DXYN - Earnings call transcript Q2 2021

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Operator

Greetings. Welcome to the Dixie Group Second Quarter 2021 Conference Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the call over to your host, Dan Frierson.

Dan Frierson

Thank you, Stacy and welcome everyone to our second quarter conference call. our Danzey. me with have CFO, Allen I

Our to our statement is reference both included by website Safe Harbor and press release.

highlighted million net has continued have were order activity and we in the quarter, results, strong quarterly As which the our we approximately had $XXX about third for income quarter, into throughout the $X.X million, the sales quarter.

per or share. from the of $X million of approximately $XXX.X For sales share. sales or continuing of second the XXXX net operations $X.XX second quarter diluted from second was company were The quarter had operations $X.XX $X.X diluted for loss the $XX.X quarter a million of in the year Net net and income per continuing XXXX, of last million loss million. of

were close we of with quarter Overall, able XXXX, flooring XX.X% of in the second favorably second to momentum of quarter was approximately second on the the XXXX, compared XX%. to residential experienced comparable quarter. XX% XXXX. industry our the sales sales first the to up products double XX.X% build the of we comparing we increased to of through end the believe quarter Net the sales were residential up which net During or

markets Allen? improved, at home remodeling additional quarter. comments new and in of but second in year. result continued For have significant pandemic which in sales Allen place home after events the will in up the prior the the period of of COVID-XX quarter year-over-year first will lower was year, X increase months I and our of the Danzey net levels. residential residential This sales of products and took same net the of volume our be covering strong in review products, our financial the which was total impact sales XX.X% the in year growth regarding last the to floor XXXX. over a during Sales has results, commercial existing

Allen Danzey

Thank you, Dan.

by just were demand the good the As increase markets. was $XX.X driven million in year, as residential the XXXX. increase over at the an strong a sales total and quarter of year the the that puts company of sales That’s XX% months during million the $XXX.X Dan very year XX% in of months this our sales this COVID-impacted over million. first first we year first discussed, second saw of at quarter quarter the of for the net it X X of this for $XXX.X of Net our

XX% on in in XX was residential XX% in the the net Prior quarter of am XX.X% rising which second was compared to as held expenses reduction of XXXX. XX.X% increased markets. increases reductions XXXX the manufacturing began same quarter the Our on of implemented administrative COVID-XX a we this and year plan. first growth margin year. and XXXX response many these the onset rising as labor pandemic, the volume the Selling for investing strategically $XX.X part in plants, sales the selling while material our which We’ve this by costs. gross were the in to of quarter products sorry, offset of and margins offset of profit compared or price in ended million in costs these administrative The costs. driven We of period quarter to to was our sales – year second and period by partially by I net of our prior the after XX.X% in the at of affected

net $X.X second was million a quarter of X.X% in or quarter sales million to of XXXX. the the $X.X in compared loss income operating Our of

de-designation the related from in million of current a the includes at reduction rate fourth expenses towards the in and for which $X.X financing our $XXX,XXX reduction. we million. XXXX, incurred $X.X expense to XXXX The quarter amount For approximately The swap. deferred quarter, our expense, interest of second interest quarter in an was of was recognition continued a decreased interest XXXX initiatives efforts the a result debt interest of is which

in in debt share million, quarter year-over-year was our from earnings the per us quarter. Our reduced of to Net $X.X of in $XX.X current $XX.X giving million XXXX second an million quarter income $X.XX. the

per of $X.X For fiscal of a reported we the earnings share $X.XX. million year-to-date, income net and

sales accrued Turning was million of and the balance XXXX, comments. this $XX agreement expenses previous under and quarter $XX.X million. quarter Capital when long-term the To in the of expenditures net quarter of was it end, of please to back investor quarter. time, Dan increases quarter. million see I end the go at credit Frierson timing $XX.X million our for first million equipment presentation, the approximately At and as at higher to on amortization drove receivables including and and demand Investors our million. well inventories website to with borrowing million. for $X.X capital by financings, Accounts our volume those sheet the be tab. June to to will due click our quarter www.dixiegroup.com Depreciation the the further $X.X some increased our funded to cash payable was $X.X $X.X payments anticipate at acquisitions, our quarter during as At approximately sales and the from end. for million on depreciation XXXX amortization $X be We and availability compared hand

