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Highlights of the third quarter of 2021:
Dalton, Georgia / ACCESSWIRE / November 12, 2021 / Dixie Group, Inc. (NASDAQ: DXYN) today announced its financial results for the quarter ended September 25, 2021. In the third quarter of 2021, the company's continuing business net sales were US$89,294,000 and revenue was US$5,597,000. Our net sales for the third quarter of 2020 were US$70,035,000. Net income from continuing operations in the third quarter of 2020 was US$175,000. On September 13, 2021, the company sold its commercial business. The net sales and expenses related to commercial operations have been listed as discontinued operations in the company’s financial statements included in this press release, and unless otherwise stated, are within the figures listed in the press release.
Commenting on the results, Chairman and CEO Daniel K. Frierson said: "With the sale of our commercial business, the third quarter is the beginning of our company's focus on residential flooring materials. This quarter, we continued to gain market share and began to make significant changes, which we believe will enhance our future prospects. Our net sales of residential flooring products increased by 26%, which is about a high increase compared to what we believe to be the industry In the first nine months of the current year, our total net sales of residential products increased by 49% compared to the same period last year. 19 The 2020 pandemic and the strong growth of new and old home sales and home renovations in 2021. STAINMASTER® exits residential The market represents a major change, but one of them offers opportunities for growth and repositioning. We are implementing strategies to help our customers transition to our new brands EnVision66", EnVisionSD" Pet Solutions. Our TRUCOR® brand continues to compare The LVF market is growing at a faster rate. With more cutting-edge products and focusing on domestic sourcing, we think we can continue to grow faster than the market. As part of our commitment to the high-end decoration market, we will launch to the market Two new series. Our Masland 1866 and Fabrica Décor products bring a lot of fresh and unique appearance, designed to complement the products we provide to the design world.
Our residential business in the third quarter continued to be very strong. Net sales increased by 27% over the same period last year, of which sales of soft noodle products increased by 22%, and sales of hard noodle products increased by 73%. Order input throughout the quarter is still much higher than last year's level.
We launched several new products with soft and hard surfaces in the third quarter. Many of them have been postponed from the second quarter due to ransomware attacks. In terms of soft surface, we introduced 13 new styles including EnVision66" and EnVisionSD" pet solutions, and introduced new decorative market segments. Our EnVision "Nylon 6,6 carpet series now has 40 products.
On the hard surface, we launched TRUCOR® Applause, which is our new domestic purchased SPC product with eight SKUs. It quickly aroused great interest and order activity in the market, and we are working with our suppliers to maximize the output of these SKUs. We also launched the TRUCOR® 3DP program, which contains 16 SKUs, including wood and stone exteriors. TRUCOR® 3DP has high-resolution digital printing directly on the core of the SPC instead of the traditional film used in most SPC and WPC products to create wood or stone visual effects. Like all SPC products, TRUCOR® 3DP is waterproof and can be easily installed on most existing hard surface floors and sub-floors with minimal floor preparation. Other advantages of this technology include clear, realistic visual effects, virtual elimination of repetitive patterns in film products, and highly durable AC5 scratch resistance.
In the third quarter, we also executed a professional retail transformation from the STAINMASTER® and PetProtect® brands to our EnVision66" and EnVisionSD" Pet Solutions brands. This includes production, distribution in our specialized retail channels and in some cases the installation of new labels on our products. As part of this work, we relocated the entire floor of the 217 retail stores that joined our new Premier Flooring Center network. Through the PFC program, we provide turnkey solutions for retailers that have worked closely with the STAINMASTER® brand in the past. The slogan of the PFC program is "Buying floors is important." It provides a first-class sales system that can promote higher tickets and retail profits, highlights the benefits of high-quality carpets made of nylon 6,6, and refreshes the display. Room provides the latest products and information. The PFC program is well received and is the foundation for the future growth of the professional retail channel," Friesen concluded.
