Flexsteel Industries Inc 10-Q for FY2022 Q3

Flexsteel Industries Inc (FLXS)

10-Q 2022-04-29 For: 2022-03-31

Added on April 10, 2026

About this 10-Q

Flexsteel Industries Inc filed this 10-Q on April 29, 2022, covering the quarter ended March 31, 2022 (FY2022 Q3).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $140.41M; up 18.6% from $118.41M a year earlier
Net income: $5.32M; up 9.0% from net income of $4.88M a year earlier
Diluted EPS: $0.82; up 22.4% from $0.67 a year earlier

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Incorporated in the 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, 2022, and June 30, 2021 (Unaudited)	3
	Consolidated Statements of Income for the three and nine months ended March 31, 2022, and March 31, 2021 (Unaudited)	4
	Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended March 31, 2022, and March 31, 2021 (Unaudited)	5
	Consolidated Statements of Cash Flows for the nine months ended March 31, 2022, and March 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	18
Signatures		19



	March 31,		June 30,
	2022		2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	3,403	$	1,342
Trade receivables - less allowances: March 31, 2022, $3,460, June 30, 2021, $3,240		44,524		55,986
Inventories		154,118		161,125
Other		6,882		9,421
Assets held for sale		616		666
Total current assets		209,543		228,540
NONCURRENT ASSETS:
Property, plant and equipment, net		38,723		39,783
Operating lease right-of-use assets		39,695		27,057
Other assets		1,917		1,399
TOTAL ASSETS	$	289,878	$	296,779

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade	$	39,274	$	67,773
Current portion of operating lease liabilities		6,495		5,833
Accrued liabilities:
Payroll and related items		6,185		7,662
Insurance		2,955		3,062
Restructuring costs		2,454		1,522
Advertising		4,333		5,196
Environmental remediation		3,570		3,570
Other		5,876		5,133
Total current liabilities		71,142		99,751
LONG-TERM LIABILITIES:
Operating lease liabilities, less current maturities		35,955		24,317
Lines of credit		41,593		3,500
Other liabilities		588		1,243
Total liabilities		149,278		128,811

SHAREHOLDERS' EQUITY:
Common stock - $1 par value; authorized 15,000 shares; 8,159 shares issued and ‎5,656 outstanding as of March 31, 2022; 8,133 shares issued and ‎6,848 outstanding as of June 30, 2021		8,159		8,133
Additional paid-in capital		35,364		34,015
Treasury stock, at cost; 2,503 shares and 1,284 shares as of March 31, 2022, and ‎June 30, 2021, respectively		(59,278)		(31,320)
Retained earnings		156,355		157,140
Total shareholders' equity		140,600		167,968
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	289,878	$	296,779


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2022		2021		2022		2021
Net sales	$	140,408	$	118,408	$	419,765	$	342,753
Cost of goods sold		118,337		95,284		364,757		272,436
Gross margin		22,071		23,124		55,008		70,317
Selling, general and administrative expenses		16,316		16,292		52,642		49,378
Restructuring (income) expense		(59)		480		715		2,724
(Gain) on disposal of assets due to restructuring		—		—		(1,400)		(5,881)
Operating income		5,814		6,352		3,051		24,096
Interest expense		176		—		602		—
Other (income)		(14)		(59)		(116)		(270)
Income before income taxes		5,652		6,411		2,565		24,366
Income tax provision		336		1,533		441		7,159
Net income	$	5,316	$	4,878	$	2,124	$	17,207
Weighted average number of common shares outstanding:
Basic		6,330		6,998		6,615		7,316
Diluted		6,494		7,270		6,842		7,551
Earnings per share of common stock:
Basic	$	0.84	$	0.70	$	0.32	$	2.35
Diluted	$	0.82	$	0.67	$	0.31	$	2.28


Common Stock - $1.00 Par Value
Shares Outstanding as of April 28, 2022	5,562,867



	Nine Months Ended March 31, 2022
	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 (loss)		—		—		—		(7,545)		(7,545)
Balance on December 31, 2021	$	8,153	$	36,001	$	(40,978)	$	151,888	$	155,064
Stock-based compensation		6		(637)		—		—		(631)
Treasury stock purchases		—		—		(18,300)		—		(18,300)
Cash dividends declared		—		—		—		(849)		(849)
Net income		—		—		—		5,316		5,316
Balance on March 31, 2022	$	8,159	$	35,364	$	(59,278)	$	156,355	$	140,600


	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



	March 31,		June 30,
(in thousands)	2022		2021
Raw materials	$	19,014	$	22,500
Work in process and finished parts		5,059		6,234
Finished goods		130,045		132,391
Total	$	154,118	$	161,125



				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

	Total assets held for sale	$	5,309	$	(4,693)	$	616



	Nine Months Ended
	March 31, 2022		March 31, 2021
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,515	$	2,621

Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	16,814	$	22,850

Weighted-average remaining lease term (in years):
Operating leases		4.4		3.2

Weighted-average discount rate:
Operating leases		3.2%		3.3%



	One-time
	Employee		Other
	Termination		Associated
(in thousands)	Benefits		Costs		Total
Accrual balance on June 30, 2021	$	1,502	$	20	$	1,522
(Income) costs incurred		(211)		926		715
Expenses reimbursed (paid)		1,145		(928)		217
Accrual balance on March 31, 2022	$	2,436	$	18	$	2,454


	Time-Based Vest (RSUs)			Performance-Based Vest (PSUs)			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, 2021	107	$	13.89	142	$	13.36	249	$	13.59
Granted	27		42.35	41		42.35	68		42.35
Forfeited	(6)		38.29	(9)		38.28	(15)		38.28
Unvested as of March 31, 2022	128	$	18.87	174	$	18.96	302	$	18.92



		Weighted
	Shares	Average
	(in thousands)	Exercise Price
Outstanding at June 30, 2021	232	$	21.91
Granted	—		—
Exercised	(8)		15.75
Canceled	(9)		36.58
Outstanding at March 31, 2022	215	$	21.50



		Options	Weighted Average
Range of		Outstanding	Remaining	Exercise
Prices		(in thousands)	Life (Years)	Price
$	9.97 - 15.14	97	7.9	$	12.64
	18.30 - 19.72	12	5.1		18.99
	21.96 - 27.57	58	5.1		24.21
	31.06 - 32.80	32	3.7		32.30
	43.09 - 47.45	16	4.5		45.42
$	9.97 - 47.45	215	6.1	$	21.50


	Nine Months Ended
	March 31, 2022		March 31, 2021
(in thousands)
Within one year	$	7,619	$	6,919
After one year and within two years		6,538		5,868
After two years and within three years		5,412		4,854
After three years and within four years		4,186		3,691
After four years and within five years		4,260		2,445
After five years		19,309		12,516
Total future minimum lease payments	$	47,324	$	36,293
Less – Discount		4,874		4,350
Lease liability	$	42,450	$	31,943


	Nine Months Ended
	March 31,
(in thousands)	2022		2021
Net cash (used in) operating activities	$	(3,909)	$	(15,401)
Net cash (used in) provided by investing activities		(930)		16,569
Net cash provided by (used in) financing activities		6,900		(32,394)
Increase (decrease) in cash and cash equivalents	$	2,061	$	(31,226)


	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
January 1, 2022, to January 31, 2022	88,540	$	26.31	936,097	$	30,607,857
February 1, 2022, to February 28, 2022	24,989		24.28	961,086		30,000,000
March 1, 2022, to March 31, 2022	780,680		18.76	1,741,766		15,323,900
Three months ended March 31, 2022 (1)	894,209	$	19.66	1,741,766	$	15,323,900


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 29, 2022	By:	/S/ Derek P. Schmidt
			Derek P. Schmidt
			Chief Financial Officer and Chief Operating Officer
			(Principal Financial & Accounting Officer)