Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (February 2014)
38 slides from Dixie's investor presentation, Feb 19, 2014
Slide 1: February 2014 Investor Presentation
February 2014 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
• Began operations in 1920 • Transitioned from textiles to floorcovering in 1990’s – now 100% floorcovering • Refined focus on upper-end markets in 2004 • For over 90 years we have focused on specialized products • Traditionally we have outperformed the industry and expect to do so in the future 3 D
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 20 carpet customers • 22% of sales 4
Slide 5: 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). 5 3,000 3,500 4,000 4,500 5,000 5,500 250 300 350 400 450 500 550 600 Jan '10 July Jan '11 July Jan '12 July Jan '13 Jul • “Existin
Slide 6: Residential Remodeling
6 Steady recovery in 2009 through 2013 with predicted higher levels in 2014 Residential Remodeling Harvard Study Leading Indicator of Remodeling Activity
Slide 7: The Industry versus GDP
7 2014 Economic growth will strengthen in 2014, starting in the first quarter and averaging about 2.6% for the year. The gains will come as business and consumer confidence strengthens and Europe begins to emerge from its 18-month recession…” Kiplinger’s Dec 23, 2013 The Industry versus GDP
Slide 8: Residential and Commercial Fixed Investment
Residential and Commercial Fixed Investment 8 Rebound in residential activity Rebound in commercial activity 2013 showed a strong rebound in growth; We expect 2014 to continue this trend 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 1 9 69 Q 1 1 9 70 Q 1 1 9 71 Q 1 1 9 7 2 Q 1 1 9 73 Q 1 1 9 74
Slide 9: Consumer Sentiment
9 Consumer Sentiment Conference Board January 2014: “Consumers’ assessment of the present situation continues to improve, with both business conditions and the job market rated more favorably.” “Looking ahead six months, consumers expect the economy and their earnings to improve, but were somewh
Slide 10: The Stock Market
The Stock Market 10 February 2014 The stock market has rebounded beyond pre- recession levels 2014 has had a slight pullback but appears to be on a more stable track of steady growth However, the market is still subject to macro events: Job growth, US fiscal policy, China, Middle East
Slide 11: The Industry as compared to The Dixie Group
The Industry as compared to The Dixie Group 11 Source: U.S. Bureau of Economic Analysis and Company estimates
Slide 12: 2012 U.S. Carpet Manufacturers
2012 U.S. Carpet Manufacturers 12 Source: Floor Focus – includes carpet as broadloom and modular tile, excludes rug sales Carpet Leaders Dollars in Millions % Total Shaw (Berkshire Hathaway) $ 2,996 38.7% Residential & Commercial Mohawk (MHK) $ 1,869 24.2% Residential & Commercial Beaulieu (Private)
Slide 13: U.S. 2013 Carpet Market Sales $10.2 Billion
U.S. 2013 Carpet Market 13 Sales $10.2 Billion Source: Floor Focus – Broadloom & Carpet Tile and Dixie Group estimate Dixie versus the Industry Dixie 2013 Market
Slide 14: Carpet Dollar Sales Indexed to 2009
Carpet Dollar Sales Indexed to 2009 14
Slide 15: Carpet Unit Sales Indexed to 2009
Carpet Unit Sales Indexed to 2009 15
Slide 16: Industry Positioning
Industry Positioning The Dixie Group 16 • 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 17: Residential Market Positioning
Residential Market Positioning The Dixie Group 17 BROADLOOM RESIDENTIAL SALES = $7.0 Billion (2012 $’s) 35% Market Share T O T A L M A R K E T : S QUA R E Y A R DS 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 P
Slide 18: High-End Residential Sales by Brand 2013
Dixie Group High-End Residential Sales All Brands 18 Sales by Brand for 2013
Slide 19: High-End Residential Sales by Channel 2013
Dixie Group High-End Residential Sales All Brands 19 Sales by Channel for 2013
Slide 20: Masland Residential 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 21: Dixie Home brand
• Leading high-end brand with reputation for innovative styling, design and color • High-end retail / designer driven – Approximately 28% of sales directly involve a designer • Hand crafted and imported rugs • Growth initiative – Stainmaster® TruSoft™ Fiber Technology – Wool products in both tufted
Slide 22: Fabrica brand
• Premium high-end brand – “Quality without Compromise” • Designer focused – Approximately 40% 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” 22
Slide 23: Commercial Market Positioning
Commercial Market Positioning The Dixie Group 23 • We focus on the “high end specified soft floorcovering contract market” • We have positioned our brands to serve this market through: – Our Masland Contract division • Broad product line for diverse commercial markets through a direct sales model –
Slide 24: Masland Contract
• Premium brand in the specified commercial marketplace – Corporate, End User, Store Planning, Hospitality, Health Care, Government and Education markets • Designer focused • Strong national account base – Nordstrom’s, Target, Delta Air Lines, Best Buy, Club Corp • Growth initiative – SPEAK modular
Slide 25: Sales by Channel for 2013
25 Sales by Channel for 2013 Channels: Interior Design Specifier and Commercial End User
Slide 26: Avant
• Avant is our newest brand • 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 26
Slide 27: Dixie Group Sales
$331 $321 $283 $205 $231 $270 $266 $345 2006 2007 2008 2009 2010 2011 2012 2013 Net Sales (millions) 27 Dixie Group Sales $ in millions
Slide 28: Sales & Operating Income
Sales & Operating Income $ in millions 28 In 2013 we: • Introduced our SPEAK modular carpet tile and FIT office remodel collections • Expanded our Stainmaster® TruSoft™ and PetProtect™ residential products • Expanded our wool “permaset” dyeing process for color flexibility • Integrated our Robertex
Slide 29: Current Business Conditions
- The residential floorcovering market continued to show positive trends at retail. The market is growing due to an improving housing sector. - Residentially we have momentum in our Stainmaster® TruSoft™, Stainmaster® PetProtect™ and wool product offerings, an expanded sales force and excellent reta
Slide 30: Outlook for 2014
Outlook for 2014 The housing & commercial markets have strengthened: • The residential housing markets are continuing their momentum • Positive market reception to our new products: Masland and Fabrica Wool Collections continued growth New Stainmaster® PetProtect™ and TruSoft™ products New mod
Slide 31: CARPETS RUGS
CARPETS RUGS HOMES RG. KS E DIXIE GROUP
Slide 32: Non-GAAP Information
Non-GAAP Information 32 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 33: Non-GAAP EPS Calculation
33 Non-GAAP EPS Calculation Q4 2013 Q4 2012 2013 2012 Net Income 1,597 (415) 5,290 (927) Loss from Discontinued Operations (1) (2) (68) (274) Income from Continuing Operations 1,598 (413) 5,358 (653) Plus: Mfg expansion & Business integration in COGS 982 529 5,105 1,383 Plus: Mfg expansion & Busines
Slide 34: Non-GAAP Gross Profit
34 Non-GAAP Gross Profit Q4 2013 Q4 2012 2013 2012 Net Sales 95,799 71,134 345,066 266,372 Gross profit 22,825 17,395 85,639 65,372 Plus: Mfg expansion & Business integration in COGS 982 529 5,105 1,383 Adjusted gross profit 23,807 17,924 90,744 66,755 Gross profit margin as % of net sales 23.8% 24.
Slide 35: Adjusted Operating Income (Loss)
35 Adjusted Operating Income (Loss) - Note 2 ($ in thousands) Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Net Sales 62,851 66,566 65,822 71,134 75,440 83,616 90,211 95,799 Operating income (loss) 620 (40) 820 415 1,677 3,271 1,829 1,813 Plus: Facility consolidation and severance
Slide 36: Free Cash Flow (FCF)
36 Free Cash Flow (FCF) - Note 5 ($ in thousands) Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Non-GAAP Adjusted EBIT (from above) 617 55 1,009 412 1,669 3,166 1,828 1,809 Times: 1 - Tax Rate = EBIAT 401 35 656 268 1,085 2,058 1,188 1,176 Plus: Depreciation and Amortization 2,402
Slide 37: Adjusted Operating Income (Loss)
37 Adjusted Operating Income (Loss) - Note 2 Note a: Restated ($ in thousands) 2007 (a) 2008 (a) 2009 (a) 2010 2011 2012 2013 Net Sales 320,795 282,710 203,480 231,322 270,110 266,373 345,066 Operating income (loss) 16,707 (28,460) (45,389) (2,570) 5,668 1,815 8,591 Plus: Facility consolidation and
Slide 38: Free Cash Flow (FCF)
38 Free Cash Flow (FCF) - Note 5 ($ in thousands) 2007 (a) 2008 (a) 2009 (a) 2010 2011 2012 2013 Non-GAAP Adjusted EBIT (from above) 16,801 (28,134) (45,208) (2,853) 5,426 2,092 8,471 Times: 1 - Tax Rate = EBIAT 10,921 (18,287) (29,385) (1,854) 3,527 1,360 5,506 Plus: Depreciation and Amortization 1