Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (May 2020)
33 slides from Dixie's investor presentation, May 19, 2020
Slide 1: May 2020 Investor Presentation
Exhibit 99.1 May 2020 Investor Presentation Contact: Allen Danzey CFO The Dixie Group Phone: 706-876-5865 allen.danzey@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: COVID – Response
COVID – 19 Response Health & Safety Cost Reductions Liquidity • Large scale COVID-19 • Temporary pay • Working with vendors, testing where necessary reductions have been landlords and providers • Monitoring and implemented for of debt to extend terms complying with all salaried workforce • Pursuing
Slide 5: 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 • 14% of sales – Top 100 carpet customers • 29% of sales 5
Slide 6: 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 b
Slide 7: New and Existing Home Sales
New and Existing Home Sales Seasonally Adjusted Annual Rate • “Unfortunately, we knew New 1,000 Existing 1,000 home sales would wane in 800 6,000 March due to the coronavirus outbreak. More 750 temporary interruptions to home sales should be 700 5,500 expected in the next couple of months, though ho
Slide 8: Remodeling Activity
Remodeling Activity QS THE DIXIE GROUP Leading Indicator of Remodeling Activity — First Quarter 2020 Homeowner Improvements & Repairs Four-Quarter Moving Totals Four-Quarter Moving Billions Rate of Change 100 10% * | 6.1% 6.0% 6.3% 67% 70% 67% 85% 59% 4 14 | $450 : 3.3% 22% 3.9% | 5% $400 1.9% 0% 0.
Slide 9: Household Formations
Household Formations G Figure 1: Household Formations HH (mm) HH formations jump on HH (mm) (1,000) (2,000) (3,000) [se] So So N Own less Rent (LHS) ------- HH Formations (RHS) Source: Census Bureau, Evercore !SI Research
Slide 10: Residential and Commercial Fixed Investment
Residential and Commercial Fixed Investment 10
Slide 11: 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 11
Slide 12: 2018 U.S. Flooring Manufacturers
2018 U.S. Flooring Manufacturers Flooring $ in Flooring Market Flooring Manufacturers millions % Shaw (Berkshire Hathaway) 5,142 21.7% Mohawk (MHK) 5,213 22.0% Engineered Floors (Private) 1,015 4.3% Interface (TILE) 601 2.5% Dixie (DXYN) 405 1.7% Imports & All Others 11,304 47.7% U.S. Carpet & Rug M
Slide 13: Dixie versus the Industry
Dixie versus the Industry 2020 First Quarter 2020 First Quarter U.S. Carpet & Rug Dixie sales Market of $10.6 billion High End Commercial, 25% Commercial, 44% High End Residential, 56% Residential, 75% Source: Floor Covering Weekly and Dixie Group estimate 13
Slide 14: Carpet Growth Dixie Market Share in Dollars and Units
Carpet Growth Dixie Market Share in Dollars and Units 14
Slide 15: 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 16: Residential Brand Positioning
Residential Brand Positioning The Dixie Group ESTIMATED WHOLESALE MARKET PRICE FOR CARPETS AND RUGS: VOLUME AND PRICE POINTS OR SALES DOLLARS Masland TOTAL MARKET: SQUARE YARDS SQUAREMARKET: YARDS TOTAL Dixie Home Fabrica $0 $8 $14 $21 $28 $35 $42 $49 INDUSTRY AVERAGE PRICE / SQ YD FOR CARPETS AND R
Slide 17: High-End Residential Sales by Brand Q1 2020
Dixie Group High-End Residential Sales All Residential Brands Sales by Brand for Q1 2020 Fabrica Masland Dixie Home 17
Slide 18: High-End Residential Sales by Channel Q1 2020
Dixie Group High-End Residential Sales All Brands Sales by Channel for Q1 2020 Specialty - OEM Commercial Builder Mass Merchant Designer Retailer The company believes that a significant portion of retail sales also involve a designer. 18
Slide 19: 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 – TRUCOR™ SPC and TRUCOR Prime™ WPC Luxury Vinyl Flooring – Sta
Slide 20: Masland
• Leading high-end brand with reputation for innovative styling, design and color • High-end retail / designer driven – Approximately 21% of sales directly involve a designer – Hand crafted and imported rugs • Growth initiative – TRUCOR Prime™ WPC Luxury Vinyl Flooring – Stainmaster® PetProtect ® Fi
Slide 21: Fabrica
• Premium high-end brand – “Quality without Compromise” • Designer focused – Approximately 29% of sales directly involve a designer – Hand crafted and imported rugs • Growth initiatives – Fabrica Fine Wood Flooring, a sophisticated collection of refined “best in class” wood flooring products. 21
Slide 22: Commercial Market Positioning
Commercial Market Positioning The Dixie Group • We focus on the “high-end specified soft floorcovering contract market” • Our AtlasMasland products – Designer driven focused on the fashion oriented market space – Broad product line for diverse commercial markets • Our Masland eNergy products – Sells
Slide 23: AtlasMasland consolidation
• The consolidation of Atlas and Masland Contract provides an exciting opportunity for us to become a greater resource to our customers in the hyper competitive commercial flooring market. • AtlasMasland has become a comprehensive resource to the commercial flooring customer. Whether a project calls
Slide 24: AtlasMasland commercial 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 – Sustaina™ cushion modular carpet backing with the ability to install in
Slide 25: Commercial Sales by Channel for Q1 2020
Sales by Channel for Q1 2020 Other Health Care Hospitality Gov't Store Planning Education Corporate Channels: Interior Design Specifier and Commercial End User 25
Slide 26: Dixie Group Sales
Dixie Group Sales $ in millions Net Sales 450 422 412 407 397 405 400 375 367 345 350 331 321 300 283 270 266 250 231 205 200 150 100 50 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 TTM 2020 *2016 had 53 weeks. 26
Slide 27: Sales & Operating Income
Sales & Operating Income $ in millions Annual FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 TTM 2020 Net Sales 266 344 407 422 397 412 405 375 367 Net Income (Loss) (0.9) 5.3 (1.4) (2.4) (5.3) (9.6) (21.4) 15.3 19.3 Operating Income 1.8 8.9 (5.2) 2.0 (3.4) 4.0 (15.6) 21.3 24.9 Non-
Slide 28: Current Business Conditions and 2020 Outlook
Current Business Conditions 2020 Outlook In 2019: • We have consolidated our two commercial brands into AtlasMasland. • We launched Sustaina™, our 95% post-consumer recycled material, PVC free and polyurethane free, cushion modular carpet tile backing. • We launched TRUCOR™ and TRUCOR Prime™ luxury
Slide 29: Dixie Home – Inspired by Design
“Arran INSPIRED BY DESIGN. DIXIE HOME THE DIXIE GROUP
Slide 30: 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 31: Non-GAAP Gross Profit and S,G&A
Non-GAAP Information Three Months Ended Non-GAAP Gross Profit Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q12019 Q22019 Q32019 Q42019 Q12020 Net Sales 98,858 106,438 101,562 98,175 88,606 100,394 95,447 90,134 80,578 Gross Profit 21,580 25,144 21,887 18,380 18,919 23,493 21,074 22,719 18,993 Plus: Unusual Worke
Slide 32: Non-GAAP Operating Income
Non-GAAP Operating Income Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q12019 Q22019 Q32019 Q42019 Q12020 Net Sales 98,858 106,438 101,562 98,175 88,606 100,394 95,447 90,134 80,578 Operating income (loss) (1,515) (165) (1,179) (12,765) (4,863) 574 (1,042) 26,681 (1,336) Plus: Unusual Workers Comp - 450 - - - -
Slide 33: Non-GAAP EBIT and EBITDA
Non-GAAP EBIT and EBITDA Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q12019 Q22019 Q32019 Q42019 Q12020 Net income (loss) as reported (2,907) (1,815) (2,962) (13,699) (6,672) (1,216) (2,554) 25,712 (2,689) Less: (Loss) from discontinued, net tax (23) 157 (40) 1 (31) (35) 23 (305) (77) Plus: Taxes (166) (26) 82