328 |  |  |  | 2,960 |
Total other current liabilities |  | $ | 15,886 |  |  | $ | 18,899 |
Other long-term liabilities: |  |  |  |  |  |
Nonqualified deferred compensation plan obligation |  | $ | 2,610 |  |  | $ | 2,402 |
Uncertain tax positions |  |  | 1,260 |  |  |  | 1,227 |
Other |  |  | 246 |  |  |  | 260 |
Total other long-term liabilities |  | $ | 4,116 |  |  | $ | 3,889 |

13

Item 2. Management’s Discussion and Analysis of 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 condensed consolidated financial statements. A reference to a “note” in this section refers to the accompanying notes to condensed consolidated financial statements. A reference to the “current period” refers to the three-month period ended September 28, 2025, while a reference to the “prior period” refers to the three-month period ended September 29, 2024. Such references may be accompanied by certain phrases for added clarity. The current period and the prior period each consisted of 13 weeks.

Our discussions in this Item 2 focus on our results during, or as of, the three months ended September 28, 2025 and September 29, 2024, and, to the extent applicable, any material changes from the information discussed in the 2025 Form 10-K or other important intervening developments or information. These discussions should be read in conjunction with the 2025 Form 10-K for more detailed and background information about our business, operations, and financial condition.

Discussion of foreign currency translation is primarily associated with changes in the Brazilian Real (“BRL”) and changes in the Chinese Renminbi (“RMB”) versus the U.S. Dollar (“USD”). Weighted average exchange rates were as follows:

| For the Three Months Ended |
| September 28, 2025 |  |  | September 29, 2024 |
BRL to USD |  | 5.45 |  |  |  | 5.55 |
RMB to USD |  | 7.16 |  |  |  | 7.17 |

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

Overview and Significant General Matters

UNIFI focuses on delivering products and solutions to direct customers and brand partners throughout the world, leveraging our internal manufacturing capabilities and an enhanced global supply chain that delivers a diverse range of synthetic and recycled fibers and polymers. Our strategic initiatives include (i) leveraging our competitive advantages to grow market share in each of the major geographies we serve, (ii) expanding our presence in non-apparel markets with additional REPREVE® products, (iii) advancing the development and commercialization of innovative and sustainable solutions, and (iv) increasing brand awareness for REPREVE®. We have increased our focus on sales opportunities beyond traditional apparel customers and continue to drive innovation throughout our portfolio to further diversify the business and enhance gross profit. We believe our strategic initiatives will increase revenue and profitability and generate improved cash flows from operations.

Current Economic Environment

Beyond the specific demand challenges within the textile industry, our business has been adversely impacted by: (i) the impact of inflation, including tariffs, on consumer spending, (ii) elevated interest rates for consumers and customers, including the impact on the carrying costs of customer inventories, and (iii) the volatility in customer order patterns resulting from trade and regulatory matters (including tariffs). This volatility in demand resulted from customers buying ahead of tariffs becoming effective for certain countries and difficulty in predicting final tariff assessments. A tariff structure that disproportionately impacts one country or region over another may result in a shift in manufacturing or flow of goods particularly as it relates to textile production across Asia and Central America. Such lower tariff countries or regions may be situated outside of UNIFI’s existing global supply chain. If UNIFI is unable to move production based on these shifts in regional demand, we may lose sales and experience an adverse effect on our financial condition, results of operations, or cash flows. UNIFI will continue to monitor these and other aspects of the current environment, leverage our global business model as necessary, and work closely with stakeholders to ensure business continuity and liquidity.

UNIFI has been expanding its supply chain and business model across multiple geographies over the last several years. Particularly, (i) our feedstock supply spans multiple domestic and foreign markets, (ii) our commercial position in the Central American market remains key to servicing compliant business for USMCA and CAFTA-DR programs, and (iii) we have expanded our asset light model beyond China, most recently with the addition of Unifi Textiles India in October 2024. Each of these initiatives affords us diversity in this dynamic trade environment and greater flexibility in servicing our customer base.

Specific to other ongoing geopolitical tensions, we recognize the disruption to global markets and supply chains caused by the conflicts in Ukraine and the Middle East, however we have not been directly impacted. Indirectly, we recognize that additional or prolonged impacts to the petroleum or other global markets could cause further inflationary pressures to our global raw material costs or additional unforeseen adverse impacts.

