HNI Corporation Reports Continued Double Digit Earnings Growth For Second Quarter Fiscal Year 2016

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MUSCATINE, Iowa, July 21, 2016 /PRNewswire/ -- HNI Corporation (NYSE: HNI) today announced sales for the second quarter ended July 2, 2016 of $536.5 million and net income of $29.0 million.  GAAP net income per diluted share improved 23 percent from the prior year quarter to $0.64.  Non-GAAP net income per diluted share, which excludes restructuring and transition costs and a nonrecurring gain, improved 28 percent from the prior year quarter to $0.68.

Second Quarter Summary Comments

"We are pleased with our strong results for the second quarter driven by outstanding operational execution in both our office furniture and hearth products segments. Our investments are generating significant financial returns. We remain focused on driving long-term shareholder value," said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.

Second Quarter Summary Comments

• Consolidated net sales decreased $31.7 million or 5.6 percent to $536.5 million. The acquisition and divestitures of small office furniture related companies increased sales $6.5 million compared to the prior year quarter. On an organic basis, sales decreased 6.7 percent.
• GAAP gross margin increased 260 basis points compared to prior year driven by strong operational performance, favorable material productivity and price realization, partially offset by lower volume. Non-GAAP gross margin increased 340 basis points.
• Selling and administrative expenses, as a percentage of sales, increased 90 basis points due to the impact of lower volume and higher incentive based compensation partially offset by cost reductions at the operating segments and corporate.
• The Corporation recorded $2.0 million of restructuring costs and $3.5 million of transition costs in the second quarter in connection with previously announced closures and structural realignment. $4.9 million of these charges were included in cost of sales. Specific items incurred include severance, accelerated depreciation and production move costs. The Corporation also recorded a $2.0 million nonrecurring gain. Restructuring charges for the prior year quarter were favorable $0.6 million due to lower than anticipated post-employment costs. The Corporation also recorded $1.3 million of transition costs in the prior year quarter in connection with previously announced closures, acquisition integration and structural realignment. These transition costs were included in cost of sales.

• Second quarter sales decreased $22.5 million or 5.0 percent to $428.1 million. Sales for the quarter decreased in our North America contract and International businesses partially offset by an increase in our supplies-driven channel. The acquisition and divestitures of small office furniture related companies increased sales $6.5 million compared to the prior year quarter. On an organic basis, sales decreased 6.4 percent.
• Second quarter GAAP and non-GAAP operating profit increased due to strong operational performance, favorable material productivity, price realization, and cost reductions. These were partially offset by lower volume, higher incentive based compensation and strategic investments.

• Second quarter sales decreased $9.2 million or 7.8 percent to $108.4 million. Growth in the new construction channel was more than offset by a decrease in the retail channel.
• For the quarter, GAAP operating profit declined due to impact from previously announced closures, lower volume, and higher incentive based compensation. These were partially offset by strong operational performance, favorable material productivity, and cost reductions. Non-GAAP operating profit, which excludes the impact of a previously announced closure, improved 200 basis points.

Outlook

"I am very pleased with our strong performance in the second quarter.  Our office furniture and hearth businesses are executing well and we continue to make significant investments to drive long-term shareholder value," said Mr. Askren.

The Corporation estimates sales to be flat to up 3 percent in the third quarter over the same period in the prior year, including impacts of acquisitions and divestitures.  Non-GAAP earnings per share are anticipated to be in the range of $0.90 to $0.95 for the third quarter and $2.80 to $2.95 for the full year, which excludes restructuring and transition costs and a nonrecurring gain.

Conference Call

HNI Corporation will host a conference call on Friday, July 22, 2016 at 10:00 a.m. (Central) to discuss second quarter fiscal year 2016 results.  To participate, call 1-877-512-9166 – conference ID number 30192037.  A live webcast of the call will be available on HNI Corporation's website at http://www.hnicorp.com (under Investors – News Releases & Events).  A replay of the webcast will be made available at this website address.  An audio replay of the call will be available until Friday, July 29, 2016, 10:59 p.m. (Central) by dialing 1-855-859-2056 or 1-404-537-3406 – Conference ID number 30192037.

About HNI Corporation

HNI Corporation is a NYSE traded company (ticker symbol:  HNI) providing products and solutions for the home and workplace environments.  HNI is a leading global provider and designer of office furniture and the nation's leading manufacturer and marketer of hearth products. We sell the broadest and deepest selection of quality office furniture solutions available to meet the needs of every customer through an extensive portfolio of well-known and trusted brands. Our hearth products are the strongest, most respected brands in the industry and include a full array of gas, electric, wood and biomass burning fireplaces, inserts, stoves, facings and accessories.  More information can be found on the Corporation's website at www.hnicorp.com.

Forward-looking Statements

This release contains "forward-looking" statements based on current expectations regarding future plans, events, outlook, objectives and financial performance, expectations for future sales growth and earnings per diluted share (GAAP and non-GAAP). Forward-looking statements can be identified by words including "expect," "believe," "anticipate," "estimate," "may," "will," "would," "could," "confident" or other similar words, phrases or expressions.  Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Corporation's actual future results and performance to differ materially from expected results.  These risks include but are not limited to:  general economic conditions in the United States and internationally; unfavorable changes in the United States housing market; industry and competitive conditions; a decline in corporate spending on office furniture; changes in raw material, component or commodity pricing; future acquisitions, divestitures or investments; the cost of energy; changing legal, regulatory, environmental and healthcare conditions; the Corporation's ability to successfully complete its business software system implementation; the Corporation's ability to implement price increases; changes in the sales mix of products; the Corporation's ability to achieve the anticipated benefits from closures and structural alignment initiatives; and force majeure events outside the Corporation's control.   A description of these risks and additional risks can be found 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.

For Information Contact:
Kurt A. Tjaden, Senior Vice President and Chief Financial Officer (563) 272-7400
Jack D. Herring, Manager, Investor Relations (563) 506-9783

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: gross profit, operating income, operating profit, and net income per diluted share (i.e., EPS).  These measures are adjusted from the comparable GAAP measures to exclude the after-tax impacts of the selected items as summarized in the table below.  Non-GAAP EPS is calculated using HNI's overall effective tax rate for the period.

The transactions excluded as part of this earnings release include restructuring and transition costs and a nonrecurring gain on a litigation settlement.  The restructuring and transition costs are costs incurred as part of the previously announced closure of the Paris, Kentucky, hearth manufacturing facility and structural realignments between office furniture facilities in Muscatine, Iowa.  Specific items incurred include severance, accelerated depreciation and production move costs.

The presentation of non-GAAP financial measures is not intended to be considered 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 non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.

We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.

This earnings release also contains a forward-looking estimate of non-GAAP earnings per diluted share. 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 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 nonrecurring items not reflective of ongoing operations.

SOURCE HNI Corporation

Related Links

http://www.hnicorp.com