Flexsteel Industries updates on restructuring, to incur $48M-$53M charge
Flexsteel Industries announced updates regarding its previously announced strategic restructuring plan. The company previously announced its collaboration with AlixPartners to develop and evaluate six key workstreams that would drive the strategic restructuring process. Based on the work and analysis already completed, Flexsteel announced its plan to take action on several key initiatives over the next two years. These actions will include optimizing sales, general and administrative expenses, right sizing its manufacturing footprint, and streamlining its supply chain, as well as monetizing certain assets. As a result of these planned actions, the company expects to incur pre-tax restructuring and related expenses of approximately $48M to $53M over this two-year timeframe of which approximately $36M to $40M will be cash and $12M to $13M non-cash. This range includes the $13M of restructuring and related expenses announced last month to facilitate the exit of the company's commercial office and custom designed hospitality product lines as well as the closure of its Riverside, California manufacturing facility. The company estimates that lower employee-related costs and improved efficiencies will result in an annualized, on-going cost savings of approximately $27M to $32M on a run rate basis to be achieved by the end of fiscal 2021. In addition, the company plans to list several properties for sale when the footprint optimization is completed. When these properties are sold, the company expects to generate $45M to $55M in cash dependent upon market conditions at time of sale.