Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (December 2005)
28 slides from Dixie's investor presentation, Dec 8, 2005
Slide 1: December 8, 2005
Exhibit 99.1 DECEMBER 8, 2005
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 produc
Slide 3: Carpet vs. Traditional Textile Industry
Carpet vs. Traditional Textile Industry 18 Largest Public Textile Companies in 1980 1. Burlington (1), (2) 11. Fieldcrest (1), (2) 2. J. P. Stevens (1), (2) 12. Reigel (2) 3. West Point (1), (2) 13. Graniteville (2) 4. Springs (1) 14. Avondale 5. Cone (2) 15. Bibb (2) 6. Cannon (2) 16. Ti-Caro (2) 7
Slide 4: Dixie Strategic Positioning
Dixie Strategic Positioning • Grew floorcovering business from 1993 and exited textiles in 1999 - now 100% floorcovering • Eight acquisitions from 1993 through 2000 • Demise of factory-built housing industry and desire to de-leverage led to the sale of our North Georgia operations • Commitment to br
Slide 5: 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 - 16% of total carpet sales o Top 40 carpet customers - 20% of total carpet sales 5
Slide 6: Dixie's Broadloom and Area Rug Carpet Sales have Outperformed the U.S. Carpet Market in Recent Years
Dixie's Broadloom and Area Rug Carpet Sales have Outperformed the U.S. Carpet Market in Recent Years • In 2002, Dixie grew at 1% while the market grew at 2.6% • 2002 growth initiatives • In 2003 and 2004, Dixie grew 11% and 26%; respectively, while the carpet market grew at an estimated 1% in 2003 a
Slide 7: Dixie Carpet and Rug Sales by End Market
Dixie Carpet and Rug Sales by End Market High-End Commercial, 31% High-End Residential, 69% YTD Sept 2005 7
Slide 8: Residential Positioning of The Dixie Group
Residential Positioning of The Dixie Group ESTIMATED TOTAL WHOLESALE MARKET FOR CARPETS AND RUGS: VOLUME AND PRICE POINTS Positioning of Dixie Brands by Price Point Segment BROADLOOM RESIDENTIAL SALES = $7.6 Billion Dixie Home Masland Fabrica $0 $7 $14 $21 $28 $35 $42 $49 INDUSTRY PRICE/ SQ YD AVERA
Slide 9: Dixie High-End Residential Sales
Dixie High-End Residential Sales Dixie Home, 26% Masland, 44% Fabrica, 30% YTD Sept. 2005 9
Slide 10: Residential Positioning
Residential Positioning • Fabrica and Masland are among the most respected brands in high-end residential carpet • Fabrica's and Masland's combined residential sales are estimated to be about 35% of total U.S. industry sales at $22.00 per SQ YD and higher • Dixie Home at $10-$20 per SQ YD o Provides
Slide 11: Residential Broadloom - Dixie Home
Residential Broadloom - Dixie Home • Launched 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 distribution
Slide 12: Masland Residential Sales
Masland Residential Sales Builders, 21% Retailers, 46% Designer / To The Trade Showrooms, 24% YTD Sept. 2005 12
Slide 13: 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 - doubling product introductions to increase market penetration 13
Slide 14: Fabrica Residential Sales
Fabrica Residential Sales Furniture/ Dept. Stores, 9% Decorators/ Design Trade, Specialty, 43% 17% Retailers, 24% YTD Sept. 2005 14
Slide 15: Fabrica Residential
Fabrica Residential • Premium high-end brand o Leader in styling/patterns/color • Designer focused • Hand crafted and imported rugs • Growth in sales and profit since July 2000 acquisition 15
Slide 16: Masland Contract Sales
Masland Contract Sales Hospitality, 29% Retail Stores, 16% Store Planning, 9% Corporate, 34% Other, 6% YTD Sept. 2005 Channels: Interior Design Specifier and Commercial End User 16
Slide 17: Masland Contract
Masland Contract • Good and growing position with premium brand • Designer focused • Strong national account base • Strong growth from new "Energy Collection" • KSA study - identified potential opportunities o Invest in carpet tile 17
