Good morning, and thank you for attending Unifi's Second Quarter Fiscal 2026 Earnings Conference Call. During this call, management will be referencing a webcast presentation that can be found in the Investor Relations section of unifi.com. Please familiarize yourselves with Page 2 of the slide deck for cautionary statements and non-GAAP measures. Today's conference is being recorded [Operator Instructions]. Our speakers are listed on Page 3 of today's presentation and include Al Carey, Executive Chairman; Eddie Ingle, Chief Executive Officer; A.J. Eaker, Chief Financial Officer. I will now turn the call over to Al Carey. Please turn to Page 4 of the presentation. You may begin.

Thank you. Well, good morning, everyone, and thanks for joining our call this morning. I'm happy to report that we're beginning to see results in our business that are coming from a major effort that began one year ago, which is essentially resetting our cost base in North America business. The closing of the Madison facility and the reduction of costs across the board have created clear operating improvements that are going to allow us to make healthy profits on a much smaller sales level. Now a couple of highlights, and A.J. will go into more details on these later on. We're pleased to see improved profit margins improved free cash flow. We have dramatically improved our inventory turns and it's probably the best we've seen in recent history. We have 25% fewer people in North America, and our plant efficiencies have come way up from the summertime now that all the changes are behind us in our Yadkinville facility and also the closing of the Madison facility. A.J. will take you through the details of these business results in a moment. But we finally have actions behind us now after a year of hard work and some difficult decisions. So that was a necessary step one for us to build our profitable business back here at Unifi. Now step two is building a strong revenue growth, and it's clear from the results of Q1 and Q2, those revenue levels need to improve dramatically. But don't forget, Q1 and Q2 of this fiscal year were largely impacted by the tariff complexity that started in about April. We've seen improvements in orders from many customers in early January, and we're cautiously optimistic about the recent order trends that we're seeing into February. You may recall back in about April, May time…

Thanks, Al. And as Al just noted, our results for the second quarter were in line with our expectations, actually with some of the metrics showing up better than expected. And while we are only a few weeks into the third quarter of our fiscal 2026, we are also starting to see some initial signs of an improved operating environment driven by increased customer engagement and many of them are beginning the post-holiday restocking. Importantly, the strategic initiatives that we have put into place to realign our cost structure and operations have put us in a much stronger position to take advantage of these positive trends as we move forward. I'm going to walk you through this in more detail in a few minutes. But first, we're going to change things up a little bit slightly this quarter. I'm going to turn the call over to A.J. now to walk us through the numbers for the quarter, and then I'm going to come back then to discuss our near-term strategic priorities and what lies ahead. With that, I'll turn it over to A.J. now to review our financial results. A.J?

Thank you, Eddie. I'll start off by discussing our consolidated financial highlights for the quarter on Slide 5. Net sales for the quarter were in line with our expectations, as Eddie said, but down 12.5% year-over-year, primarily driven by lower demand in the Asia segment and pricing pressure in the Brazil segment. Consolidated gross profit was $3.6 million and gross margin was 3% during the period compared to gross profit of $0.5 million and gross margin of 0.4% for the second quarter a year ago. SG&A was just $9.7 million during the quarter, a 25% improvement from the prior year period, and adjusted EBITDA was just a loss of $0.7 million which represents an improvement of $5.1 million compared to the year ago period. These favorable and improving results are the initial benefits of the hard work we have put into implementing our cost-saving initiatives which we anticipate will continue throughout the remainder of the fiscal year. On Slide 6. In the Americas, net sales were down 7.1% compared to the prior fiscal year due to a lower portion of fiber sales with which normally carry a higher selling price, along with the tariff uncertainty that Al mentioned. Gross profit in the Americas region increased by $6.1 million during the quarter, primarily due to the previously noted cost saving initiatives that included the consolidation of the yarn manufacturing operations in this region. While we were likely to continue to have some short-term challenges in the Americas, we do believe that the mid- and long-term outlook is improving giving the better customer engagement that we're seeing today. Slide 7 displays the Brazil segment, which saw net sales and gross profit decrease versus the prior year due to some pricing pressures associated with lower competitive prices and imports from Asia. That said,…

Thank you, A.J. As you just heard from A.J., the hard work of our team is starting to pay off, and we're excited to see the solid start of a recovery in our core operating metrics. Today, I'd like to start with a broader perspective and talk to you through the cumulative results of two years of strategic initiatives and investments which we believe has positioned Unifi for long-term success. So let's turn to Slide 10 for an overview of our priorities for the second half of fiscal 2026. As we look ahead, our focus continues to remain on returning Unifi to long-term growth and profitability. In order to achieve this goal, we are concentrating our efforts on four key areas. First, we have dramatically improved our operating model through targeted cost decisions and manufacturing footprint consolidation. And we need to continue to better leverage the work we've done here. At the same time, we have and we'll continue to invest in ourselves to help strengthen and scale our leading brands. Next, we have a culture built around innovation and new product development. And we will continue to prioritize the customer adoption of our innovative solutions to support future growth. And finally, we must convert all this operational progress into a sustained financial momentum. The next few slides offer more details on each of these priorities. Let's start on Slide 11. As you can see from this slide, over the past three years, we've executed three strategic initiatives that have helped us better align our cost structures and operations. We began this process back in December of 2023, with the implementation of our profitability improvement plan, which streamlined our organization realigned leadership to enable a more efficient responsive go-to-market structure and initiated a sales transformation plan to improve operational efficiencies…

[Operator Instructions] And our first question comes from the line of Anthony Lebiedzinski with Sidoti.

