# Flexsteel Industries Inc: Form 10-Q for the period ended Mar 31, 2025

- Company: [Flexsteel Industries Inc](/companies/flxs.md) (CIK 37472)
- Form: 10-Q
- Filed: 2025-04-23
- Accepted by EDGAR: Apr 23, 2025, 17:14 ET
- Period: 2025-03-31
- Accession: 0000950170-25-057522
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/37472/000095017025057522/flxs-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/37472/000095017025057522/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $114.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-07-01 to 2025-03-31 | $326.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $88.6m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2024-07-01 to 2025-03-31 | $256.0m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | $25.3m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2024-07-01 to 2025-03-31 | $70.5m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2025-01-01 to 2025-03-31 | $17.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2024-07-01 to 2025-03-31 | $49.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | −$5.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-07-01 to 2025-03-31 | $12.6m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $0 | us-gaap:InterestExpense |
| Interest expense | 9 months, 2024-07-01 to 2025-03-31 | $70.0k | us-gaap:InterestExpense |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | −$1.2m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-07-01 to 2025-03-31 | $3.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$3.7m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-07-01 to 2025-03-31 | $9.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.71 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-07-01 to 2025-03-31 | $1.70 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.71 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-07-01 to 2025-03-31 | $1.80 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 5,271,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-07-01 to 2025-03-31 | 5,572,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-07-01 to 2025-03-31 | $21.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-07-01 to 2025-03-31 | $2.7m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2024-07-01 to 2025-03-31 | $2.7m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2025-03-31 | $22.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $156.9m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $266.1m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $53.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $108.0m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-31 | $158.1m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 17,655 characters.

### GENERAL

The following analysis of the results of operations and financial condition of the Company should be read in conjunction with the Consolidated Financial Statements and related notes included elsewhere in this quarterly report on Form 10-Q.

CRITICAL ACCOUNTING POLICIES:

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", included in our 2024 annual report on Form 10-K.

#### Overview

The following table has been prepared as an aid in understanding the Company’s results of operations on a comparative basis for the three and nine months ended March 31, 2025 and 2024. The amounts presented are percentages of the Company’s net sales.

|  | Three Months Ended March 31, 2025 | 2024 | Nine Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| Net sales | 100.0% | 100.0% | 100.0% | 100.0% |
| Cost of goods sold | 77.8 | 78.3 | 78.4 | 78.9 |
| Gross margin | 22.2 | 21.7 | 21.6 | 21.1 |
| Selling, general and administrative expenses | 15.0 | 16.5 | 15.2 | 17.1 |
| Restructuring expense | — | 2.5 | — | 0.9 |
| Right-of-use asset impairment | 12.4 | — | 4.3 | — |
| (Gain) on sale of real estate | (0.7) | — | (0.2) | — |
| (Gain) on disposal of assets held for sale | — | — | (1.5) | — |
| Operating (loss) income | (4.4) | 2.7 | 3.8 | 3.1 |
| Interest expense | — | 0.3 | — | 0.5 |
| Interest (income) | (0.1) | — | — | — |
| (Loss) income before income taxes | (4.3) | 2.4 | 3.8 | 2.6 |
| Income tax (benefit) provision | (1.1) | 0.8 | 1.0 | 0.8 |
| Net (loss) income and comprehensive (loss) income | (3.3)% | 1.6% | 2.8% | 1.8% |

#### Results of Operations for the Quarter Ended March 31, 2025 vs. 2024

Net sales were $114.0 million for the quarter ended March 31, 2025, compared to net sales of $107.2 million in the prior year quarter, an increase of 6.3%. The increase was driven by higher sales in home furnishings products sold through retail stores of $10.6 million, or 10.9%, over the prior year quarter led by unit volume increases, freight surcharges, and product mix. Sales of products sold through e-commerce channels decreased by ($3.8) million, or (36.7%), compared to the third quarter of the prior year. Lower sales in the e-commerce channel were driven by softer consumer demand.

Home furnishings backlog was $78.3 million as of the quarter ended March 31, 2025, an increase of 25.8% compared to $61.5 million in the prior year quarter.

