NYSE: UFI

•
The Americas Segment primarily manufactures and sells recycled and synthetic textile products to yarn manufacturers, knitters and weavers that produce yarn and/or fabric for the apparel, hosiery, home furnishings, automotive, 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 recycled and synthetic textile products to knitters and weavers that produce fabric for the apparel, home furnishings, automotive, industrial, and other end-use markets principally in Brazil. The Brazil Segment includes a manufacturing location and sales offices in Brazil.

•
The Asia Segment primarily sources recycled and synthetic textile products from third party suppliers and sells to yarn manufacturers, knitters, and weavers principally in Asia and Europe that produce fabric for the apparel, automotive, home furnishings, industrial, and other end-use markets. The Asia Segment has no manufacturing assets and includes sales offices in China, Turkey, Hong Kong, and India.

Other information for UNIFI’s reportable segments is provided in Note 24, “Business Segment Information,” to the accompanying consolidated financial statements.

Strategic Overview and Operating Results

UNIFI is committed to investing strategically and synergistically in:

•
accelerating innovation and high-quality manufacturing processes;

•
expanding the REPREVE® brand;

•
growing market share in our major textile regions; and

•
penetrating new markets and end-uses, particularly beyond apparel.

Our supply chain has been developed and enhanced in multiple regions around the globe, allowing us to deliver a diverse range of fibers and polymers to key customers in the markets we serve, especially apparel. These textile products are supported by quality assurance, product development, product and fabric certifications, hangtags, and co-marketing along with technical and customer service teams across UNIFI’s operating subsidiaries. We have developed this successful operating platform by improving operational and business processes and deriving value from sustainability-based initiatives, including polyester and nylon recycling.

We believe that further commercial expansion will require a continued stream of new technology and innovation that generates products with meaningful consumer benefits. Along with our recycled platform, UNIFI has significant yarn technologies that provide optimal performance characteristics for today’s marketplace, including water repellency, flame retardation, soil release, enhanced color-fastness achieved with less water use, and protection from ultra-violet rays, among other attributes. To achieve further growth, UNIFI remains focused on innovation, bringing to market the next wave of fibers and polymers for tomorrow’s applications. As we invest and grow, sustainability remains at our core. We believe that increasing the awareness for recycled solutions in applications across fibers and polymers and furthering sustainability-based initiatives with like-minded brand partners will be key to our future success. We also believe that our manufacturing processes and our technical knowledge and capabilities will allow us to grow market share and develop new textile programs with new and existing customers. Ultimately, combining leading-edge innovation with our prominent, high-quality brand and agile regional business model will allow for underlying sales and profitability growth.

2

Fiscal 2026 Financial Performance

Fiscal 2026 represented a year of significant operational improvement for UNIFI, despite escalating geopolitical tensions contributing to volatility in petroleum markets. While global demand conditions remained challenging and customer purchasing patterns were impacted by macroeconomic uncertainty, trade disruptions, and tariff-related concerns, UNIFI executed a series of strategic actions that materially improved profitability, cash generation, and balance sheet strength.

Throughout fiscal 2026, management remained focused on initiatives within the Fiscal 2026 Profit Improvement Plan and the consolidation of Americas yarn manufacturing operations, including organizational cost reductions, operating efficiency improvements, working capital management, and optimization of the Company's global cost structure. These actions significantly reduced UNIFI’s revenue breakeven level and improved our ability to generate earnings and cash flow from a lower sales base.

Although net sales declined compared to fiscal 2025 due to cautious customer ordering patterns and continued market volatility, profitability improved substantially. Gross margins expanded meaningfully as lower manufacturing costs, improved operational execution, and the benefits of restructuring initiatives more than offset lower volumes. Selling, general and administrative expenses (“SG&A”) also declined as a result of disciplined cost management and organizational restructuring.

The Americas Segment demonstrated the most significant improvement, with cost reductions and manufacturing optimization efforts driving a return to positive gross profit despite lower revenues.

The Brazil Segment continued to provide stable operating performance, along with favorable foreign currency impacts, despite competitive import pricing pressures throughout the year.

The Asia Segment maintained profitability and advanced customer adoption of innovative and sustainable product offerings despite weak demand. The Asia Segment is better able to withstand volatility in product demand due to its asset-light model.

