Unifi (NYSE: UFI), a leader in recycled and synthetic yarn, announced plans to transition production from its Madison, North Carolina facility and put the property up for sale in 2025. The company will consolidate production into its existing facilities across North and Central America.
The strategic move aims to improve efficiency, lower fixed costs, and enhance profitability without impacting sales volume or production capacity. The consolidation will increase utilization rates at remaining facilities and improve fixed cost absorption. Proceeds from the property sale will be used to reduce existing debt.
The company will relocate certain equipment to maintain business continuity and customer service levels. UNIFI is offering existing Madison employees opportunities at other North Carolina facilities to ensure a smooth transition. Additional details will be provided during the company's Q2 fiscal 2025 earnings call on February 6, 2025.
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UNIFI's strategic consolidation of its Madison facility operations marks a decisive move to address operational inefficiencies in a challenging textile market environment. The restructuring carries several key implications for investors:
Financial Impact: The consolidation should yield multiple benefits: 1) Improved capacity utilization across remaining facilities will enhance fixed cost absorption 2) Reduced overhead costs from operating fewer locations 3) Strengthened balance sheet through debt reduction from property sale proceeds 4) Potential working capital optimization through inventory consolidation.
Operational Efficiency: The decision to maintain production capacity while reducing physical footprint suggests:
Market Positioning: This restructuring aligns with broader industry trends where textile manufacturers are optimizing their North American operations to remain competitive against Asian imports. The commitment to maintain REPREVE® innovation and production capacity indicates UNIFI is protecting its core competitive advantage in sustainable textiles while streamlining operations.
The timing of this announcement, ahead of Q2 FY2025 earnings, suggests management is proactively addressing operational inefficiencies to improve profitability metrics. While there will be near-term transition costs, the long-term benefits to operating margins and balance sheet strength make this a strategically sound decision for the company's future positioning.
Strategic decision to enhance operating efficiency, lower fixed costs, improve profitability and further strengthen balance sheet
GREENSBORO, N.C.--(BUSINESS WIRE)-- Unifi, Inc. (NYSE: UFI) (together with its consolidated subsidiaries, “UNIFI”), leading innovator in recycled and synthetic yarn, today announced it will be transitioning yarn production out of its manufacturing facility in Madison, North Carolina, and placing the property for sale in calendar 2025. Production activities currently occurring at the Madison, North Carolina facility will be consolidated into UNIFI facilities in North and Central America.
Key Highlights:
Eddie Ingle, Chief Executive Officer of UNIFI, Inc., stated, “We are very grateful for the hard work, contributions, and support from everyone involved with the Madison facility, including the community and employees, past and present. We will work closely with our employees and community to ensure the smoothest transition possible, and we are offering existing employees available opportunities at our other facilities in North Carolina.”
Ingle continued, “The closure of this facility enables us to better align UNIFI’s manufacturing footprint with our growing customer base across North and Central America. This move, which involves relocating some machinery to other manufacturing locations, will enhance our cost structure and strengthen our balance sheet. Importantly, this transition will not impact our ability to meet the demands of the market or our strategic initiatives focused on innovation, the REPREVE® portfolio, and continuous financial improvement. We look forward to transitioning to a more robust operating profile, revitalizing our Americas businesses, and creating a more sustainable future for all our stakeholders.”
Additional details on the strategic transition will be provided during the Company’s upcoming second quarter fiscal 2025 earnings conference call that will take place on February 6, 2025, at 8:00 a.m. Eastern Time.
About UNIFI
UNIFI, Inc. (NYSE: UFI) is a global leader in fiber science and sustainable synthetic textiles. Using proprietary recycling technology, UNIFI is a pioneer in scaling the transformation of post-industrial and post-consumer waste into sustainable products. Through REPREVE, the world’s leading brand of traceable, recycled fiber and resin, UNIFI is changing the way industries think about the materials they use – and reuse. A vertically-integrated manufacturer, the company has direct operations in the United States, Colombia, El Salvador, and Brazil, and sales offices all over the world. UNIFI envisions a future where circular and sustainable solutions are the only choice. For more information about UNIFI, visit www.unifi.com.
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Source: Unifi, Inc.