DXYN - Earnings call transcript Q3 2021

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Operator

Good day, and welcome to the Dixie Group Inc. 2021 Third Quarter Earnings Conference Call. Today's call is being recorded. [Operator Instructions]. 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. sir. ahead, go Please

Daniel Frierson

and to John, conference third call. welcome, you, our everyone, quarter Thank

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

For of $X.X continuing the of of $XX million. the net approximately income had sales company's and million third quarter operations XXXX,

with sales million the approximately for $XXX,XXX. of net quarter of income Our were XXXX third $XX net

The commercial a With beginning of the did the quarter residential covering our in third floor was manufacturing sale our of Alabama. Atmore the our sale only include not and focus. company business commercial as of business, facilities our Saraland,

With constrained these have facilities, we of and to the into enhanced been has customers availability business. ability our labor, throughout the our which production service very moving residential our country, grow

we became believe which Net prospects. up products continued share which XX%, market to changes, significant comparing quarter, flooring -- industry, high began of believe gain will we our and we favorably were was digits. our up residential to the single enhance and sales future During the

our have I pandemic will the of first net which floor home months Danzey, This XX% sales up year, impact residential the in review XXXX result period of our after X existing of in of the our was growth were net the increase the comments. the our year-over-year results, total will of in prior CFO, new products remodeling significant same in strong covering Allen year. products sales residential XXXX. and COVID-XX financial in over and the sales additional home and For

Allen Danzey

you, Thank Dan.

over margins the We XX% operations $XX.X comparative the third net increase the $XXX This sales by net $XX company, months in put third over sales good of another total the year, the higher an sales from XX.X% first increase quarter quarter year the was X was operating to As of of compared of the the the strong months sales XXXX. margins. XXXX. this quarter had of million, Dan of the was Gross and of discussed, consumer quarter that XX% quarter of COVID-impacted in demand market X the for profit a million of driven in net residential million, in continuing for XX.X% first our for XXXX. just

are actual we higher in of -- with in increasing raw we the pricing higher against costs. As saw period revenues line current our benefit period higher lower matching of prior materials, a costs

Selling As margins This recent began administrative the the plan. after on We've the we while reductions, and was the as in of of through sales. affected of growth which costs with those our onset raw the XXXX in costs XX.X% or in ended period anticipate the quarter third we line markets. comparative same roll reduction Prior part selling and production, residential results. held material to pandemic, XX.X% to our of net higher in $XX.X strategically the of expenses return of in prior by administrative more operating to year. favorably investing million at compares of period our a COVID-XX response many

Our quarter XXXX. of to third net or $X.X income operating operating an of million of the quarter million on of X.X% the in $X.X sales income compared

the a expense XXXX. fourth in reduction. million, the reduction the was $X.X of amount expense of the we initiatives amount million million in $X.X our quarter, efforts The and interest third as decreased result interest interest of to For $X.X our compared current $X.X in towards quarter XXXX quarter XXXX million incurred as continued the financing in XXXX debt a from of

we our contributor current quarter commercial the to commercial $XX.X million. was sale XX, third that the the operations during sold million in from third Our quarter. Heavy reduced year-over-year September reduction quarter for debt our $XX.X to of XXXX the in debt operations. million $XX.X On of

As trade the focusing operations operating deposits new sale and of cash reflected was million, the business statement. earnings We structure within certain per receivables open on our sales, the income retained $X.XX. in demand look million realign $X.X facilities forward fixed on meet the of our our inventories production residential discontinued we point the products. business part was is the the Net increased share low the an us we've giving to recorded in and as $X.X the of for at and of of our assets. agreement, purchase The our to quarter for gain