So by the way, it was a really good cash flow quarter, which is great to see. So I guess my first question, in terms of your comments about the pickup in demand that you've seen since the quarter end. Is that in all segments? Or is one segment particularly doing better than others? I just wanted to get more flavor, more color on what you're seeing thus far since the quarter ended?

Yes. Thanks, Anthony, for the question, for joining us today. We're seeing it -- really across the board. Brazil is coming out of the holiday season, so there's destocking taking place but also there's stimulation in the economy by the government, so there seems to be positive momentum in the orders that we're seeing down there. China, the new year there is happening in mid-February. So there was a lot of activity in January in our Asia business in particular. And so that seems to be actually continuing more positively than expected because we're closing that new year period now. And then the U.S. and Central America, that's where it's shining because we are seeing the impact of the restocking of the inventories post everybody year-end -- their year-end trying to get their inventories down, but also the news around the reciprocal tariff agreement with Guatemala and El Salvador is positive for us. And so we're seeing more brands taking orders to the mills and the mills are placing orders with us. So it's really across the board.

So that's encouraging to hear certainly. So when we look at your business, I mean you've talked about Beyond Apparel for a bit. Can you give us an update? And I guess as we talked about this, maybe just kind of give us an update where you are like as far as apparel or as footwear, what percent of revenue is that at the moment? And kind of how should we think about the Beyond Apparel initiatives kind of going forward?

Yes. Beyond Apparel is really centered around carpet, packaging, military/tactical and auto. And I can say that last quarter, we had a very, very strong quarter in the packaging sector. Carpet actually grew slightly also and our military and tactical, while we didn't get orders, we still continuing to do a lot of sampling. So in the Q3, we won't see as much impact as we're we expect to see in fiscal Q4 as the orders start to come through. But definitely, as we -- we're still seeing very positive signals from the market around all of those initiatives so we're excited about that. And as a percentage of our business, apparel is still, of course, a large part of that. But we are moving towards making that a lower percentage, still very, very important, of course, but we do think that we're still on the right track with these Beyond Apparel initiatives here in the U.S.

This is Al. Watch military in the next couple of quarters. It looks like it's bigger than expected, and we're making a lot of progress with it. It just takes a long time to test for durability and colors. But when you get the business, it's usually a good long-term one and with high margins.

That's good to hear certainly. And can you also give us an update on the pricing dynamics in each of your segments that you talked about. I think you really highlighted Brazil as dealing with pricing pressures. But maybe if you could just go over the pricing dynamics that you have seen and expect to see here going forward in each of the three segments.

Yes. We talked about the dumping from Asia into Brazil, that has still continued although in the last few weeks as expected as oil has gone up as the Brazilian Real strengthened and as -- it appears that some of the really inefficient assets in Asia are being shut down. So it has created an environment where in Asia, the pricing has gone up and the sale is set by that raw material supply chain. So we are seeing some positive pricing momentum going into the Q3 in Brazil. Not huge, but enough to where we're feeling positive about that. In Asia, it's a very reactionary market, and so there is some slight uptick, like I said, in the Asian market. But in particular, I wanted to circle back to the U.S. because -- and Central America. We've done a lot of bottom sizing in that business. We've tried to exit business that were very challenging from a pricing point of view and we've done targeted price increases. We've also try to make sure that for the complicated mix that we have, we've got the right price points in each of those different product lines that we serve. So we are seeing the benefit of that from a revenue point of view. And as we -- as our volumes increase, it will become more transparent. But we're all seeing that be part of our margin improvement. The margin improvement has been helped by, of course, all these restructuring we've done and the spend, the cost takeouts, but the pricing has been a big part of that.

Okay. That's -- yes, certainly good to hear. So -- and obviously, as you guys have talked about, you've done a lot of work as far as the restructuring and manufacturing transitions and so on. So as we think about the $575 million revenue that's needed to breakeven. How do you guys think about the mix between the three segments? What do you guys need to get there? I mean if I look back historically, the Asia and Brazil segment, gross margins have done better than what we've seen last couple of years or so. So just broadly speaking, how do we think about the mix that -- between the three segments that's needed to get back to breakeven?

Yes. Good question, Anthony. Thanks for bringing the breakeven topic, certainly proud of the actions we've been able to get through the system and get to this point. When we look at how that's distributed across the segments you're looking at mid- to high 300s generally for the Americas and then the other two segments filling in the gap really from some of their historical run rates similar to those historical run rates. So that's how we would see the distribution that would get you to a high single-digit gross margin for the consolidated entity and therefore, breakeven on an operating income zero basis.

Ladies and gentlemen, that concludes the question-and-answer session. Thank you all for joining in. You may now disconnect. Everyone, have a great day.