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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 | |
---|---|---|---|---|---|---|---|---|
-0.08 | -0.17% | 45.80 | 46.18 | 45.5925 | 46.11 | 160,954 | 23:34:10 |
HNI Corporation (NYSE: HNI) today announced sales of $2.434 billion and net income of $49.2 million for the full year ended December 30, 2023. GAAP net income per diluted share was $1.09, compared to $2.94 in the prior year. Non-GAAP net income per diluted share was $2.65, compared to $2.20 in the prior year. GAAP to non-GAAP reconciliations follow the financial statements in this release.
Fourth quarter sales of $679.8 million were up 19 percent from year-ago levels, and fourth quarter net income was $22.7 million. GAAP net income per diluted share was $0.48, compared to $0.39 in the prior year. Non-GAAP net income per diluted share was $0.98, up from $0.63 reported in the prior-year period.
Fourth Quarter Highlights
“We made outstanding progress in 2023 and finished the year on a strong note, delivering greater than 50 percent earnings growth in the fourth quarter. Our Workplace Furnishings profit transformation plan continues to pay dividends and drove segment fourth quarter operating margin to pre-pandemic levels. The synergy capture associated with the Kimball International acquisition is ahead of schedule; moreover, we now expect total synergies to be $10 million higher than our initial projection. In Residential Building Products, our actions to support profitability fueled margins to near record levels despite housing market weakness. Overall, we exited 2023 a fundamentally stronger company, reflecting the power and dedication of our member-owners,” stated Jeff Lorenger, Chairman, President, and Chief Executive Officer.
HNI Corporation — Fourth Quarter Results
HNI Corporation – Fourth Quarter Financial Performance
(Dollars in millions, except per share data)
Three Months Ended
December 30, 2023
December 31, 2022
Change
GAAP
Net Sales
$679.8
$568.9
19.5
%
Gross Profit %
40.2
%
36.6
%
360 bps
SG&A %
31.0
%
31.5
%
-50 bps
Restructuring and Impairment Charges %
4.6
%
1.0
%
360 bps
Operating Income
$30.7
$23.0
33.6
%
Operating Income %
4.5
%
4.0
%
50 bps
Effective Tax Rate
0.0
%
21.0
%
Net Income %
3.3
%
2.9
%
40 bps
EPS – diluted
$0.48
$0.39
23.1
%
Non-GAAP
Gross Profit %
40.2
%
37.4
%
280 bps
Operating Income
$66.1
$36.2
82.6
%
Operating Income %
9.7
%
6.4
%
330 bps
EPS – diluted
$0.98
$0.63
55.6
%
The following table contains results for (1) the Corporation’s legacy business, excluding the impacts of KII and Poppin (“Legacy HNI”) and (2) KII. As previously disclosed, the Corporation divested Poppin in the third quarter of 2023. Please refer to non-GAAP reconciliations, which follow the financial statements in this release, for further information on the adjustments made to calculate non-GAAP performance.
HNI Corporation – Fourth Quarter Impact of Kimball International Acquisition
(Dollars in millions, except per share data)
Three Months Ended
December 30, 2023
December 31, 2022
GAAP
Legacy HNI
KII
Consolidated HNI
Consolidated HNI
Legacy Change
Consolidated Change
Net Sales
$532.4
$147.4
$679.8
$568.9
(6.4
%)
19.5
%
Gross Profit
$211.8
$61.3
$273.1
$208.0
1.8
%
31.3
%
Gross Profit %
39.8
%
41.6
%
40.2
%
36.6
%
320 bps
360 bps
Restructuring and Impairment
$33.3
($1.9
)
$31.4
$5.7
488
%
455
%
Operating Income
$14.5
$16.2
$30.7
$23.0
(36.9
%)
33.6
%
Operating Income %
2.7
%
11.0
%
4.5
%
4.0
%
-130 bps
50 bps
EPS - diluted
$0.48
$0.39
23.1
%
Non-GAAP
Gross Profit
$212.1
$61.3
$273.5
$212.8
(0.3
%)
28.5
%
Gross Profit %
39.8
%
41.6
%
40.2
%
37.4
%
240 bps
280 bps
Operating Income
$50.3
$15.7
$66.1
$36.2
39.1
%
82.6
%
Operating Income %
9.5
%
10.7
%
9.7
%
6.4
%
310 bps
330 bps
EPS - diluted
$0.91
$0.98
$0.63
44.4
%
55.6
%
HNI Corporation — Fourth Quarter Summary Comments
HNI Corporation — Full Year Results
HNI Corporation — Full Year Financial Performance
(Dollars in millions, except per share data)
Twelve Months Ended
December 30, 2023
December 31, 2022
Change
GAAP
Net Sales
$2,434.0
$2,361.8
3.1
%
Gross Profit %
39.0
%
35.4
%
360 bps
SG&A %
33.4
%
30.6
%
280 bps
Gain on Sale of Subsidiary
$—
$ 50.4
NM
Restructuring and Impairment Charges %
1.8
%
0.3
%
150 bps
Operating Income
$90.3
$155.2
(41.8
%)
Operating Income %
3.7
%
6.6
%
-290 bps
Effective Tax Rate
24.1
%
15.4
%
Net Income %
2.0
%
5.2
%
-320 bps
EPS – diluted
$1.09
$2.94
(62.9
%)
Non-GAAP
Gross Profit %
39.0
%
35.7
%
330 bps
Operating Income
$178.1
$128.4
38.8
%
Operating Income %
7.3
%
5.4
%
190 bps
EPS – diluted
$2.65
$2.20
20.5
%
The following table contains results for (1) Legacy HNI, (2) KII, and (3) Poppin. Please refer to non-GAAP reconciliations, which follow the financial statements in this release, for further information on the adjustments made to calculate non-GAAP performance.
