The Dixie Group Reports 2016 Results CHATTANOOGA, Tenn.,

New Post Public Reply Private Reply Replies (0) Message Board
News Desk 2018
147
The Dixie Group Reports 2016 Results

CHATTANOOGA, Tenn., March 06, 2017 (GLOBE NEWSWIRE) -- The Dixie Group, Inc. (NASDAQ: DXYN ) today reported financial results for the year ended December 31, 2016. For 2016, the Company had net sales of $397,453,000, a 5.9% decrease versus fiscal 2015’s net sales of $422,483,000. Fiscal 2016 was a 53 week period while Fiscal 2015 had 52 weeks in the period. On a comparable 52 week basis, net sales for 2016 were down 7.2% as compared to 2015.  For 2016 the Company had a loss from continuing operations of $5,207,000, or $0.33 per diluted share, as compared to the fiscal year of 2015 when the Company had a loss from continuing operations of $2,278,000, or $0.15 per diluted share.  For the fourth quarter the loss from continuing operations was $0.17 per share for 2016 as compared to a loss of $0.03 per share for the same period in 2015.

Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, “Our carpet sales for 2016 were down 6.0% from 2015, on a comparable 52 week basis, while the industry, we believe, was down in the low single digits.  In the fourth quarter our total carpet sales were down 7.7% while the industry was flat.  Sales of our residential products were down approximately 3% on a comparable 52 week basis in 2016 versus 2015 while the industry was down similarly.  Our commercial product sales on a year over year basis were down over 11% while the industry was down slightly, also on a 52 week equivalent basis.

For the year, gross profit was 24.0% of net sales, a decline from 2015’s 25.1% gross profit percentage.  The drop in sales year over year severely impacted our bottom line.  Further, the decline in margins in both the first and fourth quarters were impacted by our reducing inventories by $17.9 million during 2016 as we under produced our sales volume, thus negatively affecting our cost absorption during these time periods. In order to service our customers, we had increased our inventory levels over the last few years as we were restructuring the plants; now, however, we are operating more efficiently and have not needed these levels of inventory to properly service our customers.  Now that our inventories are back in line, we anticipate the first quarter to have production above sales.  During the fourth quarter of 2016, we increased inventory reserves as we dropped older product lines and reduced the market price of our distressed goods resulting in significant negative inventory expenses during the quarter.  Selling and administrative expenses for the year were 24.4% of net sales as compared to 23.8% for the prior year, despite having dropped the absolute levels of spending by $3.4 million from 2015 to 2016.

Our interest expense for the year was $5.4 million as compared to $4.9 million in 2015. The higher interest expense is largely due to higher rates as we had previously locked in future interest rate swaps from 2016 until 2021 to fix the interest rate on a portion of our floating rate debt under our asset backed revolver.  We had an income tax benefit rate of 41% for the year.  Our normal rate going forward, at reasonable levels of profitability, should be in the 35% range.  For the year of 2016, our receivables dropped $7.2 million on the lower sales volume.  Our inventories declined by $17.9 million as previously explained.  Capital equipment acquisitions, including those funded by cash and financings, were $5.3 million for the year.  Depreciation and amortization for the year was $13.5 million.  We anticipate capital expenditures for 2017 of approximately $8 million and depreciation and amortization of approximately $13.3 million.  Our debt declined by $17.7 million to $108.4 million at the end of the year.

Despite this difficult year from a profit perspective, we have made several significant changes to improve our results in the future.  We completed our restructuring earlier in the year, setting the stage for a more productive manufacturing environment.  This completes the separation of our east coast commercial and residential facilities.  Our claims expense has declined significantly as our workforce training has taken effect, improving our quality.  We refinanced our debt, pushing out the maturity until 2021.  We have reduced our inventory to levels in line with our sales and reflecting the improvements in reduced waste and shorter throughput times.  As the quarter ended, the industry announced a price increase based on many increases in cost of both labor and raw material. This price increase included both residential and commercial products.

