The Dixie Group Reports Second Quarter 2018 Results
DALTON, Ga., Aug. 02, 2018 (GLOBE NEWSWIRE) -- The Dixie Group, Inc. (NASDAQ: DXYN) today reported financial results for the quarter ended June 30, 2018. For the second quarter of 2018, the Company had net sales of $106,438,000 as compared to $107,187,000 in 2017. The Company’s second quarter net sales were down 0.7% as compared to the same period in 2017 while the industry, we estimate, was ...
Commenting on the results,
Our commercial business in the second quarter was down 10.1% while the industry we believe was down slightly. We did benefit from the reorganization of our commercial business this past fall with lower selling and administrative expenses. Our commercial team, led by
Our gross profit for second quarter of 2018 was 23.6% of net sales as compared to a gross profit of 26.5% in 2017. During the second quarter of 2018, we agreed to a Memorandum of Understanding regarding settlement of a class action litigation resulting in a
Our gross margin was further impacted by higher than normal waste, purchase price variances and distribution expenses. We have made changes in our manufacturing operations to lower costs by better aligning staffing to demand, implemented several waste reduction initiatives, and are streamlining our distribution operations. To maintain our workforce, we have increased wages and improved benefits. This has helped us reduce turnover as we deal with a continued tight labor market. We announced a residential price increase for this August primarily to offset higher labor, material and other operational costs.
Selling and administrative expenses for the quarter were 22.4% of net sales, a decrease of 1.2 percentage points from our level of 23.6% in the second quarter of 2017. The decrease in our selling and administrative costs is primarily due to the Profit Improvement Program we initiated in the fourth quarter of last year as we consolidated our two commercial management teams under the leadership of
During the second quarter, our receivables increased
Interest expense was up due to higher levels of debt and higher interest rates from a year ago. During the period, the results of discontinued operations included income of
Our floorcovering sales for the first four weeks of the third quarter are down approximately 2.2% versus the same period in 2017. Our residential business continues to outperform our commercial business.
We are well positioned to continue to be the style leader in the flooring industry," concluded Frierson.
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/. 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, 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 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(As Adjusted) | (As Adjusted) | ||||||||||||||
$ | 106,438 | $ | 107,187 | $ | 205,297 | $ | 204,728 | ||||||||
Cost of sales | 81,294 | 78,761 | 158,573 | 151,141 | |||||||||||
GROSS PROFIT | 25,144 | 28,426 | 46,724 | 53,587 | |||||||||||
Selling and administrative expenses | 23,802 | 25,266 | 46,921 | 49,753 | |||||||||||
Other operating (income) expense, net | 1,507 | (14 | ) | 1,267 | 39 | ||||||||||
Facility consolidation and severance expenses, net | 190 | — | 406 | — | |||||||||||
OPERATING (LOSS) INCOME | (355 | ) | 3,174 | (1,870 | ) | 3,795 | |||||||||
Interest expense | 1,642 | 1,357 | 3,176 | 2,719 | |||||||||||
Other expense, net | 1 | 21 | 3 | 18 | |||||||||||
Income (loss) from continuing operations before taxes | (1,998 | ) | 1,796 | (5,049 | ) | 1,058 | |||||||||
Income tax provision (benefit) | (26 | ) | 570 | (192 | ) | 408 | |||||||||
Income (loss) from continuing operations | (1,972 | ) | 1,226 | (4,857 | ) | 650 | |||||||||
Income (loss) from discontinued operations, net of tax | 157 | (123 | ) | 135 | (152 | ) | |||||||||
NET INCOME (LOSS) | $ | (1,815 | ) | $ | 1,103 | $ | (4,722 | ) | $ | 498 | |||||
BASIC EARNINGS (LOSS) PER SHARE: | |||||||||||||||
Continuing operations | $ | (0.13 | ) | $ | 0.08 | $ | (0.31 | ) | $ | 0.04 | |||||
Discontinued operations | 0.01 | (0.01 | ) | 0.01 | (0.01 | ) | |||||||||
Net Income (loss) | $ | (0.12 | ) | $ | 0.07 | $ | (0.30 | ) | $ | 0.03 | |||||
DILUTED EARNINGS (LOSS) PER SHARE: | |||||||||||||||
Continuing operations | $ | (0.13 | ) | $ | 0.08 | $ | (0.31 | ) | $ | 0.04 | |||||
Discontinued operations | 0.01 | (0.01 | ) | 0.01 | (0.01 | ) | |||||||||
Net income (loss) | $ | (0.12 | ) | $ | 0.07 | $ | (0.30 | ) | $ | 0.03 | |||||
Weighted-average shares outstanding: | |||||||||||||||
Basic | 15,763 | 15,707 | 15,739 | 15,690 | |||||||||||
Diluted | 15,763 | 15,826 | 15,739 | 15,805 | |||||||||||
Consolidated Condensed Balance Sheets
(in thousands)
2018 | 2017 | ||||||
(As Adjusted) | |||||||
ASSETS | (Unaudited) | ||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 21 | $ | 19 | |||
Receivables, net | 49,408 | 46,480 | |||||
Inventories, net | 122,383 | 113,657 | |||||
Other | 7,155 | 4,669 | |||||
Total Current Assets | 178,967 | 164,825 | |||||
Property, Plant and Equipment, Net | 89,148 | 93,785 | |||||
5,698 | 5,850 | ||||||
Other Assets | 18,089 | 19,447 | |||||
TOTAL ASSETS | $ | 291,902 | $ | 283,907 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current Liabilities | |||||||
Accounts payable and accrued expenses | $ | 58,318 | $ | 49,901 | |||
Current portion of long-term debt | 7,982 | 9,811 | |||||
Total Current Liabilities | 66,300 | 59,712 | |||||
Long-Term Debt | 130,192 | 123,446 | |||||
Other Liabilities | 18,955 | 21,486 | |||||
Stockholders' Equity | 76,455 | 79,263 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 291,902 | $ | 283,907 |
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 | Six Months Ended | ||||||||||||||
Non-GAAP Income (Loss) From Continuing Operations | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net Income (Loss) as Reported | $ | (1,815 | ) | $ | 1,103 | $ | (4,722 | ) | $ | 498 | |||||
Income (Loss) from Discontinued Operations, Net of Tax | 157 | (123 | ) | 135 | (152 | ) | |||||||||
Income (Loss) from Continuing Operations | (1,972 | ) | 1,226 | (4,857 | ) | 650 | |||||||||
Facility Consolidation and Severance Expenses, Net | 190 | — | 406 | — | |||||||||||
Workers Compensation Claim | 450 | — | 450 | — | |||||||||||
California Legal Settlement | 1,514 | — | 1,514 | — | |||||||||||
Tax Effect of Above | — | — | — | — | |||||||||||
Non-GAAP Adjusted Income (Loss) From Continuing Operations (Note 1) | $ | 182 | $ | 1,226 | $ | (2,487 | ) | $ | 650 | ||||||
Adjusted Diluted Earnings (Loss) Per Share from Continuing Operations | $ | 0.01 | $ | 0.08 | $ | (0.16 | ) | $ | 0.04 | ||||||
Weighted-Average Diluted Shares Outstanding | 15,865 | 15,826 | 15,739 | 15,805 | |||||||||||
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 unusual items so defined. (Note 1) | |||||||||||||||
CONTACT:
Chief Financial Officer
706-876-5814
jon.faulkner@dixiegroup.com