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FLEX STEEL® Industries Flexsteel Industries , Inc. Reports Fiscal Third Quarter 2021 Results April 26 , 2021 DUBUQUE , Iowa -- ( BUSINESS WIRE ) -- Apr . 26 , 2021-- Flexsteel Industries , Inc. ( NASDAQ : FLXS ) ( " Flexsteel " or the " Company " ) , one of the largest manufacturers , importers and online marketers of furniture products in the United States , today reported third quarter fiscal 2021 financial results . Highlights for the Third Quarter Ended March 31 , 2021 • Net sales increased 19.8 % to $ 118.4 million compared to $ 98.8 million in the prior year quarter • Organic net sales1 , excluding discontinued Vehicle Seating and Hospitality product lines , increased by 32.9 % • Record retail home furnishings backlog of $ 140 million as of March 31 , 2021 , up 314 % versus prior year driven by strong year - over - year order growth of 131 % in the third quarter • Gross margin increased to 19.5 % compared to 14.0 % in the prior year quarter • GAAP net income per diluted share of $ 0.67 compared to net loss of ( $ 0.66 ) in the prior year quarter • Non - GAAP¹ net income per diluted share of $ 0.72 compared to net loss of ( $ 0.16 ) in the prior year quarter • Share repurchases of $ 8.5 million during the quarter 1GAAP to non - GAAP reconciliations follow the financial statements in this press release . Management Commentary " Despite ongoing industry challenges related to supply chain , we executed well and delivered on continued strong demand for home furnishings products during our third quarter as we reported sales growth of 20 % and organic sales growth of 33 % compared to the prior year quarter , with growth in virtually all product categories , " said Jerry Dittmer , President and CEO of Flexsteel Industries . " We enter the fourth quarter well positioned to continue profitable growth . Our sales momentum is strong and building . Our retail home furnishings orders in the third quarter were up 131 % versus prior year and grew 22 % sequentially from a strong order performance in the second quarter . This positive momentum gained traction throughout the third quarter as total company orders in March set a monthly historical record high for our home furnishings business . " " While we are aggressively ramping up both our North American manufacturing capacity and global supplier capacity to best serve our customers and meet growing consumer demand for furniture , global supply chain issues remain a significant near - term challenge . Ocean container availability has been constrained since the beginning of COVID - 19 , and conditions worsened in our third quarter which constricted our ability to quickly replenish inventories for customers . Increased congestion at ports and railways has further exacerbated the lead - times for sourced product . While the container situation remains highly fluid , it did improve in March , and as a result we had a significant amount of inbound inventory on the ocean at the end of the third quarter . Material and labor shortages remain headwinds and have challenged our efforts to quickly ramp up manufacturing capacity . Most notably , a shortage of foam is having a crippling impact on the furniture industry as well as many other industries , including automotive . While foam shortage has been a concern since last fall , it was significantly aggravated by the recent deep freeze in Louisiana and Texas , where most of the key chemical inputs for foam are produced . While the foam shortage has forced several furniture manufacturers to temporarily shut down operations in recent weeks , we have been able to keep our manufacturing plants running and stable , albeit at reduced levels , due to proactive planning and improved forecasting with multiple strategic suppliers . Lumber availability has also been under significant pressure driven by heightened demand for furniture coupled with extraordinary growth in housing . " " Given the shortages in ocean containers and key materials , we also experienced unprecedented cost inflation in the third quarter . Ocean container rates were three times higher than rates prior to COVID - 19 . Costs on several key materials in our home furnishings products have risen by as much as 60 % to 100 % with substantial cost increases realized specifically in the third quarter . While we attempt to pass through cost increases to the market whenever reasonably possible , there is an inherent lag between when we realize cost inflation versus prices increases . This cost - price lag is putting considerable pressure on our gross margins in the near - term . In response , we are prudently managing discretionary SG & A expenditures to partially offset the gross margin pressures until price realization catches up to cost increases . " " Despite the current supply chain challenges , we are very encouraged by our strong sales and order performance and are working feverishly to expand capacity in all areas of our supply chain operations . As noted last quarter , we signed a new building lease in Juarez , Mexico for an additional manufacturing plant which is ready to start production once foam availability improves . Production capacity at the new facility will quickly ramp up throughout the remainder of the calendar year as material availability stabilizes and new workers are trained . Most of our strategic global suppliers are also ramping up their capacity and are committed to supporting Flexsteel's growth ambitions in fiscal year 2022 and beyond . We continue to invest strategically in our business to improve our customers ' experience , expand our digital and e - commerce capabilities , build our brands , and drive product innovation relevant to the market . The future of the company is promising , and we remain confident in our ability to create value for our customers , employees , partners and shareholders . " Operating Results for the Third Quarter Ended March 31 , 2021 Net sales were $ 118.4 million for the third quarter compared to net sales of $ 98.8 million in the prior year quarter , an increase of 19.8 % . The increase was driven by home furnishings products sold through retail stores of $ 26.5 million , or 34.4 % , versus the prior year quarter and an increase in homestyles TM products sold through e - commerce channels of $ 2.8 million , or 23.4 % , versus the prior year quarter . The increases in retail and e - commerce channels were partially offset by a decline of $ 9.7 million versus the prior year quarter , due to the Company's exit of the Vehicle Seating