Dixie Group (OTCQB: DXYN) posts Q1 2026 profit as margins and costs improve
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
The Dixie Group, Inc. reported improved profitability for the first quarter ended March 28, 2026. Net sales were $59.4 million, down from $63.0 million a year earlier, but gross profit rose to $19.3 million from $16.9 million as margins strengthened.
The company generated operating income of $3.3 million versus essentially breakeven operating income of $11 thousand in the prior-year quarter. Income from continuing operations was $1.4 million, or $0.09 per diluted share, compared with a $1.6 million loss, or $(0.11) per diluted share, previously.
Results benefited from recognition of a $3.3 million receivable for anticipated IEEPA tariff refunds and cost reductions under the company’s Profit Improvement Plan. Management estimates the plan’s impact at a $17.8 million year-over-year profit improvement based on first quarter activity.
Positive
- Return to profitability from continuing operations: Q1 2026 delivered $1.4 million of income from continuing operations, or $0.09 per diluted share, compared with a $1.6 million loss and $(0.11) per diluted share in the prior-year quarter.
- Meaningful operating margin improvement: Operating income increased to $3.3 million from $11 thousand, aided by stronger gross margins and lower selling and administrative expenses, indicating materially better operating performance.
- Structural margin gains identified: Management estimates its Profit Improvement Plan will improve year-over-year profit by $17.8 million, based on Q1 activity, suggesting changes that extend beyond one-time tariff-related benefits.
Negative
- Top-line contraction persists: Net sales declined to $59.4 million from $63.0 million year over year, reflecting ongoing soft demand in the flooring market despite improved profitability.
- Higher leverage costs: Interest expense rose to $1.9 million from $1.5 million as debt increased by $2.1 million during the quarter to support operating needs, adding pressure to future earnings and cash flow.
Insights
Dixie returned to profitability as margins and costs improved despite softer sales.
The Dixie Group posted Q1 2026 net sales of $59.4M, down from $63.0M, but gross profit increased and operating income reached $3.3M versus nearly breakeven a year earlier. Earnings from continuing operations turned positive at $1.4M.
Margin expansion was driven in part by a $3.3M receivable for anticipated IEEPA tariff refunds and ongoing execution of its Profit Improvement Plan. Adjusted gross margin was 28.6% of net sales versus 26.9% in 2025, showing underlying efficiency gains alongside lower selling and administrative expenses.
Management estimates the plan will improve year-over-year profit by $17.8M based on Q1 activity. Debt increased $2.1M and interest expense rose to $1.9M, so future filings may clarify how sustained profitability and planned $2.9M 2026 capital expenditures interact with leverage and cash generation.
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Net sales Q1 2026: $59,380,000
Net sales Q1 2025: $62,990,000
Operating income Q1 2026: $3,264,000
+5 more
8 metrics
Net sales Q1 2026
$59,380,000
Quarter ended March 28, 2026
Net sales Q1 2025
$62,990,000
Quarter ended March 29, 2025
Operating income Q1 2026
$3,264,000
Quarter ended March 28, 2026
Income from continuing operations Q1 2026
$1,354,000
Quarter ended March 28, 2026
Income (loss) from continuing operations Q1 2025
$(1,582,000)
Quarter ended March 29, 2025
IEEPA tariff refund receivable
$3,318,000
Receivables - tariffs refunds at March 28, 2026
Estimated Profit Improvement Plan impact
$17,800,000
Estimated year-over-year profit improvement based on Q1 2026
Interest expense Q1 2026
$1,905,000
Quarter ended March 28, 2026
Key Terms
IEEPA tariffs, Profit Improvement Plan, gross profit margin, operating income, +1 more
5 terms
IEEPA tariffs financial
"Our gross profit margin in the first quarter of 2026 was boosted by the recognition of a $3.3 million receivable for the anticipated refund of IEEPA tariffs."
Measures labeled as IEEPA tariffs are trade restrictions or charges imposed under the U.S. International Emergency Economic Powers Act, a law that lets the government respond to national emergencies with economic tools. For investors, these actions are like suddenly adding a toll to certain imports, exports or transactions: they can raise costs, disrupt supply chains, limit market access, and change a company’s revenue or risk profile overnight.
Profit Improvement Plan financial
"The improved year over year gross profit margin is mainly the impact of our previously announced Profit Improvement Plan."
gross profit margin financial
"Adjusted for this receivable and the impact of the IEEPA tariffs in the comparable periods, the gross profit margin would have been 28.6% of net sales in 2026 as compared to 26.9% of net sales in 2025."
