by Reported $107.2 million in revenues exceeds prior guidance of $101 million to $106 million
DUBUQUE, Iowa — Full-line furniture manufacturer Flexsteel Industries reported an 8.2% increase in net sales for its fiscal third quarter 2024 ended March 31.
The company said net sales totaled $107.2 million, compared to $99.1 million in the same period last year. Net income also rose slightly to $1.8 million, or 33 cents per share, compared to $1.5 million, or 28 cents per share the same period last year. On an adjusted basis, net income was $3.6 million, or 67 cents per share, compared to adjusted net income of $1.5 million, also 28 cents per share last year.
The company said the increase in revenue was driven by higher sales of home furnishings products sold through retail stores totaling $8.5 million, up 9.7%, compared to a $400,000 decrease in sales of products sold through e-commerce channels. The company said this 3.6% decrease was driven by softer consumer demand.
The company also reported an increase in sales orders of $111.5 million, an increase of $12.2 million, or 12.3% compared to the same period last year.
In addition, gross margin rose to 21.7% compared to 18.8% in the prior year quarter, up 290 basis points. The company attributed this to fixed cost leverage on higher sales, supply chain cost savings, and efficiency improvement along with “ongoing product portfolio management.” The company added that GAAP operating income totaled $3 million, or 2.8% of net sales, compared to $2.1 million, or 2.1% of net sales the same period last year.
Adjusted operating income totaled $5.6 million, or 5.2% of net sales during the quarter compared to $2.1 million, or 2.1% of net sales the same period last year.
Meanwhile, SG&A expenses decreased to 16.5% of net sales during the quarter compared to 16.7% the same period last year. The company attributed this to “leverage on higher sales, partially offset by investments in growth initiatives and higher incentive compensation.”
CEO Jerry Dittmer said he was “extremely pleased with our third quarter results. While macroeconomic conditions continue to present headwinds in our industry, we continue to execute on our strategies, are outperforming the industry and are growing our top line, while improving our profitability.”
He noted that the sales growth exceed previous guidance of $101 million to $106 million.
“In addition, 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,” Dittmer said. “Excluding the approximately $1.5 million impact from surcharge reductions, growth from unit volume and sales mix was impressive at 9.9% in the quarter. This out-performance is a result of continued investment in new product development and innovation, coupled with an intense focus on our growth initiatives.”
He added that in terms of profitability, the company is “executing well operationally and leveraging the combined benefits of operational efficiency, cost savings and product life cycle management to meaningfully expand gross margin and improve operating income.”
He also noted that excluding $2.6 million in restructuring charges related to the closure of its Dublin, Georgia, facility, its operating margin was 5.2% of net sales in the quarter and “represented strong, sequential margin improvement versus the prior quarter.”
“Lastly, we are making good progress in improving working capital efficiency and optimizing our manufacturing network,” he added. “Given improved demand stability and better supplier lead times, we optimized and reduced our inventories by another $8.6 million in the third quarter which allowed us to reduce debt by an additional 21% in the quarter.”
“I’m very encouraged by these third quarter results and excited about the direction we are headed. Our strategies are working, and I am confident in our ability to continue creating significant value for our customers and shareholders in both the near and long-term.”
