FLEXSTEEL INDUSTRIES INC 10-K

Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm PCAOB ID 34 20 Report of Independent Registered Public Accounting Firm – Internal Control Over Financial Reporting 22 Consolidated Balance Sheets at June 30, 2026 and 2025 23 Consolidated Statements of Income and Comprehensive Income for the Years Ended June 30, 2026, 2025, and 2024 24 Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended June 30, 2026, 2025, and 2024 25 Consolidated Statements of Cash Flows for the Years Ended June 30, 2026, 2025, and 2024 26 Notes to Consolidated Financial Statements 27 - 39 Schedule II Valuation and Qualifying Accounts 43 19 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Flexsteel Industries, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Flexsteel Industries, Inc. and subsidiaries (the "Company") as of June 30, 2026 and June 30, 2025, the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended June 30, 2026, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2026 and June 30, 2025, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2026, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 19, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Inventories — Refer to Notes 1 and 3 to the financial statements Critical Audit Matter Description The Company has inventories of $90.6 million as of June 30, 2026. The Company records inventories at the lower of cost or net realizable value utilizing the first-in, first-out (“FIFO”) method. The Company’s inventory valuation reflects markdowns for the excess of the cost over the amount expected to be realized. Markdowns establish a new cost basis for the Company’s inventories. Subsequent changes in facts or circumstances do not result in the reversal of previously recorded markdowns or an increase in that newly established cost basis. Given the quantitative and qualitative materiality of the balance, coupled with the judgments and subjectivity involved to estimate the markdowns to the net realizable value of inventories, auditing management's estimates of net realizable value required subjective auditor judgment. 20 Table of Contents How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to estimated net realizable value of inventories included the following, among others: • We tested the design and operating effectiveness of internal controls over the inventory valuation process, including controls over the inputs that are used in management’s inventory markdown for the excess of the cost over the amount expected to be realized. • We tested management's methodology to determine the markdowns to net realizable value of inventory through inquiries of management, and evaluation of accounting policies and process documentation. • We tested the accuracy and completeness of the Company’s measurement of inventory markdowns using a sampling approach. We evaluated the appropriateness of methodologies and assumptions used by management to estimate inventory markdowns including inventory quantities on-hand, historical sales activity, and other assumptions used by management. • We evaluated management’s measurement of the inventory markdowns and net realizable value by testing the mathematical accuracy of the Company’s calculation. • We performed retrospective reviews of actual products sold in the current year against prior year inventory markdowns to net realizable value. /s/ Deloitte & Touche LLP Minneapolis, MN August 19, 2026 We have served as the Company’s auditor since 1965. 21 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Flexsteel Industries, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Flexsteel Industries, Inc. and subsidiaries (the "Company") as of June 30, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended June 30, 2026, of the Company and our report dated August 19, 2026, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Minneapolis, MN August 19, 2026 22 Table of Contents FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Amounts in thousands) June 30, 2026 2025 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 16,678 $ 40,006 Trade receivables - less allowances: June 30, 2026, $ 2,040 , June 30, 2025, $ 1,790 42,658 35,229 Inventories 90,593 89,135 Other 8,444 8,002 Total current assets 158,373 172,372 NONCURRENT ASSETS: Property, plant and equipment, net 35,972 36,212 Operating lease right-of-use assets 35,672 41,545 Deferred income taxes 7,928 12,444 Other assets 16,064 19,913 TOTAL $ 254,009 $ 282,486 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable - trade $ 36,238 $ 25,617 Current portion of operating lease liabilities 8,397 7,809 Accrued liabilities: Payroll and related items 13,411 11,260 Insurance 1,414 1,950 Sales and advertising related items 10,241 8,061 Other 5,964 7,317 Total current liabilities 75,665 62,014 LONG-TERM LIABILITIES: Operating lease liabilities, less current maturities 43,499 51,561 Other liabilities 1,350 1,049 Total liabilities 120,514 114,624 COMMITMENTS AND CONTINGENCIES (Note 14) SHAREHOLDERS' EQUITY: Common stock - $ 1 par value; authorized 15,000 shares; 8,629 shares issued and 4,107 shares outstanding as of June 30, 2026; 8,514 shares issued and 5,307 shares outstanding as of June 30, 2025 8,629 8,514 Additional paid-in capital 41,110 40,644 Treasury stock, at cost; 4,522 shares as of June 30, 2026, and 3,207 as of June 30, 2025 ( 135,478 ) ( 71,731 ) Retained earnings 219,234 190,435 Total shareholders' equity 133,495 167,862 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 254,009 $ 282,486 See accompanying Notes to Consolidated Financial Statements. 23 Table of Contents FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Statements of Income AND COMPREHENSIVE INCOME (Amounts in thousands, except per share data) For the years ended June 30, 2026 2025 2024 Net sales $ 459,178 $ 441,073 $ 412,752 Cost of goods sold 345,742 343,129 325,508 Gross profit 113,436 97,944 87,244 Selling, general and administrative expenses 70,886 66,696 70,444 Restructuring expense — — 2,982 Right-of-use asset impairment — 14,079 — (Gain) on sale of real estate — ( 753 ) — (Gain) on disposal of assets held for sale — ( 8,693 ) ( 3,262 ) Operating income 42,550 26,615 17,080 Other income (expense): Interest income 1,288 421 20 Interest (expense) ( 22 ) ( 70 ) ( 1,550 ) Income before income taxes 43,816 26,966 15,550 Income tax provision 10,688 6,812 5,022 Net income and comprehensive income $ 33,128 $ 20,154 $ 10,528 Weighted average number of common shares outstanding: Basic 5,125 5,249 5,170 Diluted 5,456 5,678 5,519 Earnings per share of common stock Basic $ 6.46 $ 3.84 $ 2.04 Diluted $ 6.07 $ 3.55 $ 1.91 24 Table of Contents FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Statements of Changes in Shareholders’ Equity (Amounts in thousands) Total Par Value of Common Treasury Retained Shares ($ 1 Par) Capital Stock Earnings Total Balance at June 30, 2023 $ 8,292 $ 36,605 $ ( 70,072 ) $ 166,796 $ 141,621 Stock-based compensation 24 4,622 — — 4,646 Vesting of restricted stock units 88 ( 1,739 ) — — ( 1,651 ) Stock options exercised, net 3 85 — — 88 Treasury stock purchases — — ( 1,659 ) — ( 1,659 ) Cash dividends declared — — — ( 3,206 ) ( 3,206 ) Net income — — — 10,528 10,528 Balance at June 30, 2024 $ 8,407 $ 39,573 $ ( 71,731 ) $ 174,118 $ 150,367 Stock-based compensation 14 3,855 — — 3,869 Vesting of restricted stock units 29 ( 823 ) — — ( 794 ) Stock options exercised, net 64 ( 1,961 ) — — ( 1,897 ) Cash dividends declared — — — ( 3,837 ) ( 3,837 ) Net income — — — 20,154 20,154 Balance at June 30, 2025 $ 8,514 $ 40,644 $ ( 71,731 ) $ 190,435 $ 167,862 Stock-based compensation 13 4,539 — — 4,552 Vesting of restricted stock units 100 ( 4,141 ) — — ( 4,041 ) Stock options exercised, net 2 68 — — 70 Treasury stock purchases — — ( 63,747 ) — ( 63,747 ) Cash dividends declared — — — ( 4,329 ) ( 4,329 ) Net income — — — 33,128 33,128 Balance at June 30, 2026 8,629 41,110 ( 135,478 ) 219,234 133,495 Cash dividends declared per common share were $ 0.85 , $ 0.71 , and $ 0.60 for the fiscal years ended June 30, 2026, 2025, and 2024, respectively. See accompanying Notes to Consolidated Financial Statements . 25 Table of Contents FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Amounts in thousands) For the years ended June 30, 2026 2025 2024 OPERATING ACTIVITIES: Net income $ 33,128 $ 20,154 $ 10,528 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 3,827 3,654 3,997 Deferred income taxes 4,516 ( 3,837 ) ( 1,454 ) Stock-based compensation expense 4,552 3,869 4,647 Provision for credit losses 168 ( 244 ) ( 160 ) Right-of-use asset impairment — 14,079 — Loss (gain) on disposition of property, plant and equipment 92 ( 9,446 ) ( 2,839 ) Changes in operating assets and liabilities: Trade receivables ( 7,596 ) 9,253 ( 5,910 ) Inventories ( 1,458 ) 7,441 25,499 Other current and non-current assets 3,396 ( 8,548 ) ( 8,199 ) Accounts payable - trade 10,862 ( 579 ) 1,373 Accrued liabilities ( 281 ) 830 4,177 Other long-term liabilities 311 353 224 Net cash provided by operating activities 51,517 36,979 31,883 INVESTING ACTIVITIES: Proceeds from sale of investments — 1,155 — Proceeds from sales of property, plant and equipment 21 11,535 4,179 Capital expenditures ( 3,941 ) ( 3,258 ) ( 4,772 ) Net cash (used in) provided by investing activities ( 3,920 ) 9,432 ( 593 ) FINANCING ACTIVITIES: Dividends paid ( 4,375 ) ( 3,556 ) ( 3,219 ) Treasury stock purchases ( 63,746 ) — ( 1,659 ) Proceeds from lines of credit 9,000 202,344 367,818 Payments on lines of credit ( 9,000 ) ( 207,262 ) ( 391,270 ) Proceeds from issuance of common stock 70 141 88 Shares withheld for tax payments on vested shares and options exercised ( 2,874 ) ( 2,833 ) ( 1,652 ) Net cash (used in) financing activities ( 70,925 ) ( 11,166 ) ( 29,894 ) (Decrease) increase in cash and cash equivalents ( 23,328 ) 35,245 1,396 Cash and cash equivalents at beginning of year 40,006 4,761 3,365 Cash and cash equivalents at end of year $ 16,678 $ 40,006 $ 4,761 SUPPLEMENTAL INFORMATION Interest paid 22 107 1,694 Interest received 1,288 421 — Cash paid for income taxes, net 8,109 9,397 4,296 Capital expenditures in accounts payable 149 390 23 See accompanying Notes to Consolidated Financial Statements. 26 Table of Contents FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DESCRIPTION OF BUSINESS – Flexsteel Industries, Inc. and Subsidiaries (the “Company,” “Flexsteel,” or “Our”) is one of the largest residential furniture manufacturers, importers, and marketers in the U.S. Flexsteel addresses different consumer groups through our core brand, Flexsteel, and several category-specific sub-brands: Zecliner, Statements, Zen, Perfect Match, and Pulse, all of which have unique value propositions tailored to specific consumer needs. We offer a wide assortment of product solutions for different areas within the home including stationary and motion sofas, loveseats, chairs, and sectionals, as well as bedroom furniture, dining tables and chairs, occasional and entertainment tables, and kitchen storage. For more than 130 years, Flexsteel has strived to create strong consumer value with unmatched quality, comfort, and durability, backed by innovation and highlighted by its patented Blue Steel Spring technology, designed to deliver lasting comfort and support. Today, Flexsteel products are available nationwide through retail partners and online channels. PRINCIPLES OF CONSOLIDATION – The consolidated financial statements include the accounts of Flexsteel Industries, Inc. and its wholly owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation. The Company’s consolidated financial statements and results of operations are based on consolidated financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) in the United States of America. USE OF ESTIMATES – The preparation of consolidated financial statements in conformity with GAAP in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Ultimate results could differ from those estimates. FAIR VALUE – The Company’s cash and cash equivalents, investments, accounts receivable, other current assets, accounts payable and certain accrued liabilities are carried at amounts that approximate their fair value due to their short-term nature. Under GAAP, financial assets and liabilities measured at fair value are classified into one of three levels based on the inputs used in the valuation:: Level 1: Quoted market prices in active markets for identical assets and liabilities; Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data; or Level 3: Unobservable inputs that are not corroborated by market data. The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period. ALLOWANCE FOR CREDIT LOSSES – The Company establishes an allowance for credit losses to reduce trade accounts receivable to an amount that reasonably approximates their net realizable value. The Company’s allowance for credit losses is established through review of open accounts, historical collection, and historical write-off amounts. The amount ultimately realized from trade accounts receivable may differ from the amount estimated in the consolidated financial statements. INVENTORIES – Inventories are stated at the lower of cost or net realizable value utilizing the first‑in - first‑out (“FIFO”) method. Cost of manufactured inventory includes materials, freight, import duties and tariffs, labor and overhead. In addition, sourced finished goods inventory includes the purchase price of the product and capitalized freight, import duties and tariffs, and warehousing costs. Our inventory valuation reflects markdowns for the excess of the cost over the amount expected to be realized and considers obsolete and excess inventory. Markdowns establish a new cost basis for the Company’s inventory. Subsequent changes in facts or circumstances do not result in the reversal of previously recorded markdowns or an increase in that newly established cost basis. PROPERTY, PLANT AND EQUIPMENT – Property, plant and equipment is stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets. VALUATION OF LONG–LIVED ASSETS – The Company periodically reviews the carrying value of long-lived assets and estimated depreciable or amortizable lives for continued appropriateness. This review is based upon projections of anticipated future cash flows and is performed whenever events or changes in circumstances indicate that asset carrying values may not be recoverable or that the estimated depreciable or amortizable lives may have changed. For long-lived assets, including right-of-use lease assets, if the net book value of the asset is greater than its estimated fair value less cost to sell, an impairment is recorded for the excess of net book value over estimated fair value less cost to sell. ASSETS HELD FOR SALE – Assets held for sale represent land, buildings, machinery and equipment for locations that have met the criteria of “held for sale” accounting, as specified by Accounting Standards Codification (“ASC”) 360, “Property, Plant, and Equipment.” Once an asset is classified as held for sale, the Company ceases depreciating the asset. The assets held for sale are being marketed for sale and it is the Company’s intention to complete the sale of the assets within the upcoming year. 27 Table of Contents LEASES – The Company accounts for its leases in accordance with ASC 842, Leases. ASC 842 requires lessees to (i) recognize a right-of-use asset (“ROU asset”) and a lease liability that is measured at the present value of the remaining lease payments, on the Consolidated Balance Sheets, (ii) recognize a single lease cost, calculated over the lease term on a straight-line basis and (iii) classify lease-related cash payments within operating and financing activities. The Company made an accounting policy election to not recognize short-term leases on the Consolidated Balance Sheets and all non-lease components, such as common area maintenance, were excluded. See Note 2, Leases , for the Company’s lease disclosures. WARRANTY – The Company estimates the amount of warranty claims on sold product that may be incurred based on current and historical data. The actual warranty expense could differ from the estimates made by the Company based on product performance. REVENUE RECOGNITION – Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. We generate revenue primarily by manufacturing and delivering furniture products to independent furniture retailers in the United States. Each unit of furniture is a separate performance obligation. We satisfy our performance obligations when control of our product is passed to our customer, which is the point in time that our customers are able to direct the use of and obtain substantially all of the remaining economic benefit of the goods or services. Net sales consist of product sales and outbound shipping and handling charges for customer deliveries, net of adjustments for returns and allowances. Shipping and handling costs are included in cost of goods sold. The Company’s revenues result from the sale of goods and reflect the consideration to which the Company expects to be entitled. Revenue is reduced by appropriate allowances, estimated returns, price concessions, or similar adjustments as applicable. The Company records revenue based on a five-step model in accordance with ASC 606, Revenue from Contracts with Customers . For its customer contracts, typically purchase orders, the Company identifies the performance obligations (goods), determines the transaction price, allocates the contract transaction price to the performance obligations, and recognizes the revenue when the performance obligation is transferred to the customer. A good is transferred when the customer obtains control of that good and risk of loss transfers at a point in time. Provisions for customer volume rebates, product returns, discounts, and allowances are variable considerations and are recorded as a reduction of revenue in the same period the related sales are recorded. Such provisions are calculated based upon historical data and discount percentages, set with each customer. Consideration given to customers for cooperative advertising is recognized as a reduction of revenue except to the extent there is a distinct good or service and evidence of the fair value of the advertising, in which case the expense is classified as selling, general and administrative expense (SG&A). The Company has a limited lifetime warranty on all products. The Company does not offer the option to purchase warranties. The Company accounts for warranties under ASC 460, Guarantees , and not as variable consideration related to revenue. Occasionally, the Company receives deposits from customers before it has transferred control of the product to customers, resulting in contract liabilities. These contract liabilities are reported within “Accounts payable - trade” in the consolidated balance sheets. The Company had $ 0.44 million and $ 0.25 million of customer deposits as of June 30, 2026 and 2025, respectively. The Company follows the following practical expedients and policy elections: • The Company does not adjust contract prices for the effects of a significant financing component, as it expects the period when the goods or services are transferred to the customer and when the customer pays for those goods and services to be less than a year. • Costs for outbound shipping and handling activities that occur after the product is received in the Company’s distribution centers, but before the customer obtains control of the product are accounted for as fulfillment activities. Accordingly, these expenses are recorded at the same time the Company recognizes revenue. Inbound shipping and handling activities incurred to transport product to the Company’s distribution centers is expensed when the product is received by the Company, unless there are revenue surcharges to recover such costs, in which case these expenses are recorded at the same time the Company recognizes revenue. • Incremental costs of obtaining a contract, specifically commissions, are recorded as an SG&A expense when incurred. • All taxes imposed on and concurrent with revenue-producing transactions and collected by the Company from a customer, including sales, use, excise, and franchise taxes are excluded from the measurement of the transaction price. ADVERTISING COSTS – are charged to selling, general and administrative expenses in the periods incurred. The Company conducts no direct-response advertising programs and there are no assets related to advertising recorded on the consolidated balance sheets. Advertising expenditures, primarily shared customer advertising in which an identifiable benefit is received and national trade-advertising programs, were approximately $ 5.5 million, $ 3.4 million, and $ 5.9 million in fiscal years 2026, 2025, and 2024, respectively . 