DIXIE GROUP INC
For the period ended Sep 28, 2024. Filed Oct 28, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 28, 2024 · Filed Oct 28, 2024
DXYN$0.40+5.4%Stored close · as of Jul 7, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-29; filed 2024-08-09.
0000029332-24-000050
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-28; filed 2024-10-28.
0000029332-24-000064
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 70 previous paragraphs and 70 current paragraphs.
26 unchanged; 26 reworded; 17 added; 18 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
Nasdaq Marketplace Rule 5550(a)(2) requires that, for continued listing on the exchange, we must maintain a minimum bid price of $1 per share. We received notice from Nasdaq on September 27, 2023 that our closing bid price was below $1 per share for 30 consecutive business days. We requested, and were granted, an additional 180 calendar days from March 25, 2024 to September 24, 2024 to meet the applicable minimum bid price requirement. On September 24, 2024, the Company received a letter from Nasdaq notifying the Company that it had not regained compliance with the bid price requirement by the required compliance date and, as a result, the Company's Common Stock was subject to delisting. Effective at the opening of business on October 3, 2024, our Common Stock was suspended and delisted from Nasdaq and began trading on the Over-the-Counter Market pink sheets under the stock symbol DXYN. Effective October 4, 2024, we were upgraded to the Over-the-Counter OTCQB Market ("the OTCQB") trading under the same symbol DXYN.
Current report
Other Operating (Income) Expense, Net
Current report
Net other operating (income) expense was an expense of $193 thousand in the third quarter of 2024 compared with $147 thousand of income in the third quarter of 2023.
Current report
Operating Loss
Current report
Net other (income) expense was $2 thousand of income in the third quarter of 2024 compared with $622 thousand of income in the third quarter of 2023. Net other (income) expense included a gain of $625 thousand related to an extinguishment of a debt arrangement in the third quarter of 2023.
Current report
Income Tax Provision (Benefit)
Current report
Net Loss
Current report
Table of Contents 25
Current report
Nine Months Ended September 28, 2024 Compared with the Nine Months Ended September 30, 2023
Current report
Other Operating (Income) Expense, Net
Current report
Net other operating (income) expense was $141 thousand of expense in the first nine months of 2024 compared with $313 thousand of income in the first nine months of 2023.
Current report
Operating Loss
Current report
Table of Contents 26
Current report
Income Tax Provision (Benefit)
Current report
Net Loss
Current report
Nasdaq Marketplace Rule 5550(a)(2) requires that, for continued listing on the exchange, we must maintain a minimum bid price of $1 per share. We received notice from Nasdaq on September 27, 2023 that our closing bid price was below $1 per share for 30 consecutive business days. We requested, and were granted, an additional 180 calendar days from March 25, 2024 to September 24, 2024 to meet the applicable minimum bid price requirement. On September 24, 2024, the Company received a letter from Nasdaq notifying the Company that it had not regained compliance with the bid price requirement by the required compliance date and, as a result, the Company's Common Stock was subject to delisting. Effective at the opening of business on October 3, 2024, our Common Stock was suspended and delisted from Nasdaq and began trading on the Over-the-Counter Market pink sheets under the stock symbol DXYN. Effective October 4, 2024, we were upgraded to the Over-the-Counter OTCQB Market ("the OTCQB") trading under the same symbol DXYN. Our delisting from Nasdaq could make it more difficult for us to raise additional capital if needed.
Current report
Our Senior Secured Revolving Credit Facility matures on October 30, 2025. In consideration of this, we have begun discussions with lenders to secure longer term financing in place of our senior debt. However, there can be no assurance that we will be able to extend or replace our senior debt or that other supplemental financing or other sources of funding can be obtained or will be obtained on terms favorable to us.
Removed paragraphs (18)
Previous report
Historically, we participated in the upper end specified commercial flooring marketplace through our Atlas | Masland Contract brand. On September 13, 2021, we sold our Commercial business. The results of our Commercial business activity are included in discontinued operations in the included consolidated condensed financial statements.
Previous report
We received notice from NASDAQ on September 27, 2023 that our closing bid price was below $1 per share for 30 consecutive business days. We have requested, and have been granted, an additional 180 calendar days from March 25, 2024 to meet the applicable minimum bid price requirement. As a result of the extension, we now have until September 23, 2024 to regain compliance with the bid price requirement. We will continue to monitor the closing bid price and will consider all available options to regain compliance. If we do not regain compliance with the bid price requirement by September 23, 2024 NASDAQ will provide notification that our shares will be subject to delisting. At such time, we may appeal the delisting determination to a NASDAQ Hearings panel. We would remain listed pending the panel's decision. There can be no assurance that if we appeal a subsequent delisting determination that such appeal would be successful.
Previous report
Table of Contents 21
Previous report
Other Operating Income, Net
Previous report
Net other operating income was $105 thousand of income in the second quarter of 2024 compared with $234 thousand of income in the second quarter of 2023.
Previous report
Table of Contents 22
Previous report
Operating Income
Previous report
Net other (income) expense was $4 thousand of expense in the second quarter of 2024 compared with $3 thousand of income in the second quarter of 2023.
Previous report
Income Tax Provision
Previous report
Net Income (Loss)
Previous report
Six Months Ended June 29, 2024 Compared with the Six Months Ended July 1, 2023
Previous report
Other Operating Income, Net
Previous report
Net other operating income was $52 thousand of expense in the first six months of 2024 compared with $166 thousand of expense in the first six months of 2023.
Previous report
Operating Income
Previous report
Income Tax Provision
Previous report
Net Income (Loss)
Previous report
We received notice from NASDAQ on September 27, 2023 that our closing bid price was below $1 per share for 30 consecutive business days. We have requested, and have been granted, an additional 180 calendar days from March 25, 2024 to meet the applicable minimum bid price requirement. As a result of the extension, we now have until September 23, 2024 to regain compliance with the bid price requirement. We will continue to monitor the closing bid price and will consider all available options to regain compliance. If we do not regain compliance with the bid price requirement by September 23, 2024 NASDAQ will provide notification that our shares will be subject to delisting. At such time, we may appeal the delisting determination to a NASDAQ Hearings panel. We would remain listed pending the panel's decision. There can be no assurance that if we appeal a subsequent delisting determination that such appeal would be successful. To the extent that we are unable to stay in compliance with the relevant NASDAQ bid price listing rule, there is a risk that our common stock may be delisted from NASDAQ, which would adversely impact liquidity of our common stock and potentially result in even lower bid prices for our common stock.
Previous report
Table of Contents 25 no assurance that other supplemental financing or other sources of funding can be obtained or will be obtained on terms favorable to us. We cannot predict, and are unable to know, the long-term impact of the COVID-19 pandemic and the related economic consequences or how these events may affect our future liquidity.
Reworded paragraphs (26)
Previous wording
Our business consists principally of marketing, manufacturing and selling floorcovering products to high-end customers through our various sales forces and brands. We focus primarily on the upper end of the floorcovering market where we believe we have strong brands and competitive advantages with our style and design capabilities and customer relationships. Our Fabrica, Masland, and DH Floors brands have a significant presence in the high-end residential floorcovering markets. Dixie International sells all of our brands outside of the North American market.
Current wording
Our business consists principally of marketing, manufacturing and selling floorcovering products to high-end customers through our various sales forces and brands. We focus primarily on the upper end of the floorcovering market where we believe we have strong brands and competitive advantages with our style and design capabilities and customer relationships. Our Fabrica, Masland, DH Floors and TRUCOR brands have a significant presence in the high-end residential floorcovering markets. Dixie International sells all of our brands outside of the North American market.
Previous wording
For the second quarter of 2024, our net sales from continuing operations decreased 4.7% compared with the second quarter of 2023. The lower net sales were attributed to lower demand within the floorcovering industry and related markets driven by continued high interest rates and inflation.
Current wording
For the third quarter of 2024, our net sales from continuing operations decreased 5.4% compared with the third quarter of 2023. The lower net sales were attributed to lower demand within the floorcovering industry and related markets driven by continued high interest rates and inflation.
Previous wording
Gross profit as a percentage of net sales was 28.1% in the second quarter of 2024 compared with 26.7% in the second quarter of 2023. The higher gross profit percentage in 2024 was primarily driven by operational efficiencies as the result of facility consolidations.
Current wording
Gross profit as a percentage of net sales was 24.6% in the third quarter of 2024 compared with 26.6% in the third quarter of 2023. The lower gross profit percentage in 2024 was primarily driven by lower sales volume, higher healthcare and utility costs and additional lease expense due to the sale and leaseback of the Adairsville distribution center in 2023.
Previous wording
Selling and administrative expenses were $17.4 million, or 24.6% of net sales, in the second quarter of 2024 compared with $19.0 million, or 25.7% of net sales in the year earlier period. Selling and administrative expenses as a percentage of net sales decreased in the second quarter of 2024 as compared to the second quarter of 2023 primarily due to lower sample and marketing expenses in the second quarter of 2024.
Current wording
Selling and administrative expenses were $17.6 million, or 27.1% of net sales, in the third quarter of 2024 compared with $18.7 million, or 27.3% of net sales in the year earlier period. Selling and administrative expenses as a percentage of net sales decreased in the third quarter of 2024 as compared to the third quarter of 2023 primarily due to lower sample and marketing expenses during the quarter.
Previous wording
Facility consolidation and severance expenses in the second quarter of 2024 were $247 thousand compared with $719 thousand in the second quarter of 2023. The expenses in 2024 and 2023 were related to our restructuring plan for the consolidation of our east coast manufacturing.
Current wording
Facility consolidation and severance expenses in the third quarter of 2024 were $283 thousand compared with $552 thousand in the third quarter of 2023. The expenses in 2024 and 2023 were related to our restructuring plan for the consolidation of our east coast manufacturing.
Previous wording
We reported operating income of $2.3 million in the second quarter of 2024 compared with operating income of $253 thousand in the second quarter of 2023. The increase in operating income was primarily the result of operational efficiencies as the result of facility consolidations in the second quarter of 2024.
Current wording
We reported an operating loss of $2.1 million in the third quarter of 2024 compared with an operating loss of $913 thousand in the third quarter of 2023. The increase in operating loss was primarily the result of lower sales volume, higher healthcare and utility costs and additional lease expense due to the sale and leaseback of the Adairsville distribution center in 2023.
Previous wording
Interest expense decreased $229 thousand in the second quarter of 2024 compared with the second quarter of 2023. The decrease is primarily the result of a lower debt level in 2024 offset by an increase in interest rates on our variable rate debt.
Current wording
Interest expense decreased $167 thousand in the third quarter of 2024 compared with the third quarter of 2023. The decrease is primarily the result of a lower debt level in 2024 offset by an increase in interest rates on our variable rate debt.
Previous wording
We recorded an income tax expense from continuing operations of $4 thousand in the second quarter of 2024 compared to a income tax expense of $21 thousand in the second quarter of 2023.
Current wording
We recorded an income tax benefit from continuing operations of $4 thousand in the third quarter of 2024 compared to a income tax expense of $125 thousand in the third quarter of 2023.
Previous wording
The effective income tax rate for the three months ending June 29, 2024 was 0.60% compared with a income rate of 1.31% for the three months ending July 1, 2023. Because we maintain a full valuation allowance against our deferred tax balances, we are only able to recognize refundable credits and a small amount of state taxes in the tax expense for the second quarter of 2024 and 2023. We are in a net deferred tax liability position of $91 thousand at June 29, 2024 and December 30, 2023, which is included in other long-term liabilities in our consolidated condensed balance sheets.
Current wording
The effective benefit tax rate for the three months ending September 28, 2024 was (0.11)% compared with a income tax rate of 6.00% for the three months ending September 30, 2023. Because we maintain a full valuation allowance against our deferred tax balances, we are only able to recognize refundable credits and a small amount of state taxes in the tax expense for the second quarter of 2024 and 2023. We are in a net deferred tax liability position of $91 thousand at September 28, 2024 and $91 thousand at December 30, 2023, which is included in other long-term liabilities in our consolidated condensed balance sheets.
Previous wording
We account for uncertainty in income tax positions according to FASB guidance relating to uncertain tax positions. Unrecognized tax benefits were $569 thousand and $555 thousand at June 29, 2024 and December 30, 2023, respectively. Such benefits, if recognized, would affect our effective tax rate. There were no significant interest or penalties accrued as of June 29, 2024 and December 30, 2023.
Current wording
We account for uncertainty in income tax positions according to FASB guidance relating to uncertain tax positions. Unrecognized tax benefits were $556 thousand and $555 thousand at September 28, 2024 and December 30, 2023, respectively. Such benefits, if recognized, would affect our effective tax rate. There were no significant interest or penalties accrued as of September 28, 2024 and December 30, 2023.
Previous wording
Continuing operations reflected income of $667 thousand, or $0.04 per diluted share, in the second quarter of 2024 compared with a loss of $1.6 million, or $0.11 per diluted share, in the same period in 2023. The loss from discontinued operations was $64 thousand in the second quarter of 2024 compared to a loss of $106 thousand in the second quarter of 2023. See Note 20 to the consolidated condensed financial statements for additional details related to discontinued operations.
Current wording
Continuing operations reflected a loss of $3.7 million, or $0.26 per diluted share, in the third quarter of 2024 compared with a loss of $2.2 million, or $0.15 per diluted share, in the same period in 2023. The loss from discontinued operations was $182 thousand in the third quarter of 2024 compared to a loss of $183 thousand in the third quarter of 2023. See Note 20 to the consolidated condensed financial statements for additional details related to discontinued operations.
Previous wording
For the first six months of 2024, our net sales from continuing operations decreased 3.8% compared with the first six months of 2023. The lower net sales were attributed to lower demand within the floorcovering industry and related markets driven by continued high interest rates and inflation.
Current wording
For the first nine months of 2024, our net sales from continuing operations decreased 4.3% compared with the first nine months of 2023. The lower net sales were attributed to lower demand within the floorcovering industry and related markets driven by continued high interest rates and inflation.
Previous wording
Gross profit as a percentage of net sales was 26.2% in the first six months of 2024 compared with 26.7% in the first six months of 2023. The lower gross profit percentage in 2024 was primarily driven by higher unabsorbed fixed costs in the first quarter of the year.
Current wording
Gross profit as a percentage of net sales was 25.7% in the first nine months of 2024 compared with 26.6% in the first nine months of 2023. The lower gross profit percentage in 2024 was primarily driven by lower sales volume, higher healthcare and utility costs and additional lease expense due to the sale and leaseback of the Adairsville distribution center in 2023.
Previous wording
Selling and administrative expenses were $33.7 million, or 24.9% of net sales, in the first six months of 2024 compared with $35.5 million, or 25.1% of net sales in the year earlier period. Selling and administrative expenses as a percentage of net sales decreased in the first six months of 2024 as compared to the first six months of 2023 primarily due to lower sample and marketing expenses in the first six months of 2024.
Current wording
Selling and administrative expenses were $51.3 million, or 25.6% of net sales, in the first nine months of 2024 compared with $54.2 million, or 25.9% of net sales in the year earlier period. Selling and administrative expenses as a percentage of net sales decreased in the first nine months of 2024 as compared to the first nine months of 2023 primarily due to lower sample and marketing expenses.
Previous wording
Facility consolidation and severance expenses in the first six months of 2024 were $489 thousand compared with $1.8 million in the first six months of 2023. The expenses in 2024 and 2023 were related to our restructuring plan for the consolidation of our east coast manufacturing.
Current wording
Facility consolidation and severance expenses in the first nine months of 2024 were $772 thousand compared with $2.3 million in the first nine months of 2023. The expenses in 2024 and 2023 were related to our restructuring plan for the consolidation of our east coast manufacturing.
Previous wording
We reported operating income of $1.4 million in the first six months of 2024 compared with operating income of $560 thousand in the first six months of 2023. The increase in operating income was primarily the result of operational efficiencies as the result of facility consolidations in the first six months of 2024 and lower selling expenses.
Current wording
We reported an operating loss of $669 thousand in the first nine months of 2024 compared with an operating loss of $354 thousand in the first nine months of 2023. The increase in operating loss was primarily the result of lower sales volume, higher healthcare and utility costs and additional lease expense due to the sale and leaseback of the Adairsville distribution center in 2023.
Previous wording
Interest expense decreased $555 thousand in the first six months of 2024 compared with the first six months of 2023. The decrease is primarily the result of a lower debt level in 2024 offset by an increase in interest rates on our variable rate debt.
Current wording
Interest expense decreased $723 thousand in the first nine months of 2024 compared with the first nine months of 2023. The decrease is primarily the result of a lower debt level in 2024 offset by an increase in interest rates on our variable rate debt.
Previous wording
Net other (income) expense was $8 thousand of expense in the first six months of 2024 compared with $10 thousand of income in the first six months of 2023.
Current wording
Net other (income) expense was $8 thousand of expense in the first nine months of 2024 compared with $634 thousand of income in the first nine months of 2023. Net other (income) expense included a gain of $625 thousand related to an extinguishment of a debt arrangement in the first nine months of 2023.
Previous wording
We recorded an income tax expense from continuing operations of $20 thousand in the first six months of 2024 compared to a income tax expense of $34 thousand in the first six months of 2023.
Current wording
We recorded an income tax expense from continuing operations of $16 thousand in the first nine months of 2024 compared to a income tax expense of $159 thousand in the first nine months of 2023.
Previous wording
The effective income tax rate for the six months ending June 29, 2024 was 1.16% compared with a income rate of 1.08% for the six months ending July 1, 2023. Because we maintain a full valuation allowance against our deferred tax balances, we are only able to recognize refundable credits and a small amount of state taxes in the tax expense for the first six months of 2024 and 2023.
Current wording
The effective income tax rate for the nine months ending September 28, 2024 was 0.30% compared with a income rate of 3.04% for the nine months ending September 30, 2023. Because we maintain a full valuation allowance against our deferred tax balances, we are only able to recognize refundable credits and a small amount of state taxes in the tax expense for the first nine months of 2024 and 2023.
