Business Segment Information

3 Months Ended

Oct. 02, 2022

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 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 October 2, 2022
	Americas			Brazil		Asia		Total
Net sales	$	107,644		$	38,879	$	32,996	$	179,519
Cost of sales		112,513			32,092		28,351		172,956
Gross (loss) profit		(4,869	)		6,787		4,645		6,563
Segment depreciation expense		5,480			470		—		5,950
Segment Profit	$	611		$	7,257	$	4,645	$	12,513

	For the Three Months Ended September 26, 2021
	Americas		Brazil		Asia		Total
Net sales	$	110,826	$	33,738	$	51,428	$	195,992
Cost of sales		101,640		23,798		44,457		169,895
Gross profit		9,186		9,940		6,971		26,097
Segment depreciation expense		5,075		383		—		5,458
Segment Profit	$	14,261	$	10,323	$	6,971	$	31,555

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

	For the Three Months Ended
	October 2, 2022			September 26, 2021
Americas	$	(4,869	)	$	9,186
Brazil		6,787			9,940
Asia		4,645			6,971
Segment gross profit		6,563			26,097
Selling, general and administrative expenses		11,773			12,670
Provision (benefit) for bad debts		174			(80	)
Other operating (income) expense, net		(689	)		256
Operating (loss) income		(4,695	)		13,251
Interest income		(547	)		(258	)
Interest expense		1,247			696
Equity in earnings of unconsolidated affiliates		(295	)		(280	)
(Loss) income before income taxes	$	(5,100	)	$	13,093

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