HNI Corporation Announces Results In Line With Guidance For Fourth Quarter And Year-End Fiscal 2012

HNI Corporation Announces Results In Line With Guidance For Fourth Quarter And
                             Year-End Fiscal 2012

PR Newswire

MUSCATINE, Iowa, Feb. 5, 2013

MUSCATINE, Iowa, Feb. 5, 2013 /PRNewswire/ -- HNI Corporation (NYSE: HNI)
today announced sales of $527.5 million and net income of $17.6 million for
the fourth quarter ended December 29, 2012. Net income per diluted share for
the quarter was $0.39 or $0.40 on a non-GAAP basis when excluding
restructuring and transition costs. For fiscal year 2012, the Corporation
reported sales of $2.0 billion, a 9.3 percent increase from prior year, and
net income of $49.0 million, a 6.5 percent increase from prior year. Net
income per diluted share for the year was $1.07 or $1.13 on a non-GAAP basis
when excluding restructuring and transition costs.

Fourth Quarter and FY'12 Summary Comments
"We continue to compete well in our markets and delivered solid results for
the fourth quarter and full year 2012 in a challenging environment. Our
growth investments delivered top-line improvement in the quarter despite
considerable economic uncertainty, and outstanding working capital management
drove significant cash generation. Office furniture sales growth was led by a
solid increase in our supplies-driven business. Continued strong profit
growth in our hearth business was led by substantial growth in the new
construction channel and strong operational execution. We enter 2013
financially strong, competitively well positioned, and focused on delivering
profitable growth," said Stan Askren, HNI Corporation Chairman, President and
Chief Executive Officer.

Fourth Quarter – GAAP Financial Measures
Dollars in millions                              Three Months Ended    Percent

except per share data                            12/29/2012 12/31/2011 Change
Net sales                                        $527.5     $500.3     5.5%
Gross margin                                     $186.0     $178.0     4.5%
Gross margin %                                   35.2%      35.6%
SG&A                                             $155.6     $148.2     5.0%
SG&A %                                           29.5%      29.6%
Operating income                                 $30.3      $29.8      1.6%
Operating income %                               5.7%       6.0%
Net income attributable to HNI Corporation       $17.6      $18.1      -3.0%
Earnings per share attributable to HNI           $0.39      $0.40      -2.5%
Corporation – diluted



  oConsolidated net sales increased $27.3 million or 5.5 percent from the
    prior year quarter to $527.5 million. Acquisitions contributed $10.0
    million of sales, or 2.0 percent sales growth.
  oGross margins were 0.4 percentage points lower than prior year quarter
    primarily due to unfavorable mix, investments to improve operations, new
    product ramp-up and impact of acquisitions offset partially by higher
    volume and lower material costs.
  oTotal selling and administrative expenses, including restructuring
    charges, increased 5.0 percent due to volume related expenses, investments
    in growth initiatives and the impact of acquisitions.
  oThe Corporation's fourth quarter results included $1.1 million of
    restructuring and transition costs of which $0.3 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 fourth quarter of 2011 were $1.1 million of restructuring
    and transition costs net of a non-operating gain on the sale of
    property.
  oThe provision for income taxes for fourth quarter 2012 reflects an
    effective tax rate of 37.6 percent compared to 33.8 percent in the prior
    year quarter. The increase is due to the research tax credit being
    extended in 2013 and other permanent differences. 



Fourth Quarter – Non-GAAP Financial Measures

(Reconciled with most comparable GAAP financial measures)
Dollars in      Three Months Ended 12/29/2012  Three Months Ended 12/31/2011
millions
                Gross         Operating        Gross         Operating
except per             SG&A             EPS           SG&A             EPS
share data      Profit        Income           Profit        Income
As reported     $186.0 $155.6 $30.3     $0.39  $178.0 $148.2 $29.8     $0.40
(GAAP)
 % of net      35.2%  29.5%  5.7%             35.6%  29.6%  6.0%
sales
Restructuring   -      $(0.6) $0.6      $0.01  $0.1   $(1.1) $1.2      $0.02
and impairment
Transition      $0.3   $(0.2) $0.5      $0.00  $0.2   -      $0.2      $0.00
costs
Non-operating   -      -      -         -      -      $0.4   $(0.4)    $(0.01)
gain
Results         $186.3 $154.8 $31.4     $0.40  $178.3 $147.4 $30.8     $0.41
(non-GAAP)
 % of net      35.3%  29.3%  6.0%             35.6%  29.5%  6.2%
sales

