DIXIE GROUP INC

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NOTE 1 -BASIS OF PRESENTATION

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial statements which do not include all the information and notes required by such accounting principles for annual financial statements. In the opinion of management, all adjustments (generally consisting of normal recurring accruals) considered necessary for a fair presentation have been included in the accompanying financial statements. The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in The Dixie Group, Inc.'s and its wholly-owned subsidiaries (the "Company") 2025 Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended December 27, 2025. Significant intercompany accounts and transactions have been eliminated in consolidation. The balance sheet as of December 27, 2025 has been derived from the audited financial statements at that date but does not include all of the information and notes required by U.S. GAAP for complete financial statements. Operating results for the three and six month periods ended June 27, 2026 is not necessarily indicative of the results that may be expected for the entire 2026 year.

The consolidated condensed financial statements separately report discontinued operations and the results of continuing operations. Unless specifically noted otherwise, disclosures reflect the results of continuing operations only. The results of discontinued operations are presented in Note 20.

Restricted Cash

Restricted cash represents cash serving as collateral for letters of credit issued for the Company's self-insured workers' compensation program, a lease on one of its facilities and a utility deposit.

Going Concern

The Company's consolidated condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the ordinary course of business. Under U.S. GAAP, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. If substantial doubt is raised, management must also assess whether its plans to mitigate those conditions or events will alleviate that substantial doubt.

In performing this assessment, the Company makes significant judgments about its expected liquidity, including projected cash flows from operations, capital expenditure requirements, availability and terms of external financing, compliance with financial covenants in its debt agreements, and other factors that could affect its ability to meet obligations as they become due. These estimates involve assumptions regarding, among other things, future sales volumes and pricing, gross margin performance, timing of collections from customers, payment terms with suppliers, cost‑reduction initiatives, and access to capital markets or other funding sources.

As of June 27, 2026, the Company has $55,679 of outstanding indebtedness under its senior credit facility that is classified as a current liability, unrestricted cash and cash equivalents of $2,095 and unused availability under its senior credit facility of $5,398, when reduced for the $6,000 minimum excess availability requirement and continued compliance with applicable financial covenants. The Company is required to maintain certain financial ratios and other covenants, which, if not met, could result in an event of default and an acceleration of its outstanding indebtedness. The Company's going concern and liquidity assessment therefore requires significant judgment about its ability to meet these covenants over the next twelve months, including the effectiveness and timing of management’s plans. The Company received waivers or amendments for certain financial covenant violations prior to quarter-end. Compliance with future financial covenants will be dependent on operating performance.

At the time of issuance of these financial statements, conditions and events, including recent operating losses, reduced availability under its credit facility, macroeconomic pressures, past covenant violations cured by waivers and uncertainty of future covenant violations, raised substantial doubt about its ability to continue as a going concern within twelve months after the date the financial statements are issued. Management has developed plans that are intended to improve liquidity and address these conditions, including profit improvement initiatives and seeking additional debt financing. Management is also evaluating opportunities to sale an existing building, subject to customary closing conditions and lender payoff requirements, which would be expected to generate net cash proceeds that would improve liquidity; however, because of the uncertainty of closing on such a sale, management has not assumed the full benefit in concluding whether substantial doubt is alleviated. The Company's evaluation of these plans, and its assumptions regarding their execution and timing, requires significant judgment and is subject to inherent uncertainty, therefore management has concluded that these plans do not alleviate the substantial doubt about the Company’s ability to continue as a going concern. The Company’s consolidated condensed financial statements do not include adjustments, if any, that may arise from the outcome of this uncertainty.

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If the Company's actual operating results, cash flows, or access to capital differ materially from its estimates, or if the Company is unable to execute its plans as currently contemplated, the Company may be unable to meet its obligations as they become due or maintain compliance with its debt covenants. In that event, the Company could be required to seek additional financing on less favorable terms, further reduce or delay capital expenditures and other spending, dispose of assets, or pursue other strategic alternatives. Changes in the Company's judgments or assumptions regarding going concern and liquidity could have a material effect on its consolidated condensed financial statements and related disclosures.

Variable Interest Entities

The Company determines at the inception of each arrangement whether an entity in which it has made an investment or in which the Company has other variable interests is considered a variable interest entity (“VIE”). The Company consolidates VIEs when it is the primary beneficiary. The Company is the primary beneficiary of a VIE when it has the power to direct activities that most significantly affect the economic performance of the VIE and has the obligation to absorb the majority of their losses or benefits. If the Company is not the primary beneficiary in a VIE, the Company accounts for the investment or other variable interests in a VIE in accordance with applicable U.S. GAAP. At each reporting period, the Company assesses whether any changes in our interest or relationship with the entity affect our determination of whether the entity is a VIE and, if so, whether the Company is the primary beneficiary.

