Dixie Group Inc. Reports Operating Results (10-Q)
Dixie Group Inc. has a market cap of $64 million; its shares were traded at around $5.02 with and P/S ratio of 0.3. DXYN is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations: Including $22 thousand of cost incurred in the first quarter of 2010, expenses incurred for the consolidation and organizational changes associated with the 2008 consolidation and cost reduction plan were $5.6 million since inception in the third quarter of 2008. Cost recognized included $3.2 million of costs to consolidate facilities, $1.1 million of severance and employee relocation expenses and $1.3 million of estimated costs associated with the exit of our leased facility in Santa Ana, California.
Loss from Continuing Operations. The loss from continuing operations was $2.5 million, or $0.20 per diluted share in the first quarter of 2010 compared with a loss from continuing operations of $35.4 million, or $2.90 per diluted share in the first quarter of 2009. The loss from continuing operations in the first quarter of 2010 included $143 thousand of losses, or $0.01 per diluted share for consolidation and severance expenses. The loss from continuing operations for the first quarter of 2009 included $29.5 million, or $2.42 per diluted share of losses associated with the impairment of goodwill and consolidation and severance expenses.
Net Loss. Discontinued operations reflected a loss of $70 thousand, or $0.00 per diluted share, in the first quarter of 2010 compared with a loss of $116 thousand, or $0.01 per diluted share, in the same period in 2009. Including discontinued operations, the net loss was $2.5 million, or $0.20 per diluted share, in the first quarter of 2010 compared with a net loss of $35.6 million, or $2.91 per diluted share, in the first quarter of 2009.
During the three months ended March 27, 2010, we generated $6.8 million of funds through operating activities and $210 thousand from checks issued in excess of cash. These funds were used primarily to invest $91 thousand in capital assets and reduce debt by $6.8 million.
Working capital was reduced $6.0 million in the first three months of 2010, principally as a result of lower levels of receivables and an increase in accounts payables and accrued expenses. Trade accounts receivable increased $2.2 million primarily due to an increase in sales and seasonably low accounts receivable at the end of 2009, while income tax receivables decreased $6.1 million primarily due to tax refunds of $6.7 million received in the first quarter of 2010. Accounts payable and accrued expenses increased $2.9 million principally to support a higher level of sales and production. Inventory turns have improved due to higher levels of sales while inventory dollars have remained relatively the same.
Capital expenditures for the three months ended March 27, 2010 were $91 thousand, while depreciation and amortization was $3.0 million. We expect capital expenditures to be approximately $3.0 million for fiscal 2010, while depreciation and amortization is expected to be approximately $11.7 million. Planned capital expenditures in 2010 will be primarily for enhancements to existing equipment and facilities.
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