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Flexsteel Industries Reports Second Quarter Fiscal Results

February 2, 2026  by Karen Parrish in Business Strategy, Industry   

Key Results for the Second Quarter Ended December 31, 2025
Net sales for the quarter of $118.2 million compared to $108.5 million in the prior year quarter, an increase of 9.0%.

GAAP operating income of $9.0 million or 7.6% of net sales compared to $11.7 million or 10.7% of net sales in the prior year quarter.

Adjusted operating income of $9.0 million or 7.6% of net sales for the second quarter compared to $6.7 million or 6.1% of net sales in the prior year quarter.

GAAP net income per diluted share of $1.18 for the current quarter compared to $1.62 in the prior year quarter.

Adjusted net income per diluted share of $1.18 for the quarter compared to $0.95 in the prior year quarter.

GAAP to non-GAAP reconciliations follow the financial statements in this press release

Management Commentary
"I’m pleased with our second quarter results and the way our teams continue to execute in a highly dynamic environment," said Derek Schmidt, CEO of Flexsteel Industries, Inc. "Despite uneven industry demand and a rapidly evolving tariff landscape, we delivered 9% year-over-year sales growth and meaningful profit improvement in the quarter. Our performance reflects the quality and balance of our growth, driven by new product introductions, share gains with strategic accounts, and continued progress in casegoods and health and wellness. Just as importantly, our results demonstrate the operating discipline and agility we’ve built into the organization over the past several years."

Mr. Schmidt continued, "While macroeconomic conditions and consumer demand remain inconsistent, we are navigating these challenges with a clear focus on execution. Our margin performance this quarter reflects structural improvements in how we operate, including productivity gains, cost discipline, and thoughtful product portfolio management. Tariffs continue to represent a significant source of uncertainty for the industry, and while we expect near-term pressure on demand and margins as higher-cost inventory flows through, we are actively managing pricing, costs, and our supply chain to mitigate the impact over time."

Mr. Schmidt concluded, "Flexsteel enters this period with a strong balance sheet, solid profitability, and a clear strategic roadmap. We remain confident in our ability to adapt quickly to external change while continuing to invest in innovation, consumer-led product development, and our retail partnerships. These capabilities position us well to navigate near-term volatility, continue gaining share, and drive sustainable long-term growth and shareholder value."

Operating Results for the Second Quarter Ended December 31, 2025
Net sales were $118.2 million for the second quarter compared to net sales of $108.5 million in the prior year quarter, an increase of $9.7 million, or 9.0%. The increase was driven by higher unit volume in sourced soft seating products and pricing from tariff surcharges, partially offset by lower unit volume in our made-to-order soft seating products and homestyles branded ready-to-assemble category.

Gross margin for the quarter ended December 31, 2025, was 22.7%, compared to 21.0% for the prior-year quarter, an increase of 170 basis points ("bps"). The 170-bps increase was primarily driven by favorable sales composition of higher margin products, partially offset by the dilutive impact of tariffs.

Selling, general and administrative (SG&A) expenses increased to 15.1% of net sales in the second quarter of fiscal 2026 compared with 14.9% of net sales in the prior year quarter. The increase was primarily due to investments in growth initiatives.

Operating income for the quarter ended December 31, 2025, was $9.0 million compared to $11.7 million in the prior-year quarter. Adjusted operating income for the quarter ended December 31, 2025 was $9.0 million compared to $6.7 million in the prior year quarter, an increase of 35%.

The Company reported income tax expense of $2.7 million, or an effective rate of 28.9%, during the second quarter compared to tax expense of $2.6 million, or an effective rate of 22.4%, in the prior year quarter.

The Company reported net income of $6.6 million, or $1.18 per diluted share, for the quarter ended December 31, 2025, compared to net income of $9.1 million, or $1.62 per diluted share, in the prior year quarter. Adjusted net income for the quarter ended December 31, 2025, was $6.6 million or $1.18 per diluted share compared to adjusted net income of $5.3 million or $0.95 per diluted share in the prior year quarter.

Liquidity
The Company ended the quarter with a cash balance of $36.8 million and working capital (current assets less current liabilities) of $126.0 million, and availability of approximately $54.1 million under its secured line of credit.

Capital expenditures for the six months ended December 31, 2025, were $3.1 million.

Conference Call and Webcast
The Company will host a conference call and audio webcast with analysts and investors on Tuesday, February 3, 2026, at 8:00 a.m. Central Time to discuss the results and answer questions. Conference call replay available through February 10, 2026: 855-669-9658 (domestic) or 412-317-0088 (international). Replay access code: 1354547

Live and archived webcast: ir.flexsteel.com