FLXS - Earnings call transcript Q1 2020 | Flexsteel Industries, Inc.

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Operator

Good morning and welcome to the Flexsteel Industries First Quarter of Fiscal Year 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Donni Case, Investor Relations for Flexsteel Industries. Please go ahead.

Donni Case

to fiscal to year welcome first Flexsteel and of quarter XXXX you today’s discuss call Industries Thank financial results.

which is Investor release, Monday, and Events. website, earnings we market News after Our close www.flexsteel.com October under XX section available Relations the on of our issued yesterday,

I’m with open questions. remarks prepared and Chief we will Jerry Executive Hamilton, your and Marcus provide here Financial management Officer. will call today the to Chief On Ditmer, Officer today’s call, then

remind to can you the Before the we similar like begin, include as which would today’s phrases. on statements use such will and be that call anticipate, words I comments by expect, estimate, of forward-looking the identified

uncertainties to forward-looking statements. projections, those forecasts involve Forward-looking statements the and nature differ expressed by actual in and goals, their results or could materially that cause risks from outcomes are estimates, and assumptions, subject to

XX-K our subsequent as forward-looking and described Such filings, These annual statements report include not that of risks and as the this as should other uncertainties speak of upon Form date events. are future updated be are not call those predictions Form conference of most applicable. XX-Q recent reports to on and as limited relied by in SEC but only on quarterly our

refer of information other not as the well release may available and the discussed non-GAAP substitute management on reconciliation comparable financial to intended measures. be non-GAAP but are quantitative press The GAAP Additionally, contains today, measures. for measures the directly to supplement which GAAP the most to website to as the

over call turn Jerry? I’d Ditmer. that, with And to Jerry the like to

Jerry Ditmer

year-end the we quarter us April that joining set restructuring have drive forth business and for been you fiscal Since today. thank simplification. executing and and our transformation morning to we last plan busy fourth call, XXXX Good

year fiscal to all on fronts. of make quarter continue XXXX, we progress first the During

we proceeds quarter of and of the capital assets report the Riverside, material net the driving one to and for other continue monetization Flexsteel a important use This in said was That facility infusion to California only transformation. timely was will that $XX.X event million. completed sale capital

on company. been attracting mentioned our the our top critical across I As call, successful we organization very for talent positions in last mission to have

have Simmons our two quarter, members impressive And credentials who has served I’m COO to This major industry valuable importance four Charlie proven and strengthened of of at pleased agent board as well nine asset also very to leadership a Eitel Chairman leadership a as and directors. companies will new us. in we Bedding areas be years to His our of public understanding in CEO, of as welcome us. as change Company. roles have deep

our Interim being innovator, well guiding a Dungaree. His as industries. is development Officer Chief Kaness as Strategy of serving at U.S. the Urban now as Walmart's channel, as CEO to the an leadership global acknowledged space consumer this team heading is its Division, this strategy digital, include e-commerce e-commerce in channel. important of operator Chairman especially Brand in e-commerce Lucky Outfitters, and well Matt Matt’s experiences relevant and leadership strategist in respected the in retail and its

a As corporate top the tremendous you can there's board members. imagine, to competition world attract in

to could Charlie very and company. Flexsteel’s their Matt that So transforming see and talents we excited are contribute potential insights and our

line. headwinds on high with Even that people. We’re pressuring is to the facing, China, our both with tariff XX% our the many very with and we're right are path greatly bottom our top confident exposure right industry that the the strong extremely

some but fruit. other want to to ports we make and tariffs, it where move of Vietnam self-driven our to to we good are we progress, of resulted on will bear as our others a Outside basic lesser industry, continue has Southeast Asian initiatives time take such in have we shortages, distribution capabilities, business in on and highways. labor This stampede reactive as as a Like in unfortunately, logistics, plan, infrastructure to to causing well China. countries, out degree and mode stresses a

to has our units in the as challenge chain as without supply risk or business volume caused said, aggressive our continue reposition is With in unmistakable quarter, can import approximately speed the of chain. at damage be which the execution, pivot tariff quality delivery the issues. XX% Flexsteel possible supply to This potential in to customers China down will business. putting we its All our that of disruptions

in approximate to e-commerce we XX% over I back quarter, to the of turn positive over which the Switching work last on sequentially of are sales of the channel quarter. third up I This fourth saw There's back are channel on sequential in a seeing sales full first like sequentially gears e-commerce, the were potential we year-over-year will comps quarter is of an year. this our X% increase as in want versus feel quarter recovery before track. signs positive see positive the comps unlock still and to into important fourth

working into first quarter, pieces lot that place. we've been of will on moving In a the soon fall

fast will said in to assured, to discuss make them we I rest But be more going and we're they unfold. big able broad them As detail earlier, as and happen.

