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Good morning, and thank you for attending Unifi's First Quarter Fiscal 2026 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions] Speakers for today's call include Al Carey, Executive Chairman; Eddie Ingle, Chief Executive Officer; A.J. Eaker, Chief Financial Officer. During this call, management will be referencing a webcast presentation that can be found in the Investor Relations section of unifi.com. Please familiarize yourself with Page 2 of that slide deck for cautionary statements and non-GAAP measures. I will now turn the call over to Al Carey.

Thank you. Good morning, everybody, and thank you for joining us today. Listen, I'll get started with a few comments. And to start out, I'd say our UNIFI business had a challenging quarter. However, I'd like to spend a few minutes to explain what unusual obstacles occurred in quarter 1. I think it would be helpful for those of you that follow our company to understand that this quarter had 2 primary challenges. One is beyond our control and one is within our control, but it's temporary. So let's start out with the first item, which is what is beyond our control. Most of you have probably read about this in our industry, the majority of our customers placed orders for goods that will get them through the holiday season, but they ordered them just before the tariffs went into effect in April. Then since April, orders have been extremely light and only for goods that are absolutely necessary, and this seems to be consistent across our industry, not just a UNIFI issue. This has had a significant impact on our sales revenues, particularly in Asia and also in Central America, and it's going to affect sales probably for another 8 weeks. So it will take us through our quarter 2. This is as best as we can determine. But most of our customers, retailers and brands have communicated to us that they expect to return to some level of normal ordering in January. And if not, we have a plan to deal with that. One positive development that we are keeping an eye on is that the sales growth of apparel remains solid at a plus 5% versus a year ago and inventory is declining pretty significantly. So ordering should follow. So that's topic one. Topic two, what is within our control. I think I mentioned this on the last call. We closed our Madison facility in June. We moved out of that volume. We took it from Madison to Yadkinville, our bigger facility, which added 40% to their capacity. The transition required us to hire many people, train them, moving equipment and incenting employees to stay working in Madison until we shut down so that we didn't miss out on business and kept our service up with our customers. We've had increased costs because of these transitions, but I will tell you that we've taken actions. You'll hear more about them today to put our costs back on track. And while you don't see it in our Q1 results, we are now seeing it in our October operating results, which is the first month of the quarter, the new quarter. And you can expect these transition costs are now fully complete for our company. The third item I wanted to mention is that we really have resized our company's cost model. We now have resized the operating cost to fit this new level of revenue, this new low level of revenue so that we can be profitable even at the lower levels. So we've taken some new cost reductions, headcount reductions and price actions that are now complete as of last week. These actions will allow us to deliver improved cash flow and EBITDA and the performance will step up as we move from quarter 2 through quarter 4. Then when the revenues do improve and they will improve, we will see much, much better leverage on our fixed cost as a total company. Now A.J. will take you through how our net debt is being reduced and our cash flow improves with these changes. And I'd like to mention that last, but not least, we have a plan on improving revenue growth with our efforts at beyond apparel products, which we've been talking about for quite some time, topics such as military segment, carpet, resin sales and packaging. All these products are relatively new to our business with better margins than the base. There have been a lot of work going on meeting qualifications for these projects. That's the one thing we probably didn't realize is how long it will take to qualify, but there's lots of work being done and orders are now coming in. Our efforts on the REPREVE innovation and textile Takeback are gaining a high level of interest from customers. They will see progress in the second half of calendar 2026. So in summary, despite the obstacles we faced in quarter 1, I'd say our team was agile in taking action that will make us a more profitable company and deal with these tariff uncertainties. While our comeback has taken longer than I would have liked, we have used this adversity to take additional actions fairly quickly and to be more sure of our ability to generate profits and cash flow even as the market has periodic downturns in the future. So now let me turn it over to Eddie Ingle, our President and CEO, who will take you through the actions that went on during this quarter.

