Dixie experiences solid growth in wool collections
The Dixie Group, Inc. reported financial results for the first quarter ended March 27, 2010. In the first quarter of 2010, the Company had net sales of $50,454,000 versus $47,639,000 in the same quarter of 2009. Including unusual items, the Company reported an after-tax loss from continuing operations of $2,459,000, or $0.20 per diluted share, in the quarter, compared with a loss from continuing operations of $35,441,000, or $2.90 per diluted share, for same quarter of 2009. Excluding the unusual items, the non-GAAP loss from continuing operations was $2,316,000, or $0.19 per diluted share, for the first quarter of 2010, compared with a non-GAAP loss from continuing operations of $5,932,000, or $0.48 per diluted share, for the first quarter of 2009.
Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, "The first quarter, which is usually our lowest from a seasonal standpoint, was an improvement over the same quarter of last year and our first favorable year-over-year comparison since the downturn began. Sales were up 5.9% from the prior year period, and pre-tax operating income, without unusual items, improved from a loss of $6,142,000 in the prior year to a loss of $2,075,000. We believe the industry is down slightly 2-3% in dollar terms during the period. For the industry, residential products improved slightly while the commercial sector was down over 7% versus the prior year.
"We have seen a gradual recovery in the residential markets with emphasis being on value products. In the fourth quarter, we introduced more aggressively priced, well-designed value products in both our Durasilk polyester and branded nylon product lines. These and other sales initiatives have resulted in carpet sales growth that exceeded the general market by 10% in dollars and over 20% in units for the quarter. The increase in units was due to mix changes in both our commercial and residential product markets.
"Margins continue to be under pressure due to raw material increases, growth in lower margin product lines and unfavorable volume early in the quarter. Our margins for the quarter were 24.5% of net sales or 4.3 percentage points better than the same period in 2009 but 3.2 percentage points below levels of the fourth quarter 2009. Late in the period, we began to see the results of the industry-wide price increase enacted during the quarter. Due to rising raw material costs, a second residential price increase has been announced to be effective in the second quarter. Our volume throughout the quarter has grown as evidenced by our plans to convert our yarn operation from the existing three-shift schedule back to a pre-downturn four-shift operation. Overall, we are making progress toward our objective of returning the Company to profitability at anticipated 2010 business activity levels.
"The consolidation of our West Coast operations, though physically complete, still had some additional costs relating to software changes and remaining non-accrued facility rental costs for our Pullman facility.