美国
证券交易委员会
华盛顿特区 20549
表格
(标记一个) |
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根据1934年证券交易法第13或15(d)条款的季度报告。 |
截至季度结束
或
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根据1934年证券交易法第13或15(d)条款的过渡报告 |
到 到_____
佣金档案号码：
（依凭章程所载的完整登记名称）
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（国家或其他管辖区的 |
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（IRS雇主 |
公司成立或组织） |
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唯一识别号码） |
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(主要行政办公室地址) |
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(邮政编码) |
(
(注册人电话号码，包括区号)
根据本法第 12 (b) 条注册的证券：
每种类别的名称 |
交易标的（s） |
每个注册交易所的名称 |
以勾号注明注册人 (1) 是否在过去 12 个月内提交了 1934 年证券交易法第 13 条或第 15 (d) 条所要求提交的所有报告（或在较短的时间内，注册人需要提交该等报告），以及 (2) 过去 90 天内已遵守该等申报要求。
请打勾号表明注册人是否根据《S-t条例405条规定（本章节232.405号）的规定，在过去12个月内（或注册人需要提交此类文件的更短期限内），已提交每个交互数据文件。
请勾选是否注册人是大型加速报告人、加速报告人、非加速报告人、小型报告公司或新兴成长公司。请参考交易所法案120亿.2中“大型加速报告人”、“加速报告人”、“小型报告公司”和“新兴成长公司”的定义。
大型加速归档人 |
☐ |
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非加速归档人 |
☐ |
小型报告公司 |
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新兴成长型企业 |
如果一家新兴成长型公司，请用勾选标记表示该申报人已选择不使用根据证交所法案13(a)条款提供的任何新的或修订过的财务会计准则的延长过渡期。 ☐
请勾选是否属于外壳公司（根据交易所法案第120亿2条的定义）。是
截至2024年11月1日，共有
前瞻性声明
本季度第 10-Q 表格中包含根据 1933 年证券法修正案第 27A 条和 1934 年证券交易法修正案第 21E 条的“前瞻性声明”，这些声明涉及我们的计划、目标、估计和目标。表达关于我们未来的期望、或涉及产品、销售、收入、支出、成本、战略、举措或收益的预期或预测的声明，属于这类声明的典型表现，并根据 1995 年《私人证券诉讼改革法》进行。前瞻性声明基于管理层对我们未来表现的信念、假设和期望，考虑到目前管理层掌握的信息。词语“相信”、“可能”、“可以”、“将”、“应该”、“愿意”、“预期”、“计划”、“估计”、“项目”、“期望”、“打算”、“寻找”、“努力”以及类似意义的词语，或这些词语的否定形式，识别或暗示了前瞻性声明的存在。这些声明不是历史事实陈述；它们涉及可能导致我们的实际结果、表现或财务状况与我们在任何前瞻性声明中表达或暗示的未来结果、表现或财务状况预期不符的风险和不确定因素。可能导致这种差异的因素包括但不限于：
所有板块都很难预测，包含可能严重影响实际结果的不确定性因素，且可能超出我们的控制范围。新因素不时出现，管理层无法预测所有这些因素，或评估每个因素对公司的影响。任何对未来有前瞻性看法的陈述仅代表该陈述所做之日，我们没有责任更新任何前瞻性陈述以反映该陈述所做之日后的事件或情况，除非根据联邦证券法的要求。
基于上述所有板块考虑，我们重申，前瞻性声明并不能保证未来的表现，我们提醒您不要如此依赖它们。
联合纤维股份有限公司。
第10-Q表格季报告
2024年9月29日结束的三个月
目录
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页面 |
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项目1。 |
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项目2。 |
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项目3。 |
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项目4。 |
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项目1。 |
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项目1A。 |
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项目5。 |
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项目6。 |
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部分 I—财务金融信息
项目1。 基本报表
压缩的合并资产负债表兰斯表格
(未经审计)
(以千为单位，除每股及每价外)
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2024年9月29日 |
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2024年6月30日 |
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资产 |
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现金及现金等价物 |
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$ |
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应收款项，净额 |
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存货 |
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应收所得税款项 |
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其他流动资产 |
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总流动资产 |
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物业、厂房和设备，净值 |
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营业租赁资产 |
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递延所得税 |
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其他非流动资产 |
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总资产 |
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$ |
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$ |
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负债及股东权益 |
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应付账款 |
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$ |
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$ |
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应付所得税 |
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当前经营租赁负债 |
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长期债务的流动部分 |
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其他流动负债 |
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总流动负债 |
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长期债务 |
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非流动经营租赁负债 |
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递延所得税 |
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其他长期负债 |
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总负债 |
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普通股，每股面值为 $0.0001； |
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超过面值的资本 |
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留存收益 |
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累计其他综合损失 |
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股东权益合计 |
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负债和股东权益总计 |
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$ |
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请参阅简明综合财务报表附注。
1
简明综合陈述经营和综合损失的声明
(未经审计)
（以千为单位，每股金额除外）
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在结束的三个月中 |
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2024年9月29日 |
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2023 年 10 月 1 日 |
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净销售额 |
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$ |
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$ |
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销售成本 |
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毛利（亏损） |
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销售、一般和管理费用 |
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坏账准备金（福利） |
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其他运营费用，净额 |
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营业损失 |
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利息收入 |
