Dixie Sales Down 5.7% in Q2
Dalton, GA, August 5, 2019-The Dixie Group reported a Q2 2019 net sales loss of 5.7% year over year (YOY). For Q2 2019, the company had a loss from continuing operations of $1,216,000, compared to a loss of $1,815,000 in Q2 2018.
Commercial business in Q2 2019 was down 13.7%. Residential sales were down 2.6% for Q2 2019, while residential soft surface products were down 4.1% (the company estimates its segment of the soft surface market was down high single digits). Residential hard surface sales were up 48%.
Unusual expenses during the period included $1.9 million in restructuring related expenses including a reserve for post termination worker’s compensation expenses related to the closure of our west coast facilities, facility consolidation expenses, and inventory write downs for commercial white dyeable products. The company incurred, through Q2 2019, approximately $17.4 million in costs to implement the Profit Improvement Plan including write downs of related inventory, goodwill and other assets. The company estimates the total costs of the Plan and related costs, once complete by the end of 2019, to be $18.2 million. The total cost reductions of these restructuring efforts, once fully implemented, is approximately $18.7 million annually, as compared to the company’s cost structure in 2017 when it began the process.
Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, “We began our Profit Improvement Plan in late 2017. This Plan included a review of all of our business processes though the primary focus was on the restructuring of our commercial business. Subsequent to our starting this plan, Invista made the decision to exit the production of most piece dyeable yarns for the commercial market. This decision, therefore, caused us to expand the commercial restructuring to be a complete integration of all aspects of the business.
“As a result of this action, we have completed the combination of our Atlas and Masland business into one commercial business, now known as Atlas | Masland Contract. In order to accomplish the cost reductions and combine our commercial business, we have expensed over $17 million of restructuring related charges to date which have been reflected in our statements of operations since 2017.
“… without these costs in the second quarter, the Company was profitable. Costs related to the plan are nearly complete and will be at a much lower level in the future. We look forward to completing the Profit Improvement Plan in the second half of 2019.”