FLEXSTEEL INDUSTRIES INC
For the period ended Sep 30, 2024. Filed Oct 23, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 23, 2024
FLXS$71.47-2.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-01.
0000950170-24-051378
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-23.
0000950170-24-116719
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 43 previous paragraphs and 34 current paragraphs.
15 unchanged; 14 reworded; 4 added; 11 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
Net cash provided by (used in) operating activities
Current report
Net cash provided by (used in) investing activities
Current report
For the three months ended September 30, 2024, net cash provided by investing activities was $0.7 million due to proceeds from corporate owned life insurance proceeds of $1.1 million, offset by capital expenditures of $0.4.
Current report
Net cash (used in) provided by financing activities
Removed paragraphs (11)
Previous report
During the quarter ended March 31, 2024, we incurred $2.6 million of restructuring expenses primarily for employee termination and facility closure costs as part of the previously announced closure of our Dublin, Georgia manufacturing facility. See Note 5, Restructuring, of the Notes to Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for more information.
Previous report
Results of Operations for theninem onthse nded March 31, 2024 and 2023
Previous report
Net sales were $301.9 million for the nine months ended March 31, 2024, compared to net sales of $287.9 million in the prior-year nine-month period, an increase of 4.9%. The increase in sales of $14.0 million was driven by a $16.1 million increase related to home furnishing products sold through retailers offset by a decrease of ($2.1) million for home furnishing products sold through e-commerce channels.
Previous report
Gross margin as a percent of net sales for the nine months ended March 31, 2024, was 21.1%, compared to 17.3% for the prior-year nine-month period, an increase of 380 bps. The 380-bps increase was primarily driven by the same factors discussed above for the quarter ended March 31, 2024.
Previous report
Selling, general and administrative expenses increased $5.6 million in the nine months ended March 31, 2024, compared to the prior-year nine-month period. SG&A as a percentage of sales was 17.1% in the nine months ended March 31, 2024, compared to the prior-year nine-month period of 16.0%. The 110-bps increase was primarily due to investments in growth initiatives and higher incentive compensation for the nine months ended March 31, 2024.
Previous report
During the nine months ended March 31, 2024, we incurred $2.6 million of restructuring expenses primarily for employee termination and facility closure costs as part of the previously announced closure of our Dublin, Georgia manufacturing facility. See Note 5, Restructuring, of the Notes to Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for more information.
Previous report
During the nine months ended March 31, 2023, the Company recorded income of $2.8 million related to the settlement of an environmental remediation liability. See Note 10, Commitments and Contingencies, of the Notes to Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for more information.
Previous report
Income tax expense was $2.5 million, or an effective rate of 30.8%, during the nine months ended March 31, 2024, compared to income tax expense of $0.8 million in the prior-year nine-month period, or an effective tax rate of 14.8%. The effective tax rate for the nine months ended March 31, 2023, was primarily impacted by nondeductible stock compensation, state taxes, the impacts associated with uncertain tax positions, and the impact of foreign operations.
Previous report
Net income was $5.6 million, or $1.04 per diluted share for the nine months ended March 31, 2024, compared to net income of $4.6 million, or $0.85 per diluted share in the prior-year nine-month period.
Previous report
For the nine months ended March 31, 2023, net cash used in investing activities was $3.6 million due to capital expenditures.
Previous report
For the nine months ended March 31, 2023, net cash used in financing activities was $26.6 million, primarily due to payments on lines of credit of $274.5 million, partially offset by proceeds from lines of credit of $254.5 million. In addition to the line of credit activity, net cash used in financing activities was also due to dividends paid of $3.2 million, $3.0 million for purchases of company stock, and $0.4 million for tax payments on employee vested restricted shares netted with proceeds from the issuance of common stock.
Reworded paragraphs (14)
Previous wording
The following table has been prepared as an aid in understanding the Company’s results of operations on a comparative basis for the three and nine months ended March 31, 2024 and 2023. The amounts presented are percentages of the Company’s net sales.
Current wording
The following table has been prepared as an aid in understanding the Company’s results of operations on a comparative basis for the three months ended September 30, 2024 and 2023. The amounts presented are percentages of the Company’s net sales.