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利息支出 |
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未合并关联公司的收益权益 |
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所得税前亏损 |
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所得税准备金（福利） |
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净亏损 |
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$ |
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每股普通股净亏损： |
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基本 |
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稀释 |
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综合亏损：
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在结束的三个月中 |
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2024年9月29日 |
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2023 年 10 月 1 日 |
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净亏损 |
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其他综合收益（亏损）： |
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外币折算调整 |
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其他综合收益（亏损），净额 |
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综合亏损 |
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请参阅简明综合财务报表附注。
2
综合收益的压缩综合财务状况表股东权益变动表
(未经审计)
(以千为单位)
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股票 |
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普通股 |
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超过面值的资本 |
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留存收益 |
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累计其他综合亏损 |
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股东权益总额 |
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截至 2024 年 6 月 30 日的余额 |
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$ |
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行使的期权 |
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基于股票的薪酬 |
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扣除税款的其他综合收益 |
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净亏损 |
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2024 年 9 月 29 日的余额 |
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$ |
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$ |
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$ |
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$ |
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股份 |
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普通股 |
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超额股本 |
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留存收益 |
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累计其他全面收益亏损 |
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股东权益合计 |
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2023年7月2日的结余 |
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$ |
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期权行使 |
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权益单位的转换 |
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基于股票的补偿 |
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在净股份结算交易中满足税收扣减义务的普通股被扣除 |
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其他综合损失，税后净额 |
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净亏损 |
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2023年10月1日的余额 |
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$ |
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请参阅简明综合财务报表附注。
3
综合损益及业绩表的压缩合并报表现金流量表
（未经审计）
(以千为单位)
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截至三个月结束 |
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2024年9月29日 |
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2023年10月1日 |
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期初现金及现金等价物余额 |
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$ |
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$ |
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经营活动： |
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净亏损 |
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调整以调节净亏损为经营活动提供的现金（使用） |
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合营企业及联营企业的权益持有份额收益 |
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折旧和摊销费用 |
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非现金补偿支出 |
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递延所得税 |
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其他，净数 |
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资产和负债变动： |
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应收款项，净额 |
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存货 |
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其他流动资产 |
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所得税 |
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应付账款及其他流动负债 |
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其他，净数 |
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经营活动产生的净现金流量 |
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投资活动： |
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资本支出 |
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其他，净数 |
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投资活动产生的净现金流出 |
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筹资活动： |
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来自ABL循环贷款的收益 |
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对ABL循环贷款的支付 |
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对ABL定期贷款的支付 |
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融资租赁义务支付 |
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其他，净数 |
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融资活动提供的净现金 |
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汇率变动对现金及现金等价物的影响 |
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现金及现金等价物净增加额（减少额） |
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期末现金及现金等价物 |
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$ |
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请参阅简明综合财务报表附注。
4
Unifi公司。