The Company entered into an arrangement to pool extrusion machinery whereby the Company and an independent entity, "the Entity", separately purchased machinery to concurrently produce fiber to reduce manufacturing costs. The Entity purchases the raw materials, employs the staff and owns and manages the facility and the production of the fiber. The Company receives all fiber produced on its own machines and pays the Entity an amount equal to the cost of raw materials and an agreed upon allocation of direct and indirect production and overhead costs of the fiber operations. The Company accounts for all amounts paid to the Entity as the cost of raw material inventory.

The Company determined that the Entity is a VIE and the Company's arrangement represents a variable interest in the Entity. The Company has determined that the governance and operating structures of this VIE do not allow it to direct the activities that would significantly affect the Entity's economic performance. In addition, the Company does not have an obligation to absorb losses of the Entity. Therefore, the Company is not the primary beneficiary, and the results of operations and financial position of this VIE are not included in the Company's consolidated condensed financial statements. The Company believes its maximum exposure of this unconsolidated VIE is the current carrying value of the equipment at the Entity's location. The carrying value and maximum exposure of this unconsolidated VIE was $6,240 as of June 27, 2026, and is included within property, plant and equipment, net on the Company’s consolidated condensed balance sheets.

NOTE 2 -RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Yet to Be Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosures about certain categories of expenses (including purchases of inventory, employee compensation, depreciation and intangible asset amortization) that are included in the expense captions presented on the face of the income statement, as well as disclosures about selling expenses. This new guidance is intended to provide investors with more detailed expense information in order to better understand an entity's cost structure and forecast future cash flows. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027 on a prospective basis. Early adoption and retrospective application is permitted. The Company is currently evaluating the impact of the new guidance on its financial statements and related disclosures.

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NOTE 3 -REVENUE

Revenue Recognition Policy

The Company derives its revenues primarily from the sale of floorcovering products and processing services. Revenues are recognized when control of these products or services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products and services. Sales, value add, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Shipping and handling fees charged to customers are reported within revenue. When the Company transfers control of its products to the customer prior to the related shipping and handling activities, the Company has adopted a policy of accounting for shipping and handling activities as a fulfillment cost rather than a performance obligation. Incidental items that are immaterial in the context of the contract are recognized as expense. While the Company pays sales commissions to certain personnel, the Company has not capitalized these costs as costs to obtain a contract as the Company has elected to expense costs as incurred when the expected amortization period is one year or less. The Company does not have any significant financing components as payment is received at or shortly after the point of sale. The Company determined revenue recognition through the following steps:

•Identification of the contract with a customer

•Identification of the performance obligations in the contract

•Determination of the transaction price

•Allocation of the transaction price to the performance obligations in the contract

•Recognition of revenue when, or as, the performance obligation is satisfied

Disaggregation of Revenue from Contracts with Customers

The following table disaggregates the Company’s revenue by end-user markets for the three and six month periods ended June 27, 2026 and June 28, 2025:

Residential floorcovering products. Residential floorcovering products include broadloom carpet, rugs, luxury vinyl flooring and engineered hardwood. These products are sold into the designer, retailer, mass merchant and builder markets.

Other services. Other services include carpet yarn processing and carpet dyeing services.

Contract Balances

Other than receivables that represent an unconditional right to consideration, which are presented separately (See Note 4), the Company does not recognize any contract assets which give conditional rights to receive consideration, as the Company does not incur costs to obtain customer contracts that are recoverable. The Company may receive cash payments from customers in advance of the Company’s performance for limited production run orders resulting in contract liabilities. These contract liabilities are classified in accrued expenses in the consolidated condensed balance sheets based on the timing of when the Company expects to recognize revenue, which is typically less than a year. The net decrease or increase in the contract liabilities is primarily driven by order activity for limited runs requiring deposits offset by the recognition of revenue and the application of deposit on the receivables ledger for such activity during the period. The activity in the advanced deposits for the three and six month periods ended June 27, 2026 and June 28, 2025 is as follows:

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Performance Obligations

For performance obligations related to residential floorcovering products, control transfers at a point in time. To indicate the transfer of control, the Company must have a present right to payment, legal title must have passed to the customer and the customer must have the significant risks and rewards of ownership. The Company’s principal terms of sale are FOB Shipping Point and FOB Destination and the Company transfers control and records revenue for product sales either upon shipment or delivery to the customer, respectively. Revenue is allocated to each performance obligation based on its relative stand-alone selling prices. Stand-alone selling prices are based on observable prices at which the Company separately sells the products or services.

