# EDGAR Filing Document

**Accession Number:** 0000037472
**File Stem:** 0000037472-23-000003
**Filing Date:** 2023-2
**Character Count:** 27139
**Document Hash:** 058ac35bfd3148b473db60054db06dfa
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000037472-23-000003.hdr.sgml**: 20230206

**ACCESSION NUMBER**: 0000037472-23-000003

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 13

**CONFORMED PERIOD OF REPORT**: 20230206

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Regulation FD Disclosure

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230206

**DATE AS OF CHANGE**: 20230206

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** FLEXSTEEL INDUSTRIES INC
- **CENTRAL INDEX KEY:** 0000037472
- **STANDARD INDUSTRIAL CLASSIFICATION:** HOUSEHOLD FURNITURE [2510]
- **IRS NUMBER:** 420442319
- **STATE OF INCORPORATION:** MN
- **FISCAL YEAR END:** 0630

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-05151
- **FILM NUMBER:** 23590871

**BUSINESS ADDRESS:**
- **STREET 1:** 385 BELL ST.
- **CITY:** DUBUQUE
- **STATE:** IA
- **ZIP:** 52001
- **BUSINESS PHONE:** 3195567730

**MAIL ADDRESS:**
- **STREET 1:** P.O. BOX 877
- **CITY:** DUBUQUE
- **STATE:** IA
- **ZIP:** 52004-0877

?xml version="1.0" encoding="utf-8"? flxs-20230206x8k

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 8-K**

**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934**

Date of Report (Date of earliest event reported): <u>February 6, 2023</u>

**<u>FLEXSTEEL INDUSTRIES, INC.</u>**

(Exact name of registrant as specified in its charter)

      <br> <u><u>Minnesota</u><u>(State or other jurisdiction of incorporation)</u></u> <u><u>0-5151</u><u>(Commission File Number)</u></u> <u><u>42-0442319</u><u>(IRS Employer Identification No.)</u></u>

<u>385 Bell Street</u><u>,</u> <u>Dubuque</u><u>,</u> <u>Iowa</u> <u>52001-0877</u>

(Address of principal executive offices, including zip code)

<u>563</u><u>-</u><u>556-7730</u>

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

(17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ⃞

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;Title of each class | &nbsp;&nbsp;Trading Symbol(s) | &nbsp;&nbsp;Name of each exchange on which registered |
| &nbsp;&nbsp;Common Stock, $1.00 Par Value | &nbsp;&nbsp;FLXS | &nbsp;&nbsp;The NASDAQ Stock Market LLC |

---

‎

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**Item 2.02 Results of Operations and Financial Condition.**

On February 6, 2023, Flexsteel Industries, Inc. issued a press release announcing Second Quarter Ended December 31, 2022, operating results. A copy of the Press Release is attached hereto as Exhibit 99.1.

**Item 7.01 &nbsp;&nbsp;&nbsp;&nbsp; Regulation FD Disclosure.**

The Company will host a conference call and webcast at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) on Tuesday, February 7, 2023, to discuss results and answer questions. Analysts and investors may participate in the question-and-answer session. The call can be accessed via telephone at 866-777-2509 (domestic) or 412-317-5413 (international) and requesting to be connected with the Flexsteel conference call.

Additionally, interested parties can listen to a live webcast of the call in the Investor Relations section of the Company's website at https://ir.flexsteel.com. An archived version of the webcast will be available in the same location shortly after the live call has ended.

A recorded replay can be accessed through February 14, 2023, by dialing 877-344-7529 (domestic) or 412-317-0088 (international); Replay access code: 1489243.

**Item 9.01 Financial Statements and Exhibits.**

---

| | |
|:---|:---|
| **<u>Exhibit</u>** | **<u>Description</u>** |
| [<u>99.1</u>](flxs-20230206xex99_1.htm) | [<u>Press Release by Flexsteel Industries, Inc. on February 6, 2023.</u>](flxs-20230206xex99_1.htm) |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **<u>FLEXSTEEL INDUSTRIES, INC.</u>** | **<u>FLEXSTEEL INDUSTRIES, INC.</u>** |
|  | (Registrant) | (Registrant) |
| Date: February 6, 2023 | By: | /s/ G. Alejandro Huerta |
|  |  | G. Alejandro Huerta |
|  |  | Chief Financial Officer  |

---

## Exhibit 99.1

**Exhibit 99.1**

Flexsteel Industries, Inc. Reports Fiscal Second Quarter 2023 Results

Dubuque, Iowa – February 6, 2023 – Flexsteel Industries, Inc. (NASDAQ:FLXS) ("Flexsteel" or the "Company"), one of the largest manufacturers, importers, and marketers of residential furniture products in the United States, today reported second quarter fiscal year 2023 financial results.

