DUBUQUE, Iowa — Flexsteel Industries reported record first quarter net sales and net income.
- Net sales increased 16.4% to $127 million.
- Net income increased 18.1% to $5.8 million, or 4.6% of net sales.
Net sales were $127 million for the quarter ended Sept. 30 compared to $109 million in the prior year quarter, an increase of 16.4 percent. Residential net sales increased primarily due to demand for upholstered furniture and to a lesser extent ready-to-assemble furniture.
Gross margin as a percent of net sales for the quarter ended Sept. 30 was 22.0 percent compared to 23.5 percent for the prior year quarter, representing a decrease of approximately $2 million.
The company is making long-term strategic investments in an expanded distribution network, designed to meet current and future customer needs while improving operations. In the current quarter this negatively impacted gross margin by $1.3 million or 1.0 percent.
Selling, general and administrative expenses were 14.6 percent of net sales in the current year quarter, compared to 16.9 percent in the prior year quarter. The improvement in SG&A as a percentage of net sales for the quarter reflects fixed cost leverage on higher sales volume of $1.9 million and lower direct selling costs of $1.0 million primarily due to timing of expenditures.
In the prior year quarter, the company realized a non-taxable gain on life insurance of $0.4 million, or $0.06 per share in the prior year quarter. The gain is included in “interest and other income” in the consolidated statements of income.
Net income was $5.8 million or $0.74 per share compared to $4.9 million or $0.64 per share in the prior year quarter.
Working capital (current assets less current liabilities) at Sept. 30 was $126 million compared to $120 million at June 30. Primary changes in working capital include decreases in inventory of $5 million, current borrowings of $5 million and accounts payable of $4 million and an increase in accounts receivable of $2 million.
The decrease in inventory is due to improving efficiency of the expanded distribution network which contributed to increased net sales. The increase in accounts receivable is due to the increase in net sales and the timing of collections. The decrease in accounts payable is due to timing of payments. Capital expenditures were $2 million and dividend payments totaled $1 million for the quarter.
All earnings per share amounts are on a diluted basis.
SOURCE: Flexsteel press release