Flexsteel Industries Inc 10-Q for FY2021 Q1

Flexsteel Industries Inc (FLXS)

10-Q 2020-10-30 For: 2020-09-30

Added on April 10, 2026

About this 10-Q

Flexsteel Industries Inc filed this 10-Q on October 30, 2020, covering the quarter ended September 30, 2020 (FY2021 Q1).

Headline figures

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $105.24M; up 4.9% from $100.35M a year earlier
Net income: $3.88M; down 59.4% from net income of $9.55M a year earlier
Diluted EPS: $0.49; down 58.1% from $1.17 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 September 30, 2020 and June 30, 2020 (Unaudited)	3
	Consolidated Statements of Income for the three months ended September 30, 2020 and September 30, 2019 (Unaudited)	4
	Consolidated Statements of Comprehensive Income for the three months ended September 30, 2020 and September 30, 2019 (Unaudited)	4
	Consolidated Statements of Changes in Shareholders’ Equity for the three months ended September 30, 2020 and September 30, 2019 (Unaudited)	5
	Consolidated Statements of Cash Flows for the three months ended September 30, 2020 and September 30, 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	16
Item 4.	Controls and Procedures	16
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



	September 30,		June 30,
	2020		2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	36,547	$	48,197
Trade receivables - less allowances: September 30, 2020, $1,745; June 30, 2020, $1,770		39,784		32,217
Inventories		75,738		70,565
Other		20,827		18,535
Assets held for sale		13,100		12,329
Total current assets		185,996		181,843
NONCURRENT ASSETS:
Property, plant and equipment, net		41,498		43,312
Operating lease right-of-use assets		10,418		8,683
Deferred income taxes		—		2,111
Other assets		1,297		1,310
TOTAL ASSETS	$	239,209	$	237,259
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade	$	28,802	$	27,747
Current portion of operating lease liabilities		4,182		4,408
Accrued liabilities:
Payroll and related items		5,460		3,275
Insurance		3,168		3,787
Restructuring costs		1,527		1,961
Advertising		4,791		3,823
Environmental remediation		3,600		3,600
Other		6,642		4,861
Total current liabilities		58,172		53,462
LONG-TERM LIABILITIES:
Operating lease liabilities, less current maturities		9,485		7,607
Other liabilities		927		685
Total liabilities		68,584		61,754

SHAREHOLDERS' EQUITY:
Common stock - $1 par value; authorized 15,000 shares; 8,065 shares issued and ‎7,437 outstanding as of September 30, 2020; 8,008 shares issued and ‎7,876 outstanding as of June 30, 2020		8,065		8,008
Additional paid-in capital		32,315		31,748
Treasury stock, at cost; 628 shares and 132 shares as of September 30, 2020 and ‎June 30, 2020, respectively		(10,563)		(1,563)
Retained earnings		140,808		137,312
Total shareholders' equity		170,625		175,505
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	239,209	$	237,259


	Three Months Ended
	September 30,
	2020		2019
Net sales	$	105,239	$	100,348
Cost of goods sold		82,424		83,127
Gross margin		22,815		17,221
Selling, general and administrative		14,175		17,475
Restructuring expense		1,381		6,004
Gain on disposal of assets due to restructuring		(652)		(18,941)
Operating income		7,911		12,683
Other income		49		86
Income before income taxes		7,960		12,769
Income tax provision		4,081		3,218
Net income	$	3,879	$	9,551
Weighted average number of common shares outstanding:
Basic		7,702		7,928
Diluted		7,908		8,190
Earnings per share of common stock:
Basic	$	0.50	$	1.20
Diluted	$	0.49	$	1.17


Common Stock - $1.00 Par Value
Shares Outstanding as of October 27, 2020	7,316,200



	Three Months Ended September 30, 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


	Three Months Ended September 30, 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



	Three Months Ended
(in thousands)	September 30, 2020		September 30, 2019
Operating lease expense	$	1,074	$	1,173
Variable lease expense		69		65
Total lease expense	$	1,143	$	1,238


(in thousands)
Within one year	$	4,601
After one year and within two years		4,327
After two years and within three years		3,159
After three years and within four years		2,189
After four years and within five years		200
After five years		—
Total future minimum lease payments	$	14,476
Less – Discount		809
Lease liability	$	13,667



	One-time
	Employee		Contract		Other
	Termination		Termination		Associated
(in thousands)	Benefits		Costs		Costs		Total
Accrual balance at June 30, 2020	$	1,613	$	110	$	238	$	1,961
Costs incurred		179		—		1,202		1,381
Expenses paid		(411)		(110)		(1,076)		(1,597)
Non-cash		—		—		(218)		(218)
Accrual balance at September 30, 2020	$	1,381	$	—	$	146	$	1,527



				Accumulated		Net Book
Location	Asset Category	Cost		Depreciation		Value
(in thousands)
Dubuque, Iowa	Building & building improvements	$	24,524	$	(16,295)	$	8,229
	Land & land improvements		1,497		(6)		1,491
	Machinery & equipment		8,018		(6,377)		1,641
	Total Dubuque		34,039		(22,678)		11,361

Lancaster, Pennsylvania	Building & building improvements		2,857		(2,053)		804
	Land & land improvements		41		—		41
	Total Lancaster		2,898		(2,053)		845

Starkville, Mississippi	Building & building improvements		4,615		(4,254)		361
	Land & land improvements		694		(439)		255
	Machinery & equipment		5,411		(5,183)		228
	Total Starkville		10,720		(9,876)		844

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	$	50,073	$	(36,973)	$	13,100


	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 September 30, 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
Outstanding at September 30, 2020	260	$	22.15



		Options	Weighted Average
Range of		Outstanding	Remaining	Exercise
Prices		(in thousands)	Life (Years)	Price
$	8.55 - 15.14	108	8.6	$	12.62
	17.23 - 19.77	21	1.5		18.86
	20.50 - 27.57	68	5.6		23.81
	31.06 - 32.80	37	5.6		32.20
	43.09 - 47.45	26	6.0		45.36
$	8.55 - 47.45	260	6.5	$	22.15



	September 30,		June 30,
(in thousands)	2020		2020
Raw materials	$	11,684	$	11,119
Work in process and finished parts		3,798		3,925
Finished goods		60,256		55,521
Total	$	75,738	$	70,565


	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


		FLEXSTEEL INDUSTRIES, INC.


Date:	October 30, 2020	By:	/S/ Derek P. Schmidt
			Derek P. Schmidt
			Chief Financial Officer and Chief Operating Officer
			(Principal Financial & Accounting Officer)


Exhibit No.
10.1	Credit Agreement dated August 28, 2020 between Flexsteel Industries, Inc. and Dubuque Bank and Trust Company (incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission on September 1, 2020).
10.2	Revolving Line of Credit Note dated August 28, 2020 between Flexsteel Industries, Inc. and Dubuque Bank and Trust Company (incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission on September 1, 2020).
10.3	Security Agreement dated August 28, 2020 between Flexsteel Industries, Inc. and Dubuque Bank and Trust Company (incorporated by reference to the Form 8-K filed with the Securities and Exchange Commission on September 1, 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.”