Business Segment Information

6 Months Ended

Dec. 26, 2021

Segment Reporting [Abstract]

Business Segment Information

21.  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.

UNIFI has four reportable segments.

• The operations within the Polyester Segment exhibit similar long-term economic characteristics and primarily sell into an economic trading zone covered by the USMCA, NAFTA and CAFTA (collectively, the regions comprising these economic trading zones are referred to as “NACA”) to similar customers utilizing similar methods of distribution. These operations derive revenues primarily from manufacturing polyester-based products with sales primarily to other yarn manufacturers and knitters and weavers that produce yarn and/or fabric for the apparel, hosiery, automotive, home furnishings, industrial and other end-use markets. The Polyester Segment consists of sales and manufacturing operations in the U.S. and El Salvador.

• 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, which are outside of the NACA region. The Asia Segment primarily sources polyester-based 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.

• 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 South America.  The Brazil Segment includes a manufacturing location and sales offices in Brazil.

• The operations within the Nylon Segment exhibit similar long-term economic characteristics and primarily sell into the NACA region to similar customers utilizing similar methods of distribution. These operations derive revenues primarily from manufacturing nylon-based products with sales to knitters and weavers that produce fabric primarily for the apparel, hosiery and medical markets.  The Nylon Segment includes an immaterial operating segment in Colombia that sells similar nylon-based textile products to similar customers in Colombia and Mexico utilizing similar methods of distribution.  The Nylon Segment consists of sales and manufacturing operations in the U.S. and Colombia.

In addition to UNIFI’s reportable segments, an All Other category is included in the tables below. All Other consists primarily of for-hire transportation services. For-hire transportation services revenue is derived from performing common carrier services utilizing UNIFI’s fleet of transportation equipment.

The operations within All Other (i) are not subject to review by the CODM at a level consistent with UNIFI’s other operations, (ii) are not regularly evaluated using the same metrics applied to UNIFI’s other operations, and (iii) do not qualify for aggregation with an existing reportable segment. Therefore, such operations are excluded from reportable segments.

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 December 26, 2021
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	92,418	$	59,112	$	27,601	$	21,015	$	1,264	$	201,410
Cost of sales		91,978		50,601		20,075		20,829		1,037		184,520
Gross profit		440		8,511		7,526		186		227		16,890
Segment depreciation expense		4,544		—		277		444		157		5,422
Segment Profit	$	4,984	$	8,511	$	7,803	$	630	$	384	$	22,312

	For the Three Months Ended December 27, 2020
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	76,696	$	44,692	$	24,253	$	16,008	$	1,127	$	162,776
Cost of sales		65,801		38,164		16,276		15,613		988		136,842
Gross profit		10,895		6,528		7,977		395		139		25,934
Segment depreciation expense		4,470		—		321		438		164		5,393
Segment Profit	$	15,365	$	6,528	$	8,298	$	833	$	303	$	31,327

	For the Six Months Ended December 26, 2021
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	181,885	$	110,540	$	61,339	$	41,174	$	2,464	$	397,402
Cost of sales		173,151		95,058		43,873		40,262		2,071		354,415
Gross profit		8,734		15,482		17,466		912		393		42,987
Segment depreciation expense		9,026		—		660		879		315		10,880
Segment Profit	$	17,760	$	15,482	$	18,126	$	1,791	$	708	$	53,867

	For the Six Months Ended December 27, 2020
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	145,772	$	82,415	$	46,859	$	27,037	$	2,198	$	304,281
Cost of sales		130,245		71,309		34,269		25,977		1,986		263,786
Gross profit		15,527		11,106		12,590		1,060		212		40,495
Segment depreciation expense		8,873		—		751		880		328		10,832
Segment Profit	$	24,400	$	11,106	$	13,341	$	1,940	$	540	$	51,327

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

	For the Three Months Ended						For the Six Months Ended
	December 26, 2021			December 27, 2020			December 26, 2021			December 27, 2020
Polyester	$	440		$	10,895		$	8,734		$	15,527
Asia		8,511			6,528			15,482			11,106
Brazil		7,526			7,977			17,466			12,590
Nylon		186			395			912			1,060
All Other		227			139			393			212
Segment gross profit		16,890			25,934			42,987			40,495
Selling, general and administrative expenses		11,966			12,625			24,636			23,989
Benefit for bad debts		(240	)		(259	)		(320	)		(1,146	)
Other operating expense, net		573			476			829			1,654
Operating income		4,591			13,092			17,842			15,998
Interest income		(194	)		(187	)		(452	)		(312	)
Interest expense		735			833			1,431			1,704
Equity in earnings of unconsolidated affiliates		(64	)		(130	)		(344	)		(223	)
Income before income taxes	$	4,114		$	12,576		$	17,207		$	14,829

There have been no material changes in segment assets during fiscal 2022.