FLXS - Earnings call transcript Q4 2020 | Flexsteel Industries, Inc.

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Operator

Good morning, and welcome to the Flexsteel Industries Fourth Quarter Fiscal Year 2020 Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions [Operator Instructions]. Please note that today's event is being recorded. I would like to turn the conference over to Derek Schmidt, Chief Financial Officer and Chief Operating Officer for Flexsteel Industries. ahead. go Please

Derek Schmidt

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

open release, and Web Chief On will here site, today after questions. Executive issued under News XXth, Officer. the which Jerry then your I yesterday, prepared the www.flexsteel.com, Relations provide earnings am Events. Investor our August call on is management Dittmer, market of today's section with we'll call, & Monday, to remarks, available Our closed we President and

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

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

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

Jerry Dittmer

am hope spoke is and nation grief for there now. navigate this Flexsteel Times today. you and our that ahead. Unfortunately, and by the all widespread challenges all damage each crisis economy, thank test in pandemic of to is no high grateful we and resolve had joining their its last perseverance of the of I insight. still our clear our us as and I COVID the wellbeing be especially and will to us end think morning, behind we April, and us commitment we When Good co-workers of in

will furnishings few I the levels, a impact consumer confidence COVID-XX a determinants cover level, and Now, our demand of business. take plummeted. industry which to minutes have economic future are macro home unemployment of and important on On

measures and virtually economic industry. the stores periods for the which over unemployment and rate both higher notably past and regulations, sales of sharply Conference varying in time few than present which mortar our of has measured dropped were to the These brick to February July. to local below Consumer by X%. short-term is our stands months, Although, pre-COVID long-term Board in risks which greatly has the the state demand. from January around XXX the fourth partners declined quarter, level as Due depressed XX%, it and retail all currently XX.X closed during confidence were

freight surge which from posed and our a in further vessel suppliers recently containers complicated At border costs. and marketing uncertainty shutdowns have customers have global to disrupted the reduced that This This uncertainly have industry. all demand the will customer to and reductions time, of growing turn been around today, sales. whether speak COVID, led store open, challenges levers or restrictions their our around capacity activities and created and by for is we the available capacity. uncertainty generate social As hours a canceling supply in has same ocean to country remain the facing other postponing to contribute distancing, resulting ocean events traditional imbalances

our risk consumer our demand ability had we confirmed cases or shutdown serve to are note, over good execute some sustainable. and constrain several beyond spread have and centers positive recommended despite that the to required to rebounded to but all few demand CDC On continues June as months, costly, a are past pandemic customers. plants the of procedures. visibility distribution shutdowns metro our have cleaning temporarily related As COVID-XX of had these still on for our in July COVID we to major us capacity present furniture trends not areas, Such and whether

was sales demand early Our belief through shutdown is from up late pickup the pent June. recent March that across partially to in related

and that Once also what We stimulus major term. unprecedented will recent is expect up degree dissipate, moderate buoyed demand government near demand to a likely unknown. pent demand feel the we has government stimulus but

decisive As call, and actions financial fortify we to last I our and business addressed quick our took position. on

and foremost employees to welfare and was ensure ability. the safety of First of the best our to our

permanent Next, including cash, necessary we took painful force some closures, to and yet facility protect compensation in cuts. measures reductions

say economic progress exposure our cash to accelerate to financial COVID well-positioned year Regardless was profitable ultimately response, by of career most strategic new possible. in we XX% China affected it and my global that our Moving negatively furniture. challenging business unanticipated Both namely minimize efforts by were successfully XXXX long-term our and strong on factors forces, and and fiscal can I the external we resulted to to U.S. management in quickly deterioration sales of relations date. on adjust the now control, realign brought trade of severely to largely tariffs our our wherever are tariffs moved and navigate and to COVID-XX ongoing transformation made to growth. on In uncertainty results cost summary. China to these partnerships sourcing structure the beyond

