The Dixie Group, Inc. (NASDAQ: DXYN) today reported financial
results for the year ended December 29, 2018. For 2018, the Company
had net sales of approximately $405,033,000 as compared to
$412,462,000 in 2017. The loss from continuing operations for 2018
was $21,479,000 or $1.36 per share, as compared to a loss from
continuing operations of approximately $9,322,000 in 2017. On a
non-GAAP basis, as shown on the attached schedule, the results from
continuing operations would have been a loss of $0.44 per share
adjusted for the impact of the Profit Improvement Plan.
Commenting on the results, Daniel K. Frierson,
Chairman and Chief Executive Officer, said, “2018 was a year of
change for both Dixie and the industry. The industry dynamics have
shifted as we have seen the soft floorcovering market shrink in
square feet while at the same time we saw the rapid rise of a new
market segment with luxury vinyl flooring which has taken market
share from all major flooring categories. During this time, we have
been shifting our emphasis to include hard surfaces products,
primarily luxury vinyl flooring, in our product offering. Our
residential business has continued to gain market share as we have
expanded our footprint throughout the retail environment.
Residentially our operational focus this past year has been on
taking advantage of our increased productivity as we lower our
labor and other input costs. Beginning in late 2017 when we brought
our two commercial floorcovering businesses under the leadership of
David Hobbs, we have been methodically combining our operations,
culminating with the complete integration of our management,
support functions, sales forces and commercial facilities by the
end of the first quarter of 2019. Commercially we have been driving
our product offering towards solution dyed modular carpet tile
while we reorganize the commercial business to bring it into
sustained profitability.
The residential business soft surface product
line grew by 1.8% while the industry, we believe, was flat. Our
hard surface sales tripled during this same time period. In the
residential market in 2018, we had our largest product launch ever.
We launched over 150 new products for 2018, including 67 carpet
styles and 86 hard surface designs. Our focus in 2018 was to
enhance our importance to our residential dealer network and to
gain retail floor space by broadening our product offering as we
expanded our main street commercial and mill branded soft flooring
product selection. We are especially pleased with our new Masland
eNeRgy in store display with 20 exciting main street commercial
products. This high styled main street category was developed by
Masland in the mid 2000’s and we are re-invigorating this line with
new products, designs and an updated selling vehicle. The eNeRgy
line is a complete selection of broadloom and modular carpet tile
designed for the commercial market serviced through our network of
full service dealers. We began shipment of our new EnVision 6,6™
soft floorcovering collection. This new program is an extension of
our Dixie Home product line with nicely styled carpet products at
moderate price points to reach a wider range of consumers. These
products are made with type 6,6 nylon to ensure the highest quality
and performance standards. In addition, we launched the Fabrica
wood line, initially with selective distribution in the southeast
but later expanded across the United States. The Fabrica collection
features “best in class” unique flooring looks including French
oak, maple and birch with a style and quality consistent with the
high-end quality of Fabrica’s brand. We expanded our luxury vinyl
flooring offering and placement by 40% while offering more product
selection with both plank and tile offerings in our STAINMASTER®
PetProtect® line. For 2019 we are building on the momentum we
gained by tripling our residential hard surface business in 2018
with the launch of TruCor™, our new solid polymer core or “SPC”
luxury vinyl flooring line. This latest addition to our rigid core
luxury vinyl flooring offering is designed to create an extremely
durable and waterproof luxury vinyl flooring product with a broader
range of price points to meet the needs of various consumers.
To facilitate this growth, we are expanding our
distribution of hard surface products to our west coast
distribution center as well as our east coast service center.
Our results in the commercial market have been
impacted by the restructuring we have been undergoing since late
2017. Our commercial product sales for the year were down over
13.2% while the commercial soft floorcovering market, we believe,
was down marginally. We expanded our product offering in luxury
vinyl flooring with our sales doubling through our Calibrè line of
luxury vinyl flooring products. We have introduced a new collection
of modular carpet tile products in 2018, such as Top Notch using
Thrive® by Universal® Fibers, a solution dyed nylon 6,6 that stands
alone as the most environmentally conscious solution-dyed high
performance nylon 6,6 carpet fiber in the world with the highest
level of recycled material, the lowest CO2 emission and built-in
encapsulated stain resistance. As we have merged the two commercial
sales forces into Atlas | Masland Contract, we are positioned, with
our newly reformulated footprint and 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.
