The Dixie Group Reports Stable 3rd Quarter Results

Thursday, October 29, 2015

The Dixie Group, Inc. Thursday reported financial results for the third quarter ended Sept. 26. For the quarter, the company had sales of $108,908,000 and income from continuing operations of $84,000, or $0.01 per diluted share, compared with sales of $109,006,000 and a loss from continuing operations of $8,000, or $0.00 per diluted share for the third quarter of 2014. Income from continuing operations, excluding facility consolidation and asset impairment expenses, tax affected, was $465,000 (non-GAAP adjusted income from continuing operations, as set forth herein), or $0.03 per diluted share for the period. The company had $614,000 in facility consolidation expenses during the period as it implements its previously announced plans to expand capacity, focus operations, and consolidate its corporate offices. 

Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, “Sales in the third quarter started off strong, but moderated throughout the period, similar to what we experienced in the second quarter of this year. Our sales of $108.9 million were flat with the same quarter last year. Sales for residential products declined 1.5 percent versus the same period a year ago while the industry, we believe, declined in the low single digits. Sales of residential products started stronger in July, but slowed down during the quarter relative to our performance a year ago. We anticipate the residential remodeling market to have modest growth for the remainder of the year. The increase in commercial product sales was 4.5 percent comparative to the same period last year, as compared to industry growth, we estimate, in the very low single digits. Both our Masland Contract and Atlas Carpet Mills commercial brands had sales increases during the quarter. We continue to see a healthy commercial market throughout 2015.

 “For the quarter, gross profit was 25.0 percent of net sales as compared to 24.4 percent for the third quarter of the prior year and 26.7 percent for the second quarter of 2015. Gross profit improved relative to a year ago as a result of improved operations and a reduction in acquisition related expenses. Relative to the second quarter of 2015, however, margins were lower due to lower sales, an unfavorable product mix primarily in our residential business, continued quality expenses from production made during the consolidation and a favorable adjustment in the prior quarter related to acquisition-related contingent payments. Operationally, we did not perform in the third quarter as well as expected due to continued higher quality expenses and lower production volumes. Our production levels were over 6 percent lower in the third quarter than in the second quarter of 2015. Facility consolidation expenses, both for our manufacturing facility realignment and for our corporate office consolidation, were $614 thousand during the quarter. Our projected remaining expenses to complete all of our consolidation plans is $1.2 million and should be complete by the end of the first quarter of 2016.

“Operating income was $1.3 million for the quarter as compared to $832 thousand for the third quarter of 2014. Selling and administrative costs were 23.2 percent of net sales for the quarter as compared to 21.8 percent for the same quarter of 2014. We have higher sampling costs in both our residential and commercial businesses this year. The planned launch of new products for Atlas Carpet Mills was delayed in 2014, so we have a very robust line of new products being introduced in 2015. In addition, our residential business has an unusually high sample expense due to several additional national product launches in 2015. We anticipate our new product sampling expenses will be lower in 2016, thus moderating our selling and administrative costs as a percent of sales in 2016. 

“Current assets decreased $1.3 million during the quarter, primarily due to a reduction in prepaid expenses. Inventory and trade receivables were flat. Current liabilities decreased $971 thousand during the quarter. Capital equipment acquisitions, including those funded by cash and financings, were $1.8 million for the quarter. Depreciation and amortization for the period was $3.7 million. We anticipate capital expenditures for 2015 of approximately $13 million and depreciation and amortization of approximately $14.5 million. We had a slight tax benefit as we trued up our rate for the year. We ended the quarter with $131.2 million in debt. 

“Sales in the third quarter started off strong in July, but slowed throughout the period, similar to what happened in the second quarter of this year. Further, we are continuing to see operational improvements; however, given the slower growth environment than previously expected, we are putting more emphasis on operational improvements and on moderating our investment in growth. In addition, even though we have continued to suffer from quality control issues that arose during the restructuring, we believe that they will continue to diminish as we move forward. We are continuing to see improvements as our operations return to the historical quality levels we had before the restructuring. We are intent on increasing profitability through improved operations and tighter cost controls as we complete the ongoing restructuring,” Mr. Frierson concluded. 



New Hamilton County Businesses

Here are the new businesses from the County Clerk's office: A2Z CANVASS NITA  SLATTON 2 RETAIL SALES AND SERVICE OF CANOPY'S 2001 WHEELER AVE CHATTANOOGA TN 37406 BAREFOOT GYPSY BARBARA  RODRIGUEZ 3 CRAFTS, GIFT SALES ONLINE 3600 LEE PIKE SODDY DAISY TN 37377 BAXTER HOME INSPECTIONS CHARLES H BAXTER, III 3 HOME INSPECTIONS ... (click for more)

Templeton And Cothern Become Members At Patrick, Beard, Schulman & Jacoway, P.C.

Patrick, Beard, Schulman & Jacoway, P.C. announces that John H. Templeton and Jeremy M. Cothern have been elected to firm membership. The 15-attorney, full service law firm offers business formation, governance, and transactions, estate planning, probate, and civil and criminal litigation for businesses, utilities, government entities, and individuals.  Mr. Templeton ... (click for more)

1 Killed, Another Injured In Shooting On The Southside Early Sunday Morning; Delivery Driver Carjacked On Southside Earlier

One person was killed and a second person injured in a shooting on the Southside early Sunday morning. The victims are Sharone Porter, 22, who was killed, and Torrie Porter, 24, who had non-life threatening injuries.  At 2:47 a.m., Chattanooga Police responded to 1400 Cowart St.  on a person shot. Upon arrival, Chattanooga Police found two victims suffering ... (click for more)

Bradley County Deputy Shoots And Kills Stabbing Suspect At Charleston

A Bradley County deputy shot and killed a man who was a suspect in a stabbing early Sunday morning. The Sheriff's Office said, "At approximately 11:54 p.m. on Saturday, a call was received at the Cleveland/Bradley County 911 Center to report a stabbing at a residence on Leyland Drive in Charleston. "The caller indicated a male had been stabbed and another male had fled from ... (click for more)

The Growing Monopoly

Over the last decade, five tech giants have risen to the top, and created, discovered and invented services and products that have made these companies worth billions today. Those five, of course, are Facebook, Apple, Amazon, Microsoft, and Google. Each of these companies are responsible for several products and services that we use in our everyday lives. They have devoured the ... (click for more)

Roy Exum: Those We All Ignore

I was in the midst of my “morning readings” the other day when a number leapt off my computer screen. Hark, heralded angels, did you know in the state of Iowa there are two (2) inpatient psychiatry beds for every 100,000 people? I’m not the best with percentages but there are some people in Iowa who aren’t getting the help they need. There are roughly 3.2 million people living in ... (click for more)