Flexsteel Industries (FLXS) 23 Aug 222022 Q4 Earnings call transcript

Good day and welcome to the Flexsteel Industries’ Fourth Quarter Fiscal Year 2022 Earnings Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I'd now like to turn the conference over to Alejandro Huerta, CFO. ahead. go Please

welcome fourth and call discuss to Thank and to fiscal Industries quarter results. year Flexsteel you today's XXXX financial

open release, website here at today after issued under News XXnd the which I yesterday, www.flexsteel.com Relations earnings am your prepared with President Executive Events. Chief Operating Investor our August and Jerry then on remarks, is market Chief we and today's to On call, Officer of Officer. the section we & Monday, will Dittmer, available questions. Our will and close provide call Derek Schmidt, we

like Before we can begin, remind estimate, anticipate, the I will as statements, such would comments call on which include expect words forward-looking to today’s and that phrases. using identified be you similar

nature and are include, estimates, and the expressed uncertainties are described their forecasts forward-looking outcomes results and risks those Such involve are uncertainties to to could differ risks goals, assumptions but cause that actual in not that statements. to limited or projections, Forward-looking those statements as from this most subject materially by should Form be applicable. by reports the relied XX-K quarterly as subsequent and as Form of our speak recent of and events. on XX-Q our statements only SEC forward-looking future date on filings predictions annual These conference other as call updated in of report upon not and

turn Jerry And The comparable of the with be the as measures. will which reconciliation as non-GAAP today, to well contains but supplement, measures. discussed GAAP GAAP and information for I to the Dittmer. release over call the intended most non-GAAP to other quantitative Jerry? the are that, we may refer to directly measures, to Additionally, not substitute available financial the website press on

challenging intensifying solidly organization part quarter in you glad are performed glut which these our aligns the deliver inventory, consumer most by to we're continued I'd inflationary pricing thank able demand, joining challenges building adjusted the fueled pressures. for encouraged million, and that and the We team. given fact competitive the guidance to the conditions, quarter we to our welcoming business was the to by of notably slowing to our we ongoing like of which Alejandro. morning, million exasperated slowed, a pre-pandemic I'm talent Flexsteel our sales fourth with strategic of pressures, across team have included His and and retail from Whilst by within of $XXX $XXX sales addition $XXX million. is of range of today. focus start still revenue furnishings us Good levels. for residential ahead him as of to have

In $X.X addition, million deliver prudently quarter. to of our income managed operating the spending for we

half new and of near-term in Reflecting We year surging important and navigated record of XXXX, expectations result major increase making an $XXX long-term strides first profit dedicated the adapted agility, may and our over all to disruptions cost And ancillary fiscal create in year to high the charges Their XXXX While but choppiness many on challenges fiscal committed profitability. proud world. remain fell inflation, commitment supply advancing shipping challenges, responded extraordinary significant from of grateful employees to to sales delivering am strategic to products exceptionally ability our channel want We a strategic We shipping our our of the Juarez, capabilities. chain, we across while in remain XX% We growth resilience, quickly of full-year achievements last them million, opening a was long-term. fiscal it sales offering also investment our short agenda. earnings, in the successes. they record to achieving very I investments development. and ancillary sales made compete furnishing agenda us previous and due while year. our home inflationary led around over and set on to of At in year. the by and the high same to the omnichannel focusing advancing to second product e-commerce invest an manufacturing innovative am consumers believe to our continued in pressures. time, to the would chain in product conveniently our with we and in like. content meaningful investments these return to will positive third quality and us to purchase abilities grow capacity income where I committed ability profitable retail digital plant Notable how included our allow encouraged half by continued Mexico. effectively by in operating supply

a opened and create we chain allowed reduce weeks, customers transportation. capacity competitors Northeast service domestic many solid the distribution five to alignment for to three in advantaged improve Pennsylvania which the to investments times supply to Greencastle, and addition, us a our build of our a our center customer to foundation levels, global in lead The future. compared new both service In partner and and support stronger to are

is created. entering for factors. While we which few furniture, and year which several the is There fiscal I have our progress major XXXX, a One the outlook. significant by headwind may slowing a in create consumer headwinds driven near-term we and encouraged on am that are sales our foundation believe drag by demand profits we face

fourth period to related everything normalized quarter, more demand the to consumer induced we buying see pandemic to the of First, for reverting an home. in after consumer levels began extraordinary

and from consistently online hearing shifted retail has are both downward. We furniture that traffic customers our

