The Dixie Group (DXYN) investor relations material

Executive summary

• Q3 2026 net sales rose 4.6% to $65.2M; operating income was $2.4M versus a $2.0M loss, and net income was $577K versus a $4.1M loss.

• Third consecutive profitable quarter; nine-month net income was $2.8M versus a $4.6M loss, and operating income rose to $8.7M from $1.2M.

• Substantial doubt about continuing as a going concern remains; management’s plans do not alleviate the doubt amid liquidity, covenant and financing uncertainty.

Financial highlights

• Q3 gross profit was $17.4M; gross margin increased 180 bps to 26.6% from 24.8%, supported by cost reductions and operating efficiencies.

• Nine-month sales declined 0.4% to $193.2M; gross margin was 29.4% including a $3.3M tariff refund, or 28.2% excluding its out-of-period effect, versus 27.0% prior year.

• Q3 SG&A fell to $14.6M from $16.4M; nine-month SG&A fell to $47.4M from $50.0M, reflecting lower sample and marketing costs and capitalization of display structures.

• Nine-month operating cash flow from continuing operations was $1.7M; increased receivables used $5.5M, while accounts payable and accrued expenses provided $6.7M.

Outlook and guidance

• FY2026 cost reductions are expected to total ~$18M, above the initial ~$14M plan; most savings have been achieved, and planning has begun for next year’s initiatives.

• Q4 margins may face pressure as price increases catch up with rising costs; management expects margins to return to more normal levels in Q1.

• Q4 order entry was slightly ahead of the prior year; no forward financial guidance was given amid market volatility.

• 2026 capital expenditures are expected to be $375K; depreciation and amortization are expected to be $5.5M.