The Dixie Group Reports Update on COVID-19 Recovery Plan Along with Q2 2020 Results
DALTON, GA / ACCESSWIRE / August 6, 2020 / The Dixie Group, Inc. (NASDAQ:DXYN) today reported financial results for the second fiscal quarter ended June 27, 2020. For the second quarter of 2020, the Company had net sales of $60,824,000 as compared to $100,394,000 in 2019. For the second quarter of 2020, net sales were down 39% as compared to the same quarter in 2019. In April, sales were down ...
Commenting on the results,
Sales of our residential products were down 38% for the quarter with the industry, we estimate, being down closer to 30% as compared to the prior year. The residential business has recovered more quickly than originally anticipated when the initial impact of the COVID-19 pandemic became apparent in mid-March. Our specialty retail segment was down by 50% in April, recovered to being down 35% in May and was down less than 10% in June. By the end of June, we saw positive sales comparisons versus last year, and July has started off above prior year in sales and order entry.
Our EnVision 6,6™ program continues gaining traction in the market, and our new EnVision 6,6™ introductions for 2020 are off to a very good start. In less than two years, EnVision 6,6™ has quickly become a strong platform for growth across all our residential divisions and provides us with the strategic diversification needed in our residential portfolio. In the home center channel, our order entry returned to pre-COVID-19 levels in mid-June. While our home center sales are lagging behind last year, we have placed new products as part of a reset which began in late June. The early indicators on these products are positive as we are seeing sales and orders on many of these styles within the first two weeks of the reset. We anticipate increasing sale rates in the home center channel throughout the second half of 2020.
We have continued to focus on growing our luxury vinyl flooring business. Our hard surface programs are continuing to gain traction in the market. Through June, our hard surface sales were greater than 60% ahead of last year, and our new products for 2020 have just begun to reach retail stores. A new product we are especially excited about is TRUCOR™ Tile IGT (Integrated Grout Technology) with 12 stone and tile visuals and a locking system which provides a realistic grout visual. We are also excited to introduce TRUCOR Prime™ XXL. At 10" wide and 84" long, it's the widest and longest WPC on the market, in eight colors that are on trend with today's design and consumer tastes. Lastly, we are introducing two new collections to our
In the second quarter, sales of our commercial products were down 42% on a year over year basis while the industry we believe was down close to 30% for the same time periods. Our commercial hard surface sales were up over 20% for the period relative to a year ago," Frierson concluded.
Our gross profit for the second quarter of 2020 was 20.1% of net sales as compared to a gross profit of 23.4% in 2019. Our gross profit was impacted by under absorbed fixed costs due to the lower volume during the quarter. Selling and administrative expenses for the quarter were down from
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, availability of raw material and transportation costs related to petroleum prices, the cost and availability of capital, integration of acquisitions, ability to attract, develop and retain qualified personnel 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 | Six Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
$ | 60,824 | $ | 100,394 | $ | 141,401 | $ | 189,001 | |||||||||
Cost of sales | 48,580 | 76,901 | 110,164 | 146,589 | ||||||||||||
GROSS PROFIT | 12,244 | 23,493 | 31,237 | 42,412 | ||||||||||||
