Unifi Q4 sales beat estimates as adjusted EBITDA turns positive
Unifi posted Q4 FY26 sales of $144.2 million, beating estimates, with adjusted EBITDA turning positive at $8.2 million. Brazil drove growth, while Americas saw margin improvements. A $60 million asset sale deal aims to further reduce net debt.
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Unifi, Inc. (NYSE: UFI) reported fourth-quarter fiscal 2026 net sales of $144.2 million, representing a 4% increase compared to the same period in fiscal 2025. The results beat the analyst consensus estimate of $139.7 million by 3.2%. The growth was primarily driven by higher sales volumes in the Brazil Segment, which partially offset tepid customer ordering patterns in the Americas and Asia Segments amid geopolitical and tariff-related uncertainty.
The company delivered a notable operational turnaround in profitability metrics. Gross profit rose to $14.3 million (a 9.9% gross margin) from a gross loss of $1.1 million (negative 0.8% margin) in the prior-year quarter. This expansion was fueled by multi-year cost reduction efforts in the Americas Segment and favorable pricing dynamics in Brazil. Consequently, adjusted EBITDA swung to a profit of $8.2 million from a loss of $4.1 million year-over-year.
On a per-share basis, Unifi reported quarterly losses of $(0.06), which met the analyst consensus estimate. This compares to losses of $(0.56) per share in the same period last year, reflecting an 89.3% improvement in reported earnings per share.
What the Numbers Show
A key divergence exists between GAAP net income and underlying operational performance due to non-recurring items in the prior year. While Unifi reported a GAAP net loss of $1.2 million for Q4 FY26, this compares to a net income of $15.5 million in Q4 FY25. However, the prior-year profit was heavily influenced by a $35.8 million gain on the sale of a manufacturing facility. Excluding this one-time gain and adjusting for transition costs, the company’s core operations generated significantly stronger cash flows, evidenced by the swing in adjusted EBITDA. This highlights that the current quarter’s results reflect genuine operational improvement rather than asset sales.
Balance Sheet and Cash Flow Signals
Unifi strengthened its balance sheet position during the period. Net debt decreased to $67.4 million at June 28, 2026, down from $85.3 million at the end of fiscal 2025. Total debt principal fell by $15.6 million to $92.4 million.
Cash generation improved markedly for the full fiscal year. Cash provided by operating activities increased to $26.5 million in fiscal 2026, a reversal from a cash burn of $21.3 million in fiscal 2025. Capital expenditures were disciplined, dropping 52.4% to $5.0 million from $10.5 million in the prior year. Following the quarter, the company entered into an agreement to sell non-strategic real estate assets in the Americas for $60.0 million in gross proceeds, which management expects will further support debt reduction. Management noted that the transaction is expected to have minimal tax leakage due to existing net operating losses (NOLs).
Segment Performance
- Americas: Sales declined slightly to $84.4 million from $85.0 million year-over-year, but gross profit improved by $8.6 million due to cost reductions. This marks the second consecutive quarter of positive gross profit in the segment.
- Brazil: Sales rose to $33.9 million from $28.8 million, with gross profit increasing by $6.4 million driven by favorable pricing and higher volumes.
- Asia: Sales increased modestly to $25.8 million from $24.7 million, with a slight gross profit improvement of $0.5 million due to sales mix changes.
Strategic Initiatives and Outlook
Management emphasized its focus on sustainable growth, leveraging its Repreve brand, and expanding its Beyond Apparel initiatives, which include applications in packaging, military, and carpet sectors. The company highlighted positive momentum in its resin business, primarily used in packaging, as imports were muted due to tariffs. Additionally, the carpet business saw a meaningful increase in volumes as local supply chains became more critical.
For fiscal 2027, Unifi expects sales and profitability to improve as it realizes full-year benefits from portfolio management and cost containment initiatives. Management anticipates continued pressure in the Asia Segment due to regional softness, while the Americas Segment should see increased profitability from stable demand and margin-accretive revenues from value-added products. The company plans to allocate between $7 million and $9 million for maintenance and redundancy projects in fiscal 2027.
| Metric | Q4 FY26 | Q4 FY25 | Change |
|---|---|---|---|
| Net Sales | $144.2 million | $138.5 million | +4.1% |
| Gross Profit | $14.3 million | $(1.1) million | +$15.4 million |
| Adjusted EBITDA | $8.2 million | $(4.1) million | +$12.3 million |
| Net Debt | $67.4 million | $85.3 million | -$17.9 million |
How will the $60 million sale of non-strategic real estate assets impact Unifi's debt-to-equity ratio and credit rating in the near term?
What specific strategies is Unifi employing to mitigate the anticipated continued pressure in the Asia Segment amid regional softness?
To what extent can the growth in Beyond Apparel initiatives, such as packaging and military applications, offset potential demand declines in traditional apparel markets?
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