Yahoo Finance Flexsteel Industries Inc (FLXS) Q3 2024 Earnings Call Transcript Highlights: Surpassing ...
Net Sales: $107.2 million, surpassing guidance of $101 million to $106 million.
Sales Orders: $111.5 million, up 12.3% year-over-year.
Order Backlog: $61.5 million, indicating strong future sales potential.
GAAP Operating Income: $3.0 million or 2.8% of sales.
Adjusted Operating Income: $5.6 million or 5.2% of net sales.
Gross Margin: Improved to 21.7% from 18.8% year-over-year.
SG&A Expenses: Decreased to 16.5% of net sales.
Inventory Reduction: Decreased by $8.6 million, enhancing operational efficiency.
Debt Reduction: Reduced by 21% from the previous fiscal quarter.
Free Cash Flow: Expected to be between $5 million to $11 million in Q4.
Capital Expenditures: Projected at $0.2 million to $0.4 million for Q4.
Debt Levels: Anticipated to be between $4 million to $10 million by end of fiscal 2024.
Effective Tax Rate: Expected to be between 30% to 32% for fiscal 2024.
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: What drove the top line outperformance this quarter? A: (Jerald Dittmer - CEO, Director) The core business performed well, and growth initiatives like Euclid, Charisma, Flex, Decliner, and big box retailer/e-tailer initiatives contributed significantly. Over $7 million of the $8.2 million increase came from these initiatives, with over 1% growth in core markets.
Q: How do you see the dynamic between brick-and-mortar and e-commerce sales channels playing out in the near and longer term? A: (Derek Schmidt - President & CEO) Near term, retail is performing exceptionally well, and the focus will continue there. Long term, the strategy includes expanding into big box and e-tail channels, aiming for a similar margin profile across all channels.
Q: Can you discuss your confidence level in further improving gross margin in fiscal 2025 and beyond? A: (Michael Ressler - CFO, Treasurer, Company Secretary) The company is optimistic about maintaining and expanding gross margins due to successful cost savings initiatives, improved product portfolio, and operational efficiencies. The focus will be on product mix and sales operating leverage.
Q: With plans to pay off debt by next year, how might your capital allocation priorities change? A: (Michael Ressler - CFO, Treasurer, Company Secretary) Near term priorities include reducing debt and maintaining dividends. The company is also considering accumulating cash for value-enhancing acquisitions that align with strategic goals. If suitable investments aren't found, the board will explore ways to return capital to shareholders.
Q: What are the long-term aspirations for SG&A and operating margins? A: (Derek Schmidt - President & CEO) The long-term goal is to achieve an SG&A range of 15-16% and an operating margin of 8%. This will involve prudent investments in growth initiatives and achieving top-line growth faster than SG&A increases.
Q: How is the e-commerce channel performing compared to last year? A: (Derek Schmidt - President & CEO) E-commerce sales were down double digits year over year, reflecting broader market trends. However, the company is consistently performing at or above category levels in major e-commerce platforms.
These insights from Flexsteel's earnings call highlight the company's strategic initiatives driving growth, their focus on improving profitability across all sales channels, and their prudent financial management aimed at long-term shareholder value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