and to give on to turn the our Marcus some financial operations. call you more color will I results Now review over

Marcus Hamilton

Jerry. you, Thank

in Jerry first on remain very our impact our financial The adverse tariff have the business to the just an challenging As environment results. implementation China discussed, continues quarter. of

XX% Flexsteel discussed approximately before, from of sourced we with China. As our exposure sales significant has

decreased for the tariff. lines, Custom XX% to shortfall sales quarter continued related imposed $XXX two the to residential business to and contract Net to lower Hospitality Office demand soft increases exit by from million Commercial accounting planned our the biggest price during first Also the due sales. Design contributed XX.X% with our the business

contracted sales and China sales. Home largely subject year-ago the imported impact. X.X% XX% in due Furnishings declined down tariff sales $XX.X of in this contraction sales net units to in represented the of XX% from in representing Furnishings quarter to the and tariff approximately residential Products residential Home to Residential the quarter compared million XX% XX% a X.X% products and first approximately net with quarter. were net consequently net the overall

We in American XX%, did of positive comps North motion and products our and respectively. XX% manufacturer see recliners

However, net and manufactured of residential sales. recliners XX% represent than less products motion

styles trend products through sequential distributed X% through channel grew million Our e-commerce note, decreased on they quarter. home X.X% products primarily as year-ago seeing positive a to basis. approximately improving $XX.X this sold a On an a versus we’re with

driven care this row exit decision Design Commercial noted, million to our $X.X sequential Custom Jerry in a $X.X million, the quarter and is vehicle e-commerce coupled sales down by Office primarily product seating in lines softer due demand. in were which the second and of As products Hospitality net growth channel. of Contract health decline the to with a was our

first income diluted net or $X.X the share employee million professional in to primarily or the Net to $X.XX $X facility $X.X related last termination reported inventory impairment restructuring. We and expense income related $X.XX $XXX,XXX million, per Program costs the for of of restructuring and included million per fees compared year. income share net quarter closures, a to of Transformation

also of a of included Reported sale $XX.X property. from the net Riverside gain a million net income

diluted compared share in million. per Non-GAAP Excluding per income that adjusted $X.X year-ago adjusted net $X million or non-GAAP net the quarter. $X,XXX with diluted total items $XX.X of these share, income or was one-time $X.XX

plan. points sales the basis XX.X% quarter. following. the quarter versus product XX.X% the basis by increase to margin decline the productivity profitability related plant, depreciation Gross of which a due XXX manufacturing in our XX offset as of point our and labor lower volume XX a of ongoing of to quarter. in basis now for partially A points basis currency percent decline results first exchange points our Turning points decline XXX of prior driven in was of The in decline part the from of plants was for year and primarily our as XXX the net basis manufacturing reported Dubuque consolidation by foreign mix, is an to restructuring

In million CEO. retirement expenses related and severance Former we of decreased prior-year expense $X.X incurred of a the quarter, to to administrative $XX.X million our million. the general $X.X Selling, one-time

first In addition, during quarter $X.X period. taken savings actions year-ago of restructuring XXXX compared a in fourth quarter of drove the the million with

was year. of compared net percentage SG&A last XX.X% a As with XX.X% sales,

tax or an period, income of million tax XX.X% $X.X the an rate to or the tax tax quarter in is rate first effective XX%. taxes, comparable compared million effective during expense expense Regarding of of $X.X

Now the turning to balance sheet.

equivalents the During quarter Working cash September capital activities increase ended current the was which increase assets sale compared first operating million, was the $XX.X in XX the and California of and million primarily from Riverside used of to capital million quarter. proceeds our attributed in $XX cash in from approximately up $X.X million The quarter, fourth working drove to cash cash was fourth million. end liabilities at at at $XXX.X the $XXX.X equivalents of of we net cash the with and minus million, in facility, $XX.X the current the end quarter.

offset as decline restructuring the paid in million. $X.X the to range of first and of million, at decline largely related the in expenditures to $X CapEx was $X million Capital previously, million we year in $X payable and a This accrued and by receivables of other current in partially assets trade end due $X.X accounts expenses of first was we fiscal be annualized million quarter. quarter expect to for the the mentioned

