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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 | |
---|---|---|---|---|---|---|---|---|
0.84 | 1.94% | 44.19 | 44.28 | 43.58 | 43.84 | 214,339 | 22:30:00 |
HNI Corporation (NYSE: HNI) today announced sales for the second quarter ended July 3, 2021 of $510.5 million and net income of $17.4 million. GAAP net income per diluted share was $0.39, compared to $0.29 in the prior year. Non-GAAP net income per diluted share was $0.40, compared to $0.20 in the prior year. GAAP to non-GAAP reconciliations follow the financial statements in this release.
Second Quarter Highlights
“Our members again executed at a high level during the second quarter—delivering substantial year-over-year profit improvement. Our industry leading Residential Building Products platform continues to drive exceptional growth, and we are capitalizing on the beginnings of the post-pandemic recovery in Workplace Furnishings. Our strong growth and the macro-economic environment presented new challenges related to labor availability, supply chain capacity, and inflation. Our teams managed through those challenges to deliver strong results. Overall, the second 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
July 3, 2021
June 27, 2020
Change
GAAP
Net Sales
$510.5
$417.5
22.3
%
Gross Profit %
36.8
%
36.1
%
70
bps
SG&A %
32.0
%
32.6
%
-60
bps
Operating Income
$24.7
$14.8
66.3
%
Operating Income %
4.8
%
3.6
%
120
bps
Effective Tax Rate
23.7
%
2.7
%
Net Income %
3.4
%
3.0
%
40
bps
EPS – diluted
$0.39
$0.29
34.5
%
Non-GAAP
Gross Profit %
36.8
%
36.1
%
70
bps
Operating Income
$25.3
$14.8
70.7
%
Operating Income %
5.0
%
3.6
%
140
bps
EPS – diluted
$0.40
$0.20
100.0
%
Second Quarter Summary Comments
Second Quarter Orders
Workplace Furnishings – Financial Performance
(Dollars in millions)
Three Months Ended
July 3, 2021
June 27, 2020
Change
GAAP
Net Sales
$344.1
$308.1
11.7
%
Operating Profit
$8.8
$7.8
12.5
%
Operating Profit %
2.5
%
2.5
%
0
bps
Non-GAAP
Operating Profit
$9.4
$7.8
20.8
%
Operating Profit %
2.7
%
2.5
%
20
bps
Residential Building Products – Financial Performance
(Dollars in millions)
Three Months Ended
July 3, 2021
June 27, 2020
Change
GAAP
Net Sales
$166.3
$109.4
52.1
%
Operating Profit
$30.5
$14.4
112.5
%
Operating Profit %
18.4
%
13.1
%
530
bps
Non-GAAP
Operating Profit
$30.5
$14.4
112.5
%
Operating Profit %
18.4
%
13.1
%
530
bps
Third Quarter 2021 Outlook
Concluding Remarks
“Looking to the remainder of 2021 and into 2022, we remain optimistic about our businesses and our markets. We continue to gain momentum in Workplace Furnishings, where our winning customer experiences, multiple strategic investments, and operational excellence provide a competitive advantage as the market recovers. In addition, our unique, industry-leading Residential Building Products platform is positioned for sustained long-term growth. Our growth strategies in this segment continue to gain traction, and we see strong demand supported by demographics and low housing inventories.
I am extremely proud of and grateful for the efforts of all HNI members. As we move through the next stage of the recovery, we do so positioned to grow revenue, expand margins, and increase cash flow,” Mr. Lorenger concluded.
Conference Call
HNI Corporation will host a conference call on Thursday, July 29, 2021 at 10:00 a.m. (Central) to discuss second quarter fiscal year 2021 results. To participate, call 1-833-522-0258 – conference ID number 9696837. A live webcast of the call will be available on HNI Corporation’s website at https://investors.hnicorp.com/events-and-presentations. A replay of the webcast and call will be made available from Thursday, July 29, 2021 at 1:00 p.m. (Central) through Thursday, August 5, 2021, 10:59 p.m. (Central). To replay the webcast, go to the link above. To replay the call, dial 1-800-585-8367 or 416-621-4642 – Conference ID: 9696837.
