HNI Corporation Reports Second Quarter 2024 Results
Strong second quarter EPS fueled by Workplace Furnishings profit transformation,
-
Delivered strong second quarter EPS, GAAP
$0.75 / non-GAAP$0.79 (+44% YoY). - Expanded operating margins in Workplace Furnishings +750 bps GAAP / +370 bps non-GAAP YoY.
- Net sales growth expected to return in both segments during the second half of 2024.
- 2024 EPS expected to deliver strong growth and reach an all-time high.
- Elevated earnings growth visibility extends beyond 2024 from initiatives already underway.
Highlights
-
Strong earnings growth. Second quarter GAAP earnings per share totaled
$0.75 . Non-GAAP EPS of$0.79 was a record for the second quarter driven by continued operating margin expansion in Workplace Furnishings, strong accretion fromKimball International (“KII”), and profit growth in Residential Building Products. Non-GAAP to GAAP reconciliations follow the financial statements in this release. - Expecting return of revenue growth. For the second half of 2024, Workplace Furnishings net sales are expected to increase at a low-single digit rate year-over-year. Residential Building Products net sales are projected to grow at a mid-single digit pace versus the same period in 2023. Year-over-year trends in both segments are expected to improve from the third quarter to the fourth quarter.
- Anticipating record earnings per share for 2024. Third consecutive year of non-GAAP EPS growth to be driven by continued profit transformation in Workplace Furnishings, benefits from KII, and profit enhancement in Residential Building Products.
-
Elevated visibility beyond 2024. KII synergies, including savings associated with the recently announced manufacturing network optimization initiative, and the ramp of the Corporation’s new facility in
Mexico are expected to yield total net savings of$70 to$75 million . Approximately$45 to$50 million of the benefit will impact 2025 and 2026. - Strong balance sheet. Gross leverage was 1.5x, as calculated in accordance with the Corporation’s debt agreements. That ratio was down from 1.9x in the first quarter due to higher profit and modestly lower debt. The Corporation also accelerated stock repurchase activity in the quarter.
“Our members again demonstrated the organization’s ability to drive strong profit growth. We delivered non-GAAP EPS that was 44 percent higher than the prior-year period, reaching a record level for the second quarter.
“The combination of our profit transformation initiatives and the
“In Residential Building Products, profit dollars and margin were up year-over-year despite ongoing housing market weakness. Longer-term, we remain bullish about the prospects of the housing market, broadly, and our market-leading position, specifically.
“Overall, our strategies, our dedicated member-owners, the strength of our customer-first business model, and our proven ability to manage through all parts of the economic cycle are delivering excellent results,” stated
|
|||||
(Dollars in millions, except per share data) |
|||||
|
Three Months Ended |
|
|
||
|
|
|
|
|
Change |
GAAP |
|
|
|
|
|
|
|
|
|
|
10.7% |
Gross Profit % |
41.9% |
|
38.3% |
|
360 bps |
SG&A % |
33.0% |
|
37.4% |
|
-440 bps |
Restructuring and Impairment Charges % |
0.3% |
|
1.4% |
|
-110 bps |
Operating Income (Loss) |
|
|
( |
|
NM |
Operating Income (Loss) % |
8.6% |
|
(0.6%) |
|
920 bps |
Effective Tax Rate |
21.7% |
|
(41.8%) |
|
|
Net Income (Loss) % |
5.8% |
|
(2.3%) |
|
810 bps |
EPS – diluted |
|
|
( |
|
NM |
|
|
|
|
|
|
Non-GAAP |
|
|
|
|
|
Gross Profit % |
42.0% |
|
38.2% |
|
380 bps |
Operating Income |
|
|
|
|
52.9% |
Operating Income % |
9.0% |
|
6.5% |
|
250 bps |
Effective Tax Rate |
21.7% |
|
22.4% |
|
|
EPS – diluted |
|
|
|
|
43.6% |
The following table contains results for (1) the Corporation’s legacy business, excluding the impacts of KII (“Legacy HNI”), and (2) KII. Please refer to non-GAAP to GAAP reconciliations, which follow the financial statements in this release, for further information on the adjustments made to calculate non-GAAP performance.
|
|||||||||||
(Dollars in millions, except per share data) |
|||||||||||
|
Three Months Ended |
||||||||||
|
|
|
|
||||||||
GAAP |
Legacy
|
|
KII |
|
Consolidated
|
|
Legacy
|
|
KII* |
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
|
|
|
|
|
|
|
|
|
Gross Profit % |
41.5% |
|
43.3% |
|
41.9% |
|
38.0% |
|
40.8% |
|
38.3% |
Restructuring and Impairment |
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
( |
|
( |
Operating Income (Loss) % |
7.2% |
|
13.3% |
|
8.6% |
|
1.8% |
|
(22.3%) |
|
(0.6%) |
EPS - diluted |
|
|
|
|
|
|
|
|
|
|
( |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
|
|
|
|
|
|
|
|
|
Gross Profit % |
41.6% |
|
43.3% |
|
42.0% |
|
37.9% |
|
40.8% |
|
38.2% |
Operating Income |
|
|
|
|
|
|
|
|
|
|
|
Operating Income % |
7.7% |
|
13.3% |
|
9.0% |
|
6.5% |
|
6.9% |
|
6.5% |
EPS - diluted |
|
|
|
|
|
|
|
|
|
|
|
*2023 second quarter results reflect one month of KII and include
-
Consolidated net sales increased 10.7 percent from the prior-year quarter to
$623.7 million . On an organic basis, net sales decreased 3.0 percent year-over-year. The acquisition of KII increased year-over-year net sales by$80.5 million . The divestiture of KII'sPoppin business in the third quarter of 2023 decreased year-over-year sales by$3.4 million . A reconciliation of organic net sales, a non-GAAP measure, to net sales follows the financial statements in this release. - Gross profit margin expanded 360 basis points compared to the prior-year quarter. This increase was driven by improved net productivity and the impact of the KII acquisition.
