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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 31, 2023

 

 

Flexsteel Industries Inc

(Exact name of Registrant as Specified in Its Charter)

 

 

Minnesota			0-5151	42-0442319
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
385 Bell Street
Dubuque, Iowa				52001-7004
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (563) 556-7730

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		FLXS		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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Item 2.02 Results of Operations and Financial Condition.

On October 31, 2023, Flexsteel Industries, Inc. issued a press release announcing First Quarter Ended September 30, 2023 operating results. A copy of the Press Release is attached hereto as Exhibit 99.1.

Item 7.01 Regulation FD Disclosure.

The Company will host a conference call and webcast at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) on Wednesday, November 1, 2023 to discuss results and answer questions. Analysts and investors may participate in the question-and-answer session. The call can be accessed via telephone at 866-777-2509 (domestic) or 412-317-5413 (international) and requesting to be connected with the Flexsteel conference call.

Additionally, interested parties can listen to a live webcast of the call in the Investor Relations section of the Company's website at http://ir.flexsteel.com. An archived version of the webcast will be available in the same location shortly after the live call has ended.

A recorded replay can be accessed through November 8, 2023, by dialing 877-344-7529 (domestic) or 412-317-0088 (international); Replay access code: 6306057.

Item 9.01 Financial Statements and Exhibits.

Exhibit	Description
99.1	Press Release by Flexsteel Industries, Inc. on October 31, 2023.
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			FLEXSTEEL INDUSTRIES, INC.
Date:	October 31, 2023	By:	/s/ Derek P. Schmidt
			Derek P. Schmidt, Chief Financial Officer and Chief Operating Officer

 

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Flexsteel Industries, Inc. Reports Fiscal first Quarter 2024 Results

 

Dubuque, Iowa – October 31, 2023 – Flexsteel Industries, Inc. (NASDAQ: FLXS) (“Flexsteel” or the “Company”), one of the largest manufacturers, importers, and marketers of residential furniture products in the United States, today reported first quarter fiscal 2024 results.

 

Key Results for the first Quarter Ended September 30, 2023

 

 

GAAP to non-GAAP reconciliations follow the financial statements in this press release

 

Management Commentary

 

“I am pleased with our first quarter results. We are competing well and gaining share in a challenging business environment,” said Jerry Dittmer, President and CEO of Flexsteel Industries, Inc. “While net sales were down 1% compared to the prior year quarter, sales in the quarter were adversely impacted by the elimination of ocean freight surcharges in the prior year when ocean container delivery costs were significantly inflated. Excluding the approximately $7 million impact from the surcharge elimination, growth from unit volume and sales mix was a robust 6.8% in the quarter, reflecting our strong sales execution and the momentum of our growth initiatives. In addition, we leveraged operational efficiencies and cost savings to expand gross margin and improve operating income from $0.4 million in the prior year quarter to $1.9 million this quarter.”

 

Mr. Dittmer concludes, “A variety of macroeconomic headwinds continue to weigh on industry demand and the outlook for consumer spending on higher priced discretionary purchases such as furniture. Despite these external challenges, our team isn’t deterred and remains intensely focused on profitably growing our business in fiscal year 2024. We enter the second quarter with positive momentum and are confident in our ability to grow sales both compared to last year and the first quarter, while also improving

 

 

 

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gross and operating margins over the first quarter. Our strategies are working. We’ll continue to innovate, drive expedient and relevant new product development, and build strong brands. Regardless of demand uncertainties, we remain aggressive in identifying new growth opportunities while prudently managing costs and investing for future growth and profit enhancement.”

 

Operating Results for the first Quarter Ended September 30, 2023

 

Net sales were $94.6 million for the first quarter compared to net sales of $95.7 million in the prior year quarter, a decrease of ($1.1) million, or (1.1%). The decrease was driven by lower sales in home furnishings products sold through retail stores of ($2.2) million, or (2.6%), led by a reduction of ($7.1) million due to the elimination of ocean freight surcharges which was partially offset by unit volume and product mix. Sales of products sold through e-commerce channels increased by $1.1 million, or 10.7%, compared to the first quarter of the prior year.

 

Gross margin for the quarter ended September 30, 2023, was 19.5%, compared to 16.0% for the prior-year quarter, an increase of 350 basis points (“bps”). The 350-bps increase was primarily driven by control of expenses related to material costs and the impact of strategic cost savings initiatives.

 

Selling, general and administrative (SG&A) expenses increased to 17.4% of net sales in the first quarter of fiscal 2024 compared with 15.2% of net sales in the prior-year quarter. The increase was mainly due to investment in growth initiatives.

 

Operating income for the quarter ended September 30, 2023, was $1.9 million compared to $0.4 million in the prior-year quarter.

 

The Company reported income tax expense of $0.6 million, or an effective rate of 44.2%, during the first quarter compared to a tax benefit of ($0.2) million, or an effective rate of (175.5%), in the prior-year quarter. The effective tax rate was primarily impacted by non-deductible stock compensation, state taxes, and foreign operations.

 

The Company reported net income of $0.8 million, or $0.14 per diluted share, for the quarter ended September 30, 2023, compared to net income of $0.3 million, or $0.05 per diluted share, in the prior-year quarter.

 

Liquidity

 

The Company ended the quarter with a cash balance of $3.0 million and working capital (current assets less current liabilities) of $118.3 million, and availability of approximately $27.6 million under its secured line of credit.

 

Capital expenditures for the quarter ended September 30, 2023, were $1.4 million.

 

 

 

 

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Conference Call and Webcast

 

The Company will host a conference call and audio webcast with analysts and investors on Wednesday, November 1, 2023, at 8:00 a.m. Central Time to discuss the results and answer questions.

412-317-0088 (international)

 

To pre-register for the earnings conference call and avoid the need to wait for a live operator, investors can visit https://dpregister.com/sreg/10183478/faba967b02 and enter their contact information. Investors will then be issued a personalized phone number and pin to dial into the live conference call.

 

About Flexsteel

Flexsteel Industries, Inc., and Subsidiaries (the “Company”) is one of the largest manufacturers, importers, and marketers of residential furniture products in the United States. Product offerings include a wide variety of furniture such as sofas, loveseats, chairs, reclining rocking chairs, swivel rockers, sofa beds, convertible bedding units, occasional tables, desks, dining tables and chairs, kitchen storage, bedroom furniture, and outdoor furniture. A featured component in most of the upholstered furniture is a unique steel drop-in seat spring from which the name “Flexsteel” is derived. The Company distributes its products throughout the United States through its e-commerce channel and direct sales force.

Forward-Looking Statements

Statements, including those in this release, which are not historical or current facts, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. There are certain important factors that could cause our results to differ materially from those anticipated by some of the statements made herein. Investors are cautioned that all forward-looking statements involve risk and uncertainty. Some of the factors that could affect results are the cyclical nature of the furniture industry, supply chain disruptions, litigation, the effectiveness of new product introductions and distribution channels, the product mix of sales, pricing pressures, the cost of raw materials and fuel, changes in foreign currency values, retention and recruitment of key employees, actions by governments including laws, regulations, taxes and tariffs, the amount of sales generated and the profit margins thereon, competition (both U.S. and foreign), credit exposure with customers, participation in multi-employer pension plans, disruptions or security breaches to business information systems, the impact of any future pandemic, and general economic conditions. For further information regarding these risks and uncertainties, see the “Risk Factors” section in Item 1A of our most recent Annual Report on Form 10-K.

 

For more information, visit our website at http://www.flexsteel.com.

 

 

 

 

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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

 

		September 30,				June 30,
		2023				2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	2,973			$	3,365
Trade receivables, net			31,551				38,168
Inventories			120,807				122,076
Other			9,208				6,417
Assets held for sale			616				616
Total current assets			165,155				170,642
NONCURRENT ASSETS:
Property, plant and equipment, net			39,010				38,652
Operating lease right-of-use assets			66,445				68,294
Other assets			14,260				12,962
TOTAL ASSETS		$	284,870			$	290,550
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade		$	21,002			$	24,745
Accrued liabilities			25,832				30,360
Total current liabilities			46,834				55,105
LONG-TERM LIABILITIES
Line of credit			32,998				28,273
Other liabilities			63,671				65,551
Total liabilities			143,503				148,929
SHAREHOLDERS' EQUITY			141,367				141,621
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	284,870			$	290,550

 

 

 

 

 

 

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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

(in thousands, except per share data)

 

		Three Months Ended
		September 30,
		2023				2022
Net sales		$	94,603			$	95,684
Cost of goods sold			76,193				80,335
Gross profit			18,410				15,349
Selling, general and administrative expenses			16,492				14,574
Other expense			—				347
Operating income			1,918				428
Interest expense			570				321
Other expense			—				2
Income before income taxes			1,348				105
Income tax provision (benefit)			596				(184	)
Net income and comprehensive income		$	752			$	289
Weighted average number of common shares outstanding:
Basic			5,182				5,311
Diluted			5,375				5,467
Earnings per share of common stock:
Basic		$	0.15			$	0.05
Diluted		$	0.14			$	0.05

