Financial Data and Key Metrics Changes - Net sales in Q2 2024 were $70.5 million, down approximately 4.7% from $74 million in Q2 2023 [2][4] - Gross profit margin improved to 28.1% in Q2 2024 from 26.7% in Q2 2023 [2][4] - Operating income increased to $2.3 million in Q2 2024 from $300,000 in Q2 2023 [2] - Net income from continuing operations was $700,000 in Q2 2024, compared to a net loss of $1.6 million in the same period of the prior year [2][6] - Year-to-date gross margins were 26.2%, slightly down from 26.7% in the prior year [5] Business Line Data and Key Metrics Changes - Net sales from soft surfaces were less than 1% below the prior year, while the industry was down approximately 5% [3] - Hard surface business was down in the range of 15% to 20% for the quarter [18] Market Data and Key Metrics Changes - The housing and home remodeling market is negatively impacted by high interest rates and inflation [3][12] - Existing home sales have decreased from over six million units to below four million, the lowest since 1995 [12] Company Strategy and Development Direction - The company is focused on cost reduction initiatives, with a target of $10 million to $12 million in savings for the year [12] - The extrusion facility is operational and providing cost reductions in nylon fiber, which supports new carpet styles [8][10] - The company launched 18 new carpet styles and six new collections in Q2 2024, completing its new product launches for the year [9][10] Management's Comments on Operating Environment and Future Outlook - Management expects interest rates to decline later this year or early next year, which could improve the industry [12] - The company does not anticipate improvement in Q3 2024, as current performance lags behind last year [13] - Management is optimistic about the leasing of the Saraland facility, which will positively impact income and cash flow [13] Other Important Information - The company completed a 10-year sublease agreement for warehouse space, expected to generate approximately $1.8 million in annual income [2][19] - Selling and administrative expenses were lower in dollars and as a percentage of net sales compared to the prior year due to cost-cutting initiatives [6] Q&A Session Summary Question: Will the new product launches impact SG&A in the back half? - Management indicated that expenses related to sampling activities are spread in line with sales, so the impact will be minimal, but it will positively affect cash flow [14] Question: How much of the $10 million in cost savings has been achieved? - Approximately 35% to 40% of the cost savings have been achieved in the first half, with the remainder expected in the second half [15] Question: Are the gross margins sustainable? - Management confirmed that there were no significant one-time factors affecting the gross margins, indicating they are sustainable at current revenue levels [17] Question: What is the status of the hard surfaces business? - The hard surfaces business was confirmed to be down in the range of 15% to 20%, which is less than 20% of total business [18] Question: Is the $1.8 million in sublease income incremental? - The income is mostly incremental, with some existing lease revenue already in place [19] Question: What is the expected cash CapEx for the back half of the year? - Expected cash CapEx is in the range of $9.2 million to $9.4 million, with $1 million to $1.5 million allocated for general maintenance projects [22]

Financial Performance - Net sales for Q2 2024 were $70.5 million, a decrease of 4.5% from $74.0 million in Q2 2023[2] - Gross profit margin improved to 28.1% in Q2 2024, up from 26.7% in Q2 2023[9] - Operating income increased to $2.3 million in Q2 2024, compared to $0.3 million in Q2 2023[3] - Net income from continuing operations was $0.7 million, or $0.04 per diluted share, compared to a net loss of $1.6 million, or $0.11 per diluted share, in Q2 2023[3] - For the first six months of 2024, net sales were $135.8 million, down 3.8% from $141.1 million in the same period of 2023[4] - Sales in Q3 2024 to date are approximately 5.5% below the comparable period in the prior year[11] Cost Management - The company expects to reduce year-over-year costs by over $10 million in 2024 through cost-saving initiatives[8] New Product Launches - The company launched 18 new carpet styles and 6 new collections with 38 SKUs in Q2 2024, contributing to sales volume[8] Assets and Liabilities - Total assets increased to $198,492,000 as of June 29, 2024, up from $191,169,000 on December 30, 2023, reflecting a growth of approximately 3.4%[15] - Current assets rose to $115,329,000, compared to $112,395,000 at the end of 2023, indicating an increase of about 2.6%[15] - Cash and cash equivalents increased slightly to $83,000 from $79,000, showing a growth of 5.1%[15] - Receivables, net grew to $28,019,000, up from $23,686,000, representing an increase of approximately 18.4%[15] - Total current liabilities increased to $44,813,000 from $39,554,000, marking a rise of about 13.5%[15] - Long-term debt, net rose to $82,699,000, compared to $78,290,000, reflecting an increase of approximately 5.5%[15] - Stockholders' equity decreased to $27,304,000 from $29,291,000, a decline of about 6.8%[15] - Accounts payable increased significantly to $19,371,000 from $13,935,000, indicating a rise of approximately 39.5%[15] - Operating lease liabilities decreased slightly to $24,206,000 from $25,907,000, a reduction of about 6.6%[15] - Inventories, net remained relatively stable at $76,131,000 compared to $76,211,000, showing a negligible change[15] Capital Expenditures - Capital expenditures for the full fiscal year 2024 are planned at $9.4 million[10] Sublease Agreement - A 10-year sublease agreement was completed for warehouse space, expected to generate approximately $1.8 million in annual income[2]

