Flexsteel Industries, Inc. FLXS reported impressive second-quarter fiscal 2025 (ended Dec. 31, 2024) results, with earnings and net sales surpassing the Zacks Consensus Estimate. Both metrics increased on a year-over-year basis.
Despite persistent challenges in the industry, Flexsteel has been gaining market shares. The company continued its growth trend, achieving fifth consecutive quarter of positive growth in sales. This growth was broad based, with strong performance in core markets and new initiatives. In addition, Flexsteel expanded its operating margin and generated positive free cash flow. This enabled it to pay off remaining bank debt and begin accumulating cash.
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Shares of Flexsteel gained 6.9% in yesterday’s after-hours trading session. Positive investor sentiments were witnessed as the company raised the midpoint of its sales guidance for fiscal 2025. The company also expects continued improvement in its operating margin and free cash flow for the remainder of the fiscal year.
Inside the Numbers of FLXS
In the fiscal second quarter, the company reported adjusted earnings per share (EPS) of 95 cents, beating the Zacks Consensus Estimate of 74 cents. The company reported adjusted EPS of 57 cents in the prior-year quarter.
Flexsteel Industries, Inc. Price, Consensus and EPS Surprise
Flexsteel Industries, Inc. Price, Consensus and EPS Surprise
Flexsteel Industries, Inc. price-consensus-eps-surprise-chart | Flexsteel Industries, Inc. Quote
Net sales of $108.5 million topped the consensus estimate of $105 million by 3.7%. The metric increased 8.4% from the year-ago quarter’s figure. This upside was driven by a 10.3% year-over-year increase in home furnishings sales through retail stores.
Sales through e-commerce channels declined 7.1% year over year due to weaker consumer demand.
FLXS’ Operating Highlights
The gross margin contracted 90 basis points (bps) year over year to 21%. This downside can be attributed to higher ocean freight costs.
Selling, general and administrative expenses, as a percent of net sales, decreased 240 bps to 14.9% from the prior-year quarter’s levels. This decrease was caused by leverage from higher sales and structural cost savings. However, it was partially offset by investments in growth initiatives.
Adjusted operating margin expanded 150 bps year over year to 6.1%.
Financial Highlights of FLXS
As of Dec. 31, 2024, the company had cash and cash equivalents of $11.8 million compared with $4.8 million at the end of fiscal 2024. Net cash provided by operating activities totaled $9.1 million in the first six months of fiscal 2025, down from $17.2 million reported in the year-ago period.
FLXS’ Q3 & Fiscal 2025 Guidance
For the third quarter of fiscal 2025, the company expects net sales in the range of $110-$115 million, indicating 3% to 7% growth compared with the prior year.
For fiscal 2025, the company expects net sales in the range of $435-$445 million, up from previous expectation of $427-$440 million. The estimated figure indicates 5.5-8% growth from the prior year’s number.
FLXS’ Zacks Rank
Flexsteel currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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