Our Profit Improvement Plan has captured the
many efforts we have implemented to improve operations during 2018.
We began the structural consolidation of our commercial business
with the closure of the Chickamauga tufting plant as we moved the
equipment to other facilities. This plant closure, complete at the
end of 2018, lowered our cost and improved our response time to
this segment of the marketplace. We began the process of exiting
our Commerce, California Atlas tufting facilities this past fall,
and will be completely out of those commercial tufting operations
by the end of the first quarter of 2019. The bulk of the Atlas
equipment was transferred to our Atmore, Alabama commercial tufting
operation with various other items moved to our Santa Ana,
California and Eton, Georgia operations. We moved our commercial
rug operation and commercial samples support function from
California to our Saraland facility near Mobile, Alabama. We
reduced our staffing to better match production to meet our demand
in our Atmore, Eton, Adairsville and Roanoke facilities as we were
able to take advantage of the increased productivity of our
associates in these operations. In addition to the physical
movement of equipment and inventory, we consolidated our commercial
design functions in Saraland as well as consolidated our entire
sales support functions. Our sales forces were merged to create
Atlas | Masland Contract, now equipped with a much broader product
line and providing modular carpet tile, broadloom carpet, luxury
vinyl flooring, and commercial wool and nylon rugs. This combined
sales force has the added benefit of not only a broad product line
but distinct design capabilities in custom products as well. We
have done a department by department review of all of our
operations and functions within the Company, from sales through
manufacturing. Though we are sad to lose many fine members of the
Dixie team, we feel we are stronger after having reduced our
headcount by over 330 associates, or 17% of our workforce, from the
beginning of 2018 through the first quarter of 2019. During this
process we have identified many cost reductions from marketing
through operational support functions and will continue to cut
costs wherever advantageous,” Frierson concluded.
Our gross profit margin for the year was 21.5%
for 2018, down from 24.5% in 2017. Our gross profit was negatively
impacted by $2.7 million in inventory write downs taken during the
year as part of our Profit Improvement Plan (‘the Plan”). Our
selling and administrative expenses for the year were 22.8% of net
sales, a decrease of 0.5 percentage points from our level of 23.3%
in 2017. Despite this difficult year from a profitability
perspective, we have put in place the foundation of operational
capabilities that should benefit us in the future. Our combined
expenses of the Plan, including inventory write downs,
restructuring and severance expenses and related asset impairments
were $9.2 million during 2018. However, our total cost reductions,
on an annualized basis, are over $17 million once fully implemented
during 2019. Our testing of goodwill resulted in a full impairment
of the value of the asset, resulting in a $3.4 million charge. We
have now written off all of our intangible and goodwill assets.
Our receivables decreased $3.9 million as
compared to the end of the year in 2017, primarily due to our
reduction in sales for the period. Net inventories declined $8.5
million during the year. Our accounts payable and accrued expenses
declined by $1.3 million. Our capital expenditures for the full
year of 2018 were $4.1 million and are planned for 2019 at a
maintenance level of approximately $6.0 million. Interest expense
of $6.5 million was up due to higher interest rates from a year
ago. Our debt decreased by $5.2 million during the year. Our
availability was $15.4 million under our bank lines of credit at
year end.