Slide 18: The Energy Line has Contributed Significantly to this Strong Growth
The Energy Line has Contributed Significantly to this Strong Growth • The Energy Line was started from the ground up in 2002 and generated over $13 million and $22 million; respectively, in sales for Masland during 2003 and 2004 o Approximately half is sold through our residential sales force and th
Slide 19: Masland Contract has Performed Higher than the U.S. Commercial Carpet Market
Masland Contract has Performed Higher than the U.S. Commercial Carpet Market • 1998 was a great year for Masland Contract, which grew 52% that year while the market only grew 5% • From 1999 to 2002, Masland Contract performed at about the same rate as the market • In 2003, Masland Contract grew 8% w
Slide 20: Carpet Tile (Modular)
Carpet Tile (Modular) • Specified commercial market $2.6 billion • Total specified commercial market is significantly depressed from its peak in 2000 and is expected to grow faster than the overall carpet market • In 2004, carpet tile grew 18% while broadloom commercial grew at 5% • Carpet tile is a
Slide 21: Broadloom Carpet Raw Material
Broadloom Carpet Raw Material • 65% to 70% of cost of broadloom carpet is raw material • Raw material includes fiber, yarn and backing materials which are almost 100% petroleum based • Raw material prices affected by: o Changes in petroleum prices o Industry demand • Recovery of raw material cost in
Slide 22: Dixie Profit Margin, Sales and Administrative Expenses as a % of Sales
Dixie Profit Margin, Sales and Administrative Expenses as a % of Sales 40.0% 34.6% 34.1% 34.1% (2) 35.0% 31.9% 30.6% 30.0% 28.1% (1) 25.0% 25.9% 25.3% 25.1% 24.3% 20.0% 2001 2002 2003 2004 YTD Sept. 2005 Gross Profit Selling & Admin. Expense (1) - Launch Dixie Home business (2) - LIFO Liquidation -
Slide 23: Dixie Sales Continuing Operations
Dixie Sales Continuing Operations ($ in millions) $292 $18 (1) $231 $231 $223 $234 $209 $17 $10 $37 $26 $14 $194 $197 $217 $274 $195 $221 2001 2002 2003 2004 YTD Sept. YTD Sept. 2004 2005 Carpet Sales Yarn Sales (1) - Includes sales related to disposal of North GA operations 23
Slide 24: Dixie Operating Income
Dixie Operating Income ($ in millions) $25.6 (3) $24.1 (1) $17.0 (4)(5) $14.0 $14.4 (6) $2.8 (2) 2001 2002 2003 2004 YTD Sept. YTD Sept. 2004 2005 (1) - Includes $3.2 million net gains from the sale of facilities and impairments (2) - Includes $11.4 million of impairments and charges (3) - Includes
Slide 25: Dixie Capital Structure
Dixie Capital Structure ($ in millions) Debt: Sept 24, 2005 Senior Debt $ 68.4 Subordinated Debt 24.7 $ 93.1 Equity 121.2 Total Capitalization $ 214.3 Debt to Total Capitalization: Senior Debt 32% Subordinated Debt 11% Total Debt 43% 25
Slide 26: Third QT 2005
Third QT 2005 • Rapid growth increased complexity and overtaxed manufacturing and distribution capabilities o Carpet sales growth: th • 4 QT 2003……… 22% • Year 2004………… 26% st nd • 1 & 2 QT 2005…18% rd o 3 QT 2004 sales up 5% from prior QT and 26% from prior YR. rd o Expected similar growth in 3 QT
Slide 27: Third QT 2005
Third QT 2005 • Growth impact o Overran operational capabilities o Delayed product introductions o Significantly increased cost o Poorer service o Higher levels of off-quality o Samples delayed • Changes made o Management o Adding tufting in North Georgia • Simplify operations • Improve quality • Im
Slide 28: FOCUS
FOCUS • High-end residential carpet and rugs o Price points 2 ½ to 5 times industry average • Commercial carpet o Industry rebounding from depressed levels o Growing faster than the industry o Expanding into modular/carpet tiles • Growth above industry average: o Marketing and product driven interna