Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (March 2015)
38 slides from Dixie's investor presentation, Mar 18, 2015
Slide 1: March 2015 Investor Presentation
Exhibit 99.1 March 2015 Investor Presentation Contact: Jon Faulkner CFO The Dixie Group Phone: 706-876-5814 jon.faulkner@dixiegroup.com
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, excludes Atlas) – Top 10 carpet customers • 13% of sales – Top 100 carpet customers • 27% of sales 4
Slide 5: Dixie Group Drivers
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 re
Slide 6: New and Existing Home Sales
New and Existing Home Sales Seasonally Adjusted Annual Rate New 1,000 Existing 1,000 • “Realtors® are reporting that low rates are attracting 600 5,500 potential buyers, but the lack of new and affordable listings is leading some to 550 delay decisions.” 5,000 • “Although sales cooled in 500 January
Slide 7: Residential and Commercial Fixed Investment
Residential and Commercial Fixed Investment Rebound in residential activity Rebound in commercial activity 2014 has continued the rebound in fixed investment; We expect 2015 to continue this trend 7
Slide 8: The Industry as compared to The Dixie Group
The Industry as compared to The Dixie Group Source: U.S. Bureau of Economic Analysis and Company estimates 8
Slide 9: 2013 U.S. Carpet & Rug Manufacturers
2013 U.S. Carpet & Rug Manufacturers Dollars in Carpet Leaders Millions % Total Shaw (Berkshire Hathaway) $ 3,110 27.7% Residential & Commercial Mohawk (MHK) $ 2,521 22.4% Residential & Commercial Beaulieu (Private) $ 625 5.6% Residential & Commercial Interface (TILE) $ 459 4.1% Commercial Only Engi
Slide 10: Dixie versus the Industry
Dixie versus the Industry 2014 Dixie sales including Atlas U.S. 2014 Carpet Market of $8.7 billion Source: Floor Focus – Broadloom & Carpet Tile and Dixie Group estimate 10
Slide 11: Carpet Dollar Sales
Carpet Dollar Sales Indexed to 2009 (includes Atlas Carpet Mills from date of acquisition) 11
Slide 12: Carpet Unit Sales
Carpet Unit Sales Indexed to 2009 (includes Atlas Carpet Mills from date of acquisition) 12
Slide 13: 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 14: Residential Market Positioning
Residential Market Positioning The Dixie Group ESTIMATED TOTAL WHOLESALE MARKET FOR CARPETS AND RUGS: VOLUME AND PRICE POINTS Positioning of Dixie Brands by Price Point Segment TOTAL MARKET: SQUARE YARDS OR SALES DOLLARS BROADLOOM RESIDENTIAL SALES FOCUSED NATIONAL SUPPLIER IN THE UPPER END OF THE S
Slide 15: Dixie Group High-End Residential Sales
Dixie Group High-End Residential Sales All Residential Brands Sales by Brand for TTM Q4 2014 15
Slide 16: Dixie Group High-End Residential Sales by Channel
Dixie Group High-End Residential Sales All Brands Sales by Channel for TTM Q4 2014 Specialty - OEM, 1% Commercial, 1% Builder, 4% Mass Merchant, 14% Designer, 16% Retailer, 64% The company believes that a significant portion of retail sales also involve a designer 16
Slide 17: Dixie Home brand
• 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® Sola
Slide 18: Masland brand
• 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 – Wool products in both tufted
Slide 19: Fabrica brand
• 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 • 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 21: Atlas premium commercial brand
• 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 brand
• 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: Sales by Channel for 2014
Sales by Channel for 2014 Channels: Interior Design Specifier and Commercial End User 23
Slide 24: Dixie Group Sales
Dixie Group Sales $ in millions Net Sales (millions) $407 $331 $345 $321 $283 $270 $266 $231 $205 2006 2007 2008 2009 2010 2011 2012 2013 2014 Includes Atlas Carpet Mills since March 2014 and Burtco since September 2014 25
Slide 25: Sales & Operating Income
Sales & Operating Income $ in millions Y 2007 Y 2008 Y 2009 Y 2010 Y 2011 Y 2012 Y 2013 Y 2014 Net Sales 320.8 283 203 231 270 266 344 407 Net Income (Loss) 6.2 (31.5) (42.2) (4.7) 1.0 (0.9) 5.3 (1.4) Non-GAAP Adjusted Op. Income 16.7 (28.5) (45.4) (2.6) 5.7 3.5 16.4 4.7 Non-GAAP Adjusted EBITDA 29.
