The Dixie Group, Inc. reported financial results for the quarter ended March 30, 2024.
Net sales in the first quarter of 2024 were $65.3 million compared to $67.1 million in the same period of the prior year. The gross profit margin for the three months of the first quarter of 2024 was 24.2% of net sales compared to 26.6% in the first quarter of 2023. The company began operations of its new extrusion line in the first quarter of 2024. The company also announces board approval of stock repurchase plan.
For the first quarter of 2024, the the Dixie Group had net sales of $65,254,000 as compared to $67,084,000 in the same quarter of 2023. The company had an operating loss of $857,000 compared to an operating income of $306,000 in the first quarter of 2023. The net loss from continuing operations in the first quarter of 2024 was $2,410,000 or $0.16 per diluted share. In 2023, the net loss from continuing operations for the first quarter was $1,551,000 or $0.11 per diluted share.
"Our net sales for the quarter were negatively impacted by high interest rates affecting the housing and home remodeling market and the impact on the economy from continued inflation. Overall, our net sales during the quarter were 2.7% below prior year while the industry, we believe, was down approximately 8%. Due to this lower demand, we saw less favorable margins in the first part of the quarter as lower volume resulted in under absorbed fixed costs in our manufacturing plants. By the end of the quarter, in the month of March, net sales were slightly ahead of the same month in the prior year and our operating margins for the month were more in line with prior year and our expectations," said Daniel K. Frierson, chairman and CEO
"We are excited about the start of our nylon extrusion line in North Georgia. The internal production of raw materials will provide us with lower costs, as compared to our current external purchasing, and it will provide us with a continuity of supply, protecting us and our customers from potential supply disruptions. Our initial focus has been on extruding white, dyeable nylon which allows us to present long, beautiful color lines that stand out in a residential market that has moved to a solution dyed polyester sea of sameness. In support of this, we launched a color marketing campaign, Step Into Color, which connects retailers and consumers with a world of color options, including custom colors that are prevalent in Fabrica, but also available in our other soft surface divisions.
We launched 14 new carpet styles in the first quarter, including 11 EnVision Nylon styles in our high-end divisions. Our Masland introductions are a great mix of high fashion and mid-price points to drive volume in the current challenging market conditions. In our Fabrica brand, we launched a trio of styles paying tribute to the brand's 50 year history. Homage, Tribute, and Adulation share a common color line of 50 colors which are named after key Fabrica styles from the last 50 years. These beautiful styles are available at a sharp price point and will become go to styles for Fabrica for years to come. The remainder of our soft and hard surface introductions for 2024 will be released in the second quarter.
Our new product offerings will help us continue to maintain sales volume in a difficult market. Additionally, we plan to reduce year over year costs by $10 million in 2024 through cost savings related to our extrusion operations and the reduction of other controllable costs. We believe, once interest rates come back down and consumer confidence returns, the housing market along with remodeling activity, will rebound strongly, driven by pent up demand." Frierson concluded.
The gross profit in the first quarter of 2024 was 24.2% of net sales compared to 26.6% of net sales in the first quarter of 2023. The gross profit margins in 2024 were negatively impacted by under absorbed fixed costs as the result of lower volume in plants due to lower sales demand in the first part of the quarter. Selling and administrative costs in the first quarter of 2024 were slightly below the prior year in expense dollars but higher as a percent of net sales, 25.1% in 2024 as compared to 24.5% in the same quarter of 2023.
On the balance sheet, receivables increased $4.5 million from the balance at fiscal year end 2023 due to higher sales in the last month of the first quarter 2024 as compared to the seasonally lower sales volume in the last month of the fiscal year 2023. The net inventory value at the end of the first quarter of 2024 was $1.2 million lower than the fiscal year end 2023 balance of $76.2 million. Combined accounts payable and accrued expenses were $8.7 million higher at the end of the first quarter of 2024 as compared to the December 2023 balance. This increase was primarily driven by higher payables and accruals for raw materials to replenish inventory and meet higher production needs in preparation for an expected increase in demand in the second quarter. In the first quarter of 2024, capital expenditures were $7.0 million, of which $0.5 million was a cash outlay during the quarter with the remainder having been paid in deposits in previous years. Capital expenditures for the full fiscal year 2024 are planned at $9.4 million, with $2.9 million being funded by cash investment within the year and the remaining $6.5 million from cash spent through deposits in prior years. Interest expense was $1.5 million in the first quarter of 2024 compared to $1.9 million in the first quarter of 2023. The lower interest expense in 2024 was the result of lower average debt balance within the quarter. The company's debt increased by $1.9 million in the first quarter of 2024 driven primarily by the planned cash investment in new product introductions in the first quarter. Availability under their line of credit with their senior lending facility was $15.0 million at the end of the first quarter of 2024.
Subsequent to the end of the first quarter, the company's Board of Directors approved the repurchase of up to $2.8 million of the company's common stock.
In the first four weeks of the second quarter in 2024, net sales are approximately 4% above the comparable period in the prior year and order entry is approximately 8% below the same period in the prior year. The second quarter is typically a stronger sales level than the first quarter due to seasonality and our new products hitting retail floors.
