HNI Corporation Reports Strong Sales And Earnings For Third Quarter Fiscal 2014 And Raises Full Year Guidance

MUSCATINE, Iowa, Oct. 15, 2014 /PRNewswire/ -- HNI Corporation (NYSE: HNI) today announced sales for the third quarter ended September 27, 2014, of $614.7 million and net income of $33.6 million, or $0.74 per diluted share.  Non-GAAP net income per diluted share improved 33 percent from the prior year quarter to $0.81, which excludes restructuring and transition costs.   

Third Quarter Summary Comments
"We delivered strong results which exceeded our sales and profit expectations for the third quarter.  Both our office furniture and hearth products segments increased sales and operating margins.  Performance in our hearth business was outstanding, led by continued double-digit growth in both the remodel/retrofit and new construction channels and strong operational execution.  Office furniture sales growth accelerated, led by our contract business," said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.

Third Quarter Summary Comments

• Consolidated net sales increased $49.0 million or 8.7 percent to $614.7 million. Compared to prior year quarter, divestitures reduced sales $2.0 million. On an organic basis sales increased 9.0 percent.
• Non-GAAP gross margin improved 110 basis points from prior year primarily due to increased volume, better price realization and strong operational performance, partially offset by unfavorable mix and investments in operations.
• Selling and administrative expenses, as a percentage of sales, decreased 30 basis points due to volume, partially offset by strategic investments, higher incentive-based compensation and timing of expenses.
• During the third quarter, as part of the Corporation's ongoing strategy to reduce structural costs, it made the decision to close a small international office furniture manufacturing facility. In connection with closures announced earlier this year and this decision, the Corporation recorded $4.9 million of restructuring and transition costs with $3.9 million included in cost of sales.

• Sales increased $22.4 million or 4.8 percent to $488.6 million. Compared to prior year quarter, divestitures reduced sales by $2.0 million. On an organic basis, sales increased 5.2 percent driven by growth in the supplies-driven and contract channels.
• Non-GAAP operating profit increased $6.8 million or 16.7 percent. Increased volume, higher price realization and strong operational performance were partially offset by unfavorable mix, investments in operations, increased incentive-based compensation and timing of expenses.

• Sales increased $26.6 million or 26.7 percent to $126.1 million driven by increases in both the new construction and the remodel/retrofit channel.
• Operating profit increased $9.4 million or 65.1 percent due to increased volume and higher price realization partially offset by investments in growth initiatives, higher incentive-based compensation and timing of expenses.
• The Corporation acquired Vermont Castings Group, a leading manufacturer of free standing hearth stoves and fireplaces, after the end of the Corporation's fiscal third quarter.

Outlook
"We enter the fourth quarter with solid momentum in our hearth and office furniture businesses, and remain on track to grow sales and significantly increase profits in 2014.  We continue to aggressively invest for long-term profitable growth, and I remain confident our investments are increasing shareholder value," said Mr. Askren.

The Corporation estimates sales to be up 13 to 17 percent in the fourth quarter over the same period in the prior year, including sales from the recently acquired Vermont Castings Group.  For the full year, the Corporation is raising its estimate of non-GAAP earnings per diluted share to the range of $1.95 to $2.00, which includes the Vermont Castings Group acquisition fourth quarter results and excludes restructuring and impairment charges, transition costs and gain/loss on sale of assets.

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 continuing to execute its long-standing rapid continuous improvement discipline to build best total cost and a lean enterprise.

Conference Call
HNI Corporation will host a conference call on Thursday, October 16, 2014 at 10:00 a.m. (Central) to discuss third quarter 2014 results.  To participate, call 1-877-512-9166 – conference ID number 12409411.  A live webcast of 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 23, 2014, 10:59 p.m. (Central) by dialing 1-855-859-2056 or 1-404-537-3406 – Conference ID number 12409411. 

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 fourth quarter and full year fiscal 2014.  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:
Matthew D. McGough, Vice President, Corporate Finance (563) 272-7563
Kurt A. Tjaden, 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 and net income per diluted share (i.e., EPS), excluding restructuring and impairment charges, transition costs and gain/loss on sale.  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 fourth quarter and full fiscal year 2014.  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. 

SOURCE HNI Corporation

Related Links

http://www.hnicorp.com