A key accomplishment during fiscal 2026 was UNIFI’s strong cash flow generation, which improved significantly as management maintained a sharp focus on inventory management, working capital efficiency, and capital spending discipline. This cash generation enabled meaningful debt reduction and strengthened the balance sheet throughout the fiscal year. Net debt declined substantially, providing increased financial flexibility and improving UNIFI's overall financial position.

Innovation remained a priority, including the commercialization of new differentiated performance yarn platforms and continued expansion of the REPREVE® portfolio. Sustainable and recycled product offerings remained an important component of UNIFI’s growth strategy and customer engagement efforts.

Looking ahead to fiscal 2027, management believes UNIFI is better positioned than at any point during the recent industry downturn. UNIFI’s lower cost structure, streamlined manufacturing footprint, stronger balance sheet, and continued focus on innovation provide a foundation for future growth.

REPREVE®

In the early 2000s, by recycling our own production waste into useful polyester fibers, we took the first steps toward building an important supply chain with a focus on sustainability and environmental responsibility. After nearly two decades, our REPREVE brand has become the quintessential recycled fiber of choice for brand, retail, and textile partners around the globe. REPREVE is most commonly offered in the following fiber forms: polyester staple fiber, polyester filament, nylon staple fiber, and nylon filament, comprising our REPREVE Fiber platform. We also sell REPREVE Chip, which is a recycled polyester resin product. Beyond the high quality, versatility, and breadth of application that REPREVE offers, UNIFI combines transparency, traceability, and certification for REPREVE products to support our customers’ own sustainability narratives.

REPREVE is our flagship and fastest growing brand. As part of our efforts to expand consumer brand recognition of REPREVE, UNIFI has developed recycling-focused sponsorships with various brand partners and other entities that span across sporting, music, and outdoor events. The increasing success and awareness of the REPREVE brand continues to provide new opportunities for growth, allowing for expansion into new end-uses and markets for REPREVE, as well as continued growth of the brand with current customers. This has driven traction with global brands and retailers who obtain value and lasting consumer interest from the innovation and sustainability aspects that REPREVE provides. Expanding sales of REPREVE is an important component of our business strategy, and we expect to achieve improved margins and deeper relationships with customers accordingly.

The primary metric for tracking growth of the REPREVE brand is REPREVE Fiber sales. REPREVE Fiber represents UNIFI's collection of fiber products on its recycled platform, with or without added technologies. Of our consolidated net sales in fiscal 2026, 2025, and 2024, REPREVE Fiber sales comprised 30%, 31%, and 32%, or $157,428, $174,855, and $188,517, respectively. REPREVE Fiber sales decreased primarily due to lower customer demand, cautious purchasing patterns, and ongoing competitive pressures in the recycled fiber market.

3

Capital Investments

Fiscal 2021 through 2023 capital investments increased in connection with our planned investment of approximately $100,000 into the Americas and Brazil Segments for new eAFK Evo texturing machinery that has significant efficiency, productivity, and flexibility benefits over our legacy equipment. We are encouraged by the performance metrics surrounding the eAFK Evo texturing machines currently operating in our facilities, and we expect these upgrades to generate meaningful investment returns in the future when product demand recovers. Due to the weak demand environment in fiscal 2023 and 2024, UNIFI negotiated two contract modifications with the equipment vendor. At that time, approximately 75% of the project had been completed in the Americas and 100% had been completed in Brazil. The contract modifications allowed UNIFI to delay the remaining equipment purchases and installation activities until September 2025. In the fourth quarter of fiscal 2025, UNIFI terminated the overall contract in exchange for the forfeiture of $1,448 in deposits which is included in Restructuring costs within the Consolidated Statements of Operations. These actions allow for (i) improved short- and mid-term liquidity in light of the current subdued levels of sales and facility utilization and (ii) a better matching of future capital expenditures with the consolidation of UNIFI's yarn manufacturing operations. In fiscal 2026, we continued to carefully manage capital expenditures to preserve cash.

In fiscal 2027, we expect to invest between $7,000 and $9,000 in capital projects, primarily relating to routine annual maintenance capital expenditures. We will continue to evaluate the level of capital investment required to support the needs of our customers and allocate our resources accordingly as we expand our operations outside of the Americas.

