DUBUQUE, Iowa--(BUSINESS WIRE)--May 15, 2019--
Flexsteel Industries, Inc. (NASDAQ:FLXS) (“Flexsteel” or the “Company”),
one of the oldest and largest manufacturers, importers and marketers of
residential and contract upholstered and wooden furniture products in
the United States, today announced an initial restructuring action to
increase organizational effectiveness and gain manufacturing
efficiencies to position the Company for long-term success. This first
action includes exiting the Commercial Office and custom-designed
Hospitality product lines. In addition, the Company will immediately
close its Riverside, CA manufacturing facility. The Company expects to
complete the wind down of these product lines and the closure of the
manufacturing site within the current quarter.
“While exiting businesses and reducing staff is not an easy decision, we
are confident it is the right first step toward Flexsteel’s future,”
said Jerry Dittmer, President and CEO of Flexsteel Industries. “The
Commercial Office and custom-designed Hospitality product lines we are
exiting represent approximately 7% of our annual revenue and did not
align with our strategic direction to focus on profitable core
businesses. Regarding the facility closure, we are taking advantage of a
window to take excess capacity offline within our network, generate cost
savings through fixed overhead reduction and position the Company to
monetize a real estate asset we believe has significant value – all
without disruption to our customers. We believe these steps are key in
our efforts to strategically position our business for future success
and to maximize shareholder value.”
Mr. Dittmer added, “As I stated during our April 30th
conference call, we are working aggressively to reposition the Company
and are committed to moving quickly from planning to execution in real
time with transparency to all of our stakeholders.”
As a result of the announcements, the Company expects to reduce its
workforce by approximately 130 people. In total, Flexsteel expects to
incur approximately $4 million in one-time cash charges for employee
severance and related costs and approximately $9 million in non-cash
charges for inventory impairments due to the restructuring action. Over
time, the Company expects to benefit from the resulting reduction in
employee-related costs as well as reduced occupancy costs in addition to
a one-time benefit driven by the sale of the real estate in Riverside,
CA.
About Flexsteel
Flexsteel Industries, Inc. and Subsidiaries (the “Company”) was
incorporated in 1929 and is one of the oldest and largest manufacturers,
importers and marketers of residential and contract upholstered and
wooden furniture products in the United States. Product offerings
include a wide variety of upholstered and wood 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. The Company’s products
are intended for use in home, healthcare and other contract
applications. A featured component in most of the upholstered furniture
is a unique steel drop-in seat spring from which our name “Flexsteel” is
derived. The Company distributes its products throughout the United
States through the Company’s sales force and various independent
representatives.
Forward-Looking Statements
Statements, including those in this release, which are not historical or
current facts, are “forward-looking statements” made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. There are certain important factors that could cause our
results to differ materially from those anticipated by some of the
statements made herein. Investors are cautioned that all forward-looking
statements involve risk and uncertainty. Some of the factors that could
affect results are the cyclical nature of the furniture industry, supply
chain disruptions, litigation, the effectiveness of new product
introductions and distribution channels, the product mix of sales,
pricing pressures, the cost of raw materials and fuel, retention and
recruitment of key employees, actions by governments including laws,
regulations, taxes and tariffs, the amount of sales generated and the
profit margins thereon, competition (both U.S. and foreign), credit
exposure with customers, participation in multi-employer pension plans
and general economic conditions. For further information regarding these
risks and uncertainties, see the “Risk Factors” section in Item 1A of
our most recent Annual Report on Form 10-K as updated by the additional
risk factor included in Item 1A of Part II of our Quarterly Report on
Form 10-Q for the quarter ended March 31, 2019.
For more information, visit our web site at http://www.flexsteel.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190515005291/en/
Source: Flexsteel Industries, Inc.
INVESTOR CONTACT:
Donni Case, Financial Profiles
310.622.8224
Allyson Pooley, Financial Profiles
310.622.8230
FLXS@finprofiles.com
