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Share Name | Share Symbol | Market | Type |
---|---|---|---|
HNI Corporation | NYSE:HNI | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.28 | -0.61% | 45.98 | 46.48 | 45.90 | 46.44 | 237,829 | 01:00:00 |
HNI Corporation (NYSE: HNI) today announced sales for the first quarter ended April 3, 2021 of $484.3 million and net income of $15.0 million. GAAP net income (loss) per diluted share was $0.34, compared to $(0.56) in the prior year. Non-GAAP net income per diluted share was $0.36, compared to $0.21 in the prior year. GAAP to non-GAAP reconciliations follow the financial statements in this release.
First Quarter Highlights
“This quarter, our members again demonstrated much of what is unique about HNI. We delivered substantial profit improvement, highlighted by strong revenue growth and expanded profitability in Residential Building Products. Although the pandemic continues to negatively impact demand in Workplace Furnishings, particularly in the contract market, we benefited from our reset cost structure and improving top-line performance in our brands focused on small to mid-sized customers. Overall, the first quarter shows the power of our diversified revenue streams, our ability to react quickly to changing market dynamics, and our overall operational capability,” stated Jeff Lorenger, Chairman, President, and Chief Executive Officer.
HNI Corporation – Financial Performance
(Dollars in millions, except per share data)
Three Months Ended
April 3, 2021
March 28, 2020
Change
GAAP
Net Sales
$484.3
$468.7
3.3
%
Gross Profit %
37.2
%
37.6
%
-40
bps
SG&A %
32.5
%
35.6
%
-310
bps
Impairment Charges %
—
%
7.0
%
Operating Income (Loss)
$22.6
($23.7
)
195.2
%
Operating Income (Loss) %
4.7
%
(5.1
%)
980
bps
Effective Tax Rate
28.0
%
6.4
%
Net Income (Loss) %
3.1
%
(5.1
%)
820
bps
EPS – diluted
$0.34
($0.56
)
160.7
%
Non-GAAP
Gross Profit %
37.2
%
37.6
%
-40
bps
Operating Income
$23.3
$13.9
67.3
%
Operating Income %
4.8
%
3.0
%
180
bps
EPS – diluted
$0.36
$0.21
71.4
%
First Quarter Summary Comments
First Quarter Orders
Workplace Furnishings – Financial Performance
(Dollars in millions)
Three Months Ended
April 3, 2021
March 28, 2020
Change
GAAP
Net Sales
$302.7
$338.4
(10.5
%)
Operating Loss
($3.1
)
($33.2
)
90.8
%
Operating Loss %
(1.0
%)
(9.8
%)
880
bps
Non-GAAP
Operating Profit (Loss)
($2.4
)
$2.8
(183.3
%)
Operating Profit (Loss) %
(0.8
%)
0.8
%
-160
bps
Residential Building Products – Financial Performance
(Dollars in millions)
Three Months Ended
April 3, 2021
March 28, 2020
Change
GAAP
Net Sales
$181.5
$130.3
39.3
%
Operating Profit
$39.8
$20.7
92.8
%
Operating Profit %
21.9
%
15.9
%
600
bps
Non-GAAP
Operating Profit
$39.8
$20.7
92.8
%
Operating Profit %
21.9
%
15.9
%
600
bps
Concluding Remarks
“As we look to the rest of the year, we are increasingly optimistic. We expect our strength in Residential Building Products to continue and see evidence our HNI-specific strategies are gaining momentum for the long-term. In Workplace Furnishings, we see improving conditions and expect revenue growth as we progress through the remainder of the year. Signs of improvement are strongest in our businesses focused on small to mid-sized customers, where we have a strong competitive position. Our opportunities to grow profits will improve as we move into the back half of the year.
I continue to be extremely proud of our HNI members. As we move into the next stage of the recovery, we do so as a stronger company—well positioned to grow revenue, expand margins, and generate cash flow,” Mr. Lorenger concluded.