Thanks, Al. I'm going to start with an overview of the first quarter, so please turn to Slide #4. As Al noted, our results for the first quarter came in below our expectations as we continue to be impacted by softer ordering patterns that are directly related to the recent tariff and trade uncertainties. Many of our global customers have continued to methodically slow down their ordering patterns until they are better able to formulate a strategy to handle this current tariff landscape, which remains highly fluid. While we're disappointed that the customers are being cautious, the holiday season should bring apparel inventories down to relatively low levels, and thus, we believe we should build revenue momentum at the beginning of calendar 2026. Now along those lines, I think it's important to offer a few updates on the current trade environment in the key markets that we currently operate in. In the Americas, while the short term remains challenging, the mid- and long-term outlook seems to be improving. The reality is many brand and partners of ours are starting the process of moving some of their production programs to Central America in calendar 2026. While more clarity on the global tariff situation will be needed, we are actively working with these retailers to highlight the fact that if they use our U.S. yarn during their production in Central America, they can receive much of the 10% reciprocal tariff back as all of our Central American supply chain is U.S.-based. In Asia, brands are also reassessing where they need to move the final assembly step of their supply chain. While there continues to be some uncertainty in terms of which country will end up being the most favorable, our model remains asset-light. And as we've noted many times in the past, we continue to see immense opportunity in Asia once trade pressures begin to subside, given that the majority of the world's polyester is still produced from China-based assets. In Brazil, we continue to see relative demand stability and feel highly confident in the long-term growth potential of the textured polyester yarn market. However, we are still seeing some dumping pressure from Asia-based companies whose Asia-based demand has dried up. The textured polyester industry has filed an antidumping case with the Brazilian government, and they are going through the evaluation process right now. If successful, it would help alleviate some of the short-term headwinds we are seeing in the region. However, that process will take until the end of our fiscal year to get a final resolution. So stepping back a little bit and looking at the big picture, the tariff and trade situation has hurt all of our business segments in the near term, but they may, in fact, offer the Americas segment even greater support in the long term. Given the short-term uncertainty, it was important to further align our cost structure and improve our ability to drive greater profits and cash flow in fiscal 2026. The first step was the [indiscernible] of a cost restructuring program that was executed right after the Q1 quarter close. A.J. will provide more details on the financial impact of this program, but these cost restructuring efforts reduced our headcount and brought down hours in some of our facilities as we wait for demand to recover. Implementing these actions are not something that we take lightly, but we do believe that it was a necessary step for us to help deal with the financial headwinds we are currently facing and achieve improved financial results. We have done this while keeping the manufacturing footprints and capacities of the Americas business segments intact. As the fiscal year progresses and revenues pick up, we will continue to be very selective about where we add back costs. And the second step we took during the September quarter was to communicate to customers inflation and tariff-related price increases. This increase in pricing will help drive a partial uplift to our financial results in Q2 and will be fully visible in our third fiscal quarter financial results. Turning now to our specific performance. During the first quarter of fiscal 2025, we reported $135.7 million in consolidated net sales, which was down 7.9%. In the Americas segment, we experienced a year-over-year decline, primarily due to reduced sales volumes stemming from trade uncertainty and some productivity shortfalls caused by our continued efforts to consolidate our U.S. yarn manufacturing operations. These transition costs are now complete. In our Brazil segment, we are continuing to see stable demand for our products, but as I noted earlier, our results during the period were impacted due to import pricing pressures from some dumping in the region and slightly lower sales volumes. With that said, we see -- we still see strong fundamentals in Brazil's textured polyester market, which we believe will help drive further improved financial performance in the second half of the fiscal 2026. In our Asia segment, sales continued to remain weak as trade negotiations drag on. As we've noted on our previous earnings call, our fixed cost profile in the region remains low and our asset-light model can be applied in many other countries. And thus, we will continue to adapt to the short term, and we'll be ready as global trade conditions shift and/or normalize. Turning now to Slide 5 for an update on REPREVE. During the first quarter, REPREVE Fiber represented 29% of sales, down 1% point from the previous year due to trade policy impacting ordering patterns. Despite this impact, we are seeing some green shoots for our REPREVE polyester resin, which performed well during the period. And we're cautiously optimistic that this momentum in resin will continue throughout the remainder of fiscal 2026. These REPREVE resin sales are part of the Beyond Apparel business growth in the U.S. Moving now to Slide 6 to highlight some of our recent innovation efforts. We are building off the momentum from recent global product launches. During the last quarter, we had announced the global product launch of our new offering under the A.M.Y. platform for sustainable odor control, A.M.Y. Peppermint and our updated offerings of ThermaLoop insulation and REPREVE Takeback. Both of these circular products are now offered with 100% textile fabric waste inputs. On Slide 7, you can see the first co-branded placement of our ThermaLoop insulation products with outdoor apparel leaders, Marmot and Lafuma. Both brands have launched jackets incorporating on-garment co-branding hangtags and callouts on e-commerce. Meanwhile, REPREVE Our Ocean was featured in a co-branded Instagram social media created in collaboration with Rain Rebel. The content effectively engaged audiences across both Europe and the U.S., serving as a compelling piece of brand storytelling using our REPREVE Our Ocean filament yarn in their rain ponchos made from 22 post-consumer recycled plastic bottles that are ocean cycle certified, which means they are removed from the ocean-bound environments in developing countries, lacking the formal infrastructure for waste management and recycling. Further, these customer validations were complemented by the announcement of recent award recognition as leaders in sustainable textile solutions. Our ThermaLoop insulation received an Honorable Mention from Fast Company's Innovation by Design Awards in the Sustainability and Circular Design category, standing alongside renowned companies like Google, Haworth and [indiscernible]. The REPREVE brand platform was awarded as a finalist for the Digiday Greater Goods Awards, which honors brands addressing critical social and environmental challenges. And before I call -- return the call over to A.J., I want to quickly mention that we are continuing to see positive momentum in our Beyond Apparel initiatives in carpet, military and packaging applications. So far, the government shutdown hasn't hampered sales much in the military market, but we hope to see that situation resolved reasonably quickly to keep our momentum here. We continue to believe that the sales from these initiatives will become a meaningful contributor to our financial and revenue growth in the second half of fiscal 2026. With that, I would now like to pass the call over to A.J. to discuss our financial results for the quarter.

