The Dixie Group Reports Second Quarter 2015 Results
CHATTANOOGA, Tenn.--(BUSINESS WIRE)-- The Dixie Group, Inc. (NASDAQ:DXYN) today reported financial results for the second quarter of 2015 ended June 27, 2015. Sales for the second quarter were $109,957,000 as compared to $107,926,000 in the same quarter a year ago. Profit from continuing operations was $516,000, or $0.03 per diluted share, versus a loss of $509,000, or $0.04 per diluted share, ...
Commenting on the results,
“Sales for residential products declined 0.4% compared to the same quarter in the prior year, while the industry was down mid to low single digits. Sales of residential products started stronger in April but slowed down during the quarter relative to our performance a year ago. However, we anticipate the residential remodeling market to have marginal growth for the remainder of the year. Our increase in commercial product sales was 6.7% compared to the same period last year, and as compared to industry growth, we estimate, in the low single digits. Our Masland Commercial products had a sales increase of 17.7% on a year-over-year basis. The efforts at Masland were helped by the creation of Masland Hospitality late in 2014, assisted by our acquisition of CYP technology in the fall of 2014. We continue to see a healthy commercial market throughout 2015. Atlas was still underperforming relative to the prior year, as we were delayed in getting out our new product introductions in 2014 due to issues related to delivery of new technology in 2014, as well as integration issues relative to the Atlas purchase. We are pleased with the new Atlas products we have introduced so far in 2015. Atlas order entry has continued to improve as we enter the third quarter of 2015 relative to earlier in the year.
“Gross profit for the quarter was 26.7% of net sales as compared to
24.7% the same quarter in the prior year and 24.3% in the first quarter
of 2015. Gross profit improved as a result of improved operations
following our restructuring, and income of
“Facility consolidation and asset impairment expenses during the period
were
“Other impacts during the quarter were in the areas of higher medical costs. In the second quarter of 2015, we continued to experience significantly higher costs associated with our self-insured group medical plans. We have taken additional actions, besides those described in the first quarter report, in plan design, incentives to utilize disease management services and additional rate increases to our associates that we believe will mitigate future costs. Further, we will introduce an all new self-insured medical plan in 2016 to better control costs going forward. We anticipate sampling costs to decline in 2016 and return to historical levels at that time. Our tax rate, at 44%, was higher due to truing up the tax expense for the year. Going forward, we anticipate a tax rate of 35% at normal levels of profitability. We have improved operating margins from both the first quarter and a year ago but still are not satisfied with our performance.
“Current assets increased
“Sales for the first four weeks of the third quarter are ahead of the same quarter last year by 5%, while our carpet sales are ahead of last year by over 6% on a year-over-year basis. The new home building segment is stronger and we have recently seen home resales at higher levels. Therefore, the remodeling market should be helped by a tightening housing market. We see continued opportunities in the residential market. Specific opportunities are in the growth of our wool broadloom and rug businesses, our Stainmaster® PetProtect™ products and the continued development of beautiful patterns to service the upper-end residential market utilizing both our ColorPoint™ and iTuft™ tufting technologies. The commercial market, and especially the hospitality sector, continues to see good growth. We have continued our 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 custom computerized yarn placement tufting technology. We want to thank our associates for their hard work and dedication during this period as we transition our facilities to be specifically focused on specific end markets. As always, we continue to be dedicated to supplying our customers with the most advanced style and design 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) |
