UFI

Many of the factors that affect UNIFI’s business and operations involve risk and uncertainty. The factors described below are some of the risks that could materially negatively affect UNIFI’s business, financial condition, results of operations, and cash flows. You should consider all such risks in evaluating UNIFI or making any investment decision involving UNIFI. Strategic Risks UNIFI faces intense competition from a number of domestic and foreign yarn producers and importers of foreign-sourced fabric, apparel, and other textile products. Because UNIFI and the supply chains in which UNIFI conducts its business do not typically operate on the basis of long-term contracts with textile customers or brand partners, these competitive factors could cause UNIFI’s customers or brand partners to shift rapidly to other producers. UNIFI competes not only against domestic and foreign yarn producers, but also against importers of foreign-sourced fabric, apparel, and other textile products into the U.S. and other countries in which UNIFI does business, particularly in Brazil with respect to commodity yarn products. The primary competitive factors in the textile industry include price, quality, product styling, performance attributes and differentiation, brand reputation, flexibility and location of production and finishing, delivery time, and customer service. The needs of certain customers and brand partners and the characteristics of particular products determine the relative importance of these various factors. A large number of UNIFI’s foreign competitors have significant competitive advantages that may include lower labor and raw material costs, production facilities in locations outside UNIFI’s existing supply chain, government subsidies, and favorable foreign currency exchange rates against the USD. If any of these advantages increase, if new and/or larger competitors emerge in the future, or if UNIFI’s brand reputation is detrimentally impacted, UNIFI’s products could become less competitive, and its sales and profits may decrease as a result. In particular, devaluation of the Chinese currency against the USD could result in UNIFI’s products becoming less competitive from a pricing standpoint and/or could result in the Americas region losing market share to Chinese imports, thereby adversely impacting UNIFI’s sales and profits. While foreign competitors have traditionally focused on commodity production, entities are now increasingly focused on value-added products and unbranded recycled products. Competition from unbranded recycled yarns has increased, and has resulted in market share losses for our flagship REPREVE brand. UNIFI may not be able to continue to compete effectively with foreign-made textile and apparel products, which would materially adversely affect its business, financial condition, results of operations, or cash flows. Similarly, to maximize their own supply chain efficiency, customers and brand partners sometimes request that UNIFI’s products be produced and sourced from specific geographic locations that are in close proximity to the customer’s fabric mills or that have other desirable attributes from the customer’s perspective. These locations are sometimes situated outside the footprint of UNIFI’s existing global supply chain. If UNIFI is unable to move production based on customer requests or other shifts in regional demand, we may lose sales and experience an adverse effect on our business, financial condition, results of operations, or cash flows. Due to the uncertain economic and regulatory environment with regards to China, certain customers and brand partners have shifted their supply chains from China to other countries in the region. If customers and brand partners continue to move their supply base from China, this would have a negative impact on UNIFI’s profitability in a geographic location where we have made a significant investment in people and the manufacturing partners that make up our supply chain. A significant portion of our sales is dependent upon demand from a few large brand partners. UNIFI’s strategy involves the sale of products and solutions to other yarn manufacturers and knitters and weavers (UNIFI’s direct customers) that produce yarn and/or fabric for brands and retailers in the apparel, hosiery, home furnishings, automotive, industrial, medical, and other end-use markets (UNIFI’s indirect customers). We sometimes refer to these indirect customers as “brand partners.” Although we generally do not derive revenue directly from our brand partners, sales volumes to our direct customers are linked with demand from our brand partners because our direct sales generally form a part of our brand partners’ supply chains. A significant portion of our overall sales is tied to ongoing programs for a limited number of brand partners. Our future operating results depend on both the success of our largest brand partners and on our success in diversifying our products and our indirect customer base. Because we typically do not operate on the basis of long-term contracts, our customers and brand partners can cease incorporating our products into their own with little notice to us and with little or no penalty. The loss of a large brand partner, and the failure to add new customers to replace the corresponding lost sales, would have a material adverse effect on our business, financial condition, results of operations, and cash flows. 11 Significant price volatility of UNIFI’s raw materials and rising energy costs may result in increased production costs. UNIFI attempts to pass such increases in production costs on to its customers through responsive price increases. However, any such price increases are effective only after a time lag that may span one or more quarters, during which UNIFI and its margins are negatively affected. Petroleum-based chemicals and recycled plastic bottles comprise a significant portion of UNIFI’s raw materials. The prices for these products and related energy costs are volatile and dependent on global supply and demand dynamics, including geo-political risks. While UNIFI enters into raw material supply agreements from time to time, these agreements typically provide index pricing based on quoted market prices. Therefore, supply agreements provide only limited protection against price volatility. UNIFI attempts to pass on to its customers increases in raw material costs, but at times it cannot. When it can, there is typically a time lag that adversely affects UNIFI's margins during one or more quarters. Certain customers are subject to an index-based pricing model in which UNIFI’s sales prices are adjusted based on the change in the cost of certain raw materials in the prior quarter. Pricing adjustments for other customers must be negotiated independently. In ordinary market conditions in which raw material price increases have stabilized and sales volumes are consistent with traditional levels, UNIFI has historically been successful in implementing price adjustments within one to two fiscal quarters of the raw material price increase for its index priced customers and within two fiscal quarters of the raw material price increase for its non-index priced customers. UNIFI has lost in the past (and expects that it may lose in the future) customers to its competitors as a result of price increases. In addition, competitors may be able to obtain raw materials at a lower cost due to market regulations that favor local producers in certain foreign locations where UNIFI operates, and certain other market regulations that favor UNIFI over other producers may be amended or repealed. Additionally, inflation can have a long-term impact by increasing the costs of materials, labor, and/or energy, any of which costs may adversely impact UNIFI’s ability to maintain satisfactory margins. If UNIFI is not able to pass on such cost increases to customers in a timely manner (or if it loses a large number of customers to competitors as a result of price increases), the result could be material and adverse to its business, financial condition, results of operations, or cash flows. Depending on the price volatility of petroleum-based inputs, recycled bottles, and other raw materials, the price gap between virgin Chip and recycled Chip could make virgin raw materials more cost-effective than recycled raw materials, which could result in an adverse effect on UNIFI’s ability to sell its REPREVE brand recycled products profitably. The success of UNIFI’s business is tied to the strength and reputation of its brands. If the reputation of one or more of our brands erodes significantly, it could have a material impact on our financial results. UNIFI has invested heavily in branding and marketing initiatives, and certain of our brands, particularly our REPREVE brand, have widespread recognition. Our financial success is directly dependent on the success of our brands. The success of a brand can suffer if our marketing plans or product initiatives do not have the desired impact on a brand’s image or its ability to attract consumers. Our financial results could also be negatively impacted if one of our brands suffers substantial harm to its reputation due to a product recall, product-related litigation, the sale of counterfeit products, or other circumstances that tarnish the qualities and values represented by our brands. We license our trademarks to brands and customers through formal licensing agreements, allowing for co-branding usage and related marketing claims when our products or technologies are used. All such usage must comply with the terms set forth in the licensing agreement as well as meet our requirements for certification and content usage. Although we make concerted efforts to protect our brands through quality control mechanisms and contractual obligations imposed on our licensees, there is a risk that some licensees might not be in full compliance with those mechanisms and obligations. If the reputation of one or more of our brands is significantly eroded, it could adversely affect our sales, results of operations, cash flows, and/or financial condition. UNIFI’s future success will depend in part on its ability to protect and preserve its intellectual property rights, and UNIFI’s inability to enforce these rights could cause it to lose sales, reduce any competitive advantage it has developed, or otherwise harm its business. UNIFI’s future success depends in part on its ability to protect and preserve its rights in the trademarks and other intellectual property it owns or licenses, including its proprietary know-how, methods, and processes. UNIFI relies on the trademark, copyright, and trade secret laws of the U.S. and other countries, as well as nondisclosure and confidentiality agreements, to protect its intellectual property rights. However, UNIFI may be unable to prevent third parties, employees, or contractors from using its intellectual property without authorization, breaching nondisclosure or confidentiality agreements, or independently developing technology that is similar to UNIFI’s. The use of UNIFI’s intellectual property by others without authorization may cause it to lose sales, reduce any competitive advantage UNIFI has developed, or otherwise harm its business. 12 Financial Risks UNIFI has significant foreign operations, and its consolidated results of operations and business may be adversely affected by the risks associated with doing business in foreign locations, including the risk of fluctuations in foreign currency exchange rates. UNIFI has foreign operations in Brazil, China, Colombia, El Salvador, India, and Turkey. In addition, to help service its customers, UNIFI from time to time engages with third-party independent contractors to provide sales and distribution, manufacturing, and other operational and administrative support services in locations around the world. UNIFI serves customers throughout the Americas and Asia, as well as various countries in Europe. UNIFI’s foreign operations are subject to certain political, tax, economic, and other uncertainties not encountered by its domestic operations that can materially impact UNIFI’s supply chains or other aspects of its foreign operations. The risks of international operations include trade barriers, duties, exchange controls, national and regional labor strikes, social and political unrest, general economic risks, compliance with a variety of foreign laws (including tax laws), the difficulty of enforcing agreements and collecting receivables through foreign legal systems, taxes on distributions or deemed distributions to UNIFI or any of its U.S. subsidiaries, maintenance of minimum capital requirements, and import and export controls. UNIFI’s consolidated results of operations and business could be adversely affected as a result of a significant adverse development with respect to any of these risks. Through its foreign operations, UNIFI is also exposed to foreign currency exchange rate fluctuations. Fluctuations in foreign currency exchange rates will impact period-to-period comparisons of UNIFI’s reported results. Additionally, UNIFI operates in countries with foreign exchange controls. These controls may limit UNIFI’s ability to transfer funds from its international operations or otherwise to convert local currencies into USDs. These limitations could restrict UNIFI’s ability to access cash from its foreign operations. In addition, due to its foreign operations, a risk exists that UNIFI’s employees, contractors, or agents could engage in business practices prohibited by U.S. laws and regulations applicable to the Company, such as the Foreign Corrupt Practices Act or the anti-bribery and corruption laws and regulations of other countries in which we do business. UNIFI maintains policies prohibiting these practices but remains subject to the risk that one or more of its employees, contractors, or agents, specifically ones based in or from countries where such practices are customary, will engage in business practices in violation of these laws and regulations. Any such violations, even if in breach of UNIFI’s policies, could adversely affect its business or financial performance. UNIFI may be subject to greater tax liabilities. UNIFI is subject to income tax and other taxes in the U.S. and in numerous foreign jurisdictions. UNIFI’s domestic and foreign income tax liabilities are dependent on the jurisdictions in which profits are determined to be earned and taxed. Additionally, the amount of taxes paid is subject to UNIFI’s interpretation of applicable tax laws in the jurisdictions in which we operate. Changes in tax laws including regulatory developments arising from U.S. tax reform legislation, judicial interpretations in the jurisdictions in which we operate, and multi-jurisdictional changes enacted in response to the action items provided by the Organization for Economic Co-operation and Development could have an adverse effect on UNIFI’s business, financial condition, operating results, and cash flows. Significant judgment, knowledge, and experience are required in determining our worldwide provision for income taxes. UNIFI requires cash to service its indebtedness and to fund capital expenditures and strategic initiatives, and its ability to generate sufficient cash for those purposes depends on many factors beyond its control. UNIFI’s principal sources of liquidity are cash flows generated from operations and borrowings under its credit facility. UNIFI’s ability to make payments on its indebtedness and to fund planned capital expenditures and strategic initiatives will depend on its ability to generate future cash flows from operations. This ability, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond UNIFI’s control. The business may not generate sufficient cash flows from operations, and future borrowings may not be available to UNIFI in amounts sufficient to enable UNIFI to pay its indebtedness and to fund its other liquidity needs. Any such development would have a material adverse effect on UNIFI. The Company is always engaged in efforts to reduce costs and rationalize assets (i.e. improve liquidity). UNIFI currently holds the majority of its cash deposits with large foreign banks in our associated operating regions, and management believes that it has the ability to repatriate cash to the U.S. relatively quickly, although management recognizes that various inherent risks do exist in executing the repatriation of cash from foreign subsidiaries. If any of the financial institutions within the 2022 Credit Agreement (as defined below) or the construction financing arrangement ("lending counterparties") are unable to perform on their commitments, our liquidity could be adversely impacted, and we may not be able to adequately fund our operations and pay our debts as they become due. We actively monitor all lending counterparties, and none have indicated that they may be unable to perform on their commitments. In addition, we periodically review our lending counterparties, considering the stability of the institutions and other aspects of the relationships. Based on our monitoring activities, we currently believe our lending counterparties will be able to perform their commitments. 