Previous wording
Continuing operations reflected a loss of $1.7 million, or $0.12 per diluted share, in the first six months of 2024 compared with a loss of $3.1 million, or $0.22 per diluted share, in the same period in 2023. The loss from discontinued operations was $148 thousand in the first six months of 2024 compared to a loss of $313 thousand in the first six months of 2023. See Note 20 to the consolidated condensed financial statements for additional details related to discontinued operations.
Current wording
Continuing operations reflected a loss of $5.5 million, or $0.37 per diluted share, in the first nine months of 2024 compared with a loss of $5.4 million, or $0.36 per diluted share, in the same period in 2023. The loss from discontinued operations was $329 thousand in the first nine months of 2024 compared to a loss of $496 thousand in the first nine months of 2023. See Note 20 to the consolidated condensed financial statements for additional details related to discontinued operations.
Previous wording
During the six months ended June 29, 2024, cash used in operating activities in continuing operations was $2.3 million. An increase in accounts receivable used $4.4 million during the first six months of 2024. Prepaid and other current assets used $5.3 million primarily as a result of prepaid sample and marketing expenses. A decrease in inventory generated $80 thousand and an increase in accounts payable and accrued expenses generated $5.4 million primarily driven by the quarter end timing of payments based on supplier terms.
Current wording
During the nine months ended September 28, 2024, cash used in operating activities in continuing operations was $497 thousand. An increase in accounts receivable used $3.0 million during the first nine months of 2024. Prepaid and other current assets used $2.6 million primarily as a result of prepaid sample and marketing expenses. A increase in inventory used $543 thousand and an increase in accounts payable and accrued expenses generated $5.8 million primarily driven by the quarter end timing of payments based on supplier terms.
Previous wording
Purchases of capital assets for the six months June 29, 2024 resulted in a $1.4 million cash out flow to the business. Depreciation and amortization for the six months ended June 29, 2024 were $3.3 million. We expect capital expenditures to be approximately $2.8 million in 2024 while depreciation and amortization is expected to be approximately $6.2 million.
Current wording
Purchases of capital assets for the nine months September 28, 2024 resulted in a $1.9 million cash out flow to the business. Depreciation and amortization for the nine months ended September 28, 2024 were $5.0 million. We expect capital expenditures to be approximately $2.8 million in 2024 while depreciation and amortization is expected to be approximately $6.2 million.
Previous wording
During the six months ended June 29, 2024, cash provided by financing activities was $3.8 million. We had net borrowings on our revolving credit facility of $5.6 million and net payments on notes payable and financing leases of $2.3 million.
Current wording
During the nine months ended September 28, 2024, cash provided by financing activities was $3.6 million. We had net borrowings on our revolving credit facility of $7.2 million and net payments on notes payable and financing leases of $3.5 million.
Previous wording
We believe, after having reviewed various financial scenarios, our operating cash flows, credit availability under our revolving credit facility and other sources of financing are adequate to finance our anticipated liquidity requirements under current operating conditions. We have specifically considered the impact of continued operating losses on our liquidity position and our ability to comply with financial covenants by our primary lenders. As part of our evaluation, we considered the improved gross margins driven by cost reductions implemented under our East Coast Consolidation Plan, the return from the elimination of cash discounts, lower planned sample investments and cost savings expected to be generated from the operations of our extrusion equipment. Availability under our Senior Secured Revolving Credit Facility on June 29, 2024 was $13.6 million. Significant additional cash expenditures above our normal liquidity requirements, significant deterioration in economic conditions or continued operating losses could affect our business and require supplemental financing or other funding sources. There can be
Current wording
We believe, after having reviewed various financial scenarios, our operating cash flows, credit availability under our revolving credit facility and other sources of financing are adequate to finance our anticipated liquidity requirements under current operating conditions. We have specifically considered the impact of continued operating losses on our liquidity position and our ability to comply with financial covenants by our primary lenders. As part of our evaluation, we considered the cost reductions implemented under our East Coast Consolidation Plan, the return from the elimination of cash discounts, lower planned sample investments and cost savings expected to be generated from the operations of our extrusion equipment. Availability under our Senior Secured Revolving Credit Facility on September 28, 2024 was $11.7 million. Significant additional cash expenditures
Previous wording
Our critical accounting policies were outlined in Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission.
Current wording
Our critical accounting policies were outlined in Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission. There have been no changes in our critical accounting policies during 2024.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Table of Contents 27 above our normal liquidity requirements, significant deterioration in economic conditions or continued operating losses could affect our business and require supplemental financing or other funding sources.