Despite a strong 18.1 percent gain in sales during 2014, Dixie Group Inc., lost money last year due to the costs of shutting down one carpet brand and consolidating some of its facilities purchased the previous year.
The Chattanooga-based carpet maker said Wednesday it lost $5.2 million, or 35 cents per share, in the fourth quarter. The quarterly loss pushed the company's results for all of 2014 into the red by $1.4 million as operating income fell and the company booked a $3.2 million one-time charge late last year.
Shares of Dixie stock fell Wednesday by 30 cents per share, or nearly 3.2 percent, to $9.09 per share in response to Dixie's losses. Compared with a year ago, Dixie shares are down 31.4 percent.
But Dixie CEO Dan Frierson said Wednesday that the company's path since the 2009 recession has been strong, doubling sales in the past five years. Frierson expects a better 2015.
"After the downturn of 2008 and 2009, we put together a growth plan to take advantage of the unique opportunities that emerge," he said. "And that plan has driven our sales success and investment over the last five years."
Dixie sales grew 96 percent while the industry grew only around 12 percent since 2009. Frierson said Dixie decided in 2013 to accelerate its growth plan to boost sales up to $600 million and to merge two West Coast dye houses following the 2013 purchase of Atlas.
"Having invested heavily in capital expenditures to service our growth, we anticipate this year a more normal year with capital expenditures in the $13.5 million range," Frierson told industry analysts during a conference call Wednesday. "We believe the consumer preference for innovated fashion and better quality products will continue to provide us with the opportunity to grow our business and outperform the industry."
Dixie reported sales of $406.6 million for all of 2014, up from $344.3 million in 2013. Much of the growth came from Dixie's purchase of Atlas. But even without that purchase, Dixie sales were up 7.1 percent for the year.
Income from continuing operations in 2014 totaled $673,000, or 3 cents per share, last year, compared with income from continuing operations the prior year of nearly $5.6 million, or 42 cents per share.
"In the fourth quarter we decided to discontinue the Carousel brand, a small non-core line of products that was part of the 2013 Robertex acquisition," Frierson said. "Therefore, 2014 was a year of expansion and facility re-alignment which impacted virtually all of our facilities. We had $3.2 million in facility consolidation and asset impairment expense in the fourth quarter, the peak in terms of investment on re-aligning and expanding our capacity, and thus had the most impact to our bottom line in added operating costs as well."
After booking $5.5 million in charges for consolidation expenses last year, Frierson said Dixie will likely take another $1.4 million of facility consolidation expenses in 2015.
"With most of our restructuring complete, the remaining projects are the completion of the Susan Street dye house expansion to accommodate Atlas, the move of our commercial finished goods facility from Saraland, Alabama to our Atmore, Alabama carpet manufacturing facility and the move of our Saraland rug operation out of a rented facility into a company-owned facility," said.
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.