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

the Looking quarter million. tab. long-term over Quarter and balance funded at credit investor and million our million and and our by by on prior was same in our compared those in the approximately of increases of including be payable To end, million our to year. of our XXXX and click expenses $XX.X raw acquisitions, accrued result please million, the the $XX.X increased increased drove $X.X as expenditures presentation, borrowing $X net increased amortization and approximately and $XX prior Inventories both $XX.X receivables cash higher in volume approximately cost capital materials. September anticipate Dan? end www.dixiegroup.com higher million. depreciation see We $X Capital year quarter. equipment website accounts when to of financing, Investors XXXX, agreement of availability was the the to go for under our At sheet. at the sales demand million sales a our

Daniel Frierson

you, Allen. Thank

departure for and major industry. quarter, also challenging, but opportunity represents third which and one repositioning. market of materials a availability for transportation created more residential higher labor, the resulted change, became During which offers even in of growth the the and issues Stainmaster costs for the The service

customers transition our implementing Solution to EnVision help EnVision brands Pet are our strategies and We to X,X new solutions. SD

more products feel market. brand marketplace. flooring domestic cutting-edge focus the growing than TRUCOR additional grow continue faster continued than Our we rapidly on luxury sourcing, the has even With to and vinyl we can

out to the upper of the in new end to the X decorative commitment -- collections bringing we're our of part new market, market. As bringing X

offering XXXX Masland Fabrica the for product a which and large decor complement designed number offerings design fresh bring of and our to distinctive community. looks, are Our

third the strong. in quarter business residential to be continued very Our

our sales of of the up XX% noted, were surface that XX%. surface sales soft up same As and ahead products hard the prior over over period including year, were in XX%

Our production these and SBC with remained has the a well of SKUs. throughout generated year SKUs. order hard Applause, market, In It services, above with entry ago and activity new TRUCOR levels sourced we're launched X level on our to maximize in quickly we significant interest order vendor the domestically working quarter. our offering

looks. including products. -- high-resolution residential launched virtual benefits ACX over printing The features used include be stone products wood TRUCOR scratch core We high to visuals, most in most floors program existing this sharp directly vest and to minimal with invest hard TRUCOR is XDP We're business. our XDP realistic additional of continuing of the XX surface also with repeats XDP an our surface technology highly film-based waterproof found easily SPC of preparation. SPC and WPC TRUCOR resistance digital can in film pattern rating. -- elimination subfloors on durable a installed and in hard and traditional SKUs, and instead

retail program, the closely past. aligned XXX had brand Flooring Through As from for Center of delivered in the Stainmaster, PFC our retailers a part with Stainmaster network. we transitioning been have solution new stores the away the joined turnkey Premier who

been showroom With flooring, the which nylon PFC retail selling and very X,X also best-in-class offers with high-quality the promotes well with type matters merchandising has program messaging. benefits of highlights tickets you The the margins. refreshes buy higher and where and program tagline, higher received. a it It made the system, carpets up-to-date PFC

our from optimistic company in the discussed, Stainmaster, from we and remain as were for Allen future. As quarter. residential away a challenges results flooring Despite the transitioning availability material inflation, better third

home company the believe remodeling focusing remain and production New projected are resales assets construction, forward. growth commercial utilizing our robust. to has on going home positioned of our for residential the of remaining us residential We flooring,

During and our this level. of period, Allen reduction. have amortization expenditures half debt at we mentioned depreciation capital our maintained about

In which up in than or year-to-date, our during think, the we million Over reduced by industry up summary, sales XX% compared months, more sales as the the million to ago, was quarter, was XX% mid-XXs the the when of was carpet XX have last year $XX industry, $X.XX a we up increased approximately our month. significantly range. a debt residential

We have several growth initiatives that are very doing well.

of to we're brand to PFC Stainmaster transition implementing our Lowe's, in Solutions X,X First, to the brands. our to and EnVisionSD sale EnVision program our response customers Pet

products. hard into We Fabrica our continue We'll be rapidly TRUCOR to products our the The category the products sales XXXX has and by quarter. of through residential collection our decorative our expanding of products momentum decor in introduce new offerings. Masland growing continued fourth surface to

ago call year year questions. strong. the time, like levels, X XX% our we first sales quarter quarter, the approximately this weeks to of For was up from are open the to fourth of very up the At would last and

Operator

[Operator Instructions].

