Unifi (NYSE:UFI) reported improved profitability and cash generation in its fiscal 2027 first quarter, as cost reductions, manufacturing footprint changes and portfolio management helped offset lower sales amid continued pressure in apparel-related markets.
Consolidated net sales declined 5.7% year over year to $127.9 million. However, gross profit rose to $12.5 million from $3.4 million in the prior-year quarter, while gross margin expanded to 9.8% from 2.5%. Net loss narrowed to $2 million, an improvement of more than $9 million from the first quarter of fiscal 2026, and adjusted EBITDA increased by $8.6 million year over year to $6.1 million.
Chief Executive Officer Eddie Ingle said the results reflected the benefits of actions taken in recent quarters to improve efficiency and margins. The company also implemented pricing adjustments during the quarter in response to an escalating raw-material environment tied to higher crude oil prices.
Asset Sale Reduces Debt
Executive Chairman Al Carey said the company had spent approximately 18 months pursuing three priorities: lowering costs and improving its manufacturing footprint, reducing debt and improving capital efficiency, and building revenue with large customers through innovation.
Carey said the company completed its cost-reduction work and had established disciplines intended to maintain a lower cost base. He also highlighted the closing of a sale of two non-strategic real estate assets in Yadkin County, North Carolina.
Chief Financial Officer A.J. Eaker said proceeds from the real estate transaction were immediately used to repay the company’s $55.5 million outstanding term loan balance. He described the sale as a major improvement in Unifi’s leverage profile and financial flexibility.
The company reported net debt of $64.8 million at the end of the quarter, though Eaker noted that figure did not reflect the subsequent debt reduction from the asset sale. The transaction does not reduce production capacity or affect Unifi’s ability to serve North American customers, according to Ingle.
Unifi generated $2.5 million in free cash flow during the quarter, compared with a $10.9 million cash outflow in the prior-year period, despite working-capital pressure. Capital expenditures totaled $1.2 million. The company said it has allocated $7 million to $9 million in capital expenditures for the remainder of fiscal 2027.
Regional Results Show Divergent Demand Trends
In the Americas, net sales fell $8.2 million year over year as customer ordering patterns remained subdued amid inflation and trade uncertainty. Still, the segment generated its third consecutive quarter of gross profit, with gross profit increasing $6.4 million to $4.7 million.
Eaker attributed the Americas margin improvement to footprint consolidation, cost containment and portfolio optimization. Management said it has exited certain business that did not meet pricing requirements and believes its product portfolio is now largely positioned as intended, with the focus shifting toward growth in value-added products and markets beyond apparel.
Brazil was the company’s strongest regional sales contributor in the quarter. Net sales increased $4.1 million, or 14.4%, and gross profit increased $2.4 million from the prior-year period. Eaker cited favorable pricing dynamics and improved sales mix, while Ingle said resin demand remained strong because imports have been low amid the tariff environment and limited domestic alternatives.
Asia net sales declined $3.7 million due to pricing pressure and regional volatility. Segment gross profit nevertheless rose 7.2%, with management citing the strength of its product portfolio and asset-light operating model. Unifi said the region remains pressured in the near term as geopolitical and tariff conditions remain unsettled.
Innovation and Supply-Chain Initiative
Management emphasized innovation as a central component of its effort to return to sustainable growth. During the quarter, Unifi launched Cofira, a dual-function yarn designed to combine spun-yarn comfort with filament functionality.
The company also introduced YarnProof, an industry consortium involving polyester filament yarn manufacturers in North and Central America. The program uses FibreTrace technology to embed an invisible, permanent tracer into polyester filament yarn during extrusion, allowing the material’s origin to be verified with a handheld scanner at stages ranging from yarn to finished goods.
Ingle said YarnProof is intended to support trade compliance and supply-chain integrity under regional frameworks including USMCA and CAFTA-DR. He said the initiative was launched in mid-October and that the company expects the tracer to be present in regional polyester filament yarn products by mid-to-late summer. Unifi expects potential financial effects to begin in fiscal fourth-quarter results and the first quarter of the following fiscal year.
The company also cited co-branded product activity involving REPREVE Takeback with Buckle, ThermaLoop insulation with Mango, REPREVE A.M.Y. Peppermint anti-odor technology in selected HOKA trail footwear, REPREVE TruTemp365 products at J.Crew, and a REPREVE swim collection from Speedo at Dick’s Sporting Goods.
Outlook Remains Unchanged
Unifi maintained its outlook for improved year-over-year sales and profitability in fiscal 2027 as it captures the full-year benefits of its previous strategic actions. For the second quarter, the company expects stable demand in the Americas, including margin-accretive revenue from value-added products and Beyond Apparel initiatives.
Brazil sales and profitability are expected to be similar to the prior year, though management expects inflation-related working-capital pressure. Asia is expected to remain challenged by regional softness and geopolitical volatility.
Management said retail apparel inventories and supply-chain inventories appear low, but it does not expect a return to the elevated demand levels seen during post-pandemic peak periods. Instead, the company said it is relying on product innovation, military and tactical opportunities led by Fortisyn, resin, and regional supply-chain initiatives such as YarnProof to support growth. Unifi expects stronger demand in its fiscal third and fourth quarters, including contributions from strategic customer relationships and new products.
About Unifi (NYSE:UFI)
Unifi, Inc is a textile manufacturing company that produces synthetic and recycled yarns for customers in the apparel, hosiery, home furnishings, automotive, industrial and other consumer markets. Its products include polyester and nylon textured yarns, staple fiber and related value-added textile materials used in fabrics and finished goods.
The company is best known for its REPREVE brand, which transforms recycled plastic bottles and other materials into performance fibers. REPREVE fibers are used in products designed to offer attributes such as moisture management, stretch, softness, thermal performance and enhanced durability.
