The Dixie Group Reports Financial Results for 2020
The Dixie Group reported fiscal results for 2020, highlighting a net loss of $9.2 million, a decline from a profit of $15.3 million in 2019. Net sales fell to $315.9 million from $374.6 million, influenced by the COVID-19 pandemic. Despite these challenges, the company improved operational efficiencies, raising gross profit margins to 24.2% from 23.0%. Debt reduction totaled $10 million for the year, with a total of $60 million over thirty months. A new $75 million line of credit and $25 million in loans were secured, providing a stronger balance sheet going into 2021.
- Improved gross profit margin to 24.2% from 23.0% year-over-year.
- Reduced debt by $10 million in 2020, totaling $60 million over the last 30 months.
- Secured new $75 million line of credit, enhancing liquidity.
- Net loss of $9.2 million in 2020 compared to a net income of $15.3 million in 2019.
- Net sales dropped to $315.9 million from $374.6 million, a decline attributed to COVID-19.
- Commercial sales were down more than 35% from the previous year.
DALTON, GA / ACCESSWIRE / March 4, 2021 / The Dixie Group, Inc. (NASDAQ:DXYN) today reported financial results for the year ended December 26, 2020.
Despite the unprecedented challenges faced in the COVID-19 pandemic affected year of 2020, we were able to improve our operations, and further strengthen our balance sheet to better position our Company as we entered 2021 with momentum and optimism.
- We reduced debt by
$10 million in 2020 bringing our total debt reduction to$60 million over the last thirty months. - We entered into a new
$75 million line of credit and two long term loans totaling$25 million . These transactions, along with cost reductions and operating efficiencies in 2020, allowed us to end the year with borrowing availability of$43.3 million under our new Senior Revolving Credit Facility. - Operational improvements and cost reductions generated higher gross profit margins. Our gross profit margin for the year ended December 26, 2020 was
24.2% compared with23.0% in the year ended December 28, 2019.
For the year 2020, net sales for the Company were
Commenting on the results, Daniel K. Frierson, Chairman and Chief Executive Officer, said, "2020 was a year of unprecedented circumstances and a once-in-a-century event - the COVID-19 pandemic. Not knowing where the COVID-19 pandemic would lead, we implemented our continuity plan to maintain the health and safety of our associates, preserve cash and minimize the impact on our customers. To minimize and prevent cases of COVID-19 exposure in our facilities, we have taken measures aimed at sanitation and safety, including large scale COVID-19 testing, mandatory temperature checks prior to starting work, requirements to wear masks when unable to maintain social distancing and deep cleaning and sanitation. We limited travel for our associates, implemented work from home options where appropriate, and limited physical contact with our customers. We reduced our running schedules in our facilities to below demand, to maintain order flow to our customers while simultaneously reducing inventories to generate cash and align them with our lower customer demand. In order to preserve cash, we placed a large percentage of our associates either on rotating layoff or furlough. We eliminated or deferred planned spending of
While we are still assessing the long term impacts of the COVID-19 crisis on our markets and operating practices, we are encouraged by the improvement in sales. The abrupt decline of over
We have continued to focus on growing our luxury vinyl flooring business. Our hard surface programs grew significantly for the year, with the TRUCOR™ and Fabrica Wood programs pacing well ahead of the hard surface market. We continued to invest in product innovation with our TRUCOR™ PRIME XL/XXL, the widest, longest rigid core plank on the market, and TRUCOR™ Tile IGT (Integrated Grout Technology), a tile visual with the grout line engineered into the locking system. We also invested in talent, with the addition of eight sales people dedicated to hard surfaces in key markets across the country, and we will be adding more dedicated hard surface sales people in 2021. We will continue expanding our product offering to further penetrate this market segment. Our latest innovation, TRUCOR™ 3DP, utilizes digital printing technology to deliver sharp, realistic visuals with virtually no pattern repeat. We will launch TRUCOR™ 3DP in wood plank and stone visuals in the second quarter of 2021. We will also expand our TRUCOR™ PRIME XL/XXL program with 12 new visuals. In our Fabrica Wood program, we have developed a new display system to accommodate an expansion of this program with new colors, board sizes, and price points. We expect to double our Fabrica Wood placements in the market in 2021.
Our commercial business and the commercial market continues to be adversely impacted by COVID-19. Sales for the year were down more than
The COVID-19 pandemic in 2020 presented challenges in ways The Dixie Group has not experienced in its history of over 100 years. We responded first with regard to the safety of our employees, and second to protect the operations and financial strength of our Company while continuing to service our customers. We are proud to have emerged as a stronger Company. We are proud of our history and heritage, and we are excited about starting the next 100 years as a Company," Frierson concluded.
Through cost cutting efforts and operational improvements we were able to improve our gross profit margin to
Our receivables were slightly higher as compared to the end of the year in 2019. The
Our floorcovering sales for the first 9 weeks of the quarter are down low single digits versus the same period in 2020, but orders are up mid-single digits. Our residential sales and orders are up double digits and commercial orders, on a weekly basis, are better than the second, third and fourth quarters of last year.
A listen-only Internet simulcast and replay of The Dixie Group's conference call may be accessed with appropriate software at the Company's website at www.thedixiegroup.com. The simulcast will begin at approximately 10:00 a.m. Eastern Time on March 4, 2021. 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) 407-0989 and entering 13714460 at least 10 minutes before the appointed time. A digital replay of the
call will be available for approximately two weeks after the call by dialing (877) 660-6853 and entering 13714460. 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, AtlasMasland 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, availability of raw material and transportation costs related to petroleum prices, the cost and availability of capital, integration of acquisitions, ability to attract, develop and retain qualified personnel 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)
Year Ended | ||||||||||||
December 26, 2020 | December 28, 2019 | December 29, 2018 | ||||||||||
NET SALES | $ | 315,939 | $ | 374,582 | $ | 405,033 | ||||||
Cost of sales | 239,483 | 288,377 | 318,042 | |||||||||
GROSS PROFIT | 76,456 | 86,205 | 86,991 | |||||||||
Selling and administrative expenses | 75,731 | 83,825 | 92,473 | |||||||||
Other operating (income) expense, net | (108 | ) | (23,988 | ) | 458 | |||||||
Facility consolidation and severance expenses, net | 3,752 | 5,019 | 3,167 | |||||||||
Impairment of assets | - | - | 6,709 | |||||||||
OPERATING INCOME (LOSS) | (2,919 | ) | 21,349 | (15,816 | ) | |||||||
Interest expense | 5,803 | 6,444 | 6,491 | |||||||||
Other (income) expense, net | 678 | (57 | ) | 3 | ||||||||
Income (loss) from continuing operations before taxes | (9,400 | ) | 14,962 | (22,310 | ) | |||||||
Income tax provision (benefit) | (312 | ) | (657 | ) | (831 | ) | ||||||
Income (loss) from continuing operations | (9,088 | ) | 15,619 | (21,479 | ) | |||||||
Income (loss) from discontinued operations, net of tax | (120 | ) | (348 | ) | 95 | |||||||
NET INCOME (LOSS) | $ | (9,208 | ) | $ | 15,271 | $ | (21,384 | ) | ||||
BASIC EARNINGS (LOSS) PER SHARE: | ||||||||||||
Continuing operations | $ | (0.59 | ) | $ | 0.96 | $ | (1.36 | ) | ||||
Discontinued operations | (0.01 | ) | (0.02 | ) | 0.01 | |||||||
Net income (loss) | $ | (0.60 | ) | $ | 0.94 | $ | (1.35 | ) | ||||
DILUTED EARNINGS (LOSS) PER SHARE: | ||||||||||||
Continuing operations | $ | (0.59 | ) | $ | 0.95 | $ | (1.36 | ) | ||||
Discontinued operations | (0.01 | ) | (0.02 | ) | 0.01 | |||||||
Net income (loss) | $ | (0.60 | ) | $ | 0.93 | $ | (1.35 | ) | ||||
Weighted-average shares outstanding: | ||||||||||||
Basic | 15,316 | 15,822 | 15,764 | |||||||||
Diluted | 15,316 | 15,926 | 15,764 | |||||||||
THE DIXIE GROUP, INC.
Consolidated Condensed Balance Sheets
(in thousands)
December 26, 2020 | December 28, 2019 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 1,920 | $ | 769 | ||||
Receivables, net | 37,716 | 37,138 | ||||||
Inventories, net | 85,399 | 95,509 | ||||||
Prepaid expenses | 8,296 | 6,179 | ||||||
Total Current Assets | 133,331 | 139,595 | ||||||
Property, Plant and Equipment, Net | 57,904 | 65,442 | ||||||
Operating Lease Right-Of-Use Assets | 22,074 | 24,835 | ||||||
Other Assets | 19,559 | 17,787 | ||||||
TOTAL ASSETS | $ | 232,868 | $ | 247,659 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 19,058 | $ | 16,084 | ||||
Accrued expenses | 25,965 | 25,418 | ||||||
Current portion of long-term debt | 6,116 | 6,684 | ||||||
Current portion of operating lease liabilities | 3,323 | 3,172 | ||||||
Total Current Liabilities | 54,462 | 51,358 | ||||||
Long-Term Debt | 72,041 | 81,667 | ||||||
Operating Lease Liabilities | 19,404 | 22,123 | ||||||
Other Long-Term Liabilities | 23,170 | 19,300 | ||||||
Stockholders' Equity | 63,791 | 73,211 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 232,868 | $ | 247,659 |
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 prior period results, 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
Three Months Ended | Twelve Months Ended | |||||||
December 26, 2020 | December 26, 2020 | |||||||
Net loss as reported | $ | (318 | ) | $ | (9,208 | ) | ||
Income (loss) from discontinued operations | 83 | (120 | ) | |||||
Loss from continuing operations | (401 | ) | (9,088 | ) | ||||
Facility consolidation and severance expenses, net | 986 | 1,382 | ||||||
COVID-19 Recovery Plan | 981 | 2,370 | ||||||
Other COVID-19 Related Expenses[1] | (1,596 | ) | 2,117 | |||||
Expenses Related to Major Financing During the Period[2] | 744 | 744 | ||||||
Tax effect[3] | (342 | ) | (342 | ) | ||||
Expenses Related to Restructuring Plans | 1,967 | $ | 3,752 | |||||
Income/(Loss) | $ | 372 | $ | (2,817 | ) | |||
Diluted shares | 15,441 | 15,316 | ||||||
Adjusted income(loss) per diluted share | $ | 0.02 | $ | (0.18 | ) | |||
Further non-GAAP reconciliation data are available at www.thedixiegroup.com under the Investor Relations section.
[1] Due to the COVID-19 pandemic the Company paid certain non-service wages and related health insurance charges for the safety, welfare and retention of our employees. The expenses were incurred through the second, third and fourth quarter of 2020 and were partially offset by the employee retention credit allowed under the CARES Act.
[2] During the fourth quarter, as part of the termination of a certain derivative contract and financing agreements, the Company fully expensed certain accrued amounts. These expenses would have normally been incurred over a prolonged period.
[3] The Company recognized a tax benefit in the fourth quarter related to the termination of the certain derivative contract noted in footnote two. Otherwise the company has a full valuation allowance against its deferred tax balances other than small state tax amounts.
SOURCE: The Dixie Group
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