HNI Corporation – Full Year Impact of Kimball International Acquisition
(Dollars in millions, except per share data)
Twelve Months Ended
December 30, 2023
December 31, 2022
GAAP
Legacy HNI
KII
Poppin
Consolidated HNI
Consolidated HNI
Legacy Change
Consolidated Change
Net Sales
$2,072.6
$349.8
$11.6
$2,434.0
$2,361.8
(12.2
%)
3.1
%
Gross Profit
$798.6
$142.9
$6.7
$948.3
$834.9
(4.3
%)
13.6
%
Gross Profit %
38.5
%
40.9
%
57.8
%
39.0
%
35.4
%
310 bps
360 bps
Gain on Sale of Subsidiary
$—
$—
$—
$—
$50.4
NM
NM
Restructuring and Impairment
$35.8
($1.9
)
$10.8
$44.8
$6.7
437
%
572
%
Operating Income (Loss)
$78.9
$26.0
($14.7
)
$90.3
$155.2
(49.1
%)
(41.8
%)
Operating Income (Loss) %
3.8
%
7.4
%
(126
%)
3.7
%
6.6
%
-280 bps
-290 bps
EPS - diluted
$1.09
$2.94
(62.9
%)
Non-GAAP
Gross Profit
$799.5
$142.9
$6.7
$949.2
$843.7
(5.2
%)
12.5
%
Gross Profit %
38.6
%
40.9
%
57.8
%
39.0
%
35.7
%
290 bps
330 bps
Operating Income (Loss)
$145.3
$36.7
($3.8
)
$178.1
$128.4
13.2
%
38.8
%
Operating Income (Loss) %
7.0
%
10.5
%
(32.9
%)
7.3
%
5.4
%
160 bps
190 bps
EPS - diluted
$2.50
$2.65
$2.20
13.6
%
20.5
%
*2023 fiscal year results reflect seven months of KII and approximately three and a half months of Poppin.
HNI Corporation — Full Year Summary Comments
Workplace Furnishings — Fourth Quarter and Full Year Results
Workplace Furnishings – Financial Performance
(Dollars in millions)
Three Months Ended
Twelve Months Ended
December 30, 2023
December 31, 2022
Change
December 30, 2023
December 31, 2022
Change
GAAP
Net Sales
$490.7
$351.2
39.7
%
$1,740.3
$1,486.2
17.1
%
Operating Income (Loss)
$9.5
($7.7
)
223
%
$68.6
$3.4
NM
Operating Income (Loss) %
1.9
%
(2.2
%)
410 bps
3.9
%
0.2
%
370 bps
Non-GAAP
Operating Income
$40.4
$8.4
382
%
$124.5
$23.5
430
%
Operating Income %
8.2
%
2.4
%
580 bps
7.2
%
1.6
%
560 bps
The following tables contain results for (1) the Corporation’s legacy workplace furnishings business, excluding the impacts of KII and Poppin (“Legacy Workplace”), (2) KII, and (3) Poppin. Please refer to non-GAAP reconciliations, which follow the financial statements in this release for further information on the adjustments made to calculate non-GAAP performance.
