DIXIE GROUP INC
For the period ended Mar 29, 2025. Filed May 9, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 29, 2025 · Filed May 9, 2025
DXYN$0.40+5.4%Stored close · as of Jul 7, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-28; filed 2024-10-28.
0000029332-24-000064
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-29; filed 2025-05-09.
0000029332-25-000050
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 70 previous paragraphs and 46 current paragraphs.
22 unchanged; 18 reworded; 6 added; 24 removed; 6 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
We are actively monitoring recent trade policy and tariff announcements, including various executive orders issued by the current U.S. presidential administration. Increased restrictions on global trade, including an increase in U.S. tariffs and any retaliatory responses thereto, could result in, among other things, increased input costs, supply chain disruptions, and decreased consumer demand, any of which may adversely affect our business financial condition and results of operations. We are working to determine our overall tariff cost exposure, the potential impact of retaliatory responses thereto, if any, and mitigation plans. Given the timing, uncertainty and fluidity of the evolving global trade environment, the impact to our business, financial condition and results of operations cannot be predicted.
Current report
Net Sales
Current report
Operating Income (Loss)
Current report
Other Expense, Net
Current report
Income Tax Provision
Current report
As described in Note 9, our revolving credit facility requires a lockbox arrangement, which provides for all cash receipts to be swept daily to reduce the balance outstanding. This arrangement, combined with the existence of a “subjective acceleration clause” (as defined by U.S. GAAP) in the revolving credit facility, requires the balance on the revolving credit facility to be classified as a current liability. The “subjective acceleration clause” allows the lender to declare an event of default if there is a material adverse change in our business or financial condition. Upon the occurrence of an event of default, the lender may, among other things, declare all obligations payable in full. We have $54.5 million of outstanding indebtedness under our senior credit facility that is classified as current as of March 29, 2025. As of the date of these financial statements, our existing cash and cash equivalents would not be sufficient to satisfy this debt in whole and meet our operating needs for at least one year after the issuance of these financial statements.
Removed paragraphs (24)
Previous report
Nasdaq Marketplace Rule 5550(a)(2) requires that, for continued listing on the exchange, we must maintain a minimum bid price of $1 per share. We received notice from Nasdaq on September 27, 2023 that our closing bid price was below $1 per share for 30 consecutive business days. We requested, and were granted, an additional 180 calendar days from March 25, 2024 to September 24, 2024 to meet the applicable minimum bid price requirement. On September 24, 2024, the Company received a letter from Nasdaq notifying the Company that it had not regained compliance with the bid price requirement by the required compliance date and, as a result, the Company's Common Stock was subject to delisting. Effective at the opening of business on October 3, 2024, our Common Stock was suspended and delisted from Nasdaq and began trading on the Over-the-Counter Market pink sheets under the stock symbol DXYN. Effective October 4, 2024, we were upgraded to the Over-the-Counter OTCQB Market ("the OTCQB") trading under the same symbol DXYN.
Previous report
Net Sales from Continuing Operations
Previous report
Operating Loss
Previous report
We reported an operating loss of $2.1 million in the third quarter of 2024 compared with an operating loss of $913 thousand in the third quarter of 2023. The increase in operating loss was primarily the result of lower sales volume, higher healthcare and utility costs and additional lease expense due to the sale and leaseback of the Adairsville distribution center in 2023.
Previous report
Other (Income) Expense, Net
Previous report
Income Tax Provision (Benefit)
Previous report
We recorded an income tax benefit from continuing operations of $4 thousand in the third quarter of 2024 compared to a income tax expense of $125 thousand in the third quarter of 2023.
Previous report
Nine Months Ended September 28, 2024 Compared with the Nine Months Ended September 30, 2023
Previous report
Net Sales from Continuing Operations
Previous report
Gross Profit
Previous report
Gross profit as a percentage of net sales was 25.7% in the first nine months of 2024 compared with 26.6% in the first nine months of 2023. The lower gross profit percentage in 2024 was primarily driven by lower sales volume, higher healthcare and utility costs and additional lease expense due to the sale and leaseback of the Adairsville distribution center in 2023.