Share Repurchases

In addition to capital investments and debt retirement, UNIFI may utilize excess cash for strategic share repurchases. On October 31, 2018, UNIFI announced that the Company's Board of Directors (the “Board”) approved a share repurchase program (the “2018 SRP”) under which UNIFI is authorized to acquire up to $50,000 of its common stock. Under the 2018 SRP, purchases may be made from time to time in the open market at prevailing market prices or through private transactions or block trades. The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements, and other factors. The share repurchase authorization is discretionary and has no expiration date.

As of June 28, 2026, UNIFI had repurchased 701 shares of its common stock at an average price of $15.90 per share, none of which occurred in fiscal 2026, leaving $38,859 available for repurchases under the 2018 SRP. UNIFI will continue to evaluate opportunities to use excess cash flows from operations or existing borrowings to repurchase additional stock, while maintaining sufficient liquidity to support its operational needs and to fund future strategic growth opportunities.

Developments in Principal Markets

Americas

Our operations in the U.S., El Salvador, and Colombia operate under the Dominican Republic—Central America Free Trade Agreement (“CAFTA-DR”) and the United States-Mexico-Canada Agreement (“USMCA”). Prior to the establishment of the USMCA, we benefited from a similar agreement known as the North American Free Trade Agreement (“NAFTA”).

Throughout fiscal 2023, we experienced adverse pressure from rising input costs, competitive headwinds, and weakening manufacturing productivity. In addition, in fiscal 2024, 2025, and 2026, the Americas Segment experienced lower volumes as a result of lower global demand in connection with the inventory management of major brands and retailers. However, beginning in the second half of fiscal 2026, we experienced an improvement in overall sales, primarily due to our increased commercial efforts and portfolio diversification. Looking ahead, we believe our Americas business remains well-positioned to capture long-term growth opportunities.

Brazil

UNIFI’s Brazilian operations play a key role in our strategy. This segment is primarily impacted by (i) price pressures from imported fiber, fabric, and finished goods (similar to our U.S. operations), (ii) the inflation rate in Brazil, and (iii) changes in the value of the Brazilian Real (“BRL”). Economic and political volatility remain challenging conditions in South America, despite our strong performance in recent years. UNIFI continues to (i) aggressively pursue mix enrichment and market share by working with customers to develop programs using our differentiated products, including REPREVE, and (ii) implement process improvements and manufacturing efficiency plans to help lower per-unit costs. The growth of the REPREVE brand in Brazil continues to be a focus as the segment's sales do not include a significant amount of REPREVE. In addition, our installation of eAFK Evo machinery in Brazil has been highly successful in generating manufacturing efficiencies and the associated finished goods have been highly regarded by customers.

Asia

UNIFI’s Asia operations remain an important part of our strategy due to the significant production capacity that exists in Asia, which enhances our ability to service customers with global supply chains. Competition in the Asia region remains high; however, interest and demand for UNIFI’s products in Asia have helped support strong underlying sales volumes in recent years. We are encouraged by programs undertaken with key brands and retailers that benefit from the diversification and innovation of our global portfolio. During fiscal 2025 and 2026, customer-demand headwinds resulted in depressed volumes in Asia and in the second half of fiscal 2025 and 2026, tariffs placed upon many foreign countries resulted in additional demand volatility due to the recent actions taken by the U.S. during trade-related negotiations.

4

While macroeconomic conditions, trade policy developments, and customer demand patterns remain uncertain, UNIFI expects to continue benefiting from the structural cost savings achieved through its profit improvement initiatives. Management remains focused on driving additional operating efficiencies, expanding higher-margin innovative product platforms, increasing REPREVE® penetration, generating positive free cash flow, and further strengthening the balance sheet. The actions taken during fiscal 2026 have fundamentally improved UNIFI's operating profile and positioned UNIFI to generate stronger profitability and cash flow as market conditions improve.

Industry Overview

UNIFI operates in the textile industry and, within that broad category, the respective markets for yarns, fabrics, fibers, and end-use products, such as apparel and hosiery, automotive, industrial, medical, and home furnishings, among others. Even though the textile industry is global, there are several distinctive regional or other geographic markets that often shape the business strategies and operations of participants in the industry. Because of free trade agreements and other trade regulations entered into by the U.S. government, the U.S. textile industry, which is otherwise a distinctive geographic market on its own, is often considered in conjunction with other geographic markets or regions in North, South, and Central America.

According to data compiled by PCI WoodMackenzie, a global leader in research and analysis for the polyester and raw material markets, global demand for polyester yarns has grown steadily since 1980. Polyester historically has accounted for approximately 50% to 60% of global fiber consumption, and nylon has historically accounted for an estimated 5% to 10%. Due to the higher cost of nylon, the industry may transition certain products from nylon to polyester. The polyester and nylon fiber sectors together have accounted for approximately 55% to 65% of North American textile consumption based on recent history.

According to the National Council of Textile Organizations, the U.S. textile and apparel industry’s total shipments were approximately $60.9 billion for calendar 2025 as the U.S. textile and apparel industry exported nearly $26.9 billion of textile and apparel products. The U.S. textile industry remains a large manufacturing employer.

Trade Regulation and Rules of Origin

Trade policies, free trade agreements, duty structures, and rules of origin are important factors affecting UNIFI’s competitive position, particularly within the Americas Segment. Imports into the U.S. of finished apparel categories that utilize polyester and nylon yarns generally carry duty rates ranging from 16% to 32%; however, imports of fabric and finished goods from countries outside free trade agreements or trade preference programs have increased significantly over time due to lower overseas operating costs, foreign government subsidization, increased overseas sourcing by U.S. retailers, China’s entry into the World Trade Organization, and the elimination of textile and apparel quotas.

Regional free trade agreements (“Regional FTAs”), including the regions covered by the Americas Segment and the Colombia and Peru free trade agreements, provide meaningful duty-free advantages for apparel made from qualifying regional fibers, yarns, and fabrics under “yarn forward” rules of origin. These requirements are significant to UNIFI because the Company is the largest filament yarn manufacturer, and one of the few producers of qualifying synthetic yarns, in the regions covered by these agreements. As a result, UNIFI’s ability to supply Compliant Yarns represents an important competitive advantage for customers seeking eligibility for duty-free treatment.

The USMCA, adopted by the U.S. in calendar 2020, preserved important rules of origin for textile and apparel trade in the region and closed several loopholes under NAFTA that previously allowed certain non-originating inputs, including sewing thread, pocketing, and narrow elastic fabrics. In addition, the Berry Amendment requires certain textile and apparel articles purchased by the U.S. Department of Defense to be manufactured in the U.S. and to consist of yarns and fibers produced in the U.S. UNIFI believes it is the largest producer of polyester and nylon filament yarns for Berry Amendment compliant purchasing programs.

UNIFI refers to fibers sold under specific rules of origin requirements pursuant to the Regional FTAs and the Berry Amendment as “Compliant Yarns.” Approximately half of UNIFI’s sales within the Americas Segment are sold as Compliant Yarns, making these trade and compliance programs an important component of the Company’s regional business model and customer value proposition.

UNIFI believes that rules of origin, duty-free cost advantages, Berry Amendment requirements, and customer demand for supplier responsiveness and improved inventory turns support the continued presence of a meaningful textile supply chain in the Americas. As one of the few significant producers of Compliant Yarns under the Regional FTAs, UNIFI is positioned to leverage its qualifying status to support regional and domestic fabric producers that ship products into the region.

Recent antidumping and countervailing duties on polyester textured yarn imports from certain countries further underscore the importance of trade policy to UNIFI’s competitive position, particularly in Americas Segment markets. Accordingly, imports from the following countries have been assessed additional duties:

•
China of 32% or more,

•
India of 7% or more,

•
Indonesia of 7% or more,

•
Malaysia of 8%,

•
Thailand of 14% or more, and

•
Vietnam of 2% or more.

5

While the short-term and long-term impacts are not yet known, UNIFI expects these duty rates to play a significant role in helping normalize the competitive position of its yarns in the U.S. market relative to imported yarns from those countries.