in businesses exit fiscal clarity focus best-positioned The strategic of and where organizational first, are year non-core advantaged core include, remaining and profitable with improved and growth. to accomplishments focus. 'XX on seating recent has notable strategic executing our Our RV our accelerated we drive businesses hospitality

operational complexity. reducing Second,

D.C., will These provide cost actions reduced improving which physical are Our aggressive has with and flow a complexity. in and turn approach customers experience. our streamline to structure our in plants Flexsteel better SKU overall rationalization the network in

fixed functional and is Next, and sales The leadership. structural with lower instilled and have we our processes. broad-based fiscal Mississippi to on now All include, Iowa a Lancaster, areas significant took been decision substantially which market-backed distribution we year takeout manufacturing Two to our business structure And network. senior exiting Dubuque, made and improve reduce reduced across the and understanding cost and the business, significant our simplified have sale and structural provide 'XX, Pennsylvania upgrades deeper our throughout company center, the areas which profitability costs organizational company. multi-year Starkville, a of key management deployed and stabilized we have closing improved a in sites path driving actions costs customer talent base. including the making greatly

reduced SG&A rightsizing have we agility our expenses while to the workforce, organization's improving to quickly Second, by market condition. changing respond

expanding ecommerce risk and good penetration e-tailers brick-and-mortar with our improvements made retailers. in our to mitigation distribution. new economic digital both we've shocks to provide progress capabilities will These growth brick-and-click to of future and retail continue and Finally, sources

want are are we strategy true ourselves our position a and in future. While committed how we in the and now early where to journey buy highly furniture to consumers become omnichannel this to to company,

over operational back I'll call on see to results, I'll we closing comments be some turn with the and Derek ahead. what discuss financial Now, our to and Derek?

Derek Schmidt

Jerry. Thank you,

at the quarter increase we the an a all fiscal $XX.X million recent of in most million $XX.X XXXX, fourth the overshadowed during XX% March in down million million, our and end ecommerce healthy rapidly compared prior million a sales approximately due the many virtually to the gain brick-and-mortar or COVID-XX. XX% companies, enormous $XX period. furnishings time, business by Within our $XXX.X home screeching the of sales. represent to through while halt adverse Residential brick-and-mortar partners were when As in primarily were Jerry closed retail down or of to residential, started $XX.X our COVID-XX sold the At XX%, on varying just XX% April were felt sales, of stores or same sales we pandemic stores were million loss impact or XX%. dropping net quarter. year Demand products business. to which retail sales. e-commerce of down the came Fourth their in greatly like saw Yet of to quarter up this degrees due in our was $X.X COVID impact impact discussed,

$X.X sales contract reflecting decision exit non-core were the front, RV seating million, total the our businesses. On to remaining hospitality and

net increased through in fiscal and by year of For The partially $XXX.X seating exit a XX% XXXX, function an were the RV was sales decline the sold China primarily ecommerce, sales of XXXX driven year-over-year demand. hospitality by fiscal pandemic tariff, million sales to grew versus remaining increase businesses. assemble XX.X% The higher and $XXX.X offset fiscal in million which in of COVID-XX our lower ready the declined furniture XXXX. to

with As opening a up consumer of demand, weeks of prior were on April monthly you were prior sales; were sales in retail for XX% which contextual prior June. in of June XX% sales; the stores the several sales sustained even began to surge sales. experienced Memorial give we in To momentum were around fourth sales related some we of quarter; XXX% prior pent sales Day, May perspective and XX% July, year was sales up sales;

of shutdowns, potential U.S. potential benefits election. the stimulus surrounding While and term of highly remains uncertainty intending the sales high July and include demand partial enhanced variables worsening to store upcoming relations the unknowns employment were and return variable the other the continuation China programs, of mitigate full related government to the near unemployment, or encouraging, of to sales presidential impact vulnerable the The COVID-XX.