We launched a series of new distinctive products in our residential market in 2016.  In our Fabrica brand we introduced Alluvial with its elegant feeling of movement creating channels of flowing pattern elements. In Masland we are excited about 'This and That', a pattern which whispers a hint of texture with tonal variations that create contrast and visual depth. With the introduction of many beautiful new products and the disruption of the restructuring behind us, our residential brands should outperform the industry as we have over the last 5 years.

Our Atlas brand successfully launched our Bellissimo Collection, made with our multi-color Visionweave technology.  Masland Contract has a success with Lava.  With its larger scale pattern, Lava can create fluid form in contemporary contract design projects.  Commercially last year we lagged the industry due to our lack of growth in modular carpet tile products.  To remedy this situation, we moved our Avant offering into the Masland Contract brand to give these products greater exposure and introduced a number of new modular products at Masland and Atlas.  We are beginning to see the results of this effort in our current business.

In the coming years, the housing market will be in the middle of two massive demographic waves, millennials and baby boomers, with both groups driving demand for at least the next decade. This trend should provide steady growth in the floorcovering market.  We are particularly pleased with the growth in single family housing and the rate of existing home sales.  We plan to capitalize on this opportunity while recognizing the dramatic change in the flooring marketplace as hard surface products have grown significantly faster than soft surface products over the last several years.  Therefore, we are entering into the hard surface market through several initiatives in both our residential and commercial brands.  We first introduced the Calibrè line of luxury vinyl tile products this past fall in our Masland Contract brand.  Masland Contract has brought their own unique styling to the market as they do with their soft flooring categories.  These products have been engineered to be high performance, available for quick delivery, with exceptional styling and a great value.

Residentially, our Dixie Home and Masland Residential brands are supplying Stainmaster PetProtect ® luxury vinyl tile which includes a 'Claw Scratch Shield' coating to help resist scratching from pets along with 'Pet Traction Action' for pet paws. With its resistance to liquid absorption, the new LVT flooring effectively resists pet odors and stains.  Dixie Home will be offering this superior residential product line with a limited lifetime warranty while Masland will be offering a commercial grade version of the PetProtect® line featuring a limited lifetime residential warranty and a 12 year limited commercial warranty, one of the heaviest wear layers available in the industry, keeping us a step ahead of the competition.   As the primary supplier with the Stainmaster PetProtect ® luxury vinyl tile product offering, we feel that our residential business is carving out a high end niche that meets the needs of the more discerning customer.   Finally, we are planning to launch a high end engineered wood line through our Fabrica brand that will offer more sophisticated looks and sizes to the design channels we currently serve.

From a sales and marketing perspective we have promoted David Hobbs to lead our Masland commercial business and Don Dolan to executive vice president of sales. David, with a history of supplying modular carpet tile to the specified design market, brings leadership skills from a career servicing that market.  Don, with a long history at Masland Contract, emphasizes our traditional strength in selling beautiful and sophisticated product to delight the design community.  Paul Comiskey, head of our residential business, has announced plans to retire in early 2018. To replace Paul and carry on the excellent team he has built, we have hired T.M. Nuckols, formerly of Invista. T.M. brings a long history of supporting differentiated branded product in the floorcovering market.

We have anticipated modest sales growth for the industry in 2017 as we have put together our plans for the year.  Our floorcovering sales and orders for the first 9 weeks of the quarter are both up approximately 8%. Our total sales are up just under 6% over the same period in 2016; the difference as compared to our overall sales is due to our processing sales being down significantly as we have diverted our yarn production from external sales to internal consumption.    We continue to be focused on cutting costs through select investments, such as the ongoing project to bring our beck dying in Georgia back in house in our existing Colormaster facility.  This and other projects are designed to improve our cost structure while we pursue market opportunities in this slower growth environment.  We look forward to 2017 with a continued emphasis on improving our results and providing beautiful flooring products to our customers,” Frierson concluded.

A listen-only Internet simulcast and replay of Dixie's conference call may be accessed with appropriate software at the Company's website at www.thedixiegroup.com . The simulcast will begin at approximately 11:00 a.m. Eastern Time on March 6, 2017. 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 (877) 355-1003 and entering 74667185 at least 10 minutes before the appointed time. A seven-day telephonic replay will be available two hours after the call ends by dialing (855) 859-2056 and entering 74667185 when prompted for the access code.