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Three Months Ended | Six Months Ended | |||||||||||||||
2015 |
2014 |
2015 |
2014 |
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NET SALES | $ | 109,957 | $ | 107,926 | $ | 205,812 | $ | 193,008 | ||||||||
Cost of sales | 80,651 | 81,255 | 153,167 | 148,236 | ||||||||||||
GROSS PROFIT | 29,306 | 26,671 | 52,645 | 44,772 | ||||||||||||
Selling and administrative expenses | 26,191 | 24,260 | 50,948 | 44,377 | ||||||||||||
Other operating expense, net | 63 | 219 | 553 | 371 | ||||||||||||
Facility consolidation expenses | 875 | 949 | 1,650 | 1,022 | ||||||||||||
Impairment of assets | — | 655 | — | 655 | ||||||||||||
OPERATING INCOME (LOSS) | 2,177 | 588 | (506 | ) | (1,653 | ) | ||||||||||
Interest expense | 1,222 | 1,158 | 2,400 | 2,169 | ||||||||||||
Other (income) expense, net | 31 | (47 | ) | 41 | (36 | ) | ||||||||||
Gain on purchase of business | — | — | — | (10,937 | ) | |||||||||||
Income (loss) from continuing operations before taxes | 924 | (523 | ) | (2,947 | ) | 7,151 | ||||||||||
Income tax provision (benefit) | 408 | (14 | ) | (1,083 | ) | 2,840 | ||||||||||
Income (loss) from continuing operations | 516 | (509 | ) | (1,864 | ) | 4,311 | ||||||||||
Loss from discontinued operations, net of tax | (12 | ) | (135 | ) | (100 | ) | (328 | ) | ||||||||
NET INCOME (LOSS) | $ | 504 | $ | (644 | ) | $ | (1,964 | ) | $ | 3,983 | ||||||
BASIC EARNINGS (LOSS) PER SHARE: | ||||||||||||||||
Continuing operations | $ | 0.03 | $ | (0.04 | ) | $ | (0.12 | ) | $ | 0.31 | ||||||
Discontinued operations | — | (0.01 | ) | (0.01 | ) | (0.02 | ) | |||||||||
Net income (loss) | $ | 0.03 | $ | (0.05 | ) | $ | (0.13 | ) | $ | 0.29 | ||||||
DILUTED EARNINGS (LOSS) PER SHARE: | ||||||||||||||||
Continuing operations | $ | 0.03 | $ | (0.04 | ) | $ | (0.12 | ) | $ | 0.30 | ||||||
Discontinued operations | — | (0.01 | ) | (0.01 | ) | (0.02 | ) | |||||||||
Net income (loss) | $ | 0.03 | $ | (0.05 | ) | $ | (0.13 | ) | $ | 0.28 | ||||||
Weighted-average shares outstanding: | ||||||||||||||||
Basic | 15,546 | 13,937 | 15,490 | 13,363 | ||||||||||||
Diluted | 15,656 | 13,937 | 15,490 | 13,561 |
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Consolidated Condensed Balance Sheets (in thousands) |
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ASSETS | (Unaudited) | ||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 445 | $ | 394 | |||
Receivables, net | 54,111 | 50,524 | |||||
Inventories | 114,405 | 104,207 | |||||
Other | 19,665 | 18,692 | |||||
Total Current Assets | 188,626 | 173,817 | |||||
Property, Plant and Equipment, Net | 103,835 | 102,489 | |||||
Goodwill and Other Intangibles | 6,614 | 6,767 | |||||
Other Assets | 17,886 | 17,807 | |||||
TOTAL ASSETS | $ | 316,961 | $ | 300,880 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current Liabilities | |||||||
Accounts payable and accrued expenses | $ | 63,475 | $ | 51,415 | |||
Current portion of long-term debt | 9,208 | 9,078 | |||||
Total Current Liabilities | 72,683 | 60,493 | |||||
Long-Term Debt | 124,584 | 118,210 | |||||
Deferred Income Taxes | 8,739 | 9,376 | |||||
Other Liabilities | 19,521 | 19,824 | |||||
Stockholders' Equity | 91,434 | 92,977 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 316,961 | $ | 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 |