magnitude were quarter it the store what to would due of drop in given and of parse volume have number difficult fourth earnings factors the multitude sales individual fixed related like from looked COVID-XX shutdowns. costs Our deleverage to by factors, financial making impacted precipitous accurately normalized dramatic results including a

and our from distribution centers up. inefficiencies COVID-XX then back ramping cost sizeable subsequently, Second, operations during quickly shutdown plants closing and

exit Third, associated inventory $X.XX and asset impairment the prior year DC. our share a the onetime to loss of efforts discontinued $X and of associated lines quarter. or a $XX.X of fiscal the discounting onetime quarter $XX.X with charge right a product RV expense and share fourth, the $X.XX the leases. hospitality and those related $X.X We SKU expense, or net use in fourth reported certain to impairment company's diluted businesses restructuring million million costs pretax related of million reported that million a The deep sell required costs exit rationalization loss per items. to million $XX.X And to included with the of closure of compared per loss net net remaining

fourth the million loss. a or to reconciliation non-GAAP quarter compared last adjusted adjusted share of Please adjusted in this non-GAAP per included loss detailed the loss diluted the share GAAP as $X.XX Excluding or in $X.X disclosure earnings fourth $X.XX to in per $X.X these a net release quarter expenses, non-GAAP million net non-GAAP was net of year. the see fiscal for

that to now X.X% as for prior quarter. the There Gross bit three results. percent large margin, year's year a on versus had in drivers. results both adjusted a was of improvement year point quite approximate profitability is was net basis in of X.X% a noise an quarter. The last of reported this gross quarter, quarterly the sales fourth margin the XXX Turning and impact composed in

related basis benefit point to from million impairment lower inventory a XXX program. the restructuring or company's year-over-year First, $X.X

higher related benefit, and or leverage detriment value shutdown. during ramping-up to tax. volume expense. of of SG&A points operational XX.X% Approximately added points the with XX.X% valuation and on closing related and administrative sales sales inefficiencies to operations basis due Selling XXX And basis related a basis from expenses costs lower of COVID-XX quarter. third, lease XXX debt XXX foreign this XXX due related million net loan the compared to general COVID points to or point year from reduced to costs impairments, fixed basis a prior basis increase a XXX for in Second, were point were $X.X bad

of the million of rate to tax Regarding prior $X.X during of an XX.X%. million effective benefit effective or a taxes, quarter the reported rate we during fourth tax an XX.X% quarter, compared in a $X.X or tax quarter benefit the year of tax

Now turning balance to the sheet.

And Jerry and $XX and quarter aggressive debt. As we decisive cash. ended cash the quarter million a fourth to position as preserve noted, a result, took strong during actions with the no reduce we of and costs

from During $X.X fiscal fiscal at cash million year million operations in XXXX, $XX.X XXXX. compared year generated end with we

a for end of new released, previously a of the commitment As we year line secured credit to million fiscal XXXX. $XX prior

an Working more current lower attributable Given amount fits $X.X new needs future proceeds company, million, favorable as by the facility liability cash our and of million, an unnecessary and and million was of and terms assets inventory in to increase from and Capital and expenditures strong compared next XXXX. a current at months working within $XX $X.X and $X.X to liabilities or result a and which XX, sale agreement were million. We of have in position reduction renegotiation California $XX.X $XX.X costs. current we activities, cash business's of million in to payable partially in held reduces assets for $XX.X assets capital, XXXX two. in the credit million. sales decrease minus initiated million anticipate million accounts $XXX.X increase confidence inventory Riverside the ended June for XXXX, June XX, week in to million modified finalizing million June flows, $XXX.X with $X.X million in increase better to of $X.X million the of at primarily $XX capital management receivables decrease of increase rationalization line of of in SKU due increase cash other XX, a sale The of at lower of defined the a was current the trade in the a due to $XX.X million, restructuring XX offset as

between adequate and a restructured and $X working we for requirements. finally, During spending update capital these And to have fiscal meet we expenditures, quick million $X we capital expenses. XXXX, on anticipate million believe