Our floorcovering sales for the first 9 weeks of
the quarter are down high-single digits versus the same period in
2018. Our orders, however, are only slightly behind compared to
this same period last year. We are pleased with the progress we are
making with our Profit Improvement Plan and anticipate the bulk of
the savings to be in place by the third quarter of 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 10:00 a.m. Eastern Time on March 7,
2019. A replay will be available approximately two hours later and
will continue for approximately 30 days. If Internet access is
unavailable, a telephonic conference will be available by dialing
(877) 355-1003 and entering 4773569 at least 10 minutes before the
appointed time. A seven-day telephonic replay will be available two
hours after the call ends by dialing (855) 859-2056 and entering
4773569 when prompted for the access code. The Dixie Group
(www.thedixiegroup.com) is a leading marketer and manufacturer of
carpet and rugs to higher-end residential and commercial customers
through the Fabrica International, Masland Carpets, Dixie Home,
Atlas | Masland Contract and Dixie International brands.
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
Securities and Exchange Commission. The Company disclaims any
obligation to update or revise any forward-looking statements based
on the occurrence of future events, the receipt of new information,
or otherwise.
THE DIXIE GROUP, INC.
Consolidated Condensed Statements of
Operations(unaudited; in thousands, except
earnings per share)
|
Three Months Ended |
|
Twelve Months Ended |
|
December 29,2018 |
|
December 30,2017 |
|
December 29,2018 |
|
December 30,2017 |
|
|
|
|
(As Adjusted) |
|
|
|
|
|
(As
Adjusted) |
|
NET SALES |
$ |
98,175 |
|
|
$ |
105,084 |
|
|
$ |
405,033 |
|
|
$ |
412,462 |
|
Cost of sales |
79,795 |
|
|
82,315 |
|
|
318,042 |
|
|
311,249 |
|
GROSS PROFIT |
18,380 |
|
|
22,769 |
|
|
86,991 |
|
|
101,213 |
|
Selling
and administrative expenses |
22,518 |
|
|
22,386 |
|
|
92,473 |
|
|
96,189 |
|
Other
operating expense, net |
37 |
|
|
357 |
|
|
458 |
|
|
441 |
|
Facility
consolidation and severance expenses, net |
2,230 |
|
|
634 |
|
|
3,167 |
|
|
636 |
|
Impairment of assets |
6,360 |
|
|
— |
|
|
6,709 |
|
|
— |
|
OPERATING INCOME (LOSS) |
(12,765 |
) |
|
(608 |
) |
|
(15,816 |
) |
|
3,947 |
|
Interest
expense |
1,651 |
|
|
1,535 |
|
|
6,491 |
|
|
5,739 |
|
Other
expense, net |
5 |
|
|
1 |
|
|
3 |
|
|
21 |
|
Loss from continuing operations before taxes |
(14,421 |
) |
|
(2,144 |
) |
|
(22,310 |
) |
|
(1,813 |
) |
Income tax provision (benefit) |
(721 |
) |
|
7,283 |
|
|
(831 |
) |
|
7,509 |
|
Loss from continuing
operations |
(13,700 |
) |
|
(9,427 |
) |
|
(21,479 |
) |
|
(9,322 |
) |
Income (loss) from
discontinued operations, net of tax |
1 |
|
|
(69 |
) |
|
95 |
|
|
(233 |
) |
NET
LOSS |
$ |
(13,699 |
) |
|
$ |
(9,496 |
) |
|
$ |
(21,384 |
) |
|
$ |
(9,555 |
) |
|
|
|
|
|
|
|
|
BASIC EARNINGS (LOSS)
PER SHARE: |
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.87 |
) |
|
$ |
(0.60 |
) |
|
$ |
(1.36 |
) |
|
$ |
(0.59 |
) |
Discontinued operations |
(0.00 |
) |
|
(0.00 |
) |
|
0.01 |
|
|
(0.01 |
) |
Net loss |
$ |
(0.87 |
) |
|
$ |
(0.60 |
) |
|
$ |
(1.35 |
) |
|
$ |
(0.60 |
) |
|
|
|
|