简明说明 合并基本报表
(未经审计)
1. 背景
仪化宇辉公司是一家成立于1969年的纽约公司（连同其子公司统称为“仪化宇辉”、“公司”、“我们”、“我们的”），是一个跨国公司，制造和销售创新的回收和合成产品，这些产品主要由聚酯和尼龙制成，主要销售给其他纱线制造商和编织厂（仪化宇辉的“直接客户”），这些客户生产用于服装、袜子、家居用品、汽车、工业、医疗和其他终端市场（仪化宇辉的“间接客户”的纱线和/或面料）。我们有时将这些间接客户称为“品牌合作伙伴”。聚酯产品包括部分取向纱线（“POY”）和纹理、溶液染色和包装染色、扭曲、梁式和拉伸缠绕纱线，每种产品都有原料或回收的品种。回收解决方案由预消费和后消费废料制成，包括塑料瓶片（“片”）、聚酯聚合物颗粒（“颗粒”）和短纤****龙产品包括原料或回收的纹理、溶液染色和氨纶覆盖的纱线。
仪化宇辉保持着纺织行业最全面的产品系列之一，包括一系列专业、增值和商品解决方案，主要地理市场包括北美、中美、南美、亚洲和欧洲。仪化宇辉在
2. 呈现基础；简要说明
附带的简要合并基本报表未经审计，并且已按照美国公认会计原则（“GAAP”）为中期财务信息编制。根据SEC对表格10-Q的指示，以下说明已被简化，因此不包含与年度基本报表相关的所有必要披露。应参考仪化宇辉截至2024年6月30日的年度审计合并基本报表及其年报表格10-K中的相关说明（“2024年表格10-K”）。
本报告中包含的财务信息由仪化宇辉编制，未经审计。在管理层看来，所有调整（包括认为必要的正常、经常性调整）已被包含，以公正表述中期结果。然而，中期结果不一定代表对全年结果的预期。按照GAAP的规定编制基本报表要求管理层使用影响报告金额和某些基本报表披露的估计和假设。实际结果可能与这些估计有所不同。
除每股金额外，所有金额均以千（000s）为单位呈现，除非另有说明。
仪化宇辉及其主要国内运营子公司以及其在萨尔瓦多的子公司的财务季度截至2024年9月29日结束。仪化宇辉其余重要运营子公司的财务季度截至2024年9月30日结束。在仪化宇辉的财务季度结束与其全资子公司的财务季度结束之间没有发生重大交易或事件。截止2024年9月29日和2023年10月1日的三个月期间均为13周。
3. 最近的会计准则
已发布和即将采纳
2023年12月，财务会计准则委员会（“FASB”）发布了会计准则更新（“ASU”）2023-09， 所得税（主题740）：改进所得税披露。该标准要求上市的业务实体在每年披露税率调节表的特定类别，并为满足数量门限的调节项目提供其他信息（如果这些调节项目的影响相当于或大于将税前收入（或损失）与适用的法定所得税率相乘所得金额的5%）。它还要求所有实体每年披露按联邦、州和外国税种分解的所支付的所得税（扣除退款），以及按所支付的所得税（扣除退款）在个别司法管辖区分解的金额，当所支付的所得税（扣除退款）相当于或大于所支付的总所得税（扣除退款）的5%时。最后，该标准取消了要求所有实体披露未识别税务负债余额在未来12个月内合理可能变动范围的性质和估计，或声明无法估算范围的要求。该标准对公司自2026年1月1日开始的年度适用。可以提前采纳该标准。该标准应以前瞻性基础应用。允许追溯适用。公司目前正在评估该标准可能对其财务报表产生的影响。. 仪化宇辉2023-09号公告修改了有关所得税披露的规定，要求实体披露：(i)税率协调中的具体类别，(ii)继续运营前所得税费用或利润（在国内和国外之间分开），以及(iii)继续运营的所得税费用或利益（按联邦、州和国外分开）。 该ASU还要求实体披露其对国际、联邦、州和地方管辖区的所得税支付情况，以及其他变更。 该ASU自仪化宇辉的2026财年生效，允许提前采纳，并应在前瞻性的基础上应用，但允许追溯性应用。目前，仪化宇辉正在评估该标准对公司披露的影响，但预计该标准不会对其合并财务状况、经营业绩或现金流量产生实质性影响。
2023年11月，FASB发布了ASU 2023-07，该更新通过增强重要板块支出的披露，改进了可报告板块的披露要求。这个更新中的修正应在合并财务报表中呈现的所有之前期间中进行追溯，适用于2023年12月31日后开始的财政年度和2024年12月31日后的财政年度内的中期期间。早期实施是允许的。公司目前正在评估该指引对其简明合并财务报表的潜在影响。 分部报告（主题 280）：报告服务部门（主题 280）变更披露方式，通过升级对意义重大的分部费用的披露来改进分部报告披露要求。该准则适用于 2023 年 12 月 15 日之后的财年和 2024 年 12 月 15 日之后的财年间隔期。该准则必须适用于财务报表中呈现的所有期间的追溯。该公司目前正在评估该标准对合并财务报表的影响。. 仪化宇辉2023-07号公告通过增加有关可报告部门的年度和中期披露要求，主要是通过加强对重要部门费用的披露。 该ASU对年度报告的有效性是本财年，并在2026财年第一季度对中期报告有效，允许提前采纳。 仪化宇辉尚未采纳该标准。 目前，仪化宇辉正在评估该标准对公司披露的影响，但预计该标准不会对其合并财务状况、经营业绩或现金流量产生实质性影响。
根据仪化宇辉自2024年10-k表提交以来发布的ASU的审查，没有其他新发布或新适用的会计准则对仪化宇辉的合并基本报表产生或预期产生重大影响。
5
Unifi公司。
简明合并财务报表注解（续）
(未经审计)
4. 营业收入
以下表格按客户类型分类和REPREVE进行了净销售额细分。® 纤维销售：
第三方制造商
|
|
截至三个月结束 |
|
|||||
|
|
2024年9月29日 |
|
|
2023年10月1日 |
|
||
第三方制造商 |
|
$ |
|
|
$ |
|
||
服务 |
|
|
|
|
|
|
||
净销售额 |
|
$ |
|
|
$ |
|
||
|
|
截至三个月结束 |
|
|||||
|
|
2024年9月29日 |
|
|
2023年10月1日 |
|
||
REPREVE®光纤 |
|
$ |
|
|
$ |
|
||
所有其他产品和服务 |
|
|
|
|
|
|
||
净销售额 |
|
$ |
|
|
$ |
|
||
第三方制造商的营业收入主要通过销售给直接客户而产生。这些销售代表着UNIFI履行与相关营收合同所要求的绩效义务。UNIFI的每个报告板块均来自对第三方制造商的销售。
服务收入
服务收入主要通过提供服务，通过履行有关书面协议管理的纺织品托管制造或运输服务而产生。这些托管制造和运输服务代表了UNIFI履行与相关营收合同所要求的绩效义务。
REPREVE® 纤维
再生REPREVE® 纤维代表仪化宇辉在我们的回收平台上的纤维产品，无论是否添加了技术。
可变的考虑因素
对于所有的变量考量，如适用，仪化宇辉使用预期价值法估计金额，该方法考虑了历史经验、当前合同要求、特定已知市场事件以及预测客户购买和支付方式。总的来说，这些储备体现了仪化宇辉根据合同条款认为客户有权获得的考量金额的最佳估计。变量考量对仪化宇辉的所有报表期间的基本报表影响不大。
5. 长期债务
债务方面的义务2024年6月28日和2023年12月29日分别如下:
|
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|
|
加权平均 |
|
|
|
||||||||
|
|
已安排 |
|
截至目前的利率 |
|
截至的本金金额 |
|
||||||||
|
|
到期日 |
|
2024年9月29日 |
|
2024年9月29日 |
|
|
2024年6月30日 |
|
|||||
ABL循环贷款 |
|
|
|
% |
|
|
$ |
|
|
$ |
|
||||
ABL定期贷款 |
|
|
|
% |
|
|
|
|
|
|
|
||||
融资租赁义务 |
|
(1) |
|
|
% |
|
|
|
|
|
|
|
|||
总债务 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
当前的ABL定期贷款 |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
融资租赁负债的流动部分 |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
尚未摊销的债务发行费用 |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
所有长期债务 |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||
ABL信贷协议及修订
2024年9月5日，仪化宇辉公司及其某些子公司与一组贷款方签署了第二次修订和重述信贷协议的第一次修订（简称“第一次修订”）。第一次修订主要 (i) 允许出售位于北卡罗来纳州雅德金维尔的一项公司拥有的房地产业资产（包括一个工业仓库建筑和土地产权），将净收益用于减少未偿还的ABL循环借款余额，以替代对ABL定期贷款的强制性预付款; (ii) 将最大循环借款金额从 $
6
Unifi公司。
简明合并财务报表注解（续）
(未经审计)
适用于 仪化宇辉基于SOFR的贷款利差调整至新的区间
后续事件
2024年10月25日，仪化宇辉与富国银行国家协会签署了一项新的信贷协议，金额为$
6. 所得税
所得税的准备金（收益）和实际税率如下所示：
|
|
截至三个月结束 |
|
|||||
|
|
2024年9月29日 |
|
|
2023年10月1日 |
|
||
所得税准备（收益） |
|
$ |
|
|
$ |
( |
) |
|
有效税率 |
|
|
( |
)% |
|
|
% |
|
所得税费用
仪化宇辉截至2024年9月29日和2023年10月1日的三个月的所得税准备（收益）是通过将估计的年度有效税率应用于年初至今的税前账面收入，并对期间发生的离散项目进行调整来计算的。
截至2024年9月29日和2023年10月1日的三个月的有效税率与美国联邦法定税率有所不同，主要是由于美国产生的损失，仪化宇辉预计不会实现未来的税收收益。
在截至2023年10月1日的三个月内，国税局（“IRS”）对2014至2019财政年度的审计已结束，净退款为$
未确认税务费用
仪化宇辉定期评估已完成和正在进行的检查的结果，以确保其所得税准备充足。 某些仍待审查的申报表利用了先前税年产生的递延税属性，包括净营业亏损，这些在审查时可能会被修订。
在截至2023年10月1日的期间结束时，仪化宇辉调整了2014至2019财政年度有效结算的不确定税务立场。释放净化的不确定税务负债的影响微不足道。
7. 股东权益
2018年10月31日，仪化宇辉宣布公司的董事会批准了一项股票回购计划（“2018年SRP”），该计划授权仪化宇辉最多收购$
8. 股份-based补偿
在
以下表格提供了截至2024年9月29日的相关信息，关于经修订的2020计划下用于未来发行的证券数量情况：
在2020计划下获得授权的 |
|
|
|
|
加：自第一修正案开始的股份储备增加 |
|
|
|
|
加：奖励到期、没生效或其他未行使 |
|
|
|
|
减：授予员工的奖励 |
|
|
( |
) |
减：授予非雇员董事的奖励 |
|
|
( |
) |
2020计划下可发行 |
|
|
|
7
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
9. Earnings Per Share
The components of the calculation of earnings per share (“EPS”) are as follows:
|
|
For the Three Months Ended |
|
|||||
|
|
September 29, 2024 |
|
|
October 1, 2023 |
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Basic weighted average shares |
|
|
|
|
|
|
||
Net potential common share equivalents |
|
|
— |
|
|
|
— |
|
Diluted weighted average shares |
|
|
|
|
|
|
||
Excluded from the calculation of common share equivalents: |
|
|
|
|
|
|
||
Anti-dilutive common share equivalents |
|
|
|
|
|
|
||
Excluded from the calculation of diluted shares: |
|
|
|
|
|
|
||
Unvested stock options that vest upon achievement of certain market conditions |
|
|
|
|
|
|
||
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
Related party payables for Salem Leasing Corporation consisted of the following:
|
|
September 29, 2024 |
|
|
June 30, 2024 |
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Operating lease obligations |
|
|
|
|
|
|
||
Finance lease obligations |
