Attention Seeking Stock: The Dixie Group Inc. (NASDAQ: DXYN)

DALTON, Ga., November 19, 2019 – Shares of The Dixie Group Inc. (NASDAQ: DXYN) declined -1.32% to $1.41. The stock traded total volume of 37.276K shares lower than the average volume of 85.17K shares.

For the second quarter of 2019, The Dixie Group, Inc. (DXYN) had net sales of $100.394M as compared to $106.438M in 2018. The Company’s second quarter net sales were down 5.7% as compared to the same period in 2018 while the industry, we estimate, was down similarly. For the second quarter of 2019, the Company had a loss from continuing operations of $1.216M or $0.07 per diluted share; however, adjusting for costs associated with facility restructuring and related inventory impairments, the Company had a non-GAAP adjusted profit of $697.00K or $0.04 per share for the second quarter. For the second quarter of 2018, the Company reported a loss of $1.815M or $0.12 per diluted share; which on a comparable non-GAAP adjusted basis was a loss of $1.626M or $0.10 per share.

Unusual expenses during the period included $1.90M in restructuring related expenses including a reserve for post termination worker’s compensation expenses related to the closure of our west coast facilities, facility consolidation expenses, and inventory write downs for commercial white dyeable products. We have incurred, through the second quarter of 2019, approximately $17.40M in costs to implement the Profit Improvement Plan including write downs of related inventory, goodwill and other assets. We estimate the total costs of the Plan and related costs once complete by the end of 2019, to be $18.20M. The total cost reductions of these restructuring efforts, once fully implemented, is approximately $18.70M annually, as compared to our cost structure in 2017 when we began this process.

Our receivables increased $3.90M during the second quarter of 2019 due to our normal seasonal patterns. Our inventories increased $343.0K due to normal seasonal fluctuations. Our annual capital expenditures for 2019 are planned at a level of approximately $4.0M. For the first half of 2019 our capital expenditures, including those financed through capital leases, were $2.20M as compared to depreciation and amortization of $5.90M. Interest expense was up due to higher interest rates from a year ago. Availability under our lines of credit was $10.10M at the end of the period. Our debt decreased $5.50M during the quarter and is down $11.00M from a year ago at this time.

DXYN has the market capitalization of $23.40M and its EPS growth ratio for the past five years was -38.80%. The return on assets ratio of the Company was -9.30% while its return on investment ratio stands at -7.90%. Price to sales ratio was 0.06 while 35.40% of the stock was owned by institutional investors.

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