Thank you, Eddie. As Eddie noted, we are disappointed in our financial results this quarter and thus have continued to take steps to better align and optimize costs across our business, which now includes the recent implementation of another cost restructuring initiative. This recent initiative is expected to result in significant savings on an annual basis as we reduce our headcount, match machine run rates with sales volumes and strategically reduce operating costs across our business. This new cost reduction plan includes approximately $5 million in SG&A savings on an annualized basis compared to fiscal 2025 and approximately $4 million of those savings should be reflected in this fiscal 2026. These are predominantly cash savings. Next, the new reduction in manufacturing costs are designed to drive a $5 million per quarter savings for the remainder of fiscal 2026. These measures were necessary to realign costs with the lower revenue levels that were not expected immediately following the closure of our Madison facility. Moving on to the financial results on Slide 8. You will see our consolidated financial highlights for the quarter. Consolidated net sales for the quarter were $135.7 million, down 8% year-over-year, primarily driven by trade-related uncertainty and short-term demand volatility across each business segment. Gross profit was lower at $3.4 million and gross margin was 2.5%. On Slide 9, in the Americas, net sales were down 1.3% compared to the prior year fiscal 2025 due to price and sales mix. Gross profit in the region decreased by $300,000, primarily as demand and production volatility mostly offset the savings from consolidation efforts during calendar 2025. Slide 10 displays our Brazil segment, which saw net sales and gross profit decrease versus the prior year. As Eddie noted, this was primarily due to import pricing pressures and lower sales volumes. That said, demand and growth opportunities continue to remain strong in Brazil. Finally, on Slide 11, our Asia segment net sales and gross profit declined by 19% and 16%, respectively, primarily due to lower sales volumes, a less favorable sales mix and pricing dynamics in the region. Despite these headwinds, our gross margin in the region did improve by 40 basis points, highlighting the benefit of our ability to adjust and flex our asset-light model. Slide 12 outlines our capital structure. From a CapEx perspective, we prioritize critical investments and are forecasting under $10 million in fiscal 2026. We've also continued to do a nice job managing our working capital over the last few years and expect to continue that work throughout fiscal 2026 from a leaner manufacturing base in the U.S. With all of our calendar 2025 cost actions, we have positioned the business to better generate operating cash flows under a strained revenue environment. For example, in monitoring our weekly cash spend in the Americas business, during October, we've seen a significant decrease versus August when we had more volatile customer ordering patterns and higher activity across all operating functions. Therefore, significant progress has been made. With that, I'll pass the call back to Eddie.

Thank you, A.J. Now let's turn to Slide 13 to discuss our forecast for the second quarter of fiscal 2026. For the second quarter, we are expecting to begin to see the full benefits of our proactive efforts to reduce costs, increase machine efficiencies and facility utilization to improve profitability throughout the remainder of fiscal 2026. We also expect to see adjusted EBITDA improve sequentially from the first quarter of fiscal 2026, primarily driven by cost savings in the Americas segment. Due to the holiday period, the net sales are expected to drop slightly in the Americas and Brazil and net sales in Asia are expected to increase ahead of the Lunar New Year, which this year is in mid-February 2026. And while it's difficult to -- for us to predict the exact timing of this, we also anticipate that the global trade situation will gain greater clarity by the end of calendar 2025. This as well as significantly reduced inventory levels in the channel after the holiday season should help us see incremental improvement of the top line throughout calendar 2026. Lastly, we do expect to see continued commercialization of our value-added products such as REPREVE Takeback in ThermaLoop in Asia and in the beyond apparel markets such as packaging, military, and carpets in the U.S. To wrap up on Slide 14 with our strategic priorities. While much of our cost actions were completed during the first 10 months of calendar 2025, we recognize that we still have some work ahead of us to position our business to be where we want it to be. As we've highlighted today, we are continuing to make the necessary changes needed to strengthen our business, which will help us capitalize on the investments we have made in new innovations and circular textile solutions. As we have previously noted, achieving our goals will continue to require patience and persistence. However, the cost actions we took will be seen in Q2 and beyond. And while October has not yet been rolled up, we have seen better revenues come through in the Americas. Further, now that we have rightsized our Americas footprint, we will see the cost benefits of this reduction begin to flow through. The tariff uncertainty should subside in the coming months, and the brands will have a clear supply chain strategy that we will adapt to. The focus going forward will be on growing revenues and margins through the commercialization of our value-added technologies and building our business in new markets. When successful, this is expected to create long-term value for our shareholders. With that, we would now like to open the line for questions. Operator?

[Operator Instructions] And your first question comes from Anthony Lebiedzinski from Sidoti & Company.

So first, I just wanted to see if you could guys take a step back and just maybe just provide a little bit more comment and details about the volatility that you saw in demand and production, particularly in the Americas. And it sounds like things have gotten better there in October, which is encouraging, but if you could just kind of go over the volatility in demand and how that impacted the first quarter, that would be helpful.

Yes, Anthony, thanks for joining us today, and thanks for the question. Yes, the -- we did have a lot of volatility in demand. We mentioned a little bit of this in our previous earnings call. And what happened during our Q1 is we built inventory in the first 5, 6 weeks of the quarter, expecting revenues to come through. And when they didn't, we rapidly turned around and reduced our production levels. And that, in turn, resulted in some cost-cutting actions, but the demand falloff has certainly been something that we reacted to very, very quickly. We do expect -- as I said, October was good, and we expect a slowdown as we move into the -- in the Americas into the Christmas holiday period and then expect an uptick in the Q3 as we come out of that holiday.