-
Selling and administrative expenses as a percent of sales decreased 440 basis points compared to the prior-year quarter. The decrease was driven by
$31.3 million of non-repeating KII acquisition-related fees and expenses incurred in the prior-year quarter and improved freight and distribution productivity, partially offset by lower organic volume and elevated healthcare costs. -
Restructuring and impairment charges of
$2.0 million were incurred in the current quarter primarily in connection with a Workplace Furnishings factory consolidation initiative.$8.1 million of charges were incurred in the prior-year quarter mainly related to the exit of thePoppin business. - Net income per diluted share increased from the prior-year quarter driven by the net impact of the KII acquisition, including related transaction fees, and improved net productivity, partially offset by lower organic volume and elevated healthcare costs.
Workplace Furnishings – Second Quarter Financial Performance |
|||||
(Dollars in millions) |
|||||
|
Three Months Ended |
|
|
||
|
|
|
|
|
Change |
GAAP |
|
|
|
|
|
|
|
|
|
|
16.3% |
Operating Income |
|
|
|
|
242% |
Operating Income % |
11.3% |
|
3.8% |
|
750 bps |
|
|
|
|
|
|
Non-GAAP |
|
|
|
|
|
Operating Income |
|
|
|
|
67.2% |
Operating Income % |
11.9% |
|
8.2% |
|
370 bps |
The following table contains results for (1) the Corporation’s legacy workplace furnishings business, excluding the impacts of KII (“Legacy Workplace”), and (2) KII. Please refer to non-GAAP to GAAP reconciliations, which follow the financial statements in this release, for further information on the adjustments made to calculate non-GAAP performance.
Workplace Furnishings – Second Quarter Impact of Kimball International Acquisition |
|||||||||||||||||||||||
(Dollars in millions) |
|||||||||||||||||||||||
|
Three Months Ended |
||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
GAAP |
Legacy
|
|
KII |
|
Total
|
|
Legacy
|
|
KII* |
|
Total
|
||||||||||||
|
$ |
340.6 |
|
|
$ |
139.6 |
|
|
$ |
480.2 |
|
|
$ |
357.1 |
|
|
$ |
56.0 |
|
|
$ |
413.0 |
|
Operating Income (Loss) |
$ |
35.8 |
|
|
$ |
18.6 |
|
|
$ |
54.3 |
|
|
$ |
28.4 |
|
|
($ |
12.5 |
) |
|
$ |
15.9 |
|
Operating Income (Loss) % |
|
10.5 |
% |
|
|
13.3 |
% |
|
|
11.3 |
% |
|
|
8.0 |
% |
|
|
(22.3 |
%) |
|
|
3.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Non-GAAP |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating Income |
$ |
38.3 |
|
|
$ |
18.6 |
|
|
$ |
56.9 |
|
|
$ |
30.2 |
|
|
$ |
3.9 |
|
|
$ |
34.0 |
|
Operating Income % |
|
11.3 |
% |
|
|
13.3 |
% |
|
|
11.9 |
% |
|
|
8.5 |
% |
|
|
6.9 |
% |
|
|
8.2 |
% |
*2023 second quarter results reflect one month of KII and include
-
Workplace Furnishings net sales increased 16.3 percent from the prior-year quarter to
$480.2 million . Organic net sales decreased 2.4 percent year-over-year. The impact of the KII acquisition increased sales by$80.5 million over the prior-year quarter. The divestiture of KII'sPoppin business in the third quarter of 2023 decreased year-over-year sales by$3.4 million .
-
Workplace Furnishings operating margin of 11.3 percent improved 750 basis points versus the prior-year quarter, driven by improved net productivity, favorable impacts from KII and the divestiture of
Poppin , and$10.3 million of non-repeating KII acquisition-related fees and expenses incurred in the prior-year quarter. Second quarter non-GAAP operating profit margin was 11.9 percent, an improvement of 370 basis points year-over-year.
Residential Building Products – Second Quarter Financial Performance |
|||||
(Dollars in millions) |
|||||
|
Three Months Ended |
|
|
||
|
|
|
|
|
Change |
GAAP |
|
|
|
|
|
|
|
|
|
|
(4.6%) |
Operating Income |
|
|
|
|
26.9% |
Operating Income % |
13.8% |
|
10.3% |
|
350 bps |
|
|
|
|
|
|
Non-GAAP |
|
|
|
|
|
Operating Profit |
|
|
|
|
17.5% |
Operating Profit % |
13.8% |
|
11.2% |
|
260 bps |
-
Residential Building Products net sales decreased 4.6 percent from the prior-year quarter to
$143.5 million primarily due to housing market weakness with remodel/retrofit sales declining at a higher rate than new construction.
- Residential Building Products operating profit margin of 13.8 percent increased 350 basis points year-over-year driven by improved net productivity, favorable product mix, and lower core SG&A, partially offset by lower sales volume.