program. expense, expects pursuing June primarily XXXX, the employee $X costs, transformation steadfast approximately pension incur write fees, part the by to year facility optimization to $XX.X will ongoing fully-completed first in of in and business withdrawal the of termination ended of the opportunities. continuous year of due down comprehensive and professional assets expected for incurred to end fiscal related million company facility previously transformation impairment, XXXX, million the fiscal restructuring transition of The of previously company the During half Flexsteel's improvement and closures, expense while be liability company program restructuring are XX, as Activities fiscal the to announced XXXX. remain announced

the I'll back call to Jerry? Now, turn Jerry.

Jerry Dittmer

earlier, the multiple we company very under cloudy positioning noted successfully outlook remains demand but scenarios. are to the sales As operate

position operations when a this our COVID-XX, Vietnam with in been quarter jobs up and wage growth support to direction, onset constraints. After back the amount ocean outlook for be could ability of U.S. demand response, our suppliers exposure we in reset confidence existing taking guidance unfolding in ramp the chain facilities. not supply we it effect, quickly at sales July line ship In to put Wage needed provide programs. with capacity several consumer we headwinds that border production in brought With in when Vietnam, XXXX. back currently were global due leverage demand. our result. recruit exposure future Vietnam of restrictions While not to on increased encountering, of demand and no our somewhat to record our the for of capacity supplier to container from imbalance has Vietnam and sales may are we by any applicants lifted. is the these are government Vietnam. from on the strict part workers remainder This at in constraints no a facing XX% It of control. can Vietnam. unemployment, longer recede was did added. encouraging, uncertainty are is are at stimulus our There and conservatively attract with additional place container increasingly ocean also and limit will significant costs shipping China surcharges. outside online. we to China of out sight hard are country increases, border suppliers specifically COVID-XX, to spot was container either capacity of calendar planning now, The unemployment, talent work depending workers reversed up situation only driving the production on restrictions later being be rates COVID-XX, the beyond June dependent we market highly we our as our rates various bringing Right and locations reduce order dramatically to unclear moving supply not of of tariffs to to China environment, cost outside several which The the other large is premium sales to was due despite XX% a aggressively capacity difficult container new finding our in Asia This rate increase to year profit countries for our now in circumstances in on a somewhat to change but from new of

Now margins we of out least term XXXX. situations. production the our sales have to remain capacity various continue in of additional cost back economic a through increased year gross on China in multitude preserve profit uncertainty to production revert confident scenarios. be will the potential ability drag tariffs to the stock to we for on and The cash of China at effectively inventory to calendar Despite near headwinds, and navigate avoid

remain that, and furniture omnichannel leader that our made generate core on profitability to the reduce value questions, your the cost return With to long-term. position organization refocus we've we'll operator? our the shareholder over reset confident sustainable the will accelerate as complexity, businesses, in move ourselves structure We industry, upgrade also and call the open talent, an to

Operator

Speakers, your now line open. is

the now [Operator session Instructions]. and will We answer question begin

ahead. Portland]. Bold will question First go come [David from with Please

Unidentified Analyst

of so commentary… the trends August discussed July, June, far about talk manner to same able April in you be kind you and Would the

Derek Schmidt

have are been trends sure kind the that put real in seen same what's we're trends out out same not things there. there the The know has the encouraging. we've questions until we of we August everything stabilized, So and sustainable

Just demand of have and a those trends because of pent up lot there was continued.

to lot as So with just because a a like go to here we're other here, the I have what wait of going elections up we happens forward and things. movement said, of and lot see coming

So of see true wait pent have on. much going was if versus continue related how encouraged just how will to and we’re stimulus and much that we've but up to that demand was demand that been

