Q1 FY2027
Filed Oct 26, 2026Flexsteel Industries, Inc. Reports Fiscal First Quarter 2027 Results; Continued Sales and Order Growth Driven by Strategic Initiatives
Net sales and Flexsteel brand sales grew year over year, but gross margin, operating income, net income, and diluted EPS declined amid foreign-currency translation and inflationary cost pressures.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, three months ended September 30, 2026GAAP | $114.0M | – | 3.2% |
| Cost of goods sold, three months ended September 30, 2026GAAP | 88,870 | – | – |
| Gross profit, three months ended September 30, 2026GAAP | 25,096 | – | – |
| Gross margin, three months ended September 30, 2026GAAP | 22.0% | – | decrease of 150 basis points |
| Selling, general and administrative expenses, three months ended September 30, 2026GAAP | 18,202 | – | – |
| Selling, general and administrative expense as percentage of net sales, first quarter fiscal 2027GAAP | 16.0% of net sales | – | – |
| Operating income, three months ended September 30, 2026GAAP | 6,894 | – | – |
| Operating margin, first quarter fiscal 2027GAAP | 6.0% of net sales | – | – |
| Interest income, three months ended September 30, 2026GAAP | 52 | – | – |
| Interest expense, three months ended September 30, 2026GAAP | (9) | – | – |
| Income before income taxes, three months ended September 30, 2026GAAP | 6,937 | – | – |
| Income tax provision, three months ended September 30, 2026GAAP | 1,513 | – | – |
| Effective income tax rate, first quarter fiscal 2027GAAP | 21.8% | – | – |
| Net income and comprehensive income, three months ended September 30, 2026GAAP | $5.42M | – | – |
| Basic earnings per share of common stock, three months ended September 30, 2026GAAP | $1.32 | – | – |
| Diluted earnings per share of common stock, three months ended September 30, 2026GAAP | $1.24 | – | – |
| Weighted average basic common shares outstanding, three months ended September 30, 2026GAAP | 4,122 | – | – |
| Weighted average diluted common shares outstanding, three months ended September 30, 2026GAAP | 4,365 | – | – |
| Net cash (used in) provided by operating activities, three months ended September 30, 2026GAAP | (1,465) | – | – |
| Capital expenditures, three months ended September 30, 2026GAAP | (965) | – | – |
| Net cash (used in) investing activities, three months ended September 30, 2026GAAP | (950) | – | – |
| Net cash (used in) financing activities, three months ended September 30, 2026GAAP | (9,856) | – | – |
| Cash and cash equivalents, September 30, 2026GAAP | $4,407 | – | – |
| Trade receivables, net, September 30, 2026GAAP | 41,520 | – | – |
| Inventories, September 30, 2026GAAP | 92,783 | – | – |
| Total current assets, September 30, 2026GAAP | 148,451 | – | – |
| Property, plant and equipment, net, September 30, 2026GAAP | 35,691 | – | – |
| Total assets, September 30, 2026GAAP | $242,509 | – | – |
| Total current liabilities, September 30, 2026GAAP | 67,956 | – | – |
| Total liabilities, September 30, 2026GAAP | 110,452 | – | – |
| Shareholders' equity, September 30, 2026GAAP | 132,057 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Flexsteel brandGrowth in Flexsteel branded soft seating products of $5.5 million; sales of Flexsteel branded casegoods products were relatively flat compared to the prior year period. | $112.6M | – | 5.1% |
| homestyles brandDecline of $1.9 million in Homestyles ready-to-assemble products as the Company exits the category. | $1.4M | – | (57.6) |
second quarter fiscal 2027 outlook
- Revenue$119.5 - $123.0 million
- NoteSales Growth (vs. Prior Year): 1% to 4%
- NoteSales growth excluding the impact of the homestyles brand exit: 3.5% to 6.5%
- NoteGAAP Operating Margin: 6.5% to 7.0%
- NoteFlexsteel brand sales: $119.5 - $123.0 million
- Note+3.5% to +6.5%
- Notehomestyles brand sales: $0.0
- Note-100%
Capital returns
- Dividends paid: $1.1 million
- Treasury stock purchases: $2.2 million
- Dividends paid, three months ended September 30, 2026: (1,132)
- Treasury stock purchases, three months ended September 30, 2026: (2,184)
- Shares withheld for tax payments on vested shares and options exercised, three months ended September 30, 2026: (6,540)
What drove it
- Net sales growth was driven by growth in Flexsteel branded soft seating products of $5.5 million, partially offset by a decline of $1.9 million in Homestyles ready-to-assemble products.
- Orders increased 5 percent and ending backlog grew 8.2 percent versus the prior year period.
- New product introductions, strategic account share gains, and continued expansion in health and wellness were identified as growth contributors.
- The gross-margin decline was primarily driven by a 130-bps unfavorable foreign currency translation impact from peso-denominated assets in Mexico and inflation driven by elevated energy prices.
- SG&A expense increased due to investments in consumer insights, innovation, new products, marketing and demand generation, and talent.
