UFI · Unifi, Inc.

Unifi, Inc. reported Q3 FY2026 results showing meaningful improvement in profitability and cash flow despite revenue headwinds. Revenue fell 11.3% year-over-year to $130.0 million from $146.6 million, primarily due to demand volatility stemming from geopolitical events, customer inventory management efforts, and competitive import pricing pressures in Brazil. These factors led to lower sales volumes across segments, compounded by a weaker sales mix in the Americas.

Gross profit marked a dramatic turnaround to $9.1 million from a $445 thousand loss in the prior year, delivering a 7.0% gross margin. This swing resulted from variable cost-saving initiatives and improved manufacturing utilization in certain areas, which more than offset the impacts of reduced volumes and production volatility. In the Americas segment, these efficiencies countered demand uncertainty caused by ongoing geopolitical events and tariffs, as well as lower overall conversion margins. Brazil's gross profit faced headwinds from lower sales volumes and import pricing competition, though some statements note partial offsets from volume gains.

Cash flow provided a bright spot, with net cash from operating activities flipping to $24.4 million from a $20.0 million outflow. This generation aligned with inventory reductions responsive to soft demand and production adjustments amid global volatility. Capital expenditures declined to $3.9 million from $7.9 million, yielding $20.5 million in free cash flow focused on routine maintenance rather than expansion. Management continues prioritizing debt repayment and cost savings in this environment, while expecting existing cash balances and operating cash to fund foreign operations and modest investing needs. Adjusted Working Capital serves as a key metric for production efficiency and inventory/receivables management, underscoring resilience amid input cost and demand uncertainties.