Presentation Materials

EX-99.1 2 dex991.htm PRESENTATION MATERIALS Presentation Materials

DECEMBER 8, 2005

Exhibit 99.1

Forward-Looking Statements

Statements in this presentation, which relate to the future, are

subject to risk factors and uncertainties that could cause actual results to

differ materially from those indicated in such forward-looking statements.

Such factors include the levels of demand for the products produced by the

Company. Other factors that could affect the Company's results include, but

are not limited to, raw material and transportation costs related to petroleum

prices, the cost and availability of capital, and general economic and

competitive conditions related to the Company's business. Issues related to

the availability and price of energy may adversely affect the Company's

operations. Additional information regarding these and other factors and

uncertainties may be found in the Company's filing with the Securities and

Exchange Commission.

General information set forth in this presentation concerning market

conditions, sales data and trends in the U.S. carpet and rug markets are

derived from various public and, in some cases, non-public sources.

Although

believe

such

data

and

information

accurate,

have

not

attempted to independently verify such information.

Carpet vs. Traditional Textile Industry

Burlington (1), (2)

J. P. Stevens (1), (2)

West Point (1), (2)

Springs (1)

Cone (2)

Cannon (2)

UM & M (2)

M. Lowenstein (1), (2)

Dan River (1), (2)

10.

Collins & Aikman (1), (2)

11.

Fieldcrest (1), (2)

12.

Reigel (2)

13.

Graniteville (2)

14.

Avondale

15.

Bibb (2)

16.

Ti-Caro (2)

17.

Guilford Mills (2)

18.

Dixie Yarns (3)

18 Largest Public Textile Companies in 1980

1 -

In the carpet business at one time

2 -

Have gone through bankruptcy or no longer in business

3 -

Principally in floorcovering business today

Dixie Strategic Positioning

•

Grew floorcovering business from 1993 and exited

textiles

1999

now

100%

floorcovering

•

Eight acquisitions from 1993 through 2000

•

Demise of factory-built housing industry and desire

to de-leverage led to the sale of our North Georgia

operations

•

Commitment to brands and upper-end market.

Dixie Today

•

Profitable, growing company with strong

brands in the upper-end market

•

Strong Balance Sheet

•

Diversified Customer base

Top 20 carpet customers -

16% of total carpet

sales

Top 40 carpet customers -

20% of total carpet

sales

100

110

120

130

140

150

160

170

2001

2002

2003

2004

YTD Sept. 2005

Dixie

Industry

Began

Growth

Initatives

Dixie's Broadloom and Area Rug Carpet Sales have

Outperformed the U.S. Carpet Market in Recent Years

•

In 2002, Dixie grew at 1% while the market grew at 2.6%

•

2002 growth initiatives

•

In 2003 and 2004, Dixie grew 11% and 26%; respectively, while the carpet market

grew at an estimated 1% in 2003 and 9% for 2004

•

the

nine

months

2005,

Dixie

grew

14%

while

the

market

grew

•

Total

sales

quarter

2005

expected

grow

10%

compared

with

the

quarter 2004 levels

BROADLOOM AND AREA RUG CARPET SALES

Change Index (2001=Base Year)

2003 Sales

Industry -

$13.8 Billion

Dixie -

$234 Million (1.7%)

High-End

Residential,

69%

High-End

Commercial,

31%

Dixie Carpet and Rug Sales by End Market

YTD Sept 2005

Residential Positioning of The Dixie Group

INDUSTRY

AVERAGE

PRICE/ SQ YD

$14

$21

$28

$35

$42

$49

Note: Industry average price is based on sales

reported through industry sources.

Dixie Home

Fabrica

Masland

ESTIMATED TOTAL WHOLESALE MARKET

FOR CARPETS AND RUGS:

VOLUME AND PRICE POINTS

Positioning of Dixie Brands by Price Point Segment

BROADLOOM RESIDENTIAL SALES = $7.6 Billion

Excerpt

from

KSA

Study

dated

May

2004,

Titled

"KSA

Assessment

Dixie's

Residential

and

Contract

Carpet

Businesses",

commissioned

The

Dixie

Group,

Inc.

