HNI Corporation Announces Third Quarter Fiscal 2012 Results In Line
With Revised Guidance
MUSCATINE, Iowa, Oct. 17, 2012 /PRNewswire/ -- HNI
Corporation (NYSE: HNI) today announced sales of $550.9 million and net income of $24.5 million for the third quarter ended
September 29, 2012. Net income
per diluted share for the quarter was $0.53 or $0.55 on a
non-GAAP basis when excluding restructuring and transition
costs.
Third Quarter Summary Comments
"We continue to compete
well in our markets. Growth in our supplies-driven and
contract office furniture businesses softened versus our
expectations and first half results as U.S. economic and market
uncertainty appear to be constraining near-term growth.
Office furniture profits were negatively impacted by lower than
expected sales and operational inefficiencies caused by extreme
summer heat during our peak demand season. We are making
operational improvements to ensure consistent, flawless execution
during future periods of peak production. Continued strong
profit growth in our hearth business was driven by outstanding
operational performance and growth in the new construction channel.
We continue to make good progress on our core strategies,
improving our competitive position and investing for long-term
value creation," said Stan Askren,
HNI Corporation Chairman, President and Chief Executive
Officer.
Third
Quarter – GAAP Financial Measures
|
Three Months Ended
|
Percent
Change
|
|
Dollars in
millions
except per
share data
|
|
09/29/2012
|
10/01/2011
|
|
|
|
|
|
|
Net
sales
|
$550.9
|
$504.2
|
9.2%
|
|
Gross
profit
|
$191.3
|
$179.4
|
6.7%
|
|
Gross
margin %
|
34.7%
|
35.6%
|
|
|
SG&A
|
$149.6
|
$138.9
|
7.7%
|
|
SG&A
%
|
27.2%
|
27.6%
|
|
|
Operating
income
|
$41.7
|
$40.4
|
3.2%
|
|
Operating
income %
|
7.6%
|
8.0%
|
|
|
Net income
attributable to HNI Corporation
|
$24.5
|
$24.9
|
-1.8%
|
|
Earnings
per share attributable to HNI Corporation – diluted
|
$0.53
|
$0.55
|
-3.6%
|
|
- Consolidated net sales increased $46.6
million or 9.2 percent to $550.9
million. Acquisitions contributed $42.6 million of sales, or 8.5 percent sales
growth.
- Gross margins were 0.9 percentage points lower than prior year
primarily due to unfavorable mix, seasonal ramp up inefficiencies
and the impact of acquisitions offset partially by better price
realization and lower material costs.
- Total selling and administrative expenses, including
restructuring charges, increased 7.7 percent due to investments in
growth initiatives and the impact of acquisitions.
- The Corporation's third quarter results included $0.8 million of restructuring and transition
charges of which $0.2 million were
included in cost of sales. These included costs associated
with previously announced shutdown and consolidation of office
furniture manufacturing locations. Included in the third
quarter of 2011 were $0.5 million of
restructuring and transition costs.
Third
Quarter – Non-GAAP Financial Measures
|
(Reconciled with most comparable GAAP financial
measures)
|
Dollars in
millions
except per
share data
|
Three
Months Ended
09/29/2012
|
|
Three
Months Ended
10/01/2011
|
Gross
Profit
|
Operating
Income
|
EPS
|
|
Gross
Profit
|
Operating
Income
|
EPS
|
|
|
|
|
|
|
|
|
As
reported (GAAP)
|
$191.3
|
$41.7
|
$0.53
|
|
$179.4
|
$40.4
|
$0.55
|
% of
net sales
|
34.7%
|
7.6%
|
|
|
35.6%
|
8.0%
|
|
Restructuring and impairment
|
-
|
$0.2
|
$0.00
|
|
$0.2
|
$0.4
|
$0.00
|
Transition
costs
|
$0.2
|
$0.6
|
$0.01
|
|
$0.1
|
$0.1
|
$0.00
|
Results
(non-GAAP)
|
$191.5
|
$42.5
|
$0.55
|
|
$179.7
|
$41.0
|
$0.55
|
% of
net sales
|
34.8%
|
7.7%
|
|
|
35.6%
|
8.1%
|
|
Office
Furniture – GAAP Financial Measures
|
Dollars in
millions
|
Three
Months Ended
|
Percent
Change
|
09/29/2012
|
10/01/2011
|
|
|
|
|
Net
sales
|
$467.8
|
$421.9
|
10.9%
|
Operating
profit
|
$38.4
|
$41.5
|
-7.4%
|
Operating
profit %
|
8.2%
|
9.8%
|
|
Third Quarter – Non-GAAP Financial
Measures
(Reconciled with most comparable GAAP financial
measures)
|
Dollars in millions
|
Three Months Ended
|
Percent
Change
|
09/29/2012
|
10/01/2011
|
|
|
|
|
Operating profit as reported (GAAP)
|
$38.4
|
$41.5
|
-7.4%
|
% of Net Sales
|
8.2%
|
9.8%
|
|
Restructuring and impairment
|
$0.2
|
$0.4
|
|
Transition costs
|
$0.6
|
$0.1
|
|
Operating profit (non-GAAP)
|
$39.2
|
$42.0
|
-6.7%
|
% of Net Sales
|
8.4%
|
10.0%
|
|
- Third quarter net sales for the office furniture segment
increased $45.9 million or 10.9
percent to $467.8 million.
