Dixie leaps to big profit as sales return to pre-recession levels

Dixie leaps to big profit as sales return to pre-recession levels

February 20th, 2014 by Ellis Smith in Business Around the Region

Creeler Vickie Glover replaces an empty spool at the Dixie Group in North Georgia.

Photo by Angela Lewis /Times Free Press.

Dixie Group comeback

Income (loss):

2002 - $11.4 million

2003 - ($9 million)

2004 - $12.3 million

2005 - $10.1 million

2006 - $7.7 million

2007 - $6.2 million

2008 - ($31.4 million)

2009 - ($42 million)

2010 - ($4.37 million)

2011 -- $1.27 million

2012 -- $1.8 million

2013 - $8.6 million

Source: Dixie Group, news reports

The Dixie Group powered back from the nagging recession with an $8.6 million operating profit during the full year, up from $1.8 million in earnings for 2012, the company reported on Wednesday.

Since a near-fatal $42 million loss 2009, Dixie has steadily grown the bottom line, increasing sales while cutting expenses.

During the fourth quarter, Dixie earned $1.8 million in operating profit, up from $415,000 in the fourth quarter of 2012, as the carpet maker benefited from rapid product launches and good penetration in the high end of the residential and commercial markets.

Dixie outpaced the industry, exceeded its own 2006 profits by $1 million, and is actually in expansion mode after years of staggering losses and anemic profits, said Dan Frierson, chairman and CEO of the Chattanooga-based carpet maker.

"We have made major investments in our business to fuel this growth," Frierson said. "Dixie's performance since the historic downturn of 2008 to 2009 has been exceptional."

Dixie breaks out earnings that come from continuing operations, which excludes income from parts of the company that are no longer in operation. For all of 2013, income from continuing operations grew to $5.3 million, up from from a loss from continuing operations in 2012 of $653,000. In the fourth quarter, Dixie earned almost $1.6 million, compared to a fourth quarter 2012 loss of $413,000.

Sales in 2013 increased to $345 million, up from $266 million in 2012, according to Dixie's release. Fourth-quarter sales hit $95.8 million, compared to $71.1 million in fourth quarter 2012 sales.

Sales alone have grown 68 percent while the industry has only grown sales by 12 percent, according to Dixie's estimates. Dixie's rebound has been spurred mostly by residential sales, which are up 88 percent while the industry has only seen a 10 percent jump in residential growth, as well as by a 28 percent hop in commercial sales growth, which has been matched by industry growth of about 15 percent, Frierson said.

But the key driver of Dixie's growth has been its continued investments into new styles, new tufting machines and new processes, which has kept the carpetmaker at the forefront of the constant design wars that grip the high-end carpet market.

"We have also invested in yarn processing, new tufting and rug technology and new dyeing technology," Frierson said. "Specifically, we increased our Roanoke yarn capacity by over 40 percent. We purchased, upgraded and increased the capacity of our Colormaster dyeing facility over the last 15 months. We purchased and started up our new space dye line, providing us with additional yarn capabilities."

The company also brought in new management for its commercial line, and launched a joint venture with Dutch flooring manufacturer Desso to sell more product to hotels, which should start to bring in more money late in 2014 and 2015, Frierson said. For now, much of the company's revenue is fueled not by price increases, but from solid increases in demand. That's a good sign as the company looks toward a new year.

"We believe the actions we have taken to grow our business will continue to provide growth in 2014," Frierson told investors.

-- Contact staff writer Ellis Smith at esmith@timesfreepress or 423-757-6315.