Cost to Fulfill a Contract

The Company recognizes assets for the costs to fulfill a contract with a customer if the costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered in accordance with ASC 340-40 Other Assets and Deferred Costs: Contracts with Customers. The assets related to costs to fulfill contracts with customers are capitalized and amortized over the period the related performance obligations are satisfied which is generally athree year period. The Company changed the terms and conditions on its invoices so that it now recovers the cost of marketing display structures. These assets are capitalized, with the amount recorded in other assets on the accompanying consolidated condensed balance sheets. Capitalized costs to fulfill contracts were $652 and $0 as of June 27, 2026 and December 27, 2025, respectively. Straight-line amortization expense related to these capitalized costs was $10 and $0 during the three months ended June 27, 2026 and June 28, 2025, respectively and $12 and $0 in the six months ended June 27, 2026 and June 28, 2025, respectively. This expense is included in selling and administrative expenses in the Company's consolidated condensed statements of operations.

Variable Consideration

The nature of the Company’s business gives rise to variable consideration, including rebates, allowances, and returns that generally decrease the transaction price, which reduces revenue. These variable amounts are generally credited to the customer, based on achieving certain levels of sales activity, product returns, or price concessions.

Variable consideration is estimated at the most likely amount using a portfolio approach that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are estimated based upon historical experience and known trends.

Warranties

The Company generally provides product warranties related to manufacturing defects and specific performance standards for its products for a period of up totwo years. The Company accrues for estimated future assurance warranty costs in the period in which the sale is recorded. The costs are included in cost of sales in the consolidated condensed statements of operations and the product warranty reserve is included in accrued expenses in the consolidated condensed balance sheets. The Company calculates its accrual using the portfolio approach based upon historical experience and known trends. The Company does not provide an additional service-type warranty (See Note 8).

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NOTE 4 -RECEIVABLES, NET

The Company grants credit to its customers with defined payment terms, performs ongoing evaluations of the credit worthiness of its customers and generally does not require collateral. Accounts receivable are carried at their outstanding principal amounts, less an anticipated amount for discounts and an allowance for expected credit losses, which management believes is sufficient to cover potential credit losses based on historical experience and periodic evaluation of the financial condition of the Company's customers. The Company's allowance for expected credit losses is computed using a number of factors including past credit loss experience and the aging of amounts due from our customers, in addition to other customer-specific factors. The Company also considers recent trends and developments related to the current macroeconomic environment such as unemployment rates, interest rates and inflation in determining its ending allowance for credit losses for accounts receivable. If the financial condition of the Company's customers were to deteriorate, resulting in a change in their ability to make payments, or if additional changes in macroeconomic factors occur, additional allowances may be required. Receivables are summarized as follows:

The activity related to the allowance for expected credit losses is as follows:

NOTE 5 -INVENTORIES, NET

Inventories are summarized as follows:

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NOTE 6 -PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consists of the following:

Depreciation of property, plant and equipment, including amounts for finance leases, totaled $1,237 and $1,294 in the three months ended June 27, 2026 and June 28, 2025, respectively and $2,470 and $2,587 in the six months ended June 27, 2026 and June 28, 2025, respectively.

NOTE 7 -ACCRUED EXPENSES

Accrued expenses are summarized as follows:

NOTE 8 -PRODUCT WARRANTY RESERVES

The Company generally provides product warranties related to manufacturing defects and specific performance standards for its products. Product warranty reserves are included in accrued expenses in the Company's consolidated condensed balance sheets. The following is a summary of the Company's product warranty activity for continuing operations:

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NOTE 9 -LONG-TERM DEBT AND CREDIT ARRANGEMENTS

Long-term debt consists of the following:

Revolving Credit Facility - Fifth Third Bank

On October 30, 2020, the Company entered into a $75,000 Senior Secured Revolving Credit Facility with Fifth Third Bank National Association as lender. The loan was secured by a first priority security interest on all accounts receivable, cash, and inventory, and provides for borrowing limited by certain percentages of values of the accounts receivable and inventory. The revolving credit facility was due to mature on October 30, 2025; however, on February 25, 2025, the Company refinanced its senior revolving credit facility with MidCap Financial IV Trust and the Company’s existing revolving credit facility with Fifth Third was terminated in accordance with its terms. The Company recognized a $66 loss on the extinguishment of the Fifth Third debt which was included in other expense, net in the Company's consolidated condensed statements of operations.

Revolving Credit Facility - MidCap Financial IV Trust

On February 25, 2025, the Company entered into a new $75,000 revolving credit agreement with MidCap Financial IV Trust, as agent, and lenders from time-to-time party thereto (collectively, “MidCap”). The credit agreement is secured by a security interest on all accounts receivable, inventory, and other assets other than certain excluded assets, including a deed to secure debt lien on the Company’s Calhoun and Chatsworth, Georgia facilities. The Company’s borrowing capacity is based on certain percentages of values/sub-limits of the accounts receivable, inventory, and other assets (including the real properties serving as collateral for the loan). The agreement matures on February 25, 2028.

