Flexsteel Industries, Inc., one of the largest manufacturers, importers, and marketers of residential furniture in the U.S., announced its first-quarter fiscal 2025 results.
Key Results for Q1, Ended September 30, 2024:
- Net Sales: $104.0 million, up 9.9% from $94.6 million in the same quarter last year, marking the fourth consecutive quarter of year-over-year growth.
- Sales Orders: $100.8 million, a 9.4% increase compared to the prior year.
- Gross Margin: Increased to 21.5%, up from 19.5% last year.
- GAAP Operating Income: $6.0 million (5.8% of net sales) compared to $1.9 million (2.0% of net sales) in the prior year.
- GAAP Net Income: $0.74 per diluted share, up from $0.14 in the prior year.
Management Commentary:
Derek Schmidt, President and CEO of Flexsteel, expressed satisfaction with the strong performance, despite challenging industry conditions. He noted that the 10% sales growth is the company’s fourth consecutive quarter of mid-single to low-double-digit year-over-year growth, driven by market share gains and expansion into new markets. Investments in product development, innovation, and customer experience fueled this momentum.
Schmidt highlighted profitability improvements, with operating margins rising to 5.8%, driven by sales leverage, operational efficiency, and product portfolio management. He emphasized the company’s readiness to continue profitable growth, supported by robust manufacturing and distribution capacities.
Operating Results for Q1:
- Net Sales: $104.0 million, up 9.9% from last year, led by a 13.3% increase in retail store sales. However, e-commerce sales declined by 13.3%.
- Gross Margin: Rose to 21.5%, mainly due to sales leverage, supply chain savings, and effective product management.
- SG&A Expenses: Decreased to 15.7% of net sales, compared to 17.4% last year, due to higher sales volume and structural cost savings.
- Operating Income: $6.0 million, compared to $1.9 million last year.
- Tax Expense: $1.9 million, with an effective tax rate of 31%, down from 44.2% last year due to lower non-deductible expenses and higher profits.
Liquidity:
Flexsteel ended the quarter with $5.7 million in cash, $3.6 million in credit line balance, and $98.3 million in working capital. The company had $54.9 million available under its secured line of credit.
Financial Outlook:
- Sales Growth: Updated to 3.5% to 6.5% for fiscal year 2025, up from the previous 2% to 6% range.
- Operating Margin: Increased to a range of 5.8% to 6.5%.
Sales and Operating Margin Guidance:
- Q2 Fiscal 2025: $103–107 million in sales, 5.5%–6.5% operating margin.
- Full Fiscal Year 2025: $427–440 million in sales, 5.8%–6.5% operating margin.
Conference Call Details:
Flexsteel will host a conference call on October 22, 2024, at 8:00 a.m. Central Time to discuss these results. Access is available via webcast or by phone with replay options available through October 29, 2024.
