Dixie Group Inc (DXYN) 2023 Q4 法說會逐字稿

Welcome everyone to our fourth quarter and 2023 year end conference call. Alan Danzey is with me. Allen as our CFO. Our Safe Harbor statement is included by reference, both to our website and press release.

歡迎大家參加我們的第四季和 2023 年年終電話會議。艾倫·丹澤和我在一起。艾倫擔任我們的財務長。我們的安全港聲明透過引用包含在我們的網站和新聞稿中。

Adjusted for the additional week in our prior fiscal year, weekly sales in the fourth quarter were approximately 2% better in 2023 as compared to 2022. Net sales for the year 2023 were down 9% from the prior year, but were down 7.2% on an adjusted weekly basis.

在上一財年額外一週進行調整後，2023 年第四季的每週銷售額比 2022 年成長約 2%。2023 年淨銷售額較前一年下降 9%，但調整後的周度下降 7.2%。

The lower net sales amount was the result of a slowdown in the floor covering industry driven by high interest rates, which have dramatically impacted the housing and residential remodeling markets. We believe the overall flooring industry experienced a significantly higher reduction in year-over-year sales volume, indicating we are continuing to gain market share in our core markets due to the numerous actions we took to reduce costs and improve operations during the last two years, our fourth quarter gross margin improved by 13 percentage points to 27% of net sales as compared to 14% of net sales in the fourth quarter of '22.

淨銷售額下降的原因是高利率導致地板覆蓋物行業放緩，這極大地影響了住房和住宅改建市場。我們認為，整個地板行業的銷量同比下降幅度更大，這表明由於我們在過去兩年中採取了眾多降低成本和改善運營的行動，我們正在繼續獲得核心市場的市場份額，我們第四季度的毛利率提高了13 個百分點，達到淨銷售額的27%，而2022 年第四季的毛利率為14%。

At this time, Alan will review our financial results, after which I will have additional comments Allen.

此時，艾倫將審查我們的財務業績，之後我將對艾倫提出補充意見。

Thank you, Dan. In the fourth quarter of 2023, net sales were $66.7 million compared to $70.5 million in 2022. As Dan pointed out, the fourth quarter of 2022 included 14 weeks compared to the fourth quarter of 2023 at 13 weeks.

謝謝你，丹。2023 年第四季的淨銷售額為 6,670 萬美元，而 2022 年為 7,050 萬美元。正如 Dan 指出的那樣，2022 年第四季包括 14 週，而 2023 年第四季為 13 週。

So on an average weekly basis sales in the fourth quarter of 2023 were 1.8% above 2022 average weekly sales. Net income for the fourth quarter of 2023 was $3.2 million. It compares to a loss of $18.5 million for (technical difficulty) The fourth quarter of 2023. The income included expenses of $1.5 million for facility consolidations and a net gain of approximately $8 million as a result of the sale leaseback of our there still Georgia facility. The loss in the fourth quarter of '22 was related to higher costs driven by inflation, freight rates from the forced change in our raw materials as well as under-absorbed fixed costs from our planned decrease in production.

因此，2023 年第四季的平均每週銷售額比 2022 年平均每週銷售額高出 1.8%。2023 年第四季淨利為 320 萬美元。相比之下，2023 年第四季（技術困難）損失了 1,850 萬美元。收入包括 150 萬美元的設施整合費用以及出售喬治亞州設施而產生的約 800 萬美元的淨收益。22 年第四季的虧損與通貨膨脹導致的成本上升、原材料被迫變化導致的運費以及計劃產量減少導致的固定成本吸收不足有關。

For the fiscal year '23, net sales were $276.3 million compared to $303.6 million in the prior fiscal year. The company's fiscal year 22 included an additional 53rd week, while the 23 fiscal year consisted of the traditional 52 weeks. On an adjusted average weekly comparative basis, the net sales of '23 were 7.2% below prior year. Our primary driver of the lower net sales was the unfavorable impact of higher interest rates and inflationary concerns that impacted consumer confidence and was reflected in lower home remodeling activity.