Second Quarter 2021 Outlook
Conference Call
HNI Corporation will host a conference call on Thursday, April 29, 2021 at 10:00 a.m. (Central) to discuss first quarter fiscal year 2021 results. To participate, call 1-833-522-0258 – conference ID number 7988133. 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 also be made available at that website address. An audio replay of the call will be available until Thursday, May 6, 2021, 10:59 p.m. (Central) by dialing 1-800-585-8367 or 416-621-4642 – Conference ID number 7988133.
About HNI Corporation
HNI Corporation (NYSE: HNI) is a manufacturer of workplace furnishings and residential building products, operating under two segments. The Workplace Furnishings segment is a leading global designer and provider of commercial furnishings, going to market under multiple unique brands. The Residential Building Products segment is the nation’s leading manufacturer and marketer of hearth products, which include a full array of gas, electric, wood, and pellet-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, financial performance, expectations for sales growth, and earnings per diluted share (GAAP and non-GAAP), including statements regarding the expected effects on our business, financial condition and results of operations from the COVID-19 pandemic. 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: the duration and scope of the COVID-19 pandemic, and its effect on people and the economy; the levels of office furniture needs and housing starts; overall demand for the Corporation’s products; general economic and market conditions in the United States and internationally; industry and competitive conditions; the consolidation and concentration of the Corporation’s customers; the Corporation’s reliance on its network of independent dealers; change in trade policy; changes in raw material, component, or commodity pricing; market acceptance and demand for the Corporation’s new products; changing legal, regulatory, environmental, and healthcare conditions; the risks associated with international operations; the potential impact of product defects; the various restrictions on the Corporation’s financing activities; an inability to protect the Corporation’s intellectual property; impacts of tax legislation; 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 assumes no obligation to update, amend, or clarify forward-looking statements, except as required by applicable law.
HNI Corporation and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended
April 3, 2021
March 28, 2020
Net sales
$
484,293
$
468,704
Cost of sales
304,347
292,686
Gross profit
179,946
176,018
Selling and administrative expenses
157,346
167,085
Impairment charges
—
32,661
Operating income (loss)
22,600
(23,728
)
Interest expense, net
1,755
1,811
Income (loss) before income taxes
20,845
(25,539
)
Income taxes
5,827
(1,643
)
Net income (loss)
15,018
(23,896
)
Less: Net loss attributable to non-controlling interest
(1
)
(1
)
Net income (loss) attributable to HNI Corporation
$
15,019
$
(23,895
)
Average number of common shares outstanding – basic
43,163
42,628
Net income (loss) attributable to HNI Corporation per common share – basic
$
0.35
$
(0.56
)
Average number of common shares outstanding – diluted
43,584
42,628
Net income (loss) attributable to HNI Corporation per common share – diluted
$
0.34
$
(0.56
)
Foreign currency translation adjustments
$
(132
)
$
(600
)
Change in unrealized gains (losses) on marketable securities, net of tax
(100
)
59
Change in derivative financial instruments, net of tax
263
(2,216
)
Other comprehensive income (loss), net of tax
31
(2,757
)
Comprehensive income (loss)
15,049
(26,653
)
Less: Comprehensive loss attributable to non-controlling interest
(1
)
(1
)
Comprehensive income (loss) attributable to HNI Corporation
$
15,050
$
(26,652
)
HNI Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
April 3, 2021
January 2, 2021
Assets
Current Assets:
Cash and cash equivalents
$
94,281
$
116,120
Short-term investments
1,776
1,687
Receivables
198,039
207,971
Allowance for doubtful accounts
(4,904
)
(5,514
)
Inventories
154,176
137,811
Prepaid expenses and other current assets
42,204
37,660
Total Current Assets
485,572
495,735
Property, Plant, and Equipment:
Land and land improvements
29,989
29,691
Buildings
294,760
293,708
