Financial Data and Key Metrics Changes - The gross profit margin for Q2 2025 was 29.2% of sales, an increase from 28.1% in Q2 2024 [2][3] - Operating income in Q2 2025 was $3.2 million, compared to $2.3 million in the same period of the prior year [2] - Net income for Q2 2025 was $1.2 million, up from $600,000 in Q2 2024 [3] - Selling and administrative expenses decreased by $600,000 or 3.4% year over year [5] Business Line Data and Key Metrics Changes - Soft surface sales remained relatively flat year over year, while the industry experienced a decline of approximately 7% [4] - The DuraSilk collection in soft surface products continued to gain market share, contributing to strong sales in decorative products [4][12] - The hard surface business, particularly the high-end Fabrica wood program, saw growth of nearly 10% in Q2 [11] Market Data and Key Metrics Changes - The flooring industry faced weak market conditions due to high interest rates and low consumer confidence, impacting sales negatively [4][10] - Existing home sales declined to approximately 4 million units, contributing to the challenging environment [10] Company Strategy and Development Direction - The company has implemented a cost reduction plan aimed at saving $12.6 million for the year, with approximately half achieved in the first six months [3][28] - Investments have been made in growth initiatives, particularly in hard surfaces and decorative offerings, to enhance market share [11][12] - The company is focused on maintaining selling and marketing expenses to support new product introductions [5] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing challenges in the flooring business but expressed optimism about future market improvements as consumer confidence and mortgage rates are expected to eventually rise [15] - The company believes it is well-positioned to take advantage of market dynamics when conditions improve, citing historical trends following economic downturns [15][16] Other Important Information - The net inventory balance at the end of Q2 2025 was $67.4 million, down from $76.1 million in the same period of the previous year [7] - The company plans to maintain capital expenditures at approximately $800,000 for 2025 [9] Q&A Session Summary Question: Impact of interest rate drops on sales - Management indicated that while a reduction in mortgage interest rates would positively impact sales, a definitive percentage increase could not be provided [18] Question: Lag time for sales increase after interest rate drops - Management acknowledged a lag time, noting that consumer confidence would also play a significant role in the speed of recovery [19] Question: Impact of tariffs on gross margin - Management confirmed that approximately 85% of sales are not impacted by tariffs, and price increases implemented have covered the costs associated with tariffs [22][23] Question: Cost of goods sold and raw material inputs - Management reported no inflation in raw materials yet, with some reductions helping to improve gross margins [25] Question: Incremental savings from cost savings program - Management anticipates achieving the planned $12.6 million in savings, with approximately half already realized [28][29] Question: Performance of hard flooring business - Management noted that the high-end wood segment performed well, while the luxury vinyl tile products faced more challenges due to competition [30][31]

[The Dixie Group Q2 2025 Earnings Release](index=1&type=section&id=The%20Dixie%20Group%20Q2%202025%20Earnings%20Release) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The company reported slightly lower sales but significantly improved operating and net income for Q2 2025, driven by better margins and cost controls Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $68,573,000 | $70,507,000 | -2.7% | | Operating Income | $3,189,000 | $2,295,000 | +38.9% | | Net Income (Continuing Ops) | $1,254,000 | $667,000 | +88.0% | | Diluted EPS (Continuing Ops) | $0.08 | $0.04 | +100.0% | First Half 2025 vs First Half 2024 Performance | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $131,563,000 | $135,761,000 | -3.1% | | Operating Income | $3,200,000 | $1,437,000 | +122.7% | | Net Loss (Continuing Ops) | ($328,000) | ($1,743,000) | +81.2% improvement | | Diluted EPS (Continuing Ops) | ($0.02) | ($0.12) | +83.3% improvement | [Management Commentary and Business Operations](index=1&type=section&id=Management%20Commentary%20and%20Business%20Operations) Management attributes strong Q2 profitability to cost reductions, with soft surface sales outperforming the market despite challenges in hard surfaces [Overall Performance and Cost Management](index=1&type=section&id=Overall%20Performance%20and%20Cost%20Management) The company achieved a **$1.2 million net income** in Q2, driven by improved margins and a **$12.6 million** annual cost reduction plan - Achieved a net income of **$1.2 million** in the second quarter, despite lower year-over-year sales volume[4](index=4&type=chunk) - Operating margins improved to **29.2% of net sales** compared to 28.1% in the same quarter of the prior year[4](index=4&type=chunk) - A cost reduction plan is currently estimated to produce **$12.6 million in reduced spending** year over year, contributing to favorable results[4](index=4&type=chunk) [Segment Performance and Product Launches](index=1&type=section&id=Segment%20Performance%20and%20Product%20Launches) Soft surface sales outperformed the declining market, while hard surface growth in wood was offset by challenges in the TRUCOR® segment - Soft surface sales were relatively flat year-over-year, outperforming the broader industry which is believed to have **declined by 7%**[5](index=5&type=chunk) - Key growth drivers in soft surfaces included the **DuraSilk™ SD collection** and the high-end decorative segment[5](index=5&type=chunk) - The hard surface segment experienced **over 10% year-over-year growth** in net sales of Fabrica wood products, but the TRUCOR® segment faced challenges due to low inventory and supply chain issues[8](index=8&type=chunk) - The company launched **five new soft surface introductions** and **five new hard surface collections** during the second quarter to stimulate sales[6](index=6&type=chunk)[9](index=9&type=chunk) [Marketing and Outlook](index=2&type=section&id=Marketing%20and%20Outlook) The company is leveraging digital marketing and cost controls to navigate market headwinds while preparing for future demand - Continued digital marketing partnerships with Roomvo and Broadlume are showing promising results in lead generation, online sample ordering, and room visualizations[10](index=10&type=chunk) - Management acknowledges that the industry continues to be negatively impacted by **inflationary pressures, high interest rates, and low consumer confidence**[11](index=11&type=chunk) - The company believes it has taken appropriate actions through cost reductions and operational improvements to manage the current slowdown and optimize returns when market conditions improve[11](index=11&type=chunk) [Detailed Financial Analysis](index=2&type=section&id=Detailed%20Financial%20Analysis) Improved operating margins and lower expenses boosted profitability, while the balance sheet reflects stable inventory and adequate liquidity [Profitability Analysis](index=2&type=section&id=Profitability%20Analysis) Q2 operating margin improved to **29.2%** due to efficiencies and cost reductions, with selling and administrative expenses also declining Operating Margin Comparison | Period | 2025 | 2024 | | :--- | :--- | :--- | | Q2 | 29.2% | 28.1% | | H1 | 28.1% | 26.2% | Selling & Administrative Expenses | Period | 2025 | 2024 | | :--- | :--- | :--- | | Q2 | $16.8 million | $17.4 million | | H1 | $33.7 million | $33.7 million | [Balance Sheet, Cash Flow, and Liquidity](index=2&type=section&id=Balance%20Sheet%2C%20Cash%20Flow%2C%20and%20Liquidity) The balance sheet shows stable inventory and a slight debt increase, with **$13.1 million** available under the senior credit facility - Receivables increased by **$5.6 million** and inventory was slightly higher at **$67.4 million** compared to fiscal year-end 2024[13](index=13&type=chunk) - Debt increased by **$1.1 million** in the first six months of 2025, with interest expense rising to **$1.9 million** in Q2 from $1.6 million in Q2 2024 due to higher interest