The Dixie Group, Inc. (NASDAQ:DXYN) Q2 2019 Results Earnings Conference Call August 5, 2019 11:00 AM ET Company Participants Dan Frierson - Chairman and Chief Executive Officer Jon Faulkner - Chief Financial Officer Operator Good day, ladies and gentlemen. And welcome to Dixie Group, Inc. 2019 Second Quarter Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introduction, I would like to turn the call over to the Chairman and Chief Executive Officer, Mr. Dan Frie ...

The Dixie Group, Inc. (NASDAQ:DXYN) Q1 2019 Results Conference Call May 3, 2019 11:00 AM ET Company Participants Dan Frierson - Chairman and Chief Executive Officer Jon Faulkner - Chief Financial Officer Operator Good day, ladies and gentlemen. And welcome to Dixie Group, Incorporated 2019 First Quarter Earnings Conference Call. At this time, all participants are in a listen only mode. Later we will conduct the question-andanswer session and instruction will at that time [Operator Instructions]. As a remind ...

[FORM 10-K Filing Information](index=1&type=section&id=FORM%2010-K) [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides basic registrant information for The Dixie Group, Inc., including its NASDAQ-listed common stock and smaller reporting company status - The Dixie Group, Inc.'s common stock is listed on the NASDAQ Stock Market with a par value of **$3.00**[4](index=4&type=chunk) - The company is classified as a **"smaller reporting company"**, not a large accelerated filer, accelerated filer, or non-accelerated filer[6](index=6&type=chunk) Outstanding Shares as of February 22, 2019 | Class | Outstanding as of February 22, 2019 | |:---|:---|\ | Common Stock, $3.00 Par Value | 15,522,588 shares | | Class B Common Stock, $3.00 Par Value | 839,304 shares | | Class C Common Stock, $3.00 Par Value | 0 shares | [Table of Contents](index=3&type=section&id=Table%20of%20Contents) [FORWARD-LOOKING INFORMATION](index=4&type=section&id=FORWARD-LOOKING%20INFORMATION) This section contains forward-looking statements on future financial performance, business prospects, and liquidity, subject to various risk factors - Forward-looking statements cover future financial performance, business prospects, growth strategies, and liquidity[16](index=16&type=chunk) - Key factors influencing future results include capital and raw material costs, energy supply, customer attrition, talent retention, economic changes, and other risks[16](index=16&type=chunk) [PART I](index=5&type=section&id=PART%20I) [Item 1. BUSINESS](index=5&type=section&id=Item%201.%20BUSINESS) The company markets, manufactures, and sells high-end residential and commercial floorcovering products, focusing on the upstream carpet market - The company focuses on the high-end residential and commercial floorcovering markets, marketing, manufacturing, and selling products through brands like Fabrica, Masland, Dixie Home, Atlas, and Masland Contract[18](index=18&type=chunk) - To address the growing hard surface flooring market, the company introduced luxury vinyl flooring (LVF) and high-end engineered wood flooring products[19](index=19&type=chunk) - The company operates with a single reportable segment, floorcoverings, which combines residential and commercial operating segments due to similar economic characteristics and operating models[20](index=20&type=chunk) Sales by End-User Market | | 2018 | 2017 | 2016 | |:---|:---|:---|:---|\ | Residential floorcovering products | 72% | 68% | 66% | | Commercial floorcovering products | 28% | 32% | 34% | [Our Brands](index=5&type=section&id=Our%20Brands) The company's brands, including Fabrica, Masland Residential, Dixie Home, and Atlas | Masland Contract, offer differentiated products for various high-end customer segments - The Fabrica brand specializes in luxury residential and custom carpets, with prices approximately **five times** the industry average for residential soft surface flooring[22](index=22&type=chunk) - The Masland Residential brand offers design-driven high-end residential carpets and luxury vinyl flooring, with broadloom products priced approximately **three times** the industry average[23](index=23&type=chunk) - The Dixie Home brand provides stylish and affordably priced residential carpets and luxury vinyl flooring, with average product prices approximately **twice** the soft surface flooring industry average[24](index=24&type=chunk) - Atlas | Masland Contract, a commercial brand consolidated in 2018, serves the high-end commercial market with modular carpet tile, broadloom, luxury vinyl flooring, and commercial wool/nylon carpets[25](index=25&type=chunk) [Industry](index=6&type=section&id=Industry) The U.S. floorcovering industry saw $25.5 billion in sales in 2017, with carpets remaining dominant but hard surface products growing rapidly amid intense competition - The U.S. floorcovering industry generated **$25.5 billion** in sales in 2017, an increase of approximately **4.8%** from 2016[28](index=28&type=chunk) 2017 U.S. Floorcovering Market by Major Category (by Sales) | Category | Sales Percentage | |:---|:---|\ | Carpet and rug | 45% | | Wood | 14% | | Ceramic tile | 14% | | Luxury vinyl flooring (LVF) | 9% | | Vinyl | 6% | | Stone | 6% | | Laminate and other | 6% | - The carpet and rug industry consists of fewer than 100 manufacturers, with most production concentrated in the lower-end market, creating opportunities for the company in