Dixie Group Inc (DXYN) 10-Q Quarterly Report May 2020

-- The Dixie Group, Inc. (NASDAQ: DXYN) today reported financial results for the first fiscal quarter ended March 28, 2020. For the first quarter of 2020, the Company had net sales of $80,578,000 as compared to $88,606,000 in 2019. For the first quarter of 2020 net sales were down 9.1% as compared to the same quarter in 2019. For the first quarter of 2020, the Company had a loss from continuing operations of $2,613,000 or $0.17 per diluted share as compared to a loss of $6,641,000 or $0.42 per diluted share in the first quarter of 2019.

Commenting on the results, Daniel K. Frierson, Chairman and Chief Executive Officer, said, “We had a slow start to our sales in January, but improved in February before finally seeing the slide in sales due to the COVID-19 crisis impact us the last three weeks of the quarter. Our low point in orders occurred around the Easter holiday and have improved each week since that time. As the extent of the COVID-19 pandemic became apparent, we implemented our continuity plan to maintain the health and safety of our associates, preserve cash, and minimize the impact on our customers. We limited travel for our associates, implemented work from home options where appropriate, and limited physical contact with our customers. We have had several cases of COVID-19 exposure in our operations for which we took appropriate cleaning and safety measures, including large scale COVID-19 testing, mandatory temperature checks prior to starting work, and deep cleaning and sanitation. With the beginning of the pandemic, our orders and sales declined dramatically in late March and early April. The first few weeks of April were impacted the most and our sales and orders decreased over 50% for the month of April. Since the second week of April, our sales and orders have continued to improve and in May we anticipate sales and orders being down in the 35% range but continuing to improve sequentially. Many of our customers are reopening and beginning to generate business. We would expect business to continue improving and be at more normal levels later this year. Until then, we have reduced our running schedules for most facilities to one shift, just beneath our shipping levels, so we could maintain order flow to those customers for which we still had requirements, while simultaneously reducing inventories to align them with our lower customer demand. In order to preserve cash, we have placed a large percentage of our associates either on rotating layoff or furlough.

We have reduced our anticipated spending in the current year by approximately $14 million. These spending reductions include cutting non-essential expenditures, reducing capital expenditures, select job eliminations, and temporary salary reductions. We also deferred new product introductions and reduced our sample and marketing expenses for 2020. We have worked with suppliers, lenders and landlords to extend payment terms in the second quarter for existing agreements. We are taking advantage of deferral of payroll related taxes under the CARE act as well as deferring payments into our defined contribution retirement plan. We have modified our senior credit facility to provide additional flexibility with regard to loan availability during this uncertain period. This bank amendment to our senior credit facility has increased our borrowing costs slightly while reducing the size of the lending facility to better fit our reduced borrowing base as we continue to reduce our inventories to improve liquidity. The company’s availability under its long term credit agreement is currently $10.7 million. As part of the modification to the senior debt facility, the Company has agreed to pursue additional fixed asset loans. However, if the economic crisis is more severe than anticipated it will seek additional sources of funding and/or other actions as deemed necessary. Though we are not certain with regard to the long term impacts of the COVID-19 crisis, we do not anticipate significant, long term changes to our markets or operating practices. We look forward to our markets returning to normal as we see many of our customers opening back up across the country as states are loosening the restrictions on retail and construction sectors of our economy.

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The following information was filed by Dixie Group Inc (DXYN) on Tuesday, May 19, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Dixie Group Inc's 10-Q Quarterly Report:

Financial - Expense Highlight
The following important factors may affect our future results and could cause those results to differ materially from our historical results; these factors include, in addition to those "Risk Factors" detailed in item 1A of this report, and described elsewhere in this document, the cost and availability of capital, raw material and transportation costs related to petroleum price levels, the cost and availability of energy supplies, the loss of a significant customer or group of customers, the ability to attract, develop and retain qualified personnel, materially adverse changes in economic conditions generally in carpet, rug and floorcovering markets we serve and other risks detailed from time to time in our filings with the Securities and Exchange Commission.

Revenue - Product Highlight
The increase in accounts receivable was due to the sales mix being more concentrated in our residential business which generally has selling terms that are more favorable to the customer.
Revenue - Product Highlight
Commercial product sales decreased 12.9% versus the prior year quarter while the industry, we believe, experienced a decrease in the low single digits.
Revenue - Product Highlight
Our commercial luxury vinyl flooring sales were up over 43.5% comparing the first quarter of 2020 with the same quarter in 2019.
Financial - Expense Highlight
Facility consolidation and severance expenses associated with the Profit Improvement Plan totaled $24 thousand in the first quarter of 2020 compared with expense of $2.1 million in the first quarter of 2019.
Other - Other
We are taking advantage of...Read more
Other - Other
We are taking advantage of...Read more
Other - Other
Accounts receivable increased $1.1 million...Read more
Other - Other
Such benefits, if recognized, would...Read more
Financial - Cash Flow
Table of Contents 27 To...Read more
Other - Other
We are in a net...Read more
Other - Other
However, our revolving credit facility...Read more
Other - Other
Significant additional cash expenditures above...Read more
Revenue - Product
Our residential carpet product sales...Read more
Financial - Expense
Interest expense decreased $435 thousand...Read more
Other - Other
As the extent of the...Read more
Other - Other
There can be no assurance...Read more
Revenue - Product
In the first quarter of...Read more
Revenue - Product
Beginning in the second week...Read more
Revenue - Product
While there was a significant...Read more
Financial - Expense
The first quarter of 2020...Read more
Other - Other
We focus exclusively on the...Read more
Other - Other
The benefit rate for the...Read more

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Material Contracts, Statements, Certifications & more

Dixie Group Inc provided additional information to their SEC Filing as exhibits

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32.1: Section 1350 Certification

Exhibit 32.2: Section 1350 Certification

Ticker: DXYN
CIK: 29332
Form Type: 10-Q Quarterly Report
Accession Number: 0000029332-20-000056
Submitted to the SEC: Fri May 29 2020 1:22:52 PM EST
Accepted by the SEC: Fri May 29 2020
Period: Saturday, March 28, 2020
Industry: Carpets And Rugs