The Dixie Group Reports Results for Second Quarter of 2022
All financial comparisons below are to the prior year second quarter, as adjusted for discontinued operations, unless stated otherwise.DALTON, GA / ACCESSWIRE / August 15, 2022 / The Dixie Group, Inc. (NASDAQ:DXYN) reported financial results for the quarter ended June 25, 2022. For the second quarter of 2022, the Company had net sales from continuing operations of $83,698,000 and a net loss of ...
All financial comparisons below are to the prior year second quarter, as adjusted for discontinued operations, unless stated otherwise.
Commenting on the quarter,
During the second quarter of 2022, our net sales decreased 7.0% compared with the same period of the prior year. This was primarily attributable to a
Similar to the first quarter of this year, the gross margins in the second quarter of 2022 were negatively impacted by two major items. First, our cost of goods sold reflected the impact of unprecedented price increases from our primary raw material supplier, coupled with their decision to exit the business. We have identified other suppliers to replace this volume and bring our costs down in line with the market. This conversion was substantially complete at the end of the second quarter, and we expect to work through most of the remaining balance of the higher cost inventory within the third quarter. Second, margins from our sales of hard surface goods reflected the negative impact from dramatic increases in ocean freight costs. Fortunately, beginning with the end of the first quarter, these freight costs have continued to decline but remain substantially above prior year levels.
During the second quarter, we began executing the launch of our new decorative segment programs, 1866 by Masland and Décorby Fabrica. A key growth initiative for the company, this launch includes 30 new styles, a brand refresh, and updated merchandising. The new styles began hitting retail stores late in the second quarter, and more products will become available during the third quarter.
Through the second quarter, we continued to see growth in our hard surface segment. Key growth drivers were our domestically sourced SPC collection, our oversized WPC planks, and our SPC Tile programs. We have several new innovations hitting the market during the second half of the year, including TRUCOR TYMBR XL, an oversized laminate product with excellent water resistance and an AC6 scratch resistance rating. We will also launch TRUCOR Pinnacle, a new standard in oversized WPC planks at 12" wide by 90" long. And we have the TRUCOR Boardwalk collection, an SPC offering featuring clean visuals, lighter colors inspired by coastal living, and a new pillowed edge bevel. In our hardwood segment, we have 18 new SKUs in our Fabrica Fine Hardwood line including Ash species in 9.5 inch and 7 inch widths. We are also launching a new Dixie Home engineered hardwood collection with
Our gross profit as a percentage of net sales was 19.2% in the second quarter of 2022 compared to a gross margin of 25.1% in the same period of the prior year. Substantially higher costs from our primary raw material supplier, driven by their decision to exit the business, along with increased costs as a result of inflation and higher freight costs contributed to the lower margins. Selling and administrative costs were 22.5% of net sales in the second quarter of 2022 compared to 18.8% in the second quarter of 2021. The higher selling and administrative expenses were primarily related to increased investments in samples, professional fees in finance and information systems and higher overall costs as a result of inflation.
The company's receivables decreased
In the early part of the third quarter, we have seen continued softness in the market with order entry running below prior year levels.
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
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Chief Financial Officer
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