Advances under the revolving credit facility bear interest at annual rates equal to SOFR (plus a 0.11448% SOFR adjustment) for a 1 month period, as defined with a floor of 1.00% or published SOFR, plus an applicable margin ranging between 3.75% and 4.25%. The applicable margin is determined based on the revolving loan availability percentage under the revolving credit facility with margins increasing as availability decreases. The Company is subject to a minimum excess availability covenant that is based upon a fixed charge coverage ratio which must be above a 1.10 to 1.00 ratio. The Company is subject to a monthly rolling minimum EBITDA requirement if availability is under 20% of the principal amount of the loan. The weighted-average interest rate on borrowings outstanding under the revolving credit facility was 7.98% for June 27, 2026. The credit agreement is subject to customary terms and conditions and annual administrative and unused line fees with pricing varying based on excess availability.

The 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 the Company's business or financial condition. Upon the occurrence of an event of default, the lender may, among other things, declare all obligations payable in full.

On March 24, 2026, the Company entered into its First Amendment to its Senior Secured Revolving Credit Facility (the “Amendment”). The Amendment, among other things, amends the Defined Periods for a certain financial covenant and amends availability requirements and provides for the payment of an amendment fee.

Under the Amendment, the lenders amended the springing minimum trailing twelve-month EBITDA covenant such that the covenant was not applicable for the Defined Periods ending August 30, 2025, November 1, 2025, November 29, 2025, December 27, 2025, January 31, 2026 and February 28, 2026. The Amendment does not otherwise change the minimum trailing twelve‑fiscal‑month EBITDA requirement of $8,969 for each Defined Period ending after February 28, 2026.

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The Amendment also adds a new minimum Availability requirement that applies at all times, including when the Company is not in a “Minimum Excess Availability Period.” Prior to the real estate financing trigger date (as defined in the Credit Agreement), the Company is required to maintain Availability of at least $3,000. On and after the real estate financing trigger date, the Company is required to maintain Availability of at least 6.25% of the revolving commitment.

During any Minimum Excess Availability Period (as defined in the Credit Agreement), the existing higher Availability thresholds continue to apply and are unchanged by the Amendment. In such periods, the Company must maintain Availability of at least the greater of (i) $6,000 and (ii)12.5% of the revolving commitment. As of June 27, 2026, the unused borrowing availability under the MidCap revolving credit facility was $5,398 when reduced for the $6,000 minimum excess availability requirement.

In addition, the Amendment increases the minimum Fixed Charge Coverage Ratio that applies in connection with the Availability‑based covenant regime from 1.10 to 1.00 to 1.25 to 1.00, effective as of the Amendment date.

Term Loans

Effective October 28, 2020, the Company entered into a $10,000 principal amount USDA Guaranteed term loan with AmeriState Bank as lender. The term of the loan is 25 years and bears interest at a minimum 5.00% rate or 4.00% above 5-year U.S. Treasury, to be reset every 5 years at 3.5% above 5-year U.S. Treasury. The interest rate reset at 7.11% on October 26, 2025 and will reset every 5 years thereafter. The loan is secured by a first mortgage on the Company’s Atmore, Alabama and Roanoke, Alabama facilities.

Effective October 29, 2020, the Company entered into a $15,000 principal amount USDA Guaranteed term loan with the Greater Nevada Credit Union as lender. The term of the loan is 10 years and bears interest at a minimum 5.00% rate or 4.00% above 5-year U.S. Treasury, to be reset after 5 years at 3.5% above 5-year U.S. Treasury. The interest rate reset at 7.11% on October 29, 2025. Payments on the loan are interest only over the first three years and principal and interest over the remaining seven years. The loan is secured by a first lien on a substantial portion of the Company’s machinery and equipment and a second lien on the Company’s Atmore and Roanoke facilities.

Debt Covenant Compliance

The Company's agreements for its Revolving Credit Facility and its term loans include certain compliance, affirmative, and financial covenants and, as of the reporting date, the Company is in compliance with or has received waivers or amendments for all such applicable financial covenants.

