Flexsteel Industries, Inc. (NASDAQ:FLXS) today reported net sales of
$185.8 million, a 12% increase for the six month period ended December
31, 2012 as compared to the prior year six month period. Residential net
sales were $148.9 million in the current six month period, an increase
of 15% from the prior year six month period of $129.5 million.
Commercial net sales were approximately $37.0 million in the current and
prior year six month periods.
The Company reported record net income of $5.8 million or $0.80 per
share for the six month period ended December 31, 2012 compared to $5.3
million or $0.76 per share for the prior six month period.
For the quarter ended December 31, 2012 net sales were $94.6 million, an
11% increase over prior year quarter net sales of $85.0 million.
Residential net sales were $76.6 million in the current quarter, an
increase of 14% from the prior year quarter of $67.0 million. Commercial
net sales were approximately $18.0 million in the current and prior year
quarters.
The Company reported net income of $2.9 million or $0.40 per share for
the quarter ended December 31, 2012 compared to $2.9 million or $0.42
per share for the prior year quarter.
Selling, general and administrative (SG&A) expenses were 19.2% and 18.8%
of net sales for the quarter and six month period ended December 31,
2012, respectively, and include $0.7 million, or $0.06 per share, for
employment inducement costs. Excluding these costs, SG&A was 18.4% for
the current year quarter compared to 18.6% for the prior year quarter
and 18.4% compared to 18.7% for the six month periods ended December 31,
2012 and 2011, respectively.
Working capital (current assets less current liabilities) at December
31, 2012 was $105.8 million compared to $103.7 million at June 30, 2012.
Changes in working capital from June 30, 2012 to December 31, 2012
include a reduction in cash of $5.8 million offset by increases in
inventory of $5.0 million, other current assets of $1.9 million and
accounts receivable of $0.5 million, and a reduction in current
liabilities of $0.4 million. The higher inventory levels support the
increases in residential sales volume and expanded product offerings.
The decrease in cash of $5.8 million during the first six months of
fiscal year 2013 reflects net cash provided by operating activities of
$2.1 million, capital expenditures of $4.9 million and payment of three
quarterly dividends totaling $3.1 million. The Company expects that
capital expenditures will be approximately $1.0 million for the
remainder of fiscal year 2013.
All earnings per share amounts are on a diluted basis.
Outlook
The Company believes that moderate top line growth will continue through
the end of fiscal year 2013. Residential growth will continue with
existing customers and products, and through expanding our product
portfolio and customer base. The Company expects current order trends
for commercial products to continue for the remainder of the fiscal
year. The Company is confident in its ability to take advantage of
market opportunities. However, our optimism is tempered due to economic
uncertainty and its impact on the consumers’ confidence and willingness
to buy.
The Company remains committed to its core strategies, which include a
wide range of quality product offerings and price points to the
residential and commercial markets, combined with a conservative
approach to business. We will maintain our focus on a strong balance
sheet through emphasis on cash flow and improving profitability. We
believe these core strategies are in the best interest of our
shareholders.
Conference Call
We will host a conference call on February 6, 2013, at 10:30 a.m.
Central Time. To access the call, please dial 1-866-830-5279 and provide
the operator with ID# 58147478. A replay will be available for two weeks
beginning approximately two hours after the conclusion of the call by
dialing 1-800-585-8367 and entering ID# 58147478 .
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, including expenses related to the Indiana
civil litigation, the effectiveness of new product introductions and
distribution channels, the product mix of sales, pricing pressures, the
cost of raw materials and fuel, retention and recruitment of key
employees, actions by governments including laws, regulations, taxes and
tariffs, inflation, 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 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.
About Flexsteel
Flexsteel Industries, Inc. is headquartered in Dubuque, Iowa, and was
incorporated in 1929. Flexsteel is a designer, manufacturer, importer
and marketer of quality upholstered and wood furniture for residential,
recreational vehicle, office, hospitality and healthcare markets. All
products are distributed nationally.
For more information, visit our web site at http://www.flexsteel.com.
|
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
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|
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|
December 31,
|
|
|
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June 30,
|
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Cash
|
|
|
$
|
8,149
|
|
|
$
|
13,970
|
Trade receivables, net
|
|
|
|
34,084
|
|
|
|
33,601
|
Inventories
|
|
|
|
87,731
|
|
|
|
82,689
|
Other
|
|
|
|
7,236
|
|
|
|
5,333
|
Total current assets
|
|
|
|
137,200
|
|
|
|
135,593
|
|
|
|
|
|
|
|
|
|
NONCURRENT ASSETS:
|
|
|
|
|
|
|
|
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Property, plant, and equipment, net
|
|
|
|
32,624
|
|
|
|
29,867
|
Other assets
|
|
|
|
15,953
|
|
|
|
16,212
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
185,777
|
|
|
$
|
181,672
|
|
|
|
|
|
|
|
|
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LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts payable – trade
|
|
|
$
|
13,826
|
|
|
$
|
12,973
|
Accrued liabilities
|
|
|
|
17,574
|
|
|
|
18,876
|
Total current liabilities
|
|
|
|
31,400
|
|
|
|
31,849
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES:
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
|
|
9,580
|
|
|
|
10,381
|
Total liabilities
|
|
|
|
40,980
|
|
|
|
42,230
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY
|
|
|
|
144,797
|
|
|
|
139,442
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
185,777
|
|
|
$
|
181,672
|
|
|
|
|
|
|
|
|
|
|
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
|
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2012
|
|
|
|
2011
|
NET SALES
|
|
|
$
|
94,590
|
|
|
|
$
|
85,001
|
|
|
|
$
|
185,827
|
|
|
|
$
|
166,522
|
|
COST OF GOODS SOLD
|
|
|
|
(71,843
|
)
|
|
|
|
(64,543
|
)
|
|
|
|
(141,979
|
)
|
|
|
|
(127,100
|
)
|
GROSS MARGIN
|
|
|
|
22,747
|
|
|
|
|
20,458
|
|
|
|
|
43,848
|
|
|
|
|
39,422
|
|
SELLING, GENERAL AND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADMINISTRATIVE
|
|
|
|
(18,150
|
)
|
|
|
|
(15,765
|
)
|
|
|
|
(34,860
|
)
|
|
|
|
(31,096
|
)
|
OPERATING INCOME
|
|
|
|
4,597
|
|
|
|
|
4,693
|
|
|
|
|
8,988
|
|
|
|
|
8,326
|
|
OTHER INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
|
|
65
|
|
|
|
|
45
|
|
|
|
|
225
|
|
|
|
|
170
|
|
INCOME BEFORE INCOME TAXES.
|
|
|
|
4,662
|
|
|
|
|
4,738
|
|
|
|
|
9,213
|
|
|
|
|
8,496
|
|
INCOME TAX PROVISION
|
|
|
|
(1,740
|
)
|
|
|
|
(1,790
|
)
|
|
|
|
(3,420
|
)
|
|
|
|
(3,170
|
)
|
NET INCOME
|
|
|
$
|
2,922
|
|
|
|
$
|
2,948
|
|
|
|
$
|
5,793
|
|
|
|
$
|
5,326
|
|
AVERAGE NUMBER OF COMMON
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
7,030
|
|
|
|
|
6,763
|
|
6,984
|
|
|
|
|
6,745
|
|
Diluted
|
|
|
|
7,275
|
|
|
|
|
6,967
|
|
7,245
|
|
|
|
|
6,968
|
|
EARNINGS PER SHARE OF
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON STOCK:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.42
|
|
|
|
$
|
0.44
|
$
|
0.83
|
|
|
|
$
|
0.79
|
|
Diluted
|
|
|
$
|
0.40
|
|
|
|
$
|
0.42
|
$
|
0.80
|
|
|
|
$
|
0.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
(in thousands)
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2012
|
|
|
|
2011
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
5,793
|
|
|
|
$
|
5,326
|
|
Adjustments to reconcile net income to net cash
|
|
|
|
|
|
|
|
|
provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
1,772
|
|
|
|
|
1,404
|
|
Deferred income taxes
|
|
|
|
(353
|
)
|
|
|
|
(71
|
)
|
Stock-based compensation expense
|
|
|
|
860
|
|
|
|
|
493
|
|
Change in provision for losses on accounts receivable
|
|
|
|
88
|
|
|
|
|
(180
|
)
|
Gain on disposition of capital assets
|
|
|
|
(3
|
)
|
|
|
|
(16
|
)
|
Changes in operating assets and liabilities
|
|
|
|
(6,092
|
)
|
|
|
|
(4,950
|
)
|
Net cash provided by operating activities
|
|
|
|
2,065
|
|
|
|
|
2,006
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net purchases of investments
|
|
|
|
(623
|
)
|
|
|
|
(290
|
)
|
Proceeds from sale of capital assets
|
|
|
|
3
|
|
|
|
|
16
|
|
Capital expenditures
|
|
|
|
(4,918
|
)
|
|
|
|
(2,676
|
)
|
Net cash used in investing activities
|
|
|
|
(5,538
|
)
|
|
|
|
(2,950
|
)
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Dividends paid
|
|
|
|
(3,148
|
)
|
|
|
|
(1,180
|
)
|
Proceeds from issuance of common stock
|
|
|
|
800
|
|
|
|
|
106
|
|
Net cash used in financing activities
|
|
|
|
(2,348
|
)
|
|
|
|
(1,074
|
)
|
|
|
|
|
|
|
|
|
|
Decrease in cash
|
|
|
|
(5,821
|
)
|
|
|
|
(2,018
|
)
|
Cash at beginning of period
|
|
|
|
13,970
|
|
|
|
|
17,889
|
|
Cash at end of period
|
|
|
$
|
8,149
|
|
|
|
$
|
15,871
|
|
|
|
|
|
|
|
|
|
|
|
|