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

-- The Dixie Group, Inc. (NASDAQ: DXYN) today reported financial results for the second fiscal quarter ended June 27, 2020. For the second quarter of 2020, the Company had net sales of $60,824,000 as compared to $100,394,000 in 2019. For the second quarter of 2020, net sales were down 39% as compared to the same quarter in 2019. In April, sales were down 54% from the same month in the prior year as the result of the COVID-19 pandemic and related government orders that negatively impacted ours and our customers’ ability to transact business. Sales recovered gradually over the quarter with May sales volume down 40% and June net sales down 21% from their respective months in the prior year. For the second quarter of 2020, the Company had a loss from continuing operations of $6,979,000 or $0.46 per diluted share as compared to a loss of $1,181,000 or $0.07 per diluted share in the second quarter of 2019.

Commenting on the results, Daniel K. Frierson, Chairman and Chief Executive Officer, said, “As with most companies, the COVID-19 pandemic had a significant impact on our sales in the second quarter. Our low point in sales occurred in the second week of April and has continued to improve since that time. Once 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. To minimize and prevent cases of COVID-19 exposure in our facilities, we have taken measures aimed at sanitation and safety, including large scale COVID-19 testing, mandatory temperature checks prior to starting work, requirements to wear masks when unable to maintain social distancing and deep cleaning and sanitation. We limited travel for our associates, implemented work from home options where appropriate, and limited physical contact with our customers. We reduced our running schedules in our facilities to below demand, to maintain order flow to our customers while simultaneously reducing inventories to align them with our lower customer demand. In order to preserve cash, we placed a large percentage of our associates either on rotating layoff or furlough. We implemented approximately $14 million in cost cuts for the current year. These cost cuts included deferring maintenance when possible, reduced capital expenditures, instituting select job eliminations, and temporary salary reductions. We deferred new product introductions and reduced our sample and marketing expenses for 2020. We worked with suppliers, lenders and landlords to extend payment terms in the second quarter for existing agreements. We have taken advantage of deferral of payroll related taxes under the CARES 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. The Company’s availability under its long-term credit agreement is currently $21.0 million. We are still assessing the long-term impacts of the COVID-19 crisis on our markets and operating practices. The recovery in our residential markets has been quicker than in our commercial markets, as is typical during periods of economic recovery. We are encouraged by the improvement we have seen in sales in recent weeks, but as a resurgence of COVID-19 cases has been seen in many parts of the country and as government authorities reassess their decisions to lift the restrictions in their jurisdictions, we are cautious as to what the remainder of the year may look like.

Sales of our residential products were down 38% for the quarter with the industry, we estimate, being down closer to 30% as compared to the prior year. The residential business has recovered more quickly than originally anticipated when the initial impact of the COVID-19 pandemic became apparent in mid-March. Our specialty retail segment was down by 50% in April, recovered to being down 35% in May and was down less than 10% in June. By the end of June, we saw positive sales comparisons versus last year, and July has started off above prior year in sales and order entry.

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The following information was filed by Dixie Group Inc (DXYN) on Thursday, August 6, 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 expenses in the second quarter of 2020 were comprised of costs related to our COVID-19 response plan including severance and financing related charges, as well as residual costs from our Profit Improvement Plan.

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
Commercial product sales decreased 42.1% versus the prior year quarter while the industry, we believe, experienced a decrease of slightly more than 30%.
Revenue - Product Highlight
Our residential product sales were down 38.3% for the quarter as compared to the prior year while the industry, we believe, was down closer to 30%.
Financial - Expense Highlight
Interest expense for the six months ended June 27, 2020 was $795k lower than the six-month period ended June 29, 2019.
Financial - Expense
Interest expense decreased $360 thousand...Read more
Other - Other
Such benefits, if recognized, would...Read more
Other - Other
We have taken advantage of...Read more
Financial - Cash Flow
To offset the expected short-term...Read more
Other - Other
We are in a net...Read more
Financial - Earnings
Gross profit as a percentage...Read more
Other - Other
However, our revolving credit facility...Read more
Other - Other
Significant additional cash expenditures above...Read more
Other - Other
These proceeds were offset by...Read more
Other - Other
Once the extent of the...Read more
Other - Other
There can be no assurance...Read more
Revenue - Product
In the second quarter of...Read more
Revenue - Product
The net sales results in...Read more
Revenue - Product
Lower production volumes over the...Read more
Other - Other
We focus exclusively on the...Read more
Revenue - Product
Despite the difficult market conditions,...Read more
Other - Other
The benefit rate for the...Read more
Financial - Expense
The reduction in expenses for...Read more

Financial Statements, Disclosures and Schedules

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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: 0000029332-20-000070
Submitted to the SEC: Thu Aug 06 2020 5:04:29 PM EST
Accepted by the SEC: Thu Aug 06 2020
Period: Saturday, June 27, 2020
Industry: Carpets And Rugs