Competition

The industry in which UNIFI operates is global, highly competitive, and subject to significant pricing, cost, and supply chain pressures. UNIFI competes both as a global yarn producer and as an important participant in regional textile supply chains, where customer purchasing decisions are influenced by product quality, reliability, speed, innovation, sustainability attributes, and overall cost competitiveness. For sales of Compliant Yarns, UNIFI competes with a limited number of foreign and domestic producers of polyester and nylon yarns. For sales of non-Compliant Yarns, UNIFI competes with a broader group of foreign and domestic producers capable of meeting customer specifications for quality, reliability, and delivery performance.

UNIFI’s competitive position is also affected by imports of textile, apparel, and hosiery products, which can adversely impact demand for the Company’s polyester and nylon products in certain markets. Several foreign competitors benefit from structural cost advantages, including lower wages, raw material costs, capital costs, and favorable foreign currency exchange rates against the U.S. Dollar, any of which may place pressure on UNIFI’s margins, pricing flexibility, and related regional supply chains. In addition, while competitors have historically focused on high-volume commodity products, many are increasingly targeting specialty products, including areas where UNIFI has historically generated higher margins and differentiated customer value.

UNIFI’s major competitors in the Americas region for polyester yarns include Aquafil O'Mara; United Textiles of America S. de R.L. de C.V.; NanYa Plastics Corp. of America; and C S Central America S.A. de C.V. In fiscal 2024, AKRA, S.A. de C.V., a major competitor, closed its polyester manufacturing facility in Monterrey, Mexico. UNIFI’s major competitors for nylon yarn sales in the U.S. include Sapona Manufacturing Company, Inc. and McMichael Mills, Inc.

In Brazil, UNIFI is the only domestic producer of textured polyester and primarily competes with traders of imported yarns and fibers. In fiscal 2024, Petroquimica Suape, the Company’s largest domestic competitor in Brazil, halted textured yarn production, which provides UNIFI with an opportunity to strengthen its market position in the region.

UNIFI’s operations in Asia face competition from numerous yarn manufacturers, and identifying each competitor is not feasible due to the size and fragmentation of the regional market. However, UNIFI’s Asia portfolio is supported by its specialty and recycled product offerings and a global sourcing and support model, which help differentiate the Company in a highly competitive marketplace. Globally, competitors for UNIFI’s REPREVE products include recycled brands from Far Eastern New Century, Tiejin, Radici, and Polygenta.

Raw Materials, Suppliers and Sourcing

The primary raw material supplier for the Americas Segment of virgin Chip and POY is NanYa. For the Brazil Segment, Reliance Industries, Ltd. is the primary supplier of POY. The primary suppliers of nylon raw materials for the Americas Segment are UNF America, LLC (“UNFA”); and The LYCRA Company. UNFA is a joint venture owned 50% by UNIFI. Currently, there are multiple domestic and foreign suppliers available to fulfill UNIFI’s sourcing requirements for its recycled products. The majority of plastic bottles we utilize in the U.S. are obtained in open-market transactions from recycling companies and municipalities throughout the U.S., while our Asian subsidiaries source recycled materials from various countries and entities throughout Asia.

For its operations in the U.S., UNIFI produces and buys certain of its raw material fibers for Compliant Yarns from a variety of sources in the U.S., UNIFI produces a portion of its Chip requirements in its REPREVE Recycling Center and purchases the remainder of such requirements from external suppliers for use in its domestic spinning facility to produce POY. In addition, UNIFI purchases nylon and polyester products for resale from various suppliers. Although UNIFI does not generally have difficulty meeting its raw material requirements, UNIFI has, in the past, experienced interruptions or limitations in the supply of certain raw materials.

UNIFI’s bottle processing facility in Reidsville, North Carolina provides a high-quality source of Flake for the REPREVE Recycling Center as well as for sale to external parties. Combined with recent technological advancements in recycling, we believe the Flake produced at the bottle processing facility enhances our ability to grow REPREVE into other markets, such as nonwovens, carpet fiber, and packaging.

The prices of the principal raw materials used by UNIFI continuously fluctuate, and it is difficult or impossible to predict trends or upcoming developments. In any event, UNIFI monitors these dynamic factors closely and does not currently engage in hedges of polyester or nylon raw materials.

