Dixie’s 2Q Earnings Up, Beat Estimates

Chattanooga, TN, July 31, 2007--The Dixie Group in the second quarter reported net income of $2.44 million, or $0.19 per diluted share, compared with net income of $944,000, or $0.07 per diluted share, for the second quarter of 2006.

Analysts were anticipating EPS of $0.16,

Sales for the quarter were $84.4 million down 4% from the year-earlier quarter.

For the first six months of 2007, net income was $2.61 million or $0.20 per diluted share, compared with net income of $1.78 million, or $0.14 per diluted share, in the 2006 period.

Sales for the first six months of 2007 were $158.89 million, down 5% from the prior-year period.

Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, "Our second quarter results reflected a 5% decline in sales of carpet products, compared with the year earlier period; however, our sales continued to outperform the carpet industry, where sales were off almost 8%.”

He said that despite lower revenue and higher raw material costs, gross margins were 31.1%, the highest since the second quarter of 2005. Margin improvement  reflected a better product mix, improved production quality and manufacturing efficiencies. Raw material costs increased in early June of this year, and the company raised prices.

Frierson noted that sales of new modular/carpet tile products grew over 35% from the first quarter of 2007, but were below company expectations. 

"The outlook for our commercial business continues to be favorable," he said. "Sales in this business segment increased over 7% in the second quarter verses 2% for the industry and our year-earlier sales. Order entry comparisons in July indicate that this business is strengthening."