Dan Frierson

Allen. you, Thank

have future. two our of three on by Our a second quarter was which will events, punctuated impact significant major

impacted, and on normal Certainly, to we our internal with attack, occurred operations results customers. quarter but April were it able impacted in mid-April, and our a to negatively both external operations ransom the return limited were in our which communications. impact later First, more

changes impact the business by sale the Invista price long-lasting our of the at brand will Lowe’s and from withdrawal have well Second, Stainmaster brand as industry. a retailers and the as the independent the of on

to our offerings a and enhance market. brand to executing competitive plan are We the

represent Lastly, we major a for entered an the for in of company. sale have focus our This change principle into of would commercial sale agreement our business.

negotiating the of second some We XX% our our and proposed but will to able market. delayed well-known residential than commercial floorcovering focus attack, key launches of conditions solely our respected growth were entire Upon continue the many the still Residentially, ransomware were to the the of divisions, quarter market, to represents residential less our are of our business be launch our of by into where planned we brands sale, products sales. the market Due and residential completion terms on sale. successful share. gain currently product

surface the TECHnique launched These our fiber. latest in X,X and and new with we EnVision X soft tufted innovations side, in are Masland patterns our the the produced tufting market On high-end on patterns divisions. Fabrica

edition during program, by to We X for stores the with retail key also new to coming several additional offering styles Solutions X,X brand with In hitting unveiled XX sale other One third was the to event launched Pet this April, expected X,X begin total our Stainmaster products EnVision styles, EnVisionSD our the we special of EnVision the Invista quarter. summer. all styles Lowe’s. during across second divisions, the bringing new quarter industry

help key and A offers as nondisruptive a The has to development response PFC industry. for create this X,X event, focuses our retail-friendly component to brands. our also of in premier in-store flooring Stainmaster solution retail brand system provides and a transition Stainmaster a EnVisionSD alternative flooring signage, benefits in new introduced We the existing and offerings prepare years, to EnVision such of begun X,X the company our our products was the look fiber from center, selling It last had sources nylon a their for on eventuality. materials PFC order brand the our X,X. of we these Over upselling better for of the Solutions fresh merchandising EnVision diversify materials as Pet new and was of developing couple effort strategy goods new PFC. multifaceted labels this showrooms. an and In retailers. the specialty to developed customers feel to also developed quickly to showrooms to turnkey help raw

We will this about be summer. installing stores PFC in XXX the

high-definition repeat features These deliver beautiful TRUCOR our in category, an exceptional visuals TRUCOR scratch enhanced collection introduced vinyl on built and ACX visuals our market. resistance on in currently hard products programs found wood durability products pattern rating On for and the luxury new tile vinyl of the our flooring surface print is digital XX technology. virtually key the It in two eliminate side, family. we a XDP, SPC luxury and most and core

supply simplified introduced the for great Applause, SKUs our We offering and vinyl competitive in program, first made domestically luxury seeing sourced X USA. is to with offering. this reception the points TRUCOR price SPC and we’re also This an chain

COVID-XX. be Our by commercial market commercial adversely continues business the and to impacted

sales down commercial the year. quarter approximately from products previous flooring of Our during were the X%

conditions improvement, see we an into the discuss to agreement. this not the had agreement of and commercial principle believe beginning we announced of are and but On longer the XXXX, that be as in June the Obviously, recovery. residential as to entered the We XX, market terms for dynamic coming sale business. recovery are we we will continuing

ahead ahead well Due the implemented flooring same and strong orders approximately ago. have fronts, quarter residential sales and range at sales weeks price period in of and well. as were increased increases well of the continued year July the orders year industry-wide XX% pressure first and second last sales ahead half a of Our are very to the the last in quarter. the of of for residential XXXX cost on XX% many a pace, and of Both X during orders

open costs would have labor questions time, Additional August. you the continued have. material, like transportation this At Raw meeting to announced may for been have price escalate. increases any to we and for up