Federal factor tempering new in homes, construction, recession, combat the are for rates, to which have new and home catalyst toll often led Reserve a of food driven second taken actions new inflation confidence. slowing in are increase well is same an pace by mortgage to the consumer of demand time, The the of surge The prices as the purchasing as habits. clearly At furnishings. a purchase inflation home macroeconomic economic spending consumer taking have gasoline uncertainty, regarding on especially down influencing and fears which an

spending pandemic. travel, from back abandoned away mix and towards largely shifting goods the and of peak is entertainment, that services Third, of were the during consumer the

inventories demand are Many retailers slowing that Flexsteel exasperated supply have room further the that full being by inventory due high. retailer For like short-term. able product, of order chain was is demand Until disruptions. post-COVID to move stubbornly furniture their retailers delayed Flexsteel, won't the they have warehouses of to remain inventories in support to manufacturers replenish to some this

areas we in business, inflation Another significant wage continue our all cost across transportation. of as materials, headwind pressures domestic including all and is rates global feel of to forms cost

both offset decline have truck diesel are due rates they rising to been While well as rates is and above to in our transportation costs surging competitive fall by e-commerce these and domestic pressures a We've drivers. fall, channel, being we be and consumer ocean inventories shortage maintain still high, remain may demand offsetting increases as pricing through historical the prices to but look container at power to successful squeezed our and begun the retail retail price largely market. of pricing

is As providing at attainable quality, continue of always, goal customers superior products with prices. comfort to our and durability

supply be for continue Finally, chain to logistics industry. but eased have somewhat, and a our challenge disruptions in the

risk overcome to and focused market remain these many adjusted chain mitigating have will supply conditions. changing our on We to adapt challenges quickly be and ready to of

over remain a to we foundation profitably present long-term. company are some steps for While create the I committed by to near-term current growth the growing the we challenges. taken and conditions encouraged have

on call operational of comments Derek Alejandro details with back the closing our through turn call some before I'll see I'll at be financial end priorities takes to Now to further ahead. the over what discuss of you results. our the we

you, morning, Thank everyone. and Jerry, good

know are challenging we As agile are competitors, times who take defensive opportunities but to Jerry noted, because have of industry at less at furniture disruption, through more business We're environment, current gain less are the uncertainty. the from maneuvering there financially posture. of the team a secure experienced we and periods embracing management conditions an in agile; for and skilled moment, share that's

While we our have opportunities be six existing the demand as to near-term markets consumer right next will retail pursuing months, important win. to solutions and inventories believe can but where provide to and for slowing bloated enter aggressively sales staying new we a to strained were gain differentiated offense markets, and due growing on share in to likely the three

the our three long-term legs. growth pursuits for shared business have new past, in we've As

All of year in we fiscal XXXX. are which progressing

furniture distribution. new sales consumers we We are buy First, shop. to people know and pivoting that where they and where are how broadening

retail the box of side are beyond with notably most new customers On the expanding retail, business, traditional retail. we big furniture

Wayfair, product successful As have stationary a new and we home with been a and launched shipping recently them historical an retailer the coming sales have few custom motion manufactured national large predominantly players like will a major in In of Amazon, product of program brand trial channel, e-commerce come styles to be our example, with concentrated a and the homedepot.com. from our months.

on relationships with these e-commerce While a Symantec, we'll grow aggressively other expanding to name and focused customers, Overstock, few. leading partners, to Walmart.com continue are like with we also

We in in online Flexsteel select are ’XX. brand partners also a way year meaningful the fiscal extending with e-commerce

growth our are year. big categories. strategy areas product new innovation is of driving leg focus second we The Two this where