Second Quarter Order Rates
- In the Workplace Furnishings segment, orders were approximately flat compared to the prior-year period on an organic basis. Orders from small-to-medium sized customers outpaced orders from contract customers.
- Orders in the Residential Building Products segment decreased four percent compared to the second quarter of 2023. Changes in the Corporation’s pre-season, early order program negatively impacted the second quarter order rate. Excluding the early order program, normalized second quarter orders in the segment grew four percent year-over-year, which the Corporation believes is more indicative of demand conditions.
Outlook
- Demand environment. For the second half of 2024, Workplace Furnishings net sales are expected to increase at a low-single digit rate year-over-year. This Workplace outlook represents a modest reduction from the outlook provided in the previous earnings release and primarily reflects timing in the contract space. Second-half Residential Building Products net sales are projected to grow at a mid-single digit pace versus the same period in 2023. Year-over-year trends in both segments are expected to improve from the third quarter to the fourth quarter.
- 2024 outlook commentary. Full-year non-GAAP earnings per share are expected to increase strongly from 2023 and reach record levels. Continued improvement in the second half is expected to be driven by margin expansion in both Workplace Furnishings and Residential Building Products.
-
Elevated earnings growth visibility beyond 2024. The Corporation expects
$70 to$75 million of savings associated with KII synergies (approximately$50 million ) and the ramp of itsMexico facility ($20 to$25 million ). Both initiatives are currently underway and provide strong visibility to future earnings growth with an estimated$45 to$50 million of the savings benefiting the 2025 to 2026 period.
Concluding Remarks
“Our strategies continue to drive outstanding earnings growth, and our teams delivered excellent results in the first half of 2024. In Workplace Furnishings, our profit transformation initiatives pushed margins to multi-decade highs. Adding to our momentum, workplace demand is beginning to turn. We expect revenue growth in the second half of the year, which, when combined with our transformation efforts, will drive continued year-over-year profit growth and margin improvement.
“Looking beyond 2024, we have clear line-of-sight to
“In Residential Building Products, we remain bullish about the intermediate and long-term dynamics of our business, and we expect revenue growth to return in the back half of 2024. We remain uniquely positioned to drive high-margin growth as housing stabilizes.
“Our core strategies are unchanged. We will continue to deliver margin expansion in Workplace Furnishings and drive long-term revenue growth in Residential
Conference Call
About
Forward-Looking Statements
This release contains "forward-looking" statements based on current expectations regarding future plans, events, outlook, objectives, financial performance, expectations for sales growth, and earnings per diluted share (GAAP and non-GAAP), including statements regarding future levels of demand, anticipated macroeconomic conditions, expected differences in seasonality and its effects on the Corporation’s results of operations, the anticipated benefits and cost synergies of the acquisition of
|
|||||||||||||||
Condensed Consolidated Statements of Comprehensive Income |
|||||||||||||||
(In millions, except per share data) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|||||||||
Net sales |
$ |
623.7 |
|
|
$ |
563.5 |
|
|
$ |
1,211.7 |
|
|
$ |
1,042.5 |
|
Cost of sales |
|
362.4 |
|
|
|
347.9 |
|
|
|
717.5 |
|
|
|
652.7 |
|
Gross profit |
|
261.3 |
|
|
|
215.5 |
|
|
|
494.2 |
|
|
|
389.8 |
|
Selling and administrative expenses |
|
205.9 |
|
|
|
211.0 |
|
|
|
409.0 |
|
|
|
378.9 |
|
Restructuring and impairment charges |
|
2.0 |
|
|
|
8.1 |
|
|
|
2.1 |
|
|
|
8.1 |
|
Operating income (loss) |
|
53.4 |
|
|
|
(3.6 |
) |
|
|
83.1 |
|
|
|
2.9 |
|
Interest expense, net |
|
7.4 |
|
|
|
5.5 |
|
|
|
15.1 |
|
|
|
8.2 |
|
Income (loss) before income taxes |
|
46.0 |
|
|
|
(9.0 |
) |
|
|
68.0 |
|
|
|
(5.3 |
) |
Income taxes |
|
10.0 |
|
|
|
3.8 |
|
|
|
14.3 |
|
|
|
6.0 |
|
Net income (loss) |
|
36.0 |
|
|
|
(12.8 |
) |
|
|
53.7 |
|
|
|
(11.3 |
) |
Less: Net income (loss) attributable to non-controlling interest |
|
(0.0 |
) |
|
|
(0.0 |
) |
|
|
0.0 |
|
|
|
(0.0 |
) |
Net income (loss) attributable to |
$ |
36.0 |
|
|
$ |
(12.8 |
) |
|
$ |
53.7 |
|
|
$ |
(11.3 |
) |
|
|
|
|
|
|
|
|
||||||||
Average number of common shares outstanding – basic |
|
47.2 |
|
|
|
43.3 |
|
|
|
47.1 |
|
|
|
42.4 |
|
Net income (loss) attributable to |
$ |
0.76 |
|
|
$ |
(0.30 |
) |
|
$ |
1.14 |
|
|
$ |
(0.27 |
) |
Average number of common shares outstanding – diluted |
|
48.2 |
|
|
|
43.3 |
|
|
|
48.2 |
|
|
|
42.4 |
|
Net income (loss) attributable to |
$ |
0.75 |
|
|
$ |
(0.30 |
) |
|
$ |
1.11 |
|
|
$ |
(0.27 |
) |
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments |
$ |
(0.1 |
) |
|
$ |
(0.0 |
) |
|
$ |
(0.1 |
) |
|
$ |
0.0 |
|
Change in unrealized gains (losses) on marketable securities, net of tax |
|
0.0 |
|
|
|
(0.1 |
) |
|
|
(0.0 |
) |
|
|
0.1 |
|
Change in derivative financial instruments, net of tax |
|
0.3 |
|
|
|
— |
|
|
|
1.7 |
|
|
|
(0.1 |
) |
Other comprehensive income (loss), net of tax |
|
0.3 |
|
|
|
(0.1 |
) |
|
|
1.7 |
|
|
|
0.0 |
|
Comprehensive income (loss) |
|
36.3 |
|
|
|
(12.9 |
) |
|
|
55.4 |
|
|
|
(11.2 |
) |
Less: Comprehensive income (loss) attributable to non-controlling interest |
|
(0.0 |
) |
|
|
(0.0 |
) |
|
|
0.0 |
|
|
|
(0.0 |
) |
Comprehensive income (loss) attributable to |
$ |
36.3 |
|
|
$ |
(12.9 |
) |
|
$ |
55.4 |
|
|
$ |
(11.2 |
) |
Amounts may not sum due to rounding.
