|View printer-friendly version|
The Dixie Group Reports First Quarter 2018 Results
Commenting on the results,
"At our industry’s annual trade show, Surfaces, our residential group continued the focus on developing and marketing differentiated designs and styles for the high end residential market. We launched over 150 new products for 2018, including 67 carpet styles and 86 hard surface designs. We are especially excited about 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. We are in the process of launching our Fabrica wood product line in the southeast United Sates with a selective set of dealers. We look forward to expanding this specialty wood line in the future.
"Our commercial sales in the first quarter were down over 9% while the industry we believe was down in the mid-single digits. Our commercial broadloom sales were impacted more than our commercial modular carpet tile sales. 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 first quarter of 2018 was 21.8% of net sales as compared to a gross profit of 25.8% in 2017. During the first quarter of 2018, our sales and costs were negatively impacted by severe weather which affected several of our east coast facilities in January. In addition, the launch of numerous, new, difficult to manufacture residential products severely impacted the throughput of our manufacturing operations in January and February, resulting in unabsorbed fixed costs. In addition, we had higher waste and off-quality issues as a result of the intensive effort to launch these new products during the quarter. We were further impacted by the quality initiative, which began in the fourth quarter of 2017 and completed in February of 2018, to reformulate all of our dye formulas to improve color matching through our continuous dye facility. Finally, our commercial sales were slow during the quarter, therefore, we had unabsorbed fixed costs through our facilities that produce primarily commercial products due to the lower production levels required to meet the lower demand. Our financial results improved throughout the quarter returning to profitability by March.
"In 2018, we are continuing to work on achieving all of the benefits of the new capabilities we have implemented in the past year in both our commercial and residential oriented facilities as we focus on better on time execution, lower waste and higher production efficiencies. One area of particular difficulty in 2018 has been the attraction and retention of talent in our various facilities. We anticipate further cost increases relative to associate costs as we deal with a tight labor market. We implemented a price increase at the beginning of the year and have announced a second price increase for May of 2018 to offset higher labor and other operational costs.
"Selling and administrative expenses for the quarter were 23.4% of net sales, a decrease of 1.7 percentage points from our level of 25.1% in the first quarter of 2017. The decrease in our selling and administrative costs is primarily due to the Profit Improvement Plan we initiated in the fourth quarter of last year as we consolidated our two commercial management teams under the leadership of
"Our receivables increased
"Our floorcovering sales for the first 4 weeks of the second quarter of 2018 are up approximately 1.4% relative to this same time period last year. We are well positioned to continue to be the style leader in the flooring industry and are excited about the rest of 2018,” 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/investor/investor.html. 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
|THE DIXIE GROUP, INC.
Consolidated Condensed Statements of Operations
(unaudited; in thousands, except earnings per share)
|Three Months Ended|
|Cost of sales||77,278||72,380|
|Selling and administrative expenses||23,120||24,486|
|Other operating (income) expense, net||(241||)||52|
|Facility consolidation and severance expenses, net||216||—|
|OPERATING (LOSS) INCOME||(1,515||)||623|
|Other expense (income), net||2||(1||)|
|Loss from continuing operations before taxes||(3,050||)||(738||)|
|Income tax benefit||(166||)||(163||)|
|Loss from continuing operations||(2,884||)||(575||)|
|Loss from discontinued operations, net of tax||(23||)||(29||)|
|BASIC EARNINGS (LOSS) PER SHARE:|
|DILUTED EARNINGS (LOSS) PER SHARE:|
|Weighted-average shares outstanding:|
|THE DIXIE GROUP, INC.
Consolidated Condensed Balance Sheets
|Cash and cash equivalents||$||21||$||19|
|Total Current Assets||170,672||164,825|
|Property, Plant and Equipment, Net||91,522||93,785|
|Goodwill and Other Intangibles||5,774||5,850|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accounts payable and accrued expenses||$||54,308||$||49,901|
|Current portion of long-term debt||9,113||9,811|
|Total Current Liabilities||63,421||59,712|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY||$||287,351||$||283,907|
Chief Financial Officer
Source: The Dixie Group, Inc.