Selling and administrative expenses | 16,523 | 21,114 | 36,920 | 42,774 | ||||||||||||
Other operating expense, net | 100 | 80 | 8 | 111 | ||||||||||||
Facility consolidation and severance expenses, net | 1,246 | 1,725 | 1,270 | 3,816 | ||||||||||||
OPERATING INCOME (LOSS) | (5,625 | ) | 574 | (6,961 | ) | (4,289 | ) | |||||||||
Interest expense | 1,357 | 1,717 | 2,642 | 3,437 | ||||||||||||
Other expense (income), net | (3 | ) | 4 | (7 | ) | (38 | ) | |||||||||
Loss from continuing operations before taxes | (6,979 | ) | (1,147 | ) | (9,596 | ) | (7,688 | ) | ||||||||
Income tax (benefit) provision | - | 34 | (4 | ) | 134 | |||||||||||
Loss from continuing operations | (6,979 | ) | (1,181 | ) | (9,592 | ) | (7,822 | ) | ||||||||
Loss from discontinued operations, net of tax | (81 | ) | (35 | ) | (157 | ) | (66 | ) | ||||||||
NET LOSS | $ | (7,060 | ) | $ | (1,216 | ) | $ | (9,749 | ) | $ | (7,888 | ) | ||||
BASIC EARNINGS (LOSS) PER SHARE: | ||||||||||||||||
Continuing operations | $ | (0.46 | ) | $ | (0.07 | ) | $ | (0.63 | ) | $ | (0.49 | ) | ||||
Discontinued operations | (0.01 | ) | 0.00 | (0.01 | ) | 0.00 | ||||||||||
Net loss | $ | (0.47 | ) | $ | (0.07 | ) | $ | (0.64 | ) | $ | (0.49 | ) | ||||
DILUTED EARNINGS (LOSS) PER SHARE: | ||||||||||||||||
Continuing operations | $ | (0.46 | ) | $ | (0.07 | ) | $ | (0.63 | ) | $ | (0.49 | ) | ||||
Discontinued operations | (0.01 | ) | 0.00 | (0.01 | ) | 0.00 | ||||||||||
Net loss | $ | (0.47 | ) | $ | (0.07 | ) | $ | (0.64 | ) | $ | (0.49 | ) | ||||
Weighted-average shares outstanding: | ||||||||||||||||
Basic | 15,331 | 15,885 | 15,344 | 15,847 | ||||||||||||
Diluted | 15,331 | 15,885 | 15,344 | 15,847 | ||||||||||||
Consolidated Condensed Balance Sheets
(in thousands)
2019 | ||||||||
ASSETS | (Unaudited) | |||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 383 | $ | 769 | ||||
Receivables, net | 32,007 | 37,138 | ||||||
Inventories, net | 89,959 | 95,509 | ||||||
Prepaid and other current assets | 6,773 | 6,179 | ||||||
Total Current Assets | 129,122 | 139,595 | ||||||
Property, Plant and Equipment, Net | 62,452 | 65,442 | ||||||
Operating Lease Right-Of-Use Assets | 23,741 | 24,835 | ||||||
Other Assets | 16,528 | 17,787 | ||||||
TOTAL ASSETS | $ | 231,843 | $ | 247,659 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 19,758 | $ | 16,084 | ||||
Accrued expenses | 26,948 | 25,418 | ||||||
Current portion of long-term debt | 5,965 | 6,684 | ||||||
Current portion of operating lease liabilities | 3,336 | 3,172 | ||||||
Total Current Liabilities | 56,007 | 51,358 | ||||||
Long-Term Debt | 73,088 | 81,667 | ||||||
Operating Lease Liabilities | 20,968 | 22,123 | ||||||
Other Long-Term Liabilities | 19,070 | 19,300 | ||||||
Stockholders' Equity | 62,710 | 73,211 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 231,843 | $ | 247,659 |
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 prior period results, 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 | ||||||||
Net income as reported | $ | (7,060 | ) | $ | (1,216 | ) | ||
Loss from discontinued operations, net of tax | (81 | ) | (35 | ) | ||||
Loss from continuing operations | (6,979 | ) | (1,181 | ) | ||||
COVID-19 Recovery Plan | 1,019 | - | ||||||
Inventory write-downs related to Profit Improvement Plan | - | 202 | ||||||
Facility consolidation and severance expenses, net | 227 | 1,725 | ||||||
Profit Improvement Plan related expenses | 1,246 | 1,927 | ||||||
Income/Loss | $ | (5,733 | ) | $ | 746 | |||
Diluted shares | 15,331 | 15,980 | ||||||
Adjusted loss per diluted share | $ | (0.37 | ) | $ | 0.05 |
Further non-GAAP reconciliation data are available at www.thedixiegroup.com under the Investor Relations section.
CONTACT:
Chief Financial Officer
706-876-5865
allen.danzey@dixiegroup.com
SOURCE:
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