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Dixie Group reports Q1 EPS (22c) vs. (14c) last year » 08:51

Dixie Group

$2.26 /

-0.04 (-1.74%)

Reports Q1 revenue $77.6M…

Reports Q1 revenue $77.6M vs. $72.7M last year. Daniel Frierson, Chairman and CEO, said, "During the first quarter of 2022, our net sales increased 6.6% compared with the first quarter of 2021. Order entry surpassed prior year throughout the quarter with the highest growth occurring within our Masland Residential and Fabrica business and within our hard surface products overall. Our Dixie Home business declined due to a shift in strategy by our primary mass merchant customer. Although this change in strategy will continue to negatively impact our Dixie Home business, we have increased our sales in the specialty retail segment by 9% over the prior year, outpacing the market. In the first quarter of 2022 we experienced a decline in our gross margins primarily due to two major items. First, we were negatively impacted by unprecedented price increases from our primary raw material supplier, coupled with their decision to exit the business. We are working with other suppliers to replace this volume and bring our costs to a more normal level. We expect the conversion to be complete by the end of the second quarter. Second, dramatic increases in ocean freight costs resulted in significant declines in margin on our hard surface business. Fortunately, late in the quarter we began to see a reduction in these freight costs resulting in improved margins for these products. We are excited about a number of new product offerings introduced during the quarter. We successfully launched our new decorative segment offering introducing 30 new styles under our new brands, 1866 by Masland and Decor by Fabrica. The new offering will include hand tufted, hand loomed, wire wilton, and face to face woven products with fresh looks and on trend colors. In addition to the launch of our decorative segment offering, we also introduced several new hard surface programs, including TRUCOR Tymbr and Dwellings by Dixie Home. TRUCOR Tymbr will compete in the high end of the laminate category, and includes a 9.5" wide & 72" long laminate product with excellent water resistance, stunning visuals, and an AC6 scratch resistance rating. Dwellings by Dixie Home, is an engineered wood program which hits mainstream price points and offers beautiful colors and finishes in white oak and hickory. In addition to these new categories, we also have several new innovations in our existing categories planned for introduction to the market in the second quarter. The innovations include: TRUCOR Boardwalk, a new SPC offering featuring clean visuals, lighter colors, and a new pillowed edge bevel for an authentic look, TRUCOR Prime Pinnacle, a new WPC offering with a large plank size of 12" wide by 90" long, and 18 new SKUs in our Fabrica Fine Wood program including two new Ash collections in 71/2" and 91/2" widths with fresh, clean visuals. Also, during the quarter, we continued our focus on strengthening our financial position by securing funds under a long-term low interest rate loan. On March 16, 2022 we closed on an $11 million note payable at a fixed interest rate of 3.81% over twenty years. Closing on this loan allowed us to pay off $5.5 million in existing notes payable at higher interest rates and avoid future balloon payment amounts. Looking forward to the remainder of the year, we believe our new raw material sourcing plan will allow us to have more control of our product offerings over a broader array of price points. We continue to build stronger relationships with our key retail customers through the development of the Premier Flooring Center concept focused on selling better goods, helping them improve margins and positioning us as a more important supplier to the specialty retail segment."

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