rates[13](index=13&type=chunk) - Availability under the senior lending facility was **$13.1 million** at the end of Q2 2025, subject to a $6.0 million minimum excess availability requirement[13](index=13&type=chunk) [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited consolidated statements of operations and balance sheets for Q2 and H1 2025 [Consolidated Condensed Statements of Operations](index=3&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations) The statement details revenues, costs, and profits for Q2 and H1 2025, showing lower sales but higher quarterly operating income Q2 Statement of Operations Highlights (in thousands) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | NET SALES | $68,573 | $70,507 | | GROSS PROFIT | $20,016 | $19,813 | | OPERATING INCOME | $3,189 | $2,295 | | INCOME FROM CONTINUING OPERATIONS | $1,254 | $667 | | NET INCOME | $1,160 | $603 | H1 Statement of Operations Highlights (in thousands) | Account | H1 2025 | H1 2024 | | :--- | :--- | :--- | | NET SALES | $131,563 | $135,761 | | GROSS PROFIT | $36,918 | $35,622 | | OPERATING INCOME | $3,200 | $1,437 | | LOSS FROM CONTINUING OPERATIONS | ($328) | ($1,743) | | NET LOSS | ($537) | ($1,891) | [Consolidated Condensed Balance Sheets](index=4&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) The balance sheet presents the company's financial position as of June 28, 2025, showing an increase in total assets and liabilities Balance Sheet Highlights (in thousands) | Account | June 28, 2025 | Dec 28, 2024 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $4,386 | $19 | | Inventories, net | $67,381 | $66,852 | | TOTAL CURRENT ASSETS | $106,623 | $95,839 | | TOTAL ASSETS | $188,383 | $175,872 | | **LIABILITIES & EQUITY** | | | | Accounts payable | $26,319 | $14,884 | | Current portion of long-term debt | $57,311 | $53,818 | | TOTAL CURRENT LIABILITIES | $104,282 | $88,719 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $188,383 | $175,872 |

Core Viewpoint - Dixie Gold Inc. has commenced a summer 2025 drill program at the Preston Uranium Project JV, with a budget of approximately C$3,500,000, targeting multiple high-priority uranium sites [1][5][3] Group 1: Project Update - The drill program at the Preston Uranium Project JV is being managed by Orano Canada Inc. and is expected to cover 6,000m to 7,000m [1] - Dixie Gold holds a 21% interest in the Preston Uranium Project JV, which is anticipated to decline after the drill program [3] - The project area spans approximately 49,635 hectares, adjacent to NexGen Energy Ltd.'s Rook-1 project [1] Group 2: Financial Considerations - The planned all-in budget for the drill program is approximately C$3,500,000 [1] - The company aims to manage project-level dilution rather than company-level equity dilution to maintain shareholder value [3][9] - Future funding requirements are expected to exceed the company's current working capital, necessitating a reassessment of its interests in the Preston Uranium Project JV [5][9] Group 3: Exploration Strategy - Dixie Gold is focused on maintaining a portfolio of exploration interests that provide opportunities for shareholders [7] - The company is monitoring other regional activities, including results from Ramp Metals Inc. and Kinross Gold Corporation, which may influence future project decisions [10][14] - The management emphasizes a balanced approach to exploration and equity dilution, considering the high-risk nature of early-stage mineral exploration [20]

Summary of Key Points Core Viewpoint - Ryan Kalt has increased his stake in Dixie Gold Inc. by acquiring an additional 806,000 common shares, representing 2.54% of the company's total shares, through open market transactions [2][3]. Company Ownership - Following the recent acquisition, Ryan Kalt now owns a total of 12,489,875 common shares of Dixie Gold, which constitutes approximately 39.35% of the company's currently issued and outstanding common shares [3]. Future Intentions - Mr. Kalt and/or his corporate entities may consider acquiring more securities of Dixie Gold or selling existing securities based on market conditions and other relevant factors, although no specific plans have been disclosed [5].