Unidentified Analyst

is August last So or August was flat versus up? year

Derek Schmidt

last August, it's year. up from

Operator

will question go next Mike Our ahead. Please come with Capital. Hughes SGF from

Mike Hughes

on chain those issues issues given fair that one I'm Just robust way. and question, more Is the Is revenue was the up number? growth issues. constrained is you ask if revenue is had labor weren't correct? in say assuming growth meaning previous but different at those supply Maybe the July place, even it to follow factors, that this order could a point. a exceeding by significantly

Derek Schmidt

That correct. is

Mike Hughes

this at question Second line completely in Dubuque. is that that the on for shutdown or up ramping point you right Is now? RV

Derek Schmidt

shutdown. No, that's completely

Mike Hughes

provision an there just the to And Was I know was inventory quarter. Dubuque? related in that

Derek Schmidt

Yes, it was.

Mike Hughes

basis kind putting Just charges inventory aside, money the the plant to a did quarter? the of Dubuque lose Dubuque, in level on

Derek Schmidt

low, even relatively -- was sales breakeven. actually it though it No, were

finished had And of lot so if of you the wrapped a were of produced that already lot goods think kind about and that a even were produce shipments were in goods the shipping that when already materials raw we up to we fabricated. June, finished we

be relative right… would I the expected, that really in further to business the So that of we them for and kind later shipments have expend outgoing though much to didn't yes,

Mike Hughes

the SG&A $X.X was number as then million reported in included that number? lease Is saw $XX.X the impairment. $XX.X million. And I million

Derek Schmidt

I well we normalize mean, have million $XXX,XXX in debt. bad charges provision that that of related is. It an as SG&A, number, are if noteworthy. SG&A other additional as the COVID $X.X thing to for also wanted of you And

or consider items So, as kind extraordinary. non-recurring I those three of would

Mike Hughes

I $XX of over, So normalize for that roughly? be million. if you went Is that right, just would what quarterly SG&A

Derek Schmidt

million onetime back so well. Yes. a gains less And amounted add those dollars, we had to as of than a were couple kind little that a of to

Mike Hughes

$XX So million.

about So level? think as back SG&A $XX do we sales we how from the back see pick up, coming the million

Derek Schmidt

economic taking the type prospects aggressive So terms of knowing look in out very environment. structural we've not in like of costs what been this the

As of range, I back rate appropriate we'll and think I I would kind to kind minus million some more sustainable, sales SG&A. reinvest a But plus maybe think run become of $XX an the million. think money or stabilize be in have in

Mike Hughes

revenue And point breakeven what on now? are your thoughts what's the

Derek Schmidt

At about sales, of to sales. XX% historical XX% our

Mike Hughes

sure I I'm not follow.

if just is So, So, it's number historically would the of revenue $XXX doing apologize… what million now in quarter, and $XX that kind breakeven, are company? would asking breakeven result a saying the I I'm for in be million you're you

Derek Schmidt

around annualized I million. $XXX say basis an would on

Mike Hughes

$XXX be million would breakeven?

Derek Schmidt

Yes.

Mike Hughes

more for held then And you. What's sale? monetize that quickly in for number? how questions $XX.X just the you can assets two contained And million

Derek Schmidt

in then we Yes, Harrison, right a Mississippi sale. Lancaster Dubuque have Lancaster, Arkansas, facility. properties four we contract. have the is now for now Pennsylvania, facility right Starkville, our plant under and

all going would patient The between those with million of reasonable what done, $XX other I market somewhere sure million four from aggregate would it's potential we'd in We're be all fair three, that have cash when value. interested and What those $XX to expect locations. parties. and and get tell we you make sales set be that,

Mike Hughes

they’re accounting So you're at saying that Is potentially just worth $XX they're issue? an held-for-sale and million $XX million. assets

Derek Schmidt

got I'm than that depends the hopeful on for dynamics where now, given but them books. them we've more we Correct. market right Again, what's price it on sell can

Mike Hughes

one Last for you.

can was $XX.X COVID? line [Multiple Is that asset a to million number the receivable other Speakers] related a there be versus year tax ago. changes $XX.X tax The there million in

Derek Schmidt

Yes, to were apply given XX% the rate. we a back tax paid able we when CARES the loss years Act, to previous

Mike Hughes

What roughly? is amount, receivable the tax

Derek Schmidt

$X million.