13 Operational Risks UNIFI depends on limited sources for certain of its raw materials, and interruptions in supply could increase its costs of production, cause production inefficiencies, or lead to a halt in production. UNIFI depends on a limited number of third parties for certain raw materials, such as POY, Chip, dyes, and chemicals. Although alternative sources of raw materials exist, UNIFI may not be able to obtain adequate supplies of such materials on acceptable terms, or at all, from other sources. UNIFI is dependent on USMCA/NAFTA, CAFTA-DR, and Berry Amendment qualified suppliers of raw materials for the production of Compliant Yarns. These suppliers are also at risk with their raw material supply chains. Any significant disruption or curtailment in the supply of any of its raw materials could cause UNIFI to reduce or cease production for an extended period, or require UNIFI to increase its pricing, any of which could have a material adverse effect on its business, financial condition, results of operations, or cash flows. A disruption at one of our facilities could harm our business and result in significant losses, lead to a decline in sales, and increase our costs and expenses. Our operations and business could be disrupted by natural disasters, industrial accidents, power or water shortages, extreme weather conditions, epidemics or pandemics, and other man-made disasters or catastrophic events. We carry commercial property damage and business interruption insurance against various risks, with limits we deem adequate, for reimbursement for damage to our fixed assets and resulting disruption of our operations. However, the occurrence of any of these business disruptions could harm our business and result in significant losses, lead to a decline in sales, and increase our costs and expenses. Any disruptions from these events could require substantial expenditures and recovery time to resume operations and could also have a material adverse effect on our operations and financial results to the extent losses are uninsured or exceed insurance recoveries and to the extent that such disruptions adversely impact our relationships with our customers. Our business and operations could suffer in the event of cybersecurity breaches. Attempts to gain unauthorized access to our information technology systems have become increasingly more sophisticated over time. These attempts, which might be related to industrial or other espionage, include covertly introducing malware to our computers and networks and impersonating authorized users, among others. We seek to detect and investigate all security incidents and to prevent their recurrence, but in some cases we might be unaware of an incident or its magnitude and effects. We carry cyber liability insurance against cyber-attacks, with limits we deem adequate for the reimbursement for damage to our computers, equipment, and networks and resulting disruption of our operations. However, any disruption from a cyber-attack could require substantial expenditures and recovery time in order to fully resume operations and could also have a material adverse effect on our operations and financial results to the extent losses are uninsured or exceed insurance recoveries and to the extent that such disruptions adversely impact our relationships with our customers. We have been a target of cybersecurity attacks in the past and, while such attacks have not resulted in a material impact on our operations, business, or customer relationships, such attacks could in the future. The theft, unauthorized use, or publication of our intellectual property and/or confidential business information could harm our competitive position, reduce the value of our investment in research and development and other strategic initiatives, or otherwise adversely affect our business. To the extent that any cybersecurity breach results in inappropriate disclosure of our customers’ or brand partners’ confidential information, we may incur significant liability and reputational harm as a result. In addition, devoting additional resources to the security of our information technology systems in the future could significantly increase the cost of doing business or otherwise adversely impact our financial results. A decline or change in general economic conditions, political conditions, and/or levels of consumer spending could cause a decline in demand for textile products, including UNIFI’s products. UNIFI’s products are used in the production of fabric primarily for the apparel, hosiery, home furnishings, automotive, industrial, medical, and other end-use markets. Demand for furniture and other durable goods is often affected significantly by economic conditions that have global or regional industry-wide consequences. Demand for a number of categories of apparel is impacted by discretionary spending by consumers. Discretionary spending is affected by many factors that are outside of our control, including general business conditions, interest rates, inflation, consumer debt levels, the availability of consumer credit, currency exchange rates, taxation, energy prices, unemployment trends, and other matters that influence consumer confidence and spending. Demand for textile products, therefore, tends to vary with the business cycles of the U.S. and other economies, as well as changes in global trade flows, and economic and political conditions. Additionally, prolonged economic downturns that negatively impact UNIFI’s results of operations and cash flows could result in future material impairment charges to write-down the carrying value of certain assets, including facilities and equipment, amortizable intangible assets, and equity affiliates. Specific to other ongoing geopolitical tensions, we recognize the disruption to global markets and supply chains caused by the conflicts in Ukraine and the Middle East, particularly in Iran. Escalating geopolitical tensions involving Iran have contributed to volatility in petroleum markets. In early March 2026, disruptions to certain supply routes associated with this conflict resulted in a sharp increase in crude oil and related feedstock prices. As a result of higher raw material costs stemming from disruptions in the Middle East, the Company implemented responsive price increases and surcharges that began in April 2026 and are expected to continue while petrochemical-related inflation remains elevated. We recognize that additional or prolonged impacts to the petroleum or other global markets could cause further inflationary pressures to our global raw material costs or additional unforeseen adverse impacts. Changes in consumer spending, customer preferences, fashion trends, and end-uses for UNIFI’s products could weaken UNIFI’s competitive position and cause UNIFI’s products to become less competitive, and its sales and profits may decrease as a result. Additionally, the end-consumer retail and apparel markets may continue to experience difficult conditions and other transformations, which could have an adverse effect on UNIFI’s business and financial condition. 14 General Risks Unfavorable changes in trade policies and tariffs and/or violations of existing trade policies could weaken UNIFI’s competitive position significantly and have a material adverse effect on its business. A number of markets within the textile industry in which UNIFI sells its products, particularly the apparel, hosiery, and home furnishings markets, are subject to intense foreign competition. Other markets within the textile industry in which UNIFI sells its products may in the future become subject to more intense foreign competition. There are currently a number of trade regulations, duties, and tariffs in place to protect the U.S. textile industry against competition from low-priced foreign producers, such as those in China, India, and Vietnam. Political and policy-driven influences are subjecting international trade regulations to significant volatility. Future changes in such trade regulations, duties, or tariffs may make the price of UNIFI’s products less attractive than the goods of its competitors or the finished products of a competitor in the supply chain, which could have a material adverse effect on UNIFI’s business, financial condition, results of operations, or cash flows. Such changes in import duties and tariffs in the U.S. and other countries in which we operate might also result in increased direct and indirect costs on items imported to support UNIFI’s operations and/or countervailing or responsive changes applicable to exports of our products outside the U.S. According to industry experts and trade associations, there has been a significant amount of illegal transshipments of POY and apparel products into the U.S. and into certain other countries in the Americas region in which UNIFI competes. Illegal transshipment involves circumventing duties by falsely claiming that textiles and apparel are products of a particular country of origin (or include yarn of a particular country of origin) to avoid paying higher duties and tariffs or to receive benefits from regional free trade agreements, such as USMCA/NAFTA and CAFTA-DR. If illegal transshipments are not monitored, and if enforcement is not effective to limit them, these shipments could have a material adverse effect on UNIFI’s business, financial condition, results of operations, or cash flows. In order to compete effectively, we must attract and retain qualified employees, and our failure to do so could harm our business and our results of operations. In order to compete effectively, we must attract and retain qualified employees. Our future operating results and success depend on retaining key personnel and management as well as expanding our technical, sales and marketing, innovation, and administrative support. The competition for qualified personnel is intense, particularly as it relates to hourly personnel in the domestic communities in which our manufacturing facilities are located. We cannot be sure that we will be able to attract and retain qualified personnel in the future, which could harm our business and results of operations. Catastrophic or extraordinary events, including epidemics or pandemics such as the COVID-19 pandemic, could disrupt global economic activity and/or demand and negatively impact our financial performance and results of operations. Widespread public health emergencies or outbreaks of epidemics, pandemics, or contagious diseases, such as the COVID-19 pandemic, have had, and could in the future have, a material adverse effect on UNIFI’s business, financial condition, results of operations, or cash flows. The full extent to which a global health crisis may impact our business and operating results would depend on future developments that are highly uncertain and cannot be accurately predicted, including new medical and other information that may emerge as a result and the actions by governmental entities or others to contain or treat its impact. The risks associated with climate change, localized energy management initiatives, other environmental impacts and compliance with new reporting regulations could negatively affect UNIFI’s business and operations. UNIFI’s business is susceptible to risks associated with climate change, including, but not limited to, disruptions to our supply chain, which could potentially impact the production and distribution of our products and the availability and pricing of raw materials. Increased frequency and intensity of weather events could lead to supply chain disruption, energy and resource rationing, or an adverse event at one of our manufacturing facilities or the facilities of our manufacturing partners. Further, regulatory responses to climate change could adversely affect our operations. Additionally, weaknesses in energy infrastructure could result in supply disruptions that could indirectly affect our operations and could adversely impact our results of operations and cash flows. In March 2024, the SEC issued a final rule that required registrants to provide climate disclosures in their annual reports and registration statements. The disclosure requirements of the new rule would have become effective for UNIFI beginning in fiscal 2027. In March 2025, the SEC announced that it had voted to end its defense of the final rule and in May 2026, the SEC proposed the rescission of the rule altogether. As such, it is not expected that UNIFI will have to make any climate-related disclosure under an SEC rule. However, the Company may need to make disclosure under state or international climate-related rules in the regions in which we do business. 15

The following table contains information about the principal properties owned or leased by UNIFI as of June 28, 2026 (not in thousands): Location Principal Use Approx. Total Area (Sq. Ft.) Owned or Leased Administrative Greensboro, North Carolina Corporate headquarters 121,000 Owned Americas Segment Domestic Yadkinville, North Carolina Manufacturing facility 812,000 * Owned Yadkinville, North Carolina Manufacturing facility 413,000 Owned Yadkinville, North Carolina Manufacturing facility 261,000 Owned Yadkinville, North Carolina Manufacturing facility 212,000 Owned Yadkinville, North Carolina Manufacturing facility 147,000 Owned Yadkinville, North Carolina Warehouse 400,000 * Owned Yadkinville, North Carolina Warehouse 120,000 Owned Yadkinville, North Carolina Warehouse 82,000 Leased Yadkinville, North Carolina Warehouse 61,000 Leased Reidsville, North Carolina Manufacturing facility 384,000 Owned Reidsville, North Carolina Manufacturing facility 160,000 Owned Reidsville, North Carolina Warehouse 91,000 Leased Madison, North Carolina Warehouse 31,000 Owned Foreign Ciudad Arce, El Salvador Manufacturing facility 132,000 Leased Ciudad Arce, El Salvador Warehouse 59,000 Leased Bogota (Soacha), Colombia Manufacturing facility 31,000 Owned Bogota, Colombia Sales office 1,000 Leased Brazil Segment Foreign Alfenas, Brazil Manufacturing facility 360,000 Owned Alfenas, Brazil Warehouse 372,000 Owned Sao Paulo, Brazil Corporate office 13,000 Leased Asia Segment Foreign Suzhou, China Sales office 19,000 Leased Suzhou, China Warehouse 59,000 Leased Suzhou, China Warehouse 50,000 Leased Suzhou, China Warehouse 16,000 Leased * This warehouse and 110,000 square feet of this manufacturing facility are under agreement to sale based on the 8-K filed on August 17, 2026. Management believes all of UNIFI’s operating properties are well maintained and in good condition. Management does not anticipate any capacity constraints in the foreseeable future.

We are from time to time a party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business. With respect to all such lawsuits, claims, and proceedings, we record reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. We do not believe that any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on our results of operations, financial position, or cash flows. We maintain liability insurance for certain risks that is subject to certain self-insurance limits.

The following is management’s discussion and analysis of certain significant factors that have affected UNIFI’s operations, along with material changes in financial condition, during the periods included in the accompanying consolidated financial statements. Management’s discussion and analysis should be read in conjunction with the remainder of this report, with the understanding that forward-looking statements may be present. A reference to a “note” refers to the accompanying notes to consolidated financial statements. Strategic Priorities We believe UNIFI’s underlying performance during recent fiscal years reflects the strength of our global initiative to deliver differentiated solutions to customers and brand partners throughout the world. 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, co-marketing, and 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, we believe that combining leading-edge innovation with our prominent, high-quality brand and agile regional business model will allow for underlying sales and profitability growth. Significant Developments and Trends Key drivers of our recent financial results include: •Throughout fiscal 2021, our businesses experienced sequential improvement alongside global demand and economic recovery, and we capitalized on profitable opportunities that fueled strong consolidated results. •Throughout fiscal 2022, we experienced adverse pressure from rising input costs and a weakening of labor productivity, primarily in our domestic operations. •Throughout fiscal 2023, we experienced a downturn in global textile demand as brands and retailers began to destock their inventory levels. •Throughout fiscal 2024, global textile demand remained weak, particularly in the Americas and Asia Segments with reduced overall order levels. •Throughout fiscal 2025, inflationary pressures and uncertainty over global trade policies resulted in volatility and customer-demand headwinds, particularly in the Americas and Asia Segments. •Throughout fiscal 2026, global textile demand remained weak resulting from geopolitical events and continued global trade uncertainty. However, certain demand began to improve in the second half of the fiscal year. Looking ahead, we believe our operations remain well-positioned to capture long-term growth opportunities, our liquidity position has improved significantly. Once global economic pressures subside, we believe incremental revenue for the Americas Segment will be generated from our anti-dumping petitions and efforts around fair trade of textile yarn, and continued demand for innovative and sustainable products. The Asia Segment continues to focus on demand for recycled products and serves as a significant component of future growth. The Brazil Segment has returned to more normalized levels of performance and is expected to maintain healthy volumes and margins. As the Asia market improves, the volume of low-cost Asian imports into Brazil is expected to decrease. 21 The following developments and trends occurred or were occurring in fiscal 2026: •Demand levels for the majority of our business lines in the Americas and Asia Segments were below expectations, as a result of lower global demand amid consumer and macroeconomic uncertainty including the recent geopolitical situation in Iran, trade disruptions, and tariff-related concerns. •Our REPREVE family of products continued to gain momentum with brands, retailers, and mill partners who value sustainability and UNIFI’s ability to produce leading-edge products with in-demand technologies. •The Americas Segment experienced significant improvement due to higher manufacturing utilization and production levels after UNIFI implemented the Fiscal 2026 Profit Improvement Plan as a cost-saving initiative that included reducing variable manufacturing costs across labor, spend, and support functions, while also eliminating salaried positions in the U.S. In addition, in early March 2026, disruptions to certain supply routes associated with the Iran conflict resulted in a sharp increase in crude oil and related feedstock prices. As a result of higher raw material costs stemming from disruptions in the Middle East, UNIFI implemented responsive price increases and surcharges that began in April 2026 and are expected to continue while petrochemical-related inflation remains elevated. •The Brazil Segment incurred selling price pressures from low-cost imports for most of the fiscal year, but sales volumes and margins remained strong due to diligent pricing actions associated with the Iran conflict. •The Asia Segment's sales volumes slowed in fiscal 2026, along with continued margin pressure, due to customer-demand headwinds and recent volatility from uncertainty related to tariffs; however, there remains healthy demand for REPREVE, generating continued portfolio expansion. Fluctuations in Raw Material Costs and Foreign Currency Exchange Rates Raw material costs represent a significant portion of UNIFI’s product costs. The prices for the principal raw materials used by UNIFI continually fluctuate, and it is difficult or impossible to predict trends or upcoming developments. The continuing volatility in global crude oil prices is likely to impact UNIFI’s polyester and nylon raw material costs. While it is not possible to predict the timing or amount of the impact or whether the recent fluctuations in crude oil prices will stabilize, increase, or decrease, UNIFI monitors these dynamic factors closely. In addition, UNIFI attempts to pass on to its customers increases in raw material costs but due to market pressures, this is not always possible. When price increases can be implemented, there is typically a time lag that adversely affects UNIFI and its margins during one or more quarters. Certain customers are subject to an index-based pricing model in which UNIFI’s prices are adjusted based on the change in the cost of certain raw materials in the prior quarter. Pricing adjustments for other customers must be negotiated independently. In ordinary market conditions in which raw material cost increases have stabilized and sales volumes are consistent with traditional levels, UNIFI has historically been successful in implementing price adjustments within one or two fiscal quarters of the raw material price increase for all of its customers. UNIFI is also impacted by significant fluctuations in the value of the BRL and the Chinese Renminbi (the “RMB”), the local currencies for our operations in Brazil and China, respectively. Appreciation of the BRL and the RMB improves our net sales and gross profit metrics when the results of our subsidiaries are translated into USDs at comparatively favorable rates. However, such strengthening may cause adverse impacts to the value of USDs held in these foreign jurisdictions. UNIFI expects continued volatility in the value of the BRL and the RMB to impact our key performance metrics and actual financial results, although the magnitude of the impact is dependent upon the significance of the volatility, and it is not possible to predict the timing or amount of the impact. The BRL to USD weighted average exchange rate was 5.27, 5.71, and 5.01 for fiscal 2026, 2025, and 2024, respectively. The RMB to USD weighted average exchange rate was 6.98, 7.21, and 7.22 for fiscal 2026, 2025, and 2024, respectively. 22 Key Performance Indicators and Non-GAAP Financial Measures UNIFI continuously reviews performance indicators to measure its success. These performance indicators form the basis of management’s discussion and analysis included below: •sales volume and revenue for UNIFI and for each reportable segment; •gross profit (loss) and gross margin for UNIFI and for each reportable segment; •net (loss) income and (loss) earnings per share ("EPS"); •Segment (Loss) Profit, which equals segment gross (loss) profit plus segment depreciation expense; •unit conversion margin, which represents unit net sales price less unit raw material costs, for UNIFI and for each reportable segment; •working capital, which represents current assets less current liabilities; •Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), which represents net (loss) earnings before net interest expense, income tax expense and depreciation and amortization expense; •Adjusted EBITDA, which represents EBITDA adjusted to exclude, from time to time, certain other adjustments necessary to understand and compare the underlying results of UNIFI; •Adjusted Net (Loss) Income, which represents net loss calculated under GAAP, adjusted to exclude certain amounts which management believes do not reflect the ongoing operations and performance of UNIFI and/or for which exclusion may be necessary to understand and compare the underlying results of UNIFI; •Adjusted EPS, which represents Adjusted Net (Loss) Income divided by UNIFI’s weighted average common shares outstanding; •Adjusted Working Capital, which equals receivables plus inventories and other current assets, less accounts payable and other current liabilities; and •Net Debt, which represents debt principal less cash and cash equivalents. EBITDA, Adjusted EBITDA, Adjusted Net (Loss) Income, Adjusted EPS, Adjusted Working Capital, and Net Debt (collectively, the “non-GAAP financial measures”) are not determined in accordance with GAAP and should not be considered a substitute for performance measures determined in accordance with GAAP. The calculations of the non-GAAP financial measures are subjective, based on management’s belief as to which items should be included or excluded in order to provide the most reasonable and comparable view of the underlying operating performance of the business. We may, from time to time, modify the amounts used to determine our non-GAAP financial measures. When applicable, management’s discussion and analysis includes specific consideration for items that comprise the reconciliations of its non-GAAP financial measures. We believe that these non-GAAP financial measures better reflect UNIFI’s underlying operations and performance and that their use, as operating performance measures, provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets, among otherwise comparable companies. Management uses Adjusted EBITDA (i) as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis, as it removes the impact of items (a) directly related to our asset base (primarily depreciation and amortization) and/or (b) that we would not expect to occur as a part of our normal business on a regular basis; (ii) for planning purposes, including the preparation of our annual operating budget; (iii) as a valuation measure for evaluating our operating performance and our capacity to incur and service debt, fund capital expenditures, and expand our business; and (iv) as one measure in determining the value of other acquisitions and dispositions. Adjusted EBITDA is a key performance metric utilized in the determination of variable compensation. We also believe Adjusted EBITDA is an appropriate supplemental measure of debt service capacity because it serves as a high-level proxy for cash generated from operations and is relevant to our fixed charge coverage ratio. Management uses Adjusted Net (Loss) Income and Adjusted EPS (i) as measurements of net operating performance because they assist us in comparing such performance on a consistent basis, as they remove the impact of (a) items that we would not expect to occur as a part of our normal business on a regular basis and (b) components of the provision for income taxes that we would not expect to occur as a part of our underlying taxable operations; (ii) for planning purposes, including the preparation of our annual operating budget; and (iii) as measures in determining the value of other acquisitions and dispositions. Management uses Adjusted Working Capital as an indicator of UNIFI’s production efficiency and ability to manage inventories and receivables. Management uses Net Debt as a liquidity and leverage metric to determine how much debt would remain if all cash and cash equivalents were used to pay down debt principal. See “Non-GAAP Reconciliations” below for reconciliations of each non-GAAP metrics to the most directly comparable GAAP metric. 