Financial Performance - Net sales for the fiscal year ended December 31, 2022, were $303.6 million, a decrease of 11.0% compared to $341.2 million in 2021[89]. - Gross profit decreased to $53.6 million, representing 17.7% of net sales, down from 22.6% in 2021, reflecting a 30.6% decline year-over-year[89][90]. - Selling and administrative expenses increased to $77.0 million, or 25.4% of net sales, compared to $67.9 million, or 19.9% of net sales in 2021, marking a 13.3% increase[93]. - The operating loss for 2022 was $28.2 million, a significant decline from an operating income of $10.0 million in 2021, representing a 381.5% change[96]. - Net income for 2022 was a loss of $35.1 million, or $2.32 per diluted share, compared to net income of $1.6 million, or $0.09 per diluted share in 2021[100]. Cash Flow and Operations - Cash used in continuing operations was $17.5 million, driven by a reduction in receivables of $15.2 million and a decrease in accounts payable of $9.6 million[101]. - The company incurred facility consolidation expenses of $4.6 million in 2022, a significant increase from $0.3 million in 2021, related to the consolidation of east coast manufacturing[95]. - Interest expense rose to $5.3 million in 2022 from $4.7 million in 2021, attributed to higher interest rates and increased debt[97]. Tax and Valuation - The effective income tax rate was a benefit of 0.26% in 2022, with a valuation allowance increase of $8.5 million related to net deferred tax assets[98]. - The company increased its valuation allowances by $8.5 million related to net deferred tax assets and specific federal and state net operating losses for the year ended December 31, 2022[116]. - The company had valuation allowances of $21.3 million at December 31, 2022, compared to $12.9 million at December 25, 2021[127]. Debt and Liabilities - Availability under the Senior Secured Revolving Credit Facility was $15.3 million as of December 31, 2022[103]. - At December 31, 2022, approximately 76% of the company's total debt, amounting to $76,341, was subject to floating interest rates[129]. - A one-hundred basis point fluctuation in the variable interest rates applicable to floating rate debt would have an annual pre-tax impact of approximately $763[129]. - The company recorded a liability for amounts received from a sale and leaseback transaction, with an annual rental rate of $977 thousand, subject to annual rent increases of 1.25%[112]. - The company has a reserve of $2.2 million for environmental liabilities at previously owned sites associated with discontinued textile businesses as of December 31, 2022[118]. - The company has no off-balance sheet arrangements as of December 31, 2022[115]. Purchases and Future Tax Outlook - Total purchases from Engineered Floors amounted to approximately $917 thousand in 2022, representing about 0.4% of the cost of sales[120]. - The company anticipates no cash outlays for income taxes to exceed $100 thousand during 2023 and 2024 due to tax loss carryforwards[117]. - As of December 31, 2022, the total unrecognized compensation expense related to unvested restricted stock awards was $1.8 million with a weighted-average vesting period of 6.0 years[114].
The Dixie Group(DXYN) - 2022 Q4 - Annual Report