|
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(In millions) |
|||||||
(Unaudited) |
|||||||
|
|
|
|
||||
Assets |
|
|
|
||||
Current Assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
28.2 |
|
|
$ |
28.9 |
|
Short-term investments |
|
5.3 |
|
|
|
5.6 |
|
Receivables |
|
258.9 |
|
|
|
247.1 |
|
Allowance for doubtful accounts |
|
(2.3 |
) |
|
|
(3.5 |
) |
Inventories, net |
|
222.8 |
|
|
|
196.6 |
|
Prepaid expenses and other current assets |
|
55.1 |
|
|
|
61.3 |
|
Total Current Assets |
|
568.1 |
|
|
|
535.9 |
|
Property, Plant, and Equipment: |
|
|
|
||||
Land and land improvements |
|
59.2 |
|
|
|
58.9 |
|
Buildings |
|
413.4 |
|
|
|
406.8 |
|
Machinery and equipment |
|
708.1 |
|
|
|
705.8 |
|
Construction in progress |
|
23.3 |
|
|
|
22.2 |
|
|
|
1,204.1 |
|
|
|
1,193.7 |
|
Less accumulated depreciation |
|
(656.0 |
) |
|
|
(638.5 |
) |
Net Property, Plant, and Equipment |
|
548.1 |
|
|
|
555.2 |
|
Right-of-use Finance Leases |
|
12.7 |
|
|
|
12.2 |
|
Right-of-use Operating Leases |
|
111.5 |
|
|
|
115.2 |
|
|
|
638.7 |
|
|
|
651.9 |
|
Other Assets |
|
61.8 |
|
|
|
58.4 |
|
Total Assets |
$ |
1,940.8 |
|
|
$ |
1,928.8 |
|
Liabilities and Equity |
|
|
|
||||
Current Liabilities: |
|
|
|
||||
Accounts payable and accrued expenses |
$ |
390.9 |
|
|
$ |
418.7 |
|
Current maturities of debt |
|
50.7 |
|
|
|
7.5 |
|
Current maturities of other long-term obligations |
|
2.2 |
|
|
|
7.3 |
|
Current lease obligations - Finance |
|
4.8 |
|
|
|
4.4 |
|
Current lease obligations - Operating |
|
25.7 |
|
|
|
25.9 |
|
Total Current Liabilities |
|
474.2 |
|
|
|
463.7 |
|
Long-Term Debt |
|
411.7 |
|
|
|
428.3 |
|
Long-Term Lease Obligations - Finance |
|
7.9 |
|
|
|
7.9 |
|
Long-Term Lease Obligations - Operating |
|
101.6 |
|
|
|
104.0 |
|
Other Long-Term Liabilities |
|
79.6 |
|
|
|
78.0 |
|
Deferred Income Taxes |
|
77.7 |
|
|
|
85.1 |
|
Total Liabilities |
|
1,152.7 |
|
|
|
1,167.0 |
|
Equity: |
|
|
|
||||
|
|
787.8 |
|
|
|
761.4 |
|
Non-controlling interest |
|
0.3 |
|
|
|
0.3 |
|
Total Equity |
|
788.1 |
|
|
|
761.8 |
|
Total Liabilities and Equity |
$ |
1,940.8 |
|
|
$ |
1,928.8 |
|
Amounts may not sum due to rounding.
