Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (June 2005)
33 slides from Dixie's investor presentation, Jun 1, 2005
Slide 1: The Dixie Group
OG THE DIXIE GROUP JUNE 2005 Lekenk HOMERS FABRICA Masland 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 produc
Slide 3: Carpet and Rug Industry—$13.8 Billion
Carpet and Rug Industry—$13.8 Billion (2003 Dollars in Billions) Area Rugs $2.4 17% Broadloom Carpet $11.4 83% 20% new residential construction, 30% commercial and 50% residential replacement
Slide 4: Broadloom Carpet Not Import Sensitive
Broadloom Carpet Not Import Sensitive Efficient scale—U. S. has approximately 50% share of world’s broadloom carpet production Retail placement and distribution Service Hundreds of SKUs and numerous colors Retailers reluctant to carry inventory 24 hr. to 48 hr. delivery expected Labor cost content 7
Slide 5: Carpet vs. Traditional Textile Industry
Carpet vs. Traditional Textile Industry 20 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 6: 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 almost100% petroleum based Raw material prices affected by: Changes in petroleum prices Industry demand Recovery of raw material cost increases The i
Slide 7: 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 65% Commitment to brands and upper-end market led to the sale of our North Georgia operations
Slide 8: Shaw Transaction
Shaw Transaction Sold North Georgia carpet and yarn operations to Shaw for $212 million in November 2003 One-time P & L charge $16.2 million Debt reduced $150 million
Slide 9: Dixie Today
Dixie Today Smaller, more profitable, growing company with strong balance sheet and strong brands in the upper-end market Vastly improved risk profile Financially Customer base Top 20 carpet customers – 16% of total carpet sales Top 40 carpet customers – 20% of total carpet sales Carpet sales up 2nd
Slide 10: Dixie Carpet and Rug Sales by End Market
Dixie Carpet and Rug Sales by End Market High-End Commercial 32% High-End Residential 68%
Slide 11: Growth Initiatives
Growth Initiatives Masland Residential—Doubling rate of new product introductions Dixie Home—Launch Dixie Home business Fabrica 2003 hire new director of product development 2004 Increase rate of new product introductions Masland Contract 2002 Launch Energy line 2005 Invest in modular / carpet tile
Slide 12: Dixie's Broadloom and Area Rug Carpet Sales Outperformed the Market
Dixie’s Broadloom and Area Rug Carpet sales have Out Performed the U.S. carpet market in recent years In 2002, Dixie grew at 1% while the market grew at 2.6% 2002 growth initiatives In 2003 and 2004, Dixie grew 11% and 26%; respectively, while the carpet market grew at an estimated 1% in 2003 and 9%
Slide 13: Dixie Profit Margin, Sales and Administrative Expenses as % of Sales
Dixie Profit Margin, Sales and Administrative Expenses as a % of Sales 40.0% 35.0% 30.0% 25.0% 20.0% 34.6% 34.1% 34.1% (2) 31.9% 30.6% 28.1% (1) 25.9% 25.3% 24.7% 25.1% 2001 2002 2003 2004 1st QT 2005 Gross Profit Selling and Adm. Exp. (1)—Launch Dixie Home business (2)—LIFO liquidation – Increased
Slide 14: Dixie Sales Continuing Operations
Dixie Sales Continuing Operations ($ in millions) $231 $37 $194 $223 $26 $197 $234 $17 $217 $292 $18 (1) $274 2001 2002 2003 2004 Carpet Sales Yarn Sales (1)—Includes sales related to disposal of North GA operations
Slide 15: Dixie Sales Continuing Operations
Dixie Sales Continuing Operations ($ in millions) $ 64 $6.0 (1) $58.0 $ 72 $4.0 $68.0 1st QT 2004 1st QT 2005 Carpet Sales Yarn Sales (1)—Includes sales related to disposal of North GA operations
Slide 16: Dixie Operating Income
Dixie Operating Income ($ in millions) $25.6 $24.1 (1) $14.0 $2.8 (2) 2001 2002 2003 2004 (1)—Includes $3.2 million net gains from the sale of facilities and impairments (2)—Includes $11.4 million of impairments and charges
Slide 17: Dixie Operating Income
Dixie Operating Income ($ in millions) $4.5 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 $4.3 $3.9 (1) 1st Qtr. 2004 1st Qtr. 2005 (1)—Includes $1.7 million from LIFO liquidation and non-repeating other income items
Slide 18: Dixie Capital Structure
Dixie Capital Structure ($ in millions) March 26 2005 Debt: Senior Debt $ 46.8 Subordinated Debt 27.2 74.0 Equity 113.8 Total Capitalization $ 187.8 Debt to Total Capitalization: Senior Debt 25% Subordinated Debt 14% Total Debt 39%
Slide 19: 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 ESTIMATED DATA TOTAL MARKET: SQUARE YARDS OR SALES DOLLARS Dixie Home Masland Fabric
Slide 20: Dixie High-End Residential Sales
Dixie High-End Residential Sales Fabrica 32% Dixie Home 22% Masland 46% Fabrica 30% Dixie Home 26% Masland 44% YTD 5-21-05
Slide 21: Residential Summary
Residential Summary 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 Provides access for
Slide 22: Residential Broadloom—Dixie Home
Residential Broadloom—Dixie Home Fulfill market need for third player Well-styled moderate to upper priced line Leverage needed by fiber suppliers for market access Branded high-styled goods – not “me too” Support fiber suppliers’ branded products Limited distribution strategy attractive to retailer
Slide 23: Day Rolling Average—Weekly Order Entry—Dixie Home
20 Day Rolling Average—Weekly Order Entry—Dixie Home $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 2003 2004 2005
Slide 24: Masland Residential Sales
Masland Residential Sales Other 4% Furniture 4% Builders 20% Designer / To The Trade Showrooms 26% Retailers 46%
Slide 25: Masland Residential
Masland Residential Leading high-end brand with reputation for development of products with innovative styling, design and color Growth initiative—doubling product introductions to increase market penetration Drive more volume on existing capacity at Masland/Dixie
Slide 26: Fabrica Residential Sales
Fabrica Residential Sales Other 1% Furniture/ Dept. Stores 10% Builders 6% Specialty 18% Retailers 24% Decorators/ Design Trade 41%
Slide 27: Fabrica Residential
Fabrica Residential Premium high-end brand Leader in styling/patterns/color Consistent sales and profit growth 12 years consecutive sales growth Over 50% profit growth since July 2000 acquisition
Slide 28: Masland Contract Sales
Masland Contract Sales Other 18% Healthcare 6% Store Planning 11% Corporate 32% Hospitality 33% Channels: Interior Design Specifier and Commercial End-User
Slide 29: 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 Invest in carpet tile
Slide 30: The Energy Line has Contributed Significantly to 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 Approximately half is sold through our residential sales force and the ot
Slide 31: Masland Contract 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% while t
Slide 32: 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 approxima
Slide 33: Focused on Internal Growth
Focused on Internal Growth Masland Residential – Impact beginning 3rd QT 2003 and continuing Dixie Home – Impact beginning 3rd QT 2003 and continuing Fabrica – Impact 3rd QT 2005 Masland Contract Energy Collection – Introduced 2002 – continuing to add new products Carpet Tile (Modular) – Introduced