Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (February 2015)
36 slides from Dixie's investor presentation, Feb 18, 2015
Slide 1: February 2015 Investor Presentation
February 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, excludes Atlas) – 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 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/const/c25 (new). 6 3,000 3,500 4,000 4,500 5,000 5,500 250 300 350 400 450 500 550 600 Jan '10 Jan '11 Jan '12 Jan '13 Jan '14 • “Despite low invent
Slide 7: Residential and Commercial Fixed Investment
Residential and Commercial Fixed Investment 7 Rebound in residential activity Rebound in commercial activity 2014 has continues the rebound in fixed investment; We expect 2015 to continue this trend
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: 2013 U.S. Carpet & Rug Manufacturers
2013 U.S. Carpet & Rug Manufacturers 9 Source: Floor Focus – includes carpet as broadloom and modular tile, and rug sales Carpet Leaders Dollars in Millions % Total Shaw (Berkshire Hathaway) $ 3,110 27.7% Residential & Commercial Mohawk (MHK) $ 2,521 22.4% Residential & Commercial Beaulieu (Private)
Slide 10: U.S. 2014 Carpet Market of $8.7 billion
U.S. 2014 Carpet Market of $8.7 billion 10 Source: Floor Focus – Broadloom & Carpet Tile and Dixie Group estimate Dixie versus the Industry 2014 Dixie sales on a Pro Forma basis including Atlas
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 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 15: High-End Residential Sales by Brand
Dixie Group High-End Residential Sales All Residential Brands 15 Sales by Brand for TTM Q4 2014
Slide 16: High-End Residential Sales by Channel
Dixie Group High-End Residential Sales All Brands Retailer, 64%Designer, 16% Mass Merchant, 14% Builder, 4% Commercial, 1% [CATEGORY NAME], [VALUE], 16 Sales by Channel for TTM Q4 2014 The company believes that a significant portion of retail sales also involve a designer
Slide 17: Dixie Home brand
• Well-styled moderate to upper priced residential broadloom line – Known for differentiated pattern and color selection • Dixie provides a “full line” to retailers – Sells Specialty and Mass Merchant retailers • Growth initiatives – Stainmaster® Tru Soft TM Fiber Technology – Stainmaster® SolarMax
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 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 brand
• Atlas is our premium commercial brand • Dedicated to servicing the architect and designer for 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 runni
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
23 Sales by Channel for 2014 Channels: Interior Design Specifier and Commercial End User
Slide 24: Avant brand
• 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 2006 2007 2008 2009 2010 2011 2012 2013 2014 Net Sales (millions) 25 Dixie Group Sales $ in millions
Slide 26: Sales & Operating Income
Sales & Operating Income $ in millions 26 Note: Non-GAAP reconciliation starting on slide 31 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.
Slide 27: 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 have launched Masland Hospitality - We have e
Slide 28: Current Business Conditions: 2015 Initiatives
28 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 c
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: FINE CARPE
FINE CARPE FABRICA CARPETS&RUGS HOME? Re XK HE DIXIE GROUP
Slide 31: Non-GAAP Information
Non-GAAP Information 31 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 current results and results in a prior pe
Slide 32: Non-GAAP Gross Profit
32 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
Slide 33: Non-GAAP EBIT and EBITDA
33 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) 68
Slide 34: Non-GAAP Gross Profit (Quarterly)
34 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
Slide 35: Non-GAAP EBIT and EBITDA (Quarterly)
35 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
Slide 36: Facility Consolidation Information
36 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 o