DUBUQUE, Iowa--(BUSINESS WIRE)--Flexsteel Industries, Inc. (NASDAQ: FLXS) (“Flexsteel” or the “Company”), one of the largest manufacturers, importers, and marketers of residential furniture products in the United States, today reported fourth quarter and fiscal year 2026 results.

Key Results for the Fourth Quarter and Fiscal Year Ended June 30, 2026

• Net sales for the quarter of $115.4 million compared to $114.6 million in the prior year quarter, an increase of 0.7%. For the year, net sales increased 4.1% to $459.2 million compared to $441.1 million in the prior year.
• GAAP operating income of $16.3 million or 14.2% of net sales for the fourth quarter and $42.6 million or 9.3% of net sales for the year compared to $14.0 million or 12.2% of net sales in the prior year quarter and $26.6 million or 6.0% of net sales for the prior year.
  • Adjusted operating income of $8.2 million or 7.1% of net sales for the fourth quarter and $34.4 million or 7.5% of net sales for the year compared to $10.3 million or 9.0% of net sales in the prior year quarter and $31.3 million or 7.1% of net sales for the prior year.
• GAAP net income per diluted share of $2.58 for the current quarter and $6.07 for the year compared to net income per diluted share of $1.89 for the prior year quarter and net income per diluted share of $3.55 for the prior year.
  • Adjusted net income per diluted share of $1.33 for the quarter and $4.94 for the year compared to adjusted net income per diluted share of $1.40 for the prior year quarter and $4.17 for the prior year.
• The Company generated $24.3 million of cash flow from operations and completed $62.6 million of share repurchases in the fourth quarter.

Management Commentary

“Fiscal year 2026 was a year of strong financial performance and meaningful strategic progress despite increasingly difficult industry conditions,” said Derek Schmidt, CEO of Flexsteel Industries, Inc. “For the year, we delivered sales growth of approximately 4 percent to $459 million, expanded adjusted operating margin to 7.5 percent, generated record adjusted earnings per diluted share of $4.94, and produced more than $47.5 million of free cash flow. Our strong cash generation and balance sheet enabled us to repurchase approximately $64 million of stock during the year and recently increased our dividend by 25 percent. These results were achieved despite a challenging demand environment, evolving tariff policies, geopolitical uncertainty, and rising inflationary pressures, demonstrating the resilience of our business model and the agility of our organization.”

Mr. Schmidt continued, “While fourth quarter sales were only modestly above the prior year period, it was our eleventh consecutive quarter of year-over-year growth, driven by our key growth initiatives which continue to perform well. Our health and wellness category, strategic account relationships, and recent product introductions all delivered positive contributions during the quarter despite softer overall industry demand. Consumer demand for furniture remains pressured by weak confidence, affordability constraints, and macroeconomic uncertainty related to the ongoing conflict in the Middle East. Even consumers shopping at higher price points have become increasingly value-conscious in today's environment. Despite these headwinds, we delivered strong adjusted operating margin of approximately 7.1 percent in the quarter, reflecting disciplined product portfolio management, operational productivity improvements, and prudent management of selling and administrative expenses while continuing to fund critical growth investments.”

Mr. Schmidt concluded, “Beyond the financial results, we made significant progress strengthening the long-term competitive position of the Company. We continued to expand our capabilities in consumer insights, innovation, product development, and marketing, enabling us to bring more relevant products to market and drive stronger engagement with both consumers and retail partners. Looking ahead, we remain measured in our outlook as macroeconomic uncertainty, elevated inflation, rising energy costs, and trade policy uncertainty continue to pressure industry demand and profitability. While near-term conditions may remain challenging, our strategy and priorities are unchanged. We will continue to operate with agility, maintain disciplined cost control, and invest in the capabilities that we believe will drive long-term growth, market share gains, and shareholder value creation. With a strong balance sheet, a resilient operating model, and clear strategic priorities, we believe Flexsteel is well positioned to successfully navigate the current environment and emerge even stronger over time.”

Operating Results for the Fourth Quarter Ended June 30, 2026

Net sales were $115.4 million for the fourth quarter compared to net sales of $114.6 million in the prior year quarter, an increase of $0.8 million, or 0.7%. The increase was driven by higher unit volume from soft seating products, partially offset by decreases in our ready-to-assemble products sold under the homestyles brand.

Gross margin for the quarter ended June 30, 2026, was 30.0%, compared to 23.9% for the prior year quarter, an increase of 610 basis points (“bps”). The 610-bps increase was primarily due to a 780-bps benefit from IEEPA Tariff Refunds received, offset by a 100-bps unfavorable impact of foreign currency translation of our peso-denominated assets in Mexico versus the prior period, and a 70-bps unfavorable cost impact related to the decision to exit our ready-to-assemble product category sold under the homestyles brand.

Selling, general and administrative (SG&A) expense was 15.8% of net sales for the quarter ended June 30, 2026, compared to 15.0% in the prior year quarter. The 80-bps increase was due to incremental investments in consumer insights, innovation, new products, and marketing to maintain our growth momentum.

