The Dixie Group, Inc. (DXYN) 4 Aug 232023 Q2 Earnings call transcript

Good day, and welcome to The Dixie Group, Inc. 2023 Second Quarter Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to the Chairman and Chief Executive Officer, Dan Frierson. Please go ahead.

welcome, and Priscilla, you, everyone. Thank me I Officer. our Financial Danzey, have with Chief Allen

Our included included both is safe statement harbor by and release. our press by website to reference

was approximately XXXX, For the quarter same second improvement million prior to quarter the income the $XX.X our a $XX Operating the million year. XXXX. quarter of $XXX,XXX net million the of gross in as of the our The in sales margin. was second of loss to compared $X.X quarter were in highlight compared of

The limited result housing flooring and Consequently, due sales market market remains under home lower residential of supply, continued pressure to deferred the a rates high projects. and interest as home remains weak improvement inflation.

market multifamily replacement do mid-teens, was down second in the play. we market For in share and the core residential housing our carpet with stronger segment than where we gained We mostly business. quarter, we believe the new the believe

results review I time, this At financial would quarter. Allen to Allen? our for ask the

Thank you, Dan.

As to mentioned, of million prior the $XX for XXXX the were the X compared in Dan year. second net million period in months in same the just $XX.X quarter sales

net X $XXX.X July ended the XXXX, were year X, to For million $XXX.X compared million our prior months the in sales period.

was sales rates year. offerings home our by confidence, and impacted our in largest point merchant in were partially mass decrease mass interest the that price was loss in activity. sales impacting in a last by strategy inflationary The to also consumer merchant attributable higher remodeling to lower of volume to and shift channel due Net customer concerns unfavorably reflected lower

low of that improved range. margins the consolidation primary were our Gross half tied as margins of half former the in 'XX first the year our result of to quarter began business. XXXX continued in raw first XXXX XXXX second net in the through over result the and were efforts in restructuring half from year-to-date The the a was and compares into XX% provider, of sales, and margin of pricing and low XXXX from prior the first XX.X% exit material 'XX. of in gross significantly margins facility we that high Our the exorbitantly their to which

was our by the high levels. returned and on ocean raw have normal multiple The prior year had very to by more we freight cost lower imported changed suppliers over rates providers impacted of rates also ocean material And XXXX, end and containers. to freight points,

facilities the XXXX We also plan. saw manufacturing throughout our our of as first we half facility favorable consolidation completed operating from results

The selling higher and year, administrative expenses volume product 'XX, half net same sales in a in prior new period percent offerings. was marketing in driven are expenses by samples selling as of 'XX primarily lower than the and and lower as in of the the our due activity to first in were sales dollars but investment

We facility costs. during primarily facility incurred expense quarter This maintenance $XXX,XXX second in for and closure of 'XX. to consolidation the related expense

the facility second Our was of a operating in quarter consolidation million to inclusive compared operating expense $X.X income, 'XX. loss the $XXX,XXX of

first of a of $XXX,XXX, operating there's the of For loss of an million period 'XX. the X 'XX, income months same in compared $X.X to

quarter quarter of the $X.X $X.X in compared the million was on million expense Interest to second 'XX.

by senior our current to This was interest For compared increased increased the $X.X on driven borrowings line interest million and of interest credit rates months expense was million year. period. the X July X, in ended in $X.X higher expense the prior

million a the was in year $X.X quarter the of net loss prior $X.X loss Our compared period of net same in to the million.

loss million a year. $X.X compared at to are in we the net On of a million the loss prior of $X.X year-to-date,

volume sales later That balance. Receivables our the sheet. respective from higher million balance was increased the year-end $X.X comparative prior periods timeframes. the at during driven of by Looking by

into As a for year-end to increased balance our the Accounts related anticipated from year-end due stronger to to million. quarter. and $X.X the depreciation our capital volume, spending be timing $X.X the $XXX,XXX, result million, estimated $X.X payable quarter was Total million. and down in and balance decreased planned $XXX,XXX. for higher at by year are primarily and prior from reduction were by prior the third expenditures has sales up $X inventory volume this going planned totaled brought to and costs is of Capital year-to-date expenditures million accrued the expenses

by cost by activity timing of offset decreased related introductions debt inventory of the our the facility product operations, and cost and from expense lower Our million and $X.X payments, samples quarter consolidations. to driven of decreased XXXX partly high of first the new by

the We have by $X.X year-end. balance from million our debt reduced XXXX

availability at borrowing quarter was $XX.X Our end million.

is our presentation investor available Our at www.dixiegroup.com. on Dan? website

Allen. you, Thank

are actions Our of impact second to experiencing material quarter raw the results have as as well the continued we we the positive last show in decreases over costs. year taken

in aligned reductions have and consolidations capacity, throughout demand facility have improvements and our the fixed better facilities. manufacturing experienced and our lowered our have operational company headcount we Our costs,

channel year change strategy. still A to of factor million. our in are a the to significant over due in track reduce We in on volume year-over-year was sales loss by total costs customer's this the mass decline $XX merchant

net the sales, quarter. merchant down sales for mass X.X% were Excluding

invest have Despite the marketplace, issues to continued for the future. the we in

surface invested have normal products and our in product annual to the arena, new decorative many the hard heavily in displays, introductions. market We addition in and with

marketing have reason, and times. we in expenses would this selling normal For than higher we much experienced