**Key Results from the Second Quarter Ended December 31, 2022**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Net sales for the quarter de creased 3 4.3 % to $9 3.1 million compared to $1 41.7 million in the prior - year quarter .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Gross margin in creased to 1 7 .0% for the quarter compared to 6.7% in the prior - year quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· GAAP operating income of $3.8 million for the quarter compared to a loss of ($8. 6) million in the prior - year quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Non-GAA P <sup>1</sup> operating income of $1. 0 million for the quarter compared to a loss of ($8. 0) million in the prior - year quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· GAAP net income per diluted share of $0. 53 for the current quarter compared to a net loss of ($1 . 1 3) in the prior - year quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Non-GAAP <sup>1</sup> net income per diluted share of $0. 08 for the quarter compared to a net loss of ($1 . 05) in the prior - year quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Cash flow from operations of $24 .6 mill ion for the six months ended .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Debt repayment s of $18.6 million for the six months ended .

<sup>1</sup>GAAP to non-GAAP reconciliations follow the financial statements in this press release.

**Management Commentary**

"Despite a challenging macro-economic environment, I am pleased with our second quarter results," said Jerry Dittmer, President, and CEO of Flexsteel Industries. "We delivered net sales for the quarter of $93.1 million, which was within our sales guidance of $87 to $97 million, as our growth initiatives helped partially offset the hurdles posed by high retail inventories and waning consumer demand. Our adjusted operating income of $1.0 million, or 1.0% of revenue, was at the high end of our guidance range of negative 1.5% to positive 1.5%, as we effectively managed costs and successfully navigated an intensely competitive pricing environment. As important, we continued to generate strong cash flow and strengthen our balance sheet. In the first half of fiscal 2023, we generated $22.5 million of free cash flow (cash provided by operating activities less capital expenditures) and reduced bank debt by almost half, or $18.6 million. We are focused on remaining financially agile given ongoing economic uncertainty while growing quarterly sales and expanding operating margins sequentially in the second half of the fiscal year."

------

Mr. Dittmer concludes, "While many furniture manufacturers are scaling back investments and resources in response to uncertain business conditions across the industry, we are making judicious investments to support our long-term strategic growth plans. We recently realigned our organizational structure to reallocate more dedicated resources to new growth pursuits. In our core business, we're expanding our sales force and adding sales leadership to continue gaining market share. We are also investing additional resources in product management, development, and engineering to increase our capacity for new product launches and improve our speed-to-market. In the first half of the fiscal year, Flexsteel launched a new brand, Charisma<sup>TM</sup>, and introduced two new innovative product groups which begin selling in the third quarter: flex™, our small parcel, contemporary modular furniture solution, and Zecliner™, our sleep recliner solution. In addition, we have enhanced our production capabilities to offer some of the most competitive manufacturing lead-times in the industry and maintained dependable inventory levels. We will continue to make smart, pragmatic investments to drive product innovation, operational efficiencies, and improve our customer experience, furthering our competitive position and driving us towards our long-term vision for the Company."

**Operating Results for the Second Quarter Ended December 31, 2022**

Net sales were $93.1 million for the second quarter compared to net sales of $141.7 million in the prior-year quarter, a decrease of approximately $48.5 million, or (34.3%), as home furnishings sales have reverted to be in line with pre-pandemic volumes. The decrease was driven by lower sales volume in home furnishings products sold through retail stores of $42.1 million, or (34.1%), versus the prior-year quarter. Sales of products sold through e-commerce channels decreased by $6.4 million, or (35.6%) compared to the second quarter of the prior year. Sales in the prior-year quarter were especially strong due to a surge in COVID-induced spending on home furniture.

The Company reported net income of $2.9 million, or $0.53 per diluted share, for the quarter ended December 31, 2022, compared to a net loss of ($7.5) million, or ($1.13) per diluted share, in the prior-year quarter. The reported net income for the quarter ended December 31, 2022, included a $2.8 million pre-tax benefit related to the settlement of the Indiana EPA litigation from fiscal year 2016. Excluding this item (see attached non-GAAP disclosure), the Company reported an adjusted net income of $0.4 million, or $0.08 per diluted share, as compared to an adjusted net loss of ($7.0) million, or ($1.05) per diluted share, in the second quarter of fiscal year 2022.

Gross margin as a percent of net sales for the quarter ended December 31, 2022, was 17.0%, compared to 6.7% for the prior-year quarter, an improvement of 1030 basis points ("bps"). The 1030-bps increase was primarily driven by control of expenses mainly related to ancillary charges, and the impact of strategic cost savings initiatives, partially offset by the impact of volume deleverage of fixed manufacturing costs and increased cost of delivery due to higher diesel fuel costs.

