NASDAQ: FLXS

The Company integrates manufactured products with finished products acquired from offshore suppliers who can meet quality specifications and lead-time requirements. The Company will continue to pursue and refine this blended product offering and supply chain strategy, offering customers the requisite amount of choice of made-to-order manufactured goods, and ready-to-deliver imported products. This blended focus on products allows the Company to provide a wide range of price points, styles and product categories to satisfy customer requirements.

Competition

The furniture industry is highly competitive and includes a large number of U.S. and foreign manufacturers and distributors, none of which dominate the market. The Company competes in markets with a large number of relatively small manufacturers; however, certain competitors have substantially greater sales volumes than the Company. The Company’s products compete based on style, quality, comfort, functionality, price, delivery, service and durability. The Company believes its patented, guaranteed-for-life Blue Steel Spring,

manufacturing and sourcing capabilities, facility locations, commitment to customers, product quality, consumer insights, innovation, delivery, service, value and experienced production, sales, marketing and management teams, are some of its competitive advantages.

Seasonality

The Company’s overall business is not considered materially seasonal.

Foreign Operations

The Company has minimal export sales. On June 30, 2026, the Company had approximately 30 employees located in Asia to ensure Flexsteel’s quality standards are met and to coordinate the delivery of products acquired from overseas suppliers. The Company leases and operates three manufacturing facilities in Juarez, Mexico and leases one manufacturing facility in Mexicali, Mexico. The Company had approximately 900 employees located in Mexico on June 30, 2026. The four Mexico facilities total 1,061,000 square feet. As of June 30, 2026, the Company has not begun operations in the Mexicali facility and expects to sublease the facility until such time that demand necessitates the additional capacity. See “Risk Factors” in Item 1A and 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.

Customer Backlog

The approximate backlog of customer orders believed to be firm as of the end of the current fiscal year and the prior two fiscal years were as follows (in thousands):

June 30, 2026

June 30, 2025

June 30, 2024

$

70,105

$

66,465

$

59,543

Raw Materials

The Company utilizes various types of wood, fabric, leather, filling material, high carbon spring steel, bar and wire stock, polyurethane foam and other raw materials in manufacturing furniture. The Company purchases these materials from numerous outside suppliers, both U.S. and foreign, and is not dependent upon any single source of supply. The costs of certain raw materials fluctuate, but all continue to be readily available within supplier lead-times; however, we could experience supply-chain disruptions at any time, which could impact the availability of materials.

Artificial Intelligence ("AI")

The Company is leveraging AI to strengthen the efficiency and effectiveness of its operational execution.

Industry Factors

The Company has exposure to actions by governments, including tariffs, see “Risk Factors” in Item 1A of this Annual Report on Form 10-K.

Government Regulations

The Company is subject to various local, state, and federal laws, regulations and agencies that affect businesses generally, see “Risk Factors” in Item 1A of this Annual Report on Form 10-K. Our compliance with federal, state and local laws and regulations did not have a material effect upon our capital expenditures, earnings or competitive position during the fiscal year ended June 30, 2026.

Environmental Matters

All of Flexsteel’s stakeholders have a responsibility to protect our employees and our environment. The officers of Flexsteel and its subsidiaries will use our role as business and community leaders to set the tone at the top to guide our management teams in their efforts to improve the workplace and the environment we directly impact. Because we are committed to sustainable business practices, to our people, and to our communities, we will continue to grow and expand the scope of our dedications to the stewardship of our valued resources. The Company is subject to environmental laws and regulations with respect to product content and industrial waste. Further discussion is included in “Risk Factors” in Item 1A of this Annual Report on Form 10-K.

Trademarks and Patents

The Company relies on patents, trademarks, trade secrets, proprietary know-how and other intellectual property in connection with its products and brands, including improvement patents on its Blue Steel Spring, and registered trademarks. In addition, our furniture products are designed by the Company's own design staff and through the services of third-party designers. New models and designs

of furniture, as well as new fabrics, are introduced continuously. We evaluate each new model or design for patentability and file patent applications for the United States on inventions, designs and improvements that we deem valuable, but these patents do expire at various times.

Employees

The Company had approximately 1,200 employees on June 30, 2026, including 6 employees who are covered by collective bargaining agreements. Substantially all of the Company's employees are full-time. Management believes it has good relations with employees.

Available Information

Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our website (www.flexsteel.com) as soon as reasonably practicable after we electronically file the material with or furnish it to the U.S. Securities and Exchange Commission (SEC). Additionally, the SEC maintains an internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Information on our website or linked to our website is not incorporated by reference into this Annual Report.