The Dixie Group Reports First Quarter 2015 Results
CHATTANOOGA, Tenn.--(BUSINESS WIRE)-- The Dixie Group, Inc. (NASDAQ:DXYN) today reported financial results for the first quarter of 2015 ended March 28, 2015. For the first quarter of 2015, the Company had sales of $95,855,000 and a loss from continuing operations of $2,380,000 or $0.15 per diluted share compared with net sales of $85,082,000 and income from continuing operations of $4,820,000 ...
Commenting on the results,
“We have completed the majority of the structural changes in our facilities. Our higher cost of sales for the quarter resulted primarily from higher training, quality, and waste costs associated with our restructuring. Now that the majority of the structural movements within the facilities is completed, we are going through extensive and ongoing training as our associates settle into new roles. Improvements in operations continued throughout the quarter, and we anticipate further operational improvements going forward. We anticipate we will see the positive benefits of the restructuring plan to expand capacity and re-align our facility operational flows in the second half of 2015. Other items affecting the quarter included higher medical costs, currency losses and continued higher sampling costs. We have implemented both rate increases and medical plan design changes to offset these higher medical costs. We have increased prices to offset currency changes and believe that the change in currencies has now stabilized. We still anticipate sampling costs to decline in 2016 and return to historical levels.
“Gross profit for the quarter was 24.3% of net sales as compared with
21.3% the same quarter in the prior year. This improvement was partially
due to our experiencing less weather disruptions compared with the prior
year. Our selling and administrative expenses were 25.8% of net sales
for the quarter as compared with 23.6% for the same quarter of 2014. We
had high sampling costs in both our residential and commercial
businesses. The planned launch of new products for
“Current assets increased
“The first quarter started off very slow in January with sales building throughout the period. As a result, we ran large unfavorable fixed cost variances early in the quarter. We have had significant improvements each month, but still have not completed all of the training nor implemented all of the improvements needed to get back to the historical quality and waste levels we had prior to the restructuring. We still anticipate most of these actions to be completed by mid-year 2015. We are intent on increasing profitability through improved operations and tighter cost controls as we substantially complete the ongoing restructuring in the first half of 2015.
“Sales for the first four weeks of the second quarter are ahead of the same quarter last year by over 6%. Mortgage rates are still low by historical standards, unemployment is under control and wage increases are pointing to a healthier economy. This points to continued growth as the housing market continues to rebound from historically low levels. Further, the remodeling market should be helped by rising home prices as the supply of housing stock has dwindled with the improving economy. These factors should lead to continued opportunities in the residential market. Particular opportunities are in the growth of our wool business, further increases in our Stainmaster® PetProtect™ products as well as utilization of our latest investments in both ColorPoint™ and iTuft™ tufting technologies for beautiful patterns in the upper-end residential market. The commercial market continues to be strong. We continue to experience growth in our modular tile offerings in both the Masland Contract and Atlas markets. Further, we are pleased with the activity we are seeing in Masland Hospitality as we leverage our investment in Burtco and its unique position in custom computerized yarn placement tufting technology. We want to thank our associates for their dedication during this challenging period of operational transition and look forward to reaping the benefits of their efforts. As always, we continue to be dedicated to supplying our customers with the finest products of the highest quality,” 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.
The simulcast will begin at approximately
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
Consolidated Condensed Statements of Operations (unaudited; in thousands, except earnings per share) |
||||||||||
Three Months Ended | ||||||||||
2015 |
2014 |
|||||||||
NET SALES | $ | 95,855 | $ | 85,082 | ||||||
Cost of sales | 72,516 | 66,981 | ||||||||
GROSS PROFIT | 23,339 | 18,101 | ||||||||
Selling and administrative expenses | 24,757 | 20,117 | ||||||||
Other operating expense, net | 490 | 152 | ||||||||
Facility consolidation expenses | 775 | 73 | ||||||||
OPERATING LOSS | (2,683 | ) | (2,241 | ) | ||||||
Interest expense | 1,177 | 1,012 | ||||||||
Other expense, net | 10 | 10 | ||||||||
Gain on purchase of business | — | (10,937 | ) | |||||||
Income (loss) from continuing operations before taxes | (3,870 | ) | 7,674 | |||||||
Income tax provision (benefit) | (1,490 | ) | 2,854 | |||||||
Income (loss) from continuing operations | (2,380 | ) | 4,820 | |||||||
Loss from discontinued operations, net of tax | (88 | ) | (192 | ) | ||||||
NET INCOME (LOSS) | $ | (2,468 | ) | $ | 4,628 | |||||
BASIC EARNINGS (LOSS) PER SHARE: | ||||||||||
Continuing operations | $ | (0.15 | ) | $ | 0.36 | |||||
Discontinued operations | (0.01 | ) | (0.02 | ) | ||||||
Net income (loss) | $ | (0.16 | ) | $ | 0.34 | |||||
DILUTED EARNINGS (LOSS) PER SHARE: | ||||||||||
Continuing operations | $ | (0.15 | ) | $ | 0.36 | |||||
Discontinued operations | (0.01 | ) | (0.02 | ) | ||||||
Net income (loss) | $ | (0.16 | ) | $ | 0.34 | |||||
Weighted-average shares outstanding: | ||||||||||
Basic | 15,435 | 12,789 | ||||||||
Diluted | 15,435 | 13,017 | ||||||||
Consolidated Condensed Balance Sheets (in thousands) |
|||||||||
2015 |
2014 |
||||||||
ASSETS | (Unaudited) | ||||||||
Current Assets | |||||||||
Cash and cash equivalents | $ | 743 | $ | 394 | |||||
Receivables, net | 51,730 | 50,524 | |||||||
Inventories | 110,254 | 104,207 | |||||||
Other | 20,482 | 18,692 | |||||||
Total Current Assets | 183,209 | 173,817 | |||||||
Property, Plant and Equipment, Net | 104,655 | 102,489 | |||||||
Other Assets | 24,503 | 24,574 | |||||||
TOTAL ASSETS | $ | 312,367 | $ | 300,880 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Current Liabilities | |||||||||
Accounts payable and accrued expenses | $ | 60,074 | $ | 51,415 | |||||
Current portion of long-term debt | 9,265 | 9,078 | |||||||
Total Current Liabilities | 69,339 | 60,493 | |||||||
Long-Term Debt | 123,780 | 118,210 | |||||||
Deferred Income Taxes | 8,501 | 9,376 | |||||||
Other Liabilities | 21,077 | 19,824 | |||||||
Stockholders' Equity | 89,670 | 92,977 | |||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 312,367 | $ | 300,880 | |||||
Use of Non-GAAP Financial Information:
(in thousands)
The Company believes that non-GAAP performance measures, which
management uses in evaluating the Company's business, may provide users
of the Company's financial information with additional meaningful bases
for comparing the Company's current results and results in a prior
period, as these measures reflect factors that are unique to one period
relative to the comparable period. However, the non-GAAP performance
measures should be viewed in addition to, not as an alternative for, the
Company's reported results under accounting principles generally
accepted in
Non-GAAP Summary | ||||||||||
Three Months Ended | ||||||||||
Non-GAAP Gross Profit |
2015 |
2014 |
||||||||
Net Sales | $ | 95,855 | $ | 85,082 | ||||||
Gross Profit | $ | 23,339 | $ | 18,101 | ||||||
Plus: Mfg. Integration Expense | — | 445 | ||||||||
Non-GAAP Adjusted Gross Profit (Note 1) | $ | 23,339 | $ | 18,546 | ||||||
Gross Profit as % of Net Sales | 24.3 | % | 21.3 | % | ||||||
Non-GAAP Adjusted Gross Profit % of Net Sales | 24.3 | % | 21.8 | % | ||||||
The Company defines Adjusted Gross Profit as Gross Profit plus manufacturing integration expenses of new or expanded operations, plus amortization of acquisition inventory step-up, plus one-time items so defined. (Note 1) | ||||||||||
Three Months Ended | ||||||||||
Non-GAAP Adjusted Selling and Administrative Expenses |
2015 |
2014 |
||||||||
Net Sales | $ | 95,855 | $ | 85,082 | ||||||
Selling and Administrative Expenses | $ | 24,757 | $ | 20,117 | ||||||
Less: Mfg. Integration Expense | — | (377 | ) | |||||||
Less: Acquisition Expense | — | (455 | ) | |||||||
Non-GAAP Adjusted Selling and Administrative Expenses (Note 2) | $ | 24,757 | $ | 19,285 | ||||||
Selling and Administrative Expenses as % of Net Sales | 25.8 | % | 23.6 | % | ||||||
Non-GAAP Adjusted Selling and Administrative Expenses as % of Net Sales | 25.8 | % | 22.7 | % | ||||||
