Flexsteel's sales run flat in 3Q
By Furniture Today Staff -- Furniture Today, April 21, 2003
Dubuque, Iowa — Sales were essentially flat and earnings were off 29.5% for upholstery manufacturer Flexsteel Inds. in its third quarter ended March 31, although sales and earnings for the nine months were both up.
Sales for the quarter came in at $73.5 million compared to $73.7 million in the prior year's period. Net income was $1.4 million, or 22 cents per share, compared to $2 million, or 33 cents per share, in the previous year's third period.
Net sales for the nine months were $217.1 million, an increase of 7% over $202.8 million in the prior year's nine months. Net income for the nine months rose 93.9% to $5.7 million, or 89 cents per share, from $2.9 million, or 48 cents a share, in the previous year's first nine months.
Flexsteel said gross margin in the latest quarter was 21% compared to 22.4% in the prior year.
The company attributed the drop in margins to raw material price increases, particularly in polyfoam — where there were "tremendous increases that continue," said President Bruce Lauritsen — and to changes in product mix, higher delivery expenses related to fuel costs, and weather-related expenses.
The weather contributed to higher utility costs, manufacturing interruptions at the company's plant in eastern Pennsylvania, and delivery inefficiencies in the Eastern third of the United States during February and early March.
"We took a beating in the third quarter," Lauritsen told analysts in a conference call.
For the nine months, the gross margin was 22.2%, compared to 21% for the prior year's nine months. The improvement was due to higher volume and improved fixed cost absorption in the first six months, offset by the third quarter's difficulties. In addition, the prior year's gross margin was reduced by a charge of $900,000 for facility closing costs.
During the third quarter, residential seating sales were $49 million, down 6% from the prior year. Recreational vehicle seating sales were $19.2 million, up 8%. Commercial seating sales were $5.3 million, up 38%.
Lauritsen said that galleries now make up about 50% of Flex-steel's business. Flexsteel has 40 galleries coming online, and 17 Christopher Lowell galleries.
| Flexsteel Inds. | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 3/31 | 2003 | 2002 | Change |
| (a) Based on average shares outstanding of 6.4 million in the 2003 periods, 6.2 million in the 2002 quarter and 6.1 million in the 2002 nine months. | |||
| Sales | $73,461,304 | $73,742,322 | (0.4%) |
| Operating income | 2,270,705 | 3,024,927 | (24.9%) |
| Net income | 1,420,985 | 2,014,818 | (29.5%) |
| Earnings per share (a) | 0.22 | 0.33 | (33.3%) |
| 9 months ended 3/31 | 2003 | 2002 | Change |
| Sales | $217,060,741 | $202,776,664 | 7.0% |
| Operating income | 8,646,788 | 4,003,416 | 116.0% |
| Net income | (b)5,668,088 | 2,922,469 | 93.9% |
| Earnings per share (a) | 0.89 | 0.48 | 85.4% |