Financial Data and Key Metrics Changes - The company reported net sales of $65.254 million for Q1 2024, a decrease of approximately 2.7% compared to roughly $67 million in the same quarter of the previous year [2][4] - An operating loss of $857,000 was recorded, contrasting with an operating income of $306,000 in Q1 2023 [2] - The net loss from continuing operations was $2.41 million or $0.16 per diluted share, compared to a net loss of $1.551 million or $0.11 per diluted share in Q1 2023 [2] Business Line Data and Key Metrics Changes - The gross profit margin for Q1 2024 was 24.2% of net sales, down from 26.6% in the same quarter of the prior year, primarily due to lower production volumes [6] - Selling and administrative expenses were aligned with the prior year but increased as a percentage of lower net sales, at 25.1% compared to 24.5% in the prior year [7] Market Data and Key Metrics Changes - The overall industry was believed to be down approximately 8%, while the company's net sales were only down 2.7%, indicating better performance relative to the industry [4][5] Company Strategy and Development Direction - The company is focusing on cost reduction, implementing a $10 million cost reduction plan following a successful $35 million reduction last year [15] - New product launches include 14 new carpet styles, with a focus on high-end divisions and a color marketing campaign to enhance consumer engagement [12][13] - The company has begun extruding its own raw materials to reduce costs and ensure supply stability [12] Management's Comments on Operating Environment and Future Outlook - Management expressed that the company is at the bottom of a down cycle but anticipates improvement with lower interest rates in the future [11] - The first quarter is typically the slowest, but there was a noted seasonal improvement in March, with net sales slightly ahead of the same month last year [11] - Management remains cautious about the timeline for significant business improvement due to ongoing high interest rates [20] Other Important Information - The company’s quarter-end receivables increased by $4.5 million, while inventory decreased by $1.2 million, reflecting a strategy to align inventory with demand [8] - The Board of Directors approved a stock repurchase plan of up to $2.8 million, set to begin on or about May 8 [16] Q&A Session Summary Question: How will the company navigate the current environment with high interest rates affecting remodeling activity? - Management acknowledged the challenges posed by high interest rates but emphasized ongoing cost-cutting measures and the potential for profitability despite the environment [20] Question: What is the timeline for the $10 million savings plan? - The $10 million savings will be distributed over the next 12 months, with some impact already seen in the first quarter [25] Question: Any updates on the NASDAQ listing regarding the stock being under $1? - The company has received an extension until September of this year to address the listing deficiency [26]

Financial Performance - Net sales for the first quarter of 2024 were $65.3 million, a decrease of 2.7% compared to $67.1 million in the same period of 2023[3] - The operating loss for the first quarter of 2024 was $857,000, compared to an operating income of $306,000 in the first quarter of 2023[3] - The net loss from continuing operations in the first quarter of 2024 was $2.41 million, or $0.16 per diluted share, compared to a net loss of $1.55 million, or $0.11 per diluted share, in the same quarter of 2023[3] - The gross profit margin for the first quarter of 2024 was 24.2% of net sales, down from 26.6% in the first quarter of 2023[7] Product Development - The company launched 14 new carpet styles in the first quarter, including 11 high-end EnVision Nylon styles[6] Cost Management - The company plans to reduce year-over-year costs by $10 million in 2024 through cost savings related to extrusion operations[7] Capital Expenditures - Capital expenditures for the full fiscal year 2024 are planned at $9.4 million, with $2.9 million funded by cash investment within the year[10] Shareholder Actions - The company's Board of Directors approved a stock repurchase plan of up to $2.8 million[11] Sales Trends - In the first four weeks of the second quarter of 2024, net sales were approximately 4% above the comparable period in the prior year[12] Receivables - The company experienced an increase in receivables by $4.5 million due to higher sales in the last month of the first quarter 2024[10]

