Flexsteel Industries, Inc. (NASDAQ:FLXS) today reported net sales of
$104.3 million for the quarter ended September 30, 2013, an increase of
14% from the prior year quarter. Residential net sales increased
approximately 16% to $84.0 million in the current quarter, primarily due
to increased sales of upholstered and ready to assemble products.
Commercial net sales increased approximately $1.4 million or 8% to $20.3
million.
Net income for the first fiscal quarter ended September 30, 2013 was
$3.8 million or $0.51 per share compared to $2.9 million or $0.40 per
share for the prior year quarter.
Gross margin as a percent of net sales for the quarter ended September
30, 2013 was 22.7% compared to 23.1% for the prior year quarter. The
decrease of 0.4% is primarily due to changes in product mix and price
discounting on certain traditional case goods to improve operating
efficiency. The discounting may continue for the remainder of the fiscal
year as we realign inventory to focus on growth opportunities.
Selling, general and administrative (SG&A) expenses as a percent of net
sales for the current quarter improved to 17.5% from 18.3% in the prior
year quarter. The percentage decrease reflects fixed cost leverage on
higher sales volume offset by increased legal costs of $0.4 million
related to an Indiana civil lawsuit. In addition, the prior year quarter
included approximately $0.5 million of executive transition costs.
Working capital (current assets less current liabilities) at September
30, 2013 was $117.2 million compared to $113.7 million at June 30, 2013.
Changes in working capital from June 30, 2013 to September 30, 2013
include increases in inventory of $4.7 million, accounts receivable of
$2.9 million and current liabilities of $3.9 million. The higher
inventory levels support increased residential sales volume and expanded
product offerings. The accounts receivable increase is primarily due to
higher sales volume in the current quarter and the timing of collections.
Cash decreased by $0.3 million during the first fiscal quarter of 2014
with net cash provided by operating activities of $1.2 million, capital
expenditures of $0.7 million and payment of dividends of $1.1 million.
The Company expects that capital expenditures for the remainder of
fiscal year 2014 will be approximately $3.5 million, primarily for
delivery and manufacturing equipment and information technology
infrastructure.
All earnings per share amounts are on a diluted basis.
Outlook
The Company believes that top
line growth will continue through the end of fiscal year 2014.
Residential growth is expected to continue with existing customers and
products, and through expanding our product portfolio and customer base.
The Company expects this growth to be led by increased demand for
upholstered and ready to assemble products. The Company anticipates
sales of commercial products to moderately increase for the remainder of
the fiscal year. The Company is confident in its ability to take
advantage of market opportunities.
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 increasing profitability. We
believe these core strategies are in the best interest of our
shareholders.
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.
Analysts Conference Call
The Company
will host a conference call for analysts on October 16, 2013, at 10:30
a.m. Central Time. To access the call, please dial 1-866-830-5279 and
provide the operator with ID# 55755852. 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# 55755852.
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.
For more information, visit our web site at http://www.flexsteel.com.
