The Dixie Group Reports Results for Second Quarter of 2022
The Dixie Group (NASDAQ:DXYN) reported second quarter 2022 results, revealing net sales of $83.7 million, down 7% compared to the previous year, with a net loss of $4.5 million or $0.29 per diluted share. For the six months ending June 25, 2022, net sales decreased by 0.9% to $161.3 million, while net loss reached $7.8 million. The company plans to establish a joint venture for luxury vinyl flooring production. Despite growth in some brands, the loss of a major customer contributed to lower sales. Gross profit margins declined due to increased raw material and freight costs.
- Formation of a joint venture for luxury vinyl flooring to enhance production capabilities.
- Growth in Fabrica, Masland, and TRUCOR brands despite overall sales decline.
- Launch of new decorative segment programs with 30 new styles and updated merchandising.
- Net sales decreased 7% year-over-year in Q2 2022.
- Net loss of $4.5 million in Q2 2022 compared to net income of $3.3 million in Q2 2021.
- Significant impact on gross margins due to rising costs from primary raw material supplier and increased freight charges.
All financial comparisons below are to the prior year second quarter, as adjusted for discontinued operations, unless stated otherwise.
DALTON, GA / ACCESSWIRE / August 15, 2022 / The Dixie Group, Inc. (NASDAQ:DXYN) reported financial results for the quarter ended June 25, 2022. For the second quarter of 2022, the Company had net sales from continuing operations of
Commenting on the quarter, Daniel K. Frierson, Chairman and Chief Executive Officer, said, "We are excited to announce our formation of a joint venture to begin production of luxury vinyl flooring within our manufacturing plant in Atmore Alabama. This domestic production will enable us to better serve our customers and more quickly respond to market changes.
During the second quarter of 2022, our net sales decreased
Similar to the first quarter of this year, the gross margins in the second quarter of 2022 were negatively impacted by two major items. First, our cost of goods sold reflected the impact of unprecedented price increases from our primary raw material supplier, coupled with their decision to exit the business. We have identified other suppliers to replace this volume and bring our costs down in line with the market. This conversion was substantially complete at the end of the second quarter, and we expect to work through most of the remaining balance of the higher cost inventory within the third quarter. Second, margins from our sales of hard surface goods reflected the negative impact from dramatic increases in ocean freight costs. Fortunately, beginning with the end of the first quarter, these freight costs have continued to decline but remain substantially above prior year levels.
During the second quarter, we began executing the launch of our new decorative segment programs, 1866 by Masland and Décorby Fabrica. A key growth initiative for the company, this launch includes 30 new styles, a brand refresh, and updated merchandising. The new styles began hitting retail stores late in the second quarter, and more products will become available during the third quarter.
Through the second quarter, we continued to see growth in our hard surface segment. Key growth drivers were our domestically sourced SPC collection, our oversized WPC planks, and our SPC Tile programs. We have several new innovations hitting the market during the second half of the year, including TRUCOR TYMBR XL, an oversized laminate product with excellent water resistance and an AC6 scratch resistance rating. We will also launch TRUCOR Pinnacle, a new standard in oversized WPC planks at 12" wide by 90" long. And we have the TRUCOR Boardwalk collection, an SPC offering featuring clean visuals, lighter colors inspired by coastal living, and a new pillowed edge bevel. In our hardwood segment, we have 18 new SKUs in our Fabrica Fine Hardwood line including Ash species in 9.5 inch and 7 inch widths. We are also launching a new Dixie Home engineered hardwood collection with White Oak and Hickory SKUs in beautiful colors at middle of the road price points," Frierson concluded.
Our gross profit as a percentage of net sales was
The company's receivables decreased
On August 15, The Dixie Group announced board authorization to repurchase up to
In the early part of the third quarter, we have seen continued softness in the market with order entry running below prior year levels.