Input Costs and Global Production Volatility

Despite lower input and freight costs and a marginally more stable labor pool recently, global demand volatility and uncertainty continued into fiscal 2026. The threat of an economic slowdown and global tensions continue to create uncertainty. Such existing challenges and future uncertainty, particularly for rising input costs, labor productivity, and global demand, could worsen and/or continue for prolonged periods, materially impacting our consolidated sales, gross profit, and operating cash flows. Also, the need for future selling price adjustments in connection with inflationary costs could impact our ability to retain current customer programs and compete successfully for new programs in certain regions.

Fiscal 2026 Profit Improvement Plan

UNIFI has implemented additional cost savings initiatives that include reducing variable manufacturing costs across labor, spend, and support functions, while also eliminating a meaningful percentage of salaried positions in the U.S. ("Fiscal 2026 Profit Improvement Plan"). Accordingly, UNIFI expects to incur restructuring charges in the second quarter of fiscal 2026 of between $500 and $1,000, primarily relating to severance costs.

14

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 (loss) profit and gross margin for UNIFI and for each reportable segment;
•
net loss and diluted 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 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, 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 divided by UNIFI’s diluted 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, 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 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.

15

Review of Results of Operations

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

Consolidated Overview

The below tables provide:

•
the components of net loss and the percentage increase or decrease over the prior period amounts, and
•
a reconciliation from net loss to EBITDA and Adjusted EBITDA, and

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

Net Loss

|  | For the Three Months Ended |  |  |  |
|  | September 28, 2025 |  |  | September 29, 2024 |  |  |  |
|  |  |  |  | % of Net Sales |  |  |  |  |  | % of Net Sales |  |  | % Change |
Net sales |  | $ | 135,674 |  |  |  | 100.0 |  |  | $ | 147,372 |  |  |  | 100.0 |  |  |  | (7.9 | )
Cost of sales |  |  | 132,287 |  |  |  | 97.5 |  |  |  | 137,914 |  |  |  | 93.6 |  |  |  | (4.1 | )
Gross profit |  |  | 3,387 |  |  |  | 2.5 |  |  |  | 9,458 |  |  |  | 6.4 |  |  |  | (64.2 | )
SG&A |  |  | 11,948 |  |  |  | 8.8 |  |  |  | 11,842 |  |  |  | 8.0 |  |  |  | 0.9 |
(Benefit) provision for bad debts |  |  | (69 | ) |  |  | (0.1 | ) |  |  | 312 |  |  |  | 0.2 |  |  |  | (122.1 | )
Restructuring costs |  |  | 1,068 |  |  |  | 0.8 |  |  |  | — |  |  |  | — |  |  | nm |
Other operating expense, net |  |  | 70 |  |  |  | 0.1 |  |  |  | 520 |  |  |  | 0.4 |  |  |  | (86.5 | )
Operating loss |  |  | (9,630 | ) |  |  | (7.1 | ) |  |  | (3,216 | ) |  |  | (2.2 | ) |  |  | 199.4 |
Interest expense, net |  |  | 1,628 |  |  |  | 1.2 |  |  |  | 2,250 |  |  |  | 1.5 |  |  |  | (27.6 | )
Equity in earnings of unconsolidated affiliate |  |  | (97 | ) |  |  | (0.1 | ) |  |  | (11 | ) |  |  | — |  |  | nm |
Loss before income taxes |  |  | (11,161 | ) |  |  | (8.2 | ) |  |  | (5,455 | ) |  |  | (3.7 | ) |  |  | 104.6 |
Provision for income taxes |  |  | 196 |  |  |  | 0.2 |  |  |  | 2,177 |  |  |  | 1.5 |  |  |  | (91.0 | )
Net loss |  | $ | (11,357 | ) |  |  | (8.4 | ) |  | $ | (7,632 | ) |  |  | (5.2 | ) |  |  | 48.8 |

nm = not meaningful

EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)

The reconciliations of the amounts reported under GAAP for Net loss to EBITDA and Adjusted EBITDA were as follows:

|  | For the Three Months Ended |
|  | September 28, 2025 |  |  | September 29, 2024 |
Net loss |  | $ | (11,357 | ) |  | $ | (7,632 | )
Interest expense, net |  |  | 1,628 |  |  |  | 2,250 |
Provision for income taxes |  |  | 196 |  |  |  | 2,177 |
Depreciation and amortization expense (1) |  |  | 5,921 |  |  |  | 6,504 |
EBITDA |  |  | (3,612 | ) |  |  | 3,299 |
Transition costs (2) |  |  | 1,068 |  |  |  | — |
Adjusted EBITDA |  | $ | (2,544 | ) |  | $ | 3,299 |