The Dixie Group ( www.thedixiegroup.com ) is a leading marketer and manufacturer of carpet and rugs to higher-end residential and commercial customers through the Fabrica International, Masland Carpets, Dixie Home, Atlas Carpet Mills, Masland Contract, Masland Hospitality and Dixie International brands.

This press release contains forward-looking statements. Forward-looking statements are based on estimates, projections, beliefs and assumptions of management and the Company at the time of such statements and are not guarantees of performance. Forward-looking statements are subject to risk factors and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Such factors include the levels of demand for the products produced by the Company. Other factors that could affect the Company's results include, but are not limited to, raw material and transportation costs related to petroleum prices, the cost and availability of capital, integration of acquisitions and general economic and competitive conditions related to the Company's business. Issues related to the availability and price of energy may adversely affect the Company's operations. Additional information regarding these and other risk factors and uncertainties may be found in the Company's filings with the Securities and Exchange Commission. The Company disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise.

THE DIXIE GROUP, INC. Consolidated Condensed Statements of Operations (unaudited; in thousands, except earnings per share)

  Three Months Ended   Twelve Months Ended
  December 31,  2016   December 26,  2015   December 31,  2016   December 26,  2015
NET SALES $ 102,606     $ 107,763     $ 397,453     $ 422,483  
Cost of sales 80,760     81,443     302,028     316,253  
GROSS PROFIT 21,846     26,320     95,425     106,230  
Selling and administrative expenses 25,223     24,207     96,983     100,422  
Other operating (income) expense, net (124 )   188     401     872  
Facility consolidation expenses, net (359 )   682     1,456     2,946  
OPERATING INCOME (LOSS) (2,894 )   1,243     (3,415 )   1,990  
Interest expense 1,423     1,332     5,392     4,935  
Other expense, net 7     2     22     47  
Loss from continuing operations before taxes (4,324 )   (91 )   (8,829 )   (2,992 )
Income tax provision (benefit) (1,686 )   407     (3,622 )   (714 )
Loss from continuing operations (2,638 )   (498 )   (5,207 )   (2,278 )
Loss from discontinued operations, net of tax (79 )   (30 )   (131 )   (148 )
Income (loss) on disposal of discontinued operations, net of tax (5 )   —     60     —  
NET LOSS $ (2,722 )   $ (528 )   $ (5,278 )   $ (2,426 )
               
BASIC EARNINGS (LOSS) PER SHARE:              
Continuing operations $ (0.17 )   $ (0.03 )   $ (0.33 )   $ (0.15 )
Discontinued operations (0.01 )   (0.00 )   (0.01 )   (0.01 )
Disposal of discontinued operations (0.00 )   —     0.00     —  
Net loss $ (0.18 )   $ (0.03 )   $ (0.34 )   $ (0.16 )
               
DILUTED EARNINGS (LOSS) PER SHARE:              
Continuing operations $ (0.17 )   $ (0.03 )   $ (0.33 )   $ (0.15 )
Discontinued operations (0.01 )   (0.00 )   (0.01 )   (0.01 )
Disposal of discontinued operations (0.00 )   —     0.00     —  
Net loss $ (0.18 )   $ (0.03 )   $ (0.34 )   $ (0.16 )
               
Weighted-average shares outstanding:              
Basic 15,659     15,590     15,638     15,536  
Diluted 15,659     15,590     15,638     15,536  
               

THE DIXIE GROUP, INC. Consolidated Condensed Balance Sheets (in thousands)

  December 31,  2016   December 26,  2015
ASSETS (Unaudited)    
Current Assets      
Cash and cash equivalents $ 140     $ 281  
Receivables, net 43,605     50,806  
Inventories, net 97,237     115,146  
Other 4,376     3,362  
Total Current Assets 145,358     169,595  
       
Property, Plant and Equipment, Net 92,807     101,146  
Goodwill and Other Intangibles 6,156     6,461  
Other Assets 24,666     21,016  
TOTAL ASSETS $ 268,987     $ 298,218  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current Liabilities      
Accounts payable and accrued expenses $ 53,509     $ 60,821  
Current portion of long-term debt 10,122     10,142  
Total Current Liabilities 63,631     70,963  
       