|
|||||||
Condensed Consolidated Statements of Cash Flows |
|||||||
(In millions) |
|||||||
(Unaudited) |
|||||||
|
Six Months Ended |
||||||
|
|
|
|
||||
Net Cash Flows From (To) Operating Activities: |
|
|
|
||||
Net income (loss) |
$ |
53.7 |
|
|
$ |
(11.3 |
) |
Non-cash items included in net income: |
|
|
|
||||
Depreciation and amortization |
|
52.8 |
|
|
|
42.7 |
|
Other post-retirement and post-employment benefits |
|
0.5 |
|
|
|
0.5 |
|
Stock-based compensation |
|
11.7 |
|
|
|
7.6 |
|
Deferred income taxes |
|
(7.6 |
) |
|
|
(9.5 |
) |
Other – net |
|
2.3 |
|
|
|
2.3 |
|
Net increase (decrease) in cash from operating assets and liabilities |
|
(61.2 |
) |
|
|
4.8 |
|
Increase (decrease) in other liabilities |
|
(5.1 |
) |
|
|
2.7 |
|
Net cash flows from (to) operating activities |
|
47.0 |
|
|
|
39.8 |
|
|
|
|
|
||||
Net Cash Flows From (To) Investing Activities: |
|
|
|
||||
Capital expenditures |
|
(27.3 |
) |
|
|
(37.7 |
) |
Acquisition spending, net of cash acquired |
|
— |
|
|
|
(369.8 |
) |
Capitalized software |
|
(1.4 |
) |
|
|
(3.4 |
) |
Purchase of investments |
|
(1.9 |
) |
|
|
(3.1 |
) |
Sales or maturities of investments |
|
3.4 |
|
|
|
3.0 |
|
Other – net |
|
0.2 |
|
|
|
0.2 |
|
Net cash flows from (to) investing activities |
|
(26.9 |
) |
|
|
(410.8 |
) |
|
|
|
|
||||
Net Cash Flows From (To) Financing Activities: |
|
|
|
||||
Payments of debt |
|
(202.4 |
) |
|
|
(161.7 |
) |
Proceeds from debt |
|
228.6 |
|
|
|
572.3 |
|
Dividends paid |
|
(32.1 |
) |
|
|
(28.6 |
) |
Purchase of |
|
(13.4 |
) |
|
|
— |
|
Proceeds from sales of |
|
1.2 |
|
|
|
1.2 |
|
Other – net |
|
(2.7 |
) |
|
|
(5.9 |
) |
Net cash flows from (to) financing activities |
|
(20.8 |
) |
|
|
377.3 |
|
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents |
|
(0.7 |
) |
|
|
6.3 |
|
Cash and cash equivalents at beginning of period |
|
28.9 |
|
|
|
17.4 |
|
Cash and cash equivalents at end of period |
$ |
28.2 |
|
|
$ |
23.8 |
|
Amounts may not sum due to rounding.
|
|||||||||||||||
Reportable Segment Data |
|||||||||||||||
(In millions) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Workplace furnishings |
$ |
480.2 |
|
|
$ |
413.0 |
|
|
$ |
920.0 |
|
|
$ |
712.7 |
|
Residential building products |
|
143.5 |
|
|
|
150.4 |
|
|
|
291.7 |
|
|
|
329.8 |
|
Total |
$ |
623.7 |
|
|
$ |
563.5 |
|
|
$ |
1,211.7 |
|
|
$ |
1,042.5 |
|
|
|
|
|
|
|
|
|
||||||||
Income (Loss) Before Income Taxes: |
|
|
|
|
|
|
|
||||||||
Workplace furnishings |
$ |
54.3 |
|
|
$ |
15.9 |
|
|
$ |
80.6 |
|
|
$ |
11.9 |
|
Residential building products |
|
19.8 |
|
|
|
15.6 |
|
|
|
41.1 |
|
|
|
43.6 |
|
General corporate |
|
(20.7 |
) |
|
|
(35.0 |
) |
|
|
(38.6 |
) |
|
|
(52.7 |
) |
Operating income (loss) |
|
53.4 |
|
|
|
(3.6 |
) |
|
|
83.1 |
|
|
|
2.9 |
|
Interest expense, net |
|
7.4 |
|
|
|
5.5 |
|
|
|
15.1 |
|
|
|
8.2 |
|
Total |
$ |
46.0 |
|
|
$ |
(9.0 |
) |
|
$ |
68.0 |
|
|
$ |
(5.3 |
) |
|
|
|
|
|
|
|
|
||||||||
Depreciation and Amortization Expense: |
|
|
|
|
|
|
|
||||||||
Workplace furnishings |
$ |
17.8 |
|
|
$ |
13.8 |
|
|
$ |
35.6 |
|
|
$ |
25.0 |
|
Residential building products |
|
3.6 |
|
|
|
3.4 |
|
|
|
7.1 |
|
|
|
6.7 |
|
General corporate |
|
5.0 |
|
|
|
5.4 |
|
|
|
10.1 |
|
|
|
11.0 |
|
Total |
$ |
26.4 |
|
|
$ |
22.6 |
|
|
$ |
52.8 |
|
|
$ |
42.7 |
|
|
|
|
|
|
|
|
|
||||||||
Capital Expenditures (including capitalized software): |
|
|
|
|
|
|
|
||||||||
Workplace furnishings |
$ |
12.3 |
|
|
$ |
17.9 |
|
|
$ |
18.4 |
|
|
$ |
31.8 |
|
Residential building products |
|
1.8 |
|
|
|
2.4 |
|
|
|
4.3 |
|
|
|
7.4 |
|
General corporate |
|
3.4 |
|
|
|
0.9 |
|
|
|
5.9 |
|
|
|
2.0 |
|
Total |
$ |
17.5 |
|
|
$ |
21.1 |
|
|
$ |
28.7 |
|
|
$ |
41.2 |
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
As of
|
|
As of
|
||||||||
Identifiable Assets: |
|
|
|
|
|
|
|
||||||||
Workplace furnishings |
|
|
|
|
$ |
1,321.8 |
|
|
$ |
1,311.4 |
|
||||
Residential building products |
|
|
|
|
|
476.3 |
|
|
|
467.1 |
|
||||
General corporate |
|
|
|
|
|
142.7 |
|
|
|
150.3 |
|
||||
Total |
|
|
|
|
$ |
1,940.8 |
|
|
$ |
1,928.8 |
|
Amounts may not sum due to rounding.
Non-GAAP Financial Measures
This earnings release includes certain non-GAAP financial measures as defined by Securities and Exchange Commission Regulation G. Pursuant to the requirements of this regulation, reconciliations of historical non-GAAP financial measures to the most directly comparable historical GAAP measures are included below and throughout this earnings release. This information gives investors additional insights into HNI’s financial performance and operations. While HNI’s management believes the non-GAAP financial measures are useful in evaluating HNI’s operations, this information should be considered supplemental and not in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. In addition, these measures may be different from similarly titled non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.
To supplement the condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, this earnings release contains the following non-GAAP financial measures: organic net sales and non-GAAP gross profit, operating income, operating profit, income taxes, net income, and net income per diluted share (EPS). These measures are adjusted from the comparable GAAP measures to exclude the impacts of the selected items as summarized in the tables below. Generally, non-GAAP EPS is calculated using HNI’s overall effective tax rate for the period, as this rate is reflective of the tax applicable to most non-GAAP adjustments. In the prior-year quarter, the effective tax rate used to calculate non-GAAP EPS differs from the GAAP effective tax rate due to the impact of nondeductible charges associated with the acquisition of
The sales adjustments to arrive at the non-GAAP organic net sales information presented in this earnings release relate to the exclusion of net sales of KII in the current period, and
This earnings release refers to our expectations regarding non-GAAP EPS. The Corporation is unable to provide a reconciliation of this forward-looking non-GAAP measure to future EPS without unreasonable effort due to the uncertainty regarding, and to the potential variability of, many of the costs and expenses that could potentially impact EPS calculated on a GAAP basis. These items include, but are not limited to, impairments, financial impacts from changes in legal, regulatory, and tax requirements, charges related to actions taken to improve future profitability, and the impact of acquisitions and divestitures, if any. These items necessary to reconcile forward-looking non-GAAP EPS to EPS could be material and have a significant impact on the Corporation’s results computed in accordance with GAAP.
HNI Corporation Reconciliation |
||||||||||||||||
(Dollars in millions) |
||||||||||||||||
|
Three Months Ended |
|||||||||||||||
|
|
|
|
|||||||||||||
|
Workplace Furnishings |
Residential Building
|
Total |
|
Workplace Furnishings |
Residential Building
|
Total |
|||||||||
Net sales as reported (GAAP) |
$ |
480.2 |
|
$ |
143.5 |
|
$ |
623.7 |
|
|
$ |
413.0 |
$ |
150.4 |
$ |
563.5 |
% change from PY |
|
16.3 |
% |
|
(4.6 |
%) |
|
10.7 |
% |
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||||||||
Less: |
|
80.5 |
|
|
— |
|
|
80.5 |
|
|
|
— |
|
— |
|
— |
Less: |
|
— |
|
|
— |
|
|
— |
|
|
|
3.4 |
|
— |
|
3.4 |
|
|
|
|
|
|
|
|
|||||||||
Organic net sales (non-GAAP) |
$ |
399.8 |
|
$ |
143.5 |
|
$ |
543.2 |
|
|
$ |
409.6 |
$ |
150.4 |
$ |
560.1 |
% change from PY |
|
(2.4 |
%) |
|
(4.6 |
%) |
|
(3.0 |
%) |
|
|
|
|
HNI Corporation Reconciliation |
|||||||||||||||||||
(Dollars in millions, except per share data) |
|||||||||||||||||||
|
Three Months Ended |
||||||||||||||||||
|
|
||||||||||||||||||
|
Gross
|
|
Operating
|
|
Tax |
|
Net
|
|
EPS |
||||||||||
As reported (GAAP) |
$ |
261.3 |
|
|
$ |
53.4 |
|
|
$ |
10.0 |
|
|
$ |
36.0 |
|
|
$ |
0.75 |
|
% of net sales |
|
41.9 |
% |
|
|
8.6 |
% |
|