And then just curious if you guys could provide more details as to what are you hearing from your customers about the operating environment and the upcoming holiday season. There seem to be a lot of mixed signals with the overall economy. So just wondering if you guys could talk about that.

Yes. What we're seeing is that everybody is very cautious with their inventories, and they're starting to do what we started 2 months ago, which is manage their inventory levels down by reducing their production levels and really being very reactionary to any demand. Everybody is telling us that this is really in preparation for managing their year-end inventories, which we understand. But they are also saying at the same time, like I said earlier, Q3 should be better. And it should be better for us in the Americas because Central America is expected to pick up and it's expected to pick up because of natural seasonality, but also because the brands are moving some of the programs back here. While there is still that 10% tariff for Central America, USMCA -- not USMCA, but CAFTA-DR goods, there is an opportunity for some of the brands to claim back some of that 10% reciprocal tariff if there is a U.S. supply chain. So we're excited about the fact that the brands are learning about how to capture some of that money back to make it a more level playing field with some of the Asia tariffs.

Anthony, this is Al. I'll just add something that was in the trade press. It's in April, I mean, if I were a buyer for a chain, I do the same thing. When the tariffs were announced, they went right to the point of April -- in April and everyone ordered product that would come in, in time for Christmas. And the report was that the ports in Los Angeles had the highest level of deliveries in any time in the 17 years that they've tracked. And then in July, August, September, they've gone very low and that the inventories for the Christmas holidays were in place and ready to go a month earlier than ever before. And they literally are sitting on a -- they were sitting on a bit of inventory and now blowing through it as the holiday comes in. So it's kind of remarkable that everybody is doing the same thing, but it makes sense. The tariffs, they got -- they almost bought into a price increase, right? Before a price increase. So the other thing I'd mention to you was in the last question you asked, the one thing that's really important is our plants -- I'll say these numbers to you, they don't mean anything, but you can see the change. If we were running in the summer at about 85 pounds per man hour. And since then, we've jumped to 107, and we have the ability to get well above that. So the training and the hiring and the production and the goals we've set for our people are starting to take place. That's one of the most important things that's happened in the last 3 months. And we think these cases per man hour go up a good bit above what I just mentioned as they -- as some of these people get in the saddle for a while.

And then, Eddie, I think you said earlier that you're seeing some green shoots with REPREVE. Can you expand on that? What are you expecting going forward?

Yes. Much of our REPREVE is in Asia. And I mentioned that there's 2 brands, Marmot, that were and Lafuma who have adopted ThermaLoop in their products, but we're also seeing some action on the REPREVE Takeback, which is also the 100% circular solution. So as we move through the year, we're expecting the Asia business to grow simply because REPREVE plus technologies and plus the circular solutions are going to grow. And we can see this in some of the ordering patterns that we have visibility to in the December, January period. In the U.S., there is still a renewed interest in keeping a lot of the performance apparel with REPREVE. And that is what that business is generally run through the Central America supply chain. So as we get into Q3, we should see the growth in Q3 of REPREVE also in the Americas business.

And then in terms of the price increases that you referenced, can you give us more details as far as like what's the extent of the price increases? And also, are these price increases in certain markets? How should we think about that?

Yes. I'll add a little bit of color there, Anthony. Certainly, we work closely with the customers to make sure we're delivering the right value. So we're not in a position to disclose the specific price increases or the overall amount, but know that these are responsive to costs and tariffs. And so we're doing our best to work closely with the customers to make sure everything is fair as we get through the supply chain and that we're delivering the same value we have.