Workplace Furnishings – Fourth Quarter Impact of Kimball International Acquisition
(Dollars in millions)
Three Months Ended
December 30, 2023
December 31, 2022
GAAP
Legacy Workplace
KII
Total Workplace
Total Workplace
Legacy Change
Total Change
Net Sales
$343.3
$147.4
$490.7
$351.2
(2.3
%)
39.7
%
Operating Income (Loss)
($6.7
)
$16.2
$9.5
($7.7
)
12.7
%
223
%
Operating Income (Loss) %
(2.0
%)
11.0
%
1.9
%
(2.2
%)
20 bps
410 bps
Non-GAAP
Operating Income
$24.6
$15.7
$40.4
$8.4
194
%
382
%
Operating Income %
7.2
%
10.7
%
8.2
%
2.4
%
480 bps
580 bps
Workplace Furnishings – Full Year Impact of Kimball International Acquisition
(Dollars in millions)
Twelve Months Ended
December 30, 2023
December 31, 2022
GAAP
Legacy Workplace
KII
Poppin
Total Workplace
Total Workplace
Legacy Change
Total Change
Net Sales
$1,378.8
$349.8
$11.6
$1,740.3
$1,486.2
(7.2
%)
17.1
%
Operating Income (Loss)
$57.3
$26.0
($14.7
)
$68.6
$3.4
NM
NM
Operating Income (Loss) %
4.2
%
7.4
%
(126
%)
3.9
%
0.2
%
400 bps
370 bps
Non-GAAP
Operating Income (Loss)
$91.6
$36.7
($3.8
)
$124.5
$23.5
290
%
430
%
Operating Income (Loss) %
6.6
%
10.5
%
(32.9
%)
7.2
%
1.6
%
500 bps
560 bps
*2023 fiscal year results reflect seven months of KII and approximately three and a half months of Poppin.
Workplace Furnishings — Fourth Quarter Summary Comments
Workplace Furnishings — Full Year Summary Comments
Residential Building Products — Fourth Quarter and Full Year Results
Residential Building Products – Financial Performance
(Dollars in millions)
Three Months Ended
Twelve Months Ended
December 30, 2023
December 31, 2022
Change
December 30, 2023
December 31, 2022
Change
GAAP
Net Sales
$189.1
$217.7
(13.1
%)
$693.7
$875.6
(20.8
%)
Operating Income
$42.1
$41.7
0.9
%
$116.6
$158.7
(26.5
%)
Operating Income %
22.3
%
19.2
%
310 bps
16.8
%
18.1
%
-130 bps
Non-GAAP
Operating Income
$42.1
$43.3
(2.7
%)
$117.8
$160.3
(26.5
%)
Operating Income %
22.3
%
19.9
%
240 bps
17.0
%
18.3
%
-130 bps
Residential Building Products — Fourth Quarter Summary Comments
Residential Building Products — Full Year Summary Comments
Fourth Quarter Orders
Outlook
Concluding Remarks
“Our strategies have driven non-GAAP EPS growth in excess of 60 percent and expanded operating margin by 270 basis points over the past two years despite a consistently turbulent macroeconomic environment. In Workplace Furnishings, our profit transformation initiatives and the addition of Kimball International have expanded margins more than 600 basis points, and segment operating profit has grown $110 million or more than 750 percent from 2021 levels. We expect continued year-over-year profit and margin improvement from here.
“The integration and accretion from Kimball International are ahead of schedule, and our synergy expectations have moved higher. KII is complementary from a product, market, and cultural perspective; and it strengthens our Workplace Furnishings exposure to several important trends and markets—namely, ancillary products, secondary geographies, healthcare, and hospitality. Each provides new opportunities for profit growth. Our confidence in the combination’s strategic and financial benefits continues to accelerate.
“In Residential Building Products, we quickly adjusted our cost structure to respond to the housing re-set in 2023. Despite the macro-driven top line pressure, our operating profit margin in the fourth quarter expanded to near-record levels, even as we continued to invest in our growth strategies, leading brands, and operating platforms. Although the near term remains dynamic, leading indicators are improving, and we are uniquely positioned to drive high-margin growth as the housing market stabilizes.
“Our balance sheet is in excellent shape, and our cash flow is strong. Our members are focused and driving our core strategies of expanding margins in Workplace Furnishings and driving long-term high-margin revenue growth in Residential Building Products,” concluded Mr. Lorenger.
Conference Call
HNI Corporation will host a conference call on Thursday, February 22, 2024 at 10:00 a.m. (Central) to discuss fourth quarter and fiscal year 2023 results. To participate, call 1-855-761-5600 – conference ID number 7175411. A live webcast of the call will be available on HNI Corporation’s website at http://www.hnicorp.com (under Investors – Events & Presentations). 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 29, 2024, 10:59 p.m. (Central) by dialing 1-800-770-2030 – Conference ID number 7175411.
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 future levels of demand, anticipated macroeconomic conditions, expected differences in seasonality and its results on the Corporation’s results of operations, the anticipated benefits and cost synergies of the acquisition of Kimball International and sale of Poppin, and future levels of productivity. 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. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results due to the risks and uncertainties described elsewhere in this release, including but not limited to: the Corporation’s ultimate realization of the anticipated benefits of the acquisition of Kimball International and sale of Poppin; disruptions in the global supply chain; the effects of prolonged periods of inflation and rising interest rates; labor shortages; 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; cybersecurity threats, including those posed by potential ransomware attacks; impacts of tax legislation; and force majeure events outside the Corporation’s control, including those that may result from the effects of climate change. 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 millions, except per share data)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 30, 2023
December 31, 2022
December 30, 2023
December 31, 2022
Net sales
$
679.8
$
568.9
$
2,434.0
$
2,361.8
Cost of sales
406.7
361.0
1,485.7
1,526.9
Gross profit
273.1
208.0
948.3
834.9
Selling and administrative expenses
211.0
179.1
813.2
723.4
(Gain) loss on sale of subsidiary
—
0.3
—
(50.4
)
Restructuring and impairment charges
31.4
5.7
44.8
6.7
Operating income
30.7
23.0
90.3
155.2
Interest expense, net
7.9
2.3
25.5
8.8
Income before income taxes
22.7
20.6
64.8
146.4
Income taxes
0.0
4.3
15.6
22.5
Net income
22.7
16.3
49.2
123.9
Less: Net income (loss) attributable to non-controlling interest
0.0
0.0
0.0
(0.0
)
Net income attributable to
HNI Corporation
$
22.7
$
16.3
$
49.2
$
123.9
Average number of common shares outstanding – basic
46.7
41.4
44.5
41.7
Net income attributable to
HNI Corporation per common share – basic
$
0.49
$
0.39
$
1.11
$
2.97
Average number of common shares outstanding – diluted
47.7
41.9
45.4
42.2
Net income attributable to
HNI Corporation per common share – diluted
$
0.48
$
0.39
$
1.09
$
2.94
Foreign currency translation adjustments
$
(0.0
)
$
(0.2
)
$
(0.2
)
$
(5.7
)
Change in unrealized gains (losses) on marketable securities, net of tax
0.3
0.1
0.4
(0.7
)
Change in pension and post-retirement liability, net of tax
(0.0
)
4.3
(0.0
)
4.3
Change in derivative financial instruments, net of tax
(2.7
)
(0.1
)
(2.8
)
0.8
Other comprehensive income (loss), net of tax
(2.4
)
4.1
(2.6
)
(1.3
)
Comprehensive income
20.3
20.4
46.6
122.6
Less: Comprehensive income (loss) attributable to non-controlling interest
0.0
0.0
0.0
(0.0
)
Comprehensive income attributable to HNI Corporation
$
20.3
$
20.4
$
46.6
$
122.6
Amounts may not sum due to rounding.
HNI Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)
December 30, 2023
December 31, 2022
Assets
Current Assets:
Cash and cash equivalents
$
28.9
$
17.4
Short-term investments
5.6
2.0
Receivables
247.1
218.4
Allowance for doubtful accounts
(3.5
)
(3.2
)
Inventories, net
196.6
180.1
Prepaid expenses and other current assets
61.3
54.4
Total Current Assets
535.9
469.2
Property, Plant, and Equipment:
Land and land improvements
58.9
30.8
Buildings
406.8
275.4
Machinery and equipment
705.8
602.6
Construction in progress
22.2
34.2
1,193.7
942.9
Less accumulated depreciation
(638.5
)
(590.3
)
Net Property, Plant, and Equipment
555.2
352.5
Right-of-use Finance Leases
12.2
11.4
Right-of-use Operating Leases
115.2
88.4
Goodwill and Other Intangible Assets, net
651.9
439.8
Other Assets
58.4
53.2
Total Assets
$
1,928.8
$
1,414.5
Liabilities and Equity
Current Liabilities:
Accounts payable and accrued expenses
$
418.7
$
367.7
Current maturities of debt
7.5
1.3
Current maturities of other long-term obligations
7.3
2.1
Current lease obligations - Finance
4.4
3.7
Current lease obligations - Operating
25.9
20.3
Total Current Liabilities
463.7
395.1
Long-Term Debt
428.3
188.8
Long-Term Lease Obligations - Finance
7.9
7.7
Long-Term Lease Obligations - Operating
104.0
78.9
Other Long-Term Liabilities
78.0
66.3
Deferred Income Taxes
85.1
61.0
Equity:
HNI Corporation shareholders’ equity
761.4
616.5
Non-controlling interest
0.3
0.3
Total Equity
761.8
616.8
Total Liabilities and Equity
$
1,928.8
$
1,414.5
Amounts may not sum due to rounding.
HNI Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
Twelve Months Ended
December 30, 2023
December 31, 2022
Net Cash Flows From (To) Operating Activities:
Net income
$
49.2
$
123.9
Non-cash items included in net income:
Depreciation and amortization
94.9
84.2
Other post-retirement and post-employment benefits
1.1
1.3
Stock-based compensation
16.5
9.0
Deferred income taxes
(0.6
)
(15.3
)
Restructuring and impairment charges
31.5
6.2
Gain on sale of subsidiary
—
(50.4
)
Other – net
5.1
2.7
Net increase (decrease) in cash from operating assets and liabilities
76.5
(72.7
)
Decrease in other liabilities
(6.6
)
(7.7
)
Net cash flows from (to) operating activities
267.5
81.2
Net Cash Flows From (To) Investing Activities:
Capital expenditures
(78.1
)
(60.0
)
Acquisition spending, net of cash acquired
(369.7
)
(11.4
)
Capitalized software
(1.0
)
(8.4
)
Purchase of investments
(5.7
)
(2.8
)
Sales or maturities of investments
5.4
2.3
Net proceeds from sale of subsidiary
2.7
69.5
Other – net
1.6
0.0
Net cash flows from (to) investing activities
(444.8
)
(10.7
)
Net Cash Flows From (To) Financing Activities:
Payments of debt
(436.0
)
(401.6
)
Proceeds from debt
684.0
413.9
Dividends paid
(58.5
)
(53.2
)
Purchase of HNI Corporation common stock
(0.3
)
(65.2
)
Proceeds from sales of HNI Corporation common stock
2.3
4.7
Other – net
(2.8
)
(4.0
)
Net cash flows from (to) financing activities
188.8
(105.4
)
Net increase (decrease) in cash and cash equivalents
11.5
(34.8
)
Cash and cash equivalents at beginning of period
17.4
52.3
Cash and cash equivalents at end of period
$
28.9
$
17.4
Amounts may not sum due to rounding.
HNI Corporation and Subsidiaries
Reportable Segment Data
(In millions)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 30, 2023
December 31, 2022
December 30, 2023
December 31, 2022
Net Sales:
Workplace Furnishings
$
490.7
$
351.2
$
1,740.3
$
1,486.2
Residential Building Products
189.1
217.7
693.7
875.6
Total
$
679.8
$
568.9
$
2,434.0
$
2,361.8
Income (Loss) Before Income Taxes:
Workplace Furnishings
$
9.5
$
(7.7
)
$
68.6
$
3.4
Residential Building Products
42.1
41.7
116.6
158.7
General corporate
(20.9
)
(10.8
)
(94.9
)
(57.3
)
Gain (loss) on sale of subsidiary
—
(0.3
)
—
50.4
Operating Income
$
30.7
$
23.0
$
90.3
$
155.2
Interest expense, net
7.9
2.3
25.5
8.8
Total
$
22.7
$
20.6
$
64.8
$
146.4
Depreciation and Amortization Expense:
Workplace Furnishings
$
17.8
$
11.1
$
59.5
$
45.7
Residential Building Products
3.5
3.3
13.7
12.6
General corporate
5.2
6.4
21.6
25.9
Total
$
26.5
$
20.7
$
94.9
$
84.2
Capital Expenditures (including capitalized software):
Workplace Furnishings
$
12.2
$
14.0
$
62.7
$
40.4
Residential Building Products
2.5
4.1
12.6
16.2
General corporate
1.6
1.5
3.7
11.7
Total
$
16.3
$
19.7
$
79.1
$
68.4
As of December 30, 2023
As of December 31, 2022
Identifiable Assets:
Workplace Furnishings
$
1,311.4
$
761.5
Residential Building Products
467.1
493.0
General corporate
150.3
160.0
Total
$
1,928.8
$
1,414.5
Amounts may not sum due to rounding.