|
|
|
5.8 |
% |
|
|
||||
Tax % |
|
|
|
|
|
21.7 |
% |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Restructuring charges |
|
0.6 |
|
|
|
2.6 |
|
|
|
0.6 |
|
|
|
2.0 |
|
|
|
0.04 |
|
Acquisition costs |
|
— |
|
|
|
(0.1 |
) |
|
|
(0.0 |
) |
|
|
(0.0 |
) |
|
|
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Results (non-GAAP) |
$ |
261.9 |
|
|
$ |
55.9 |
|
|
$ |
10.5 |
|
|
$ |
38.0 |
|
|
$ |
0.79 |
|
% of net sales |
|
42.0 |
% |
|
|
9.0 |
% |
|
|
|
|
6.1 |
% |
|
|
||||
Tax % |
|
|
|
|
|
21.7 |
% |
|
|
|
|
HNI Corporation Reconciliation |
|||||||||||
(Dollars in millions) |
|||||||||||
|
Three Months Ended |
||||||||||
|
|
||||||||||
|
Legacy
|
|
KII |
|
Consolidated
|
||||||
Gross Profit as reported (GAAP) |
$ |
200.8 |
|
|
$ |
60.5 |
|
|
$ |
261.3 |
|
% of net sales |
|
41.5 |
% |
|
|
43.3 |
% |
|
|
41.9 |
% |
|
|
|
|
|
|
||||||
Restructuring charges recorded to cost of sales |
|
0.6 |
|
|
|
— |
|
|
|
0.6 |
|
Gross Profit (non-GAAP) |
$ |
201.4 |
|
|
$ |
60.5 |
|
|
$ |
261.9 |
|
% of net sales |
|
41.6 |
% |
|
|
43.3 |
% |
|
|
42.0 |
% |
|
|
|
|
|
|
||||||
Operating income as reported (GAAP) |
$ |
34.9 |
|
|
$ |
18.6 |
|
|
$ |
53.4 |
|
% of net sales |
|
7.2 |
% |
|
|
13.3 |
% |
|
|
8.6 |
% |
|
|
|
|
|
|
||||||
Restructuring charges |
|
2.6 |
|
|
|
0.0 |
|
|
|
2.6 |
|
Acquisition costs |
|
(0.1 |
) |
|
|
0.0 |
|
|
|
(0.1 |
) |
Operating income (non-GAAP) |
$ |
37.4 |
|
|
$ |
18.6 |
|
|
$ |
55.9 |
|
% of net sales |
|
7.7 |
% |
|
|
13.3 |
% |
|
|
9.0 |
% |
HNI Corporation Reconciliation |
|||||||
(Dollars in millions, except per share data) |
|||||||
|
Three Months Ended |
||||||
|
|
||||||
GAAP (as reported): |
Legacy HNI |
|
Consolidated HNI |
||||
Operating income |
$ |
34.9 |
|
|
$ |
53.4 |
|
Interest expense, net |
|
1.8 |
|
|
|
7.4 |
|
Income taxes (21.7%) |
|
7.2 |
|
|
|
10.0 |
|
Net income |
$ |
25.9 |
|
|
$ |
36.0 |
|
Average number of common shares outstanding – diluted |
|
43.3 |
(1 |
) |
|
|
48.2 |
EPS - Diluted |
$ |
0.60 |
|
|
$ |
0.75 |
|
|
|
|
|
|
|||
Non-GAAP: |
|
|
|
|
|||
Operating income |
$ |
37.4 |
|
|
$ |
55.9 |
|
Interest expense, net |
|
1.8 |
|
|
|
7.4 |
|
Income taxes (21.7%) |
|
7.7 |
|
|
|
10.5 |
|
Net income |
$ |
27.9 |
|
|
$ |
38.0 |
|
Average number of common shares outstanding – diluted |
|
43.3 |
(1 |
) |
|
|
48.2 |
EPS - Diluted |
$ |
0.64 |
|
|
$ |
0.79 |
(1) |
The average number of common shares outstanding – diluted for the Legacy HNI business is calculated by excluding the average impacts of new issuances of HNI common stock (4.7 million) and dilutive HNI restricted stock units (0.1 million) as a result of the acquisition of |
HNI Corporation Reconciliation |
|||||||||||||||||||
(Dollars in millions, except per share data) |
|||||||||||||||||||
|
Three Months Ended |
||||||||||||||||||
|
|
||||||||||||||||||
|
Gross
|
|
Operating Income
|
|
Tax |
|
Net Income
|
|
EPS |
||||||||||
As reported (GAAP) |
$ |
215.5 |
|
|
$ |
(3.6 |
) |
|
$ |
3.8 |
|
|
$ |
(12.8 |
) |
|
$ |
(0.30 |
) |
% of net sales |
|
38.3 |
% |
|
|
(0.6 |
%) |
|
|
|
|
(2.3 |
%) |
|
|
||||
Tax % |
|
|
|
|
|
(41.8 |
%) |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Restructuring charges |
|
(0.2 |
) |
|
|
7.2 |
|
|
|
1.6 |
|
|
|
5.6 |
|
|
|
0.13 |
|
Impairment charges |
|
— |
|
|
|
0.6 |
|
|
|
0.1 |
|
|
|
0.5 |
|
|
|
0.01 |
|
Cost reduction initiative |
|
— |
|
|
|
1.1 |
|
|
|
0.2 |
|
|
|
0.8 |
|
|
|
0.02 |
|
Acquisition costs |
|
— |
|
|
|
31.3 |
|
|
|
1.2 |
|
|
|
30.1 |
|
|
|
0.69 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Results (non-GAAP) |
$ |
215.3 |
|
|
$ |
36.6 |
|
|
$ |
7.0 |
|
|
$ |
24.1 |
|
|
$ |
0.55 |
|
% of net sales |
|
38.2 |
% |
|
|
6.5 |
% |
|
|
|
|
4.3 |
% |
|
|
||||
Tax % |
|
|
|
|
|
22.4 |
% |
|
|
|
|
HNI Corporation Reconciliation |
|||||||||||
(Dollars in millions) |
|||||||||||
|
Three Months Ended |
||||||||||
|
|
||||||||||
