Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (November 2011)
37 slides from Dixie's investor presentation, Nov 4, 2011
Slide 1: November 2011 Investor Presentation
Slide 2: Forward-Looking Statements
Forward-Looking Statements OS THE DIXIE GROUP ¢ 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 d
Slide 3: Dixie History
Dixie History OSG F THE DIXIE GROUP * Began operations in 1920 ¢ Entered floorcovering in 1993 and exited textiles in 1999 — now 100% floorcovering * Refined focus on upper-end markets in 2004 * Traditionally we have outperformed the industry and expect to do so in the future
Slide 4: Dixie Today
Gam Dixie Today OSG , THE DIXIE GROUP * Commitment to brands in the upper-end market with strong growth potential ¢ Diversified between Commercial and Residential markets ¢ Diversified customer base = Top 10 carpet customers—20% of carpet sales = Top 20 carpet customers—22% of carpet sales
Slide 5: New and Existing Home Sales
New and Existing Home Sales Seasonally Adjusted Rate New 1,000 Existing 1,000 550 6,500 ——New Homes Existing Homes bead Tax Credit 6,000 Response = 450 5,500 400 5,000 360 4,500 300 250 4,000 Jan'08 July Jan'09 July Jan"10 July Jan'11 July OSG HE DIXIE GROUP August 2011: = Newhome sales declined 2.3
Slide 6: Residential Remodeling
Residential Remodeling RF Owner-Occupied Improvements* OG 6 THE DIXIE GROUP Upward revisions for May, June and July. The annual rate in August was 10.5% above a year ago. Millions of dollars $150,000 $140,000 $130,000 January "11 / rT $120,000 $110,000 $100,000 $90,000 $80,000 2000 2001 2002 2003 20
Slide 7: The Industry
The Industry XG THE DIXIE GROUP Mfg. Value US Carpet and Rug Mill Shipments ($ 000's) 16,000,000 14,000,000 A 12,000,000 - - - - as 12 to 18months dips during recessionary times 10,000,000 = £ 2,000,000 Multi-year decline | 4,000,000 2,000,000 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1
Slide 8: The Industry versus GDP
The Industry versus GDP SG THE DIXIE GROUP Value of U.S. Carpet and Rug Mill Shipments versus Gross Domestic Product 2010: 16000900 15,000 «Weare startingto see areboundin 14,900,000 A a ss a the relationship betweencarpet 12,900,000 ; #7 | andrug shipments iS. and GDP eo} 20.000 1000000 | = We beli
Slide 9: Residential and Commercial Fixed Investment
Residential and Commercial AS Fixed Investment Ve Bi kite SaOOE Fixed Investment as % of GDP 0 merce
Slide 10: Consumer Sentiment
Consumer Sentiment AS University of Michigan nay “caw 0 1966=100 100 October 14: 95 = Overall sentiment declined 1.9% in 80 early October. 2 = Expectations forthe future declined 80 AM%, 75 = Consumers remain cautious aboutthe direction of the U.S. and world economy. = The Michigan indexis sensitive
Slide 11: The Stock Market
> RZ, The Stock Market AW @ DIXIE GROUP Dow Jones Industrial Average a October 2011: 14000 = The stock market has dropped back 19900 000 200 Pa slow down seen in carpet salesas ‘August market disruption occurred FESS ws LESS - EIS E, Pr SPP “oho FS as the European debt crisis remains unresolved = Fo
Slide 12: 2010 U.S. Carpet Manufacturers
2010 U.S. Carpet Manufacturers Carpet & Rug Sales Shaw Mohawk Bealieau Interface Dixie Other Market Source: Floor Focus OG Dollars in Millions % Total $ 3,024 31.2% $ 2,442 25.2% $ 896 9.2% $ 496 5.1% $ 225 2.3% $ 2,618 27.0% $ 9,701 100.0% 12
Slide 13: The Industry
The Industry G THE DIXIE GROUP Sales $10.19 Billion Sales $7.40 Billion 13 Commercial 43% Source: Floor Focus— Broadloom & Carpet Tile From 32% to 43%
Slide 14: Dixie Group Carpet Sales
Dixie Group Carpet Sales SG THE DIXIE GROUP 14 From 29% to 38% High£nd Commercial 29% High£nd Residential 71%
Slide 15: Carpet Dollar Sales Indexed to 2004
Carpet HS Dolla r Sales Indexed to 2004 uc pixic croup 130 oo 1012004 032004 012008 032095 04 2006 03 2006 012007 03 2007 012008 32008 04 2009 022009 O41 2010 252010 Q12011 G3 2011 15
Slide 16: Carpet Unit Sales Indexed to 2004
Carpet RS Unit Sales Indexed to 2004 tusk pixie crovr *
Slide 17: Residential Positioning of Dixie Brands
Residential Positioning of REF Y The Dixie Group een ne eee ESTIMATED TOTAL WHOLESALE MARKET FOR CARPETSAND RUGS VOLUME AND PRICE POINTS &s Positioning of Dixie Brands by Price Point Segment TIM, Try (Over $20 per SQ YD) Dany BROADLOOMRESIDENTIAL SALES 7.0 Billion (2009 $’s) 35% Market Share TOTAL M
Slide 18: Dixie High-End Residential Sales
Dixie High-End RS Residential Sales Ve Bi kite SaOOE / Fabrica, ee / ae 18% | Masland,
Slide 19: Dixie Group High-End Residential Sales by Channel