(1)
Within this reconciliation, depreciation and amortization expense excludes the amortization of debt issuance costs, which are reflected in interest expense, net. However, within the accompanying Condensed Consolidated Statements of Cash Flows, amortization of debt issuance costs is reflected in depreciation and amortization expense.
(2)
In the first quarter of fiscal 2026, UNIFI incurred various transition costs totaling $1,068 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs (including asset impairments and disposals) of $1,021, and (ii) employee separation costs of $47. The facility closure, equipment relocation, and employee separation costs were all recorded within Restructuring costs in the Condensed Consolidated Statements of Operations.

16

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

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

|  | For the Three Months Ended September 28, 2025 |  |  | For the Three Months Ended September 29, 2024 |
|  | Pre-tax Loss |  |  | Tax Impact |  |  | Net Loss |  |  | Diluted EPS |  |  | Pre-tax Loss |  |  | Tax Impact |  |  | Net Loss |  |  | Diluted EPS |
GAAP results |  | $ | (11,161 | ) |  | $ | (196 | ) |  | $ | (11,357 | ) |  | $ | (0.62 | ) |  | $ | (5,455 | ) |  | $ | (2,177 | ) |  | $ | (7,632 | ) |  | $ | (0.42 | )
Transition costs (1) |  |  | 1,068 |  |  |  | — |  |  |  | 1,068 |  |  |  | 0.06 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Adjusted results |  | $ | (10,093 | ) |  | $ | (196 | ) |  | $ | (10,289 | ) |  | $ | (0.56 | ) |  | $ | (5,455 | ) |  | $ | (2,177 | ) |  | $ | (7,632 | ) |  | $ | (0.42 | )
Weighted average common shares outstanding |  |  |  | 18,361 |  |  |  |  |  |  |  |  |  |  |  |  | 18,255 |

(1)
In the first quarter of fiscal 2026, UNIFI incurred various transition costs totaling $1,068 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs (including asset impairments and disposals) of $1,021, and (ii) employee separation costs of $47. The facility closure, equipment relocation, and employee separation costs were all recorded within Restructuring costs in the Condensed Consolidated Statements of Operations. The associated tax impact was estimated to be $0 due to a valuation allowance against net operating losses in the U.S.

Net Sales

Consolidated net sales for the current period decreased by $11,698, or 7.9%, and consolidated sales volumes decreased 5.2%, compared to the prior period. Net sales in the current period were lower primarily due to (i) lower sales volumes and lower-priced sales mix in the Asia Segment and (ii) lower sales volumes and prices in the Brazil Segment. Overall sales remain depressed, particularly in the Americas and Asia Segments as a result of continued volatility from uncertainty over global trade policies and competition from lower-priced products.

Consolidated weighted average sales prices decreased 2.7%. The decrease in sales prices was primarily attributable to sales mix and lower average selling prices in the Asia and Brazil Segments.

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

Gross Profit

Gross profit for the current period decreased to $3,387 from $9,458 in the prior period. Gross profit decreased primarily due to (i) lower sales volumes, (ii) lower overall conversion margins and (iii) production volatility from an inability to forecast demand due to the tariff uncertainty in the Americas Segment. The decrease was partially offset by (a) variable cost saving initiatives and (b) improved utilization in certain manufacturing areas. Gross profit continues to be unfavorably impacted by demand volatility in the Americas Segment and import pricing pressures in the Brazil Segment.

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

SG&A

SG&A did not change meaningfully from the prior period to the current period, nor did the change include any significant offsetting impacts. Actions from the Fiscal 2026 Profit Improvement Plan are expected to reduce SG&A in future fiscal quarters.

(Benefit) Provision for Bad Debts

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

Restructuring Costs

On February 3, 2025, UNIFI announced the closing of its Madison, North Carolina facility and the transition of those manufacturing operations to other UNIFI production facilities in North and Central America. As a result, UNIFI incurred transition costs of $1,068 in the current period which consisted of (i) equipment relocation and facility closure costs (including asset impairments and disposals) of $1,021 and (ii) employee separation costs of $47. There were no Restructuring costs for the prior period.