Notes Payable - Other

On January 14, 2019, the Company, entered into a purchase and sale agreement (the “Purchase and Sale Agreement”) with Saraland Industrial, LLC, an Alabama limited liability company (the “Purchaser”). Pursuant to the terms of the Purchase and Sale Agreement, the Company sold its Saraland facility, and approximately 17.12 acres of surrounding property located in Saraland, Alabama (the “Property”) to the Purchaser for a purchase price of $11,500. Concurrent with the sale of the Property, the Company and the Purchaser entered into atwenty-year lease agreement (the “Lease Agreement”), whereby the Company will lease back the Property at an annual rental rate of $977, subject to annual rent increases of 1.25%. Under the Lease Agreement, the Company has two (2) consecutive options to extend the term of the Lease byten years for each such option. This transaction was recorded as a failed sale and leaseback. The Company recorded a liability for the amounts received, will continue to depreciate the asset, and has imputed an interest rate of 7.07% so that the net carrying amount of the financial liability and remaining assets will be zero at the end of thetwenty-year lease term.

The Company has other financing notes that has terms up to 1 year, bear interest ranging from 6.45% to 6.75% and are due in monthly installments through their maturity dates. The Company's other notes do not contain any financial covenants.

Finance Lease Obligations

The Company's finance lease obligations are due in monthly installments through their maturity dates. The Company's finance lease obligations are secured by the specific equipment leased.

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Debt Maturities

Maturities of long-term debt for periods following June 27, 2026 are as follows:

(1) This includes $55,679 for the revolving credit facility which 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 the Company's business or financial condition. Upon the occurrence of an event of default, the lender may, among other things, declare all obligations payable in full. The Company does not expect these amounts related to the revolving credit facility to be paid in 2026.

NOTE 10 -LEASES

Leases as Lessee

Balance sheet information related to right-of-use assets and liabilities is as follows:

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Lease cost recognized in the consolidated condensed financial statements is summarized as follows:

Other supplemental information related to leases is summarized as follows:

The following table summarizes the Company's future minimum lease payments under non-cancellable contractual obligations for operating and financing liabilities as of June 27, 2026:

Leases as Lessor

The Company leases or subleases to third parties certain excess space in its facilities, which are included as fixed assets. The leases are accounted for as operating leases and the lease or sublease income is included in other operating income, net. The Company recognizes lease income on a straight-line basis as collectability is probable, including any escalation or lease incentives, as applicable, and the Company continues to recognize the underlying asset which is included in property, plant and

Table of Contents 17 equipment, net on the Company's consolidated condensed balance sheets. The leases do not have any residual value guarantees. The Company has elected the practical expedient to combine all non-lease components as a combined component. The nature of the Company’s sublease agreements do not provide for variable lease payments or options to purchase.

Lease income and sublease income related to fixed lease payments is recognized in other operating income, net in the consolidated condensed statement of operations because they are not ordinary activities of the Company and is summarized as follows:

The following table summarizes the Company's undiscounted lease payments to be received under operating leases including amounts to be paid by the Company to the head lessor for the next five years and thereafter as of June 27, 2026:

NOTE 11 -FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange value of an asset or a liability in an orderly transaction between market participants. The fair value guidance outlines a valuation framework and establishes a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and disclosures. The hierarchy consists of three levels as follows:

Level 1 - Quoted market prices in active markets for identical assets or liabilities as of the reported date;

Level 2 - Other than quoted market prices in active markets for identical assets or liabilities, quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and other than quoted prices for assets or liabilities and prices that are derived principally from or corroborated by market data by correlation or other means; and

Level 3 - Measurements using management's best estimate of fair value, where the determination of fair value requires significant management judgment or estimation.

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The carrying amounts and estimated fair values of the Company's financial instruments are summarized as follows:

The fair values of the Company's long-term debt and finance leases were estimated using market rates the Company believes would be available for similar types of financial instruments and represent level 2 measurements. The fair values of cash and cash equivalents and restricted cash approximate their carrying amounts due to the short-term nature of the financial instruments.

NOTE 12 -EMPLOYEE BENEFIT PLANS

Defined Contribution Plans

The Company sponsors a 401(k) defined contribution plan that covers approximately 98% of the Company's current associates. This plan includes a mandatory Company match on the first 1% of participants' contributions. The Company matches the next 2% of participants' contributions if the Company meets prescribed earnings levels. The plan also provides for additional Company contributions above the 3% level if the Company attains certain additional performance targets. Matching contribution expense for this 401(k) plan was $247 and $85 for the three months ended June 27, 2026 and June 28, 2025, respectively and $327 and $173 for the six months ended June 27, 2026 and June 28, 2025, respectively.

Additionally, the Company sponsors a 401(k) defined contribution plan that covers associates atone facility who are under a collective-bargaining agreement. The number of associates under the plan represents approximately 2% of the Company's total current associates. Under this plan, the Company generally matches participants' contributions, on a sliding scale, up to a maximum of 2.75% of the participant's earnings. Matching contribution expense for the collective-bargaining 401(k) plan was $1 and $1 for the three months ended June 27, 2026 and June 28, 2025, respectively and $2 and $2 for the six months ended June 27, 2026 and June 28, 2025, respectively.

