Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (November 2004)
34 slides from Dixie's investor presentation, Nov 30, 2004
Slide 1: The Dixie Group
THE DIXIE GROUP November 30, 2004 and December 1, 2004
Slide 2: Carpet and Rug Industry - $13.8 Billion
Carpet and Rug Industry - $13.8 Billion (Dollars in Billions) Area Rugs $2.4 17% Broadloom Carpet $11.4 83% 20% new residential construction, 30% commercial and 50% residential replacement
Slide 3: Broadloom Carpet Not Import Sensitive
Broadloom Carpet Not Import Sensitive Efficient scale - U. S. has approximately 50% share of world’s broadloom carpet production Service Hundreds of SKUs and numerous colors Retailers reluctant to carry inventory 24 hr. to 48 hr. delivery expected Labor cost content 7% to 11% of sales value Freight
Slide 4: Carpet vs. Traditional Textile Industry
Carpet vs. Traditional Textile Industry 20 Largest Public Textile Companies in 1980 1. Burlington (1), (3) 2. J. P. Stevens (1), (2), (3) 3. West Point (1), (3) 4. Springs (1) 5. Cone (3) 6. Cannon (2), (3) 7. UM & M (2), (3) 8. M. Lowenstein (2), (3) 9. Dan River (1), (3) 10. Collins & Aikman (1) 1
Slide 5: Broadloom Carpet Raw Material
Broadloom Carpet Raw Material 65% to 70% of cost of broadloom carpet is raw material Raw material includes fiber, yarn and backing materials which are almost 100% petroleum based Raw material prices affected by: Changes in petroleum prices Industry demand Branded vs. unbranded fiber Unbranded fiber
Slide 6: Dixie Strategic Positioning
Dixie Strategic Positioning Exited textiles and grew floorcovering business – now 100% floorcovering Eight acquisitions since 1993 Commitment to brands and upper-end market led to the sale of our North Georgia operations
Slide 7: Shaw Transaction
Shaw Transaction Sold North Georgia carpet and yarn operations to Shaw for $212 million One-time P & L charge $16.2 million Debt reduced $150 million
Slide 8: Dixie Today
Dixie Today Smaller, more profitable, growing company with strong balance sheet and strong brands in the upper-end Vastly improved risk profile Financially Customer base Top 20 carpet customers – 16% of total carpet sales Top 40 carpet customers – 20% of total carpet sales High-end business (Fabrica
Slide 9: Dixie Sales by End Market
Dixie Sales by End Market High-End Commercial 30% Yarn 6% High-End Residential 64%
Slide 10: Dixie's Carpet Sales Have Outperformed the U.S. Carpet Market
Dixie’s Broadloom and Area Rug Carpet Sales Have Out Performed the U.S. Carpet Market In Recent Years In 2002, Dixie grew at 1% while the market grew at 2.6% In 2003 and YTD November 20, 2004, Dixie grew 11% and 25%; respectively, while the carpet market grew at only 1% in 2003 and at an estimated 9
Slide 11: Dixie Profit Margin and SG&A as a % of Sales
Dixie Profit Margin and Sales and Administrative Expenses as a % of Sales 40.0% 35.0% 30.0% 25.0% 20.0% 34.6% 34.8% 34.1% 33.7% 33.4% 31.9% 28.1% 27.3% 26.1% 25.9% 25.3% 24.3% 2001 2002 2003 1st QT 2004 2nd QT 2004 3rd QT 2004 Gross Profit Selling and Adm. Exp.