Most First, living sleep with in mind. sleep solutions. furniture room isn't designed

we launch believe and to continues unmet year, new present avenue need a the as We Health an satisfy furniture we which growth an category in and which Wellness a solution could in the later define to market. have itself intend sizable for long-term. entirely

popularity in and parcel it focus on as with lifestyles is people's shifts innovation is growing changes which needs. modular Our second in small furniture,

solution in second and and a innovations the better leveraging of However, of assembly quality, market are half in to to fiscal our market the and we offerings patent year current the ‘XX. pending are comfort ease know-how, bring lacking

initiatives strategy of leg segments have progress. and third we The two new is the growth consumer in

for consumers comfort. which large priced to where value disparity large the furniture, brand. brand competes, due new through lower mass in market goods and quality There durability Flexsteel is addressing we're soft a the below oriented a is First,

to compete a alternatives. by lineup our these we can and prowess reach lower price This quality in and at new effectively that competitive second superior quarter. will we However, offering leveraging capabilities new prices, to points believe the comfort the engineering manufacturing while brand shipping is these start with

consumer a set Many that brands, for on a profile deliver ’XX addressing have should summary, company the growth some been a partner, of for we're becoming years. vision growth and development initiatives fiscal modern and believe manufacturing focused in rough in year in to shareholder value of brands. we year these market In have and well. will By half fiscal long-term we the high new profitable several but lifestyle ambitious of meaningful will second which as incremental growth preferred be position efforts lifestyle conditions hugely near-term, successful past the Second, remain segment the our creation. product

market. savings in we've efforts year continued prices and priorities, ’XX offset reinforced lower fiscal the also inflationary both growth the and Beyond to cost to pressures initiatives

earlier, exponentially. to and to in the place the above that, savings until the too through alluded profit in but inventory through quarter promotions. erosion. competitive continuous expect significant retailers at drive demand first and To reductions on manufacturing areas our so, these to alike strengthened the the pricing pricing talent inventories flow market prepared have all generating the leadership rather on the outlook large have to irrational tirelessly value is the improvement a we pricing we respond our Jerry than it placements and two savings efforts pressures, fund yet, have We accept market, Alejandro retail, to compete performance, growing we effectively to vigorously we are aggressive pressures margin you manufacturers the for As amassed gain We've chain that sourcing. in put and for the to worked charges product have turn additional during for business. works inbound fiscal necessary positions. heavy financial in positive significant last resulted to over years when the time discounting slowing industry in result, are remain product growth but stand quarter of and and of give glut. And place intend the logistics, to while ‘XX. no at defend With and operations, to accumulating do price which cash year its nothing cost consumer details Competitive will There's fourth ancillary I'll to in to they

today part a Good Flexsteel. to I'm with happy team Thank at you great you, be glad Derek. morning, be everyone. of here to and

X% the quarter, prior fourth retail down e-commerce our million $XX.X to while performance were million, million the net million declined down XX% prior earnings during year, guidance versus were to sales our $XXX in by third range year. through $XXX.X compared the $XXX.X sales or provided within $X.X X.X%, or in period, the results For our prior prior quarter the $XXX million million channel call. versus sales Product or year $X million our from decreased Sales year.

both channels, traffic, the in-store results to in and were that buying. we customers While declines well robust are pandemic-driven sizable our e-commerce retail reporting in competing spurred compared several and are last both of online year's by

changes shift million for prospects of gain to tax perspective, new downward the in $X.X to delivered our positive The full the as a margin million $X.X assets quarter We was plans net as quarter, diluted the the we aggressive and is fourth the and tax income net excludes a due from per adjusted levels pricing primarily quarter, share we loss decline headwind, allowance. million SG&A operating through inflated dropped net product sales. XX.X%. third valuation share in by not SG&A company launches we pursuing $X.XX. driven the impact per was was for as $X.XX. domestic the long-term of competitive year. retail a prices. new controlled income sales, fiscal on million primarily a income of due in the a $X.X a demand of of benefit $X.X largely advertising content net and do or Although of which to our near-term X% expected pressure, our continued to was fourth quarter percent percent From slowing the customers, was remeasuring remain the income mainly coupled was traffic to in spending supported of expense remain improved tax profit effectiveness. recorded charge, allowance driven in quarter the Gross charges, fourth diluted of which loss lowest to related as and sales share deferred valuation income loss by a The receive with quarter inflation surging fuel to by XX.X% inventory Operating are due transportation and Adjusted

