UNIFI Fiscal Q4 2026 Earnings: Gross Margin Rebounds to 9.9%

UNIFI (NYSE: UFI) reported fiscal Q4 2026 net sales of $144.2 million, up 4.1% from $138.5 million, while diluted EPS was a loss of $0.06 compared with earnings of $0.82 a year earlier. The EPS comparison was distorted by a prior-year asset-sale gain, while gross margin, adjusted EBITDA, and cash generation showed underlying operational improvement.

Core Earnings Results

The quarter’s main change was the return to positive gross profitability. Gross profit improved by $15.5 million, and gross margin rose 10.7 percentage points as cost reductions benefited the Americas segment, favorable pricing supported Brazil, and sales mix improved in Asia.

The decline in GAAP operating income and EPS does not reflect the same operational direction because fiscal Q4 2025 included a $35.8 million gain from a manufacturing facility sale, partly offset by $10.6 million of transition costs. On an adjusted basis, the net loss narrowed to $1.1 million from $10.6 million, while adjusted EBITDA turned positive.

Selling, general and administrative expenses declined 1.0% to $11.8 million, reflecting the company’s cost-reduction efforts.

Business and Segment Performance

Brazil was the primary source of consolidated revenue growth, with segment sales increasing approximately 17.8%. Americas sales were nearly flat, while Asia posted modest growth despite regional demand pressure.

Gross profit improved in all three segments. The Americas delivered the largest dollar improvement due to multi-year cost reductions, Brazil benefited from favorable pricing, and Asia gained from a better sales mix.

REPREVE Fiber products generated $40.2 million, representing 28% of quarterly net sales. UNIFI did not provide a year-over-year comparison for this product category.

Profitability, Cash Flow, and the Balance Sheet

UNIFI recorded $1.4 million of pretax income but a $2.6 million income tax provision, resulting in the $1.2 million GAAP net loss. Adjusted EBITDA of $8.2 million provides a clearer view of the operating turnaround because the prior-year comparison contained substantial asset-sale and transition items.

Cash flow improvement was more pronounced on a full-year basis. Fiscal 2026 operating cash flow reached $26.5 million, compared with cash use of $21.3 million in fiscal 2025. Capital expenditures fell to $5.0 million from $10.5 million, while inventories declined to $101.1 million from $122.9 million.

At June 28, 2026, cash and cash equivalents were $25.1 million. Debt principal declined to $92.4 million from $108.0 million, and net debt fell to $67.4 million from $85.3 million.

After the quarter ended, UNIFI agreed to sell certain non-strategic Americas real estate assets for $60.0 million in gross proceeds. The transaction had not yet closed, but the company intends to use the added financial flexibility to support debt reduction and strengthen the balance sheet, with no expected effect on customer service or daily operations.

Management’s View

CEO Eddie Ingle attributed the profitability and cash flow progress to cost reductions, operational optimization, and portfolio management, which management says have lowered UNIFI’s revenue break-even point.

Management expects fiscal 2027 sales and profitability to improve from fiscal 2026 as the company realizes full-year benefits from portfolio actions, cost containment, and operating improvements. No numerical ranges were provided.

For fiscal Q1 2027, management expects Brazil’s sales and profitability to improve, while Asia remains pressured by regional softness and geopolitical volatility. In the Americas, cost savings, stable demand, value-added products, and Beyond Apparel initiatives are expected to support higher profitability.

Recent Insider Transactions

The supplied insider data shows three reported purchases by director and greater-than-10% beneficial owner Kenneth G. Langone in late 2025. The purchases totaled approximately $347,515; the data did not provide the corresponding share quantities.

These transactions establish only that the purchases occurred; they do not by themselves indicate an outlook for UNIFI’s future performance.

Risks Investors Need to Watch

• Uneven regional demand: Customer ordering in the Americas and Asia remained subdued because of geopolitical, trade, and tariff-related uncertainty. Continued hesitation could limit the benefit of UNIFI’s lower cost base.
• Asia segment pressure: Management expects regional softness and geopolitical volatility to continue weighing on Asia during fiscal Q1 2027.
• Profitability remains incomplete: Gross margin and adjusted EBITDA improved, but UNIFI still reported a quarterly GAAP net loss and a fiscal 2026 net loss of $24.6 million. Sustaining positive operating results remains an important test of the turnaround.
• Debt and transaction execution: Net debt declined but remained $67.4 million at year-end. Further balance-sheet improvement partly depends on closing the planned $60.0 million real estate transaction and applying the resulting proceeds as intended.

Summary

UNIFI’s fiscal Q4 2026 results showed better underlying operations despite a weaker GAAP EPS comparison caused by the prior-year facility-sale gain. Cost reductions restored Americas gross profit, favorable pricing supported Brazil, and adjusted EBITDA turned positive. Investors’ next focus will be whether these margin gains can continue amid soft ordering in the Americas and Asia, and whether the planned real estate sale produces the expected balance-sheet improvement.