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
Six Months Ended
July 3, 2021
June 27, 2020
July 3, 2021
June 27, 2020
Net sales
$
510,455
$
417,456
$
994,748
$
886,161
Cost of sales
322,593
266,551
626,940
559,238
Gross profit
187,862
150,905
367,808
326,923
Selling and administrative expenses
163,175
136,063
320,521
303,148
Impairment charges
—
—
—
32,661
Operating income (loss)
24,687
14,842
47,287
(8,886
)
Interest expense, net
1,857
1,943
3,612
3,754
Income (loss) before income taxes
22,830
12,899
43,675
(12,640
)
Income taxes
5,418
345
11,245
(1,299
)
Net income (loss)
17,412
12,554
32,430
(11,341
)
Less: Net loss attributable to non-controlling interest
(2
)
(2
)
(3
)
(2
)
Net income (loss) attributable to HNI Corporation
$
17,414
$
12,556
$
32,433
$
(11,339
)
Average number of common shares outstanding – basic
43,776
42,640
43,469
42,634
Net income (loss) attributable to HNI Corporation per common share – basic
$
0.40
$
0.29
$
0.75
$
(0.27
)
Average number of common shares outstanding – diluted
44,481
42,929
43,986
42,634
Net income (loss) attributable to HNI Corporation per common share – diluted
$
0.39
$
0.29
$
0.74
$
(0.27
)
Foreign currency translation adjustments
$
194
$
45
$
62
$
(555
)
Change in unrealized gains (losses) on marketable securities, net of tax
(25
)
244
(125
)
302
Change in derivative financial instruments, net of tax
143
(283
)
406
(2,499
)
Other comprehensive income (loss), net of tax
312
6
343
(2,752
)
Comprehensive income (loss)
17,724
12,560
32,773
(14,093
)
Less: Comprehensive loss attributable to non-controlling interest
(2
)
(2
)
(3
)
(2
)
Comprehensive income (loss) attributable to HNI Corporation
$
17,726
$
12,562
$
32,776
$
(14,091
)
HNI Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
July 3, 2021
January 2, 2021
Assets
Current Assets:
Cash and cash equivalents
$
118,498
$
116,120
Short-term investments
102
1,687
Receivables
213,925
207,971
Allowance for doubtful accounts
(4,365
)
(5,514
)
Inventories
187,467
137,811
Prepaid expenses and other current assets
47,571
37,660
Total Current Assets
563,198
495,735
Property, Plant, and Equipment:
Land and land improvements
29,974
29,691
Buildings
293,842
293,708
Machinery and equipment
580,730
578,643
Construction in progress
24,310
17,750
928,856
919,792
Less accumulated depreciation
568,551
553,835
Net Property, Plant, and Equipment
360,305
365,957
Right-of-use Finance Leases
9,671
6,095
Right-of-use Operating Leases
66,254
70,219
Goodwill and Other Intangible Assets
451,624
458,896
Other Assets
26,136
21,130
Total Assets
$
1,477,188
$
1,418,032
Liabilities and Equity
Current Liabilities:
Accounts payable and accrued expenses
$
420,706
$
413,638
Current maturities of long-term debt
3,955
841
Current maturities of other long-term obligations
4,119
2,990
Current lease obligations - Finance
2,439
1,589
Current lease obligations - Operating
19,680
19,970
Total Current Liabilities
450,899
439,028
Long-Term Debt
174,566
174,524
Long-Term Lease Obligations - Finance
7,193
4,516
Long-Term Lease Obligations - Operating
50,710
53,249
Other Long-Term Liabilities
85,710
81,264
Deferred Income Taxes
73,327
74,706
Total Liabilities
842,405
827,287
Equity:
HNI Corporation shareholders' equity
634,460
590,419
Non-controlling interest
323
326
Total Equity
634,783
590,745
Total Liabilities and Equity
$
1,477,188
$
1,418,032
HNI Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
July 3, 2021
June 27, 2020
Net Cash Flows From (To) Operating Activities:
Net income (loss)
$
32,430
$
(11,341
)
Non-cash items included in net income:
Depreciation and amortization
41,139
38,605
Other post-retirement and post-employment benefits
664
736
Stock-based compensation
7,788
5,659
Reduction in carrying amount of right-of-use assets
13,081
11,342
Deferred income taxes
(1,430
)
1,092
Impairment of goodwill and intangible assets
—
32,661
Other – net
3,211
(284
)
Net increase (decrease) in operating assets and liabilities
(62,905
)
(49,631
)
Increase (decrease) in other liabilities
3,305
(1,019
)
Net cash flows from (to) operating activities
37,283
27,820
Net Cash Flows From (To) Investing Activities:
Capital expenditures
(26,215
)
(15,739
)
Proceeds from sale of property, plant, and equipment
151
69
Acquisition spending, net of cash acquired
(1,529
)
(10,857
)
Capitalized software
(6,078
)
(5,037
)
Purchase of investments
(2,375
)
(1,631
)
Sales or maturities of investments
2,393
1,043
Net cash flows from (to) investing activities
(33,653
)
(32,152
)
Net Cash Flows From (To) Financing Activities:
Payments of long-term debt
(648
)
(73,828
)
Proceeds from long-term debt
3,785
82,129
Dividends paid
(26,841
)
(26,040
)
Purchase of HNI Corporation common stock
(6,543
)
(6,764
)
Proceeds from sales of HNI Corporation common stock
29,320
1,294
Other – net
(325
)
1,672
Net cash flows from (to) financing activities
(1,252
)
(21,537
)
Net increase (decrease) in cash and cash equivalents
2,378
(25,869
)
Cash and cash equivalents at beginning of period
116,120
52,073
Cash and cash equivalents at end of period
$
118,498
$
26,204
HNI Corporation and Subsidiaries
Reportable Segment Data
(In thousands)
(Unaudited)
Three Months Ended
Six Months Ended
July 3, 2021
June 27, 2020
July 3, 2021
June 27, 2020
Net Sales:
Workplace furnishings
$
344,137
$
308,081
$
646,885
$
646,467
Residential building products
166,318
109,375
347,863
239,694
Total
$
510,455
$
417,456
$
994,748
$
886,161
Income (Loss) Before Income Taxes:
Workplace furnishings
$
8,756
$
7,785
$
5,685
$
(25,446
)
Residential building products
30,525
14,365
70,374
35,036
General corporate
(14,594
)
(7,308
)
(28,772
)
(18,476
)
Operating Income (Loss)
24,687
14,842
47,287
(8,886
)
Interest expense, net
1,857
1,943
3,612
3,754
Total
$
22,830
$
12,899
$
43,675
$
(12,640
)
Depreciation and Amortization Expense:
Workplace furnishings
$
12,051
$
10,782
$
24,035
$
22,113
Residential building products
2,448
2,318
4,858
4,624
General corporate
6,177
6,019
12,246
11,868
Total
$
20,676
$
19,119
$
41,139
$
38,605
Capital Expenditures (including capitalized software):
Workplace furnishings
$
7,017
$
4,293
$
17,504
$
11,394
Residential building products
1,947
206
6,657
3,179
General corporate
4,365
3,118
8,132
6,203
Total
$
13,329
$
7,617
$
32,293
$
20,776
As of
July 3, 2021
As of
January 2, 2021
Identifiable Assets:
Workplace furnishings
$
784,880
$
762,780
Residential building products
408,333
381,550
General corporate
283,975
273,702
Total
$
1,477,188
$
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.
HNI Corporation Reconciliation
(Dollars in millions)
Three Months Ended
July 3, 2021
June 27, 2020
Workplace Furnishings
Residential Building Products
Total
Workplace Furnishings
Residential Building Products
Total
Sales as reported (GAAP)
$
344.1
$
166.3
$
510.5
$
308.1
$
109.4
$
417.5
% change from PY
11.7
%
52.1
%
22.3
%
Less: Acquisitions
8.7
1.5
10.2
—
—
—
Organic Sales (non-GAAP)
$
335.4
$
164.8
$
500.2
$
308.1
$
109.4
$
417.5
% change from PY
8.9
%
50.7
%
19.8
%
HNI Corporation Reconciliation
(Dollars in millions, except per share data)
Three Months Ended
July 3, 2021
Gross Profit
Operating Income
Tax
Net Income
EPS
As reported (GAAP)
$
187.9
$
24.7
$
5.4
$
17.4
$
0.39
% of net sales
36.8
%
4.8
%
3.4
%
Tax %
23.7
%
COVID-19 costs
—
0.6
0.2
0.5
0.01
Results (non-GAAP)
$
187.9
$
25.3
$
5.6
$
17.9
$
0.40
% of net sales
36.8
%
5.0
%
3.5
%
Tax %
23.7
%
HNI Corporation Reconciliation
(Dollars in millions, except per share data)
Three Months Ended
June 27, 2020
Gross Profit
Operating Income
Tax
Net Income
EPS
As reported (GAAP)
$
150.9
$
14.8
$
0.3
$
12.6
$
0.29
% of net sales
36.1
%
3.6
%
3.0
%
Tax %
2.7
%
Income tax adjustment
—
—
3.8
(3.8)
(0.09)
Results (non-GAAP)
$
150.9
$
14.8
$
4.2
$
8.7
$
0.20
% of net sales
36.1
%
3.6
%
2.1
%
Tax %
32.5
%
Workplace Furnishings Reconciliation
(Dollars in millions)
Three Months Ended
July 3, 2021
June 27, 2020
Percent Change
Operating profit as reported (GAAP)
$
8.8
$
7.8
12.5
%
% of net sales
2.5
%
2.5
%
COVID-19 costs
0.6
—
Operating profit (non-GAAP)
$
9.4
$
7.8
20.8
%
% of net sales
2.7
%
2.5
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20210729005072/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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