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.

• Focus on upper-end residential flooring with diversified customer base; top 10 customers account for 6.8% of sales, top 100 for 24.6%.

• Continued to gain market share in the carpet segment despite industry declines of 4% in Q4 and 5% for the year.

• Strategic emphasis on design, quality, and product innovation, not manufacturing scale.

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.

• Cost reduction initiatives yielded $59.3M in savings from 2023–2025, with $14.1M forecast for 2026.

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

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.

• Gross margins expected to improve with higher production volumes and operational efficiencies.