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.

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 ~~April 29, 2022,~~February 6, 2023, there were ~~18,477,791~~18,051,505 shares of the registrant’s common stock, par value $0.10 per share, outstanding.

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”~~“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; ~~and~~ 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:

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 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.

FOR THE THREE MONTHS AND ~~NINE~~SIX MONTHS ENDED ~~MARCH 27, 2022~~JANUARY 1, 2023

5. ~~Receivables, Net~~

~~Receivables, net consists of the following:~~

March 27, 2022

June 27, 2021

Customer receivables

$
103,347

$
81,921

Allowance for uncollectible accounts

(2,071
)

(2,525
)
Reserves for quality claims

(778
)

(703
)
Net customer receivables

100,498

78,693

Other receivables

9,033

16,144

Total receivables, net

$
109,531

$
94,837

Other receivables includes $8,346 and $13,391 of banker’s acceptance notes (“BANs”) as of March 27, 2022 and June 27, 2021, respectively, in connection with the settlement of certain customer receivables generated from trade activity in the Asia Segment. The BANs are redeemable upon maturity from the drawing financial institutions, or earlier at a discount.

~~6. Inventories~~

~~Inventories consists of the following:~~

March 27, 2022

June 27, 2021

Raw materials

$
66,127

$
54,895

Supplies

11,429

10,692

Work in process

10,598

7,516

Finished goods

78,184

70,525

Gross inventories

166,338

143,628

Net realizable value adjustment

(2,958
)

(2,407
)
Total inventories

$
163,380

$
141,221

~~7. Other Current Assets~~

~~Other current assets consist of the following:~~

March 27, 2022

June 27, 2021

Vendor deposits

$
5,168

$
3,341

Value-added taxes receivable

2,701

2,484

Prepaid expenses and other

3,001

2,753

Recovery of non-income taxes, net

9,600

3,456

Contract assets

508

330

Total other current assets

$
20,978

$
12,364

~~Unifi, Inc.~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

~~Recovery of Non-Income Taxes, Net~~

Brazilian companies are subject to various taxes on business operations, including turnover taxes used to fund social security and unemployment programs, commonly referred to as PIS/COFINS taxes. UNIFI, along with numerous other companies in Brazil, challenged the constitutionality of certain state taxes historically included in the PIS/COFINS tax base.

On May 13, 2021, Brazil’s Supreme Federal Court (“SFC”) ruled in favor of taxpayers, and on July 7, 2021, the Brazilian Internal Revenue Service withdrew its existing appeal. Following the SFC decision, the federal government will not issue refunds for these taxes but will instead allow for the overpayments and associated interest to be applied as credits against future PIS/COFINS tax obligations.

There are no limitations or restrictions on UNIFI’s ability to recover the associated overpayment claims as future income is generated. In fiscal 2021, UNIFI recognized an estimated benefit from the expected recovery of these non-income taxes in Brazil. During the quarter ended March 27, 2022, UNIFI (i) reduced the estimate based on additional clarity and review of the recovery process during the months following the associated SFC decision and (ii) updated the expected duration of claim recovery to the 12-month period following March 27, 2022. The remaining estimated recovery amount has been reclassed to current assets accordingly, with no amounts reflected in other non-current assets at March 27, 2022.

~~8. Property, Plant and Equipment, Net~~

~~Property, plant and equipment (“PP&E”), net consists of the following:~~

March 27, 2022

June 27, 2021

Land

$
3,200

$
3,184

Land improvements

16,443

16,372

Buildings and improvements

161,557

160,122

Assets under finance leases

22,882

22,000

Machinery and equipment

622,758

609,414

Computers, software and office equipment

25,717

24,848

Transportation equipment

10,542

10,461

Construction in progress

24,568

17,834

Gross PP&E

887,667

864,235

Less: accumulated depreciation

(665,100
)

(656,576
)
Less: accumulated amortization – finance leases

(7,489
)

(5,963
)
Total PP&E, net

$
215,078

$
201,696

~~9. Other Non-Current Assets~~

Other non-current assets were immaterial at March 27, 2022 and June 27, 2021. Included within Other non-current assets are UNIFI’s investments in unconsolidated affiliates: U.N.F. Industries, Ltd. (“UNF”); and UNF America LLC (“UNFA”) (collectively “UNFs”).

~~U.N.F. Industries, Ltd.~~

Raw material and production services for UNF are provided by Nilit Ltd. under separate supply and services agreements. UNF’s fiscal year end is December 31, and it is a registered Israeli private company located in Migdal Ha-Emek, Israel.

~~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 March 27, 2022, UNIFI’s open purchase orders related to this supply agreement were $2,079.

~~UNIFI’s raw material purchases under this supply agreement consisted of the following:~~

For the Nine Months Ended

March 27, 2022

March 28, 2021

UNFA

$
20,849

$
13,677

UNF

239

548

Total

$
21,088

$
14,225

~~As of March 27, 2022 and June 27, 2021, UNIFI had combined accounts payable due to UNF and UNFA of $5,167 and $2,955, respectively.~~

UNIFI has determined that UNF and UNFA are variable interest entities and that UNIFI is the primary beneficiary of these entities, based on the terms of the supply agreement discussed above. As a result, these entities should be consolidated with UNIFI’s financial results. As (i) UNIFI purchases

~~Unifi, Inc.~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

Long-Term Debt

substantially all of the output from the two entities; (ii) the two entities’ balance sheets constitute 3% or less of UNIFI’s current assets, total assets, and total liabilities at each of UNIFI’s fiscal year ends; and (iii) such balances are not expected to comprise a larger portion in the future, UNIFI has not included the accounts of UNF and UNFA in its consolidated financial statements. The financial results of UNF and UNFA are included in UNIFI’s consolidated financial statements with a one-month lag, using the equity method of accounting and with intercompany profits eliminated in accordance with UNIFI’s accounting policy. Other than the supply agreement discussed above, UNIFI does not provide any other commitments or guarantees related to either UNF or UNFA.Debt Obligations

~~Condensed balance sheet and income statement information for UNIFI’s unconsolidated affiliates (including reciprocal balances) are presented in the tables below.~~

March 27, 2022

June 27, 2021

Current assets

$
9,263

$
7,931

Non-current assets

634

659

Current liabilities

6,969

3,967

Non-current liabilities

—

—

Shareholders’ equity and capital accounts

2,928

4,623

UNIFI’s portion of undistributed earnings

1,715

2,100

For the Three Months Ended

For the Nine Months Ended

March 27, 2022

March 28, 2021

March 27, 2022

March 28, 2021

Net sales
$
8,816

$
5,983

$
22,301

$
13,847

Gross profit

487

1,047

1,059

2,580

Income (loss) from operations

60

629

(194
)

1,348

Net income (loss)

54

630

(199
)

1,353

Depreciation and amortization

29

38

93

116

Distributions received

750

—

750

—

~~10. Other Current Liabilities~~

~~Other current liabilities consists of the following:~~

March 27, 2022

June 27, 2021

Payroll and fringe benefits

$
8,830

$
10,204

Incentive compensation

3,283

12,356

Deferred revenue

2,810

2,691

Interest rate swaps

168

1,234

Current portion of supplemental post-employment plan

20

1,087

Other

3,695

4,066

Total other current liabilities

$
18,806

$
31,638

~~11. Long-Term Debt~~

~~Debt Obligations~~

The following table and narrative presents the ~~total balances outstanding for~~detail of UNIFI’s debt ~~obligations, their scheduled maturity dates and~~obligations. Capitalized terms not otherwise defined within this Note shall have the ~~weighted average interest rates for borrowings as well as the applicable current portion of long-term debt:~~

Weighted Average

Scheduled

Interest Rate as of

Principal Amounts as of

Maturity Date

March 27, 2022

March 27, 2022

June 27, 2021

ABL Revolver

December 2023

2.0
%

$
18,500

$
—

ABL Term Loan

December 2023

3.2
%
(1)

70,000

77,500

Finance lease obligations

(2)

3.5
%

7,363

8,475

Construction financing

(3)

1.5
%

1,458

882

Total debt

97,321

86,857

Current ABL Term Loan

(12,500
)

(12,500
)
Current portion of finance lease obligations

(2,009
)

(3,545
)
Unamortized debt issuance costs

(307
)

(476
)
Total long-term debt

$
82,505

$
70,336

~~(1)~~

~~Includes the effects of interest rate swaps.~~

~~(2)~~

~~Scheduled maturity dates for finance lease obligations range from May 2022 to November 2027.~~

~~(3)~~

~~Refer to the discussion below under the subheading “Construction Financing” for further information.~~

~~Unifi, Inc.~~

~~Notes~~meanings attributed to ~~Condensed Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

~~ABL Facility~~

On December 18, 2018, Unifi, Inc. and certain of its subsidiaries entered into a Third Amendment to Amended and Restated Credit Agreement and Second Amendment to Amended and Restated Guaranty and Security Agreement (the “2018 Amendment”). The 2018 Amendment amendedthem in the Amended and Restated Credit Agreement, dated as of March 26, 2015 by(together with amendments, the "Prior Credit Agreement"), or the Second Amended and Restated Credit Agreement, dated as of October 28, 2022 (the "2022 Credit Agreement").


		Weighted Average
	Scheduled	Interest Rate as of			Principal Amounts as of
	Maturity Date	January 1, 2023			January 1, 2023			July 3, 2022
ABL Revolver	October 2027		8.0	%	$	3,400		$	41,300
ABL Term Loan	October 2027		5.9	%		115,000			65,000
Finance lease obligations	(1)		3.6	%		7,091			7,261
Construction financing	(2)		5.0	%		4,900			729
Total debt						130,391			114,290
Current ABL Term Loan						(9,200	)		(10,000	)
Current portion of finance lease obligations						(1,892	)		(1,726	)
Unamortized debt issuance costs						(319	)		(255	)
Total long-term debt					$	118,980		$	102,309

(1)

Scheduled maturity dates for finance lease obligations range from March 2025 to November 2027.

(2)

Refer to the discussion below under the subheading “Construction Financing” for further information.

ABL Facility

Unifi, Inc. entered into the Sixth Amendment to Amended and Restated Credit Agreement (the “Sixth Amendment”) on September 2, 2022. The Sixth Amendment modified the Trigger Level of the Prior Credit Agreement, which relates to, among other things, the requirement to maintain a Fixed Charge Coverage Ratio such that it occurs when Excess Availability falls below (a) for the period beginning on September 2, 2022 through and including the date that is 60 days after such date, $16,500 and (b) at all other times, the greatest of (i) $10,000, (ii) 20% of the Maximum Revolver Amount, and (iii) 12.5% of the sum of the Maximum Revolver Amount plus the outstanding principal amount of the Term Loan.

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

On October 28, 2022, Unifi, Inc. and certain of its subsidiaries entered into the 2022 Credit Agreement with a syndicate of ~~lenders, as previously amended (together with all previous and subsequent amendments, the “Credit Agreement”).~~lenders. The 2022 Credit Agreement provides for a ~~$200,000~~$230,000 senior secured credit facility (the ~~“ABL~~“2022 ABL Facility”), including a ~~$100,000~~$115,000 revolving credit facility ~~(the “ABL Revolver”)~~ and a term loan ("2022 ABL Term Loan") that can be reset up to a maximum amount of ~~$100,000,~~$115,000, once per fiscal year, if certain conditions are ~~met (the “ABL Term Loan”).~~met. The 2022 ABL Facility has a maturity date of ~~December 18,~~October 28, 2027. The 2022 ABL Term Loan requires quarterly principal payments of $2,300 commencing on February 1, 2023.

Borrowings under the2022 ABL Facility ~~borrowings~~ bear interest at ~~LIBOR~~SOFR plus 0.10% plus an applicable margin of ~~1.25%~~1.25% to ~~1.75%~~1.75%, or the Base Rate (as defined in the 2022 Credit Agreement) plus an applicable margin of ~~0.25%~~0.25% to ~~0.75%~~0.75%, with interest ~~currently being~~ paid on a monthly basis.

Prior to entering the 2022 Credit Agreement, Unifi, Inc. and certain of its subsidiaries maintained the Prior Credit Agreement that established a $200,000 senior secured credit facility (the “Prior ABL Facility”), including a $100,000 revolving credit facility and a term loan that could be reset up to a maximum amount of $100,000, once per fiscal year, if certain conditions were met. The Prior ABL Facility had a maturity date of December 18, 2023. Prior ABL Facility borrowings bore interest at LIBOR plus an applicable margin of 1.25% to 1.75%, or the Base Rate plus an applicable margin of 0.25% to 0.75%, with interest paid on a monthly basis.

In connection with the 2022 Credit Agreement, UNIFI ~~currently maintains 3~~recorded a $273 loss on debt extinguishment to interest ~~rate swaps as cash flow hedges intended to fix LIBOR at approximately 1.9% on $75,000~~expense in the second quarter of variable-rate debt. Such swaps are scheduled to terminate in May 2022. During the quarter ended December 26, 2021, UNIFI’s outstanding variable-rate debt fell below the combined $75,000 notional amount. Accordingly, the $20,000 notional interest rate swap was de-designated from hedge accounting treatment. The impact of de-designation was not material.fiscal 2023.

Construction Financing

In May 2021, UNIFI entered into an agreement with a third party lender that provides for construction-period financing for certain ~~eAFK Evo~~ texturing machinery included in our capital allocation plans. UNIFI records project costs to construction in progress and the corresponding liability to construction financing (within long-term debt). The agreement provides for monthly, interest-only payments during the construction period at a rate of SOFR plus ~~1.25%~~1.25%, and contains terms customary for a financing of this type.

Each borrowing under the agreement provides for 60 monthly payments, which will commence ~~in the form of a finance lease obligation~~ upon the completion of the construction ~~period with an interest rate of approximately 3.4%.~~period. In connection with this construction financing arrangement, ~~we have~~UNIFI has borrowed a total of ~~$3,222~~$8,122 and transitioned ~~a total of $1,764~~$3,222 of completed asset costs to finance lease obligations as of ~~March 27, 2022.~~January 1, 2023.