Our gross profit as a percentage of net sales in the third quarter of 2021 was 27.9%, while the gross profit margin in the third quarter of 2020 was 24.5%. The higher profit margin in the third quarter of 2021 is due to the matching of current and previous costs. Although the company benefited from favorable profit margins in the third quarter, we continue to receive increases in raw material costs, which may adversely affect future profit margins. Our sales and administrative expenses accounted for 20.3% of net sales this quarter, compared to 21.8% in the third quarter of 2020, as we continue to retain many of the cost-saving measures implemented as part of the response to the COVID-19 pandemic. And in 2020 Compared to the third quarter, our accounts receivable increased by $9.1 million, mainly due to the increase in sales during the period. Compared with the third quarter of 2020, net inventory increased by $15.3 million. Due to increased sales and increased costs, our accounts payable and accrued expenses increased by US$12.2 million year-on-year. Our capital expenditure in the third quarter of 2021 is approximately US$2 million, and we plan to reach the level of approximately US$5 million in 2021. Interest expenses for the third quarter of 2021 were US$1.2 million, and debt was reduced by US$17.5 million in the quarter. Under our premium line of credit, our available line at the end of the quarter was $54.1 million.
The company's non-terminated business income recorded for the quarter was $836,000. The discontinued business includes a gain of US$2.7 million from the sale of our commercial business, which was offset by the operating loss of the commercial business. Due to the loss of commercial business, the business that has been discontinued so far this year recorded a loss of US$1.3 million.
The sales momentum of our residential products continued into the fourth quarter. In the first five weeks of the quarter, our sales increased by 20% compared to the strong performance a year ago. Due to increased cost pressures in many areas, the third quarter announced price increases for the entire industry. As raw material, labor, and transportation costs continue to rise, additional price increases were announced at the end of the year.
It can be accessed through the appropriate software on the company website https://investor.dixiegroup.com only to listen to the Internet simulcast and the replay of the Dixie conference call. The simulcast will begin around 11:00 AM Eastern Time on November 12, 2021. The replay will be available in approximately two hours and will last approximately 30 days. If you cannot access the Internet, please dial (877) 407-0989 and enter 13723869 at least 10 minutes before the specified time for a listen-only conference call. Dixie Group, Inc. is a leading carpet marketer and manufacturer, providing carpets and carpets to high-end residential customers through the Fabrica International, Masland Carpets and Dixie Home brands.
This press release contains forward-looking statements. Forward-looking statements are based on estimates, forecasts, beliefs and assumptions made by management and the company at the time such statements are made, and are not guarantees of performance. Forward-looking statements are subject to risk factors and uncertainties, which may cause actual results to differ materially from those shown in such forward-looking statements. These factors include the level of demand for the company's products. Other factors that may affect the company's performance include, but are not limited to, raw material supply and transportation costs related to oil prices, capital costs and availability, acquisition and integration, the ability to attract, develop and retain qualified personnel, and the economy and competition generally related to the company's business condition. Issues related to energy supply and prices may adversely affect the company's operations. More information about these and other risk factors and uncertainties can be found in the company's filings with the US Securities and Exchange Commission. The company assumes no obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information or other circumstances.
THE DIXIE GROUP, INC. Consolidated Condensed Operating Statement (Unaudited; in thousands, except for earnings (loss) per share)
Facility consolidation and severance payments, net
Income (loss) from continuing operations before tax
Income (loss) from continuing operations
Income (loss) from discontinued operations, net after tax
Basic earnings (loss) per share:
Diluted earnings (loss) per share:
THE DIXIE GROUP, INC. Consolidated Condensed Balance Sheet (in thousands)
Prepaid and other current assets
Discontinued current assets
Property, plant and equipment, net
Discontinued long-term assets
The current portion of long-term debt
Current portion of operating lease liabilities
Current liabilities of discontinued operations
Discontinued long-term liabilities
Total liabilities and shareholders' equity
Allen Danzey Chief Financial Officer 706-876-5865 allen.danzey@dixiegroup.com
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