Unifi (UFI) investor relations material

Executive summary

• Net sales declined 7.9% year-over-year to $135.7 million in Q1 fiscal 2026, driven by trade and tariff-related uncertainty, demand volatility, and global softness, with the most significant impacts in Asia and Central America.

• Gross profit dropped 64.2% to $3.4 million (2.5% margin), and net loss widened to $11.4 million, including $1.1 million in transition costs.

• Significant cost reductions and restructuring actions, including facility consolidation and workforce reductions, were implemented to align with lower demand and improve profitability.

• Beyond apparel initiatives (military, carpet, resin, packaging) and new sustainable products like A.M.Y. Peppermint and ThermaLoop insulation are gaining traction, with meaningful revenue expected in the second half of fiscal 2026.

• The flexible global model and asset-light approach position the company to capture improved demand as market conditions stabilize in 2026.

Financial highlights

• Q1 consolidated net sales were $135.7 million, down 7.9% year-over-year, with gross profit at $3.4 million and gross margin at 2.5%.

• Adjusted EBITDA was negative $2.5 million, and adjusted EPS was $(0.56); net loss was $11.4 million.

• REPREVE fiber represented 29% of sales, down from 30% the prior year.

• Americas segment net sales were $85.2 million (down 1.3%), Brazil $28.8 million (down 16.2%), and Asia $21.7 million (down 18.9%).

• Gross margin declined from 6.4% to 2.5% year-over-year.

Outlook and guidance

• Management expects improved operating cash flows and sequential improvement in Adjusted EBITDA in Q2, driven by cost reductions, working capital improvements, and lower production spend.

• Americas and Brazil net sales are expected to drop slightly in Q2 due to the holiday period, while Asia is expected to see an increase.

• Full benefits of cost reduction and improved working capital are expected after Q1 FY26, with incremental top-line improvement anticipated throughout 2026 as trade clarity returns.

• Commercialization of value-added products (REPREVE Take-Back, ThermaLoop, A.M.Y. Peppermint) and expansion into beyond apparel markets are expected to drive growth.

• Management believes liquidity is sufficient for ongoing operations, but further macroeconomic deterioration could require additional cost controls or financing.