Previous report
Selling and Administrative Expenses
Previous report
Other Operating (Income) Expense, Net
Previous report
Net other operating (income) expense was $141 thousand of expense in the first nine months of 2024 compared with $313 thousand of income in the first nine months of 2023.
Previous report
Operating Loss
Previous report
Table of Contents 26
Previous report
Interest Expense
Previous report
Interest expense decreased $723 thousand in the first nine months of 2024 compared with the first nine months of 2023. The decrease is primarily the result of a lower debt level in 2024 offset by an increase in interest rates on our variable rate debt.
Previous report
Other (Income) Expense, Net
Previous report
Net other (income) expense was $8 thousand of expense in the first nine months of 2024 compared with $634 thousand of income in the first nine months of 2023. Net other (income) expense included a gain of $625 thousand related to an extinguishment of a debt arrangement in the first nine months of 2023.
Previous report
Income Tax Provision (Benefit)
Previous report
Net Loss
Previous report
Nasdaq Marketplace Rule 5550(a)(2) requires that, for continued listing on the exchange, we must maintain a minimum bid price of $1 per share. We received notice from Nasdaq on September 27, 2023 that our closing bid price was below $1 per share for 30 consecutive business days. We requested, and were granted, an additional 180 calendar days from March 25, 2024 to September 24, 2024 to meet the applicable minimum bid price requirement. On September 24, 2024, the Company received a letter from Nasdaq notifying the Company that it had not regained compliance with the bid price requirement by the required compliance date and, as a result, the Company's Common Stock was subject to delisting. Effective at the opening of business on October 3, 2024, our Common Stock was suspended and delisted from Nasdaq and began trading on the Over-the-Counter Market pink sheets under the stock symbol DXYN. Effective October 4, 2024, we were upgraded to the Over-the-Counter OTCQB Market ("the OTCQB") trading under the same symbol DXYN. Our delisting from Nasdaq could make it more difficult for us to raise additional capital if needed.
Previous report
Our Senior Secured Revolving Credit Facility matures on October 30, 2025. In consideration of this, we have begun discussions with lenders to secure longer term financing in place of our senior debt. However, there can be no assurance that we will be able to extend or replace our senior debt or that other supplemental financing or other sources of funding can be obtained or will be obtained on terms favorable to us.
Reworded paragraphs (18)
Previous wording
Our business is sensitive to macroeconomic events in the United States. High interest rates, delayed consumer discretionary spending due to inflationary pressures, and other macroeconomic factors continue to impact new home construction and residential renovation and remodeling activity. Residential remodeling is a primary sales driver of flooring products, and most flooring is replaced before a home is listed for sale or just after a home purchase is completed. The current housing market conditions have suppressed remodeling activity as home sales remain soft. Housing turnover rates remain suppressed due to high home mortgage rates and consumers continue to face a higher cost of living and delay discretionary spending on large durable goods purchases such as flooring. We have, to some extent, offset the impact of a soft housing market and decreased renovation activity through cost containment, productivity and lower input costs. Due to low housing availability, aging stock and greater household formation, we believe demand in our markets will accelerate when interest rates decline. We believe that a number of circumstances may influence trends in 2024, including the impact of inflation and higher interest rates, but the extent and duration of such impact cannot be predicted.
Current wording
We continue to be impacted by soft consumer demand, inflationary pressures and fluctuating interest rates. Persistent inflation continues to hinder consumer discretionary spending, which has caused consumers to postpone large purchases of durable goods such as flooring. Macroeconomic factors continue to impact new home construction and residential renovation and remodeling activity. Residential remodeling is a primary sales driver of flooring products, and most flooring is replaced before a home is listed for sale or just after a home purchase is completed. The current housing market conditions have suppressed remodeling activity as home sales remain soft. Housing turnover rates remain suppressed due to high home mortgage rates and consumers continue to face a higher cost of living. We have, to some extent, offset the impact of a soft housing market and decreased renovation activity through cost containment, productivity and lower input costs. Due to low housing availability, aging stock and greater household formation, we believe demand in our markets will accelerate when interest rates decline. However, the ongoing impact of soft consumer demand, inflationary pressures and fluctuating interest rates to our business, financial condition, and results of operations cannot be determined at this time.
Previous wording
For the third quarter of 2024, our net sales from continuing operations decreased 5.4% compared with the third quarter of 2023. The lower net sales were attributed to lower demand within the floorcovering industry and related markets driven by continued high interest rates and inflation.
Current wording
For the first quarter of 2025, our net sales from continuing operations decreased 3.5% compared with the first quarter of 2024. The lower net sales were attributed to continued lower demand within the floorcovering industry and related markets driven by continued high interest rates and inflation.
Previous wording
Gross profit as a percentage of net sales was 24.6% in the third quarter of 2024 compared with 26.6% in the third quarter of 2023. The lower gross profit percentage in 2024 was primarily driven by lower sales volume, higher healthcare and utility costs and additional lease expense due to the sale and leaseback of the Adairsville distribution center in 2023.
Current wording
Gross profit as a percentage of net sales was 26.8% in the first quarter of 2025 compared with 24.2% in the first quarter of 2024. The higher gross profit percentage in 2025 was primarily driven by cost reductions in our operations offset by higher healthcare costs.
Previous wording
Selling and administrative expenses were $17.6 million, or 27.1% of net sales, in the third quarter of 2024 compared with $18.7 million, or 27.3% of net sales in the year earlier period. Selling and administrative expenses as a percentage of net sales decreased in the third quarter of 2024 as compared to the third quarter of 2023 primarily due to lower sample and marketing expenses during the quarter.
Current wording
Selling and administrative expenses were $16.9 million, or 26.8% of net sales, in the first quarter of 2025 compared with $16.4 million, or 25.1% of net sales in the year earlier period. Selling and administrative expenses as a percentage of net sales increased in the first quarter of 2025 as compared to the first quarter of 2024 primarily due to higher healthcare costs and professional fees during the quarter.
Previous wording
Net other operating (income) expense was an expense of $193 thousand in the third quarter of 2024 compared with $147 thousand of income in the third quarter of 2023.
Current wording
Net other operating (income) expense was income of $98 thousand in the first quarter of 2025 compared with an expense of $52 thousand in the first quarter of 2024.
Previous wording
Facility consolidation and severance expenses in the third quarter of 2024 were $283 thousand compared with $552 thousand in the third quarter of 2023. The expenses in 2024 and 2023 were related to our restructuring plan for the consolidation of our east coast manufacturing.
Current wording
Facility consolidation and severance expenses in the first quarter of 2025 were $115 thousand compared with $242 thousand in the first quarter of 2024. The expenses in 2025 and 2024 were related to our restructuring plan for the consolidation of our east coast manufacturing.
Previous wording
We reported an operating loss of $669 thousand in the first nine months of 2024 compared with an operating loss of $354 thousand in the first nine months of 2023. The increase in operating loss was primarily the result of lower sales volume, higher healthcare and utility costs and additional lease expense due to the sale and leaseback of the Adairsville distribution center in 2023.
Current wording
We reported operating income of $11 thousand in the first quarter of 2025 compared with an operating loss of $857 thousand in the first quarter of 2024. The decrease in operating loss was primarily the result of cost reductions in our operations partially offset by higher healthcare costs in 2025.
Previous wording
Interest expense decreased $167 thousand in the third quarter of 2024 compared with the third quarter of 2023. The decrease is primarily the result of a lower debt level in 2024 offset by an increase in interest rates on our variable rate debt.
Current wording
Interest expense decreased $39 thousand in the first quarter of 2025 compared with the first quarter of 2024. The decrease is primarily the result of lower interest rates in 2025 on our variable rate debt.
Previous wording
Net other (income) expense was $2 thousand of income in the third quarter of 2024 compared with $622 thousand of income in the third quarter of 2023. Net other (income) expense included a gain of $625 thousand related to an extinguishment of a debt arrangement in the third quarter of 2023.
Current wording
Net other expense was an expense of $88 thousand in the first quarter of 2025 compared with an expense of $5 thousand in the first quarter of 2024. Net other expense included a loss of $66 thousand related to an extinguishment of a debt arrangement in the first quarter of 2025.
Previous wording
We recorded an income tax expense from continuing operations of $16 thousand in the first nine months of 2024 compared to a income tax expense of $159 thousand in the first nine months of 2023.
Current wording
We recorded an income tax expense from continuing operations of $12 thousand in the first quarter of 2025 compared to a income tax expense of $16 thousand in the first quarter of 2024.