|
|
|
|
|
|
||
Total related party payables |
|
$ |
|
|
$ |
|
||
The following were the Company’s significant related party transactions:
|
|
|
|
For the Three Months Ended |
|
|||||
Affiliated Entity |
|
Transaction Type |
|
September 29, 2024 |
|
|
October 1, 2023 |
|
||
Salem Leasing Corporation |
|
Payments for transportation equipment costs and finance lease debt service |
|
$ |
|
|
$ |
|
||
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
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 29, 2024 |
|
|||||||||||||
|
|
Americas |
|
|
Brazil |
|
|
Asia |
|
|
Total |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross (loss) profit |
|
|
( |
) |
|
|
|
|
|
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|
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|
|||
Segment depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Profit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
For the Three Months Ended October 1, 2023 |
|
|||||||||||||
|
|
Americas |
|
|
Brazil |
|
|
Asia |
|
|
Total |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross (loss) profit |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Segment depreciation expense |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Segment (Loss) Profit |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The reconciliations of segment gross profit (loss) to consolidated loss before income taxes are as follows:
|
|
For the Three Months Ended |
|
|||||
|
|
September 29, 2024 |
|
|
October 1, 2023 |
|
||
Americas |
|
$ |
( |
) |
|
$ |
( |
) |
Brazil |
|
|
|
|
|
|
||
Asia |
|
|
|
|
|
|
||
Segment gross profit (loss) |
|
|
|
|
|
( |
) |
|
Selling, general and administrative expenses |
|
|
|
|
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|
||
Provision (benefit) for bad debts |
|
|
|
|
|
( |
) |
|
Other operating expense, net |
|
|
|
|
|
|
||
Operating loss |
|
|
( |
) |
|
|
( |
) |
Interest income |
|
|
( |
) |
|
|
( |
) |
Interest expense |
|
|
|
|
|
|
||
Equity in earnings of unconsolidated affiliates |
|
|
( |
) |
|
|
( |
) |
Loss before income taxes |
|
$ |
( |
) |
|
$ |
( |
) |
There have been no material changes in segment assets during fiscal 2025.
9
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
13. Investments in Unconsolidated Affiliates
Included within Other non-current assets are UNIFI’s investments in unconsolidated affiliates: U.N.F. Industries, Ltd. (“UNF”) and UNF America LLC (“UNFA”).
U.N.F. Industries, Ltd.
In December 2023, UNIFI dissolved its interest in UNF under an agreement whereby UNIFI agreed to pay the former joint venture partner $
UNF America LLC
Raw material and production services for UNFA are provided by Nilit America Inc. under separate supply and services agreements. UNFA’s fiscal year end is December 31, and it is a limited liability company located in Ridgeway, Virginia. UNFA is treated as a partnership for its income tax reporting.
In conjunction with the formation of UNFA, UNIFI entered into a supply agreement with UNF and UNFA whereby UNIFI agreed to purchase all of its first quality nylon POY requirements for texturing (subject to certain exceptions) from either UNF or UNFA. The supply agreement has no stated minimum purchase quantities and pricing is typically negotiated every six months, based on market rates. As of September 29, 2024, UNIFI’s open purchase orders related to this supply agreement, all with UNFA, were $
UNIFI’s raw material purchases under this supply agreement consisted of the following:
|
|
For the Three Months Ended |
|
|||||
|
|
September 29, 2024 |
|
|
October 1, 2023 |
|
||
UNFA |
|
$ |
|
|
$ |
|
||
UNF |
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
|
||
As of September 29, 2024 and June 30, 2024, UNIFI had accounts payable due to UNFA of $
UNIFI has determined that UNF was, and UNFA is, a variable interest entity and has also determined that UNIFI has been the primary beneficiary of these entities, based on the terms of the supply agreement. As a result, these entities should be consolidated with UNIFI’s financial results. As (i) UNIFI purchases substantially all of the output and all intercompany sales would be eliminated in consolidation, (ii) the entity balance sheets constitute
Condensed balance sheet and income statement information for UNIFI’s unconsolidated affiliates (including reciprocal balances) are presented in the tables below.
|
|
September 29, 2024 |
|
|
June 30, 2024 |
|
||
Current assets |
|
$ |
|
|
$ |
|
||
Non-current assets |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Non-current liabilities |
|
|
— |
|
|
|
— |
|
Shareholders’ equity and capital accounts |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
UNIFI’s portion of undistributed earnings |
|
|
|
|
|
|
||
|
|
For the Three Months Ended |
|
|||||
|
|
September 29, 2024 |
|
|
October 1, 2023 |
|
||
Net sales |
|
$ |
|
|
$ |
|
||
Gross profit |
|
|
|
|
|
|
||
(Loss) income from operations |
|
|
( |
) |
|
|
|
|
Net (loss) income |
|
|
( |
) |
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Distribution received |
|
|
— |
|
|
|
— |
|
10
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
14. Supplemental Cash Flow Information
Cash payments for interest and taxes consist of the following:
|
|
For the Three Months Ended |
|
|||||
|
|
September 29, 2024 |
|
|
October 1, 2023 |
|
||
Interest, net of capitalized interest of $ |
|
$ |
|
|
$ |
|
||
Income tax payments, net |
|
|
|
|
|
|
||
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 29, 2024 and June 30, 2024, $
During the three months ended September 29, 2024 and October 1, 2023, UNIFI recorded non-cash activity relating to finance leases of $
11
Unifi, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
15. Other Financial Data
Select balance sheet information is presented in the following table.