 

 

 

 

 

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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 

		Three Months Ended
		September 30,
		2023				2022
OPERATING ACTIVITIES:
Net income		$	752			$	289
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation			940				1,128
Deferred income taxes			94				—
Stock-based compensation expense			911				825
Change in provision for losses on accounts receivable			(70	)			(10	)
Loss on disposal of assets			34				—
Changes in operating assets and liabilities			(4,442	)			10,762
Net cash (used in) provided by operating activities			(1,781	)			12,994
INVESTING ACTIVITIES:
Capital expenditures			(1,355	)			(1,878	)
Net cash (used in) investing activities			(1,355	)			(1,878	)
FINANCING ACTIVITIES:
Dividends paid			(879	)			(867	)
Treasury stock purchases			(455	)			(403	)
Proceeds from line of credit			101,365				88,058
Payments on line of credit			(96,640	)			(95,768	)
Shares withheld for tax payments on vested restricted shares			(647	)			(349	)
Net cash provided by (used in) financing activities			2,744				(9,329	)
(Decrease) increase in cash and cash equivalents			(392	)			1,787
Cash and cash equivalents at beginning of the period			3,365				2,184
Cash and cash equivalents at end of the period		$	2,973			$	3,971

 

 

 

 

 

 

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NON-GAAP DISCLOSURE (UNAUDITED)

The Company is providing information regarding adjusted net sales, adjusted operating income, adjusted net income, and adjusted diluted earnings per share of common stock, which are not recognized terms under U.S. Generally Accepted Accounting Principles (“GAAP”) and do not purport to be alternatives to net sales, operating income, net income, or diluted earnings per share of common stock as a measure of operating performance. A reconciliation of adjusted net sales, adjusted operating income, adjusted net income, and adjusted diluted earnings per share of common stock is provided below. Management believes the use of these non-GAAP financial measures provides investors useful information to analyze and compare performance across periods excluding the items which are considered by management to be extraordinary or one-time in nature. Because not all companies use identical calculations, these presentations may not be comparable to other similarly titled measures of other companies.

Reconciliation of GAAP net sales to non-GAAP adjusted net sales:

The following table sets forth the reconciliation of the Company's reported GAAP net sales to the calculation of adjusted net sales for the three months ended September 30, 2023 and 2022:

 

		Three Months Ended
		September 30,				September 30,
(in thousands)		2023				2022				% Change
Net Sales		$	94,603			$	95,684			(1.1%)
Freight Surcharges		$	—			$	(7,099	)
Adjusted Net Sales		$	94,603			$	88,585			6.8%

Reconciliation of GAAP operating income to non-GAAP adjusted operating income:

The following table sets forth the reconciliation of the Company’s reported GAAP operating income to the calculation of non-GAAP adjusted operating income for the three months ended September 30, 2023 and 2022:

 

		Three Months Ended
		September 30,
(in thousands)		2023				2022
Reported GAAP operating income		$	1,918			$	428
Other expense			—				347
Non-GAAP operating income		$	1,918			$	775

 

Reconciliation of GAAP net income to non-GAAP adjusted net income:

The following table sets forth the reconciliation of the Company’s reported GAAP net income to the calculation of non-GAAP adjusted net income for the three months ended September 30, 2023 and 2022:

 

		Three Months Ended
		September 30,
(in thousands)		2023				2022
Reported GAAP net income		$	752			$	289
Other expense			—				347
Tax impact of the above adjustments(1)			—				(94	)
Non-GAAP net income		$	752			$	542

 

(1) Effective tax rate of 27.0% was used to calculate the three months ended September 30, 2022.

 

 

 

 

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Reconciliation of GAAP diluted earnings per share of common stock to non-GAAP adjusted diluted earnings per share of common stock:

The following table sets forth the reconciliation of the Company’s reported GAAP diluted earnings per share to the calculation of non-GAAP adjusted diluted earnings per share for the three months ended September 30, 2023 and 2022:

 

		Three Months Ended
		September 30,
		2023				2022
Reported GAAP diluted earnings per share		$	0.14			$	0.05
Other expense			—				0.06
Tax impact of the above adjustments(1)			—				(0.02	)
Non-GAAP diluted earnings per share		$	0.14			$	0.09

Note: The table above may not foot due to rounding.

(1) Effective tax rate of 27.0% was used to calculate the three months ended September 30, 2022.

 

 

 

 

 

INVESTOR CONTACT:

Derek Schmidt, Flexsteel Industries, Inc.
563-585-8122
investors@flexsteel.com

 

 

 

 

 

 

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