HNI Corporation Reports Strong Earnings Growth For Fourth Quarter And Fiscal Year 2015

MUSCATINE, Iowa, Feb. 10, 2016 /PRNewswire/ -- HNI Corporation (NYSE: HNI) today announced sales for the fourth quarter ended January 2, 2016, of $596.9 million and net income of $32.2 million, or  $0.71 per diluted share.  Non-GAAP net income per diluted share improved 40 percent from the prior year quarter to $0.91, which excludes restructuring, goodwill and intangible impairment and transition costs.

Fourth Quarter and Year End Summary Comments

"We delivered double digit earnings growth in the fourth quarter despite a challenging economic environment.  I'm pleased with our results in 2015 and the strong profit growth we've delivered over the last several years of modest economic recovery.  We continue to compete well in our markets.  We remain focused on executing operational performance improvements and reducing structural costs to drive long-term shareholder value," said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.

Fourth Quarter Summary Comments

• Consolidated net sales decreased $49.8 million or 7.7 percent to $596.9 million.
• Non-GAAP gross margin increased 220 basis points compared to prior year driven by strong operational performance, structural cost reductions, favorable material costs and price realization, partially offset by lower volume.
• Selling and administrative expenses, as a percentage of sales, decreased 40 basis points due to cost  reductions and lower incentive based compensation.
• The Corporation recorded $12.7 million of restructuring and impairment charges and transition costs.  These costs included goodwill and intangible impairment charges of $11.2 million related to a small office furniture business and $1.5 million of restructuring and transition costs in connection with previously announced closures, acquisition integration and structural realignment.  Fourth quarter 2014 included $24.5 million of restructuring and impairment charges and transition costs.

Full Year Summary Comments

• Consolidated net sales increased $81.7 million or 3.7 percent to $2.3 billion.  Compared to prior year, the Vermont Castings Group acquisition increased sales $62.7 million.  On an organic basis, sales increased 0.9 percent. 
• Non-GAAP gross margin increased 130 basis points compared to prior year driven by strong operational performance, structural cost reductions, favorable material costs and price realization, partially offset by lower volume and unfavorable product mix.
• Selling and administrative expenses, as a percentage of sales, were flat to the prior year.  Higher freight costs, strategic investments and acquisition impact were offset by lower incentive based compensation and cost reductions.
• The Corporation recorded $17.3 million of restructuring and impairment charges and transition costs.  These costs included goodwill and intangible impairment charges of $11.2 million related to a small office furniture business and $6.1 million of restructuring and transition costs in connection with previously announced closures, acquisition integration and structural realignment.  2014 included $43.1 million of restructuring and impairment charges and transition costs.

• Fourth quarter sales decreased $24.8 million or 5.3 percent to $443.8 million.  Sales for the quarter decreased in both our supplies-driven and contract channels.     
• Fourth quarter non-GAAP operating profit increased $7.8 million or 23.4 percent.  Strong operational performance, structural cost reductions, favorable material costs and price realization were partially offset by lower volume.

• Fourth quarter sales decreased $24.9 million or 14.0 percent to $153.1 million.  Significantly lower biomass sales in the remodel/retrofit channel were partially offset by continued growth in the new construction channel.
• For the quarter, non-GAAP operating profit decreased $2.0 million or 6.0 percent due to lower volume partially offset by cost reductions, favorable material costs and price realization.

Outlook

"I am pleased with our performance and believe we are competing well.  Our markets have slowed and we are aggressively moving to reduce structural costs while continuing to invest for long-term profitable growth.  I remain confident in our ability to create long-term shareholder value," said Mr. Askren.

The Corporation estimates sales to be down 3 to 7 percent in the first quarter over the same period in the prior year.  Non-GAAP earnings per share are anticipated to be in the range of $0.16 to $0.21 for the first quarter and $2.20 to $2.60 for the full year, which excludes restructuring and transition costs.

Conference Call

HNI Corporation will host a conference call on Thursday, February 11, 2016 at 10:00 a.m. (Central) to discuss fourth quarter and fiscal year 2015 results.  To participate, call 1-877-512-9166 – conference ID number 28682457.  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 Thursday, February 18, 2016, 10:59 p.m. (Central) by dialing 1-855-859-2056 or 1-404-537-3406 – Conference ID number 28682457.

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 a leading global office furniture manufacturer and is the nation's leading manufacturer of hearth products.  The Corporation's strong brands have leading positions in their markets.  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) for the first quarter and full year fiscal 2016.  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; 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

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, net income per diluted share (i.e., EPS), excluding restructuring and impairment charges, transition costs and (gain)/loss on sale of assets.  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 first quarter and full fiscal year 2016.  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 first quarter and 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.

SOURCE HNI Corporation

Related Links

http://www.hnicorp.com