Gross profit margin shows how much money a company keeps from sales after paying for the goods or services it sold. It’s like checking how much profit is left over from each dollar earned before covering other costs. A higher margin indicates the company makes more money from its sales, which helps assess its profitability and efficiency.
operating income financial
"The Company had an operating income of $3,264,000 in the first quarter of 2026 compared to an operating income of $11,000 in the first quarter of 2025."
Operating income is the profit a company earns from its regular business activities after subtracting the costs directly related to running the business, such as wages, rent, and supplies. It shows how well the core operations are performing, ignoring income or expenses from non-regular activities like investments or one-time events. Investors use it to assess the company's efficiency and profitability from its main work.
discontinued operations financial
"Loss from discontinued operations, net of tax"
Discontinued operations are parts of a company that it has decided to sell or shut down, and no longer plans to run in the future. This matters to investors because it helps them understand which parts of the business are ongoing and which are being phased out, providing a clearer picture of the company’s current performance and future prospects. Think of it like a store closing a department—it no longer contributes to sales or profits.
Earnings Snapshot
Net sales: $59,380,000
Q1 2026
Net sales
$59,380,000
Operating income
$3,264,000
Income from continuing operations
$1,354,000
Diluted EPS from continuing operations
$0.09
Adjusted gross margin
28.6% of net sales
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 11, 2026
(Exact name of registrant as specified in its charter)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
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1
Item 2.02. Results of Operations and Financial Condition.
On May 11, 2026, The Dixie Group, Inc. issued a press release reporting results for the first quarter ended March 28, 2026.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
(99.1) Press Release, dated May 11, 2026
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: | THE DIXIE GROUP, INC. | |||||||
By: /s/ Allen L. Danzey | ||||||||
| Allen L. Danzey | ||||||||
| Chief Financial Officer | ||||||||
Exhibit 99.1
CONTACT: Allen Danzey
Chief Financial Officer
706-876-5865
allen.danzey@dixiegroup.com
THE DIXIE GROUP REPORTS RESULTS FOR FIRST QUARTER OF 2026
DALTON, GEORGIA (May 11, 2026) -- The Dixie Group, Inc. (OTCQB: DXYN) today reported financial results for the quarter ended March 28, 2026.
For the first quarter of 2026, the Company had net sales of $59,380,000 as compared to $62,990,000 in the same quarter of 2025. The Company had an operating income of $3,264,000 in the first quarter of 2026 compared to an operating income of $11,000 in the first quarter of 2025. The net income from continuing operations in the first quarter of 2026 was $1,354,000 or $0.09 per diluted share. In 2025, the net loss from continuing operations for the first quarter was $1,582,000 or $0.11 per diluted share.
Commenting on the results, Daniel K. Frierson, Chairman and Chief Executive Officer, said, "Continued soft market conditions within the flooring industry, driven by historical low existing home sales, high home prices and interest rates, were compounded in the first quarter of 2026 by the uncertainty caused by the conflict in the Middle East. Our gross profit margin in the first quarter of 2026 was boosted by the recognition of a $3.3 million receivable for the anticipated refund of IEEPA tariffs. Adjusted for the impact of the IEEPA tariffs, year over year margins improved by 2% of net sales despite lower sales volume in 2026. The improved year over year gross profit margin is mainly the impact of our previously announced Profit Improvement Plan. Based on our first quarter activity, including the recognition of the IEEPA tariff refund and additional new initiatives, we estimate the impact of our Plan to be an improvement in year over year profit of $17.8 million.
In the second quarter of 2026 we started seeing higher costs for our raw materials driven primarily by the higher price of oil. We have implemented a price increase in the second quarter, as have many others in the industry, to offset these rising material costs. Order entry in the second quarter of 2026 has been closely in line with the order entry for the same period in 2025.
In the first quarter we participated in multiple trade shows, including the International Surfaces trade show in Las Vegas, where we showcased thirty-four new broadloom carpet styles across our nylon, polyester and decorative collections. Our focus continues to be on the creation of differentiated styles for the mid to high end consumer with an emphasis on color, pattern and textural visuals. We also showcased new visuals and innovations in our hard surface offerings. This included new colors and patterns in our Fabrica wood program and expanded WPC offerings, with new visuals and colors, in our TRUCOR brand.", Frierson concluded.