That sounds good, A.J. And then I just want to follow up as far as the cost savings that you talked about, are these on a gross basis or a net basis in terms of the numbers that you provided?

So for SG&A, we are expecting a strong decline year-over-year in the annual consolidated SG&A amount. So in fiscal '25, you saw approximately $49 million of SG&A, and we expect that to be under $45 million for fiscal 2026. So that would be the overall impact to the SG&A line. From a COGS basis, at these revenue levels, we are expecting that $5 million per quarter to come through as compared to the quarter that we just completed. So improvement throughout the year beyond this Q1.

And then just also thinking about the beyond apparel initiatives. You've referenced the military and carpet, not just on this call, but on previous calls as well. Just wondering if you guys could comment as far as how much revenue are you currently deriving from these? And what's the opportunity going forward?

Yes. We still believe that in the calendar 2026, we should see a market improvements. And I'm going to put a range of around $20 million with the Q3 fiscal or Q1 calendar being on the lower range. And as we move through the 12 months in fiscal 2026 -- calendar 2026 to see a significant uptick to the run rate of around $20 million by the end of the calendar year. We are already seeing quite a nice improvement in our resin business, which is our flake and chip business, polyester, recycled polyester. And that is expected to continue as we move through 2026 calendar.

And then just overall, as far as the -- I guess the last question I would have here is just aside from military and carpet, are there any other key beyond apparel initiatives that we should think about? I think in the past, you've talked about automotive. Just wondering if you could provide anything else in regards to that.

Yes. We do, from time to time, talk about automotive specifically, and that has been quite actually good for us over the last few months. We are a little bit -- we haven't called it out because we're just a little bit nervous about the automotive industry with a lot of the changes going on. And so we still see that as being robust and helping us with our Beyond Apparel initiative. The trick there is to move it over to the value-added products that we have, and we're working hard on that. But it is something that's a very important part of our business.

And your next question comes from Chris Reynolds from Neuberger Berman.

I have 2 questions. The first relates to Brazil and sort of Latin America in general. That's an area where you have some strength. But if I recall, you have a balance sheet there that's fairly significant with cash that sort of stays in region. Can you provide an update on what those general numbers look like and then the trends because I think one of your competitors went bankrupt, and that's helped you. The second question is any clarification on the changes to the de minimis import rules? I saw some numbers out of UPS, which said that they had big earnings gains because they didn't have to have a bunch of cost to handle that change in using software and AI and other things to help manage that transition. I'm just wondering if there's any real benefit that would come to the apparel industry in general from this change on customs.

Thanks, Chris. Two good questions there. A.J. here. I'll start with the first. Certainly, we've been proud of what the Brazil operation has been able to achieve over the last several years. Certainly, last year was stronger with the pricing environment there and a little bit more pressure in this current quarter. Fortunately, their operation has run quite well, especially from a working capital and margin perspective. Despite these pressures, they have been able to generate cash, both the quarter that we just completed and the quarter that we're in now. So that balance sheet remains healthy and their cash levels remain in excess right now of their absolute needs for the next few quarters. And I'll let Eddie comment on de minimis for you.

Yes. We're excited about what happened with the de minimis. It was August -- at the end of August, basically an executive order was signed that you can't bring in goods duty-free and regulation-free basically. We know that it's impacting a lot of the brands in a positive way because the very, very cheap imports that were coming in under the de minimis are no longer coming in. We do expect to see this translate into better revenues for the bigger domestic brands. And then some of the brands got caught because they were not got caught, but they were flat-footed because they were bringing in goods through the de minimis. So they are having to pay the extra cost, the extra duties and the extra transportation as the other brands who are not using that ruling. So I think we're going to see the benefit in the region over the next few quarters, but it will be -- it's right now hard to determine exactly how it's impacting us because we don't have the normal data that we get because of the government shutdown. So we're sort of running a little bit blind now on the exact import situation. So -- but more to come on that in the coming quarters. Thanks for the question.