Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (October 2014)
37 slides from Dixie's investor presentation, Oct 29, 2014
Slide 1: October 2014 Investor Presentation
October 2014 Investor Presentation Contact: Jon Faulkner CFO The Dixie Group Phone: 706-876-5814 jon.faulkner@dixiegroup.com Exhibit 99.1
Slide 2: Forward Looking Statements
• Statements in this presentation which relate to the future, are subject to risk factors and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Such factors include the levels of demand for the products produced by the Company
Slide 3: Dixie History
• 1920 Began as Dixie Mercerizing in Chattanooga, TN • 1990’s Transitioned from textiles to floorcovering • 2003 Refined focus on upper- end floorcovering market • 2003 Launched Dixie Home - upper end residential line • 2005 Launched modular tile carpet line – new product category • 2007 Launched wo
Slide 4: Dixie Today
Dixie Today • Commitment to brands in the upper- end market with strong growth potential • Diversified between Commercial and Residential markets • Diversified customer base (TTM Basis, excludes Atlas) – Top 10 carpet customers • 15% of sales – Top 20 carpet customers • 18% of sales 4
Slide 5: New and Existing Home Sales
New and Existing Home Sales Seasonally Adjusted Annual Rate New 1,000 Existing 1,000 Source: National Association of Realtors (existing) and census.gov/const/c25 (new). 5 3,000 3,500 4,000 4,500 5,000 5,500 250 300 350 400 450 500 550 600 Jan '10 July Jan '11 July Jan '12 July Jan '13 Jul Jan '14 •
Slide 6: Residential Remodeling
6 Residential Remodeling Harvard Study Leading Indicator of Remodeling Activity
Slide 7: Household formation drives home sales
7 Household formation drives home sales Pent up demand will fuel future growth • “Historically, there had been about 1.2 to 1.4 million net new household formations each year in the U.S. • “The figure is typically low during an economic downturn and then bounces higher as better times return. • “Wha
Slide 8: Residential and Commercial Fixed Investment
Residential and Commercial Fixed Investment 8 Rebound in residential activity Rebound in commercial activity 2014 has shown a strong rebound in growth; We expect 2015 to continue this trend
Slide 9: Consumer Sentiment
9 Consumer Sentiment Conference Board September 2014: “Consumer confidence retreated in September after four consecutive months of improvement. “A less positive assessment of the current job market …. was the sole reason for the decline in consumers’ assessment of present-day conditions. “All
Slide 10: The Stock Market October 2014
The Stock Market 10 October 2014 The stock market has rebounded beyond pre- recession levels 2014 has had a slight pullback but appears to be on a more stable track of steady growth However, the market is still subject to macro events: Job growth, Mideast, Europe, U.S. Election
Slide 11: The Industry as compared to The Dixie Group
The Industry as compared to The Dixie Group 11 Source: U.S. Bureau of Economic Analysis and Company estimates
Slide 12: 2013 U.S. Carpet & Rug Manufacturers
2013 U.S. Carpet & Rug Manufacturers 12 Source: Floor Focus – includes carpet as broadloom and modular tile, and rug sales Carpet Leaders Dollars in Millions % Total Shaw (Berkshire Hathaway) $ 3,110 27.7% Residential & Commercial Mohawk (MHK) $ 2,521 22.4% Residential & Commercial Beaulieu (Private
Slide 13: U.S. TTM Q3 2014 Carpet Market of $8.7 billion
U.S. TTM Q3 2014 Carpet Market of $8.7 billion 13 Source: Floor Focus – Broadloom & Carpet Tile and Dixie Group estimate Dixie versus the Industry Dixie plus Atlas TTM Q3 2014 on a Pro Forma basis
Slide 14: Carpet Dollar Sales Indexed to 2009
Carpet Dollar Sales Indexed to 2009 (includes Atlas Carpet Mills from date of acquisition) 14
Slide 15: Carpet Unit Sales Indexed to 2009
Carpet Unit Sales Indexed to 2009 (includes Atlas Carpet Mills from date of acquisition) 15
Slide 16: Industry Positioning The Dixie Group
Industry Positioning The Dixie Group 16 • Strategically our residential and commercial businesses are driven by our relationship to the upper-end consumer and the design community • This leads us to: – Have a sales force that is attuned to design and customer solutions – Be a “product driven company
Slide 17: Residential Market Positioning The Dixie Group
Residential Market Positioning The Dixie Group 17 BROADLOOM RESIDENTIAL SALES = $7.0 Billion (2012 $’s) T O T A L M A R K E T : S QUA R E Y A R DS OR S AL E S DO L L A R S ESTIMATED TOTAL WHOLESALE MARKET FOR CARPETS AND RUGS: VOLUME AND PRICE POINTS Positioning of Dixie Brands by Price Point Segmen
Slide 18: High-End Residential Sales by Brand
Dixie Group High-End Residential Sales All Brands 18 Sales by Brand for TTM Q3 2014
Slide 19: High-End Residential Sales by Channel
Dixie Group High-End Residential Sales All Brands 19 Sales by Channel for TTM Q3 2014
Slide 20: Dixie Home brand
• Well-styled moderate to upper priced residential broadloom line – Known for differentiated pattern and color selection • Dixie provides a “full line” to retailers – Sells Specialty and Mass Merchant retailers • Growth initiatives – Stainmaster® Tru Soft TM Fiber Technology – Stainmaster® SolarMax