Slide 26: 2014 Restructuring
2014 Restructuring $ in millions 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 savings f
Slide 27: Current Business Conditions: 2014 Activity
Current Business Conditions 2014 Activity • We continue to outperform the industry in sales growth • We have grown 96% since 2009 while the industry is up 12% • Operationally we continue to create advantages for the future: • We have integrated the Burtco and Atlas Carpet Mills acquisitions • We hav
Slide 28: Current Business Conditions: 2015 Initiatives
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 will be growing our new Masland Hospitality brand, building on our purchase of Burtco and its expertise in custom comp
Slide 29: 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 30: The Dixie Group brands
FABRICA FINE CARPET & RUGS CARPETS&:RUCS HOME AF KE THE DIXIE GROUP
Slide 31: Non-GAAP Information
Non-GAAP Information 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 curre
Slide 32: Non-GAAP Gross Profit
Non-GAAP Gross Profit 2007 (a) 2008 (a) 2009 (a) 2010 2011 2012 2013 2014 Net Sales 320,795 282,710 203,480 231,322 270,110 266,372 344,374 406,588 Gross Profit 97,217 78,089 52,105 56,651 65,506 65,372 85,570 95,497 Plus: Business integration expense - - - - - 1,383 4,738 445 Plus: Amortization of
Slide 33: Non-GAAP EBIT and EBITDA
Non-GAAP EBIT and EBITDA 2007 (a) 2008 (a) 2009 (a) 2010 2011 2012 2013 2014 Net income (loss) as reported 6,247 (31,481) (42,241) (4,654) 986 (927) 5,291 (1,402) Less: (Loss) from discontinued, net tax (521) (313) (382) (280) (286) (275) (266) (2,075) Plus: Taxes 3,686 (2,932) (8,870) (2,604) 684 (
Slide 34: Non-GAAP Gross Profit (Quarterly)
Non-GAAP Gross Profit Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Net Sales 95,384 85,082 107,926 109,006 104,574 Gross Profit 22,755 18,101 26,671 26,599 24,126 Plus: Business integration expense 875 445 - - - Plus: Amortization of inventory step up 107 - 194 196 216 Non-GAAP Adj. Gross Profit (Note 1)
Slide 35: Non-GAAP EBIT and EBITDA (Quarterly)
Non-GAAP EBIT and EBITDA Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Net income (loss) as reported 1,597 4,628 (645) (185) (5,200) Less: (Loss) from discontinued, net tax (106) (193) (135) (177) (1,570) Plus: Taxes (758) 2,853 (13) 44 (1,830) Plus: Interest 996 1,012 1,158 991 1,141 Non-GAAP Adjusted EB
Slide 36: Recast Non-GAAP Information
Recast Non-GAAP Information 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'
Slide 37: Recast Non-GAAP Detail
Prior Year Actual Recast Non-GAAP December 28, December 27, December 27, Amount 2013 2014 2014 Recast Reason Net Sales $ 344,374 $ 406,588 $ 408,082 $ 1,494 Sales deductions = 2013 rate Cost of Sales 258,804 311,091 300,860 (9,625) Variances = 2013 rate Operating Margin 85,570 95,497 107,222 (606) R
Slide 38: Facility Consolidation Information
Facility Consolidation Information Facility Consolidation Plan Summary 2014 2015 Est 2016 Est Total East Coast Facility consolidation 4,148 1,010 342 5,158 East Coast Asset write off 1,133 - - 1,133 West Coast Facility consolidation 1,366 379 - 1,745 Total facility consolidation and asset write off'