Business Segment Information

9 Months Ended

Apr. 02, 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 profit (loss) 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 April 2, 2023
	Americas		Brazil		Asia		Total
Net sales	$	101,946	$	27,380	$	27,412	$	156,738
Cost of sales		98,788		24,998		23,299		147,085
Gross profit		3,158		2,382		4,113		9,653
Segment depreciation expense		5,574		549		—		6,123
Segment Profit	$	8,732	$	2,931	$	4,113	$	15,776

	For the Three Months Ended March 27, 2022
	Americas		Brazil		Asia		Total
Net sales	$	119,736	$	29,767	$	51,277	$	200,780
Cost of sales		113,952		23,784		43,900		181,636
Gross profit		5,784		5,983		7,377		19,144
Segment depreciation expense		5,226		382		—		5,608
Segment Profit	$	11,010	$	6,365	$	7,377	$	24,752

	For the Nine Months Ended April 2, 2023
	Americas			Brazil		Asia		Total
Net sales	$	294,832		$	91,946	$	85,691	$	472,469
Cost of sales		309,627			81,447		73,179		464,253
Gross (loss) profit		(14,795	)		10,499		12,512		8,216
Segment depreciation expense		16,596			1,410		—		18,006
Segment Profit	$	1,801		$	11,909	$	12,512	$	26,222

	For the Nine Months Ended March 27, 2022
	Americas		Brazil		Asia		Total
Net sales	$	345,259	$	91,106	$	161,817	$	598,182
Cost of sales		329,436		67,657		138,958		536,051
Gross profit		15,823		23,449		22,859		62,131
Segment depreciation expense		15,446		1,042		—		16,488
Segment Profit	$	31,269	$	24,491	$	22,859	$	78,619

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

	For the Three Months Ended						For the Nine Months Ended
	April 2, 2023			March 27, 2022			April 2, 2023			March 27, 2022
Americas	$	3,158		$	5,784		$	(14,795	)	$	15,823
Brazil		2,382			5,983			10,499			23,449
Asia		4,113			7,377			12,512			22,859
Segment gross profit		9,653			19,144			8,216			62,131
Selling, general and administrative expenses		12,063			14,389			35,584			39,025
Benefit for bad debts		(56	)		(169	)		(38	)		(489	)
Other operating expense (income), net		324			(831	)		(139	)		(2	)
Operating (loss) income		(2,678	)		5,755			(27,191	)		23,597
Interest income		(554	)		(492	)		(1,615	)		(944	)
Interest expense		2,073			709			5,209			2,140
Equity in earnings of unconsolidated affiliates		(158	)		(41	)		(539	)		(385	)
Recovery of non-income taxes, net		—			815			—			815
(Loss) income before income taxes	$	(4,039	)	$	4,764		$	(30,246	)	$	21,971

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