Previous wording
The effective benefit tax rate for the three months ending September 28, 2024 was (0.11)% compared with a income tax rate of 6.00% for the three months ending September 30, 2023. Because we maintain a full valuation allowance against our deferred tax balances, we are only able to recognize refundable credits and a small amount of state taxes in the tax expense for the second quarter of 2024 and 2023. We are in a net deferred tax liability position of $91 thousand at September 28, 2024 and $91 thousand at December 30, 2023, which is included in other long-term liabilities in our consolidated condensed balance sheets.
Current wording
The effective tax rate for the three months ending March 29, 2025 was 0.76% compared with an income tax rate of 0.67% for the three months ending March 30, 2024. Because we maintain a full valuation allowance against our deferred tax balances, we are only able to recognize refundable credits and a small amount of state taxes in the tax expense for the first quarter of 2025 and 2024. We are in a net deferred tax liability position of $91 thousand at March 29, 2025 and December 28, 2024, which is included in other long-term liabilities in our consolidated condensed balance sheets.
Previous wording
We account for uncertainty in income tax positions according to FASB guidance relating to uncertain tax positions. Unrecognized tax benefits were $556 thousand and $555 thousand at September 28, 2024 and December 30, 2023, respectively. Such benefits, if recognized, would affect our effective tax rate. There were no significant interest or penalties accrued as of September 28, 2024 and December 30, 2023.
Current wording
We account for uncertainty in income tax positions according to FASB guidance relating to uncertain tax positions. Unrecognized tax benefits were $564 thousand and $560 thousand at March 29, 2025 and December 28, 2024, respectively. Such benefits, if recognized, would affect our effective tax rate. There were no significant interest or penalties accrued as of March 29, 2025 and December 28, 2024.
Previous wording
Continuing operations reflected a loss of $3.7 million, or $0.26 per diluted share, in the third quarter of 2024 compared with a loss of $2.2 million, or $0.15 per diluted share, in the same period in 2023. The loss from discontinued operations was $182 thousand in the third quarter of 2024 compared to a loss of $183 thousand in the third quarter of 2023. See Note 20 to the consolidated condensed financial statements for additional details related to discontinued operations.
Current wording
Continuing operations reflected a loss of $1.6 million, or $0.11 per diluted share, in the first quarter of 2025 compared with a loss of $2.4 million, or $0.16 per diluted share, in the same period in 2024. The loss from discontinued operations was $115 thousand in the first quarter of 2025 compared to a loss of $84 thousand in the first quarter of 2024. See Note 20 to the consolidated condensed financial statements for additional details related to discontinued operations.
Previous wording
During the nine months ended September 28, 2024, cash used in operating activities in continuing operations was $497 thousand. An increase in accounts receivable used $3.0 million during the first nine months of 2024. Prepaid and other current assets used $2.6 million primarily as a result of prepaid sample and marketing expenses. A increase in inventory used $543 thousand and an increase in accounts payable and accrued expenses generated $5.8 million primarily driven by the quarter end timing of payments based on supplier terms.
Current wording
During the three months ended March 29, 2025, cash provided by operating activities in continuing operations was $7.6 million. An increase in accounts receivable used $4.7 million during the first three months of 2025. Prepaid and other current assets used $517 thousand primarily as a result of prepaid sample and marketing expenses. A decrease in inventory provided $111 thousand and an increase in accounts payable and accrued expenses generated $11.5 million primarily driven by needs to meet higher expected demand in the second quarter.
Previous wording
Purchases of capital assets for the nine months September 28, 2024 resulted in a $1.9 million cash out flow to the business. Depreciation and amortization for the nine months ended September 28, 2024 were $5.0 million. We expect capital expenditures to be approximately $2.8 million in 2024 while depreciation and amortization is expected to be approximately $6.2 million.
Current wording
Purchases of capital assets for the three months ended March 29, 2025 resulted in a $74 thousand cash out flow to the business. Depreciation and amortization for the three months ended March 29, 2025 were $1.4 million. We expect capital expenditures to be approximately $2.5 million in 2025 while depreciation and amortization is expected to be approximately $5.8 million.
