THE DIXIE GROUP REPORTS FINANCIAL RESULTS FOR THE FOURTH QUARTER AND THE FISCAL YEAR 2025 (Form 8-K)

THE DIXIE GROUP REPORTS FINANCIAL RESULTS FOR THE FOURTH QUARTER AND THE FISCAL YEAR 2025

DALTON, GEORGIA (March 26, 2026) -- The Dixie Group, Inc. (OTCQB: DXYN) today reported financial results for the fourth quarter and the year ended December 27, 2025.

In the fourth quarter of 2025, net sales were $63,487,000 or 1.4% below the net sales in the fourth quarter of 2024 at $64,338,000. The net loss for the fourth quarter of 2025 was $3,001,000. This compares to a net loss of $7,198,000 in the fourth quarter of 2024.

For the fiscal year 2025, net sales for the Company were $257,429,000 or 2.9% below the net sales of $265,026,000 in the fiscal year 2024. The net loss from continuing operations on the year was $7,275,000 in 2025, or $0.50 per diluted share, compared to a net loss of $12,210,000, or $0.83 per diluted share, in 2024. The net loss on the year was $7,615,000, or $0.52 per diluted share, compared to a net loss of $13,000,000, or $0.88 per diluted share, in 2024.

Commenting on the results, Daniel K. Frierson, Chairman and Chief Executive Officer, said, "In 2025, we continued to navigate through a challenging economic environment while staying focused on strategic internal initiatives. Our focus on higher-end flooring markets, operational efficiency and disciplined cost management enabled us to improve year over year gross profit margins and financial results despite ongoing softness in residential demand. We were forced to manage the unexpected implementation of "Liberation Day" tariffs and other tariff measures throughout much of 2025. We implemented price increases in order to mitigate the financial impact of the tariffs, however, the difference in timing of the tariffs and the price increases resulted in a negative financial impact on the year of approximately $1.4 million. Our total payment of IEPPA tariffs through March of 2026 was approximately $3.3 million.

As we closed out 2025 we implemented key drivers as part of a profit improvement plan for 2026 totaling $13 million in year over year improvements. These improvements range from price increases to reductions in selling expenses and administrative costs.

Throughout 2025 our sales and marketing strategy focused on our strengths in design and color through our Step into Color campaign. Through this initiative we have showcased colors in our standard palette that stands out from our competitors. We also launched an updated custom color program giving our retail and designer partners the ability to custom color any of our white dyeable nylon products. We are building on this momentum in 2026 through several key growth initiatives with our larger retail accounts and buying groups.

Our soft surface sales for both the fourth quarter and the year were down less than 1% from the year ago periods. We believe the industry was down approximately 4% for the quarter and approximately 5% on the year, both in comparison to the same prior year periods. Consequently, we continued to gain market share in the carpet market

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during this difficult period. So far in 2026, our sales pattern is similar to the prior year with sales of soft surfaces down slightly but performing better than our hard surface products.

Despite recent reductions in interest rates, market conditions remain uncertain as the overall flooring industry continues to be negatively impacted by low existing home sales, delayed remodeling projects due to low consumer confidence and limited housing availability. Historically, such prolonged periods of decline in the flooring markets have been followed by several periods of strong growth driven by pent up consumer demand. We believe the actions we have taken position us well for long-term growth and value creation." Frierson concluded.

The gross margin for the fiscal year 2025 was 27.0% of net sales as compared to 24.7% in the fiscal year 2024. The year over year gross margin improvement was the result of reduced costs of raw materials and manufacturing operations. In the fourth quarter of 2025, gross margins were 27.0% compared to 21.7% in the same period of the prior year. Selling and administrative costs for the fiscal year were $67.7 million or $2.2 million lower than the prior year of $69.9 million. This was primarily due to lower spending on samples in 2025.

The Company's net receivables were $23.0 million at the end of the fiscal year 2025 compared to $23.3 million at fiscal year end 2024. Net inventories were $66.4 million, a decrease of $500 thousand from the fiscal year 2024 balance of $66.9 million. The total of the balances in accounts payable and accrued expenses increased by $8.9 million over the prior year. This increase was the result of timing of payments and extended terms with key vendors. Capital expenditures in 2025 were $598 thousand compared to $2.1 million in the prior fiscal year. Interest expense was $7.3 million in 2025 compared to $6.4 million in 2024. The year over year increase was primarily due to higher interest rates.