by DUBUQUE, Iowa — Full-line furniture resource Flexsteel reported a 34.3% decrease in net sales and an increase in net income for its fiscal second quarter ended Dec. 31, 2022.
Net sales were $93.1 million for the quarter, compared to $141.7 million for the same period a year earlier. Net income totaled $2.9 million, or 53 cents per share, compared to a loss of $7.6 million, or $1.13 per share a year earlier.
For the full first half, sales totaled $188.8 million, down 32.4% from $279.4 million in the same period a year earlier. Net income for the first half totaled $3.1 million, or 58 cents per share, compared to a loss of $3.2 million, or 47 cents per share the same period in 2021.
The company said the decline in revenues during the quarter occurred “as home furnishings sales have reverted to be in line with pre-pandemic volumes.” It went on to say that the decrease was driven by lower sales volume in home furnishings products sold through retail stores of $42.1 million compared to the prior-year quarter.
Sales of products sold through e-commerce channels decreased by $6.4 million compared to the same quarter a year earlier. At that time, the company said, sales were especially strong because of a surge in Covid-induced spending on residential furniture.
Other highlights of the report were as follows:
+ GAAP operating income totaled $3.8 million during the quarter, compared to a loss of $8.6 million in the prior-year quarter.
+ Non-GAAP income totaled $1 million during the quarter compared to a loss of $8 million in the prior-year quarter.
+ Cash flow from operations totaled $24.6 million for the six-month period.
+ Debt repayments totaled $18.6 million for the six-month period.
Flexsteel President and CEO Jerry Dittmer said that despite a challenging macro-economic environment, he was pleased with the second-quarter results.
“We delivered net sales for the quarter of $93.1 million, which was within our sales guidance of $87 (million) to $97 million, as our growth initiatives helped partially offset the hurdles posed by high retail inventories and waning consumer demand,” he said. “Our adjusted operating income of $1.0 million, or 1.0% of revenue, was at the high end of our guidance range of negative 1.5% to positive 1.5%, as we effectively managed costs and successfully navigated an intensely competitive pricing environment. As important, we continued to generate strong cash flow and strengthen our balance sheet. In the first half of fiscal 2023, we generated $22.5 million of free cash flow (cash provided by operating activities less capital expenditures) and reduced bank debt by almost half, or $18.6 million. We are focused on remaining financially agile given ongoing economic uncertainty while growing quarterly sales and expanding operating margins sequentially in the second half of the fiscal year.”
He added that Flexsteel also continues to make judicious investments to support its long-term strategic growth plans at a time when other manufacturers are scaling back.
“We recently realigned our organizational structure to reallocate more dedicated resources to new growth pursuits,” he said. “In our core business, we’re expanding our sales force and adding sales leadership to continue gaining market share. We are also investing additional resources in product management, development and engineering to increase our capacity for new product launches and improve our speed to market.”
“In the first half of the fiscal year, Flexsteel launched a new brand, Charisma, and introduced two new innovative product groups which begin selling in the third quarter: Flex, our small-parcel, contemporary modular furniture solution, and Zecliner, our sleep recliner solution,” Dittmer added. “In addition, we have enhanced our production capabilities to offer some of the most competitive manufacturing lead times in the industry and maintained dependable inventory levels. We will continue to make smart, pragmatic investments to drive product innovation, operational efficiencies and improve our customer experience, furthering our competitive position and driving us towards our long-term vision for the company.”
