Business Segment Information

6 Months Ended

Jan. 01, 2023

Segment Reporting [Abstract]

Business Segment Information

14. Business Segment Information

UNIFI defines operating segments as components of the organization for which discrete financial information is available and operating results are evaluated on a regular basis by UNIFI’s principal executive officer, who is the chief operating decision maker (the “CODM”), in order to assess performance and allocate resources. Characteristics of UNIFI which were relied upon in making the determination of reportable segments include the nature of the products sold, the internal organizational structure, the trade policies in the geographic regions in which UNIFI operates, and the information that is regularly reviewed by the CODM for the purpose of assessing performance and allocating resources.

In the fourth fiscal quarter of fiscal 2022, UNIFI realigned its operating and reportable segments to correspond with changes to its operating model, management structure, and organizational responsibilities, reflecting the manner in which business performance is evaluated, resources are allocated, and financial statement users can best understand the results of operations. Accordingly, UNIFI is now reporting the Americas Segment, Brazil Segment, and Asia Segment. The Americas Segment represents the combination of the previously reported Polyester Segment, Nylon Segment, and All Other category. There are no changes to the composition of the historical Brazil Segment and Asia Segment. Comparative prior period disclosures have been updated to conform to the new presentation.

UNIFI has three reportable segments.

•The operations within the Americas Segment exhibit similar long-term economic characteristics and primarily sell into an economic trading zone covered by the USMCA and CAFTA-DR to similar customers utilizing similar methods of distribution. These operations derive revenues primarily from manufacturing synthetic and recycled textile products with sales primarily to yarn manufacturers, knitters, and weavers that produce yarn and/or fabric for the apparel, hosiery, automotive, home furnishings, industrial, medical, and other end-use markets principally in North and Central America. The Americas Segment consists of sales and manufacturing operations in the U.S., El Salvador, and Colombia.

•The Brazil Segment primarily manufactures and sells polyester-based products to knitters and weavers that produce fabric for the apparel, automotive, home furnishings, industrial, and other end-use markets principally in Brazil. The Brazil Segment includes a manufacturing location and sales offices in Brazil.

•The operations within the Asia Segment exhibit similar long-term economic characteristics and sell to similar customers utilizing similar methods of distribution primarily in Asia and Europe. The Asia Segment primarily sources synthetic and recycled textile products from third-party suppliers and sells to other yarn manufacturers, knitters, and weavers that produce fabric for the apparel, automotive, home furnishings, industrial, and other end-use markets principally in Asia. The Asia Segment includes sales offices in China, Turkey, and Hong Kong.

UNIFI evaluates the operating performance of its segments based upon Segment Profit, which represents segment gross (loss) profit plus segment depreciation expense. This measurement of segment profit or loss best aligns segment reporting with the current assessments and evaluations performed by, and information provided to, the CODM.

The accounting policies for the segments are consistent with UNIFI’s accounting policies. Intersegment sales are omitted from segment disclosures, as they are (i) insignificant to UNIFI’s segments and eliminated from consolidated reporting and (ii) excluded from segment evaluations performed by the CODM.

Selected financial information is presented below:

	For the Three Months Ended January 1, 2023
	Americas			Brazil		Asia		Total
Net sales	$	85,242		$	25,687	$	25,283	$	136,212
Cost of sales		98,326			24,357		21,529		144,212
Gross (loss) profit		(13,084	)		1,330		3,754		(8,000	)
Segment depreciation expense		5,542			391		—		5,933
Segment (Loss) Profit	$	(7,542	)	$	1,721	$	3,754	$	(2,067	)

	For the Three Months Ended December 26, 2021
	Americas		Brazil		Asia		Total
Net sales	$	114,697	$	27,601	$	59,112	$	201,410
Cost of sales		113,844		20,075		50,601		184,520
Gross profit		853		7,526		8,511		16,890
Segment depreciation expense		5,145		277		—		5,422
Segment Profit	$	5,998	$	7,803	$	8,511	$	22,312

	For the Six Months Ended January 1, 2023
	Americas			Brazil		Asia		Total
Net sales	$	192,886		$	64,566	$	58,279	$	315,731
Cost of sales		210,839			56,449		49,880		317,168
Gross (loss) profit		(17,953	)		8,117		8,399		(1,437	)
Segment depreciation expense		11,022			861		—		11,883
Segment (Loss) Profit	$	(6,931	)	$	8,978	$	8,399	$	10,446

	For the Six Months Ended December 26, 2021
	Americas		Brazil		Asia		Total
Net sales	$	225,523	$	61,339	$	110,540	$	397,402
Cost of sales		215,484		43,873		95,058		354,415
Gross profit		10,039		17,466		15,482		42,987
Segment depreciation expense		10,220		660		—		10,880
Segment Profit	$	20,259	$	18,126	$	15,482	$	53,867

The reconciliations of segment gross (loss) profit to consolidated (loss) income before income taxes are as follows:

	For the Three Months Ended						For the Six Months Ended
	January 1, 2023			December 26, 2021			January 1, 2023			December 26, 2021
Americas	$	(13,084	)	$	853		$	(17,953	)	$	10,039
Brazil		1,330			7,526			8,117			17,466
Asia		3,754			8,511			8,399			15,482
Segment gross (loss) profit		(8,000	)		16,890			(1,437	)		42,987
Selling, general and administrative expenses		11,748			11,966			23,521			24,636
(Benefit) provision for bad debts		(156	)		(240	)		18			(320	)
Other operating expense (income), net		226			573			(463	)		829
Operating (loss) income		(19,818	)		4,591			(24,513	)		17,842
Interest income		(514	)		(194	)		(1,061	)		(452	)
Interest expense		1,889			735			3,136			1,431
Equity in earnings of unconsolidated affiliates		(86	)		(64	)		(381	)		(344	)
(Loss) income before income taxes	$	(21,107	)	$	4,114		$	(26,207	)	$	17,207

There have been no material changes in segment assets during fiscal 2023.