Exhibit 99.1
Flexsteel Announces Fiscal 2007 Third Quarter
and Year-To-Date Operating Results
DUBUQUE, Iowa--(BUSINESS WIRE)--April 23, 2007--Flexsteel
Industries, Inc. (NASDAQ:FLXS) today reported sales and earnings for
its third quarter and fiscal year-to-date ended March 31, 2007.
Net sales for the fiscal quarter ended March 31, 2007 were $104.1
million compared to the prior year quarter of $110.3 million, a
decrease of 6%. Net income for the current quarter was $1.5 million or
$0.23 per share, including a $0.4 million pre-tax gain from the sale
of vacant land, compared to $1.8 million or $0.27 per share in the
prior year quarter.
Net sales for the nine months ended March 31, 2007 were $311.1
million compared to $314.1 million in the prior year nine-month
period, a decrease of 1%. Net income for the nine months ended March
31, 2007 was $3.5 million or $0.53 per share, including the
aforementioned $0.4 million pre-tax gain from the sale of vacant land,
compared to net income of $3.2 million or $0.49 per share for the nine
months ended March 31, 2006.
For the quarter ended March 31, 2007, residential net sales were
$59.5 million, compared to $69.6 million, a decrease of 15% from the
prior year quarter. Recreational vehicle net sales were $17.6 million
for the quarter ended March 31, 2007, compared to $19.1 million, a
decrease of 8% from the prior year quarter. Commercial net sales were
$27.0 million for the quarter ended March 31, 2007, compared to $21.6
million in the prior year quarter, an increase of 25%.
For the nine months ended March 31, 2007, residential net sales
were $188.2 million, a decrease of 5% from the nine months ended March
31, 2006. Recreational vehicle net sales were $48.4 million for the
nine months ended March 31, 2007, a decrease of 9% from the nine
months ended March 31, 2006. Commercial net sales were $74.5 million
for the nine months ended March 31, 2007, an increase of 17% from the
nine months ended March 31, 2006.
Gross margin for the quarter ended March 31, 2007 was 19.7%
compared to 19.4% in the prior year quarter. This improvement is
primarily due to the impact of changes in product mix. For the nine
months ended March 31, 2007, the gross margin was 18.9% compared to
19.2% for the prior year nine-month period. Increased freight and
warehousing costs and lower sales volume resulting in under absorption
of fixed costs have negatively impacted gross margin during the
current nine-month period, as compared to the prior year nine-month
period.
Selling, general and administrative expenses were 17.6% and 16.5%
of net sales for the quarters ended March 31, 2007 and 2006,
respectively. This increase in selling, general and administrative
expenses for the current quarter compared to the prior year quarter is
primarily due to the impact of fixed selling costs at the lower
residential sales volume. For the nine months ended March 31, 2007 and
2006, selling, general and administrative expenses were 17.0% and
17.3%, respectively. The decrease in selling, general and
administrative costs on a year-to-date basis in comparison to the
prior year period is due primarily to lower collection related
expenses, and to a lesser extent to lower selling expenses and a
reduction in stock-based compensation expense.
During the quarter ended March 31, 2007, the Company recorded a
pre-tax gain on the sale of vacant land of $0.4 million.
Working capital (current assets less current liabilities) at March
31, 2007 was $91.0 million. Net cash provided by operating activities
was $17.0 million for the nine months ended March 31, 2007. The
increase in net cash provided by operating activities was primarily
the result of a reduction in finished product and raw material
inventories. The decrease of approximately $3.6 million in finished
product inventory is primarily due to improved inventory turns. The
decrease of approximately $5.6 million in raw material inventory is
due to lower levels of domestic manufacturing.
Capital expenditures were $10.2 million during the first nine
months of fiscal year 2007, including approximately $6.0 million for
the purchase of a west coast warehouse, approximately $1.5 million for
a warehouse addition in Indiana and approximately $1.4 million for
delivery equipment. Depreciation and amortization expense was $4.0
million and $4.1 million for the nine-month periods ended March 31,
2007 and 2006, respectively. The Company expects that capital
expenditures will be approximately $1.0 million for the remainder of
fiscal year 2007. The Company believes that existing credit facilities
are adequate for its capital requirements for the remainder of fiscal
year 2007.
All earnings per share amounts are on a diluted basis.
Outlook
Consistent with industry-wide trends, the residential and vehicle
markets continued soft through the Company's third fiscal quarter. The
Company expects this to continue through the remainder of the 2007
fiscal year. Sales of products into commercial applications continued
to be strong in the third quarter of the 2007 fiscal year. We expect
the growth rate in commercial applications to moderate somewhat in the
fourth quarter of the fiscal year.
The Company continues to explore cost control opportunities in all
facets of its business. The Company believes it has the necessary
inventories and product offerings in place to take advantage of
opportunities for expansion of certain markets, such as commercial
office and hospitality. The Company will continue its strategy of
providing furniture from a wide selection of domestically manufactured
and imported products.
Analysts Conference Call
We will host a conference call for analysts on Wednesday, April
25, 2007, at 10:30 a.m. Central Time. To access the call, please dial
1-888-275-4480 and provide the operator with ID# 9921107. A replay
will be available for two weeks beginning approximately two hours
after the conclusion of the call by dialing 1-800-642-1687 and
entering ID# 9921107.
Forward-Looking Statements
Statements, including those in this release, which are not
historical or current facts, are "forward-looking statements" made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. There are certain important factors
that could cause our results to differ materially from those
anticipated by some of the statements made in this press release.
Investors are cautioned that all forward-looking statements involve
risk and uncertainty. Some of the factors that could affect results
are the cyclical nature of the furniture industry, the effectiveness
of new product introductions and distribution channels, the product
mix of sales, pricing pressures, the cost of raw materials and fuel,
foreign currency valuations, actions by governments including taxes
and tariffs, the amount of sales generated and the profit margins
thereon, competition (both foreign and domestic), changes in interest
rates, credit exposure with customers and general economic conditions.
