The Dixie Group Reports Financial Results for 2023
- The Dixie Group, Inc. reported an operating income of $5.0 million for 2023.
- Gross profit margin improved to 26.7% in 2023 from 17.7% in 2022.
- Net sales for the year were $276.3 million, down 9% year over year.
- The Company reduced costs by $35 million in 2023 and plans to cut $10 million more in 2024.
- Dixie Group aims to start extruding nylon in 2024 to lower costs and mitigate raw material disruptions.
- Net sales for the year 2023 decreased by 9% compared to 2022.
- The Company's net loss in 2023 was $2.7 million, or $0.18 per diluted share.
- Interest expense increased to $7.2 million in 2023 from $5.3 million in 2022 due to higher comparative interest rates.
Insights
Examining The Dixie Group's financial results reveals a notable improvement in operating income, transitioning from a significant loss in the previous year to a positive figure in 2023. This indicates a successful turnaround in operations, likely driven by strategic cost reductions and efficiency improvements. The increase in gross profit margin by nine percentage points is particularly impressive, signifying enhanced profitability per unit of sales. This could be attributed to the company's consolidation efforts and a decrease in raw material costs.
However, the reduction in net sales by 9% year over year, even when adjusted for the extra week in 2022, suggests that the company is not immune to broader economic pressures, such as high interest rates affecting the housing and remodeling markets. The company's ability to reduce debt by 16.9% and its successful sale and leaseback transaction are positive indicators of financial stability and liquidity management. These actions, coupled with a reported alignment of order entries with the previous year, may reassure investors of the company's resilience and potential for sustained performance amidst economic challenges.
The Dixie Group's performance in the context of the floorcovering industry indicates a strategic gain in market share despite a general downturn in the industry. This could reflect the company's competitive positioning and the effectiveness of its growth initiatives, such as new product launches and brand marketing campaigns. The mention of operational improvements and planned cost reductions for 2024 suggests a proactive approach to maintaining competitiveness.
Investing in extrusion capabilities for nylon production is a strategic move that may reduce reliance on external suppliers and mitigate future raw material disruptions. This vertical integration could lead to further cost savings and supply chain stability, which are crucial in an industry susceptible to fluctuations in raw material availability and pricing.
The Dixie Group's financial results must be contextualized within the broader economic landscape. High interest rates have a dual impact on the floorcovering industry: they reduce consumer spending on housing and remodeling and they increase the cost of borrowing for companies. The Dixie Group's ability to improve gross margins despite these headwinds is commendable. However, the increase in interest expense reflects the challenging interest rate environment.
While the company has managed to decrease its debt levels, the economic outlook will continue to play a significant role in its operational success. The resilience shown by The Dixie Group in terms of gross profit margin improvement and debt reduction may position it favorably for when the economic environment improves, potentially leading to an upturn in consumer spending and industry sales.
DALTON, GA / ACCESSWIRE / March 8, 2024 / The Dixie Group, Inc. (NASDAQ:DXYN) today reported financial results for the year ended December 30, 2023.
- The Company announced an operating income of
$5.0 million for fiscal year 2023 - Gross profit margin in the fiscal year 2023 was
26.7% compared to17.7% in the fiscal year 2022 - Year over year net sales in the fourth quarter were up
1.8% on an average weekly basis
For the year 2023, net sales for the Company were
In the fourth quarter of 2023, net sales were
Commenting on the results, Daniel K. Frierson, Chairman and Chief Executive Officer, said, "Adjusted for the additional week in our prior fiscal year, weekly sales in the fourth quarter were approximately
During 2023, we were able to reduce costs over
As part of our 2024 cost improvement initiatives, and in order to better position our company strategically, we will start operations on our own extrusion of nylon in the first quarter of 2024. This action will moderate the impact of any disruptions of raw materials in the future and lower our costs.
In addition to lowering costs and improving operations throughout 2023, we also continued to invest in our growth initiatives which have enabled us to gain market share. As we enter 2024, we are pleased with the growth we are seeing from our key growth initiatives and the resilience of our nylon carpet category. We have new product launches planned in each product segment, and we will be celebrating the 50th anniversary of our Fabrica brand with a strong marketing and promotional campaign. Our early 2024 market season has been very good with strong levels of attendance and great reception to our new products.
Throughout 2023, we took numerous actions to drive sales and improve our operations while continuing to invest in our future through growth initiatives and extrusion capabilities. We believe the actions we have taken have better prepared us for the current difficult economic environment and have positioned us for the eventual upturn which we will inevitably experience. To date, for the first quarter of 2024, order entry is closely in line with orders in the same period a year ago." Frierson concluded.