Financial Performance - Net sales for the fiscal year ended December 30, 2023, were $276.3 million, a decrease of 9.0% compared to $303.6 million in 2022[92]. - Gross profit increased by 37.8% to $73.9 million, with gross profit margin rising to 26.7% from 17.7% in the previous year[92][93]. - Selling and administrative expenses decreased to $74.1 million in 2023 from $76.9 million in 2022, representing 26.8% of net sales[96]. - Operating income improved to $5.0 million in 2023 from an operating loss of $28.2 million in 2022, marking a significant turnaround[99]. - Net loss narrowed to $2.7 million, or $0.18 per diluted share, compared to a net loss of $35.1 million, or $2.32 per diluted share, in 2022[104]. Cash Flow and Investments - Cash provided by continuing operations was $4.2 million, driven by a reduction in receivables and a decrease in inventories[105]. - Net cash provided by investing activities was $15.1 million, primarily from the sale of the Adairsville distribution center[106]. - On December 14, 2023, the company sold its distribution center in Adairsville, Georgia for $11.0 million and completed a sale and leaseback, paying off an existing note of $10.4 million[114]. Debt and Interest - Interest expense increased to $7.2 million in 2023 from $5.3 million in 2022 due to higher interest rates[100]. - The company has $14.1 million of unused borrowing availability under its revolving credit facility as of December 30, 2023[111]. - Approximately 85% of the company's total debt, amounting to $71,494 thousand, is subject to floating interest rates, with a potential annual pre-tax impact of $715 thousand from a 100 basis point fluctuation[131]. - The company has other financing notes with interest rates ranging from 6.34% to 7.84%, due in monthly installments[116]. Tax and Liabilities - The effective income tax rate was a provision of 12.3% in 2023, compared to a benefit of 0.26% in 2022[102][103]. - The company anticipates cash outlays for income taxes during 2024 and 2025 will not exceed $200 thousand due to tax loss carryforwards[120]. - As of December 30, 2023, the company had a net deferred tax liability position of $91 thousand, with valuation allowances of $21.0 million[120]. - The company has a reserve of $2.2 million for environmental liabilities associated with discontinued textile businesses as of December 30, 2023[121]. Compensation and Stock - The total unrecognized compensation expense related to unvested restricted stock awards was $1.1 million as of December 30, 2023, with a weighted-average vesting period of 6.9 years[117]. - The company recorded total purchases from Engineered Floors of approximately $64 thousand in 2023, representing about 0.03% of its cost of sales[123]. Off-Balance Sheet Arrangements - The company has no off-balance sheet arrangements as of December 30, 2023[118]. Lease Agreements - The company entered into a 10-year operating lease for the Adairsville property with an initial annual rent of $1.5 million, increasing to $1.6 million in the second five years[114].

Financial Data and Key Metrics Changes - The gross margin improved by 13 percentage points to 27% of net sales in Q4 2023 compared to 14% in Q4 2022 [3] - Net income for Q4 2023 was $3.2 million, a significant improvement from a loss of $18.5 million in Q4 2022 [9] - For the fiscal year 2023, net sales were $236.3 million, down from $303.6 million in the prior year, reflecting a decrease of 9% [30] - The operating income for 2023 was $5 million compared to an operating loss of $28.2 million in 2022 [12] - The net loss for the year was $2.7 million, an improvement from a net loss of $35.1 million in the previous year [12] Business Line Data and Key Metrics Changes - The company experienced a 7.2% decline in adjusted average weekly sales in 2023 compared to the prior year, primarily due to high interest rates and inflation affecting consumer confidence [10] - Hard surface products now represent about 20% of total sales, indicating growth in this segment [17] - The company invested heavily in displays and samples for its DuraSilk collection, which has seen strong acceptance [18] Market Data and Key Metrics Changes - The flooring industry faced a significant reduction in year-over-year sales volume, with the company gaining market share in its core markets despite a slowdown in the overall industry [8] - The actual square yards of carpets sold by the industry in 2023 were about 20% lower than in 2021, indicating a challenging market environment [36] Company Strategy and Development Direction - The company is focused on minimizing expenses and reducing overhead, with a plan to cut costs by an additional $10 million in 2024 after reducing costs by over $35 million in 2023 [16] - A major initiative includes starting up extrusion capabilities to produce its own nylon yarn, which will provide a more cost-effective source of raw materials [39] - The company aims to leverage its growth initiatives to gain market share, particularly in the hard surface and polyester product offerings [17][18] Management's Comments on Operating Environment and Future Outlook - Management noted that the industry is at a cyclical low point, but they are positioned to take advantage of a future upturn when interest rates recede and housing rebounds [20] - Current business conditions for the first 10 weeks of 2024 show sales slightly behind last year, but orders