The Dixie Group, Inc. (NASDAQ:DXYN) today reported financial
results for the quarter ended April 1, 2017. For the first quarter
of 2017, the Company had net sales of $97,541,000, or 9.3% above,
sales of $89,234,000 in the first quarter of 2016. The Company had
a loss from continuing operations of $575,000 for the first quarter
of 2017 as compared to a loss from continuing operations of
$4,757,000 in the first quarter of 2016.
Commenting on the results, Daniel K. Frierson,
chairman and chief executive officer, said, “Though the first
quarter of the year is historically our weakest quarter, this year
our sales were substantially stronger as compared to the same
period in 2016. Our floorcovering sales were up over the first
quarter of 2016 by 11.9% while we estimate the industry was flat
for the same comparative period. Sales of residential products
increased 12.7% in the first quarter of 2017 versus the same period
in 2016 while we believe the industry was up only slightly for the
year over year period. Our commercial product sales, largely led by
modular carpet tile, increased 10.4% in 2017 versus 2016 while the
industry sales, we believe, were off in the low single digits.
Our cost structure improved significantly on the
higher sales and production volumes. Additionally, we significantly
reduced our quality related expenses across both our residential
and commercial product lines. Offsetting these gains were
substantial increases in medical costs as well as other people
related costs. Further, we had uncharacteristically high
maintenance costs as we have been modifying our Colormaster dye
facility to add beck and skein dye capabilities as well as startup
costs related to adding additional yarn processing capabilities to
our commercial Atmore, Alabama plant. We had a price increase
early in the first quarter to offset some of these higher
production and material costs. Another industry wide price increase
has been announced for late in the second quarter as material costs
continue to rise.
We are completing the startup of our expanded
yarn processing capabilities in our Atmore, Alabama commercial
facility. These changes should improve our response time and
further lower the cost of our make to order production model.
In the second quarter we will complete the startup of our carpet
and yarn beck dyeing operations in our north Georgia Colormaster
facility. This will complete the centralization of all of our east
coast internal and external dyeing needs into a single facility.
This addition is aimed at improving our time to market and lowering
the cost of our residential products manufactured in the north
Georgia area.
Our interest expense for the quarter was $1.4
million as compared to $1.3 million in the first quarter of 2016.
We had an income tax benefit rate of 22.1% for the quarter. For the
first quarter of 2017, our receivables increased by $7.6 million on
higher sales activity. Our inventories increased seasonally by $6.3
million. Capital equipment acquisitions, including those funded by
cash and financings, totaled $3.8 million for the quarter.
Depreciation and amortization for the period was $3.2 million. We
have budgeted capital expenditures for 2017 of approximately $9
million and depreciation and amortization of approximately $13.3
million. Our debt stood at $120.7 million at the end of the
quarter.
We announced our entry into the residential
luxury vinyl tile market during the quarter and have been very
pleased with the response to our introduction of Stainmaster®
PetProtect™ Luxury Vinyl Tile under the Masland and Dixie Home
brands. We have been pleased by the number and quality of new
floorcovering dealers signing up for our new LVT offerings.
Further, our commercial line of Calibrè luxury vinyl tile products
is beginning to gain traction with larger installations being
ordered as we have now had time for the specification process to
yield results.
At Surfaces, the annual residential show, we saw
positive results from our new product line up for 2017. Notable in
this launch was Stainmaster’s® LiveWell™ brand, the first carpet
and cushion system designed to reduce dust and allergen-particle
buildup without adding steps to the cleaning routine. Made with kid
and pet-safe AllerShield™ technology, it helps reduce the bonding
of allergy-aggravating particles to the carpet fibers. When
allergen particles release easily from the carpet fibers, more of
them end up in the vacuum. This product line meets the needs of
today’s more educated consumer who desires healthier products and
lifestyle solutions.
Commercially, our Atlas brand launched the
Metáfora Collection. Inspired by modern retro design, the Metáfora
Collection creates a contemporary feel with a touch of nostalgia.
This artistic assortment, available in broadloom, carpet tile and
area rugs, mixes imaginative and versatile style, texture and color
for use in public spaces, retail, corporate, healthcare and
hospitality designs. Masland Hospitality introduced The Crazed
Collection which reflects the intentional irregularity found in
ceramics, with patterns that are both loose and structured;
primitive and refined.
For the first four weeks of the second quarter,
our floorcovering sales are up low-single digits on a year over
year basis but are up mid-single digits as compared to this same
time in the prior year after adjusting for the Easter holiday.
