Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (October 2013)
36 slides from Dixie's investor presentation, Oct 30, 2013
Slide 1: October 2013 Investor Presentation
October 2013 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 • 21% 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 • After hittin
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 2013 We are seeing a rebound in the relationship between carpet and rug shipments and GDP We believe that the 2013 will be the year we start to see housing outpace GDP growth as it catches up to household formation 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 Year to date 2013 shows stronger growth; Expect this growth to continue as the year progresses
Slide 9: Consumer Sentiment
9 Consumer Sentiment Conference Board September 2013: “Consumer Confidence decreased in September as concerns about the short-term outlook ….” Consumers’ assessment of current business and labor market conditions, however, was more positive.” Lynn Franco, Director of The Conference Board Consumer
Slide 10: The Stock Market
The Stock Market 10 October 2013 The stock market has rebounded beyond pre- recession levels 2013 is positive but still subject to macro events: US Fiscal Issues, 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 Q3 TTM Carpet Market Sales
U.S. 2013 Q3 TTM Carpet Market 13 Sales $7.7 Billion Source: Floor Focus – Broadloom & Carpet Tile Dixie versus the Industry Dixie 2013 Q3 TTM 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 OT AL M AR K E T : SQUAR E Y AR DS OR S ALE S DOL L AR S ESTIMATED TOTAL WHOLESALE MARKET FOR CARPETS AND RUGS: VOLUME AND PRICE POINTS Positioning of Dixie Brands by Price Poin
Slide 18: High-End Residential Sales by Brand
Dixie Group High-End Residential Sales All Brands 18 Sales by Brand for TTM Q3 2013
Slide 19: High-End Residential Sales by Channel
Dixie Group High-End Residential Sales All Brands 19 Sales by Channel for TTM Q3 2013
Slide 20: Dixie Home
• 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: Masland Residential
• Leading high-end brand with reputation for innovative styling, design and color • High-end retail / designer driven – Approximately 30% 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
• 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, AECOM, Club Corp • Growth initiative – SPEAK modular car
Slide 25: Commercial Sales by Channel
25 Sales by Channel for TTM Q3 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
- 50 100 150 200 250 300 350 2006 2007 2008 2009 2010 2011 2012 2013 Annualized 314 305 272 199 225 263 258 324 17 16 11 6 6 7 8 11 Carpet Sales Processing Sales 27 $331 $321 $283 $203 $231 $270 Dixie Group Sales $ in millions $266 $335
Slide 28: Sales & Operating Income
Sales & Operating Income $ in millions 28 In 2013 our key objectives are: • Introduction of our SPEAK modular carpet tile and FIT office remodel collections • Expansion of our Stainmaster® TruSoft™ and SolarMax™ residential products • Expansion of our wool “permaset” dyeing process for color flexibi
Slide 29: Current Business Conditions
Third quarter 2013 activity: - The residential floorcovering market strengthened throughout the quarter. The market is growing due to an improving housing sector. - Residentially we have momentum in our Stainmaster® TruSoft™, Stainmaster® SolarMax™ and wool product offerings and an expanded sales fo
Slide 30: Outlook for 2013
Outlook for 2013 The housing & commercial markets have strengthened: • The residential housing & commercial end use markets are gaining momentum. • Positive market reception to our new products: - Masland and Fabrica Wool Collections continued growth - New Stainmaster® SolarMax® and TruSoft™ product
Slide 31: The Dixie Group
THE ‘DT R2nE. GRO oC P
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: Adjusted Tax Rate and Adjusted EPS
33 Due to rounding, totals of the quarterly information for each of the years reflected may not necessarily equal the annual totals. Q3 Adjusted Tax Rate Q3 2013 Pre-tax income 931 Taxes (501) Taxes without credit 295 Adjusted Tax rate 31.6% Adjusted EPS Q3 2013 Q3 2012 Q3 2013 Q3 2012 Net Income 1,
Slide 34: Restated Adjusted Operating Income (Loss)
Note a: Restated Adjusted Operating Income (Loss) - Note 2 ($ in thousands) 2007 (a) 2008 (a) 2009 (a) 2010 2011 2012 2013 YTD Net Sales 320,795 282,710 203,480 231,322 270,110 266,373 249,266 Operating income (loss) 16,707 (28,460) (45,389) (2,570) 5,668 1,815 6,777 Plus: Facility consolidation and
Slide 35: Quarterly Adjusted Operating Income (Loss)
Adjusted Operating Income (Loss) - Note 2 ($ in thousands) Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Net Sales 62,851 66,566 65,822 71,134 75,440 83,616 90,211 Operating income (loss) 620 (40) 820 415 1,677 3,271 1,829 Plus: Facility consolidation and severance expenses - - - - - - - P
Slide 36: Free Cash Flow
36 Free Cash Flow (FCF) - Note 5 ($ in thousands) Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Non-GAAP Adjusted EBIT (from above) 617 55 1,009 412 1,669 3,166 1,828 Times: 1 - Tax Rate = EBIAT 401 35 656 268 1,085 2,058 1,188 Plus: Depreciation and Amortization 2,402 2,379 2,355 2,259 2,