28 Table of Contents DESIGN, RESEARCH, AND DEVELOPMENT COSTS – are charged to selling, general and administrative expenses in the periods incurred. Expenditures for design, research, an d development costs were approxima tely $ 2.6 million, $ 2.1 million, and $ 2.1 million in fiscal years 2026, 2025, and 2024, respective ly. INSURANCE – The Company is self-insured for health care and most workers’ compensation up to predetermined amounts above which third-party insurance applies. The Company purchases specific stop-loss insurance for individual health care claims in excess of $ 175,000 per plan year. For workers’ compensation, the Company retains the first $ 250,000 per claim and purchases excess coverage up to the statutory limits for amounts in excess of the retention limit. Losses are accrued based upon the Company’s estimates of the aggregate liability for claims incurred using certain actuarial assumptions followed in the insurance industry and based on Company experience. The Company records these insurance accruals within “Accrued liabilities – insurance” on the consolidated balance sheets. INCOME TAXES – The Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted ta x rates and laws that will be in effect when the differences are expected to reverse. The Company recognizes in its financial statements the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. EARNINGS PER SHARE (EPS) – Basic EPS of common stock is based on the weighted-average number of common shares outstanding during each fiscal year. Diluted EPS of common stock includes the dilutive effect of potential common shares outstanding. The Company’s potential common shares outstanding are stock options, shares associated with the long-term management incentive compensation plan and non-vested restricted shares. The Company calculates the dilutive effect of outstanding options using the treasury stock method; all options are anti-dilutive when there is a loss. Anti-dilutive shares are not included in the computation of diluted EPS when their exercise price was greater than the average closing market price of the common shares. The Company calculates the dilutive effect of shares related to the long-term management incentive compensation plan and non-vested shares based on the number of shares, if any, that would be issuable if the end of the fiscal year were the end of the contingency period. In computing EPS, net income as reported for each respective period is divided by the fully diluted weighted average number of shares outstanding: June 30, (in thousands) 2026 2025 2024 Basic shares 5,125 5,249 5,170 Potential common shares: Stock options 101 100 117 Long-term incentive plan 230 329 232 Diluted shares 5,456 5,678 5,519 Anti-dilutive shares 3 6 37 STOCK–BASED COMPENSATION – The Company recognizes compensation expense related to the cost of employee services received in exchange for Company equity interests based on the award’s fair value at the date of grant. The Company recognizes long-term incentive compensation plan expenses during the three-year performance periods; stock awards are issued following the end of the performance periods and are subject to verification of results and the Compensation Committee of the Board of Directors approval. See Note 11, Stock-Based Compensation . SEGMENT REPORTING – The Company operates as one operating segment and one reportable segment, furniture products. The Company’s operations involve the distribution of manufactured and imported furniture for the residential market. The Company’s furniture products are sold primarily throughout the United States by the Company’s internal sales force and various independent representatives. The Company has minimal export sales, primarily to Canada or Mexico. No single customer accounted for more than 10% of net sales. See Note 12, Segment Information . TREASURY STOCK – Treasury stock purchases ar e stated at cost and presented as a reduction of equity on the consolidated balance sheets. As of June 30, 2026 , the Company has purchased a total of 4,522,313 shares at a cost of $ 135.5 million under approved share repurchase programs and has $ 28.6 million remaining in the share repurchase program approved in December 2024. RECENT ACCOUNTING STANDARDS PENDING ADOPTION – In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, which requires disclosure in the notes to the financial statements of specified information about certain costs and 29 Table of Contents expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the disclosure impacts of this ASU on its consolidated financial statements. RECENTLY ADOPTED ACCOUNTING STANDARDS – In December 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2023-09, Improvements to Income Tax Disclosures. The amendments in this ASU are intended to increase transparency through enhanced income tax disclosures, primarily related to the rate reconciliation and income taxes paid. The Company adopted this guidance effective as of the end of fiscal 2026. The adoption affected the Company's income tax disclosures but did not have an impact on its financial position, results of operations, or cash flows. See Note 10, Income Taxes, for additional information. 2. LEASES The Company accounts for its leases in accordance with ASU 842, Leases. ASC 842 requires lessees to (i) recognize a right-of-use asset (“ROU asset”) and a lease liability that is measured at the present value of the remaining lease payments on the Consolidated Balance Sheets, (ii) recognize a single lease cost, calculated over the lease term on a straight-line basis and (iii) classify lease-related cash payments within operating and financing activities. The Company made an accounting policy election to not recognize short-term leases on the Consolidated Balance Sheets and all non-lease components, such as common area maintenance, were excluded. At any given time during the lease term, the lease liability represents the present value of the remaining lease payments, and the ROU asset is measured as the amount of the lease liability, adjusted for pre-paid rent, unamortized initial direct costs, the remaining balance of lease incentives received, and any impairment. Both the lease ROU asset and lease liability are reduced to zero at the end of the lease term. The Company leases distribution centers and warehouses, manufacturing facilities, showrooms, and office space. At the lease inception date, the Company determines if an arrangement