The Dixie Group Reports First Quarter 2016 Results
DALTON, Ga., May 03, 2016 (GLOBE NEWSWIRE) -- The Dixie Group, Inc. (NASDAQ:DXYN) today reported financial results for the quarter ended March 26, 2016. For the first quarter of 2016, the Company had net sales of $89,234,000, or 6.9% below, sales of $95,855,000 in the first quarter of 2015. The Company had a loss from continuing operations of $4,757,000 for the first quarter of 2016 as ...
Commenting on the results,
Our cost structure has been impacted by very low production levels in the plants as we had both low sales volume and low productivity from product development activities. We accelerated the initial manufacturing of our new product introductions, getting these offerings to market quicker and thus helping future sales, but in turn this lowered our efficiencies in the plants during the first quarter. Our internal production was down 17% from the same period in 2015. The fourth quarter of 2015 had modest sales growth relative to our expectations, resulting in higher than normal inventories at year end, which reduced production during the first quarter. The resulting unabsorbed fixed costs from the lower sales and production activities had a major impact on our results for the period. We had high waste costs during the period as we have continued the process of evaluating our inventory manufactured during the restructuring period for specific items that do not meet our quality expectations. However, we have seen a reduction in our customer related quality costs during the first quarter of 2016.
In response to our poor performance during the quarter, we have chosen to reduce our capital expenditure budget by approximately half. Further, we have initiated actions to lower our operating costs including implementing plans to vacate a smaller rented facility, continuing to bring production in house, reducing staff and cutting overtime. Our headcount is down by 33 associates since the beginning of 2016 and 72 associates since our peak in 2015. We have seen positive results from our efforts to control our medical costs through both plan redesign and associate premium increases. We will continue to implement appropriate cost reductions as we refine our sales expectations for this year.
To complete our Warehousing, Distribution & Manufacturing Consolidation Plan, we moved our
Our interest expense for the quarter was
In the residential market we have seen the normal seasonal uptick in customer activity relative to the first quarter. Our residential sales for the first five weeks of the second quarter were down low single digits as compared to the same period last year. In the commercial market our sales for the first five weeks of the quarter are behind the same period last year by approximately 10%. Our commercial backlog dollars, however, are up 27% at the end of the first five weeks as compared to year end and approximately the same as this time last year. Overall, our sales over the first five weeks of the second quarter are down mid-single digits as compared with the same period in the prior year. Our internal production for the first five weeks of the quarter is up 29% over our average weekly production for the first quarter of this year and approximately the same as the first five weeks of the second quarter a year ago.
We are celebrating the 150th anniversary of our Masland brands with a series of anniversary sales and other promotional events. We are pleased with our 2016 offerings both residentially and commercially. We continue to have success with our expanded line of Stainmaster PetProtect® products. Commercially our Atlas brand has introduced the Metropolitan Collection, a collaboration with
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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 | |||||||
2016 | 2015 | ||||||
$ | 89,234 | $ | 95,855 | ||||
Cost of sales | 69,728 | 72,516 | |||||
GROSS PROFIT | 19,506 | 23,339 | |||||
Selling and administrative expenses | 23,666 | 24,757 | |||||
Other operating expense, net | 267 | 490 | |||||
Facility consolidation expenses | 1,413 | 775 | |||||
OPERATING LOSS | (5,840 | ) | (2,683 | ) | |||
Interest expense | 1,324 | 1,177 | |||||
Other expense, net | 8 | 10 | |||||
Loss from continuing operations before taxes | (7,172 | ) | (3,870 | ) | |||
Income tax benefit | (2,415 | ) | (1,490 | ) | |||
Loss from continuing operations | (4,757 | ) | (2,380 | ) | |||
Loss from discontinued operations, net of tax | (10 | ) | (88 | ) | |||
NET LOSS | $ | (4,767 | ) | $ | (2,468 | ) | |
BASIC EARNINGS (LOSS) PER SHARE: | |||||||
Continuing operations | $ | (0.30 | ) | $ | (0.15 | ) | |
Discontinued operations | — | (0.01 | ) | ||||
Net loss | $ | (0.30 | ) | $ | (0.16 | ) | |
DILUTED EARNINGS (LOSS) PER SHARE: | |||||||
Continuing operations | $ | (0.30 | ) | $ | (0.15 | ) | |
Discontinued operations | — | (0.01 | ) | ||||
Net loss | $ | (0.30 | ) | $ | (0.16 | ) | |
Weighted-average shares outstanding: | |||||||
Basic | 15,600 | 15,435 | |||||
Diluted | 15,600 | 15,435 | |||||
Consolidated Condensed Balance Sheets | ||||||||
(in thousands) | ||||||||
2016 | 2015 | |||||||
ASSETS | (Unaudited) | |||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 314 | $ | 281 | ||||
Receivables, net | 45,733 | 50,806 | ||||||
Inventories | 108,873 | 115,146 | ||||||
Other | 5,789 | 3,362 | ||||||
Total Current Assets | 160,709 | 169,595 | ||||||
Property, Plant and Equipment, Net | 98,895 | 101,146 | ||||||
6,384 | 6,461 | |||||||
Other Assets | 22,925 | 21,016 | ||||||
TOTAL ASSETS | $ | 288,913 | $ | 298,218 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 57,057 | $ | 60,821 | ||||
Current portion of long-term debt | 9,690 | 10,142 | ||||||
Total Current Liabilities | 66,747 | 70,963 | ||||||
Long-Term Debt | 115,891 | 115,907 | ||||||
Other Liabilities | 20,926 | 20,544 | ||||||
Stockholders' Equity | 85,349 | 90,804 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 288,913 | $ | 298,218 |
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 Income (Loss) From Continuing Operations | 2016 | 2015 | |||||
Net Loss as Reported | $ | (4,767 | ) | $ | (2,468 | ) | |
Less: Loss from Discontinued Operations, Net of Tax | (10 | ) | (88 | ) | |||
Loss from Continuing Operations | (4,757 | ) | (2,380 | ) | |||
Plus: Facility Consolidation Expense | 1,413 | 775 | |||||
Plus: Tax Effect of Above | (537 | ) | (295 | ) | |||
Non-GAAP Adjusted Income (Loss) From Continuing Operations (Note 1) | $ | (3,881 | ) | $ | (1,900 | ) | |
Adjusted Diluted Earnings (Loss) Per Share from Continuing Operations | $ | (0.25 | ) | $ | (0.12 | ) | |
Weighted-Average Diluted Shares Outstanding | 15,600 | 15,435 | |||||
The Company defines Adjusted Income (Loss) from Continuing Operations as Net Income (Loss) less loss from discontinued operations, net of tax, plus manufacturing 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 1)
Facility Consolidation Plan Summary | |||||||||||||||||||
2015 | Q1 2016 | Q2 2016 Est. | |||||||||||||||||
Warehousing, Distribution & Manufacturing Consolidation Plan | $ | 2,016 | $ | 1,342 | $ | 230 | $ | 1,572 | |||||||||||
Atlas Integration Plan | 202 | — | — | — | |||||||||||||||
Corporate Office Consolidation Plan | 728 | 71 | 5 | 76 | |||||||||||||||
Total Facility Consolidation Expense | $ | 2,946 | $ | 1,413 | $ | 235 | $ | 1,648 | |||||||||||
Further non-GAAP reconciliation data are available at www.thedixiegroup.com under the Investor Relations section.
CONTACT:Source:Jon Faulkner Chief Financial Officer 706-876-5814 jon.faulkner@dixiegroup.com