The Dixie Group(DXYN) - 2023 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the Company's financial statements, management's analysis, market risk disclosures, and internal controls Item 1. Financial Statements This section presents the Company's unaudited consolidated financial statements and related detailed notes Consolidated Condensed Balance Sheets Total assets and stockholders' equity decreased from December 2022 to September 2023, while total liabilities remained stable | Metric | September 30, 2023 (thousands) | December 31, 2022 (thousands) | | :--- | :--- | :--- | | Total Assets | $197,135 | $202,946 | | Total Liabilities | $171,207 | $171,432 | | Total Stockholders' Equity | $25,928 | $31,514 | | Current Assets | $120,675 | $119,879 | | Current Liabilities | $45,141 | $41,666 | Consolidated Condensed Statements of Operations Net and operating losses significantly reduced for Q3 and YTD 2023, despite lower net sales, due to improved gross profit percentage | Metric | Three Months Ended Sep 30, 2023 (thousands) | Three Months Ended Sep 24, 2022 (thousands) | Nine Months Ended Sep 30, 2023 (thousands) | Nine Months Ended Sep 24, 2022 (thousands) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $68,576 | $71,762 | $209,669 | $233,034 | | Gross Profit | $18,235 | $12,537 | $55,848 | $43,768 | | Operating Loss | $(913) | $(7,150) | $(354) | $(12,333) | | Net Loss | $(2,394) | $(8,780) | $(5,878) | $(16,624) | | Basic EPS (Net Loss) | $(0.16) | $(0.58) | $(0.40) | $(1.09) | Consolidated Condensed Statements of Comprehensive Income (Loss) Comprehensive losses for Q3 and YTD 2023 were reported, primarily from net loss and other comprehensive losses | Metric | Three Months Ended Sep 30, 2023 (thousands) | Three Months Ended Sep 24, 2022 (thousands) | Nine Months Ended Sep 30, 2023 (thousands) | Nine Months Ended Sep 24, 2022 (thousands) | | :--- | :--- | :--- | :--- | :--- | | Net Loss | $(2,394) | $(8,780) | $(5,878) | $(16,624) | | Total Other Comprehensive Income (Loss), Net of Tax | $(5) | $0 | $(16) | $170 | | Comprehensive Loss | $(2,399) | $(8,780) | $(5,894) | $(16,454) | Consolidated Condensed Statements of Cash Flows Operating activities generated positive cash flow for YTD 2023, a significant improvement, with reduced cash usage in investing and financing | Metric | Nine Months Ended Sep 30, 2023 (thousands) | Nine Months Ended Sep 24, 2022 (thousands) | | :--- | :--- | :--- | | Net Cash Provided By (Used In) Operating Activities | $5,040 | $(13,720) | | Net Cash Used In Investing Activities | $(734) | $(4,921) | | Net Cash Provided By (Used In) Financing Activities | $(3,338) | $16,714 | | Decrease In Cash And Cash Equivalents | $(190) | $(510) | | Cash And Cash Equivalents At End Of Period | $173 | $961 | Consolidated Condensed Statements of Stockholders' Equity Stockholders' equity decreased from December 2022 to September 2023, primarily due to net losses and other comprehensive losses | Metric | December 31, 2022 (thousands) | September 30, 2023 (thousands) | | :--- | :--- | :--- | | Total Stockholders' Equity | $31,514 | $25,928 | | Accumulated Deficit | $(173,784) | $(179,860) | - Repurchases of Common Stock for the nine months ended September 30, 2023, totaled $(44) thousand[23] - Stock-based compensation expense for the nine months ended September 30, 2023, totaled $550 thousand[23] Notes to Consolidated Condensed Financial Statements These notes provide detailed disclosures on accounting policies, debt, leases, employee benefits, income taxes, stock compensation, and discontinued operations NOTE 1 - BASIS OF PRESENTATION The unaudited consolidated condensed financial statements are prepared under U.S. GAAP for interim reporting and should be read with the 2022 Annual Report on Form 10-K - Financial statements are unaudited and prepared under U.S. GAAP for interim reporting, to be read in conjunction with the 2022 10-K[28] - The Company has one reportable segment: Floorcovering[29] - Discontinued operations are reported separately and detailed in Note 20[30] NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS The Company adopted ASU 2016-13 (CECL model) effective January 1, 2023, resulting in a $198 thousand increase in accumulated deficit - Adopted ASU 2016-13 (CECL model) effective January 1, 2023[31] - Cumulative impact of $198 thousand recorded as an increase in accumulated deficit due to CECL adoption[31] NOTE 3 - REVENUE Revenue is primarily from residential floorcovering products and processing services, recognized upon transfer of control, with net sales decreasing in 2023 - Revenue is recognized when control of products or services is transferred to customers[32] Net Sales by Product/Service (thousands) | Product/Service | Three Months Ended Sep 30, 2023 (thousands) | Three Months Ended Sep 24, 2022 (thousands) | Nine Months Ended Sep 30, 2023 (thousands) | Nine Months Ended Sep 24, 2022 (thousands) | | :--- | :--- | :--- | :--- | :--- | | Residential floorcovering products | $67,659 | $70,125 | $206,515 | $227,610 | | Other services | $917 | $1,637 | $3,154 | $5,424 | | Total net sales | $68,576 | $71,762 | $209,669 | $233,034 | Contract Liability Activity (thousands) | Contract Liability Activity | Three Months Ended Sep 30, 2023 (thousands) | Nine Months Ended Sep 30, 2023 (thousands) | | :--- | :--- | :--- | | Beginning contract liability | $1,034 | $1,055 | | Revenue recognized from beginning balance | $(742) | $(862) | | Increases due to cash received, net | $785 | $884 | | Ending contract liability | $1,077 | $1,077 | NOTE 4 - RECEIVABLES, NET Net receivables increased to $28,074 thousand at September 30, 2023, due to higher trade receivables and an increased allowance for expected credit losses Receivables, Net (thousands) | Metric | September 30, 2023 (thousands) | December 31, 2022 (thousands) | | :--- | :--- | :--- | | Receivables, net | $28,074 | $25,009 | | Allowance for expected credit losses | $(439) | $(111) | - Adoption of ASU 2016-13 (CECL) resulted in a cumulative impact of $388 thousand from continuing operations[44] NOTE 5 - INVENTORIES, NET Net inventories decreased to $79,940 thousand at September 30, 2023, driven by reductions across all categories and a lower LIFO reserve Inventories, Net (thousands) |