the mid-to-high-end segments[30](index=30&type=chunk) [Competition](index=6&type=section&id=Competition) The floorcovering industry is highly competitive, with the company differentiating itself through styling, design, quality, and service against both carpet and hard surface flooring providers - The floorcovering industry is highly competitive, with the company competing against carpet manufacturers and hard surface flooring suppliers like luxury vinyl tile and wood[31](index=31&type=chunk) - The company believes its primary competitive factors are styling, color, product design, quality, and service, maintaining a leading position in the high-end residential and commercial carpet markets[32](index=32&type=chunk) - The company enhances product differentiation and competitive advantage through an attractive brand portfolio, investments in new yarns like Stainmaster® LiveWell™ and PetProtect™, and innovative tufting and dyeing technologies[32](index=32&type=chunk) [Customer and Product Concentration](index=6&type=section&id=Customer%20and%20Product%20Concentration) Lowe's is the company's largest customer, accounting for 13% of net sales in 2018, while no single product category exceeds 10% of sales - Lowe's is the company's largest customer, accounting for **13%** of net sales in 2018, **14%** in 2017, and **10%** in 2016[35](index=35&type=chunk) - No single product category accounts for more than **10%** of the company's sales[37](index=37&type=chunk) Sales by End-User Market | | 2018 | 2017 | 2016 | |:---|:---|:---|:---|\ | Residential floorcovering products | 72% | 68% | 66% | | Commercial floorcovering products | 28% | 32% | 34% | [Raw Materials](index=7&type=section&id=Raw%20Materials) The company's primary raw materials are bulk continuous filament yarns, predominantly nylon, with significant reliance on a single supplier for most nylon yarn - The company's primary raw materials are bulk continuous filament yarns, mainly nylon, supplemented by wool and polyester yarns[40](index=40&type=chunk) - The company sources most of its primary raw material (nylon yarn) from a **single supplier** and procures most luxury vinyl tile from outside the U.S[40](index=40&type=chunk) [Item 1A. RISK FACTORS](index=8&type=section&id=Item%201A.%20RISK%20FACTORS) This section details significant risks that could adversely affect the company's business, financial condition, and operating results - The floorcovering industry is sensitive to overall economic conditions, and a decline in residential or commercial construction activity could materially harm the company's business[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) - The company's sales are highly dependent on a specific mass merchandiser (Lowe's), and a reduction in sales through this channel could adversely affect the business[51](index=51&type=chunk)[52](index=52&type=chunk) - The company faces substantial debt, which could lead to insufficient cash flow, impaired profitability, or inadequate asset value to repay obligations[53](index=53&type=chunk)[54](index=54&type=chunk) - The company risks delisting from the NASDAQ Stock Market if its stock price remains below **$1.00** for an extended period[57](index=57&type=chunk)[58](index=58&type=chunk) - The floorcovering industry is highly competitive, with accelerating growth of hard surface alternatives leading to declining demand and market share loss for soft surface products[59](index=59&type=chunk)[60](index=60&type=chunk) - The company relies on a **single supplier** for most of its nylon yarn, and an unexpected termination or interruption of supply could materially harm the business[66](index=66&type=chunk)[67](index=67&type=chunk) - Government trade actions, such as tariffs, could impact the competitiveness of imported luxury vinyl flooring (LVF) and wood products, adversely affecting the company's costs and operating results[71](index=71&type=chunk) [Item 1B. UNRESOLVED STAFF COMMENTS](index=11&type=section&id=Item%201B.%20UNRESOLVED%20STAFF%20COMMENTS) This section states that the company has no unresolved staff comments - The company has no unresolved staff comments[83](index=83&type=chunk) [Item 2. PROPERTIES](index=12&type=section&id=Item%202.%20PROPERTIES) The company owns and leases various administrative, manufacturing, and distribution facilities totaling over 3 million square feet, with most owned properties mortgaged to secure credit financing Company Facilities List as of February 22, 2019 | Location | Type of Operation | Approximate Square Feet | |:---|:---|:---|\ | **Administrative:** | | |\ | Saraland, AL | Administrative | 29,000 | | Commerce, CA* | Administrative | 21,800 | | Santa Ana, CA | Administrative | 4,000 | | Calhoun, GA | Administrative | 10,600 | | Dalton, GA* | Administrative | 50,800 | | **Total Administrative** | | **116,200** | | **Manufacturing and Distribution:** | | |\ | Atmore, AL | Carpet Manufacturing, Distribution | 610,000 | | Roanoke, AL | Carpet Yarn Processing |

Dixie Group, Inc. (NASDAQ:DXYN) Q4 2018 Earnings Conference Call March 7, 2019 10:00 AM ET Corporate Participants Dan Frierson - Chairman and Chief Executive Officer Jon Faulkner - Chief Financial Officer Conference Call Participants Operator Good day, and welcome to Dixie Group, Inc. 2018 Fourth Quarter Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Chairman and Chief Executive Officer, Dan Frierson. Pleas ...