Selling, general and administrative (SG&A) expenses decreased to $14.9 million in the second quarter of fiscal 2023 compared to $17.5 million in the prior-year quarter, a decrease of 15.3%.

------

The decrease is mainly due to reduced compensation expenses and controlled spending across all other categories.

The Company reported a tax expense of $0.6 million, or an effective rate of 17.2%, during the second quarter compared to a $1.2 million tax benefit, or an effective rate of 13.8%, in the prior-year quarter. The effective tax rate is primarily impacted by non-deductible stock compensation, state taxes, the impacts associated with uncertain tax positions, and impacts arising from the reversal of the valuation allowance associated with movements in certain deferred tax assets.

**Liquidity**

The Company ended the quarter with a cash balance of $1.8 million and working capital (current assets less current liabilities) of $107.1 million, and availability of approximately $44.1 million under its secured line of credit.

------

Capital expenditures for the six months ended December 31, 2022, were $2.2 million.

**Conference Call and Webcast** 

The Company will host a conference call and audio webcast with analysts and investors on Tuesday, February 7, 2023, at 8:00 a.m. Central Time to discuss the results and answer questions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Live conference call: 866-777-2509 (domestic) or 412-317-5413 (international)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Conference call replay available through February 14 , 202 3 : 877-344-7529 (domestic) or

412-317-0088 (international)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Replay access code: 1489243

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Live and archived webcast: ir.flexsteel.com

To pre-register for the earnings conference call and avoid the need to wait for a live operator, investors can visit **https://dpregister.com/sreg/10173641/f5410e4582** and enter their contact information. Registered participants will receive their dial-in number upon registration.

**About Flexsteel**

Flexsteel Industries, Inc. and Subsidiaries (the "Company") is one of the largest manufacturers, importers, and marketers of furniture products in the United States. Product offerings include a wide variety of furniture such as sofas, loveseats, chairs, reclining rocking chairs, swivel rockers, sofa beds, convertible bedding units, occasional tables, desks, dining tables and chairs, kitchen storage, bedroom furniture, and outdoor furniture. A featured component in most of the upholstered furniture is a unique steel drop-in seat spring from which the name "Flexsteel" is derived. The Company distributes its products throughout the United States through its e-commerce channel and direct sales force.

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**Forward-Looking Statements**

Statements, including those in this release, which are not historical or current facts, are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. There are certain important factors that could cause our results to differ materially from those anticipated by some of the statements made herein. Investors are cautioned that all forward-looking statements involve risk and uncertainty. Some of the factors that could affect results are the cyclical nature of the furniture industry, supply chain disruptions, litigation, the effectiveness of new product introductions and distribution channels, the product mix of sales, pricing pressures, the cost of raw materials and fuel, retention and recruitment of key employees, actions by governments including laws, regulations, taxes and tariffs, the amount of sales generated and the profit margins thereon, competition (both U.S. and foreign), credit exposure with customers, participation in multi-employer pension plans, the impact of the COVID-19 pandemic and general economic conditions. For further information regarding these risks and uncertainties, see the "Risk Factors" section in Item 1A of our most recent Annual Report on Form 10-K.

For more information, visit our website at http://www.flexsteel.com.

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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2022** | **June 30,**<br>**2022** |
| **ASSETS** |  |  |
| CURRENT ASSETS: |  |  |
| &nbsp;&nbsp; Cash and cash equivalents | $1774 | $2184 |
| &nbsp;&nbsp; Trade receivables, net | 32665 | 41106 |
| &nbsp;&nbsp; Inventories | 110825 | 141212 |
| &nbsp;&nbsp; Other  | 6908 | 4950 |
| &nbsp;&nbsp; Assets held for sale | 616 | 616 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current assets | 152788 | 190068 |
| NONCURRENT ASSETS: |  |  |
| &nbsp;&nbsp; Property, plant and equipment, net | 38065 | 38543 |
| &nbsp;&nbsp; Operating lease right-of-use assets | 69201 | 38189 |
| &nbsp;&nbsp; Other assets | 1941 | 1941 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; TOTAL ASSETS | $261995 | $268741 |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| CURRENT LIABILITIES: |  |  |
| &nbsp;&nbsp; Accounts payable - trade | $17638 | $32147 |
| &nbsp;&nbsp; Accrued liabilities | 28064 | 32480 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current liabilities | 45702 | 64627 |
| LONG-TERM LIABILITIES |  |  |
| &nbsp;&nbsp; Lines of credit | 19173 | 37739 |
| &nbsp;&nbsp; Other liabilities | 65033 | 34815 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 129908 | 137181 |
| SHAREHOLDERS' EQUITY | 132087 | 131560 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $261995 | $268741 |

