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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

______________________________________

FORM 10-Q

______________________________________

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 2022

or

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number 0-5151

______________________________________

FLEXSTEEL INDUSTRIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Incorporated in the State of Minnesota

42-0442319

(State or other Jurisdiction of

(I.R.S. Identification No.)

Incorporation or Organization)

385 BELL STREET

DUBUQUE, IA 52001-0877

(Address of Principal Executive Offices) (Zip Code)

(563) 556-7730

(Registrant’s Telephone Number, Including Area Code)

______________________________________

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

FLXS

The Nasdaq Stock Market, LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such a shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one).

Large Accelerated Filer ¨ Accelerated Filer þ Non-Accelerated Filer ¨ Smaller Reporting Company þ 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.  ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨ No þ

Common Stock - $1.00 Par Value

Shares Outstanding as of February 8, 2023

5,177,386


FLEXSTEEL INDUSTRIES, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED DECEMBER 31, 2022

Page

Part I – Financial Information

Item 1.

Financial Statements

3

Consolidated Balance Sheets as of December 31, 2022, and June 30, 2022 (Unaudited)

3

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and six months ended December 31, 2022, and December 31, 2021 (Unaudited)

4

Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended December 31, 2022, and December 31, 2021 (Unaudited)

5

Consolidated Statements of Cash Flows for the six months ended December 31, 2022, and December 31, 2021 (Unaudited)

6

Notes to Consolidated Financial Statements (Unaudited)

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

14

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

17

Item 4.

Controls and Procedures

17

Part II – Other Information

Item 1A.

Risk Factors

18

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

18

Item 6.

Exhibits

19

Signatures

20


PART I FINANCIAL INFORMATION

Item 1.Financial Statements

FLEXSTEEL INDUSTRIES, INC., AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Amounts in thousands)

December 31,

June 30,

2022

2022

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

1,774

$

2,184

Trade receivables - less allowances: December 31, 2022, $2,880, June 30, 2022, $2,980

32,665

41,106

Inventories

110,825

141,212

Other

6,908

4,950

Assets held for sale

616

616

Total current assets

152,788

190,068

NONCURRENT ASSETS:

Property, plant and equipment, net

38,065

38,543

Operating lease right-of-use assets

69,201

38,189

Other assets

1,941

1,941

TOTAL ASSETS

$

261,995

$

268,741

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable - trade

$

17,638

$

32,147

Current portion of operating lease liabilities

8,027

6,361

Accrued liabilities:

Payroll and related items

5,441

6,385

Insurance

2,636

2,158

Restructuring costs

1,290

Advertising

5,004

4,052

Environmental remediation

3,570

Other

6,956

8,664

Total current liabilities

45,702

64,627

LONG-TERM LIABILITIES:

Operating lease liabilities, less current maturities

64,480

33,992

Lines of credit

19,173

37,739

Other liabilities

553

823

Total liabilities

129,908

137,181

SHAREHOLDERS' EQUITY:

Common stock - $1 par value; authorized 15,000 shares; 8,239 shares issued and

5,201 outstanding as of December 31, 2022; 8,190 shares issued and

5,300 outstanding as of June 30, 2022

8,239

8,190

Additional paid-in capital

35,681

34,467

Treasury stock, at cost; 3,038 shares, and 2,890 shares as of December 31, 2022, and

June 30, 2022, respectively

(68,598)

(66,372)

Retained earnings

156,765

155,275

Total shareholders' equity

132,087

131,560

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

261,995

$

268,741

See accompanying Notes to Consolidated Financial Statements (Unaudited).

FLEXSTEEL INDUSTRIES, INC., AND SUBSIDIARIES

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

(Amounts in thousands, except per share data)

Three Months Ended

Six Months Ended

December 31,

December 31,

2022

2021

2022

2021

Net sales

$

93,137

$

141,668

$

188,821

$

279,356

Cost of goods sold

77,299

132,141

157,634

246,419

Gross margin

15,838

9,527

31,187

32,937

Selling, general and administrative expenses

14,864

17,541

29,438

36,326

Environmental remediation

(2,788)

(2,788)

Restructuring expense

622

774

Other expense

347

Gain on disposal of assets due to restructuring

(1,400)

Operating income (loss)

3,762

(8,636)

4,190

(2,763)

Interest expense

316

223

637

426

Other (income) expense

(1)

(104)

1

(102)

Income (loss) before income taxes

3,447

(8,755)

3,552

(3,087)

Income tax provision (benefit)

594

(1,210)

410

105

Net income (loss) and comprehensive income (loss)

$

2,853

$

(7,545)

$

3,142

$

(3,192)

Weighted average number of common shares outstanding:

Basic

5,259

6,682

5,285

6,758

Diluted

5,339

6,682

5,436

6,758

Earnings (loss) per share of common stock:

Basic

$

0.54

$

(1.13)

$

0.59

$

(0.47)

Diluted

$

0.53

$

(1.13)

$

0.58

$

(0.47)

See accompanying Notes to Consolidated Financial Statements (Unaudited).


FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

(Amounts in thousands)

Six Months Ended December 31, 2022

Total Par

Value of

Additional

Common

Paid-In

Treasury

Retained

Shares ($1 Par)

Capital

Stock

Earnings

Total

Balance on June 30, 2022

$

8,190

$

34,467

$

(66,372)

$

155,275

$

131,560

Stock-based compensation

8

817

825

Vesting of restricted stock units and restricted shares

28

(378)

(350)

Treasury stock purchases

(403)

(403)

Cash dividends declared

(833)

(833)

Net income

289

289

Balance on September 30, 2022

$

8,226

$

34,906

$

(66,775)

$

154,731

$

131,088

Stock-based compensation

10

835

845

Vesting of restricted stock units and restricted shares

3

(60)

(57)

Treasury stock purchases

(1,823)

(1,823)

Cash dividends declared

(819)

(819)

Net income

2,853

2,853

Balance on December 31, 2022

$

8,239

$

35,681

$

(68,598)

$

156,765

$

132,087

Six Months Ended December 31, 2021

Total Par

Value of

Additional

Common

Paid-In

Treasury

Retained

Shares ($1 Par)

Capital

Stock

Earnings

Total

Balance on June 30, 2021

$

8,133

$

34,015

$

(31,320)

$

157,140

$

167,968

Stock-based compensation

3

1,159

1,162

Vesting of restricted stock units and restricted shares

7

(257)

(250)

Treasury stock purchases

(1,915)

(1,915)

Cash dividends declared

(1,047)

(1,047)

Net income

4,353

4,353

Balance on September 30, 2021

$

8,143

$

34,917

$

(33,235)

$

160,446

$

170,271

Stock-based compensation

4

1,016

1,020

Vesting of restricted stock units and restricted shares

(2)

(42)

(44)

Stock options exercised

8

110

118

Treasury stock purchases

(7,743)

(7,743)

Cash dividends declared

(1,013)

(1,013)

Net income

(7,545)

(7,545)

Balance on December 31, 2021

$

8,153

$

36,001

$

(40,978)

$

151,888

$

155,064

See accompanying Notes to Consolidated Financial Statements (Unaudited).


FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Amounts in thousands)

Six Months Ended

December 31,

2022

2021

OPERATING ACTIVITIES:

Net income (loss)

$

3,142

$

(3,192)

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation

2,277

2,662

Stock-based compensation expense

1,670

2,182

Change in provision for losses on accounts receivable

(100)

190

(Gain) on disposal of assets

(1,887)

Changes in operating assets and liabilities:

Trade receivables

8,541

5,795

Inventories

30,387

(17,917)

Other current assets

(1,958)

1,021

Other assets

(508)

Accounts payable - trade

(14,132)

(29,521)

Accrued liabilities

(4,914)

720

Other long-term liabilities

(271)

(543)

Net cash provided by (used in) operating activities

24,642