|
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
|
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
June 30,
|
|
|
|
|
2013
|
|
|
|
2013
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Cash
|
|
|
$
|
10,625
|
|
|
$
|
10,934
|
Trade receivables, net
|
|
|
|
38,926
|
|
|
|
36,075
|
Inventories
|
|
|
|
97,131
|
|
|
|
92,417
|
Other
|
|
|
|
10,008
|
|
|
|
9,775
|
Total current assets
|
|
|
|
156,690
|
|
|
|
149,201
|
|
|
|
|
|
|
|
|
|
NONCURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Property, plant, and equipment, net
|
|
|
|
31,696
|
|
|
|
32,145
|
Other assets
|
|
|
|
11,734
|
|
|
|
11,193
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
200,120
|
|
|
$
|
192,539
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts payable – trade
|
|
|
$
|
16,262
|
|
|
$
|
13,927
|
Accrued liabilities
|
|
|
|
23,180
|
|
|
|
21,575
|
Total current liabilities
|
|
|
|
39,442
|
|
|
|
35,502
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES:
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
|
|
6,282
|
|
|
|
5,800
|
Total liabilities
|
|
|
|
45,724
|
|
|
|
41,302
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY
|
|
|
|
154,396
|
|
|
|
151,237
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
$
|
200,120
|
|
|
$
|
192,539
|
|
|
|
|
|
|
|
|
|
|
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
|
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
September 30,
|
|
|
|
|
2013
|
|
|
|
2012
|
NET SALES
|
|
|
$
|
104,348
|
|
|
|
$
|
91,237
|
|
COST OF GOODS SOLD
|
|
|
|
(80,703
|
)
|
|
|
|
(70,136
|
)
|
GROSS MARGIN
|
|
|
|
23,645
|
|
|
|
|
21,101
|
|
SELLING, GENERAL AND ADMINISTRATIVE
|
|
|
|
(18,209
|
)
|
|
|
|
(16,710
|
)
|
OPERATING INCOME
|
|
|
|
5,436
|
|
|
|
|
4,391
|
|
INTEREST AND OTHER INCOME
|
|
|
|
502
|
|
|
|
|
161
|
|
INCOME BEFORE INCOME TAXES
|
|
|
|
5,938
|
|
|
|
|
4,552
|
|
INCOME TAX PROVISION
|
|
|
|
(2,170
|
)
|
|
|
|
(1,680
|
)
|
NET INCOME
|
|
|
$
|
3,768
|
|
|
|
$
|
2,872
|
|
|
|
|
|
|
|
|
|
|
AVERAGE NUMBER OF COMMON
|
|
|
|
|
|
|
|
|
SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
7,125
|
|
|
|
|
6,938
|
|
Diluted
|
|
|
|
7,432
|
|
|
|
|
7,241
|
|
EARNINGS PER SHARE OF COMMON STOCK:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.53
|
|
|
|
$
|
0.41
|
|
Diluted
|
|
|
$
|
0.51
|
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
|
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
September 30,
|
|
|
|
|
2013
|
|
|
|
2012
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
3,768
|
|
|
|
$
|
2,872
|
|
Adjustments to reconcile net income to net cash
|
|
|
|
|
|
|
|
|
(used in) provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
1,011
|
|
|
|
|
792
|
|
Deferred income taxes
|
|
|
|
(244
|
)
|
|
|
|
(19
|
)
|
Stock-based compensation expense
|
|
|
|
105
|
|
|
|
|
312
|
|
Provision for losses on accounts receivable
|
|
|
|
86
|
|
|
|
|
30
|
|
Gain on disposition of capital assets
|
|
|
|
(5
|
)
|
|
|
|
(1
|
)
|
Changes in operating assets and liabilities
|
|
|
|
(3,478
|
)
|
|
|
|
(7,503
|
)
|
Net cash provided by (used in) operating activities
|
|
|
|
1,243
|
|
|
|
|
(3,517
|
)
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net purchases of investments
|
|
|
|
(324
|
)
|
|
|
|
(159
|
)
|
Proceeds from sale of capital assets
|
|
|
|
11
|
|
|
|
|
1
|
|
Capital expenditures
|
|
|
|
(679
|
)
|
|
|
|
(3,005
|
)
|
Net cash used in investing activities
|
|
|
|
(992
|
)
|
|
|
|
(3,163
|
)
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Dividends paid
|
|
|
|
(1,066
|
)
|
|
|
|
(1,035
|
)
|
Proceeds from issuance of common stock
|
|
|
|
506
|
|
|
|
|
273
|
|
Net cash used in financing activities
|
|
|
|
(560
|
)
|
|
|
|
(762
|
)
|
|
|
|
|
|
|
|
|
|
Decrease in cash
|
|
|
|
(309
|
)
|
|
|
|
(7,442
|
)
|
Cash at beginning of period
|
|
|
|
10,934
|
|
|
|
|
13,970
|
|
Cash at end of period
|
|
|
$
|
10,625
|
|
|
|
$
|
6,528
|
|
|
|
|
|
|
|
|
|
|
Copyright Business Wire 2013