Non-Qualified Retirement Savings Plan

The Company sponsors a non-qualified retirement savings plan that allows eligible associates to defer a specified percentage of their compensation. The obligations for continuing operations owed to participants under this plan were $15,484 at June 27, 2026 and $16,350 at December 27, 2025 and are included in other long-term liabilities in the Company's consolidated condensed balance sheets. The obligations are unsecured general obligations of the Company and the participants have no right, interest or claim in the assets of the Company, except as unsecured general creditors. The Company utilizes a Rabbi Trust to hold, invest and reinvest deferrals and contributions under the plan. Amounts are invested in Company-owned life insurance in the Rabbi Trust and the cash surrender value of the policies for continuing operations was $15,012 at June 27, 2026 and $16,225 at December 27, 2025 and is included in other assets in the Company's consolidated condensed balance sheets.

Multi-Employer Pension Plan

The Company contributes to a multi-employer pension plan under the terms of a collective-bargaining agreement that covers its union-represented employees. Expenses related to the multi-employer pension plan were $7 and $7 for the three months ended June 27, 2026 and June 28, 2025, respectively and $12 and $13 for the six months ended June 27, 2026 and June 28, 2025, respectively. If the Company were to withdraw from the multi-employer plan, a withdrawal liability would be due, the amount of which would be determined by the plan. The withdrawal liability, as determined by the plan, would be a function of contribution rates, fund status, discount rates and various other factors at the time of any such withdrawal.

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NOTE 13 -INCOME TAXES

The effective tax rate was 4.40% and 5.07% for the three months ended June 27, 2026 and June 28, 2025, respectively and was 3.50% and 31.73% for the six months ended June 27, 2026 and June 28, 2025, respectively. Because the Company maintains a full valuation allowance against its deferred income tax balances, the Company is only able to recognize refundable credits and a small amount of state taxes in the tax expense for the three months of 2026 and 2025. The Company is in a net deferred tax liability position of $91 and $91 at June 27, 2026 and December 27, 2025, respectively, which is included in other long-term liabilities in the Company's consolidated condensed balance sheets.

The Company accounts for uncertainty in income tax positions according to FASB guidance relating to uncertain tax positions. Unrecognized tax benefits were $583 and $576 at June 27, 2026 and December 27, 2025, respectively. Such benefits, if recognized, would affect the Company's effective tax rate. There wereno significant interest or penalties accrued as of June 27, 2026 and December 27, 2025.

The Company and its subsidiaries are subject to United States federal income taxes, as well as income taxes in a number of state jurisdictions. The tax years subsequent to 2021 remain open to examination for U.S. federal income taxes, including the Company's fiscal 2023 income tax return which was recently selected by the IRS for examination. The majority of state jurisdictions remain open for tax years subsequent to 2021. A few state jurisdictions remain open to examination for tax years subsequent to 2020.

NOTE 14 -EARNINGS (LOSS) PER SHARE

The Company's unvested stock awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are considered participating securities and are included in the computation of earnings per share. The Company calculates basic and diluted earnings per common share using the two-class method. The accounting guidance requires disclosure of EPS for common stock and unvested share-based payment awards, separately disclosing distributed and undistributed earnings. Undistributed earnings represent earnings that were available for distribution but were not distributed. Common stock and unvested share-based payment awards earn dividends equally. All earnings were undistributed in all periods presented.

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The following table sets forth the computation of basic and diluted earnings (loss) per share from continuing operations:

(1)Includes Common and Class B Common shares, excluding unvested participating securities of 779 thousand as of June 27, 2026 and 690 thousand as of June 28, 2025.

(2)Shares issuable under stock option plans where the exercise price is greater than the average market price of the Company's Common Stock during the relevant period and directors' stock performance units have been excluded to the extent they are anti-dilutive. There were 315 thousand and 469 thousand aggregate shares excluded for the three and six months ended June 27, 2026 and June 28, 2025, respectively.

NOTE 15 -STOCK-BASED COMPENSATION EXPENSE

The Company recognizes compensation expense relating to share-based payments based on the fair value of the equity instrument issued and records such expense in selling and administrative expenses in the Company's consolidated condensed statements of operations. The Company's stock compensation expense was $46 and $61 for the three months ended June 27, 2026 and June 28, 2025, respectively and $88 and $162 for the six months ended June 27, 2026 and June 28, 2025, respectively.