Gross margin as a percent of net sales for the quarter ended March 31, 2025, was 22.2%, compared to 21.7% for the prior year quarter, an increase of 50 basis points (“bps”). The 50-bps increase was primarily due to leverage of fixed costs on higher sales and favorable mix, partially offset by no sub-lease income from our Mexicali facility compared to the prior year period.

Selling, general and administrative (“SG&A”) expenses decreased ($0.6) million to $17.1 million in the third quarter ended March 31, 2025, as compared to $17.7 million in the prior year quarter. As a percentage of net sales, SG&A was 15.0% in the quarter ended March 31, 2025 compared to 16.5% of net sales in the prior year quarter. The 150-bps was due to leverage on higher sales and cost savings, partially offset by investments in growth initiatives for the quarter ended March 31, 2025.

During the quarter, the Company completed the sale of an ancillary building, formerly part of its Huntingburg, IN distribution center complex. The Company received proceeds of $0.8 million and recorded a pre-tax gain of $0.7 million related to the sale. The company also committed to a plan to sell a second ancillary building which is part of the Huntingburg, IN distribution center complex. The

Company has classified $0.4 million of assets associated with the second building as held-for-sale in its balance sheet at March 31, 2025. The Company has adequate distribution capacity to support our growth as we continue to optimize our distribution and logistics network. See Note 3, Assets Held For Sale, of the Notes to Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for more information.

In July 2022, Flexsteel commenced a 12-year lease for a manufacturing facility in Mexicali, Mexico to support strong demand growth which was elevated due to pandemic-driven buying at that time. Subsequently, U.S. furniture demand reverted to pre-pandemic norms, and the Company’s plan for the facility pivoted to subleasing the space short-term while maintaining the option to utilize it longer term to support growth. While the Company secured multiple short-term sublease tenants at the beginning of the lease term, substantial changes in U.S. trade policy in early 2025 have created significant uncertainty in US-Mexico trade relations, slowed foreign direct investment in Mexico, and greatly diminished tenant interest in subleasing the Mexicali facility. As a result, management concluded that the right of use asset related to this lease is not fully recoverable and recorded a pre-tax non-cash asset impairment charge of $14.1 million during the quarter ended March 31, 2025. See Note 4, Leases, of the Notes to Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for more information.

Income tax expense was ($1.2) million, or an effective rate of 24.5% for the quarter ended March 31, 2025, compared to an income tax expense of $0.9 million, or an effective rate of 32.2% during the quarter ended March 31, 2024. For the quarter ended March 31, 2025, the effective tax rate differs from the statutory tax rate of 21% primarily due to state taxes and the impact of foreign operations.

Net loss was ($3.7) million, or $(0.71) per diluted share for the quarter ended March 31, 2025, compared to net income of $1.8 million, or $0.33 per diluted share in the prior year quarter.

On April 2, 2025, the President of the United States issued an executive order to regulate imports by imposing reciprocal country specific tariffs on multiple nations around the world, including 46% on goods imported from Vietnam where the Company sources a significant amount of finished product. A further executive order issued April 9, 2025, paused the implementation of the country specific tariffs on Vietnam and many other countries for 90 days, maintaining a 10% tariff while the United States works with its trade partners to negotiate new trade agreements. The current situation is dynamic, and it is unknown if the United States and its trade partners will reach an agreement to further pause or eliminate the pending tariffs. Should these tariffs be enacted they could have a material impact on our future net sales, cost of goods sold, profit and cash flow. The ultimate effect will be dependent on the magnitude and duration of the tariffs and the countries implicated. The Company is assessing options to mitigate any potential impact.

#### Results of Operations for the nine months ended March 31, 2025 and 2024

Net sales were $326.5 million for the nine months ended March 31, 2025, compared to net sales of $301.9 million in the prior-year nine-month period, an increase of 8.1%. The increase in sales of $24.6 million was driven by a $30.8 million increase related to home furnishing products sold through retailers offset by a decrease of ($6.2) million for home furnishing products sold through e-commerce channels.

Gross margin as a percent of net sales for the nine months ended March 31, 2025, was 21.6%, compared to 21.1% for the prior-year nine-month period, an increase of 50 bps. The 50-bps increase was primarily driven by sales volume leverage and structural cost reduction savings versus the nine months ended March 31, 2024.

