The Dixie Group Reports an Operating Profit for the Fourth Quarter of 2019
DALTON, GA / ACCESSWIRE / March 5, 2020 / The Dixie Group, Inc. (NASDAQ:DXYN) today reported financial results for the year ended December 28, 2019. For 2019, the Company had net sales of $374,582,000 as compared to $405,033,000 in 2018. The profit from continuing operations for 2019 was $15,619,000 or $0.95 per diluted share, as compared to a loss from continuing operations of $21,479,000 in ...
In the fourth quarter of 2019, we sold our
Commenting on the results,
This emphasis by our mass merchant customer impacted our sales in the second half of the year. Despite the decline in our mass merchant sales, we outpaced the market in the specialty retail segment, where our soft surface sales declined low to mid single digits and our hard surface sales grew by approximately 50%. At Surfaces, our national industry trade show, we featured around 50 new styles in soft surface, including STAINMASTER®, EnVision 6,6™, and Strongwool. We continue to be a leading manufacturer in STAINMASTER® carpet and are proud to launch some of the most unique and beautiful STAINMMASTER® products on the market. We are also taking steps to diversify our offering with our new EnVision 6,6™ program, which we initially launched in late 2018 and saw significant traction and growth in 2019. In 2020 we have 17 new styles in EnVision 6,6™, across all our divisions. In our Masland Energy line, we are adding new products in broadloom and tile addressing some key opportunities in that program. We are featuring a patent pending yarn innovation, Colorplay, in a new PetProtect® product named Grace, in our Masland product line. This Colorplay innovation gives us a unique color story for solution dyed nylon, with natural striations across 16 different colors. We are very excited about a new tufting technology, "TECHnique", which is being showcased in our Masland and
We have continued to focus on growing our luxury vinyl flooring business. With the successful launch of TRUCOR™ and TRUCOR Prime™ we are poised to continue the substantial growth we achieved in 2019. We are growing the number of items in our TRUCOR™ family of products by over 40%. We are building out our TRUCOR™ SPC program with updated visuals and new sizes in our 5", 7" and 9" wide plank and tile programs. We are featuring a new innovation in tile, "Integrated Grout Technology" where the locking system is engineered to simulate a real grout line. We are launching this integrated grout program with 12 beautiful visuals in multiple sizes including exquisite 24"x 24" Carrara marble designs. We are launching our new TRUCOR Prime™ WPC program, including 18 oversized planks in contemporary, clean visuals. The feature product in this offering is our XXL plank, 10 inches wide and 84 inches long, inspired by high end French Oak visuals. This is the longest and widest rigid core plank product on the market. We
are expanding our
division. To accelerate this growth, we are adding dedicated sales representatives to our residential sales team to focus exclusively on our hard surface products under our
In 2019, we completed the realignment of our commercial business. Our commercial soft surface sales for the year were down over 12% while the commercial soft floorcovering market, we believe, was down marginally. Despite the drop in business, we feel that we have positioned Atlas | Masland Contract for growth with one of the most extensive product lines in the commercial business. As we have merged the two commercial businesses into Atlas | Masland Contract, we are positioned with our complete line of broadloom carpet, modular carpet tile, luxury vinyl flooring and commercial rugs to service our customers with excellent service and cutting edge design from our focused operational facilities dedicated to the commercial marketplace. As part of this broad product line, we have introduced one of the most unique innovations: Crafted Collection with Sustaina™ backing. This environmentally conscious and installer friendly product line comes in a beautiful set of patterns. The Sustaina™ modular tile backing system is a PVC and polyurethane free cushion modular carpet tile backing with very high recycled content. The product is breathable and able to be installed in environments up to 99% relative humidity and up to a pH of 12 when utilizing our custom formulated Sustaina™ 99 adhesive. Crafted collection along with our Sustaina™ backing has an 81.5% total recycled content, the highest available on the market today. This product innovation differentiates us in the market to our environmentally conscious designers and commercial customers.
We completed our Profit Improvement Plan in 2019. Since the beginning of 2017, this plan cost over
We are excited to celebrate 100 years in business in 2020. Over our 100-year history, the company has transformed itself again and again. From cotton yarns to textile synthetic yarns, then to carpet yarns. Then from a yarn supplier to carpet manufacturer, and today we continue the transformation to a full service floor covering provider with a growing hard surface program. We are proud of our history and heritage, and we are excited about starting the next 100 years as a company," Frierson concluded.
Our gross profit margin for the year was 23.0% for 2019, up from our 21.5% gross profit margin in 2018. Our selling and administrative expenses for the year were 22.4% of net sales, a decrease of 0.4 percentage points from our level of 22.8% in 2018. Our gross profit was negatively impacted by
Our receivables decreased
As the year 2020 began, business activity was slow and behind the levels of last year. Fortunately, as the quarter progressed, order activity and sales have improved. Sales and orders in February have improved significantly and are above the level of last year. We have experienced improvement in both the residential retail and commercial business, however, our mass merchant sales continue to underperform. For the quarter to date, excluding our mass merchant sales, our sales are slightly behind this same period in 2019.