23 財年，淨銷售額為 2.763 億美元，而上一財年為 3.036 億美元。該公司的第 22 財年包括額外的第 53 週，而第 23 財年則包括傳統的 52 週。以調整後的平均週比較計算，23 年的淨銷售額比去年同期下降了 7.2%。淨銷售額下降的主要原因是利率上升和通膨擔憂的不利影響，這些影響影響了消費者信心，並反映在房屋改造活動的減少中。

Gross margins in 23 were significantly improved over 22 as a result of our restructuring and facility consolidation efforts beginning in '22 and continuing through the early part of '23. Our gross margins year to date '23 were 26.7% of net sales compared to margins in the prior year's 17.7%. The low margins in '22 were the result of exorbitantly high pricing from our former primary raw material provider side to their exit from the business.

由於我們從 22 年開始並持續到 23 年初的重組和設施整合工作，23 年的毛利率比 22 年顯著提高。23 年至今，我們的毛利率佔淨銷售額的 26.7%，而前一年的毛利率為 17.7%。22 年的低利潤率是我們以前的主要原材料供應商退出該業務時定價過高的結果。

The prior year was also impacted by very high ocean freight rates on imported containers by the end of 22. We have changed the raw material fibers over to multiple suppliers at lower cost points and ocean freight rates have returned to normal levels. We also saw reductions in the cost of raw materials and favorable operating results from our manufacturing facility.

上一年也受到截至 22 年底進口貨櫃海運費極高的影響。我們已將原材料纖維更換為成本更低的多個供應商，海運費也已恢復到正常水平。我們也看到原材料成本的降低和製造工廠良好的營運表現。

Selling and administrative expenses in the full year of '23 were $2.8 million lower compared to the prior year, but higher as a percent of the lower net sales. The selling expenses are primarily driven by samples and marketing investment in our new growth initiatives. We incurred $3.9 million in expense for facility consolidations during 2023. This expense primarily related to facility closure and maintenance costs.

2023 年全年的銷售和管理費用比前一年減少了 280 萬美元，但佔淨銷售額下降的百分比有所上升。銷售費用主要由我們新增長計劃中的樣品和行銷投資驅動。2023 年，我們因設施整合支出了 390 萬美元。此費用主要與設施關閉和維護成本有關。

Also, as previously mentioned, in the fourth quarter of '23, we recognized a gain of approximately $8 million in other operating income as a result of the sale and leaseback of our DSD, Georgia facility. Our operating income, inclusive of the facility consolidation expenses here and the gain on sale was $5 million compared to a $28.2 million operating loss in 2022.

此外，如前所述，在 2023 年第四季度，由於我們喬治亞州 DSD 工廠的出售和回租，我們確認了約 800 萬美元的其他營業收入收益。我們的營業收入（包括設施整合費用和銷售收益）為 500 萬美元，而 2022 年的營業虧損為 2,820 萬美元。

Our interest expense on the year was $7.2 million compared to $5.3 million in 2022. This increased interest expense was primarily driven by higher interest rates in the current year. Our net loss on the year was $2.7 million compared to a net loss in the prior year at $35.1 million.

我們當年的利息支出為 720 萬美元，而 2022 年為 530 萬美元。利息支出增加主要是由於本年度利率上升所致。我們今年的淨虧損為 270 萬美元，而前一年的淨虧損為 3,510 萬美元。

Looking at our balance sheet, our receivables decreased by $1.3 million from the prior year end balance. The decrease was driven by increased timing of customer payments during the last month of the current period. As a result of decreasing calls and planned reduction in volume, our inventory was down from the prior year-end balance by $7.5 million or 9%.