23 Review of Results of Operations for Fiscal 2026, 2025, and 2024 UNIFI’s fiscal 2026, 2025, and 2024 each consisted of 52 weeks, with no impacts to net sales, gross profit, and selling, general, and administrative ("SG&A") expenses due to extra weeks. Consolidated Overview The below tables provide: •the components of net loss and the percentage increase or decrease over the prior fiscal year amounts, •a reconciliation from net loss to EBITDA and Adjusted EBITDA, and •a reconciliation from net loss to Adjusted Net Loss and Adjusted EPS. Following the tables is a discussion and analysis of the significant components of net loss. Net Loss Fiscal 2026 % Change Fiscal 2025 % Change Fiscal 2024 Net sales $ 531,303 (7.0 ) $ 571,344 (1.9 ) $ 582,209 Cost of sales 500,847 (11.0 ) 562,926 (0.5 ) 565,593 Gross profit 30,456 nm 8,418 (49.3 ) 16,616 SG&A 44,681 (8.8 ) 49,005 5.1 46,632 (Benefit) provision for bad debts (156 ) (6.0 ) (166 ) (110.6 ) 1,571 Restructuring costs, net 1,853 (79.2 ) 8,924 74.9 5,101 (Gain) loss on sales and disposals of assets (4 ) (100.0 ) (40,079 ) nm 62 Other operating (income) expense, net (1,270 ) nm 254 (62.1 ) 671 Operating loss (14,648 ) 53.9 (9,520 ) (74.6 ) (37,421 ) Interest expense, net 5,114 (40.8 ) 8,632 11.7 7,726 Loss from unconsolidated affiliates 266 (44.2 ) 477 22.3 390 Loss before income taxes (20,028 ) 7.5 (18,629 ) (59.1 ) (45,537 ) Provision for income taxes 4,534 163.8 1,719 (7.5 ) 1,858 Net loss $ (24,562 ) 20.7 $ (20,348 ) (57.1 ) $ (47,395 ) nm – not meaningful Non-GAAP Reconciliations EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures) The reconciliations of the amounts reported under GAAP for Net Loss to EBITDA and Adjusted EBITDA are as follows. Fiscal 2026 Fiscal 2025 Fiscal 2024 Net loss $ (24,562 ) $ (20,348 ) $ (47,395 ) Interest expense, net 5,114 8,632 7,726 Provision for income taxes 4,534 1,719 1,858 Depreciation and amortization expense (1) 23,820 25,064 27,513 EBITDA 8,906 15,067 (10,298 ) Transition costs (2) 1,068 13,485 — Gain on foreign currency transaction, net (3) (1,892 ) — — Gain on sales of assets (4) — (40,103 ) — Restructuring costs, net (5) 785 — 5,101 Adjusted EBITDA $ 8,867 $ (11,551 ) $ (5,197 ) (1)Within this reconciliation, depreciation and amortization expense excludes the amortization of debt issuance costs, which are reflected in interest expense, net. Within the accompanying Consolidated Statements of Cash Flows, amortization of debt issuance costs is reflected in depreciation and amortization expense. In fiscal 2025, interest expense, net includes $136 of loss on debt extinguishment. (2)In fiscal 2026, UNIFI incurred various transition costs totaling $1,068 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs (including asset impairments and disposals) of $1,021, and (ii) employee separation costs of $47. The facility closure, equipment relocation, and employee separation costs were all recorded within Restructuring costs in the Consolidated Statements of Operations. In fiscal 2025, UNIFI incurred various transition costs totaling $13,485 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs (including asset impairments and disposals) of $5,896, (ii) inventory write-downs of $2,923, (iii) excess fixed manufacturing costs of $1,638, (iv) employee separation or retention costs of $1,580, and (v) forfeitures of deposits for texturing machinery of $1,448. The facility closure, equipment relocation, employee separation and retention costs, and forfeitures of deposits were all recorded within Restructuring costs and the inventory write-downs and excess fixed manufacturing costs were recorded within Cost of sales in the Consolidated Statements of Operations. 24 (3)In fiscal 2026, UNIFI recorded a foreign currency gain of $1,892. In December 2025, Brazil declared dividends against the majority of its retained earnings in connection with certain tax law changes related to future dividends. Foreign currency transaction gains (losses) are recorded to reflect changes in the exchange rate of the Brazilian Real to the U.S. Dollar while the dividend payable is outstanding. (4)In the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina. In the fourth quarter of fiscal 2025, UNIFI recorded a gain of $35,807 related to the sale of a manufacturing facility in Madison, North Carolina. (5)In fiscal 2026, UNIFI recorded employee separation costs of $1,093 in connection with the Fiscal 2026 Profit Improvement Plan and a $308 gain from disposals of assets from the consolidation of Americas yarn manufacturing operations. In fiscal 2024, UNIFI incurred severance costs of $2,351 in connection with the Profitability Improvement Plan in the U.S. and a loss of $2,750 related to the dissolution of a nylon joint venture. Adjusted Net Loss and Adjusted EPS (Non-GAAP Financial Measures) The tables below set forth reconciliations of (i) Loss Before Income Taxes (“Pre-tax Loss”), Provision for Income Taxes (“Tax Impact”) and Net Loss to Adjusted Net Loss and (ii) Diluted EPS to Adjusted EPS. Fiscal 2026 Pre-tax Loss Tax Impact Net Loss Diluted EPS GAAP results $ (20,028 ) $ (4,534 ) $ (24,562 ) $ (1.33 ) Transition costs (1) 1,068 — 1,068 0.06 Gain on foreign currency transaction, net (2) (1,892 ) 488 (1,404 ) (0.07 ) Restructuring costs, net (3) 785 (11 ) 774 0.04 Adjusted results $ (20,067 ) $ (4,057 ) $ (24,124 ) $ (1.30 ) Weighted average common shares outstanding 18,488 Fiscal 2025 Pre-tax Loss Tax Impact Net Loss Diluted EPS GAAP results $ (18,629 ) $ (1,719 ) $ (20,348 ) $ (1.11 ) Transition costs (1) 13,485 — 13,485 0.74 Gain on sales of assets (4) (40,103 ) — (40,103 ) (2.19 ) Recovery of income taxes (5) — (893 ) (893 ) (0.05 ) Adjusted results $ (45,247 ) $ (2,612 ) $ (47,859 ) $ (2.61 ) Weighted average common shares outstanding 18,314 Fiscal 2024 Pre-tax Loss Tax Impact Net Loss Diluted EPS GAAP results $ (45,537 ) $ (1,858 ) (47,395 ) $ (2.61 ) Restructuring costs, net (3) 5,101 — 5,101 0.28 Adjusted results $ (40,436 ) $ (1,858 ) $ (42,294 ) $ (2.33 ) Weighted average common shares outstanding 18,154 (1)In fiscal 2026, UNIFI incurred various transition costs totaling $1,068 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs (including asset impairments and disposals) of $1,021, and (ii) employee separation costs of $47. The facility closure, equipment relocation, and employee separation costs were all recorded within Restructuring costs in the Consolidated Statements of Operations. The associated tax impact was estimated to be $0 due to a valuation allowance against net operating losses in the U.S. In fiscal 2025, UNIFI incurred various transition costs totaling $13,485 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs (including asset impairments and disposals) of $5,896, (ii) inventory write-downs of $2,923, (iii) excess fixed manufacturing costs of $1,638, (iv) employee separation or retention costs of $1,580, and (v) forfeitures of deposits for texturing machinery of $1,448. The facility closure, equipment relocation, employee separation and retention costs, and forfeitures of deposits were all recorded within Restructuring costs and the inventory write-downs and excess fixed manufacturing costs were recorded within Cost of sales in the Consolidated Statements of Operations. The associated tax impact was estimated to be $0 due to a valuation allowance against net operating losses in the U.S. (2)In fiscal 2026, UNIFI recorded a foreign currency gain of $1,892. In December 2025, Brazil declared dividends against the majority of its retained earnings in connection with certain tax law changes related to future dividends. Foreign currency transaction gains (losses) are recorded to reflect changes in the exchange rate of the Brazilian Real to the U.S. Dollar while the dividend payable is outstanding. The associated tax impact was estimated to be $488, based on the relevant jurisdiction's statutory tax rate for the period. (3)In fiscal 2026, UNIFI recorded employee separation costs of $1,093 in connection with the Fiscal 2026 Profit Improvement Plan and a $308 gain from disposals of assets from the consolidation of Americas yarn manufacturing operations. The associated tax impact was estimated to be $11 related to employee separation costs in the Asia Segment. In fiscal 2024, UNIFI incurred severance costs of $2,351 in connection with the Profitability Improvement Plan in the U.S. and a loss of $2,750 related to the dissolution of a nylon joint venture. 25 (4)In the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina. In the fourth quarter of fiscal 2025, UNIFI recorded a gain of $35,807 related to the sale of a manufacturing facility in Madison, North Carolina. The associated tax impact was estimated to be $0 due to a valuation allowance against net operating losses and capital losses in the U.S. (5)In fiscal 2025, following a favorable preliminary court injunction, UNIFI recorded a recovery of income taxes in connection with ICMS deductibility for Brazil's federal income tax return relating to the income taxes paid in prior fiscal years. Net Sales Fiscal 2026 vs. Fiscal 2025 Consolidated net sales for fiscal 2026 decreased by $40,041, or 7.0%, and consolidated sales volumes decreased 5.1%, compared to fiscal 2025. Net sales in fiscal 2026 were lower primarily due to (i) lower sales volumes in the Asia Segment, (ii) lower sales volumes and lower-priced sales mix in the Americas Segment, and (iii) lower sales volumes and prices in the Brazil Segment. Overall sales remain depressed, particularly in the Americas and Asia Segments as a result of continued volatility from uncertainty over ongoing geopolitical events, global trade policies, and competition from lower-priced products. Additionally, UNIFI’s strategic pricing initiatives in the Americas Segment led to a decline in lower-margin sales. Consolidated weighted average sales prices decreased 1.9%. The decrease in sales prices was primarily attributable to sales mix and lower average selling prices in the Americas and Brazil Segments. REPREVE Fiber products for fiscal 2026 comprised 30%, or $157,428, of consolidated net sales, compared to 31%, or $174,855, for fiscal 2025. Fiscal 2025 vs. Fiscal 2024 Consolidated net sales for fiscal 2025 decreased by $10,865, or 1.9%, and consolidated sales volumes increased 0.2%, compared to fiscal 2024. Net sales in fiscal 2025 were lower primarily due to lower sales in the Asia Segment which were partially offset by improved sales volumes and prices in the Brazil Segment. However, most of Brazil's improvement was offset by unfavorable foreign currency translation effects. Despite some volume improvements, overall sales remain depressed, particularly in the Americas and Asia Segments as a result of continued customer-demand headwinds and volatility from uncertainty over global trade policies. Consolidated weighted average sales prices decreased 2.1%. The decrease in sales prices was primarily attributable to sales mix and lower average selling prices in the Asia Segment, together with unfavorable foreign currency translation effects from the weakening of the BRL versus the USD within our Brazil Segment. REPREVE Fiber products for fiscal 2025 comprised 31%, or $174,855, of consolidated net sales, compared to 32%, or $188,517, for fiscal 2024. REPREVE Fiber sales decreased primarily due to lower customer demand, cautious purchasing patterns, and ongoing competitive pressures in the recycled fiber market. Gross Profit Fiscal 2026 vs. Fiscal 2025 Gross profit for fiscal 2026 increased to $30,456 from $8,418 in fiscal 2025. Gross profit increased primarily due to (i) variable cost-saving initiatives and (ii) improved utilization in certain manufacturing areas. This increase was partially offset by (a) lower sales volumes and (b) production volatility from an inability to forecast demand due to the uncertainty caused by geopolitical events and tariffs impacting the Americas Segment. Gross profit continues to be unfavorably impacted by demand volatility in the Americas Segment and import pricing pressures in the Brazil Segment. •Americas Segment gross profit increased primarily due to overall cost-saving initiatives, including reductions in manufacturing costs from the consolidation of Americas yarn manufacturing operations and the Fiscal 2026 Profit Improvement Plan, partially offset by demand and production volatility stemming from geopolitical events and tariff uncertainty. •Brazil Segment gross profit decreased primarily due to (i) lower sales volumes and (ii) competitive import pricing pressures. •Asia Segment gross profit decreased primarily due to lower sales volumes. Fiscal 2025 vs. Fiscal 2024 Gross profit for fiscal 2025 decreased to $8,418 from $16,616 in fiscal 2024. Gross profit decreased primarily due to (i) lower overall conversion margins and (ii) low utilization and decreased productivity related to the consolidation of yarn manufacturing operations in the Americas Segment. This was partially offset by (a) increased sales volumes, (b) variable cost-saving initiatives, and (c) improved productivity in certain manufacturing areas. Gross profit continues to be unfavorably impacted by weak manufacturing utilization in the Americas Segment, where utilization and productivity remain below expected levels. 