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 | Six Months Ended | |||||||||||||||
| June 25, 2022 | June 26, 2021 As Adjusted | June 25, 2022 | June 26, 2021 As Adjusted | |||||||||||||
NET SALES | $ | 83,698 | $ | 89,982 | $ | 161,273 | $ | 162,729 | ||||||||
Cost of sales | 67,642 | 67,416 | 130,041 | 123,290 | ||||||||||||
GROSS PROFIT | 16,056 | 22,566 | 31,232 | 39,439 | ||||||||||||
Selling and administrative expenses | 18,855 | 16,894 | 36,268 | 32,698 | ||||||||||||
Other operating (income) expense, net | 136 | 33 | 146 | 35 | ||||||||||||
Facility consolidation and severance expenses, | ||||||||||||||||
net | - | 71 | - | 96 | ||||||||||||
OPERATING INCOME (LOSS) | (2,935 | ) | 5,568 | (5,182 | ) | 6,610 | ||||||||||
Interest expense | 1,081 | 1,242 | 2,196 | 2,571 | ||||||||||||
Other income, net | - | - | (1 | ) | (1 | ) | ||||||||||
Income (Loss)from continuing operations before taxes | (4,016 | ) | 4,326 | (7,377 | ) | 4,040 | ||||||||||
Income tax provision (benefit) | 3 | 563 | (16 | ) | 535 | |||||||||||
Income (Loss) from continuing operations | (4,019 | ) | 3,763 | (7,361 | ) | 3,505 | ||||||||||
Loss from discontinued operations, net of tax | (468 | ) | (414 | ) | (483 | ) | (2,184 | ) | ||||||||
NET INCOME (LOSS) | $ | (4,487 | ) | $ | 3,349 | $ | (7,844 | ) | $ | 1,321 | ||||||
BASIC EARNINGS (LOSS)PER SHARE: | ||||||||||||||||
Continuing operations | $ | (0.26 | ) | $ | 0.24 | $ | (0.48 | ) | $ | 0.22 | ||||||
Discontinued operations | (0.03 | ) | (0.03 | ) | (0.03 | ) | (0.14 | ) | ||||||||
Net loss | $ | (0.29 | ) | $ | 0.21 | $ | (0.51 | ) | $ | 0.08 | ||||||
DILUTED EARNINGS (LOSS) PER SHARE: | ||||||||||||||||
Continuing operations | $ | (0.26 | ) | $ | 0.24 | $ | (0.48 | ) | $ | 0.22 | ||||||
Discontinued operations | (0.03 | ) | (0.03 | ) | (0.03 | ) | (0.14 | ) | ||||||||
Net loss | $ | (0.29 | ) | $ | 0.21 | $ | (0.51 | ) | $ | 0.08 | ||||||
Weighted-average shares outstanding: | ||||||||||||||||
Basic | 15,225 | 15,119 | 15,184 | 15,102 | ||||||||||||
Diluted | 15,225 | 15,249 | 15,184 | 15,232 | ||||||||||||
THE DIXIE GROUP, INC.
Consolidated Condensed Balance Sheets
(in thousands)
| June 25, 2022 | December 25, 2021 | |||||||
ASSETS | (Unaudited) | |||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 893 | $ | 1,471 | ||||
Receivables, net | 36,031 | 40,291 | ||||||
Inventories, net | 86,984 | 82,739 | ||||||
Prepaids and other current assets | 12,430 | 9,925 | ||||||
Current assets of discontinued operations | 2,480 | 5,991 | ||||||
Total Current Assets | 138,818 | 140,417 | ||||||
Property, Plant and Equipment, Net | 47,678 | 48,658 | ||||||
Operating Lease Right-Of-Use Assets | 21,038 | 22,534 | ||||||
Other Assets | 17,169 | 21,138 | ||||||
Long-term assets of discontinued operations | 2,063 | 2,752 | ||||||
TOTAL ASSETS | $ | 226,766 | $ | 235,499 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 19,246 | $ | 16,748 | ||||
Current Liabilities | ||||||||
Accounts payable | ||||||||
Accrued expenses | 21,382 | 26,214 | ||||||
Current portion of long-term debt | 1,910 | 3,361 | ||||||
Current portion of operating lease liabilities | 2,512 | 2,528 | ||||||
Current liabilities of discontinued operations | 3,337 | 5,362 | ||||||
Total Current Liabilities | 48,387 | 54,213 | ||||||
Long-Term Debt, net | 83,465 | 73,701 | ||||||
Operating Lease Liabilities | 19,460 | 20,692 | ||||||
Other Long-Term Liabilities | 12,672 | 16,030 | ||||||
Long-Term Liabilities of Discontinued Operations | 3,825 | 4,488 | ||||||
Stockholders' Equity | 58,957 | 66,375 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 226,766 | $ | 235,499 | ||||
CONTACT:
Allen Danzey
Chief Financial Officer
706-876-5865
allen.danzey@dixiegroup.com
SOURCE: The Dixie Group
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