Unifi Q4 Earnings Call Highlights

Key Points

• Unifi’s fourth-quarter performance improved significantly: Sales rose 4% to $144.2 million, while gross profit reached $14.3 million versus a $1.1 million loss a year earlier. Adjusted EBITDA improved by $12.3 million to $8.2 million.
• Brazil led segment growth, while cost reductions strengthened the Americas: Brazil sales increased 17.8%, and the Americas recorded a second consecutive quarter of positive gross profit despite lower volumes. Unifi also generated $21.5 million in full-year free cash flow and reduced net debt to $67.4 million.
• Management is targeting growth in fiscal 2027: Priorities include REPREVE and other sustainable products, packaging, military, carpet and broader Beyond Apparel applications. The company also expects to sell non-strategic U.S. real estate for $60 million, supporting its balance sheet without reducing production capacity.

Unifi NYSE: UFI reported fourth-quarter fiscal 2026 net sales of $144.2 million, up 4% from a year earlier, as higher revenue in Brazil and gains in Asia offset continued volume pressure in the Americas. The company also reported improved profitability and cash generation following an approximately 18-month effort to reduce costs, streamline operations and improve its balance sheet.

“We closed out fiscal 2026 on a strong note with 4% top-line growth and another quarter of improving profitability and cash generation,” Chief Executive Officer Eddie Ingle said during the company’s earnings call. He attributed the performance to cost-structure realignment, operational improvements and portfolio management.

Fourth-quarter gross profit was $14.3 million, compared with a gross loss of $1.1 million in the prior-year period. Gross margin was approximately 10%, versus negative 0.8% a year earlier. Unifi posted a net loss of $1.2 million, though Chief Financial Officer A.J. Eaker said year-over-year comparability was affected by the prior year’s gain on the sale of the Madison facility and related transition costs. Excluding those items, adjusted net loss improved by $9.5 million from the prior-year quarter.

Adjusted EBITDA totaled $8.2 million, improving $12.3 million year over year.

Segment Results Reflect Brazil Strength

Brazil was the company’s strongest operating segment during the quarter. Net sales in the region increased $5.1 million, or 17.8%, while gross profit rose $6.4 million. Ingle said Unifi benefited from its supply chain and position as the region’s largest manufacturer of textured polyester when certain import competitors pulled back their sales efforts.

He also said the company was able to manage pricing amid rising overseas petrochemical costs tied to developments in Iran and the broader Middle East.

In the Americas, sales declined 1% amid continuing volume headwinds. However, the segment generated gross profit of $3.3 million, its second consecutive quarter of positive gross profit. Eaker said footprint consolidation and cost optimization measures had improved the efficiency and profitability of domestic operations.

Asia posted increases of $1.1 million in net sales and $500,000 in gross profit, driven primarily by portfolio strength. Ingle described the market as challenging, citing uncertainty over tariffs that has caused some brands to pull back across markets including China, Vietnam and Indonesia. Still, he said the company continues to see sampling activity and interest in REPREVE Takeback and specialty REPREVE products.

Cash Flow, Debt Reduction and Asset Sale

Unifi generated $1 million of free cash flow in the fourth quarter, bringing full-year free cash flow to $21.5 million. That represented an improvement of more than $50 million from fiscal 2025, according to Eaker.

Capital expenditures were $1.1 million in the quarter and $5 million for the full year, down 50% from the prior year. For fiscal 2027, the company has allocated $7 million to $9 million for maintenance and redundancy projects.

Net debt declined to $67.4 million at quarter-end. Management also highlighted an agreement to sell non-strategic U.S. real estate assets, including warehouses and adjacent land, for $60 million. The company said the sale would not reduce production capacity at its Yadkinville, North Carolina complex or affect its ability to serve customers.

Eaker said the transaction is expected to have minimal tax leakage because Unifi has net operating losses and tax credits carried forward from prior years. He said the company has no additional asset monetization plans currently under consideration, describing the “hopper” for further asset sales as empty.

Ingle said the company was far along in completing the required subdivision work and legal documentation for the transaction, adding that management did not see the remaining closing steps as a concern. He also said the assets are industrially zoned, including for data-center uses, and that the company believes it has cleared the relevant hurdles.

Growth Priorities Center on Innovation and Beyond Apparel

Executive Chairman Al Carey said Unifi’s transformation began with reducing excess capacity, closing the Madison facility, resizing its workforce, improving manufacturing efficiency and eliminating unprofitable products. The company then focused on reducing inventories, controlling capital spending and lowering debt.

“It is all about revenue right now,” Carey said, while emphasizing that the company’s turnaround work was not complete.

Management said its next phase centers on revenue growth, particularly through its sustainable REPREVE brand, innovation and its Beyond Apparel initiatives. Ingle said the company saw positive fourth-quarter momentum in packaging, military applications and carpet.

• Unifi’s resin business, which primarily serves packaging customers, experienced volume growth as tariffs muted imports and increased the value of domestic supply.
• The carpet business saw higher volumes as local supply chains became more important amid logistics challenges that intensified from March onward.
• The company said Fortisyn has gained adoption in military and tactical applications, where management cited its performance properties and color consistency.

Unifi said it remains confident in REPREVE Takeback and ThermaLoop Insulation, despite slower-than-expected adoption of its circular offerings. Ingle said the company continues to see brands pursuing sustainability goals and expects demand for circular solutions to expand over time.

Fiscal 2027 Outlook

For fiscal 2027, Unifi expects sales and profitability to improve year over year as it realizes a full year of benefits from prior strategic actions. Management expects Brazil to deliver improved sales and profitability in the upcoming quarter, supported by its competitive position and supply chain.

In Asia, the company expects revenue conditions to remain difficult in the near term, though it anticipates that growing adoption of new innovations and circular products will support volumes later in the fiscal year. In the Americas, Unifi expects a challenging revenue environment but forecasts improved year-over-year and sequential margins through a greater focus on margin-accretive value-added products and Beyond Apparel initiatives.

Management said it will maintain disciplined capital allocation, prioritize customer service and production capacity, and provide additional updates after completing the real estate transaction.

About Unifi (NYSE:UFI)

Unifi, Inc NYSE: UFI is a global manufacturer of polyester and nylon textured yarns and fibers, specializing in both virgin and recycled synthetic materials. Headquartered in Greensboro, North Carolina, the company serves a diverse range of end markets including apparel, athleisure, home furnishings, automotive and industrial applications. Unifi's vertically integrated operations encompass polymer extrusion, spinning, texturing, and finishing processes designed to meet the performance and aesthetic requirements of its customers.

A key differentiator for Unifi is its REPREVE® brand, a family of certified recycled performance fibers made from post‐consumer plastic bottles and other waste streams.

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