Company Overview - The Dixie Group focuses on the upper-end residential market with growth potential[8] - The top 10 customers account for 6.8% of sales, and the top 100 customers account for 24.6% of sales[8] - The company's strategy is driven by its relationship with the upper-end consumer and the design community, emphasizing product-driven innovation and quality[31] Market Trends - Industry sales have declined by 23.2% in dollars and 24.0% in units over the last three calendar years[13] - The company competes in the independent floor covering retailers segment, excluding big box stores and multi-family housing/new home construction[18] - In 2023, Shaw had 21.6% of the flooring market with $5.487 billion in sales, while Mohawk had 19.3% with $4.895 billion in sales[16] Growth Initiatives & Challenges - The company faced challenges including the sale of the Stainmaster brand to Lowes, leading to the loss of business with its largest mass merchant customer[50] - The company sold its commercial division to Mannington and began a restructuring plan[50] - The company plans for cost reductions of $11.0 million in 2024 and $13.1 million in 2025 through various initiatives[52, 54]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported net sales of $62.99 million, a decrease of 3.5% from $65.25 million in Q1 2024 [2][3] - The operating income for Q1 2025 was $11,000, a significant improvement from an operating loss of $857,000 in Q1 2024 [2][5] - The net loss from continuing operations was $1.58 million or $0.11 per diluted share, compared to a net loss of $2.41 million or $0.16 per diluted share in the same quarter of 2024 [3] Business Line Data and Key Metrics Changes - Sales of soft floor covering products outperformed hard surface products, with continued market share gains in the soft surface category [3] - Premium products consistently performed better than the market across all categories, contributing to improved gross margins [4][11] Market Data and Key Metrics Changes - The industry is facing weak market conditions due to low existing home sales and lower consumer confidence [3][10] - The residential remodeling market continues to experience a multiyear slump, with uncertainty regarding when market dynamics will change [12] Company Strategy and Development Direction - The company is focused on creating differentiated styles for the residential market, emphasizing color, pattern, and texture [11] - Efforts are being made to simplify product lines and enhance consumer-friendly messaging, particularly in the TrueCore brand [12] - The company aims to manage expenses and capital expenditures while improving gross margins in anticipation of a future market upturn [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted that low consumer confidence was exacerbated by uncertainty around tariff increases, impacting product costs [10] - The company is optimistic about its position for future growth when interest rates decline and the housing market rebounds [14] Other Important Information - The company closed a new $75 million senior credit facility, which will support operations and improve financial flexibility [8][9] - Inventory management has been a focus, with a planned reduction leading to a decrease in net inventory from $75 million in Q1 2024 to $66.7 million in Q1 2025 [6] Q&A Session Summary Question: Is the stock buyback program still in effect? - The stock buyback program is no longer in effect, having ceased during the latter part of the previous year [16] Question: Are there signs of consolidation in the industry? - There has not been much consolidation among manufacturers, although some smaller retailers have gone out of business [17] Question: Have buying habits changed between big box stores and boutique retailers? - Premium products are performing better overall, with the Fabrica brand seeing exceptional success in the soft covering market [18]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported net sales of $62.99 million, a decrease of 3.5% from $65.25 million in Q1 2024 [2][3] - The operating income improved to $11,000 in Q1 2025 from an operating loss of $857,000 in Q1 2024 [2][5] - The net loss from continuing operations was $1.58 million or $0.11 per diluted share, compared to a net loss of $2.41 million or $0.16 per diluted share in the same quarter of 2024 [3] Business Line Data and Key Metrics Changes - Sales of soft floor covering products outperformed hard surface products, with continued market share gains in the soft surface category [3] - Gross margins improved to $16.90 million or 26.8% of net sales, compared to $15.80 million or 24.2% of net sales in the prior year [4] Market Data and Key Metrics Changes - The industry is experiencing weak market conditions due to low existing home sales and lower consumer confidence [3] - The residential remodeling market continues to face a multiyear slump, with uncertainty regarding when market dynamics