The Dixie Group (DXYN) Reports Second Quarter 2011 Results
The Dixie Group, Inc. (NASDAQ:DXYN) today reported financial results for the second quarter ended July 2, 2011. In the second quarter of 2011, the Company had sales of $69,200,000 and income from continuing operations of $808,000, or $0.06 per diluted share, compared with a loss from continuing operations of $684,000, or $0.05 per diluted share for the second quarter of 2010. Net sales increased 17.2% for the fiscal second quarter of 2011 as compared with the second quarter of 2010. For the year-to-date, sales are $135,154,000 and income from continuing operations is $1,452,000 or $0.11 per diluted share, compared with sales of $109,512,000 and a loss from continuing operations of $3,143,000, or $0.25 per diluted share, for the year-ago period. Net sales for the year-to-date are 23.4% above the same period of 2010.
Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, Dixie had strong growth in the quarter with a 17% improvement in sales compared to modest growth for the industry. Our commercial products had growth of 20%, which we believe is significantly above the industry. Notable was growth in the modular carpet tile sector, which continues to exceed that of the broadloom product category in commercial products for both Dixie and the industry. Likewise, our residential product sales grew over 15% above the same period in 2010. This increase is in contrast with sales decline for the residential market. The residential carpet market, plagued by low sales of new and existing residential homes as well as by tight credit, is still working its way through the recovery from the severe economic downturn of the last few years.
Having completed six consecutive quarters of sales growth in excess of the industry, we believe that our strategy of continuing to invest in new products during this historic downturn has proven successful and positions us for the future. We have seen significant sales growth at the very high end as evidenced by double-digit sales growth during the period for our Fabrica business as well as for our Masland wool and rug products. We continue to believe that the upper end customer has regained confidence, as demonstrated by our improved sales to the upper end of the market. Our Dixie Home line has had particular success with the Stainmaster products introduced in the last year. Masland Contract continues to see excellent growth in the commercial market, particularly its modular carpet tile products and sales to end users.
During the second quarter we had rising raw material costs. We implemented a price increase but due to the timing differences, margins were compressed during the period. In addition, we had unusually heavy shipments to our larger commercial accounts; therefore, our gross profit, at 24.2% of net sales was below our margin of 25.8% for the same period a year ago. We have taken advantage of one-time opportunities for added business during the summer months, which we anticipate will continue to cause us to have tight margins during the third quarter. However, our selling, general and administrative expenses will continue to compare favorably to the prior year due to higher sales volumes in the current year. Our S,GA, at 21.6% of sales, was 3.8 percentage points below last years 25.4% of sales for the second quarter.
As we saw the industry slowdown late in the second quarter, we maintained a tight rein on running schedules, inventories and overtime; however, we have continued to see growth in all of our brands in the first four weeks of the third quarter.
Capital expenditures were $2.1 million for the year-to-date, while depreciation and amortization was $4.9million. We continue to underspend our depreciation and amortization levels. We anticipate total capital expenditures of $6.2 million for the year, the bulk of which will be used to expand our capacity and capabilities in our yarn operations. Total debt, which normally rises during the middle of the year, increased by $4.0 million during the quarter to $72.3 million. We recorded a gain of $563,000 in our facility consolidation and severance expense primarily due to the settlement of the lease on our Pullman facility, thus completing the last of the restructuring plans initiated during the recent economic downturn. The unused borrowing capacity under our credit lines was $11.3 million as of July 2, 2011, and $14.8 million as of August 3, 2011. We are in the due diligence phase with potential lenders regarding the replacement of our current revolving and term credit agreements. The purpose of such transactions is to repay the $9.7million of convertible subordinated debentures due in May of 2012, to extend our financing for another five-year period and to provide the funding needed to continue our growth.
Continued uncertainty in the economy, along with a stubbornly high unemployment rate and a weak housing recovery, will likely remain through the rest of the year. We continue to invest, however, in new products and processes as we maintain our goal of being the fashion leader in the industry. We feel that the continued investment in beautiful products, responsive operations and strong controls over expenses are the formulas needed to be able to continue to outgrow the industry during these uncertain times, Frierson concluded.
The Companys loss from discontinued operations was $42,000, or $0.00 per diluted share, for the second quarter of 2011, compared with a loss from discontinued operations of $60,000, or $0.01 per diluted share, for the prior year. Including discontinued operations, the Company reported net income of $766,000, or $0.06 per diluted share, for the second quarter of 2011 compared with a net loss of $744,000, or $0.06 per diluted share, for the year-earlier period. The Companys loss from discontinued operations was $62,000, or $0.00 per diluted share, for the six months ended July 2, 2011, compared with a loss from discontinued operations of $130,000, or $0.01 per diluted share, for the six-month period ended June 26, 2010. Including discontinued operations, the Company reported net income of $1,390,000 of $0.11 per diluted share, for the first six months of 2011 compared with a net loss of $3,273,000, or $0.26 per diluted share, for the prior period.
A listen-only Internet simulcast and replay of Dixie’s conference call may be accessed with appropriate software at the Company’s website or at www.earnings.com. The simulcast will begin at approximately 11:00 a.m. Eastern Time on August 4, 2011. A replay will be available approximately two hours later and will continue for approximately 30 days. If Internet access is unavailable, a listen-only telephonic conference will be available by dialing (913) 312-1481 at least ten minutes before the appointed time. A seven-day telephonic replay will be available two hours after the call ends by dialing (719) 457-0820 and entering 4372890 when prompted for the access code. For further information, please see updated investor presentation at www.thedixiegroup.com and click on the Investor Relations tab; file is listed under Overview – Featured Reports.
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, Masland Contract and Whitespace brands.
Statements in this news release, which relate to the future, 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, 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 DIXIE GROUP, INC. Consolidated Condensed Statements of Operations (unaudited; in thousands, except earnings per share) |
||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
July 2, 2011 |
June 26, 2010 |
July 2, 2011 |
June 26, 2010 |
|||||||||||||||
NET SALES | $ | 69,200 | $ | 59,058 | $ | 135,154 | $ | 109,512 | ||||||||||
Cost of sales | 52,477 | 43,821 | 101,861 | 81,922 | ||||||||||||||
GROSS PROFIT | 16,723 | 15,237 | 33,293 | 27,590 | ||||||||||||||
Selling and administrative expenses | 14,944 | 15,026 | 30,337 | 29,384 | ||||||||||||||
Other operating income | (55 | ) | (61 | ) | (629 | ) | (120 | ) | ||||||||||
Other operating expense | 97 | 91 | 179 | 220 | ||||||||||||||
Facility consolidation and severance expenses, net | (563 | ) | 122 | (563 | ) | 333 | ||||||||||||
OPERATING INCOME (LOSS) | 2,300 | 59 | 3,969 | (2,227 | ) | |||||||||||||
Interest expense | 900 | 1,082 | 1,832 | 2,317 | ||||||||||||||
Other income | (8 | ) | (10 | ) | (32 | ) | (22 | ) | ||||||||||
Other expense | 18 | 307 | 26 | 317 | ||||||||||||||
Income (loss) from continuing operations before taxes | 1,390 | (1,320 | ) | 2,143 | (4,839 | ) | ||||||||||||
Income tax provision (benefit) | 582 | (636 | ) | 691 | (1,696 | ) | ||||||||||||
Income (loss) from continuing operations | 808 | (684 | ) | 1,452 | (3,143 | ) | ||||||||||||
Loss from discontinued operations, net of tax | (42 | ) | (60 | ) | (62 | ) | (130 | ) | ||||||||||
NET INCOME (LOSS) | $ | 766 | $ | (744 | ) | $ | 1,390 | $ | (3,273 | ) | ||||||||
BASIC EARNINGS (LOSS) PER SHARE: | ||||||||||||||||||
Continuing operations | $ | 0.06 | $ | (0.05 | ) | $ | 0.11 | $ | (0.25 | ) | ||||||||
Discontinued operations | (0.00 | ) | (0.01 | ) | (0.00 | ) | (0.01 | ) | ||||||||||
Net income (loss) | $ | 0.06 | $ | (0.06 | ) | $ | 0.11 | $ | (0.26 | ) | ||||||||
DILUTED EARNINGS (LOSS) PER SHARE: | ||||||||||||||||||
Continuing operations | $ | 0.06 | $ | (0.05 | ) | $ | 0.11 | $ | (0.25 | ) | ||||||||
Discontinued operations | (0.00 | ) | (0.01 | ) | (0.00 | ) | (0.01 | ) | ||||||||||
Net income (loss) | $ | 0.06 | $ | (0.06 | ) | $ | 0.11 | $ | (0.26 | ) | ||||||||
Weighted-average shares outstanding: | ||||||||||||||||||
Basic | 12,596 | 12,532 | 12,574 | 12,514 | ||||||||||||||
Diluted | 12,648 | 12,532 | 12,624 | 12,514 |
THE DIXIE GROUP, INC. Consolidated Condensed Balance Sheets (in thousands) |
||||||||
July 2, 2011 | December 25, 2010 | |||||||
ASSETS | (Unaudited) | |||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 151 | $ | 244 | ||||
Receivables, net | 30,545 | 28,550 | ||||||
Inventories | 68,753 | 58,289 | ||||||
Other | 8,877 | 6,943 | ||||||
Total Current Assets | 108,326 | 94,026 | ||||||
Net Property, Plant and Equipment | 67,605 | 70,246 | ||||||
Other Assets | 14,291 | 13,830 | ||||||
TOTAL ASSETS | $ | 190,222 | $ | 178,102 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 34,229 | $ | 30,385 | ||||
Current portion of long-term debt | 13,270 | 7,145 | ||||||
Total Current Liabilities | 47,499 | 37,530 | ||||||
Long-Term Debt | ||||||||
Senior indebtedness | 58,551 | 47,876 | ||||||
Capital lease obligations | 455 | 532 | ||||||
Convertible subordinated debentures | — | 9,662 | ||||||
Deferred Income Taxes | 4,962 | 4,759 | ||||||
Other Liabilities | 14,193 | 15,313 | ||||||
Stockholders’ Equity | 64,562 | 62,430 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 190,222 | $ | 178,102 | ||||
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 the United States.
The first six months of 2011 contained 27 operating weeks compared with 26 operating weeks in the first six months of 2010. Percentage changes in net sales have been adjusted to reflect the comparable number of weeks in the reporting periods.
The Company defines Adjusted Operating Income (Loss) as Operating Income (Loss) plus facility consolidation expenses and severance expenses, plus impairment of assets, plus impairment of goodwill, plus one-time items so defined.
Three Months Ended | Six Months Ended | ||||||||||||||||
July 2, 2011 | June 26, 2010 | July 2, 2011 | June 26, 2010 | ||||||||||||||
Net Sales Adjusted | |||||||||||||||||
Weeks in period | 13 | 13 | 27 | 26 | |||||||||||||
Net sales as reported | $ | 69,200 | $ | 59,058 | $ | 135,154 | $ | 109,512 | |||||||||
Adjusted for weeks | — | — | (4,711 | ) | — | ||||||||||||
Non-GAAP net sales as adjusted | $ | 69,200 | $ | 59,058 | $ | 130,443 | $ | 109,512 | |||||||||
Reconciliation of Operating Income (Loss) | |||||||||||||||||
Operating income (loss) | $ | 2,300 | $ | 59 | $ | 3,969 | $ | (2,227 | ) | ||||||||
Facility consolidation and severance expenses, net | (563 | ) | 122 | (563 | ) | 333 | |||||||||||
Insurance gain non-taxable | — | — | (492 | ) | — | ||||||||||||
Workers compensation retention | — | — | 625 | — | |||||||||||||
Non-GAAP Adjusted Operating Income (Loss) | $ | 1,737 | $ | 181 | $ | 3,539 | $ | (1,894 | ) |
TraderPower Featured Companies
Top Small Cap Market News
- $SOBR InvestorNewsBreaks – SOBR Safe Inc. (NASDAQ: SOBR) Closes on $8.2M Private Placement
- $CLNN InvestorNewsBreaks – Clene Inc. (NASDAQ: CLNN) Announces Participation at Two Upcoming Investor Conferences
- $ATBHF Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) Releases Updated Report on Storm Copper Project Drilling Program
- $LGVN InvestorNewsBreaks – Longeveron Inc. (NASDAQ: LGVN) to Present at This Month’s Congenital Heart Surgeons’ Society Annual Meeting
- $LEXX InvestorNewsBreaks – Lexaria Bioscience Corp. (NASDAQ: LEXX) Begins Subject Dosing in Human Pilot Study #3 Evaluating Oral DehydraTECH-Processed Tirzepatide
- $FSTTF InvestorNewsBreaks – First Tellurium Corp. (CSE: FTEL) (OTC: FSTTF) Shares Additional Information on the PyroDelta Thermoelectric Generator, Relationship with Subsidiary
- $TMET.V Gold Stutters as Strong US Jobs Data Dampens Expectations of Large Rate Cuts
- $RFLXF JPMorgan Executive Says US Backlash Against ESG Is Exaggerated
- $SFWJ InvestorNewsBreaks – Software Effective Solutions Corp. (d/b/a MedCana) (SFWJ) Releases Report on Series of Acquisitions, Multiple Cannabis Licenses
- $EAWD IEA Hosts G20 Ministers, Influential Personalities to Discuss Clean and Affordable Energy Transition
Recent Posts
- $EAWD IEA Hosts G20 Ministers, Influential Personalities to Discuss Clean and Affordable Energy Transition
- $SFWJ InvestorNewsBreaks – Software Effective Solutions Corp. (d/b/a MedCana) (SFWJ) Releases Report on Series of Acquisitions, Multiple Cannabis Licenses
- $RFLXF JPMorgan Executive Says US Backlash Against ESG Is Exaggerated
- $TMET.V Gold Stutters as Strong US Jobs Data Dampens Expectations of Large Rate Cuts
- $FSTTF InvestorNewsBreaks – First Tellurium Corp. (CSE: FTEL) (OTC: FSTTF) Shares Additional Information on the PyroDelta Thermoelectric Generator, Relationship with Subsidiary
- $LEXX InvestorNewsBreaks – Lexaria Bioscience Corp. (NASDAQ: LEXX) Begins Subject Dosing in Human Pilot Study #3 Evaluating Oral DehydraTECH-Processed Tirzepatide
- $LGVN InvestorNewsBreaks – Longeveron Inc. (NASDAQ: LGVN) to Present at This Month’s Congenital Heart Surgeons’ Society Annual Meeting
- $ATBHF Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) Releases Updated Report on Storm Copper Project Drilling Program
Recent Comments
Archives
- October 2024
- January 2023
- June 2022
- December 2021
- September 2021
- August 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
- February 2021
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009