The Dixie Group, Inc. reported its financial results for the first quarter ended March 29, 2025, achieving an operating income of $11 thousand. This marks a significant improvement from an operating loss of $857 thousand in the same period of 2024, driven by favorable year-over-year gross margins of 26.8%, up from 24.2%.
Despite the improvement in operating income, net sales for the first quarter of 2025 were $62,990,000, a decrease compared to $65,254,000 in the first quarter of 2024. The company's cost reduction programs and operational efficiencies contributed to the margin expansion.
During the first quarter of 2025, the company closed on a new $75 million senior credit facility. This financing arrangement is crucial for the company's liquidity, though $54.5 million of its outstanding indebtedness under this facility is classified as a current liability due to specific credit terms.
The net loss from continuing operations narrowed to $1.6 million, or $0.11 per diluted share, in Q1 2025, compared to a net loss of $2.4 million, or $0.16 per diluted share, in the prior-year period. This indicates progress in reducing losses.
The company's balance sheet showed an increase in receivables of $4.7 million and accounts payable/accrued expenses of $11.5 million, partly to meet higher expected demand in Q2. Capital expenditures were minimal at $74 thousand, reflecting a strategy to minimize investments.
The new credit facility includes a subjective acceleration clause that allows the lender to declare an event of default under certain conditions, raising substantial doubt about the company's ability to continue as a going concern without successful mitigation plans. Unused borrowing availability under the facility was $12.0 million as of March 29, 2025, subject to a $6.0 million minimum excess availability requirement.
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