Other Operating Expense, Net

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

17

Interest Expense, Net

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

Equity in Earnings of Unconsolidated Affiliate

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

Income Taxes

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

|  | For the Three Months Ended |
|  | September 28, 2025 |  |  | September 29, 2024 |
Provision for income taxes |  | $ | 196 |  |  | $ | 2,177 |
Effective tax rate |  |  | (1.8 | )% |  |  | (39.9 | )%

The effective tax rate is subject to variation due to a number of factors, including variability in pre-tax book income; the mix of income by jurisdiction; changes in deferred tax valuation allowances; and changes in statutes, audit settlement, regulations, and case law. Additionally, the impacts of discrete and other rate impacting items are more pronounced when loss before income taxes is lower.

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

Net Loss

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

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

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

Segment Overview

Following is a discussion and analysis of the revenue and profitability performance of UNIFI’s reportable segments for the current period.

Americas Segment

The components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior period amounts for the Americas Segment, were as follows:

|  | For the Three Months Ended |  |  |  |
|  | September 28, 2025 |  |  | September 29, 2024 |  |  |  |
|  |  |  |  | % of Net Sales |  |  |  |  |  | % of Net Sales |  |  | % Change |
Net sales |  | $ | 85,196 |  |  |  | 100.0 |  |  | $ | 86,283 |  |  |  | 100.0 |  |  |  | (1.3 | )
Cost of sales |  |  | 86,908 |  |  |  | 102.0 |  |  |  | 87,661 |  |  |  | 101.6 |  |  |  | (0.9 | )
Gross loss |  |  | (1,712 | ) |  |  | (2.0 | ) |  |  | (1,378 | ) |  |  | (1.6 | ) |  |  | 24.2 |
Depreciation expense |  |  | 4,877 |  |  |  | 5.7 |  |  |  | 5,410 |  |  |  | 6.3 |  |  |  | (9.9 | )
Segment Profit |  | $ | 3,165 |  |  |  | 3.7 |  |  | $ | 4,032 |  |  |  | 4.7 |  |  |  | (21.5 | )
Segment net sales as a percentage of consolidated amounts |  |  | 62.8 | % |  |  |  |  |  | 58.5 | % |  |  |  |  |  |
Segment Profit as a percentage of consolidated amounts |  |  | 34.9 | % |  |  |  |  |  | 25.8 | % |  |  |  |  |  |

The change in net sales for the Americas Segment was as follows:

Net sales for the prior period |  | $ | 86,283 |
Change in average selling price and sales mix |  |  | (2,446 | )
Increase in sales volumes |  |  | 1,359 |
Net sales for the current period |  | $ | 85,196 |

The slight decrease in net sales for the Americas Segment from the prior period to the current period was primarily attributable to a lower-priced sales mix which was partially offset by higher sales volumes. Both periods were unfavorably impacted by the continued volatile global textile demand environment resulting from tariff uncertainty.

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

Segment Profit for the prior period |  | $ | 4,032 |
Change in underlying unit margins and sales mix |  |  | (931 | )
Increase in sales volumes |  |  | 64 |
Segment Profit for the current period |  | $ | 3,165 |

The decrease in Segment Profit for the Americas Segment from the prior period to the current period was primarily attributable to lower productivity, partially offset by higher sales volumes.

Brazil Segment

The components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior period amounts for the Brazil Segment, were as follows:

|  | For the Three Months Ended |  |  |  |
|  | September 28, 2025 |  |  | September 29, 2024 |  |  |  |
|  |  |  |  | % of Net Sales |  |  |  |  |  | % of Net Sales |  |  | % Change |
Net sales |  | $ | 28,761 |  |  |  | 100.0 |  |  | $ | 34,310 |  |  |  | 100.0 |  |  |  | (16.2 | )
Cost of sales |  |  | 26,100 |  |  |  | 90.7 |  |  |  | 26,373 |  |  |  | 76.9 |  |  |  | (1.0 | )
Gross profit |  |  | 2,661 |  |  |  | 9.3 |  |  |  | 7,937 |  |  |  | 23.1 |  |  |  | (66.5 | )
Depreciation expense |  |  | 783 |  |  | 2.7 |  |  |  | 741 |  |  |  | 2.2 |  |  |  | 5.7 |
Segment Profit |  | $ | 3,444 |  |  |  | 12.0 |  |  | $ | 8,678 |  |  |  | 25.3 |  |  |  | (60.3 | )
Segment net sales as a percentage of consolidated amounts |  |  | 21.2 | % |  |  |  |  |  | 23.3 | % |  |  |  |  |  |
Segment Profit as a percentage of consolidated amounts |  |  | 38.0 | % |  |  |  |  |  | 55.5 | % |  |  |  |  |  |