The Company's fiscal year 2023 consisted of 52 weeks as compared to fiscal year 2022 consisting of 53 weeks. Net sales in fiscal year 2023 were
The gross margin in 2023 was
The Company's net receivables decreased
In December of 2023, the Company completed a sale and leaseback of its distribution facility in Adairsville, Georgia. The sale resulted in a gain of over
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 (loss) per share)
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 30, | December 31, | December 30, | December 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
NET SALES | $ | 66,674 | $ | 70,535 | $ | 276,343 | $ | 303,570 | ||||||||
Cost of sales | 48,644 | 60,680 | 202,464 | 249,946 | ||||||||||||
GROSS PROFIT | 18,030 | 9,855 | 73,879 | 53,624 | ||||||||||||
Selling and administrative expenses | 19,941 | 22,082 | 74,136 | 76,957 | ||||||||||||
Other operating (income) expense, net | (8,859 | ) | (20 | ) | (9,172 | ) | 239 | |||||||||
Facility consolidation and severance expenses, net | 1,547 | 3,616 | 3,867 | 4,584 | ||||||||||||
OPERATING INCOME (LOSS) | 5,401 | (15,823 | ) | 5,048 | (28,156 | ) | ||||||||||
Interest expense | 1,714 | 1,842 | 7,217 | 5,340 | ||||||||||||
Other (income) expense, net | 203 | 9 | (431 | ) | 6 | |||||||||||
Income (loss) from continuing operations before taxes | 3,484 | (17,674 | ) | (1,738 | ) | (33,502 | ) | |||||||||
Income tax provision (benefit) | 54 | 7 | 214 | (87 | ) | |||||||||||
Income (loss) from continuing operations | 3,430 | (17,681 | ) | (1,952 | ) | (33,415 | ) | |||||||||
Loss from discontinued operations, net of tax | (270 | ) | (773 | ) | (766 | ) | (1,664 | ) | ||||||||
NET INCOME(LOSS) | $ | 3,160 | $ | (18,454 | ) | $ | (2,718 | ) | $ | (35,079 | ) | |||||
BASIC EARNINGS (LOSS)PER SHARE: Continuing operations | $ | 0.23 | $ | (1.19 | ) | $ | (0.13 | ) | $ | (2.21 | ) | |||||
Discontinued operations | (0.02 | ) | (0.05 | ) | (0.05 | ) | (0.11 | ) | ||||||||
Net income (loss) | $ | 0.21 | $ | (1.24 | ) | $ | (0.18 | ) | $ | (2.32 | ) | |||||
DILUTED EARNINGS (LOSS)PER SHARE: Continuing operations | $ | 0.22 | $ | (1.19 | ) | $ | (0.13 | ) | $ | (2.21 | ) | |||||
Discontinued operations | (0.02 | ) | (0.05 | ) | (0.05 | ) | (0.11 | ) | ||||||||
Net income (loss) | $ | 0.20 | $ | (1.24 | ) | $ | (0.18 | ) | $ | (2.32 | ) | |||||
Weighted-average shares outstanding: | ||||||||||||||||
Basic | 14,824 | 14,914 | 14,783 | 15,121 | ||||||||||||
Diluted | 14,954 | 14,914 | 14,783 | 15,121 | ||||||||||||
THE DIXIE GROUP, INC.
Consolidated Condensed Balance Sheets
(in thousands)
| December 30, 2023 | December 31, 2022 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 79 | $ | 363 | ||||
Receivables, net | 23,686 | 25,009 | ||||||
Inventories, net | 76,211 | 83,699 | ||||||
Prepaid and other current assets | 12,154 | 10,167 | ||||||
Current assets of discontinued operations | 265 | 641 | ||||||
Total Current Assets | 112,395 | 119,879 | ||||||
Property, Plant and Equipment, Net | 31,368 | 44,916 | ||||||
Operating Lease Right-Of-Use Assets | 28,962 | 20,617 | ||||||
Other Assets | 17,130 | 15,982 | ||||||
Long-Term Assets of Discontinued Operations | 1,314 | 1,552 | ||||||
TOTAL ASSETS | $ | 191,169 | $ | 202,946 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 13,935 | $ | 14,205 | ||||
Accrued expenses | 16,598 | 17,667 | ||||||
Current portion of long-term debt | 4,230 | 4,573 | ||||||
Current portion of operating lease liabilities | 3,654 | 2,774 | ||||||
Current liabilities of discontinued operations | 1,137 | 2,447 | ||||||
Total Current Liabilities | 39,554 | 41,666 | ||||||
Long-Term Debt, Net | 78,290 | 94,725 | ||||||
Operating Lease Liabilities | 25,907 | 18,802 | ||||||
Other Long-Term Liabilities | 14,591 | 12,480 | ||||||
Long-Term Liabilities of Discontinued Operations | 3,536 | 3,759 | ||||||
Stockholders' Equity | 29,291 | 31,514 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 191,169 | $ | 202,946 | ||||
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 30, 2023 | December 31, 2022 | Increase (Decrease)% | December 30, 2023 | December 31, 2022 | Increase (Decrease) | % | |||||||||||||||
Net Sales as Reported | $ | 66,674 | $ | 70,535 | $ | (3,861) (5.5)% | $ | 276,343 | $ | 303,570 | $ | (27,227 | ) | (9.0) | % | ||||||
Number of Weeks | 13 | 14 | 52 | 53 | |||||||||||||||||
Adjusted WeeklyBasis (1) | $ | 5,129 | $ | 5,038 | $ | 91 | $ | 5,314 | $ | 5,728 | $ | (414 | ) | (7.2) | % | ||||||
(1) The Company defines Adjusted WeeklyBasis as net sales divided by number of weeks in the respective period.
CONTACT:
Allen Danzey
Chief Financial Officer
706-876-5865
allen.danzey@dixiegroup.com
SOURCE: The Dixie Group
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