Mike Hughes

assets cash, gets $XX held-for-sale in the million, is XX. million to plus XX at $XX X So

Okay.

quarters? of working So next for just, what are needs the the capital couple

Derek Schmidt

our healthier I'd was want frankly, more million $XX about in supplier to now, in right position, a invest if Yes, capacity inventory.

gets in we're the think So a supply deeper going again, take position chain to global healthier, once inventory. I

top working as line longer-term profitable will capital. use of sustainable, well. feel investments then, kind that that growth drive we other a again, So be of And the to when have we

Operator

John go with next Pinnacle. Our Deysher from will ahead. come Please question

John Deysher

you've if year, solid the I'm end like the going past be and made that then? done the suggest now priorities transformation. progress Where curious end be needs this December, by fiscal looks to now you year, the between just to year? the restructuring calendar What between year, is complete and are of and It of this the

Derek Schmidt

relates restructuring? the to As it

John Deysher

that's general. point. good in and Yes a Yes,

Derek Schmidt

as is part And our the it over to next place, costs for There's structure a think we field cost year $X belief is well clean that. relates and facilities about we $XX about put be. we us. year to and and up we've things just complete. in need able Right of that and But restructuring the kind we the fixed to and so on most in ongoing million the of restructuring, put pretty So spend million to like we'll it spent over million we where our to out structural $XX behind want in the now, from the take restructuring close assets. million restructuring, half last been generated about that for $XX restructuring now

Now, just sales of our parts again. we'll can after that the we our grow various and top-line be to different go initiatives really working through

John Deysher

been So the to this done heavy up point. lifting has

Derek Schmidt

Correct.

John Deysher

rough Or the are maybe are limited hours? closed for stores this retail just I'm this point? all at is -- base but words, In are a percentage. customer to What of at is that there looking your still sales front. percentage stores have other Back everyone open the open, point?

Derek Schmidt

maybe everybody our the new now. we for all in for become most The back the open back part But norm. most think limited the essence, of could hours are part, So customers open. almost

John Deysher

up, I do you And that as kind guess what having the you under just anticipate anticipate quick sold a plant Lancaster contract. the follow proceeds? of When is and do

Derek Schmidt

close close that, for specific -- we targeting but $X.X a I don't if we by remember Right now, had sales September. of end you we're give listed it million. Until I to want the price

gives indication. So directional that a you

Operator

Instructions] will Global Geygan Investment next [Operator come with ahead. Value question Our today Corp. go Please Jess from

Jess Geygan

you here. interesting Very had lots of quarter, information

be going I Act that? receivable roughly million, to collecting $X is Regarding the you CARES the tax cited. of from do When believe anticipate

Derek Schmidt

IRS. Well, given it's get the difficult the for us shutdown, been to all

the think I not quarter wishful end be would early this more than QX. maybe thinking likely or of

Jess Geygan

tell as You a what and your are? you of ecommerce sales the ecommerce can mentioned but us growing absolute increase, dollar segment

Jerry Dittmer

Yes, while another looking second give looking you at up? we're I'm Do here. question, number. me a have that

Jess Geygan

flow On in for your your year purchases. fiscal recollection you statement, all stock $X.X the My showed QX. that occurred is of cash million

board a of cite of million. the Is inclusive that in buyback or by million? approval You $X the $X.X addition

Derek Schmidt

That would of be The authorization million in to active. addition $X authorization still the is previous $X million.