Acquisitions contributed $42.6
million of sales, or 10.1 percent sales growth.
Organic growth was effectively flat across all channels of the
office furniture segment.
- Third quarter GAAP operating profit decreased $3.1 million. Operating profit was
negatively impacted by unfavorable mix, seasonal ramp up
inefficiencies and investments in growth initiatives. These
were partially offset by better price realization and lower
material costs.
Hearth
Products – GAAP Financial Measures
|
|
Three
Months Ended
|
|
Dollars in
millions
|
|
Percent
Change
|
09/29/2012
|
10/01/2011
|
|
|
|
|
Net
sales
|
$83.1
|
$82.3
|
0.9%
|
Operating
profit
|
$9.1
|
$6.9
|
32.0%
|
Operating
profit %
|
10.9%
|
8.3%
|
|
- Third quarter net sales for the hearth products segment
increased $0.7 million or 0.9 percent
to $83.1 million driven by an
increase in the new construction channel partially offset by a
decline in the remodel/retrofit channel.
- Third quarter operating profit increased $2.2 million. Operating profit was
positively impacted by higher price realization and lower material
costs offset partially by investments in selling and growth
initiatives.
Year-to-Date Results
Consolidated net sales for the
first nine months of 2012 increased $143.3
million, or 10.7 percent, to $1.5
billion compared to $1.3
billion in 2011. Acquisitions contributed $83.0 million of sales, or 6.2 percent sales
growth. Gross margin decreased to 34.1 percent compared to
34.6 percent for the same period last year. Net income
attributable to HNI Corporation was $31.4
million compared to $27.8
million in 2011. Earnings per share increased to
$0.68 per diluted share compared to
$0.61 per diluted share for the first
nine months of 2011.
Cash flow from operations for the first nine months of 2012 was
$80.8 million compared to
$67.0 million last year.
Capital expenditures during the first nine months were $44.7 million in 2012 compared to $20.2 million in 2011. The Corporation
completed the acquisition of BP Ergo, a leading manufacturer and
marketer of office furniture in India, during the third quarter of
2012.
Outlook
"Despite near-term economic and political
uncertainties, I remain positive about our markets and prospects
for long-term profitable growth. We remain confident in our
strategies and will continue to closely monitor our markets,
aggressively manage operating expenses, and invest in long-term
growth. Our businesses are agile and well positioned for the
future," said Mr. Askren.
The Corporation estimates sales growth between 2 to 6 percent in
the fourth quarter over the same period in the prior year.
For the full year, the Company is revising its estimate of
non-GAAP earnings per diluted share to the range of $1.13 to $1.19 excluding restructuring charges
and transition costs.
The Corporation remains focused on creating long-term
shareholder value by growing its business through investment in
building brands, product solutions and selling models, enhancing
its strong member-owner culture and remaining focused on its
long-standing rapid continuous improvement programs to build best
total cost and a lean enterprise.
Conference Call and Presentation
HNI Corporation will
host a conference call on Thursday, October
18, 2012 at 10:00 a.m.
