Dixie Group Inc (DXYN) 10-Q Quarterly Report November 2022

•The Dixie Group announces its plan to consolidate the East Coast tufting operations to its existing plant in Eton, Georgia. This plan, along with other cost reductions, is expected to produce annual cost savings of approximately $25 million

DALTON, GEORGIA (November 3, 2022)-- The Dixie Group, Inc. (NASDAQ: DXYN) reported financial results for the quarter ended September 24, 2022. For the third quarter of 2022, the Company had net sales from continuing operations of $71,762,000 and a net loss of $8,780,000 or $0.58 per diluted share. In the third quarter of 2021 net sales from continuing operations were $89,294,000 with a net income of $6,433,000 or $0.40 per diluted share. Net sales from continuing operations for the nine month period ending September 24, 2022 were $233,034,000, a decrease of 7.5% from the net sales of $252,022,000 in the same period of the previous year. The net loss for the nine month period ended September 24, 2022 was $16,624,000 or $1.09 per diluted share compared to a net income of $7,754,000 or $0.49 per diluted share in the nine month period ended September 25, 2021.

Commenting on the quarter, Daniel K. Frierson, Chairman and Chief Executive Officer, said, “Our third quarter results were the culmination of the impact of several factors, beginning in the fourth quarter of 2021, that have had an unfavorable impact on our Company. As well as a general industry downturn which began in mid-second quarter and extended through the third quarter. The lower sales volume in the third quarter was also attributable to a year over year loss of approximately $8 million in sales with our largest mass merchant retail customer. Our sales with this customer ended in the first quarter of 2022 as the result of their change in strategy to focus on lower price point products. Our sales volume in 2022 has also been negatively impacted by the delay of new product introductions due to supply chain problems and issues with our sample vendors. This caused particular delays with the launch of our new decorative and hard-surface products which meant we have incurred the cost of launching these products but have not benefited from any sales of the products.

Gross margins in the third quarter of 2022 reflected the impact of several major items. In the third quarter we continued to work through the balance of the higher cost inventory resulted from the unprecedented price increases from our primary raw material supplier, coupled with their decision to exit the business. We have identified other suppliers to replace this volume and bring our costs down in line with the market and we began manufacturing inventory using these new lower cost raw materials in the third quarter. Second, gross margins from our sales of hard surface goods reflected the negative impact from dramatic increases in ocean freight costs. Fortunately, beginning with the end of the first quarter, these freight costs have continued to decline but remain substantially above prior year levels. And last, as with most every industry, we have incurred inflation driven cost increases throughout the year in most all of our raw materials, freight and people related costs.

In the third quarter we began a plan to reduce our manufacturing costs. Under this plan, we have consolidated all of our east coast tufting to one plant in North Georgia. We also began relocating our east coast distribution of luxury vinyl flooring from our facility in Saraland, Alabama to our plant in Atmore, Alabama. Our Atmore, Alabama plant will

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The following information was filed by Dixie Group Inc (DXYN) on Thursday, November 3, 2022 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.

Financial - Expense Highlight
Accounts payable and accrued expenses decreased $1.2 million primarily driven by the quarter end timing of payments based on supplier terms and payroll payment dates.
Revenue - Product Highlight
Our sales were also negatively impacted by delayed introductions of new products in 2022 due to a change in raw material providers and supply chain issues.
Revenue - Product Highlight
Our sales were also negatively impacted by delayed introductions of new products in 2022 due to a change in raw material providers and supply chain issues.
Other - Other Highlight
We had net borrowings on our revolving credit facility of $13.9 million and net borrowings on notes payable and financing leases of $2.5 million which included a new note payable on buildings (see Note 8).
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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: 0000029332-22-000148
Submitted to the SEC: Thu Nov 03 2022 11:55:39 AM EST
Accepted by the SEC: Thu Nov 03 2022
Period: Saturday, September 24, 2022
Industry: Carpets And Rugs