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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 21, 2024

 

 

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 21, 2024, Flexsteel Industries, Inc. issued a press release announcing First Quarter Ended September 30, 2024 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 Tuesday, October 22, 2024 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 833-816-1123 (domestic) or 412-317-0710 (international) and requesting to be connected with 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 https://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 October 29, 2024, by dialing 877-344-7529 (domestic) or 412-317-0088 (international); Replay access code: 3572796

Item 9.01 Financial Statements and Exhibits.

Exhibit Description

99.1 Press Release on Fiscal First Quarter Results by Flexsteel Industries, Inc. dated October 21, 2024

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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 21, 2024	By:	/S/ Michael J. Ressler
			Michael J. Ressler Chief Financial Officer

 

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Flexsteel Industries, Inc. Reports Strong Fiscal first Quarter 2025 Results; 10% Sales Growth and Continued Operating Margin Expansion

 

Dubuque, Iowa – October 21, 2024 – 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 2025 results.

 

Key Results for the first Quarter Ended September 30, 2024

 

Management Commentary

 

“I am very pleased with our first quarter results and continued strong execution,” said Derek Schmidt, President and Chief Executive Officer of Flexsteel Industries, Inc. “While industry demand remains lackluster due to challenging macroeconomic conditions, we continue to build growth momentum and delivered 10% sales growth in the quarter which represents our fourth consecutive quarter of mid-single to low-double digit year-over-year growth. Our exceptional growth performance was driven by both share gains in our core markets and diversified new growth in expanded markets resulting from our commitment to aggressively invest in new product development, innovation, customer experience and marketing.”

 

Mr. Schmidt continues, “In addition to our top-line growth success, the organization remains steadfast in driving meaningful profitability improvement. Operating margin was 5.8% in the quarter, up compared to 2.0% in the prior year quarter, and represents our fifth consecutive quarter of year-over-year adjusted operating margin improvement. The levers driving our consistent profit improvement are unchanged and working effectively: sales growth leverage, strong operational execution and productivity, and product portfolio management. With ample manufacturing and distribution capacity to support continued aggressive profitable growth, the earnings growth potential of the Company remains compelling.”

 

Mr. Schmidt concludes, “I’m proud of our team’s strong start to fiscal year 2025 and encouraged by our trajectory and prospects for continued profitable growth. Our strategies are working and delivering healthy results. Given

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our confidence in continuing our strong execution, we are increasing the midpoints of both our sales and operating profit guidance ranges for fiscal year 2025. We are operating from a point of financial strength and will remain tenacious, but financially disciplined, in investing for future growth to maintain our strong momentum. Industry demand conditions are expected to remain challenged in the near-term, but I’m confident in our team’s ability to deliver exceptional value for our customers, continue gaining share, and delivering strong earnings growth throughout the remainder of our fiscal year.”

 

Operating Results for the first Quarter Ended September 30, 2024

 

Net sales were $104.0 million for the first quarter compared to net sales of $94.6 million in the prior year quarter, an increase of $9.4 million, or 9.9%. The increase was driven by sales of home furnishings products sold through retail stores of $11.0 million, or 13.3%, led by unit volume and product mix. Sales of products sold through e-commerce channels decreased by $1.6 million, or 13.3%, compared to the first quarter of the prior year.

 

Gross margin for the quarter ended September 30, 2024, was 21.5%, compared to 19.5% for the prior year quarter, an increase of 200 basis points (“bps”). The 200-bps increase was primarily driven by sales leverage, supply chain cost savings, and product portfolio management.

 

Selling, general and administrative (SG&A) expenses decreased to 15.7% of net sales in the first quarter of fiscal 2025 compared with 17.4% of net sales in the prior year quarter. The decrease was mainly due to leverage on higher sales volume and structural cost savings, partially offset by investments in growth initiatives.

 

Operating income for the quarter ended September 30, 2024, was $6.0 million compared to $1.9 million in the prior year quarter.

 

The Company reported income tax expense of $1.9 million, or an effective rate of 31%, during the first quarter compared to tax expense of $0.6 million, or an effective rate of 44.2%, in the prior year quarter. The effective tax rate in the quarter was primarily impacted by non-deductible foreign expenses, state taxes, and foreign operations. The decrease in effective tax rate from the prior year is primarily the result of lower anticipated non-deductible compensation expense, expected research & development credits and higher profit offsetting the impact of non-deductible expenses.

 

The Company reported net income of $4.1 million, or $0.74 per diluted share, for the quarter ended September 30, 2024, compared to net income of $0.8 million, or $0.14 per diluted share, in the prior year quarter.

 

Liquidity

 

The Company ended the quarter with a cash balance of $5.7 million, a line of credit balance of $3.6 million, and working capital (current assets less current liabilities) of $98.3 million, and availability of approximately $54.9 million under its secured line of credit.

 

Capital expenditures for the quarter ended September 30, 2024, were $0.4 million.

 

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Financial Outlook

For the full-year fiscal 2025, the Company is increasing the previously disclosed range of expected sales growth from 2% to 6% to 3.5% to 6.5% and the range of operating margin from 5.5% to 6.5% to 5.8% to 6.5%.

	Second Quarter Fiscal 2025	Fiscal Year 2025
Sales	$103 - 107 million	$427 - 440 million
Sales Growth (vs. Prior Year)	3% to 7%	3.5% to 6.5%
GAAP Operating Margin	5.5% to 6.5%	5.8% to 6.5%
Free Cash Flow(1)	$5 to 10 million	$20 to 30 million
Line of Credit Borrowings	$0	$0

(1) Free cash flow is calculated as net cash provided by operations, less capital expenditures

 

Conference Call and Webcast

 

The Company will host a conference call and audio webcast with analysts and investors on Tuesday, October 22, 2024, at 8:00 a.m. Central Time to discuss the results and answer questions.

 

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/10193259/fda62ddad4 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

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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,
		2024				2024
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	5,740			$	4,761
Trade receivables, net			39,481				44,238
Inventories			95,897				96,577
Other			8,787				8,098
Assets held for sale			1,707				1,707
Total current assets			151,612				155,381
NONCURRENT ASSETS:
Property, plant and equipment, net			36,175				36,709
Operating lease right-of-use assets			59,462				61,439
Other assets			21,475				20,933
TOTAL ASSETS		$	268,724			$	274,462
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade		$	24,852			$	25,830
Accrued liabilities			28,482				34,576
Total current liabilities			53,334				60,406
LONG-TERM LIABILITIES
Line of credit			3,581				4,822
Other liabilities			57,106				58,867
Total liabilities			114,021				124,095
SHAREHOLDERS' EQUITY			154,703				150,367
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	268,724			$	274,462

 

 

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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,
		2024				2023
Net sales		$	104,007			$	94,603
Cost of goods sold			81,639				76,193
Gross profit			22,367				18,410
Selling, general and administrative expenses			16,320				16,492
Operating income			6,047				1,918
Interest expense			51				570
Income before income taxes			5,996				1,348
Income tax provision			1,856				596
Net income and comprehensive income		$	4,140			$	752
Weighted average number of common shares outstanding:
Basic			5,203				5,182
Diluted			5,576				5,375
Earnings per share of common stock:
Basic		$	0.80			$	0.15
Diluted		$	0.74			$	0.14

 

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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 

		Three Months Ended
		September 30,
		2024				2023
OPERATING ACTIVITIES:
Net income		$	4,140			$	752
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation			929				940
Deferred income taxes			22				94
Stock-based compensation expense			1,138				911
Change in provision for losses on accounts receivable			(40	)			(70	)
Loss on disposal of assets			10				34
Changes in operating assets and liabilities			(3,801	)			(4,442	)
Net cash provided by (used in) operating activities			2,398				(1,781	)
INVESTING ACTIVITIES:
Proceeds from sales of investments			1,155				—
Capital expenditures			(427	)			(1,355	)
Net cash provided by (used in) investing activities			728				(1,355	)
FINANCING ACTIVITIES:
Dividends paid			(874	)			(879	)
Treasury stock purchases			—				(455	)
Proceeds from line of credit			102,851				101,365
Payments on line of credit			(104,092	)			(96,640	)
Shares withheld for tax payments on vested shares and options exercised			(32	)			(647	)
Net cash (used in) provided by financing activities			(2,147	)			2,744
Increase (decrease) in cash and cash equivalents			979				(392	)
Cash and cash equivalents at beginning of the period			4,761				3,365
Cash and cash equivalents at end of the period		$	5,740			$	2,973

 

 

 

 

 

 

 

 

 

INVESTOR CONTACT:

Michael Ressler, Flexsteel Industries, Inc.
563-585-8116
investors@flexsteel.com

 

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