The Dixie Group, Inc. (NASDAQ:DXYN) today reported financial
results for the quarter ended September 30, 2017. The Company’s
third quarter sales were $102.7 million or 2.3% above the same
quarter a year ago. For the nine month period our total net sales
increased 4.3% to $307.4 million as compared to $294.8 million in
the year earlier period. The Company had a loss from
continuing operations for the third quarter of $547 thousand as
compared to a profit of $573 thousand in the same quarter a year
ago. On a year to date basis, the Company had a profit from
continuing operations of $104 thousand for 2017 as compared to a
loss from continuing operations of $2.6 million for the first nine
months of 2016.
Commenting on the results, Daniel K. Frierson,
chairman and chief executive officer, said, ”For the quarter, our
floorcovering sales were up year over year by 3.1% while the
industry, we believe, was down slightly. For the year to date
our floorcovering sales were up 5.9% against prior year and a
market that was marginally down year over year. Our
commercial product sales for the quarter were down 5.5% while the
market was down in the mid-single digits. However, our
commercial product sales were up 1.3% for the year to date relative
to 2016 while the industry, we estimate, was down low single
digits. Our commercial sales were strong in July but weakened
throughout the quarter as order entry was quite weak in July and
August. We have seen a pickup of order entry starting late in
September and continuing through October. Our residential
products were up 7.4% for the quarter as compared to the third
quarter of 2016 with the industry we estimate was up in the low
single digit range. For the nine month period ending in
September our residential product sales were up 8.3% compared to
the same time period in 2016 while the industry, we believe, was up
only in the low single digits.
"In our residential markets our sales for the
quarter and the year to date were favorably impacted by the higher
level of sales in the west coast and through our mass merchant
retailers. Our west coast residential sales were positively
affected by Royalty Carpet Mills shutting its doors in June.
In addition, we have hired a number of Royalty associates in our
sales and west coast manufacturing operations as well as taking
over and restarting the Royalty Porterville yarn plant during the
quarter. For September, our overall sales were negatively
impacted as a result of the storms affecting Florida and Texas. We
continue to be negatively affected in these two geographic areas in
October.
"The launch of our Masland and Dixie Home Pet
Protect luxury vinyl flooring product lines is going well. By
the end of the third quarter we had shipped over 1,200 retail
displays between the two product lines. Our Calibre Line of luxury
vinyl flooring products continues to grow as we see the results of
continued placement in the specified commercial market.
"Our gross profit for the quarter was 24.2% of
net sales as compared to 25.8% in the year earlier period. For the
nine months our gross profit was 25.5% versus 25.0% for the same
period in 2016. During the third quarter of 2017, our gross profit
was positively impacted by higher sales volume offset by higher raw
material costs, the startup expenses of our new Porterville yarn
operation, the completion of our Colormaster skein and beck dye
expansion and under absorbed manufacturing expenses as our
production volume dropped off significantly late in the quarter due
to weak order volume earlier in the period. Our order
entry volume has improved significantly early in the fourth
quarter. To offset higher operating costs, we have announced
a price increase effective in January 2018.
"We reported operating income of $767 thousand
in the third quarter of 2017 compared with operating income of $1.9
million in the third quarter of 2016. We had an operating income of
$4.6 million in the first nine months of 2017 compared with an
operating loss of $522 thousand in the first nine months of
2016. During the first nine months of 2017, our operating
income was positively impacted by higher production levels in the
plants as we had higher order volume than the prior year period
resulting in increased absorption of fixed costs partially offset
by higher raw material costs and startup expenses for our expanded
skein and beck dyeing operations in our Colormaster facility, our
Porterville yarn processing and the new yarn processing and precoat
operations in our Atmore facility.
"We announced in mid-October the appointment of
David Hobbs as president of Dixie Commercial. With this
change his responsibilities will now encompass both the Masland
Contract and Atlas Carpet Mills commercial brands. We will
maintain the distinct sales forces of Masland Contract and Atlas
and the unique style and design characteristics that these brands
have been known for in the past. The organizational change we
are instituting on the commercial side is parallel to the
successful change we made to our residential business in 2009 when
we consolidated the residential management structure but maintained
our three distinct brands and sales forces.