In in continued executing XX new X brands. In the quarter, brands, the soft products in DuraSilk new solution-dyed with X This we new have XXXX to including Seasons we second our Collection. our growth made additions new included Floors XX polyester. decorative launched with strategy surface collection All introductions, our styles our DH synthetic our

We hard our Select and have added with items additional Bravo TYMBR collections. new surface

easy experience, an ordering. integration retailer about expansion through and online our our including consumer online websites, We're program with Broadlume. sample partnership excellent continued the This personalized excited of capability digital product visualization with provides

industry experiencing change. point, some have is Too downturn economic it to like we will, will the prepare investing actions, the operations, To past. the and have prepared new, this, improving and for a industry customer early by rebound at experience. flooring taken situation beautiful we improving a and determine But in cyclical in cutting product the grow. when had The costs, will experience

selling As greater a have percentage been result, expect would sales a we our conditions. costs during market than normal of

operations position in and Hopefully, SG&A and cycle. improve we're the a we With will in at profitability improved be lower the margins more bottom share to market and of the efficient costs, future.

for of July press the first month ago was the in new impact our for order ahead period. to will of time momentum. more slightly As we launches noted release, also entry this believe year add product the this We year, the of

open we up questions. the call time, this to At will

[Operator from comes Instructions]. first with our Mike SGF Hughes And Capital. question

You touched on the step-up in SG&A.

million I over step the What's was think look number? going $XX quarter, little that does What level back like sequentially. the same assuming up XXs? normalized down forward? million $X.X a of the it It was number into that in June a does revenue,

Yes.

coming We the growth are the mentioned, is particularly introductions, surface, some in continuing product as that to invest a products decorative in of new hard which us. and were also out lines, around area for new our Dan our

you in coming for and expect, level. going in next The million $XX So mentioned, growth more the high will future effect be but to back we year range. in in normalized is at the sales that periods, forward a we're opportunity as down still cost expensing levels do

Okay.

So now it from a level? be the will quarters lower normalizes to few it until

growth that Yes, some yes. we've identified. in This significant year is opportunities continuing the investment

be to percentage expect several a it would But sales. we lower points percent of as

quarter? did said order the of strengthen to just the And Okay. late just quarter? month, entry did cadence July. that quarter in product the then out you throughout Maybe higher play the can you in the by slightly them of was -- -- introductions most speak second were of new How it month the

comparison -- ago March again the the year was It It April. with May. the The then July. improved and worst June improved in improved in . It improved period in in period. to

see few number? release are we Okay. over a a the reserve, next that of Terrific. in Then the where LIFO might quarters you actually position

we're Yes, a inventory continuing costs. to reduction And Mike, absorption planned complicated would do of XXXX levels. the we as But in a that what is volume upon fixed it's through lower our manufacturing we're ordinarily, as or up on values plan we're drive anticipating go this. higher in seeing, calculation based overall based

the But consolidation the our offsetting resulted efficiencies facility in volume at of improved through we're year. half seeing our has the and first more plan is material in coming plants, costs than time, lower raw this which

So our projection see costs. the year the lower is as favorable decrease and we will through that results LIFO to reserve continue these it on

second the operating Okay. flow -- you to in And then be cash do half? expect positive

want Watching don't watching with Yes. half projections operate to We results on that by continue strongly, encouraged to anything we expect first results. we're positive -- volume, I economy we are but but our our throughout well expenses, forecast in the feeling our demand, year. based pretty and and mean, to the believe

Okay. Or it? the you unencumbered I And us this that point? sell, is guess, parties. there is property you're interested on to then a for give are question And maybe mortgage The that? last going color, then property Georgia at that there you. Can other timing any on

multiple to at opportunities. looking opportunities. are at the multiple this of to work are a or some not part continue But have negotiations have give it, and process. does And there's be potential we We -- buyers would will we any against with as mortgage anything property continuing projection and which One the conversations. I time,

question Morgan with next comes Riemenschneider from Stanley. Our Chris

You the answered one distribution regarding consolidation. question

that is a market you share? share. Can would had you What believe you that? I more our on question specific little How other you The gained that? mentioned you be How market you that? measuring that do do be, are quantify

data our Well, and to surface the the organization, that we I have basing the Through was soft I referring only was sales, measure we market that, data the what that's receive we on for. because quarterly have best that's market way we that on. industry --

With additional to no remarks. Please go for further in I queue, questions or Frierson turn closing will call back the any ahead. Dan the

being thank third of to call. of with you. speaking look We you Priscilla, you and forward your you the appreciate much. all the very Thank end for again the Thank interest at on quarter.

and have Ladies great day. a for and conference. Thank your does that again participation, today's gentlemen, you concludes