FLXS 10-Q

Flexsteel Industries Inc (FLXS)

10-Q 2021-01-29 For: 2020-12-31

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Added on April 10, 2026

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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 December 31, 2020 and June 30, 2020 (Unaudited)	3
	Consolidated Statements of Income for the three and six months ended December 31, 2020 and December 31, 2019 (Unaudited)	4
	Consolidated Statements of Comprehensive Income for the three and six months ended December 31, 2020 and December 31, 2019 (Unaudited)	4
	Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended December 31, 2020 and December 31, 2019 (Unaudited)	5
	Consolidated Statements of Cash Flows for the six months ended December 31, 2020 and December 31, 2019 (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



	December 31,		June 30,
	2020		2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	33,296	$	48,197
Trade receivables - less allowances: December 31, 2020, $3,110; June 30, 2020, $1,770		46,317		32,217
Inventories		92,024		70,565
Other		12,496		18,535
Assets held for sale		666		12,329
Total current assets		184,799		181,843
NONCURRENT ASSETS:
Property, plant and equipment, net		40,251		43,312
Operating lease right-of-use assets		9,463		8,683
Deferred income taxes		—		2,111
Other assets		1,299		1,310
TOTAL ASSETS	$	235,812	$	237,259

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade	$	27,842	$	27,747
Current portion of operating lease liabilities		4,155		4,408
Accrued liabilities:
Payroll and related items		8,210		3,275
Insurance		3,201		3,787
Restructuring costs		1,418		1,961
Advertising		5,231		3,823
Environmental remediation		3,570		3,600
Other		4,849		4,861
Total current liabilities		58,476		53,462
LONG-TERM LIABILITIES:
Operating lease liabilities, less current maturities		8,000		7,607
Other liabilities		929		685
Total liabilities		67,405		61,754

SHAREHOLDERS' EQUITY:
Common stock - $1 par value; authorized 15,000 shares; 8,082 shares issued and ‎7,087 outstanding as of December 31, 2020; 8,008 shares issued and ‎7,876 outstanding as of June 30, 2020		8,082		8,008
Additional paid-in capital		33,373		31,748
Treasury stock, at cost; 995 shares and 132 shares as of December 31, 2020 and ‎June 30, 2020, respectively		(21,576)		(1,563)
Retained earnings		148,528		137,312
Total shareholders' equity		168,407		175,505
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	235,812	$	237,259


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2020		2019		2020		2019
Net sales	$	119,106	$	102,949	$	224,345	$	203,297
Cost of goods sold		94,728		86,899		177,152		170,026
Gross margin		24,378		16,050		47,193		33,271
Selling, general and administrative		18,911		18,088		33,086		35,563
Restructuring expense		863		5,067		2,244		11,071
Gain on disposal of assets due to restructuring		(5,229)		(26)		(5,881)		(18,967)
Operating income (loss)		9,833		(7,079)		17,744		5,604
Other income		162		107		211		193
Income (loss) before income taxes		9,995		(6,972)		17,955		5,797
Income tax provision (benefit)		1,545		(1,588)		5,626		1,630
Net income (loss)	$	8,450	$	(5,384)	$	12,329	$	4,167
Weighted average number of common shares outstanding:
Basic		7,246		7,944		7,475		7,936
Diluted		7,495		7,944		7,681		8,146
Earnings (loss) per share of common stock:
Basic	$	1.17	$	(0.68)	$	1.65	$	0.53
Diluted	$	1.13	$	(0.68)	$	1.61	$	0.51


Common Stock - $1.00 Par Value
Shares Outstanding as of January 27, 2021	7,061,152



	Six Months Ended December 31, 2020
	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


	Six Months Ended December 31, 2019
	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



	Six Months Ended
	December 31, 2020		December 31, 2019
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,547	$	1,990

Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	2,741	$	3,604

Weighted-average remaining lease term (in years):
Operating leases		1.9		2.0

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


(in thousands)
Within one year	$	4,491
After one year and within two years		4,048
After two years and within three years		2,844
After three years and within four years		1,491
After four years and within five years		1
After five years		—
Total future minimum lease payments	$	12,875
Less – Discount		720
Lease liability	$	12,155



			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		—		2,065		2,289
Expenses paid		—		(420)		(110)		(1,821)		(2,351)
Non-cash		(45)		—		—		(436)		(481)
Accrual balance at December 31, 2020	$	—	$	1,372	$	—	$	46	$	1,418



				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	64		12.01	99		12.01	163		12.01
Unvested as of December 31, 2020	108	$	13.98	143	$	13.47	251	$	13.69



		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 December 31, 2020	242	$	22.51



		Options	Weighted Average
Range of		Outstanding	Remaining	Exercise
Prices		(in thousands)	Life (Years)	Price
$	9.97 - 15.14	104	8.6	$	12.72
	19.72 - 19.77	9	1.9		19.72
	20.50 - 27.57	66	5.5		23.93
	31.06 - 32.80	37	5.4		32.20
	43.09 - 47.45	26	5.7		45.36
$	8.55 - 47.45	242	6.5	$	22.51



	December 31,		June 30,
(in thousands)	2020		2020
Raw materials	$	17,746	$	11,119
Work in process and finished parts		3,743		3,925
Finished goods		70,535		55,521
Total	$	92,024	$	70,565


	Six Months Ended
	December 31,
(in thousands)	2020		2019
Net cash (used in) provided by operating activities	$	(10,934)	$	779
Net cash provided by investing activities		17,864		17,839
Net cash used in financing activities		(21,831)		(3,531)
(Decrease) increase in cash and cash equivalents	$	(14,901)	$	15,087


	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


Exhibit No.
10.1	Amended and Restated Omnibus Stock Plan (incorporated by Reference to the Form 8-K filed with the Securities and Exchange Commission on December 15, 2020).
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 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:	January 29, 2021	By:	/S/ Derek P. Schmidt
			Derek P. Schmidt
			Chief Financial Officer and Chief Operating Officer
			(Principal Financial & Accounting Officer)