On March 12, 2026, the Company issued 247,458 shares of restricted stock to certain key employees. The grant-date fair value of the awards was $105, or $0.425 per share, and is expected to be recognized as stock compensation expense over a weighted-average period of 5.7 years from the date the awards were granted. Each award is subject to a continued service condition. The fair value of each restricted stock awarded was equal to the market value of a share of the Company's Common Stock on the grant date.

On May 6, 2026, the Company issued 32,000 shares of restricted stock to the Company's non-employee directors. The grant-date fair value of the awards was $12, or $0.360 per share, and is expected to be recognized as stock compensation expense over a weighted-average period of 1.0 year from the date the awards were granted. Each award is subject to a continued service condition. The fair value of each restricted stock awarded was equal to the market value of a share of the Company's Common Stock on the grant date.

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NOTE 16 -ACCUMULATED OTHER COMPREHENSIVE INCOME

Components of accumulated other comprehensive income, net of tax, are as follows:

NOTE 17 -COMMITMENTS AND CONTINGENCIES

Contingencies

The Company assesses its exposure related to legal matters, including those pertaining to product liability, safety and health matters and other items that arise in the regular course of its business. If the Company determines that it is probable a loss has been incurred, the amount of the loss, or an amount within the range of loss, that can be reasonably estimated will be recorded. There are no pending or threatened legal matters for which a reasonably estimated range of losses can be determined except as described below, and accordingly, the Company has not identified any such legal matters that could have a material adverse effect on its consolidated condensed results of operations, financial position or cash flows.

Legal Proceedings

During the first six months of 2026, the Company settled all claims pending against it in the previously reported lawsuit styled Moss Land Company, LLC, et al. v City of Calhoun, et al., in the Superior Court of Gordon County Georgia, case No. 24CV74289, including all claims and counter-claims asserted against the Company in that case by the City of Calhoun, Georgia. Those claims have been dismissed with prejudice.

Additionally, the claims asserted against the Company in the previously reported lawsuit styled the City of Chatsworth, Georgia and Chatsworth Water Works Commission v. 3M Company, et al. in the Superior Court of Murray County, Georgia, Case No. 25-CI-0245, have been dismissed without prejudice.

The Company has settled all claims against it in the previously reported lawsuits styled William Hartwell Brooks, et al. v City of Calhoun Georgia, et al., in the Superior Court of Gordon County Georgia, Case No. 25CV74289, and James Haley Stephens and Pamela J. Stephens v 3M Company, et al., in the Superior Court of Gordon County Georgia, case No. 25CV75072. Accordingly, the Company expects a prompt dismissal of those claims with prejudice.

Environmental Remediation

The Company accrues for losses associated with environmental remediation obligations when such losses are probable and estimable. Remediation obligations are accrued based on the latest available information and are recorded at undiscounted amounts. The Company regularly monitors the progress of environmental remediation. If studies indicate that the cost of remediation has changed from the previous estimate, an adjustment to the liability would be recorded in the period in which such determination is made (see Note 20).

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NOTE 18 -OTHER OPERATING EXPENSE, NET

Other operating expense, net is summarized as follows:

The Company allocates direct expenses associated with the leases to lease expense in other operating (income) expense, net on the Company's consolidated condensed statements of operations.

NOTE 19 -FACILITY CONSOLIDATION AND SEVERANCE EXPENSES, NET

2022 Consolidation of East Coast Manufacturing Plan

During 2022, the Company implemented a plan to consolidate its East Coast manufacturing in order to reduce its manufacturing costs. Under this plan, the Company consolidated its East Coast tufting operations intoone plant in North Georgia, relocated the distribution of luxury vinyl flooring from its Saraland, Alabama facility to its Atmore, Alabama facility and identified space in its Saraland, Alabama and Atmore, Alabama facilities as available for lease or sublease. Costs for the plan include machinery and equipment relocation, inventory relocation, staff reductions and unabsorbed fixed costs during conversion of the Atmore facility.

Costs related to this consolidation plan were $111 and $117 for the three months ended June 27, 2026 and June 28, 2025, respectively and $223 and $232 for the six months ended June 27, 2026 and June 28, 2025, respectively.

2026 Consolidation of West Coast Yarn Processing Plan

During 2026, the Company implemented a plan to begin consolidation of a portion of its West Coast yarn processing facility into its Roanoke, Alabama facility in order to reduce its manufacturing costs. Costs for the plan include machinery relocation, inventory relocation, staff reductions and professional fees. Costs related to this consolidation plan were $389 for the three months ended June 27, 2026 and $389 for the six months ended June 27, 2026. Expected costs for this consolidation are expected to be approximately $500.

