FLXS - Earnings call transcript Q3 2020 | Flexsteel Industries, Inc.

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Operator

Good morning, and welcome to the Flexsteel Industries' Third Quarter Fiscal Year 2020 Earnings Conference Call. [Operator Instructions]. Please note that today's event is being recorded. At this time, I would like to turn the conference over to Donni Case, Investor Relations for Flexsteel Industries. Please go ahead.

Donni Case

to Year to XXXX welcome Third Flexsteel and Fiscal Quarter financial you, today's discuss call Industries' Thank results.

Officer. Relations available Our after earnings Events. Financial Chief the I is Jerry today News Schmidt, Chief Executive market issued our Operating Investor on Dittmer, closed yesterday, am and www.flexsteel.com, release, Tuesday, April & which under section of we Officer; with Derek website, here XX, Chief and

to your On management call we'll provide open remarks, prepared then today's and questions. call, will the

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

and not the to could most Form in are are uncertainties include, that statements, SEC those results materially Such that actual limited, filings and and but subject projections, those and other Forward-looking updated as involve nature, assumptions as on by XX-K annual risks cause risks recent their quarterly Form outcomes forward-looking by our XX-Q are uncertainties statements. expressed estimates, from reports to subsequent to our or the report differ applicable. and in goals, described forecasts on

only speak These forward-looking future of conference relied of date upon predictions and this of statements as should the call as be not events.

I'll the as call Dittmer. GAAP substitute, on And today but Additionally, available discussed directly management over measures. non-GAAP may of quantitative a refer Jerry contains to press information which the that, for Jerry? reconciliation the and the other as release to not most be are to supplement, with non-GAAP measures. measures, the GAAP to turn The intended well to financial comparable website

Jerald Dittmer

international have today. setting Since that the our for we changed COVID-XX of were could the in and predicted joining to no on has At with the level spoke deep company focus our then, The morning, customers, future greatly Good process time, growth. you the last business quarter. severity economy. our on you world thank one I and of since us

impact the relations. X who quarter discuss spans joined for Financial want tremendous range that Chief worked I I third know together at investor I COVID-XX so Schmidt, and and Chief Flexsteel HNI, Derek and to public Derek as years of Operating our recently of on company Officer. finance, firsthand I Before his treasury results, introduce experience

is driving in proven profitable management. through He service also leader supply levels and optimizing growth chains, inventory a

contribution that is move he am to has important and I for addition, which our at the to talent, company. very developing In Derek confident right He a identifying make so will plan forward. a time future of passion right is the significant the strategic person Flexsteel. our to

that no due with already Regarding pricing. the impact surprise demand fell on by We our store short tariff third quarter lower they results, customers retail expectations. a dealing were were initial in Then coronavirus regulations. mid-March, our of of it's shuttered to majority

for bankruptcy. Even pandemic net which before Van, its total spread, announced sales, accounted X% the of Art

in net into net will As XX% loss $X.XX versus year-over-year Derek resulted operating sales in million million of $XX detail a go third declined $XXX result of and challenges, share. the per quarter. to these more

on So to response will now our I COVID-XX. focus

corporate was most all our foremost, empty, people companies and to from our as headquarters could across remotely CDC. outlined following relatively goal many working by we best the with Like is home. protect First safety employees by the the our precautions nation,

took salaries cut compensation nonexecutive decisions, starting employees, our to make with a some risk, swift reductions, We had until company operational we XX% salary XX% also took and of action all $XXX,XXX, above by base the temporarily and difficult and with reduced officers financial to notice. was mitigate

had Directors Our cash of XX% reduction also compensation. temporary a of Board

hardest, The X, due to through June calendar facilities in our of year. match was manufacturing temporary employees American effective and the the XXX(k) was decline all shutdown measure Our North the end the of yet sharp suspended, necessary, the layoff demand. of

layoff we start employees While week the next and production our manufacturing expect operations provided when month of no these production return to month, to this of to will plans if welfare benefits the May by or line impacted we levels. through have and pre-COVID-XX sight

distribution service time. Indiana customers will in centers to Our this valuable Kansas, open California challenging remain and our during

work closed permanently relocated distribution other its Lancaster, we Finally, centers. to and Pennsylvania center distribution our

inventory, sales there cost and all eliminating to vendors online is lower capital We manage overseas we cash vendors are with are to products take placing expenditures, to with our extend negotiating on payment hand and structure continuing ensure inventory To flow, existing when still are and orders on reset we retail our nonessential ship from expenses and for orders are and terms. volume return. the we and best-selling

our terms effectively We drew period and to the liquidity the is of cash million, to totaled investments liquidity under slowdown. increase financial an economic to strengthen cash At current while down credit $XX line are extended our quarter, end of million the preserve of navigate and position strong, our prepared we revolving and $XX.X position. aggressively third our uncertainty

committed company's term. Directors our quarterly history long dividend of policy over cash consecutive on requirements. a of payouts, always, dividend our reviews dividends basis, the the economic considering continually assess to we current our environment XXX With As and are Board we'll and a

worldwide actions companies accelerating next? playing means across The our what's At Flexsteel, down is, the business big as out The duration laid question businesses plans around just are it for of I transformation. pandemic. hunker the

economic to move and for on provided best will the our have vision. profitable us create fully to an current We how clarity coronavirus the company long-term to position opportunity has for our we realize the growth slowdown due shareholders, and value

residential vehicle for core announced financial and e-commerce with seating and cannot the exiting determined workspace strategic and deliver the these the have an noncore potential of have remaining fit platforms company organizational to we on recreational home no future By exit business adequate our business namely have we those furnishings, the to intent our businesses, that hospitality We return. longer competencies solutions. focus greatest are our will growth profitable strategically sharpen growing that long-term and

Class business RV are exiting, our entered seating to the A market efforts, segment less $XXX well providing Furthermore, home attractive decline we of To substantially to context Flexsteel of large In is shipments faster result comparison, from is size decline long-term current than extremely it COVID-XX, a furnishings as our for reprioritization fragmented, growth potential. already the XXXX XXXX to is as had estimated dropped and by pandemic. as as which a offers at provide Class-A cyclical on in opportunities and XXXX. highly offering has a than U.S. prior the billion, RVs, market million $XXX additional more XX% differentiate

our Because positioning there within multiple and furnishing business, our growth. our is we accelerate significant profit and sales deployed to growth improve have initiatives potential competitive home

offerings. tailoring most assortment concentrating product high-demand profitable and are and items on more We become relevant to to our low-performing our off market the cutting while

On the experience operational we ways expand focused to to profitability. in side, improve complexity on the are reduce customers' our processes and heavily both our

The confidence our is not disappointing for extent home robust. will the This on our be our Flexsteel closed, that quarter. expanding outstanding. price term of the counts Flexsteel quality partners is and in actively a that furnishing products this of buying products, new e-commerce plan experience furniture suffer point is to attracting relationships my big for Customers our the will opportunity business our for our styles online short and channel e-commerce adversely closings, the by With greatly impacted in reinforces the with we and exceeded ways. While e-commerce stores in home with business people side, are a ones. the couple customer bright store e-commerce

customers, needed with For our e-commerce we them to brick-and-mortar out their build are working capability. critically

as part a reshape on partner time, business. website generate grow with we of I can them our be can significant think to volume. this store Over with working the part online business this business prominently actively be display do As to valuable the our are endeavor, in of Flexsteel our customers e-commerce to we expertise, online their to they channel way Furthermore, future. they a

sold become category. in resource placing the that online We a can price our are in firmly Flexsteel go-to for stake the furniture ground

building I disruption tariffs to market. our the mentioned in we have the furniture to to at to product new quarter, we customer last exciting using As designing strong from of insights pandemic, hard of ahead look Regardless bring reason a work new industry, and are introductions pipeline optimistically.

our We streamlining are out while operations pushing footprint. of and opportunity boundaries the

expect We nimble, of this out crisis more more to competitive. more come flexible and

over Now to in call to I'll operational turn the detail. and financial our Derek? results Derek discuss