Any forward-looking statement speaks only as of the date of this press
release. We specifically decline to undertake any obligation to
publicly revise any forward-looking statements that have been made to
reflect events or circumstances after the date of such statements or
to reflect the occurrence of anticipated or unanticipated events.
About Flexsteel
Flexsteel Industries, Inc. is headquartered in Dubuque, Iowa, and
was incorporated in 1929. Flexsteel is a designer, manufacturer,
importer and marketer of quality upholstered and wood furniture for
residential, recreational vehicle, office, hospitality and healthcare
markets. All products are distributed nationally.
For more information, visit our web site at
http://www.flexsteel.com.
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, June 30,
2007 2006
------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........... $2,281,832 $1,985,768
Investments......................... 975,656 817,618
Trade receivables, net.............. 50,001,632 51,179,791
Inventories......................... 75,148,334 84,769,972
Other............................... 6,146,876 6,634,121
------------- -------------
Total current assets...................... 134,554,330 145,387,270
NONCURRENT ASSETS:
Property, plant, and equipment, net. 30,259,434 24,158,041
Other assets........................ 14,718,218 13,780,393
------------- -------------
TOTAL..................................... $179,531,982 $183,325,704
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade............... $13,851,456 $15,768,435
Notes payable and current maturities of
long-term debt........................ 5,393,147 9,466,643
Accrued liabilities.................... 24,273,418 23,164,927
------------- -------------
Total current liabilities................. 43,518,021 48,400,005
LONG-TERM LIABILITIES:
Long-term debt......................... 21,463,751 21,846,386
Other long-term liabilities............ 5,707,572 5,576,988
------------- -------------
Total liabilities......................... 70,689,344 75,823,379
SHAREHOLDERS' EQUITY...................... 108,842,638 107,502,325
------------- -------------
TOTAL..................................... $179,531,982 $183,325,704
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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------------- ---------------------------
2007 2006 2007 2006
------------- ------------- ------------- -------------
NET SALES..... $104,071,451 $110,345,280 $311,110,666 $314,081,702
COST OF GOODS
SOLD......... (83,593,396) (88,979,296) (252,453,428) (253,869,453)
------------- ------------- ------------- -------------
GROSS MARGIN.. 20,478,055 21,365,984 58,657,238 60,212,249
SELLING,
GENERAL AND
ADMINI-
STRATIVE..... (18,277,812) (18,223,706) (52,885,603) (54,320,932)
GAIN ON SALE
OF LAND...... 392,685 392,685
------------- ------------- ------------- -------------
OPERATING
INCOME....... 2,592,928 3,142,278 6,164,320 5,891,317
------------- ------------- ------------- -------------
OTHER INCOME
(EXPENSE):
Interest
and other
income... 128,356 247,120 459,363 554,055
Interest
expense.. (329,682) (487,530) (1,110,298) (1,118,934)
------------- ------------- ------------- -------------
Total.. (201,326) (240,410) (650,935) (564,879)
------------- ------------- ------------- -------------
INCOME BEFORE
INCOME TAXES. 2,391,602 2,901,868 5,513,385 5,326,438
PROVISION FOR
INCOME TAXES. (870,000) (1,140,000) (2,020,000) (2,090,000)
------------- ------------- ------------- -------------
NET INCOME.... $1,521,602 $1,761,868 $3,493,385 $3,236,438
============= ============= ============= =============
AVERAGE NUMBER
OF COMMON
SHARES
OUTSTANDING:
Basic.... 6,568,251 6,562,456 6,566,396 6,556,669
============= ============= ============= =============
Diluted.. 6,586,488 6,583,230 6,578,661 6,576,487
============= ============= ============= =============
EARNINGS PER
SHARE OF
COMMON STOCK:
Basic.... $0.23 $0.27 $0.53 $0.49
============= ============= ============= =============
Diluted.. $0.23 $0.27 $0.53 $0.49
============= ============= ============= =============
FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended
March 31,
-------------------------
2007 2006
------------ ------------
OPERATING ACTIVITIES:
Net income.................................. $3,493,385 $3,236,438
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization........... 3,989,813 4,099,889
Gain on disposition of capital assets... (473,060) (41,647)
Stock-based compensation expense........ 274,000 427,000
Changes in operating assets and
liabilities............................ 9,676,238 (14,211,816)
------------ ------------
Net cash provided by (used in) operating
activities................................. 16,960,376 (6,490,136)
------------ ------------
INVESTING ACTIVITIES:
Net purchases and sales of investments.. (152,551) 631,110
Proceeds from sale of capital assets.... 637,466 75,286
Capital expenditures.................... (10,196,972) (3,169,859)
------------ ------------
Net cash provided by (used in) investing
activities................................. (9,712,057) (2,463,463)
------------ ------------
FINANCING ACTIVITIES:
Net (repayments of) proceeds from
borrowings............................. (4,456,132) 10,525,838
Dividends paid.......................... (2,560,361) (2,555,874)
Proceeds from issuance of common stock.. 64,238 78,101
------------ ------------
Net cash (used in) provided by financing
activities................................. (6,952,255) 8,048,065
------------ ------------
Increase (decrease) in cash and cash
equivalents................................ 296,064 (905,534)
Cash and cash equivalents at beginning of
period..................................... 1,985,768 1,706,584
------------ ------------
Cash and cash equivalents at end of period.. $2,281,832 $801,050
============ ============
CONTACT: Flexsteel Industries, Inc., Dubuque
Timothy E. Hall, Chief Financial Officer, 563-585-8392