The change in net sales for the Brazil Segment was as follows:

Net sales for the prior period |  | $ | 34,310 |
Change in average selling price and change in sales mix |  |  | (3,592 | )
Decrease in sales volumes |  |  | (2,590 | )
Favorable foreign currency translation effects |  |  | 633 |
Net sales for the current period |  | $ | 28,761 |

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

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

Segment Profit for the prior period |  | $ | 8,678 |
Decrease in underlying unit margins |  |  | (4,737 | )
Decrease in sales volumes |  |  | (655 | )
Favorable foreign currency translation effects |  |  | 158 |
Segment Profit for the current period |  | $ | 3,444 |

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

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Asia Segment

The components of Segment Profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior period amounts for the Asia Segment, were as follows:

|  | For the Three Months Ended |  |  |  |
|  | September 28, 2025 |  |  | September 29, 2024 |  |  |  |
|  |  |  |  | % of Net Sales |  |  |  |  |  | % of Net Sales |  |  | % Change |
Net sales |  | $ | 21,717 |  |  |  | 100.0 |  |  | $ | 26,779 |  |  |  | 100.0 |  |  |  | (18.9 | )
Cost of sales |  |  | 19,279 |  |  |  | 88.8 |  |  |  | 23,880 |  |  |  | 89.2 |  |  |  | (19.3 | )
Gross profit |  |  | 2,438 |  |  |  | 11.2 |  |  |  | 2,899 |  |  |  | 10.8 |  |  |  | (15.9 | )
Depreciation expense |  |  | 14 |  |  |  | 0.1 |  |  |  | 17 |  |  |  | 0.1 |  |  |  | (17.6 | )
Segment Profit |  | $ | 2,452 |  |  |  | 11.3 |  |  | $ | 2,916 |  |  |  | 10.9 |  |  |  | (15.9 | )
Segment net sales as a percentage of consolidated amounts |  |  | 16.0 | % |  |  |  |  |  | 18.2 | % |  |  |  |  |  |
Segment Profit as a percentage of consolidated amounts |  |  | 27.1 | % |  |  |  |  |  | 18.7 | % |  |  |  |  |  |

The change in net sales for the Asia Segment was as follows:

Net sales for the prior period |  | $ | 26,779 |
Decrease in sales volumes |  |  | (3,675 | )
Change in average selling price and sales mix |  |  | (1,413 | )
Favorable foreign currency translation effects |  |  | 26 |
Net sales for the current period |  | $ | 21,717 |

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

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

Segment Profit for the prior period |  | $ | 2,916 |
Decrease in sales volumes |  |  | (400 | )
Change in underlying unit margins and sales mix |  |  | (64 | )
Segment Profit for the current period |  | $ | 2,452 |

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

Liquidity and Capital Resources

Note 5, “Long-Term Debt” to the condensed consolidated financial statements includes the detail of UNIFI’s debt obligations and terms and conditions thereof. Further discussion and analysis of liquidity and capital resources follow.

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 the third quarter of fiscal 2025, UNIFI borrowed $22,000 against the 2024 Facility and used the proceeds to reduce the outstanding ABL Revolver balance. There was no impact to debt principal from these transactions.

UNIFI’s primary capital requirements are for working capital, capital expenditures, and debt service. UNIFI’s primary sources of capital are cash generated from operations, borrowings available under the 2022 Credit Agreement and the 2024 Facility. For the current period, cash used by operations was $8,920 and, at September 28, 2025, availability under the ABL Revolver and 2024 Facility was $36,233 and $586, respectively.

As of September 28, 2025, all of UNIFI’s $120,345 of debt obligations were guaranteed by certain of its domestic operating subsidiaries, while nearly all of UNIFI’s cash and cash equivalents were held by its foreign subsidiaries. Cash and cash equivalents held by foreign subsidiaries may not be presently available to fund UNIFI’s domestic capital requirements, including its domestic debt obligations. UNIFI employs a variety of strategies to ensure that its worldwide cash is available in the locations where it is needed.