Slide 12: Dixie Sales - Continuing Operations
Dixie Sales Continuing Operations ($ in millions) LTM Ending September $274 $231 $234 $224 $223 $18.0 $17.0 $37.0 $26.0 $17.0 $256.0 $217.0 $207.0 $197.0 $194.0 2001 2002 2003 2003 2004 Carpet Sales Yarn Sales
Slide 13: Dixie EBIT - Continuing Operations
Dixie EBIT(1) Continuing Operations ($ in millions) LTM Ending September $21.8 $23.0 (2) $17.8 $16.6 $14.9 (2) 2001 2002 2003 2003 2004 (1) - Income from continuing operations before interest and taxes (2) - excludes $21.1 million of impairments and charges
Slide 14: Dixie Capital Structure
Dixie Capital Structure Sept. 25, Debt: 2004 Senior Debt 54.0 Subordinated Debt 27.2 81.2 Equity 106.6 Total Capitalization 187.8 Debt to Total Capitalization: Senior Debt 29% Subordinated Debt 14% Total Debt 43%
Slide 15: Dixie High-End Residential Sales
Dixie High-End Residential Sales Dixie Home 22% Fabrica 32% Masland 46%
Slide 16: Residential Positioning
Residential Positioning Goal is to be a highly profitable, high-styled supplier at the upper-end of the residential marketplace Retailers rate the Masland and Fabrica lines as leaders in quality, service and innovation. Together, these lines have the largest market share in the > $22 price range How
Slide 17: Residential Positioning of The Dixie Group
Residential Positioning of The Dixie Group ESTIMATED TOTAL WHOLESALE MARKET ESTIMATED DATA FOR CARPETS AND RUGS: VOLUME AND PRICE POINTS Positioning of Dixie Brands by Price Point Segment BROADLOOM RESIDENTIAL SALES = $7.6 Billion TOTAL MARKET: SQUARE YARDS OR SALES DOLLARS Dixie Home Masland Fabric
Slide 18: Customers Are Extremely Happy With Dixie's Products and Service
Overall, Customers Are Extremely Happy With Dixie’s Products and Service Customers had a lot of positive things to say about both Masland and Fabrica: “Fabrica and Masland are perceived by me and my customers as having quality, style and a great reputation.” “My Masland and Fabrica reps are the best
Slide 19: Retailers Appreciate Dixie's Products and Service
Retailers Appreciate Dixie’s Products And Service In the retail segment, Fabrica and Masland are rated stronger than the competition in providing high quality, innovative products, responsive customer service and fast sample turn-around time Base: Retailers Importance Ranking Performance Ranking Key
Slide 20: Designers Think Fabrica and Masland Provide a Strong Offering
Designers Think Fabrica And Masland Provide An Overall Strong Offering In the designer segment, Fabrica and Masland stand out above Mohawk and Shaw in several key areas Base: Designers Importance Ranking Performance Ranking Key Functions DESIGNERS FABRICA MASLAND MOHAWK SHAW Offers innovative and go
Slide 21: Residential Summary
Residential Summary Fabrica and Masland are among the most respected brands in high-end residential carpet Fabrica’s and Masland’s combined residential sales are estimated to be about 35% of total U.S. industry sales at $22.00 and higher Dixie Home at $10-$20 Provides access for Dixie to a larger se
Slide 22: Residential Broadloom - Dixie Home
Residential Broadloom - Dixie Home Fulfill market need for third player. Well-styled moderate to upper priced line Leverage need by fiber suppliers for market access. Branded high-styled goods – not “me too” Support fiber suppliers’ branded products Limited distribution strategy attractive to retail
Slide 23: Today's Situation
Today’s Situation Dixie Home is now well positioned with retailers 2,468 active retail stores 1,598 active mass merchant stores Impact of 2004 introductions Potential impact of January 2005 Surfaces introductions
Slide 24: Dixie Home New Product Order Entry
Dixie Home New Product Order Entry (Dollars per week) $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $- 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 Weeks
Slide 25: Dixie Home Sales
Dixie Home Sales (Dollars per week) $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 Total Dixie Home Total Dixie Home Trend TIME PERIOD W8-FY2003 W2-FY2003 W4-FY2003 W6-FY2003 W10-FY2003 W12-FY2003 W14-FY2003 W16-FY2003 W18-FY2003 W20-FY2003 W22-FY2003 W24-FY2003 W26-FY2003 W
Slide 26: Masland Residential Sales
Masland Residential Sales Buying Groups 16% Designers 27% Builders 12% Retail 45%
Slide 27: Masland Residential
Masland Residential Leading high-end brand with reputation for development of products with innovative styling, design and color Doubling product introductions to increase market penetration Drive more volume on existing capacity at Masland/Dixie
Slide 28: Fabrica Residential Sales
Fabrica Residential Sales Specialty Manufacturers 10% Builders 9% Furniture/ Department Stores 11% Retailers 26% Decorator/ Design Trade 44%
Slide 29: Fabrica Residential
Fabrica Residential Premium high-end brand Leader in styling/patterns/color Consistent sales and profit growth 12 years consecutive sales growth Over 50% profit growth since July 2000 acquisition
Slide 30: Masland Commercial Sales
Masland Commercial Sales Other 14% Store Planning 14% Corporate 45% Hospitality 27% Channels: Interior Design Specifier and Commercial End-User
Slide 31: Masland Commercial
Masland Commercial Good and growing position with premium brand Designer focused Strong national account base Strong growth from new “Energy Collection” KSA study – identified potential opportunities
Slide 32: Masland Contract Has Performed Higher Than the U.S. Commercial Carpet Market
Masland Contract Has Performed Higher Than the U.S. Commercial Carpet Market 1998 was a great year for Masland Contract, which grew 52% that year while the market only grew 5% From 1999 to 2002, Masland Contract performed at about the same rate as the market In 2003, Masland Contract grew 8% while t
Slide 33: The Energy Line Has Contributed Significantly To This Strong Growth
The Energy Line Has Contributed Significantly To This Strong Growth The Energy line was started from the ground up in 2002 and generated over $13 million and $16 million; respectively, in sales for Masland during 2003 and the 1st nine-months of 2004 Approximately half is sold through our residential
Slide 34: Summary
Summary Smaller, highly profitable, growing company with strong brands in the upper-end Vastly improved risk profile Financially – strong balance sheet Customer base Focused on internal profitable growth