So excess cash if $X that. additional we're an still give return to when to working But the to million really intended and us option shareholders was appropriate. through

just really we So our wanted -- option we back in pocket. wanted that

Jerry Dittmer

really And so math, total. it's in really it's six Jeff, the plus million eight, $XX

Jess Geygan

have it And been existing six down, you how much net are of drawn that plan? saying was six of prior the

Derek Schmidt

it. of again, we've up majority used but it's a million, still the $X active No

Jess Geygan

really $X amount from of prior million some plan? looking the plus de new we're at So minimis

Derek Schmidt

Correct…

Jerry Dittmer

question to back then ecommerce. your to go on And

were So for in million. about million the quarter $XX.X $XX the absolute and full sales year

Jess Geygan

I SG&A number? a very for of us for number which gave revenue You that the encouraging What's number. think million, roughly of is a ratio $XX

Derek Schmidt

tell X% maybe XX% which I'll contextual that range. and a give what SG&A the perspective on XX% And or be of would the X% our an is Yes, in you or long-term target, a components higher I'll of lower. gross you, margin EBIT

Jess Geygan

is even gross transformation that Do margin you after number XX% your right for the plan? your think

Jerry Dittmer

this. place kind the ran that's in is in step We're range. corporation next XX% want to the stair think I go. of that where that's Historically, we

than way believe that there's means and We think kind stop there. be a are, on we’re thought no where of the that is rate as run do do the or Once try we sit trend that we So next get XX%, XXXX. can that’s to and out be time fees on remember just that And but the they need we're SG&A Absolutely. XX%, XX% said, better looking in we and feel margins, basis X% we really But EBITDA Derek that. we'd we XX%, XX%, higher. big obviously there going on there out in to to be, we to that. step put that to it still track because we're we to

Jess Geygan

And which $XX you're a you've last your transformation million divestiture Balancing million, that included of highlighted. today suggesting little certain higher. regarding question maybe bit market plan could assets, be $XX fair

versus plan at that plan it transformation expectation, Just how think high level was XXXX I rolled that has unfolded you the mid-year a out? versus

Jerry Dittmer

We some during of interesting. been really originally it, to Jess, on back kind COVID So basically were we’ve catch able behind up.

the I I've in. one other mentioned to earlier all think questions. And So earlier

and restructurings, our We to will generated have $XX cash. year down we’ll million structural we've in $XX closer spend even probably fixed the last million on half in been costs take to a million, plus have about $XX $XX able over million

of you combined So in the core businesses really, as strategic there's both But standpoint at about. couple now reset the it, there. generate, we've And the course, were sales a net-net good a corporation. than a decisions from higher in business that lot of really our know, of really is the belief we will hard we’re we've we're and now feeling got

and back our end really good taken actually We've it. lot out of about a really simplified of a lot we're So, feeling complexity business. the of

Jess Geygan

job think luck. exceptional Good circumstances. All say, and right, guys. you've would I I under an Congratulations. I the just it, comment And appreciate done

been You've our capital. of stewards excellent

you. thank So

Jerry Dittmer

Thank Jess.

Operator

from [Operator [David Instructions] Portland]. Please next will come question ahead. with Our Bold go

Unidentified Analyst

that linearity on or on quarter far, August based the Just an demand caution your recede? on will commentary. just Is your expectation that Is the up is part? abundance that following of of so August demand

Jerry Dittmer

of It abundance caution. is

Unidentified Analyst

your that and to debt last SG&A. the -- how the counterparties? should And health the expect one, of financial that be it, is Is last bad expense of we

Jerry Dittmer

haven't Right now, any Van. major had of knock kind we beyond bankruptcies Art wood on

any will -- could of kind if accounts ball stands right That unravel reserved said, receivable. then feel we're starts a as we it the So the I pretty economy for to that arise But about kind now. game. that's think issues new of good now, that

Operator

[Operator go from come Instructions] Our with SGF Hughes ahead. next will question Please Capital. Mike

Mike Hughes

year July a flat First ago, on trends, August at the basically July. and with revenue least

contract the Are out forming you? pro not business. You're

Jerry Dittmer

No. That have right we is minuscule. largely gone. now left is What

Mike Hughes

least that $XX a plus out, million last month that in I'm Is showing because September's in did July, I last, on roughly presumably basis at XX% revenue from perform if from for you're growth, of right? example, quarterly removing quarter. So the

Jerry Dittmer

correct. You're

discontinued Our organic businesses growth, was in XX% July. excluding those

Mike Hughes

follow-up indicated breakeven. be then would million just you And $XXX around

you're million that's off be $XX at you be operating million So it there? gross gross SG&A should $XX even profit, at profitable. million, margin million, that's more Even $XX million, income. if if you XX% SG&A, my bring $XXX math at $XXX like in Where's in a annualized seems of some $XX million back

Jerry Dittmer

not. million really directional. $XXX was The It's

Mike Hughes

goal by this I you Speakers] point? to the And X%. achieve to, When say then did [Multiple wanted at the follow-up, X% you could just

Jerry Dittmer

rate out, put said year would that in in a that We year we fiscal do last run we XXXX.

Mike Hughes

June think So the you at to you quarter third fourth be still year, the current could of even margins? or meaning 'XX, March by fiscal or X% X%

Jerry Dittmer

all point things not in the Yes, the this happen. to seeing time, that try At could plan and do that’s still that.

Mike Hughes

higher the costs. You costs, talked higher shipping about labor

of at that? competitive think a pricing? industry-wide kind Meaning have those do disadvantage you're issue. given because you faces with everyone's not a of And costs, on two, I that's One, pushed that? agree you

Jerry Dittmer

issue universal of the Obviously, So do not furniture. advantage, much pushing But the can. to there's just pass of across in pushback as have started whether channel. been some multiple to as effectively answer container terms we through no. we industries, And with that is from the to is resistance and that. we're The pricing, at trying regard we're through

Derek Schmidt

not as as true We’ve And done doing surcharge. it as it to we’ve we'll bring go a surcharge we're knowing as a that, And hopefully, done and up a price it out. it's it it increase down. eliminates going back

Operator

from comes go Investment Global Geygan Our Corp. question Please Value next ahead. Jess with

Jess Geygan

was Asian follow One and China and is we're But about to albeit countries, out other Asia I'm Vietnam how or sure what from on. what of move as coming of shipping as of today a China? up There beyond Southeast long much your not that’s ratio is of talking of that offshore, the -- out business quick actually otherwise coming that Vietnam.

Jerry Dittmer

XX%. is roughly sales, about XX% what before down And month I our you Yes, in our say sourced. would China I’d total exposure was of terms below last tell

calendar So suppliers to in revert have shift back quickly be Europe then be remainder we're of going we kind the our to, we're a least as in production to a better for alluded Jerry their to up do we Vietnam at at would Vietnam. can to chain, other looking expect year. of the plan But back we we position to broadly whether to ramp that global supply capacity with have Eastern -- that And so -- to are that diversify more looking our Mexico. or China

we well. reduce can our that So as to exposure Asia overall

Jess Geygan

XX% China products bringing to you're tariff? import from a continues in have And these

Jerry Dittmer

Correct.

that will will it be to back short on drag be So margins. term China a move --

Operator

it our conclude any to Jerry to session. will back remarks. would turn for closing question This Dittmer answer I like and

Jerry Dittmer

to participating and the call. company you full hard Thank achieve will potential. this transform our we Throughout in of continue for to pandemic, work today's its duration

vision clear We I ability to And and a carry team's you our where plans have we the I’m questions appreciate in daunting out our your ones. of unprecedented face confident today. of out these if times. want go, and in even please have reach additional to any

support. for We healthy thanks continued stay quarter, and please sane. safe, are next today. time your until grateful your for And Again,

Operator

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

disconnect. may now You

Flexsteel Industries (FLXS) 25 Aug 202020 Q4 Earnings call transcript