Selling, general and administrative expenses decreased ($2.1) million in the nine months ended March 31, 2025, compared to the prior-year nine-month period. SG&A as a percentage of sales was 15.2% in the nine months ended March 31, 2025, compared to the prior-year nine-month period of 17.1%. The 190-bps decrease was primarily due to sales volume leverage and structural cost savings partially offset by investments in growth initiatives for the nine months ended March 31, 2025.

During the nine-month period ended March 31, 2025, the Company completed the sale of its Dublin, Georgia facility which had been previously recorded as held for sale. The Company recorded a pre-tax gain of $5.0 million related to the sale. See Note 3, Assets Held For Sale, of the Notes to Consolidated Financial Statements, included in the December 31, 2024 Quarterly Report on Form 10-Q for more information.

During the nine-month period ended March 31, 2025, the Company completed the sale of an ancillary building, formerly part of its Huntingburg, IN distribution center complex. The Company received proceeds of $0.8 million and recorded a pre-tax gain of $0.7 million related to the sale. The company also committed to a plan to sell a second ancillary building which is part of the Huntingburg, IN distribution center complex. The Company has classified $0.4 million of assets associated with the second building as held-for-sale in its balance sheet at March 31, 2025. The Company has adequate distribution capacity to support our growth as we continue to optimize our distribution and logistics network. See Note 3, Assets Held For Sale, of the Notes to Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for more information

As described above, the Company determined that the carrying amount of the right of use asset associated with the 12-year lease for a manufacturing facility in Mexicali, Mexico is no longer fully recoverable and recorded a pre-tax non-cash asset impairment charge of $14.1 million during the nine months ended March 31, 2025. See Note 4, Leases, of the Notes to Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for more information.

Income tax expense was $3.3 million, or an effective rate of 25.6%, during the nine months ended March 31, 2025, compared to income tax expense of $2.5 million in the prior-year nine-month period, or an effective tax rate of 30.8%. The effective tax rate for the nine months ended March 31, 2025, was primarily impacted by state taxes and the impact of foreign operations.

Net income was $9.5 million, or $1.70 per diluted share for the nine months ended March 31, 2025, compared to net income of $5.6 million, or $1.04 per diluted share in the prior-year nine-month period.

#### Liquidity and Capital Resources

Working capital (current assets less current liabilities) on March 31, 2025, was $103.4 million compared to $95.0 million on June 30, 2024. The $8.4 million increase in working capital was primarily due to an increase in cash of $17.9 million, a decrease in accounts payable of $3.7 million, a decrease in payroll and related liabilities of $2.7 million, and an decrease in other current liabilities of $0.7 million offset by an decrease in inventories of $9.4 million, a decrease in net trade receivables of $5.8 million, and a decrease in assets held for sale of $1.3 million. Refer to discussion of working capital changes below, under *Net cash provided by operating activities*. Capital expenditures were $2.7 million during the nine months ended March 31, 2025.

A summary of operating, investing, and financing cash flow is shown in the following table:

*(in thousands)*

|  | Nine Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $21,353 | $24,361 |
| Net cash provided by (used in) investing activities | 6,003 | (4,361) |
| Net cash (used in) financing activities | (9,483) | (18,795) |
| Increase in cash and cash equivalents | $17,873 | $1,205 |

### Net cash provided by operating activities

For the nine months ended March 31, 2025, net cash provided by operating activities was $21.4 million, primarily due to net income of $9.5 million, adjustments for non-cash items including a right-of-use asset impairment of $14.1 million, a pre-tax gain on sale of assets of $5.8 million, deferred income tax of $3.5 million, stock-based compensation of $3.0 million, and depreciation of $2.8 million, as well as changes in operating assets and liabilities including, a decrease in inventory of $9.4 million, and a decrease in trade receivables of $5.8 million, offset by an increase in other assets of $5.6 million, a decrease in accounts payable of $3.7 million, a decrease in accrued liabilities of $3.5 million, an increase in other current assets of $1.3 and a decrease in other long-term liabilities of $0.2 million.