Long-Term Debt 98,256     115,907  
Other Liabilities 19,978     20,544  
Stockholders' Equity 87,122     90,804  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 268,987     $ 298,218  
               

Use of Non-GAAP Financial Information: (in thousands)

The Company believes that non-GAAP performance measures, which management uses in evaluating the Company's business, may provide users of the Company's financial information with additional meaningful bases for comparing the Company's current results and results in a prior period, as these measures reflect factors that are unique to one period relative to the comparable period. However, the non-GAAP performance measures should be viewed in addition to, not as an alternative for, the Company's reported results under accounting principles generally accepted in the United States. In considering our supplemental financial measures, investors should bear in mind that other companies that report or describe similarly titled financial measures may calculate them differently. Accordingly, investors should exercise appropriate caution in comparing our supplemental financial measures to similarly titled financial measures reported by other companies.

 
Non-GAAP Summary
 
  Twelve Months Ended
Net Sales As Adjusted December 31, 2016 Week 53 Net Sales as Adjusted December 31, 2016   December 26, 2015 Increase (Decrease) Net Sales as Adjusted % Change
Net Sales As Adjusted (Note 1) $ 397,453   $ (5,380 ) $ 392,073     $ 422,483   $ (30,410 ) (7.2)%
               
The Company defines Net Sales as Adjusted as net sales less the last week of sales in a 53 week fiscal year. (Note 1)

Further non-GAAP reconciliation data are available at www.thedixiegroup.com  under the Investor Relations section.

CONTACT: Jon Faulkner Chief Financial Officer 706-876-5814 jon.faulkner@dixiegroup.com

Scroll down for more posts ▼

Top 10 Most Recent News Articles

RAI's TrustX Lab Unveils AI Assurance Framework

Updated Category News Views 127

Pushing the Envelope on AI Control Alright, AI wonks, the Responsible AI Institute just introduced a new sheriff in town. It's called the TrustX Assurance Lab, and it was rolled out during RAISE 2026. We're talking about an independent setup designed to answer whether autonomous AI can stay within its limits. Who's involved? A lot of brainpower from member organizations...

Continue Reading
Navigating Car Wreck Chaos for Legal Protection

Updated Category News Views 46

Clarity Amid Chaos: Handling a Crash in Abilene Let me tell you, if your day starts with a car wreck, every second post-crash counts more than you think. Attorney Chaile Allen out of Abilene's laying down the law on how to protect yourself—because that wreck scene ain't just about bent fenders and bruised egos. It's about getting your ducks in a row for any potential...

Continue Reading
Bluerock's Split: What November's Trading Change Means

Updated Category News Views 41

Bluerock's Strategic Move: Untying the Bundle Ah, Bluerock Acquisition Corp. II has thrown a new bone to the market. Starting November 16, 2026, the firm ain't keeping their Class A ordinary shares and warrants locked in a bundle anymore. This shift comes after they sold 17,250,000 units in their IPO back in September, which also saw underwriters fully clinking their...

Continue Reading
Inflatable Wonders Turn Christmas into a Hoot at Lowe's

Updated Category News Views 96

Inflatables Bringing the Cheer (and Laughs) Well, it's that season again—where decorations either have us grumbling at the electric bill or chuckling at the lawn art. Lowe's has teamed up with Gemmy to serve a heaping platter of holiday giggles this year. They've rolled out a quirky lineup of inflatables that go from shivering Highland cows to dinosaurs and elves....

Continue Reading
Sound Credit Union, WTA Team Up for Trail Support

Updated Category News Views 43

Heading Into the Great Outdoors with Every Swipe You ever feel like your money's going nowhere useful? Well, folks in Washington are about to flip the script thanks to Sound Credit Union and the Washington Trails Association (WTA). They've cooked up a slick new money move—a co-branded debit and credit card program—where every swipe backs the state's beloved trails. A...

Continue Reading
China-Kenya Trade: Avocado Diplomacy in Action

Updated Category News Views 44

Avocado: A Trade Symbol with a Pit of Potential Who'd have thought a simple avocado could become such a heavyweight in the international trade arena? But here we are, with Kenyan avocados making a splash on the grand stage at the ninth China International Import Expo in Shanghai. Thanks to zero-tariff treatment, Kenya's prized green exports are rolling into China easier...