Machinery and equipment
580,398
578,643
Construction in progress
20,460
17,750
925,607
919,792
Less accumulated depreciation
562,717
553,835
Net Property, Plant, and Equipment
362,890
365,957
Right-of-use Finance Leases
10,119
6,095
Right-of-use Operating Leases
66,897
70,219
Goodwill and Other Intangible Assets
455,486
458,896
Other Assets
24,617
21,130
Total Assets
$
1,405,581
$
1,418,032
Liabilities and Equity
Current Liabilities:
Accounts payable and accrued expenses
$
367,072
$
413,638
Current maturities of long-term debt
1,261
841
Current maturities of other long-term obligations
3,731
2,990
Current lease obligations - Finance
2,398
1,589
Current lease obligations - Operating
20,195
19,970
Total Current Liabilities
394,657
439,028
Long-Term Debt
174,545
174,524
Long-Term Lease Obligations - Finance
7,677
4,516
Long-Term Lease Obligations - Operating
50,222
53,249
Other Long-Term Liabilities
84,895
81,264
Deferred Income Taxes
75,824
74,706
Equity:
HNI Corporation shareholders' equity
617,436
590,419
Non-controlling interest
325
326
Total Equity
617,761
590,745
Total Liabilities and Equity
$
1,405,581
$
1,418,032
HNI Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
April 3, 2021
March 28, 2020
Net Cash Flows From (To) Operating Activities:
Net income (loss)
$
15,018
$
(23,896
)
Non-cash items included in net income:
Depreciation and amortization
20,463
19,487
Other post-retirement and post-employment benefits
332
364
Stock-based compensation
5,220
4,358
Reduction in carrying amount of right-of-use assets
6,537
5,599
Deferred income taxes
1,076
12,258
Impairment of goodwill and intangible assets
—
32,661
Other – net
1,315
(2,252
)
Net increase (decrease) in operating assets and liabilities
(51,436
)
(81,573
)
Increase (decrease) in other liabilities
3,159
(312
)
Net cash flows from (to) operating activities
1,684
(33,306
)
Net Cash Flows From (To) Investing Activities:
Capital expenditures
(16,197
)
(8,488
)
Proceeds from sale of property, plant, and equipment
48
49
Acquisition spending, net of cash acquired
(1,408
)
(9,321
)
Capitalized software
(2,767
)
(4,671
)
Purchase of investments
(598
)
(1,456
)
Sales or maturities of investments
515
996
Net cash flows from (to) investing activities
(20,407
)
(22,891
)
Net Cash Flows From (To) Financing Activities:
Payments of long-term debt
(118
)
(15,000
)
Proceeds from long-term debt
547
70,129
Dividends paid
(13,234
)
(13,033
)
Purchase of HNI Corporation common stock
—
(5,839
)
Proceeds from sales of HNI Corporation common stock
13,030
722
Other – net
(3,341
)
2,558
Net cash flows from (to) financing activities
(3,116
)
39,537
Net increase (decrease) in cash and cash equivalents
(21,839
)
(16,660
)
Cash and cash equivalents at beginning of period
116,120
52,073
Cash and cash equivalents at end of period
$
94,281
$
35,413
HNI Corporation and Subsidiaries
Reportable Segment Data
(In thousands)
(Unaudited)
Three Months Ended
April 3, 2021
March 28, 2020
Net Sales:
Workplace furnishings
$
302,748
$
338,386
Residential building products
181,545
130,318
Total
$
484,293
$
468,704
Income (Loss) Before Income Taxes:
Workplace furnishings
$
(3,071
)
$
(33,231
)
Residential building products
39,849
20,671
General corporate
(14,178
)
(11,168
)
Operating Income
22,600
(23,728
)
Interest expense, net
1,755
1,811
Total
$
20,845
$
(25,539
)
Depreciation and Amortization Expense:
Workplace furnishings
$
11,984
$
11,332
Residential building products
2,410
2,306
General corporate
6,069
5,849
Total
$
20,463
$
19,487
Capital Expenditures (including capitalized software):
Workplace furnishings
$
10,487
$
7,101
Residential building products
4,710
2,973
General corporate
3,767
3,085
Total
$
18,964
$
13,159
As of April 3, 2021
As of January 2, 2021
Identifiable Assets:
Workplace furnishings
$
757,753
$
762,780
Residential building products
390,520
381,550
General corporate
257,308
273,702
Total
$
1,405,581
$
1,418,032
Non-GAAP Financial Measures
This earnings release includes certain non-GAAP financial information as defined by Securities and Exchange Commission Regulation G. Pursuant to the requirements of this regulation, reconciliations of this non-GAAP financial information to HNI’s financial statements as prepared in accordance with GAAP 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 non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.
