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,
|
|
September 26,
|
|
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,
|
|
September 26,
|
|
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,
|
|
September 26,
|
|
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,
|
|
September 26,
|
|
October 2,
|
|
September 26,
|
|||||||||
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,
|
|
January 2,
|
||||
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,
|
|
September 26,
|
||||
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,
|
|
September 26,
|
|
October 2,
|
|
September 26,
|
||||||||
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,
|
|
As of
|
||||||||
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
|
Residential
|
Total |
|
Workplace
|
Residential
|
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