Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (July 2014)
37 slides from Dixie's investor presentation, Jul 28, 2014
Slide 1: July 2014 Investor Presentation
July 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
• Began operations in 1920 • Transitioned from textiles to floorcovering in 1990’s – now 100% floorcovering • Refined focus on upper-end markets in 2004 • For over 90 years we have focused on specialized products • Traditionally we have outperformed the industry and expect to do so in the future 3 D
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 • 16% of sales – Top 20 carpet customers • 19% 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: The Industry versus GDP
7 2014 Look for the economy to pick up speed in the second half of 2014, with GDP rising at about a 3% annualized rate as the expansion cycle matures and hindrances to growth ease. Given the dismal first quarter …. GDP is likely to rack up only about 1.5% growth for the whole of 2014. Kiplinger’s
Slide 8: Residential and Commercial Fixed Investment
Residential and Commercial Fixed Investment 8 Rebound in residential activity Rebound in commercial activity 2013 showed a strong rebound in growth; We expect 2014 to continue this trend
Slide 9: Consumer Sentiment
9 Consumer Sentiment Conference Board June 2014: “Consumer confidence continues to advance and the index is now at its highest level since January 2008. June’s increase was driven primarily by improving current conditions, particularly consumers’ assessment of business conditions. …. the momentu
Slide 10: The Stock Market July 2014
The Stock Market 10 July 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, US policies, China, Ukraine
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 Q2 2014 Carpet Market of $8.7 billion
U.S. TTM Q2 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 Q2 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
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
Residential Market Positioning The Dixie Group 17 BROADLOOM RESIDENTIAL SALES = $7.0 Billion (2012 $’s) T OT AL M AR K E T : SQUAR E Y AR DS OR S ALE S DOL L AR S ESTIMATED TOTAL WHOLESALE MARKET FOR CARPETS AND RUGS: VOLUME AND PRICE POINTS Positioning of Dixie Brands by Price Point Segment (Over $
Slide 18: High-End Residential Sales by Brand
Dixie Group High-End Residential Sales All Brands 18 Sales by Brand for TTM Q2 2014
Slide 19: High-End Residential Sales by Channel
Dixie Group High-End Residential Sales All Brands 19 Sales by Channel for TTM Q2 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 Residential 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 40% 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
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 Q2 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 $407 2006 2008 2010 2012 YTD 2014 Seasonally adjusted to represent an Annual Run Rate Net Sales (millions) 28 Dixie Group Sales $ in millions
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 320.8 283 203 231 270 266 345 193 Net Income (Loss) 6.2 (31.5) (42.2) (4.7) 1.0 (0.9) 5.3 3.8 Non-GAAP Adjusted Op. Income 16.7 (28.5) (45.
Slide 30: Current Business Conditions: Second quarter 2014 activity
- Operationally we improved throughout the quarter: - Our operating costs improved each month throughout the quarter - We continue to improve operations with focus on improving margins - We implemented a price increase in the period - We are implementing our restructuring projects - The Adairsville
Slide 31: Current Business Conditions: 2014 Initiatives
31 Current Business Conditions 2014 Initiatives • We will consolidate our east coast distribution facilities and streamline our east coast dyeing operations in 2014 & 15 in a $4.4 million restructuring plan to expand capacity, lower costs and reduce excess freight and waste • We consolidated our wes
Slide 32: Outlook for 2014
Outlook for 2014 The housing & commercial markets have strengthened: • Our upper-end residential market is continuing its momentum • Commercial market is forecasted to improve (AIA forecast) • Positive market reception to our new products: Masland and Fabrica Wool Collections continued growth Ne
Slide 33: CARPI
CARPI HOME Lo OG THE DIXIE GROUP | ATER “| % a
Slide 34: Non-GAAP Information
Non-GAAP Information 34 The Company believes that non-GAAP performance measures, which management uses in evaluating the Company's business, may provide users of the Company's financial information with additional meaningful bases for comparing the Company's current results and results in a prior pe
Slide 35: Non-GAAP Gross Profit
35 Non-GAAP Gross Profit Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Net Sales 75,440 83,617 90,210 95,799 85,313 108,171 Gross Profit 18,412 22,302 22,100 22,825 18,007 26,636 Plus: Mfg integration expense 1,303 1,143 1,417 875 445 - Plus: Amortization of inventory step up - - 260 107 - 194 Non
Slide 36: Non-GAAP Income from Continuing Operations
36 Non-GAAP Income from Continuing Operations Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Net income (loss) as reported 636 1,645 1,412 1,597 4,396 (644) Less: (Loss) from discontinued, net tax (15) (32) (20) (1) (39) (39) Income (loss) from Continuing Operations 652 1,677 1,432 1,597 4,435 (605
Slide 37: Facility Consolidation Information
37 Facility Consolidation Information ($ in thousands) Q1 2014 Q2 2014 Q3 2014 Est Q4 2014 Est 2014 Est 2015 Est East Coast Facility consolidation - 38 900 670 1,954 1,815 st st Asset write off - 655 - - 6 5 - West Coast Facility consolidation 73 56 340 125 1,103 500 Total facility consolidati n and