For the nine months ended March 31, 2024, net cash provided by operating activities was $24.4 million, primarily due to a decrease in inventory of $25.5 million, net income of $5.6 million, an increase in accrued liabilities of $1.6 million, an increase in other long-term liabilities of $0.1 million, and adjustments for non-cash items including depreciation of $2.9 million, stock-based compensation of $2.7 million, and deferred income taxes of $0.1 million partially offset by an increase in other assets of $7.6 million, a decrease in accounts payable of $3.0 million, an increase in other current assets of $2.8 million, an increase in trade receivables of $0.6 million and an increase in trade receivables provision of $0.1 million.

### Net cash provided by (used in) investing activities

For the nine months ended March 31, 2025, net cash provided by investing activities was $6.0 million due to proceeds from the sales of property, plant and equipment of $7.5 million, and corporate owned life insurance proceeds of $1.2 million, offset by capital expenditures of $2.7 million.

For the nine months ended March 31, 2024, net cash used in investing activities was $4.4 million due to capital expenditures.

### Net cash (used in) financing activities

For the nine months ended March 31, 2025, net cash used in financing activities was $9.5 million, due to payments on the line of credit of $207.3 million, dividends paid of $2.7 million, and shares withheld for tax payments on vested shares and options exercised of $2.1 million, partially offset by proceeds from the line of credit of $202.3 million and proceeds from issuance of common stock of $0.1 million.

For the nine months ended March 31, 2024, net cash used in financing activities was $18.8 million, due to payments on the line of credit of $284.5 million partially offset by proceeds from the line of credit of $270.4 million, dividends paid of $2.4 million, $1.7 million paid for purchases of company stock, and $0.7 million paid for tax payments on employee vested restricted shares netted with proceeds from the issuance of common stock partially offset by proceeds from issuance of common stock of $0.1 million.

#### Line of Credit

On September 8, 2021, the Company, as the borrower, entered into a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association (the “Lender”), and the other lenders party thereto. The Credit Agreement has a five-year term and provides for up to an $85 million revolving line of credit. Subject to certain conditions, the Credit Agreement also provides for the issuance of letters of credit in an aggregate amount up to $5 million which, upon issuance, would be deemed advances under the revolving line of credit. Proceeds of borrowings were used to refinance all indebtedness owed to a prior lender and for working capital purposes. The Company’s obligations under the Credit Agreement are secured by substantially all its assets, excluding real property. The Credit Agreement contains customary representations, warranties, and covenants, including a financial covenant to maintain a fixed coverage ratio of not less than 1.00 to 1.00. In addition, the Loan Agreement places restrictions on the Company’s ability to incur additional indebtedness, to create liens or other encumbrances, to sell or otherwise dispose of assets, and to merge or consolidate with other entities. As of March 31, 2025, management believes the Company was in compliance with all covenants.

On April 18, 2022, the Company, as the borrower, entered into a first amendment to the Credit Agreement (“First Amendment to the Credit Agreement”), with the Lender and the lenders thereto. The amendment to the Credit Agreement changed the definition of the term ‘Payment Conditions’ and further defined default or event of default and the calculation of the Fixed Charge Coverage Ratio.

Subject to certain conditions, borrowings under the Credit Agreement initially bore interest at LIBOR plus 1.25% or 1.50% per annum. On May 24, 2023, the Company entered into a second amendment to the Credit Agreement ("Second Amendment to the Credit Agreement") with the Lender to transition the applicable interest rate from LIBOR to Secured Overnight Financing Rate ("SOFR"). Effective as of the date of the Second Amendment to the Credit Agreement, borrowings under the amended Credit Agreement bear interest at SOFR plus 1.36% to 1.61%, or an effective interest rate of 5.72%, on March 31, 2025.

As of March 31, 2025, there were no outstanding borrowings under the Credit Agreement, exclusive of fees and letters of credit.

Letters of credit outstanding with the Lender as of March 31, 2025, totaled $0.9 million.

#### Contractual Obligations

As of March 31, 2025, there have been no material changes to our contractual obligations presented in our Annual Report on Form 10-K for the year ended June 30, 2024.

## Market risk

As filed, 2,611 characters.

