Flexsteel Industries Inc 10-Q for FY2022 Q2

Flexsteel Industries Inc (FLXS)

10-Q 2022-01-28 For: 2021-12-31

Added on April 10, 2026

About this 10-Q

Flexsteel Industries Inc filed this 10-Q on January 28, 2022, covering the quarter ended December 31, 2021 (FY2022 Q2).

Headline figures

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

Revenue: $141.67M; up 18.9% from $119.11M a year earlier
Net loss: $7.55M; compared with net income of $8.45M a year earlier
Diluted EPS: -$1.13; compared with $1.13 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 December 31, 2021 (Unaudited) and June 30, 2021	3
	Consolidated Statements of Income for the three and six months ended December 31, 2021, and December 31, 2020 (Unaudited)	4
	Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended December 31, 2021, and December 31, 2020 (Unaudited)	5
	Consolidated Statements of Cash Flows for the six months ended December 31, 2021, and December 31, 2020 (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



	December 31,		June 30,
	2021		2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	4,087	$	1,342
Trade receivables - less allowances: December 31, 2021, $3,430, June 30, 2021, $3,240		50,001		55,986
Inventories		179,042		161,125
Other		8,399		9,421
Assets held for sale		616		666
Total current assets		242,145		228,540
NONCURRENT ASSETS:
Property, plant and equipment, net		38,495		39,783
Operating lease right-of-use assets		41,206		27,057
Other assets		1,908		1,399
TOTAL ASSETS	$	323,754	$	296,779

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade	$	38,092	$	67,773
Current portion of operating lease liabilities		6,665		5,833
Accrued liabilities:
Payroll and related items		5,708		7,662
Insurance		2,961		3,062
Restructuring costs		2,671		1,522
Advertising		6,190		5,196
Environmental remediation		3,570		3,570
Other		5,173		5,133
Total current liabilities		71,030		99,751
LONG-TERM LIABILITIES:
Operating lease liabilities, less current maturities		37,241		24,317
Lines of credit		59,734		3,500
Other liabilities		685		1,243
Total liabilities		168,690		128,811

SHAREHOLDERS' EQUITY:
Common stock - $1 par value; authorized 15,000 shares; 8,153 shares issued and ‎6,544 outstanding as of December 31, 2021; 8,133 shares issued and ‎6,848 outstanding as of June 30, 2021		8,153		8,133
Additional paid-in capital		36,001		34,015
Treasury stock, at cost; 1,608 shares and 1,284 shares as of December 31, 2021, and ‎June 30, 2021, respectively		(40,978)		(31,320)
Retained earnings		151,888		157,140
Total shareholders' equity		155,064		167,968
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	323,754	$	296,779


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Net sales	$	141,668	$	119,106	$	279,356	$	224,345
Cost of goods sold		132,141		94,728		246,419		177,152
Gross margin		9,527		24,378		32,937		47,193
Selling, general and administrative expenses		17,541		18,911		36,326		33,086
Restructuring expense		622		863		774		2,244
(Gain) on disposal of assets due to restructuring		—		(5,229)		(1,400)		(5,881)
Operating (loss) income		(8,636)		9,833		(2,763)		17,744
Interest expense		223		—		426		—
Other (income)		(104)		(162)		(102)		(211)
(Loss) income before income taxes		(8,755)		9,995		(3,087)		17,955
Income tax (benefit) provision		(1,210)		1,545		105		5,626
Net (loss) income	$	(7,545)	$	8,450	$	(3,192)	$	12,329
Weighted average number of common shares outstanding:
Basic		6,682		7,246		6,758		7,475
Diluted		6,682		7,495		6,758		7,681
(Loss) earnings per share of common stock:
Basic	$	(1.13)	$	1.17	$	(0.47)	$	1.65
Diluted	$	(1.13)	$	1.13	$	(0.47)	$	1.61


Common Stock - $1.00 Par Value
Shares Outstanding as of January 27, 2022	6,487,755



	Six Months Ended December 31, 2021
	Total Par
	Value of		Additional
	Common		Paid-In		Treasury		Retained
	Shares ($1 Par)		Capital		Stock		Earnings		Total
Balance at 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 at 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 at December 31, 2021	$	8,153	$	36,001	$	(40,978)	$	151,888	$	155,064


	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



	December 31,		June 30,
(in thousands)	2021		2021
Raw materials	$	25,920	$	22,500
Work in process and finished parts		5,333		6,234
Finished goods		147,789		132,391
Total	$	179,042	$	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



	Six Months Ended
	December 31, 2021		December 31, 2020
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,059	$	2,547

Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	16,814	$	2,741

Weighted-average remaining lease term (in years):
Operating leases		4.7		1.9

Weighted-average discount rate:
Operating leases		2.5%		3.3%



			One-time
			Employee		Contract		Other
	Inventory		Termination		Termination		Associated
(in thousands)	Impairment		Benefits		Costs		Costs		Total
Accrual balance at June 30, 2021	$	—	$	1,502	$	—	$	20	$	1,522
Costs incurred		—		—		—		774		774
Expenses (paid) reimbursed		—		(130)		—		505		375
Accrual balance at December 31, 2021	$	—	$	1,372	$	—	$	1,299	$	2,671


	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		42.50	40		42.50	67		42.50
Forfeited	(3)		39.49	(4)		39.49	(7)		39.49
Unvested as of December 31, 2021	131	$	19.25	178	$	19.39	309	$	19.33



		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 December 31, 2021	215	$	21.50



		Options	Weighted Average
Range of		Outstanding	Remaining	Exercise
Prices		(in thousands)	Life (Years)	Price
$	9.97 - 15.14	97	8.2	$	12.64
	18.30 - 19.72	12	5.3		18.99
	21.96 - 27.57	58	5.3		24.21
	31.06 - 32.80	32	4.4		32.30
	43.09 - 47.45	16	4.8		45.42
$	9.97 - 47.45	215	6.4	$	21.50


	Six Months Ended
	December 31, 2021		December 31, 2020
(in thousands)
Within one year	$	7,819	$	4,491
After one year and within two years		6,872		4,048
After two years and within three years		5,590		2,844
After three years and within four years		4,167		1,491
After four years and within five years		4,242		1
After five years		20,227		—
Total future minimum lease payments	$	48,917	$	12,875
Less – Discount		5,011		720
Lease liability	$	43,906	$	12,155


	Six Months Ended
	December 31,
(in thousands)	2021		2020
Net cash (used in) operating activities	$	(40,998)	$	(10,934)
Net cash provided by investing activities		402		17,864
Net cash provided by (used in) financing activities		43,341		(21,831)
Increase (decrease) in cash and cash equivalents	$	2,745	$	(14,901)


	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 Plan	Be Purchased
October 1, 2021, to October 31, 2021	66,326	$	30.40	638,535	$	8,858,135
November 1, 2021, to November 30, 2021	124,944		28.58	763,479		5,287,672
December 1, 2021, to December 31, 2021	85,611		27.77	847,557		2,941,456
Three months ended December 31, 2021 (1)	276,881	$	28.76	847,557	$	2,941,456


Exhibit No.
3.1	Amended and Restated Bylaws, Dated December 8, 2021 (incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission on December 8, 2021).
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:	January 28, 2022	By:	/S/ Derek P. Schmidt
			Derek P. Schmidt
			Chief Financial Officer and Chief Operating Officer
			(Principal Financial & Accounting Officer)