Likewise, our total sales are flat as compared to the prior year
but would be up low-single digits on a similarly holiday adjusted
basis due to our exiting the sales of yarn to outside customers in
2016 as we brought that production in house.
During the quarter, T.M. Nuckols, formerly of
Invista, joined Dixie’s residential team in preparation for Paul
Comiskey’s retirement in early 2018. T.M. brings a long history of
supporting differentiated branded product in the floorcovering
market. As we look ahead at the remainder of 2017, we have
continued emphasis on improving our results and continuing to
provide exciting and beautiful products to our customers,” 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 10:00 a.m. Eastern Time on May 4, 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 10128515 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
10128515 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, Masland Hospitality and Dixie International
brands.
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 |
|
April 1, 2017 |
|
March 26, 2016 |
NET SALES |
$ |
97,541 |
|
|
$ |
89,234 |
|
Cost of sales |
72,380 |
|
|
69,728 |
|
GROSS PROFIT |
25,161 |
|
|
19,506 |
|
Selling
and administrative expenses |
24,481 |
|
|
23,666 |
|
Other
operating expense, net |
52 |
|
|
267 |
|
Facility
consolidation expenses, net |
— |
|
|
1,413 |
|
OPERATING INCOME (LOSS) |
628 |
|
|
(5,840 |
) |
Interest
expense |
1,362 |
|
|
1,324 |
|
Other
expense, net |
4 |
|
|
8 |
|
Loss from continuing operations before taxes |
(738 |
) |
|
(7,172 |
) |
Income tax benefit |
(163 |
) |
|
(2,415 |
) |
Loss from continuing
operations |
(575 |
) |
|
(4,757 |
) |
Loss from discontinued
operations, net of tax |
(29 |
) |
|
(10 |
) |
NET LOSS |
$ |
(604 |
) |
|
$ |
(4,767 |
) |
|
|
|
|
BASIC EARNINGS (LOSS)
PER SHARE: |
|
|
|
Continuing operations |
$ |
(0.04 |
) |
|
$ |
(0.30 |
) |
Discontinued operations |
(0.00 |
) |
|
(0.00 |
) |
Net loss |
$ |
(0.04 |
) |
|
$ |
(0.30 |
) |
|
|
|
|
DILUTED EARNINGS (LOSS)
PER SHARE: |
|
|
|
Continuing operations |
$ |
(0.04 |
) |
|
$ |
(0.30 |
) |
Discontinued operations |
(0.00 |
) |
|
(0.00 |
) |
Net loss |
$ |
(0.04 |
) |
|
$ |
(0.30 |
) |
|
|
|
|
Weighted-average shares
outstanding: |
|
|
|
Basic |
15,673 |
|
|
15,600 |
|
Diluted |
15,673 |
|
|
15,600 |
|
THE DIXIE GROUP, INC.Consolidated
Condensed Balance Sheets(in
thousands)
|
April 1, 2017 |
|
December 31, 2016 |
ASSETS |
(Unaudited) |
|
|
Current Assets |
|
|
|
Cash and
cash equivalents |
$ |
143 |
|
|
$ |
140 |
|
Receivables, net |
51,164 |
|
|
43,605 |
|
Inventories, net |
103,542 |
|
|
97,237 |
|
Other |
4,555 |
|
|
4,376 |
|
Total
Current Assets |
159,404 |
|
|
145,358 |
|
|
|
|
|
Property, Plant and
Equipment, Net |
93,503 |
|
|
92,807 |
|
Goodwill and Other
Intangibles |
6,079 |
|
|
6,156 |
|
Other Assets |
25,366 |
|
|
24,666 |
|
TOTAL ASSETS |
$ |
284,352 |
|
|
$ |
268,987 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
Current
Liabilities |
|
|
|
Accounts
payable and accrued expenses |
$ |
56,899 |
|
|
$ |
53,509 |
|
Current portion of long-term debt |
9,872 |
|
|
10,122 |
|
Total
Current Liabilities |
66,771 |
|
|
63,631 |
|
|
|
|
|
Long-Term Debt |
110,811 |
|
|
98,256 |
|
Other Liabilities |
19,829 |
|
|
19,978 |
|
Stockholders'
Equity |
86,941 |
|
|
87,122 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
284,352 |
|
|
$ |
268,987 |
|
CONTACT:
Jon Faulkner
Chief Financial Officer
706-876-5814
jon.faulkner@dixiegroup.com
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