Derek Schmidt

opportunity Jerry's that team. enthusiasm morning. Thank considerable to has and excited and Flexsteel of the you, be also I'm part very ahead, Jerry, I share good

with office the approximately net softness decline For $X last for May, decreased designed the $X.X a third hospitality to commercial and the quarter or decline quarter, quarter. million $XX.X from Exiting business, million products last RV XX.X% coupled year. million of from accounted the custom in second sales the

with quarter from customer residential Our driven on lesser to products results, a store mostly by degree sales and impact third the that XX% also closures volume, tariff in widespread mid-March. of group delivered started disappointing X.X%,

the safety year. will retail anticipate of impact closed of through this lifted. today, balance our fiscal are the on customer majority remain the sales health COVID-XX of stores regulations As until our and adverse have We an

strong the sales continuing a the positive the is On distributed up furniture, are Home in primarily ready-to-assemble brand XX.X% Styles its sold under reported e-commerce note, which trajectory. channel, and through quarter, growth

at grew our period, X-month the XX.X%. For channel e-commerce

contract Turning briefly performance. to

down of end custom are the We the complete by this track wind design remaining year. of on the orders fiscal to hospitality

in year-to-date. well. intend premium the described, down As recover hospitality XX% RV the XX% remaining not Jerry to post-COVID-XX. as that contributed The the home may Jerry products industry, soon Vehicle category we noted business anytime earlier, and especially motor quarter, down sales the exit to Class-A decline, also now Seating

are a company, strategic complex. is a the manufacturer determined attractive require strict have support. for to other that fit specialized review, meet it core products profitability relative engineering longer requirements of considerable and the and potential It seating present long-term RV mentioned, we previously After which vehicle is As future. Flexsteel's must no not businesses, regulatory growth we does to compliance customized and have

resources to such, financial intend return seating focus order on businesses. As to vehicle we higher exit in our

a in business quarter. The to declined once specific impacts of year these XXX determined subsequently margin basis sales XX.X% communicated financial net known. points as will in prior the exits be quarter of percent timing versus fourth and associated quarter, the XX% third the gross In and

on and profitability retail we quarter product and the customer XXX margin initiative, in an through products our basis inventory valuation of contraction stores, rationalization which executed SKU resulted residential a of our approximately part As in points. sold adjustment

rationalizing approximately XXX customer exchange currency foreign Breaking basis products cost and believe favorable times cutting remaining points tail that basis the compression, and lead We improvement. term to basis managing impact, are be material offering is to can associated product off improve down by cycle, margin points XXX mix, the attributed points. to by product XXX our experience. offset points due the to key product profitability labor costs XXX with life is simplifying effectively sustainable the and basis increased long and of

benefit Selling, primarily was in partially SG&A $X.X restructuring general $XX.X from expense to period of third million bankruptcy reduced debt, year or cost. by offset associated expenses, and termination savings an expense last $X.X onetime The further the increase in a quarter on defined administrative, expenses year a one-time of XXXX. in of decrease related million by settlement decreased million as reduced million million fiscal $X.X of severance to lower to and compared bad $X.X or volume. of current SG&A primarily a This the due comparable XX% million reduction SG&A was to $X with taken noncash and driven was plan. and CFO expense customer

items. of loss we third net loss compared net The year. last bottom to loss Turning million or the share diluted to of $X.X a $X.XX reported $X.XX X in line, unusual included the diluted per net a per $XX.X or share million quarter reported

for First, termination primarily facility professional part of employee and transformation as program. $X.X million of fees pretax closures, restructuring announced costs comprehensive the previously expense,

disposal for assets. million severance. related third, And on gain a Second, of $X.X to CFO $X.X million

million net in third adjusted adjusted net - as release effective during benefit share third non-GAAP included tax XXXX. quarter $X loss $X.X press of the $X.XX the benefit of Please share more a an per $X.XX $X.X quarter on or these diluted diluted a We loss. to the third calculation per or compared reported disclosure million the to rate Excluding of million refer of compared income to items, an our earnings adjusted in of company million in the XX.X%. prior $X.X quarter tax third reported an fiscal information year or the of of for quarter net our tax

March to XX XX, increase current minus sheet. $XXX.X due XXXX. working to was our facility as credit, primarily by million from due and rationalization assets million, on sale capital in current $XXX.X inventory to June Working defined as draw compared Turning an increase million as SKU from Riverside, the of cash of of a liabilities, balance in partially capital, The of was in of revolving inventory the resulting management $XX.X offset and $XX.X decline activities. lines to our California million an

in factors decrease trade a impacting accounts XX, range an in current $X.X capital for in an to $X.X a Capital of assets million and estimate year. $X.X We a the expenditures receivables XXXX, notable payable full months million, million. working CapEx fiscal X decline of of increase of March million, were $X the Other included in million. restructuring liability $X.X $X.X increase for $X.XX ended million other

XX, revolvers, our XXXX. March $X.X The company remained at of million which currently on available million maintains $XX

the Now open operator, please questions. for call

Operator

question James Global comes Geygan with Today's Investment [Operator Value Instructions]. from first Corp.

James Geygan

some curious, the contemplated restructuring to you these your where decisive of COVID-XX. in some quarter Jerry your after plan? restructuring during actions took deal and made How and this with actions leave Derek, these with or actions does many plan, you were

Jerald Dittmer

we on we in all and And action plan, or current the we'll with range quarter, our we these million. Yes. took were of with $XX.X a in now, previous restructuring of along current them re-reviewing to our we take come items things along million range our review with $XX contemplating Right with restructuring out a will we're that restructuring is these previous actions. that fourth plan them. JP, restructuring. million none new current in be to These our had during of $XX that our our actions at

James Geygan

Curious as hospitality the your exactly particular time Understood. this RV that it. unit? if particular means cost exit them savings plan sell if at to you the you'll business businesses liquidate and and time? if the about and capital? or of you deploy to made Got sort expect? would decision this to you a your expect you What decision this do you Why at any, proceeds, sort of What how what

Jerald Dittmer

will in in questions them. make company decided is, nine we there, the markets cyclical vehicle return the It's accelerated, decision the the decline. had the near been now, market serves the hospitality You this these that and we'll JP, at first to for businesses is prepandemic the mid-term. greatly new the already to go environment. a the Basically, thing but were in Indication in obviously, within industries recreational demand not levels or

the to and this decision Given on has fully we been made business, this do e-commerce focus the workspace was home it. time to thought best furnishings

to We also to suppliers and we're let do it's and was that them felt know time employees that the going right to customers, it our best do for that.

or know like that, As for really far proceeds to things it's too as just any things. those early us

magnitude length to that. pandemic of have estimate we what now be going to - no duration is of how tough, mean and to not I the It's right be. impossible, idea long this the if going

So see these we this the selling forward buildings, up about time. in and we businesses, move currently we if know those not will selling will and later not especially wrapping any We look as there then operations of be, what do and at would these facilities go valuations we time. wind uncertain up obviously the go a with forward

Derek Schmidt

known. financial expect, those quantify those fourth and fully though, quarter subsequently would once communicate We impacts in to the

communicate the effectively to over and be figure consistent was business. to our values. to suppliers with the our will open how and with coming felt we that all the be we to any willing opportunities and customers It mentioned, our And we down Jerry most to will working both monetize and ramp and As our important explore operation. intent we out days we organizational employees, our customers employees exit,

James Geygan

uncertain Recognizing that we for live you in of sort the times, goal disposal? timing do have some that on

Jerald Dittmer

we'd anything would really with pandemic mean on. facts I right we No. would based now have - Timing? the say going no

start our for quarter. through have is today, a that good that, all the in plan hopefully So Derek said, as that, and timing fourth I to early as here that as mean, all the of estimate going

anything a any sale that in Our to at plan or fire properties not particular this time. of be dispose would like

least to goes this - rest we're - at wrap over quarter. next the knowledge over of So better the have hoping that here as this forward

James Geygan

finally, Okay. what If can on have elaborate pushed was you fiscal be that please into then XXXX? effects postponed? business? And And that will CapEx the will any on

Jerald Dittmer

really. Not

$X was in can there was we easily It major of ones was the our were that whole it Georgia around already million, we done $X that we're there So facilities our things that little year total, a modernizing our we was that, spend IT amounts you a to there We've from to stuff was had bit did the a this out. million Dublin, only tell had, when comfortable postponed. push few related really a And able it with. mostly lot. lot money in of not more standpoint very by and The plant.

