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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 third quarter ended October 2, 2021 of $586.7 million and net income of $19.2 million. GAAP net income per diluted share was $0.43, compared to $0.71 in the prior year. There was no variation between GAAP and Non-GAAP net income per diluted share in the third quarter of 2021 or 2020.
Third Quarter Highlights
“Our members stayed focused on serving customers in the third quarter as the continued ripple effects of the pandemic created near-term headwinds. While we drove strong order growth, the ongoing difficulties tied to labor availability, supply chain disruptions, and inflation in all categories of input costs negatively impacted our results. Despite these pressures, we are increasingly encouraged about 2022 given the actions we are taking, the on-going recovery in Workplace Furnishings, and strength in our Hearth business,” stated Jeff Lorenger, Chairman, President, and Chief Executive Officer.
HNI Corporation – Financial Performance
(Dollars in millions, except per share data)
Three Months Ended
October 2, 2021
September 26, 2020
Change
GAAP
Net Sales
$586.7
$507.1
15.7
%
Gross Profit %
33.3
%
36.6
%
-330
bps
SG&A %
28.8
%
28.9
%
-10
bps
Operating Income
$26.2
$38.8
(32.3
%)
Operating Income %
4.5
%
7.6
%
-310
bps
Effective Tax Rate
21.5
%
17.6
%
Net Income %
3.3
%
6.1
%
-280
bps
EPS – diluted
$0.43
$0.71
(39.4
%)
Third Quarter Summary Comments
Third Quarter Orders
Workplace Furnishings – Financial Performance
(Dollars in millions)
Three Months Ended
October 2, 2021
September 26, 2020
Change
GAAP
Net Sales
$393.1
$353.4
11.3
%
Operating Profit
$3.9
$16.8
(76.9
%)
Operating Profit %
1.0
%
4.8
%
-380
bps
Residential Building Products – Financial Performance
(Dollars in millions)
Three Months Ended
October 2, 2021
September 26, 2020
Change
GAAP
Net Sales
$193.6
$153.7
26.0
%
Operating Profit
$33.4
$30.2
10.6
%
Operating Profit %
17.2
%
19.6
%
-240
bps
Fourth Quarter 2021 Outlook
Concluding Remarks
“We remain optimistic about our businesses and ability to drive profit growth. We are aggressively addressing the current headwinds. This includes increasing our capacity, strengthening our supply chains, and taking aggressive pricing actions to offset the ongoing and increasing inflationary pressures. Supported by our strong balance sheet, we are also continuing to invest as reflected by the addition of Trinity, which expands our strong Fireside Hearth & Home installing distribution business into a rapidly expanding housing region. These actions and investments position us for success in 2022 and over the long-term,” Mr. Lorenger concluded.
Conference Call
HNI Corporation will host a conference call on Monday, October 25, 2021 at 10:00 a.m. (Central) to discuss third quarter fiscal year 2021 results. To participate, call 1-833-522-0258 – conference ID number 3066955. 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 Monday, October 25, 2021 at 1:00 p.m. (Central) through Monday, November, 1, 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: 3066955.