~~The following table presents the scheduled maturities of UNIFI’s outstanding debt obligations for the remainder of fiscal 2022, the following four fiscal years and thereafter:~~

UNIFI regularly assesses whether it is more-likely-than-not that some portion or all of its deferred tax assets will not be realized. UNIFI considers the scheduled reversal of taxable temporary differences, taxable income in carryback years, projected future taxable income and tax planning strategies in making this assessment. Since UNIFI operates in multiple jurisdictions, the assessment is made on a jurisdiction-by-jurisdiction basis, taking into consideration the effects of local tax law. The three-month and nine-month periods ended March 28, 2021 includes discrete tax (benefit) expense of $(133) and $1,508, respectively, for a change in valuation allowance related to the GILTI regulations enacted during that period.

UNIFI’s (benefit) provision for income taxes for the ~~nine~~six months ended ~~March 27, 2022~~January 1, 2023 and ~~March 28,~~December 26, 2021 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~~rates for the three months and ~~nine~~six months ended ~~March 27, 2022 was~~January 1, 2023 varied from the U.S. federal statutory rate primarily due to losses for which UNIFI does not expect to realize a future benefit and a discrete tax benefit related to the recovery of certain Brazilian income taxes paid in prior years.

The effective tax rates for the three months and six months ended December 26, 2021 were higher than the U.S. federal statutory rate primarily due to an increase in the valuation allowance for deferred tax assets, earnings taxed at higher rates in foreign jurisdictions, and deferred tax on unremitted earnings.

The effective tax rate for the three months ended March 28, 2021 was higher than the U.S. federal statutory rate primarily due to current U.S. tax on GILTI and earnings taxed at higher rates in foreign jurisdictions. These rate impacts were partially offset by additional research credits claimed during the period. The effective tax rate for the nine months ended March 28, 2021 was higher than the U.S. federal statutory rate primarily due to current U.S. tax on GILTI, the change in valuation allowance for deferred tax assets, and earnings taxed at higher rates in foreign jurisdictions. These rate impacts were partially offset by the retroactive GILTI high-tax exclusion for prior periods, and additional R&D credits claimed during the current period.

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.

UNIFI evaluates the operating performance of its segments based upon Segment Profit, which represents segment gross (loss) profit ~~(loss)~~ 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.

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

There have been no material changes in segment assets during fiscal ~~2022.~~2023.

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 ~~March 27, 2022,~~January 1, 2023, while a reference to the “prior period” refers to the three-month period ended ~~March 28,~~December 26, 2021. A reference to the “current ~~nine-month~~six-month period” refers to the ~~nine-month~~six-month period ended ~~March 27, 2022,~~January 1, 2023, while a reference to the “prior ~~nine-month~~six-month period” refers to the ~~nine-month~~six-month period ended ~~March 28,~~December 26, 2021. Such references may be accompanied by certain phrases for added clarity. The current period and the prior period each consisted of 13 weeks. The current ~~nine-month~~six-month period and the prior ~~nine-month~~six-month period each consisted of 3926 weeks.

Our discussions in this Item 2 focus on our results during, or as of, the three months and ~~nine~~six months ended ~~March 27, 2022~~January 1, 2023 and ~~March 28,~~December 26, 2021, and, to the extent applicable, any material changes from the information discussed in the ~~2021~~2022 Form 10-K or other important intervening developments or information. These discussions should be read in conjunction with the ~~2021~~2022 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”). ~~In discussion of operating results in this report, we refer to our operations in the “NACA” region, which is the region comprised of the trade zones covered by USMCA, NAFTA and CAFTA-DR.~~Weighted average exchange rates were as follows:

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

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 believe our strategic initiatives will increase revenue and profitability and generate improved cash flows from operations.

The current economic environment and significant decrease in textile product demand has ~~four reportable segments for its operations –~~adversely impacted our consolidated sales and profitability in fiscal 2023. In addition to the ~~Polyester Segment, the Asia Segment, the Brazil Segment~~current unfavorable economic environment and the Nylon Segment – as well as certain ancillary operations that include for-hire transportation services, which comprise an All Other category. The ancillary operations classified within All Other are insignificant for all periods presented; therefore, UNIFI’s discussioninventory destocking measures taken by brands and ~~analysis~~retailers, the following pressures have continued from fiscal 2022 into fiscal 2023: (i) the impact of ~~those activities is generally limited~~inflation on consumer spending, (ii) rising interest rates, (iii) the Russia-Ukraine conflict, (iv) global input cost volatility, and (v) supply chain disruption. UNIFI will continue to ~~their impact on consolidated results, where appropriate.~~

~~The COVID-19 pandemic had no significant pervasive impact to either~~monitor these and other aspects of the current ~~or prior nine-month periods taken as a whole. On average, global demand~~economic environment and ~~consumer spending were predominantly restored over the prior nine-month period~~work closely with stakeholders to ensure business continuity and ~~such economic levels did not decline within the current nine-month period.~~liquidity.

UNIFI remains committed to pursuing relief from the elevated levels of low-cost and subsidized polyester textured yarn (“Subject Imports”) entering the U.S. market from foreign countries. Trade petition efforts to slow Subject Imports from China and India were successful during calendar 2019.

Due to the continued pressure from Subject Imports on our Polyester Segment revenues and gross margins in the U.S. market, UNIFI petitioned the United States Department of Commerce (“Commerce Department”) and the United States International Trade Commission (“ITC”) relating to Subject Imports from Indonesia, Malaysia, Thailand, and Vietnam (the “Subject Countries”). In November 2021, the ITC determined that the U.S. textile industry was materially injured by reason of imports of polyester textured yarn from Subject Countries, and in December 2021, the Commerce Department issued unanimous final antidumping duty orders on such imports.

We believe both trade petitions on Subject Imports are necessary to normalize the U.S. polyester market for fair pricing and competition and will aid in generating incremental revenue and gross margins for the Polyester Segment.

The prior nine-month period benefited from stable, comparatively low raw material costs and restoration of global demand levels. As fiscal 2021 concluded, global economic recovery, domestic weather events, supply constraints and general inflationary pressures led to higher input costs in fiscal 2022. Rising input costs and a tighter labor pool in the U.S. have placed meaningful pressure on our domestic gross profit performance during the current nine-month period.

In the past, selling price adjustments were associated primarily with changes in the price of polyester and nylon raw materials, but in the current environment, selling price adjustments are required to accommodate significant increases in all categories of input costs including packaging, supplies, additives, and labor. For the majority of our portfolio, we have been able to implement selling price adjustments to protect gross margins in the current nine-month period. However, some selling price adjustments in the U.S. and Central America were not realized rapidly enough to avoid temporary gross margin declines in certain portions of our portfolio. While we have navigated the dynamic cost environment better than in recent prior years, elevated levels of input costs and the weakening of labor productivity in our manufacturing operations remain short-term headwinds to our underlying domestic performance.

In order to address these input cost and labor headwinds, we have (i) instituted responsive selling price adjustments, including most recently in January and March 2022, and (ii) prioritized more focused training and retention initiatives with our manufacturing workforce. We expect both actions to improve our Polyester Segment profitability in future periods.

In addition to the ~~recent~~ escalation of input costs in fiscal 2022, UNIFI ~~is experiencing~~experienced inefficiencies in the global supply chain in connection with (i) freight costs and logistics slowdowns in foreign markets; (ii) a tighter labor pool in the U.S.; and (iii) suppressed productivity from our business partners resulting from pandemic-related lockdowns in certain regions, particularly Asia. Despite significant improvement in ~~Asia. While our businesses are not currently materially impacted by these adverse events~~input and ~~circumstances,~~freight costs and a more stable labor pool during the current period, the global demand volatility and uncertainty that began in late fiscal 2022 has continued through the second quarter of fiscal 2023, as the threat of recession continues to create uncertainty for calendar 2023. The existing challenges and future uncertainty, particularly for rising input costs, labor productivity, and ~~pandemic-related closures,~~global demand, could worsen and/or ~~occur~~continue for prolonged periods, materially impacting our consolidated sales and ~~materially~~gross profit. Also, the need for future selling price adjustments in connection with inflationary costs could impact our ~~Polyester~~ability to retain current customer programs and ~~Asia Segments.~~compete successfully for new programs in certain regions.

Furthermore, we recognize the disruption to global markets and supply chains caused by the Russia-Ukraine conflict. While volatility and uncertainty continue, we have no significant customers or supply chains established in the conflicted region, and 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 raw material costs or unforeseen adverse impacts.

UNIFI continuously reviews performance indicators to measure its success. These performance indicators form the basis of management’s discussion and analysis included below:

EBITDA, Adjusted EBITDA, Adjusted Net (Loss) Income, Adjusted EPS, Adjusted Working Capital, and Net Debt (collectively, the “non-GAAP financial measures”) are not determined in accordance with GAAP and should not be considered a substitute for performance measures determined in accordance with GAAP. The calculations of the non-GAAP financial measures are subjective, based on management’s belief as to which items should be included or excluded in order to provide the most reasonable and comparable view of the underlying operating performance of the business. We may, from time to time, modify the amounts used to determine our non-GAAP financial measures. When applicable, management’s discussion and analysis includes specific consideration for items that comprise the reconciliations of its non-GAAP financial measures. We believe that these non-GAAP financial measures better reflect UNIFI’s underlying operations and performance and that their use, as operating performance measures, provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets, among otherwise comparable companies.

Management uses Adjusted EBITDA (i) as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis, as it removes the impact of items (a) ~~items~~ directly related to our asset base (primarily depreciation and amortization) ~~and~~and/or (b) ~~items~~ 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 ~~prospective~~ acquisitions and dispositions. Adjusted EBITDA is a key performance metric utilized in the determination of variable compensation. We also believe Adjusted EBITDA is an appropriate supplemental measure of debt service capacity because it serves as a high-level proxy for cash generated from operations and is relevant to our fixed charge coverage ratio.

Management uses Adjusted Net (Loss) Income and Adjusted EPS (i) as measurements of net operating performance because they assist us in comparing such performance on a consistent basis, as they remove the impact of (a) items that we would not expect to occur as a part of our normal business on a regular basis and (b) components of the provision for income taxes that we would not expect to occur as a part of our underlying taxable operations; (ii) for planning purposes, including the preparation of our annual operating budget; and (iii) as measures in determining the value of other ~~prospective~~ acquisitions and dispositions.

Management uses Adjusted Working Capital as an indicator of UNIFI’s production efficiency and ability to manage inventories and receivables. ~~Adjusted Working Capital is a metric used in the determination of variable compensation.~~

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.

Three Months Ended ~~March 27, 2022~~January 1, 2023 Compared to Three Months Ended ~~March 28,~~December 26, 2021

Following the tables is a discussion and analysis of the significant components of net (loss) income.

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

For the Three Months Ended

March 27, 2022

March 28, 2021

Net income

$
2,066

$
4,758

Interest expense, net

217

726

Provision for income taxes

2,698

3,660

Depreciation and amortization expense ⁽¹⁾

6,433

6,761

EBITDA

11,414

15,905

Recovery of non-income taxes, net ⁽²⁾

815

—

Adjusted EBITDA

$
12,229

$
15,905

(1)

Within this reconciliation, depreciation and amortization expense excludes the amortization of debt issuance costs, which are reflected in interest expense, net. Within the accompanying condensed consolidated statements of cash flows, amortization of debt issuance costs is reflected in depreciation and amortization expense. In the second quarter of fiscal 2023, interest expense, net reflects $273 of loss on debt extinguishment.

~~(1)~~

~~(2)~~

In fiscal 2021, UNIFI recognized an estimated benefit for the recovery of non-income taxes following a decision by the SFC in Brazil. During the quarter ended March 27, 2022, UNIFI reduced the estimated benefit based on additional clarity and review of the recovery process during the months following the decision.

(2)

For the periods presented, there were no other adjustments necessary to reconcile Net (loss) income to Adjusted EBITDA.

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

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


	For the Three Months Ended January 1, 2023												For the Three Months Ended December 26, 2021
	Pre-tax Loss			Tax Impact			Net Loss			Diluted EPS			Pre-tax Income		Tax Impact			Net Income		Diluted EPS
GAAP results	$	(21,107	)	$	3,070		$	(18,037	)	$	(1.00	)	$	4,114	$	(3,185	)	$	929	$	0.05
Recovery of income taxes (1)		—			(3,799	)		(3,799	)		(0.21	)		—		—			—		—
Adjusted results	$	(21,107	)	$	(729	)	$	(21,836	)	$	(1.21	)	$	4,114	$	(3,185	)	$	929	$	0.05

Weighted average common shares outstanding											18,034										19,004

For the Three Months Ended March 27, 2022

For the Three Months Ended March 28, 2021

Pre-tax Income

Tax Impact

Net Income

Diluted EPS

Pre-tax
Income

Tax Impact

Net Income

Diluted EPS

GAAP results

$
4,764

$
(2,698
)

$
2,066

$
0.11

$
8,418

$
(3,660
)

$
4,758

$
0.25

Recovery of non-income taxes, net ⁽¹⁾

815

(257
)

558

0.03

—

—

—

—

Adjusted results

$
5,579

$
(2,955
)

$
2,624

$
0.14

$
8,418

$
(3,660
)

$
4,758

$
0.25

Weighted average common shares outstanding

18,942

18,967

(1)

In the second quarter of fiscal 2023, UNIFI recorded a recovery of income taxes in connection with filing amended tax returns in Brazil relating to certain income taxes paid in prior fiscal years.

~~(1)~~

Net Sales

Consolidated net sales for the current period ~~increased~~decreased by ~~$21,914,~~$65,198, or ~~12.3%~~32.4%, and consolidated sales volumes decreased ~~7.0%, and consolidated weighted average sales prices increased 19.3%~~35.6%, compared to the prior period. The ~~changes~~decreases occurred primarily due to lower volumes in the Americas and Asia Segments as a result of lower global demand in connection with the inventory de-stocking efforts of major brands and retailers, in addition to pandemic-related lockdowns in Asia, partially offset by higher selling prices in response to increasing raw material and input costs.