with the working the the capital to quarter reduction of during decrease result solid $XX working $XX.X flows. inventory, and a the of quarter, of by the largely Moving a $XXX.X The million flow million $XX.X with the million balance represents which sheet in of operating of driven cash management of million, cash a during cash strong quarter. and million balance statement capital company ended $X.X

we or the key also $X.X And $X.X As previously priority. communicated, debt million reduction of outstanding operating cash our is borrowings a strong in million. repurchases X% by quarter, enabled in The approximately the reduced period. fund flow us share to

quarter forward, Looking for between is $XX guidance $XX million and first sales million.

While in compared for normalize or sourced the We sales. prior we're improves result given should for benefits lead on inventories of and XXXX. most then, quarter, discussions our be do fiscal other outlined. the year the quarter Derek a times, to will new the on inventory early optimistic results piling be quarter the rather placing substantially retail will are our drag expect as it first inventory sequentially back solid recent partners, second and and quarter which retailers battling orders competitive XXXX our Until will fiscal full expect demand that various point remain our sales the focused on late a cautiously significant we grow of The manufacturer Based each initiatives, products decline we on to for situation distribution the recently containers low they the feel near-term near-term with this warehouses yards. they pulled year growth throughout of and realize that do as represents retailers orders North in-stock as expect from products to than year be have up that have our We in goods. selling American we heavily calendar manufacturers.

in decline will Regarding profits. significant outsized profitability, impact the the quarter adverse on have in first sales an

costs investments P&L we with These While sales the the growth leveraged lower take will our steps are we ambitions, added in lower D.C. new investments near-term with support to line long-term are be to investments structural and and will and critical manufacturing facility strategic have in have continue Northeast that protecting we costs, namely sales. levels, Mexicali adjust our our new under feel to

we largest income for range of in negative the such, the X% demand X.X% and projecting the quarter in drivers a are range of As sales as to sales conditions. the of with percentage pricing competitive operating first variability being

While it time at we worsen, there pricing best sequentially quarter of our view is year. the the this the in second and results improve could much market conditions half and that in deliver would second and profit would in the demand uncertainty is

prudently range the mid If in improve fixed lower XX% margins down half. expect sales cost SG&A later costs million and upper expansion. teens XX% the deleverage pricing second $XX fiscal on gross the weighed year the the sales ramp in to spending up year, margin gross should first to during in margin by control quarter and of to the in expected between may improve as quarter. expect We We the and intend SG&A first in dependent to million $XX SG&A gross costs from pressures.

be opportunistic value. Regarding throughout to stock discount first Near-term as flow a the the a remain capital debt with price at intrinsic our modest to decline capital outlook, be We levels steadily continue and expenditures. reducing expected view source year. cash significant cash funding priorities cash we to flow anticipate at and in is remains full-year share may our to for spending the inventories quarter if of working repurchases of

XXXX at debt expect of $XX million to the in of the million. end range fiscal $X levels We

The in of XX%, million. effective XX% the revaluation million the valuation we deferred to of the asset tax between fiscal expenditures be allowances. impact any to is rate quarter, of XXXX first tax expected range excluding $X.X For expect for $X.X and capital

the Now, back on perspectives I'll outlook. Jerry our his to to turn call share over

slowdowns We along and the inflationary Thanks. demand near-term. challenging months bloated our on to pressure will to decreased challenges believe economy, retailer our put pressure be the next for due XX with continued will in the These levels. margins continue industry in profit inventory furniture

solid I down plant the manufacturing provide fiscal to of times However, and of backlog weeks Derek earlier five newest our long-term brought our the to competitors. team, reduction Juarez, profitable manufactured and in am which Mexico XXXX our in third investments lead accelerated Production outlined for confident priorities, our three successfully and the a fiscal will XXXX our that than we faster products growth. made many in from foundation

Our center in new growth is Coast furniture Greencastle, Pennsylvania in improved levels the and distribution East supporting service market.

While these will they future near-term, recent build resiliency investments innovation, well we open in product our strategic to ongoing to while talent, provide be the debt near-term, and generating investments levels, for in to achieve and service we'll capacity your may preserve meaningful support These questions. the underutilized near-term, as supporting cash delivering call position combined term well North capacity With initiatives improved as expand the to chain remain investments. supply us brand focused liquidity digital compete flow our growth down pay in with customer American effectively ambitions. and critical capabilities, that, the growth. on In and longer profitability Operator?

Lebiedzinski Sidoti. question question-and-answer Please today Instructions] the go begin session. now will First We with from ahead. comes [Operator Anthony

with Yes, catch as and welcome you taking Alejandro you guys good thank up well. questions for to morning, and the

terms as a the from quarter, fairly monthly Just get during revenue much to April throughout to variability or on as the that? of the curious far there of handle June wanted was just in it better going first, quarter? consistent cadence So was

Yes.

almost June that, April, months. quarter, for May, for basically Anthony, the So fourth were identical

sales we see difference. -- So on side, really much and didn't the that's

the a XXXX. the and at kind level, lot had were The that different, On have really backlog, of with we calendar up our backlog which order back to, still obviously now. seen down we the would we're do and side pre-pandemic is levels historical of, the back trended that then our back has to now finishing -- towards where in was orders

throughout there? Thanks okay. geographic seeing you just curious that. positioning, it far parts And of are as it, Got much country, just different as variation kind that. Or the then about mean, of is consistent for I

be is very I shifts, no geographic we any really real stronger, We there. to changes No, were haven't so stronger, where consistent. seen continue mean, we

think Derek, strategies Got All And will most the will impactful terms of which main the that you in be out it, okay. you one would right. of three then outlined, these say? you

the year in probably new biggest and our a sales. on think brand I going is Yes, fiscal priced a using have goods ’XX, soft lower entry impact to

not I that actually But the think think here years, that market, superior about and meaningful couple will are new feel of, a we mentioned a as for brand. only a in And doing the the be all points comfort competitive in that terms matching as I actually really I have when strongly next of quality to during our mentioned, months, orders so two we're it's three those kind ’XX, price providing but fulfilling alternative. impact. we has product we initiatives call, pretty the we'll launch that versus in

that opportunity team jazzed pretty it. we're about up excited is sell to and our So sales

it, Got okay.

And brand, curious of what spending, will this this of this -- terms distribution will supported so the new that? will consumers these about where marketing be And by be just product? additional where will find in

about really Yes. omnichannel. new We're this brand thinking

stores large with marketplaces furniture happy traditional and our Wayfair. to it online with selling the we're discussions club retailers. we're discussions like We're regarding having So offering our

Okay.

So will distributed. be we broadly

at Okay, point as five in so to like that the then just got outlook, as right, three of okay. it, this within far terms and orders you’re -- so All so near fulfilling term weeks. looks

the said you inventories far course end implies definitely you thinking we own down have it how quite meaningful step would your the where are as by mean have of of see I like own just but I your missed may the inventories year? like, as expect you but may this, say the should as throughout you terms you of a as that far in quarter? know, So this, first how how

sales the work to look consistently $XX year bring levels going of the Alejandro. a meaningful the $XX Thanks, near-term to is Anthony. as rest place somewhere Yes, over million, down of question. million may to good towards in we to inventory on of We're This -- may also not inventory into demand year. the have reinvest as demand to because throughout year, our depend the goes the the end throughout where we But may will pick that up. back or

and All I that? the and guess, there lastly, okay. way near-term terms it, so Got don't the longer appropriate job you then in of revenue. right to the did percent nice here of think you of quarter what as spending, right, term think do roughly for guys about a SG&A I know a XX% revenue, kind of, is

normal time, Yes. XX% at Anthony, at a of this From a run rate, as looking SG&A sales. XX% percent spend we're to normalized

a okay. it, right. Well, luck. of and thanks Got All lot best

Anthony. Thanks,

The ahead. go comes Geygan Please next from Global with question Investment Value JP Corporation.