26 •For the Americas Segment, gross profit decreased primarily due to (i) low manufacturing utilization and (ii) decreased productivity related to the consolidation of yarn manufacturing operations, partially offset by (a) slightly higher sales volumes, (b) higher conversion margins, and (c) variable cost management efforts. Additionally, $4,561 of transition costs were incurred during fiscal 2025, recorded in Cost of sales, related to (i) inventory write-downs of $2,923, and (ii) excess fixed manufacturing costs of $1,638. •For the Brazil Segment, gross profit increased primarily due to (i) higher selling prices and (ii) higher sales volumes from market share gains, which were partially offset by (a) increased raw material costs and (b) an unfavorable foreign currency translation impact. However, low-cost import competition unfavorably impacted sales prices during the fiscal year. •For the Asia Segment, gross profit decreased primarily due to (i) lower sales volumes and (ii) lower conversion margins from an unfavorable change in sales mix in a volatile and weak demand environment. SG&A Expenses The changes in SG&A expenses were as follows: SG&A for fiscal 2024 $ 46,632 Net increase in compensation-related expenses 2,454 Net increase in professional fees 690 Other net increases 158 Net decrease in depreciation and amortization expenses (929 ) SG&A for fiscal 2025 $ 49,005 SG&A for fiscal 2025 $ 49,005 Net decrease in professional fees (1,544 ) Net decrease in salary expenses (1,493 ) Net decrease in travel and entertainment (547 ) Net decrease in marketing expenses (487 ) Other net decreases (253 ) SG&A for fiscal 2026 $ 44,681 Fiscal 2026 vs. Fiscal 2025 SG&A expenses decreased from fiscal 2025, primarily due to the actions from the Fiscal 2026 Profit Improvement Plan. Fiscal 2025 vs. Fiscal 2024 SG&A expenses increased from fiscal 2024, primarily due to higher compensation-related expenses and professional fee expenses, partially offset by decreases in depreciation and amortization expenses. (Benefit) Provision for Bad Debts Fiscal 2026 vs. Fiscal 2025 The (benefit) provision for bad debts was a benefit of $156 in fiscal 2026 and a benefit of $166 in fiscal 2025 as the current year reflects no material activity. Fiscal 2025 vs. Fiscal 2024 The (benefit) provision for bad debts changed to a benefit of $166 in fiscal 2025 from a provision of $1,571 in fiscal 2024 as the current year reflects a partial recovery of a provision recorded in fiscal 2024 for a specifically identified customer balance originating in the U.S. fiber market. Restructuring Costs, Net During October 2025, UNIFI implemented additional cost-saving initiatives that include reducing variable manufacturing costs across labor, spend, and support functions, while also eliminating a meaningful percentage of salaried positions in the U.S. In fiscal 2026, UNIFI incurred employee separation costs of $1,093 related to the Fiscal 2026 Profit Improvement Plan. Additionally, UNIFI recognized a gain of $308 during fiscal 2025 from disposals of assets in conjunction with the consolidation of Americas yarn manufacturing operations. In fiscal 2026, UNIFI incurred $1,068 in additional costs related to the Madison facility shutdown described below. On February 3, 2025, UNIFI announced the closing of its Madison, North Carolina facility and the transition of those manufacturing operations to other UNIFI production facilities in North and Central America. As a result, UNIFI incurred transition costs of $8,924 in fiscal 2025 which consisted of (i) equipment relocation and facility closure costs (including asset impairments and disposals) of $5,896, (ii) employee separation or retention costs of $1,580 and (iii) $1,448 in forfeitures of deposits for texturing machinery. Restructuring costs for fiscal 2024 consisted of (i) a loss of $2,750 for the dissolution of a nylon joint venture and (ii) severance charges of $2,351 in connection with the Profitability Improvement Plan in the U.S. 27 Loss (Gain) on Sales and Disposals of Assets In the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina. In the fourth quarter of fiscal 2025, UNIFI recorded a gain of $35,807 related to the sale of its manufacturing facility in Madison, North Carolina. There was no meaningful activity in fiscal 2026 or 2024. Other Operating (Income) Expense, Net Fiscal 2026 vs. Fiscal 2025 vs. Fiscal 2024 Other operating (income) expense, net for fiscal 2026, 2025, and 2024 includes foreign currency transaction (gains) losses of $(1,215), $323, and $376, respectively, with no other meaningful activity. In December 2025, Brazil declared dividends against the majority of its retained earnings in connection with certain tax law changes related to future dividends. Foreign currency transaction gains (losses) are recorded to reflect changes in the exchange rate of the Brazilian Real to the U.S. Dollar while the dividend payable is outstanding. Interest Expense, Net Fiscal 2026 vs. Fiscal 2025 Interest expense, net decreased from fiscal 2025. The decrease was attributable to lower average debt principal and lower average interest rates in fiscal 2026. Fiscal 2025 also included a $136 loss on debt extinguishment. Fiscal 2025 vs. Fiscal 2024 Interest expense, net increased from fiscal 2024. The increase was attributable to higher average borrowings on the revolving credit facilities for most of fiscal 2025 and lower global cash balances in fiscal 2025. Fiscal 2025 also included a $136 loss on debt extinguishment. Loss from Unconsolidated Affiliates There was no material activity for fiscal 2026, 2025, and 2024. Provision for Income Taxes The change in consolidated income taxes is as follows: Fiscal 2026 Fiscal 2025 Fiscal 2024 Loss before income taxes $ (20,028 ) $ (18,629 ) $ (45,537 ) Provision for income taxes 4,534 1,719 1,858 Effective tax rate (22.6 )% (9.2 )% (4.1 )% The effective tax rate is subject to variation due to a number of factors, including: variability in pre-tax and taxable income; the mix of income by jurisdiction; changes in deferred tax valuation allowances; and changes in audit adjustments, statutes, regulations, and case law. Additionally, the effects of discrete and other rate impacting items are more pronounced when income before income taxes is lower. Fiscal 2026 vs. Fiscal 2025 The decrease in the effective tax rate from fiscal 2025 to fiscal 2026 was primarily attributable to (i) a greater increase in the valuation allowances on losses and credit carryforwards in fiscal 2026, and (ii) a tax benefit associated with the recovery of income taxes in Brazil in fiscal 2025. Fiscal 2025 vs. Fiscal 2024 The decrease in the effective tax rate from fiscal 2024 to fiscal 2025 was primarily attributable to (i) lower losses in the U.S. current year and (ii) a decrease in valuation allowances and release of interest and penalty reserves for uncertain tax benefits as a result of concluding an IRS audit in prior period. Net Loss Fiscal 2026 vs. Fiscal 2025 Net loss for fiscal 2026 was $24,562, or $1.33 per diluted share, compared to $20,348, or $1.11 per diluted share, for fiscal 2025. The change in net loss was primarily attributable to (i) a gain on sales of assets in fiscal 2025 and (ii) higher income tax expense, which were partially offset by (a) increased gross profit, (b) lower SG&A expenses, (c) lower interest expense, net, and (d) lower restructuring costs in fiscal 2026. Fiscal 2025 vs. Fiscal 2024 Net loss for fiscal 2025 was $20,348, or $1.11 per diluted share, compared to $47,395, or $2.61 per diluted share, for fiscal 2024. The improvement in net loss was primarily attributable to gains on the sales of assets, partially offset by (a) lower gross profit and (b) higher restructuring costs. 28 Adjusted EBITDA (Non-GAAP Financial Measure) Adjusted EBITDA increased from $(11,551) for fiscal 2025 to $8,867 for fiscal 2026, primarily due to (i) higher gross profit and (ii) lower SG&A. Adjusted EBITDA decreased from $(5,197) for fiscal 2024 to $(11,551) for fiscal 2025, primarily due to lower gross profit together with increases in SG&A expenses, partially offset by the improvement in bad debt expense. Adjusted Net Loss (Non-GAAP Financial Measure) Adjusted Net Loss improved from $(47,859) for fiscal 2025 to $(24,124) for fiscal 2025, primarily due to (i) higher gross profit, (ii) lower SG&A, and (iii) lower interest expense. Adjusted Net Loss increased from $(42,294) for fiscal 2024 to $(47,859) for fiscal 2025, primarily due to lower gross profit together with increases in SG&A expenses, partially offset by the improvement in bad debt expense. Segment Overview Following is a discussion and analysis of the revenue and profitability performance of UNIFI’s reportable segments for fiscal 2025, 2024, and 2023. Americas Segment The components of Segment Profit and the percentage increase or decrease over the prior period amounts for the Americas Segment are as follows: Fiscal 2026 % Change Fiscal 2025 % Change Fiscal 2024 Net sales $ 325,210 (6.5 ) $ 347,931 1.1 $ 344,256 Cost of sales 320,397 (13.0 ) 368,148 1.7 361,886 Gross profit (loss) 4,813 123.8 (20,217 ) (14.7 ) (17,630 ) Depreciation expense 19,559 (6.9 ) 21,003 (5.2 ) 22,154 Segment Profit $ 24,372 nm $ 786 (82.6 ) $ 4,524 Gross margin 1.5 % (5.8 )% (5.1 )% Segment margin 7.5 % 0.2 % 1.3 % Segment net sales as a percentage of consolidated amount 61.2 % 60.9 % 59.1 % Segment Profit as a percentage of consolidated amount 45.7 % 2.4 % 10.8 % nm – not meaningful The changes in net sales for the Americas Segment are as follows: Net sales for fiscal 2024 $ 344,256 Net change in average selling price and sales mix 1,843 Increase in sales volumes 1,832 Net sales for fiscal 2025 $ 347,931 Net sales for fiscal 2025 $ 347,931 Net change in average selling price and sales mix (21,741 ) Decrease in sales volumes (980 ) Net sales for fiscal 2026 $ 325,210 The decrease in net sales for the Americas Segment from fiscal 2025 to fiscal 2026 was primarily attributable to (i) a lower-priced sales mix and (ii) lower sales volumes as discussed above. The increase in net sales for the Americas Segment from fiscal 2024 to fiscal 2025 was primarily attributable to higher sales volumes, partially offset by a lower-priced sales mix. Both periods were unfavorably impacted by customer-demand headwinds and the volatile global textile demand environment. 29 The changes in Segment Profit for the Americas Segment are as follows: Segment Profit for fiscal 2024 $ 4,524 Change in underlying margins and sales mix (3,738 ) Segment Profit for fiscal 2025 $ 786 Segment Profit for fiscal 2025 $ 786 Change in underlying margins and sales mix 23,586 Segment Profit for fiscal 2026 $ 24,372 The increase in Segment Profit for the Americas Segment from fiscal 2025 to fiscal 2026 was primarily attributable to overall cost-saving initiatives, including reductions in manufacturing costs from the consolidation of Americas yarn manufacturing operations and the Fiscal 2026 Profit Improvement Plan, contributing to improved facility utilization. The decrease in Segment Profit for the Americas Segment from fiscal 2024 to fiscal 2025 was primarily attributable to lower than anticipated manufacturing utilization and inconsistent productivity, along with transition costs related to the consolidation of yarn manufacturing operations. Brazil Segment The components of Segment Profit and the percentage increase or decrease over the prior period amounts for the Brazil Segment are as follows: Fiscal 2026 % Change Fiscal 2025 % Change Fiscal 2024 Net sales $ 115,148 (3.0 ) $ 118,726 0.8 $ 117,783 Cost of sales 101,008 (1.6 ) 102,699 (0.3 ) 103,028 Gross profit 14,140 (11.8 ) 16,027 8.6 14,755 Depreciation expense 3,271 18.0 2,771 (14.9 ) 3,257 Segment Profit $ 17,411 (7.4 ) $ 18,798 4.4 $ 18,012 Gross margin 12.3 % 13.5 % 12.5 % Segment margin 15.1 % 15.8 % 15.3 % Segment net sales as a percentage of consolidated amount 21.7 % 20.8 % 20.2 % Segment Profit as a percentage of consolidated amount 32.6 % 58.3 % 42.8 % The changes in net sales for the Brazil Segment are as follows: Net sales for fiscal 2024 $ 117,783 Increase in average selling price and change in sales mix 10,735 Increase in sales volumes 4,476 Unfavorable foreign currency translation effects (14,268 ) Net sales for fiscal 2025 $ 118,726 Net sales for fiscal 2025 $ 118,726 Decrease in average selling price and change in sales mix (6,998 ) Decrease in sales volumes (6,058 ) Favorable foreign currency translation effects 9,478 Net sales for fiscal 2026 $ 115,148 The decrease in net sales for the Brazil Segment from fiscal 2025 to fiscal 2026 was primarily attributable to (i) lower selling prices associated with competitive import pricing pressures and (ii) lower sales volumes due to market conditions, partially offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD. The increase in net sales for the Brazil Segment from fiscal 2024 to fiscal 2025 was primarily attributable to (i) higher average selling prices in response to increasing raw material costs and (ii) an improvement in sales volumes from market share gains, mostly offset by unfavorable foreign currency translation effects from the weakening of the BRL versus the USD. 30 The changes in Segment Profit for the Brazil Segment are as follows: Segment Profit for