Consolidated weighted average sales prices increased 3.2%, primarily attributable to higher selling prices in response to ~~increasing input costs, partially offset by volume declines in (i) the U.S. due to labor challenges and (ii) Asia and Brazil due to comparably softer market conditions.~~higher raw material costs.

REPREVE® Fiber products for the current period comprised ~~36%~~31%, or $42,866, of consolidated net sales, ~~compared to 34%~~down from 40%, or $81,524, for the prior period. The lower volumes and net sales in the Asia Segment, which has the highest portion of REPREVE® Fiber sales as a percentage of segment net sales, was the main driver for the lower REPREVE® Fiber sales.

Gross (Loss) Profit

Gross profit for the current period decreased by ~~$6,451,~~$24,890, or ~~25.2%~~147.4%, compared to the prior period. Gross profit ~~performance was lower than anticipated~~decreased as a result of ~~labor~~the decline in net sales, combined with weak fixed cost absorption for the Americas Segment, where utilization and ~~input~~productivity are materially impactful to gross profit. Although raw material costs for the Americas Segment have decreased meaningfully in fiscal 2023, the associated benefit was muted by low production levels, weak demand, and higher priced raw material inventory purchased in the fourth fiscal quarter of 2022.

•

For the Americas Segment, gross profit decreased due to weaker global demand and weak fixed cost ~~challenges,~~absorption in connection with lower production, along with the impact of higher priced raw material inventory purchased in the fourth fiscal quarter of 2022.

•

For the Brazil Segment, gross profit decreased primarily ~~for our Polyester~~due to the combination of high priced raw material inventory purchased in the fourth fiscal quarter of 2022 and ~~Nylon Segments.~~decreasing market prices in Brazil due to lower cost import competition.

•

For the Asia Segment, gross profit decreased primarily due to lower sales volumes in connection with weaker global demand and pandemic-related lockdowns in Asia.

SG&A

•

For the Polyester Segment, gross profit decreased due to higher-than-expected input costs, primarily for polyester raw material. Labor challenges, including attrition and the reduced availability of labor, also contributed to lower productivity and efficiency.

•

~~For the Asia Segment, gross profit was essentially unchanged from the prior period.~~

•

For the Brazil Segment, gross profit decreased from the prior period primarily due to normalization from the exceptional performance achieved in the prior period, which was characterized by a significant but temporary improvement in competitive position and market share following the pandemic-related rebound in product demand in Brazil.

•

~~For the Nylon Segment, gross profit increased in connection with improved manufacturing efficiency and sales mix, partially offset by input cost and labor challenges.~~

~~SG&A~~

SG&A was ~~comparable to~~generally flat as the prior period ~~as lower~~included a reduction in incentive compensation inexpense while the current period ~~was partially offset by higher~~included lower discretionary ~~expenses.~~spending.

Benefit for Bad Debts

The current period and prior period bad debt changes reflect no material activity.

Other Operating Expense, Net

The current period and prior period include foreign currency transaction (gains) losses of $(78) and $297, respectively in addition to $298 of severance costs recorded in the prior period.

Interest Expense, Net

Interest expense, net increased in connection with higher debt principal following continued capital investments and higher interest rates. Interest expense, net for the current period includes $273 of loss on debt extinguishment.

Equity in Earnings of Unconsolidated Affiliates

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

~~Other Operating (Income) Expense, Net~~

The current period and prior period primarily reflect net foreign currency transaction (gains) losses of $(895) and $4, respectively. In addition, the prior period reflects a predominantly non-cash loss on the disposal of assets of $2,559 primarily relating to the removal of existing texturing machinery to allow for the future installation of new eAFK Evo texturing machinery.

~~Interest Expense, Net~~

~~Interest expense, net decreased in connection with greater interest income in the current period, primarily generated from foreign cash on deposit.~~

~~Equity in Earnings of Unconsolidated Affiliates~~

~~The performance decrease from the prior period to the current period is primarily attributable to higher raw material costs.~~

~~Recovery of Non-income Taxes, Net~~

In fiscal 2021, UNIFI recognized an estimated benefit from the expected recovery of non-income taxes related to over-taxation in Brazil. During the current period, UNIFI reduced the estimate by $815 based on additional clarity and precedent surrounding the recovery process during the months following the associated SFC decision.

Income Taxes

~~Provision~~(Benefit) provision for income taxes and the effective tax rate were as follows:

	For the Three Months Ended
	March 27, 2022			March 28, 2021			For the Three Months Ended
Provision for income taxes	$	2,698		$	3,660
							January 1, 2023			December 26, 2021
(Benefit) provision for income taxes							$	(3,070	)	$	3,185
Effective tax rate		56.6	%		43.5	%		14.5	%		77.4	%

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

The ~~increase~~decrease in the effective tax rate from the prior period to the current period is primarily attributable to ~~(i)~~a discrete tax benefit related to the recovery of certain Brazilian income taxes paid in prior years, partially offset by an increase in the valuation allowance for deferred tax assets in the current ~~period, (ii) additional research credits claimed during the prior period, and (iii) foreign earnings taxed at a higher rate in the current~~ period. ~~These increases are partially offset by lower U.S. tax on GILTI in the current period.~~

Net (Loss) Income

~~Net income for the current period was $2,066, or $0.11 per diluted share, compared to net income of $4,758 or $0.25 per diluted share, for the prior period.~~ The decrease in net (loss) income was primarily attributable to ~~lower~~the decrease in gross profit and the associated ~~increase in~~adverse impact of lower U.S. earnings on the effective tax ~~rate in the current period, partially offset by the favorable change in other operating (income) expense, net.~~rate.

Adjusted EBITDA (Non-GAAP Financial Measure)

Adjusted EBITDA decreased ~~from the prior period to the current period,~~ primarily ~~due to~~in connection with lower gross ~~profit, partially offset by the favorable change in other operating (income) expense, net.~~profit.

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

Adjusted Net (Loss) Income and Adjusted EPS decreased from the prior period to the current period, commensurate with the ~~decline~~decrease in net (loss) income.

Segment Overview

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

~~Polyester~~Americas Segment

The components of Segment (Loss) 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
	January 1, 2023						December 26, 2021
				% of Net Sales						% of Net Sales		% Change
Net sales	$	85,242			100.0		$	114,697			100.0		(25.7	)
Cost of sales		98,326			115.3			113,844			99.3		(13.6	)
Gross (loss) profit		(13,084	)		(15.3	)		853			0.7	nm
Depreciation expense		5,542		6.5				5,145			4.5		7.7
Segment (Loss) Profit	$	(7,542	)		(8.8	)	$	5,998			5.2	nm

Segment net sales as a percentage of consolidated amounts		62.6	%					56.9	%
Segment (Loss) Profit as a percentage of consolidated amounts	nm							26.9	%

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


Net sales for the prior period	$	114,697
Decrease in sales volumes		(31,532	)
Net change in average selling price and sales mix		2,077
Net sales for the current period	$	85,242

The change in net sales for the Americas Segment from the prior period to the current period was primarily attributable to lower sales volumes following weaker global textile demand, partially offset by higher average selling prices in response to higher input costs.

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


Segment Profit for the prior period	$	5,998
Net decrease in underlying margins from excess capacity		(11,826	)
Decrease in sales volumes		(1,714	)
Segment Loss for the current period	$	(7,542	)

The decrease in Segment (Loss) Profit for the Americas Segment from the prior period to the current period was primarily attributable to lower production volumes driving weaker fixed cost absorption in connection with lower 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 ~~Polyester~~Brazil Segment, were as follows:


	For the Three Months Ended
	January 1, 2023					December 26, 2021
				% of Net Sales					% of Net Sales		% Change
Net sales	$	25,687			100.0	$	27,601			100.0		(6.9	)
Cost of sales		24,357			94.8		20,075			72.7		21.3
Gross profit		1,330			5.2		7,526			27.3		(82.3	)
Depreciation expense		391			1.5		277			1.0		41.2
Segment Profit	$	1,721			6.7	$	7,803			28.3		(77.9	)

Segment net sales as a percentage of consolidated amounts		18.9	%				13.7	%
Segment Profit as a percentage of consolidated amounts		-83.3	%				35.0	%

For the Three Months Ended

March 27, 2022

March 28, 2021

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
93,924

100.0

$
82,668

100.0

13.6

Cost of sales

90,043

95.9

75,446

91.3

19.3

Gross profit

3,881

4.1

7,222

8.7

(46.3
)
Depreciation expense

4,642

5.0

5,036

6.1

(7.8
)
Segment Profit

$
8,523

9.1

$
12,258

14.8

(30.5
)

Segment net sales as a percentage of
consolidated amounts

46.8
%

46.2
%

Segment Profit as a percentage of
consolidated amounts

34.4
%

38.9
%

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


Net sales for the prior period	$	82,668		$	27,601
Net change in average selling price and sales mix		18,007
Decrease in sales volumes		(6,751	)
Decrease in average selling price					(5,802	)
Increase in sales volumes					2,240
Favorable foreign currency translation effects					1,648
Net sales for the current period	$	93,924		$	25,687

The ~~increase~~decrease in net sales for the ~~Polyester~~Brazil Segment from the prior period to the current period was primarily attributable to ~~higher average selling prices in response~~pricing pressure due to ~~higher input costs,~~import competition, partially offset by ~~lower~~higher sales ~~volume due to labor challenges.~~volumes.

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


Segment Profit for the prior period	$	7,803
Decrease in underlying unit margins		(7,165	)
Increase in sales volumes		632
Favorable foreign currency translation effects		451
Segment Profit for the current period	$	1,721

Segment Profit for the prior period

$
12,258

Net decrease in underlying margins

(2,734
)
Decrease in sales volumes

(1,001
)
Segment Profit for the current period

$
8,523

The decrease in Segment Profit for the ~~Polyester~~Brazil Segment from the prior period to the current period was primarily attributable to ~~(i)~~ ~~higher-than-expected input costs, primarily for polyester~~an overall decrease in gross margin mainly due to pressure on selling prices from low-priced import competition and higher raw material costs.~~in the current period due to inflationary pressures, along with (ii) weaker labor productivity.~~

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
	January 1, 2023					December 26, 2021
				% of Net Sales					% of Net Sales		% Change
Net sales	$	25,283			100.0	$	59,112			100.0		(57.2	)
Cost of sales		21,529			85.2		50,601			85.6		(57.5	)
Gross profit		3,754			14.8		8,511			14.4		(55.9	)
Depreciation expense		—			—		—			—		—
Segment Profit	$	3,754			14.8	$	8,511			14.4		(55.9	)

Segment net sales as a percentage of consolidated amounts		18.6	%				29.3	%
Segment Profit as a percentage of consolidated amounts		-181.6	%				38.1	%

For the Three Months Ended

March 27, 2022

March 28, 2021

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
51,277

100.0

$
48,483

100.0

5.8

Cost of sales

43,900

85.6

41,330

85.2

6.2

Gross profit

7,377

14.4

7,153

14.8

3.1

Depreciation expense

—

—

—

—

—

Segment Profit

$
7,377

14.4

$
7,153

14.8

3.1

Segment net sales as a percentage of
consolidated amounts

25.5
%

27.1
%

Segment Profit as a percentage of
consolidated amounts

29.8
%

22.7
%

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


Net sales for the prior period	$	48,483		$	59,112
Net decrease in sales volumes					(31,562	)
Unfavorable foreign currency translation effects					(5,370	)
Change in average selling price and sales mix		4,459			3,103
Favorable foreign currency translation effects		964
Net decrease in sales volumes		(2,629	)
Net sales for the current period	$	51,277		$	25,283

The ~~increase~~decrease in net sales for the Asia Segment from the prior period to the current period was primarily attributable to ~~(i) the continued momentum of REPREVE~~^®~~-branded products contributing to underlying~~weaker global demand and pandemic-related lockdowns driving lower sales ~~growth and sales mix and (ii) favorable foreign currency translation effects,~~volumes, partially offset by ~~the beginning of pandemic-related lockdowns in China during March 2022.~~a strong sales mix.

~~The RMB weighted average exchange rate was 6.35 RMB/USD and 6.49 RMB/USD for the current period and the prior period, respectively.~~ 20

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


Segment Profit for the prior period	$	7,153		$	8,511
Decrease in sales volumes					(4,524	)
Unfavorable foreign currency translation effects					(808	)
Change in underlying margins and sales mix		467			575
Favorable foreign currency translation effects		145
Decrease in sales volumes		(388	)
Segment Profit for the current period	$	7,377		$	3,754

The ~~increase~~decrease in Segment Profit for the Asia Segment from the prior period to the current period follows the decline in net sales and sales volumes discussed above, as the comparable gross margin rate for the Asia Segment improved with a strong sales mix.

Six Months Ended January 1, 2023 Compared to Six Months Ended December 26, 2021

Consolidated Overview

The below tables provide:

•

the components of net (loss) income and the percentage increase or decrease over the prior six-month period amounts,

•

a reconciliation from net (loss) income to EBITDA and Adjusted EBITDA, and

•

a reconciliation from net (loss) income to Adjusted Net (Loss) Income and Adjusted EPS.

Following the tables is a discussion and analysis of the significant components of net (loss) income.

