UNIFI®, a leading innovator in Reports recycled and synthetic yarn and the creator of REPREVE®, has released its operating results for the second fiscal quarter ended December 29, 2024. The company’s performance reflects both challenges and opportunities as it navigates global market pressures while implementing strategic measures to enhance operational efficiency and profitability.
Second Quarter Fiscal 2025 Overview
Net sales for the quarter reached $138.9 million, marking a modest increase of 1.4% compared to the same period in fiscal 2024. This growth was primarily driven by higher sales volumes, although the company faced headwinds from a weaker sales mix in certain regions. Revenues from REPREVE Fiber products, a cornerstone of UNIFI’s sustainability-focused portfolio, amounted to $43.3 million, representing 31% of net sales. This figure is slightly lower than the $45.7 million or 33% of net sales reported in the second quarter of fiscal 2024, reflecting shifting demand dynamics in key markets.
Gross profit for the quarter was $0.5 million, resulting in a gross margin of 0.4%, down from $1.6 million and 1.2% in the prior-year period. The decline in gross profit was attributed to regional challenges, particularly in the Asia Segment, where unfavorable sales mix and pricing dynamics led to a $1.9 million decrease in gross profit. In contrast, the Americas Segment maintained flat gross profit as production and sales gains were offset by inflationary pressures. The Brazil Segment showed improvement, with gross profit increasing by $0.6 million due to favorable pricing and market share gains.
The company reported a net loss of $11.4 million, or $0.62 per share, for the quarter, an improvement from the net loss of $19.8 million, or $1.10 per share, recorded in the second quarter of fiscal 2024. Adjusted Net Loss, which excludes a $4.3 million gain on a warehouse sale, stood at $15.7 million, compared to an Adjusted Net Loss of $14.7 million in the prior-year period, which excluded $5.1 million in restructuring costs.
Adjusted EBITDA* for the quarter was $(5.8) million, slightly below the $(5.5) million reported for the second quarter of fiscal 2024. Both figures exclude the impact of the warehouse sale gain and restructuring costs, highlighting the ongoing efforts to stabilize operations amid challenging market conditions.
Strategic Actions to Enhance Efficiency and Profitability
In response to these results and broader industry trends, UNIFI announced significant steps to optimize its manufacturing operations. Following the quarter’s close, the company revealed plans to consolidate its U.S. manufacturing footprint, a move aimed at enhancing operating efficiency, reducing fixed costs, improving profitability, and strengthening the balance sheet. These initiatives underscore UNIFI’s commitment to becoming a leaner, more agile organization capable of delivering sustainable value to customers and shareholders.
Eddie Ingle, Chief Executive Officer of UNIFI, commented on the quarter’s performance and the company’s forward-looking strategy: “While our results for the second quarter came in slightly below our expectations due to global and localized pressures, we’ve taken numerous proactive actions to position the business for more durable and profitable future growth. This is evident by the recent increase in customer orders and interest we are seeing for some of our Beyond Apparel initiatives and REPREVE Fiber products.”
Ingle emphasized the importance of these strategic changes, stating, “To help support this expected growth and make UNIFI a stronger operating company, we are taking steps to optimize our business by consolidating our U.S. manufacturing footprint. This will make us a leaner and more profitable organization without having to sacrifice our ability to service the market. As a result, we believe we are in a better position to drive long-term shareholder value.”
Segment Performance Highlights
The second quarter results highlight varying performances across UNIFI’s geographic segments:
- Asia Segment: Gross profit declined by $1.9 million, primarily due to a less favorable sales mix and pricing pressures in the region. Despite higher sales volumes, these factors weighed heavily on profitability.
- Americas Segment: Gross profit remained flat as gains from increased production and sales were offset by inflationary pressures. The segment demonstrated resilience but faced challenges in maintaining margins amid rising costs.
- Brazil Segment: Gross profit improved by $0.6 million, driven by favorable pricing strategies and market share gains. This segment showcased strong execution and adaptability in a competitive environment.
Operational Improvements and Financial Metrics
Operating loss for the quarter improved to $7.6 million, a significant reduction from $17.6 million in the second quarter of fiscal 2024. This improvement was largely attributable to a $4.3 million gain on a warehouse sale in fiscal 2025, compared to $5.1 million in restructuring costs incurred in fiscal 2024. Excluding these one-time items, the company’s core operations showed signs of stabilization, though challenges remain.
Adjusted EBITDA*, a key measure of operational performance, stood at $(5.8) million, slightly below the $(5.5) million reported in the prior-year period. Both figures exclude the impact of the warehouse sale gain and restructuring costs, underscoring the ongoing efforts to streamline operations and improve financial health.
A Focus on Sustainability and Innovation
As a leader in the chemical and textile industries, UNIFI remains committed to driving innovation and sustainability through its flagship REPREVE® brand. The company’s Beyond Apparel initiatives, which focus on expanding the use of recycled fibers in non-apparel applications, have garnered increased interest from customers. This growing demand reflects UNIFI’s ability to adapt to evolving consumer preferences and regulatory requirements while maintaining its leadership in sustainable solutions.
The consolidation of U.S. manufacturing operations represents a critical step in UNIFI’s journey toward greater efficiency and profitability. By reducing fixed costs and optimizing its supply chain, the company aims to enhance its competitive position and deliver consistent value to stakeholders.