fiscal 2024 $ 18,012 Increase in underlying margins 2,198 Increase in sales volumes 688 Unfavorable foreign currency translation effects (2,100 ) Segment Profit for fiscal 2025 $ 18,798 Segment Profit for fiscal 2025 $ 18,798 Decrease in underlying margins (1,592 ) Decrease in sales volumes (942 ) Favorable foreign currency translation effects 1,147 Segment Profit for fiscal 2026 $ 17,411 The decrease in Segment Profit for the Brazil Segment from fiscal 2025 to fiscal 2026 was primarily attributable to (i) lower margins primarily due to sales mix and import pricing pressures and (ii) a decrease in sales volumes discussed above, partially offset by favorable foreign currency translation effects from the strengthening of the BRL versus the USD. We continue to prioritize innovation and differentiation to improve our portfolio and competitive position in Brazil. The increase in Segment Profit for the Brazil Segment from fiscal 2024 to fiscal 2025 was primarily attributable to (i) higher conversion margins and (ii) an increase in sales volumes discussed above, partially offset by unfavorable foreign currency translation effects. We continue to prioritize innovation and differentiation to improve our portfolio and competitive position in Brazil. Asia Segment The components of Segment Profit and the percentage increase or decrease over the prior period amounts for the Asia Segment are as follows: Fiscal 2026 % Change Fiscal 2025 % Change Fiscal 2024 Net sales $ 90,945 (13.1 ) $ 104,687 (12.9 ) $ 120,170 Cost of sales 79,442 (13.7 ) 92,079 (8.5 ) 100,679 Gross profit 11,503 (8.8 ) 12,608 (35.3 ) 19,491 Depreciation expense 57 — 57 470.0 10 Segment Profit $ 11,560 (8.7 ) $ 12,665 (35.1 ) $ 19,501 Gross margin 12.6 % 12.0 % 16.2 % Segment margin 12.7 % 12.1 % 16.2 % Segment net sales as a percentage of consolidated amount 17.1 % 18.3 % 20.6 % Segment Profit as a percentage of consolidated amount 21.7 % 39.3 % 46.4 % The changes in net sales for the Asia Segment are as follows: Net sales for fiscal 2024 $ 120,170 Change in average selling price and sales mix (10,103 ) Decrease in sales volumes (5,433 ) Favorable foreign currency translation effects 53 Net sales for fiscal 2025 $ 104,687 Net sales for fiscal 2025 $ 104,687 Decrease in sales volumes (14,673 ) Change in average selling price and sales mix (2,157 ) Favorable foreign currency translation effects 3,088 Net sales for fiscal 2026 $ 90,945 The decrease in net sales for the Asia Segment from fiscal 2025 to fiscal 2026 was primarily attributable to (i) an overall decrease in sales volumes due to competitive pricing pressures and the continued volatility stemming from geopolitical events and tariffs and (ii) a change in sales mix of REPREVE products, partially offset by favorable foreign currency translation effects from the strengthening of the RMB versus the USD. The decrease in net sales for the Asia Segment from fiscal 2024 to fiscal 2025 was primarily attributable to (i) a change in sales mix of REPREVE products and (ii) an overall decrease in sales volumes due to the continued customer-demand headwinds, particularly for apparel, and volatility introduced by recent tariffs partially offset by favorable foreign currency translation effects due to the strengthening of the RMB versus the USD. 31 The changes in Segment Profit for the Asia Segment are as follows: Segment Profit for fiscal 2024 $ 19,501 Change in underlying margins and sales mix (5,979 ) Decrease in sales volumes (882 ) Favorable foreign currency translation effects 25 Segment Profit for fiscal 2025 $ 12,665 Segment Profit for fiscal 2025 $ 12,665 Decrease in sales volumes (1,782 ) Change in underlying margins and sales mix 252 Favorable foreign currency translation effects 425 Segment Profit for fiscal 2026 $ 11,560 The decrease in Segment Profit for the Asia Segment from fiscal 2025 to fiscal 2026 was primarily attributable to a decline in sales volumes as discussed above. The decrease in Segment Profit for the Asia Segment from fiscal 2024 to fiscal 2025 was primarily attributable to a decline in gross margin associated with (i) a change in sales mix of REPREVE products and (ii) lower sales volumes due to customer-demand headwinds and volatility introduced by recent tariffs. Liquidity and Capital Resources UNIFI’s primary capital requirements are for working capital, capital expenditures, and debt service. UNIFI’s primary sources of capital are cash generated from operations and borrowings available under existing debt agreements. As of June 28, 2026, $70,439 of UNIFI's debt obligations were guaranteed by certain of its domestic operating subsidiaries and the remaining $22,000 were guaranteed by a related party discussed below, and nearly all of UNIFI’s cash and cash equivalents were held by its foreign subsidiaries. Cash and cash equivalents held by foreign subsidiaries may not be presently available to fund UNIFI’s domestic capital requirements, including its domestic debt obligations. UNIFI employs a variety of strategies to ensure that its worldwide cash is available in the locations where it is needed. The following table presents a summary of cash and cash equivalents, borrowings available under financing arrangements, liquidity, working capital, and total debt obligations as of June 28, 2026 for domestic operations compared to foreign operations: Domestic Foreign Total Cash and cash equivalents $ 41 $ 25,031 $ 25,072 Potential borrowings available under financing arrangements 44,741 — 44,741 Trigger level under ABL Revolver (16,500 ) — (16,500 ) Available liquidity $ 28,282 $ 25,031 $ 53,313 Working capital $ 41,131 $ 106,767 $ 147,898 Total debt obligations $ 92,439 $ — $ 92,439 For fiscal 2026, cash provided from operations was $26,534 and, at June 28, 2026, excess availability under the 2022 ABL Revolver and the 2024 Facility was $44,147 and $594, respectively. Our liquidity position (calculated in the table above) and asset base remains elevated and is expected to be adequate to allow UNIFI to manage through the current macro-economic environment and to respond quickly to demand recovery. UNIFI considers $44,110 of its unremitted foreign earnings to be permanently reinvested to fund working capital requirements and operations abroad, and has therefore not recognized a deferred tax liability for the estimated future taxes that would be incurred upon repatriation. If these earnings were distributed in the form of dividends or otherwise, or if the shares of the relevant foreign subsidiaries were sold or otherwise transferred, UNIFI could be subject to additional tax liabilities of approximately $13,728. Liquidity Considerations Inflationary pressures and demand uncertainty throughout fiscal 2024, 2025, and 2026 created risks to UNIFI's liquidity. Following the establishment of the 2022 Credit Agreement and the reduction in net debt from the sale of the Madison manufacturing facility, UNIFI’s cash and liquidity positions are considered sufficient to sustain its operations and meet its growth needs. However, further degradation in the macroeconomic environment could introduce additional liquidity risk and require UNIFI to limit cash outflows for discretionary activities while further utilizing available and additional forms of credit. 32 Short-term global demand appears somewhat uncertain and any adverse events or circumstances could place critical pressure on (i) our liquidity position; and/or (ii) our ability to fund our operations, capital expenditures, and expected business growth. Should global demand, economic activity, or input availability decline considerably for a prolonged period of time (for example, in connection with the Russia-Ukraine or Middle East conflicts or other macro-economic factors), UNIFI maintains the ability to (i) seek additional credit or financing arrangements and/or (ii) re-implement cost reduction initiatives to preserve cash and secure the longevity of the business and operations. Additionally, UNIFI considers opportunities to repatriate existing cash to reduce debt and preserve or enhance liquidity. In fiscal 2024, 2025, and 2026, we repatriated approximately $32,000, $15,000, and $13,000, respectively, from our operations in Asia and Brazil to the U.S. and, after remitting the appropriate withholding taxes, utilized the cash to reduce our outstanding revolver borrowings, thereby increasing the availability. Management regularly evaluates such repatriations and believes that it has the ability to take additional, similar actions from time to time, as circumstances warrant. In the fourth quarter of fiscal 2025, UNIFI sold its Madison, North Carolina facility, as well as certain machinery and equipment located thereon, for a cash purchase price of $45,000. The sale of this facility was part of a plan announced in February 2025 to consolidate the Americas Segment yarn manufacturing operations and transition the associated manufacturing operations to other production facilities in North and Central America. During fiscal 2027, we expect the majority of our capital will be deployed to support further working capital needs in response to the current demand environment and product sales. However, given the current global economic risks, we are prepared to act swiftly and decisively to ensure the vitality of the business. Our recent actions, specifically the transition of our Madison operations to other production facilities within North and Central America, will continue to provide better operational efficiency as a result of the cost savings that have been realized. We have also entered into an agreement to sell certain non-strategic real estate assets in North Carolina, and the closing of this transaction would have a significant positive impact to deleveraging the balance sheet and operating structure. Debt Obligations The following table presents details for UNIFI’s debt obligations: Weighted Average Scheduled Interest Rate as of Principal Amounts as of Maturity Date June 28, 2026 June 28, 2026 June 29, 2025 ABL Revolver October 2027 7.8% $ 3,900 $ 11,000 2024 Facility October 2027 4.5% 22,000 22,000 ABL Term Loan October 2027 5.8% 57,800 67,000 Finance lease obligations (1) 4.8% 8,739 8,008 Total debt 92,439 108,008 Current ABL Term Loan (9,200 ) (9,200 ) Current portion of finance lease obligations (3,171 ) (2,959 ) Unamortized debt issuance costs (70 ) (122 ) Total long-term debt $ 79,998 $ 95,727 (1)Scheduled maturity dates for finance lease obligations range from November 2026 to October 2032, as further outlined in Note 4, “Leases,” to the accompanying consolidated financial statements. 2022 ABL Facility and Amendments On October 28, 2022, Unifi, Inc. and certain of its subsidiaries entered into a Second Amended and Restated Credit Agreement (the “2022 Credit Agreement”) with a syndicate of lenders which provided for a $230,000 senior secured credit facility (the “2022 ABL Facility”), including a $115,000 revolving credit facility (the "2022 ABL Revolver") and a term loan (the "2022 ABL Term Loan") that can be reset up to a maximum amount of $115,000, once per fiscal year, if certain conditions are met. The 2022 ABL Facility has a maturity date of October 28, 2027. The 2022 ABL Term Loan requires quarterly principal payments of $2,300. Borrowings under the 2022 ABL Facility bear interest at the Secured Overnight Financing Rate ("SOFR") plus 0.10% plus an applicable margin of 2.0%, or the Base Rate (as defined in the 2022 Credit Agreement) plus an applicable margin of 1.0%, with interest paid most commonly on a monthly basis. On September 5, 2024, UNIFI, Inc. and certain of its subsidiaries entered into a First Amendment to the 2022 Credit Agreement (the “First Amendment”) with a syndicate of lenders. The First Amendment primarily (i) permitted the sale of a Company-owned real estate asset (consisting of an industrial warehouse building and land acreage) located in Yadkinville, North Carolina with application of the net proceeds to reduce the outstanding ABL Revolver balance, in lieu of the prescribed mandatory prepayment to the ABL Term Loan; (ii) reduced the Maximum Revolver Amount from $115,000 to $80,000; (iii) modified the definition of the Trigger Level as of any date of determination to the greater of (a) $16,500 and (b) 10% of the sum of (i) the Maximum Revolver Amount plus (ii) the outstanding principal amount of the ABL Term Loan on such date of determination; (iv) increased the range of the Applicable Margin on (a) SOFR-based loans to a new range of 1.50% to 2.00% and (b) Base Rate-based loans to a new range of 0.50% to 1.00%, with such new ranges of Applicable Margin rates becoming immediately effective and continuing until the Company achieves a Fixed Charge Coverage Ratio of 1.05 to 1.00 or better; (v) for a Term Loan Reset, established an additional requirement to obtain lender approval; and (vi) modified certain terms and conditions of the 2022 Credit Agreement including, but not limited to, Swing Loans, Letter of Credit sublimits, and costs related to normal course collateral valuations for the ABL Facility. 