查看我們的資產負債表，我們的應收帳款比上年末餘額減少了 130 萬美元。這一下降是由於本期最後一個月客戶付款時間增加所致。由於電話數量減少和計劃減少數量，我們的庫存比上年年底餘額減少了 750 萬美元，即 9%。

Accounts payable and accrued expenses were below prior year end by $1.3 million, primarily due to lower year over year calls. Our capital expenditures on the year totaled under $1 million and depreciation was at $7.3 million. Our debt decreased by $16.8 million from the end of '22, driven by the sale of our there's build facility along with operating results, decreased inventory and the timing of lower cost of expense payments and purchases. These favorable cash flow items were offset by the costs of our facility consolidations. Our borrowing availability on our senior line of credit is currently at $14.5 million. Our investor presentation is available on our website at www.dixiegroup.com.

應付帳款和應計費用比上年末減少了 130 萬美元，主要是因為催繳費用逐年減少。我們當年的資本支出總額不到 100 萬美元，折舊為 730 萬美元。與 2022 年底相比，我們的債務減少了 1,680 萬美元，這主要是由於出售我們的建築設施以及營運績效、庫存減少以及費用支付和採購成本降低的時機。這些有利的現金流項目被我們的設施整合成本所抵銷。我們的高級信貸額度目前可提供的借款為 1,450 萬美元。我們的投資者介紹可在我們的網站 www.dixiegroup.com 上取得。

Thank you, Alan. 2023 was a year of transition for our company. We spent much of 2022 adjusting to the exit of Invista from the fiber business and the sale of the Stainmaster brand to Lowe's, which resulted in the loss of our business in the home center channel. These changes, along with our sale of our commercial business, de-manning and necessitated numerous restructuring of our operations, which we began in 2022 and finished in 2023. These changes would have been difficult under any circumstances, but were also adversely impacted by the slowdown in the floor covering business during the year, we had to match capacity levels to current business activity.

謝謝你，艾倫。 2023 年是我們公司轉型的一年。2022 年的大部分時間我們都在調整英威達退出纖維業務以及將 Stainmaster 品牌出售給 Lowe's，這導致我們失去了家居中心通路的業務。這些變化，加上我們出售商業業務、裁員，並需要對我們的業務進行大量重組，我們於 2022 年開始並於 2023 年完成。這些變化在任何情況下都是困難的，也受到了今年地板覆蓋物業務放緩的不利影響，我們必須將產能水平與當前的業務活動相匹配。

While the economy is that has thus far avoided a recession, many of those industries which are interest rate sensitive have already experienced a hard landing. Our particular business is focused on the independent residential retailer, and our customers have been severely impacted by the rapid increase in interest rates, which have dramatically impacted the housing and residential remodeling markets. While our while new home construction has begun to improve, the sale of existing sub homes is at the lowest point since 1995. Because of this economic environment, Floor Covering sales decreased during 2023. Actual square yards of carpet sold by the industry in '23 were about 20% lower than two years before in 2021.

雖然經濟迄今為止避免了衰退，但許多對利率敏感的行業已經經歷了硬著陸。我們的特定業務專注於獨立住宅零售商，我們的客戶受到利率快速上漲的嚴重影響，這極大地影響了住房和住宅改造市場。雖然我們的新住宅建設已開始改善，但現有次級住宅的銷售量卻處於 1995 年以來的最低點。由於這種經濟環境，2023 年地板覆蓋物銷售額有所下降。2023 年該行業實際銷售的地毯面積比兩年前的 2021 年減少了約 20%。

As we begin 2024, our industry is at a cyclical low point. So we're continuing to minimize expenses, reducing overhead and lowering costs. During '23, we were able to reduce costs over $35 million and have a plan to further reduce costs in 2024 by an additional $10 million. As a result of these actions taken in '23, our gross margin percentage improved by 900 basis points as Alan has pointed out. We also gained market share in 2023 and believe we can continue to do so through our growth ambition.

