0000037472-20-000027.txt : 20200501 0000037472-20-000027.hdr.sgml : 20200501 20200501151433 ACCESSION NUMBER: 0000037472-20-000027 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 65 CONFORMED PERIOD OF REPORT: 20200331 FILED AS OF DATE: 20200501 DATE AS OF CHANGE: 20200501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLEXSTEEL INDUSTRIES INC CENTRAL INDEX KEY: 0000037472 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD FURNITURE [2510] IRS NUMBER: 420442319 STATE OF INCORPORATION: MN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-05151 FILM NUMBER: 20840422 BUSINESS ADDRESS: STREET 1: 385 BELL ST. CITY: DUBUQUE STATE: IA ZIP: 52001 BUSINESS PHONE: 3195567730 MAIL ADDRESS: STREET 1: P.O. BOX 877 CITY: DUBUQUE STATE: IA ZIP: 52004-0877 10-Q 1 flxs-20200331x10q.htm 10-Q flxs-20200331x10q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

______________________________________

FORM 10-Q

______________________________________

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2020

or

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number 0-5151

______________________________________

FLEXSTEEL INDUSTRIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Incorporated in State of Minnesota

42-0442319

(State or other Jurisdiction of

(I.R.S. Identification No.)

Incorporation or Organization)

385 BELL STREET

DUBUQUE, IA 52001-0877

(Address of Principal Executive Offices) (Zip Code)

(563) 556-7730

(Registrant’s Telephone Number, Including Area Code)

______________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

FLXS

The Nasdaq Stock Market, LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one).

Large Accelerated Filer ¨ Accelerated Filer þ Non-Accelerated Filer ¨ Smaller Reporting Company þ Emerging Growth Company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨ No þ

Common Stock - $1.00 Par Value

Shares Outstanding as of April 29, 2020

8,000,663


FLEXSTEEL INDUSTRIES, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED March 31, 2020

Page

Part I – Financial Information

Item 1.

Financial Statements

3

Consolidated Balance Sheets as of March 31, 2020 and June 30, 2019 (Unaudited)

3

Consolidated Statements of Income (Loss) for the three and nine months ended March 31, 2020 and March 31, 2019 (Unaudited)

4

Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended March 31, 2020 and March 31, 2019 (Unaudited)

4

Consolidated Statements of Changes in Shareholders’ Equity for the nine months ended March 31, 2020 (Unaudited)

5

Consolidated Statements of Changes in Shareholders’ Equity for the nine months ended March 31, 2019 (Unaudited)

6

Consolidated Statements of Cash Flows for the nine months ended March 31, 2020 and March 31, 2019 (Unaudited)

7

Notes to Consolidated Financial Statements (Unaudited)

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

19

Item 4.

Controls and Procedures

20

Part II – Other Information

Item 1A.

Risk Factors

21

Item 6.

Exhibits

21

Signatures

22


PART I FINANCIAL INFORMATION

Item 1.Financial Statements

FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Amounts in thousands, except share and per share data)

March 31,

June 30,

2020

2019

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

62,540

$

22,247

Trade receivables - less allowances: March 31, 2020, $4,500; June 30, 2019, $250

34,292

38,157

Inventories

75,096

93,659

Other

14,924

11,904

Assets held for sale

129

Total current assets

186,981

165,967

NONCURRENT ASSETS:

Property, plant and equipment, net

74,653

79,238

Operating lease right-of-use assets

12,793

Deferred income taxes

93

7,564

Other assets

1,318

1,518

TOTAL ASSETS

$

275,838

$

254,287

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable - trade

$

23,046

$

18,414

Lines of credit

15,000

Current portion of operating lease liabilities

4,686

Accrued liabilities:

Payroll and related items

3,842

4,428

Insurance

4,103

4,554

Restructuring costs

982

6,203

Advertising

2,724

3,497

Environmental remediation

3,600

3,600

Other

6,423

7,068

Total current liabilities

64,406

47,764

LONG-TERM LIABILITIES:

Operating lease liabilities, less current maturities

8,473

Other liabilities

692

1,096

Total liabilities

73,571

48,860

SHAREHOLDERS' EQUITY:

Common stock - $1 par value; authorized 15,000,000 shares;
  outstanding March 31, 2020, 8,000,663 shares;
  outstanding June 30, 2019, 7,902,708 shares

8,001

7,903

Additional paid-in capital

30,758

27,512

Retained earnings

163,508

170,004

Accumulated other comprehensive income

8

Total shareholders' equity

202,267

205,427

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

275,838

$

254,287

See accompanying Notes to Consolidated Financial Statements (Unaudited).

FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

(Amounts in thousands, except per share data)

Three Months Ended

Nine Months Ended

March 31,

March 31,

2020

2019

2020

2019

Net sales

$

98,821

$

111,542

$

302,118

$

343,381

Cost of goods sold

84,973

90,214

254,999

278,786

Gross margin

13,848

21,328

47,119

64,595

Selling, general and administrative

20,115

22,915

55,678

62,484

Restructuring expense

2,377

13,448

ERP impairment

18,668

18,668

Gain on disposal of assets

302

19,269

Operating loss

(8,342)

(20,255)

(2,738)

(16,557)

Interest expense

16

16

Other income

135

158

328

397

Loss before income taxes

(8,223)

(20,097)

(2,426)

(16,160)

Income tax benefit

2,953

4,545

1,323

3,470

Net loss

$

(5,270)

$

(15,552)

$

(1,103)

$

(12,690)

Weighted average number of common shares outstanding:

Basic

7,965

7,892

7,955

7,884

Diluted

7,965

7,892

7,955

7,884

Loss per share of common stock:

Basic

$

(0.66)

$

(1.97)

$

(0.14)

$

(1.61)

Diluted

$

(0.66)

$

(1.97)

$

(0.14)

$

(1.61)

See accompanying Notes to Consolidated Financial Statements (Unaudited).

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands)

Three Months Ended

Nine Months Ended

March 31,

March 31,

2020

2019

2020

2019

Net loss

$

(5,270)

$

(15,552)

$

(1,103)

$

(12,690)

Other comprehensive income (loss):

Unrealized gain (loss) on securities

157

(18)

240

Reclassification of realized gain (loss) on securities to

other income

(107)

7

(211)

Unrealized gains (losses) in securities before taxes

50

(11)

29

Income tax (expense) benefit related to securities

gains (losses)

(13)

3

(8)

Net unrealized gains (losses) on securities

37

(8)

21

Reclassification of realized gains on terminated pension

2,727

2,727

Income tax (expense) benefit related to terminated pension

(709)

(709)

Net realized gain on terminated pension

2,018

2,018

Other comprehensive income (loss), net of tax

2,055

(8)

2,039

Comprehensive loss

$

(5,270)

$

(13,497)

$

(1,111)

$

(10,651)

See accompanying Notes to Consolidated Financial Statements (Unaudited).

FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

(Amounts in thousands)

Nine Months Ended March 31, 2020

Total Par

Accumulated

Value of

Additional

Other

Common

Paid-In

Retained

Comprehensive

Shares ($1 Par)

Capital

Earnings

(Loss) Income

Total

Balance at June 30, 2019

$

7,903

$

27,512

$

170,004

$

8

$

205,427

Adoption of ASU 2016-02

(42)

(42)

Unrealized loss on available for sale investments,
  net of tax

(8)

(8)

Long-term incentive compensation

109

109

Stock-based compensation

39

1,201

1,240

Cash dividends declared

(1,754)

(1,754)

Net income

9,551

9,551

Balance at September 30, 2019

$

7,942

$

28,822

$

177,759

$

$

214,523

Stock options exercised

2

19

21

Long-term incentive compensation

104

104

Stock-based compensation

6

1,787

1,793

Cash dividends declared

(1,816)

(1,816)

Net loss

(5,384)

(5,384)

Balance at December 30, 2019

$

7,950

$

30,732

$

170,559

$

$

209,241

Long-term incentive compensation

89

89

Stock-based compensation

7

449

456

Vesting of restricted stock units and restricted shares

44

(512)

(468)

Cash dividends declared

(1,781)

(1,781)

Net loss

(5,270)

(5,270)

Balance at March 31, 2020

$

8,001

$

30,758

$

163,508

$

$

202,267

See accompanying Notes to Consolidated Financial Statements (Unaudited).


FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

(Amounts in thousands)

Nine Months Ended March 31, 2019

Total Par

Accumulated

Value of

Additional

Other

Common

Paid-In

Retained

Comprehensive

Shares ($1 Par)

Capital

Earnings

(Loss) Income

Total

Balance at June 30, 2018

$

7,868

$

26,321

$

209,553

$

(2,044)

$

241,698

Stock options exercised

3

41

44

Unrealized gain on available for sale investments,
  net of tax

17

17

Long-term incentive compensation

7

(115)

(108)

Stock-based compensation