To supplement condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, this earnings release uses the following non-GAAP financial measures: organic sales, gross profit, operating income (loss), operating profit (loss), income taxes, net income (loss), and net income (loss) per diluted share (i.e., EPS). These measures are adjusted from the comparable GAAP measures to exclude the impacts of the selected items as summarized in the table below. Generally, non-GAAP EPS is calculated using HNI’s overall effective tax rate for the year, as this rate is reflective of the tax applicable to most non-GAAP adjustments.
The sales adjustments to arrive at the non-GAAP organic sales information included in this earnings release excludes the impact of acquiring DPG and residential building products distributors. The transactions excluded for purposes of our other non-GAAP financial information included in this earnings release include non-recurring costs related to the COVID-19 pandemic, and prior year impairments of goodwill and intangible assets.
HNI Corporation Reconciliation
(Dollars in millions)
Three Months Ended
April 3, 2021
March 28, 2020
Workplace Furnishings
Residential Building Products
Total
Workplace Furnishings
Residential Building Products
Total
Sales as reported (GAAP)
$
302.7
$
181.5
$
484.3
$
338.4
$
130.3
$
468.7
% change from PY
(10.5
%)
39.3
%
3.3
%
Less: Acquisitions
6.4
2.4
8.8
—
—
—
Organic Sales (non-GAAP)
$
296.4
$
179.1
$
475.5
$
338.4
$
130.3
$
468.7
% change from PY
(12.4
%)
37.4
%
1.5
%
HNI Corporation Reconciliation
(Dollars in millions, except per share data)
Three Months Ended April 3, 2021
Gross Profit
Operating Income
Tax
Net Income
EPS
As reported (GAAP)
$
179.9
$
22.6
$
5.8
$
15.0
$
0.34
% of net sales
37.2
%
4.7
%
3.1
%
Tax %
28.0
%
COVID-19 costs
—
0.7
0.2
0.5
0.01
Results (non-GAAP)
$
179.9
$
23.3
$
6.0
$
15.5
$
0.36
% of net sales
37.2
%
4.8
%
3.2
%
Tax %
28.0
%
HNI Corporation Reconciliation
(Dollars in millions, except per share data)
Three Months Ended March 28, 2020
Gross Profit
Operating Income (Loss)
Tax
Net Income (Loss)
EPS
As reported (GAAP)
$
176.0
$
(23.7
)
$
(1.6
)
$
(23.9
)
$
(0.56
)
% of net sales
37.6
%
(5.1
%)
(5.1
%)
Tax %
6.4
%
Impairment charges
—
32.7
4.0
28.7
0.67
COVID-19 costs
—
5.0
0.6
4.4
0.10
Results (non-GAAP)
$
176.0
$
13.9
$
2.9
$
9.2
$
0.21
% of net sales
37.6
%
3.0
%
2.0
%
Tax %
24.1
%
Workplace Furnishings Reconciliation
(Dollars in millions)
Three Months Ended
April 3, 2021
March 28, 2020
Percent Change
Operating loss as reported (GAAP)
$
(3.1
)
$
(33.2
)
90.8
%
% of net sales
(1.0
%)
(9.8
%)
Impairment charges
—
32.7
COVID-19 costs
0.7
3.4
Operating profit (loss) (non-GAAP)
$
(2.4
)
$
2.8
(183.3
%)
% of net sales
(0.8
%)
0.8
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20210428005833/en/
Marshall H. Bridges, Senior Vice President and Chief Financial Officer (563) 272-7400 Matthew S. McCall, Vice President, Investor Relations and Corporate Development (563) 275-8898
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