Previous wording
Net sales were $107.2 million for the quarter ended March 31, 2024, compared to net sales of $99.1 million in the prior year quarter, an increase of 8.2%. The increase was driven by higher sales in home furnishings products sold through retail stores of $8.5 million, or 9.7%, led by unit volume increases and product mix. Sales of products sold through e-commerce channels decreased by ($0.4) million, or (3.6%), compared to the third quarter of the prior year. Lower sales in the e-commerce channel were driven by softer consumer demand and less promotional activity to improve overall profitability.
Current wording
Net sales were $104.0 million for the quarter ended September 30, 2024, compared to net sales of $94.6 million in the prior year quarter, an increase of 9.9%. The increase was driven by higher sales in home furnishings products sold through retail stores of $11.0 million, or 13.3%, led by unit volume increases 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. Lower sales in the e-commerce channel were driven by softer consumer demand.
Previous wording
Home furnishings backlog was $62 million as of the quarter ended March 31, 2024, a decrease of (1.6%) compared to $63 million in the prior year quarter.
Current wording
Home furnishings backlog was $61 million as of the quarter ended September 30, 2024, an increase of 27.1% compared to $48 million in the prior year quarter.
Previous wording
Gross margin as a percent of net sales for the quarter ended March 31, 2024, was 21.7%, compared to 18.8% for the prior year quarter, an increase of 290 basis points (“bps”). The 290-bps increase was primarily due to supply chain cost saving initiatives and fixed cost leverage on higher sales volume.
Current wording
Gross margin as a percent of net sales 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 due to sales growth leverage, supply chain cost savings and product portfolio management.
Previous wording
Selling, general and administrative (“SG&A”) expenses increased $1.2 million or 7.3% to $17.7 million in the third quarter ended March 31, 2024, as compared to $16.5 million in the prior year quarter. As a percentage of net sales, SG&A was 16.5% in the quarter ended March 31, 2024 compared to 16.7% of net sales in the prior year quarter. The 20-bps decrease was due to leverage on higher sales partially offset by investments in growth initiatives for the quarter ended March 31, 2024.
Current wording
Selling, general and administrative (“SG&A”) expenses decreased ($0.2) million to $16.3 million in the first quarter ended September 30, 2024, as compared to $16.5 million in the prior year quarter. As a percentage of net sales, SG&A was 15.7% in the quarter ended September 30, 2024 compared to 17.4% of net sales in the prior year quarter. The 170-bps decrease was due to leverage on higher sales and structural cost savings, partially offset by investments in growth initiatives for the quarter ended September 30, 2024.
Previous wording
Income tax expense was $0.9 million, or an effective rate of 32.2% for the quarter ended March 31, 2024, compared to an income tax expense of $0.4 million, or an effective rate of 21.0% during the quarter ended March 31, 2023. For the quarter ended March 31, 2024, the effective tax rate differs from the statutory tax rate of 21% due to nondeductible stock compensation, state taxes, the impacts associated with uncertain tax positions, and the impact of foreign operations.
Current wording
Income tax expense was $1.9 million, or an effective rate of 31.0% for the quarter ended September 30, 2024, compared to an income tax expense of $0.6 million, or an effective rate of 44.2% during the quarter ended September 30, 2023. For the quarter ended September 30, 2024, the effective tax rate differs from the statutory tax rate of 21% primarily due to state taxes and the impact of foreign operations.
Previous wording
Net income was $1.8 million, or $0.33 per diluted share for the quarter ended March 31, 2024, compared to net income of $1.5 million, or $0.28 per diluted share in the prior year quarter.
Current wording
Net income was $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.
Previous wording
Working capital (current assets less current liabilities) on March 31, 2024, was $96.2 million compared to $115.5 million on June 30, 2023. The $19.4 million decrease in working capital was primarily due to a decrease in inventory of $25.5 million, an increase in other current liabilities of $1.3 million, and an increase of operating lease liabilities of $0.4 million partially offset by a decrease in accounts payable of $3.1 million, an increase in other current assets of $2.8 million, an increase in cash of $1.2 million, and an increase in net trade receivables of $0.7 million. Refer to discussion of working capital changes below, under Net cash provided by operating activities. Capital expenditures were $4.4 million during the nine months ended March 31, 2024.
Current wording
Working capital (current assets less current liabilities) on September 30, 2024, was $98.3 million compared to $95.0 million on June 30, 2024. The $3.3 million increase in working capital was primarily due to a decrease in payroll and related liabilities of $5.9 million, a decrease in accounts payable of $1.0 million, and a decrease in other current liabilities of $0.3 million offset by an increase in cash of $1.0 million and a decrease in net trade receivables of $4.8 million. Refer to discussion of working capital changes below, under Net cash provided by (used in) operating activities. Capital expenditures were $0.4 million during the three months ended September 30, 2024.
