Flexsteel Industries, Inc. Announces Business Transformation Actions & More Updates

Flexsteel Industries, Inc. (“Flexsteel” or the “Company”), one of the largest manufacturers, importers and online marketers of furniture products in the United States, today reported third quarter 2020 sales of $98.8 million and a net loss of $5.3 million. GAAP net loss per diluted share was ($0.66), compared to ($1.97) in the prior year quarter. Non-GAAP net income (loss) per diluted share was ($0.45), compared to $0.10 in the prior year. GAAP to non-GAAP reconciliations follow the financial statements in this press release.

COVID-19 Response

As previously disclosed in our Form 8-K filed with the SEC on April 13, 2020, the Company has taken the following actions to mitigate the financial and operational impacts of the COVID-19 pandemic:

Temporary compensation measures:

– 25% reduction to the base salaries of the Company’s officers

– 20% base-salary reduction for non-executive employees earning above $150 thousand

– 50% reduction of cash compensation for the Company’s Board of Directors

Staff and facility measures:

– Temporary lay-off of employees aligned with business requirements and shut-downs

– Employees, who can perform work outside the workplace, are working remotely

– All manufacturing within the United States and Mexico has been temporarily suspended, pending weekly reviews of the external environment and demand

– Our distribution center in Lancaster, Pennsylvania has been permanently closed, with demand being supported by our other distribution centers

Financial measures:

– Elimination of all non-essential expenses and capital expenditures

– Negotiation with vendors to extend payment terms

– Suspension of the 401K match effective June 1, 2020 through the end of the calendar year

– The Company has borrowed $15 million under its revolving credit facilities

The Company expects the COVID-19 pandemic to have an adverse effect on its business, financial condition, and results of operations; however, it is unable to predict the extent or nature of these impacts at this time.

Business Transformation Actions

Consistent with the previously announced comprehensive restructuring plan designed to increase shareholder value and pursue strategies that drive long-term profitable growth, the Company has decided to exit its Recreational Vehicle and remaining Hospitality businesses. The specific timing of these exits and the associated financial impact will be determined in the fourth quarter and subsequently communicated once known. Based on rapidly declining demand and changing market conditions driven by the coronavirus pandemic, it was determined that these businesses are no longer a strategic fit and will not provide an attractive return on investment for shareholders. These actions will enable the Company to increase its focus on profitably growing three business platforms where it is advantaged and can create value: (1) home furnishings, (2) e-commerce, and (3) workspace solutions.

For the full release, including third quarter results, click here.

About Flexsteel

Flexsteel Industries, Inc. and Subsidiaries (the “Company”) is one of the largest manufacturers, importers and online marketers of residential and contract upholstered furniture and products in the United States. Product offerings include a wide variety of upholstered furniture such as sofas, loveseats, chairs, reclining and rocker-reclining chairs, swivel rockers, sofa beds, convertible bedding units, occasional tables, desks, dining tables and chairs and bedroom furniture. A featured component in most of the upholstered furniture is a unique steel drop-in seat spring from which the name “Flexsteel” is derived. The Company distributes its products throughout the United States through its ecommerce channel and direct sales force.

Contact:

Donni Case – Financial Profiles – (310) 622-8224

Source: Flexsteel Industries, Inc.