33 On April 10, 2025, UNIFI entered into a Second Amendment to the 2022 Credit Agreement (the “Second Amendment”). The Second Amendment primarily (i) permitted the Company to enter into the purchase agreement related to, and consummate the sale of, the Madison, North Carolina property, (ii) permitted the Company to allocate a portion of the net proceeds from the sale to repay outstanding revolving loans under the 2022 Credit Agreement, after the application of the greater of $25,000 or 50% of such net proceeds toward outstanding term loans, and (iii) required the consent of all lenders, rather than the Required Lenders (as defined in the 2022 Credit Agreement), in order to reset the maximum amount of the term loans available under the 2022 Credit Agreement. The 2022 ABL Facility is secured by a first-priority perfected security interest in substantially all owned property and assets (together with all proceeds and products) of Unifi, Inc., Unifi Manufacturing, Inc., and a certain subsidiary guarantor (collectively, the “Loan Parties”). It is also secured by a first-priority security interest in all (or 65% in the case of UNIFI’s first-tier controlled foreign subsidiary, as required by the lenders) of the stock of (or other ownership interests in) each of the Loan Parties (other than Unifi, Inc.) and certain subsidiaries of the Loan Parties, together with all proceeds and products thereof. If excess availability under the 2022 ABL Revolver falls below the Trigger Level (as defined in the First Amendment), a financial covenant requiring the Loan Parties to maintain a fixed charge coverage ratio on a quarterly basis of at least 1.05 to 1.00 becomes effective. The Trigger Level as of June 28, 2026 was $16,500. In addition, the 2022 ABL Facility contains restrictions on particular payments and investments, including certain restrictions on the payment of dividends and share repurchases. Subject to specific provisions, the 2022 ABL Term Loan may be prepaid at par, in whole or in part, at any time before the maturity date, at UNIFI’s discretion. The applicable margin is based on (i) the excess availability under the 2022 ABL Revolver and (ii) the consolidated leverage ratio, calculated as of the end of each fiscal quarter. UNIFI’s ability to borrow under the 2022 ABL Revolver is limited to a borrowing base equal to specified percentages of eligible accounts receivable and inventories and is subject to certain conditions and limitations. There is also a monthly unused line fee under the 2022 ABL Revolver of 0.25%. As of June 28, 2026, UNIFI was in compliance with all financial covenants in the 2022 Credit Agreement; excess availability under the 2022 ABL Revolver was $44,147 and UNIFI had $0 of standby letters of credit. Management maintains the capability to improve the fixed charge coverage ratio utilizing existing foreign cash and cash equivalents. UNIFI did not incur additional costs or administrative burdens during the transition from LIBOR to SOFR with the establishment of the 2022 Credit Agreement. 2024 Facility On October 25, 2024, UNIFI entered into a new credit agreement with Wells Fargo Bank, National Association for a $25,000 revolving credit facility (the "2024 Facility"). The maturity date of the 2024 Facility is the earlier of (i) October 28, 2027 and (ii) the termination or refinancing of the 2022 Credit Agreement. The 2024 Facility is deemed unsecured financing for UNIFI, but is collateralized by certain assets pledged by related party Kenneth G. Langone, one of the members of UNIFI's Board of Directors. Borrowings under the 2024 Facility bear interest at a rate of SOFR plus 0.90%. The 2024 Facility contains no additional financial covenants beyond those already in effect for the 2022 Credit Agreement and is subject to a monthly unused line fee of 0.25% on available borrowing capacity. UNIFI borrowed $22,000 against the 2024 Facility during the third fiscal quarter and used the proceeds to reduce the outstanding ABL Revolver balance. There was no impact to debt principal from these transactions. Finance Lease Obligations During fiscal 2026, UNIFI entered into finance lease obligations totaling $4,117 for transportation equipment. The maturity dates of these obligations range from October 2030 to October 2032 with interest rates ranging from 4.2% to 4.5%. During fiscal 2025, UNIFI entered into finance lease obligations totaling $1,716 for transportation equipment. The maturity dates of these obligations range from March 2028 to August 2032 with interest rates ranging from 4.2% to 5.4%. Scheduled Debt Maturities The following table presents the scheduled maturities of UNIFI’s outstanding debt obligations for the following five fiscal years and thereafter. Fiscal 2027 Fiscal 2028 Fiscal 2029 Fiscal 2030 Fiscal 2031 Thereafter ABL Revolver $ — $ 3,900 $ — $ — $ — $ — 2024 Facility — 22,000 — — — — ABL Term Loan 9,200 48,600 — — — — Finance lease obligations 3,171 2,210 973 949 834 602 Total $ 12,371 $ 76,710 $ 973 $ 949 $ 834 $ 602 Further discussion of the terms and conditions of the Credit Agreement and the Company’s existing indebtedness is outlined in Note 12, “Long-Term Debt,” to the accompanying consolidated financial statements. 34 Net Debt (Non-GAAP Financial Measure) The reconciliations for Net Debt are as follows: June 28, 2026 June 29, 2025 Long-term debt $ 79,998 $ 95,727 Current portion of long-term debt 12,371 12,159 Unamortized debt issuance costs 70 122 Debt principal 92,439 108,008 Less: cash and cash equivalents 25,072 22,664 Net Debt $ 67,367 $ 85,344 Net debt decreased from fiscal 2025 to fiscal 2026 primarily due to improved operating cash flow generation, driven by higher gross profit and lower working capital levels, which enabled the Company to repay $16,300 on its ABL Facility reducing overall debt principal. Working Capital and Adjusted Working Capital (Non-GAAP Financial Measure) The following table presents the components of working capital and the reconciliation from working capital to Adjusted Working Capital: June 28, 2026 June 29, 2025 Cash and cash equivalents $ 25,072 $ 22,664 Receivables, net 76,666 75,383 Inventories 101,067 122,929 Income taxes receivable 905 5,429 Other current assets 7,743 9,222 Accounts payable (31,151 ) (37,468 ) Other current liabilities (17,249 ) (18,899 ) Income taxes payable (656 ) (49 ) Current operating lease liabilities (2,128 ) (2,368 ) Current portion of long-term debt (12,371 ) (12,159 ) Working capital $ 147,898 $ 164,684 Less: Cash and cash equivalents (25,072 ) (22,664 ) Less: Income taxes receivable (905 ) (5,429 ) Less: Income taxes payable 656 49 Less: Current operating lease liabilities 2,128 2,368 Less: Current portion of long-term debt 12,371 12,159 Adjusted Working Capital $ 137,076 $ 151,167 Working capital decreased from $164,684 as of June 29, 2025 to $147,898 as of June 28, 2026, while Adjusted Working Capital decreased from $151,167 to $137,076, both primarily in connection with slower overall economic conditions and higher input costs. Working capital and Adjusted Working Capital are within the range of management’s expectations based on the composition of the underlying business and global structure. The increase in receivables, net was primarily due to the timing of cash receipts. The decrease in inventories was primarily attributable to concerted efforts to reduce inventory levels in response to the depressed demand environment and in relation to the consolidation of yarn manufacturing operations with the recent closure of the Madison, North Carolina facility. The decrease in other current assets was primarily due to the decrease in inventory prepayments. The decrease in accounts payable followed the decrease in inventories and production activity in fiscal 2026. The decrease in other current liabilities primarily reflects the change in compensation-related accruals in fiscal 2026 and the timing of payroll and operating expense payments between the two period-ends. The decrease in income taxes receivable was primarily due to receipt of refunds of income taxes recovered for prior periods in Brazil. The change in income taxes payable, current operating lease liabilities, and current portion of long-term debt were insignificant. Capital Projects Maintenance capital expenditures are necessary to support UNIFI’s current operations, capacities, and capabilities and exclude expenses relating to repairs and costs that do not extend an asset’s useful life. In fiscal 2026, UNIFI invested $5,002 in capital projects, primarily relating to (i) modifications of machinery with the consolidation of yarn manufacturing operations, (ii) further improvements in production capabilities and technological enhancements in the Americas, and (iii) routine annual maintenance capital expenditures. In fiscal 2025, UNIFI invested $10,488 in capital projects, primarily relating to (i) modifications of machinery with the consolidation of yarn manufacturing operations, (ii) further improvements in production capabilities and technological enhancements in the Americas, and (iii) routine annual maintenance capital expenditures. 35 In fiscal 2024, UNIFI invested $11,198 in capital projects, primarily relating to (i) further improvements in production capabilities and technological enhancements in the Americas, and (ii) routine annual maintenance capital expenditures. In fiscal 2027, UNIFI expects to invest between $7,000 and $9,000 in capital projects, primarily relating to routine annual maintenance capital expenditures. UNIFI will seek to ensure maintenance capital expenditures are sufficient to allow continued production at high efficiencies. The total amount ultimately invested for fiscal 2027 could be more or less than the currently estimated amount depending on the timing and scale of contemplated initiatives and is expected to be funded primarily with cash provided by operating activities and other borrowings. UNIFI expects recent and future capital projects to provide benefits to future profitability. The additional assets from these capital projects consist primarily of machinery and equipment. Share Repurchase Program On October 31, 2018, UNIFI announced that the Board approved 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. Liquidity Summary UNIFI has met its historical liquidity requirements for working capital, capital expenditures, debt service requirements, and other operating needs from its cash flows from operations and available borrowings. UNIFI believes that its existing cash balances, cash provided by operating activities, and credit facility will enable UNIFI to meet its foreseeable liquidity requirements. However, further degradation in the macroeconomic environment could introduce additional liquidity risk and require UNIFI to limit cash outflows while further utilizing available and additional forms of credit. Cash Provided (Used) by Operating Activities The significant components of net cash provided (used) by operating activities are summarized below. UNIFI analyzes net cash provided by operating activities utilizing the major components of the statements of cash flows prepared under the indirect method. Fiscal 2026 Fiscal 2025 Fiscal 2024 Net loss $ (24,562 ) $ (20,348 ) $ (47,395 ) Depreciation and amortization expense 24,050 25,284 27,669 Equity in loss of unconsolidated affiliates 266 477 390 Non-cash compensation expense 3,352 3,252 2,074 Gain on foreign currency transaction, net (1,892 ) — — (Gain) loss on sales and disposals of assets (119 ) (39,317 ) 62 Deferred income taxes 235 (676 ) (3,543 ) Subtotal 1,330 (31,328 ) (20,743 ) Distributions received from unconsolidated affiliates — — 1,000 Change in inventories 24,441 9,588 13,879 Other changes in assets and liabilities 763 429 7,956 Net cash provided (used) by operating activities $ 26,534 $ (21,311 ) $ 2,092 Fiscal 2026 Compared to Fiscal 2025 The increase in operating cash flows from fiscal 2025 was primarily due to improvement in gross profit and the reduction in working capital balances in fiscal 2026. Fiscal 2025 Compared to Fiscal 2024 The decrease in operating cash flows from fiscal 2024 was primarily due to weaker underlying earnings together with less favorable impacts from changes in working capital than in the prior year, and transition activities. 