Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (May 2018)
30 slides from Dixie's investor presentation, May 3, 2018
Slide 1: May 2018 Investor Presentation
May 2018 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
Forward Looking Statements The Dixie Group, Inc. • 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 o
Slide 3: Dixie History
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 • 20
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) – Top 10 carpet customers • 18% of sales – Top 100 carpet customers • 31% of sales 4
Slide 5: Dixie Group Drivers
5 Dixie Group Drivers What affects our business? The market dynamics: • Residentially • The market is driven by home sales and remodeling. • New construction is a smaller effect. • Dixie is driven by the wealth effect. • The stock market and consumer confidence. • Commercially • The market is driven
Slide 6: New and Existing Home Sales
New and Existing Home Sales Seasonally Adjusted Annual Rate 6 New 1,000 Existing 1,000 Source: National Association of Realtors (existing) and census.gov/newhomesales 3,000 3,500 4,000 4,500 5,000 5,500 6,000 250 300 350 400 450 500 550 600 650 700 750 800 Jan '13 Jan '14 Jan '15 Jan '16 Jan '17 Jan
Slide 7: Residential and Commercial Fixed Investment
Residential and Commercial Fixed Investment 7 Rebound in residential activity Commercial activity is flat We expect 2018 to continue the rebound of residential fixed investment as a percent of GDP
Slide 8: The Industry as compared to The Dixie Group
The Industry as compared to The Dixie Group 8 Source: U.S. Bureau of Economic Analysis and Company estimates
Slide 9: 2016 U.S. Flooring Manufacturers
2016 U.S. Flooring Manufacturers 9 Source: Floor Focus - Flooring includes sales of carpet, rugs, ceramic floor tile, wood, laminate, resilient and rubber Carpet & Rug Leaders Flooring $ in millions Flooring % Shaw (Berkshire Hathaway) 3,983 19.2% Mohawk (MHK) 4,892 23.6% Engineered Floors (Private)
Slide 10: Dixie versus the Industry
Dixie versus the Industry 2018 First Quarter U.S. Carpet & Rug Market of $10.6 billion 10 Source: Floor Covering Weekly and Dixie Group estimate 2018 First Quarter Dixie sales [CATE GORY NAME] , [VALU E] [CATE GORY NAME] , [VALU E] [CATE GORY NAME] , [VALU E] [CATE GORY NAME] , [VALU E]
Slide 11: Carpet Growth: Dixie Market Share in Dollars and Units
Carpet Growth Dixie Market Share in Dollars and Units 11
Slide 12: Industry Positioning
Industry Positioning The Dixie Group • 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” w
Slide 13: Residential Brand Positioning
Residential Brand Positioning The Dixie Group 13 T O T A L M A R K E T : S Q U A R E Y A R D S OR S AL E S DO L L A R S Dixie Home Fabrica INDUSTRY AVERAGE PRICE / SQ YD FOR CARPETS AND RUGS $0 $14 $21 $28 $35 $42 $49 Note: Market share data based on internal company estimates – Industry average pri
Slide 14: High-End Residential Sales by Brand
Dixie Group High-End Residential Sales All Residential Brands Masland Dixie Home Fabrica 14 Sales by Brand for 2018 First Quarter
Slide 15: High-End Residential Sales by Channel
Dixie Group High-End Residential Sales All Brands Retailer Designer Mass Merchant Builder Commercial Specialty - OEM 15 Sales by Channel for 2018 First Quarter The company believes that a significant portion of retail sales also involve a designer.
Slide 16: Dixie Home
• Well-styled moderate to upper priced residential broadloom line – Known for differentiated pattern and color selection • Dixie Home provides a “full line” to retailers – Sells specialty and mass merchant retailers • Growth initiatives – Stainmaster® Tru Soft TM Fiber Technology – Stainmaster® PetP
Slide 17: Masland Residential
• Leading high-end brand with reputation for innovative styling, design and color • High-end retail / designer driven – Approximately 23% of sales directly involve a designer – Hand crafted and imported rugs • Growth initiative – Stainmaster® TruSoft™ Fiber Technology – Stainmaster® PetProtect ® Fib
Slide 18: Fabrica
• Premium high-end brand – “Quality without Compromise” • Designer focused – Approximately 31% 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” 18
Slide 19: Commercial Market Positioning
Commercial Market Positioning The Dixie Group • We focus on the “high-end specified soft floorcovering contract market” • Our Atlas brand – Designer driven focused on the fashion oriented market space • Our Masland Contract brand – Broad product line for diverse commercial markets • Our Masland Hosp
Slide 20: Atlas
• Atlas is our premium commercial brand • Dedicated to serving the architect and designer needing 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 both custom and run
Slide 21: Masland Contract
• Upper-end brand in the specified commercial marketplace – Corporate, End User, Store Planning, Hospitality, Health Care, Government and Education markets • Designer focused • Strong national account base • Growth initiatives – Masland Contract Modular Carpet Tile – Masland Hospitality using “compu
Slide 22: Commercial Sales by Channel
Hospitality Corporate Education Store Planning Gov't Health Care Other 22 Sales by Channel for 2018 First Quarter Channels: Interior Design Specifier and Commercial End User
Slide 23: Dixie Group Sales
Dixie Group Sales $ in millions 23 331 321 283 205 231 270 266 345 407 422 397 412 414 0 50 100 150 200 250 300 350 400 450 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 TTM Q1 2018 Net Sales *2016 had 53 weeks.
Slide 24: Sales & Operating Income
Sales & Operating Income $ in millions 24 Note: Non-GAAP reconciliation starting on slide 27 Annual Y 2007 Y 2008 Y 2009 Y 2010 Y 2011 Y 2012 Y 2013 Y 2014 Y 2015 Y 2016 Y2017 TTM Q1 2018 Net Sales 321 283 203 231 270 266 344 407 422 397 412 414 Net Income (Loss) 6.2 (31.5) (42.2) (4.7) 1.0 (0.9) 5.
Slide 25: Current Business Conditions: 2018 Initiatives
Current Business Conditions 2018 Initiatives • We have consolidated our two commercial brands, Masland Contract and Atlas, under one management, sharing operations in marketing, product development and manufacturing but maintaining distinct sales forces. • We announced our Profit Improvement Plan an
Slide 26: {Ne BRICA
{Ne BRICA FINE CARPE CARPETS Toes DIXIE HOME ft? OG E DIXIE GROUP
Slide 27: Non-GAAP Information
Non-GAAP Information 27 Use of Non-GAAP Financial Information: 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 cu
Slide 28: Non-GAAP Information: Gross Profit and SG&A
Non-GAAP Information 28 Non-GAAP Gross Profit Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Net Sales 89,234 105,316 100,297 102,606 97,541 107,187 102,650 105,084 98,858 Gross Profit 19,506 28,242 25,831 21,846 25,161 28,426 24,857 22,769 21,580 Plus: Business integration
Slide 29: Non-GAAP Operating Income
29 Non-GAAP Operating Income Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Net Sales 89,234 105,316 100,297 102,606 97,541 107,187 102,650 105,084 98,858 Operating income (loss) (5,840) 3,403 1,916 (2,894) 628 3,179 767 (608) (1,515) Plus: Acquisition expenses - - - - - - -
Slide 30: Non-GAAP EBIT and EBITDA
30 Non-GAAP EBIT and EBITDA Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Net income (loss) as reported (4,767) 1,677 534 (2,722) (604) 1,103 (558) (9,496) (2,907) Less: (Loss) from discontinued, net tax (10) 62 (39) (84) (29) (123) (11) (69) (23) Plus: Taxes (2,415) 451 27