Dixie Group, Inc. · OTC:DXYN
Dixie — Investor Presentation (March 2020)
32 slides from Dixie's investor presentation, Mar 5, 2020
Slide 1: March 2020 Investor Presentation
Exhibit 99.1 March 2020 Investor Presentation Contact: Allen Danzey CFO The Dixie Group Phone: 706-876-5865 allen.danzey@dixiegroup.com
Slide 2: Forward Looking Statements
Forward Looking Statements The Dixie Group, Inc. • 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 o
Slide 3: Dixie History
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 • 20
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 • 16% of sales – Top 100 carpet customers • 31% of sales 4
Slide 5: Dixie Group Drivers
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 b
Slide 6: New and Existing Home Sales
New and Existing Home Sales Seasonally Adjusted Annual Rate • “I view 2019 as a neutral New 1,000 Existing 1,000 year for housing in terms of 800 6,000 sales,” Yun said. “Home sellers are positioned well, 750 but prospective buyers aren’t as fortunate. Low 700 5,500 inventory remains a problem, with
Slide 7: Leading Indicator of Remodeling Activity — Fourth Quarter 19
Leading Indicator of Remodeling Activity — Fourth Quarter 2019 Homeowner Improvements & Repairs Four-Quarter Moving Totals Four-Quarter Moving Billions Rate of Change $475 10% 6.1% 61% 64% 6.8% 7.0% 67% 65% go% $425 ee $375 0% $325 $225 » | 10% 4 2018-1 2 3 4 20191 2 3 4 2020-1 2 3 4 (p) (p) (p) (p)
Slide 8: Household Formations Year Over Year Growth
Household Formations Year Over Year Growth 8
Slide 9: Residential and Commercial Fixed Investment
Residential and Commercial Fixed Investment 9
Slide 10: The Industry as compared to The Dixie Group
The Industry as compared to The Dixie Group Source: U.S. Bureau of Economic Analysis and Company estimates 10
Slide 11: 2018 U.S. Flooring Manufacturers
2018 U.S. Flooring Manufacturers Flooring $ in Flooring Market Flooring Manufacturers millions % Shaw (Berkshire Hathaway) 5,142 21.7% Mohawk (MHK) 5,213 22.0% Engineered Floors (Private) 1,015 4.3% Interface (TILE) 601 2.5% Dixie (DXYN) 405 1.7% Imports & All Others 11,304 47.7% U.S. Carpet & Rug M
Slide 12: Dixie versus the Industry
Dixie versus the Industry 2019 2019 U.S. Carpet & Rug Market of Dixie sales $10.6 billion High End Commercial, 25% Commercial, 44% High End Residential, 56% Residential, 75% Source: Floor Covering Weekly and Dixie Group estimate 12
Slide 13: Carpet Growth: Dixie Market Share in Dollars and Units
Carpet Growth Dixie Market Share in Dollars and Units 13
Slide 14: Industry Positioning
Industry Positioning The Dixie Group • 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” w
Slide 15: Residential Brand Positioning
Residential Brand Positioning The Dixie Group ESTIMATED WHOLESALE MARKET PRICE FOR CARPETS AND RUGS: VOLUME AND PRICE POINTS OR SALES DOLLARS Masland TOTAL MARKET: SQUARE YARDS SQUAREMARKET: YARDS TOTAL Dixie Home Fabrica $0 $8 $14 $21 $28 $35 $42 $49 INDUSTRY AVERAGE PRICE / SQ YD FOR CARPETS AND R
Slide 16: High-End Residential Sales by Brand for 2019
Dixie Group High-End Residential Sales All Residential Brands Sales by Brand for 2019 Fabrica Masland Dixie Home 16
Slide 17: High-End Residential Sales by Channel for 2019
Dixie Group High-End Residential Sales All Brands Sales by Channel for 2019 Specialty - OEM Commercial Builder Mass Merchant Retailer Designer The company believes that a significant portion of retail sales also involve a designer. 17
Slide 18: 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 – TRUCOR™ SPC and TRUCOR Prime™ WPC Luxury Vinyl Flooring – Sta
Slide 19: Masland