"The announcement regarding the consolidation of
our two commercial brands, Atlas Carpet Mills and Masland
Contract, is part of the Company’s Profit Improvement Plan to
improve profitability through lower cost and streamlined decision
making, aligning processes to maximize efficiency. The plan
includes consolidating the management of Dixie's two commercial
brands under one management team, sharing operations in sales,
marketing, product development and manufacturing. Specific to
this plan includes focusing nearly all commercial solution dyed
make to order production in our Atmore, Alabama operations where we
have developed such make to order capabilities over the last 5
years. Further, the Company is aligning its west coast production
facilities, better utilizing its west coast real estate by moving
production to its Porterville, California and Atmore, Alabama
operations and preparing for more efficient distribution of its
west coast products. In parallel the Company had reductions in
related support functions such as accounting and information
services. As a result of this plan we will take a charge of
approximately $775 thousand in the fourth quarter. We
estimate annualized reductions in cost in excess of $3 million per
year once the Plan is fully implemented in 2018.
"Capital expenditures for the third quarter,
including those funded by cash and financings, were $5.7 million
and we anticipate a total of $13.7 million in capital expenditures
for 2017 compared to depreciation and amortization of $13.1 million
for 2017. We raised our estimated capital expenditures as we took
advantage of expanding our west coast business due to the
opportunity created by Royalty Carpet Mills choosing to cease
operations. Accessible availability under our credit lines was $11
million at the end of the third quarter while debt stood at $138.5
million at the end of the third quarter, an increase of $14.8
million in the quarter. Our debt is high due to the initial
stocking of our luxury vinyl flooring programs, bringing in fiber
to complete the transition of yarn production into Porterville and
defensively as we dealt with the force majeure, now over, of our
largest supplier of nylon fiber. These temporary inventory
increases should moderate in the fourth quarter as we reach normal
inventory levels.
"The fourth quarter has started off upbeat with
sales for our floorcovering business up 11% over the first 5 weeks
as compared to this same time in 2016. We are excited about the
opportunities in the market and feel that with home resales at a
healthy clip and the economy showing increasing strength in hiring,
we will continue to see opportunities for growth in the
floorcovering market,” Frierson concluded.
A listen-only Internet simulcast and replay of
Dixie's conference call may be accessed with appropriate software
at the Company's website at
www.thedixiegroup.com/investor/investor.html. The simulcast will
begin at approximately 1:30 p.m. Eastern Time on November 9, 2017.
A replay will be available approximately two hours later and will
continue for approximately 30 days. If internet access is
unavailable, a telephonic conference will be available by dialing
877-355-1003 and entering 4786777 at least ten minutes before the
appointed time. A seven-day telephonic replay will be available two
hours after the call ends by dialing (855) 859-2056 and entering
4786777 when prompted for the access code.
The Dixie Group (www.thedixiegroup.com) is a
leading marketer and manufacturer of carpet and rugs to higher-end
residential and commercial customers through the Fabrica
International, Masland Carpets, Dixie Home, Atlas Carpet Mills,
Masland Contract and Masland Hospitality.
This press release contains forward-looking
statements. Forward-looking statements are based on estimates,
projections, beliefs and assumptions of management and the Company
at the time of such statements and are not guarantees of
performance. Forward-looking statements are subject to risk factors
and uncertainties that could cause actual results to differ
materially from those indicated in such forward-looking statements.
Such factors include the levels of demand for the products produced
by the Company. Other factors that could affect the Company's
results include, but are not limited to, raw material and
transportation costs related to petroleum prices, the cost and
availability of capital, integration of acquisitions and general
economic and competitive conditions related to the Company's
business. Issues related to the availability and price of energy
may adversely affect the Company's operations. Additional
information regarding these and other risk factors and
uncertainties may be found in the Company's filings with the
Securities and Exchange Commission. The Company disclaims any
obligation to update or revise any forward-looking statements based
on the occurrence of future events, the receipt of new information,
or otherwise.