(Central) to discuss third quarter 2012 results. To
participate, call 1-877-512-9166 - conference ID number
34711184. A live webcast of the call and a presentation
intended to accompany the call will be available on HNI
Corporation's website at http://www.hnicorp.com (under Investor
Information – Webcasts). A replay of the webcast will be made
available at the website address above. An audio replay of
the call will be available until Thursday,
October 25, 10:59 p.m.
(Central) by dialing 1-855-859-2056 or 1-404-537-3406 – Conference
ID: 34711184.
About HNI Corporation
HNI Corporation is a NYSE traded company (ticker symbol: HNI)
providing products and solutions for the home and workplace
environments. HNI Corporation is the second largest office
furniture manufacturer in the world and is also the nation's
leading manufacturer and marketer of gas- and wood-burning
fireplaces. The Corporation's strong brands, including
HON®, Allsteel®, Gunlocke®,
Paoli®, Maxon®, Lamex®,
HBF® , Artco-BellTM, Midwest Folding
ProductsTM, LSI Corporation of AmericaTM,
ERGO®, Heatilator®, Heat &
Glo®, Quadra-Fire® and Harman StoveTM have leading positions
in their markets. HNI Corporation is committed to maintaining
its long-standing corporate values of integrity, financial
soundness and a culture of service and responsiveness. More
information can be found on the Corporation's website at
www.hnicorp.com.
Non-GAAP Financial Measures
This earnings release contains certain non-GAAP financial
measures. A "non-GAAP financial measure" is a numerical
measure of a company's financial performance that excludes or
includes amounts different than the most directly comparable
measure calculated and presented in accordance with GAAP in the
statements of income, balance sheets or statements of cash flow of
the company. We have provided a reconciliation of non-GAAP
financial measures to the most directly comparable GAAP financial
measure.
The non-GAAP financial measures used within this earnings
release are: gross profit, operating income, operating profit
and net income per diluted share (i.e., EPS), excluding
restructuring and impairment charges and transition costs.
Non-GAAP EPS is calculated using the Corporation's overall
effective tax rate for the period. We present these measures
because management uses this information to monitor and evaluate
financial results and trends. Management believes this
information is also useful for investors. This earnings
release also contains a forward-looking estimate of non-GAAP
earnings per diluted share for the full fiscal year. We
provide such non-GAAP measures to investors on a prospective basis
for the same reasons we provide them to investors on a historical
basis. We are unable to provide a reconciliation of our
forward-looking estimate of non-GAAP earnings per diluted share to
a forward-looking estimate of GAAP earnings per diluted share
because certain information needed to make a reasonable
forward-looking estimate of GAAP earnings per diluted share for the
full fiscal year is difficult to predict and estimate and is often
dependent on future events which may be uncertain or outside of our
control. These may include unanticipated charges related to
asset impairments (fixed assets, intangibles or goodwill),
unanticipated acquisition related costs and other unanticipated
non-recurring items not reflective of ongoing operations.
Forward Looking Statements
This release contains "forward-looking" statements that refer to
future events and expectations. These statements address
future plans, outlook, objectives and financial performance
including expectations for future sales growth and earnings per
diluted share (GAAP and non-GAAP) for the fourth quarter of fiscal
2012 and for fiscal 2012. In addition, forward looking
statements may be identified by words such as "anticipate,"
"believe," "could," "confident," "estimate," "expect," "forecast,"
"hope," "intend," "likely," "may," "plan," "possible," "potential,"
"predict," "project," "should," "will," "would" and variations of
such words and similar expressions. Forward-looking
statements involve known and unknown risks, which may cause the
Corporation's actual future results to differ materially from
expected results. These risks include, without
limitation: the Corporation's ability to realize financial
benefits from its (a) price increases, (b) cost containment and
business simplification initiatives, (c) investments in strategic
acquisitions, new products and brand building, (d) investments in
distribution and rapid continuous improvement, (e) ability to
maintain its effective tax rate, (f) repurchases of common stock
and (g) consolidation and logistical realignment initiatives;
uncertainty related to the availability of cash and credit, and the
terms and interest rates on which credit would be available, to
fund operations and future growth; lower than expected demand for
the Corporation's products due to uncertain political and economic
conditions; slow or negative growth rates in global and domestic
economies and the protracted decline in the domestic housing
market; lower industry growth than expected; major disruptions at
key facilities or in the supply of any key raw materials,
components or finished goods; competitive pricing pressure from
foreign and domestic competitors; higher than expected costs and
lower than expected supplies of materials; higher costs for energy
and fuel; changes in the mix of products sold and of customers
purchasing; relationships with distribution channel partners,
including the financial viability of distributors and dealers;
restrictions imposed by the terms of the Corporation's revolving
credit facility and note purchase agreement; currency fluctuations
and other factors described in the Corporation's annual and
quarterly reports filed with the Securities and Exchange Commission
on Forms 10-K and 10-Q. The Corporation undertakes no
obligation to update, amend or clarify forward-looking
statements.
