Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (July 2015)
38 slides from Dixie's investor presentation, Jul 29, 2015
Slide 1: July 2015 Investor Presentation
July 2015 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) – Top 10 carpet customers • 13% of sales – Top 100 carpet customers • 26% 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 by
Slide 6: 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/newhomesales 6 3,000 3,500 4,000 4,500 5,000 5,500 6,000 250 300 350 400 450 500 550 600 Jan '10 Jan '11 Jan '12 Jan '13 Jan '14 Jan '15 • “Buyers h
Slide 7: Residential and Commercial Fixed Investment
Residential and Commercial Fixed Investment 7 Rebound in residential activity Rebound in commercial activity We expect 2016 to continue the trend of continuing the rebound of 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 8Source: U.S. Bureau of Economic Analysis and Company estimates
Slide 9: 2014 U.S. Carpet & Rug Manufacturers
2014 U.S. Carpet & Rug Manufacturers 9Source: Floor Focus – includes carpet as broadloom and modular tile, and rug sales Carpet Leaders Dollars in Millions % Total Shaw (Berkshire Hathaway) $ 3,107 29.2% Residential & Commercial Mohawk (MHK) $ 2,563 24.1% Residential & Commercial Beaulieu (Private)
Slide 10: U.S. 2014 Carpet & Rug Market of $10.6 billion
U.S. 2014 Carpet & Rug Market of $10.6 billion 10Source: Floor Focus and Dixie Group estimate Residential 56% Commercial 44% Dixie versus the Industry High- End Residential 67% High- End Commercial 33% TTM Q2 2015 Dixie sales
Slide 11: Carpet Dollar Sales Indexed to 2009
Carpet Dollar Sales Indexed to 2009 (includes Atlas Carpet Mills from date of acquisition) 11
Slide 12: Carpet Unit Sales Indexed to 2009
Carpet Unit Sales Indexed to 2009 (includes Atlas Carpet Mills from date of acquisition) 12
Slide 13: Industry Positioning
Industry Positioning The Dixie Group 13 • 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 14: Residential Market Positioning
Residential Market Positioning The Dixie Group 14 BROADLOOM RESIDENTIAL SALES T O T A L M A R K E T : S Q U A R E Y A R D S O R S A L E S D O L L A R S ESTIMATED TOTAL WHOLESALE MARKET FOR CARPETS AND RUGS: VOLUME AND PRICE POINTS Positioning of Dixie Brands by Price Point Segment Dixie Home Fabrica
Slide 15: High-End Residential Sales by Brand
Dixie Group High-End Residential Sales All Residential Brands Masland, 36% Dixie Home, 45% Fabrica, 19% 15 Sales by Brand for TTM Q2 2015
Slide 16: High-End Residential Sales by Channel
Dixie Group High-End Residential Sales All Brands Retailer, 65% Designer, 16% Mass Merchant, 13% Builder, 3% Commercial, 1% Specialty - OEM, 2% 16 Sales by Channel for TTM Q2 2015 The company believes that a significant portion of retail sales also involve a designer
Slide 17: 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 18: Masland Residential
• Leading high-end brand with reputation for innovative styling, design and color • High-end retail / designer driven – Approximately 26% of sales directly involve a designer – Hand crafted and imported rugs • Growth initiative – Stainmaster® TruSoft™ Fiber Technology – Stainmaster® PetProtect ® Fib
Slide 19: Fabrica
• Premium high-end brand – “Quality without Compromise” • Designer focused – Approximately 34% 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” 19
Slide 20: Commercial Market Positioning
Commercial Market Positioning The Dixie Group 20 • 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 H
Slide 21: 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 22: 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 – Market specific modular carpet tile collections – Masland Hospitality u
Slide 23: Commercial Sales by Channel
Hospitality, 20% Corporate, 57% Education, 3% Store Planning, 8% Gov't, 1% Health Care, 3% Other, 8% 23 Sales by Channel for TTM Q2 2015 Channels: Interior Design Specifier and Commercial End User
Slide 24: Avant
• 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 24
