Dixie Group Reports Sales Decrease w/ Improved Earnings for Q4 & FY '19

Dalton, GA, March 6, 2020-The Dixie Group, which is celebrating 100 years of business in 2020, reported a YOY net sales loss of 8.2% for Q4 2019; the company had a net income of $26,681 in Q4 2019, compared to a net loss of $12,765 in Q4 2018.

For the year, net sales fell 7.5% YOY; the company had a net income of $21,349 in FY 2019, compared to a net loss of $15,816 in FY 2018.

Said the company, “In the fourth quarter of 2019, we sold our Susan Street facility and signed a lease with options for a period of up to twenty years. The gain on the sale was approximately $25 million, or over $1.50 per share. Our senior credit facility was paid down by $36 million as a result of the sale. Our total debt reduction from the third quarter of 2018 through the end of 2019 has been over $50 million. Our total stockholders' equity increased 50% over the third quarter of 2019.

Says Daniel Frierson, CEO, “The residential soft surface business was impacted by the weakness in soft floorcovering for the industry. The residential soft surface market was down high-single digits in 2019 relative to 2018. We also saw substantial changes in the mass merchant channel as these retailers shifted more floor space to hard surface products…

“Despite the decline in our mass merchant sales, we outpaced the market in the specialty retail segment, where our soft surface sales declined low to mid single digits and our hard surface sales grew by approximately 50%...

“We have continued to focus on growing our luxury vinyl flooring business. With the successful launch of Trucor and Trucor Prime we are poised to continue the substantial growth we achieved in 2019. We are growing the number of items in our Trucor family of products by over 40%...

“In 2019, we completed the realignment of our commercial business. Our commercial soft surface sales for the year were down over 12% while the commercial soft floorcovering market, we believe, was down marginally…

“We completed our Profit Improvement Plan in 2019. Since the beginning of 2017, this plan cost over $18 million to implement and generated over $18 million in annual savings relative to our 2017 cost structure. As part of this plan we have shut down or realigned five plants.Throughout the implementation of this plan our cost of quality has been reduced by over 25%. Our headcount has been reduced by 20% since the beginning of 2018. The combination of the sale of our Susan Street facility and reduction in our working capital has reduced our debt by over $50 million. The reduction in working capital has come about from a focused just in time planning and scheduling system. In addition to the Profit Improvement Plan, in 2020 we anticipate cost reductions, including changes in our medical plans, raw material reductions and savings in processing of over $5 million per year as we continue to work to restore our margins to acceptable levels.”

The market reponded favorably overnight with a 32% increase in share price.