Dixie High-End Residential Sales

Fabrica, 30%

Dixie Home,

26%

Masland, 44%

YTD Sept. 2005

Residential Positioning

•

Fabrica and Masland are among the most respected

brands in high-end residential carpet

•

Fabrica's

and Masland's

combined residential sales

are estimated to be about 35% of total U.S. industry

sales at $22.00 per SQ YD and higher

•

Dixie Home at $10-$20 per SQ YD

Provides access for Dixie to a larger sector of the

market

Helps Dixie become more important to upper-

middle & high-end customers

Excerpt

from

SKA

Study

dated

May

2004,

Titled

"KSA

Assessment of Dixie's

Residential

and

Contract

Carpet

Businesses",

commissioned

The

Dixie

Group,

Inc.

Residential Broadloom -

Dixie Home

•

Launched 2003

•

Fulfill market need for third player

Well-styled moderate to upper priced line

•

Leverage needed by fiber suppliers for market access

Branded

high-styled

goods

not

"me

too"

Support fiber suppliers' branded products

•

Selective distribution strategy attractive to retailers

•

Growth potential well above industry average

2005 -

33% to 36%

2006 -

22% to 28%

Retailers, 46%

Designer / To

The Trade

Showrooms,

24%

Builders, 21%

Masland Residential Sales

YTD Sept. 2005

Masland Residential

•

Leading high-end brand with reputation for

development of products with innovative styling,

design and color

•

High-end retail/designer driven

•

Hand crafted and imported rugs

•

Growth initiative -

doubling product introductions to

increase market penetration

Decorators/

Design Trade,

43%

Retailers, 24%

Furniture/

Dept. Stores,

Specialty,

17%

Fabrica Residential Sales

YTD Sept. 2005

Fabrica Residential

•

Premium high-end brand

Leader in styling/patterns/color

•

Designer focused

•

Hand crafted and imported rugs

•

Growth in sales and profit since July 2000 acquisition

Corporate, 34%

Hospitality, 29%

Other, 6%

Store Planning,

Retail Stores,

16%

Masland Contract Sales

Channels: Interior Design Specifier and Commercial End User

YTD Sept. 2005

Masland Contract

•

Good and growing position with premium brand

•

Designer focused

•

Strong national account base

•

Strong growth from new "Energy Collection"

•

KSA study -

identified potential opportunities

Invest in carpet tile

The Energy Line has Contributed Significantly

to this Strong Growth

•

The Energy Line was started from the ground up in 2002 and generated over $13 million and

$22 million; respectively, in sales for Masland during 2003 and 2004

Approximately half is sold through our residential sales force and the other half is sold through our

contract sales force

•

Introduced 1 new product in 2005 and 5 new products in 2006

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

$5,500

$6,000

$6,500

$7,000

$7,500

2002

2003

2004

2005

ENERGY LINES SALES

(Dollars in thousands)

Masland Contract has Performed Higher than

the U.S. Commercial Carpet Market

•

1998 was a great year for Masland Contract, which grew 52% that year while the market only

grew 5%

•

From 1999 to 2002, Masland Contract performed at about the same rate as the market

•

In 2003, Masland Contract grew 8% while the market declined slightly

•

In 2004, Masland Contract grew 15% while the market grew 10%

•

the

2005,

Masland

Contract

grew

16%

while

the

market

grew

10%

100

110

120

130

140

150

160

170

180

190

200

210

220

1997

1998

1999

2000

2001

2002

2003

2004

2005

Masland

Contract

Commercial

SPECIFIED COMMERCIAL CARPET SALES

CHANGE INDEX (1997 = Base Year)

Carpet Tile (Modular)

•

Specified commercial market $2.6 billion

•

Total specified commercial market is significantly

depressed from its peak in 2000 and is expected to

grow faster than the overall carpet market

•

In 2004, carpet tile grew 18% while broadloom

commercial grew at 5%

•

Carpet tile is approximately 32% of the specified

commercial market and over 50% of the corporate

office market

Broadloom Carpet Raw Material

•

65% to 70% of cost of broadloom carpet is raw material

•

Raw material includes fiber, yarn and backing materials which are almost 100%

petroleum based

•

Raw material prices affected by:

Changes in petroleum prices

Industry demand

•

Recovery of raw material cost increases

The industry has generally been successful passing major raw material increases

through to its customers

There tends to be a lag from the time costs increase until higher selling prices are

fully implemented, partially due to LIFO inventories

Longer-term major fiber cost increases are opportunities to recover other cost

increases and improve margins

•

Branded vs. unbranded fiber

Unbranded fiber generally used with lower-end products

Unbranded fiber self extruded

Branded fiber costs similar with all competitors

25.9%

25.3%

25.1%

24.3%

30.6%

34.1% (2)

34.1%

34.6%

31.9%

28.1% (1)

20.0%

25.0%

30.0%

35.0%

40.0%

2001

2002

2003

2004

YTD Sept.

2005

Gross Profit

Selling & Admin. Expense

Dixie Profit Margin, Sales and Administrative

Expenses as a % of Sales

(1) -

Launch Dixie Home business

(2) -

LIFO Liquidation -

increased gross profit by .8%

Dixie Sales Continuing Operations

($ in millions)

$194

$37

$197

$26

$217

$17

$274

$18 (1)

$195

$14

$221

$10

2001

2002

2003

2004

YTD Sept.

2004

YTD Sept.

2005

Carpet Sales

Yarn Sales

$231

$223

$234

$292

(1) -

Includes sales related to disposal of North GA operations

$209

$231

Dixie Operating Income

($ in millions)

$14.0

$24.1

(1)

$2.8 (2)

$25.6

(3)

$17.0

(4)(5)

$14.4

(6)

2001

2002

2003

2004

YTD Sept.

2004

YTD Sept.

2005

(1) -

Includes $3.2 million net gains from the sale of facilities and

impairments

(2) -

Includes $11.4 million of impairments and charges

(3) -

Includes LIFO liquidation that increased operating income by $2.3 million in 2004

(4) -

Includes LIFO liquidation that increased operating income by $1.3 million YTD September 25, 2004

(5) -

LIFO reserve decreased $252 thousand YTD September 25, 2004

(6) -

LIFO reserve increased $2.1 million YTD September 24, 2005

Dixie Capital Structure

($ in millions)

43%

Total Debt

11%

Subordinated Debt

32%

Senior Debt

Debt to Total Capitalization:

$ 214.3

Total Capitalization

121.2

Equity

$ 93.1

24.7

Subordinated Debt

$ 68.4

Senior Debt

Sept 24, 2005

Debt:

Third QT 2005

•

Rapid growth increased complexity and overtaxed manufacturing and

distribution capabilities

Carpet sales growth:

•

2003………

22%

•

Year

2004…………

26%

•

2005…18%

QT 2004 sales up 5% from prior QT and 26% from prior YR.

Expected

similar

growth

2005

sales

down

from

prior

and

only

from

prior

YR.

Extremely

high

levels

order

entry

April

2005

over

50%

•

Cost increased in 3

QT 2005

Added associates, lengthened operating schedules and increased

outsourcing to improve customer service

Completed staffing and movement of inventory into two new distribution

centers

Began installing modular/carpet tile equipment.

Natural gas cost up 25% VS prior Yr.

Tropical storm and two hurricanes interrupted order entry, manufacturing

and distribution.

Third QT 2005

•

Growth impact

Overran operational capabilities

Delayed product introductions

Significantly increased cost

Poorer service

Higher levels of off-quality

Samples delayed

•

Changes made

Management

Adding tufting in North Georgia

•

Simplify operations

•

Improve quality

•

Improve service

•

Lower costs

•

Expected effect

Attain

historical

levels

performance

last

half

2006

2007

Continue growth above industry average

FOCUS

•

High-end residential carpet and rugs

Price

points

times

industry

average

•

Commercial carpet

Industry rebounding from depressed levels

Growing faster than the industry

Expanding into modular/carpet tiles

•

Growth above industry average:

Marketing and product driven internal growth

Continuous development of stylish differentiated products

Grow upper-end at Home Depot and Lowe's

•

Support customers with selective distribution strategy

•

Partner with raw material suppliers

Support fiber brands

•

Strong balance sheet

•

In 2005, invested in assets to support future growth