Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (February 2016)
32 slides from Dixie's investor presentation, Feb 24, 2016
Slide 1: February 2016 Investor Presentation
February 2016 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) – Top 10 carpet customers • 13% of sales – Top 100 carpet customers • 26% 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
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/newhomesales 6 3,000 3,500 4,000 4,500 5,000 5,500 6,000 250 300 350 400 450 500 550 600 Jan '10 Jan '11 Jan '12 Jan '13 Jan '14 Jan '15 • “Although
Slide 7: Residential and Commercial Fixed Investment
Residential and Commercial Fixed Investment 7 Rebound in residential activity Commercial activity is flat We expect 2016 to continue the trend of continuing the rebound of fixed investment as a percent of GDP
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: 2014 U.S. Carpet & Rug Manufacturers
2014 U.S. Carpet & Rug Manufacturers 9 Source: Floor Focus – includes carpet as broadloom and modular tile, and rug sales Carpet & Rug Leaders Dollars in Millions % Total Shaw (Berkshire Hathaway) $ 3,107 29.2% Residential & Commercial Mohawk (MHK) $ 2,563 24.1% Residential & Commercial Beaulieu (Pr
Slide 10: U.S. 2014 Carpet & Rug Market of $10.6 billion
U.S. 2014 Carpet & Rug Market of $10.6 billion 10 Source: Floor Focus and Dixie Group estimate Residential 56% Commercial 44% Dixie versus the Industry High- End Residential 64% High- End Commercial 36% 2015 Dixie sales
Slide 11: Carpet Dollars & Unit Market Share
Carpet Dollars & Unit Market Share Indexed to 2009 (includes Atlas Carpet Mills from date of acquisition) 11
Slide 12: Industry Positioning
Industry Positioning The Dixie Group 12 • 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 13: Residential Market Positioning
Residential Market Positioning The Dixie Group 13 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 14: High-End Residential Sales by Brand
Dixie Group High-End Residential Sales All Residential Brands Masland, 35% Dixie Home, 45% Fabrica, 20% 14 Sales by Brand for 2015
Slide 15: High-End Residential Sales by Channel
Dixie Group High-End Residential Sales All Brands Retailer, 63% Designer, 16% Mass Merchant, 14% Builder, 4% Commercial, 1% Specialty - OEM, 2% 15 Sales by Channel for 2015 The company believes that a significant portion of retail sales also involve a designer
Slide 16: 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 – Stainmaster® Tru Soft TM Fiber Technology – Stainmaster® PetP
Slide 17: Masland
• 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 – Stainmaster® PetProtect ® Fib
Slide 18: Fabrica
• Premium high-end brand – “Quality without Compromise” • Designer focused – Approximately 33% 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” 18
Slide 19: Commercial Market Positioning
Commercial Market Positioning The Dixie Group 19 • 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 20: Atlas
• Atlas is our premium commercial brand • Dedicated to serving the architect and designer needing 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 run
Slide 21: Masland Contract
• 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 22: Commercial Sales by Channel 2015
Hospitality, 25% Corporate, 54% Education, 3% Store Planning, 7% Gov't, 1% Health Care, 4% Other, 6% 22 Sales by Channel for 2015 Channels: Interior Design Specifier and Commercial End User
Slide 23: Dixie Group Sales
$331 $321 $283 $205 $231 $270 $266 $345 $407 $422 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Net Sales (millions) 23 Dixie Group Sales $ in millions Includes Atlas Carpet Mills since March 2014 and Burtco since September 2014
Slide 24: Sales & Operating Income
Sales & Operating Income $ in millions 24 Note: Non-GAAP reconciliation starting on slide 28 Below is the estimated cost to complete the remaining Facility Consolidation Plans: 2008 2009 2010 2011 2012 2013 2014 2015 Net Sales 283 203 231 270 266 344 407 422 Net Income (Loss) (31.5) (42.2) (4.7) 1.0
Slide 25: Current Business Conditions 2016 Initiatives
25 Current Business Conditions 2016 Initiatives • Completion of our facility consolidation plans in 2016. Our service is fully at pre-consolidation levels, our quality expenses are still declining as we deal with issues from 2014 and 2015. We are now streamlining the operational changes with a focus
Slide 26: Outlook for 2016
Outlook for 2016 The housing & commercial markets are growing moderately: • The upper-end residential market continues to favor the upper-end market as compared to mid-priced product lines: Masland and Fabrica Wool growth opportunities. New Stainmaster® PetProtect™ and the Stainmaster® family of
Slide 27: FINE CARPE
FINE CARPE FABRICA CARPETS&RUGS HOME? Re XK HE DIXIE GROUP
Slide 28: Non-GAAP Information
Non-GAAP Information 28 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 29: Non-GAAP Gross Profit
29 Non-GAAP Gross Profit 2009 2010 2011 2012 2013 2014 2015 Net Sales 203,480 231,322 270,110 266,372 344,374 406,588 422,484 Gross Profit 52,105 56,651 65,506 65,372 85,569 95,497 106,231 Plus: Business integration expense - - - 1,383 4,738 445 - Plus: Amortization of inventory step up - - - - 367
Slide 30: Non-GAAP Income from Continuing Operations
30 Non-GAAP Income from Continuing Operations 2009 2010 2011 2012 2013 2014 2015 Net income (loss) as reported (42,241) (4,654) 986 (927) 5,291 (1,402) (2,426) Less: (Loss) from discontinued, net tax (382) (280) (286) (275) (266) (2,075) (148) Income (loss) from Continuing Operations (41,859) (4,374
Slide 31: Non-GAAP Free Cash Flow
31 Non-GAAP Free Cash Flow 2009 2010 2011 2012 2013 2014 2015 Non-GAAP Adjusted EBIT (from above) (45,208) (2,854) 5,426 2,092 8,737 6,029 1,943 Times: 1 - Tax Rate = EBIAT (28,029) (1,769) 3,364 1,297 5,417 3,738 1,205 Plus: Depreciation and amortization 13,504 11,575 9,650 9,396 10,263 12,908 14,1
Slide 32: Facility Consolidation Information
32 Facility Consolidation Information Facility Consolidation Plan Summary 2014 2015 2016 West Coast Facility consolidation 1,366 202 - East Coast Facility consolidation 4,148 2,016 406 East Coast Asset write off 1,134 - - Corporate Office consolidation - 728 60 Total facility consolidation and asset