is, or contains, a lease. Some of the Company’s leases include options to renew at similar terms. The Company assesses these options to determine if the Company is reasonably certain of exercising these options based on relevant economic and financial factors. Options that meet these criteria are included in the lease term at the lease commencement date. For purposes of measuring the Company’s ROU asset and lease liability, the discount rate utilized by the Company was based on the average interest rates effective for the Company’s line of credit. Some of the Company’s leases contain variable rent payments, including common area maintenance and utilities. Due to the variable nature of these costs, they are not included in the measurement of the ROU asset and lease liability. In July 2022, Flexsteel commenced a 12-year lease for a manufacturing facility in Mexicali, Mexico to support strong demand growth which was elevated due to pandemic-driven buying at that time. Subsequently, U.S. furniture demand reverted to pre-pandemic norms, and the Company’s plan for the facility pivoted to subleasing the space short-term while maintaining the option to utilize it longer term to support growth. While the Company secured multiple short-term sublease tenants at the beginning of the lease term, substantial changes in U.S. trade policy in early 2025 created significant uncertainty in US-Mexico trade relations, slowed foreign direct investment in Mexico, and greatly diminished tenant interest in subleasing the Mexicali facility. As a result, management concluded that the right of use asset related to this lease was not fully recoverable and recorded a pre-tax, non-cash asset impairment charge of $ 14.1 million during the quarter ended March 31, 2025. The fair value of the right of use asset on March 31, 2025, was estimated under the income approach using a discounted cash flow technique, including assumptions for future sublease rental income and an appropriate discount rate. This technique involves estimates and uncertainties and actual results could differ. The impairment charge is included within operating income in the Consolidated Statements of Income and Comprehensive Income under right-of-use asset impairment. For the year ended June 30, 2026, the Company evaluated the triggering events described in ASC 360-10-35-21 and considered current operating, market, legal and economic conditions. Based on this evaluation, management concluded that no new events or changes in circumstances occurred during the year that would indicate the carrying amount of the Mexicali ROU asset may not be recoverable. Accordingly, management determined that an additional recoverability test under ASC 360 was not required. The remaining carrying value of the Mexicali ROU asset, after reflecting normal current-year lease accounting activity, lease was $ 12.4 million as of June 30, 2026. No impairment was recognized during the year. The components of the Company’s leases reflected on the Company’s consolidated statements of income were as follows: (in thousands) June 30, 2026 June 30, 2025 Operating lease expense $ 8,438 $ 8,643 Variable lease expense 1,832 1,661 Total lease expense $ 10,270 $ 10,304 30 Table of Contents Other information related to leases and future minimum lease payments under non-cancellable operating leases were as follows: Fiscal year June 30, 2026 June 30, 2025 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 10,037 $ 9,698 Cash received from subleasing of operating lease: Operating cash flows received from subleasing of operating lease $ — $ 594 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 456 $ 4,119 Weighted-average remaining lease term (in years): Operating leases 6.3 7.2 Weighted-average discount rate: Operating leases 3.9 % 4.0 % Fiscal year June 30, 2026 (in thousands) Payments in FY2027 $ 10,255 FY2028 10,025 FY2029 8,949 FY2030 8,713 FY2031 7,085 Thereafter 13,315 Total future minimum lease payments $ 58,342 Less imputed interest 6,446 Lease liability $ 51,896 3. INVENTORIES A comparison of inventories is as follows: June 30, (in thousands) 2026 2025 Raw materials $ 9,097 $ 11,114 Work in process and finished parts $ 1,753 2,632 Finished goods $ 79,743 75,389 Total $ 90,593 $ 89,135 31 Table of Contents 4. PROPERTY, PLANT AND EQUIPMENT A comparison of property, plant and equipment is as follows: Estimated June 30, (in thousands) Life (Years) 2026 2025 Land $ 3,175 $ 3,175 Buildings and improvements 5 - 39 39,067 38,455 Machinery and equipment 3 - 7 21,079 20,281 Delivery equipment 3 - 5 2,594 2,241 Furniture and fixtures 3 - 7 3,173 3,248 Computer software and hardware 3 - 7 10,040 10,118 Construction in progress 843 3,301 Total 79,971 80,819 Less accumulated depreciation ( 43,999 ) ( 44,607 ) Net $ 35,972 $ 36,212 The Company recognized impairment charges of $ 0.1 million, nil, and $ 0.1 million for fiscal years 2026, 2025, and 2024 , respectively. 5. RESTRUCTURING Manufacturing Network Optimization On February 5, 2024, the Company announced its plan to close its Dublin, Georgia manufacturing facility. The closure was completed in the fourth quarter of fiscal year 2024. As a result of the closure the Company incurred cumulative restructuring expense and related costs of $ 3.0 million as of June 30, 2024. See Note 6, Assets Held For Sale, for more information. The following is a summary of restructuring costs: For the years ended June 30, (in thousands) 2026 2025 2024 One-time employee termination benefits — — 2,558 Fixed asset impairments — — 74 Other associated costs — — 350 Total restructuring and related expenses $ — $ — $ 2,982 Reported as: Operating expenses $ — $ — $ 2,982 One-time employee termination benefits include costs for employee separation benefits. During the year ended June 30, 2024, the Company recorded one-time employee termination benefits, fixed asset impairment charges and other associated costs related to the Dublin closure. Other associated costs include legal and professional fees, inventory and equipment transfer costs, and other transition costs. All expenses related to the manufacturing network optimization restructuring plan were incurred and paid during the year ended June 30, 2024. 6. ASSETS HELD FOR SALE During fiscal year 2024, the Company committed to a restructuring plan to sell the Company's Dublin, Georgia location. As of December 31, 2024, the Company completed the sale and received proceeds of $ 6.7 million and recorded a pre-tax gain of $ 5.0 million. During the quarter ended March 31, 2025, the Company completed the sale of an ancillary building which was formerly part of the Company's Huntingburg, Indiana distribution center complex. The Company received proceeds of $ 0.8 million and recorded a pre-tax gain of $ 0.7 million related to the sale. During fiscal year 2025, the Company committed to a plan to sell a second ancillary building at the Huntingburg, Indiana distribution center complex. This property was recorded as held for sale at the quarter ended March 31, 2025, and the Company completed the sale during the quarter ended June 30, 2025. The Company received proceeds of $ 4.0 million and recorded a pre-tax gain of $ 3.7 million related to the sale. 32 Table of Contents There are no assets held for sale as of June 30, 2026 . 