Flexsteel Industries Reports Second Quarter Fiscal Year Financial Results

February 7, 2023  by HFBusiness Staff in Business Strategy, Industry   

Key Results from the Second Quarter Ended December 31, 2022

+  Net sales for the quarter decreased 34.3% to $93.1 million compared to $141.7 million in the prior-year quarter.

+  Gross margin increased to 17.0% for the quarter compared to 6.7% in the prior-year quarter.

+  GAAP operating income of $3.8 million for the quarter compared to a loss of ($8.6) million in the prior-year quarter.

+  Non-GAAP¹ operating income of $1.0 million for the quarter compared to a loss of ($8.0) million in the prior-year quarter.

+  GAAP net income per diluted share of $0.53 for the current quarter compared to a net loss of ($1.13) in the prior-year quarter.

+  Non-GAAP¹ net income per diluted share of $0.08 for the quarter compared to a net loss of ($1.05) in the prior-year quarter.

+  Cash flow from operations of $24.6 million for the six months ended.

+  Debt repayments of $18.6 million for the six months ended.

¹GAAP to non-GAAP reconciliations follow the financial statements in this press release.

"Despite a challenging macro-economic environment, I am pleased with our second quarter results," said Jerry Dittmer, president, and CEO of Flexsteel Industries. "We delivered net sales for the quarter of $93.1 million, which was within our sales guidance of $87 to $97 million, as our growth initiatives helped partially offset the hurdles posed by high retail inventories and waning consumer demand.”

“Our adjusted operating income of $1.0 million, or 1.0% of revenue, was at the high end of our guidance range of negative 1.5% to positive 1.5%, as we effectively managed costs and successfully navigated an intensely competitive pricing environment. As important, we continued to generate strong cash flow and strengthen our balance sheet.”

In the first half of fiscal 2023, we generated $22.5 million of free cash flow (cash provided by operating activities less capital expenditures) and reduced bank debt by almost half, or $18.6 million.”

“We are focused on remaining financially agile given ongoing economic uncertainty while growing quarterly sales and expanding operating margins sequentially in the second half of the fiscal year."

Mr. Dittmer concludes, "While many furniture manufacturers are scaling back investments and resources in response to uncertain business conditions across the industry, we are making judicious investments to support our long-term strategic growth plans.”

“We recently realigned our organizational structure to reallocate more dedicated resources to new growth pursuits. In our core business, we’re expanding our sales force and adding sales leadership to continue gaining market share. We are also investing additional resources in product management, development, and engineering to increase our capacity for new product launches and improve our speed-to-market.”

“In the first half of the fiscal year, Flexsteel launched a new brand, Charisma™, and introduced two new innovative product groups which begin selling in the third quarter: flex™, our small parcel, contemporary modular furniture solution, and Zecliner™, our sleep recliner solution.”

“In addition, we have enhanced our production capabilities to offer some of the most competitive manufacturing lead-times in the industry and maintained dependable inventory levels.”

“We will continue to make smart, pragmatic investments to drive product innovation, operational efficiencies, and improve our customer experience, furthering our competitive position and driving us towards our long-term vision for the Company."