THE DIXIE GROUP, INC.Consolidated
Condensed Statements of Operations(unaudited; in
thousands, except earnings per share)
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, 2017 |
|
September 24, 2016 |
|
September 30, 2017 |
|
September 24, 2016 |
NET SALES |
$ |
102,650 |
|
|
$ |
100,297 |
|
|
$ |
307,378 |
|
|
$ |
294,847 |
|
Cost of sales |
77,793 |
|
|
74,466 |
|
|
228,934 |
|
|
221,268 |
|
GROSS PROFIT |
24,857 |
|
|
25,831 |
|
|
78,444 |
|
|
73,579 |
|
Selling
and administrative expenses |
24,044 |
|
|
23,774 |
|
|
73,786 |
|
|
71,760 |
|
Other
operating expense, net |
46 |
|
|
141 |
|
|
84 |
|
|
525 |
|
Facility
consolidation expenses, net |
— |
|
|
— |
|
|
— |
|
|
1,816 |
|
OPERATING INCOME (LOSS) |
767 |
|
|
1,916 |
|
|
4,574 |
|
|
(522 |
) |
Interest
expense |
1,486 |
|
|
1,312 |
|
|
4,205 |
|
|
3,969 |
|
Other
expense, net |
9 |
|
|
4 |
|
|
38 |
|
|
15 |
|
Income (loss) from continuing operations before taxes |
(728 |
) |
|
600 |
|
|
331 |
|
|
(4,506 |
) |
Income tax provision (benefit) |
(181 |
) |
|
27 |
|
|
227 |
|
|
(1,937 |
) |
Income (loss) from
continuing operations |
(547 |
) |
|
573 |
|
|
104 |
|
|
(2,569 |
) |
Income (loss) from
discontinued operations, net of tax |
(11 |
) |
|
(39 |
) |
|
(163 |
) |
|
13 |
|
NET INCOME (LOSS) |
$ |
(558 |
) |
|
$ |
534 |
|
|
$ |
(59 |
) |
|
$ |
(2,556 |
) |
|
|
|
|
|
|
|
|
BASIC EARNINGS (LOSS)
PER SHARE: |
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.03 |
) |
|
$ |
0.04 |
|
|
0.00 |
|
$ |
(0.16 |
) |
Discontinued operations |
(0.00 |
) |
|
(0.00 |
) |
|
(0.01 |
) |
|
0.00 |
|
Net income (loss) |
$ |
(0.03 |
) |
|
$ |
0.04 |
|
|
$ |
(0.01 |
) |
|
$ |
(0.16 |
) |
|
|
|
|
|
|
|
|
DILUTED EARNINGS (LOSS)
PER SHARE: |
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.03 |
) |
|
$ |
0.04 |
|
|
0.00 |
|
$ |
(0.16 |
) |
Discontinued operations |
(0.00 |
) |
|
(0.00 |
) |
|
(0.01 |
) |
|
0.00 |
|
Net income (loss) |
$ |
(0.03 |
) |
|
$ |
0.04 |
|
|
$ |
(0.01 |
) |
|
$ |
(0.16 |
) |
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
15,707 |
|
|
15,648 |
|
|
15,696 |
|
|
15,631 |
|
Diluted |
15,707 |
|
|
15,744 |
|
|
15,814 |
|
|
15,631 |
|
|
|
|
|
|
|
|
|
THE DIXIE GROUP, INC.Consolidated
Condensed Balance Sheets(in
thousands)
|
|
|
|
|
September 30, 2017 |
|
December 31, 2016 |
ASSETS |
(Unaudited) |
|
|
Current Assets |
|
|
|
Cash and
cash equivalents |
$ |
138 |
|
|
$ |
140 |
|
Receivables, net |
50,748 |
|
|
43,605 |
|
Inventories, net |
122,880 |
|
|
97,237 |
|
Other |
4,381 |
|
|
4,376 |
|
Total
Current Assets |
178,147 |
|
|
145,358 |
|
|
|
|
|
Property, Plant and
Equipment, Net |
95,774 |
|
|
92,807 |
|
Goodwill and Other
Intangibles |
5,927 |
|
|
6,156 |
|
Other Assets |
25,880 |
|
|
24,666 |
|
TOTAL ASSETS |
$ |
305,728 |
|
|
$ |
268,987 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
Current
Liabilities |
|
|
|
Accounts
payable and accrued expenses |
$ |
58,411 |
|
|
$ |
53,509 |
|
Current portion of long-term debt |
9,721 |
|
|
10,122 |
|
Total
Current Liabilities |
68,132 |
|
|
63,631 |
|
|
|
|
|
Long-Term Debt |
128,785 |
|
|
98,256 |
|
Other Liabilities |
20,793 |
|
|
19,978 |
|
Stockholders'
Equity |
88,018 |
|
|
87,122 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
305,728 |
|
|
$ |
268,987 |
|
|
|
|
|
|
|
|
|
CONTACT:Jon FaulknerChief Financial
Officer706-876-5814 jon.faulkner@dixiegroup.com
Dixie (NASDAQ:DXYN)
Historical Stock Chart
From Mar 2024 to Apr 2024
Dixie (NASDAQ:DXYN)
Historical Stock Chart
From Apr 2023 to Apr 2024