7. OTHER NONCURRENT ASSETS June 30, (in thousands) 2026 2025 VAT receivable 15,121 19,041 Other 943 872 Total $ 16,064 $ 19,913 8. ACCRUED LIABILITIES – OTHER June 30, (in thousands) 2026 2025 Dividends $ 1,208 $ 1,255 Warranty 1,001 915 Income taxes — 1,345 Other 3,755 3,802 Total $ 5,964 $ 7,317 9. CREDIT ARRANGEMENTS On September 8, 2021, the Company, as the borrower, entered into a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association (the “Lender”), and the other lenders party thereto. The Credit Agreement has a five-year term and provides for up to an $ 85 million revolving line of credit. Subject to certain conditions, the Credit Agreement also provides for the issuance of letters of credit in an aggregate amount up to $ 5 million which, upon issuance, would be deemed advances under the revolving line of credit. Proceeds of borrowings were used to refinance all indebtedness owed to a prior lender and for working capital purposes. The Company’s obligations under the Credit Agreement are secured by substantially all its assets, excluding real property. The Credit Agreement contains customary representations, warranties, and covenants, including a financial covenant to maintain a fixed coverage ratio of not less than 1.00 to 1.00. In addition, the Credit Agreement places restrictions on the Company’s ability to incur additional indebtedness, to create liens or other encumbrances, to sell or otherwise dispose of assets, and to merge or consolidate with other entities. As of June 30, 2026, management believes the Company was in compliance with all covenants. On April 18, 2022, the Company, as the borrower, entered into a first amendment to the Credit Agreement (“First Amendment to the Credit Agreement”), with the Lender and the lenders thereto. The amendment to the Credit Agreement changed the definition of the term ‘Payment Conditions’ and further defined default or event of default and the calculation of the Fixed Charge Coverage Ratio. Subject to certain conditions, borrowings under the Credit Agreement initially bore interest at LIBOR plus 1.25 % or 1.50 % per annum. On May 24, 2023, the Company entered into a second amendment to the Credit Agreement ("Second Amendment to the Credit Agreement") with the Lender to transition the applicable interest rate from LIBOR to Secured Overnight Financing Rate ("SOFR"). Effective as of the date of the Second Amendment to the Credit Agreement, borrowings under the amended Credit Agreement bear interest at SOFR plus 1.36 % to 1.61 %, or an effective interest rate of 4.98 % on June 30, 2026. On June 3, 2025, the Company entered into a third amendment to its Credit Agreement ("Third Amendment to the Credit Agreement") with Wells Fargo Bank, NA. The amendment reduced the maximum revolving line of credit amount to $ 55 million and modified certain definitions in the Credit Agreement which include dollar figures derived from the maximum revolver amount. The Company initiated the amendment to better align with current and projected borrowing availability under the Credit Agreement. As of June 30, 2026 , there were no outstanding borrowings under the Credit Agreement, exclusive of fees and letters of credit. Letters of credit outstanding at the Lender as of June 30, 2026, totaled $ 0.9 m illion. 10. INCOME TAXES The Company recognizes deferred tax assets to the extent that they believe the assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. 33 Table of Contents The One Big Beautiful Bill Act (“OBBBA”), enacted into law on July 4, 2025, introduced significant changes to the U.S. federal income tax laws. The OBBBA made permanent certain expiring provisions of the Tax Cuts and Job Act of 2017 (TCJA) and modified other provisions of the TCJA, as well as the Inflation Reduction Act of 2022 (the “IRA”). These changes included the permanent extension of 100% “bonus” depreciation for certain property, the permanent restoration of the tax-basis EBITDA-based limitation on the deductibility of business interest expense subject to certain modifications to the computation of tax-basis EBITDA, and the immediate expensing of qualified domestic research and development expenses. The OBBBA contained various effective dates with certain provisions becoming effective in 2025 and others in 2026 and beyond. The Company has reflected the impact of the OBBBA on current and deferred income taxes in its Consolidated Balance Sheets and Consolidated Statements of Income and Comprehensive Income. Income tax expense was calculated based upon the following components of income (loss) before income taxes for the years ended June 30: (in thousands) 2026 2025 2024 United States $ 41,194 $ 24,028 $ 15,348 Foreign 2,622 2,938 202 Income before income taxes $ 43,816 $ 26,966 $ 15,550 The income tax provision is as follows for the years ended June 30: (in thousands) 2026 2025 2024 Current Federal $ 3,685 $ 7,847 $ 4,708 State 1,670 2,061 1,134 Foreign 816 741 634 Deferred Federal 4,244 ( 3,523 ) ( 2,080 ) State 273 ( 314 ) 626 Foreign — — — Total $ 10,688 $ 6,812 $ 5,022 Reconciliation between the U.S. federal statutory tax rate and the effective tax rate in accordance with the guidance in ASU 2023-09 is as follows for the years ended June 30, 2026: June 30, 2026 (in thousands) Amount Rate Federal statutory tax rate $ 9,201 21.0 % State and local income taxes, net of federal income tax effect* 1,259 2.9 Foreign tax effects 265 0.6 Effect of cross border tax laws 46 0.1 Tax credits ( 287 ) ( 0.7 ) Nontaxable or nondeductible items: Executive compensation limitation 1,144 2.6 Stock compensation ( 1,225 ) ( 2.8 ) Other 28 0.1 Changes in uncertain tax positions 260 0.6 Other adjustments ( 3 ) ( 0.0 ) Total $ 10,688 24.4 % *State taxes in Indiana, Pennsylvania, California and Illinois made up the majority of the tax effect in this category. 