• Leading high-end brand with reputation for innovative styling, design and color • High-end retail / designer driven – Approximately 21% of sales directly involve a designer – Hand crafted and imported rugs • Growth initiative – TRUCOR Prime™ WPC Luxury Vinyl Flooring – Stainmaster® PetProtect ® Fi
Slide 20: Fabrica
• Premium high-end brand – “Quality without Compromise” • Designer focused – Approximately 30% of sales directly involve a designer – Hand crafted and imported rugs • Growth initiatives – Fabrica Fine Wood Flooring, a sophisticated collection of refined “best in class” wood flooring products. 20
Slide 21: Commercial Market Positioning
Commercial Market Positioning The Dixie Group • We focus on the “high-end specified soft floorcovering contract market” • Our Atlas | Masland products – Designer driven focused on the fashion oriented market space – Broad product line for diverse commercial markets • Our Masland eNergy products – Se
Slide 22: Atlas | Masland Contract consolidation
• The consolidation of Atlas and Masland Contract provides an exciting opportunity for us to become a greater resource to our customers in the hyper competitive commercial flooring market. • Atlas | Masland has become a comprehensive resource to the commercial flooring customer. Whether a project ca
Slide 23: Atlas | 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 – Sustaina™ cushion modular carpet backing with the ability to install in
Slide 24: Commercial Sales by Channel for 2019
Sales by Channel for 2019 Other Health Care Gov't Hospitality Store Planning Education Corporate Channels: Interior Design Specifier and Commercial End User 24
Slide 25: Dixie Group Sales
Dixie Group Sales $ in millions Net Sales 450 422 412 407 397 405 400 375 345 350 331 321 300 283 270 266 250 231 205 200 150 100 50 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 *2016 had 53 weeks. 25
Slide 26: Sales & Operating Income
Sales & Operating Income $ in millions Annual FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Net Sales 266 344 407 422 397 412 405 375 Net Income (Loss) (0.9) 5.3 (1.4) (2.4) (5.3) (9.6) (21.4) 15.3 Operating Income 1.8 8.9 (5.2) 2.0 (3.4) 4.0 (15.6) 21.3 Non-GAAP Adjusted Op. Incom
Slide 27: Current Business Conditions: 2019 Accomplishments and 2020 Outlook
Current Business Conditions 2019 Accomplishments and 2020 Outlook • We have consolidated our two commercial brands into Atlas | Masland Contract. • We launched Sustaina™, our 95% post-consumer recycled material, PVC free and polyurethane free, cushion modular carpet tile backing. • We launched TRUCO
Slide 28: Inspired by Design
“Arran INSPIRED BY DESIGN. DIXIE HOME THE DIXIE GROUP
Slide 29: Non-GAAP Information
Non-GAAP Information 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 curre
Slide 30: Non-GAAP Information: Gross Profit and SG&A
Non-GAAP Information Twelve Months Ended Non-GAAP Gross Profit 2011 2012 2013 2014 2015 2016 2017 2018 2019 Net Sales 270,110 266,372 344,374 406,588 422,484 397,453 412,462 405,033 374,581 Gross Profit 65,506 65,372 85,569 95,497 106,231 95,425 101,213 86,991 86,205 Plus: Unusual Workers Comp - - -
Slide 31: Non-GAAP Operating Income
Non-GAAP Operating Income 2011 2012 2013 2014 2015 2016 2017 2018 2019 Net Sales 270,110 266,372 344,374 406,588 422,484 397,453 412,462 405,033 374,581 Operating income (loss) 5,668 1,815 8,855 (5,236) 1,990 (3,415) 3,965 (15,624) 21,350 Plus: Acquisition expenses - 318 350 789 - - - - - Plus: Amor
Slide 32: Non-GAAP EBIT and EBITDA
Non-GAAP EBIT and EBITDA 2011 2012 2013 2014 2015 2016 2017 2018 2019 Net income (loss) as reported 986 (927) 5,291 (1,402) (2,426) (5,278) (9,555) (21,384) 15,270 Less: (Loss) from discontinued, net tax (286) (275) (266) (2,075) (148) (71) (233) 95 (348) Plus: Taxes 684 (401) (576) 1,055 (714) (3,6