Net (loss) income


	For the Six Months Ended
	January 1, 2023						December 26, 2021
				% of Net Sales						% of Net Sales			% Change
Net sales	$	315,731			100.0		$	397,402			100.0			(20.6	)
Cost of sales		317,168			100.5			354,415			89.2			(10.5	)
Gross (loss) profit		(1,437	)		(0.5	)		42,987			10.8			(103.3	)
SG&A		23,521			7.4			24,636			6.2			(4.5	)
Provision (benefit) for bad debts		18			—			(320	)		(0.1	)		(105.6	)
Other operating (income) expense, net		(463	)		(0.1	)		829			0.2			(155.9	)
Operating (loss) income		(24,513	)		(7.8	)		17,842			4.5		nm
Interest expense, net		2,075			0.6			979			0.3			112.0
Equity in earnings of unconsolidated affiliates		(381	)		(0.1	)		(344	)		(0.1	)		10.8
(Loss) income before income taxes		(26,207	)		(8.3	)		17,207			4.3		nm
(Benefit) provision for income taxes		(336	)		(0.1	)		7,598			1.9			(104.4	)
Net (loss) income	$	(25,871	)		(8.2	)	$	9,609			2.4		nm

nm = not meaningful

EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)

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


	For the Six Months Ended
	January 1, 2023			December 26, 2021
Net (loss) income	$	(25,871	)	$	9,609
Interest expense, net		2,075			979
(Benefit) provision for income taxes		(336	)		7,598
Depreciation and amortization expense (1)		13,390			12,574
EBITDA		(10,742	)		30,760

Other adjustments (2)		—			—
Adjusted EBITDA	$	(10,742	)	$	30,760

(1)

(2)

For the periods presented, there were no other adjustments necessary to reconcile Net (loss) income to Adjusted EBITDA.

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

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


	For the Six Months Ended January 1, 2023												For the Six Months Ended December 26, 2021
	Pre-tax Loss			Tax Impact			Net Loss			Diluted EPS			Pre-tax Income		Tax Impact			Net Income		Diluted EPS
GAAP results	$	(26,207	)	$	336		$	(25,871	)	$	(1.44	)	$	17,207	$	(7,598	)	$	9,609	$	0.51
Recovery of income taxes (1)		—			(3,799	)		(3,799	)		(0.21	)		—		—			—		—
Adjusted results	$	(26,207	)	$	(3,463	)	$	(29,670	)	$	(1.65	)	$	17,207	$	(7,598	)	$	9,609	$	0.51

Weighted average common shares outstanding											18,017										18,999

(1)

In the second quarter of fiscal 2023, UNIFI recorded a recovery of income taxes in connection with filing amended tax returns in Brazil relating to certain income taxes paid in prior fiscal years.

Net Sales

Consolidated net sales for the current six-month period decreased by $81,671, or 20.6%, and consolidated sales volumes decreased 28.6%, compared to the prior six-month period. The decreases occurred primarily due to lower volumes in the Americas and Asia Segments as a result of lower global demand in connection with the inventory de-stocking efforts of major brands and retailers, in addition to pandemic-related lockdowns in Asia, partially offset by higher selling prices in response to increasing raw material and input costs.

Consolidated weighted average sales prices increased 8.0%, primarily attributable to higher selling prices in response to higher raw material costs.

REPREVE® Fiber products for the current six-month period comprised 29%, or $92,045, of consolidated net sales, down from 39%, or $153,430, for the prior six-month period. The lower volumes and net sales in the Asia Segment, which has the highest portion of REPREVE® Fiber sales as a percentage of segment net sales, was the main driver for the lower REPREVE® Fiber sales.

Gross (Loss) Profit

Gross (loss) profit for the current six-month period decreased by $44,424, or 103.3%, compared to the prior six-month period. Gross profit decreased as a result of the decline in net sales, combined with weak fixed cost absorption for the Americas Segment, where utilization and productivity are materially impactful to gross profit. Although raw material costs for the Americas Segment decreased meaningfully in the current six-month period, the associated benefit was muted by low production levels, weak demand, and higher priced raw material inventory purchased in the fourth fiscal quarter of 2022.

•

For the Americas Segment, gross profit decreased due to weaker global demand and weak fixed cost absorption in connection with lower production.

•

For the Brazil Segment, gross profit decreased primarily due to the combination of high priced raw material inventory purchased in the fourth fiscal quarter of 2022 and decreasing market prices in Brazil due to lower cost import competition.

•

For the Asia Segment, gross profit decreased primarily due to lower sales volumes in connection with weaker global demand and pandemic-related lockdowns in Asia.

SG&A

SG&A for the current six-month period decreased compared to the prior six-month period, primarily due to (i) lower incentive compensation for the current six-month period and (ii) lower discretionary expenses, including marketing and advertising.

Provision (Benefit) for Bad Debts

The current six-month period and prior six-month period bad debt changes reflect no material activity.

Other Operating (Income) Expense, Net

The current six-month period and prior six-month period include foreign currency transaction (gains) losses of $(803) and $530, respectively, in addition to $314 of severance costs in the prior six-month period.

Interest Expense, Net

Interest expense, net increased in connection with higher debt principal following continued capital investments and higher interest rates. Interest expense, net for the current six-month period includes $273 of loss on debt extinguishment.

Equity in Earnings of Unconsolidated Affiliates

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

Income Taxes

(Benefit) provision for income taxes and the effective tax rate were as follows:


	For the Six Months Ended
	January 1, 2023			December 26, 2021
(Benefit) provision for income taxes	$	(336	)	$	7,598
Effective tax rate		1.3	%		44.2	%

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, regulations, and case law. Additionally, the impacts of discrete and other rate impacting items are more pronounced when income (loss) before income taxes is lower.

The decrease in the effective tax rate from the prior six-month period to the current six-month period is primarily attributable to a discrete tax benefit related to the recovery of certain Brazilian income taxes paid in prior years, partially offset by an increase in the valuation allowance for deferred tax assets in the current six-month period.

Net (Loss) Income

The decrease in net (loss) income was primarily attributable to ~~sales mix improvement~~the decrease in Americas gross profit and the associated adverse impact of lower U.S. earnings on the effective tax rate.

Adjusted EBITDA (Non-GAAP Financial Measure)

Adjusted EBITDA decreased primarily in connection with lower gross profit.

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

Adjusted Net (Loss) Income and Adjusted EPS decreased from the prior six-month period to the current period, commensurate with the decrease in net (loss) income.

Segment Overview

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

Americas Segment

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


	For the Six Months Ended
	January 1, 2023						December 26, 2021
				% of Net Sales						% of Net Sales		% Change
Net sales	$	192,886			100.0		$	225,523			100.0		(14.5	)
Cost of sales		210,839			109.3			215,484			95.5		(2.2	)
Gross (loss) profit		(17,953	)		(9.3	)		10,039			4.5	nm
Depreciation expense		11,022		5.7				10,220			4.5		7.8
Segment (Loss) Profit	$	(6,931	)		(3.6	)	$	20,259			9.0		(134.2	)

Segment net sales as a percentage of consolidated amounts		61.1	%					56.7	%
Segment (Loss) Profit as a percentage of consolidated amounts		-66.4	%					37.6	%

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


Net sales for the prior six-month period	$	225,523
Decrease in sales volumes		(54,418	)
Net change in average selling price and sales mix		21,781
Net sales for the current six-month period	$	192,886

The change in net sales for the Americas Segment from the prior six-month period to the current six-month period was primarily attributable to lower sales volumes following weaker global textile demand, partially offset by higher average selling prices in response to higher input costs.

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


Segment Profit for the prior six-month period	$	20,259
Change in underlying margins and sales mix from excess capacity		(22,196	)
Decrease in sales volumes		(4,994	)
Segment Loss for the current six-month period	$	(6,931	)

The decrease in Segment (Loss) Profit for the Americas Segment from the prior six-month period to the current six-month period was primarily attributable to lower production volumes driving weaker fixed cost absorption along with lower 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 six-month period amounts for the Brazil Segment, were as follows:


	For the Three Months Ended													For the Six Months Ended
	March 27, 2022					March 28, 2021								January 1, 2023					December 26, 2021
				% of Net Sales					% of Net Sales		% Change						% of Net Sales					% of Net Sales		% Change
Net sales	$	29,767			100.0	$	25,704			100.0		15.8		$	64,566			100.0	$	61,339			100.0		5.3
Cost of sales		23,784			79.9		15,106			58.8		57.4			56,449			87.4		43,873			71.5		28.7
Gross profit		5,983			20.1		10,598			41.2		(43.5	)		8,117			12.6		17,466			28.5		(53.5	)
Depreciation expense		382			1.3		299			1.2		27.8			861			1.3		660			1.1		30.5
Segment Profit	$	6,365			21.4	$	10,897			42.4		(41.6	)	$	8,978			13.9	$	18,126			29.6		(50.5	)

Segment net sales as a percentage of consolidated amounts		14.8	%				14.4	%							20.4	%				15.4	%
Segment Profit as a percentage of consolidated amounts		25.7	%				34.6	%							85.9	%				33.6	%

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

Net sales for the prior period

$
25,704

Increase in average selling price

4,906

Favorable foreign currency translation effects

1,298

Decrease in sales volumes

(2,141
)
Net sales for the current period

$
29,767


Net sales for the prior six-month period	$	61,339
Increase in sales volumes		7,948
Favorable foreign currency translation effects		1,573
Decrease in average selling price and change in sales mix		(6,294	)
Net sales for the current six-month period	$	64,566

The increase in net sales for the Brazil Segment from the prior six-month period to the current six-month period was primarily attributable to ~~(i)~~ higher ~~selling prices in response to increasing input costs and (ii) favorable foreign currency translation effects. These benefits were partially offset by lower~~ sales volumes during strong market conditions in ~~connection with a more normalized market share position following the pandemic-related rebound in product demand that benefited our market share in the prior period.~~Brazil.

~~The BRL weighted average exchange rate was 5.20 BRL/USD and 5.47 BRL/USD for the current period and the prior period, respectively.~~

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

Segment Profit for the prior period

$
10,897

Decrease in underlying unit margins

(4,201
)
Decrease in sales volumes

(910
)
Favorable foreign currency translation effects

579

Segment Profit for the current period

$
6,365


Segment Profit for the prior six-month period	$	18,126
Decrease in underlying margins		(11,929	)
Increase in sales volumes		2,345
Favorable foreign currency translation effects		436
Segment Profit for the current six-month period	$	8,978

The decrease in Segment Profit for the Brazil Segment from the prior six-month period to the current six-month period was primarily attributable to ~~the unmatched, exceptional sales~~an overall decrease in gross margin mainly due to pressure on selling prices from low-priced import competition and production volume levels achieved in the prior period following the pandemic-related rebound in product demand in Brazil. The current period includes a more normalized performance for the Brazil Segment.higher raw material costs.

~~Nylon~~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 Nylon Segment, were as follows:~~

For the Three Months Ended

March 27, 2022

March 28, 2021

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
24,689

100.0

$
20,778

100.0

18.8

Cost of sales

22,925

92.9

20,341

97.9

12.7

Gross profit

1,764

7.1

437

2.1

303.7

Depreciation expense

441

1.8

441

2.1

—

Segment Profit

$
2,205

8.9

$
878

4.2

151.1

Segment net sales as a percentage of
consolidated amounts

12.3
%

11.6
%

Segment Profit as a percentage of
consolidated amounts

8.9
%

2.8
%

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

Net sales for the prior period

$
20,778

Net change in average selling price and sales mix

5,494

Decrease in sales volumes

(1,583
)
Net sales for the current period

$
24,689

The increase in net sales for the Nylon Segment from the prior period to the current period was primarily attributable to higher selling prices in connection with higher raw material costs, partially offset by lower sales volumes.

~~The change in Segment Profit for the Nylon Segment was as follows:~~

Segment Profit for the prior period

$
878

Net increase in underlying margins

1,409

Decrease in sales volumes

(82
)
Segment Profit for the current period

$
2,205

~~The increase in Segment Profit for the Nylon Segment from the prior period was primarily due to productivity and sales mix improvements, partially offset by input cost and labor challenges.~~

~~Review of Results of Operations~~

~~Nine Months Ended March 27, 2022 Compared to Nine Months Ended March 28, 2021~~

~~Consolidated Overview~~

~~The below tables provide:~~

•

~~the components of net income and the percentage increase or decrease over the prior nine-month period amounts, and~~

•

~~a reconciliation from net income to EBITDA and Adjusted EBITDA, and~~

•

~~a reconciliation from net income to Adjusted Net Income and Adjusted EPS.~~

~~Following the tables is a discussion and analysis of the significant components of net income.~~

~~Net income~~

For the Nine Months Ended

March 27, 2022

March 28, 2021

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
598,182

100.0

$
483,147

100.0

23.8

Cost of sales

536,051

89.6

417,057

86.3

28.5

Gross profit

62,131

10.4

66,090

13.7

(6.0
)
SG&A

39,025

6.6

38,570

8.0

1.2

Benefit for bad debts

(489
)

(0.1
)

(1,330
)

(0.3
)

(63.2
)
Other operating (income) expense, net

(2
)

—

4,236

0.9

(100.0
)
Operating income

23,597

3.9

24,614

5.1

(4.1
)
Interest expense, net

1,196

0.2

2,118

0.5

(43.5
)
Equity in earnings of unconsolidated affiliates

(385
)

(0.1
)

(751
)

(0.2
)

(48.7
)
Recovery of non-income taxes, net

815

0.1

—

—

—

Income before income taxes

21,971

3.7

23,247

4.8

(5.5
)
Provision for income taxes

10,296

1.7

7,593

1.6

35.6

Net income

$
11,675

2.0

$
15,654

3.2

(25.4
)

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

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

For the Nine Months Ended

March 27, 2022

March 28, 2021

Net income

$
11,675

$
15,654

Interest expense, net

1,196

2,118

Provision for income taxes

10,296

7,593

Depreciation and amortization expense ⁽¹⁾

19,007

18,829

EBITDA

42,174

44,194

Recovery of non-income taxes, net ⁽²⁾

815

—

Adjusted EBITDA

$
42,989

$
44,194

~~(1)~~

~~(2)~~

~~Adjusted Net Income and Adjusted EPS (Non-GAAP Financial Measures)~~

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

For the Nine Months Ended March 27, 2022

For the Nine Months Ended March 28, 2021

Pre-tax Income

Tax Impact

Net Income

Diluted EPS

Pre-tax Income

Tax Impact

Net Income

Diluted EPS

GAAP results

$
21,971

$
(10,296
)

$
11,675

$
0.62

$
23,247

$
(7,593
)

$
15,654

$
0.83

Recovery of non-income taxes, net ⁽¹⁾

815

(257
)

558

0.02

—

—

—

—

Adjusted results

$
22,786

$
(10,553
)

$
12,233

$
0.64

$
23,247

$
(7,593
)

$
15,654

$
0.83

Weighted average common shares outstanding

18,974

18,796

~~(1)~~

~~Net Sales~~

Consolidated net sales for the current nine-month period increased by $115,035, or 23.8%, and consolidated sales volumes increased 4.3%, compared to the prior nine-month period. The increases occurred primarily due to (i) higher selling prices in response to increasing raw material costs and (ii) underlying sales growth led by the Asia Segment and REPREVE^® ~~products.~~

~~Consolidated weighted average sales prices increased 19.5%, primarily attributable to higher selling prices in response to increasing raw material costs.~~

~~REPREVE~~^® ~~Fiber products for the current nine-month period comprised 38% of consolidated net sales, up from 36% for the prior nine-month period.~~

~~Gross Profit~~

Gross profit for the current nine-month period decreased by $3,959, or 6.0%, compared to the prior nine-month period. Although we experienced a significant increase in net sales, input cost and labor challenges muted our domestic gross profit, primarily in the second and third quarters of fiscal 2022.

•

For the Polyester Segment, gross profit decreased due to higher-than-expected input costs primarily for raw material, labor, packaging, and supplies, along with weaker labor productivity, offsetting the benefit from the restoration of U.S. demand following the negative impact the COVID-19 pandemic had on the prior period.

•

~~For the Asia Segment, gross profit increased primarily due to higher sales volumes.~~

•

~~For the Brazil Segment, gross profit was generally flat.~~

•

~~For the Nylon Segment, gross profit increased with productivity and sales mix improvements during the third quarter ended March 27, 2022, partially offset by input cost and labor challenges.~~

~~SG&A~~

SG&A was generally flat, primarily due to (i) higher discretionary expenses, including marketing and advertising, and (ii) higher amortization from customer list assets acquired in fiscal 2021 in the current nine-month period, both of which were partially offset by (iii) lower incentive compensation for the current nine-month period.

~~Benefit for Bad Debts~~

The current nine-month period benefit for bad debts reflects no material activity. The prior nine-month period reflects a benefit for general improvement in customer payment frequency following the adverse effects of the COVID-19 pandemic on customer financial health.

~~Other Operating (Income) Expense, Net~~

The current nine-month period and prior nine-month period include foreign currency transaction (gains) losses of $(365) and $610, respectively, along with $346 and $837 of severance costs, respectively. In addition, the prior period reflects a predominantly non-cash loss on the disposal of assets of $2,773 primarily relating to the removal of existing texturing machinery to allow for the future installation of new eAFK Evo texturing machinery.

~~Interest Expense, Net~~

~~Interest expense, net decreased in connection with greater interest income in the current nine-month period, primarily generated from foreign cash on deposit.~~

~~Equity in Earnings of Unconsolidated Affiliates~~

~~There was no material activity for the current nine-month period or the prior nine-month period.~~

~~Recovery of Non-income Taxes, Net~~

In fiscal 2021, UNIFI recognized an estimated benefit from the expected recovery of non-income taxes related to over-taxation in Brazil. During the current nine-month period, UNIFI reduced the estimate by $815 based on additional clarity and precedent surrounding the recovery process during the months following the associated SFC decision.

~~Income Taxes~~

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

For the Nine Months Ended

March 27, 2022

March 28, 2021

Provision for income taxes

$
10,296

$
7,593

Effective tax rate

46.9
%

32.7
%

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, regulations and case law. Additionally, the impacts of discrete and other rate impacting items are greater when income before income taxes is lower.

The increase in the effective tax rate from the prior nine-month period to the current nine-month period is primarily attributable to (i) an increase in the valuation allowance in the current nine-month period and (ii) a discrete benefit in the prior nine-month period for the retroactive GILTI high-tax exclusion. These increases are partially offset by lower U.S. tax on GILTI in in the current period.

~~Net Income~~

Net income for the current nine-month period was $11,675, or $0.62 per diluted share, compared to net income of $15,654 or $0.83 per diluted share, for the prior nine-month period. The decrease in net income was primarily attributable to the increase in the effective tax rate in the current nine-month period.

~~Adjusted EBITDA (Non-GAAP Financial Measure)~~

~~Adjusted EBITDA exhibited no material change from the prior nine-month period to the current nine-month period, consistent with gross profit.~~

~~Adjusted Net Income and Adjusted EPS (Non-GAAP Financial Measures)~~

~~Adjusted Net Income and Adjusted EPS decreased from the prior nine-month period to the current nine-month period, commensurate with the decrease in net income.~~

~~Segment Overview~~

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

~~Polyester Segment~~

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

For the Nine Months Ended

March 27, 2022

March 28, 2021

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
275,809

100.0

$
228,440

100.0

20.7

Cost of sales

263,194

95.4

205,691

90.1

28.0

Gross profit

12,615

4.6

22,749

9.9

(44.5
)
Depreciation expense

13,668

4.9

13,909

6.1

(1.7
)
Segment Profit

$
26,283

9.5

$
36,658

16.0

(28.3
)

Segment net sales as a percentage of
consolidated amounts

46.1
%

47.3
%

Segment Profit as a percentage of
consolidated amounts

33.4
%

44.2
%

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

Net sales for the prior nine-month period

$
228,440

Net change in average selling price and sales mix

47,113

Increase in sales volumes

256

Net sales for the current nine-month period

$
275,809

~~The increase in net sales for the Polyester Segment from the prior nine-month period to the current nine-month period was primarily attributable to~~ ~~higher average selling prices in response to higher polyester raw material costs.~~

~~The change in Segment Profit for the Polyester Segment was as follows:~~

Segment Profit for the prior nine-month period

$
36,658

Change in underlying margins and sales mix

(10,416
)
Increase in sales volumes

41

Segment Profit for the current nine-month period

$
26,283

The decrease in Segment Profit for the Polyester Segment from the prior nine-month period to the current nine-month period was primarily attributable to the adverse impacts of higher input costs outpacing selling price adjustments and weaker labor productivity that began in the quarter ending December 26, 2021.

~~Asia Segment~~

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


	For the Nine Months Ended												For the Six Months Ended
	March 27, 2022					March 28, 2021							January 1, 2023					December 26, 2021
				% of Net Sales					% of Net Sales		% Change					% of Net Sales					% of Net Sales		% Change
Net sales	$	161,817			100.0	$	130,898			100.0		23.6	$	58,279			100.0	$	110,540			100.0		(47.3	)
Cost of sales		138,958			85.9		112,639			86.1		23.4		49,880			85.6		95,058			86.0		(47.5	)
Gross profit		22,859			14.1		18,259			13.9		25.2		8,399			14.4		15,482			14.0		(45.7	)
Depreciation expense		—			—		—			—		—		—			—		—			—		—
Segment Profit	$	22,859			14.1	$	18,259			13.9		25.2	$	8,399			14.4	$	15,482			14.0		(45.7	)

Segment net sales as a percentage of consolidated amounts		27.1	%				27.1	%						18.5	%				27.8	%
Segment Profit as a percentage of consolidated amounts		29.1	%				22.0	%						80.4	%				28.7	%

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

Net sales for the prior nine-month period

$
130,898

Net increase in sales volumes

20,605

Change in average selling price and sales mix

5,438

Favorable foreign currency translation effects

4,876

Net sales for the current nine-month period

$
161,817


Net sales for the prior six-month period	$	110,540
Net decrease in sales volumes		(52,068	)
Unfavorable foreign currency translation effects		(7,947	)
Change in average selling price and sales mix		7,754
Net sales for the current six-month period	$	58,279

The ~~increase~~decrease in net sales for the Asia Segment from the prior ~~nine-month~~six-month period to the current ~~nine-month~~six-month period was primarily attributable to ~~(i) the continued momentum of REPREVE~~^®~~-branded products contributing to underlying~~weaker global demand and pandemic-related lockdowns driving lower sales ~~growth and (ii) favorable foreign currency translation effects.~~volumes, partially offset by a strong sales mix.

~~The RMB weighted average exchange rate was 6.40 RMB/USD and 6.65 RMB/USD for the current nine-month period and the prior nine-month period, respectively.~~

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

Segment Profit for the prior nine-month period

$
18,259

Increase in sales volumes

2,871

Change in underlying margins and sales mix

1,070

Favorable foreign currency translation effects

659

Segment Profit for the current nine-month period

$
22,859


Segment Profit for the prior six-month period	$	15,482
Decrease in sales volumes		(7,260	)
Unfavorable foreign currency translation effects		(1,177	)
Change in underlying margins and sales mix		1,354
Segment Profit for the current six-month period	$	8,399

The ~~increase~~decrease in Segment Profit for the Asia Segment from the prior ~~nine-month~~six-month period to the current ~~nine-month~~six-month period ~~was primarily attributable to higher sales volumes~~follows the decline in ~~the current nine-month period.~~

~~Brazil Segment~~

~~The components of Segment Profit, each component as a percentage of~~ net sales and sales volumes discussed above, as the ~~percentage increase or decrease over the prior nine-month period amounts~~comparable gross margin rate for the ~~Brazil~~Asia Segment ~~were as follows:~~

For the Nine Months Ended

March 27, 2022

March 28, 2021

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
91,106

100.0

$
72,563

100.0

25.6

Cost of sales

67,657

74.3

49,375

68.0

37.0

Gross profit

23,449

25.7

23,188

32.0

1.1

Depreciation expense

1,042

1.2

1,050

1.4

(0.8
)
Segment Profit

$
24,491

26.9

$
24,238

33.4

1.0

Segment net sales as a percentage of
consolidated amounts

15.2
%

15.0
%

Segment Profit as a percentage of
consolidated amounts

31.2
%

29.3
%

~~The change in net~~improved with a stronger sales ~~for the Brazil Segment was as follows:~~

Net sales for the prior nine-month period

$
72,563

Increase in average selling price and change in sales mix

24,361

Favorable foreign currency translation effects

1,184

Decrease in sales volumes

(7,002
)
Net sales for the current nine-month period

$
91,106

The increase in net sales for the Brazil Segment from the prior nine-month period to the current nine-month period was primarily attributable to higher selling prices in response to increasing input costs, partially offset by lower sales volumes due to a more normalized market share position following a significant but temporary improvement in market share and competitive position during fiscal 2021.

~~The BRL weighted average exchange rate was 5.32 BRL/USD and 5.43 BRL/USD for the current nine-month period and the prior nine-month period, respectively.~~

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

Segment Profit for the prior nine-month period

$
24,238

Increase in underlying margins

2,159

Favorable foreign currency translation effects

437

Decrease in sales volumes

(2,343
)
Segment Profit for the current nine-month period

$
24,491

Segment Profit for the Brazil Segment was generally flat, primarily attributable to strong sales mix and conversion margin amid rising market prices, partially offset by the softer market environment described in the net sales analysis above.

~~Nylon Segment~~

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

For the Nine Months Ended

March 27, 2022

March 28, 2021

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
65,863

100.0

$
47,815

100.0

37.7

Cost of sales

63,187

95.9

46,318

96.9

36.4

Gross profit

2,676

4.1

1,497

3.1

78.8

Depreciation expense

1,320

2.0

1,321

2.8

(0.1
)
Segment Profit

$
3,996

6.1

$
2,818

5.9

41.8

Segment net sales as a percentage of
consolidated amounts

11.0
%

9.9
%

Segment Profit as a percentage of
consolidated amounts

5.1
%

3.4
%

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

Net sales for the prior nine-month period

$
47,815

Net change in average selling price and sales mix

9,434

Increase in sales volumes

8,614

Net sales for the current nine-month period

$
65,863

The increase in net sales for the Nylon Segment from the prior nine-month period to the current nine-month period was primarily attributable to (i) higher selling prices in response to increasing raw material costs and (ii) higher sales volumes in connection with demand recovery.

~~The change in Segment Profit for the Nylon Segment was as follows:~~

Segment Profit for the prior nine-month period

$
2,818

Net increase in underlying margins

687

Increase in sales volumes

491

Segment Profit for the current nine-month period

$
3,996

~~The increase in Segment Profit for the Nylon Segment was primarily attributable to a more favorable sales and production mix, partially offset by input cost and labor challenges.~~mix.

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, debt service, and share repurchases. UNIFI’s primary sources of capital are cash generated from operations and borrowings available under the ABL Revolver of its credit facility. For the current ~~nine-month~~six-month period, cash ~~used~~provided by operations was ~~$2,063,~~$7,272, and, at ~~March 27, 2022,~~January 1, 2023, excess availability under the ABL Revolver was ~~$64,795.~~$64,694.

As of ~~March 27, 2022,~~January 1, 2023, all of UNIFI’s ~~$97,321~~$130,391 of debt obligations were guaranteed by certain of its domestic operating subsidiaries, while ~~nearly 100%~~approximately 99% 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 ~~March 27, 2022~~January 1, 2023 for domestic operations compared to foreign operations:


	Domestic		Foreign		Total		Domestic		Foreign		Total
Cash and cash equivalents	$	307	$	52,665	$	52,972	$	19	$	50,762	$	50,781
Borrowings available under financing arrangements		64,795		—		64,795		64,694		—		64,694
Liquidity	$	65,102	$	52,665	$	117,767	$	64,713	$	50,762	$	115,475

Working capital	$	84,009	$	160,165	$	244,174	$	88,370	$	130,975	$	219,345
Total debt obligations	$	97,321	$	—	$	97,321	$	130,391	$	—	$	130,391

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, ~~and~~ (iv) debt ~~service.~~service, and (v) share repurchases.

