Dixie Group Q3 FY'13 sales zoom 37%

“Sales expenses associated with the growth initiatives were higher during the quarter by $770 thousand due to added marketing and sample costs to launch our newly acquired Carousel line within the Fabrica brand, incorporate Robertex products into the Masland Residential brand and launch the Avant commercial brand. We estimate these ongoing sales and marketing efforts will increase our selling and administrative expense by approximately $400 thousand in the fourth quarter and $900 thousand in 2014.

“The quarter had a gross profit margin of 24.5% and an operating income of 2.0% of net sales. On a non-GAAP adjusted basis, our gross profit margin was 26.2%, and our operating income was 4.6% for the third quarter. Our tax rate was positively affected by $795 thousand in prior years’ tax credits. The majority of these tax credits were for qualified research and development expenses. Our tax rate without these credits was 31.6% for the period.

“Working capital increased by $7,804,000 during the quarter due to higher receivables and inventory to support the higher level of sales. Inventory turns improved 13% versus the same quarter last year. Capital leases and expenditures were $4,450,000, while depreciation and amortization was $2,748,000 for the quarter. The fair value of capital assets acquired from the Robertex acquisition was $1,863,000. We anticipate capital leases and expenditures to be $13,500,000 and depreciation and amortization to be $10,500,000 for the entire year of 2013. Total debt increased $12,383,000 during the quarter, $3,769,000 of which was related to the Robertex acquisition. Availability under our credit lines was $26.4 million at quarter end.

“We are pleased to see continued industry growth in both the residential and commercial sectors in the third quarter as signs that the economy is on the mend. Despite potential macro-economic issues, we believe that conditions in the upper-end residential portion of our industry will continue to improve through 2014. The commercial market appears to be on an upward cycle with the highest growth in the modular carpet tile segment. We continue our commitment to growing our market share through innovative products, improvements in our processes and investment in our people,” Frierson concluded.

The Company's loss from discontinued operations was $20,000, or $0.00 per diluted share, for the third quarter of 2013, compared with a loss from discontinued operations of $167,000, or $0.01 per diluted share, for the prior year. Including discontinued operations, the Company reported a net income of $1,412,000, or $0.11 per diluted share, for the third quarter of 2013, compared with a net income of $102,000, or $0.01 per diluted share, for the year-earlier period.

The Dixie Group