Flexsteel(US:FLXS)2025-02-05 22:06Financial Performance - Net sales for the quarter ended December 31, 2024, were $108.5 million, an increase of 8.4% compared to $100.1 million in the prior year quarter[54]. - Gross margin for the quarter ended December 31, 2024, was 21.0%, a decrease of 90 basis points from 21.9% in the prior year quarter[55]. - Selling, general and administrative expenses decreased to $16.1 million, or 14.9% of net sales, down from $17.4 million, or 17.3% of net sales in the prior year quarter[56]. - Net income for the quarter ended December 31, 2024, 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 quarter[58]. - For the six months ended December 31, 2024, net sales were $212.5 million, a 9.1% increase from $194.7 million in the prior year[60]. - Gross margin for the six months ended December 31, 2024, was 21.3%, an increase of 60 basis points from 20.7% in the prior year[61]. - Net cash provided by operating activities for the six months ended December 31, 2024, was $9.1 million, down from $17.2 million in the prior year[68]. - The company recorded a pre-tax gain of $5.0 million from the sale of its Dublin, Georgia facility during the quarter ended December 31, 2024[57]. Backlog and Inventory - Home furnishings backlog increased by 40.0% to $77 million as of December 31, 2024, compared to $55 million in the prior year quarter[55]. Foreign Currency and Tariff Risks - The company is assessing options to mitigate potential impacts from a 25% tariff on products from Mexico, effective February 4, 2025[59]. - The Company did not have sales during the quarters ended December 31, 2024 and 2023, but incurred purchases and expenses in foreign currencies, primarily the Mexican Peso[79]. - A negative shift in the value of the U.S. dollar against the Peso could increase the cost of manufactured products[79]. - The Company began using a derivative instrument in Q3 of fiscal year 2025 to reduce exposure to foreign currency risk from changes in the Peso's exchange rate[79]. - The Company does not employ any foreign currency hedges against its exposure to the Mexican Peso[79]. Market and Operational Risks - Political issues and shipping disruptions can adversely affect the ability to import furniture products[78]. - The Company faces risks related to government regulations, duties, taxes, and tariffs on imports[78]. - Significant fluctuations in the value of the U.S. dollar against foreign currencies could interrupt supply and decrease earnings[78]. - The Company has certain assets and liabilities related to manufacturing operations denominated in Pesos, including a VAT receivable[79]. - The primary market risk exposure for the Company is changes in interest rates[80]. Debt and Credit - As of December 31, 2024, the Company had no outstanding borrowings on its line of credit, exclusive of fees and letters of credit[80].