HNI
CORPORATION
|
Unaudited Condensed Consolidated Statements of
Operations
|
|
|
|
(Dollars
in thousands, except per share data)
|
Three
Months Ended
|
Nine
Months Ended
|
Sep. 29,
2012
|
Oct.
1,
2011
|
Sep. 29,
2012
|
Oct.
1,
2011
|
Net
Sales
|
$
550,855
|
$
504,220
|
$1,476,467
|
$1,333,181
|
Cost of
products sold
|
359,519
|
324,825
|
973,191
|
872,132
|
Gross
profit
|
191,336
|
179,395
|
503,276
|
461,049
|
Selling
and administrative expenses
|
149,421
|
138,671
|
444,610
|
407,281
|
Restructuring and impairment charges
|
172
|
277
|
1,361
|
2,130
|
Operating
income
|
41,743
|
40,447
|
57,305
|
51,638
|
Interest
income
|
155
|
222
|
610
|
465
|
Interest
expense
|
2,658
|
2,567
|
8,181
|
9,189
|
Income
before income taxes
|
39,240
|
38,102
|
49,734
|
42,914
|
Income
taxes
|
15,036
|
13,186
|
18,785
|
15,192
|
Net
income
|
24,204
|
24,916
|
30,949
|
27,722
|
Less: Net income (loss) attributable to the
noncontrolling interest
|
(286)
|
(31)
|
(425)
|
(127)
|
Net income
attributable to HNI Corporation
|
$
24,490
|
$
24,947
|
$
31,374
|
$
27,849
|
Net income
attributable to HNI Corporation per common share – basic
|
$0.54
|
$0.56
|
$0.69
|
$0.62
|
Average
number of common shares outstanding – basic
|
45,224,059
|
44,787,437
|
45,265,050
|
44,795,155
|
Net income
attributable to HNI Corporation per common share –
diluted
|
$0.53
|
$0.55
|
$0.68
|
$0.61
|
Average
number of common shares outstanding – diluted
|
45,820,422
|
45,637,042
|
45,839,917
|
45,683,520
|
Unaudited Condensed Consolidated Balance
Sheet
|
|
|
Assets
|
Liabilities and Shareholders'
Equity
|
|
As
of
|
|
As
of
|
(Dollars
in thousands)
|
Sep. 29,
2012
|
Dec. 31,
2011
|
|
Sep. 29,
2012
|
Dec. 31,
2011
|
Cash and
cash equivalents
|
$
49,265
|
$
72,812
|
Accounts
payable and
|
|
|
Short-term
investments
|
7,250
|
9,157
|
accrued expenses
|
$
401,122
|
$
358,290
|
Receivables
|
247,297
|
204,036
|
Note
payable and current
|
|
|
Inventories
|
104,879
|
101,873
|
maturities of long-term debt
|
43,877
|
30,345
|
Deferred
income taxes
|
19,500
|
18,797
|
Current
maturities of other
|
|
|
Prepaid
expenses and
|
|
|
long-term obligations
|
266
|
275
|
other current assets
|
27,986
|
27,365
|
|
|
|
Current
assets
|
456,177
|
434,040
|
Current
liabilities
|
445,265
|
388,910
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
150,159
|
150,200
|
|
|
|
Capital
lease obligations
|
259
|
340
|
|
|
|
Other
long-term liabilities
|
56,814
|
52,716
|
Property
and equipment – net
|
238,300
|
229,727
|
Deferred
income taxes
|
49,602
|
42,770
|
Goodwill
|
293,359
|
270,761
|
|
|
|
Other
assets
|
134,946
|
119,730
|
Parent
Company shareholders'
|
|
|
|
|
|
equity
|
420,042
|
419,057
|
|
|
|
Noncontrolling interest
|
641
|
265
|
|
|
|
Shareholders' equity
|
420,683
|
419,322
|
|
|
|
Total liabilities
and
|
|
|