---

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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(in thousands, except per share data)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2022** | **2021** | **2022** | **2021** |
| Net sales | $93137 | $141668 | $188821 | $279356 |
| Cost of goods sold | 77299 | 132141 | 157634 | 246419 |
| Gross margin | 15838 | 9527 | 31187 | 32937 |
| Selling, general and administrative expenses | 14864 | 17541 | 29438 | 36326 |
| Environmental remediation | (2788) | &nbsp;&nbsp;&nbsp;&nbsp;— | (2788) | &nbsp;&nbsp;&nbsp;&nbsp;— |
| Restructuring expense | &nbsp;&nbsp;&nbsp;&nbsp;— | 622 | &nbsp;&nbsp;&nbsp;&nbsp;— | 774 |
| Other expense | &nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;— | 347 | &nbsp;&nbsp;&nbsp;&nbsp;— |
| Gain on disposal of assets due to restructuring | &nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;— | (1400) |
| Operating income (loss) | 3762 | (8636) | 4190 | (2763) |
| Interest expense | 316 | 223 | 637 | 426 |
| Other (income) expense | (1) | (104) | 1 | (102) |
| Income (loss) before income taxes | 3447 | (8755) | 3552 | (3087) |
| Income tax provision (benefit)  | 594 | (1210) | 410 | 105 |
| Net income (loss) and comprehensive income (loss) | $2853 | $(7545) | $3142 | $(3192) |
| Weighted average number of common shares outstanding: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | 5259 | 6682 | 5285 | 6758 |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | 5339 | 6682 | 5436 | 6758 |
| Earnings (loss) per share of common stock: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | $0.54 | $(1.13) | $0.59 | $(0.47) |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | $0.53 | $(1.13) | $0.58 | $(0.47) |

---

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FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

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| | | |
|:---|:---|:---|
|  | **Six Months Ended** | **Six Months Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| OPERATING ACTIVITIES: |  |  |
| Net income (loss) | $3142 | $(3192) |
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: |  |  |
| &nbsp;&nbsp; Depreciation | 2277 | 2662 |
| &nbsp;&nbsp; Stock-based compensation expense | 1670 | 2182 |
| &nbsp;&nbsp; Change in provision for losses on accounts receivable | (100) | 190 |
| (Gain) on disposal of assets | &nbsp;&nbsp;&nbsp;&nbsp;— | (1887) |
| &nbsp;&nbsp; Changes in operating assets and liabilities | 17653 | (40953) |
| Net cash provided by (used in) operating activities | 24642 | (40998) |
| INVESTING ACTIVITIES: |  |  |
| &nbsp;&nbsp; Proceeds from the sale of capital assets | &nbsp;&nbsp;&nbsp;&nbsp;— | 1937 |
| &nbsp;&nbsp; Capital expenditures | (2176) | (1535) |
| Net cash (used in) provided by investing activities | (2176) | 402 |
| FINANCING ACTIVITIES: |  |  |
| &nbsp;&nbsp; Dividends paid | (1678) | (3060) |
| &nbsp;&nbsp; Treasury stock purchases | (2226) | (9658) |
| &nbsp;&nbsp; Proceeds from lines of credit | 166933 | 81247 |
| &nbsp;&nbsp; Payments on lines of credit | (185498) | (25013) |
| &nbsp;&nbsp; Proceeds from issuance of common stock | &nbsp;&nbsp;&nbsp;&nbsp;— | 118 |
| &nbsp;&nbsp; Shares withheld for tax payments on vested restricted shares | (407) | (293) |
| Net cash (used in) provided by financing activities | (22876) | 43341 |
| (Decrease) increase in cash and cash equivalents | (410) | 2745 |
| Cash and cash equivalents at beginning of the period | 2184 | 1342 |
| Cash and cash equivalents at end of the period | $1774 | $4087 |

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<u>NON-GAAP DISCLOSURE (Unaudited)</u>

The Company is providing information regarding adjusted operating income, adjusted net income and adjusted diluted earnings per share of common stock, which are not recognized terms under the U.S. Generally Accepted Accounting Principles ("GAAP") and do not purport to be alternatives to operating income, net income or diluted earnings per share of common stock as a measure of operating performance. A reconciliation of adjusted operating income, adjusted net income and adjusted diluted earnings per share of common stock is provided below. Management believes the use of these non-GAAP financial measures provides investors useful information to analyze and compare performance across periods, excluding the items which are considered by management to be special or one-time in nature. Because not all companies use identical calculations, these presentations may not be comparable to other similarly titled measures of other companies.