Our from Maupin first line Derek comes question Hodges with Capital. of the

Derek Maupin

Dan, Allen, congratulations the quarter. on

Daniel Frierson

Thank you.

Derek Maupin

As as gross going of price maybe offset? a of can material raw inflation think about logistics, indicated we know but I forward? well how timing think as lot margins, far increases kind you those should you're you seeing you of and as what

Allen Danzey

willing that what about the any quarter. experienced projections or just we've area, forward-looking talking not in to provide bit Yes. a We little certainly in but

price historically certainly timing-related capitalize to saw our seen in to in the revenues recent forward look period In try come believe predict current raw I the to in come As in actual as the would -- this allowed it's third that. be out prior difficult continue increases particularly third from of to And certainly in been higher having level continue to costs as to the have, a margins. timing issues delays with going demand capacity cost to this a there, around benefit to But we quarter, tell of timing commercial increases the more able fourth in on to to respond we fulfill divestiture as increases to our residential it's matching We'd but ways, something from we've we'll materials, against our and to we're as high some issues see raw sometimes up and more, operations, costs we costs looking of the environment, pricing price around of increases said, cost drive as to I we the year, cost our and the Atmore a as more continue saw there that some margins. efficiencies products. materials, lower cost benefit the have materials, more many comparatively the hit, more so business, a people quarter get we're some our of issue in quarter. and on in of quarter, methodology been we've to that plant raw to you implementing our increases to the our our expect difficult there's recoup our the products on on know, and getting both

Daniel Frierson

or year. a major from Derek, increases, everything X materials. to I increases X price seeing from Stainmaster sources. lot We're a think to up, Obviously, of have perfect during other transportation we also gone the different X to products raw costs actually raw labor switch our had material

So there, next there hope January. virtually, would a very we the parts has of December inflationary increasing It's mill every as has that we have to And lot here. prices. early increase moving when But price for been pressure or a difficult had clearly, inflation either is this announced don't year as are year. we that industry much predict. But

Derek Maupin

you what's opportunity maybe Maybe to market a that you little front One, the deliver? being not versus And with going you as second just maybe to over customers resets of your employees of some color competitors you on of that able given little do side, and in to incremental those indicated, labor share? is some customers' maybe on a a question on get the an meet giving moved part more this on residential, the think bit take demands Stainmaster. could

Daniel Frierson

we'll course, would like do Well, specific that marketplace. It in feel new as we are to other in products rapidly time not we'll we the But that's position. the have on to suppliers, in some we be and We'll and takes replace the more a Obviously, may be can. there road think have already supplier, We sources. stronger in be easy the Stainmaster and be products, introduced to sources it will possible. there. Stainmaster, fiber task, diversity think do with products, as as a replicate be better of as And net-net, in we rapidly much away more bumps we're position. fiber of moving I an

was assets plant the we are commercial that now commercial business, those labor would industry, the Georgia. really major say our our every produced. where The today the of residential in Unemployment And area, folks I And in in those of the serve -- residential there are and and the virtually extremely not and in equipment part our of people transaction of business. terms carpet whole help the North mill capacity a impacted was plant service commercial In Atmore can rates utilize to selling were products most low. therefore, have constraints particularly Georgia. North is factor

we have this in to that machinery see opportunity business. our people to the we have So grow and an the utilize as we Atmore the and assets residential

Derek Maupin

last maybe question And for me.

get a balance level to as as leverage will job the far it that goes? the bringing down to going be Is certain the focus there You've -- tremendous still sheet a you'd as done that a Is as like sheet. on far balance forward?

