The Dixie Group Reports 2012 Year-End Results
The Dixie Group, Inc. recently reported financial results for the fiscal year ended December 29, 2012. Net sales for fiscal 2012 were $266,372,000, up slightly versus the prior year on a non-GAAP adjusted comparable 52 week basis, as detailed on the enclosed schedule.Sales decreased 1.4% from $270,110,000 in the prior year on a fiscal basis. In 2012, we had a loss from continuing operations of $653,000, or $0.05 per diluted share, compared with income from continuing operations of $1,272,000, or $0.10 per diluted share, for the year ended December 31, 2011. The prior year included a gain of $563,000 from the favorable termination of a lease while 2012 included manufacturing realignment and Colormaster dye facility integration expenses of $1,383,000.
In the fourth quarter of 2012, the Company had sales of $71,134,000 and a loss from continuing operations of $413,000, or $0.03 per diluted share, compared with sales of $65,349,000 and a loss from continuing operations of $203,000, or $0.02 per diluted share for the fourth quarter of 2011.
Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, "The year of 2012 was a year of changes. Though 2012 was not satisfactory from a profitability standpoint, we put in place structural changes to our business to take advantage of the positive market dynamics we foresee in the future. We see a positive impact in 2013 from the rise in existing home sales we have seen in 2012 and positive momentum in the commercial business. For the year our residential products sales, again adjusted to a comparable 52 week basis, grew 4.3% while industry results were slightly positive. Our commercial business was down for the year while the industry grew in the low mid-single digits.
"Our fourth quarter sales were up 8.9% or approximately three times industry growth for the period. Of particular note, we had growth in both our residential and commercial product categories that exceeded industry growth. We had particularly strong sales in our wool and rug product segments. Our fourth quarter profitability was negatively impacted due to higher investments in new products, and acquisition and integration expenses associated with our Colormaster dyeing facility; however, we believe that these investments will continue our above-industry average sales growth into 2013.
"Over the year just completed, we have had several initiatives to expand our capabilities while improving our response to the market. We expanded our yarn facility in 2012 and are continuing that expansion into 2013. Combined, we are increasing capacity 43% over the two year period. We re-established our Eton tufting operation, accomplishing the dual objectives of simplifying our Atmore tufting facility while lowering cost and improving quality for both facilities. We purchased the Colormaster continuous dyeing facility; thereby providing an opportunity to lower our dyeing costs as we transition our products into the plant during 2013. We acquired the rug assets of a supplier to increase the supply for our popular Infinity and Rug 4.0 wool rug programs. Finally, we installed new raw material processing equipment to lower cost and improve delivery in our modular carpet tile business.
"We have new management in our commercial business and are implementing several new growth initiatives as a result. These include launching our Speak modular tile product line, which offers high styled products with a strong infusion of color play, and allows the design community to specify products on a budget without sacrificing the design aesthetic. In addition we have re-aligned and expanded our sales force to better service select commercial markets.
"In the residential market in 2013, we will build on the successful product introductions we had in 2012. We are excited about the continued success of our new Stainmaster products using TruSoft, the new standard of "soft" in the floorcovering market and SolarMax, with its inherent stain and fade resistance. In addition, we will continue to expand our product offering using our wool "permaset" process giving the designer unlimited color flexibility.
"From a financial perspective in 2012, gross margins improved slightly, despite added expenses due to the ongoing manufacturing re-alignment and integration costs associated with the Colormaster acquisition. Our capital expenditures consisted of $4 million in expenditures for normal operational needs and $9 million for the Colormaster and rug asset acquisitions. Our depreciation and amortization for 2012 was $9.4 million. For 2013, we anticipate capital expenditures of $8 million as compared to depreciation and amortization of $10 million.
"We see 2013 as a positive year of growth as we implement new initiatives both operationally and in the sales and marketing areas. We will continue to emphasize new product introductions and expanded presence on the retail floor to better position us for growth as the market improves. We are optimistic about 2013 and that this is the year in which the industry should finally gain momentum after the longest downturn we have ever experienced. As always we are dedicated to continue to supply our customers with beautiful products of the highest quality," Frierson concluded.
For the year, the Company's loss from discontinued operations was $274,000, or $0.02 per diluted share, compared with a loss from discontinued operations of $286,000, or $0.02 per diluted share, for the prior year. Including discontinued operations, the Company reported a net loss of $927,000, or $0.07 per diluted share for the year of 2012, compared with a net income of $986,000, or $0.08 per diluted share, for the year-earlier period. For the fourth quarter of 2012, the loss from discontinued operations was $2,000, or $0.00 per diluted share, compared to a loss from discontinued operations of $158,000, or $0.01 per diluted share for 2011. Including discontinued operations, the Company reported a net loss of $415,000, or $0.03 per diluted share, for the fourth quarter of 2012, compared with net loss of $361,000, or $0.03 per diluted share, for the year-earlier period.
A listen-only Internet simulcast and replay of Dixie's conference call may be accessed with appropriate software at the Company's web site or at www.earnings.com. The simulcast will begin at approximately 11:00 a.m. Eastern Time on February 20, 2013. A replay will be available approximately two hours later and will continue for approximately 30 days. If Internet access is unavailable, a listen-only telephonic conference will be available by dialing (913) 312-0827 and entering 3343568 at least ten minutes before the appointed time. A seven-day telephonic replay will be available two hours after the call ends by dialing (719) 457-0820 and entering 3343568 when prompted for the access code.