Flexsteel Industries Inc 10-Q for FY2021 Q3

Flexsteel Industries Inc (FLXS)

10-Q 2021-04-30 For: 2021-03-31

Added on April 10, 2026

About this 10-Q

Flexsteel Industries Inc filed this 10-Q on April 30, 2021, covering the quarter ended March 31, 2021 (FY2021 Q3).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $118.41M; up 19.8% from $98.82M a year earlier
Net income: $4.88M; compared with a net loss of $5.27M a year earlier
Diluted EPS: $0.67; compared with -$0.66 a year earlier

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


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


		Page
Part I – Financial Information
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of March 31, 2021 and June 30, 2020 (Unaudited)	3
	Consolidated Statements of Income for the three and nine months ended March 31, 2021 and March 31, 2020 (Unaudited)	4
	Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2021 and March 31, 2020 (Unaudited)	4
	Consolidated Statements of Changes in Shareholders’ Equity for the nine months ended March 31, 2021 and March 31, 2020 (Unaudited)	5
	Consolidated Statements of Cash Flows for the nine months ended March 31, 2021 and March 31, 2010 (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 2A.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 6.	Exhibits	18
Signatures		19



	March 31,		June 30,
	2021		2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	16,971	$	48,197
Trade receivables - less allowances: March 31, 2021, $3,050; June 30, 2020, $1,770		44,231		32,217
Inventories		109,448		70,565
Other		10,182		18,535
Assets held for sale		666		12,329
Total current assets		181,498		181,843
NONCURRENT ASSETS:
Property, plant and equipment, net		40,309		43,312
Operating lease right-of-use assets		28,539		8,683
Deferred income taxes		—		2,111
Other assets		1,384		1,310
TOTAL ASSETS	$	251,730	$	237,259

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade	$	31,798	$	27,747
Current portion of operating lease liabilities		5,741		4,408
Accrued liabilities:
Payroll and related items		4,914		3,275
Insurance		2,987		3,787
Restructuring costs		1,392		1,961
Advertising		4,730		3,823
Environmental remediation		3,570		3,600
Other		5,331		4,861
Total current liabilities		60,463		53,462
LONG-TERM LIABILITIES:
Operating lease liabilities, less current maturities		26,202		7,607
Other liabilities		1,539		685
Total liabilities		88,204		61,754

SHAREHOLDERS' EQUITY:
Common stock - $1 par value; authorized 15,000 shares; 8,125 shares issued and 6,875 outstanding as of March 31, 2021; 8,008 shares issued and 7,876 outstanding as of June 30, 2020		8,125		8,008
Additional paid-in capital		33,100		31,748
Treasury stock, at cost; 1,249 shares and 132 shares as of March 31, 2021 and June 30, 2020, respectively		(30,048)		(1,563)
Retained earnings		152,349		137,312
Total shareholders' equity		163,526		175,505
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	251,730	$	237,259


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2021		2020		2021		2020
Net sales	$	118,408	$	98,821	$	342,753	$	302,118
Cost of goods sold		95,284		84,973		272,436		254,999
Gross margin		23,124		13,848		70,317		47,119
Selling, general and administrative		16,292		20,115		49,378		55,678
Restructuring expense		480		2,377		2,724		13,448
Gain on disposal of assets due to restructuring		—		(302)		(5,881)		(19,269)
Operating income (loss)		6,352		(8,342)		24,096		(2,738)
Interest expense		—		(16)		—		(16)
Other income		59		135		270		328
Income (loss) before income taxes		6,411		(8,223)		24,366		(2,426)
Income tax provision (benefit)		1,533		(2,953)		7,159		(1,323)
Net income (loss)	$	4,878	$	(5,270)	$	17,207	$	(1,103)
Weighted average number of common shares outstanding:
Basic		6,998		7,965		7,316		7,955
Diluted		7,270		7,965		7,551		7,955
Earnings (loss) per share of common stock:
Basic	$	0.70	$	(0.66)	$	2.35	$	(0.14)
Diluted	$	0.67	$	(0.66)	$	2.28	$	(0.14)


