The Dixie Group, Inc. (NASDAQ:DXYN) Q3 2021 Earnings Conference Call - Final Transcript

Nov 07, 2019 • 10:00 am ET

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The Dixie Group, Inc. (NASDAQ:DXYN) Q3 2021 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, and welcome to Dixie Group, Inc. 2019 Third 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 the Chairman and Chief Executive Officer, Dan Frierson. Please go ahead, sir.

Executive
Dan Frierson

Thank you, Victor and Welcome, everyone. I have with me Jon Faulkner our CFO, who will be making comments during the meeting. Our safe harbor statement is included by reference both to our website and press release.

Net sales for the third quarter were $95.447 million compared to $101 million in the same period of 2018. Our sales excluding the mass merchant channel, where we had unusually high stocking orders a year ago and were down 1.5% compared to a year ago. For the year of 2019, the company had a loss from continuing operations of approximately $2.5 million or $0.16 per share. However, adjusting for cost associated with facility restructuring and related inventory impairments, the company had a loss of $1.452 million for the third quarter of 2019. For the third quarter of 2018, the company reported a loss from continuing operations of $2.922 million or $0.19 per share on a higher level of sales. Unusual expenses during the period including what included $1.1 million in restructuring-related expenses, including facility consolidations related to the reduction of our west -- relocation of our West Coast distribution center.

Inventory write-downs from Atlas dyeable valuable products and severance expenses. Other unusually high expenses during the period were medical costs associated with our traditional preferred provider networks. These medical plans were replaced, one in the third quarter and one in the early part of the fourth quarter.

At this time, I'm going to turn the meeting over to -- the call over to Jon Faulkner to review our financial results, after which I will have additional comments.

Executive
Jon Faulkner

Thank you, Dan. Looking at sales for the quarter, they were $95.5 million a 6% decrease over sales of $101.6 million in the third quarter of 2018. Gross profit for the quarter was 22.1% of net sales, as compared to 21.5% in 2018. For the third quarter of 2019, our sales and costs were negatively impacted by lower sales in our residential business. We also had $82,000 inventory write-downs related to our restructuring. In addition, we had higher medical expenses relative to the same period a year ago. Selling and administrative expense for the quarter was 22% as compared to 22.7% in 2018. Expenses were down largely due to the cost-cutting efforts under our profit improvement plan.

Other items in the quarter included $1 million facility consolidation and severance expenses. We completed the closure of our Commerce California distribution center in the third quarter. Our total expense reduction from the profit improvement plan as compared to our 2017 cost structure is $18.7 million on an annualized basis. And an operating loss of $1 million in the third quarter of 2019 is compared to an operating loss of $1.2 million