The Company defines Adjusted Selling and Administrative Expenses as Selling and Administrative Expenses less manufacturing integration expenses and direct acquisition expenses included in Selling and Administrative Expenses, less one-time items so defined. (Note 2) | ||||||||||
Non-GAAP Summary | ||||||||||
Three Months Ended | ||||||||||
Non-GAAP Operating Income (Loss) |
2015 |
2014 |
||||||||
Net Sales | $ | 95,855 | $ | 85,082 | ||||||
Operating Income (Loss) | $ | (2,683 | ) | $ | (2,241 | ) | ||||
Plus: Acquisition Expense | — | 455 | ||||||||
Plus: Mfg. Integration Expense | — | 822 | ||||||||
Plus: Facility Consolidation Expense | 775 | 73 | ||||||||
Plus: Impairment of Assets | — | — | ||||||||
Non-GAAP Adjusted Operating Income (Loss) (Note 3) | $ | (1,908 | ) | $ | (891 | ) | ||||
Operating Income (Loss) as % of Net Sales | (2.8 | )% | (2.6 | )% | ||||||
Adjusted Operating Income (Loss) as a % of Net Sales | (2.0 | )% | (1.0 | )% | ||||||
The Company defines Adjusted Operating Income (Loss) as Operating Income (Loss) plus manufacturing integration expenses of new or expanded operations, plus amortization of acquisition inventory step-up, plus facility consolidation and severance expenses, plus direct acquisition expenses, plus impairment of assets, plus impairment of goodwill, plus one-time items so defined. (Note 3) |
Non-GAAP Summary | ||||||||||
Three Months Ended | ||||||||||
Non-GAAP EBIT and EBITDA |
2015 |
2014 |
||||||||
Net Income (Loss) as Reported | $ | (2,468 | ) | $ | 4,628 | |||||
Less: Loss from Discontinued Operations, Net of Tax | (88 | ) | (192 | ) | ||||||
Plus: Taxes | (1,490 | ) | 2,854 | |||||||
Plus: Interest | 1,177 | 1,012 | ||||||||
Non-GAAP Adjusted EBIT (Note 5) | (2,693 | ) | 8,686 | |||||||
Plus: Depreciation and Amortization | 3,637 | 2,988 | ||||||||
EBITDA | 944 | 11,674 | ||||||||
Plus: Acquisition Expense | — | 455 | ||||||||
Less: Gain on Purchase of Business | — | (10,937 | ) | |||||||
Plus: Facility Consolidation Expense | 775 | 73 | ||||||||
Plus: Mfg. Integration Expense | — | 822 | ||||||||
Non-GAAP Adjusted EBITDA (Note 5) | $ | 1,719 | $ | 2,087 | ||||||
Non-GAAP Adjusted EBITDA as % of Net Sales | 1.8 | % | 2.5 | % | ||||||
Management estimate of severe weather (not in above) | — | 1,054 | ||||||||
The Company defines Adjusted EBIT as Net Income (Loss) less loss from discontinued operations, plus taxes and plus interest. The Company defines Adjusted EBITDA as Adjusted EBIT plus depreciation and amortization, plus manufacturing in integration expenses of new or expanded operations, plus facility consolidation and severance expenses, plus amortization of acquisition inventory step-up, plus direct acquisition expenses, less gain on purchase of business, plus impairment of assets, plus impairment of goodwill, plus one-time items so defined. (Note 5) | ||||||||||
Non-GAAP Summary | ||||||||||
Three Months Ended | ||||||||||
Non-GAAP Free Cash Flow |
2015 |
2014 |
||||||||
Non-GAAP Adjusted EBIT | $ | (2,693 | ) | $ | 8,686 | |||||
Times: 1 - Tax Rate = EBIAT | (1,670 | ) | 5,385 | |||||||
Plus: Depreciation and amortization | 3,637 | 2,988 | ||||||||
Minus: Net change in working capital | 546 | 14,485 | ||||||||
Non-GAAP Cash from Operations | 1,421 | (6,112 | ) | |||||||
Minus: Capital expenditures, net of asset sales | 5,704 | 4,299 | ||||||||
Minus: Business/Capital acquisitions | — | 6,716 | ||||||||
Non-GAAP Free Cash Flow (Note 6) | $ | (4,283 | ) | $ | (17,127 | ) | ||||
The Company defines Free Cash Flow as Non-GAAP Adjusted EBIT plus interest plus depreciation and amortization, plus non-cash impairment of assets and goodwill, minus the net change in working capital minus the tax shield on interest, minus capital expenditures, net of asset sales, minus business/capital acquisitions. The change in net working capital is the change in current assets less current liabilities between periods. (Note 6) |
Facility Consolidation Plan Summary | |||||||||||||||||||||||
Q1 2015 |
Q2 |
Q3 |
Q4 |
|
|||||||||||||||||||
Warehousing, Distribution & Manufacturing Consolidation Plan | $ | 605 | $ | 595 | $ | — | $ | 227 | $ | 165 | |||||||||||||
Atlas Integration Plan | 170 | 100 | 109 | — | — | ||||||||||||||||||
Total Facility Consolidation Expense | $ | 775 | $ | 695 | $ | 109 | $ | 227 | $ | 165 |
Further non-GAAP reconciliation data are available at www.thedixiegroup.com under the Investor Relations section.
Chief
Financial Officer
jon.faulkner@dixiegroup.com
Source: