Dixie Group boosted its residential floor covering sales last year by over 36% and returned to profitability last year after selling off the company’s commercial lines, which had accounted for about 15% of its sales.
But the hoped-for turnaround was limited by an unexpected ransomware attack last April and the shift and price hikes by a key fiber supplier last year that created both supply and service problems and raised Dixie’s supply costs.
For all of 2021, Dalton, Georgia-based Dixie said Thursday it earned $1.6 million, or 9 cents per share, on sales from ongoing operations of $341.3 million. In the previous year, Dixie reported a loss of $9.2 million on sales of $250.9 million from the same business lines.
Dixie had a fourth-quarter loss of $6.1 million, or 40 cents per share, which company CEO Dan Fierson said was due, in part, to Invista’s decision to sell its Stainmaster brand to Lowe’s and no longer be a fiber supplier.
Frierson said fourth quarter sales were still up 18% over the previous year and sales are running “in the high single digits” ahead so far in 2022. But Dixie has suffered from the decision by Invista to boost prices “and we are in the process of replacing all Invista fiber as quickly as possible.
Dan Frierson of the Dixie Group / Staff file photo“These actions by Invista negatively impacted our margins and profitability in the fourth quarter and will continue to impact us until we complete the conversion to other suppliers in the second quarter,” Frierson said. “We, like everyone else in the industry, must deal with the cost and availability of raw materials, severe labor shortages and transportation issues. Our new raw material sourcing plan will be implemented during the first half of 2022.”
In response to the fourth quarter loss, shares of Dixie Group fell nearly 14.2% Thursday in trading on the Nasdaq Exchange, dropping to $3.21 a share – the lowest price for the company since last August. So far this year, Dixie shares are down by nearly 44%.
Despite the challenges of 2021, including ongoing recovery from the mid-April ransomware attack, Frierson said “we approach the New Year with great optimism.
“In 2021, we continued to gain market share,” which he said has doubled since 2009.
” The sale of our commercial business allows us to focus on the residential business which plays to our greatest strengths,” he said. ” The industry implemented a price increase in January and has announced another increase for the second quarter. The movement away from Invista fiber should bring our margins to a more normal level.”
As the result of the inflationary impact on inventory costs, Dixie’s LIFO reserve for inventory increased by $16.2 million in 2021; more than doubling the reserve balance at the end of fiscal year 2020.
The company did reduce its total debt to the lowest level since 2011.
– Compiled by Dave Flessner