Operator

comes next Deysher The John from of Pinnacle. question

John Deysher

curious, you, in news publicly starting stores closed customer terms chains There a intentions Welcome was customer south are to start to I currently just of chain reopen. you going stores. reopen the want you're of was in major for announced Derek. of to we're hearing however furniture just describe pockets And news in about that to was the but their curious, hearing geography they're or base, your them from what I reopening? it, to their base,

Jerald Dittmer

XX% in I'll and open seen of Ohio. open up, or up. it, our way, What is trying to seen close. open and shape different in right are back realizing seen also question. XX% round We've up immediately but go that numbers, we're some back now we've states Good Mississippi, to answer seeing you've Yes. form we're about Georgia, seeing retailers states some

as if is what anything demand, that, - is that a et pent-up or which furniture And good of going you starting a open dense is can the help be of population, have more which back to there's in the now. up. we're is it seeing We distance, about see cetera. traffic lot A social to like we're no lot stores, idea right what thing areas of they going to less

start We open in are bit. that cities major think seen any of is see start at point, major, any places customer to month none we'll course, will of when take question but us And they we of to big the back. And comes at to as haven't the this little that's then, we this And openings the least a the do this. course, be, major question answer. next can of the some going encouraged that

John Deysher

right. All Sure.

Okay. of the of of bankruptcy health terms the receivables? regarding the or mentioned That's delaying You getting Art encouraging. What's or you from right like Van. anything Are payments pushback receivables in that the now? customers forbearance

Derek Schmidt

we're collections surprised pleasantly Actually, have been No. that strong. relatively

payment been extend the financial and said, customers other run did at surprised in We're the payment this help them flow collections we of as But Given terms magnitude we thus many of uncertainty to going proactively go, in of to most closely. this through terms cash I duration far. are Flexsteel prioritizing this any both given customer it we'll stream. impact patch. environment, But the bankruptcy. see their in we've pleasantly our monitoring if But of is the how long

will time So tell.

Jerald Dittmer

Jerry. is This

without and suppliers, that's a customers us. a for partners. long The very great a of XXX time. we've us been on we a year every them a closely our big and for other would really have help been working we lot have We're have with been long, and old with thing our question, that, with too, - company, Almost of be, thing one of same lot very,

So we're encouraged.

so what said, don't may we've we Derek like very look course, course, now. as But Of encouraged. know, far, been of

John Deysher

Great. Okay.

specifics going still be terms seems You product mentioned the the tariffs an of And this issue to of or sourcing? think are are we've less suppliers. the do to past you know more here. I in product an It in talked migrating competitive. the make terms about tariffs issue When of like in changing

Jerald Dittmer

if be. Well, they're no we, the of what course, we're over the thing here doing forever when percentage or will tariff, way control it, have

way as we've what little for to China and bit bring really is been in is done exposure up exposure the handling been we've continue lowered to have our Close ramp a world it, is parts other help. So us. which it was. down the we now are a XX% that It's of under big to where able we'll XX%, to

really our that's we - it to to to them States, parts of the since move to it, and way do do Canada, products. So control over we're continue Vietnam, have Asia, We just back different United different we'll Southeast to is Mexico, move going the no to to that. continue

John Deysher

Do continue you will think China decline? to

Jerald Dittmer

now. my You're out scope of

Derek Schmidt

now. we couple asking transitioning not we think we to product we're about have of China, Well necessary. the in absolutely the long launching new expect products major term, exposure be we will product our products, of as mean decline. in development terms over of process our to in you're start launching about and And if unless those new it groups a that new of I still any

So exposure absolutely of go our over time, a China expect down. period to we

John Deysher

which And you out China at groups this product Okay. point? transitioning of are

Jerald Dittmer

furniture. Most of and are right Recliners Yes. in motion our our now Sofas them

John Deysher

restructuring the June? they year-end completed your a Okay. come and Good. Or for the you by separate the stage that wait in announcement results is, until whenever August will June. the in Will probably to said evaluate I going And of we have last findings me next out? you you're make or one of guess

Jerald Dittmer

It's know yet. that good don't a really We question. Yes.

know we out what come about really and continues happens of will as and the - will out. long A it, lot as severity. pandemic soon soon going It quarter we full with depend on be know to put that here But As fourth us how do it's it, to confident we could we information. stuff feel what into as something take that. the

Derek Schmidt

announce if Obviously, that. if quarter, before the it's and we'll material known it's

Operator

Today's next question from comes [indiscernible].