The net sales for the first quarter of 2026 were $59.4 million compared to $63.0 million in the first quarter of the previous year. Year over year gross margin improved by 5.6% of gross sales with the biggest impact being the recognition of $3.3 million for the receivable of IEEPA tariffs paid in 2025 and 2026. Adjusted for this receivable and the impact of the IEEPA tariffs in the comparable periods, the gross profit margin would have been 28.6% of net sales in 2026 as compared to 26.9% of net sales in 2025. Selling and administrative expenses were below the prior year at $16.0 million compared to $16.9 million. This improvement was driven by cost reductions as part of our Profit Improvement Plan. On our balance sheet, receivables, excluding the receivable recorded for the IEEPA tariff refund,
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The Dixie Group Reports First Quarter 2026 Results
Page 2
May 11, 2026
increased $3.7 million from the balance at fiscal year end 2025 due to higher sales in the last month of the first quarter 2026 as compared to the seasonally lower sales volume in the last month of the fiscal year 2025. Net inventory value at the end of the first quarter of 2026 was $68.1 million or $1.7 million greater than the balance of $66.4 million at fiscal year end 2025. The increase in inventory is mainly the result of increased volume in preparation of the expectation for the seasonally higher sales volume in the second quarter. Combined accounts payable and accrued expenses were $4.3 million higher at the end of the first quarter of 2026 as compared to the December 2025 balance. This increase was primarily driven by higher payables and accruals to replenish inventory and meet higher production needs in preparation for an expected increase in demand in the second quarter. In the first quarter of 2026, capital expenditures were $59 thousand. Capital expenditures for the full fiscal year 2026 are planned at $2.9 million. Interest expense was $1.9 million in the first quarter of 2026 compared to $1.5 million in the first quarter of 2025. Our debt increased by $2.1 million in the first quarter of 2026 driven by operating needs.
This press release contains forward-looking statements. Forward-looking statements are based on estimates, projections, beliefs and assumptions of management and the Company at the time of such statements and are not guarantees of performance. Forward-looking statements are subject to risk factors and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Such factors include the levels of demand for the products produced by the Company. Other factors that could affect the Company's results include, but are not limited to, availability of raw material and transportation costs related to petroleum prices, the cost and availability of capital, integration of acquisitions, ability to attract, develop and retain qualified personnel and general economic and competitive conditions related to the Company's business. Issues related to the availability and price of energy may adversely affect the Company's operations. Additional information regarding these and other risk factors and uncertainties may be found in the Company's filings with the Securities and Exchange Commission. The Company disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise.
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The Dixie Group Reports First Quarter 2026 Results
Page 3
May 11, 2026
THE DIXIE GROUP, INC.
Consolidated Condensed Statements of Operations
(unaudited; in thousands, except earnings (loss) per share)
| Three Months Ended | |||||||||||
| March 28, 2026 | March 29, 2025 | ||||||||||
| NET SALES | $ | 59,380 | $ | 62,990 | |||||||
| Cost of sales | 40,092 | 46,088 | |||||||||
| GROSS PROFIT | 19,288 | 16,902 | |||||||||
| Selling and administrative expenses | 15,996 | 16,874 | |||||||||
| Other operating income, net | (84) | (98) | |||||||||
| Facility consolidation and severance expenses, net | 112 | 115 | |||||||||
| OPERATING INCOME | 3,264 | 11 | |||||||||
| Interest expense | 1,905 | 1,493 | |||||||||
| Other (income) expense, net | (32) | 88 | |||||||||
| INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES | 1,391 | (1,570) | |||||||||
| Income tax provision | 37 | 12 | |||||||||
| INCOME (LOSS) FROM CONTINUING OPERATIONS | 1,354 | (1,582) | |||||||||
| Loss from discontinued operations, net of tax | (203) | (115) | |||||||||
| NET INCOME (LOSS) | $ | 1,151 | $ | (1,697) | |||||||
| BASIC EARNINGS (LOSS) PER SHARE: | |||||||||||
| Continuing operations | $ | 0.09 | $ | (0.11) | |||||||
| Discontinued operations | (0.01) | (0.01) | |||||||||
| Net income (loss) | $ | 0.08 | $ | (0.12) | |||||||
| BASIC SHARES OUTSTANDING | 14,533 | 14,366 | |||||||||
| DILUTED EARNINGS (LOSS) PER SHARE: | |||||||||||
| Continuing operations | $ | 0.09 | $ | (0.11) | |||||||
| Discontinued operations | (0.01) | (0.01) | |||||||||
| Net income (loss) | $ | 0.08 | $ | (0.12) | |||||||
| DILUTED SHARES OUTSTANDING | 14,626 | 14,366 | |||||||||
| DIVIDENDS PER SHARE: | |||||||||||
| Common Stock | $ | — | $ | — | |||||||
| Class B Common Stock | $ | — | $ | — | |||||||
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The Dixie Group Reports First Quarter 2026 Results
Page 4
May 11, 2026
THE DIXIE GROUP, INC.