Slide 21: Masland brand
• Leading high-end brand with reputation for innovative styling, design and color • High-end retail / designer driven – Approximately 27% of sales directly involve a designer • Hand crafted and imported rugs • Growth initiative – Stainmaster® TruSoft™ Fiber Technology – Wool products in both tufted
Slide 22: Fabrica brand
• Premium high-end brand – “Quality without Compromise” • Designer focused – Approximately 39% of sales directly involve a designer • Hand crafted and imported rugs • Growth initiatives – Stainmaster® TruSoft™ Fiber Technology – Fabrica Permaset dyeing process “unlimited color selection in wool” 22
Slide 23: Commercial Market Positioning The Dixie Group
Commercial Market Positioning The Dixie Group 23 • We focus on the “high end specified soft floorcovering contract market” – Our Masland Contract brand • Broad product line for diverse commercial markets – Our Atlas brand • Designer driven focused on the fashion oriented market space – Our Avant bra
Slide 24: Masland Contract brand
• Premium brand in the specified commercial marketplace – Corporate, End User, Store Planning, Hospitality, Health Care, Government and Education markets • Designer focused • Strong national account base – Delta Air Lines, Best Buy, Club Corp • Growth initiative – SPEAK and FIT collections – Desso A
Slide 25: Commercial Sales by Channel
25 Sales by Channel for TTM Q3 2014 Channels: Interior Design Specifier and Commercial End User
Slide 26: Atlas brand
• Atlas is our newest brand • Dedicated to servicing the architect and designer for finer goods • Focus is on the corporate market through high fashion broadloom and modular carpet tile offerings • With state-of-the-art tufting machines Atlas can quickly manufacture custom running line products 26
Slide 27: Avant brand
• Avant is a forward thinking brand that has an Artisan’s theme • Dedicated to servicing the designer through the multi-line interior finishes sales agent • Focus is on the corporate market through high fashion broadloom and modular carpet tile offerings 27
Slide 28: Dixie Group Sales
$331 $321 $283 $205 $231 $270 $266 $345 $408 2006 2007 2008 2009 2010 2011 2012 2013 2014 * Net Sales (millions) 28 Dixie Group Sales $ in millions Note *: Year to date results seasonally adjusted
Slide 29: Sales & Operating Income
Sales & Operating Income $ in millions 29 Note: Non-GAAP reconciliation starting on slide 34 Y 2007 Y 2008 Y 2009 Y 2010 Y 2011 Y 2012 Y 2013 YTD 2014 Net Sales 320.8 283 203 231 270 266 345 303 Net Income (Loss) 6.2 (31.5) (42.2) (4.7) 1.0 (0.9) 5.3 3.6 Non-GAAP Adjusted Op. Income 16.7 (28.5) (45.
Slide 30: Current Business Conditions: Third quarter 2014 activity
- Operationally we continue to create advantages for the future: - Our sales growth residentially significantly exceeded the marketplace - We are well along in the integration of Atlas Carpet Mills - Purchased Burtco enhancing our position in the hospitality market - We are implementing our restruct
Slide 31: Current Business Conditions: 2014 Initiatives
31 Current Business Conditions 2014 Initiatives • We are consolidating our east coast distribution facilities and dyeing operations in 2014 & 15 to expand capacity, lower costs and reduce excess freight and waste • We are consolidating our west coast dye houses in 2014 to lower cost and improve util
Slide 32: Outlook for 2014 and 2015
Outlook for 2014 and 2015 The housing & commercial markets are still growing: • Our upper-end residential market is continuing its momentum Masland and Fabrica Wool growth opportunities New Stainmaster® PetProtect™ and TruSoft™ products Stainmaster ® partnership to expand retail coverage • Com
Slide 33: FINE CARPE
FINE CARPE FABRICA CARPETS&RUGS HOME? Re XK HE DIXIE GROUP
Slide 34: Non-GAAP Information
Non-GAAP Information 34 The Company believes that non-GAAP performance measures, which management uses in evaluating the Company's business, may provide users of the Company's financial information with additional meaningful bases for comparing the Company's current results and results in a prior pe
Slide 35: Non-GAAP Gross Profit
Non-GAAP Gross Profit Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Net Sales 75,440 83,617 90,210 95,799 85,313 108,171 109,359 Gross Profit 18,412 22,302 22,100 22,825 18,007 26,636 26,496 Plus: Business integration expense 1,303 1,143 1,417 875 445 - - Plus: Amortization of inventory st
Slide 36: Non-GAAP Income from Continuing Operations
36 Non-GAAP Income from Continuing Operations Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Net income (loss) as reported 636 1,645 1,412 1,597 4,396 (644) (185) Less: (Loss) from discontinued, net tax (15) (32) (20) (1) (39) (39) (19) Income (loss) from Continuing Operations 652 1,677 1,4
Slide 37: Facility Consolidation Information
37 Facility Consolidation Information Facility Consolidation Plan Summary Q1 2014 Q2 2014 Q3 2014 Q4 2014 Est 2014 Est 2015 Est Total East Coast Facility consolidation - 384 1,279 2,011 3,674 789 4,463 East Coast Asset write off - 656 103 (90) 669 - 669 West Coast Facility consolidation 73 565 353 4