UFI

• Transformation Completion: All three phases of the company's 18-month transformation initiative are largely complete. The first phase, which included closing the Madison facility, reducing excess capacity, resizing the labor force, improving manufacturing efficiency, and removing unprofitable products from the portfolio, is fully finished.
• Balance Sheet Improvements: Inventories have been dramatically reduced over 18 months, capital discipline has improved, and cost controls are in place. The company signed a $60 million purchase agreement to sell non-strategic U.S. real estate and excess assets; closing will significantly reduce net debt and strengthen the balance sheet with no impact to existing production capacity or customer service.
• Full-Year Financial Performance: Full-year fiscal 2026 free cash flow reached $21.5 million, a $50 million improvement over fiscal 2025. Full-year CapEx was constrained to $5 million, a 50% decline year-over-year, and net debt was reduced to $67.4 million at quarter-end, beating prior expectations.
• Strategic Priorities: The company's four core strategic priorities are: 1) Lock in existing operational improvements and invest in capabilities/technology to scale sustainable solutions around the premium Reprieve brand; 2) Continue investing in innovation and new product development to drive customer adoption of innovative solutions; 3) Navigate ongoing trade and geopolitical challenges; 4) Grow Beyond Apparel initiatives across packaging, military/tactical, and carpet end markets.
• Innovation and Sustainability Momentum: Beyond Apparel segments saw strong momentum in Q4: domestic resin (for packaging) grew significantly on muted import volumes, carpet volumes increased meaningfully amid supply chain logistical challenges, and military/tactical applications continue to build momentum. The company's circular sustainable solutions (Reprieve Take Back, Thermaloop Insulation) have strong brand customer interest, with recent sustainability events (Champions of Sustainability, Earth Month, World Oceans Day) driving partnership growth with major brands including Tiffany & Co. High-performance Fortisim fiber continues to gain adoption in critical U.S. military and tactical applications, with strong market feedback on performance and color consistency.

• Management expects full-year fiscal 2027 sales and profitability to improve year-over-year, reflecting full-year benefits from completed strategic transformation actions.
• CapEx for fiscal 2027 is budgeted between $7 million and $9 million, allocated for maintenance and capacity redundancy projects, an increase from the constrained $5 million full-year fiscal 2026 spend.
• The Brazil segment is expected to deliver improved sales and profitability year-over-year, leveraging the company's strong competitive position and advantageous regional supply chain.
• The Asia segment is expected to see expanded adoption of innovative and circular technologies, supporting revenue growth once tariff uncertainty is resolved.
• Overall sequential and year-over-year margin improvement is expected for fiscal 2027, driven by a higher mix of margin-accretive value-added and Beyond Apparel products.

Consolidated net sales for the quarter were $144.2 million, representing a 4% year-over-year increase. Consolidated gross profit was $14.3 million (10% gross margin), compared to a gross loss of $1.1 million (negative 0.8% gross margin) in the prior year quarter. Net loss was $1.2 million, and adjusted EBITDA was $8.2 million, a $12.3 million year-over-year improvement.

• Americas: Net sales decreased 1% year-over-year amid ongoing volume headwinds. Generated $3.3 million in gross profit, marking the second consecutive quarter of positive gross profit for the segment, following completed cost optimization and footprint consolidation.
• Brazil: Net sales increased by $5.1 million (17.8% year-over-year), with gross profit improving $6.4 million. Strong performance was driven by higher sales volumes and favorable pricing amid volatile global costs.
• Asia: Net sales increased by $1.1 million and gross profit increased by $0.5 million year-over-year. The segment's asset-light model maintained stable margins despite ongoing market uncertainty.

• The broader industry continues to face macro headwinds including shifting oil prices, tariff rate volatility, and inflation that have pressured industry revenues over the past 12+ months.
• The Asia segment faces ongoing market uncertainty due to unresolved tariff uncertainty, which has caused brand customers to pull back on orders and creates near-term revenue challenges, even as long-term pipeline remains strong.
• Adoption of the company's circular sustainable Reprieve platform has been slower than originally expected, despite sustained brand customer interest in sustainability targets.

Q: Brazil had a very strong quarter; what actions are allowing the company to leverage its competitive position and supply chain there? / A: Unifi is the largest manufacturer of textured polyester in the region, with an established robust domestic supply chain. When competing importers pulled back on sales amid global cost volatility tied to Middle East conflicts, Unifi was able to efficiently and quickly serve customer demand. The company also managed pricing effectively, leveraging its cost-competitive local raw material position to expand gross profits.

Q: Are there any additional non-strategic assets that management plans to monetize after closing the current $60 million real estate deal? / A: Management confirmed there are no additional assets planned for monetization at this time, noting the pipeline is empty. The company expects the current transaction to deliver meaningful leverage reduction on favorable terms, with no further asset sales targeted for the near term.

Q: What are the key milestones to close the $60 million real estate deal, and what will the after-tax proceeds to Unifi be? / A: The purchase and sale agreement is already signed, and the company is very far along in the process. Remaining work includes finalizing subdivision of the Yadkinville property and completing remaining legal requirements, with no major concerns about closing. Minimal tax leakage is expected due to available net operating loss carryforwards from prior difficult years, so nearly the full $60 million will strengthen Unifi's balance sheet.

Q: What is the long-term revenue target for the Reprieve sustainable product platform, and how will it impact margins? / A: The company maintains a target that 50% of its fiber sales will be Reprieve by 2030, pushed back from an earlier target due to recent market headwinds. Reprieve offers higher margins than commodity products, and its built-in verification of sustainable materials is increasingly valuable to brands, which remain committed to their sustainability targets despite near-term market challenges. The company continues to add innovative performance features to the Reprieve platform to drive additional growth.