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

|  | Domestic |  |  | Foreign |  |  | Total |
Cash and cash equivalents |  | $ | 17 |  |  | $ | 20,538 |  |  | $ | 20,555 |
Potential borrowings available under financing arrangements |  |  | 36,819 |  |  |  | — |  |  |  | 36,819 |
Trigger level under ABL Revolver |  |  | (16,500 | ) |  |  | — |  |  |  | (16,500 | )
Available Liquidity |  | $ | 20,336 |  |  | $ | 20,538 |  |  | $ | 40,874 |
Working capital |  | $ | 61,682 |  |  | $ | 106,635 |  |  | $ | 168,317 |
Total debt obligations |  | $ | 120,345 |  |  | $ | — |  |  | $ | 120,345 |

Borrowings available under financing arrangements are generally collateralized by receivables and inventory owned in the U.S., plus cash equivalents pledged by Mr. Langone, and generally constrained by the fixed charge coverage ratio and trigger level prescribed in the 2022 Credit Agreement. Accordingly, “Available Liquidity” includes consideration for the trigger level that currently constrains our borrowing ability until a fixed charge coverage ratio of 1.05 to 1.00 is achieved. UNIFI’s primary cash requirements, in addition to normal course operating activities (e.g., working capital and payroll), primarily include (i) capital expenditures that generally have commitments of up to 12 months, (ii) contractual obligations that support normal course ongoing operations and production, (iii) operating leases and finance leases, (iv) debt service, and (v) share repurchases.

Liquidity Considerations

Following the establishment of the 2024 Facility, UNIFI believes its global cash and liquidity positions are sufficient to sustain its operations and to meet its growth needs for the foreseeable future. Additionally, UNIFI considers opportunities to repatriate existing cash to reduce debt and preserve or enhance liquidity. However, further degradation in the macroeconomic environment could introduce additional liquidity risk and require UNIFI to limit cash outflows for discretionary activities while further utilizing available and additional forms of credit.

We feel that our current liquidity position is sufficient to fund our operations and expected business growth. Should global demand, economic activity, or input availability decline considerably for an even longer period of time, UNIFI maintains the ability to (i) seek additional credit or financing arrangements and/or (ii) re-implement cost reduction initiatives to preserve cash and secure the longevity of the business and operations. Management continues to (i) explore cost savings opportunities and (ii) prioritize repayment of debt in the current operating environment.

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

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

•
UNIFI was in compliance with all applicable financial covenants in the 2022 Credit Agreement and 2024 Facility;
•
availability under the 2024 Facility was $586 as of September 28, 2025;
•
availability exceeding the Trigger Level (as defined in the 2022 Credit Agreement) under the ABL Revolver was $19,733;
•
the Trigger Level under the ABL Revolver was $16,500; and
•
$0 of standby letters of credit were outstanding.

In addition to making payments in accordance with the scheduled maturities of debt required under its existing debt obligations, UNIFI may, from time to time, elect to repay additional amounts borrowed under the ABL Facility. Funds to make such repayments may come from the operating cash flows of the business or other sources and will depend upon UNIFI’s strategy, prevailing market conditions, liquidity requirements, contractual restrictions within the 2022 Credit Agreement, and other factors.

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, expected cash provided by operating activities, and credit facilities will enable UNIFI to meet its foreseeable liquidity requirements. For its foreign operations, UNIFI expects its existing cash balances, cash provided by operating activities, and available financing arrangements will provide the needed liquidity to fund the associated operating activities and investing activities, such as future capital expenditures. UNIFI believes its operations in Asia and Brazil are in a position to obtain local country financing arrangements due to the operating results of each subsidiary.

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Net Debt (Non-GAAP Financial Measure)

The reconciliations for Net Debt are as follows:

|  | September 28, 2025 |  |  | June 29, 2025 |
Long-term debt |  | $ | 107,516 |  |  | $ | 95,727 |
Current portion of long-term debt |  |  | 12,720 |  |  |  | 12,159 |
Unamortized debt issuance costs |  |  | 109 |  |  |  | 122 |
Debt principal |  |  | 120,345 |  |  |  | 108,008 |
Less: cash and cash equivalents |  |  | 20,555 |  |  |  | 22,664 |
Net Debt |  | $ | 99,790 |  |  | $ | 85,344 |

