HNI Corporation Announces Third Quarter Fiscal 2012 Results In Line With Revised Guidance

   HNI Corporation Announces Third Quarter Fiscal 2012 Results In Line With
                               Revised Guidance

PR Newswire

MUSCATINE, Iowa, Oct. 17, 2012

MUSCATINE, Iowa, Oct. 17, 2012 /PRNewswire/ --HNI Corporation (NYSE: HNI)
today announced sales of $550.9 million and net income of $24.5 million for
the third quarter ended September 29, 2012. Net income per diluted share for
the quarter was $0.53 or $0.55 on a non-GAAP basis when excluding
restructuring and transition costs.

Third Quarter Summary Comments
"We continue to compete well in our markets. Growth in our supplies-driven
and contract office furniture businesses softened versus our expectations and
first half results as U.S. economic and market uncertainty appear to be
constraining near-term growth. Office furniture profits were negatively
impacted by lower than expected sales and operational inefficiencies caused by
extreme summer heat during our peak demand season. We are making operational
improvements to ensure consistent, flawless execution during future periods of
peak production. Continued strong profit growth in our hearth business was
driven by outstanding operational performance and growth in the new
construction channel. We continue to make good progress on our core
strategies, improving our competitive position and investing for long-term
value creation," said Stan Askren, HNI Corporation Chairman, President and
Chief Executive Officer.



Third Quarter – GAAP Financial Measures                              

Dollars in millions                             Three Months Ended Percent

except per share data                          09/29/2012  10/01/2011 Change
Net sales                                      $550.9      $504.2     9.2%
Gross profit                                   $191.3      $179.4     6.7%
Gross margin %                                 34.7%       35.6%
SG&A                                           $149.6      $138.9     7.7%
SG&A %                                         27.2%       27.6%
Operating income                               $41.7       $40.4      3.2%
Operating income %                             7.6%        8.0%
Net income attributable to HNI Corporation     $24.5       $24.9      -1.8%
Earnings per share attributable to HNI         $0.53       $0.55      -3.6%
Corporation – diluted

  oConsolidated net sales increased $46.6 million or 9.2 percent to $550.9
    million. Acquisitions contributed $42.6 million of sales, or 8.5 percent
    sales growth.
  oGross margins were 0.9 percentage points lower than prior year primarily
    due to unfavorable mix, seasonal ramp up inefficiencies and the impact of
    acquisitions offset partially by better price realization and lower
    material costs.
  oTotal selling and administrative expenses, including restructuring
    charges, increased 7.7 percent due to investments in growth initiatives
    and the impact of acquisitions.
  oThe Corporation's third quarter results included $0.8 million of
    restructuring and transition charges of which $0.2 million were included
    in cost of sales. These included costs associated with previously
    announced shutdown and consolidation of office furniture manufacturing
    locations. Included in the third quarter of 2011 were $0.5 million of
    restructuring and transition costs.



Third Quarter – Non-GAAP Financial Measures
(Reconciled with most comparable GAAP financial measures)
                             Three Months Ended      Three Months Ended
Dollars in millions
                             09/29/2012              10/01/2011
except per share data        Gross  Operating       Gross  Operating 

                             Profit Income    EPS    Profit Income    EPS
As reported (GAAP)           $191.3 $41.7     $0.53  $179.4 $40.4     $0.55
% of net sales              34.7%  7.6%             35.6%  8.0%
Restructuring and impairment -      $0.2      $0.00  $0.2   $0.4      $0.00
Transition costs             $0.2   $0.6      $0.01  $0.1   $0.1      $0.00
Results (non-GAAP)           $191.5 $42.5     $0.55  $179.7 $41.0     $0.55
% of net sales              34.8%  7.7%             35.6%  8.1%



Office Furniture – GAAP Financial Measures
                   Three Months Ended    Percent

Dollars in millions 09/29/2012 10/01/2011 Change
Net sales           $467.8     $421.9     10.9%
Operating profit    $38.4      $41.5      -7.4%
Operating profit %  8.2%       9.8%



Third Quarter – Non-GAAP Financial Measures

(Reconciled with most comparable GAAP financial measures)
                                    Three Months Ended    Percent
Dollars in millions
                                    09/29/2012 10/01/2011 Change
Operating profit as reported (GAAP) $38.4      $41.5      -7.4%
% of Net Sales                      8.2%       9.8%
Restructuring and impairment        $0.2       $0.4
Transition costs                    $0.6       $0.1
Operating profit (non-GAAP)         $39.2      $42.0      -6.7%
% of Net Sales                      8.4%       10.0%



  oThird quarter net sales for the office furniture segment increased $45.9
    million or 10.9 percent to $467.8 million. Acquisitions contributed $42.6
    million of sales, or 10.1 percent sales growth. Organic growth was
    effectively flat across all channels of the office furniture segment.
  oThird quarter GAAP operating profit decreased $3.1 million. Operating
    profit was negatively impacted by unfavorable mix, seasonal ramp up
    inefficiencies and investments in growth initiatives. These were
    partially offset by better price realization and lower material costs.