Previous wording
For the nine months ended March 31, 2023, net cash provided by operating activities was $30.5 million, which primarily consisted of net income of $4.6 million, adjusted for non-cash items including depreciation of $3.5 million, stock-based compensation of $2.5 million, and a decrease in provisions for losses of $0.1 million. Net cash provided by operating assets and liabilities was $20.0 million and was primarily due to a decrease in inventories of $27.9 million, and a decrease in trade receivables of $4.7 million, partially offset by a decrease in accrued liabilities of $3.4 million, a decrease in payables of $6.3 million, a decrease in other current assets of $2.6 million, and a decrease in other long-term liabilities of $0.2 million.
Current wording
For the three months ended September 30, 2024, net cash provided by operating activities was $2.4 million, primarily due to a decrease in trade receivables of $4.8 million, net income of $4.1 million, adjustments for non-cash items including stock-based compensation of $1.1 million and depreciation of $0.9 million, and a decrease in inventory of $0.7 million offset by a decrease in accrued liabilities of $6.0 million, an increase in other current assets of $1.8 million, a decrease in accounts payable of $1.0 million and a decrease of other assets and liabilities of $0.4 million.
Previous wording
For the nine months ended March 31, 2024, net cash provided by operating activities was $24.4 million, primarily due to a decrease in inventory of $25.5 million, net income of $5.6 million, an increase in accrued liabilities of $1.6 million, an increase in other long-term liabilities of $0.1 million, and adjustments for non-cash items including depreciation of $2.9 million, stock-based compensation of $2.7 million, and deferred income taxes of $0.1 million partially offset by an increase in other assets of $7.6 million, a decrease in accounts payable of $3.0 million, an increase in other current assets of $2.8 million, an increase in trade receivables of $0.6 million and an increase in trade receivable provision of $0.1 million.
Current wording
For the three months ended September 30, 2023, net cash used by operating activities was $1.8 million, primarily due to a decrease in accrued liabilities of $4.5 million, a decrease in accounts payable of $3.7 million, a decrease in other current assets of $2.8 million, and a decrease in other assets of $1.4 million partially offset by an increase in trade receivables of $6.7 million, an increase in inventory of $1.3 million, net income of $0.8 million, and adjustments for non-cash items including depreciation of $0.9 million and stock-based compensation of $0.9 million.
Previous wording
For the nine months ended March 31, 2024, net cash used in investing activities was $4.4 million due to capital expenditures.
Current wording
For the three months ended September 30, 2023, net cash used in investing activities was $1.4 million due to capital expenditures.
Previous wording
For the nine months ended March 31, 2024, net cash used in financing activities was $18.8 million, due to payments on the line of credit of $284.5 million partially offset by proceeds from the line of credit of $270.4 million, dividends paid of $2.4 million, $1.7 million paid for purchases of company stock, and $0.7 million paid for tax payments on employee vested restricted shares netted with proceeds from the issuance of common stock partially offset by proceeds from issuance of common stock of $0.1 million.
Current wording
For the three months ended September 30, 2023, net cash provided by financing activities was $2.7 million, due to proceeds from the line of credit of $101.3 million partially offset by payments on the line of credit of $96.6 million, dividends paid of $0.9 million, $0.6 million for tax payments on employee vested restricted shares netted with proceeds from the issuance of common stock, and $0.5 million for purchases of company stock..
Previous wording
As of March 31, 2024, there was $14.2 million outstanding under the Credit Agreement, exclusive of fees and letters of credit.
Current wording
As of September 30, 2024, there was $3.6 million outstanding under the Credit Agreement, exclusive of fees and letters of credit.
Previous wording
Letters of credit outstanding with the Lender as of March 31, 2024, totaled $1.1 million.
Current wording
Letters of credit outstanding with the Lender as of September 30, 2024, totaled $0.9 million.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
For the three months ended September 30, 2024, net cash used in financing activities was $2.1 million, due to payments on the line of credit of $104.1 million partially offset by proceeds from the line of credit of $102.9 million and dividends paid of $0.9 million.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Net cash provided by operating activities
Previous report — wording carried elsewhere
Net cash (used in) investing activities
Previous report — wording carried elsewhere
Net cash (used in) financing activities