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

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

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

|  | September 28, 2025 |  |  | June 29, 2025 |
Cash and cash equivalents |  | $ | 20,555 |  |  | $ | 22,664 |
Receivables, net |  |  | 76,856 |  |  |  | 75,383 |
Inventories |  |  | 124,405 |  |  |  | 122,929 |
Income taxes receivable |  |  | 4,090 |  |  |  | 5,429 |
Other current assets |  |  | 7,456 |  |  |  | 9,222 |
Accounts payable |  |  | (33,558 | ) |  |  | (37,468 | )
Other current liabilities |  |  | (15,886 | ) |  |  | (18,899 | )
Income taxes payable |  |  | (325 | ) |  |  | (49 | )
Current operating lease liabilities |  |  | (2,556 | ) |  |  | (2,368 | )
Current portion of long-term debt |  |  | (12,720 | ) |  |  | (12,159 | )
Working capital |  | $ | 168,317 |  |  | $ | 164,684 |
Less: Cash and cash equivalents |  |  | (20,555 | ) |  |  | (22,664 | )
Less: Income taxes receivable |  |  | (4,090 | ) |  |  | (5,429 | )
Less: Income taxes payable |  |  | 325 |  |  |  | 49 |
Less: Current operating lease liabilities |  |  | 2,556 |  |  |  | 2,368 |
Less: Current portion of long-term debt |  |  | 12,720 |  |  |  | 12,159 |
Adjusted Working Capital |  | $ | 159,273 |  |  | $ | 151,167 |

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

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

Operating Cash Flows

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

|  | For the Three Months Ended |
|  | September 28, 2025 |  |  | September 29, 2024 |
Net loss |  | $ | (11,357 | ) |  | $ | (7,632 | )
Equity in earnings of unconsolidated affiliate |  |  | (97 | ) |  |  | (11 | )
Depreciation and amortization expense |  |  | 5,977 |  |  |  | 6,547 |
Non-cash compensation expense |  |  | 801 |  |  |  | 435 |
Deferred income taxes |  |  | (372 | ) |  |  | 344 |
Subtotal |  |  | (5,048 | ) |  |  | (317 | )
Receivables, net |  |  | (900 | ) |  |  | 2,221 |
Inventories |  |  | (678 | ) |  |  | (12,851 | )
Accounts payable and other current liabilities |  |  | (6,184 | ) |  |  | (460 | )
Other changes |  |  | 3,890 |  |  |  | (1,427 | )
Net cash used by operating activities |  | $ | (8,920 | ) |  | $ | (12,834 | )

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

For the current period, the increases in accounts receivable was largely driven by the timing of cash receipts. The decrease in accounts payable and other current liabilities was largely due to lower production activity, variable cost savings initiatives, and satisfaction of incentive compensation liabilities. The increase in inventories was not meaningful. Other changes comprise mostly jurisdictional tax liabilities.

For the prior period, the increase in inventories was primarily due to higher on hand units. The decrease in accounts receivable was largely driven by the decrease in sales and timing of cash receipts. The increase in accounts payable and other current liabilities was not meaningful.

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Investing Cash Flows

Investing activities primarily include $2,029 for capital expenditures. UNIFI expects recent and future capital projects to provide benefits to future profitability. The additional assets from these capital projects consist primarily of machinery and equipment.

Financing Cash Flows

Financing activities primarily include net proceeds from the ABL Revolver and payments on the ABL Term Loan.

Share Repurchase Program

As described in Note 7, “Shareholders’ Equity,” no share repurchases have been completed in fiscal 2026.

Contractual Obligations

UNIFI incurs various financial obligations and commitments in the ordinary course of business. Financial obligations are considered to represent known future cash payments that UNIFI is required to make under existing contractual arrangements, such as debt and lease agreements.

Except for the $3,705 of new finance leases commencing during the three months ended September 28, 2025, there have been no material changes in the scheduled maturities of UNIFI’s contractual obligations as disclosed under the heading “Contractual Obligations” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2025 Form 10-K.

Off-Balance Sheet Arrangements

UNIFI is not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on UNIFI’s financial condition, results of operations, liquidity, or capital expenditures.

Critical Accounting Policies

UNIFI’s critical accounting policies are discussed in the 2025 Form 10-K. There have been no changes to UNIFI’s critical accounting policies in fiscal 2026.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

UNIFI is exposed to market risks associated with changes in interest rates, 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 September 28, 2025, UNIFI had borrowings under the 2022 ABL Term Facility and 2024 Facility that totaled $109,300. UNIFI’s sensitivity analysis indicates that a 50-basis point interest rate increase as of September 28, 2025 would result in an increase in annual interest expense of approximately $500.

Foreign Currency Exchange Rate Risk

A complete discussion of foreign currency exchange rate risk is included in the 2025 Form 10-K and is supplemented by the following disclosures.