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
Nine Months Ended
October 2, 2021
September 26, 2020
October 2, 2021
September 26, 2020
Net sales
$
586,750
$
507,063
$
1,581,498
$
1,393,224
Cost of sales
391,394
321,516
1,018,334
880,754
Gross profit
195,356
185,547
563,164
512,470
Selling and administrative expenses
169,113
146,785
489,634
449,933
Impairment charges
—
—
—
32,661
Operating income
26,243
38,762
73,530
29,876
Interest expense, net
1,853
1,517
5,465
5,271
Income before income taxes
24,390
37,245
68,065
24,605
Income taxes
5,232
6,558
16,476
5,259
Net income
19,158
30,687
51,589
19,346
Less: Net loss attributable to non-controlling interest
0
(1
)
(3
)
(3
)
Net income attributable to HNI Corporation
$
19,158
$
30,688
$
51,592
$
19,349
Average number of common shares outstanding – basic
43,781
42,684
43,573
42,651
Net income attributable to HNI Corporation per common share – basic
$
0.44
$
0.72
$
1.18
$
0.45
Average number of common shares outstanding – diluted
44,342
43,010
44,045
42,905
Net income attributable to HNI Corporation per common share – diluted
$
0.43
$
0.71
$
1.17
$
0.45
Foreign currency translation adjustments
$
46
$
923
$
107
$
368
Change in unrealized gains (losses) on marketable securities, net of tax
(32
)
(33
)
(157
)
269
Change in derivative financial instruments, net of tax
170
106
577
(2,393
)
Other comprehensive income (loss), net of tax
184
996
527
(1,756
)
Comprehensive income
19,342
31,683
52,116
17,590
Less: Comprehensive loss attributable to non-controlling interest
0
(1
)
(3
)
(3
)
Comprehensive income attributable to HNI Corporation
$
19,342
$
31,684
$
52,119
$
17,593
HNI Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
October 2, 2021
January 2, 2021
Assets
Current Assets:
Cash and cash equivalents
$
126,436
$
116,120
Short-term investments
1,299
1,687
Receivables
238,620
207,971
Allowance for doubtful accounts
(4,185
)
(5,514
)
Inventories
188,590
137,811
Prepaid expenses and other current assets
44,702
37,660
Total Current Assets
595,462
495,735
Property, Plant, and Equipment:
Land and land improvements
29,983
29,691
Buildings
294,240
293,708
Machinery and equipment
588,126
578,643
Construction in progress
26,082
17,750
938,431
919,792
Less accumulated depreciation
576,423
553,835
Net Property, Plant, and Equipment
362,008
365,957
Right-of-use Finance Leases
9,940
6,095
Right-of-use Operating Leases
80,223
70,219
Goodwill and Other Intangible Assets
446,758
458,896
Other Assets
39,975
21,130
Total Assets
$
1,534,366
$
1,418,032
Liabilities and Equity
Current Liabilities:
Accounts payable and accrued expenses
$
464,599
$
413,638
Current maturities of long-term debt
3,345
841
Current maturities of other long-term obligations
3,598
2,990
Current lease obligations - Finance
2,632
1,589
Current lease obligations - Operating
19,970
19,970
Total Current Liabilities
494,144
439,028
Long-Term Debt
174,587
174,524
Long-Term Lease Obligations - Finance
7,270
4,516
Long-Term Lease Obligations - Operating
64,634
53,249
Other Long-Term Liabilities
91,270
81,264
Deferred Income Taxes
72,754
74,706
Total Liabilities
904,659
827,287
Equity:
HNI Corporation shareholders' equity
629,384
590,419
Non-controlling interest
323
326
Total Equity
629,707
590,745
Total Liabilities and Equity
$
1,534,366
$
1,418,032
HNI Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended
October 2, 2021
September 26, 2020
Net Cash Flows From (To) Operating Activities:
Net income
$
51,589
$
19,346
Non-cash items included in net income:
Depreciation and amortization
62,010
57,917
Other post-retirement and post-employment benefits
996
1,104
Stock-based compensation
9,540
6,746
Reduction in carrying amount of right-of-use assets
18,964
16,965
Deferred income taxes
(2,057
)
(3,730
)
Impairment of goodwill and intangible assets
—
32,661
Other – net
2,640
815
Net increase (decrease) in cash from operating assets and liabilities
(64,073
)
13,316
Increase (decrease) in other liabilities