|
2014 |
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Net Sales | $ | 109,957 | $ | 107,926 | ||||
Gross Profit | $ | 29,306 | $ | 26,671 | ||||
Plus: Amortization of Acquisition Inventory Step-up | — | 194 | ||||||
Non-GAAP Adjusted Gross Profit (Note 1) | $ | 29,306 | $ | 26,865 | ||||
Gross Profit as % of Net Sales | 26.7 | % | 24.7 | % | ||||
Non-GAAP Adjusted Gross Profit % of Net Sales | 26.7 | % | 24.9 | % | ||||
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 |
|
2014 |
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Net Sales | $ | 109,957 | $ | 107,926 | ||||
Selling and Administrative Expenses | $ | 26,191 | $ | 24,260 | ||||
Less: Mfg. Integration Expense | — | (269 | ) | |||||
Less: Acquisition Expense | — | (154 | ) | |||||
Non-GAAP Adjusted Selling and Administrative Expenses (Note 2) | $ | 26,191 | $ | 23,837 | ||||
Selling and Administrative Expenses as % of Net Sales | 23.8 | % | 22.5 | % | ||||
Non-GAAP Adjusted Selling and Administrative Expenses as % of Net Sales | 23.8 | % | 22.1 | % | ||||
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 | $ | 109,957 | $ | 107,926 | |||
Operating Income (Loss) | $ | 2,177 | $ | 588 | |||
Plus: Acquisition Expense | — | 154 | |||||
Plus: Amortization of Acquisition Inventory Step-up | — | 194 | |||||
Plus: Mfg. Integration Expense | — | 269 | |||||
Plus: Facility Consolidation Expense | 875 | 949 | |||||
Plus: Impairment of Assets | — | 655 | |||||
Non-GAAP Adjusted Operating Income (Loss) (Note 3) | $ | 3,052 | $ | 2,809 | |||
Operating Income (Loss) as % of Net Sales | 2.0 | % | 0.5 | % | |||
Adjusted Operating Income (Loss) as a % of Net Sales | 2.8 | % | 2.6 | % | |||
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 | $ | 504 | $ | (644 | ) | ||
Less: Loss from Discontinued Operations, Net of Tax | (12 | ) | (135 | ) | |||
Plus: Taxes | 408 | (14 | ) | ||||
Plus: Interest | 1,222 | 1,158 | |||||
Non-GAAP Adjusted EBIT (Note 5) | 2,146 | 635 | |||||
Plus: Depreciation and Amortization | 3,665 | 3,262 | |||||
EBITDA | 5,811 | 3,897 | |||||
Plus: Acquisition Expense | — | 154 | |||||
Plus: Amortization of Acquisition Inventory Step-up | — | 194 | |||||
Plus: Facility Consolidation Expense | 875 | 949 | |||||
Plus: Mfg. Integration Expense | — | 269 | |||||
Plus: Impairment of Assets | — | 655 | |||||
Non-GAAP Adjusted EBITDA (Note 5) | $ | 6,686 | $ | 6,118 | |||
Non-GAAP Adjusted EBITDA as % of Net Sales | 6.1 | % | 5.7 | % | |||
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 |
|
|
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Non-GAAP Adjusted EBIT | $ | 2,146 | $ | 635 | ||||
Times: 1 - Tax Rate = EBIAT | 1,331 | 393 | ||||||
Plus: Depreciation and amortization | 3,665 | 3,262 | ||||||
Plus: Non-cash impairment of assets | — | 655 | ||||||
Minus: Net change in working capital | 2,073 | 3,575 | ||||||
Non-GAAP Cash from Operations | 2,923 | 735 | ||||||
Minus: Capital expenditures, net of asset sales | 2,593 | 4,192 | ||||||
Non-GAAP Free Cash Flow (Note 6) | $ | 330 | $ | (3,457 | ) | |||
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 2015 |
Q3 2015 |
Q4 2015 |
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Warehousing, Distribution & Manufacturing Consolidation Plan | $ | 605 | $ | 840 | $ | 369 | $ | 259 | $ | 318 | |||||||||
Atlas Integration Plan | 170 | 35 | — | — | — | ||||||||||||||
Corporate Office Consolidation Plan | — | — | 398 | 318 | — | ||||||||||||||
Total Facility Consolidation Expense | $ | 775 | $ | 875 | $ | 767 | $ | 577 | $ | 318 |
Further non-GAAP reconciliation data are available at www.thedixiegroup.com under the Investor Relations section.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150729005359/en/
Chief
Financial Officer
jon.faulkner@dixiegroup.com
Source: