The Dixie Group has reported financial results for the third quarter.

For the quarter, the company had sales of $108,908,000 and income from continuing operations of $84,000, or $.01 per diluted share, compared with sales of $109,006,000 and a loss from continuing operations of $8,000, or $0 per diluted share for the third quarter of 2014. Income from continuing operations, excluding facility consolidation and asset impairment expenses, tax affected, was $465,000 (non-GAAP adjusted income from continuing operations, as set forth herein), or $.03 per diluted share for the period. The company had $614,000 in facility consolidation expenses during the period as it implements its previously announced plans to expand capacity, focus operations and consolidate its corporate offices.

“Sales in the third quarter started off strong, but moderated throughout the period, similar to what we experienced in the second quarter of this year,” said Daniel Frierson, chairman and CEO. “Our sales of $108.9 million were flat with the same quarter last year. Sales for residential products declined 1.5% versus the same period a year ago while the industry, we believe, declined in the low single digits. Sales of residential products started stronger in July, but slowed down during the quarter relative to our performance a year ago. We anticipate the residential remodeling market to have modest growth for the remainder of the year. The increase in commercial product sales was 4.5% comparative to the same period last year, as compared to industry growth, we estimate, in the very low single digits. Both our Masland Contract and Atlas Carpet Mills commercial brands had sales increases during the quarter. We continue to see a healthy commercial market throughout 2015.”

For the quarter, gross profit was 25.0% of net sales as compared to 24.4% for the third quarter of the prior year and 26.7% for the second quarter of 2015.

“Our production levels were over 6% lower in the third quarter than in the second quarter of 2015,” said Frierson. “Facility consolidation expenses, both for our manufacturing facility realignment and for our corporate office consolidation, were $614 thousand during the quarter. Our projected remaining expenses to complete all of our consolidation plans is $1.2 million and should be complete by the end of the first quarter of 2016.”

Frierson added that Dixie's operating income was $1.3 million for the quarter as compared to $832 thousand for the third quarter of 2014. Dixie has higher sampling costs in both residential and commercial businesses this year.

“Current assets decreased $1.3 million during the quarter, primarily due to a reduction in prepaid expenses,” he said. “Inventory and trade receivables were flat. Current liabilities decreased $971 thousand during the quarter. Capital equipment acquisitions, including those funded by cash and financings, were $1.8 million for the quarter. Depreciation and amortization for the period was $3.7 million. We anticipate capital expenditures for 2015 of approximately $13 million and depreciation and amortization of approximately $14.5 million. We had a slight tax benefit as we trued up our rate for the year. We ended the quarter with $131.2 million in debt.”

Frierson noted that sales in the third quarter started off strong in July, but slowed throughout the period, similar to what happened in the second quarter of this year. Further, the company is continuing to see operational improvements; however, given the slower growth environment than previously expected, Dixie is putting more emphasis on operational improvements and on moderating its investment in growth.

"In addition, even though we have continued to suffer from quality control issues that arose during the restructuring, we believe that they will continue to diminish as we move forward,” Frierson added. “We are continuing to see improvements as our operations return to the historical quality levels we had before the restructuring. We are intent on increasing profitability through improved operations and tighter cost controls as we complete the ongoing restructuring.”

For more information, visit thedixiegroup.com.