Consolidated Condensed Balance Sheets
(in thousands)
| March 28, 2026 | December 27, 2025 | ||||||||||
| ASSETS | (Unaudited) | ||||||||||
| CURRENT ASSETS | |||||||||||
| Cash and cash equivalents | $ | 2,346 | $ | 3,204 | |||||||
| Receivables, net of allowances for expected credit losses of $773 and $640 | 26,566 | 22,984 | |||||||||
| Receivables - tariffs refunds | 3,318 | — | |||||||||
| Inventory, net | 68,070 | 66,370 | |||||||||
| Prepaid and other current assets | 6,173 | 5,391 | |||||||||
| TOTAL CURRENT ASSETS | 106,473 | 97,949 | |||||||||
| PROPERTY, PLANT AND EQUIPMENT, NET | 28,059 | 29,154 | |||||||||
| OPERATING LEASES RIGHT-OF-USE ASSETS | 22,541 | 23,649 | |||||||||
| RESTRICTED CASH | 3,898 | 3,865 | |||||||||
| OTHER ASSETS | 17,270 | 19,488 | |||||||||
| LONG TERM ASSETS OF DISCONTINUED OPERATIONS | 1,002 | 1,053 | |||||||||
| TOTAL ASSETS | $ | 179,243 | $ | 175,158 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| CURRENT LIABILITIES | |||||||||||
| Accounts payable | $ | 26,118 | $ | 22,781 | |||||||
| Accrued expenses | 17,022 | 16,043 | |||||||||
| Current portion of long-term debt | 59,222 | 56,642 | |||||||||
| Current portion of operating lease liabilities | 4,781 | 4,553 | |||||||||
| Current liabilities of discontinued operations | 1,200 | 1,073 | |||||||||
| TOTAL CURRENT LIABILITIES | 108,343 | 101,092 | |||||||||
| LONG-TERM DEBT, NET | 24,610 | 25,096 | |||||||||
| OPERATING LEASE LIABILITIES | 18,963 | 20,200 | |||||||||
| OTHER LONG-TERM LIABILITIES | 14,070 | 16,651 | |||||||||
| LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS | 3,273 | 3,321 | |||||||||
| STOCKHOLDERS' EQUITY | 9,984 | 8,798 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 179,243 | $ | 175,158 | |||||||
-END-
FAQ
How did The Dixie Group (DXYN) perform financially in Q1 2026?
The Dixie Group posted net sales of $59.4 million in Q1 2026, down from $63.0 million in 2025. However, operating income rose sharply to $3.3 million, and income from continuing operations reached $1.4 million, or $0.09 per diluted share, versus a prior-year loss.
Did The Dixie Group (DXYN) return to profitability in Q1 2026?
Yes. The Dixie Group generated $1.4 million of income from continuing operations in Q1 2026, or $0.09 per diluted share. This compares with a $1.6 million loss and $(0.11) per diluted share from continuing operations in the same quarter of 2025.
What drove margin improvement for The Dixie Group (DXYN) in Q1 2026?
Margins improved through a $3.3 million receivable for anticipated IEEPA tariff refunds and execution of the Profit Improvement Plan. Adjusted gross margin reached 28.6% of net sales versus 26.9% a year earlier, helped by cost reductions in selling and administrative expenses.
How much IEEPA tariff refund did The Dixie Group (DXYN) recognize in Q1 2026?
The company recognized a $3.3 million receivable related to anticipated IEEPA tariff refunds paid in 2025 and 2026. This boosted reported gross profit and contributed to a 5.6% improvement in gross margin as a percentage of gross sales for the quarter.
What is the expected impact of The Dixie Group’s Profit Improvement Plan?
Based on first quarter 2026 activity, management estimates the Profit Improvement Plan will improve year-over-year profit by $17.8 million. The plan includes margin initiatives and cost reductions, contributing to higher operating income despite lower net sales versus the prior-year quarter.
How did debt and interest expense change for The Dixie Group (DXYN) in Q1 2026?
Debt increased by $2.1 million in Q1 2026, driven by operating needs. Correspondingly, interest expense rose to $1.9 million from $1.5 million in the first quarter of 2025, increasing the company’s ongoing financing costs alongside improved operating performance.