Q1 2022 Dixie Group Inc Earnings Call

Speaker 9: Good day and welcome to the Dixie group. Ing 2022 first 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 pherson. Please go ahead.

Speaker 10: Thank you Laura, welcome everyone, and I have with me Allan andan CR CFO . Our safe harbor statement is included by reference both to our website and press release.

Speaker 10: Net sales for the quarter were 77.6 million, or 7% above the net sales of 72.7 million in the first quarter of 2021, as adjusted for the divestiture of the commercial business.

Speaker 11: The net loss for the quarter was three point three million, compared to two million a year ago, including discontinued operations.

Speaker 10: Our carpet business was significantly impacted by unprecedented price increases from our major supplier.

Speaker 11: During 2021, in the first quarter of thousand and twenty-two.

Speaker 11: The magnitude of the price. increas made sale of product with their fiber unsustainable and they have announced plans to exit the business.

Speaker 11: We're working with other suppliers to replace this volume and bring our cost to a more normal level.

Speaker 11: These conversions should be completed during the second quarter.

Speaker 10: Our heart service business has continued to grow rapidly.

Speaker 11: But ocean freight costs have risen dramatically, which impacted our first quarter results. Fortunately, we have experienced a reduction- some reduction- in freight costs, which started to improved margins late in the quarter.

Speaker 11: At this time, Allan damsey will review our financial results, after which I will have additional comments.

Speaker 12: Thank you Dan.

Speaker 12: As Dan noted, our first quarter results were negatively impacted by price increases imposed by our primary raw material provider, exceptionally high rate costs on our imported goods and other increased costs driven by inflation.

Speaker 13: Primarily as a result of these factors. Our gross profit is percent of net sales for the quarter was 20%, compared to 23% in the first quarter of 2021.

Speaker 13: Selling and administrative expenses were 22% of net sales in the first quarter of 2022, compared to 22% in the first quarter of the prior year.

Speaker 12: theincreased expenses in 2022 were primarily directed at an investment in samples and marketing, as well as increased spending in our information systems area. Those information systems spend expenses were primarily directed at improvement in Cyber security and data systems.

Speaker 12: Interest expense on the quarter was $1.1 million, which was found for the previous year at $1.3 million.

Speaker 12: Looking at changes on our balance sheet during the quarter, the our receivables decreas by $1.8 million from our fiscal year-end balance. This was primarily due to seasonality and decreased sales volume with our primary home center customer.

Speaker 14: Net inventory increased by $3.2 million during the quarter, primarily as a result of the increased raw material costs.

Speaker 13: Timing of payments on accounts stable and accrued expenses decreased the total balance by one point. Paid million dollars from fiscal year-end.

Speaker 10: Our debt increased by $3.8 million during the quarter, driven by the higher cost and timing of payments on accruals.

Speaker 13: During the quarter we closed on an $11 million loan secured by our facility in the derersville- Georgia as longan is over 20 years, at a fixed raight of 4%.

Speaker 13: This long-term low interest loan allowed us to pay off existing mortgages on the facility at a total of $5.5 million, which were at higher interest rates, and avoided future balloing payments.