The Dixie Group, Inc. (NASDAQ:DXYN) today reported financial results for the first quarter ended March 29, 2014. For the first quarter of 2014, the Company had sales of $85,313,000 and income from continuing operations of $3,308,000, or $0.24 per diluted share, compared with sales of $75,440,000 and income from continuing operations of $651,000, or $0.05 per diluted share for the same quarter in 2013. The Company had an operating loss of $2,469,000 for the period offset by a gain on the acquisition of Atlas Carpet Mills.
Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, “The first quarter was a difficult quarter operationally, both due to external events as well as our internal operations not performing up to expectations. The January and February period stood in contrast to the months of March and April. Our order entry for carpet products for January and February were up 6.8% on a year-over-year basis while for March and April, excluding Atlas, our order entry was up 17.0% as compared to the prior year. Likewise, our carpet product sales for the January and February period were up 8.8% while our sales for the March and April period, excluding Atlas, were up 12.7% relative to the prior year. Our sales rate in the March and April period was more in line with our expectations, and therefore our cost structure.
“January and February were impacted by the slow startup of our upgraded Colormaster dye line, lower production levels as we brought down inventories previously built up to facilitate the dye line upgrade and severe weather affecting our facilities. We had built up our inventories to allow us to shut down the facility for the two weeks needed to replace our dryer as we expanded our capacity by approximately 75%. The slow startup of our dye line, we estimate, added approximately $445 thousand in additional costs during the period, not including the under absorption of other operations as we worked down our inventories. In addition, poor weather in January and February disrupted operations in our seven east coast facilities, many of them multiple times. This impacted our production, order entry and distribution. As a result, we estimate the unexpected closures added approximately $1.1 million in direct costs during the quarter. We did not perform as well as needed in containing cost during this volatile time and have taken actions to increase profitability through improved operational performance and tighter cost control.
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