Published: February 03, 2011
Flexsteel Announces Second Quarter and Year-To-Date Fiscal 2011 Operating Results
DUBUQUE, Iowa - (BUSINESS WIRE) - Flexsteel Industries, Inc. (NASDAQ:FLXS) today reported results of
operations for its second quarter and fiscal year-to-date December 31,
2010.
The Company reported net sales for the quarter ended December 31, 2010
of $82.8 million compared to $83.5 million in the prior year quarter.
The Company reported net income for the current quarter of $2.1 million
or $0.31 per share compared to net income of $3.0 million or $0.45 per
share in the prior year quarter. During the current year quarter the
Company completed the closing of a manufacturing facility and recorded a
pre-tax charge to cost of goods sold of $0.6 million to write-down
related inventory.
For the six months ended December 31, 2010, the Company reported net
sales of $170.1 million compared to the prior year sales of $159.5
million, an increase of 6.6%. The Company reported net income for the
current six-month period of $4.5 million or $0.65 per share compared to
a net income of $4.3 million or $0.66 per share in the prior year
period. The current year six-month period includes a pre-tax charge of
approximately $1.0 million to facility closing costs for employee
separation and other closing costs, and an inventory write-down to cost
of goods sold of $0.6 million related to closing the manufacturing
facility described above.
For the quarter ended December 31, 2010, residential net sales were
$63.5 million, an increase of 1.5% from the prior year quarter net sales
of $62.6 million. Commercial net sales were $19.3 million compared to
$20.9 million in the prior year quarter, a decrease of 7.8%.
For the six months ended December 31, 2010, residential net sales were
$128.8 million compared to residential net sales of $118.8 million in
the six months ended December 31, 2009, an increase of 8.4%. Commercial
net sales were $41.3 million for the six months ended December 31, 2010
compared to $40.7 million for the six months ended December 31, 2009, an
increase of 1.6%.
Gross margin for the quarter ended December 31, 2010 was 22.7% compared
to 24.0% in the prior year quarter. For the six months ended December
31, 2010, the gross margin was 22.6% compared to 22.9% for the prior
year six-month period. Gross margin for the quarter and six-month period
was adversely impacted by inventory write-down associated with the
facility closing.
Selling, general and administrative expenses for the quarter ended
December 31, 2010 were $15.5 million or 18.7% of net sales compared to
$15.3 million or 18.3% of net sales in the prior year quarter due to
increases in bad debt and selling costs on slightly lower sales. For the
six months ended December 31, 2010, selling, general and administrative
expenses were $30.4 million or 17.9% of net sales compared to $29.4
million or 18.4% of net sales in the prior year six-month period
reflecting better absorption of fixed costs.
Working capital (current assets less current liabilities) at December
31, 2010 was $95.4 million. Net cash provided by operating activities
was $0.2 million during the six months ended December 31, 2010. Net
income of $4.5 million and accounts receivables reduction of $2.5
million were offset by a $5.3 million increase in inventory and lower
accrued liabilities.
Capital expenditures were $0.6 million during the first six months of
fiscal year 2011. Depreciation expense was $1.4 million and $1.5 million
in the six-month periods ended December 31, 2010 and 2009, respectively.
The Company expects that capital expenditures will be less than $2.5
million for the remainder of the fiscal year.
All earnings per share amounts are on a diluted basis.
Outlook
Our balance sheet remains
strong reflecting working capital in excess of $95 million and no bank
borrowings. We had a sales increase for the current year over the prior
year due in part to a strong backlog going into the year. Our
residential furniture incoming order rate slowed during the first
quarter, but improved slightly as we moved through the second quarter.
Commercial product sales continue at low levels and we do not anticipate
significant improvements in the second half of fiscal year 2011. The
Company is beginning to see pricing pressures on certain raw materials
and finished products. At this time we are unable to determine what the
impact will be on our gross margin.
We remain committed to our 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 4, 2011, at 10:30 a.m. Central Time. To
access the call, please dial 1-866-830-5279 and provide the operator
with ID# 29493988. A replay will be available for two weeks beginning
approximately two hours after the conclusion of the call by dialing
1-800-642-1687 and entering ID# 29293988.
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
in this press release. 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, the
effectiveness of new product introductions and distribution channels,
the product mix of sales, pricing pressures, the cost of raw materials
and fuel, foreign currency valuations, actions by governments including
taxes and tariffs, inflation, the amount of sales generated and the
profit margins thereon, competition (both foreign and domestic), changes
in interest rates, credit exposure with customers and general economic
conditions. Any forward-looking statement speaks only as of the date of
this press release. We specifically decline to undertake any obligation
to publicly revise any forward-looking statements that have been made to
reflect events or circumstances after the date of such statements or to
reflect the occurrence of anticipated or unanticipated events.
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
|
2010
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
7,160
|
|
$
|
8,278
|
|
Trade receivables, net
|
|
|
32,454
|
|
|
35,748
|
|
Inventories
|
|
|
77,907
|
|
|
72,637
|
|
Other
|
|
|
5,258
|
|
|
5,126
|
|
Total current assets
|
|
|
122,779
|
|
|
121,789
|
|
|
|
|
|
|
|
|
|
NONCURRENT ASSETS:
|
|
|
|
|
|
|
|
Property, plant, and equipment, net
|
|
|
20,669
|
|
|
21,614
|
|
Other assets
|
|
|
15,578
|
|
|
14,267
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
159,026
|
|
$
|
157,670
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
Accounts payable - trade
|
|
$
|
10,076
|
|
$
|
10,815
|
|
Accrued liabilities
|
|
|
17,316
|
|
|
20,174
|
|
Total current liabilities
|
|
|
27,392
|
|
|
30,989
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES:
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
|
9,341
|
|
|
9,069
|
|
Total liabilities
|
|
|
36,733
|
|
|
40,058
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
122,293
|
|
|
117,612
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
159,026
|
|
$
|
157,670
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
2010
|
|
|
2009
|
|
2010
|
|
|
2009
|
|
NET SALES
|
|
$
|
82,821
|
|
|
$
|
83,524
|
|
$
|
170,051
|
|
|
$
|
159,465
|
|
|
COST OF GOODS SOLD
|
|
|
(63,996
|
)
|
|
|
(63,483
|
)
|
|
(131,620
|
)
|
|
|
(122,868
|
)
|
|
GROSS MARGIN
|
|
|
18,825
|
|
|
|
20,041
|
|
|
38,431
|
|
|
|
36,597
|
|
|
SELLING, GENERAL AND
ADMINISTRATIVE
|
|
|
(15,508
|
)
|
|
|
(15,263
|
)
|
|
(30,406
|
)
|
|
|
(29,404
|
)
|
|
FACILITY CLOSING COSTS
|
|
|
--
|
|
|
|
--
|
|
|
(1,016
|
)
|
|
|
--
|
|
|
OPERATING INCOME
|
|
|
3,317
|
|
|
|
4,778
|
|
|
7,009
|
|
|
|
7,193
|
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
|
14
|
|
|
|
91
|
|
|
115
|
|
|
|
123
|
|
|
Interest expense
|
|
|
--
|
|
|
|
(95
|
)
|
|
--
|
|
|
|
(233
|
)
|
|
Total
|
|
|
14
|
|
|
|
(4
|
)
|
|
115
|
|
|
|
(110
|
)
|
|
INCOME BEFORE INCOME TAXES
|
|
|
3,331
|
|
|
|
4,774
|
|
|
7,124
|
|
|
|
7,083
|
|
|
INCOME TAX PROVISION
|
|
|
(1,200
|
)
|
|
|
(1,810
|
)
|
|
(2,650
|
)
|
|
|
(2,740
|
)
|
|
NET INCOME
|
|
$
|
2,131
|
|
|
$
|
2,964
|
|
$
|
4,474
|
|
|
$
|
4,343
|
|
|
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
6,691
|
|
|
|
6,588
|
|
6,676
|
|
|
|
6,582
|
|
|
Diluted
|
|
|
6,924
|
|
|
|
6,627
|
|
6,881
|
|
|
|
6,621
|
|
|
EARNINGS PER SHARE OF
COMMON STOCK:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.32
|
|
|
$
|
0.45
|
$
|
0.67
|
|
|
$
|
0.66
|
|
|
Diluted
|
|
$
|
0.31
|
|
|
$
|
0.45
|
$
|
0.65
|
|
|
$
|
0.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2010
|
|
|
2009
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
4,474
|
|
|
$
|
4,343
|
|
|
Adjustments to reconcile net income to net cash
provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
Depreciation
|
|
|
1,408
|
|
|
|
1,545
|
|
|
Deferred income taxes
|
|
|
(498
|
)
|
|
|
(922
|
)
|
|
Stock-based compensation expense
|
|
|
699
|
|
|
|
431
|
|
|
Provision for losses on accounts receivable
|
|
|
800
|
|
|
|
640
|
|
|
Gain on disposition of capital assets
|
|
|
(8
|
)
|
|
|
(6
|
)
|
|
Changes in operating assets and liabilities
|
|
|
(6,633
|
)
|
|
|
11,751
|
|
|
Net cash provided by operating activities
|
|
|
242
|
|
|
|
17,782
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Net sales of investments
|
|
|
(189
|
)
|
|
|
(292
|
)
|
|
Proceeds from sale of capital assets
|
|
|
42
|
|
|
|
11
|
|
|
Capital expenditures
|
|
|
(585
|
)
|
|
|
(923
|
)
|
|
Net cash used in investing activities
|
|
|
(732
|
)
|
|
|
(1,204
|
)
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Net repayment of borrowings
|
|
|
--
|
|
|
|
(5,000
|
)
|
|
Dividends paid
|
|
|
(834
|
)
|
|
|
(658
|
)
|
|
Proceeds from issuance of common stock
|
|
|
206
|
|
|
|
241
|
|
|
Net cash used in financing activities
|
|
|
(628
|
)
|
|
|
(5,417
|
)
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in cash and cash equivalents
|
|
|
(1,118
|
)
|
|
|
11,161
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
8,278
|
|
|
|
1,714
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
7,160
|
|
|
$
|
12,875
|
|
Flexsteel Industries, Inc., Dubuque, IA
Timothy E. Hall, Chief
Financial Officer, 563-585-8392
Copyright © 2012, Business Wire, Inc., All rights reserved. Copyright © 2012, NewsBlaze, Daily News
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