FLEXSTEEL INDUSTRIES INC [FLXS] Filings

10-Q 1 flxs-20221231x10q.htm 10-Q flxs-20221231x10q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

______________________________________

FORM 10-Q

______________________________________

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 2022

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number 0-5151

______________________________________

FLEXSTEEL INDUSTRIES, INC.

(Exact Name of Registrant as Specified in Its Charter)


Incorporated in the State of Minnesota	42-0442319
(State or other Jurisdiction of	(I.R.S. Identification No.)
Incorporation or Organization)

385 BELL STREET

DUBUQUE, IA 52001-0877

(Address of Principal Executive Offices) (Zip Code)

(563) 556-7730

(Registrant’s Telephone Number, Including Area Code)

______________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	FLXS	The Nasdaq Stock Market, LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such a shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one).

Large Accelerated Filer ¨ Accelerated Filer þ Non-Accelerated Filer ¨ Smaller Reporting Company þ Emerging Growth Company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ


Common Stock - $1.00 Par Value
Shares Outstanding as of February 8, 2023	5,177,386

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Table of Contents

FLEXSTEEL INDUSTRIES, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED DECEMBER 31, 2022



		Page
Part I – Financial Information
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of December 31, 2022, and June 30, 2022 (Unaudited)	3
	Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and six months ended December 31, 2022, and December 31, 2021 (Unaudited)	4
	Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended December 31, 2022, and December 31, 2021 (Unaudited)	5
	Consolidated Statements of Cash Flows for the six months ended December 31, 2022, and December 31, 2021 (Unaudited)	6
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17
Part II – Other Information
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 6.	Exhibits	19
Signatures		20

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Table of Contents

PART I FINANCIAL INFORMATION

Item 1.Financial Statements

FLEXSTEEL INDUSTRIES, INC., AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Amounts in thousands)



	December 31,		June 30,
	2022		2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,774	$	2,184
Trade receivables - less allowances: December 31, 2022, $2,880, June 30, 2022, $2,980		32,665		41,106
Inventories		110,825		141,212
Other		6,908		4,950
Assets held for sale		616		616
Total current assets		152,788		190,068
NONCURRENT ASSETS:
Property, plant and equipment, net		38,065		38,543
Operating lease right-of-use assets		69,201		38,189
Other assets		1,941		1,941
TOTAL ASSETS	$	261,995	$	268,741

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade	$	17,638	$	32,147
Current portion of operating lease liabilities		8,027		6,361
Accrued liabilities:
Payroll and related items		5,441		6,385
Insurance		2,636		2,158
Restructuring costs		—		1,290
Advertising		5,004		4,052
Environmental remediation		—		3,570
Other		6,956		8,664
Total current liabilities		45,702		64,627
LONG-TERM LIABILITIES:
Operating lease liabilities, less current maturities		64,480		33,992
Lines of credit		19,173		37,739
Other liabilities		553		823
Total liabilities		129,908		137,181

SHAREHOLDERS' EQUITY:
Common stock - $1 par value; authorized 15,000 shares; 8,239 shares issued and 5,201 outstanding as of December 31, 2022; 8,190 shares issued and 5,300 outstanding as of June 30, 2022		8,239		8,190
Additional paid-in capital		35,681		34,467
Treasury stock, at cost; 3,038 shares, and 2,890 shares as of December 31, 2022, and June 30, 2022, respectively		(68,598)		(66,372)
Retained earnings		156,765		155,275
Total shareholders' equity		132,087		131,560
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	261,995	$	268,741

See accompanying Notes to Consolidated Financial Statements (Unaudited).

Table of Contents

FLEXSTEEL INDUSTRIES, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(Amounts in thousands, except per share data)


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2022		2021		2022		2021
Net sales	$	93,137	$	141,668	$	188,821	$	279,356
Cost of goods sold		77,299		132,141		157,634		246,419
Gross margin		15,838		9,527		31,187		32,937
Selling, general and administrative expenses		14,864		17,541		29,438		36,326
Environmental remediation		(2,788)		—		(2,788)		—
Restructuring expense		—		622		—		774
Other expense		—		—		347		—
Gain on disposal of assets due to restructuring		—		—		—		(1,400)
Operating income (loss)		3,762		(8,636)		4,190		(2,763)
Interest expense		316		223		637		426
Other (income) expense		(1)		(104)		1		(102)
Income (loss) before income taxes		3,447		(8,755)		3,552		(3,087)
Income tax provision (benefit)		594		(1,210)		410		105
Net income (loss) and comprehensive income (loss)	$	2,853	$	(7,545)	$	3,142	$	(3,192)
Weighted average number of common shares outstanding:
Basic		5,259		6,682		5,285		6,758
Diluted		5,339		6,682		5,436		6,758
Earnings (loss) per share of common stock:
Basic	$	0.54	$	(1.13)	$	0.59	$	(0.47)
Diluted	$	0.53	$	(1.13)	$	0.58	$	(0.47)

See accompanying Notes to Consolidated Financial Statements (Unaudited).

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Table of Contents

FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

(Amounts in thousands)



	Six Months Ended December 31, 2022
	Total Par
	Value of		Additional
	Common		Paid-In		Treasury		Retained
	Shares ($1 Par)		Capital		Stock		Earnings		Total
Balance on June 30, 2022	$	8,190	$	34,467	$	(66,372)	$	155,275	$	131,560
Stock-based compensation		8		817		—		—		825
Vesting of restricted stock units and restricted shares		28		(378)		—		—		(350)
Treasury stock purchases		—		—		(403)		—		(403)
Cash dividends declared		—		—		—		(833)		(833)
Net income		—		—		—		289		289
Balance on September 30, 2022	$	8,226	$	34,906	$	(66,775)	$	154,731	$	131,088
Stock-based compensation		10		835		—		—		845
Vesting of restricted stock units and restricted shares		3		(60)						(57)
Treasury stock purchases		—		—		(1,823)		—		(1,823)
Cash dividends declared		—		—		—		(819)		(819)
Net income		—		—		—		2,853		2,853
Balance on December 31, 2022	$	8,239	$	35,681	$	(68,598)	$	156,765	$	132,087


	Six Months Ended December 31, 2021
	Total Par
	Value of		Additional
	Common		Paid-In		Treasury		Retained
	Shares ($1 Par)		Capital		Stock		Earnings		Total
Balance on June 30, 2021	$	8,133	$	34,015	$	(31,320)	$	157,140	$	167,968
Stock-based compensation		3		1,159		—		—		1,162
Vesting of restricted stock units and restricted shares		7		(257)		—		—		(250)
Treasury stock purchases		—		—		(1,915)		—		(1,915)
Cash dividends declared		—		—		—		(1,047)		(1,047)
Net income		—		—		—		4,353		4,353
Balance on September 30, 2021	$	8,143	$	34,917	$	(33,235)	$	160,446	$	170,271
Stock-based compensation		4		1,016		—		—		1,020
Vesting of restricted stock units and restricted shares		(2)		(42)		—		—		(44)
Stock options exercised		8		110		—		—		118
Treasury stock purchases		—		—		(7,743)		—		(7,743)
Cash dividends declared		—		—		—		(1,013)		(1,013)
Net income		—		—		—		(7,545)		(7,545)
Balance on December 31, 2021	$	8,153	$	36,001	$	(40,978)	$	151,888	$	155,064

See accompanying Notes to Consolidated Financial Statements (Unaudited).

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Table of Contents

FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Amounts in thousands)



	Six Months Ended
	December 31,
	2022		2021
OPERATING ACTIVITIES:
Net income (loss)	$	3,142	$	(3,192)
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation		2,277		2,662
Stock-based compensation expense		1,670		2,182
Change in provision for losses on accounts receivable		(100)		190
(Gain) on disposal of assets		—		(1,887)
Changes in operating assets and liabilities:
Trade receivables		8,541		5,795
Inventories		30,387		(17,917)
Other current assets		(1,958)		1,021
Other assets		—		(508)
Accounts payable - trade		(14,132)		(29,521)
Accrued liabilities		(4,914)		720
Other long-term liabilities		(271)		(543)
Net cash provided by (used in) operating activities		24,642

FLEXSTEEL INDUSTRIES INC [FLXS] Filings
10-Q	[2023-02-08]
10-Q	[2022-10-31]
10-K	[2022-08-26]
10-Q	[2022-04-29]
10-Q	[2022-01-28]
10-Q	[2021-10-29]
10-K	[2021-09-08]
10-Q	[2021-04-30]
10-Q	[2021-01-29]
10-Q	[2020-10-30]
10-K	[2020-08-31]
10-Q	[2020-05-01]
10-Q	[2020-01-31]
10-Q	[2019-10-31]
10-K	[2019-09-13]
10-Q	[2019-05-02]
10-Q	[2019-02-06]
10-Q	[2018-10-30]
10-K	[2018-09-06]
10-Q	[2018-05-02]
10-Q	[2018-01-30]
10-Q	[2017-10-25]
10-K	[2017-08-22]
10-Q	[2017-04-26]
10-Q	[2017-02-08]
10-Q	[2016-10-25]
10-K	[2016-08-24]
10-Q	[2016-04-22]
10-Q	[2016-02-09]
10-Q	[2015-10-21]
10-K	[2015-08-28]
10-Q	[2015-04-23]
10-Q	[2015-02-09]
10-Q	[2014-10-17]
10-K	[2014-08-28]
10-Q	[2014-04-22]
10-Q	[2014-02-10]
10-Q	[2013-10-18]
10-K	[2013-08-23]
10-Q	[2013-04-18]
10-Q	[2013-02-08]
10-Q	[2012-10-19]
10-K	[2012-08-22]
10-Q	[2012-04-19]
10-Q	[2012-02-07]