for my morning. Thank you Hey, taking questions. good

decision Can ramifications engage You some customer share? you inventory, and might you looking to in to during not force decision? continued particularly talk it the market made it of as it's COVID, ago the relationships course were invest in which supplying several pertains retrospectively deposits of discounting. to allowed you quarters like negative, customers that but about your Your

a get so Yes, know, were customer us far a lot supply to do we good of demand to those helped is We our able year, and as our our we JP, are to with problems largely get as went to last things control had customers, ancillary there. able which in it decent able under high, been all really really of were been control We've good costs behind we've Yes, able lot great. of -- you inventories. charges which as helped us, us. of question. we Obviously,

competitors because may say, smart it's can looking I it, a else We but competitive some do bringing it. from seeing more mostly, there discounting, drag. there. where we we're to to a down that the are think now obviously going going we've possibly landscape things and going we're got of Some don't huge we're there it at keep looking be we're But out be about be to what at like

on post the of, JP pandemic among in up helped that we things some traditional in will through went adverse the Number And other one, think placements significant things of of during, set. I because our positive competitive largely I I they kind investment the placements of double-digits, sell their customers period. Couple ramifications, the add. better gain placements our inventory our than serviced mean, ramifications. retail, Jerry terms have went retail floor. what retailers us in

The really I’d other disciplined we've is share you thing product lifecycle been that management. with around

we moving So are items. constantly slow cutting

So we of tail obsolete our moving. do a not in have long inventory or slow

discounting yes, the what is doing wants. got the sells stuff on So but levels, deep inventory have some products where the news inventory market really we still good we're of we've is surgical that in

Thanks. recognizing how give you us industry helpful. That's excess faced? be Can exists the inventory sense for that a across question might a much more nuanced than on its

Yes.

to maybe end into there's take calendar there. thinking looks We're to the of demand at year, really depends standpoint, first of like. part out calendar probably So the it least timeframe months Obviously, from it's the going what a six ‘XX. this

after inventory place. good into feeling be a that we're lot pretty of move the we'll the know of We of, will and really end calendar should a year people, now see Labor here changes kind market but hopefully by in Day

great. Okay,

of on, for mentioned give lot of opportunities you Moving those sleep you fiscal size exciting living by modular dollar a Can by expected the sense [indiscernible] either slated us furniture. amount, a developments 'XX, of room oriented, furniture, design and existing distribution what sales, to [Technical which part in Anthony addressed investment was bit, question, Difficulty] your marketing, production little And then be this of or magnitude the type a cetera of required? relative et second business?

shared growth core business. share contribute specific product $XX believe incrementally forecasts the initiatives. Yes, though, all What sales prefer initiatives not for will on we reasons, tell that JP, I those between somewhere I aggregate, our $XX in you and million so earlier to competitive to that can million I

new part fiscal I big see heavily after here is of here this to think start products, and a strategy we'll the invested development markets, we've year new going consumers, new fruits year again, and So growth in past our ‘XX. fairly around product

I prudent those growth what in development, initiatives tell marketing are product in spending, in to managed fully but that you the successfully the terms shared terms will In is IP, all very of launch I SG&A manner, as the funded a well as of both market. we've

So we initiatives. still Alejandro within those SG&A fully are managing and that gave supporting guidance the

All right.

sort oriented consolidated should effect of, your we margin the You mentioned of understand value on profile? how those product lines lines, product some,

not the of kind if huge Yes. there's such and around Flexsteel brand, The price quality. margins are there similar, is with cannibalization And points a really no the because better. disparity

So this truly business us. for is new incremental

great. Okay,

is guidance three provided gross think you previously year which and years potentially I that around that considering still longer think timeframe with guidance recent to Finally, I margins range. ranging and long-term performance parameters the then broad put say including of, developments? XX% along XX% and your, in other intact long-term five term, you mid-term the plus kind performance you've a Is exceeding

What long, do the seen the think economic at the six, are intact, here, I think we we've on we're than we'll still inflation, I that how long-term look given to because where that, XX-months roadmap had ago. from different I tell today of that you, get goals of disruption the we JP, probably because slowing, view

intent our more XX% become best The that roadmap certain, margins what investment certainly. to gross roadmap might term things certainly new view that the more provide is like. above community -- So on look clear, as we'll still get longer

Great.