|
|
September 29, 2024 |
|
|
June 30, 2024 |
|
||
Receivables, net: |
|
|
|
|
|
|
||
Customer receivables |
|
$ |
|
|
$ |
|
||
Allowance for uncollectible accounts |
|
|
( |
) |
|
|
( |
) |
Reserves for quality claims |
|
|
( |
) |
|
|
( |
) |
Net customer receivables |
|
|
|
|
|
|
||
Banker's acceptance notes |
|
|
|
|
|
|
||
Other receivables |
|
|
|
|
|
|
||
Total receivables, net |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Inventories: |
|
|
|
|
|
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Supplies |
|
|
|
|
|
|
||
Work in process |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Gross inventories |
|
|
|
|
|
|
||
Net realizable value adjustment |
|
|
( |
) |
|
|
( |
) |
Total inventories |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Other current assets: |
|
|
|
|
|
|
||
Assets held for sale (1) |
|
$ |
|
|
$ |
|
||
Vendor deposits |
|
|
|
|
|
|
||
Prepaid expenses and other |
|
|
|
|
|
|
||
Value-added taxes receivable |
|
|
|
|
|
|
||
Contract assets |
|
|
|
|
|
|
||
Total other current assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Property, plant and equipment, net: |
|
|
|
|
|
|
||
Land |
|
$ |
|
|
$ |
|
||
Land improvements |
|
|
|
|
|
|
||
Buildings and improvements |
|
|
|
|
|
|
||
Assets under finance leases |
|
|
|
|
|
|
||
Machinery and equipment |
|
|
|
|
|
|
||
Computers, software and office equipment |
|
|
|
|
|
|
||
Transportation equipment |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
Gross property, plant and equipment |
|
|
|
|
|
|
||
Less: accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Less: accumulated amortization – finance leases |
|
|
( |
) |
|
|
( |
) |
Total property, plant and equipment, net |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Other non-current assets: |
|
|
|
|
|
|
||
Recovery of taxes |
|
$ |
|
|
$ |
|
||
Grantor trust |
|
|
|
|
|
|
||
Investments in unconsolidated affiliates |
|
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other non-current assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Other current liabilities: |
|
|
|
|
|
|
||
Payroll and fringe benefits |
|
$ |
|
|
$ |
|
||
Utilities |
|
|
|
|
|
|
||
Incentive compensation |
|
|
|
|
|
|
||
Deferred revenue |
|
|
|
|
|
|
||
Property taxes, interest and other |
|
|
|
|
|
|
||
Total other current liabilities |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Other long-term liabilities: |
|
|
|
|
|
|
||
Nonqualified deferred compensation plan obligation |
|
$ |
|
|
$ |
|
||
Uncertain tax positions |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other long-term liabilities |
|
$ |
|
|
$ |
|
||
(1) Assets held for sale as of September 29, 2024 relates to a warehouse located in Yadkinville, North Carolina. On October 30, 2024, this property was sold for $
12
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 29, 2024, while a reference to the “prior period” refers to the three-month period ended October 1, 2023. 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 29, 2024 and October 1, 2023, and, to the extent applicable, any material changes from the information discussed in the 2024 Form 10-K or other important intervening developments or information. These discussions should be read in conjunction with the 2024 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 29, 2024 |
|
|
October 1, 2023 |
|
||
BRL to USD |
|
|
5.55 |
|
|
|
4.89 |
|
RMB to USD |
|
|
7.17 |
|
|
|
7.25 |
|
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
The challenging environment for textile production and demand has adversely impacted our consolidated sales and profitability. In addition, the following pressures have been present: (i) the impact of inflation on consumer spending and (ii) elevated interest rates for consumers and customers, including the impact on the carrying costs of customer inventories. UNIFI will continue to monitor these and other aspects of the current environment and work closely with stakeholders to ensure business continuity and liquidity.
While we recognize the disruption to global markets and supply chains caused by the conflicts in Ukraine and the Middle East, 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 lowered input and freight costs and a marginally more stable labor pool recently, global demand volatility and uncertainty continued into fiscal 2025. The threat of recession 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.
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:
13
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.
14
Review of Results of Operations
Three Months Ended September 29, 2024 Compared to Three Months Ended October 1, 2023
Consolidated Overview
The below tables provide:
following the tables is a discussion and analysis of the significant components of net loss.
Net Loss
|
|
For the Three Months Ended |
|
|
|
|
||||||||||||||
|
|
September 29, 2024 |
|
|
October 1, 2023 |
|
|
|
|
|||||||||||
|
|
|
|
|
% of |
|
|
|
|
|
% of |
|
|
% |
|
|||||
Net sales |
|
$ |
147,372 |
|
|
|
100.0 |
|
|
$ |
138,844 |
|
|
|
100.0 |
|
|
|
6.1 |
|
Cost of sales |
|
|
137,914 |
|
|
|
93.6 |
|
|
|
139,419 |
|
|
|
100.4 |
|
|
|
(1.1 |
) |
Gross profit (loss) |
|
|
9,458 |
|
|
|
6.4 |
|
|
|
(575 |
) |
|
|
(0.4 |
) |
|
nm |
|
|
SG&A |
|
|
11,842 |
|
|
|
8.0 |
|
|
|
11,609 |
|
|
|
8.4 |
|
|
|
2.0 |
|
Provision (benefit) for bad debts |
|
|
312 |
|
|
|
0.2 |
|
|
|
(209 |
) |
|
|
(0.2 |
) |
|
nm |
|
|
Other operating expense, net |
|
|
520 |
|
|
|
0.4 |
|
|
|
54 |
|
|
|
— |
|
|
nm |
|
|
Operating loss |
|
|
(3,216 |
) |
|
|
(2.2 |
) |
|
|
(12,029 |
) |
|
|
(8.6 |
) |
|
|
(73.3 |
) |
Interest expense, net |
|
|
2,250 |
|
|
|
1.5 |
|
|
|
1,904 |
|
|
|
1.4 |
|
|
|
18.2 |
|
Equity in earnings of unconsolidated affiliates |
|
|
(11 |
) |
|
|
— |
|
|
|
(200 |
) |
|
|
(0.1 |
) |
|
|
(94.5 |
) |
Loss before income taxes |
|
|
(5,455 |
) |
|
|
(3.7 |
) |
|
|
(13,733 |
) |
|
|
(9.9 |
) |
|
|
(60.3 |
) |
Provision (benefit) for income taxes |
|
|
2,177 |
|
|
|
1.5 |
|
|
|
(463 |
) |
|
|
(0.3 |
) |
|
nm |
|
|
Net loss |
|
$ |
(7,632 |
) |
|
|
(5.2 |
) |
|
$ |
(13,270 |
) |
|
|
(9.6 |
) |
|
|
(42.5 |
) |
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 29, 2024 |
|
|
October 1, 2023 |
|
||
Net loss |
|
$ |
(7,632 |
) |
|
$ |
(13,270 |
) |
Interest expense, net |
|
|
2,250 |
|
|
|
1,904 |
|
Provision (benefit) for income taxes |
|
|
2,177 |
|
|
|
(463 |
) |
Depreciation and amortization expense (1) |
|
|
6,504 |
|
|
|
6,988 |
|
EBITDA |
|
|
3,299 |
|
|
|
(4,841 |
) |
|
|
|
|
|
|
|
||
Other adjustments (2) |
|
|
— |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
3,299 |
|
|
$ |
(4,841 |
) |
Adjusted Net Loss and Adjusted EPS (Non-GAAP Financial Measures)
For the current period and the prior period, there were no adjustments necessary to reconcile Net loss to Adjusted Net Loss or Adjusted EPS.
Net Sales
Consolidated net sales for the current period increased by $8,528, or 6.1%, while consolidated sales volumes increased 7.7%, compared to the prior period. Net sales in the current period were higher primarily due to improved sales volumes in each of the reportable segments, along with favorable pricing in Brazil. Despite these sales volume improvements, volumes remain depressed, particularly in the Americas and Asia Segments as a result of continued weak global demand.
Consolidated weighted average sales prices decreased 1.6% which partially offset the volume increase. The decrease in sales prices was primarily attributable to sales mix and lower average selling prices in Asia and the Americas Segment, together with unfavorable foreign currency translation effects from the weakening of the BRL versus the USD within our Brazil Segment.
REPREVE® Fiber products for the current period comprised 30%, or $44,742, of consolidated net sales, compared to 31%, or $42,461, for the prior period.
15
Gross Profit (Loss)
Gross profit for the current period increased to $9,458 from a gross loss of $(575) in the prior period. Gross profit increased primarily due to (i) increased sales volumes, (ii) variable cost saving initiatives, (iii) improved productivity, and (iv) higher conversion margins. However, gross profit continues to be unfavorably impacted by weak fixed cost absorption in the Americas Segment, where utilization and productivity remain below historical averages due to depressed demand.
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.
Provision (Benefit) for Bad Debts
The current period and prior period provision reflect no material activity.
Other Operating Expense, Net
The current period and the prior period include foreign currency transaction losses (gains) of $489 and $(33), respectively, with no other meaningful activity.
Interest Expense, Net
Interest expense, net increased primarily due to lower interest income in the current period, associated with lower global cash balances.
Equity in Earnings of Unconsolidated Affiliates
There was no material activity for the current period or the prior period.
Income Taxes
Provision (benefit) for income taxes and the effective tax rate were as follows:
|
|
For the Three Months Ended |
|
|||||
|
|
September 29, 2024 |
|
|
October 1, 2023 |
|
||
Provision (benefit) for income taxes |
|
$ |
2,177 |
|
|
$ |
(463 |
) |
Effective tax rate |
|
|
(39.9 |
)% |
|
|
3.4 |
% |
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 decrease in the effective tax rate is primarily attributable to a decrease in the valuation allowance on deferred tax asset balances adjusted by the IRS audit of tax years 2014 through 2019, which was concluded during the prior period. The impact of this on comparative results is heightened by a smaller loss before income taxes in the current period.
Net Loss
The improvement in net loss was primarily attributable to increased gross profit, partially offset by foreign currency transaction losses, higher interest expense, net, and higher income tax expense.
Adjusted EBITDA (Non-GAAP Financial Measure)
Adjusted EBITDA increased primarily attributable to increased gross profit, partially offset by foreign currency transaction losses.
16
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 (Loss), each component as a percentage of net sales, and the percentage increase or decrease over the prior period amounts for the Americas Segment, were as follows:
|
|
For the Three Months Ended |
|
|
|
|
||||||||||||||
|
|
September 29, 2024 |
|
|
October 1, 2023 |
|
|
|
|
|||||||||||
|
|
|
|
|
% of |
|
|
|
|
|
% of |
|
|
% |
|
|||||
Net sales |
|
$ |
86,283 |
|
|
|
100.0 |
|
|
$ |
81,573 |
|
|
|
100.0 |
|
|
|
5.8 |
|
Cost of sales |
|
|
87,661 |
|
|
|
101.6 |
|
|
|
88,953 |
|
|
|
109.0 |
|
|
|
(1.5 |
) |
Gross loss |
|
|
(1,378 |
) |
|
|
(1.6 |
) |
|
|
(7,380 |
) |
|
|
(9.0 |
) |
|
|
(81.3 |
) |
Depreciation expense |
|
|
5,410 |
|
|
6.3 |
|
|
|
5,497 |
|
|
|
6.7 |
|
|
|
(1.6 |
) |
|
Segment Profit (Loss) |
|
$ |
4,032 |
|
|
|
4.7 |
|
|
$ |
(1,883 |
) |
|
|
(2.3 |
) |
|
nm |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment net sales as a percentage of |
|
|
58.5 |
% |
|
|
|
|
|
58.8 |
% |
|
|
|
|
|
|
|||
Segment Profit (Loss) as a percentage of |
|
|
25.8 |
% |
|
|
|
|
|
(32.7 |
)% |
|
|
|
|
|
|
|||
The change in net sales for the Americas Segment was as follows:
Net sales for the prior period |
|
$ |
81,573 |
|
Increase in sales volumes |
|
|
6,692 |
|
Change in average selling price and sales mix |
|
|
(1,982 |
) |
Net sales for the current period |
|
$ |
86,283 |
|
The increase in net sales for the Americas Segment from the prior period to the current period was primarily attributable to higher sales volumes, partially offset by a lower-priced sales mix. Both periods were unfavorably impacted by the continued weak global textile demand environment.
The change in Segment Profit (Loss) for the Americas Segment was as follows:
Segment Loss for the prior period |
|
$ |
(1,883 |
) |
Change in underlying unit margins and sales mix |
|
|
6,069 |
|
Change in sales volumes |
|
|
(154 |
) |
Segment Profit for the current period |
|
$ |
4,032 |
|
The increase in Segment Profit for the Americas Segment from the prior period to the current period was primarily attributable to higher conversion margins primarily due to improved variable cost management efforts. Segment Profit for the Americas Segment continues to be negatively impacted by a lower proportion of fiber sales volumes. As fiber products carry a higher selling price and allocation of production costs versus Chip and Flake, lower fiber production drives weaker fixed cost absorption and adversely impacts gross profit and gross margin.
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 29, 2024 |
|
|
October 1, 2023 |
|
|
|
|
|||||||||||
|
|
|
|
|
% of |
|
|
|
|
|
% of |
|
|
% |
|
|||||
Net sales |
|
$ |
34,310 |
|
|
|
100.0 |
|
|
$ |
29,909 |
|
|
|
100.0 |
|
|
|
14.7 |
|
Cost of sales |
|
|
26,373 |
|
|
|
76.9 |
|
|
|
27,742 |
|
|
|
92.7 |
|
|
|
(4.9 |
) |
Gross profit |
|
|
7,937 |
|
|
|
23.1 |
|
|
|
2,167 |
|
|
|
7.3 |
|
|
nm |
|
|
Depreciation expense |
|
|
741 |
|
|
|
2.2 |
|
|
|
840 |
|
|
|
2.8 |
|
|
|
(11.8 |
) |
Segment Profit |
|
$ |
8,678 |
|
|
|
25.3 |
|
|
$ |
3,007 |
|
|
|
10.1 |
|
|
|
188.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment net sales as a percentage of |
|
|
23.3 |
% |
|
|
|
|
|
21.5 |
% |
|
|
|
|
|
|
|||
Segment Profit as a percentage of |
|
|
55.5 |
% |
|
|
|
|
|
52.2 |
% |
|
|
|
|
|
|
|||
17
The change in net sales for the Brazil Segment was as follows:
Net sales for the prior period |
|
$ |
29,909 |
|
Increase in average selling price and change in sales mix |
|
|
4,952 |
|
Increase in sales volumes |
|
|
3,007 |
|
Unfavorable foreign currency translation effects |
|
|
(3,558 |
) |
Net sales for the current period |
|
$ |
34,310 |
|
The increase in net sales for the Brazil Segment from the prior period to the current period was primarily attributable to (i) higher average selling prices due to increasing raw material costs and (ii) an improvement in sales volumes from market share gains, partially offset by unfavorable foreign currency translation effects from the weakening of the BRL versus the USD.
The change in Segment Profit for the Brazil Segment was as follows:
Segment Profit for the prior period |
|
$ |
3,007 |
|
Increase in underlying unit margins |
|
|
5,722 |
|
Increase in sales volumes |
|
|
303 |
|
Unfavorable foreign currency translation effects |
|
|
(354 |
) |
Segment Profit for the current period |
|
$ |
8,678 |
|
The increase in Segment Profit for the Brazil Segment from the prior period to the current period was primarily attributable to (i) higher conversion margins and (ii) an increase in sales volumes discussed above, partially offset by unfavorable foreign currency translation effects. We continue to prioritize innovation and differentiation to improve our portfolio and competitive position in Brazil.
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 29, 2024 |
|
|
October 1, 2023 |
|
|
|
|
|||||||||||
|
|
|
|
|
% of |
|
|
|
|
|
% of |
|
|
% |
|
|||||
Net sales |
|
$ |
26,779 |
|
|
|
100.0 |
|
|
$ |
27,362 |
|
|
|
100.0 |
|
|
|
(2.1 |
) |
Cost of sales |
|
|
23,880 |
|
|
|
89.2 |
|
|
|
22,724 |
|
|
|
83.0 |
|
|
|
5.1 |
|
Gross profit |
|
|
2,899 |
|
|
|
10.8 |
|
|
|
4,638 |
|
|
|
17.0 |
|
|
|
(37.5 |
) |
Depreciation expense |
|
|
17 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
nm |
|
|
Segment Profit |
|
$ |
2,916 |
|
|
|
10.9 |
|
|
$ |
4,638 |
|
|
|
17.0 |
|
|
|
(37.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment net sales as a percentage of |
|
|
18.2 |
% |
|
|
|
|
|
19.7 |
% |
|
|
|
|
|
|
|||
Segment Profit as a percentage of |
|
|
18.7 |
% |
|
|
|
|
|
80.5 |
% |
|
|
|
|
|
|
|||
The change in net sales for the Asia Segment was as follows:
Net sales for the prior period |
|
$ |
27,362 |
|
Change in average selling price and sales mix |
|
|
(1,704 |
) |
Increase in sales volumes |
|
|
819 |
|
Favorable foreign currency translation effects |
|
|
302 |
|
Net sales for the current period |
|
$ |
26,779 |
|
The decrease in net sales for the Asia Segment from the prior period to the current period was primarily attributable to changes in sales mix, partially offset by (a) an improvement in sales volumes compared to the prior period despite continued weak global demand, particularly for apparel and (b) favorable foreign currency translation effects due to the strengthening of the RMB versus the USD.
The change in Segment Profit for the Asia Segment was as follows:
Segment Profit for the prior period |
|
$ |
4,638 |
|
Change in underlying unit margins and sales mix |
|
|
(1,920 |
) |
Increase in sales volumes |
|
|
139 |
|
Favorable foreign currency translation effects |
|
|
59 |
|
Segment Profit for the current period |
|
$ |
2,916 |
|
The decrease in Segment Profit for the Asia Segment from the prior period to the current period was attributable to a decline in gross margin rate associated with a change in sales mix of REPREVE products, partially offset by (a) the increase in sales volumes and (b) the favorable foreign currency translation effects.
18
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.
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 2024 Facility. For the current three-month period, cash used by operations was $12,834 and, at September 29, 2024, availability under the ABL Revolver was $38,645.
As of September 29, 2024, all of UNIFI’s $131,691 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.
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 29, 2024 for domestic operations compared to foreign operations:
|
|
Domestic |
|
|
Foreign |
|
|
Total |
|
|||
Cash and cash equivalents |
|
$ |
479 |
|
|
$ |
13,224 |
|
|
$ |
13,703 |
|
Borrowings available under financing arrangements |
|
|
38,645 |
|
|
|
— |
|
|
|
38,645 |
|
Liquidity |
|
$ |
39,124 |
|
|
$ |
13,224 |
|
|
$ |
52,348 |
|
|
|
|
|
|
|
|
|
|
|
|||
Working capital |
|
$ |
73,177 |
|
|
$ |
101,769 |
|
|
$ |
174,946 |
|
Total debt obligations |
|
$ |
131,691 |
|
|
$ |
— |
|
|
$ |
131,691 |
|
Borrowings available under financing arrangements are generally collateralized by receivables and inventory owned in the U.S. and generally constrained by the fixed charge coverage ratio and trigger level prescribed in the 2022 Credit Agreement. Accordingly, not all of such funds are immediately available for use in UNIFI's operations. 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 do not currently anticipate that any adverse events or circumstances will place critical pressure on our liquidity position or our ability 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 facility as of September 29, 2024:
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. As of the report date, no amounts had been borrowed against the 2024 Facility.
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 and 2024 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.
19
Liquidity Summary
UNIFI has met its historical liquidity requirements for working capital, capital expenditures, debt service requirements, and other operating needs from its cash flows from operations and available borrowings. UNIFI believes that its existing cash balances, cash provided by operating activities, and credit facility will enable UNIFI to meet its foreseeable liquidity requirements. 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.