Previous wording
During the nine months ended September 28, 2024, cash provided by financing activities was $3.6 million. We had net borrowings on our revolving credit facility of $7.2 million and net payments on notes payable and financing leases of $3.5 million.
Current wording
During the three months ended March 29, 2025, cash provided by financing activities was $1.7 million. We had net payments on our previous revolving credit facility of $50.0 million and net borrowings on our current revolving credit facility of $54.5 million. We had net payments on notes payable and financing leases of $1.1 million and paid $1.2 million in debt issuance costs for our current revolving facility.
Previous wording
We believe, after having reviewed various financial scenarios, our operating cash flows, credit availability under our revolving credit facility and other sources of financing are adequate to finance our anticipated liquidity requirements under current operating conditions. We have specifically considered the impact of continued operating losses on our liquidity position and our ability to comply with financial covenants by our primary lenders. As part of our evaluation, we considered the cost reductions implemented under our East Coast Consolidation Plan, the return from the elimination of cash discounts, lower planned sample investments and cost savings expected to be generated from the operations of our extrusion equipment. Availability under our Senior Secured Revolving Credit Facility on September 28, 2024 was $11.7 million. Significant additional cash expenditures
Current wording
We have evaluated our liquidity position over the next twelve months. In our evaluation, we considered the impact of past operating losses on our liquidity position, the continuing impact of cost reductions implemented under our East Coast Consolidation Plan, lower planned sample investments, additional cost savings expected to be generated from the operations of our extrusion equipment and other cost reductions. We believe, after having reviewed various financial scenarios, our operating cash flows, credit availability under our revolving credit facility and other sources of financing are adequate to finance our anticipated liquidity requirements under current operating conditions. However, our current forecast projects we may not be able to maintain compliance with certain of our financial covenants under our loan agreements. We have been able to obtain waivers in the past for such violations but it cannot be assured that such waivers will be obtained in the future. Refer to Note 1 in our consolidated condensed financial statements for detail regarding our assessment as a going concern.
Previous wording
Table of Contents 27 above our normal liquidity requirements, significant deterioration in economic conditions or continued operating losses could affect our business and require supplemental financing or other funding sources.
Current wording
Availability under our MidCap Financial Senior Secured Revolving Credit Facility on March 29, 2025 was $12.0 million which is subject to a $6.0 million minimum excess availability requirement. Significant additional cash expenditures above our normal liquidity requirements, significant deterioration in economic conditions or continued operating losses could affect our business and require supplemental financing or other funding sources.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
For the first nine months of 2024, our net sales from continuing operations decreased 4.3% compared with the first nine months of 2023. The lower net sales were attributed to lower demand within the floorcovering industry and related markets driven by continued high interest rates and inflation.
Previous report — wording carried elsewhere
Selling and administrative expenses were $51.3 million, or 25.6% of net sales, in the first nine months of 2024 compared with $54.2 million, or 25.9% of net sales in the year earlier period. Selling and administrative expenses as a percentage of net sales decreased in the first nine months of 2024 as compared to the first nine months of 2023 primarily due to lower sample and marketing expenses.
Previous report — wording carried elsewhere
Facility Consolidation and Severance Expenses, Net
Previous report — wording carried elsewhere
Facility consolidation and severance expenses in the first nine months of 2024 were $772 thousand compared with $2.3 million in the first nine months of 2023. The expenses in 2024 and 2023 were related to our restructuring plan for the consolidation of our east coast manufacturing.
Previous report — wording carried elsewhere
The effective income tax rate for the nine months ending September 28, 2024 was 0.30% compared with a income rate of 3.04% for the nine months ending September 30, 2023. Because we maintain a full valuation allowance against our deferred tax balances, we are only able to recognize refundable credits and a small amount of state taxes in the tax expense for the first nine months of 2024 and 2023.
Previous report — wording carried elsewhere
Continuing operations reflected a loss of $5.5 million, or $0.37 per diluted share, in the first nine months of 2024 compared with a loss of $5.4 million, or $0.36 per diluted share, in the same period in 2023. The loss from discontinued operations was $329 thousand in the first nine months of 2024 compared to a loss of $496 thousand in the first nine months of 2023. See Note 20 to the consolidated condensed financial statements for additional details related to discontinued operations.