Hearth Products – GAAP Financial Measures
                    Three Months Ended
                                         Percent
                    09/29/2012 10/01/2011
Dollars in millions                       Change
Net sales           $83.1      $82.3      0.9%
Operating profit    $9.1       $6.9       32.0%
Operating profit %  10.9%      8.3%



  oThird quarter net sales for the hearth products segment increased $0.7
    million or 0.9 percent to $83.1 million driven by an increase in the new
    construction channel partially offset by a decline in the remodel/retrofit
    channel.
  oThird quarter operating profit increased $2.2 million. Operating profit
    was positively impacted by higher price realization and lower material
    costs offset partially by investments in selling and growth initiatives.



Year-to-Date Results
Consolidated net sales for the first nine months of 2012 increased $143.3
million, or 10.7 percent, to $1.5 billion compared to $1.3 billion in 2011.
Acquisitions contributed $83.0 million of sales, or 6.2 percent sales growth.
Gross margin decreased to 34.1 percent compared to 34.6 percent for the same
period last year. Net income attributable to HNI Corporation was $31.4
million compared to $27.8 million in 2011. Earnings per share increased to
$0.68 per diluted share compared to $0.61 per diluted share for the first nine
months of 2011.

Cash flow from operations for the first nine months of 2012 was $80.8 million
compared to $67.0 million last year. Capital expenditures during the first
nine months were $44.7 million in 2012 compared to $20.2 million in 2011. The
Corporation completed the acquisition of BP Ergo, a leading manufacturer and
marketer of office furniture in India, during the third quarter of 2012.

Outlook
"Despite near-term economic and political uncertainties, I remain positive
about our markets and prospects for long-term profitable growth. We remain
confident in our strategies and will continue to closely monitor our markets,
aggressively manage operating expenses, and invest in long-term growth. Our
businesses are agile and well positioned for the future," said Mr. Askren.

The Corporation estimates sales growth between 2 to 6 percent in the fourth
quarter over the same period in the prior year. For the full year, the
Company is revising its estimate of non-GAAP earnings per diluted share to the
range of $1.13 to $1.19 excluding restructuring charges and transition costs.

The Corporation remains focused on creating long-term shareholder value by
growing its business through investment in building brands, product solutions
and selling models, enhancing its strong member-owner culture and remaining
focused on its long-standing rapid continuous improvement programs to build
best total cost and a lean enterprise.

Conference Call and Presentation
HNI Corporation will host a conference call on Thursday, October 18, 2012 at
10:00 a.m. (Central) to discuss third quarter 2012 results. To participate,
call 1-877-512-9166 - conference ID number 34711184. A live webcast of the
call and a presentation intended to accompany the call will be available on
HNI Corporation's website at http://www.hnicorp.com (under Investor
Information – Webcasts). A replay of the webcast will be made available at
the website address above. An audio replay of the call will be available
until Thursday, October 25, 10:59 p.m. (Central) by dialing 1-855-859-2056 or
1-404-537-3406 – Conference ID: 34711184.

About HNI Corporation

HNI Corporation is a NYSE traded company (ticker symbol: HNI) providing
products and solutions for the home and workplace environments. HNI
Corporation is the second largest office furniture manufacturer in the world
and is also the nation's leading manufacturer and marketer of gas- and
wood-burning fireplaces. The Corporation's strong brands, including HON^®,
Allsteel^®, Gunlocke^®, Paoli^®, Maxon^®, Lamex^®, HBF^® , Artco-Bell^TM,
Midwest Folding Products^TM, LSI Corporation of America^TM, ERGO^®,
Heatilator^®, Heat & Glo^®, Quadra-Fire^® and Harman Stove^TM have leading
positions in their markets. HNI Corporation is committed to maintaining its
long-standing corporate values of integrity, financial soundness and a culture
of service and responsiveness. More information can be found on the
Corporation's website at www.hnicorp.com.

Non-GAAP Financial Measures

This earnings release contains certain non-GAAP financial measures. A
"non-GAAP financial measure" is a numerical measure of a company's financial
performance that excludes or includes amounts different than the most directly
comparable measure calculated and presented in accordance with GAAP in the
statements of income, balance sheets or statements of cash flow of the
company. We have provided a reconciliation of non-GAAP financial measures to
the most directly comparable GAAP financial measure.

