The Dixie Group, Inc. on Friday reported financial results for the quarter ended Sept. 28.
Net sales in the third quarter of 2024 were $64.9 million compared to $68.6 million in the same period of the prior year.
The gross profit margin for the three months of the third quarter of 2024 was 24.6 percent of net sales compared to 26.6 percent in the third quarter of 2023.
Operating loss in the third quarter of 2024 was $2.1 million compared to a loss of $0.9 million in the third quarter of the prior year.
For the third quarter of 2024, the company had net sales of $64,877,000 as compared to $68,576,000 in the same quarter of 2023. The company had an operating loss of $2,107,000 compared to an operating loss of $913,000 in the third quarter of 2023. The net loss from continuing operations in the third quarter of 2024 was $3,729,000 or $0.26 per diluted share. In 2023, the net loss from continuing operations for the third quarter was $2,211,000 or $0.15 per diluted share.
For the nine months ended Sept. 28, net sales were $200,638,000 or 4.3 percent below the net sales for the nine-month period ended Sept. 30, 2023 at $209,669,000. The operating loss for the first nine months of 2024 was $669,000 compared to an operating loss of $354,000 in the same period of the prior year. The company had a net loss from continuing operations of $5,473,000 or $0.37 per diluted share for the nine months ended Sept. 28, compared to a net loss from continuing operations of $5,382,000 or $0.36 per diluted share in the nine month period ending Sept. 30, 2023.
Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, "Net sales in the third quarter started off slow in the month of July but improved throughout the remainder of the quarter. Soft market conditions, as a result of high interest rates, low existing home sales and low consumer confidence, have negatively impacted our overall sales volume. Net sales from soft surfaces during the quarter were 3 percent below prior year while the industry, we believe, was down approximately 6.5 percent. Operating margins in the third quarter were unfavorably impacted by the lower manufacturing volume in the plants, and significant non-recurring charges for capacity charges from utilities at our manufacturing facilities in California and higher costs related to our self-insured medical benefits and workers' compensation.
"We are pleased by the results of the successful operation of our extrusion equipment that began in the first quarter of this year. Along with providing raw materials at a lower cost, the importance of securing an internal supply of fiber became more apparent as one of our key suppliers of white nylon announced they would be shutting down their operations later this year.
"Throughout the third quarter we continued to promote our Step Into Color campaign through marketing materials placed in our customers' retail stores as well as digital advertising. The Step Into Color campaign connects our retail customers, designers and consumers with a world of color options, including custom colors available in all of our brands. This provides the end user with colorful options in piece dyed nylon as opposed to the sea of sameness that is solution dyed polyester.
"Our marketing activities in the third quarter included continued focus on expanding our digital marketing efforts which has resulted in increased lead generation, sample order activity from our websites and improved capabilities for online product visualization. We also saw strong growth from retail stores where we have placed our Premier Flooring Center program. The investment in samples, merchandising and training in these stores have provided returns of increased business and greater market share.
"Our product and marketing initiatives should allow us to continue to outperform the industry in what has been a difficult flooring market. Our cost savings initiatives, including the successful operation of our extrusion equipment and the consolidation of our east coast manufacturing facilities, have us in a strong position to maximize the return from an anticipated improvement in demand going into 2025. This higher demand is expected to be driven by higher existing home sales and remodeling as the result of decreasing interest rates and access to elevated home equity." Mr. Frierson concluded.
Net sales in the third quarter of 2024, $64.9 million, decreased by 5.4 percent from the net sales in the third quarter of 2023, $68.6 million. The gross profit in the third quarter of 2024 was 24.6 percent of net sales compared to 26.6 percent in the third quarter of 2023. The gross profit margin in 2024 was negatively impacted by under absorbed fixed cost as a result of lower production volume, higher utility costs in California from capacity charges, additional facilities rent and higher expenses related to our self-insured medical plan.
Selling and administrative expenses in the third quarter of 2024 were $17.6 million as compared to $18.7 million in the third quarter of the previous year. This was a 6.3 percent year over year decrease and represented 27.1 percent of the net sales in 2024 as opposed to 27.3 percent of the higher net sales in 2023.
On the September fiscal month end balance sheet, receivables increased $2.9 million from the balance at fiscal year end 2023 due to higher sales in the last month of the third quarter 2024 as compared to the seasonally lower sales volume in the last month of the fiscal year 2023. Inventory was $76.8 million, slightly above the 2023 year end balance of $76.2 million and 4.0 percent below the inventory balance in September of 2023. Combined accounts payable and accrued expenses were $6.3 million higher at the end of the third quarter of 2024 as compared to the December 2023 balance but $1.0 million lower than the same quarter of the previous year. The lower year over year accounts payable and accrued expenses were driven by planned reductions in inventory in the fourth quarter of 2024. In the third quarter of 2024, capital expenditures were $0.6 million. Capital expenditures for the full fiscal year 2024 are planned at $9.3 million, with $2.8 million being funded by cash investment within the year and the remaining $6.5 million from cash spent through deposits in prior years. Interest expense was $1.6 million in the third quarter of 2024 compared to $1.8 million in the third quarter of 2023. The lower interest expense in 2024 was the result of lower average debt balance within the quarter. The debt increased by $3.9 million in the first nine months of 2024 driven primarily by the cash investment in new product introductions in the first half of the year and operating expenses coupled with lower sales volume in the third quarter. Availability under the line of credit with the senior lending facility was $11.7 million at the end of the third quarter of 2024.
For the first four weeks of the fourth quarter 2024 to date, net sales are approximately 1 percent below the comparable period in the prior year.