Products, Technologies, and Related Markets

Our virgin and recycled products sold across all geographies range from specialty, value-added, to commodity. We provide products to a variety of end-use markets, principally apparel, industrial, furnishings, and automotive.

We estimate our consolidated net sales for fiscal 2026 were distributed across our primary end markets as follows:

•
Apparel (including hosiery and footwear) represented approximately 54% of our consolidated net sales.

•
Industrial represented approximately 13% of our consolidated net sales, and includes medical, belting, tapes, filtration, ropes, protective fabrics, and awnings.

•
Furnishings (including both contract and home furnishings) represented approximately 13% of our consolidated net sales, and is largely dependent upon the housing market, which, in turn, is influenced by consumer confidence and credit availability.

•
Automotive represented approximately 6% of our consolidated net sales.

•
All other markets represented approximately 14% of our consolidated net sales.

6

In addition to the above, UNIFI combines its research and development efforts with the demands of customers and brand partners to develop innovative technologies that enhance yarn characteristics. Application of these technologies allows for a diversity of benefits, including: water repellency, flame retardation, soil release, enhanced color-fastness achieved with less water use, and protection from ultra-violet rays, among other attributes.

As we continue to diversify our portfolio beyond apparel and pursue new end markets, we expect to increase margin accretive sales and improve facility utilization. Indicating our expanded product portfolio and enhanced technological capabilities, we introduced new products based on the Textile Takeback platform and Thermaloop insulation during fiscal 2025 and 2026.

Customers

UNIFI’s Americas Segment, Brazil Segment, and Asia Segment serve approximately 430, 370, and 510 customers, respectively, all in a variety of geographic markets. UNIFI’s products are manufactured according to customer specifications and are shipped based upon customer order requirements. Customer payment terms are generally consistent with prevailing industry practices for the geographies in which we participate.

UNIFI’s consolidated net sales are not materially dependent on a single direct customer and no single direct customer accounts for 10% or more of UNIFI’s consolidated net sales. In fiscal 2026, Milliken & Company comprised 12% of the Americas Segment's sales. UNIFI’s top 10 direct customers accounted for approximately 29% of consolidated net sales for fiscal 2026 and approximately 30% of receivables as of June 28, 2026. However, UNIFI’s consolidated net sales are dependent on demand from a relatively small number of brand partners.

Sales and Marketing

UNIFI employs an internal sales force operating out of sales offices primarily in the U.S., Brazil, China, El Salvador, Colombia, Turkey, India, and Europe. UNIFI also relies on independent sales agents for sales in several other countries. UNIFI seeks to create strong customer relationships and to build and strengthen those relationships throughout the supply chain. Through frequent communications with customers, partnering in product development, and engaging key downstream brands and retailers, UNIFI has created significant pull-through sales and brand recognition for its products. For example, UNIFI works with brands and retailers to educate and create demand for its products, including recent engagements involving REPREVE, REPREVE Takeback™, ThermaLoop™ insulation, and other performance technology products at multiple events and venues in the U.S. and globally. UNIFI then works with key fabric mill partners to develop specific fabrics for those brands and retailers utilizing UNIFI products. In many of these regards, UNIFI draws upon and integrates the resources of its innovation and research and development personnel. In addition, UNIFI is enhancing co-branding activations with integrated point-of-sale and online marketing with popular brands and retailers to enable consumers to find REPREVE and other performance technology products in multiple retail channels. Our sales and marketing strategy leverages a multi-channel digital approach, including targeted social media collaborations and campaigns, dynamic website engagement, trade presence, and strategic media outreach, to enhance brand visibility, drive customer acquisition, and support product conversion across key markets. Based on the establishment of many commercial and branded programs, this strategy has been successful for UNIFI.

Product Customization and Manufacturing Processes

UNIFI uses advanced production processes to manufacture its high-quality products cost-effectively in North America, Central America, and Brazil and transfers relevant technical knowledge to its asset light operations in Asia for manufacture with trusted supply chain partners. One component of UNIFI's unique competitive position is concentrated geographic presence; our facilities, resources, and people operate in the primary yarn producing regions of the world, allowing us to maintain proximity to brands and textile partners that value our products and require advanced manufacturing or supply chain management.