**Reconciliation of GAAP operating income (loss) to non-GAAP adjusted operating income (loss):**

The following table sets forth the reconciliation of the Company's reported GAAP operating income (loss) to the calculation of non-GAAP adjusted operating income (loss) for the three and six months ended December 31, 2022, and 2021:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
| *(in thousands)* | **2022** | **2021** | **2022** | **2021** |
| Reported GAAP operating income (loss) | $3762 | $(8636) | $4190 | $(2763) |
| Other expense | &nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;— | 347 | &nbsp;&nbsp;&nbsp;&nbsp;— |
| Environmental remediation | (2788) | &nbsp;&nbsp;&nbsp;&nbsp;— | (2788) | &nbsp;&nbsp;&nbsp;&nbsp;— |
| Restructuring expense | &nbsp;&nbsp;&nbsp;&nbsp;— | 622 | &nbsp;&nbsp;&nbsp;&nbsp;— | 774 |
| Gain on disposal of assets due to restructuring | &nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;— | (1400) |
| Non-GAAP operating income (loss) | $974 | $(8014) | $1749 | $(3389) |

---

**Reconciliation of GAAP net income (loss) to non-GAAP adjusted net income (loss):**

The following table sets forth the reconciliation of the Company's reported GAAP net income (loss) to the calculation of non-GAAP adjusted net income (loss) for the three and six months ended December 31, 2022, and 2021:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
| *(in thousands)* | **2022** | **2021** | **2022** | **2021** |
| Reported GAAP net income (loss) | $2853 | $(7545) | $3142 | $(3192) |
| Other expense | &nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;— | 347 | &nbsp;&nbsp;&nbsp;&nbsp;— |
| Environmental remediation | (2788) | &nbsp;&nbsp;&nbsp;&nbsp;— | (2788) | &nbsp;&nbsp;&nbsp;&nbsp;— |
| Restructuring expense | &nbsp;&nbsp;&nbsp;&nbsp;— | 622 | &nbsp;&nbsp;&nbsp;&nbsp;— | 774 |
| Gain on disposal of assets due to restructuring | &nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;— | (1400) |
| Tax impact of the above adjustments<sup>(1)</sup> | 375 | (86) | 281 | (21) |
| Non-GAAP net income (loss) | $440 | $(7009) | $982 | $(3839) |

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<sup>(1</sup> <sup>)</sup> Effective tax rates of 13.5% and 13.8% were used to calculate the three months ended December 31, 2022, and December 31, 2021, respectively. Effective tax rates of 11.5% and (3.4%) were used to calculate the six months ended December 31, 2022, and December 31, 2021, respectively.

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**Reconciliation of GAAP earnings (loss) per share of common stock to non-GAAP adjusted earnings (loss) per share of common stock:**

The following table sets forth the reconciliation of the Company's reported GAAP earnings (loss) per share to the calculation of non-GAAP adjusted earnings (loss) per share for the three and six months ended December 31, 2022, and 2021:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Six Months Ended** | **Six Months Ended** |
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2022** | **2021** | **2022** | **2021** |
| Reported GAAP diluted earnings (loss) per share | $0.53 | $(1.13) | $0.58 | $(0.47) |
| Other expense |  |  | 0.06 | &nbsp;&nbsp;&nbsp;&nbsp;— |
| Environmental remediation | (0.52) | &nbsp;&nbsp;&nbsp;&nbsp;— | (0.51) | &nbsp;&nbsp;&nbsp;&nbsp;— |
| Restructuring expense | &nbsp;&nbsp;&nbsp;&nbsp;— | 0.09 | &nbsp;&nbsp;&nbsp;&nbsp;— | 0.12 |
| Gain on disposal of assets due to restructuring | &nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp;— | (0.21) |
| Tax impact of the above adjustments<sup>(1)</sup> | 0.07 | (0.01) | 0.05 | (0.00) |
| Non-GAAP diluted earnings (loss) per share | $0.08 | $(1.05) | $0.18 | $(0.57) |

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<sup>(1)</sup> Effective tax rates of 13.5% and 13.8% were used to calculate the three months ended December 31, 2022, and December 31, 2021, respectively. Effective tax rates of 11.5% and (3.4%) were used to calculate the six months ended December 31, 2022, and December 31, 2021, respectively.

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INVESTOR CONTACT:

    <br> <u> Alejandro Huerta, Flexsteel Industries </u> <u> 563-585-8126 </u> <br> <u> investors@flexsteel.com </u>  

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