Core Insights - Flexsteel Industries, Inc. reported strong second-quarter fiscal 2025 results, with earnings and net sales exceeding expectations and showing year-over-year growth [1][4] Financial Performance - Adjusted earnings per share (EPS) reached 95 cents, surpassing the Zacks Consensus Estimate of 74 cents, and increased from 57 cents in the prior-year quarter [4] - Net sales amounted to $108.5 million, exceeding the consensus estimate of $105 million by 3.7% and reflecting an 8.4% increase from the previous year [4] - Home furnishings sales through retail stores rose by 10.3% year-over-year, contributing to the overall sales growth [4] Operational Highlights - Flexsteel achieved its fifth consecutive quarter of positive sales growth, driven by strong performance in core markets and new initiatives [2] - The company expanded its operating margin by 150 basis points year-over-year to 6.1% [7] - Gross margin contracted by 90 basis points to 21% due to higher ocean freight costs, although selling, general, and administrative expenses as a percentage of net sales decreased by 240 basis points to 14.9% [6] Cash Flow and Debt Management - The company generated positive free cash flow, allowing it to pay off remaining bank debt and accumulate cash, with cash and cash equivalents increasing to $11.8 million from $4.8 million at the end of fiscal 2024 [2][8] Future Guidance - For the third quarter of fiscal 2025, Flexsteel expects net sales between $110 million and $115 million, indicating a growth of 3% to 7% compared to the prior year [9] - The company raised its fiscal 2025 net sales guidance to a range of $435 million to $445 million, up from the previous expectation of $427 million to $440 million, reflecting a projected growth of 5.5% to 8% year-over-year [9] Market Reaction - Following the positive earnings report, shares of Flexsteel increased by 6.9% in after-hours trading, driven by favorable investor sentiment [3]

Financial Data and Key Metrics Changes - For Q2 fiscal year 2025, net sales were $108.5 million, representing an 8.4% growth compared to $100.1 million in the prior year quarter, marking the fifth consecutive quarter of year-over-year sales growth [12] - GAAP operating income was $11.7 million, or 10.7% of sales, while adjusted operating income, excluding a $5 million pretax gain from the sale of a facility, was $6.7 million, or 6.1% of net sales, reflecting a 150 basis point increase from the prior year quarter [12][13] - The company generated $6.7 million of operating cash flow and ended the quarter debt-free, with a cash balance of $11.8 million [13] Business Line Data and Key Metrics Changes - Sales growth was broad-based, with the Flexsteel brand core markets up 7%, while the home styles ready-to-assemble brand saw a decline of nearly 30% due to competitive pressures [25][26] - Expanded market initiatives, including ZCliner and Flex Casegoods, contributed to a 92% year-over-year growth [26] Market Data and Key Metrics Changes - Retailer appointments increased by 18% compared to the prior year, with strong engagement from top 100 retailers [5] - Overall industry demand remains soft, but improved traffic trends and sales close rates during the holiday season provide optimism for modest growth in calendar 2025 [4] Company Strategy and Development Direction - The company is focused on driving innovation, enhancing customer experience, and maintaining a diversified portfolio of growth initiatives [19] - Plans to mitigate tariff risks include identifying new sources of supply and dual sourcing products to enhance supply chain agility [10][37] Management's Comments on Operating Environment and Future Outlook - Management expressed a moderately positive outlook for the industry and broader economy, but noted potential adverse impacts from policy changes under the new administration [7] - The company remains confident in its ability to deliver growth exceeding industry averages, barring any highly disruptive external events [11][19] Other Important Information - The company plans to prioritize high ROI investments in new product development and marketing while managing SG&A costs in the range of 15% to 15.5% of sales [32] - Capital expenditures for Q3 are expected to be between $700,000 and $1 million, primarily for ERP system modernization [15] Q&A Session Summary Question: What were the main reasons for revenue being better than guidance? - Management attributed the outperformance to broad-based growth across nearly all business elements, driven by new product development and enhanced customer experience [22][24] Question: What is the outlook on ocean freight costs? - Ocean freight rates remain volatile, and the company plans to continue assessing the situation while passing costs through to maintain retail price points [28][30] Question: How should SG&A be viewed going forward? - SG&A is expected to be managed thoughtfully, aiming to maintain it in the 15% to 15.5% of sales range while reinvesting in high ROI initiatives [31][32] Question: What would be the financial impact of a 25% tariff on Mexico? - A 25% tariff could increase costs by $1.5 million to $2 million per month, but the company has strategies in place to mitigate this impact [33][34] Question: What are the cash priorities moving forward? - The company aims to maintain a cushion of cash on the balance sheet while reinvesting 70% into high ROI initiatives, with potential returns to shareholders if attractive options are not available [39]

Flexsteel Industries, Inc. Reports Strong Fiscal Second Quarter 2025 Results Mr. Schmidt concludes, "In addition to our improved sales outlook, we were also anticipating continued improvement in our operating margin and free cash flow for the remainder of the fiscal year, but the executive orders announced this weekend to implement 25% tariffs on Mexico and Canada introduced significant uncertainty and could materially change our business outlook given our sizable operations in Mexico. The current situation ...

Dwindling consumer confidence and economic uncertainty are marring prospects of the Zacks Furniture industry. Despite industry-wide headwinds in the furniture and home furnishings sector, including reduced home-related spending due to higher mortgage rates and housing affordability challenges, companies like La-Z-Boy Incorporated (LZB) , Sleep Number Corporation (SNBR) and Flexsteel Industries, Inc. (FLXS) are capitalizing on this period by strategically investing in technological advancements, product inno ...

The Consumer Discretionary group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Flexsteel Industries (FLXS) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? Let's take a closer look at the stock's year-to-date performance to find out.Flexsteel Industries is a member of our Consumer Discretionary group, which includes 272 different companies and curren ...

Investors interested in Consumer Discretionary stocks should always be looking to find the best-performing companies in the group. Is Flexsteel Industries (FLXS) one of those stocks right now? Let's take a closer look at the stock's year-to-date performance to find out.Flexsteel Industries is one of 272 companies in the Consumer Discretionary group. The Consumer Discretionary group currently sits at #4 within the Zacks Sector Rank. The Zacks Sector Rank gauges the strength of our 16 individual sector groups ...

Investors interested in stocks from the Furniture sector have probably already heard of Flexsteel Industries (FLXS) and SharkNinja, Inc. (SN) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimat ...

The Consumer Discretionary group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Has Flexsteel Industries (FLXS) been one of those stocks this year? Let's take a closer look at the stock's year-to-date performance to find out.Flexsteel Industries is a member of our Consumer Discretionary group, which includes 270 different companies and currently sits at #9 in the Zacks Sector Rank. The Zacks Sector Rank includes 16 different groups and is ...

Investors interested in Furniture stocks are likely familiar with Flexsteel Industries (FLXS) and SharkNinja, Inc. (SN) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets co ...

Here are three stocks with buy rank and strong momentum characteristics for investors to consider today, October 28th: Impinj (PI) : This company which is a provider of referral and information network radio frequency identification solutions to the retail, pharmaceutical, healthcare, food and beverage and other industries, has a Zacks Rank #1(Strong Buy), and witnessed the Zacks Consensus Estimate for its cuurent year earnings increasing 4.2% over the last 60 days. Impinj' shares gained 28.2% over the last ...