by The company’s 4th-quarter increase was driven by sales at brick-and-mortar stores and offset by an 11.7% drop in e-commerce
DUBUQUE, Iowa — Flexsteel Inds. reported an increase in net sales for the its fourth fiscal quarter and full fiscal year ended June 30.
The company also remained profitable for both periods, although its net income for the quarter was less than half reported for the same period last year.
For the quarter, the company reported net sales of $110.8 million, up 4.7% compared to $105.8 million in the same period last year. The company said the increase was driven by $6.7 million in higher furniture sales sold through retail stores, a 7.3% increase “led by unit volume and product mix.”
Meanwhile, sales of products sold through e-commerce channels decreased by $1.7 million, or 11.7%, compared to the fourth quarter of the prior year. The company noted that lower e-commerce sales were driven by softer consumer demand.
During the quarter, net income totaled $4.9 million, or 89 cents per share, compared to net income of $10.2 million, or $1.91 per share, the same period last year.
For the full year, the company reported net sales of $412.8 million, up 4.8% from $393.7 million the prior fiscal year. Net income for the year was $10.5 million, or $1.91 per share, compared to $14.8 million, or $2.74 per share, the same period last year.
Other highlights of the report were as follows:
+ The company said that its gross margin for the quarter ended was 21.3%, compared to 20% for the prior-year quarter, up 130 basis points. This 130-bps increase, the company said, was primarily due to “fixed cost leverage on higher sales, supply chain cost savings and efficiency improvements, and product portfolio management partially offset by higher ocean freight costs.” Its gross margin for the year was 21.1% compared to 18% the prior year.
+ Selling, general and administrative expense was 17% of net sales for the quarter compared to 16% in the prior-year quarter. The current quarter includes $1.5 million in non-recurring stock-based compensation expense, or 1.4% of net sales, related to the re-valuation of previously awarded equity grants to Flexsteel’s former CEO Jerry Dittmer. The company said that the number of stock grants previously awarded to Dittmer under the company’s long-term incentive plans were reduced based on a time proration of his employment from grant date through his retirement date with the company.
+ GAAP operating income totaled $7.6 million, or 6.9% of net sales for the fourth quarter and $17.1 million, or 4.1% of net sales for the year. This compares to $4.2 million, or 4% of net sales in the prior-year quarter and $10.5 million, or 2.7% of net sales, for the prior year.
+ Adjusted operating income was $6.2 million, or 5.6% of net sales for the fourth quarter and $18.3 million, or 4.4% of net sales for the year compared to $4.2 million, or 4% of net sales, in the prior-year quarter and $8.1 million, or 2.1% of net sales for the prior year.
+ The company reported $7.5 million in cash flow from operations in the fourth quarter and $31.9 million for the year.
+ It also reported debt repayments of $23.5 million for the year, or an 83% reduction in borrowings under its line of credit.
+ The company said it ended the quarter with a cash balance of $4.8 million, working capital (current assets less current liabilities) of $95.0 million, and availability of approximately $55.2 million under its secured line of credit.
+ Capital expenditures for the year ended June 30, 2024, totaled $4.8 million.
“I am extremely pleased with our fourth-quarter results,” said Derek Schmidt, president and chief executive officer. “Despite continued challenging conditions for our industry, we are executing well and delivered 4.7% sales growth in the quarter which represents our third consecutive quarter of mid- to high-single-digit year-over-year growth. Our strategies to gain share in our core markets and pursue new growth in expanded markets are working due to our investments in innovation, new product development, customer experience and marketing.”
“At the same time, we continue to improve our profitability and achieved a third consecutive quarter of sequential quarter-over-quarter adjusted operating margin improvement,” he added. “The keys to our consistent profit improvement have been our sales growth, strong operational execution, cost savings and product portfolio management, all of which have strong momentum and will continue to be catalysts for continued margin expansion.”
He said that the organization also continues to manage working capital and cash effectively, “generating $7.5 million in operating cash flow and reducing debt by $9.4 million in the quarter.”
“I’m very encouraged by these fourth-quarter results and excited about the direction we are headed,” Schmidt said. “In a period where many industry participants continue to realize meaningful year-over-year declines in both sales and profits, Flexsteel is financially strong, growing sales, improving profitability, generating cash and aggressively investing for the future. While we expect industry headwinds will likely remain during our fiscal year 2025, our team is hyper-focused on continuing our sales growth and profit improvement momentum despite these challenges. I remain confident in our team and its ability to continue creating significant value for our customers and shareholders in both the near and long term.”
