Flexsteel Industries Reports 8.4% Revenue Growth and Increased Net Income in Q2 FY 2024

Flexsteel Industries, Inc. reported a notable increase in financial performance for the second quarter and first half of fiscal year 2024, as detailed in its latest 10-Q filing. For the three months ended December 31, 2024, the company achieved net sales of $108.5 million, an 8.4% increase from $100.1 million in the same period last year. The six-month figures also reflected growth, with sales rising to $212.5 million from $194.7 million, marking a 9.1% increase. The company's net income for the quarter was $9.1 million, or $1.62 per diluted share, compared to $3.1 million, or $0.57 per diluted share, in the prior year. For the six months, net income reached $13.2 million, or $2.38 per diluted share, up from $3.8 million, or $0.71 per diluted share, in the previous year.

The financial results indicate significant operational improvements, particularly in gross margins, which increased to 21.0% for the quarter and 21.3% for the six-month period, compared to 21.9% and 20.7% respectively in the prior year. This improvement was attributed to sales volume leverage and cost reduction initiatives, despite facing challenges such as increased ocean freight charges. Selling, general, and administrative expenses decreased to $16.1 million for the quarter, down from $17.4 million, reflecting a more efficient cost structure as a percentage of sales.

Strategically, Flexsteel completed the sale of its Dublin, Georgia facility during the quarter, resulting in a pre-tax gain of $5.0 million. This move is part of a broader restructuring plan aimed at optimizing operations. The company reported a backlog of home furnishings orders amounting to $77 million, a 40% increase from the previous year, indicating strong demand for its products. However, sales through e-commerce channels saw a decline of 7.1%, attributed to softer consumer demand.

In terms of liquidity, Flexsteel's working capital increased to $98.2 million as of December 31, 2024, compared to $95.0 million at the end of the previous fiscal year. The company reported net cash provided by operating activities of $9.1 million for the six months, down from $17.2 million in the prior year, primarily due to changes in working capital components. The company also noted that it had no outstanding borrowings under its credit agreement as of the reporting date, maintaining a strong financial position.

Looking ahead, Flexsteel faces potential challenges due to recent executive orders imposing tariffs on products from Mexico, where the company has significant manufacturing operations. The company is currently assessing the impact of these tariffs on its cost structure and profitability. Despite these uncertainties, Flexsteel remains focused on leveraging its operational efficiencies and strong market position to navigate the evolving landscape.