will change [11] Company Strategy and Development Direction - The company is focused on creating differentiated styles for the residential market, emphasizing color, pattern, and texture [10] - Efforts are being made to minimize expenses, reduce overhead costs, and improve gross margins [12] - The company has closed on a new $75 million senior credit facility to support operations and manage costs effectively [7][12] Management's Comments on Operating Environment and Future Outlook - Management noted that low consumer confidence was impacted by uncertainty around tariff increases, with some industry players announcing price increases to mitigate these impacts [9] - The company believes that actions taken during the current difficult environment will position it well for an eventual market upturn [13] Other Important Information - The company has seen improvements in operations, including productivity, quality, and raw material utilization [11] - The first quarter trade show showcased 25 new styles of carpet and eight hard surface collections, which were well received [10] Q&A Session Summary Question: Is the stock buyback program still in effect? - The stock buyback program is no longer in effect as it was ceased during the latter part of the previous year [16] Question: Are there signs of consolidation in the industry? - There has not been much consolidation at the manufacturing level, although some smaller retailers have gone out of business [17] Question: Have buying habits changed between big box stores and boutique retailers? - Premium products are performing better than the market overall, with the Fabrica brand doing exceptionally well [18]

Financial Data and Key Metrics Changes - In Q4 2024, net sales were approximately $64.4 million, down from $66.7 million in Q4 2023 [2] - The net loss for Q4 2024 was $7.2 million compared to a net loss of $3.2 million in Q4 2023, which included an $8.2 million gain on the sale of assets [3] - For the fiscal year 2024, net sales were $265 million, down 4.1% from $276 million in 2023 [4] - The net loss from continuing operations for 2024 was $12.2 million or $0.83 per diluted share, compared to a net loss of $1.95 million or $0.13 per diluted share in 2023 [3] - Gross profit margin in 2024 was 24.7% of net sales, down from 26.7% in the prior year [5] Business Line Data and Key Metrics Changes - Selling and administrative expenses in 2024 were reduced by $4.3 million or 5.8% of net sales due to planned cost-cutting initiatives [5] - Facility consolidation expenses were $2.5 million lower than the prior year, including additional write-downs of idled assets [6] - The company reduced costs by over $35 million in 2023 and further reduced costs by over $10 million in 2024 [11] Market Data and Key Metrics Changes - Existing home sales have declined dramatically from over 6 million homes per year to under 4 million, impacting the industry significantly [9] - The actual square yards of carpet chips have decreased by 25% over the last three years [10] Company Strategy and Development Direction - The company has focused on cost reduction and restructuring to align capacity with current volume, reducing the number of associates by approximately 28% over the last three years [11] - Investment in extrusion equipment aims to provide lower-cost raw materials and ensure a consistent supply [12] - The company is expanding its product offerings, including hard surface products under the TrueCore brand and enhancing its high-end wood program [13][14] Management Comments on Operating Environment and Future Outlook - The management noted that the industry has been in a recession for several years, with existing home sales at the lowest point since 1995 [9] - The company anticipates further cost reductions exceeding $10 million in 2025 and continues to manage working capital effectively [11][17] - The impact of tariffs on imported products is uncertain, but the company is prepared to take appropriate actions as needed [16] Other Important Information - The company closed a new $75 million senior credit facility, enhancing its financial position [8] - The company has maintained low capital expenditures except for investments in extrusion equipment [11] Q&A Session Summary Question: What percent of hard surfaces is imported from China? - Very little is imported from China, with imports coming from Thailand, Cambodia, Vietnam, and some from Europe [19] Question: How quickly can the company pass along price increases due to tariffs? - It is unclear, but it is likely that price increases will be passed on quickly as tariffs become impactful [22] Question: What was the amount of the Q4 inventory write-down? - The overall reduction in inventory was $9.8 million, with additional reserves made for excess inventory [25][26] Question: How soon will the company achieve the $10 million cost reduction? - The company is very close to that level today, with most of the reductions planned months ago [27] Question: Is there potential benefit from tariffs for the soft side of the business? - It depends on where the tariffs end up, but imports are not a major factor for the domestic tufted carpet business [34] Question: Is the full amount of $12.2 million available to borrow under the new credit facility? - Yes, the $12.2 million includes the $6 million excess availability [35]

Financial Performance - In Q4 2024, net sales were $64.39 million, a decrease of 3.8% from $66.67 million in Q4 2023[2] - The net loss for Q4 2024 was $7.20 million, compared to a net income of $3.16 million in Q4 2023, which included an $8.20 million gain on asset sale[2] - For the fiscal year 2024, net sales totaled $265.03 million, down 4.1% from $276.34 million in 2023[2] - The gross margin for fiscal year 2024 was 24.7%, down from 26.7% in 2023, primarily due to under absorbed fixed costs and higher utility and medical expenses[10] Cost Management - The company achieved a cost reduction plan exceeding $10 million in 2025, alongside a planned reduction in inventory[7] - Selling and administrative expenses decreased by $4.3 million or 5.8% in 2024 compared to 2023[10] Capital Expenditures and Financing - Capital expenditures in 2024 were $2.1 million, an increase from $1.0 million in 2023[11] - The company closed a new $75 million senior credit facility in February 2025, replacing the previous facility[9] Inventory Management - Net inventories decreased by $9.4 million or 12.3% from the fiscal year end 2023 due to planned reductions and write downs[11] Product Development - The company experienced growth in higher-end product offerings, particularly in decorative programs and nylon carpet[5]

Financial Performance - Net sales for the fiscal year ended December 28, 2024, were $265.0 million, a decrease of 4.1% compared to $276.3 million in 2023[106][108] - Gross profit decreased by 11.3% to $65.5 million, with gross profit as a percentage of net sales dropping from 26.7% in 2023 to 24.7% in 2024[106][109] - Operating loss for 2024 was $5.9 million, a significant decline from an operating income of $5.0 million in 2023, primarily due to increased costs and lower sales volume[106][113] - The net loss for 2024 was $13.0 million, or $0.88 per diluted share, compared to a net loss of $2.7 million, or $0.18 per diluted share, in 2023[106][118] Cash Flow and Debt - Cash provided by continuing operations was $3.6 million, with a reduction in inventories generating $9.4 million[120] - The company had $50.0 million of outstanding indebtedness under its senior credit facility as of December 28, 2024, maturing on October 30, 2025[123] - On February 25, 2025, the company entered into a new three-year $75.0 million senior secured credit facility with MidCap Financial IV Trust[123] - The unused borrowing availability under the revolving credit facility was $9.9 million as of December 28, 2024[129] - The company entered into a $10.0 million principal amount USDA Guaranteed term loan with a minimum interest rate of 5.00% and a term of 25 years[130] - The company also secured a $15.0 million principal amount USDA Guaranteed term loan with a minimum interest rate of 5.00% and a term of 10 years[131] Expenses and Income - Selling and administrative expenses decreased to $69.9 million in 2024 from $74.1 million in 2023, representing 26.4% of net sales[106][110] - Other operating income was a net expense of $200 thousand in 2024, compared to income of $9.2 million in 2023 due to the sale and leaseback of the Adairsville distribution center[106][111] Compliance and Valuation - The company received notice from Nasdaq regarding non-compliance with the minimum bid price requirement, leading to delisting from Nasdaq effective October 3, 2024[105][122] - Valuation allowances increased by $3.8 million related to net deferred tax assets and specific federal and state net operating losses for the year ended December 28, 2024[136] - At December 28, 2024, the company had valuation allowances of $24.7 million compared to $21.0 million at December 30, 2023[146] Interest Rates and Liabilities - As of December 28, 2024, the applicable margin on the revolving credit facility was 2.50% for SOFR and 1.50% for Prime due to the fixed charge coverage ratio being below 1.10 to 1.00[127] - The weighted-average interest rate on borrowings outstanding under the revolving credit facility was 7.18% at December 28, 2024, compared to 8.15% for December 30, 2023[128] - Approximately 86% of the company's total debt, amounting to $71,960, was subject to floating interest rates as of December 28, 2024[148] - A one-hundred basis point fluctuation in the variable interest rates applicable to floating rate debt would have an annual pre-tax impact of approximately $720[148] Environmental Liabilities - The company has a reserve of $2.2 million for environmental liabilities associated with discontinued operations as of December 28, 2024[138]