34 Table of Contents Reconciliation between the U.S. federal statutory tax rate and the effective tax rate in accordance with the guidance prior to the adoption of ASU 2023-09 for the years ended June 30: 2025 2024 Federal statutory tax rate 21.0 % 21.0 % State taxes, net of federal effect 3.5 4.7 Foreign rate differential 0.9 2.1 Uncertain tax positions 0.6 1.1 Stock based compensation ( 4.1 ) ( 1.1 ) Executive compensation limitation 4.0 4.2 Foreign adjustments ( 0.2 ) 1.7 Expired state credits - 0.6 Research and development credit ( 2.0 ) ( 4.8 ) Remeasurement of deferred tax assets and valuation allowance ( 0.1 ) 0.3 State rate change and other state items 1.0 2.1 Other 0.6 0.4 Effective tax rate 25.2 % 32.3 % A reconciliation of income taxes paid (net of refunds received) by jurisdiction is as follows: (in thousands) 2026 U.S. federal $ 5,800 U.S. state and local: Kansas 440 Other 1,053 Total U.S. state and local 1,493 Foreign: Mexico 816 Other — Total foreign 816 Total income taxes paid (net of refunds received) $ 8,109 The components of the gross liabilities related to unrecognized tax benefits and the related deferred tax assets are as follows: June 30, (in thousands) 2026 2025 Gross unrecognized tax benefits $ 942 $ 777 Accrued interest and penalties 358 210 Gross liabilities related to unrecognized tax benefits $ 1,300 $ 987 Deferred tax assets 238 186 Valuation allowance — — Net deferred tax assets $ 238 $ 186 A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: (in thousands) 2026 2025 2024 Balance at July 1 $ 777 $ 607 $ 424 Reductions for tax positions of the prior year ( 13 ) — — Additions based on tax positions related to the current year 178 314 183 Lapse of statute of limitations — ( 154 ) — Addition for tax positions of the prior year — 9 — Balance at June 30 $ 942 $ 777 $ 607 The Company records interest expense and penalties related to income taxes as income tax expense in the Consolidated Statements of Income and Comprehensive Income. The Company does not expect that there will be any positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months. The amount of 35 Table of Contents unrecognized tax benefits as of June 30, 2026, and 2025 that if recognized, would affect the effective tax rate was $ 0.7 million and $ 0.6 million respectively. The primary components of deferred tax assets and (liabilities) are as follows: June 30, (in thousands) 2026 2025 Accounts receivable $ 498 $ 432 Inventory 1,462 2,257 Self-insurance 29 31 Payroll and related 1,377 1,402 Accrued liabilities 489 524 Property, plant, and equipment ( 341 ) 473 Investment tax credit 93 134 Valuation allowance ( 29 ) ( 31 ) Net operating loss carryover 120 5 Lease assets ( 8,699 ) ( 10,042 ) Lease liabilities 12,655 14,351 Research and development expenditure — 2,722 Other 274 186 Total $ 7,928 $ 12,444 On June 30, 2026, certain state tax attribute carryforwards of $ 0.3 million were available, with $ 0.1 million of credits expiring beginning in fiscal years 2026 through 2028 , and $ 0.1 million of state NOLs carryforward. Some of the state NOL carryforwards will have an indefinite carryforward and some will expire in varying amounts between 2035 and 2041. The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. Generally, fiscal years 2022 through 2026 remain open to examination by the Internal Revenue Service or other taxing jurisdictions to which the Company is subject. 11. STOCK-BASED COMPENSATION The Company accounts for its stock-based compensation plans in accordance with ASC 718, Stock Compensation , which requires the Company to measure all share-based payments at grant date fair value and recognize the cost over the requisite service period. Restricted shares and restricted stock units (“RSUs”) generally vest over 1 to 3 years. Stock options are granted at an exercise price equal to the fair value of the Company’s common stock price at the grant date and are exercisable for up to 10 years from the date of grant. Stock-based compensation is included in selling, general and administrative expenses on the Consolidated Statements of Income and Comprehensive Income. Forfeitures are recognized as incurred. Total stock-based compensation expense was $ 4.6 mil lion, $ 3.9 million and $ 4.6 million for fiscal years 2026, 2025, and 2024, respectively. The Company’s shareholders approved the Flexsteel Industries, Inc. 2022 Equity Incentive Plan (“2022 Plan”) on December 14, 2022 and approved amendments to the 2022 Plan on December 10, 2025. The 2022 Plan replaced the Long-Term Incentive Compensation Plan (“LTIP”) and the 2013 Omnibus Stock Plan (collectively, the “Prior Plans”). No further awards will be made under either of the Prior Plans, but these Prior Plans will continue to govern awards previously granted under them. (1) 2022 Equity Incentive Plan The 2022 Plan is a long-term incentive plan pursuant to which awards may be granted to certain employees, independent contractors and directors of the Company, in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares or other stock-based awards. For periods beginning on or after July 1, 2023, restricted stock units ("RSUs") and performance stock units ("PSUs") granted to officers and key employees as part of long-term compensation programs are issued from the 2022 Plan. RSUs and PSUs awarded from the 2022 Plan are included in the Long-Term Incentive Compensation or Restricted Share and RSUs tables below. 36 Table of Contents (2) Long-Term Incentive Compensation Plan (“LTIP”) The LTIP provides for PSUs to be awarded to officers and key employees based on performance goals set by the Compensation Committee of the Board of Directors (the “Committee”). In conjunction with each grant of PSUs, the Committee granted RSUs under the 2013 Omnibus Stock Plan that vested at the end of three years . No further awards will be issued under this plan. (3) 2013 Omnibus Stock Plan The 2013 Omnibus Stock Plan was for key employees, officers and directors and provides for the granting of incentive and nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and performance units. No further stock units will be granted under this plan . Long-Term Incentive Compensation The table below sets forth, as of June 30, 2026, the number of unvested PSUs granted at the target performance level for the 2024-2026, 2025-2027, and 2026-2028 performance periods under the 2022 Plan and the number of unvested RSUs granted in conjunction with the PSUs. For PSUs awarded for the three year performance periods ending June 30, 2026, 2027 and 2028, achievement is based on meeting performance goals set for each year within the three year period. The Committee selected Adjusted Operating Income as the performance metric for the performance periods ending June 30, 2026, 2027, and 2028. Time Based Vest Performance Based Vest Total Weighted average Weighted average Weighted average fair value fair value fair value (shares in thousands) Shares per share Shares per share Shares per share Unvested as of June 30, 2024 97 $ 17.92 182 $ 22.07 279 $ 20.65 Granted 31 31.66 46 31.66 77 31.66 Vested — — — — — — Forfeited — — ( 37 ) 39.07 ( 37 ) 39.07 Unvested as of June 30, 2025 128 $ 21.25 191 $ 21.09 319 $ 21.17 Granted 31 35.94 46 35.94 77 35.94 Vested ( 48 ) 19.23 ( 72 ) 19.23 ( 120 ) 19.23 Forfeited ( 2 ) 25.89 ( 4 ) 25.89 ( 6 ) 25.89 Unvested as of June 30, 2026 109 $ 26.23 161 $ 26.05 270 $ 26.14 Total unrecognized stock-based compensation related to the unvested PSUs at the target performance level and the related unvested RSUs wa s $ 2.2 million as of June 30, 2026, which is expected to be recognized over a perio d of 1.0 year. Restricted Shares and RSUs A summary of the activity in the Company’s unvested restricted shares and unvested RSUs, not granted in conjunction with PSUs, as of June 30, 2026, is presented below: Weighted average Shares fair value (in thousands) per share Unvested as of June 30, 2024 16 $ 21.96 Granted 4 31.66 Vested ( 3 ) 21.53 Forfeited — 20.33 Unvested as of June 30, 2025 17 $ 24.32 Granted 6 40.96 Vested ( 10 ) 12.92 Forfeited ( 1 ) 31.12 Unvested as of June 30, 2026 12 $ 41.57 Total unrecognized stock-based compensation related to unvested restricted shares and unvested RSUs (not granted in conjunction with the PSUs) wa s $ 0.2 million as of June 30, 2026, which is expected to be recognized over a weighted average period of 1.5 ye ars. 37 Table of Contents Options At June 30, 2026, the Company had 59,496 options outstanding under equity incentive plans with a weighted average exercise price of $ 15.37 and weighted average remaining life of 3.7 years. No options were granted during the period ended June 30, 2026 and there is no remaining unrecognized stock-based compensation expense related to outstanding options as of June 30, 2026. Stock-based compensation granted outside a plan During the quarter ended June 30, 2020, the Company awarded its former Chief Financial Officer/Chief Operating Officer (current Chief Executive Officer) 79,000 options outside of any Company stock plans. All 79,000 options remain outstanding as of June 30, 2026 , with an exercise price of $ 9.97 and a remaining life of 4.0 ye ars. There is no remaining unrecognized stock-based compensation expense related to these options. 12. SEGMENT INFORMATION As disclosed in Note 1, Summary of Significant Accounting Policies, the Company operates as a single operating segment and reportable segment reflecting the integrated nature of its operations across various products, manufacturing platforms and sales channels across the entire United States. The Company's chief operating decision maker (“CODM”) is its President and Chief Executive Officer , who has final authority over the allocation of resources, assessment of performance, and key operating decisions. The CODM manages the business on a consolidated basis and measures segment performance using operating income and net income, which the Company believes provide the best analysis of business performance. The CODM analyzes the performance of operating income and net income to provide insight into all aspects of the segment’s operations and overall success for a given period. In addition, the CODM reviews significant segment expenses focused on cost of sales, selling and general administrative expenses, and restructuring charges, net. These costs used to measure segment profitability are the same costs already reported in the accompanying Consolidated Statements of Income and Comprehensive Income. Similarly, segment assets are reported in the accompanying Consolidated Balance Sheets. The Company has minimal export sales, primarily to Canada or Mexico. The Company leases and operates three manufacturing facilities in Juarez, Mexico and leases one manufacturing facility in Mexicali, Mexico. Long-lived assets, including property, plant and equipment and right-of-use assets related to leases, located in the United States and Mexico totaled $ 40.3 million and $ 31.4 million, respectively, at June 30, 2026 and $ 42.4 million and $ 35.4 million, respectively, at June 30, 2025. 13. BENEFIT AND RETIREMENT PLANS Defined Contribution and Retirement Plans The Company sponsors a defined contribution retirement plan, which covers substantially all employees. The Company’s total matching contribution expense w as $ 1.6 mi llion, $ 1.6 million, and $ 1.8 million in fiscal years 2026, 2025, and 2024, respectively. Multi-employer Pension Plans The Company contributes to one multi-employer defined benefit pension plan under the terms of collective-bargaining agreements that cover its union-represented employees. The Company’s participation in the current and previous defined benefit pension plans for the fiscal year ended June 30, 2026, is o utlined in the following table. Unless otherwise noted, the most recent Pension Protection Act zone status available in 2026 and 2025 is for the plan’s year-end on December 31, 2025, and 2024, respectively. The zone status is based on information that the Company received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are between 65 percent and 80 percent funded, and plans in the green zone are at least 80 percent funded. Pension Protection Expiration Date Number of Act Zone Status Company Contributions of Collective Company EIN/Pension June 30, Rehabilitation (in thousands) Surcharge Bargaining Employees Pension Fund Plan Number 2026 2025 Plan Status 2026 2025 2024 Imposed Agreement in Plan Central States SE and SW Areas Pension Fund 366044243 Red Red Implemented $ 111 $ 113 $ 109 No 3/31/2028 6 $ 111 $ 113 $ 109 38 Table of Contents 14. COMMITMENTS AND CONTINGENCIES From time to time, the Company is subject to various other legal proceedings, including lawsuits, which arise out of, and are incidental to, the conduct of the Company’s business. The Company does not consider any of such other proceedings that are currently pending, individually or in the aggregate, to be material to its business or likely to result in a material effect on its consolidated operating results, financial condition, or cash flows. 15. SUBSEQUENT EVENTS Subsequent to fiscal year end, on August 18, 2026 the Company, as the borrower, entered into a new $ 30.0 million secured revolving credit facility that replaces the Credit Agreement. The new facility reduces the Company's maximum borrowing capacity from $ 55.0 million to $ 30.0 million but extends availability with a new maturity date of August 18, 2029 and is expected to better align with current needs and adequately support the Company’s anticipated future requirements for working capital and general corporate purposes. 16. RELATED PARTY TRANSACTIONS On April 26, 2026, the Company entered a privately negotiated transaction to repurchase shares of its common stock from a member of the Company's Board of Directors and certain members of the director's immediate family. The aggregate purchase price was $ 60.2 million for 1,279,870 shares. The transaction was reviewed and approved by the disinterested members of the Board of Directors in accordance with the Company's related party transaction policy. No amounts remained outstanding related to the transaction of June 30, 2026. 39 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.