Liquidity Considerations

~~Throughout~~UNIFI navigated the impact on liquidity of the COVID-19 pandemic by diligently managing the balance sheet and operational spending, in addition to utilizing cash received from a minority interest divestiture in April 2020. Following the COVID-19 pandemic, global demand recovery allowed for strong results and cash generation in fiscal 2021. However, inflation and demand uncertainty in fiscal 2022 and during the current six-month period have introduced new pressures to liquidity.

Following the establishment of the 2022 Credit Agreement, UNIFI’s cash and liquidity positions are sufficient to sustain its operations and meet its growth needs. However, further degradation in the macroeconomic environment could introduce additional liquidity risk and require UNIFI to limit cash outflows for capital expenditures and discretionary activities while further utilizing available and additional forms of credit. Since the onset of the COVID-19 pandemic and the ~~Russia-Ukraine conflict, UNIFI has not experienced any (i) substantial, prolonged issues relating to liquidity; (ii) outbreaks~~date of ~~COVID-19 among employees that significantly affected the Company’s operations;~~this report, we have not:

•

taken advantage of rent, lease or ~~(iii)~~debt deferrals, forbearance periods, or other ~~extensive disruptions to ongoing operations. The following are a reflection of UNIFI’s strong liquidity position and access to capital resources:~~

•

~~We have not accessed public or private capital markets for recent liquidity needs.~~

concessions or

•

We do not currently expect our cost of or access to existing capital and funding sources to change materially; however, new capital and funding sources (if any) may carry higher costs than our current structure.

•

relied on supply chain financing, structured trade payables, or vendor financing.

•

~~We have not taken advantage of rent, lease or debt deferrals, forbearance periods or other concessions, nor have we modified any material agreements to provide concessions.~~

•

~~We have not relied on supply chain financing, structured trade payables or vendor financing.~~

•

~~We are not at material risk of not meeting our financial covenants.~~

•

~~We continue to maintain significant borrowing availability on our existing credit facility.~~

~~We expect our available borrowings to continue to provide adequate liquidity in the current environment. As~~25

Although global demand ~~appears to remain strong,~~for the remainder of calendar 2023 is uncertain, we do not currently anticipate that any adverse events or circumstances will place critical pressure on ~~(i)~~ our liquidity ~~position; (ii)~~position or our ability to fund our operations, capital expenditures, and expected business ~~growth; or (iii) the financial targets we have set for fiscal 2025.~~growth. Should global demand, economic activity, or input availability decline considerably for a prolonged period of time, ~~(for example, in connection with the Russia-Ukraine conflict),~~ UNIFI maintains the ability to (i) seek additional credit or financing ~~arrangements or extensions of existing~~ arrangements and/or (ii) re-implement cost reduction initiatives to preserve cash and secure the longevity of the business and operations.

AsAdditionally, UNIFI considers opportunities to deploy existing cash to preserve or enhance liquidity. In August 2022, we ~~anticipate strong textile demand~~repatriated approximately $14,000 from our operations in Asia to ~~continue through~~the U.S. via an existing intercompany note and, after remitting the appropriate withholding taxes, utilized the cash to reduce our outstanding revolver borrowings, thereby increasing the availability. Management regularly evaluates such repatriations and maintains the ability to take additional, similar actions from time to time, as circumstances warrant.

For the remainder of ~~fiscal 2022 and into~~ fiscal 2023, we expect the majority of our capital will be deployed to (i) upgrade the machinery in our U.S., El Salvador, and Brazil manufacturing facilities via capital expenditures and (ii) support ~~further~~ working capital needs associated with ~~increased~~recovering demand and product sales. Nonetheless, we understand the current global economic risks and we are prepared to act swiftly and diligently to ensure the vitality of the business.

~~Debt Obligations~~

The following ~~table presents~~outlines the ~~total balances outstanding for UNIFI’s debt obligations, their scheduled maturity dates~~attributes relating to our credit facility as of January 1, 2023:

•

UNIFI was in compliance with all applicable financial covenants in the 2022 Credit Agreement;

•

excess availability under the ABL Revolver was $64,694;

•

the Trigger Level (as defined in the 2022 Credit Agreement) was $23,000; and ~~the weighted average interest rates for borrowings as well as the applicable current portion~~

•

$0 of ~~long-term debt:~~

~~(1)~~

~~Includes the effects of interest rate swaps.~~

~~(2)~~

~~Scheduled maturity dates for finance lease obligations range from May 2022 to November 2027.~~

~~(3)~~

~~Refer to the discussion below under the subheading “Construction Financing” for further information.~~

~~As of March 27, 2022:~~

•

~~UNIFI was in compliance with all financial covenants in the Credit Agreement,~~

•

~~excess availability under the ABL Revolver was $64,795,~~

•

~~the Trigger Level (as defined in the Credit Agreement) was $21,250, and~~

•

~~$0 of standby letters of credit were outstanding.~~

UNIFI currently maintains three interest rate swaps as cash flow hedges intended to fix LIBOR at approximately 1.9% on $75,000 of variable-rate debt. Such swaps are scheduled to terminate in May 2022. During the quarter ended December 26, 2021, UNIFI’s outstanding variable-rate debt fell below the combined $75,000 notional amount. Accordingly, the $20,000 notional interest rate swap was de-designated from hedge accounting treatment. The impact of de-designation was not material to the consolidated financial statements.

Management will continue to monitor the expected termination of LIBOR and its impact on UNIFI’s operations. However, the Credit Agreement currently includes fallback language that allows for a seamless transition to a secured overnight financing rate and management does not expect (i) significant efforts to accommodate a termination of LIBOR or (ii) a significant impact to UNIFI’s operations upon a termination of LIBOR.

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, and other factors.

~~Construction Financing~~Liquidity Summary

~~In May 2021,~~ UNIFI ~~entered into an agreement with a third party lender~~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 ~~provides for construction-period financing for certain eAFK Evo texturing machinery included in our capital allocation plans.~~its existing cash balances, cash provided by operating activities, and credit facility will enable UNIFI ~~records project costs~~ to ~~construction in progress~~meet its foreseeable liquidity requirements. Domestically, UNIFI’s cash balances, cash provided by operating activities, and the corresponding liability to construction financing (within long-term debt). The agreement provides for monthly, interest-only payments during the construction period, at a rate of SOFR plus 1.25%, and contains terms customary for a financing of this type.

~~Each borrowing~~borrowings available under the ~~agreement provides~~ABL Revolver continue to be sufficient to fund UNIFI’s domestic operating activities as well as cash commitments for ~~60 monthly payments, which~~its investing and financing activities. For its foreign operations, UNIFI expects its existing cash balances, cash provided by operating activities, and available foreign financing arrangements will ~~commence~~provide the needed liquidity to fund the associated operating activities and investing activities, such as future capital expenditures. UNIFI’s foreign operations in Asia and Brazil are in a position to obtain local country financing arrangements due to the ~~form~~operating results of a finance lease obligation upon the completion of the construction period with an interest rate of approximately 3.4%. In connection with this construction financing arrangement, UNIFI has borrowed a total of $3,222 and transitioned a total of $1,764 of completed asset costs to finance lease obligations as of March 27, 2022.each subsidiary.

~~Scheduled Debt Maturities~~

~~The following table presents the scheduled maturities of UNIFI’s outstanding debt obligations for the remainder of fiscal 2022, the following four fiscal years and thereafter:~~

Fiscal 2022

Fiscal 2023

Fiscal 2024

Fiscal 2025

Fiscal 2026

Thereafter

ABL Revolver

$
—

$
—

$
18,500

$
—

$
—

$
—

ABL Term Loan

5,000

10,000

55,000

—

—

—

Finance lease obligations

820

1,592

1,648

1,553

1,102

648

Total ⁽¹⁾

$
5,820

$
11,592

$
75,148

$
1,553

$
1,102

$
648

~~(1)~~

~~Total reported excludes $1,458 of construction financing, described above.~~

Net Debt (Non-GAAP Financial Measure)

The reconciliations for Net Debt are as follows:


	March 27, 2022		June 27, 2021		January 1, 2023		July 3, 2022
Long-term debt	$	82,505	$	70,336	$	118,980	$	102,309
Current portion of long-term debt		14,509		16,045		11,092		11,726
Unamortized debt issuance costs		307		476		319		255
Debt principal		97,321		86,857		130,391		114,290
Less: cash and cash equivalents		52,972		78,253		50,781		53,290
Net Debt	$	44,349	$	8,604	$	79,610	$	61,000

There was no significant change in Net Debt in connection with the establishment of the 2022 Credit Agreement in the second quarter of fiscal 2023. Further, Net Debt remained relatively unchanged from October 2, 2022 to January 1, 2023.

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

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


	March 27, 2022			June 27, 2021			January 1, 2023			July 3, 2022
Cash and cash equivalents	$	52,972		$	78,253		$	50,781		$	53,290
Receivables, net		109,531			94,837			64,980			106,565
Inventories		163,380			141,221			147,253			173,295
Income taxes receivable		11,664			2,392			1,938			160
Other current assets		20,978			12,364			13,203			18,956
Accounts payable		(67,134	)		(54,259	)		(33,784	)		(73,544	)
Other current liabilities		(18,806	)		(31,638	)		(11,345	)		(19,806	)
Income taxes payable		(11,609	)		(1,625	)		(587	)		(1,526	)
Current operating lease liabilities		(2,293	)		(1,856	)		(2,002	)		(2,190	)
Current portion of long-term debt		(14,509	)		(16,045	)		(11,092	)		(11,726	)
Working capital	$	244,174		$	223,644		$	219,345		$	243,474

Less: Cash and cash equivalents		(52,972	)		(78,253	)		(50,781	)		(53,290	)
Less: Income taxes receivable		(11,664	)		(2,392	)		(1,938	)		(160	)
Less: Income taxes payable		11,609			1,625			587			1,526
Less: Current operating lease liabilities		2,293			1,856			2,002			2,190
Less: Current portion of long-term debt		14,509			16,045			11,092			11,726
Adjusted Working Capital	$	207,949		$	162,525		$	180,307		$	205,466

~~Working~~When comparing from July 3, 2022 to January 1, 2023, working capital ~~increased from $223,644 as of June 27, 2021 to $244,174 as of March 27, 2022, while~~and Adjusted Working Capital ~~increased from $162,525 to $207,949.~~decreased.

The decrease in cash and cash equivalents was primarily driven by (i) the increase in receivables, net and inventories, (ii) the routine payment of incentive compensation earned in fiscal 2021, (iii) capital expenditures and (iv) scheduled debt service. The increase in receivables, net was primarily due ~~primarily~~ to ~~an increase in sales pricing as a result of higher raw material costs in the current nine-month period, partially offset by~~(i) a decrease in ~~BANs~~sales following lower global demand and (ii) a decrease in banker’s acceptance notes held by our Asia Segment. The ~~increase~~decrease in inventories was primarily attributable to ~~higher~~a decline in raw material purchases and costs in the current ~~nine-month~~six-month period. The ~~increase~~decrease in other current assets was primarily due to utilization of the ~~reclassification of Brazil’s~~fiscal 2021 recovery of non-income taxes ~~from long-term to current based on an accelerated recovery timeline.~~in Brazil and lower vendor deposits. The ~~increase~~decrease in accounts payable ~~was consistent with higher raw material costs~~followed the decrease in inventories and production activity in the current ~~nine-month~~six-month period. The decrease in other current liabilities ~~was~~ primarily ~~attributable to~~reflects the ~~payment~~routine timing differences for payroll and other operating expenses. The changes in current operating lease liabilities, current portion of ~~incentive compensation earned in fiscal 2021. The increase in~~long-term debt, income taxes receivable, and income taxes payable ~~primarily reflects the impact of the interim tax provision. The changes in current operating lease liabilities and current portion of long-term debt~~ were insignificant.

~~Capital Projects~~Operating Cash Flows

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


	For the Six Months Ended
	January 1, 2023			December 26, 2021
Net (loss) income	$	(25,871	)	$	9,609
Equity in earnings of unconsolidated affiliates		(381	)		(344	)
Depreciation and amortization expense		13,478			12,687
Recovery of income taxes		(3,799	)		—
Non-cash compensation expense		1,976			2,261
Deferred income taxes		(304	)		(3,197	)
Subtotal		(14,901	)		21,016

Receivables, net		40,552			1,358
Inventories		25,422			(10,953	)
Accounts payable and other current liabilities		(47,599	)		(11,598	)
Other changes		3,798			(3,773	)
Net cash provided (used) by operating activities	$	7,272		$	(3,950	)

The increase in operating cash flows was primarily due to reducing working capital associated with a decline in overall business activity in the current six-month period, which was primarily offset by significantly weaker earnings.

Investing Cash Flows

Investing activities primarily includes $23,950 for capital expenditures.

During the current ~~nine-month~~six-month period, UNIFI invested ~~$30,094~~$23,950 in capital projects, primarily relating to (i) eAFK Evo texturing machinery, (ii) further improvements in production capabilities and technology enhancements in the Americas, and (iii) routine annual maintenance capital expenditures. Maintenance capital expenditures are necessary to support UNIFI’s current operations, capacities, and capabilities and exclude expenses relating to repairs and costs that do not extend an asset’s useful life.

For the remainder of fiscal 2022, we expect to invest up to an additional $11,900 in capital projects for an aggregate annual estimate of $40,000 to $42,000, to include (i) continuing the purchase and installation of new eAFK Evo texturing machines, (ii) making further improvements in production capabilities and technology enhancements in the Americas, and (iii) annual maintenance capital expenditures.

The total amount ultimately invested for fiscal 2022 could be more or less than the currently estimated amount depending on the timing and scale of contemplated initiatives and is expected to be funded primarily by cash provided by operating activities and other borrowings. UNIFI expects recent and future capital projects to provide benefits to future profitability. The additional assets from these capital projects consist primarily of machinery and equipment.