As of September 28, 2025, UNIFI had no outstanding foreign currency forward contracts. As of September 28, 2025, foreign currency exchange rate risk positions 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 |  |  | 30.8 | %
Cash and cash equivalents held outside the U.S.: |  |  |
Denominated in USD |  | $ | 9,851 |
Denominated in RMB |  |  | 621 |
Denominated in BRL |  |  | 6,953 |
Denominated in other foreign currencies |  |  | 560 |
Total cash and cash equivalents held outside the U.S. |  | $ | 17,985 |
Percentage of total cash and cash equivalents held outside the U.S. |  |  | 87.5 | %
Cash and cash equivalents held inside the U.S. in USD by foreign subsidiaries |  | $ | 2,553 |

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Raw Material and Commodity Cost Risks

A complete discussion of raw material and commodity cost risks is included in the 2025 Form 10-K.

Other Risks

UNIFI is also exposed to geopolitical 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 4. Controls and Procedures

As of September 28, 2025, an evaluation of the effectiveness of UNIFI’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) was performed under the supervision and with the participation of UNIFI’s management, including the principal executive officer and the principal financial officer. Based on that evaluation, UNIFI’s principal executive officer and principal financial officer concluded that UNIFI’s disclosure controls and procedures are effective to ensure that information required to be disclosed by UNIFI in its reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that information required to be disclosed by UNIFI in the reports UNIFI files or submits under the Exchange Act is accumulated and communicated to UNIFI’s management, including its principal executive officer and its principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in UNIFI’s internal control over financial reporting during the three months ended September 28, 2025 that have materially affected, or are reasonably likely to materially affect, UNIFI’s internal control over financial reporting.

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PART II—OTHE R INFORMATION

Item 1. Legal Proceedings

We are from time to time a party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business. With respect to all such lawsuits, claims, and proceedings, we record reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. We do not believe that any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on our results of operations, financial position, or cash flows. We maintain liability insurance for certain risks that is subject to certain self-insurance limits.

Item 1A. Risk Factors

There have been no material changes in UNIFI’s risk factors from those included in “Item 1A. Risk Factors” in the 2025 Form 10-K.

Item 5. Other Information

Insider Trading Arrangements

During the quarter ended September 28, 2025, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (as such terms are defined in Item 408 of Regulation S-K).

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Item 6. Exhibits

Exhibit No. |  | Description
3.1 |  | Restated Certificate of Incorporation of Unifi, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed October 31, 2016 (File No. 001-10542)).
3.2 |  | Amended and Restated By-laws of Unifi, Inc., as of October 26, 2016 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed October 31, 2016 (File No. 001-10542)).
3.3 |  | Declaration of Amendment to the Amended and Restated By-laws of Unifi, Inc. effective April 30, 2019 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed May 1, 2019 (File No. 001-10542)).
10.1+ |  | Letter Agreement by and between Unifi, Inc. and Albert P. Carey, effective as of October 5, 2025.
10.2+ |  | Unifi, Inc. Director Compensation Policy, effective October 23, 2025.
10.3+ |  | Form of Restricted Stock Unit Agreement for Non-Employee Directors for use in connection with the Unifi, Inc. Second Amended and Restated 2013 Incentive Compensation Plan (File No. 001-10542).
10.4+ |  | Form of Cash-Settled Performance Share Unit Agreement for Employees for use in connection with the Unifi, Inc. Second Amended and Restated 2013 Incentive Compensation Plan (File No. 001-10542).
10.5+ |  | Form of Performance Share Unit Agreement for Employees for use in connection with the Unifi, Inc. Second Amended and Restated 2013 Incentive Compensation Plan (File No. 001-10542).
10.6 |  | Second Amendment to the Unifi, Inc. Second Amended and Restated 2013 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed October 29, 2025 (File No. 001-10542).
31.1+ |  | Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2+ |  | Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32++ |  | Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS |  | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH |  | Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document.
104 |  | Cover Page Interactive Data File (embedded within the Inline XBRL document).

+ Filed herewith.

++ Furnished herewith.

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SIGNAT URES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  | UNIFI, INC.
|  | (Registrant)
Date: November 5, 2025 |  | By: | /s/ ANDREW J. EAKER
|  |  | Andrew J. Eaker
|  |  | Executive Vice President & Chief Financial Officer Treasurer
|  |  | (Principal Financial Officer and Principal Accounting Officer)

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