NOTE 20 -DISCONTINUED OPERATIONS

The Company has either sold or discontinued certain operations that are accounted for as "Discontinued Operations" under applicable accounting guidance. Discontinued operations are summarized as follows:

Workers' compensation costs from former textile operations

Undiscounted reserves are maintained for the self-insured workers' compensation obligations related to the Company's former textile operations. These reserves are administered by a third-party workers' compensation service provider under the supervision of Company personnel. Such reserves are reassessed on a quarterly basis. Pre-tax cost incurred for workers' compensation as a component of discontinued operations primarily represents a change in estimate for each period from unanticipated medical costs associated with the Company's obligations.

Environmental remediation costs from former textile operations

Reserves for environmental remediation obligations are established on an undiscounted basis. The Company has an accrual for environmental remediation obligations related to discontinued operations of $2,083 as of June 27, 2026 and $2,120 as of December 27, 2025. The liability established represents the Company's best estimate of possible loss and is the reasonable amount to which there is any meaningful degree of certainty given the periods of estimated remediation and the dollars applicable to such remediation for those periods. The actual timeline to remediate, and thus, the ultimate cost to complete such remediation through these remediation efforts, may differ significantly from the Company's estimates. Pre-tax cost for environmental remediation obligations classified as discontinued operations were primarily a result of specific events requiring action and additional expense in each period.

For the three and six months ended June 27, 2026 and June 28, 2025, the Company reclassified the following operations of the Commercial business included in discontinued operations in the accompanying consolidated condensed statements of operations:

NOTE 21 -SEGMENT REPORTING

Based on applicable accounting standards, the Company has determined that it hasone reportable segment, Floorcovering. The Floorcovering segment derives revenues from customers through the sale of residential floorcovering products which include broadloom carpet, rugs, luxury vinyl flooring andengineered hardwood. These products are sold into the designer, retailer, mass merchant and builder markets. The Company derives revenues primarily in the United States and Canada and manages the business activities on a consolidated basis. No customer accounted for more than 10% of net sales in 2026 or 2025, nor did the Company make a significant amount of sales to foreign countries outside of Canada during 2026 or 2025.

The accounting policies of the Floorcovering segment are the same as those described in the summary of significant accounting policies. The chief operating decision maker ("CODM"), which is the Company's Chief Executive Officer, assesses performance of the Floorcovering segment and decides how to allocate resources based on segment operating income (loss). The CODM uses segment operating income to monitor budget versus actual results and is used in assessing the performance of the segment. The measure of segment assets is reported on the balance sheet as total assets.

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The following table outlines information about the reported segment including net sales, significant segment expenses, and segment operating income for the three and six months ended June 27, 2026 and June 28, 2025.

(1)Significant segment expense categories and amounts align with the information that is regularly provided to the CODM, included in the measure of segment profit, and considered to be significant. Amounts include the allocation of corporate overhead.

Geographical Disclosures

(1)Long-lived assets are comprised of property, plant and equipment - net and operating lease right-of-use assets.

NOTE 22 -RECEIVABLE - TARIFF REFUNDS

On February 20, 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (“IEEPA”), which the U.S. administration relied on to impose certain tariffs, does not authorize the administration to impose tariffs. On March 4, 2026, the U.S. Court of International Trade ("CIT") issued an order directing the U.S. Customs and Border Protection (“CBP”) agency to begin formalizing a process for refunds. On April 20, 2026, the CBP launched an online portal that can be used to submit IEEPA tariff refund requests. All requests will be reviewed by the CBP to determine validity prior to the issuance of refunds. The Company was able to submit its IEEPA tariff refund request on April 20, 2026 through the portal. The Company has

Table of Contents 24 paid IEEPA tariffs to the U.S. government since the enactment on February 1, 2025, and accordingly the Company submitted its request for refund of $3,318 related to IEEPA tariffs paid during the period from February 1, 2025 to February 20, 2026.

Based on the U.S. Supreme Court's ruling, related CIT proceedings, and the Company's submission of tariff refund requests and assessment of the recoverability of amounts paid, the Company concluded that the recovery of previously incurred IEEPA tariffs is probable. Under a loss recovery accounting method, the Company recognized a receivable of $3,318 for the IEEPA tariffs incurred in Receivables - tariff refund within the condensed consolidated balance sheet and a corresponding reversal of Cost of sales for $3,318 within the condensed consolidated statement of income for the six-month period ended June 27, 2026. During the quarter-ended June 27, 2026, the Company received partial payments of $261 plus an immaterial amount of interest of previously paid tariffs. The Company will continue to monitor regulatory guidance regarding the refund process.

NOTE 23 -SUBSEQUENT EVENTS

Subsequent to June 27, 2026, the Company received additional IEEPA refunds totaling $3,036 plus an immaterial amount of interest. This leaves a remaining receivable balance of $21 for the previously paid tariffs.

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