~~Share Repurchase Program~~

On October 31, 2018, the Board approved the 2018 SRP under which UNIFI is authorized to acquire up to $50,000 of its common stock. Under the 2018 SRP, purchases will be made from time to time in the open market at prevailing market prices or through private transactions or block trades. The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements and other factors. The share repurchase authorization is discretionary and has no expiration date.

As of March 27, 2022, UNIFI repurchased a total of 186 shares since October 2018, at an average price of $22.35 (for a total of $4,150 inclusive of commission costs) pursuant to the 2018 SRP, leaving $45,854 available for repurchase under the 2018 SRP.

~~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 borrowings available under the ABL Revolver will enable UNIFI to comply with the terms of its indebtedness and meet its foreseeable liquidity requirements. Domestically, UNIFI’s cash balances, cash provided by operating activities and borrowings available under the ABL Revolver continue to be sufficient to fund

UNIFI’s domestic operating activities as well as cash commitments for its investing and financing activities. For its foreign operations, UNIFI expects its existing cash balances, cash provided by operating activities and available foreign financing arrangements to provide the needed liquidity to fund the associated operating activities and investing activities, such as future capital expenditures. UNIFI’s foreign operations in Asia and Brazil are in a position to obtain local country financing arrangements due to the strong operating results of each subsidiary.

~~Operating Cash Flows~~27

~~The significant components of net cash (used) provided by operating activities are summarized below.~~

For the Nine Months Ended

March 27, 2022

March 28, 2021

Net income

$
11,675

$
15,654

Equity in earnings of unconsolidated affiliates

(385
)

(751
)
Depreciation and amortization expense

19,176

19,007

Non-cash compensation expense

3,081

2,656

Deferred income taxes

(3,019
)

(1,826
)
Subtotal

30,528

34,740

Distribution received from unconsolidated affiliate

750

—

Receivables, net

(13,537
)

(43,034
)
Inventories

(20,170
)

(11,825
)
Accounts payable and other current liabilities

1,084

33,033

Other changes

(718
)

12,796

Net cash (used) provided by operating activities

$
(2,063
)

$
25,710

The decrease in net cash (used) provided by operating activities from the prior nine-month period to the current nine-month period was primarily due to a greater increase in working capital associated with (i) higher raw material costs and consolidated sales activity and (ii) lower other current liabilities resulting from the payment of incentive compensation earned in fiscal 2021.

~~Investing Cash Flows~~

~~Investing activities primarily includes $30,094 for capital expenditures, as previously described in~~ ~~Capital Projects~~ ~~above.~~

Financing Cash Flows

Financing activities primarily include (i) scheduled payments against the ABL Term Loan and finance leases, (ii) proceeds and payments on the ABL Revolver, and (iii) proceeds from construction financing ~~and (iv) $2,156 for share repurchases~~ during the current ~~nine-month~~six-month period.

Share Repurchase Program

As described in Note 7, “Shareholders’ Equity,” no share repurchases have been completed in fiscal 2023.

Contractual Obligations

UNIFI ~~has incurred~~incurs various financial obligations and commitments in ~~its normal~~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~~After considering the changes generated by the 2022 Credit Agreement, there have been no further 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 ~~2021~~2022 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

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The SEC has defined a company’s most critical accounting policies as those involving accounting estimates that require management to make assumptions about matters that are highly uncertain at the time and where different reasonable estimates or changes in the accounting estimate from quarter to quarter could materially impact the presentation of the financial statements. UNIFI’s critical accounting policies are discussed in the ~~2021~~2022 Form 10-K. There ~~were~~have been no ~~material~~ changes to ~~these~~UNIFI’s critical accounting policies ~~during the current nine-month period.~~in fiscal 2023.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~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 ~~March 27, 2022,~~January 1, 2023, UNIFI had borrowings under its ABL Facility that totaled ~~$88,500. After considering the variable rate debt obligations that have been hedged and UNIFI’s outstanding debt obligations with fixed rates of interest,~~$118,400. UNIFI’s sensitivity analysis indicates that a 50-basis point interest rate increase ~~in LIBOR~~ as of ~~March 27, 2022~~January 1, 2023 would result in an increase in annual interest expense of approximately ~~$100.~~$600.

Foreign Currency Exchange Rate Risk

~~UNIFI conducts its business in various foreign countries and in various foreign currencies. Each~~A complete discussion of UNIFI’s subsidiaries may enter into transactions (sales, purchases, fixed purchase commitments, etc.) that are denominated in currencies other than the subsidiary’s functional currency and thereby expose UNIFI to foreign currency exchange rate risk. UNIFI may enter into foreign currency forward contracts to hedge this exposure. UNIFI may also enter into foreign currency forward contracts to hedge its exposure for certain equipment or inventory purchase commitments. risk is included in the 2022 Form 10-K and is supplemented by the following disclosures.

As of ~~March 27, 2022,~~January 1, 2023, UNIFI had no outstanding foreign currency forward contracts.

A significant portion of raw materials purchased by the Brazil Segment are denominated in USDs, requiring UNIFI to regularly exchange BRL. A significant portion of sales and asset balances for the Asia Segment are denominated in USDs. During recent fiscal years, UNIFI has been negatively impacted by fluctuations of the BRL and the RMB. Discussion and analysis surrounding the impact of fluctuations of the BRL and the RMB on UNIFI’s results of operations are included above in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” UNIFI does not enter into foreign currency derivatives to hedge its net investment in its foreign operations.

As of ~~March 27, 2022,~~January 1, 2023, foreign currency exchange rate risk concepts included the following:


	Approximate Amount or Percentage			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		31.7	%		30.6	%

Cash and cash equivalents held outside the U.S.:
Denominated in USD	$	10,387		$	10,580
Denominated in RMB		31,993			27,648
Denominated in BRL		8,717			9,879
Denominated in other foreign currencies		141			469
Total cash and cash equivalents held outside the U.S.	$	51,238		$	48,576
Percentage of total cash and cash equivalents held outside the U.S.		96.7	%		95.7	%

Cash and cash equivalents held inside the U.S. in USD by foreign subsidiaries	$	1,427		$	2,186

Raw Material and Commodity Cost Risks

A ~~significant portion~~complete discussion of ~~UNIFI’s~~ raw material and energy costs are derived from petroleum-based chemicals. The prices for petroleum and petroleum-related products and related energy costs are volatile and dependent on global supply and demand dynamics, including certain geo-political risks. A sudden risecommodity cost risks is included in the ~~price of petroleum~~2022 Form 10-K and petroleum-based products could have a material impact on UNIFI’s profitability. UNIFI does not use financial instruments to hedge its exposure to changes in these costs as management has concluded thatis supplemented by the overall cost of hedging petroleum exceeds the potential risk mitigation. The costs of the primary raw materials that UNIFI uses throughout all of its operations are generally based on USD pricing, and such materials are purchased at market or at fixed prices that are established with individual vendors as part of the purchasing process for quantities expected to be consumed in the ordinary course of business. UNIFI manages fluctuations in the cost of raw materials primarily by making corresponding adjustments to the prices charged to its customers. Certain customers are subject to an index-based pricing model in which UNIFI’s prices are adjusted based on the change in the cost of raw materials in the prior quarter. Pricing adjustments for other customers must be negotiated independently. UNIFI attempts to quickly pass on to its customers increases in raw material costs, but due to market conditions, this is not always possible. When price increases can be implemented, there is typically a time lag that adversely affects UNIFI’s margins during one or more quarters. In ordinary market conditions in which raw material price increases have stabilized and sales volumes are consistent with traditional levels, UNIFI has historically been successful in implementing price adjustments within one to two fiscal quarters of the raw material price increase for its index-priced customers and within two fiscal quarters of the raw material price increase for its non-index-priced customers.following disclosures.

As fiscal ~~2021~~2022 concluded, UNIFI experienced cost increases for raw materials ~~primarily~~ related to ~~(i) increases in petroleum prices~~inflationary pressures and ~~(ii) supply chain disruptions that occurred in Texas during February 2021 due~~competing alternatives to ~~abnormally cold weather. Our~~U.S. polyester production. Following the recent global demand deterioration, raw material costs ~~remain elevated~~have declined in fiscal ~~2022. However, we~~2023. We have been able to implement responsive selling price adjustments for the majority of our ~~portfolio.~~portfolio throughout fiscal 2022 and 2023. While our underlying gross margin ~~has been~~is predominantly pressured ~~somewhat during fiscal 2022,~~by lower textile demand, we expect the impact of recent selling price adjustments to ~~improve margins in~~aid margin improvement throughout the remainder of ~~the~~ fiscal ~~year.~~2023. Nonetheless, ~~such~~input costs remain subject to ~~the~~ volatility, ~~described above~~ and, should ~~raw material~~inputs costs increase unexpectedly or should textile demand worsen, UNIFI’s results of operations and cash flows are likely to be adversely impacted.

Other Risks

UNIFI is also exposed to political risk, including changing laws and regulations governing international trade, such as quotas, tariffs, and tax laws. The degree of impact and the frequency of these events cannot be predicted.

~~The risks associated with climate change, localized energy management initiatives, and other environmental impacts could negatively affect UNIFI’s business and operations.~~

UNIFI’s business is susceptible to risks associated with climate change, including, but not limited to, disruptions to our supply chain, which could potentially impact the production and distribution of our products and availability and pricing of raw materials. Increased frequency and intensity of weather events due to climate change could lead to supply chain disruption, energy and resource rationing, or an adverse event at one of our manufacturing facilities. For example, the February 2021 winter storm in Texas impacted our U.S. supply chain and led to non-routine fees and surcharges being applied to routine business activities and products. Further, the recent energy management initiatives in China temporarily constrained global supply chains and reduced supplier and customer activity. UNIFI remains focused on diversifying our product portfolio and manufacturing footprint while utilizing fewer resources to help address the risks associated with climate change. Nonetheless, the associated risks could adversely impact our results of operations and cash flows.

Item 4. Controls and Procedures

~~Item 4.~~

~~Controls and Procedures~~

As of ~~March 27, 2022,~~January 1, 2023, 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 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 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 ~~March 27, 2022~~January 1, 2023 that have materially affected, or are reasonably likely to materially affect, UNIFI’s internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

~~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 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

~~Items 2(a) and (b) are not applicable.~~

(c) The following table summarizes UNIFI’s purchases of its common stock during the fiscal quarter ended March 27, 2022, all of which purchases were made under the 2018 SRP approved by the Board on October 31, 2018, under which UNIFI is authorized to acquire up to $50,000 of common stock. The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements and other factors. The share repurchase authorization is discretionary and has no expiration date.

Period

Total Number of
Shares Purchased

Average Price
Paid per Share

Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs

Maximum
Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the Plans
or Programs

12/27/21 – 1/27/22

—

$
—

—

$
46,805

1/28/22 – 2/27/22

45

$
19.04

45

45,948

2/28/22 – 3/27/22

5

$
18.93

5

45,854

Total

50

$
19.03

50

Repurchases are subject to applicable limitations and requirements set forth in the ABL Facility. For additional information, including information regarding limitations on payment of dividends and share repurchases, s~~ee Note 12,~~ ~~“Long-Term Debt” contained in UNIFI’s Annual Report on Form 10-K for the fiscal year ended June 27, 2021.~~

Item 6. Exhibits


Exhibit No.	~~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)).

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.

~~32.1~~³²⁺⁺		~~Certification~~Certifications of Principal Executive Officer ~~pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~32.2~~⁺⁺		~~Certification of~~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 Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

+	~~Filed herewith.~~

++	~~Furnished herewith.~~

+ Filed herewith.

++ Furnished herewith.

~~SIGNATURES~~30

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.


	UNIFI, INC.
	(Registrant)

Date: ~~May 4, 2022~~February 8, 2023	By:	/s/ CRAIG A. CREATURO
		Craig A. Creaturo
		Executive Vice President & Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)


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)


	March 27, 2022			June 27, 2021			January 1, 2023			July 3, 2022
ASSETS
Cash and cash equivalents	$	52,972		$	78,253		$	50,781		$	53,290
Receivables, net		109,531			94,837			64,980			106,565
Inventories		163,380			141,221			147,253			173,295
Income taxes receivable		11,664			2,392			1,938			160
Other current assets		20,978			12,364			13,203			18,956
Total current assets		358,525			329,067			278,155			352,266
Property, plant and equipment, net		215,078			201,696			226,279			216,338
Operating lease assets		9,520			8,772			7,736			8,829
Deferred income taxes		2,670			1,208			2,841			2,497
Other non-current assets		7,389			14,625			13,222			8,788
Total assets	$	593,182		$	555,368		$	528,233		$	588,718

LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	67,134		$	54,259		$	33,784		$	73,544
Income taxes payable		11,609			1,625			587			1,526
Current operating lease liabilities		2,293			1,856			2,002			2,190
Current portion of long-term debt		14,509			16,045			11,092			11,726
Other current liabilities		18,806			31,638			11,345			19,806
Total current liabilities		114,351			105,423			58,810			108,792
Long-term debt		82,505			70,336			118,980			102,309
Non-current operating lease liabilities		7,331			7,032			5,818			6,736
Deferred income taxes		5,015			6,686			4,986			4,983
Other long-term liabilities		6,715			7,472			4,760			4,449
Total liabilities		215,917			196,949			193,354			227,269

Commitments and contingencies

Common stock, $0.10 par value (500,000,000 shares authorized; 18,451,039 and 18,490,338 shares issued and outstanding as of March 27, 2022 and June 27, 2021, respectively)		1,845			1,849
Common stock, $0.10 par value (500,000,000 shares authorized; 18,049,381 and 17,979,362 shares issued and outstanding as of January 1, 2023 and July 3, 2022, respectively)								1,805			1,798
Capital in excess of par value		67,523			65,205			67,875			66,120
Retained earnings		354,693			344,797			327,265			353,136
Accumulated other comprehensive loss		(46,796	)		(53,432	)		(62,066	)		(59,605	)
Total shareholders’ equity		377,265			358,419			334,879			361,449
Total liabilities and shareholders’ equity	$	593,182		$	555,368		$	528,233		$	588,718


