Financial Data and Key Metrics Changes - Net sales for Q1 2022 were 72.7 million in Q1 2021, adjusted for the divestiture of the commercial business [3] - The net loss for the quarter was 2 million a year ago [3] - Gross profit as a percentage of net sales decreased to 19.6% from 23.2% in Q1 2021 [6] - Selling and administrative expenses increased to 22.4% of net sales in Q1 2022 from 21.7% in the prior year [7] - Interest expense decreased to 1.3 million in the previous year [7] Business Line Data and Key Metrics Changes - The carpet business was significantly impacted by unprecedented price increases from major suppliers, leading to unsustainable product sales [4] - The hard surface business continued to grow rapidly, although ocean freight costs negatively impacted results [5] - The residential business grew by 6.6%, with key growth areas including Masland, Fabrica, and the hard surface segment [10] Market Data and Key Metrics Changes - The average price of residential carpet in the industry rose by 10% over the last year and 20% over the last two years [17] - The industry is facing headwinds such as labor availability, material supply shortages, and increased energy costs [18] Company Strategy and Development Direction - The company is diversifying raw material sourcing to mitigate the impact of price increases and improve cost control [15][19] - A new flooring center concept is being developed to strengthen relationships with key retail customers [19] - The company launched new decorative and hard surface product lines, which are expected to hit the market in Q2 [11][12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the year due to a structural deficit in housing availability and ongoing remodeling trends [18] - The transition to new raw material suppliers is expected to improve costs in the second half of the year [16] - Despite challenges, orders and sales to residential retail customers are up, indicating positive momentum [20] Other Important Information - The company closed on an 345,000, with depreciation just over $2 million [10] Q&A Session Summary Question: Regarding the divestiture of the commercial business and retained inventory value - Management stated that the value of the retained inventory was written down to estimated disposal recovery value and maintained at that value [23] Question: On the return of on-premises designers and installations in the residential sector - Management noted that retail customers adapted to selling methods during the pandemic, and there is now a return to allowing staff on-premises, enhancing their selling skills in the process [25]
The Dixie Group(DXYN) - 2022 Q1 - Earnings Call Transcript