Operating income for the quarter ended June 30, 2026, was $16.3 million compared to $14.0 million in the prior year quarter. On an adjusted basis, operating income for the quarter ended June 30, 2026, was $8.2 million compared to $10.3 million in the prior year quarter.

Income tax expense was $3.8 million, or an effective rate of 23.0%, during the fourth quarter compared to tax expense of $3.6 million, or an effective rate of 25.0%, in the prior year quarter.

Net income was $12.7 million, or $2.58 per diluted share, for the quarter ended June 30, 2026, compared to net income of $10.7 million, or $1.89 per diluted share, in the prior year quarter. On an adjusted basis, net income for the quarter ended June 30, 2026, was $6.6 million or $1.33 per diluted share compared to adjusted net income of $7.9 million or $1.40 per diluted share in the prior year quarter.

Liquidity

The Company ended the quarter with a cash balance of $16.7 million, working capital (current assets less current liabilities) of $94.6 million, and availability of approximately $54.1 million under its secured line of credit.

Capital expenditures for the year ended June 30, 2026, were $3.9 million.

Financial Outlook

For the first quarter of fiscal year 2027, the Company expects sales growth of 1% to 4% compared to the prior year quarter and operating margin of 6.5% to 7%. The most significant drivers of variability in the financial outlook are consumer demand and logistics and material cost inflation driven by elevated energy prices.

Conference Call and Webcast

The Company will host a conference call and audio webcast with analysts and investors on Tuesday, August 18, 2026, at 8:00 a.m. Central Time to discuss the results and answer questions.

• Live conference call: 833-816-1123 (domestic) or 412-317-0710 (international)
• Conference call replay available through August 25, 2026: 855-669-9658 (domestic) or 412-317-0088 (international)
• Replay access code: 7455617
• Live and archived webcast: ir.flexsteel.com

To pre-register for the earnings conference call and avoid the need to wait for a live operator, investors can visit https://dpregister.com/sreg/10210984/1049369efa0 and enter their contact information. Investors will then be issued a personalized phone number and PIN to dial into the live conference call.

About Flexsteel

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.

Forward-Looking Statements

Statements, including those in this release, which are not historical or current facts, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. There are certain important factors that could cause the Company’s results to differ materially from those anticipated by some of the statements made herein. Investors are cautioned that all forward-looking statements involve risk and uncertainty. Some of the factors that could affect results are the cyclical nature of the furniture industry, supply chain disruptions, litigation, the effectiveness of new product introductions and distribution channels, the product mix of sales, pricing pressures, the cost of raw materials and fuel, changes in foreign currency values, retention and recruitment of key employees, actions by governments including laws, regulations, taxes and tariffs, the amount of sales generated and the profit margins thereon, competition (both U.S. and foreign), credit exposure with customers, participation in multi-employer pension plans, disruptions or security breaches to business information systems, the impact of any future pandemic, and general economic conditions. For further information regarding these risks and uncertainties, see the “Risk Factors” section in Item 1A of our most recent Annual Report on Form 10-K.

For more information, visit our website at http://www.flexsteel.com.

NON-GAAP DISCLOSURE (UNAUDITED)

The Company is providing information regarding adjusted operating income, adjusted operating margin, adjusted net income, and adjusted diluted earnings per share of common stock, which are not recognized terms under U.S. Generally Accepted Accounting Principles (“GAAP”) and do not purport to be alternatives to operating income, net income, or diluted earnings per share of common stock as a measure of operating performance. A reconciliation of adjusted operating income, adjusted operating margin, adjusted net income, and adjusted diluted earnings per share of common stock is provided below. Management believes the use of these non-GAAP financial measures provides investors with useful information to analyze and compare performance across periods excluding the items which are considered by management to be extraordinary or one-time in nature. Because not all companies use identical calculations, these presentations may not be comparable to other similarly titled measures of other companies.

Reconciliation of GAAP operating income to adjusted operating income and GAAP operating margin to adjusted operating margin:

The following table sets forth the reconciliation of the Company’s reported GAAP operating income to the calculation of adjusted operating income for the three and twelve months ended June 30, 2026 and 2025:

Reconciliation of GAAP net income to adjusted net income:

The following table sets forth the reconciliation of the Company’s reported GAAP net income to the calculation of adjusted net income for the three and twelve months ended June 30, 2026 and 2025:

Reconciliation of GAAP diluted earnings per share of common stock to adjusted diluted earnings per share of common stock:

The following table sets forth the reconciliation of the Company’s reported GAAP diluted earnings per share to the calculation of adjusted diluted earnings per share for the three and twelve months ended June 30, 2026 and 2025:

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INVESTOR CONTACT:
Michael Ressler, Flexsteel Industries, Inc.
563-585-8116
investors@flexsteel.com

Source: Flexsteel Industries, Inc.