*General –* Market risk represents the risk of changes in the value of a financial instrument, derivative or non-derivative, caused by fluctuations in interest rates, foreign exchange rates and equity prices. As discussed below, management of the Company does not believe that changes in these factors could cause material fluctuations in the Company’s results of operations or cash flows. The ability to import furniture products can be adversely affected by political issues in the countries where suppliers are located, as well as disruptions associated with shipping distances and negotiations with port employees. Other risks related to furniture product importation include government imposition of regulations and/or quotas; duties, taxes or tariffs on imports; and significant fluctuation in the value of the U.S. dollar against foreign currencies. Any of these factors could interrupt supply, increase costs, decrease demand, and decrease earnings.

*Foreign Currency Risk –* During the quarters ended March 31, 2025 and 2024, the Company did not have sales but did have purchases and other expenses denominated in foreign currencies, primarily the Mexican Peso. The wages of our employees and certain other employee benefits and indirect costs related to our operations in Mexico are made in Pesos and subject to foreign currency fluctuation with the U.S. dollar. The Company does not employ any foreign currency hedges against this operating expense exposure. A negative shift in the value of the U.S. dollar against the Peso could increase the cost of our manufactured product. In addition, the Company has certain asset and liabilities related to our manufacturing operations which are denominated in pesos, primarily our VAT receivable for recoverable VAT paid in Mexico. A negative shift in the value of the Peso against the U.S. dollar could result in the value of our receivable decreasing which may impact our earnings. During the third quarter of fiscal year 2025, we utilized a derivative instrument to reduce our exposure to foreign currency risk from changes in the peso’s exchange rate for this exposure. This instrument expired on

March 31, 2025 without being utilized and the Company does not currently hedge foreign currency risk. See “Risk Factors” in Item 1A in the most recent Annual Report on Form 10-K for further discussion.

*Interest Rate Risk –* The Company’s primary market risk exposure regarding financial instruments is changes in interest rates. On March 31, 2025, the Company had no outstanding borrowings on its line of credit, exclusive of fees and letters of credit.

## Controls and procedures

As filed, 2,953 characters.

(a) *Evaluation of disclosure controls and procedures.* Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) were effective as of March 31, 2025.

(b) *Changes in internal control over financial reporting.* During the quarter ended March 31, 2025, there were no significant changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

### Cautionary Statement Relevant to Forward-Looking Information for “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995

The Company and its representatives may from time to time make written or oral forward-looking statements concerning long-term goals or anticipated results of the Company, including statements contained in the Company’s filings with the Securities and Exchange Commission and its reports to stockholders.

Statements, including those in this Quarterly Report on Form 10-Q, 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, restructurings, 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.

The Company specifically declines to undertake any obligation to publicly revise any forward-looking statements that have been made to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

## Risk factors

As filed, 1,945 characters.

Other than the addition of the following risk factor, there has been no material change in the risk factors set forth under Part 1, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

**Changes in global trade policy and the impact on tariffs may have a material adverse effect on our business and results of operations.**

We source certain finished products from external suppliers in foreign countries, primarily Vietnam, and have significant manufacturing operations in Mexico. On April 2, 2025, the President of the United States issued an executive order to regulate imports by imposing reciprocal country specific tariffs on multiple nations around the world, including Vietnam. A further executive order issued April 9, 2025, paused the implementation of the country specific tariffs on Vietnam and many other countries for 90 days, maintaining a 10% global baseline tariff, while the United States works with its trade partners to negotiate new trade agreements. Although the country specific tariffs and the global 10% baseline tariffs do not apply to our products imported from Mexico, that status could change at any time. The current situation is dynamic, and it is unknown if the United States and its trade partners will reach an agreement to further pause or eliminate the pending tariffs. Tariffs or other trade restrictions may lead to continuing uncertainty and volatility in U.S. economic conditions and commodity markets, declining consumer confidence, significant inflation and diminished expectations for the economy, and ultimately reduced demand for our products. Such conditions could have a material adverse impact on our future net sales, cost of goods sold, profit and cash flow. The ultimate effect will be dependent on the magnitude and duration of the tariffs and the countries implicated. The Company is assessing options to mitigate any potential impact.

Filed Apr 23, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-057522. Last ingested by Listed: Oct 29, 2026, 05:20 ET. No prices; not investment advice.