The Dixie Group, Inc.

First-quarter 2026 net sales were $59.38 million versus $62.99 million in Q1 2025, down 5.7%. Operating income rose to $3.264 million from $11,000, and net income from continuing operations was $1.354 million, or $0.09 per diluted share, versus a loss of $1.582 million, or $0.11 per diluted share, in Q1 2025. Allen Danzey said the company recorded a $3.3 million receivable for anticipated IEEPA tariff refunds, which was recognized as a gain in cost of goods sold. Excluding IEEPA tariffs, gross margin was 28.6% versus 26.9% last year. Management said the profit improvement plan contributed to an estimated $17.8 million improvement in year-over-year profit. For Q2, management said sales and orders had improved in the mid-teen range sequentially, with order entry at about the same level as a year ago, but no formal revenue or EPS guidance was provided. On the balance sheet, net receivables were $26.6 million, inventory was $68.1 million, accounts payable and accrued expenses were $43.1 million, capital expenditures were about $59,000, and available borrowing capacity under the senior credit facility was estimated at about $10.2 million, subject to a $6 million excess availability requirement.

Dan Frierson said the quarter was pressured by a historically weak flooring market, driven by low existing-home sales, high home prices, high interest rates, and geopolitical uncertainty. He emphasized that the company is responding by cutting costs, improving operations, and continuing its profit improvement plan, including downsizing the Porterville, California yarn operation to lower future costs. He also said the company continues to focus on differentiated mid- to high-end products in both soft and hard surface, and noted soft surface remains stronger than hard surface.

Allen Danzey highlighted the $3.3 million IEEPA tariff receivable and said gross margin would have been 28.6% without the tariff effect, up from 26.9% a year ago. He pointed to lower S&A expense, down $878,000 or 5.2%, and said interest expense increased to $1.9 million from $1.5 million due to higher internal interest rates and financing expenses. On liquidity and working capital, he cited net receivables of $26.6 million, inventory of $68.1 million, payables and accrued expenses of $43.1 million, $59,000 of capex, and about $10.2 million of borrowing availability, while also saying the company is still exploring real estate monetization and other financing options.

Analysts asked whether smaller competitors were exiting the market; management said most small soft-surface competitors are already out, with fewer remaining and little expectation of further consolidation. Questions also focused on housing weakness, tariff refund timing, price increases, LIFO, and liquidity. Management said the $3.3 million tariff refund is expected in full, cash timing is uncertain but could begin within about 60 days, the April price increase should help offset higher costs but not immediately, LIFO will step up with higher costs, and the company continues to evaluate real estate monetization and other financing avenues.