The Dixie Group Reports Financial Results for 2020
DALTON, GA / ACCESSWIRE / March 4, 2021 / The Dixie Group, Inc. (NASDAQ:DXYN) today reported financial results for the year ended December 26, 2020.Despite the unprecedented challenges faced in the COVID-19 pandemic affected year of 2020, we were able to improve our operations, and further strengthen our balance sheet to better position our Company as we entered 2021 with momentum and ...Thu, 04 Mar 2021 00:00:00
Despite the unprecedented challenges faced in the COVID-19 pandemic affected year of 2020, we were able to improve our operations, and further strengthen our balance sheet to better position our Company as we entered 2021 with momentum and optimism.
- We reduced debt by
$10 millionin 2020 bringing our total debt reduction to $60 millionover the last thirty months.
- We entered into a new
$75 millionline of credit and two long term loans totaling $25 million. These transactions, along with cost reductions and operating efficiencies in 2020, allowed us to end the year with borrowing availability of $43.3 millionunder our new Senior Revolving Credit Facility.
- Operational improvements and cost reductions generated higher gross profit margins. Our gross profit margin for the year ended
December 26, 2020was 24.2% compared with 23.0% in the year ended December 28, 2019.
For the year 2020, net sales for the Company were
Commenting on the results,
While we are still assessing the long term impacts of the COVID-19 crisis on our markets and operating practices, we are encouraged by the improvement in sales. The abrupt decline of over 50% in sales in April was certainly a shock to our system, but we have been pleased with the recovery in the residential market. Low interest rates helped drive strong trends in new home construction and existing home sales helped to improve business conditions for our residential segment through the second half of the year, as many flooring retailers emerged from the COVID-19 downturn, and an increasing number of consumers began home improvement projects. The third quarter showed positive growth versus prior year, driven by strong sales in the specialty retail channel, and the fourth quarter was a very strong quarter in all segments of the residential business. Our soft surface segment grew throughout the second half of 2020, driven by our EnVision 6,6™ program as well as aggressive promotional activity. We are continuing our diversification strategy by significantly expanding our EnVision 6,6™ offering with over 20 new styles across all brands. This growing collection of beautiful styles with exceptional durability at competitive price points has become our primary growth platform in carpet. In September, our soft surface mass merchant program returned to growth with new products and an expansion of our roll bar program making an impact. 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. Our hard surface programs grew significantly for the year, with the TRUCOR™ and Fabrica Wood programs pacing well ahead of the hard surface market. We continued to invest in product innovation with our TRUCOR™ PRIME XL/XXL, the widest, longest rigid core plank on the market, and TRUCOR™ Tile IGT (Integrated Grout Technology), a tile visual with the grout line engineered into the locking system. We also invested in talent, with the addition of eight sales people dedicated to hard surfaces in key markets across the country, and we will be adding more dedicated hard surface sales people in 2021. We will continue expanding our product offering to further penetrate this market segment. Our latest innovation, TRUCOR™ 3DP, utilizes digital printing technology to deliver sharp, realistic visuals with virtually no pattern repeat. We will launch TRUCOR™ 3DP in wood plank and stone visuals in the second quarter of 2021. We will also expand our TRUCOR™ PRIME XL/XXL program with 12 new visuals. In our Fabrica Wood program, we have developed a new display system to accommodate an expansion of this program with new colors, board sizes, and price points. We expect to double our Fabrica Wood placements in the market in 2021.
Our commercial business and the commercial market continues to be adversely impacted by COVID-19. Sales for the year were down more than 35% from the previous year. We are beginning to see some improvement, but we believe the recovery will be longer coming and not as dynamic as the residential market recovery. Our commercial business is excited about one of the most unique innovations in our modular carpet tile offering. Sustaina™ is now the "standard" for backing on orders. 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. The product provides the cushion backing benefits of increased under foot comfort, appearance retention and sound absorption.
The COVID-19 pandemic in 2020 presented challenges in ways
Through cost cutting efforts and operational improvements we were able to improve our gross profit margin to 24.2% in 2020 as compared to 23.0% in 2019. Selling and general administrative expenses were reduced by
Our receivables were slightly higher as compared to the end of the year in 2019. The
Our floorcovering sales for the first 9 weeks of the quarter are down low single digits versus the same period in 2020, but orders are up mid-single digits. Our residential sales and orders are up double digits and commercial orders, on a weekly basis, are better than the second, third and fourth quarters of last year.
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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, 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)
Cost of sales
Selling and administrative expenses
Other operating (income) expense, net
Facility consolidation and severance expenses, net
Impairment of assets
OPERATING INCOME (LOSS)
Other (income) expense, net
Income (loss) from continuing operations before taxes
Income tax provision (benefit)
Income (loss) from continuing operations
Income (loss) from discontinued operations, net of tax
NET INCOME (LOSS)
BASIC EARNINGS (LOSS) PER SHARE:
Net income (loss)
DILUTED EARNINGS (LOSS) PER SHARE:
Net income (loss)
Weighted-average shares outstanding:
Consolidated Condensed Balance Sheets
Cash and cash equivalents
Total Current Assets
Property, Plant and Equipment, Net
Operating Lease Right-Of-Use Assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt
Current portion of operating lease liabilities
Total Current Liabilities
Operating Lease Liabilities
Other Long-Term Liabilities
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
Use of Non-GAAP Financial Information:
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
|Three Months Ended||Twelve Months Ended|
Net loss as reported
Income (loss) from discontinued operations
Loss from continuing operations
Facility consolidation and severance expenses, net
COVID-19 Recovery Plan
Other COVID-19 Related Expenses
Expenses Related to Major Financing During the Period
Expenses Related to Restructuring Plans
Adjusted income(loss) per diluted share
Further non-GAAP reconciliation data are available at www.thedixiegroup.com under the Investor Relations section.
 Due to the COVID-19 pandemic the Company paid certain non-service wages and related health insurance charges for the safety, welfare and retention of our employees. The expenses were incurred through the second, third and fourth quarter of 2020 and were partially offset by the employee retention credit allowed under the CARES Act.
 During the fourth quarter, as part of the termination of a certain derivative contract and financing agreements, the Company fully expensed certain accrued amounts. These expenses would have normally been incurred over a prolonged period.
 The Company recognized a tax benefit in the fourth quarter related to the termination of the certain derivative contract noted in footnote two. Otherwise the company has a full valuation allowance against its deferred tax balances other than small state tax amounts.
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