Business Segment Information

9 Months Ended

Mar. 27, 2022

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 March 27, 2022
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	93,924	$	51,277	$	29,767	$	24,689	$	1,123	$	200,780
Cost of sales		90,043		43,900		23,784		22,925		984		181,636
Gross profit		3,881		7,377		5,983		1,764		139		19,144
Segment depreciation expense		4,642		—		382		441		143		5,608
Segment Profit	$	8,523	$	7,377	$	6,365	$	2,205	$	282	$	24,752

	For the Three Months Ended March 28, 2021
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	82,668	$	48,483	$	25,704	$	20,778	$	1,233	$	178,866
Cost of sales		75,446		41,330		15,106		20,341		1,048		153,271
Gross profit		7,222		7,153		10,598		437		185		25,595
Segment depreciation expense		5,036		—		299		441		161		5,937
Segment Profit	$	12,258	$	7,153	$	10,897	$	878	$	346	$	31,532

	For the Nine Months Ended March 27, 2022
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	275,809	$	161,817	$	91,106	$	65,863	$	3,587	$	598,182
Cost of sales		263,194		138,958		67,657		63,187		3,055		536,051
Gross profit		12,615		22,859		23,449		2,676		532		62,131
Segment depreciation expense		13,668		—		1,042		1,320		458		16,488
Segment Profit	$	26,283	$	22,859	$	24,491	$	3,996	$	990	$	78,619

	For the Nine Months Ended March 28, 2021
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	228,440	$	130,898	$	72,563	$	47,815	$	3,431	$	483,147
Cost of sales		205,691		112,639		49,375		46,318		3,034		417,057
Gross profit		22,749		18,259		23,188		1,497		397		66,090
Segment depreciation expense		13,909		—		1,050		1,321		489		16,769
Segment Profit	$	36,658	$	18,259	$	24,238	$	2,818	$	886	$	82,859

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

	For the Three Months Ended						For the Nine Months Ended
	March 27, 2022			March 28, 2021			March 27, 2022			March 28, 2021
Polyester	$	3,881		$	7,222		$	12,615		$	22,749
Asia		7,377			7,153			22,859			18,259
Brazil		5,983			10,598			23,449			23,188
Nylon		1,764			437			2,676			1,497
All Other		139			185			532			397
Segment gross profit		19,144			25,595			62,131			66,090
Selling, general and administrative expenses		14,389			14,581			39,025			38,570
Benefit for bad debts		(169	)		(184	)		(489	)		(1,330	)
Other operating (income) expense, net		(831	)		2,582			(2	)		4,236
Operating income		5,755			8,616			23,597			24,614
Interest income		(492	)		(159	)		(944	)		(471	)
Interest expense		709			885			2,140			2,589
Equity in earnings of unconsolidated affiliates		(41	)		(528	)		(385	)		(751	)
Recovery of non-income taxes, net		815			—			815			—
Income before income taxes	$	4,764		$	8,418		$	21,971		$	23,247

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