Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (May 2007)
24 slides from Dixie's investor presentation, May 22, 2007
Slide 1: May 2007
Exhibit 99.1 So OG Leukrd, HOME {FABRICA Masland FINE CARPET & RUGS contract
Slide 2: Forward-Looking Statements
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 product
Slide 3: Dixie History
Dixie History • Began operations in 1920 • Grew floorcovering business from 1993 and exited textiles in 1999 - now 100% floorcovering • Eight acquisitions from 1993 through 2000 • Sold factory-built housing and needlepunch carpet operations in 2003 • Commitment to brands and upper-end market 3
Slide 4: Dixie Today
Dixie Today • Profitable, growing company with strong brands in the upper-end market • Strong balance sheet • Diversified customer base o Top 20 carpet customers - 17% of total carpet sales o Top 40 carpet customers - 21% of total carpet sales 4
Slide 5: Dixie Carpet and Rug Sales by End Market
Dixie Carpet and Rug Sales by End Market High-End Commercial, 32% High-End Residential, 68% Year 2006 5
Slide 6: Residential Positioning of The Dixie Group
Residential Positioning of The Dixie Group ESTIMATED TOTAL WHOLESALE MARKET FOR CARPETS AND RUGS: TOTAL MARKET: SQUARE YARDS VOLUME AND PRICE POINTS EST IMA Positioning of Dixie Brands by Price Point Segment TE D OR SALES DOLLARS DAT A BROADLOOM RESIDENTIAL SALES = $7.6 Billion 35% Market Share Dixi
Slide 7: Dollar Sales Growth vs. Carpet Industry
Dollar Sales Growth vs. Carpet Industry BROADLOOM CARPET SALES DOLLARS CHANGE PER YEAR – 2002 THROUGH 1st QT 2007 15% Dixie - CAGR 2002 - 2006 10% 12.6% Precent Change Industry - CAGR 2002 - 2006 5% 4.1% 0% 2002 2003 2004 2005 2006 -5% Sales in the 1st QT of this year were very soft. Compared with t
Slide 8: Dixie High-End Residential Sales
Dixie High-End Residential Sales Dixie Home, 32% Masland, 42% Fabrica, 26% Year 2006 8
Slide 9: Residential Broadloom - Dixie Home
Residential Broadloom - Dixie Home • Launched in 2003 • Fulfill market need for third player o Well-styled moderate to upper priced line • Leverage needed by fiber suppliers for market access o Branded high-styled goods - not "me too" o Support fiber suppliers' branded products • Selective distribut
Slide 10: Masland Residential Sales
Masland Residential Sales Ot h Fu er, rni 8 tur % e, 4% Retailers, 40% Builders, 20% Designer / To The Trade Showrooms, 28% Year 2006 10
Slide 11: Masland Residential
Masland Residential • Leading high-end brand with reputation for development of products with innovative styling, design and color • High-end retail/designer driven • Hand crafted and imported rugs • Growth initiative – o Increasing product introductions to increase market penetration o Wool product
Slide 12: Fabrica Residential Sales
Fabrica Residential Sales Othe Bu il d r, ers 1% Furniture/ Dept. 6%, Stores, 9% Decorators/ Design Trade, Specialty, 15% 42% Retailers, 27% Year 2006 12
Slide 13: Fabrica Residential
Fabrica Residential • Premium high-end brand o Leader in styling/patterns/color • Designer focused • Hand crafted and imported rugs • New products, heightened focus on retail penetration and wool products will drive growth 13
Slide 14: Masland Contract Sales
Masland Contract Sales Hospitality, A 26% ss is te d Li vi ng ,5 Retail % Stores, 20% Store r, 5% Corporate, Planning, 10% 34% Othe Year 2006 Channels: Interior Design Specifier and Commercial End User 14
Slide 15: Masland Contract
Masland Contract • Good and growing position with premium brand • Designer focused • Strong national account base • Strong growth driven by "Energy Collection" o Contract carpet sales grew 8% in 2003, 15% in 2004, 12% in 2005 and 6% in 2006 o Expected to grow significantly in 2007 • Potential opport
Slide 16: Carpet Tile (Modular)
Carpet Tile (Modular) • Specified commercial market $2.6 billion • Carpet tile has grown significantly faster than broadloom commercial products in recent years • Carpet tile products represent approximately 1/3 of the sales to the specified commercial market and over half of sales to the corporate
Slide 17: The Energy Line has Contributed Significantly to Strong Commercial Growth
The Energy Line has Contributed Significantly to Strong Commercial Growth • The Energy Line was started from the ground up in 2002 and generated over $31.5 million of sales for Masland in 2006 • Approximately half is sold through our residential sales force and the other half is sold through our con
Slide 18: Masland Contract has Performed Better than the U.S. Commercial Carpet Market
Masland Contract has Performed Better than the U.S. Commercial Carpet Market • Started in 1993 – significant growth in the 1990’s • From 1999 to 2002, Masland Contract performed at about the same rate as the market • Masland developed its Energy commercial product line in 2002 • Masland’s CAGR in 20
Slide 19: Dixie Sales Continuing Operations
Dixie Sales Continuing Operations ($ in millions) $331 $319 $292 $17 $14 $234 $18 (1) $223 $17 $26 $274 $305 $197 $217 $314 2002 2003 2004 2005 2006 Carpet Sales Yarn Sales (1) - Includes sales related to disposal of North GA operations 19
Slide 20: Dixie Operating Income
Dixie Operating Income ($ in millions) $24.1 (1) $25.6 (3) $19.8 $19.5 $2.8 (2) 2002 2003 2004 2005 2006 (1) - Includes $3.2 million net gains from the sale of facilities and impairments (2) - Includes $11.4 million of impairments and charges (3) - Includes LIFO liquidation that increased operating
Slide 21: 1st Qtr. Sales and Operating Income
1st Qtr. Sales 1st Qtr. Operating Income $79.2 $74.5 $4.2 $4.3 $75.0 $70.2 $3.2 $1.9 2006 2007 2006 2007 Carpet Yarn & Other Sales 21
Slide 22: Dixie Capital Structure
Dixie Capital Structure ($ in millions) Mar 30, Debt: 2007 Senior Debt $ 68.5 Subordinated Debt 22.2 $ 90.7 Equity 136.1 Total Capitalization $ 226.8 Debt to Total Capitalization: Senior Debt 30.2% Subordinated Debt 9.8% Total Debt 40.0% 22
Slide 23: Current Business Conditions
Current Business Conditions • Carpet industry’s business soft: Sales Dollars Dixie Industry 1st QT 2007 -6.3% -9.8% • Our sales were very soft in the 1st QT of this year, down over 6% from the prior year 1st QT. Over half of the decline was due to one customer whose business was extremely weak. Sale
Slide 24: Outlook
Outlook • Although the industry is experiencing a difficult period and raw material prices are increasing, we are encouraged by several factors: o Favorable sales comparison to the industry o Improved average selling prices and product mix. Our average selling prices were over $21 per square yard in