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 the condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, this earnings release contains the following non-GAAP financial measures: organic sales, gross profit, operating income, operating profit, income taxes, net income, and net income 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 tables below. In the current quarter and year periods, the effective tax rate used to calculate non-GAAP EPS differs from the GAAP effective tax rate primarily due to the impact of the Kimball International acquisition. In the prior-year quarter and year periods, the effective tax rate used to calculate non-GAAP EPS differs from the GAAP effective tax rate due to the impact of the Lamex divestiture. Generally, non-GAAP EPS is calculated using HNI’s overall effective tax rate for the period, as this rate is reflective of the tax applicable to most non-GAAP adjustments. Additionally, non-GAAP EPS for the Legacy HNI business is calculated by excluding the impact of new issuances of HNI common stock and HNI restricted stock units made in connection with the acquisition of Kimball International.
The sales adjustments to arrive at the non-GAAP organic sales information presented in this earnings release relate to the exclusion of net sales of KII and Poppin in the current year periods, as well as a residential building products company acquired in the second quarter of 2022. Furthermore, prior year net sales of the Lamex business that was divested in the third quarter of 2022 are excluded.
The transactions excluded for purposes of other non-GAAP financial information included in this earnings release include: professional fees and other costs related to the acquisition of Kimball International; current prior periods charges incurred due to the impairment of equity investments; current and prior periods restructuring charges recorded to cost of sales comprised of inventory valuation adjustments and relocation and new facility setup costs in the Workplace Furnishings segment; current periods restructuring and impairment costs in the Workplace Furnishings segment related to goodwill and intangible asset impairments, the exit of Poppin, the sale of an office building, and the exit of an eCommerce business. Additionally, prior period transactions excluded include the gain from the divestiture of the Lamex business and charges related to company-wide cost reduction initiatives.
HNI Corporation Reconciliation
(Dollars in millions)
Three Months Ended
December 30, 2023
December 31, 2022
Workplace Furnishings
Residential Building Products
Total
Workplace Furnishings
Residential Building Products
Total
Sales as reported (GAAP)
$
490.7
$
189.1
$
679.8
$
351.2
$
217.7
$
568.9
% change from PY
39.7
%
(13.1
%)
19.5
%
Less: Kimball International acquisition
147.4
—
147.4
—
—
—
Organic sales (non-GAAP)
$
343.3
$
189.1
$
532.4
$
351.2
$
217.7
$
568.9
% change from PY
(2.3
%)
(13.1
%)
(6.4
%)
HNI Corporation Reconciliation
(Dollars in millions)
Twelve Months Ended
December 30, 2023
December 31, 2022
Workplace Furnishings
Residential Building Products
Total
Workplace Furnishings
Residential Building Products
Total
Sales as reported (GAAP)
$
1,740.3
$
693.7
$
2,434.0
$
1,486.2
$
875.6
$
2,361.8
% change from PY
17.1
%
(20.8
%)
3.1
%
Less: Kimball International acquisition
361.4
—
361.4
—
—
—
Less: Building Products acquisition
—
2.4
2.4
—
—
—
Less: Lamex divestiture
—
—
—
46.9
—
46.9
Organic sales (non-GAAP)
$
1,378.8
$
691.4
$
2,070.2
$
1,439.3
$
875.6
$
2,314.9
% change from PY
(4.2
%)
(21.0
%)
(10.6
%)
HNI Corporation Reconciliation