Okay, thank you.

right. All

Richard Dearnley Partners. [Operator with next Instructions] Longport ahead. question go Please The comes from

will up be think that to normal loading When or Juarez Good the utilization? morning. would plant you

make something see slowing we've we've It's got the we a probably increase see was some of that of the mentioned we because had new year, probably ’XX about. adjustments, it to we've with because is talking be again demand. some will year now, is rough but Derek to ’XX, right till think especially stuff fiscal probably that So as obviously gradually obviously going

So good totally we'll probably to we're out a until XX-month it have where was. it back

I think to first in running in in XX% capacity. mean, maximum terms I the we're of utilization the XX% quarter,

will that in year, our expect sustainable new the facility. will range. closer how of increase. then Given if throughout have picks we'd year we to the more we increase up, shape Certainly, view here to to see demand a our option the the demand utilization Mexicali And if up will demand, XX% start end

the Right. [Multiple Mexicali the for outlook And facility starting? what's current Speakers]

focused of, kind that a we so and long-term and an our it the long-term important is growth strategic the fiscal Jerry, facility ’XX, capacity to, yes, part as strategy. of now, having still year Right asset, alluded are on ambitions is

underutilized, near-term, in So in to be important role the play future. assets really going it's going confident in the feel the our to still but success a we that

better and the it by you. new or Is days? word on reading would though that that that three lean incorrectly important then steel. the I next steel growth less so, capability seem -- am initiatives Thank played does less your Flexsteel the these that is And stronger, for years as -- or

besides are us to still important there. also there. that of lot to are very new there. very, and still we're plans grow of to a our got ways We've and product it's are planned development we No, what to here, going lot in great grow other continue Really launches a highlighting that

looking customers and important all. things, in for we're So have very for from It's go we the the of brand be going where we'll modern and other that's the and ways these capabilities and lot other sales come that forward. it's not our the at and to lower points, are how furniture, Flexsteel a us price sleep whole more and These durability very, -- great and it's that grow story to are all we've whether solutions, company. those in downplaying a whether manufacturing new whether at

at you and/or And dividends paying the accumulating versus Great. re-examined cash? all have out buyback

ahead. Go

Yes.

to this not time, Board continuous conversations in on to planning with how get to to we're we dividend, At look to how are stop experience. maximize continue shareholder shareholders. our our the back at but We

right it, so we have now, examining always at the place. in dividend still we're been to but And this time, have planning

the order. not we only kind that future. our and look bit at dividends in look in You et know, investments of accelerate We’ve do growth to then it manufacturing growth, equipment acquisitions do in but in the too could all we do our need both that, with obviously also. a share hey, and investments talent center inventory? support that And then cetera. to what What have business, at, we distribution also like need We from look current a buyback possibly continueed little and at

said, is dividend. Alejandro reduce time review as we no all And to the dividend the intent near-term, the our and there in

Okay, thank you.

This Jerry session. any to back to concludes question-and-answer the closing like over our would for turn I remarks. conference Dittmer

to thank us Thank your like In additional Thank like what fiscal and a today if that you the day. look and great going else, to everyone. And forward. you again during call. I'd ones reach for those have next you. employees our you their closing, if any Flexsteel have they're had for forward of out also I'd in and have Thanks anything Great. do you please to we you to all thank going participated questions our Everybody on performance call. today's for service outstanding year questions. and updating

The conference attending today's presentation. Thank is for now you concluded.

You may now disconnect.