Common Stock - $1.00 Par Value
Shares Outstanding as of April 27, 2021	6,853,593



	Nine Months Ended March 31, 2021
	Total Par
	Value of		Additional
	Common		Paid-In		Treasury		Retained
	Shares ($1 Par)		Capital		Stock		Earnings		Total
Balance at June 30, 2020	$	8,008	$	31,748	$	(1,563)	$	137,312	$	175,505
Stock-based compensation		2		954		—		—		956
Vesting of restricted stock units and restricted shares		55		(387)						(332)
Treasury stock purchases		—		—		(9,000)		—		(9,000)
Cash dividends declared		—		—		—		(383)		(383)
Net income		—		—		—		3,879		3,879
Balance at September 30, 2020	$	8,065	$	32,315	$	(10,563)	$	140,808	$	170,625
Stock-based compensation		10		1,017		—		—		1,027
Stock options exercised		7		41		—		—		48
Treasury stock purchases		—		—		(11,013)		—		(11,013)
Cash dividends declared		—		—		—		(730)		(730)
Net income		—		—		—		8,450		8,450
Balance at December 31, 2020	$	8,082	$	33,373	$	(21,576)	$	148,528	$	168,407
Stock-based compensation		3		772		—		—		775
Vesting of restricted stock units and restricted shares		40		(1,045)		—		—		(1,005)
Treasury stock purchases		—		—		(8,472)		—		(8,472)
Cash dividends declared		—		—		—		(1,057)		(1,057)
Net income		—		—		—		4,878		4,878
Balance at March 31, 2021	$	8,125	$	33,100	$	(30,048)	$	152,349	$	163,526


	Nine Months Ended March 31, 2020
	Total Par						Accumulated
	Value of		Additional				Other
	Common		Paid-In		Retained		Comprehensive
	Shares ($1 Par)		Capital		Earnings		(Loss) Income		Total
Balance at June 30, 2019	$	7,903	$	27,512	$	170,004	$	8	$	205,427
Adoption of ASU 2016-02		—		—		(42)		—		(42)
Unrealized gain on available for sale investments, net of tax		—		—		—		(8)		(8)
Stock-based compensation		39		1,310		—		—		1,349
Cash dividends declared		—		—		(1,754)		—		(1,754)
Net income		—		—		9,551		—		9,551
Balance at September 30, 2019	$	7,942	$	28,822	$	177,759	$	—	$	214,523
Stock-based compensation		6		1,891		—		—		1,897
Stock options exercised		2		19		—		—		21
Cash dividends declared		—		—		(1,816)		—		(1,816)
Net income		—		—		(5,384)		—		(5,384)
Balance at December 31, 2019	$	7,950	$	30,732	$	170,559	$	—	$	209,241
Stock-based compensation		7		538		—		—		545
Vesting of restricted stock units and ‎ restricted shares		44		(512)		—		—		(468)
Cash dividends declared		—		—		(1,781)		—		(1,781)
Net loss		—		—		(5,270)		—		(5,270)
Balance at March 31, 2020	$	8,001	$	30,758	$	163,508	$	—	$	202,267



	Nine Months Ended
	March 31, 2021		March 31, 2020
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,621	$	2,943

Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	22,850	$	3,573

Weighted-average remaining lease term (in years):
Operating leases		3.2		2.1

Weighted-average discount rate:
Operating leases		3.3%		3.5%


(in thousands)
Within one year	$	6,919
After one year and within two years		5,868
After two years and within three years		4,854
After three years and within four years		3,691
After four years and within five years		2,445
After five years		12,516
Total future minimum lease payments	$	36,293
Less – Discount		4,350
Lease liability	$	31,943



			One-time
			Employee		Contract		Other
	Inventory		Termination		Termination		Associated
(in thousands)	Impairment		Benefits		Costs		Costs		Total
Accrual balance at June 30, 2020	$	—	$	1,613	$	110	$	238	$	1,961
Costs incurred		45		179		—		2,545		2,769
Expenses paid		—		(420)		(110)		(2,327)		(2,857)
Non-cash		(45)		—		—		(436)		(481)
Accrual balance at March 31, 2021	$	—	$	1,372	$	—	$	20	$	1,392



				Accumulated		Net Book
Location	Asset Category	Cost		Depreciation		Value
(in thousands)
Starkville, Mississippi	Building & building improvements		4,615		(4,254)		361
	Land & land improvements		694		(439)		255
	Total Starkville		5,309		(4,693)		616

Harrison, Arkansas	Building & building improvements		1,000		(1,000)		—
	Land & land improvements		86		(36)		50
	Machinery & equipment		1,330		(1,330)		—
	Total Harrison		2,416		(2,366)		50

	Total assets held for sale	$	7,725	$	(7,059)	$	666


	Time Based Vest			Performance Based Vest			Total
		Weighted average			Weighted average			Weighted average
		fair value			fair value			fair value
(shares in thousands)	Shares	per share		Shares	per share		Shares	per share
Unvested as June 30, 2020	44	$	16.90	44	$	16.76	88	$	16.83
Granted	68		12.01	105		12.01	173		12.01
Forfeited	(6)		14.04	(9)		14.03	(15)		14.04
Unvested as of March 31, 2021	106	$	13.92	140	$	13.41	246	$	13.63



		Weighted
	Shares	Average
	(in thousands)	Exercise Price
Outstanding at June 30, 2020	223	$	23.70
Granted	37		12.77
Exercised	(13)		18.90
Cancelled	(5)		12.89
Outstanding at March 31, 2021	242	$	22.51



		Options	Weighted Average
Range of		Outstanding	Remaining	Exercise
Prices		(in thousands)	Life (Years)	Price
$	9.97 - 15.14	104	8.3	$	12.72
	19.72 - 19.77	9	1.7		19.72
	20.50 - 27.57	66	5.3		23.93
	31.06 - 32.80	37	5.1		32.20
	43.09 - 47.45	26	5.5		45.36
$	8.55 - 47.45	242	6.5	$	22.51



	March 31,		June 30,
(in thousands)	2021		2020
Raw materials	$	19,010	$	11,119
Work in process and finished parts		3,934		3,925
Finished goods		86,504		55,521
Total	$	109,448	$	70,565


	Nine Months Ended
	March 31,
(in thousands)	2021		2020
Net cash (used in) provided by operating activities	$	(15,401)	$	13,888
Net cash provided by investing activities		16,569		17,202
Net cash (used in) financing activities		(32,394)		9,203
(Decrease) increase in cash and cash equivalents	$	(31,226)	$	40,293


	Total Number	Average		Total Number	Approximate Dollar Value
	of Shares	Price Paid		of Shares Purchased	of Shares that May Yet
Period	Purchased	per Share		as Part of Plans	Be Purchased
As of June 30, 2020	132,197	$	11.83	132,197	$	4,429,960
July 1, 2020 to July 31, 2020	155,808		14.46	155,808		2,168,981
August 1, 2020 to August 31, 2020	116,562		17.24	116,562		153,690
September 1, 2020 to September 30, 2020	223,905		21.16	223,905		3,405,667
As of September 30, 2020	628,472		16.81	628,472		3,405,667
October 1, 2020 to October 31, 2020	132,326		25.69	132,326		30,000,000
November 1, 2020 to November 30, 2020	132,831		29.55	132,831		26,067,622
December 1, 2020 to December 31, 2020	101,689		32.69	101,689		22,738,200
As of December 31, 2020	995,318	$	21.31	995,318	$	22,738,200
January 1, 2021 to January 31, 2021	84,012		35.15	84,012		19,780,863
February 1, 2021 to February 28, 2021	94,104		34.24	94,104		16,553,899
March 1, 2021 to March 31, 2021	75,536		35.23	75,536		13,888,648
As of March 31, 2021	1,248,970	$	24.06	1,248,970	$	13,888,648


Exhibit No.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.*
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
104.Cover Page	Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*	Filed herewith
**	In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be “furnished” and not “filed.”


		FLEXSTEEL INDUSTRIES, INC.


Date:	April 30, 2021	By:	/S/ Derek P. Schmidt
			Derek P. Schmidt
			Chief Financial Officer and Chief Operating Officer
			(Principal Financial & Accounting Officer)