September revolver a XX. $XX.X million maintains currently available $XX company of The remains at on which million

As second it's quarter, the begin we execution. about all

talent We returning call right and transformation With fully profitable to our committed open value that, remain and place creation. to I'll Flexsteel the questions. to the have in for long-term execute plan growth

Operator

Thank you.

first ahead. JP of session. [Operator will Investment We Instructions] Global Value question question-and-answer The go from Please Corporation. begin the today now comes Geygan

JP Geygan

pace. Hey, things on at are made. like good progress the moving looks morning, congratulations It a and you've quick gentlemen

Jerry Ditmer

JP. Thanks

JP Geygan

details Jerry, you plan hold. on said discuss that you your depends additional restructuring on

this Given the announcing you're quarterly on on would progressing a Or expect you sort at announcement? interim we plan, which of do basis? progress speed anticipate some

Jerry Ditmer

at the in that each reviews. definitely plan is our during point to something plan plan good will JP. of we're quarterly If come going. we come you question, At is there this that's where quarter to Right we're give is Yes, time, major, out. the and out detailed come where just a we back and obviously now

JP Geygan

paradigm from expect on being going on you've the or behaviors be new elaborate end? Okay, done can that the supplier how given forward? we the of either tariffs, you customers the provide effect might end the what or And mentioned some reactions tariffs some more spots and maybe of mitigate detail your present done to then the to customer to bright customer from be might

Jerry Ditmer

I'll that, do JP. Yes,

besides think So and will over introduced we in we met a a it Jeff places also done works with show that products which in down six of Point, your lot in with just months coming firm China. is I High I every got who from that's be other new

pricing slots would been we've So From are that, we be some to to standpoint, that short congestion -- the prepared issues there, have about that mitigate pretty less albeit us. forward In there obviously we because begin lot slower. a a the plans us us will of will exposure of lot happened tariffs bit you will but like that well Marcus's far. of our a there's talk just secure But going make to a have in lot little going so going we forward, are making heard our able what's port things of and comments, think tariffs term no tariff. lot a a to there's course, forward, can

Now, that's XX%. assuming at they stay

whatever. go can down. And those all we'll they know, XX% the the to come. you XX% end of day, course, of at as they go as we with to deal they course, But hope Of

at what customers, with saw really we if really big High pricing. the everybody come we'll the thing show you that out was call Point non-tariff Our

us our to and all, new with So had at our customers very the new if seen is tariffs have a these you you comfortable were price, this not that. would are mention gone showroom, slots,

months. behind So have most we're that we us six the to in will about excited part next XX here -- pretty for that the

JP Geygan

being or and finally, your property can relates you Dubuque as or facility? Great. provide the on particularly that it update you've properties previously And to closed footprint, your announced consolidated of transition an then

Jerry Ditmer

to you that? handle do want Marcus, So go and

Marcus Hamilton

Yes, sold the so as know, in JP, the Riverside property quarter. we've, you we've

So that's now gone.

Indiana, nothing some We've facility. then We in or no, Arkansas it our we've in offers property. had that Huntingberg, of also which one but warehouses some and selling And interest yet some are trying also Harrison, interest to on yet no confirmed sell our we're had interest.

it's the terms feet it's Dubuque, of probably being I the the the you Legacy in facility. they've already In XXX,XXX square XXX,XXX down process torn of if of Dubuque XX,XXX to recall, facility over and torn and would property, foot down, say square

we'll get of the in after time we The to ground we're at the down process we So point that what site. this and is the then to get in remediating facility that point. next to plan do decide

JP Geygan

for time. thank Great, your you

Marcus Hamilton

Thanks JP.

Jerry Ditmer

Thanks JP.

Operator

further any closing [Operator the Instructions] concludes like session. conference As there over to questions, I our back Ditmer are for no would to question-and-answer remarks. this Jerry turn

Jerry Ditmer

in Thank are and call have that you asking JP feel people serving We us want to listening direction those to returns. questions. very our much. to I today. and we appreciate together re-energize the the I shareholder for coming growth and a goals our of on clear profitable thank right place, some continue our journey improving and company our customers, better to generating accomplish

the grateful look all to I our their our their Thanks want contributions of progress directors employees next our for shareholders. I on to to most in for thank updating quarter. board transformation you again. forward guidance, our our we’re support and of

Operator

now The for attending concluded. Thank you conference presentation. today's has

disconnect. now may You

Flexsteel Industries (FLXS) 29 Oct 192020 Q1 Earnings call transcript