Dixie Group Reports Net Sales Decrease For Third Quarter

Friday, November 9, 2012

The Dixie Group, Inc. Friday reported financial results for the third quarter ended Sept. 29. In the third quarter of 2012, the company had sales of $65,822,000 and income from continuing operations of $269,000, or $0.02 per diluted share, compared with income from continuing operations of $22,000, or $0.00 per diluted share for the third quarter of 2011. Net sales decreased by $3,785,000 for the fiscal third quarter of 2012, compared with the third quarter of 2011, primarily due to a one-time sales promotion in the prior period.  

Year-to-date sales were $195,238,000, with a loss from continuing operations of $240,000 or $0.02 per diluted share, compared with sales of $204,761,000 and income from continuing operations of $1,474,000 or $0.11 per diluted share, from the year-ago period. When adjusting for the number of weeks in the two periods, net sales for the year-to-date were 2.4 percent below the same period of 2011.  

Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, "We continued our strong residential growth in the quarter with 6.5 percent increase in product sales, excluding a one-time promotional special in the prior year. Each of our residential brands had nice increases through the retail and design channels. The only area of decline was in our mass merchant category, due primarily to the non-repeating one-time promotion in 2011. Our residential product sales, including mass merchants, declined 2.9 percent relative to a slight growth for the industry. Our commercial sales during the period were hurt by a slow start to the quarter with a sales decline of 10.6 percent relative to the industry growth in the low-single digits.  

"We are excited by our new management team led by Lee Martin, who came on board during the quarter, and who has developed new growth plans for our commercial business. Our business started the quarter slower but strengthened throughout the period and has continued to be stronger during October.

"Our focus on new products to drive growth has continued with our new Speak Collection of high-performance modular carpet tile being introduced during the period. This, along with the continued success of our Chrome Collection in the commercial marketplace, has given us confidence in seeing stronger results in the year ahead. Project activity in the commercial market has been exceeding expectations. The launch of Stainmaster TruSoft during the quarter is proving successful across all of our residential product lines and market categories. We are reaping the rewards of being one of the first two participants to market with this revolutionary breakthrough in soft fiber technology. We continued double digit growth in the wool market, led by the introduction of our line of Permaset wool products which give the designer unlimited color flexibility. We have spent heavily this year with increased investment in new product development and sampling of products to our customers. We remain committed to being the industry leader in style and design and this investment enables us to continue outperforming the industry.

"Margins for the third quarter have improved relative to the prior year with a gross profit margin of 25.2 percent, compared to 22.7 percent in the prior-year period. This has been due to better quality and efficiency. Most notable have been the improvements in our Atmore and Eton tufting operations as we have simplified and streamlined these operations by establishing dedicated tufting facilities to focus on specific segments of the market. We spent over $300,000 during the quarter to implement this change and over $1 million year-to-date. Our selling, general and administrative expenses were 24.0 percent of net sales for the quarter, compared to 20.8 percent in the year-ago period. This higher expense is partially due to our heavy investment this year in added sampling expenses with the launch of the line of Stainmaster TruSoft products as we continue to pursue above industry growth.

"Capital expenditures were $2.0 million year-to-date while our depreciation and amortization were $7.1 million year-to-date. Including the acquisition of the Colormaster continuous dye-house we purchased early in November, we anticipate capital investments to be approximately $9.5 million for the year. The acquisition of the Colormaster facility will have a negative effect on earnings during the transition period as we ramp up production to take advantage of the more efficient dye capabilities of the facility. Our working capital rose slightly during the quarter, primarily due to higher accounts receivable. Our total debt was $75.8 million and our availability under our credit lines stood at $20.2 million as of quarter end.

"The fourth quarter is coming in stronger than the weaker summer months as we have seen positive signs in the housing market beginning to take effect. We still believe that the upper-end residential market will continue to outperform the market in general. We have renewed vigor in the commercial market under our new management team and with our new line of Speak modular carpet tile products. Our continued emphasis on operational efficiency and the coming integration of the Colormaster facility will help us to expand our product offerings to position us for continued growth," Mr. Frierson concluded. 

The company's loss from discontinued operations was $167,000, or $0.01 per diluted share, for the third quarter of 2012, compared with a loss from discontinued operations of $65,000, or $0.00 per diluted share, for the prior year. Including discontinued operations, the company reported a net income of $102,000, or $0.01 per diluted share, for the third quarter of 2012, compared with net loss of $43,000, or $0.00 per diluted share, for the year-earlier period. The company's loss from discontinued operations was $272,000, or $0.02 per diluted share, for the nine months ended Sept. 29, compared with a loss from discontinued operations of $127,000, or $0.01 per diluted share, for the nine-month period ended Oct. 1, 2011. Including discontinued operations, the company reported a net loss of $512,000 or $0.04 per diluted share, for the first nine months of 2012, compared with a net income of $1,347,000, or $0.10 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 a.m. Eastern Time on Friday. 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  913.312-1446 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 4342839 when prompted for the access code. For further information, see the updated investor presentation at www.thedixiegroup.com and click on the Investor Relations tab; the file is listed under Overview - Featured Reports. 




Justin Robinson State Farm Celebrates Grand Opening Feb. 2

Justin Robinson State Farm will celebrate a grand opening with a ribbon cutting ceremony on Thursday, Feb. 2, at 11 a.m. at 1459 North Mack Smith Road.  The Chattanooga Area Chamber of Commerce will co-host this event with Justin Robinson State Farm.  Mr. Robinson said he has made it his life goal to serve the East Ridge and Chattanooga community with his ... (click for more)

EPB's Fiberoptic Venture Continues To Boost Electric Side

EPB's venture into phone, television and Internet continues to boost its electric side - putting $11.8 million in profits onto the ledger already this fiscal year. Greg Eaves, chief financial officer, said the profit by the end of the fiscal year should be between $18 million and $19 million. Electrical sales have been doing well on their own. Mr. Eaves said sales in December ... (click for more)

Alabama Man Faces Murder Charge In Shooting Death At Bradley County Landfill

An investigation by  s pecial agents with the Tennessee Bureau of Investigation has resulted in the arrest of an Alabama man in a shooting death that occurred last fall at the Bradley County landfill.   At the request of 10 th  District Attorney General Steve Crump, last Sept. 8 TBI special agents began investigating a shooting death that occurred that ... (click for more)

Man Shot In East Lake Winds Up Facing Several Criminal Charges

Police said a man who was shot on Sunday morning in East Lake was assaulting the woman who shot him and others immediately before the gunfire.   Police said 29-year-old Latesha Hinton would not be charged in the shooting of Dieshunn Lindsey, 30. At approximately  10:50 a.m.,  officers with the Chattanooga Police Department responded to the 2700 block of ... (click for more)

Proud Of Chattanooga And The Women's March

I was very happy to participate in the Women’s March on Chattanooga yesterday afternoon. The diversity and the sheer numbers of women, men and children were incredible. One estimate was at least 3,000. Standing together with all of these like-minded souls was overwhelming and humbling.  I have rarely been so happy and so proud of my town.  One question is, why is ... (click for more)

Roy Exum: Washington’s Favorite

By the time darkness fell over Washington, D.C., on Sunday, it had clearly been a monumental weekend. On Friday Donald Trump had ben inaugurated as the 45 th President of the United States. On Saturday a fierce crowd of a half-million women who each are entitled to have the identical rights as men in the same United States, marched on The Mall. And then, the Washington Post printed ... (click for more)