Furniture supplier Flexsteel Industries Inc. today (Oct. 16) reported the “strongest first quarter” in the company’s history, buoyed by a 14% increase in sales.
During the fiscal first, ended Sept. 30, sales totaled $104.3 million as esidential sales increased approximately 16% to $84 million and commercial sales increased 8% to $20.3 million. Net income for the first fiscal quarter was $3.8 million, or 51 cents per share, compared to $2.9 million or 40 cents per share, for the prior year quarter.
Gross margin as a percent of net sales for the quarter was 22.7% compared to 23.1% for the prior year quarter. The decrease of 0.4% is primarily due to changes in product mix and price discounting on certain traditional case goods to improve operating efficiency. The discounting may continue for the remainder of the fiscal year as the company realigns inventory to focus on growth opportunities.
Selling, general and administrative (SG&A) expenses as a percent of net sales for the current quarter improved to 17.5% from 18.3% in the prior year quarter. The percentage decrease reflects fixed cost leverage on higher sales volume offset by increased legal costs of $0.4 million related to an Indiana civil lawsuit. In addition, the prior year quarter included approximately $0.5 million of executive transition costs.
Working capital (current assets less current liabilities) at Sept. 30 was $117.2 million compared to $113.7 million at June 30, 2013. Cash decreased by $0.3 million during the first fiscal quarter of 2014 with net cash provided by operating activities of $1.2 million, capital expenditures of $0.7 million and payment of dividends of $1.1 million.
The company expects that capital expenditures for the remainder of fiscal year 2014 will be approximately $3.5 million, primarily for delivery and manufacturing equipment and information technology infrastructure.
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