Daniel Frierson

been XX% that debt XX% capitalization, we're in I above say still. traditionally, would and to we've little the pretty to a comfortable

continue to So bring debt our we will down. trying

Operator

question next SGF with comes the of Mike from Capital. Our line Hughes

Michael Hughes

First, a detailed balance question sheet. on the

$X.X As in the million X to $XX.X ops. long-term current line discontinued quarter, assets going the ops to What and end million forward? those of items of assets happens in there was related discontinued for September

Allen Danzey

the as fixed we assets, accounts the of from assets. The as retained we some business and inventories the as the well mentioned, receivables

the through for accounts quarters. also better the off is terminology that end more we'll receivable market the guess, the the And of the working a we into expectation of it, the that and the significantly obtainable would dispose will course, next sell assets market, like items are fixed little around bit process Of just diminish be at see collecting expect are year. taken a into those but couple of, take within value that that a I care to we inventory, best on, then and working to of by

fully As well. and some of the liabilities, liabilities former open most responsibilities, in the the end significantly responsibilities year. rapidly those far of decreased are the quarter as as employee paid are there we by that as have be for are ongoing part liabilities as far But off would

Daniel Frierson

commercial appropriately Mike, the that in residential be assets. that used be the were facilities business. used but let on in the in clarify business assets Those aren't ones can that Many cannot the in assets were fixed were me the these business, residential used that used those of residential the not business. or in are will

Michael Hughes

And I a cost Great. just SG&A own your branding? run Stainmaster these at then million $XX.X Okay. from quarter, to some of maybe in to was the the if was is good that rate forward? some onetime there going resets curious

Allen Danzey

the were earlier there's some year any had general, issues costs to have our as no reassess far strategy next commitment particular we would the building There plan for We've as But our item throughout sales our year. cost. large into other residential of certainly the look areas. and that to we impact investment one outstanding particular, in marketing and selling as France as different year some around there. delayed in timing -- our are cost at we But business, went or and onetime, those continue the in in nothing develop

Michael Hughes

And your exceptional been have quarters. last Okay. sales the few

sale Just levels at resets curious, think of of the point there was channel the the or on Stainmaster dynamic kind quarter, of just selling? related as fill this can you're we any to same

Daniel Frierson

other industry. from do Basically, different we're stock. sell a Mike, lot the not a we some little suppliers of to

get a for sales a with a very order usually of an and So a we certain a places filling. lady, retailer, our cut, -- order XX consumer, there little size. over occur when channel end are XX% an

-- possibility channel there's a lot fill selling for of small. It's not a us. lot not very we're So

Michael Hughes

Okay. not I And last but LIFO. then appreciate it. accounting question, cost get I discussion, just think to into on a you're

a was the strong I were the surprised So how quarter. in gross bit little margins

you can a out So little flush maybe just more? that bit issue

Allen Danzey

accounting you methodology an those. income seeing deferral as get our really now, as for costs some applying right companies as this mean, many and into mentioned, calculation inflationary as and impact. for the The we're capturing LIFO into As you're I you seeing you cost actual said, far LIFO quarter,

as for things and prior LIFO relatively again, there getting the million we commercial of that the around was our a In flat inventory with real were situation as movement the movement some a from there, quarter. number the of off of that movement cost, price having estimation the far business the the inventory the for place quarter-to-quarter cost For point. on LIFO timing us, calculation was all $XX.X far period rolling and general, of with through. books the is as moved our continuing after calculate actual increases operations as at result as in our really cost driven actual The LIFO

it's benefit we get we again, the moving the quarter the settle quarter. unique little So to expect bit that on -- fourth we a down forward in as

Daniel Frierson

Mike, I queue is think of quarter, was second reserve was quarter end at almost is end. the of available, it million year identical what and I you LIFO the third up, notice the from the that will the once to that around think, end $X at

Operator

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

Daniel Frierson

John. Thank you,

of available grow number of was residential, watershed to of people out commercial getting our both assets soft quarter a quarter with grow business. on a for help business and business with us the initiatives surface Third hard our concentrating sort and to totally a and

appreciate forward we're you. you Thank the and to looking future us. So being with

Operator

again, conclude gentlemen, that Ladies for conference. Thank a your Have great day. participation. today's you, will and

The Dixie Group, Inc. (DXYN) 13 Nov 212021 Q3 Earnings call transcript