(Dollars in millions, except per share data)
Three Months Ended
December 30, 2023
Gross Profit
Operating Income
Tax
Net Income
EPS
As reported (GAAP)
$
273.1
$
30.7
$
0.0
$
22.7
$
0.48
% of net sales
40.2
%
4.5
%
3.3
%
Tax %
0.0
%
Restructuring charges
0.4
(0.7
)
(0.3
)
(0.4
)
(0.01
)
Impairment charges
—
32.5
6.9
25.6
0.54
Acquisition costs
—
3.6
4.7
(1.1
)
(0.02
)
Results (non-GAAP)
$
273.5
$
66.1
$
11.3
$
46.8
$
0.98
% of net sales
40.2
%
9.7
%
6.9
%
Tax %
19.5
%
HNI Corporation Reconciliation
(Dollars in millions, except per share data)
Three Months Ended
December 31, 2022
Gross Profit
Operating Income
Tax
Net Income
EPS
As reported (GAAP)
$
208.0
$
23.0
$
4.3
$
16.3
$
0.39
% of net sales
36.6
%
4.0
%
2.9
%
Tax %
21.0
%
Restructuring charges
4.8
7.5
1.7
5.8
0.14
Impairment charges
—
3.0
0.7
2.3
0.06
Cost reduction initiative
—
2.5
0.5
1.9
0.05
(Gain) loss on sale of subsidiary
—
0.3
0.1
0.2
0.00
Results (non-GAAP)
$
212.8
$
36.2
$
7.3
$
26.6
$
0.63
% of net sales
37.4
%
6.4
%
4.7
%
Tax %
21.4
%
HNI Corporation Reconciliation
(Dollars in millions)
Three Months Ended
December 30, 2023
Legacy HNI
KII
Consolidated HNI
Gross profit as reported (GAAP)
$
211.8
$
61.3
$
273.1
% of net sales
39.8
%
41.6
%
40.2
%
Restructuring charges recorded to cost of sales
0.4
—
0.4
Gross profit (non-GAAP)
$
212.1
$
61.3
$
273.5
% of net sales
39.8
%
41.6
%
40.2
%
Operating income as reported (GAAP)
$
14.5
$
16.2
$
30.7
% of net sales
2.7
%
11.0
%
4.5
%
Restructuring charges
1.2
(1.9
)
(0.7
)
Impairment charges
32.5
—
32.5
Acquisition costs
2.2
1.4
3.6
Operating income (non-GAAP)
$
50.3
$
15.7
$
66.1
% of net sales
9.5
%
10.7
%
9.7
%
HNI Corporation Reconciliation
(Dollars in millions, except per share data)
Three Months Ended
December 30, 2023
GAAP (as reported):
Legacy HNI
Consolidated HNI
Operating income
$
14.5
$
30.7
Interest expense, net
1.9
7.9
Income taxes (Legacy 9.1%, Consolidated 0.0%)
1.2
0.0
Net income
$
11.4
$
22.7
Average number of common shares outstanding – diluted
42.8
(1)
47.7
EPS - Diluted
$
0.27
$
0.48
Non-GAAP:
Operating income
$
50.3
$
66.1
Interest expense, net
1.9
7.9
Income taxes (19.5%)
9.4
11.3
Net income
$
39.0
$
46.8
Average number of common shares outstanding – diluted
42.8
(1)
47.7
EPS - Diluted
$
0.91
$
0.98
(1) The average number of common shares outstanding – diluted for the Legacy HNI business is calculated by excluding the fourth quarter average impacts of new issuances of HNI common stock (4.7 million) and dilutive HNI restricted stock units (0.1 million) as a result of the acquisition of Kimball International.
HNI Corporation Reconciliation
(Dollars in millions, except per share data)
Twelve Months Ended
December 30, 2023
Gross Profit
Operating Income
Tax
Net Income
EPS
As reported (GAAP)
$
948.3
$
90.3
$
15.6
$
49.2
$
1.09
% of net sales
39.0
%
3.7
%
2.0
%
Tax %
24.1
%
Restructuring charges
0.9
12.4
2.6
9.7
0.21
Impairment charges
—
33.3
7.1
26.2
0.58
Cost reduction initiative
—
1.0
0.2
0.8
0.02
Acquisition costs
—
41.2
7.0
34.2
0.75
Results (non-GAAP)
$
949.2
$
178.1
$
32.5
$
120.1
$
2.65
% of net sales
39.0
%
7.3
%
4.9
%
Tax %
21.3
%
HNI Corporation Reconciliation
(Dollars in millions, except per share data)
Twelve Months Ended
December 31, 2022
Gross Profit
Operating Income
Tax
Net Income
EPS
As reported (GAAP)
$
834.9
$
155.2
$
22.5
$
123.9
$
2.94
% of net sales
35.4
%
6.6
%
5.2
%
Tax %
15.4
%
Restructuring charges
8.8
11.5
2.6
8.9
0.21
Impairment charges
—
4.0
0.9
3.1
0.07
Cost reduction initiative
—
8.0
1.8
6.2
0.15
Gain on sale of subsidiary
—
(50.4
)
(1.0
)
(49.4
)
(1.17
)
Results (non-GAAP)
$
843.7
$
128.4
$
26.8
$
92.8
$
2.20
% of net sales