Unidentified Analyst

get employees. taking crisis, very would well relieved cut the a team across to I taking first for want as executive to am see to this the Board more actions and I this if follow what's especially especially of as executive would because reductions need XX% cut to you all on impact our wish that start the and your flexibility we a on weather such the do off, saying what lot this. I have first to that's cash further, through companies But that do example pay decisive by going how right much here definitely flow? pay kind be? thing And have you levels,

Derek Schmidt

broader to I'll I compensation. answer Yes. attempt just question is the And answer than that. to the executive think

make assured that that can aggressive impact, pandemic point. appreciate, efficiently you and we're normal As and can monitoring demand running due please multiple and our actions to proactive our to what rate scenarios, to this. at the be we're resulting endure unknown the determine run recover and duration of is to impossible But almost Flexsteel business economic it's scale operations sales taking this sure

structure. business so further, to demand our should within And prepared expense adjust our think the if areas cost across a are I different we various actions dissipate multitude to take of

Unidentified Analyst

any Following the an risks time see mentioned layoff to reopen having resume and comes eventually in in you adequate the that do production? manufacturing, your you when return workforce

Jerald Dittmer

can I unknown. very out those news if it's programs they use that there them an happy them. good are the much the a that programs government now are those a for employees, right is That's there lot. We're question. good is, any mean helping Obviously,

come of our they a part get our far back can were Most folks I to one - this come of that go guess back, to them people standpoint lot able As we our to to Monday, ecstatic a coming jobs probably plants good we're aren't right for have back. as pretty brought back able of to and are to be there starting work. is now.

and another one coming Monday, one to we've the So we're this doing callback. plant. started start We're going up

So that right will back, continue. now, coming and we're hoping we've seen workers is what

Unidentified Analyst

hear right. good This for All is to Well, definitely Derek. question that. that's

on all sales of the month How here those XX% say, on decline it, bad based sales for, doesn't quarter. April? this because was what Our - do really to hit look look year-over-year that

Derek Schmidt

when than until in much wasn't about we it the you think mid-March. the tell really mid-month. if at hit slower what place can I What of saw shelters you April really broadly, about I looks can tail-end mean Yes. the

tail-end. kind we so until And the decline didn't of sales see

Now kind run of we're it's about, what I to determine to XX% terms orders difficult rate. of our now, in are go at here, XX% seeing from where mean normal right are of about but we

the fair are amount is March. Now of April much worse much, certainly but optimism, hearing what sales a we're from retail than channel

Unidentified Analyst

to So of down they typically be? XX% to XX% you said would what

Derek Schmidt

That's what we're currently cautiously retail the Again, up, seeing up. pick that open as we're stores we'll that optimistic see that now.

We momentum as in encouraging. e-commerce which well, business is good are seeing really our

Unidentified Analyst

have done What shift right. of you kind enhancing All Right. consumer market all your research say, regarding, in advantage? competitive and trends

Jerald Dittmer

and research the going what been at, that look and in we is what look to like to we is the our just of people going that trends should happening looking doing these have right it what we've what a portfolio fair with What's time. to home portfolios, our there's real-time So really this, but a product most consumer like doing about been happening the now, out and know, don't is we're doing amount like are that a lot said, customers a the going workplace marketing right working trends research research changes, got now at real our - with that of lot look been as and then interesting our with of more our we've And we've product like because to of ongoing group look course, of working be consumer coming future. lot shifts do. are is I going doing it through our of product the is are

Unidentified Analyst

competitive that advantage would describe you what And Okay. has?

Jerald Dittmer

What Flexsteel's competitive advantage is?

Unidentified Analyst

Yes.

Jerald Dittmer

Yes.

have there we very and product size We other various broad U.S. that advantage it's manufacturer from whether rooms portfolio. Canada ability of very, And places a Mexico in So fairly a in places, or sourcing to source plus everywhere and standpoint. furniture here of Asia the We to a workplace. Southeast we the hit the from Flexsteel's most scale our hit the quickly we to in is from house have

have of would probably quickly be. advantages. the adapt our And that's consumer to those fairly We trends what biggest one competitive to ability

Derek Schmidt

industry. think has just both the a Jerry parts and I coming the the other actually the really of of kind valued upon with is in brand I'll what of that into lot power, consumer how said, recognized build surprised the the multiple thing channel. the brand I organization well was and

I think diverse we've the second and thing got very broad distribution. is,

the deeply different opportunity e-tailers. of got broaden channels touching consistent flexibility with think portfolio to kind domestically, X,XXX of mean, given reach. the major aligned level, quality that to source penetrate of kind more have to And And I different of to We're retail either nationally. on of kind the and So I our I outsource, regardless got product. all an our we've we're to retailers manufacture broad operational we've the think

Operator

[Operator Instruction].

question next comes Our from [indiscernible].