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 Twelve Months Ended | |||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||
$ | 90,135 | $ | 98,175 | $ | 374,582 | $ | 405,033 | ||||||||||
Cost of sales | 67,415 | 79,795 | 288,377 | 318,042 | |||||||||||||
GROSS PROFIT | 22,720 | 18,380 | 86,205 | 86,991 | |||||||||||||
Selling and administrative expenses | 20,015 | 22,518 | 83,825 | 92,473 | |||||||||||||
Other operating (income) expense, net | (24,136 | ) | 37 | (23,988 | ) | 458 | |||||||||||
Facility consolidation and severance expenses, net | 160 | 2,230 | 5,019 | 3,167 | |||||||||||||
Impairment of assets | - | 6,360 | - | 6,709 | |||||||||||||
OPERATING INCOME (LOSS) | 26,681 | (12,765 | ) | 21,349 | (15,816 | ) | |||||||||||
Interest expense | 1,358 | 1,651 | 6,444 | 6,491 | |||||||||||||
Other (income) expense, net | (13 | ) | 5 | (57 | ) | 3 | |||||||||||
Income (loss) from continuing operations before taxes | 25,336 | (14,421 | ) | 14,962 | (22,310 | ) | |||||||||||
Income tax provision (benefit) | (683 | ) | (721 | ) | (657 | ) | (831 | ) | |||||||||
Income (loss) from continuing operations | 26,019 | (13,700 | ) | 15,619 | (21,479 | ) | |||||||||||
Income (loss) from discontinued operations, net of tax | (305 | ) | 1 | (348 | ) | 95 | |||||||||||
NET INCOME (LOSS) | $ | 25,714 | $ | (13,699 | ) | $ | 15,271 | $ | (21,384 | ) | |||||||
BASIC EARNINGS (LOSS) PER SHARE: | |||||||||||||||||
Continuing operations | $ | 1.61 | $ | (0.87 | ) | $ | 0.96 | $ | (1.36 | ) | |||||||
Discontinued operations | (0.02 | ) | 0.00 | (0.02 | ) | 0.01 | |||||||||||
Net income (loss) | $ | 1.59 | $ | (0.87 | ) | $ | 0.94 | $ | (1.35 | ) | |||||||
DILUTED EARNINGS (LOSS) PER SHARE: | |||||||||||||||||
Continuing operations | $ | 1.60 | $ | (0.87 | ) | $ | 0.95 | $ | (1.36 | ) | |||||||
Discontinued operations | (0.02 | ) | 0.00 | (0.02 | ) | 0.01 | |||||||||||
Net income (loss) | $ | 1.58 | $ | (0.87 | ) | $ | 0.93 | $ | (1.35 | ) | |||||||
Weighted-average shares outstanding: | |||||||||||||||||
Basic | 15,693 | 15,792 | 15,822 | 15,764 | |||||||||||||
Diluted | 15,801 | 15,792 | 15,926 | 15,764 | |||||||||||||
Consolidated Condensed Balance Sheets
(in thousands)
2019 | 2018 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 769 | $ | 18 | ||||
Receivables, net | 37,138 | 42,542 | ||||||
Inventories, net | 95,509 | 105,195 | ||||||
Prepaid expenses | 6,179 | 5,204 | ||||||
Total Current Assets | 139,595 | 152,959 | ||||||
Property, Plant and Equipment, Net | 65,442 | 84,111 | ||||||
Operating Lease Right-Of-Use Assets | 24,835 | - | ||||||
Other Assets | 17,787 | 15,708 | ||||||
TOTAL ASSETS | $ | 247,659 | $ | 252,778 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 16,084 | $ | 17,779 | ||||
Accrued expenses | 25,418 | 30,852 | ||||||
Current portion of long-term debt | 6,684 | 7,794 | ||||||
Current portion of operating lease liabilities | 3,172 | - | ||||||
Total Current Liabilities | 51,358 | 56,425 | ||||||
Long-Term Debt | 81,667 | 120,251 | ||||||
Operating Lease Liabilities | 22,123 | - | ||||||
Other Long-Term Liabilities | 19,300 | 17,118 | ||||||
Stockholders' Equity | 73,211 | 58,984 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 247,659 | $ | 252,778 |
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 | Twelve Months Ended | |||||||
2019 | 2019 | |||||||
Net income as reported | $ | 25,714 | $ | 15,271 | ||||
Income (loss) from discontinued operations | (305 | ) | (348 | ) | ||||
Income from continuing operations | 26,019 | 15,619 | ||||||
Inventory write-downs related to Profit Improvement Plan | 123 | 572 | ||||||
Facility consolidation and severance expenses, net | 160 | 5,019 | ||||||
Gain on Sale of Building | (25,121 | ) | (25,121 | ) | ||||
Tax effect | - | - | ||||||
Profit Improvement Plan related expenses | 283 | 5,591 | ||||||
Income/Loss | $ | 1,182 | $ | (3,910 | ||||
Diluted shares | 15,801 | 15,926 | ||||||
Adjusted loss per diluted share | $ | 0.07 | $ | (0.25 | ||||
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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