Dixie’s 2Q Earnings Beat Estimates
Chattanooga, TN, July 28--The Dixie Group, Inc.reported second quarter income from continuing operations of $3,486,000, or $0.27 per diluted share, compared with income from continuing operations of $1,889,000, or $0.16 per diluted share, for the second quarter of 2003.
The company beat consensus earnings per share estimates of $0.23.
Sales for the second quarter of 2004 were $70,818,000, up 20% from sales of $58,857,000 in the year-earlier quarter.
For the first six months of fiscal 2004, income from continuing operations was $5,463,000, or $0.43 per diluted share, compared with income from continuing operations of $2,766,000, or $0.24 per diluted share, for the first half of 2003. Sales for the first six months of 2004 were $135,221,000, up 22% from sales of $110,742,000 in the prior-year period.
Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, "Our 2004 results significantly improved due to strong revenue growth, lower manufacturing costs and reduced interest expense. The increase in revenues was driven by sales of our residential carpet products, which reflected year-over-year growth of 28% and 30%, respectively, for the second quarter and first six months of 2004.
"Our commercial carpet sales rose over 8% for the second quarter and first six months of 2004. Half of our total growth came from our Dixie Home initiative and the other half occurred at Fabrica and Masland.
"Our new Dixie Home business continued to be robust, with second quarter sales up 38% from the first quarter levels. While the infrastructure and start-up costs of this growth initiative have reduced our bottom line results, profitability of the line continues to improve. We expect that Dixie Home will drive sales growth and enhance our future profitability, and are optimistic that the brand will be a positive contributor to our results by year-end 2004.
"Raw material, energy and other costs were higher in the second quarter 2004. These increases were more than offset by the effect of higher sales volume, increased selling prices, improved manufacturing efficiencies and the effect of a small LIFO inventory liquidation. We expect additional raw material cost increases in the last half of this year; however, full implementation of the selling price increases initiated in the second quarter and those scheduled for third quarter should offset the higher costs.
"Sales and order entries remained very strong during the first four weeks of July, reflecting positive response to the new products we have introduced during the past several years, strengthening consumer confidence, and a growing economy.
"We have doubled the rate of new residential product introductions and added a new line of commercial products at Masland, introduced our Dixie Home brand and expanded its product line, and premiered new, differentiated products at Fabrica.
"Although year-over-year sales comparisons will be more difficult in the second half of the year, we remain optimistic that our revenue will grow in the range of 15% to 20% for 2004 as a whole," Frierson concluded.
Results of discontinued operations reflected a loss of $38,000, or less than $0.01 per diluted share, for the second quarter of 2004, compared with a loss of $492,000, or $0.04 per diluted share, for the second quarter of 2003.
Related Topics:Masland Carpets & Rugs, The Dixie Group