Slide 25: Dixie Group Sales
$331 $321 $283 $205 $231 $270 $266 $345 $407 $419 2006 2007 2008 2009 2010 2011 2012 2013 2014 TTM Q2 2015 Net Sales (millions) 25 Dixie Group Sales $ in millions Includes Atlas Carpet Mills since March 2014 and Burtco since September 2014
Slide 26: Sales & Operating Income
Sales & Operating Income $ in millions 26Note: Non-GAAP reconciliation starting on slide 33 Below is the estimated cost to complete the remaining Facility Consolidation Plans: Y 2009 Y 2010 Y 2011 Y 2012 Y 2013 Y 2014 TTM 15 Net Sales 203 231 270 266 344 407 419 Net Income (Loss) (42.2) (4.7) 1.0 (0
Slide 27: 2014 - 2015 Restructuring
2014 - 2015 Restructuring $ in millions 27 To present an order of magnitude impact on Dixie due to the restructuring, we recast the 2014 numbers using our 2013 experience in manufacturing and claims as well as removed the impacts from the acquisitions and restructuring. This does not include planned
Slide 28: Current Business Conditions 2015 Activity
• We continue to outperform the industry in sales growth • Operationally we continue to create advantages for the future: • We have launched Masland Hospitality • We have expanded our product offerings: • New wool products plus “Permaset” unlimited wool color selection • Stainmaster® TruSoft™ and Pe
Slide 29: Current Business Conditions 2015 Initiatives
29 Current Business Conditions 2015 Initiatives • We are now streamlining the operational changes of the past year with a focus on training, yields, waste and process efficiencies • We are growing our new Masland Hospitality brand, building on our purchase custom computerized yarn placement (CYP) te
Slide 30: Outlook for 2015
Outlook for 2015 The housing & commercial markets are still growing: • Our upper-end residential market is continuing to grow with an improved economy and consumer confidence: Masland and Fabrica Wool growth opportunities New Stainmaster® PetProtect™ and TruSoft™ products Stainmaster ® partner
Slide 31: FABRICA
FABRICA CARPETSS:RUGS HOME> OS THE DIZTS ROU e BNilas ge >
Slide 32: Non-GAAP Information
Non-GAAP Information 32 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 33: Non-GAAP Gross Profit
33 Non-GAAP Gross Profit 2009 (a) 2010 2011 2012 2013 2014 YTD 2015 Net Sales 203,480 231,322 270,110 266,372 344,374 406,588 205,812 Gross Profit 52,105 56,651 65,506 65,372 85,569 95,497 52,645 Plus: Business integration expense - - - 1,383 4,738 445 - Plus: Amortization of inventory step up - - -
Slide 34: Non-GAAP EBIT and EBITDA
34 Non-GAAP EBIT and EBITDA 2009 (a) 2010 2011 2012 2013 2014 YTD 2015 Net income (loss) as reported (42,241) (4,654) 986 (927) 5,291 (1,402) (1,964) Less: (Loss) from discontinued, net tax (382) (280) (286) (275) (266) (2,075) (100) Plus: Taxes (8,870) (2,604) 684 (401) (576) 1,054 (1,083) Plus: In
Slide 35: Non-GAAP Gross Profit (Quarterly)
35 Non-GAAP Gross Profit Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Net Sales 95,384 85,082 107,926 109,006 104,574 95,855 109,957 Gross Profit 22,755 18,101 26,671 26,599 24,126 23,339 29,306 Plus: Business integration expense 875 445 - - - - - Plus: Amortization of inventory step up 1
Slide 36: Non-GAAP EBIT and EBITDA (Quarterly)
36 Non-GAAP EBIT and EBITDA Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Net income (loss) as reported 1,597 4,628 (645) (185) (5,200) (2,468) 504 Less: (Loss) from discontinued, net tax (106) (192) (135) (177) (1,570) (88) (12) Plus: Taxes (758) 2,854 (13) 44 (1,830) (1,490) 407 Plus: In
Slide 37: Recast Non-GAAP Information Year 2014
Recast Non-GAAP Information Year 2014 37 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
Slide 38: Facility Consolidation Information
38 Facility Consolidation Information Facility Consolidation Plan Summary Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 Est 2016 Est West Coast Facility consolidation 170 35 - - 205 - East Coast Facility consolidation 605 840 369 259 2,073 318 East Coast Asset write off - - - - - - Corporate Office consolida