	Shares			Common Stock			Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at October 2, 2022		18,012		$	1,801		$	66,709		$	345,302		$	(65,513	)	$	348,299
Options exercised		—			—			2			—			—			2
Conversion of equity units		31			4			(4	)		—			—			—
Stock-based compensation		12			1			1,217			—			—			1,218
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions		(6	)		(1	)		(49	)		—			—			(50	)
Other comprehensive income, net of tax		—			—			—			—			3,447			3,447
Net loss		—			—			—			(18,037	)		—			(18,037	)
Balance at January 1, 2023		18,049		$	1,805		$	67,875		$	327,265		$	(62,066	)	$	334,879

	Shares			Common Stock			Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at June 27, 2021		18,490		$	1,849		$	65,205		$	344,797		$	(53,432	)	$	358,419
Options exercised		9			1			(1	)		—			—			—
Conversion of restricted stock units		68			6			(6	)		—			—			—
Stock-based compensation		5			1			2,827			—			—			2,828
Common stock repurchased and retired under publicly announced program		(102	)		(10	)		(367	)		(1,779	)		—			(2,156	)
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions		(19	)		(2	)		(135	)		—			—			(137	)
Other comprehensive income, net of tax		—			—			—			—			6,636			6,636
Net income		—			—			—			11,675			—			11,675
Balance at March 27, 2022		18,451		$	1,845		$	67,523		$	354,693		$	(46,796	)	$	377,265

	Shares			Common Stock			Capital in Excess of Par Value			Retained Earnings		Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at June 28, 2020		18,446		$	1,845		$	62,392		$	315,724	$	(63,806	)	$	316,155
Options exercised		1			—			—			—		—			—
Conversion of restricted stock units		45			4			(4	)		—		—			—
Stock-based compensation		4			1			2,409			—		—			2,410
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions		(6	)		(1	)		(111	)		—		—			(112	)
Other comprehensive income, net of tax		—			—			—			—		1,490			1,490
Net income		—			—			—			15,654		—			15,654
Balance at March 28, 2021		18,490		$	1,849		$	64,686		$	331,378	$	(62,316	)	$	335,597


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



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


Large accelerated filer	☐	Accelerated filer	☒

~~Non-accelerated filer~~	☐	~~Smaller reporting company~~	☐
Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐


PART I—FINANCIAL INFORMATION
		Page

Item 1.	Financial Statements		1

	Condensed Consolidated Balance Sheets as of ~~March 27,~~January 1, 2023 and July 3, 2022 ~~and June 27, 2021~~		1

	Condensed Consolidated Statements of ~~Income~~Operations for the Three Months and ~~Nine~~Six Months Ended ~~March 27, 2022~~January 1, 2023 and ~~March 28,~~December 26, 2021		2

	Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three Months and ~~Nine~~Six Months Ended ~~March 27, 2022~~January 1, 2023 and ~~March 28,~~December 26, 2021		3

	Condensed Consolidated Statements of Shareholders’ Equity for the Three Months and ~~Nine~~Six Months Ended ~~March 27, 2022~~January 1, 2023 and ~~March 28,~~December 26, 2021		4

	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~March 27, 2022~~January 1, 2023 and ~~March 28,~~December 26, 2021		5

	Notes to Condensed Consolidated Financial Statements		6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		1715

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		3428

Item 4.	Controls and Procedures		3529

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings		3630

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		3630

Item 6.	Exhibits		3730

	Signatures		3831

	March 27, 2022			June 27, 2021
Customer receivables	$	103,347		$	81,921
Allowance for uncollectible accounts		(2,071	)		(2,525	)
Reserves for quality claims		(778	)		(703	)
Net customer receivables		100,498			78,693
Other receivables		9,033			16,144
Total receivables, net	$	109,531		$	94,837

	March 27, 2022			June 27, 2021
Raw materials	$	66,127		$	54,895
Supplies		11,429			10,692
Work in process		10,598			7,516
Finished goods		78,184			70,525
Gross inventories		166,338			143,628
Net realizable value adjustment		(2,958	)		(2,407	)
Total inventories	$	163,380		$	141,221

	March 27, 2022		June 27, 2021
Vendor deposits	$	5,168	$	3,341
Value-added taxes receivable		2,701		2,484
Prepaid expenses and other		3,001		2,753
Recovery of non-income taxes, net		9,600		3,456
Contract assets		508		330
Total other current assets	$	20,978	$	12,364

	March 27, 2022			June 27, 2021
Land	$	3,200		$	3,184
Land improvements		16,443			16,372
Buildings and improvements		161,557			160,122
Assets under finance leases		22,882			22,000
Machinery and equipment		622,758			609,414
Computers, software and office equipment		25,717			24,848
Transportation equipment		10,542			10,461
Construction in progress		24,568			17,834
Gross PP&E		887,667			864,235
Less: accumulated depreciation		(665,100	)		(656,576	)
Less: accumulated amortization – finance leases		(7,489	)		(5,963	)
Total PP&E, net	$	215,078		$	201,696

	March 27, 2022		June 27, 2021
Current assets	$	9,263	$	7,931
Non-current assets		634		659
Current liabilities		6,969		3,967
Non-current liabilities		—		—
Shareholders’ equity and capital accounts		2,928		4,623

UNIFI’s portion of undistributed earnings		1,715		2,100

	March 27, 2022		June 27, 2021
Payroll and fringe benefits	$	8,830	$	10,204
Incentive compensation		3,283		12,356
Deferred revenue		2,810		2,691
Interest rate swaps		168		1,234
Current portion of supplemental post-employment plan		20		1,087
Other		3,695		4,066
Total other current liabilities	$	18,806	$	31,638

	Fiscal 2022		Fiscal 2023		Fiscal 2024		Fiscal 2025		Fiscal 2026		Thereafter
ABL Revolver	$	—	$	—	$	18,500	$	—	$	—	$	—
ABL Term Loan		5,000		10,000		55,000		—		—		—
Finance lease obligations		820		1,592		1,648		1,553		1,102		648
Total ⁽¹⁾	$	5,820	$	11,592	$	75,148	$	1,553	$	1,102	$	648

	March 27, 2022		June 27, 2021
Uncertain tax positions	$	3,565	$	3,045
Supplemental post-employment plan		2,328		2,090
Other		822		2,337
Total other long-term liabilities	$	6,715	$	7,472


	Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs		Average Price Paid per Share		Approximate Dollar Value that May Yet Be Repurchased Under Publicly Announced Plans or Programs		Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs		Average Price Paid per Share		Approximate Dollar Value that May Yet Be Repurchased Under Publicly Announced Plans or Programs
Fiscal 2019		—	$	—	$	50,000		—	$	—	$	50,000
Fiscal 2020		84	$	23.72	$	48,008		84	$	23.72	$	48,008
Fiscal 2021		—	$	—	$	48,008		—	$	—	$	48,008
Fiscal 2022 (through March 27, 2022)		102	$	21.22	$	45,854
Fiscal 2022								617	$	14.84	$	38,859
Fiscal 2023 (through January 1, 2023)								—	$	—	$	38,859
Total		186	$	22.35	$	45,854		701	$	15.90	$	38,859


Authorized under the 2020 Plan	850
Plus: Awards expired, forfeited or otherwise terminated unexercised	14
Less: Awards granted to employees	(~~209~~544	)
Less: Awards granted to non-employee directors	(41114	)
Available for issuance under the 2020 Plan	~~601~~196

	Foreign Currency Translation Adjustments			Changes in Interest Rate Swaps			Accumulated Other Comprehensive Loss
Balance at June 27, 2021	$	(52,480	)	$	(952	)	$	(53,432	)
Other comprehensive income		5,833			803			6,636
Balance at March 27, 2022	$	(46,647	)	$	(149	)	$	(46,796	)


	Foreign Currency Translation Adjustments			Accumulated Other Comprehensive Loss
Balance at July 3, 2022	$	(59,605	)	$	(59,605	)
Other comprehensive loss		(2,461	)		(2,461	)
Balance at January 1, 2023	$	(62,066	)	$	(62,066	)


		For the Three Months Ended				For the Six Months Ended
Affiliated Entity	Transaction Type	January 1, 2023		December 26, 2021		January 1, 2023		December 26, 2021
Salem Leasing Corporation	Payments for transportation equipment costs and finance lease debt service	$	1,184	$	1,059	$	2,383	$	2,087

	For the Three Months Ended March 27, 2022
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	93,924	$	51,277	$	29,767	$	24,689	$	1,123	$	200,780
Cost of sales		90,043		43,900		23,784		22,925		984		181,636
Gross profit		3,881		7,377		5,983		1,764		139		19,144
Segment depreciation expense		4,642		—		382		441		143		5,608
Segment Profit	$	8,523	$	7,377	$	6,365	$	2,205	$	282	$	24,752


	For the Three Months Ended January 1, 2023
	Americas			Brazil		Asia		Total
Net sales	$	85,242		$	25,687	$	25,283	$	136,212
Cost of sales		98,326			24,357		21,529		144,212
Gross (loss) profit		(13,084	)		1,330		3,754		(8,000	)
Segment depreciation expense		5,542			391		—		5,933
Segment (Loss) Profit	$	(7,542	)	$	1,721	$	3,754	$	(2,067	)

	For the Three Months Ended March 28, 2021
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	82,668	$	48,483	$	25,704	$	20,778	$	1,233	$	178,866
Cost of sales		75,446		41,330		15,106		20,341		1,048		153,271
Gross profit		7,222		7,153		10,598		437		185		25,595
Segment depreciation expense		5,036		—		299		441		161		5,937
Segment Profit	$	12,258	$	7,153	$	10,897	$	878	$	346	$	31,532

	For the Nine Months Ended March 28, 2021
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	228,440	$	130,898	$	72,563	$	47,815	$	3,431	$	483,147
Cost of sales		205,691		112,639		49,375		46,318		3,034		417,057
Gross profit		22,749		18,259		23,188		1,497		397		66,090
Segment depreciation expense		13,909		—		1,050		1,321		489		16,769
Segment Profit	$	36,658	$	18,259	$	24,238	$	2,818	$	886	$	82,859


	January 1, 2023			July 3, 2022
Receivables, net:
Customer receivables	$	61,960		$	99,963
Allowance for uncollectible accounts		(1,378	)		(1,498	)
Reserves for quality claims		(1,294	)		(860	)
Net customer receivables		59,288			97,605
Banker's acceptance notes		4,439			7,849
Other receivables		1,253			1,111
Total receivables, net	$	64,980		$	106,565

Inventories:
Raw materials	$	58,788		$	69,994
Supplies		11,805			11,953
Work in process		6,879			10,358
Finished goods		73,916			84,477
Gross inventories		151,388			176,782
Net realizable value adjustment		(4,135	)		(3,487	)
Total inventories	$	147,253		$	173,295

Other current assets:
Prepaid expenses and other	$	3,647		$	3,004
Value-added taxes receivable		3,433			1,987
Vendor deposits		2,874			6,910
Recovery of non-income taxes, net		2,801			6,770
Contract assets		448			285
Total other current assets	$	13,203		$	18,956

Property, plant and equipment, net:
Land	$	3,150		$	3,160
Land improvements		16,443			16,443
Buildings and improvements		165,905			164,252
Assets under finance leases		11,498			10,921
Machinery and equipment		637,855			635,699
Computers, software and office equipment		25,883			25,348
Transportation equipment		10,455			10,591
Construction in progress		23,605			20,397
Gross property, plant and equipment		894,794			886,811
Less: accumulated depreciation		(663,885	)		(666,569	)
Less: accumulated amortization – finance leases		(4,630	)		(3,904	)
Total property, plant and equipment, net	$	226,279		$	216,338

Other non-current assets:
Recovery of taxes	$	5,131		$	1,463
Grantor trust		2,897			2,196
Investments in unconsolidated affiliates		2,430			2,072
Intangible assets, net		1,813			2,500
Other		951			557
Total other non-current assets	$	13,222		$	8,788

Other current liabilities:
Payroll and fringe benefits	$	4,725		$	9,414
Utilities		1,306			2,287
Deferred revenue		1,306			1,694
Incentive compensation		445			3,916
Property taxes and other		3,563			2,495
Total other current liabilities	$	11,345		$	19,806

Other long-term liabilities:
Nonqualified deferred compensation plan obligation	$	2,355		$	1,982
Uncertain tax positions		1,879			1,575
Other		526			892
Total other long-term liabilities	$	4,760		$	4,449

Segment Profit for the prior period	$	12,258
Net decrease in underlying margins		(2,734	)
Decrease in sales volumes		(1,001	)
Segment Profit for the current period	$	8,523

Net sales for the prior period	$	25,704
Increase in average selling price		4,906
Favorable foreign currency translation effects		1,298
Decrease in sales volumes		(2,141	)
Net sales for the current period	$	29,767

Segment Profit for the prior period	$	878
Net increase in underlying margins		1,409
Decrease in sales volumes		(82	)
Segment Profit for the current period	$	2,205

Net sales for the prior nine-month period	$	130,898
Net increase in sales volumes		20,605
Change in average selling price and sales mix		5,438
Favorable foreign currency translation effects		4,876
Net sales for the current nine-month period	$	161,817

Net sales for the prior nine-month period	$	72,563
Increase in average selling price and change in sales mix		24,361
Favorable foreign currency translation effects		1,184
Decrease in sales volumes		(7,002	)
Net sales for the current nine-month period	$	91,106

Segment Profit for the prior nine-month period	$	24,238
Increase in underlying margins		2,159
Favorable foreign currency translation effects		437
Decrease in sales volumes		(2,343	)
Segment Profit for the current nine-month period	$	24,491

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
12/27/21 – 1/27/22		—	$	—		—	$	46,805
1/28/22 – 2/27/22		45	$	19.04		45		45,948
2/28/22 – 3/27/22		5	$	18.93		5		45,854
Total		50	$	19.03		50