The Dixie Group Inc. is selling its commercial business to Mannington Mills Inc. to focus on its more profitable residential carpet lines.
Terms of the sale are to be finalized in the near future, but Dixie said in an announcement Wednesday that the family-owned Mannington Mills would buy the AtlasMasland business, including certain tufting machines, other equipment and inventories. However, Mannington is not planning to purchase any facilities in the proposed transaction.
The shift for the Dalton, Georgia-based Dixie will trim its revenues by about $60 million "but make the company a nimble, upper-end residential floocovering manufacturer with a growing business," Floor Focus daily publisher Kemp Harr said.
The deal helped propel Dixie shares by 11.4% in trading Wednesday on the Nasdaq stock exchange. Dixie shares rose 30 cents per share to close at $2.93 per share.
Despite Wednesday's stock market gains for Dixie, the company's shares are still down by more than 47% from the highs reached in March prior to Dixie's report of a $9.2 million loss in 2020 during the pandemic.
Dixie said Mannington would absorb AtlasMasland sales, marketing and product design functions once the deal is completed in the next several months. During that time, the Dixie Group will continue to manufacture goods for Mannington while they relocate tufting machines and other equipment to their facilities in Calhoun, Georgia.
"Our Dixie residential business is very strong, and, in order to support our residential growth strategy, we are investing in additional tufting and cabling equipment for the Atmore (Alabama) plant," said Daniel K. Frierson, chairman and chief executive officer for the Dalton, Georgia-based Dixie Group. "In addition, we are introducing a new solution-dyed product offering that is currently being launched. This product offering will be supported from our Atmore facility."
Frierson said strong demand for Dixie's residential products along with the company's new introductions, including the new solution-dyed products, drive the need for more residential products to be produced in the Atmore facility.
"We will continue to service our rapidly growing Trucor hard surface business from our Saraland (Alabama) facility," Frierson said.
In its first-quarter report released in May, Dixie said its residential product sales were up 23% compared with the prior year, beating the industry average of a 20% year-over-year gain. However, Dixie's commercial products sales decreased 37% versus in the first quarter compared with 2020, compared with an estimated industry drop in commercial carpet sales of about 18%.
Dixie bought Atlas in 2014 and combined it with its Masland brand in 2018.
Mannington Mills generates an estimated $117 million in commercial carpet sales and the acquisition of Dixie will swell that number to nearly $180 million, Harr said.
"Today marks an important day for Mannington Commercial's future and for our customers," Mannington Commercial President Tom Pendley said in a statement Wednesday. "We will be adding significantly more sales and carpet manufacturing capacity to meet the continued demand for our commercial product line. We are also gaining proven product lines that are well-established within certain commercial segments where we see expanded growth opportunities."
Mannington Commercial previously acquired Amtico, a provider of luxury vinyl tile, in 2012, and bought Burke Flooring, a manufacturer of rubber and vinyl floorcoverings, in 2008.
Russell Grizzle, CEO of Mannington, said AtlasMasland "has a strong brand in the commercial market, some great looking products, and this move will not only give us an expanded presence in the market but also improve our manufacturing efficiencies."
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.