8,925
(1,779
)
Net cash flows from (to) operating activities
88,534
143,361
Net Cash Flows From (To) Investing Activities:
Capital expenditures
(38,182
)
(24,751
)
Proceeds from sale of property, plant, and equipment
193
81
Acquisition spending, net of cash acquired
(1,530
)
(10,857
)
Capitalized software
(9,613
)
(7,250
)
Purchase of investments
(3,273
)
(3,922
)
Sales or maturities of investments
3,164
3,246
Net cash flows from (to) investing activities
(49,241
)
(43,453
)
Net Cash Flows From (To) Financing Activities:
Payments of long-term debt
(1,810
)
(82,828
)
Proceeds from long-term debt
4,335
82,119
Dividends paid
(40,419
)
(39,060
)
Purchase of HNI Corporation common stock
(18,461
)
(6,764
)
Proceeds from sales of HNI Corporation common stock
29,944
2,210
Other – net
(2,566
)
1,727
Net cash flows from (to) financing activities
(28,977
)
(42,596
)
Net increase in cash and cash equivalents
10,316
57,312
Cash and cash equivalents at beginning of period
116,120
52,073
Cash and cash equivalents at end of period
$
126,436
$
109,385
HNI Corporation and Subsidiaries
Reportable Segment Data
(In thousands)
(Unaudited)
Three Months Ended
Nine Months Ended
October 2, 2021
September 26, 2020
October 2, 2021
September 26, 2020
Net Sales:
Workplace furnishings
$
393,141
$
353,361
$
1,040,026
$
999,827
Residential building products
193,609
153,702
541,472
393,397
Total
$
586,750
$
507,063
$
1,581,498
$
1,393,224
Income (Loss) Before Income Taxes:
Workplace furnishings
$
3,893
$
16,826
$
9,578
$
(8,619)
Residential building products
33,392
30,197
103,766
65,232
General corporate
(11,042)
(8,261)
(39,814)
(26,737)
Operating Income
26,243
38,762
73,530
29,876
Interest expense, net
1,853
1,517
5,465
5,271
Total
$
24,390
$
37,245
$
68,065
$
24,605
Depreciation and Amortization Expense:
Workplace furnishings
$
11,882
$
11,065
$
35,918
$
33,177
Residential building products
2,545
2,351
7,403
6,976
General corporate
6,443
5,896
18,689
17,764
Total
$
20,870
$
19,312
$
62,010
$
57,917
Capital Expenditures (including capitalized software):
Workplace furnishings
$
6,494
$
6,946
$
24,001
$
18,340
Residential building products
5,456
2,695
12,113
5,874
General corporate
3,549
1,584
11,681
7,787
Total
$
15,499
$
11,225
$
47,795
$
32,001
As of, October 2, 2021
As of January 2, 2021
Identifiable Assets:
Workplace furnishings
$
832,055
$
762,780
Residential building products
415,092
381,550
General corporate
287,219
273,702
Total
$
1,534,366
$
1,418,032
Non-GAAP Financial Measure
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. This information gives investors additional insights into HNI’s financial performance and operations. While HNI’s management believes the non-GAAP financial measure is 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, this measure may be different from non-GAAP financial measures used by other companies, limiting its 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 measure: organic sales. This measure is adjusted from the comparable GAAP measure to exclude the impacts of the selected items as summarized in the table below.
The sales adjustments to arrive at the non-GAAP organic sales information included in this earnings release exclude the impact of acquiring DPG and residential building products distributors.
HNI Corporation Reconciliation
(Dollars in millions)
Three Months Ended
October 2, 2021
September 26, 2020
Workplace Furnishings
Residential Building Products
Total
Workplace Furnishings
Residential Building Products
Total
Sales as reported (GAAP)
$
393.1
$
193.6
$586.7
$
353.4
$
153.7
$
507.1
% change from PY
11.3
%
26.0
%
15.7
%
Less: Acquisitions
8.9
0.9
9.8
—
—
—
Organic Sales (non-GAAP)
$
384.2
$
192.8
$
577.0
$
353.4
$
153.7
$
507.1
% change from PY
8.7
%
25.4
%
13.8
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20211025005116/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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