Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (May 2016)
32 slides from Dixie's investor presentation, May 4, 2016
Slide 1: May 2016 Investor Presentation
May 2016 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 • 27% 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 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 6,000 250 300 350 400 450 500 550 600 650 700 750 800 Jan '10 Jan '11 Jan '12 Jan '13 Jan '14 Jan
Slide 7: Residential and Commercial Fixed Investment
Residential and Commercial Fixed Investment 7 Rebound in residential activity Commercial activity is flat 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 8 Source: U.S. Bureau of Economic Analysis and Company estimates
Slide 9: 2014 U.S. Carpet & Rug Manufacturers
2014 U.S. Carpet & Rug Manufacturers 9 Source: Floor Focus – includes carpet as broadloom and modular tile, and rug sales Carpet & Rug Leaders Dollars in Millions % Total Shaw (Berkshire Hathaway) $ 3,107 29.2% Residential & Commercial Mohawk (MHK) $ 2,563 24.1% Residential & Commercial Beaulieu (Pr
Slide 10: TTM Q1 2016 U.S. Carpet & Rug Market of $10.2 billion
TTM Q1 2016 U.S. Carpet & Rug Market of $10.2 billion 10 Source: Floor Focus and Dixie Group estimate Residential 55% Commercial 45% Dixie versus the Industry High- End Residential 64% High- End Commercial 36% TTM Q1 2016 Dixie sales
Slide 11: Carpet Dollars Indexed to 2009
Carpet Dollars Indexed to 2009 (includes Atlas Carpet Mills from date of acquisition) 11
Slide 12: Industry Positioning
Industry Positioning The Dixie Group 12 • 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 13: Residential Market Positioning
Residential Market Positioning The Dixie Group 13 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 OR S AL E S DO 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 IN
Slide 14: High-End Residential Sales by Brand
Dixie Group High-End Residential Sales All Residential Brands Masland, 35% Dixie Home, 45% Fabrica, 20% 14 Sales by Brand for TTM Q1 2016
Slide 15: High-End Residential Sales by Channel
Dixie Group High-End Residential Sales All Brands Retailer, 63% Designer, 16% Mass Merchant, 14% Builder, 4% Commercial, 1% Specialty - OEM, 2% 15 Sales by Channel for TTM Q1 2016 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 26% 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 33% 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 19 • 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 20: Atlas Carpet Mills
• 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 – Market specific modular carpet tile collections – Masland Hospitality u
Slide 22: Commercial Sales by Channel
Hospitality, 27% Corporate, 52% Education, 3% Store Planning, 7% Gov't, 1% Health Care, 4% Other, 6% 22 Sales by Channel for TTM Q1 2016 Channels: Interior Design Specifier and Commercial End User
Slide 23: Dixie Group Sales
$331 $321 $283 $205 $231 $270 $266 $345 $407 $422 $414 2006 2008 2010 2012 2014 2016 Annualized Net Sales (millions) 23 Dixie Group Sales $ in millions Includes Atlas Carpet Mills since March 2014 and Burtco since September 2014
Slide 24: Sales & Operating Income
Sales & Operating Income $ in millions 24 Note: Non-GAAP reconciliation starting on slide 28 Below is the estimated cost to complete the remaining Facility Consolidation Plans: Facility Consolidation Plan Summary 2013 2014 2015 Q1 2016 Q2 2016 Colormaster dryer write off 195 - - - - West Coast Facil
Slide 25: Current Business Conditions
Current Business Conditions 2016 Initiatives • We are completing our facility consolidation plans in 2016. • Our shipping quality is back in line and our quality expenses declining. • We are streamlining the operational changes with a focus on lower cost. • Our sales over the first five weeks of the
Slide 26: Outlook for 2016
Outlook for 2016 • Expansion of our Visionweave products through Atlas Carpet Mills division, a premium supplier to the specified commercial marketplace. • We have expanded the distribution of our Avant products throughout the Masland Contract salesforce. • We are growing our Masland Hospitality bra
Slide 27: FINE CARPE
FINE CARPE FABRICA CARPETS&RUGS HOME? Re XK HE DIXIE GROUP
Slide 28: Non-GAAP Information
Non-GAAP Information 28 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 29: Non-GAAP Gross Profit
Non-GAAP Gross Profit 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016 Net Sales 320,795 282,710 203,480 231,322 270,110 266,372 344,374 406,588 422,484 89,234 Gross Profit 97,217 78,089 52,105 56,651 65,506 65,372 85,569 95,497 106,231 19,506 Plus: Business integration expense - - - - - 1,383 4
Slide 30: Non-GAAP Income from Continuing Operations
Non-GAAP Income from Continuing Operations 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016 Net income (loss) as reported 6,247 (31,481) (42,241) (4,654) 986 (927) 5,291 (1,402) (2,426) (4,767) Less: (Loss) from discontinued, net tax (521) (313) (382) (280) (286) (275) (266) (2,075) (148) (10) I
Slide 31: Non-GAAP Free Cash Flow
31 Non-GAAP Free Cash Flow 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016 Non-GAAP Adjusted EBIT (from above) 16,801 (28,134) (45,208) (2,854) 5,426 2,092 8,737 6,029 1,943 (5,848) Times: 1 - Tax Rate = EBIAT 10,416 (17,443) (28,029) (1,769) 3,364 1,297 5,417 3,738 1,205 (3,626) Plus: Deprecia
Slide 32: Facility Consolidation Information
32 Facility Consolidation Information Facility Consolidation Plan Summary 2013 2014 2015 Q1 2016 Q2 2016 Colormaster dryer write off 195 - - - - West Coast Facility consolidation - 1,366 202 - - East Coast Facility consolidation - 4,148 2,016 1,342 230 East Coast Asset write off - 1,133 - - - Corpor