2024 年伊始，我們的產業正處於週期性低點。因此，我們將繼續最大限度地減少開支、減少管理費用並降低成本。23 年期間，我們減少了超過 3,500 萬美元的成本，並計劃在 2024 年進一步減少 1,000 萬美元的成本。正如艾倫指出的那樣，由於 23 年採取的這些行動，我們的毛利率提高了 900 個基點。我們還在 2023 年獲得了市場份額，並相信我們可以透過我們的成長雄心繼續實現這一目標。

Our initiative to grow our hard surface businesses continued to gain momentum as we have invested in our true core brand by broadening our product offering as well as a high-end program -- high end wood program as part of our Fabrica offering. Today, hard-surface products represent about 20% of our sales and we believe can continue to gain market share. We have been the leader in the industry in the world category. The addition of more distinct woven pattern, St. Louis than handcrafted products have made us a more important supplier to the designer and high-end retail community through our 1866 biomass loan and the core by Fabrica collection, we have broadened our offering and made a significant investment for the future.

我們發展硬表面業務的舉措繼續獲得動力，因為我們透過擴大我們的產品範圍以及高端計劃（作為 Fabrica 產品的一部分的高端木材計劃）投資於我們真正的核心品牌。如今，硬表面產品約占我們銷售額的 20%，我們相信可以繼續獲得市場份額。我們一直是世界範圍內行業的領導者。透過我們1866 年的生物質貸款和Fabrica 系列的核心，添加比手工產品更獨特的聖路易斯編織圖案，使我們成為設計師和高端零售社區更重要的供應商，我們擴大了我們的產品範圍，並製作了對未來的重大投資。

Our third initiative initiative has been to broaden our polyester product offering by incorporating our style and design capabilities at price points we cannot reach with now on products. We continue to add products to our Duracell collection and sales have reflected the strong acceptance of these looks. With these three initiatives in 23, we invested heavily in displays and samples, which has enabled us to expand our retail exposure. While we think the industry will not grow significantly in '24, these initiatives should enable us to gain market share.

我們的第三項措施是透過將我們的風格和設計能力融入我們目前產品無法達到的價格點來擴大我們的聚酯產品供應。我們繼續在金霸王系列中添加產品，銷售反映了人們對這些外觀的強烈接受。透過 23 年的這三項舉措，我們在展示和樣品方面投入了大量資金，這使我們能夠擴大零售業務。雖然我們認為該行業在 24 年不會顯著增長，但這些舉措應該使我們能夠獲得市場份額。

A major initiative for us this year is the starting up of our extrusion capability. The ability to produce our own nylon yarn will give us the assurance of having our own source of raw material and not be in the position we were in when Invista exited the business production began. It has begun and in the future will give us more cost-effective source of raw materials. Our commitment to be stable now on fiber enables us to be the leader in the industry and offering a wider variety of fashionable products, color to the taste of our discerning customers.

我們今年的一項重大措施是啟動擠壓產能。生產我們自己的尼龍紗線的能力將確保我們擁有自己的原材料來源，而不是處於英威達退出業務生產開始時的境地。它已經開始，並且將來將為我們提供更具成本效益的原材料來源。我們對纖維穩定的承諾使我們能夠成為行業的領導者，並提供更廣泛的時尚產品和顏色，以滿足挑剔客戶的品味。

The movement in the industry to solution that products has created a sea of sameness from which our customers can escape during the year, we have taken numerous actions to improve operational and sales results and have made structural changes to prepare us better for the future. Simultaneously, we've been investing in the future through our growth initiatives and extrusion capability. We believe that the actions we have taken to prepare us for the current difficult environment also positioned us for the eventual upturn, which we will inevitably experience. The actions we have taken have been done with an eye to the future. When interest rates for seed and housing rebounds, we will be in a great position to take advantage of a prolonged upturn in existing home sales and a strong residential remodeling market.

