FLXS

• U.S. tariffs and trade restrictions on imports from Vietnam and Mexico could raise cost of goods sold, force price increases, and reduce competitiveness.
• Third parties may assert claims over tariff refunds the Company has already received, potentially reducing the benefit of those refunds.
• Inflation in ocean freight, raw materials, labor, and transportation, plus adverse peso-dollar moves, could compress margins before price increases take effect.
• Furniture is a deferrable purchase, so economic downturns could cut demand and a sales recovery may lag the broader economy.
• The Company recorded a $14.1 million impairment on its leased Mexicali, Mexico right-of-use asset in Q3 FY2025 and warns the remaining carrying amount may also be unrecoverable.
• A multi-employer pension plan covering union employees is materially underfunded, exposing the Company to greater and more volatile funding obligations.

The Company owns the following facilities as of June 30, 2026: Approximate Location Size (square feet) Principal Operations Edgerton, Kansas 500,000 Distribution Huntingburg, Indiana 337,000 Distribution Dubuque, Iowa 40,000 Corporate Office The Company leases the following facilities as of June 30, 2026: Approximate Location Size (square feet) Principal Operations Mexicali, Mexico 508,000 Manufacturing Greencastle, Pennsylvania 206,000 Distribution Juarez, Mexico 225,000 Manufacturing Juarez, Mexico 197,000 Manufacturing Juarez, Mexico 131,000 Manufacturing High Point, North Carolina 60,000 Showroom El Paso, Texas 38,000 Warehouse High Point, North Carolina 15,000 Design and Engineering Center Las Vegas, NV 10,000 Showroom Shenzhen, China 2,000 Office Bangkok, Thailand 1,000 Office Binh Duong, Vietnam 1,000 Office See Note 2, Leases, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion of the leased assets.

See Note 14, Commitments and Contingencies, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for discussion of legal proceedings. 11 Table of Contents

• Net sales increased $18.1 million, or 4.1%, to $459.2 million, driven by $28.0 million of soft seating growth, partially offset by a $9.0 million decline in homestyles ready-to-assemble sales and a $0.9 million decline in Flexsteel branded casegoods.
• Gross margin expanded 250 bps to 24.7%, primarily from a 200-bps benefit from IEEPA tariff refunds and favorable product and customer mix.
• SG&A rose $4.2 million to 15.4% of net sales, with higher growth investments and incentive compensation partly offset by fixed cost leverage on higher volume.
• Net income was $33.1 million, or $6.07 per diluted share, up from $20.2 million, or $3.55 per diluted share, with an effective tax rate of 24.4% versus 25.3%.
• Working capital fell $27.7 million to $82.7 million, and financing activities used $70.9 million, primarily for $63.7 million of common stock repurchases.
• Subsequent to year-end, the Company replaced its credit agreement with a new $30.0 million secured revolving credit facility maturing August 18, 2029.

• Management does not believe interest rate, foreign exchange, or equity price changes could materially affect results of operations or cash flows.
• The Company has no foreign-currency sales but has peso-denominated purchases, wages, benefits, and indirect costs from its Mexico operations.
• The Company does not currently hedge foreign currency risk; a prior peso derivative expired March 31, 2025 without being utilized.
• A weaker U.S. dollar against the peso could raise manufactured product costs, while a weaker peso could reduce the value of its Mexico VAT receivable.
• As of June 30, 2026, the Company had no outstanding balance on its line of credit, limiting interest-rate exposure.
• Import-related risks include supplier-country political issues, shipping disruptions, port labor negotiations, tariffs, duties, quotas, and dollar fluctuations.

• Deloitte issued unqualified opinions on the FY2026 financial statements and on internal control over financial reporting, with inventories ($90.6M) identified as the sole critical audit matter.
• Net sales grew 4.1% to $459.2M and net income rose 64.4% to $33.1M, while diluted EPS increased to $6.07 from $3.55.
• Cash and cash equivalents fell to $16.7M from $40.0M, driven mainly by $63.7M of treasury stock repurchases, including a $60.2M related-party buyback of 1,279,870 shares from a director's family.
• The FY2025 $14.1M right-of-use asset impairment on the Mexicali, Mexico facility was not repeated; the remaining Mexicali ROU asset carrying value was $12.4M at June 30, 2026.
• The revolving credit facility was reduced to $55M in June 2025, had no outstanding borrowings at year-end, and was replaced after year-end by a new $30M facility maturing August 18, 2029.
• The company operates as a single reportable segment and had no single customer exceeding 10% of net sales.