are in line with expectations [42] Other Important Information - The company recognized a gain of approximately $8 million from the sale and leaseback of its Adairsville facility [32] - The company is celebrating the 50th anniversary of its Fabrica brand, highlighting its commitment to quality and industry leadership [41] Q&A Session All Questions and Answers Question: Can you quantify the market share gained in the soft surface market? - Management indicated that while they cannot provide exact numbers, they have gained market share and noted that carpet has continued to lose market share to hard surfaces [46] Question: What is the Board's goal regarding debt in relation to equity? - The company has made significant progress in reducing debt and is monitoring economic conditions to determine future financing needs [54] Question: Will the company address compliance with NASDAQ efficiency filing dates? - Management confirmed that they will be addressing compliance issues soon [44]

Financial Performance - For the fiscal year 2023, net sales were $276,343,000, a decrease of 9.0% compared to $303,570,000 in 2022[3] - The operating income for 2023 was $5,048,000, a significant improvement from an operating loss of $28,156,000 in the previous year[3] - The net loss for 2023 was $2,718,000, or $0.18 per diluted share, compared to a net loss of $35,079,000, or $2.32 per diluted share, in 2022[3] - In Q4 2023, net sales were $66,674,000, down from $70,535,000 in Q4 2022, but average weekly sales increased by approximately 2% when adjusted for the additional week in the prior year[4][5] - Net sales for the three months ended December 30, 2023, were $66,674 million, a decrease of $3,861 million or 5.5% compared to $70,535 million in the same period of 2022[18] - For the twelve months ended December 30, 2023, net sales totaled $276,343 million, down $27,227 million or 9.0% from $303,570 million in 2022[18] - The company reported an adjusted weekly sales figure of $5,129 million for the three months ended December 30, 2023, reflecting an increase of $91 million or 1.8% from $5,038 million in the same period of 2022[18] - For the twelve months ended December 30, 2023, adjusted weekly sales were $5,314 million, a decrease of $414 million or 7.2% compared to $5,728 million in 2022[18] Cost Management - The company reduced costs by over $35 million in 2023 and plans to further reduce costs by $10 million in 2024[6] - Gross profit margin improved to 26.7% in 2023, up from 17.7% in 2022, reflecting cost reductions and plant consolidation efforts[6] - Capital expenditures in 2023 were $1 million, a decrease from $4.6 million in 2022[12] Debt and Financing - The debt level at the end of 2023 was $82.5 million, a 16.9% decrease from $99.3 million at the end of 2022[12] - The company completed a sale and leaseback of its distribution facility in December 2023, resulting in a gain of over $8 million and a debt reduction of approximately $16 million[13] Future Operations - The company plans to start its own nylon extrusion operations in Q1 2024 to mitigate raw material disruptions and lower costs[7]

Financial Data and Key Metrics Changes - For Q3 2023, net sales were $68.6 million, down approximately 4% from $71.8 million in Q3 2022. Net operating income was a loss of $913,000, an improvement from a loss of over $7 million in the same quarter last year. Gross margin improved by over 9 percentage points from 17.5% to 26.6% [3][4][10] - Year-to-date operating income for the first nine months of 2023 was a loss of $354,000, significantly better than a loss of $12.3 million for the same period in 2022. The year-to-date loss included $2.3 million in facility consolidation expenses [3][9] - Net loss for Q3 2023 was $2.4 million compared to a net loss of $8.8 million in the same period last year. Year-to-date net loss was $5.9 million, down from $16.6 million in the prior year [10] Business Line Data and Key Metrics Changes - Sales decline was partially attributed to a loss in volume in the mass merchant channel due to a strategic shift by the largest mass merchant customer towards lower price point offerings [5][6] - The company has continued to invest in hard surface initiatives and broadened its product offerings, gaining retail floor space and market share despite overall industry challenges [13][14] Market Data and Key Metrics Changes - The housing market remains constrained due to limited supply, high interest rates, and inflation, leading to a weak residential flooring market. The company believes it gained market share despite the overall industry decline [4][6] - The upper end of the market is outperforming the general market, and sales and orders for the first six weeks of Q4 2023 are slightly better than the previous year [15] Company Strategy and Development Direction - The company is focused on managing controllable aspects of the business, including productivity improvements, cost reductions, and restructuring assets to optimize cash flow [12][18] - Plans to begin in-house nylon extrusion in Q1 2024 to mitigate future raw material disruptions and lower costs [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the cyclical downturn in the flooring industry but remains optimistic about a future rebound. They are