Dixie Group High-End REF Residential Sales (all brands) ..,,, Ries wees Other, 1%_ Distributor, _ Specialty - Builder, 3% Commercial, OEM, 1% 2% National Retailers, 2%. Mass | Merchant, 18% Retailer, 53%
Slide 20: Sales by Channel
AE QE THE DIXIE GROUP Distributor, Builder, 2% 1% A
Slide 21: Dixie Home
OSG THE DIXIE GROUP al * Well-styled moderate to upper priced residential broadloom line * Dixie provides a “full line” to retailers ¢ Leverage needed by fiber suppliers for market access | © Selective distribution strategy attractive | to retailers * Growth initiatives = Stainmaster ®SolarMax™ Fibe
Slide 22: Sales by Channel for Q3 2011 TTM
fous 9S THE DIXIE GROUP ales by Channel for Q3 2011 TTM Commercial, _ 6% \, Other, 1% Builder, 5%__ National Retailers, 2%, Designer, 31%
Slide 23: Fabrica
Gr snk xS ; CARPETS&RUG' THE DIXIE GROUP * Leading high-end brand with reputation for innovative styling, design and color ¢ High-end retail / designer driven ¢ Hand crafted and imported rugs * Growth initiative = Stainmaster® TruSoft™ Fiber Technology = Wool products o First introductions in 2007 o
Slide 24: Fabrica Sales by Channel
FABRICA FINE CARPET & RUGS Specialty - Other, 5% OEM. 3% Builder, 3% ___- National Retailers, 8% Designer, 38%
Slide 25: Fabrica
FABRICA FINE CARPET & RUGS 25 Premium high-end brand Designer focused Hand crafted and imported rugs Growth initiative = New products, heightened focus on retail penetration = Fullservice supplier of wool to the designer trade with excellent service and support
Slide 26: Masland Sales by Channel for Q3 2011 TTM
Masland BE 26 ewaiht £Ffr8e tt THE DIXIE GROUP =) > YY Salesby Channel for Q3 2011 TIM ~ Education 3%
Slide 27: Masland
a nA Masland SS THE DIXIE GROUP ¢ Premium brand in the commercial marketplace * Designer focused ¢ Strong national account base = Nordstrom’s, Target, Sears, Belk, Delta Air Lines, AECOM, Club Corporation of America * Growth initiative = Modular/carpet tile = End Users
Slide 28: Dixie Sales Continuing Operations
Dixie Sales Continuing RS AI Operations (gin mitiions) [ah Bite SOUS $331 $321 $283 $203 $231 $268 16 11 7 4 05 ; j ; : 2006 2007 2008 2009 2010 2011 Annualized ™ Carpet Sales _™ Processing Sales
Slide 29: Sales & Operating Income
Sales & Operating Income SG ($ in millions) 29 THE DIXIE GROUP Net Sales 56.7 65.1 66.0 69.2 69.6 Net Income (Loss) from continuing operations (1.9) 0.6 0.6 0.8 0.0 Non-GAAP Adjusted Operating Income (Loss) (1.6) 2.5 1.8 1.7 1.2 Non-GAAP Adjusted EBITDA 1.3 5.2 43 41 3.6 * Mix less favorable June —
Slide 30: Current Business Conditions
Current Business Conditions DG : A The 3 quarter of 2011 versus prior year ; al * Residential sales up 26% while the industry is down slightly * Commercial sales up 14%, above the industry growth rate * Dixie Group sales up 23% versus modest growth for the industry = Allbrands up for the quarter and
Slide 31: Outlook
=> Outlook SG Opportunities in the future THE DIXIE GROUP al Though the market has been difficult, we are encouraged by: = Despite slow recovery in the residential sector, we have seen improvement of higher end goods in the luxury market = The sales improvement is strongest at the highest price poin
Slide 32: Slide 32
Slide 33: Non-GAAP Information
y) Ca Non-GAAP Information SG THE DIXIE GROUP 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 comp
Slide 34: Non-GAAP Information
i OG Non-GAAP Information HWY THE DIXIE GROUP ($ in thousands) YTD 2010 YTD 2011 Y/Y Chge Weeks in Period 39 40 Net Sales as Reported 166,188 204,761 23.2% Adjustment for Weeks : (4,711) -2.8% Non-GAAP Net Sales as Adjusted (Note 1) $166,188 $ 200,050 20.4%
Slide 35: Non-GAAP Adjusted Operating Income and EBIT (Restated)
Note a: Restated (Sin thousands) 2007 (a) 2008 (a) 2009 (a) 2010-2011 TD 35 Operating income (loss) 16,707 (28,460) (45,389) (2,570) 5,148 Plus: Facility consolidation and severance expenses - 2,317 4,091 1,556 (563) Plus: Impairment of assets - 4,478 1,459 a - Plus: Impairment of goodwill - 23,121
Slide 36: Non-GAAP Quarterly Operating Income and EBIT
(Sin thousands) Q1 2010 =Q22010 Q32010 42010 Q12011 Q22011 32011 Operating income (loss) (2,286) so (1937) 159446692301 aaa Plus: Facility consolidation and severance expenses 211 122 304 918 - (563) - Plus: Impairment of assets ” # = ~ # ” # Plus: Impairment of goodwill = a = ~ ¥ = a Less One time
Slide 37: Non-GAAP Information
o> Non-GAAP Information OG THE DIXIE GROUP ca ($ in thousands) Q12010 Q22010 Q32010 Q42010 Q12011 Q22011 32011 Net income (loss) as reported (2,529) (744) (1,897) 516 623 766 (43) Plus: Interest 1,235 1,082 904 903 932 900 904 Plus: Depreciation 2914 2916 2941 2,655 2,469 2,311 2,421 Minus: Net chan