35.7
%
5.4
%
3.9
%
Tax %
22.4
%
HNI Corporation Reconciliation
(Dollars in millions)
Twelve Months Ended
December 30, 2023
Legacy HNI
KII
Poppin
Consolidated HNI
Gross profit as reported (GAAP)
$
798.6
$
142.9
$
6.7
$
948.3
% of net sales
38.5
%
40.9
%
57.8
%
39.0
%
Restructuring charges recorded to cost of sales
0.9
—
—
0.9
Gross profit (non-GAAP)
$
799.5
$
142.9
$
6.7
$
949.2
% of net sales
38.6
%
40.9
%
57.8
%
39.0
%
Operating income (loss) as reported (GAAP)
$
78.9
$
26.0
$
(14.7
)
$
90.3
% of net sales
3.8
%
7.4
%
(126
%)
3.7
%
Restructuring charges
3.4
(1.9
)
10.8
12.4
Impairment charges
33.3
—
—
33.3
Cost reduction initiative
1.0
—
—
1.0
Acquisition costs
28.6
12.5
—
41.2
Operating income (loss) (non-GAAP)
$
145.3
$
36.7
$
(3.8
)
$
178.1
% of net sales
7.0
%
10.5
%
(32.9
%)
7.3
%
HNI Corporation Reconciliation
(Dollars in millions, except per share data)
Twelve Months Ended
December 30, 2023
GAAP (as reported):
Legacy HNI
Consolidated HNI
Operating income
$
78.9
$
90.3
Interest expense, net
10.1
25.5
Income taxes (24.1%)
16.6
15.6
Net income
$
52.2
$
49.2
Average number of common shares outstanding – diluted
42.5
(1)
45.4
EPS - Diluted
$
1.23
$
1.09
Non-GAAP:
Operating income
$
145.3
$
178.1
Interest expense, net
10.1
25.5
Income taxes (21.3%)
28.8
32.5
Net income
$
106.3
$
120.1
Average number of common shares outstanding – diluted
42.5
(1)
45.4
EPS - Diluted
$
2.50
$
2.65
(1)
The average number of common shares outstanding – diluted for the Legacy HNI business is calculated by excluding the full year average impacts of new issuances of HNI common stock (2.8 million) and dilutive HNI restricted stock units (0.05 million) as a result of the acquisition of Kimball International.
Workplace Furnishings Reconciliation
(Dollars in millions)
Three Months Ended
December 30, 2023
December 31, 2022
Legacy Workplace Furnishings
KII
Total Workplace Furnishings
Total Workplace Furnishings
Total Percent Change
Operating income (loss) as reported (GAAP)
$
(6.7
)
$
16.2
$
9.5
$
(7.7
)
223
%
% of net sales
(2.0
%)
11.0
%
1.9
%
(2.2
%)
Restructuring charges
0.4
(1.9
)
(1.5
)
7.5
Impairment charges
31.0
—
31.0
3.0
Cost reduction initiative
—
—
—
5.6
Acquisition costs
—
1.4
1.4
—
Operating income (non-GAAP)
$
24.6
$
15.7
$
40.4
$
8.4
382
%
% of net sales
7.2
%
10.7
%
8.2
%
2.4
%
Workplace Furnishings Reconciliation
(Dollars in millions)
Twelve Months Ended
December 30, 2023
December 31, 2022
Legacy Workplace Furnishings
KII
Poppin
Total Workplace Furnishings
Total Workplace Furnishings
Total Percent Change
Operating income (loss) as reported (GAAP)
$
57.3
$
26.0
$
(14.7
)
$
68.6
$
3.4
NM
% of net sales
4.2
%
7.4
%
(126
%)
3.9
%
0.2
%
Restructuring charges
2.6
(1.9
)
10.8
11.6
11.5
Impairment charges
31.8
—
—
31.8
3.0
Cost reduction initiative
(0.1
)
—
—
(0.1
)
5.6
Acquisition costs
—
12.5
—
12.5
—
Operating income (loss) (non-GAAP)
$
91.6
$
36.7
$
(3.8
)
$
124.5
$
23.5
430
%
% of net sales
6.6
%
10.5
%
(32.9
%)
7.2
%
1.6
%
Residential Building Products Reconciliation
(Dollars in millions)
Three Months Ended
Twelve Months Ended
December 30, 2023
December 31, 2022
Percent Change
December 30, 2023
December 31, 2022
Percent Change
Operating income as reported (GAAP)
$
42.1
$
41.7
0.9
%
$
116.6
$
158.7
(26.5
%)
% of net sales
22.3
%
19.2
%
16.8
%
18.1
%
Cost reduction initiative
—
1.5
1.3
1.5
Operating income (non-GAAP)
$
42.1
$
43.3
(2.7
%)
$
117.8
$
160.3
(26.5
%)
% of net sales
22.3
%
19.9
%
17.0
%
18.3
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20240219742244/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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