Total
assets
|
$1,122,782
|
$1,054,258
|
shareholders' equity
|
$1,122,782
|
$1,054,258
|
Unaudited Condensed Consolidated Statement of
Cash Flows
|
|
|
(Dollars
in thousands)
|
Nine
Months Ended
|
Sep. 29,
2012
|
Oct. 1,
2011
|
Net cash
flows from (to) operating activities
|
$
80,836
|
$
66,972
|
Net cash
flows from (to) investing activities:
|
|
|
Capital expenditures
|
(44,659)
|
(20,194)
|
Other
|
(27,048)
|
(5,588)
|
Net cash
flows from (to) financing activities
|
(32,676)
|
(38,753)
|
Net
increase (decrease) in cash and cash equivalents
|
(23,547)
|
2,437
|
Cash and
cash equivalents at beginning of period
|
72,812
|
99,096
|
Cash and
cash equivalents at end of period
|
$
49,265
|
$101,533
|
Business Segment Data
|
|
|
|
(Dollars
in thousands)
|
Three
Months Ended
|
Nine
Months Ended
|
Sep.
29,
2012
|
Oct.
1,
2011
|
Sep.
29,
2012
|
Oct.
1,
2011
|
Net
sales:
|
|
|
|
|
Office furniture
|
$
467,787
|
$
421,873
|
$1,264,953
|
$1,125,643
|
Hearth products
|
83,068
|
82,347
|
211,514
|
207,538
|
|
$
550,855
|
$
504,220
|
$1,476,467
|
$1,333,181
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
Office furniture
|
|
|
|
|
Operations before restructuring
and impairment charges
|
$
38,605
|
$
41,776
|
$
69,707
|
$
69,161
|
Restructuring and impairment
charges
|
(172)
|
(277)
|
(1,361)
|
(1,711)
|
Office furniture
– net
|
38,433
|
41,499
|
68,346
|
67,450
|
Hearth products
|
|
|
|
|
Operations before restructuring
and impairment charges
|
9,077
|
6,875
|
11,066
|
5,749
|
Restructuring and impairment
charges
|
-
|
-
|
-
|
(419)
|
Hearth products
– net
|
9,077
|
6,875
|
11,066
|
5,330
|
Total operating profit
|
47,510
|
48,374
|
79,412
|
72,780
|
Unallocated
corporate expense
|
(8,270)
|
(10,272)
|
(29,678)
|
(29,866)
|
Income before income taxes
|
$
39,240
|
$
38,102
|
$
49,734
|
$
42,914
|
|
|
|
|
|
Depreciation and amortization expense:
|
|
|
|
|
Office furniture
|
$
8,542
|
$
8,855
|
$
25,423
|
$
27,308
|
Hearth products
|
1,454
|
1,818
|
4,519
|
5,925
|
General corporate
|
751
|
700
|
2,162
|
1,902
|
|
$
10,747
|
$
11,373
|
$
32,104
|
$
35,135
|
|
|
|
|
|
Capital
expenditures (including capitalized software):
|
|
|
|
|
Office furniture
|
$
10,206
|
$
4,578
|
$
25,206
|
$
15,812
|
Hearth products
|
519
|
975
|
1,472
|
1,980
|
General corporate
|
8,868
|
69
|
17,981
|
2,402
|
|
$
19,593
|
$
5,622
|
$
44,659
|
$
20,194
|
|
|
|
|
|
|
|
|
As
of
Sep. 29,
2012
|
As
of
Oct. 1,
2011
|
Identifiable assets:
|
|
|
|
|
Office furniture
|
|
|
$
725,763
|
$
618,588
|
Hearth products
|
|
|
272,951
|
282,168
|
General corporate
|
|
|
124,068
|
154,428
|
|
|
|
$1,122,782
|
$1,055,184
|
For Information Contact:
Derek
P. Schmidt, Vice President, Corporate Finance (563)
272-7344
Kurt A. Tjaden, Vice President and
Chief Financial Officer (563) 272-7400
SOURCE HNI Corporation