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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 March 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 April 28, 2022

5,562,867


FLEXSTEEL INDUSTRIES, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2022

Page

Part I – Financial Information

Item 1.

Financial Statements

3

Consolidated Balance Sheets as of March 31, 2022, and June 30, 2021 (Unaudited)

3

Consolidated Statements of Income for the three and nine months ended March 31, 2022, and March 31, 2021 (Unaudited)

4

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

5

Consolidated Statements of Cash Flows for the nine months ended March 31, 2022, and March 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

18

Signatures

19


PART I FINANCIAL INFORMATION

Item 1.Financial Statements

FLEXSTEEL INDUSTRIES, INC., AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Amounts in thousands)

March 31,

June 30,

2022

2021

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

3,403

$

1,342

Trade receivables - less allowances: March 31, 2022, $3,460, June 30, 2021, $3,240

44,524

55,986

Inventories

154,118

161,125

Other

6,882

9,421

Assets held for sale

616

666

Total current assets

209,543

228,540

NONCURRENT ASSETS:

Property, plant and equipment, net

38,723

39,783

Operating lease right-of-use assets

39,695

27,057

Other assets

1,917

1,399

TOTAL ASSETS

$

289,878

$

296,779

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable - trade

$

39,274

$

67,773

Current portion of operating lease liabilities

6,495

5,833

Accrued liabilities:

Payroll and related items

6,185

7,662

Insurance

2,955

3,062

Restructuring costs

2,454

1,522

Advertising

4,333

5,196

Environmental remediation

3,570

3,570

Other

5,876

5,133

Total current liabilities

71,142

99,751

LONG-TERM LIABILITIES:

Operating lease liabilities, less current maturities

35,955

24,317

Lines of credit

41,593

3,500

Other liabilities

588

1,243

Total liabilities

149,278

128,811

SHAREHOLDERS' EQUITY:

Common stock - $1 par value; authorized 15,000 shares; 8,159 shares issued and
5,656 outstanding as of March 31, 2022; 8,133 shares issued and
6,848 outstanding as of June 30, 2021

8,159

8,133

Additional paid-in capital

35,364

34,015

Treasury stock, at cost; 2,503 shares and 1,284 shares as of March 31, 2022, and
June 30, 2021, respectively

(59,278)

(31,320)

Retained earnings

156,355

157,140

Total shareholders' equity

140,600

167,968

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

289,878

$

296,779

See accompanying Notes to Consolidated Financial Statements (Unaudited).

FLEXSTEEL INDUSTRIES, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Amounts in thousands, except per share data)

Three Months Ended

Nine Months Ended

March 31,

March 31,

2022

2021

2022

2021

Net sales

$

140,408

$

118,408

$

419,765

$

342,753

Cost of goods sold

118,337

95,284

364,757

272,436

Gross margin

22,071

23,124

55,008

70,317

Selling, general and administrative expenses

16,316

16,292

52,642

49,378

Restructuring (income) expense

(59)

480

715

2,724

(Gain) on disposal of assets due to restructuring

(1,400)

(5,881)

Operating income

5,814

6,352

3,051

24,096

Interest expense

176

602

Other (income)

(14)

(59)

(116)

(270)

Income before income taxes

5,652

6,411

2,565

24,366

Income tax provision

336

1,533

441

7,159

Net income

$

5,316

$

4,878

$

2,124

$

17,207

Weighted average number of common shares outstanding:

Basic

6,330

6,998

6,615

7,316

Diluted

6,494

7,270

6,842

7,551

Earnings per share of common stock:

Basic

$

0.84

$

0.70

$

0.32

$

2.35

Diluted

$

0.82

$

0.67

$

0.31

$

2.28

See accompanying Notes to Consolidated Financial Statements (Unaudited).


FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

(Amounts in thousands)

Nine Months Ended March 31, 2022

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 (loss)

(7,545)

(7,545)

Balance on December 31, 2021

$

8,153

$

36,001

$

(40,978)

$

151,888

$

155,064

Stock-based compensation

6

(637)

(631)

Treasury stock purchases

(18,300)

(18,300)

Cash dividends declared

(849)

(849)

Net income

5,316

5,316

Balance on March 31, 2022

$

8,159

$

35,364

$

(59,278)

$

156,355

$

140,600

Nine Months Ended March 31, 2021

Total Par

Value of

Additional

Common

Paid-In

Treasury

Retained

Shares ($1 Par)

Capital

Stock

Earnings

Total

Balance at June 30, 2020

$

8,008

$

31,748

$

(1,563)

$

137,312

$

175,505

Stock-based compensation

2

954

956

Vesting of restricted stock units and restricted shares

55

(387)

(332)

Treasury stock purchases

(9,000)

(9,000)

Cash dividends declared

(383)

(383)

Net income

3,879

3,879

Balance at September 30, 2020

$

8,065

$

32,315

$

(10,563)

$

140,808

$

170,625

Stock-based compensation

10

1,017

1,027

Stock options exercised

7

41

48

Treasury stock purchases

(11,013)

(11,013)

Cash dividends declared

(730)

(730)

Net income

8,450

8,450

Balance at December 31, 2020

$

8,082

$

33,373

$

(21,576)

$

148,528

$

168,407

Stock-based compensation

3

772

775

Vesting of restricted stock units and restricted shares

40

(1,045)

(1,005)

Treasury stock purchases

(8,472)

(8,472)

Cash dividends declared

(1,057)

(1,057)

Net income

4,878

4,878

Balance at March 31, 2021

$

8,125

$

33,100

$

(30,048)

$

152,349

$

163,526

See accompanying Notes to Consolidated Financial Statements (Unaudited).


FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Amounts in thousands)