|
Legacy
|
|
KII |
|
Consolidated
|
||||||
Gross Profit as reported (GAAP) |
$ |
192.7 |
|
|
$ |
22.9 |
|
|
$ |
215.5 |
|
% of net sales |
|
38.0 |
% |
|
|
40.8 |
% |
|
|
38.3 |
% |
|
|
|
|
|
|
||||||
Restructuring charges recorded to cost of sales |
|
(0.2 |
) |
|
|
— |
|
|
|
(0.2 |
) |
Gross Profit (non-GAAP) |
$ |
192.4 |
|
|
$ |
22.9 |
|
|
$ |
215.3 |
|
% of net sales |
|
37.9 |
% |
|
|
40.8 |
% |
|
|
38.2 |
% |
|
|
|
|
|
|
||||||
Operating income (loss) as reported (GAAP) |
$ |
8.9 |
|
|
$ |
(12.5 |
) |
|
$ |
(3.6 |
) |
% of net sales |
|
1.8 |
% |
|
|
(22.3 |
%) |
|
|
(0.6 |
%) |
|
|
|
|
|
|
||||||
Restructuring charges |
|
1.2 |
|
|
|
6.0 |
|
|
|
7.2 |
|
Impairment charges |
|
0.6 |
|
|
|
— |
|
|
|
0.6 |
|
Cost reduction actions |
|
1.1 |
|
|
|
— |
|
|
|
1.1 |
|
Acquisition costs |
|
20.9 |
|
|
|
10.3 |
|
|
|
31.3 |
|
Operating income (non-GAAP) |
$ |
32.7 |
|
|
$ |
3.9 |
|
|
$ |
36.6 |
|
% of net sales |
|
6.5 |
% |
|
|
6.9 |
% |
|
|
6.5 |
% |
HNI Corporation Reconciliation |
|||||||||
(Dollars in millions, except per share data) |
|||||||||
|
Three Months Ended |
||||||||
|
|
||||||||
GAAP (as reported): |
Legacy HNI |
|
Consolidated HNI |
||||||
Operating income (loss) |
$ |
8.9 |
|
|
|
$ |
(3.6 |
) |
|
Interest expense, net |
|
3.0 |
|
|
|
|
5.5 |
|
|
Income taxes (-41.8%) |
|
(2.5 |
) |
|
|
|
3.8 |
|
|
Net income (loss) |
$ |
8.4 |
|
|
|
$ |
(12.8 |
) |
|
Average number of common shares outstanding – diluted |
|
42.2 |
|
(1 |
) |
|
|
43.3 |
|
EPS - Diluted |
$ |
0.20 |
|
|
|
$ |
(0.30 |
) |
|
|
|
|
|
|
|||||
Non-GAAP: |
|
|
|
|
|||||
Operating income |
$ |
32.7 |
|
|
|
$ |
36.6 |
|
|
Interest expense, net |
|
3.0 |
|
|
|
|
5.5 |
|
|
Income taxes (22.4%) |
|
6.7 |
|
|
|
|
7.0 |
|
|
Net income |
$ |
23.1 |
|
|
|
$ |
24.1 |
|
|
Average number of common shares outstanding – diluted |
|
42.2 |
|
(1 |
) |
|
|
43.9 |
|
EPS - Diluted |
$ |
0.55 |
|
|
|
$ |
0.55 |
|
(1) |
The average number of common shares outstanding – diluted for the Legacy HNI business is calculated by excluding the average impacts of new issuances of HNI common stock (4.7 million) and dilutive HNI restricted stock units (0.1 million) as a result of the acquisition of |
Workplace Furnishings Reconciliation |
|||||||||||||||||||||||
(Dollars in millions) |
|||||||||||||||||||||||
|
Three Months Ended |
||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
Legacy Workplace Furnishings |
|
KII |
|
Total Workplace Furnishings |
|
Legacy Workplace Furnishings |
|
KII |
|
Total Workplace Furnishings |
||||||||||||
Operating income
|
$ |
35.8 |
|
|
$ |
18.6 |
|
|
$ |
54.3 |
|
|
$ |
28.4 |
|
|
$ |
(12.5 |
) |
|
$ |
15.9 |
|
% of net sales |
|
10.5 |
% |
|
|
13.3 |
% |
|
|
11.3 |
% |
|
|
8.0 |
% |
|
|
(22.3 |
%) |
|
|
3.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Impairment charges |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.6 |
|
|
|
— |
|
|
|
0.6 |
|
Restructuring charges |
|
2.6 |
|
|
|
0.0 |
|
|
|
2.6 |
|
|
|
1.2 |
|
|
|
6.0 |
|
|
|
7.2 |
|
Acquisition costs |
|
— |
|
|
|
0.0 |
|
|
|
0.0 |
|
|
|
— |
|
|
|
10.3 |
|
|
|
10.3 |
|
Operating income (non-GAAP) |
$ |
38.3 |
|
|
$ |
18.6 |
|
|
$ |
56.9 |
|
|
$ |
30.2 |
|
|
$ |
3.9 |
|
|
$ |
34.0 |
|
% of net sales |
|
11.3 |
% |
|
|
13.3 |
% |
|
|
11.9 |
% |
|
|
8.5 |
% |
|
|
6.9 |
% |
|
|
8.2 |
% |
|
|
|
|
|
|
|||||
Residential |
||||||||||
(Dollars in millions) |
||||||||||
|
Three Months Ended |
|
|
|||||||
|
|
|
|
|
Percent Change |
|||||
Operating income as reported (GAAP) |
$ |
19.8 |
|
|
$ |
15.6 |
|
|
26.9 |
% |
% of net sales |
|
13.8 |
% |
|
|
10.3 |
% |
|
|
|
|
|
|
|
|
|
|||||
Cost reduction actions |
|
— |
|
|
|
1.3 |
|
|
|
|
|
|
|
|
|
|
|||||
Operating income (non-GAAP) |
$ |
19.8 |
|
|
$ |
16.8 |
|
|
17.5 |
% |
% of net sales |
|
13.8 |
% |
|
|
11.2 |
% |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240723332376/en/
Source: