Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (November 2012)
37 slides from Dixie's investor presentation, Nov 9, 2012
Slide 1: November 2012 Investor Presentation
November 2012 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 • Entered floorcovering in 1993 and exited textiles in 1999 – 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
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 – Top 10 carpet customers • 13% of sales – Top 20 carpet customers • 16% 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 New in July-Existing in August: New home sales increased 3.6% from June. The rate of 372,000 was 25.3% better than one year ago. The West leads the regions with YTD sales up 34.7%. Existing home sales increase
Slide 6: Residential Remodeling Owner-Occupied Improvements
$80,000 $90,000 $100,000 $110,000 $120,000 $130,000 $140,000 $150,000 00 01 02 03 04 05 06 07 08 09 10 11 Jan Feb Mar Apr May Jun Jul Aug 6 Steady recovery in 2009 through 2011 with predicted similar pattern for 2012. Millions of dollars http://www.census.gov/construction/c30/c30index.html Private c
Slide 7: The Industry versus GDP
7 2012 We are starting to see a rebound in the relationship between carpet and rug shipments and GDP We believe that the long-term trend will once again be restored once purchases of existing homes rebounds The Industry versus GDP
Slide 8: Residential and Commercial Fixed Investment
Residential and Commercial Fixed Investment 8 Slight rebound in residential activity Rebound in commercial activity
Slide 9: Consumer Sentiment
9 Consumer Sentiment Conference Board September 2012: Consumer expectations over the next 6 months are up (green) Upper-end consumer confidence has increased (red) “Despite continuing economic uncertainty, consumers are slightly more optimistic than they have been in several months.” ─ Lynn Fran
Slide 10: The Stock Market
The Stock Market 10 October 2012 The stock market has rebounded to pre-recession levels 2012 is positive but is still subject to macro events: Europe, US Election, China
Slide 11: The Industry
The Industry 11 Source: U.S. Bureau of Economic Analysis - 50,000 100,000 150,000 200,000 250,000 300,000 350,000 - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 18,000,000 20,000,000 19 63 19 68 19 73 19 78 19 83 19 88 19 93 19 98 20 03 20 08 Value of U.S. Carp
Slide 12: 2011 U.S. Carpet Manufacturers
2011 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 $ 2,966 38.8% Residential & Commercial Mohawk $ 1,884 24.6% Residential & Commercial Beaulieu $ 726 9.5% Residential & Commercial
Slide 13: The Industry: Carpet End Use
2006 Carpet End Use TTM 2012 Q3 Carpet End Use 13 Sales $10.19 Billion Sales $7.45 Billion Commercial % 2001 – 2012 From 32% to 43% Source: Floor Focus – Broadloom & Carpet Tile Residential 65% Commercial 35% Residential 57% Commercial 43% The Industry
Slide 14: Dixie Group Carpet Sales by End Market
Dixie Group Carpet Sales High-End Residential 74% High-End Commercial 26% 14 Dixie TTM Q3 2012 Carpet and Rug Sales by End Market Commercial % 2001 – 2012 From 25% to 38%
Slide 15: Carpet Dollar Sales Indexed to 2008
Carpet Dollar Sales Indexed to 2008 15
Slide 16: Carpet Unit Sales Indexed to 2008
Carpet Unit Sales Indexed to 2008 16
Slide 17: Residential Positioning
Residential Positioning The Dixie Group 17 BROADLOOM RESIDENTIAL SALES = $7.0 Billion (2009 $’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 Price Po
Slide 18: High-End Residential Sales All Brands
Dixie Group High-End Residential Sales All Brands Masland, 43% Dixie Home, 38% Fabrica, 19% 18 TTM Q3 2012
Slide 19: Sales by Channel for TTM Q3 2012
Dixie Group High-End Residential Sales All Brands Retailer, 61% Designer, 19% Mass Merchant, 11% National Retailers, 2% Builder, 3% Commercial, 2% Other, 0.9% Distributor, 0.4% Specialty - OEM, 0.7% 19 Sales by Channel for TTM Q3 2012
Slide 20: Sales by Channel for TTM Q3 2012
20 Sales by Channel for TTM Q3 2012 Retailer, 68% Mass Merchant, 29% Builder, 2% Distributor, 1%
Slide 21: Dixie Home
• Well-styled moderate to upper priced residential broadloom line • Dixie provides a “full line” to retailers • Leverage needed by fiber suppliers for market access • Selective distribution strategy attractive to retailers • Growth initiatives – Stainmaster® Tru Soft TM Fiber Technology – Stainmaste
