Flexsteel reports strong 2Q preliminary results

A vignette showcasing Flexsteel Industries' bedroom furniture offerings.

Photo By Flexsteel Industries

DUBUQUE, Iowa -- Flexsteel Industries, Inc., one of the largest manufacturers, importers, and marketers of residential furniture products in the United States, released preliminary second quarter 2024 results that showed health sales growth, robust sales orders, and gross margin improvements. The rest of fiscal years 2024 and 2025 appear strong as well.

The company announced it will issue its final second quarter 2024 financial results after market close on Monday, February 5, 2024.

Preliminary Fiscal 2024 Second Quarter Financial Results

The company expects to report the following financial results for its second quarter ended December 31, 2023:

  • Healthy sales growth of 7.5%: Net sales for the quarter of $100.1 million compared to $93.1 million in the prior year quarter.
  • Robust sales orders of $104.8 million representing growth of $12.8M, or 13.9%, compared to prior year quarter.
  • Significant gross margin improvement to 21.9% compared to 17.0% in the prior year quarter.
  • Solid GAAP operating income of $4.6 million or 4.6% of net sales compared to $3.8 million or 4.0% of net sales in the prior year quarter.
    --Non-GAAP operating income of $4.6 million or 4.6% of net sales compared to $1.0 million or 1.0% of net sales in the prior year quarter.
  • GAAP net income per diluted share of $0.57 for the current quarter compared to net income of $0.53 in the prior year quarter.
    –Non-GAAP net income per diluted share of $0.57 for the quarter compared to non-GAAP net income of $0.08 in the prior year quarter.
  • Strong cash flow generation: cash flow from operations of $18.9 million for the quarter driven by higher profits and a $15.6 million reduction in inventories.
  • Strengthened balance sheet: Debt repayments of $15.1 million for the quarter, or a 46% reduction in borrowings under the line of credit.

“I am extremely pleased with our second quarter results. We are competing well, growing and gaining share, improving profitability, and generating cash to reduce debt and further strengthen our balance sheet,” said Jerry Dittmer, CEO of Flexsteel Industries, Inc. “While macroeconomic conditions combined with discretionary consumer spending shifts away from home furnishings continue to present headwinds to the industry, our growth initiatives are enabling us to profitably grow despite difficult conditions. As a result, we delivered strong net sales of $100.1 million, or growth of 7.5%, which was slightly above our sales guidance range of $94 to $100 million. Comparisons to prior year continued to be adversely impacted by the elimination of ocean freight surcharges in the prior year when ocean container delivery costs were inflated. Excluding the approximately $3.5 million impact from surcharge reductions, growth from unit volume and sales mix was an impressive 11.7% in the quarter, reflecting our strong sales execution.”

Dittmer said the company was executing well operationally and leveraging the combined benefits of continued productivity and cost savings, which led to an operating margin of 4.6% in the second quarter that was a significant improvement compared to the first quarter and prior year quarter, and above our guidance range of 2 to 4%. "We also expect to further improve operating margins in the second half of fiscal year 2024 and fiscal year 2025."

“Our strategies are working, and we’re seeing the outcomes in our improved financial performance," he said. "While I’m encouraged by second quarter’s results, I’m more enthused about the results yet to come. Our organization is driven and executing well on multiple fronts which gives me confidence in our ability to continue to profitably grow and generate cash near-term, but more importantly, to generate significant value for our shareholders and customers long-term.”

Financial Outlook

 

Third Quarter

Fiscal 2024

Fourth Quarter

Fiscal 2024

Full Year

Fiscal 2025

Sales

$101 - 106 million

$107 - 112 million

$416 - 432 million

Sales Growth (vs. Prior Year)

2% to 7%

1% to 6%

2% to 6%

Operating Margin

4.5% to 5.5%

5.0% to 6.0%

5.5% to 6.5%

Free Cash Flow

$11 to 17 million (for 2nd half Fiscal 2024)

$20 to 30 million

Line of Credit Borrowings

$12 to 17 million

$0 to 10 million

$0

.

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Larry Adams | Editor

Larry Adams is a Chicago-based writer and editor who writes about how things get done. A former wire service and community newspaper reporter, Larry is an award-winning writer with more than three decades of experience. In addition to writing about woodworking, he has covered science, metrology, metalworking, industrial design, quality control, imaging, Swiss and micromanufacturing . He was previously a Tabbie Award winner for his coverage of nano-based coatings technology for the automotive industry. Larry volunteers for the historic preservation group, the Kalo Foundation/Ianelli Studios, and the science-based group, Chicago Council on Science and Technology (C2ST).