The non-GAAP financial measures used within this earnings release are: gross
profit, operating income, operating profit and net income per diluted share
(i.e., EPS), excluding restructuring and impairment charges and transition
costs. Non-GAAP EPS is calculated using the Corporation's overall effective
tax rate for the period. We present these measures because management uses
this information to monitor and evaluate financial results and trends.
Management believes this information is also useful for investors. This
earnings release also contains a forward-looking estimate of non-GAAP earnings
per diluted share for the full fiscal year. We provide such non-GAAP measures
to investors on a prospective basis for the same reasons we provide them to
investors on a historical basis. We are unable to provide a reconciliation of
our forward-looking estimate of non-GAAP earnings per diluted share to a
forward-looking estimate of GAAP earnings per diluted share because certain
information needed to make a reasonable forward-looking estimate of GAAP
earnings per diluted share for the full fiscal year is difficult to predict
and estimate and is often dependent on future events which may be uncertain or
outside of our control. These may include unanticipated charges related to
asset impairments (fixed assets, intangibles or goodwill), unanticipated
acquisition related costs and other unanticipated non-recurring items not
reflective of ongoing operations.

Forward Looking Statements

This release contains "forward-looking" statements that refer to future events
and expectations. These statements address future plans, outlook, objectives
and financial performance including expectations for future sales growth and
earnings per diluted share (GAAP and non-GAAP) for the fourth quarter of
fiscal 2012 and for fiscal 2012. In addition, forward looking statements may
be identified by words such as "anticipate," "believe," "could," "confident,"
"estimate," "expect," "forecast," "hope," "intend," "likely," "may," "plan,"
"possible," "potential," "predict," "project," "should," "will," "would" and
variations of such words and similar expressions. Forward-looking statements
involve known and unknown risks, which may cause the Corporation's actual
future results to differ materially from expected results. These risks
include, without limitation: the Corporation's ability to realize financial
benefits from its (a) price increases, (b) cost containment and business
simplification initiatives, (c) investments in strategic acquisitions, new
products and brand building, (d) investments in distribution and rapid
continuous improvement, (e) ability to maintain its effective tax rate, (f)
repurchases of common stock and (g) consolidation and logistical realignment
initiatives; uncertainty related to the availability of cash and credit, and
the terms and interest rates on which credit would be available, to fund
operations and future growth; lower than expected demand for the Corporation's
products due to uncertain political and economic conditions; slow or negative
growth rates in global and domestic economies and the protracted decline in
the domestic housing market; lower industry growth than expected; major
disruptions at key facilities or in the supply of any key raw materials,
components or finished goods; competitive pricing pressure from foreign and
domestic competitors; higher than expected costs and lower than expected
supplies of materials; higher costs for energy and fuel; changes in the mix of
products sold and of customers purchasing; relationships with distribution
channel partners, including the financial viability of distributors and
dealers; restrictions imposed by the terms of the Corporation's revolving
credit facility and note purchase agreement; currency fluctuations and other
factors described in the Corporation's annual and quarterly reports filed with
the Securities and Exchange Commission on Forms 10-K and 10-Q. The
Corporation undertakes no obligation to update, amend or clarify
forward-looking statements.



HNI CORPORATION
Unaudited Condensed Consolidated Statements of Operations
                            Three Months Ended       Nine Months Ended
                                           Oct. 1,                  Oct. 1,
(Dollars in thousands,       Sep. 29, 2012            Sep. 29, 2012
except per share data)                     2011                     2011
Net Sales                    $ 550,855     $ 504,220  $1,476,467    $1,333,181
Cost of products sold        359,519       324,825    973,191       872,132
Gross profit                 191,336       179,395    503,276       461,049
Selling and administrative   149,421       138,671    444,610       407,281
expenses
Restructuring and impairment 172           277        1,361         2,130
charges
Operating income             41,743        40,447     57,305        51,638
Interest income              155           222        610           465
Interest expense             2,658         2,567      8,181         9,189
Income before income taxes   39,240        38,102     49,734        42,914
Income taxes                 15,036        13,186     18,785        15,192
Net income                   24,204        24,916     30,949        27,722
Less: Net income (loss)
attributable to the          (286)         (31)       (425)         (127)
noncontrolling interest
Net income attributable to   $ 24,490     $ 24,947  $ 31,374     $  27,849
HNI Corporation
Net income attributable to
HNI Corporation per common   $0.54         $0.56      $0.69         $0.62
share – basic
Average number of common     45,224,059    44,787,437 45,265,050    44,795,155
shares outstanding – basic
Net income attributable to
HNI Corporation per common   $0.53         $0.55      $0.68         $0.61
share – diluted
Average number of common     45,820,422    45,637,042 45,839,917    45,683,520
shares outstanding – diluted