Net Debt (Non-GAAP Financial Measure)
The reconciliations for Net Debt are as follows:
|
|
September 29, 2024 |
|
|
June 30, 2024 |
|
||
Long-term debt |
|
$ |
119,324 |
|
|
$ |
117,793 |
|
Current portion of long-term debt |
|
|
12,153 |
|
|
|
12,277 |
|
Unamortized debt issuance costs |
|
|
214 |
|
|
|
229 |
|
Debt principal |
|
|
131,691 |
|
|
|
130,299 |
|
Less: cash and cash equivalents |
|
|
13,703 |
|
|
|
26,805 |
|
Net Debt |
|
$ |
117,988 |
|
|
$ |
103,494 |
|
The increase in Net Debt primarily reflects the increase in inventories 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 29, 2024 |
|
|
June 30, 2024 |
|
||
Cash and cash equivalents |
|
$ |
13,703 |
|
|
$ |
26,805 |
|
Receivables, net |
|
|
77,885 |
|
|
|
79,165 |
|
Inventories |
|
|
145,350 |
|
|
|
131,181 |
|
Income taxes receivable |
|
|
1,355 |
|
|
|
164 |
|
Other current assets |
|
|
12,923 |
|
|
|
11,618 |
|
Accounts payable |
|
|
(41,250 |
) |
|
|
(43,622 |
) |
Other current liabilities |
|
|
(18,923 |
) |
|
|
(17,662 |
) |
Income taxes payable |
|
|
(1,510 |
) |
|
|
(754 |
) |
Current operating lease liabilities |
|
|
(2,434 |
) |
|
|
(2,251 |
) |
Current portion of long-term debt |
|
|
(12,153 |
) |
|
|
(12,277 |
) |
Working capital |
|
$ |
174,946 |
|
|
$ |
172,367 |
|
|
|
|
|
|
|
|
||
Less: Cash and cash equivalents |
|
|
(13,703 |
) |
|
|
(26,805 |
) |
Less: Income taxes receivable |
|
|
(1,355 |
) |
|
|
(164 |
) |
Less: Income taxes payable |
|
|
1,510 |
|
|
|
754 |
|
Less: Current operating lease liabilities |
|
|
2,434 |
|
|
|
2,251 |
|
Less: Current portion of long-term debt |
|
|
12,153 |
|
|
|
12,277 |
|
Adjusted Working Capital |
|
$ |
175,985 |
|
|
$ |
160,680 |
|
Adjusted Working Capital increased $15,305 from June 30, 2024 to September 29, 2024.
The increase in Adjusted Working Capital was primarily attributable to an increase in inventories, partially impacted by insignificant changes in other balance sheet accounts. The increase in inventories was primarily a result of weaker-than-expected sales levels in the U.S. and Asia, causing a decrease in inventory turnover.
20
Operating Cash Flows
The significant components of net cash (used) provided by operating activities are summarized below.
|
|
For the Three Months Ended |
|
|||||
|
|
September 29, 2024 |
|
|
October 1, 2023 |
|
||
Net loss |
|
$ |
(7,632 |
) |
|
$ |
(13,270 |
) |
Equity in earnings of unconsolidated affiliates |
|
|
(11 |
) |
|
|
(200 |
) |
Depreciation and amortization expense |
|
|
6,547 |
|
|
|
7,026 |
|
Non-cash compensation expense |
|
|
435 |
|
|
|
212 |
|
Deferred income taxes |
|
|
344 |
|
|
|
(679 |
) |
Subtotal |
|
|
(317 |
) |
|
|
(6,911 |
) |
|
|
|
|
|
|
|
||
Receivables, net |
|
|
2,221 |
|
|
|
4,111 |
|
Inventories |
|
|
(12,851 |
) |
|
|
12,608 |
|
Accounts payable and other current liabilities |
|
|
(460 |
) |
|
|
(3,432 |
) |
Other changes |
|
|
(1,427 |
) |
|
|
743 |
|
Net cash (used) provided by operating activities |
|
$ |
(12,834 |
) |
|
$ |
7,119 |
|
The decrease in operating cash flows was due to increased working capital primarily from an increase in inventories (as described above), partially offset by an improvement in earnings in the current period compared to the prior period.
Investing Cash Flows
Investing activities primarily include $2,018 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. In March 2023, UNIFI amended certain existing contracts related to future purchases of texturing machinery by delaying the scheduled receipt and installation of such equipment in the U.S. and El Salvador for 18 months. In December 2023, UNIFI extended this delay by an additional 12 months at no cost to the Company.
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 2025.
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.
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 2024 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 2024 Form 10-K. There have been no changes to UNIFI’s critical accounting policies in fiscal 2025.
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 29, 2024, UNIFI had borrowings under its ABL Facility that totaled $123,100. UNIFI’s sensitivity analysis indicates that a 50-basis point interest rate increase as of September 29, 2024 would result in an increase in annual interest expense of approximately $700.
Foreign Currency Exchange Rate Risk
A complete discussion of foreign currency exchange rate risk is included in the 2024 Form 10-K and is supplemented by the following disclosures.
21
As of September 29, 2024, UNIFI had no outstanding foreign currency forward contracts. As of September 29, 2024, foreign currency exchange rate risk positions included the following:
|
|
Approximate |
|
|
Percentage of total consolidated assets held by UNIFI's subsidiaries outside the U.S. whose functional currency |
|
|
29.5 |
% |
|
|
|
|
|
Cash and cash equivalents held outside the U.S.: |
|
|
|
|
Denominated in USD |
|
$ |
9,794 |
|
Denominated in RMB |
|
|
732 |
|
Denominated in BRL |
|
|
1,768 |
|
Denominated in other foreign currencies |
|
|
220 |
|
Total cash and cash equivalents held outside the U.S. |
|
$ |
12,514 |
|
Percentage of total cash and cash equivalents held outside the U.S. |
|
|
91.3 |
% |
|
|
|
|
|
Cash and cash equivalents held inside the U.S. in USD by foreign subsidiaries |
|
$ |
710 |
|
Raw Material and Commodity Cost Risks
A complete discussion of raw material and commodity cost risks is included in the 2024 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 29, 2024, 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 29, 2024 that have materially affected, or are reasonably likely to materially affect, UNIFI’s internal control over financial reporting.
22
PART II—OTHER 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.
23
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 2024 Form 10-K.
Item 5. Other Information
Insider Trading Arrangements
During the quarter ended September 29, 2024, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act)
Item 6. Exhibits
Exhibit No. |
|
Description |
|
|
|
3.1 |
|
|
|
|
|
3.2 |
|
|
|
|
|
3.3 |
|
|
|
|
|
4.1 |
|
|
|
|
|
4.2 |
|
|
|
|
|
10.1+ |
|
|
|
|
|
10.2+ |
|
|
|
|
|
10.3+ |
|
|
|
|
|
10.4+ |
|
|
|
|
|
31.1+ |
|
|
|
|
|
31.2+ |
|
|
|
|
|
32++ |
|
|
|
|
|
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. |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document. |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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+ Filed herewith.
++ Furnished herewith.
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SIGNATURES
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.
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UNIFI, INC. |
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(Registrant) |
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Date: November 6, 2024 |
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By: |
/s/ ANDREW J. EAKER |
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Andrew J. Eaker |
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Executive Vice President & Chief Financial Officer Treasurer |
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(Principal Financial Officer and Principal Accounting Officer) |
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