The Dixie Group Reports Increased Second Quarter Sales

Thursday, August 3, 2017

The Dixie Group, Inc. on Thursday reported financial results for the quarter ended July 1, 2017. The company’s second quarter sales were $107.2 million or 1.8 percent above the same quarter a year ago. For the six month period total net sales increased 5.2 percent to $204.7 million as compared to $194.6 million in the year earlier period. Income from continuing operations was $1,226,000, or $0.08 per fully diluted share, for the second quarter of 2017 as compared to income from continuing operations of $1,615,000, or $0.10 per fully diluted share, in the second quarter of 2016. 

Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, “For the quarter, our floorcovering sales were up year over year by 3.6 percent while the industry, we believe, was flat. For the year to date our floorcovering sales were up 7.4 percent versus prior year and versus a market that was flat year over year. Our commercial product sales for the quarter were flat while the market was down in the low single digits. Further, our commercial product sales were up 5.0 percent for the year to date relative to 2016 while the industry, we estimate, was down low single digits. Our residential products were up 5.4 percent for the quarter as compared to the second quarter of 2016 with the industry being up in the low single digit range. For the six month period ending in June our residential product sales were up 8.7 percent compared to the same time period in 2016 while the industry, we believe, was up only in the low single digits. 

"Our gross profit for the quarter was 26.5 percent of net sales as compared to 26.8 percent in the year earlier period.  For the six months our gross profit was 26.2 percent versus 24.5 percent for the same period in 2016. Our results for the quarter and the year to date were favorably impacted by the higher level of sales. We had a price increase in the first quarter and a second price increase late in the second quarter, as did the industry. Offsetting these gains were higher raw material and medical costs. In addition, during this time period we had over $1 million in startup expenses of our expanded Colormaster dyeing and Atmore yarn and tile coating operations. These expansions are now fully operational. The Colormaster expansion completes the centralization of all of our east coast internal and external dyeing needs into a single facility.  The completion of our expanded yarn and tile pre-coat operations at our Atmore, Alabama commercial facility improves our response time while lowering the cost of our make to order production model. 

"The launch of our Masland and Dixie Home Stainmaster PetProtect luxury vinyl flooring product lines is going well.  We have commitments to place over a thousand displays in the marketplace between the two product lines. We anticipate all of these displays to be shipped to retailers by the end of the third quarter. Our Calibrè Line of luxury vinyl flooring products continues to grow as we see the results of continued placement in the specified commercial market. 

"In June Royalty Carpet Mills, a primarily west coast supplier of residential carpet, chose to cease operations. We took advantage of this opportunity to increase our presence by placing additional retail displays and product lines with select retailers across our three residential brands. In addition, with the recognition that the industry is tight with respect to yarn manufacturing due to higher face weights and tighter twist construction, we purchased the operating machinery of Royalty’s Porterville carpet yarn manufacturing operation. We are starting production in Porterville at the beginning of August and will shift most our west coast yarn demand to this facility. This also relieves pressure on our Roanoke yarn manufacturing facility where it simplifies the product mix and opens up capacity for growth. 

"Capital expenditures for the second quarter, including those funded by cash and financings, were $2.7 million and we anticipate a total of $13 million in capital expenditures for 2017 compared to depreciation and amortization of $13.5 million for 2017. We raised our estimated capital expenditures as we took advantage of expanding our west coast business due to the opportunity created by Royalty Carpet Mills choosing to cease operations. Accessible availability under our credit lines was $22 million at the end of the second quarter while debt stood at $123.7 million at the end of the second quarter, an increase of $3.1 million in the quarter. We anticipate debt will climb in the third quarter as we complete the initial stocking of our luxury vinyl flooring programs and bring in fiber to complete the transition of yarn production into Porterville. These temporary inventory increases should moderate in the fourth quarter as we reach normal sales and production levels from these two startup situations. 

"The third quarter has started off upbeat with our floorcovering sales up over 9 percent over the first four weeks as compared to this same time in 2016. Our total sales for this four week period are up over 8 percent, the difference due to our exiting the external yarn sales business in 2016. We are seeing sales increases in both the residential and commercial markets during this period. Our business seems to track consumer sentiment and the stock market, as well as housing trends. The strength in single family housing and home resales has improved the environment for the carpet retail replacement business. Also, the changes in our industry with the closing of Royalty's operations and the Beaulieu announced bankruptcy offer opportunity for us to gain space and commitment from the floorcovering retail community. As we move into the second half of 2017, we continue our emphasis on providing high quality, unique and beautiful products to our customers,” Mr. Frierson concluded. 



AOC Launching New Indigent Representation Payment System In February

The Administrative Office of the Courts will modernize its disbursement system for indigent representation payments to attorneys, interpreters, expert witnesses, and investigators in February 2018. The new AOC Claims and Payment (ACAP) system will replace the Indigent Claim Entry (ICE) system and will allow users to more accurately and efficiently input and track claims for payment.The ... (click for more)

Consistent Cold Temps Boosting EPB Bottom Line

Consistent cold temps are boosting EPB's bottom line, Chief Financial Officer Greg Eaves said. The city utility had $1.1 million in revenues from kilowatt sales in December. It wound up with a positive margin of over $3 million for the month. Mr. Eaves said January "is looking real good as well with consistent cold temperatures." He said the fact that the cold weather ... (click for more)

Ivy Johnson, 23, And Cordarrius Johnson, 26, Shot Early Sunday Morning On Lillian Lane

Ivy Johnson, 23, And Cordarrius Johnson, 26, were shot early Sunday morning.   Chattanooga Police were notified at 4:39 a.m. of two people arriving at a local hospital with gunshot wounds. Upon arrival, police spoke with the two victims who were suffering from non-life threatening gunshot wounds. The victims arrived at the hospital via personal vehicle.   ... (click for more)

2 Top Officials Leave Administration Of Sheriff Eric Watson

Bradley County Sheriff Eric Watson on Sunday announced the resignations of Chief Deputy Brian Smith and Director of Administrations Arnold Botts. He said they "served with distinction for the past four years." The Sheriff's Office said, "Smith notified Sheriff Watson that he is exploring business opportunities in the private sector, while Botts mentioned the timing was right ... (click for more)

DACA Or Amnesty To Become The Majority?

As we have the political drama that we see in D.C. let’s be honest about what DACA is all about. We understand as the liberal policies of abortion, dependency on the government and an anti-American globalist / progressive agenda that many have come to realize these policies no longer represent their core beliefs and have left a certain party. Without an influx of new dependency ... (click for more)

Roy Exum: What’s The ‘Super’ Done?

The headline on Jan. 10 in the Times Free Press read, “Report shows Hamilton County students still lagging behind Tennessee peers.” In smaller type underneath, the sub-head added, “Less than 33 percent of county elementary, middle school students read at grade level.” Then, just seven days later, this on Friday, the same newspaper bannered, “Hamilton County Schools superintendent ... (click for more)