|
|
|
|
DILUTED EARNINGS (LOSS)
PER SHARE: |
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.87 |
) |
|
$ |
(0.60 |
) |
|
$ |
(1.36 |
) |
|
$ |
(0.59 |
) |
Discontinued operations |
(0.00 |
) |
|
(0.00 |
) |
|
0.01 |
|
|
(0.01 |
) |
Net loss |
$ |
(0.87 |
) |
|
$ |
(0.60 |
) |
|
$ |
(1.35 |
) |
|
$ |
(0.60 |
) |
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
15,792 |
|
|
15,707 |
|
|
15,764 |
|
|
15,699 |
|
Diluted |
15,792 |
|
|
15,707 |
|
|
15,764 |
|
|
15,699 |
|
THE DIXIE GROUP, INC.Consolidated
Condensed Balance Sheets(in
thousands)
|
December 29,2018 |
|
December 30,2017 |
|
(Unaudited) |
|
|
(As Adjusted) |
Current Assets |
Cash and cash
equivalents |
$ |
18 |
|
|
$ |
19 |
|
Receivables, net |
42,542 |
|
|
46,480 |
|
Inventories, net |
105,195 |
|
|
113,657 |
|
Prepaid expenses |
5,204 |
|
|
4,669 |
|
Total
Current Assets |
152,959 |
|
|
164,825 |
|
|
|
|
|
Property, Plant and
Equipment, Net |
84,111 |
|
|
93,785 |
|
Goodwill and Other
Intangibles |
— |
|
|
5,850 |
|
Other Assets |
15,708 |
|
|
19,447 |
|
TOTAL ASSETS |
$ |
252,778 |
|
|
$ |
283,907 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
Current
Liabilities |
|
|
|
Accounts
payable |
$ |
17,779 |
|
|
$ |
18,541 |
|
Accrued
expenses |
30,852 |
|
|
$ |
31,360 |
|
Current portion of long-term debt |
7,794 |
|
|
9,811 |
|
Total
Current Liabilities |
56,425 |
|
|
59,712 |
|
|
|
|
|
Long-Term Debt |
120,251 |
|
|
123,446 |
|
Other Long-Term
Liabilities |
17,118 |
|
|
21,486 |
|
Stockholders'
Equity |
58,984 |
|
|
79,263 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
252,778 |
|
|
$ |
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 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 the
United States. In considering our supplemental financial measures,
investors should bear in mind that other companies that report or
describe similarly titled financial measures may calculate them
differently. Accordingly, investors should exercise appropriate
caution in comparing our supplemental financial measures to
similarly titled financial measures reported by other
companies.
|
|
|
|
|
|
ThreeMonthsEnded |
TwelveMonthsEnded |
|
December29, 2018 |
December29, 2018 |
Net loss as reported |
$ |
(13,699 |
) |
|
$ |
(21,384 |
) |
Income from discontinued
operations |
1 |
|
|
95 |
|
Loss from continuing operations |
(13,700 |
) |
|
(21,479 |
) |
Unusual worker's compensation |
— |
|
|
450 |
|
Legal settlement |
— |
|
|
1,514 |
|
Inventory write-off related to Profit Improvement
Plan |
1,738 |
|
|
2,701 |
|
Facility consolidation and severance expenses,
net |
2,230 |
|
|
3,167 |
|
Impairment of assets |
815 |
|
|
1,164 |
|
Impairment of goodwill and
intangibles |
5,545 |
|
|
5,545 |
|
Loss from continuing operations |
$ |
(3,372 |
) |
|
$ |
(6,938 |
) |
Diluted shares |
15,792 |
|
|
15,764 |
|
Adjusted loss per diluted share |
$ |
(0.21 |
) |
|
$ |
(0.44 |
) |
Further non-GAAP reconciliation data are available at
www.thedixiegroup.com under the Investor Relations
section.
CONTACT: |
Jon Faulkner |
|
Chief Financial Officer |
|
706-876-5814 |
|
jon.faulkner@dixiegroup.com |
Dixie (NASDAQ:DXYN)
Graphique Historique de l'Action
De Août 2024 à Sept 2024
Dixie (NASDAQ:DXYN)
Graphique Historique de l'Action
De Sept 2023 à Sept 2024