Unidentified Analyst

caller's executive to echo thing to adjust taken the to want I right previous compensation compensation. and you've on do. comments the absolutely Directors' It the is steps

made referred Your to X-K agree of as debt relative put to used press all taking in it, it early be that large today. that night out flexibility to dividend. April, reviewing of would as shame think that, you history, mention a you pay when on debt we The you need released last is you I Considering dividend are be it you to a back but no the going much you possible. comments mentioned in you were XXth, release the your amount

about to about but do, cut right you to talk you what out that presumably, when thinking will out? you're now? haven't going you're what going can it, spell You And spelled you're

Derek Schmidt

So address I'll that.

long of term, will assume payouts, strong June. Board though, got think we've dividend term. an we'll meets to but short fair mentioned, Jerry on dividend has considering requirements. Board by been in current our and a of the dividend over consecutive Directors over dividends I that review a There cash quarterly to and yet environment tell it's we're continually made change our our or not both and history long I our topic the that to decision the economic discussion when important As Board policy the of you, term assess next here it will the basis, a the be committed What XXX

aggressively we're So cash. managing

continue term. interest and the do capital company shareholders of both will to what's We in best our And deploy the effectively. long we'll

Unidentified Analyst

When you is Can to scheduled dividend your me? shareholders? next payment remind

Derek Schmidt

Yes.

meeting June. in Board is next early Our

end of me. here it So the be right probably don't early July. I the June, with date would have

Unidentified Analyst

fine. That's No.

then, one but - and now isn't So basically? between there

Derek Schmidt

There is not.

Unidentified Analyst

And time What Wonderful. borrowing covenants you give capacity your you open for And have I you about covenants moment. taking most additional with your doing think do you Are unsecured. - flexibility? additional the your do Obviously, your this from Okay. at lenders on comments thank your any debt some prevent borrowing of you conversations is additional stability? more? some borrowers on during to have your to had

Jerald Dittmer

What I lines our all them. are with that regarding can those expanding tell banks of well extending discussions we in you productive very is as as

Unidentified Analyst

lending are unsecured? considering on be you that would And Or as a an secured well?

Jerald Dittmer

Yes. moment. the we're It's appropriate comment in that said, I all assured banks very our discussions at but to not for be really like having, of me with productive details, just

Unidentified Analyst

manufacturing did that's I gave? the the XX% on - mentioned you hear an being number update being sourced is from You China

Jerald Dittmer

Yes.

Our sales exposure.

Unidentified Analyst

exposure. account for motion So for that you're forma in recliners? in expecting Sales [indiscernible] what furniture? the does China XX% for away recliners motion movements to that the Is you're and making move pro currently from

Jerald Dittmer

of prospective It's in fairly months. I'd here we X next, Yes. say, what the project

Unidentified Analyst

is and furniture? So the the the in XX% including recliners motion decline

Jerald Dittmer

transitioned majority - that of in can products Yes. I We a mean, large groups process. are that couple be of we the we've have a still that transitioned. only actually just have a

Unidentified Analyst

about to once is But you'll it XX%? be that complete, process Okay. expect

Jerald Dittmer

of is time over there as diversify long other much the we in our we launches will a portfolio And manage China again, Correct. over gaps natural we move But and try look of product start our to term, because how can certainly then to risk. at countries. new of - capability out limitation country

Unidentified Analyst

helpful. very XX% That's order some e-commerce Or to outlook really customer business And retail rate, run XX% include gave that April, the does that for happening your you as what's is base? in well? strictly hardline the to interesting

Jerald Dittmer

build. can tell had you in I That's very we and we're strong all that is business. e-commerce, a see quarter third in the continuing to What for

momentum up, to the XX% with starting the this predict open how next change back. there. dramatically bounce It's throw demand to stores And we're out strong difficult what caveat, very week. Things I'll is to week. So that again, could seeing will XX% literally

Operator

up follow is a John question The from next Deysher.