Concerns
- GAAP operating income declined to $6.9 million from $9.0 million and GAAP operating margin declined to 6.0% from 8.1%.
- Ocean transportation rates have nearly doubled over the last six months, while higher fuel prices and rising material costs continue to pressure margins.
- Management expects consumer confidence, affordability constraints, geopolitical uncertainty, and evolving tariff policies to weigh on industry demand and costs.
- Net cash (used in) provided by operating activities was (1,465), compared with 4,114 in the prior-year quarter.
- Cash and cash equivalents were $4,407 at September 30, 2026, compared with $16,678 at June 30, 2026.
What to watch
- Second-quarter fiscal 2027 sales guidance of $119.5 - $123.0 million and GAAP operating-margin guidance of 6.5% to 7.0%.
- Consumer demand and logistics and material cost inflation driven by elevated energy prices, which management identified as the most significant drivers of financial-outlook variability.
- The effect of the homestyles brand exit, with second-quarter homestyles brand sales forecast at $0.0.
- Order growth, ending backlog growth, strategic account share gains, and the contribution from new product and wellness portfolio introductions.
Balance sheet and cash flow
- Cash and cash equivalents at end of the period: $4,407
- Working capital (current assets less current liabilities): $80.5 million
- Availability under secured line of credit: approximately $29.1 million
- Net cash (used in) provided by operating activities: (1,465)
- Capital expenditures: (965)
- (Decrease) in cash and cash equivalents: (12,271)
- Cash and cash equivalents at beginning of the period: 16,678
Analysis
Flexsteel reported first-quarter fiscal 2027 net sales of $113,966, compared with $110,439 in the prior-year quarter. The release attributed the increase to $5.5 million of growth in Flexsteel branded soft seating products, partly offset by a $1.9 million decline in Homestyles ready-to-assemble products. Flexsteel brand revenue was $112.6 million and grew 5.1%, while homestyles brand revenue was $1.4 million and declined (57.6) as the Company exits the category. Management also cited 5 percent order growth and 8.2 percent ending-backlog growth versus the prior year period.
Profitability weakened despite the sales increase. Gross margin was 22.0%, compared with 23.5%, reflecting a 150-bps decline that management said was primarily driven by a 130-bps unfavorable foreign-currency translation impact from peso-denominated Mexican assets and inflation from elevated energy prices. SG&A expense was 16.0% of net sales, compared with 15.4%, as the Company invested in consumer insights, innovation, product development, marketing, demand generation, and talent. GAAP operating income was $6,894, compared with $8,987, and GAAP diluted EPS was $1.24, compared with $1.31.
Cash flow and liquidity warrant attention. Net cash used in operating activities was (1,465), versus cash provided by operating activities of 4,114 in the prior-year quarter. Capital expenditures were (965). Cash and cash equivalents ended the quarter at $4,407, with working capital of $80.5 million and approximately $29.1 million of secured-line-of-credit availability. The Company paid dividends of (1,132), made treasury stock purchases of (2,184), and reported (6,540) of shares withheld for tax payments on vested shares and options exercised.
For the second quarter of fiscal 2027, Flexsteel expects sales of $119.5 - $123.0 million, growth of 1% to 4% versus the prior-year quarter, and GAAP operating margin of 6.5% to 7.0%. Excluding the homestyles brand exit, sales growth is expected to be 3.5% to 6.5%. Management identifies consumer demand and logistics and material-cost inflation driven by elevated energy prices as the largest variables in the outlook. The key execution question is whether Flexsteel brand growth, strategic account gains, and product introductions can support the guided margin while transportation, fuel, material, and foreign-exchange pressures remain elevated.
Management, verbatim
Net sales increased 3.2 percent compared to the prior year, toward the upper end of our guidance range, marking our twelfth consecutive quarter of year-over-year growth. Sales of Flexsteel branded products grew approximately 5 percent, while sales in our Homestyles ready-to-assemble category, which we are exiting, were down $1.9 million or 57% compared to the prior year quarter. Encouragingly, orders increased 5 percent and our ending backlog grew 8.2 percent versus the prior year period, reinforcing our confidence in the underlying strength of our business.
Derek Schmidt, CEO of Flexsteel Industries, Inc.
From a profitability standpoint, we delivered a GAAP operating margin of approximately 6 percent, which included a $0.8 million or 70 bps unfavorable foreign currency translation impact related to our peso-denominated asset exposure in Mexico.
Derek Schmidt, CEO of Flexsteel Industries, Inc.
Not in the filing
stated, not guessed- Non-GAAP financial measures, including non-GAAP revenue, non-GAAP operating income, non-GAAP net income, non-GAAP EPS, and non-GAAP cash flow, were not reported.
- Free cash flow was not reported.
- Debt balance was not reported.
- Segment operating income or segment profitability was not reported.
- Prior-quarter income-statement comparisons were not reported.
- Prior outlook was not provided, so comparison of actual results with prior guidance was not available.
- Gross-margin, operating-expense, and tax-rate guidance was not reported for second quarter fiscal 2027.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.