Commitments and Contingencies

6 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation and Other Matters

The Company is party to certain lawsuits or claims in the ordinary course of business. The Company does not believe that these proceedings, individually or in the aggregate, will have a material adverse effect on the financial position, results of operations or cash flow of the Company.

Warranties

The Company provides warranties on certain product sales. Allowances for estimated warranty costs are recorded during the period of sale. The determination of such allowances requires the Company to make estimates of product return rates and expected costs to repair or to replace the products under warranty. If actual return rates and/or repair and replacement costs differ significantly from management’s estimates, adjustments to recognize additional cost of sales may be required in future periods. The Company’s warranty reserve was approximately $83,000 as of December 31, 2022 and $31,000 as of July 2, 2022, respectively.

Gain from Insurance Recoveries, Net of Losses

Gain from insurance recoveries, net of losses, relate to losses incurred from storm damage to the Company’s Arkansas facility on July 29, 2022, as the result of a lightning strike. During the three and six months ended December 31, 2022, the Company recorded a gain from insurance recoveries, net of losses, of $2.7 million and $3.6 million, respectively due to the storm event.The gains are net of a $0.4 million loss on the disposal of fixed assets, which were damaged in the event. During the second quarter of fiscal year 2023, the Company received additional insurance proceeds of $3.5 million to repair the plant and replace equipment, which should be completed by the second half of fiscal year 2023. These initial coverage amounts, net of equipment book value loss, are included in reported gain on insurance claims during the quarter.