Dixie Group Inc

and welcome to the Dixie Group Inc. 2026 Second Quarter Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Chief Operating Officer Kennedy Frierson. Please go ahead.

Thank you, Maria, and welcome everyone to our 2026 Second Quarter Conference Call. As reported last month by Floordaily.net, my father, Dan Frierson, Chairman and CEO of the Dixie Group, had a bad fall on July 5th, which required surgery the following day to the pelvis and hip area. He is continuing to recover extremely well at home and will be back in short order when his recovery is complete. I will be sitting in for him today for the conference call. With me, I have Allen Danzey, our Chief Financial Officer. Our safe harbor statement is included by reference both to our website and press release. For the second quarter of 2026, the company's net sales were flat with last year at $68.6 million. The company had an operating income of $3,093,000 in the second quarter of 2026 compared to an operating income of $3,189,000 in the second quarter of the previous year. Thank you, Kennedy.

As Kennedy said, our second quarter net sales at 68.6 million were closely in line with the same quarter in the prior year, but we were able to report a higher gross profit margin for 2026 at 29.5% compared to 29.2% in 2025. On the year-to-date, net sales were 128 million compared to 132 million in the prior year. The 2026 year-to-date gross profit margin Frierson, Daniel Phelan Frierson, Daniel Phelan was the result of cost reductions and profit improvement initiatives implemented in 2025 and the early part of this year. Selling and administrative expenses were relatively flat year over year in the second quarter, but are 3% lower on the year to date. Our facility consolidation expense in the second quarter of 2026 included $389,000 for a cost-saving initiative to consolidate a portion of our West Coast yarn processing To our existing plant in Roanoke, Alabama. Our interest expense on the quarter was $2 million compared to $1.9 million in the prior year. On the year, interest expense was $3.9 million compared to $3.4 million in the prior year. For the second quarter of 2026, we had a net income of $1.1 million and $2.2 million on the year to date. The prior year net income was $1.2 million in the quarter and a loss of $537,000 for the six-month period. On our balance sheet, our quarter end net receivable balance, excluding the IECA tariff receivable, was $27.8 million compared to the prior year end balance of $23 million. This increase was driven by higher sales activity in the final month of the second quarter compared to year end. Our net inventory balance was also slightly over year end at $67 million and Quarter 2 compared to $66.4 million at year-end 2025. Accounts payable and accrued expenses were $42.2 million compared to $38.8 million at the end of the previous year as a result of the higher volume compared to the seasonally low year-end. Net property plan equipment decreased by $2.2 million from prior year, which included $2.3 million in depreciation. Capital expenditure was $175,000. Thank you, Allen.