DUBUQUE, Iowa--(BUSINESS WIRE)--Jun. 18, 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 updates regarding its previously
announced strategic restructuring plan. The plan is intended to improve
customer experience, increase organizational effectiveness and gain
manufacturing efficiencies to position the Company for long-term
success. The Company previously announced its collaboration with
AlixPartners to develop and evaluate six key workstreams that would
drive the strategic restructuring process. Based on the work and
analysis already completed, Flexsteel today announced its plan to take
action on several key initiatives over the next two years. These actions
will include optimizing sales, general and administrative (SG&A)
expenses, right sizing its manufacturing footprint, and streamlining its
supply chain, as well as monetizing certain assets.
As a result of these planned actions, the Company expects to incur
pre-tax restructuring and related expenses of approximately $48 million
to $53 million over this two-year timeframe of which approximately $36
million to $40 million will be cash and $12 million to $13 million
non-cash. This range includes the $13 million of restructuring and
related expenses announced last month to facilitate the exit of the
Company’s commercial office and custom designed hospitality product
lines as well as the closure of its Riverside, California manufacturing
facility. The Company estimates that lower employee-related costs and
significantly improved efficiencies will result in an annualized,
on-going cost savings of approximately $27 million to $32 million on a
run rate basis to be achieved by the end of fiscal 2021. In addition,
the Company plans to list several properties for sale when the footprint
optimization is completed. When these properties are sold, the Company
expects to generate $45 million to $55 million in cash dependent upon
market conditions at time of sale.
“In a relatively short period of time, our team has performed a thorough
evaluation of the strategic direction and operations at Flexsteel with
the goal of improving the customer experience, simplifying the business,
reducing costs, and ultimately creating shareholder value,” said Jerry
Dittmer, President and CEO of Flexsteel Industries. “We are having to
make some difficult decisions in this process, but know these steps are
in the best interest of the long-term success of the Company and our
shareholders. Right now, we are deep into the execution phase of the
plan and will be able to share more specific detail when we announce
fourth quarter results in August.”
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,
timing to implement restructuring 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/20190618006076/en/
Source: Flexsteel Industries, Inc.
Investor Contact:
Donni Case, Financial Profiles
310.622.8224
FLXS@finprofiles.com
