Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (March 2018)
31 slides from Dixie's investor presentation, Mar 1, 2018
Slide 1: March 2018 Investor Presentation
March 2018 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
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) – Top 10 carpet customers • 18% of sales – Top 100 carpet customers • 31% 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 6 New 1,000 Existing 1,000 Source: National Association of Realtors (existing) and census.gov/newhomesales 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 '13 Jan '14 Jan '15 Jan '16 Jan '17 • “
Slide 7: Residential and Commercial Fixed Investment
Residential and Commercial Fixed Investment 7 Rebound in residential activity Commercial activity is flat We expect 2018 to continue the rebound of residential 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: 2016 U.S. Flooring Manufacturers
2016 U.S. Flooring Manufacturers 9 Source: Floor Focus - Flooring includes sales of carpet, rugs, ceramic floor tile, wood, laminate, resilient and rubber Carpet & Rug Leaders Flooring $ in millions Flooring % Shaw (Berkshire Hathaway) 3,983 19.2% Mohawk (MHK) 4,892 23.6% Engineered Floors (Private)
Slide 10: Dixie versus the Industry
Dixie versus the Industry 2017 U.S. Carpet & Rug Market of $10.6 billion 10 Source: Floor Covering Weekly and Dixie Group estimate 2017 Dixie sales [CATE GORY NAME] , [VALU E] [CATE GORY NAME] , [VALU E] [CATE GORY NAME] , [VALU E] [CATE GORY NAME] , [VALU E]
Slide 11: Carpet Growth: Dixie Market Share in Dollars and Units
Carpet Growth Dixie Market Share in Dollars and Units 11
Slide 12: 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 13: Residential Brand Positioning
Residential Brand Positioning The Dixie Group 13 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 Dixie Home Fabrica INDUSTRY AVERAGE PRICE / SQ YD FOR CARPETS AND RUGS $0 $14 $21 $28 $35 $42 $49 Note: Market share data based on internal company estimates – Industry average pri
Slide 14: High-End Residential Sales by Brand for 2017
Dixie Group High-End Residential Sales All Residential Brands Masland Dixie Home Fabrica 14 Sales by Brand for 2017
Slide 15: High-End Residential Sales by Channel for 2017
Dixie Group High-End Residential Sales All Brands Retailer Designer Mass Merchant Builder Commercial Specialty - OEM 15 Sales by Channel for 2017 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 24% 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 31% 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 • 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 20: 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 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 – Masland Contract Modular Carpet Tile – Masland Hospitality using “compu
Slide 22: Commercial Sales by Channel for 2017
Hospitality Corporate Education Store Planning Gov't Health Care Other 22 Sales by Channel for 2017 Channels: Interior Design Specifier and Commercial End User
Slide 23: Dixie Group Sales
Dixie Group Sales $ in millions 23 331 321 283 205 231 270 266 345 407 422 397 412 0 50 100 150 200 250 300 350 400 450 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Net Sales *2016 had 53 weeks.
Slide 24: Sales & Operating Income
Sales & Operating Income $ in millions 24 Note: Non-GAAP reconciliation starting on slide 27 Annual Y 2007 Y 2008 Y 2009 Y 2010 Y 2011 Y 2012 Y 2013 Y 2014 Y 2015 Y 2016 Y2017 Net Sales 321 283 203 231 270 266 344 407 422 397 412 Net Income (Loss) 6.2 (31.5) (42.2) (4.7) 1.0 (0.9) 5.3 (1.4) (2.4) (5
Slide 25: Current Business Conditions
Current Business Conditions 2017 Initiatives • We have consolidated our two commercial brands, Masland Contract and Atlas, under one management, sharing operations in marketing, product development and manufacturing but maintaining distinct sales forces. • We announced our Profit Improvement Program
Slide 26: {Ne BRICA
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Slide 27: Non-GAAP Information
Non-GAAP Information 27 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 28: Non-GAAP Information: Gross Profit and S,G&A
Non-GAAP Information 28 Non-GAAP Gross Profit 2011 2012 2013 2014 2015 2016 2017 Net Sales 270,110 266,372 344,374 406,588 422,484 397,453 412,462 Gross Profit 65,506 65,372 85,569 95,497 106,231 95,425 101,213 Plus: Business integration expense - 1,383 4,738 445 - - - Plus: Amortization of inventor
Slide 29: Non-GAAP Operating Income
29 Non-GAAP Operating Income 2011 2012 2013 2014 2015 2016 2017 Net Sales 270,110 266,372 344,374 406,588 422,484 397,453 412,462 Operating income (loss) 5,668 1,815 8,855 (5,236) 1,990 (3,415) 3,965 Plus: Acquisition expenses - 318 350 789 - - - Plus: Amortization of inventory step up - - 367 606 -
Slide 30: Non-GAAP EBIT and EBITDA
30 Non-GAAP EBIT and EBITDA 2011 2012 2013 2014 2015 2016 2017 Net income (loss) as reported 986 (927) 5,291 (1,402) (2,426) (5,278) (9,555) Less: (Loss) from discontinued, net tax (286) (275) (266) (2,075) (148) (71) (233) Plus: Taxes 684 (401) (576) 1,055 (714) (3,622) 7,509 Plus: Interest 3,470 3
Slide 31: Net Sales as Adjusted
31 Net Sales as Adjusted Net Sales December 31, Extra December 31, December 30, As Adjusted 2016 Week 2016 2017 Difference % Change Year 2017 Net Sales as Adjusted 397,453$ (5,380)$ 392,073$ 412,462$ 20,389$ 5.2% December 30, Adjusted for Tax Cut and Jobs Act of 2017 (Note 9) 2017 Net Loss as report