The Dixie Group Reports Higher Sales
Chattanooga, TN, Apr. 29--The Dixie Group, Inc. today reported income from continuing operations of $1,976,000, or $0.16 per diluted share, for the first quarter ended March 27, 2004, compared with income from continuing operations of $877,000, or $0.07 per diluted share, for the first quarter of 2003. Sales for the first quarter of 2004 were $64.4 million, up 24% from sales of $51.9 million in the year-earlier quarter.
Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, "The first quarter results reflect strong sales gains in all of our markets, including a 31% increase in revenue from residential carpet products.
Approximately half of our total revenue growth was at Fabrica and Masland, where sales of residential carpet were up 15% and commercial carpet sales increased over 9%. Our Dixie Home brand continued to grow with sales running at an annualized rate of approximately $29.0 million in March 2004. This growth initiative reduced our results by $2.2 million in the first quarter of 2004, reflecting a $700,000 improvement, compared with the preceding quarter.
"Raw material, energy, medical and other costs increased significantly during the first quarter. We believe the effect of the higher costs was more than offset by a LIFO inventory liquidation gain of approximately $1.0 million and manufacturing efficiencies. In response to the higher costs, we, along with the rest of the industry, are increasing the selling prices of our products. We began implementing these price increases late in the first quarter, and the impact should be felt in the second quarter and subsequent periods. We are optimistic that our pricing strategy will offset the cost increases we are experiencing.
"We believe the revenue growth and improved order entry we are seeing reflect the positive response to new products at Fabrica and Masland, continued acceptance of the Dixie Home brand, and growing consumer confidence, as well as a rebound of the soft floorcovering industry from the depressed levels in the first half of 2003. 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," Frierson concluded.
Income from the disposal of discontinued operations, including the previously announced sale of a spun yarn facility in Ringgold, GA was $79,000, or $0.01 per diluted share. Results of discontinued operations reflected a loss of $338,000, or $0.03 per diluted share, in the first quarter of 2004, compared with a loss of $1,213,000, or $0.10 per diluted share, in the first quarter of 2003. Including discontinued operations, the company reported net income of $1,717,000, or $0.14 per diluted share, in the first quarter of 2004 compared with a net loss of $336,000, or $0.03 per diluted share, in the first quarter of 2003. The assets sold in fiscal 2004 were classified as assets held for sale on the company's balance sheets at December 27, 2003. Financial results for the operations sold have been classified as discontinued operations for all periods presented.
In April 2004, The Dixie Group amended and restated its senior credit facility, which now provides revolving credit of up to $40.0 million through May 11, 2007, and a $20.0 million term-loan. The amended credit facility primarily reduced interest rates and certain administrative costs, lowered term-debt amortization requirements, and modified financial covenants in recognition of the company's improved capital structure.
Related Topics:Masland Carpets & Rugs, The Dixie Group