36 Cash (Used) Provided by Investing Activities and Financing Activities Fiscal 2026 Significant investing activities included $5,002 for capital expenditures (as described above). Significant financing activities included $16,300 of net payments against the 2022 ABL Facility. Fiscal 2025 Significant investing activities included $10,488 for capital expenditures (as described above) and $51,553 of cash proceeds from the sales of a warehouse in Yadkinville, North Carolina and manufacturing facility in Madison, North Carolina. Significant financing activities included $20,900 of net payments against the 2022 ABL Facility (including $25,000 and $18,322 of payments towards the 2022 ABL Term Loan and Revolver, respectively, associated with the sale of the Madison, North Carolina facility in the fourth quarter) along with $3,093 of payments on finance lease obligations. Fiscal 2024 Significant investing activities included $11,189 for capital expenditures (as described above). Significant financing activities included $7,600 of net payments against the 2022 ABL Facility, along with $3,001 of payments on finance lease obligations. Contractual Obligations In addition to management’s discussion and analysis surrounding our liquidity and capital resources, long-term debt, finance leases, operating leases, and the associated principal and interest components thereof, as of June 28, 2026, UNIFI’s contractual obligations consisted of the following additional concepts and considerations: •Purchase obligations are agreements that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Such obligations, predominantly related to ongoing operations and service contracts in support of normal course business, range from approximately $1,000 to $10,000 per annum and vary based on the renewal timing of specific commitments and the range of services received. •Non-capital purchase orders totaled approximately $20,170 at the end of fiscal 2026 and are expected to be settled in fiscal 2027. Such open purchase orders are in the ordinary course of business for the procurement of (i) raw materials used in the production of inventory, (ii) certain consumables and outsourced services used in UNIFI’s manufacturing processes, and (iii) selected finished goods for resale sourced from third-party suppliers. •Other balance sheet items are detailed within the notes to the consolidated financial statements, including, but not limited to, post-employment plan liabilities, unpaid invoice and contract amounts, and other balances and charges that primarily relate to normal course operations. UNIFI does not engage in off-balance sheet arrangements and only enters into material contracts in the ordinary course of business and/or to hedge the associated risks (e.g., interest rate swaps). Recent Accounting Pronouncements Issued and Pending Adoption In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU No. 2024-03 does not change or remove existing expense disclosure requirement but requires disaggregated disclosures about certain expense categories and captions, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization, and selling expenses. This ASU will become effective for UNIFI's fiscal 2028 and in the first quarter of fiscal 2029 for interim reporting, with retrospective application permitted. UNIFI is currently evaluating the impact on the Company's disclosures on its consolidated financial statements. Upon review of each ASU issued by the FASB through the date of this report, UNIFI identified no other newly issued accounting pronouncements that are expected to have a significant impact on UNIFI’s consolidated financial statements. Recently Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU No. 2023-09 modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (iii) income tax expense or benefit from continuing operations (separated by federal, state, and foreign). The ASU also requires entities to disclose their income tax payments to international, federal, state, and local jurisdictions, among other changes. UNIFI adopted the ASU this fiscal year and the adoption did not have a material impact to UNIFI's consolidated financial statements. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU No. 2023-07 expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. UNIFI adopted the ASU this fiscal year and the adoption did not have a material impact to UNIFI's consolidated financial statements. 37 Off-Balance Sheet Arrangements UNIFI is not a party to any off-balance sheet arrangements that have had, or are reasonably likely to have, a current or future material effect on UNIFI’s financial condition, results of operations, liquidity, or capital expenditures. Critical Accounting Policies The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The SEC has defined a company’s most critical accounting policies as those involving accounting estimates that require management to make assumptions about matters that are highly uncertain at the time and where different reasonable estimates or changes in the accounting estimate from quarter to quarter could materially impact the presentation of the financial statements. The following discussion provides further information about accounting policies critical to UNIFI and should be read in conjunction with Note 2, “Summary of Significant Accounting Policies,” to the accompanying consolidated financial statements. Inventory Net Realizable Value Adjustment The inventory net realizable value adjustment is established based on many factors, including: historical recovery rates, inventory age, expected net realizable value of specific products, and current economic conditions. Specific reserves are established based on a determination of the obsolescence of the inventory and whether the inventory cost exceeds net realizable value. Anticipating selling prices and evaluating the condition of the inventories require judgment and estimation, which may impact the resulting inventory valuation and gross margins. UNIFI uses current and historical knowledge to record reasonable estimates of its markdown percentages and expected sales prices. UNIFI believes it is unlikely that differences in actual demand or selling prices from those forecasted by management would have a material impact on UNIFI’s financial condition or results of operations. UNIFI has not made any material changes to the methodology used in establishing its inventory net realizable value adjustment during the past three fiscal years. A plus or minus 10% change in the inventory net realizable value adjustment would not have been material to UNIFI’s consolidated financial statements for the past three fiscal years. June 28, 2026 June 29, 2025 June 30, 2024 Net realizable value adjustment $ (3,779 ) $ (3,964 ) $ (3,813 )

UNIFI is exposed to market risks associated with changes in interest rates, and fluctuations in foreign currency exchange rates and raw material and commodity costs, which may adversely affect its financial position, results of operations or cash flows. UNIFI does not enter into derivative financial instruments for trading purposes, nor is it a party to any leveraged financial instruments. Interest Rate Risk UNIFI is exposed to interest rate risk through its borrowing activities. As of June 28, 2026, UNIFI had borrowings under the 2022 ABL Facility and 2024 Facility totaling $83,700. After considering UNIFI’s outstanding debt obligations with fixed rates of interest, UNIFI’s sensitivity analysis indicates that a 50-basis point interest rate increase as of June 28, 2026 would result in an increase in annual interest expense of approximately $400. Foreign Currency Exchange Rate Risk UNIFI conducts its business in various foreign countries and in various foreign currencies. Each of UNIFI’s subsidiaries may enter into transactions (sales, purchases, fixed purchase commitments, etc.) that are denominated in currencies other than the subsidiary’s functional currency and thereby expose UNIFI to foreign currency exchange rate risk. UNIFI may enter into foreign currency forward contracts to hedge this exposure. UNIFI may also enter into foreign currency forward contracts to hedge its exposure for certain equipment or inventory purchase commitments. As of June 28, 2026, UNIFI had no outstanding foreign currency forward contracts. A significant portion of raw materials purchased by the Brazil Segment are denominated in USDs, requiring UNIFI to exchange BRL for USD. A significant portion of sales and asset balances for the Asia Segment are denominated in USDs. During recent fiscal years, UNIFI has been negatively impacted by fluctuations of the BRL and the RMB. Discussion and analysis surrounding the impact of fluctuations of the BRL and the RMB on UNIFI’s results of operations are included above in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” UNIFI does not enter into foreign currency derivatives to hedge its net investment in its foreign operations. 38 As of June 28, 2026, foreign currency exchange rate risk concepts included the following: Approximate Amount or Percentage Percentage of total consolidated assets held by UNIFI's subsidiaries outside the U.S. whose functional currency is not the USD 35 % Cash and cash equivalents held outside the U.S.: Denominated in USD $ 12,216 Denominated in RMB 1,654 Denominated in BRL 10,200 Denominated in other foreign currencies 644 Total cash and cash equivalents held outside the U.S. $ 24,714 Percentage of total cash and cash equivalents held outside the U.S. 99 % Cash and cash equivalents held inside the U.S. in USD by foreign subsidiaries $ 317 Raw Material and Commodity Cost Risks A significant portion of UNIFI’s raw material and energy costs are derived from petroleum-based chemicals. The prices for petroleum and petroleum-related products and related energy costs are volatile and dependent on global supply and demand dynamics, including certain geo-political risks. A sudden rise in the price of petroleum and petroleum-based products could have a material impact on UNIFI’s profitability. UNIFI does not use financial instruments to hedge its exposure to changes in these costs as management has concluded that the overall cost of hedging petroleum exceeds the potential risk mitigation. The costs of the primary raw materials that UNIFI uses throughout all of its operations are generally based on USD pricing, and such materials are purchased at market or at fixed prices that are established with individual vendors as part of the purchasing process for quantities expected to be consumed in the ordinary course of business. UNIFI manages fluctuations in the cost of raw materials primarily by making corresponding adjustments to the prices charged to its customers. Certain customers are subject to an index-based pricing model in which UNIFI’s prices are adjusted based on the change in the cost of certain raw materials in the prior quarter. Pricing adjustments for other customers must be negotiated independently. UNIFI attempts to pass on to its customers increases in raw material costs, but due to market conditions, this is not always possible. When price increases can be implemented, there is typically a time lag that adversely affects UNIFI’s margins during one or more quarters. In ordinary market conditions in which raw material price increases have stabilized and sales volumes are consistent with traditional levels, UNIFI has historically been successful in implementing price adjustments within one to two fiscal quarters of the raw material price increase for its index-priced customers and within two fiscal quarters of the raw material price increase for its non-index-priced customers. During fiscal 2022 and 2023, our raw material costs were elevated. We were able to implement responsive selling price adjustments for the majority of our portfolio; however our underlying gross margin was pressured. In fiscal 2024, 2025, and 2026, while gross margins were still pressured, UNIFI experienced a more stable raw material pricing environment. Nonetheless, such costs remain subject to the volatility described above and, should raw material costs increase unexpectedly, UNIFI’s results of operations and cash flows are likely to be adversely impacted. In any event, UNIFI monitors these dynamic factors closely. Cash Deposits and Financial Institution Risk During calendar 2023, certain regional bank crises and failures generated additional uncertainty and volatility in the financial and credit markets. UNIFI currently holds the vast majority of its cash deposits with large foreign banks in our associated operating regions, and management believes that it has the ability to repatriate cash to the U.S. Accordingly, UNIFI has not modified its mix of financial institutions holding cash deposits, but UNIFI continues to monitor the environment and current events to ensure any increase in concentration or credit risk is appropriately and timely addressed. Likewise, if any of our lending counterparties are unable to perform on their commitments, our liquidity could be adversely impacted and we may not be able to adequately fund our operations and pay our debts as they become due. We actively monitor all lending counterparties, and none have indicated that they may be unable to perform on their commitments. In addition, we periodically review our lending counterparties, considering the stability of the institutions and other aspects of the relationships. Based on our monitoring activities, we currently believe our lending counterparties will be able to perform their commitments. Other Risks UNIFI is also exposed to political risk, including changing laws and regulations governing international trade, such as quotas, tariffs, and tax laws. The degree of impact and the frequency of these events cannot be predicted. 39

Our consolidated financial statements and the related notes begin on page F-i herein.