業界的產品解決方案運動造成了我們的客戶在這一年中可以擺脫的千篇一律的海洋，我們採取了許多行動來改善營運和銷售業績，並進行了結構性變革，以便我們為未來做好更好的準備。同時，我們一直透過我們的成長計劃和擠壓能力投資未來。我們相信，我們為應對當前困難環境而採取的行動也為我們最終不可避免地經歷的改善做好了準備。我們採取的行動都是著眼於未來。當種子和住房利率反彈時，我們將處於有利地位，可以利用現有房屋銷售的長期回升和強勁的住宅改造市場。

During 24, we are celebrating with our industry partners, the 50th anniversary of Fabrica, we will be celebrating a 50-year commitment to quality without compromise, which has positioned fabric as an industry leader in style design and color as well as quality. We have been fortunate to have lower decline as a director for the past 20 years, his input and counsel have been most helpful as we progress through the turbulent times with which we have been faced during his tenure, his presence has provided a calming and insightful influence. Regardless of the issues at hand. He will not be standing for election at this year's shareholder meeting, and we will miss his presence and greatly appreciate his tremendous contributions to our company.

24 日期間，我們將與行業合作夥伴一起慶祝 Fabrica 成立 50 週年，我們將慶祝 50 年來對品質毫不妥協的承諾，這種承諾使 Fabrica 在風格設計、色彩以及品質方面成為行業領導者。我們很幸運，在過去的20 年裡，作為董事，我們的衰退幅度較小，他的意見和建議對我們在他任職期間所面臨的動盪時期的進展非常有幫助，他的存在為我們提供了平靜和富有洞察力的指導。影響。不管眼前的問題如何。他將不會參加今年的股東大會，我們將懷念他的出席，並非常感謝他對我們公司的巨大貢獻。

Looking at current business conditions for the first 10 weeks of the year, our sales are slightly behind last year, but orders are in line with the first 10 weeks of the quarter last year. While this is better than we had expected and projected, we believe a reduction of interest rates is the catalyst that will positively change business conditions.

從目前今年前10週的業務狀況來看，我們的銷售額略低於去年，但訂單與去年該季前10週持平。雖然這比我們的預期和預測要好，但我們相信利率降低是積極改變商業狀況的催化劑。

At this time, we'd like to open up the meeting to any questions.

目前，我們願意在會議上回答任何問題。

(Operator Instructions) Barry Gertner, Improverb.

（操作說明）Barry Gertner，Improverb。

Good morning. Thank you so much. Congratulations on a great margin quarter. Seems to be improvements are really coming along and down. I just I had a question along the line on firm model. Is it fair to think about these gross margins on kind of improving and trailing upwards now that some of this consolidation is done and you're doing a bunch of in-house expertise, taking line third parties support?

早安.太感謝了。恭喜季度利潤豐厚。看來改進確實在不斷出現和下降。我只是有一個關於公司模型的問題。既然一些整合已經完成，並且您正在利用大量內部專業知識，並獲得第三方支持，那麼考慮這些毛利率的改善和上升是否公平？

Yes, of course, the gross margin, we do not provide forward-looking data. But as we've discussed, the manufacturing operations and accommodations we've done, they have produced significant efficiency fee projects continue forward, and we've identified and continue to implement cost-savings initiatives in the current year. So we're very happy, of course, with the margins that we saw in 23 and continue to plan to continue the momentum they settled upon.

是的，當然是毛利率，我們不提供前瞻性數據。但正如我們所討論的，我們已經完成的製造業務和住宿，他們產生了顯著的效率費用項目，並將繼續推進，我們已經確定並在今年繼續實施成本節約舉措。當然，我們對我們在 23 中看到的利潤率感到非常高興，並繼續計劃繼續保持他們所確定的勢頭。

Understood. And if I can just one more on the NASDAQ. Unlike deficiency filing date, the Company has, if mentioned any plan that I'm assuming, is this something that companies looking to address to make sure that the state compliance with the listing.

明白了。如果我能再在納斯達克上市的話。與缺陷申請日期不同，如果提到我假設的任何計劃，該公司是否希望解決這一問題，以確保該州遵守上市規定。

Barry, first of all, thank you for your questions. And obviously, yes, we will be addressing that soon.

巴里，首先感謝你的提問。顯然，是的，我們很快就會解決這個問題。

Chris Raymond, Morgan Stanley.

