The Dixie Group (DXYN) investor relations material

Executive summary

• Net sales for Q1 2026 were $59.4 million, down 5.7% year-over-year from $63.0 million, reflecting continued soft demand due to high interest rates and inflation.

• Operating income rose sharply to $3.3 million from $11,000 in the prior year, driven by profit improvement initiatives and a $3.3 million IEEPA tariff refund.

• Net income from continuing operations was $1.4 million ($0.09 per diluted share) versus a net loss of $1.6 million ($0.11 loss per share) last year.

• Gross margin improved to 32.5% from 26.8% in Q1 2025, primarily due to the $3.3 million IEEPA tariff refund reversal.

• Loss from discontinued operations was $203,000.

Financial highlights

• Gross profit margin (excluding IEEPA tariffs) improved to 28.6% from 26.9% year-over-year; reported gross margin was 32.5%.

• Selling and administrative expenses fell to $16.0 million from $16.9 million, a 5.2% decrease year-over-year.

• Interest expense increased to $1.9 million from $1.5 million due to higher rates and financing costs.

• Net income for Q1 2026 was $1.2 million, compared to a net loss of $1.7 million in Q1 2025.

• Diluted EPS was $0.08, compared to $(0.12) year-over-year.

Outlook and guidance

• Management expects continued volatility due to macroeconomic pressures, including high interest rates, inflation, and geopolitical risks.

• Price increases were implemented in Q2 to offset rising raw material costs, especially oil.

• Seasonal improvement in sales activity observed in early Q2, with orders and sales in the mid-teen percentage range above Q1.

• Order entry in Q2 2026 is tracking closely with the same period in 2025.

• Full-year 2026 capital expenditures are planned at $2.9 million.