Flexsteel Industries, Inc.

Good day and welcome to the fourth quarter fiscal year 2024 earnings results conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mike Ressler, Chief Financial Officer. Please go ahead.

Thank you, and welcome to today's call to discuss Flexco Industries' fourth quarter and fiscal year 2024 financial results. Our earnings release, which we issued after market closed yesterday, Monday, August 19th, is available on the investor relations section of our website, at www.flexdeal.com under news and events. I'm here today with Derek Schmidt, President and Chief Executive Officer. On today's call, we will provide prepared remarks and we'll then open the call to your questions. Before we begin, I would like to remind you that the comments on today's call will include forward-looking statements, which can be identified using words such as estimate, anticipate, expect, and similar phrases. Forward-looking statements by their nature involve estimates, projections, goals, forecasts, and assumptions, and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Such risks and uncertainties include, but are not limited to, those that are described in our most recent annual report on Form 10-K, as updated by our subsequent quarterly reports on Form 10-Q, and other SEC filings as applicable. These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. Additionally, we may refer to non-GAAP measures which are intended to supplement but not substitute for the most directly comparable GAAP measures. Press release available on the website contains the financial and other quantitative information to be discussed today. as well as the reconciliation of the GAAP to non-GAAP measures. And with that, I'll turn the call over to Derek Schmidt. Derek?

Good morning, and thank you for joining us today. I am pleased to share with you our fourth quarter and fiscal year 2024 results. We continued our positive momentum in the fourth quarter, delivering 4.7% sales growth over the prior year period near the top end of our guidance range. Despite continued weak demand conditions for our industry, our fourth quarter results represent our third consecutive quarter of mid to high single-digit year-over-year growth. I'm confident that our growth strategies are working. We are winning and gaining share, and we are working aggressively to accelerate our positive sales momentum going into fiscal year 2025. Our strong execution over the past 12 months resulted in annual sales growth of 4.8 percent, which we feel is exceptional performance relative to the industry and the many industry participants who realized double-digit declines during the same period due to challenging industry dynamics. Our strong performance in fiscal year 2024 not only reflects our team's intense and aggressive focus on growing the business, but also the attractive returns from continued investments in innovation, new product development, customer experience, and marketing, which are unlocking growth in our core markets and opening doors to new growth and expanded markets with long-term potential. At the same time, we continue to improve our profitability. Adjusted operating margin was 5.6 percent in the fourth quarter up compared to 4 percent in the prior year quarter and represents our third consecutive quarter of sequential quarter-over-quarter growth in adjusted operating margin. For fiscal year 2024, we grew our adjusted operating income to $18.3 million, or a 126 percent year-over-year improvement. The keys to our consistent profit improvement have been our sales growth, strong operational execution and efficiencies, robust cost savings, and disciplined product portfolio management, all of which have strong momentum and will continue to be catalysts for continued margin expansion in fiscal year 2025. I'm also very pleased with the progress we've made to improve working capital efficiency and strengthen our balance sheet. Inventories were reduced by over $25 million in fiscal year 2024, while sustaining strong customer service levels. Coupled with higher profits, solid working capital management helped generate almost $32 million in operating cash flow and eliminated most of our bank debt. In the recent period where we've seen numerous industry bankruptcies, and many industry participants continue to realize meaningful year-over-year declines in both sales and profits, Flex Steel is financially strong, growing sales, improving profitability, generating cash, and aggressively investing for the future. Our customers, investors, and other business partners should all have confidence that Flex Steel is well-positioned long-term for profitable, sustainable growth. As we look forward to fiscal year 2025, weak consumer demand is expected to continue to be a major headwind for the industry in the near term. The impact of inflation, albeit slowing, and high interest rates continue to take a toll on consumers' cost of living and their overall confidence, and on the housing market, which is an important underlying driver for furniture demand. Until U.S. consumers regain confidence in the economy, and the outlook for these structural concerns, there's not an obvious catalyst to meaningfully move consumer demand for furniture in a more positive direction. That said, we are deeply committed to continue growing and gaining share under challenging industry conditions, and we will remain aggressive with our strategies and investments to pursue new growth. Our strategic priorities for fiscal year 2025 remain largely unchanged, We have robust plans to continue growing through both our core markets and expansion into new markets. In our core markets, we remain focused on differentiating ourselves through value-added innovation and new product development and delivering a superior customer experience. Our focus on expanded markets remains threefold. First, expanding and repositioning our brand portfolio to align with consumer needs of the future, especially younger consumers. Second, expanding beyond our core sales distribution and into new brick-and-mortar and e-commerce channels to position our brands wherever consumers desire to shop, both today and in the future. And third, expanding our penetration in the home beyond primary living areas. In fiscal 2024, We made strong progress in advancing all these strategic growth initiatives, and we are gaining momentum to further these pursuits in fiscal 2025. Simultaneously, we will continue to aggressively invest in three key growth capabilities that are foundational to achieving our long-term growth aspirations. First, we are investing more heavily in consumer insights to reveal both emerging and unmet consumer needs that we can uniquely position Flexsteel to address. Second, we are investing in innovation fed by consumer insights that both differentiates Flexsteel and can be protected through IP, exclusivity, or trademarks. Our innovation focus transcends many areas, including health and wellness, safety, ease of use, and superior consumer experience. The third area of key investment is marketing and brand awareness. While we will continue to excel at marketing to and through our trade partners, we are also building new abilities to engage consumers directly and strengthen awareness and trust in our brands. While we are intensely focused on growing the business and building long-term growth capabilities, the organization is also highly attentive to driving meaningful profit growth. through operational excellence and disciplined portfolio management in fiscal 2025 and beyond. I am very proud of what our Flexsteel team accomplished this year and even more excited about the future potential of the business. We have the right strategies, talent, and culture to continue to strengthen our market leadership long-term and to deliver exceptional results to our customers and investors. With that, I'll turn the call over to Mike, who will give you some additional details on the financial performance for the fourth quarter and the outlook for the first quarter and full year fiscal 2025. Mike?