Flexsteel Industries Reports Record Income
Flexsteel Industries Inc., a Dubuque, Iowa-based supplier to the RV industry, reported record net income for the fiscal year ended June 30 of $10.8 million, compared to a net loss of $1.5 million in the prior year.
Net income for the quarter ended June 30 was a record $4.1 million or 61 cents per share, compared to net income of $800,000 or 12 cents per share in the prior year quarter.
Net sales for the fiscal year ended June 30 were $326.5 million, compared to $324.2 million in the prior fiscal year, an increase of 1%. Net sales for the quarter ended June 30 were $85.6 millionm compared to the prior year quarter of $74.6 million, an increase of 15%.
For the fiscal year June 30, 2010, residential net sales were $246.0 million, compared to $230.7 million for the year ended June 30, 2009, an increase of 7%. Commercial net sales were $80.5 million for the year ended June 30, 2010, a decrease of 14% from net sales of $93.5 million for the year ended June 30, 2009.
For the quarter ended June 30, residential net sales were $65.7 million, compared to the prior year quarter of $57.0 million, an increase of 15%. Commercial net sales were $19.9 million for the quarter ended June 30, compared to $17.6 million in the prior year quarter, an increase of 13%.
The company’s operating income improved by $19.8 million in fiscal year 2010 in comparison to the prior year. The company benefited from strategies implemented and actions taken during fiscal year 2009 including consolidation of manufacturing operations and workforce reductions that brought production capacity and fixed overhead more in line with current product demand.
During the prior fiscal year the company recorded pre-tax charges of approximately $2.6 million related to facility consolidation and employee separation costs. Companywide employment was reduced approximately 30% through plant closures and workforce reductions and remains at these reduced levels. These factors contributed significantly to gross margin improvement and selling, general and administrative expense reductions.
“We enter the 2011 fiscal year with a strong balance sheet reflecting working capital in excess of $90.0 million and no bank borrowings,” said CFO Timothy Hall. “We had an increase in sales volume for the current quarter over the prior year quarter, and anticipate modest improvement in sales volume will continue in fiscal 2011.
“We believe that we have the necessary manufacturing capacity, importing capability and fixed cost controls in place to meet current and expected demand for our products,” he explained. “However, we are experiencing selected cost increases on various manufacturing component materials and increases on ocean freight rates in comparison to prior year rates.
“Our residential product category has performed well in relation to our competition, and we anticipate continued improvement in the residential sales category. However, residential furniture remains a highly deferrable item and can be adversely impacted by factors, such as, low levels of consumer confidence, a depressed market for housing, limited consumer credit and high unemployment.”
“Demand for our commercial product shipments fell considerably as the U.S. economy contracted and credit tightened,” Hall added. “While we believe that commercial product sales are at or near the bottom of the downward cycle and should level off, we do not anticipate significant improvements in commercial markets before the second half of fiscal year 2011.
“We remain committed to our core strategies, which include a wide range of quality product offerings and price points to the residential and commercial markets, combined with a conservative approach to business. We will maintain our focus on a strong balance sheet through emphasis on cash flow and improving profitability. We believe these core strategies will be in the best interest of our shareholders in the longer term.”