Operator

first you. Hughes question Mike SGF [Operator Instructions] Thank Your Capital. with is

Mike Hughes

for questions. morning. Good Thanks my taking

line, you? it the size above-average is in on First just specialty channel? does Stainmaster opportunity, your retail the then And the product for opportunity carry an one, revenue gross – to that margin it possible

Dan Frierson

products I in respond we the build opportunity, which who an introduce were can and I concentrate the had the our brand, retailers already end excellent with of the business market. it end upper been years anyway Well, we to quantify don’t that the there in think see opportunity on as to over of last that. the to much higher very but is of obviously, the Stainmaster to couple doing

So, important become we our Stainmaster retail with and there but this will it a an for products pet EnVision EnVision selection Obviously, take longer going period do products, Solution and we Pet our product will for solution as customers. time, us to – opportunity X,X see opportunity. more transition be – as see a but term some from broader to an that

Mike Hughes

of from percentage the what And product Okay. right sales are now your EnVision line? residential

Dan Frierson

are going in the to be from products EnVision all don’t Stainmaster I but to – That have being switched today, is that X,X. process of are brand. our

accomplished So are that soon, be with very we branding process, almost the next be with everything couple the in or of will we in months. will everything that or

Mike Hughes

And an idea disclosed us on numbers. Okay. divestiture, for the line are on commercial operating margins line? what then think pending Can and the contribution revenue you give that gross just you I the

Dan Frierson

We the of previously. had sales you with shared percent

one We have segment.

other available will have any for Obviously, at be the that or material we is or consummated, divulged the So once will business. of commercial not be time. there transaction the separated side gross margin that our financials some

Mike Hughes

quarter wait the number question gross till to for think get need level XX%? just pricing will the and everyone the is kind Do third cost at the will just we margins then are in you protect of pricing. taking obviously, last pressures industry was the actions quarter or to And back the to fourth you that close with kind reported you faced Okay. of to you, the

Dan Frierson

add That’s to I on that predict. somewhat are LIFO. difficult would we

increases come costs. right us So, in to those our away

will that’s obviously, predict price and But over material we to on four passing say some we transportation difficult But the is easy prices is side, a been – to increases it impact of we those and hard the raw from be make. we have that. LIFO on to I our But year the this offset there complicated intent is increases. prediction So typically, are again, behind been year to the when the are costs, by been last little to raise are not which have costs an increase have along. cost and would probably prices, there increases. surface half

Mike Hughes

was residential quarter $XX about $XX I being Okay. million. full one quarter the ‘XX sneak ‘XX of And if sales commentary and question, of just was ahead in The XXXX, month of September last may the XXXX the of approximately orders and July, million. of just XX% September full

So, compare by a to? am monthly I number, know you – that it’s to but confused a I what little

Dan Frierson

downturn because of are trying last what was were growth I’ve the we prior the think mentioned is were but relative out seeing to actually I But to just the coming – it get obviously, COVID greater, we I year we increase. ‘XX Well, COVID. was across to solid and where

Mike Hughes

Okay, very you as much. Thank I thought. Appreciate it.

Dan Frierson

Thank you.

Operator

you. like to floor for Thank closing to turn I over remarks. would the Dan

Dan Frierson

all much on Stacy, thank conference with and of again We of thank the end you look us talking quarter. very our call. to for you forward with you at third being

The Dixie Group, Inc. (DXYN) 8 Aug 212021 Q2 Earnings call transcript