Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (June 2013)
34 slides from Dixie's investor presentation, Jun 6, 2013
Slide 1: June 2013 Investor Presentation
June 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 – Top 10 carpet customers • 16% of sales – Top 20 carpet customers • 19% 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 and existing home sales: "The robust housing market recovery is occurring in spite of tight access to credit and limited inventory. Without these frictions, existing-home sales easily would be well above the 5
Slide 6: Residential Remodeling Leading Indicator
6 Steady recovery in 2009 through 2012 with predicted similar pattern for 2013 Millions of dollars Residential Remodeling Harvard Study Leading Indicator of Remodeling Activity TTM rate of change Projected 2013 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 May 2013: “Consumer Confidence posted another gain this month and is now at a five-year high.” “Back-to-back monthly gains suggest that consumer confidence is on the mend and may be regaining the traction it lost due to the fiscal cliff, payroll- tax hike, a
Slide 10: The Stock Market
The Stock Market 10 May 2013 The stock market has rebounded to pre-recession levels 2013 is positive but is still subject to macro events: Europe, US Fiscal Issues, China
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
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 Q1 TTM Carpet Market Sales
U.S. 2013 Q1 TTM Carpet Market 13 Sales $7.7 Billion Source: Floor Focus – Broadloom & Carpet Tile Dixie versus the Industry Dixie 2013 Q1 TTM Market
Slide 14: Carpet Dollar Sales Indexed to 2008
Carpet Dollar Sales Indexed to 2008 14
Slide 15: Carpet Unit Sales Indexed to 2008
Carpet Unit Sales Indexed to 2008 15
Slide 16: Residential Positioning
Residential Positioning The Dixie Group 16 BROADLOOM RESIDENTIAL SALES = $7.0 Billion (2009 $’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 Point Segme
Slide 17: High-End Residential Sales by Brand
Dixie Group High-End Residential Sales All Brands 17 Sales by Brand for Q1 2013 TTM
Slide 18: High-End Residential Sales by Channel
Dixie Group High-End Residential Sales All Brands 18 Sales by Channel for TTM Q1 2013
Slide 19: Dixie Home
• Well-styled moderate to upper priced residential broadloom line • Dixie provides a “full line” to retailers • Known for differentiated pattern and color selection • Selective distribution strategy attractive to retailers • Growth initiatives – Stainmaster® Tru Soft TM Fiber Technology – Stainmaste
Slide 20: 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 20
Slide 21: Sales by Channel for TTM Q1 2013
21 Sales by Channel for TTM Q1 2013
Slide 22: 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 23: Sales by Channel for TTM Q1 2013
23 Sales by Channel for TTM Q1 2013
Slide 24: Commercial brand
• Premium brand in the commercial marketplace • Designer focused • Strong national account base – Nordstrom’s, Target, Delta Air Lines, AECOM, Club Corporation of America • Growth initiative – SPEAK modular carpet tile and FIT office remodel collections – End User Channel growth initiative 24
Slide 25: Sales by Channel for TTM Q1 2013
25 Sales by Channel for TTM Q1 2013 Channels: Interior Design Specifier and Commercial End User
Slide 26: Dixie Group Sales
- 50 100 150 200 250 300 350 2006 2007 2008 2009 2010 2011 2012 2013 Annualized 314 305 272 199 225 263 258 288 17 16 11 6 6 7 8 14 Carpet Sales Processing Sales 26 $331 $321 $283 $203 $231 $270 Dixie Group Sales $ in millions $266 $302
Slide 27: Sales & Operating Income
Sales & Operating Income $ in millions 27 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 28: Current Business Conditions
Second quarter 2013 activity: - The percentage sales increase in the second quarter is somewhat ahead of our first quarter year over year increase of 20%. The continued sales increase is, however, against a seasonally weaker second quarter in 2012. - Residentially we have new displays, momentum in o
Slide 29: Outlook for 2013
Outlook for 2013 The housing & commercial markets have strengthened: • The residential housing & commercial end use markets are gaining momentum. We anticipate the carpet & rug industry to be up in the low to mid single digits. • Positive market reception to our new products: - Masland and Fabrica W
Slide 30: Fabrica
FABRICA CARPETS&:RUGS
Slide 31: Non-GAAP Information
Non-GAAP Information 31 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 32: Adjusted Operating Income (Loss)
32 Adjusted Operating Income (Loss) - Note 2 ($ in thousands) Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Operating income (loss) 620 (40) 820 415 1,677 Plus: Facility consolidation and severance expenses - - - - - Plus: Impairment of assets - - - - - Plus: Impairment of goodwill - - - - - Plus: Manufac
Slide 33: 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 Operating income (loss) 16,707 (28,460) (45,389) (2,570) 5,668 1,815 1,677 Plus: Facility consolidation and severance expenses - 2,317 4,091 1,556 (563) - - Plus: Impairment
Slide 34: Non-GAAP Information: Free Cash Flow
34 Non-GAAP Information Due to rounding, totals of the quarterly information for each of the years reflected may not necessarily equal the annual totals. Free Cash Flow (FCF) - Note 5 ($ in thousands) Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Non-GAAP Adjusted EBIT (from above) 617 55 1,009 412 1,669