John Deysher

quarter, that the of you're in curious, or is hospitality Just to the $XX remaining going much what out if so? total we million in sales sales how and forego, RV that - back the

Derek Schmidt

about X.X% RV is Our in the quarter.

Jerald Dittmer

Yes. The about two at X%. combined right

Derek Schmidt

That's exactly Yes. right, sure.

John Deysher

X% of $XX million.

the going Okay. underlying other be And as words, at these are profit remaining of what businesses to items? lines the In are? treat see will discontinued the what able to fourth quarter we discontinued point

Derek Schmidt

intent of as well, this answer One, terms is me it in long - uncertain our It is two Yes. point, earlier, that to in take. not the mentioned at ramp will question down Jerry parts. how let

businesses of have be. of don't good what duration visibility in those So terms will we yet running the

What I contribute do from you a standpoint, profitability materially. can not these tell businesses

is opportunity financial a that platforms and you focus or these of us change that future. investment So these I benefit substantial expect, organizational The really should profitable not energy will the can greatest the think, the P&L. for exiting so we to businesses those our growth spinning in the provide towards

as So exiting clarity we have these the of external stated we share earlier, that time around and the will as line, community. with the impact financial more as we businesses soon

John Deysher

That's Okay. helpful.

was P&L make X% clear, quarter? to minimal this the was quarter, I'm sure impact just the it So in but

Derek Schmidt

Yes.

Operator

The is [indiscernible]. from a question next up follow

Unidentified Analyst

to XX% work it's to crisis say, a to paying want out of goes months Board, the year, pay believe, to is would somewhat a $X continuing dividend would that do X material on our reserves. our if which million, moving I review this understand over dividend. Do year? flexibility you from I per on for out that discuss another cash that effect the that currently but under I about forward, feel have

Jerald Dittmer

Yes.

And said, that and how we're but and a basically, say I we amount. be price. I - going So dividend doing what there'll am mind need we it what to but of will now, will can't discussion very forward. going what it Derek a had go Board all, mean, And our that repeat dividend have to in assume won't assess back I quarter. should every June critically we're is fair that in decline, it's review be assured, be that. stock my to bring I trying rest we're a return then at no high with to we dividend Right there's look take to with that a going hard our because conserve to lower cash, doubt a

Unidentified Analyst

these for Yes. a my that, paying as with - Board big I I you just I if all? on I were million dividend and shareholders, a that in here I looked mean, and cash mean, I at check stress buy to levels, on you prefer just continue vital. Have do $X return very would conservation cutting to a to back shares depressed far XXX% that, good to at or is although want latter, have cash to if cut very, review. choices taking capital out that I as am want the buyback the either to at

Derek Schmidt

We beyond with Board, and we've again, in all critically just management I into So and already are - your comments point think view had discussion team valid, June. we our points points provide the And your have all your and will meet we'll what we are Board and take consideration the cannot shared. considerations so of they valid. not are assess, that the when

Unidentified Analyst

a right. million, in renegotiating about have the I worthiness, and guys your going I question. credit have cash. were you Because, $XX I And do someone's probably All million at terms after if one $XX concerned How been with would with payment say, be vendors? successful vendor last I were

Derek Schmidt

been of suppliers. largely We've all payable extending those terms. And terms extending our the at if successful sheet, to due accounts you at our balance quarter-over-quarter was up with look very

Unidentified Analyst

on extended? how Can numbers you been any as out comment hard as they've far far

Derek Schmidt

XX days. to XX range, general The

Operator

the like Jerry to to closing remarks. any This over back ends our question-and-answer session. At Mr. for this conference Dittmer turn time, I would

Jerald Dittmer

participating working to hard and face in unprecedented potential. I today's We're the call. for team's these full execute confident am of our times. ability achieve and our company you to in transform its in Thank even daunting

vision have want we clear We go. of to a where

you partners Until again. Thanks, calls all grateful stay are forward We continued support. for on progress their healthy look safe, then, sane. updating our - today. We We questions next do to to quarter. the and our all appreciate

Operator

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

You may disconnect. now

Flexsteel Industries (FLXS) 29 Apr 202020 Q3 Earnings call transcript