The Dixie Group, Inc. on Thursday reported financial results for the quarter ended June 29.
Net sales in the second quarter of 2024 were $70.5 million compared to $74.0 million in the same period of the prior year. The gross profit margin for the three months of the second quarter of 2024 was 28.1 percent of net sales compared to 26.7 percent in the second quarter of 2024. Operating income in the second quarter of 2024 was $2.3 million compared to $0.3 million in the second quarter of the prior year.
The company had a net income from continuing operations of $0.7 million in the second quarter of 2024 compared to a net loss of $1.6 million in the same period of the prior year.
Subsequent to quarter end, the company completed a 10 year sublease agreement to lease out all of the available warehouse space in its Saraland, Al. facility. The company will recognize an annual amount of approximately $1.8 million in other income over the term of the lease.
For the second quarter of 2024, the company had net sales of $70,507,000 as compared to $74,009,000 in the same quarter of 2023. The company had an operating income of $2,295,000 compared to an operating income of $253,000 in the second quarter of 2023. The net income from continuing operations in the second quarter of 2024 was $667,000 or $0.04 per diluted share. In 2023, the net loss from continuing operations for the second quarter was $1,620,000 or $0.11 per diluted share.
For the six months ended June 29, net sales were $135,761,000 or 3.8 percent below the net sales for the six-month period ended July 1, 2023 at $141,093,000. The operating income for the first six months of 2024 was $1,437,000 compared to an operating income of $560,000 in the same period of the prior year. The company had a net loss from continuing operations of $1,743,000 or $0.12 per diluted share for the six months ended June 29, compared to a net loss form continuing operations of $3,171,000 or $0.22 per diluted share in the six month period ending July 1, 2023.
Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, "High interest rates affecting the housing and home remodeling market and the impact on the economy from continued inflation continue to negatively impact our overall sales volume. Net sales from soft surfaces during the quarter were less than 1 percent below prior year while the industry, we believe, was down approximately 5.4 percent. We saw favorable margins in the second quarter as a result of the consolidation of our manufacturing operations on the East Coast and other cost savings initiatives, including the start of operations on our new extrusion line. The successful start up of our extrusion line provides us with raw materials at lower costs, as compared to our current external purchasing, and also provides a continuity of supply, protecting us and our customers from potential supply disruptions.
"During the quarter, we launched our Step Into Color campaign with in store marketing materials and a digital presence. This campaign connects our retail customers, designers, and consumers with a world of color options including custom color, which is now available in all brands. This is a great option for the customer who is looking for that perfect hue of a particular color. In a residential market which continues to move toward the sea of sameness that is solution dyed polyester, we are setting ourselves apart with piece dyed nylon.
"In addition, we launched 18 new carpet styles in the second quarter, including six new DuraSilk polyester styles in our DH Floors line and 11 new decorative styles in our 1866 and Décor lines. We also launched six new collections with 38 SKUs as updates to our hard surface programs. These included SPC Tile Looks, high end WPC, and high end engineered wood in our Fabrica program. These launches complete our new product launches for 2024 and these new products are already generating meaningful volume.
"Our new product offerings will help us continue to maintain sales volume in a difficult market. We continue to be on track with our plan to reduce year over year costs by over $10 million in 2024 through cost savings related to our extrusion operations and the reduction of other controllable costs. We believe, once interest rates come down and consumer confidence returns, the housing market, along with remodeling activity, will rebound strongly, driven by pent up demand." Mr. Frierson concluded.
The gross profit in the second quarter of 2024 was 28.1 percent of net sales compared to 26.7 percent of net sales in the second quarter of 2023. The improved gross profit margins in 2024 were the result of efficiencies in manufacturing operations, specifically related to east coast plant consolidations, higher volumes and cost reductions including savings generated from our extrusion line operations. Selling and administrative costs in the second quarter of 2024 were below the prior year in expense dollars and as a percent of net sales, 24.6 percent in 2024 as compared to 25.7 percent in the same quarter of 2023.
On the balance sheet, receivables increased $4.3 million from the balance at fiscal year end 2023 due to higher sales in the last month of the second quarter 2024 as compared to the seasonally lower sales volume in the last month of the fiscal year 2023. The net inventory value of $76.1 million at the end of the second quarter of 2024 was slightly lower than the fiscal year end 2023 balance of $76.2 million. Combined accounts payable and accrued expenses were $6.2 million higher at the end of the second quarter of 2024 as compared to the December 2023 balance. This increase was primarily driven by higher payables and accruals for raw materials to replenish inventory and meet higher production needs in preparation for higher levels of demand in the third quarter as compared to the first quarter. In the second quarter of 2024, capital expenditures were $0.9 million. Capital expenditures for the full fiscal year 2024 are planned at $9.4 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 second quarter of 2024 compared to $1.8 million in the second quarter of 2023. The lower interest expense in 2024 was the result of lower average debt balance within the quarter. Debt increased by $3.4 million in the first six months of 2024 driven primarily by the planned cash investment in new product introductions in the first half of the year. Availability under the line of credit with the senior lending facility was $13.6 million at the end of the second quarter of 2024.
Subsequent to the end of the second quarter, the company signed a sublease agreement for 370,000 square feet of warehouse space in its leased facility in Saraland, Al. The lease is a 10-year lease at a gross lease value of $23.3 million, excluding certain required landlord payments. This lease replaces the existing five year subleases of 200,000 total square feet in the Saraland facility.
In the 2024 third quarter to date, sales are approximately 5.5 percent below the comparable period in the prior year.