Unaudited Condensed Consolidated Balance Sheet
Assets                                Liabilities and Shareholders' Equity
              As of                                      As of

              Sep. 29,    Dec. 31,                       Sep. 29,   Dec. 31,
(Dollars in   2012        2011                           2012       2011
thousands)
Cash and cash $  49,265 $  72,812 Accounts payable
equivalents                           and
Short-term    7,250       9,157        accrued       $ 401,122 $ 358,290
investments                           expenses
Receivables   247,297     204,036     Note payable and
                                      current
Inventories   104,879     101,873      maturities of   43,877     30,345
                                      long-term debt
Deferred      19,500      18,797      Current maturities
income taxes                          of other
Prepaid                                long-term       266        275
expenses and                          obligations
 other
current       27,986      27,365
assets
 Current 456,177     434,040      Current      445,265    388,910
assets                                liabilities
                                      Long-term debt     150,159    150,200
                                      Capital lease      259        340
                                      obligations
                                      Other long-term    56,814     52,716
                                      liabilities
Property and                          Deferred income
equipment –   238,300     229,727     taxes              49,602     42,770
net
Goodwill      293,359     270,761
Other assets  134,946     119,730     Parent Company
                                      shareholders'
                                       equity          420,042    419,057
                                      Noncontrolling     641        265
                                      interest
                                      Shareholders'      420,683    419,322
                                      equity
                                       Total
                                      liabilities and
                                      
Total assets  $1,122,782  $1,054,258  shareholders'      $1,122,782 $1,054,258
                                      equity



Unaudited Condensed Consolidated Statement of Cash Flows
(Dollars in thousands)                              Nine Months Ended
                                                    Sep. 29, 2012 Oct. 1, 2011
Net cash flows from (to) operating activities       $ 80,836      $ 66,972
Net cash flows from (to) investing activities:
 Capital expenditures                             (44,659)      (20,194)
 Other                                            (27,048)      (5,588)
Net cash flows from (to) financing activities       (32,676)      (38,753)
Net increase (decrease) in cash and cash            (23,547)      2,437
equivalents
Cash and cash equivalents at beginning of period    72,812        99,096
Cash and cash equivalents at end of period          $ 49,265      $101,533







Business Segment Data
                               Three Months Ended   Nine Months Ended
(Dollars in thousands)         Sep. 29,  Oct. 1,    Sep. 29,      Oct. 1,
                               2012      2011       2012          2011
Net sales:
 Office furniture             $ 467,787 $ 421,873 $1,264,953    $1,125,643
 Hearth products              83,068    82,347     211,514       207,538
                               $ 550,855 $ 504,220 $1,476,467    $1,333,181
Operating profit:
 Office furniture
 Operations before
restructuring and impairment   $ 38,605  $ 41,776  $ 69,707      $ 69,161
charges
 Restructuring and          (172)     (277)      (1,361)       (1,711)
impairment charges
 Office furniture – net  38,433    41,499     68,346        67,450
 Hearth products
 Operations before
restructuring and impairment   9,077     6,875      11,066        5,749
charges
 Restructuring and          -         -          -             (419)
impairment charges
 Hearth products – net   9,077     6,875      11,066        5,330
 Total operating profit       47,510    48,374     79,412        72,780
 Unallocated corporate   (8,270)   (10,272)   (29,678)      (29,866)
expense
 Income before income taxes   $ 39,240  $ 38,102  $ 49,734      $ 42,914
Depreciation and amortization
expense:
 Office furniture             $ 8,542  $ 8,855   $ 25,423     $ 27,308
 Hearth products              1,454     1,818      4,519         5,925
 General corporate            751       700        2,162         1,902
                               $ 10,747  $ 11,373   $ 32,104     $ 35,135
Capital expenditures
(including capitalized
software):
 Office furniture             $ 10,206  $ 4,578   $ 25,206      $ 15,812
 Hearth products              519       975        1,472         1,980
 General corporate            8,868     69         17,981        2,402
                               $ 19,593  $ 5,622   $ 44,659      $ 20,194
                                                    As of         As of

                                                    Sep. 29, 2012 Oct. 1, 2011
Identifiable assets:
 Office furniture                                  $ 725,763    $  618,588
 Hearth products                                   272,951       282,168
 General corporate                                 124,068       154,428
                                                    $1,122,782    $1,055,184



For Information Contact:
Derek P. Schmidt, Vice President, Corporate Finance (563) 272-7344
Kurt A. Tjaden, Vice President and Chief Financial Officer (563) 272-7400

SOURCE HNI Corporation

Website: http://www.hnicorp.com
 
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