Continue Reading
Sands China Fosters Cultural Ties with Macau Concert

Updated Category News Views 32

Macao's Wind Music Legacy Hits a High Note Who would've thought—a gathering of 550 musicians from Macao SAR and France could ignite such a dynamic cross-cultural exchange? Celebrating three decades of musical milestones, the Macau Band Directors Association (MBDA) didn't just throw any old concert but a spectacle that took international collaboration to an upscale...

Continue Reading
Yeastar 2026 Summit: AI, Growth, and Global Vision

Updated Category News Views 32

Reflecting on Two Decades of Innovation Yeastar's 20th anniversary summit in Xiamen was no ordinary gathering. It wasn't just about handshakes and business cards. Nope, it was a celebration intertwined with a deeper vision of growth and influence in the UCaaS space that Yeastar has carved out for itself over the years. Here's a company that's been plotting its course for...

Continue Reading
Fake Profiles Dominate Daters' Trust Issues Today

Updated Category News Views 188

Trust Erosion in the Digital Dating Arena When it comes to modern dating, we're not talking hearts and flowers anymore; it's more like an elaborate game of detective work. A recent survey from Stud or Dud highlights the harsh reality that blind trust in digital dating profiles is about as outdated as sending a singing telegram. Almost half of the respondents pinned fake...

Continue Reading
Angels on Call: Leading Dementia Care Recognition

Updated Category News Views 66

A Milestone in Dementia Care Excellence Angels on Call Homecare has done what no other U.S. homecare provider seems to have managed—nab recognition from the Alzheimer's Association Curriculum Review while also holding the Purple Flag accreditation. That's a combo meal of accolades in the world of dementia care, and it speaks volumes about their commitment to top-notch...

Continue Reading

Top 5 Most Recently Viewed Articles

Stardock Unleashes New Elemental DLC: Treasures Awaken

Updated Category News Views 46

Stirring the Magic Cauldron Again Alright, strap in, gaming troupe! Stardock Entertainment just threw another log on the fire of their game franchise Elemental: Reforged. "Treasures of the Magi," their latest DLC, is rolling out at the appealing tag of $8.99. But before you toss it aside as just another add-on, know this: it’s more than just another costumed...

Continue Reading
Funny Coffee Mugs Introduces 500 Unique Designs for Fans

Updated Category News Views 267

Funny Coffee Mugs Expands Product Offerings with New Designs Funny Coffee Cups and Mugs, an innovative online retailer specializing in quirky and fun drinkware, has recently increased its product range to include over 500 new designs. This expansion is designed to cater to the diverse tastes of coffee lovers, tea enthusiasts, and those who simply enjoy a good laugh with...

Continue Reading
Canada Goose Faces Investigation Over Tariff Windfall

Updated Category News Views 23

Unpacking the Canada Goose Controversy The luxury outerwear brand Canada Goose is currently weathering a storm of scrutiny tied to how it handled tariffs during a particularly convoluted spell in trade policy. Law firm Edelson Lechtzin LLP has zeroed in on allegations that the company inflated its American pricing to cover tariff costs, never lowering those prices or...

Continue Reading
Major Ruling Forces Apple to Compensate Masimo $634 Million

Updated Category News Views 185

Apple Inc. Faces Significant Patent Ruling A federal jury in California has ruled that Apple Inc. (NASDAQ: AAPL) must pay Masimo Corporation (NASDAQ: MASI) a substantial sum of $634 million for infringing a patent related to blood-oxygen reading technology. Highlights of the Jury's Decision The jury found Apple guilty, which prompted a robust statement from Masimo,...

Continue Reading
Positive Trends in Greek Stocks and Market Highlights

Updated Category News Views 412

Market Overview: Greek Stocks on the Rise The Greek stock market experienced a positive turn recently, showcasing a trend of growth that has investors intrigued. Gainful performances in sectors like construction, banking, and travel have propelled the market higher, contributing to a more optimistic economic outlook. Athens General Composite Index Improves Recently, the...

Continue Reading