Additional processing of UNIFI’s polyester POY includes texturing, dyeing, twisting, beaming, draw winding, and covering. The texturing process involves the use of high-speed machines to draw, heat, and false-twist POY to produce yarn with different physical characteristics, depending on its ultimate end-use. Texturing gives the yarn greater bulk, strength, stretch, consistent dye-ability, and a softer feel, thereby making it suitable for use in the knitting and weaving of fabric. Solution dyeing and package dyeing allow for matching of customer-specific color requirements for yarns sold into various markets. Twisting incorporates real twist into filament yarns, which can be sold for a variety of uses, such as sewing thread, home furnishings, and apparel. Beaming places both textured and covered yarns onto beams to be used by customers in warp knitting and weaving applications. The draw winding process utilizes heat and draws POY to produce mid-tenacity, flat yarns. Lastly, covering operations utilize a spandex core to produce yarns with more stretch, compression, or comfort.

UNIFI’s subsidiaries in Asia offer the same high-quality and innovative products and technologies through contract manufacturing arrangements with local manufacturers. This asset-light model allows for seamless integration of our products into the global supply chains of our customers. As we expand our Asian operations to meet the needs of our global customers, we will continue to leverage the asset-light model where the existing infrastructure can accommodate our highly technical processes, while continually evaluating the need for additional UNIFI assets in response to ever-changing market dynamics.

7

Research and Development

UNIFI employs research and development personnel, primarily in the U.S., who work closely with UNIFI’s customers, brand partners, and others to develop a variety of new yarns as well as improvements to the performance properties of existing yarns and fabrics. Among other things, UNIFI evaluates trends and uses the latest technology to create innovative yarns that meet the needs of evolving consumer preferences. Most of UNIFI’s branded yarns, including its flagship REPREVE brand, were derived from its research and development initiatives. UNIFI also includes, as part of its research and development initiatives, the use of continuous improvement methodologies to increase its manufacturing and other operational efficiencies, both to enhance product quality and to derive cost savings.

For fiscal 2026, 2025, and 2024, UNIFI incurred $7,707, $8,750, and $9,599, respectively, in costs for research and development (including employee costs).

Intellectual Property

UNIFI has numerous trademarks registered in the U.S. and in other countries and jurisdictions around the world. Due to its current brand recognition and potential growth opportunities, UNIFI believes that its portfolio of registered REPREVE trademarks is its most significant trademark asset. Ownership rights in registered trademarks typically do not expire if the trademarks are continued in use and properly protected under applicable law.

UNIFI licenses certain trademarks, including Dacron® and Softec™, from Invista S.a.r.l. (“INVISTA”).

UNIFI also employs its innovative manufacturing know-how, methods, and processes to produce and deliver proprietary solutions to customers and brand partners. UNIFI relies on the copyright and trade secret laws of the U.S. and other countries, as well as nondisclosure and confidentiality agreements, to protect these rights.

Human Capital

As of June 28, 2026, UNIFI had approximately 2,400 employees. The number of employees in each of the Americas, Brazil, and Asia Segments and the corporate office were approximately 1,430, 800, 90, and 80, respectively, at June 28, 2026. In fiscal 2026, UNIFI implemented additional cost-saving initiatives that included reducing variable manufacturing costs across labor, spend, and support functions, while also eliminating salaried positions in the U.S. While employees of our Brazil Segment are unionized, none of the labor forces employed by UNIFI’s domestic or other foreign subsidiaries are currently covered by a collective bargaining agreement. UNIFI believes the Company has a good relationship with its employees.

We believe in the importance of the retention, growth, and development of our employees. UNIFI endeavors to offer competitive compensation and benefits packages to our employees, as well as professional development opportunities to cultivate talent throughout the organization. We focus on employee health and safety initiatives, with thorough training and monitoring practices to enhance workplace safety. We also value people and ideas from varying backgrounds and are constantly striving to create a more diverse workforce and inclusive organization.

Geographic Data

Geographic information reported in conformance with U.S. generally accepted accounting principles (“GAAP”) is included in Note 24, “Business Segment Information,” to the accompanying consolidated financial statements. Information regarding risks attendant to UNIFI’s foreign operations is included in “