克里斯雷蒙德，摩根士丹利。

Good morning. Just a couple of industry questions. Back in 15, the soft market, the soft surface market was about 55% of the overall foreign market.

早安.只是幾個行業問題。早在15年，軟質市場，軟質表面市場約佔國外整體市場的55%。

In 18, it dropped to 50%. Currently, where are we in 2024 with soft surface, seeing that 80% of our business is soft surface. And every quarter you mentioned that you gain market share. Can you quantify that? Thank you.

18年下降至50%。目前，到2024年我們的軟面在哪裡，看到我們80%的業務都是軟面。每個季度你都提到你獲得了市場份額。你能量化一下嗎？謝謝。

Chris, we can't quantify. We get numbers through our industry association, but those are not published. So we cannot give you exact numbers, but we certainly have gained market share of carpet has continued to lose market share to hard surface. I would say until the last year it seems to be to have leveled off and I think probably we'll maintain that as a percentage. We are about 5% of the soft floor covering business. And consequently, we're in the upper end of the soft floor covering business. I don't believe the upper end, and we don't have empirical data to to back this up. But I think the upper end of the market has done much better than the market overall. And that obviously has helped us gain market share. But we don't have data that should separate the market back price points.

克里斯，我們無法量化。我們透過行業協會獲得數據，但這些數據並未公佈。因此，我們無法給您確切的數字，但我們確實獲得了地毯的市場份額，但硬表面的市場份額仍在繼續流失。我想說，直到去年，這一數字似乎已經趨於平穩，我認為我們可能會維持這個百分比。我們約佔軟地板業務的 5%。因此，我們處於軟地板業務的高端。我不相信上限，而且我們沒有經驗數據來支持這一點。但我認為高端市場的表現比整體市場好得多。這顯然幫助我們獲得了市場份額。但我們沒有可以區分市場價格點的數據。

In addition, can you just discuss a little bit about the balance sheet and what is the Board's goal with the debt as it relates to equity?

此外，您能否簡單討論一下資產負債表以及董事會在債務與股本相關方面的目標是什麼？

Yeah, our balance sheet, we've taken great steps this year is for us to continue to decrease our debt, but it will fluctuate with our operating needs. We did discuss with our Board in the past Board meeting as far as what our financing opportunities are and watching economic conditions. Our CapEx and inventory investments, as well as any new product initiatives may drive the need for some more financing opportunities. And but we're again as we talked about on the margins, we're excited about the opportunity to continue to improve our margins and grow them. And you can see the cash flow contributions from that. But we're watching the economy as everyone is, and we'll continue to monitor that and make sure that we identify our financing opportunities if needed. But hopefully the economy, as Dan said, interest rates reductions come in early, we start seeing a rebound and we look forward to positive cash flow from operations going to focus on reducing our debt position.

是的，我們的資產負債表，今年我們採取了重大措施，繼續減少債務，但它會隨著我們的營運需求而波動。我們在過去的董事會會議上確實與董事會討論了我們的融資機會以及觀察經濟狀況。我們的資本支出和庫存投資以及任何新產品計劃可能會推動對更多融資機會的需求。但正如我們在利潤率方面所討論的那樣，我們對繼續提高利潤率和成長利潤的機會感到興奮。你可以從中看到現金流的貢獻。但我們正在像每個人一樣關注經濟，我們將繼續監控這種情況，並確保在需要時找到我們的融資機會。但希望經濟，正如丹所說，降息早日到來，我們開始看到反彈，我們期待來自業務的正現金流將專注於減少我們的債務狀況。

Thank you. With no further questions in the queue, I would now like to turn the call back to Dan Frierson for any additional or closing remarks.

謝謝。由於隊列中沒有其他問題，我現在想將電話轉回丹·弗里森（Dan Frierson）以獲取任何補充或結束語。

Christina, thank you and thank all of you for being with us for our call and look forward to visiting with you again at the end of next quarter. Thank you.

克里斯蒂娜，謝謝您並感謝大家接受我們的電話，並期待在下個季度末再次與您會面。謝謝。