Flexsteel Reports Net Income Increase For Quarter
Furniture World Magazine
Flexsteel Industries, Inc. reported sales and earnings for its first fiscal quarter ended September 30, 2007.
The Company reported net sales for the quarter ended September 30, 2007 of $100.9 million, comparable to the prior year quarter of $101.3 million. Net income for the current quarter was $1.2 million or $0.18 per share compared to $0.6 million or $0.09 per share in the prior year quarter.
For the quarter ended September 30, 2007, residential net sales were $62.7 million, an increase of 2% from the prior year quarter net sales of $61.8 million. Recreational vehicle net sales were $15.7 million, a decrease of 1% from the prior year quarter net sales of $15.9 million. Commercial net sales were $22.5 million compared to $23.6 million in the prior year quarter, a decrease of 5%. The decrease in commercial net sales is primarily due to a slowdown of orders for our hospitality products.
Gross margin for the quarter ended September 30, 2007 was 19.6% compared to 18.2% in the prior year quarter. The gross margin improvement is primarily due to the impact of changes in product mix and increased cost control.
Selling, general and administrative expenses increased by approximately $0.3 million in comparison to the prior year quarter, representing 17.4% and 17.1% of net sales for the quarters ended September 30, 2007 and 2006, respectively.
Working capital (current assets less current liabilities) at September 30, 2007 was $100.9 million. Net cash used in operating activities was $0.9 million at September 30, 2007. Net cash provided by operating activities was $4.9 million at September 30, 2006.
Capital expenditures were $0.4 million for the quarter ended September 30, 2007. Depreciation and amortization expense was $1.2 million and $ 1.4 million for the fiscal quarters ended September 30, 2007 and 2006, respectively. The Company expects that capital expenditures will be approximately $2.5 million for the remainder of the 2008 fiscal year.
All earnings per share amounts are on a diluted basis.
Outlook: Although industry-wide trends indicate a soft market environment for residential products, orders for the Company’s residential products have remained constant throughout the first fiscal quarter. The Company expects order levels to remain comparable to the prior year levels throughout fiscal year 2008. However, further industry-wide declines could result in lower order levels for the Company. Orders for recreational vehicle products continue to be down, and we expect this to continue through our third fiscal quarter ending March 31, 2008, at which time we will be able to better evaluate the spring and summer selling season. Our orders for products into commercial hospitality applications slowed significantly in the first quarter of the 2008 fiscal year as compared to the relatively high levels experienced in the first quarter of fiscal year 2007, and we expect orders to be lower than the prior year period into the second half of fiscal year 2008. The Company anticipates continued modest increases in commercial office orders and shipments through the balance of fiscal year 2008.
The Company continues to explore cost control opportunities in all facets of its business. The Company believes it has the necessary inventories, product offerings and marketing strategies in place to take advantage of opportunities for expansion of market share in certain markets, such as commercial office and hospitality. The Company anticipates continuing its strategy of providing furniture from a wide selection of domestically manufactured and imported product lines.
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 http://www.flexsteel.com.