focused on cost reductions and growth initiatives to position the company for recovery [4][18] - The company expects to continue lowering costs into the next year while investing in growth initiatives that will positively impact sales once the market improves [35] Other Important Information - Capital expenditures for Q3 totaled $166,000, with a year-to-date total of $763,000. Total capital expenditures are planned around $1 million for the year [17] - The company reduced debt by over $3 million at the end of Q3 compared to the end of the prior year [14] Q&A Session Summary Question: Anticipated lag time for sales increase following interest rate decreases - Management indicated that remodeling typically precedes home resales, and a significant decrease in interest rates would likely result in a shorter lag time for sales increases [16][22] Question: Adjustments made following the loss of Lowe's business - Management confirmed a focus on residential retailers across the country and believes they are gaining market share despite the decline in big box market share [23] Question: Progress on facility consolidation and in-house production - Management detailed the consolidation of manufacturing facilities into lower-cost operations, which has helped reduce overall costs. They expect to incur about $500,000 in remaining consolidation expenses [27][28][29] Question: Status of the Ardennes Ville facility sale leaseback - Management confirmed ongoing efforts to pursue a sale leaseback opportunity for the Ardennes Ville facility, aiming to close a deal by the end of the year [30]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) THE DIXIE GROUP, INC. (Exact name of Registrant as specified in its charter) | Tennessee | | 62-0183370 | | --- | --- | --- | | (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) | | 475 Reed Road, Dalton, Georgia | 30720 | (706) 876-5800 | | (Address of principal executive offices) | (zip code) | (Registrant's telephone number, including area code) | | | Not Appl ...

Financial Data and Key Metrics Changes - For Q2 2023, net sales were approximately $74 million, down from $83.7 million in Q2 2022, reflecting a year-over-year decline [1][6] - Operating income improved to $253,000 compared to a loss of $2.9 million in the same quarter of the prior year [1][8] - Gross margin for Q2 2023 was 26.7% of net sales, significantly improved from the low 19% range in the prior year [7] - Net loss for the quarter was $1.7 million, an improvement from a net loss of $4.5 million in the same period last year [9] Business Line Data and Key Metrics Changes - The decrease in sales was partially due to a loss of volume in the mass merchant channel, which was affected by the customer's shift to lower price point offerings [2][10] - Excluding mass merchant sales, net sales were down 9.1% for the quarter [10] - Selling and administrative expenses were lower in dollars than the same period in the prior year but higher as a percentage of net sales due to lower sales volume [23] Market Data and Key Metrics Changes - The residential flooring market remains weak due to limited supply, high interest rates, and inflation, with the carpet market down in the mid-teens [21] - Multifamily and new housing segments were stronger than the residential replacement segment [21] Company Strategy and Development Direction - The company is focused on reducing total costs by over $35 million this year and has invested heavily in the hard surface market and decorative products [10][11] - Facility consolidations have better aligned demand and capacity, leading to operational improvements [26] - The company launched 11 new products in synthetic soft surface brands and continued executing its growth strategy with 23 new introductions in decorative brands [27] Management Comments on Operating Environment and Future Outlook - Management noted that the flooring industry is experiencing a cyclical downturn, but they are preparing for a future rebound by cutting costs and improving operations [13][28] - There is optimism regarding order entry for July, which was slightly ahead of the previous year, indicating potential momentum from new product launches [28] Other Important Information - Interest expense for the quarter was $1.8 million, up from $1.1 million in Q2 2022, driven by increased borrowings and higher interest rates [4] - The company incurred $719,000 in expenses related to facility consolidation during Q2 2023 [8] - Capital expenditures for the quarter totaled $238,000, with a planned total of $3 million for the year [24] Q&A Session Summary Question: What is the normalized SG&A number going forward? - Management expects SG&A to be several percentage points lower as a percent of sales [15] Question: How did order entry play out in Q2? - Order entry improved throughout the quarter, with July showing slight growth compared to the previous year [16][37] Question: Will the company be operating cash flow positive in the second half? - Management is optimistic about operating cash flow positivity based on first half results and projections [18] Question: How is market share quantified? - Market share is measured through quarterly sales data received from industry organizations, specifically in the soft surface market [40]