Slide 22: Sales by Channel for TTM Q3 2012
Retailer, 60% Designer, 29% National Retailers, 1% Builder, 4.6% Commercial, 5% Other, 0.4% 22 Sales by Channel for TTM Q3 2012
Slide 23: Masland
• Leading high-end brand with reputation for innovative styling, design and color • High-end retail / designer driven • Hand crafted and imported rugs • Growth initiative – Stainmaster® TruSoft™ Fiber Technology – Wool products • Complete line of broadloom and rugs to the industry 23
Slide 24: Sales by Channel for TTM Q3 2012
24 Retailer, 48% Designer, 40% National Retailers, 7% Builder, 2% Specialty - OEM, 3% Sales by Channel for TTM Q3 2012
Slide 25: Fabrica
• Premium high-end brand – Superior quality in all aspects • Designer focused • Hand crafted and imported rugs • Growth initiatives – Stainmaster® TruSoft™ Fiber Technology – Fabrica Permaset dyeing process allows unlimited color selection in select wool products – Expand select retail distribution
Slide 26: Commercial Sales by Channel for TTM Q3 2012
26 Sales by Channel for TTM Q3 2012 Channels: Interior Design Specifier and Commercial End User Hospitality, 31% Corporate, 40%Education, 3% Store Planning, 13% Gov't, 2% Health Care, 6% Other, 5%
Slide 27: Commercial Brand
• Premium brand in the commercial marketplace • Designer focused • Strong national account base – Nordstrom’s, Target, Sears, Delta Air Lines, AECOM, Club Corporation of America • Growth initiative – Modular/carpet tile – End User Channel 27
Slide 28: Dixie Group Sales
- 50 100 150 200 250 300 350 2006 2007 2008 2009 2010 2011 2012 Seasonally Adjusted 314 305 272 199 225 263 260 17 16 11 6 6 7 5 Carpet Sales Processing Sales 28 $331 $321 $283 $203 $231 $270 Dixie Group Sales $ in millions $265
Slide 29: Sales & Operating Income
Sales & Operating Income $ in millions 29 • In 2012, we have: – Improved Residential Retail Sales (non mass merchant) by 6.5% in Q3 while the industry was flat – Completed acquisition of Colormaster enhancing our piece dye capabilities – Estimated 2012 investments of normal capital expenditures and
Slide 30: Current Business Conditions
Current Business Conditions 2012 Activity Activity: • Third quarter as compared to prior year: - Residential non mass merchant sales up 6.5% compared to the industry being down slightly - New commercial sector management team is in place - New high value performance modular carpet tile being launche
Slide 31: Outlook
Outlook Current quarter Though the market has been difficult, we are encouraged by: • Dixie’s high-end goods are growing faster than the market • Positive market reception to our new products: - Masland and Fabrica Wool Collections continued growth - Masland Avenue – new technology with a woven look
Slide 32: fABrich 24) dl
fABrich 3 24) dl b CARPETS<RUCS
Slide 33: Non-GAAP Information
Non-GAAP Information 33 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 34: Non-GAAP Information
34 Non-GAAP Information ($ in thousands) YTD 2011 YTD 2012 Y/Y Chge Weeks in Period 40 39 Net Sales as Reported 204,761 195,238 -4.7% Adjustment for Weeks (4,711) - 2.2% Non-GAAP Net Sales as Adjusted (Note 1) 200,050$ 195,238$ -2.4% Use of Non-GAAP Financial Information: Net Sales Adjusted - Note 1
Slide 35: Non-GAAP Adjusted Operating Income and EBIT
Note a: Restated ($ in thousands) 2007 (a) 2008 (a) 2009 (a) 2010 2011 2012 YTD Operating income (loss) 16,707 (28,460) (45,389) (2,570) 5,668 1,400 Plus: Facility consolidation and severance expenses - 2,317 4,091 1,556 (563) - Plus: Impairment of assets - 4,478 1,459 - - - Plus: Impairment of good
Slide 36: Quarterly Non-GAAP Reconciliation
36 Due to rounding, totals of the quarterly information for each of the years reflected may not necessarily equal the annual totals. ($ in thousands) Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Operating income (loss) 1,668 2,300 1,178 520 620 (40) 820 Plus: Facility consolidation and se
Slide 37: Non-GAAP Information
37 Non-GAAP Information ($ in thousands) Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Non-GAAP Adjusted EBIT (from above) 1,685 2,290 882 568 617 55 1,009 Times: 1 - Tax Rate = EBIAT 1,096 1,489 573 369 401 36 656 Plus: Depreciation and Amortization 2,519 2,360 2,422 2,348 2,402 2,379 2,3