The Dixie Group (DXYN) investor relations material

Executive summary

• Net sales for Q4 2025 were $63.5M, down 1.4% year-over-year; full-year 2025 net sales were $257.4M, down 2.9% from 2024.

• Net loss for Q4 2025 was $3M, a significant improvement from $7.2M in Q4 2024; full-year net loss was $7.6M, improved from $13M in 2024.

• Focused on higher-end flooring, operational efficiency, and cost management, resulting in improved gross margins despite soft residential demand.

• Implemented price increases to offset tariffs, but timing differences led to a $1.4M negative impact; total tariff payments through March 2026 were $3.3M.

• Launched new marketing initiatives and custom color programs, gaining market share as industry volumes declined.

Financial highlights

• Gross margin improved to 27% for both Q4 and full-year 2025, up from 21.7% and 24.7% in the prior year.

• Selling and administrative expenses decreased by 3.1% year-over-year, with notable reductions in marketing and samples offset by higher legal costs.

• Interest expense rose to $7.3M in 2025 from $6.4M in 2024 due to higher rates and financing fee amortization.

• Capital expenditures were $600K in 2025, with $2.5M planned for 2026.

• Other operating expenses of $1.2M were mainly due to legal settlements in Q3 2025.

Outlook and guidance

• $14.2M in incremental cost savings targeted for 2026, with $8.4M from lower material costs and pricing, though geopolitical risks may impact this.

• CapEx planned at $2.5M for 2026, up from $600K in 2025.

• No expectation of improved sales volumes in 2026 unless mortgage rates decline; current sales trends similar to prior year.

• Management expects long-term growth as pent-up demand may drive future industry recovery.

• Profit improvement plan for 2026 targets $13M in year-over-year improvements via price increases and cost reductions.