Furniture supplier Flexsteel Industries Inc. reported a 9.2% increase in net sales for the company’s fiscal second quarter, ended Dec. 31.
Revenue totaled $129.4 million for the quarter compared to net sales of $118.5 million in the prior year quarter. Sales were $249.2 million for the six months, an increase of 8.1%.
The Dubuque, Iowa-based company posted net income of $6.2 million, or 78 cents per share, for the quarter compared to $5.3 million, or 68 cents per share, in the prior year quarter. For the six months ended net income was $12.4 million, or $1.56 per share, compared to $10.1 million, or $1.29 per share, in the prior year period.
Gross margin as a percent of net sales for the quarter was 21.2% compared to 22.6% for the prior year quarter. For the six months gross margin as a percent of net sales was 21.5% compared to 23.1% for the prior year period. The decrease is primarily due to increased labor and raw material costs partially offset by volume leverage on fixed costs. In response to margin pressure, the company implemented select sales price increases late in the fiscal quarter.
Selling, general and administrative (SG&A) expenses were 15.2% of net sales in the current year quarter compared to 15.5% of net sales in the prior year quarter. For the six months, SG&A expenses decreased to 15.2% compared to 16.1% in the prior year period primarily due to improved fixed cost leverage.
During the current fiscal year, the company completed a $6.5 million sale of a facility and recognized a pre-tax gain of $1.8 million. On an after-tax basis, the gain represents $1.3 million, or 16 cents per share.
Working capital (current assets less current liabilities) at Dec. 31 was $163 million compared to $158 million at June 30. Changes in working capital include increases of $11 million in inventory; $5 million in accounts receivable; $2 million in investments; $2 million in accounts payable; and a decrease of $11 million in cash and cash equivalents. Accounts receivable increased due to increased sales volume. Inventory increased to improve service levels.
For the six months capital expenditures were $12.9 million including $6.8 million invested to upgrade the business information system and $3.7 million for the construction of a new manufacturing facility.