Full Year – GAAP Financial Measures
Dollars in millions                        Twelve Months Ended   Percent

except per share data                      12/29/2012 12/31/2011 Change
Net sales                                  $2,004.0   $1,833.5   9.3%
Gross margin                               $689.2     $639.1     7.8%
Gross margin %                             34.4%      34.9%
SG&A                                       $601.6     $557.6     7.9%
SG&A %                                     30.0%      30.4%
Operating income                           $87.6      $81.5      7.5%
Operating income %                         4.4%       4.4%
Net income attributable to HNI Corporation $49.0      $46.0      6.5%
Earnings per share attributable to HNI     $1.07      $1.01
Corporation – diluted



  oNet sales increased $170.6 million, or 9.3 percent, to $2.0 billion
    compared to $1.8 billion for the prior year. Acquisitions contributed
    $93.0 million, or 5.1 percent sales growth.
  oGross margins were 0.5 percentage points lower than prior year due to
    unfavorable mix, investments to improve operations, new product ramp-up
    and impact of acquisitions offset partially by increased volume, better
    price realization and lower material costs.
  oTotal selling and administrative expenses as a percent of net sales,
    including restructuring charges, improved 0.4 percentage points due to
    higher volume partially offset by investments in growth initiatives and
    costs associated with acquisitions. Included in 2012 were $3.0 million of
    restructuring and transition charges compared to $3.3 million in 2011.
  oThe provision for income taxes for 2012 reflects an effective tax rate of
    37.7 percent compared to 34.8 percent in 2011. The increase is due to the
    research tax credit being extended in 2013 and other permanent
    differences.

Cash flow from operations for the year was $144.8 million compared to $134.3
million in 2011. Capital expenditures were $60.3 million in 2012 compared to
$31.1 million in 2011. The Corporation completed the acquisition of BP Ergo,
a leading manufacturer and marketer of office furniture in India.

Full Year – Non-GAAP Financial Measures

(Reconciled with most comparable GAAP financial measures)
Dollars in     Twelve Months Ended 12/29/2012  Twelve Months Ended 12/31/2011
millions
               Gross          Operating        Gross         Operating
except per             SG&A             EPS           SG&A             EPS
share data     Profit         Income           Profit        Income
As reported    $689.2  $601.6 $87.6     $1.07  $639.1 $557.6 $81.5     $1.01
(GAAP)
 % of net     34.4%   30.0%  4.4%             34.9%  30.4%  4.4%
sales
Restructuring  $0.4    $(1.9) $2.3      $0.03  $0.2   $(3.3) $3.5      $0.05
and impairment
Transition     $0.7    $(1.1) $1.8      $0.03  $0.3   -      $0.3      $0.00
costs
Non-operating  -       -      -         -      -      $0.4   $(0.4)    $(0.01)
gains
Results        $690.3  $598.6 $91.8     $1.13  $639.6 $554.7 $84.9     $1.05
(non-GAAP)
 % of net     34.4%   29.9%  4.6%             34.9%  30.3%  4.6%
sales

Office Furniture – GAAP Financial Measures
Dollars in         Three Months Ended    Percent Twelve Months Ended   Percent
millions           12/29/2012 12/31/2011 Change  12/29/2012 12/31/2011 Change
Sales              $422.3     $402.4     5.0%    $1,687.3   $1,528.1   10.4%
Operating profit   $23.5      $32.2      -27.0%  $91.8      $99.6      -7.8%
Operating profit % 5.6%       8.0%               5.4%       6.5%

Non-GAAP Financial Measures

(Reconciled with most comparable GAAP measures)
Dollars in         Three Months Ended    Percent Twelve Months Ended   Percent
millions           12/29/2012 12/31/2011 Change  12/29/2012 12/31/2011 Change
Operating profit
                   $23.5      $32.2      -27.0%  $91.8      $99.6      -7.8%
as reported (GAAP)
% of net sales     5.6%       8.0%               5.4%       6.5%
Restructuring and  $0.6       $1.2               $2.3       $3.1
impairment
Transition costs   $0.5       $0.2               $1.8       $0.3
Non-operating      -          $(0.4)             -          $(0.4)
gains
Operating profit   $24.6      $33.2      -25.8%  $96.0      $102.6     -6.4%
(non-GAAP)
% of net sales     5.8%       8.2%               5.7%       6.7%

  oFourth quarter and full year sales for the office furniture segment
    increased $19.9 million and $159.3 million, respectively. These increases
    were driven mainly by an increase in the supplies driven channel of the
    office furniture industry. Acquisitions contributed $10.0 million of
    sales or 2.5 percent sales growth in the fourth quarter and $93.0 million
    of sales or 6.1 percent sales growth for the full year.
  oFourth quarter and full year operating profit decreased $8.7 million and
    $7.8 million, respectively. Operating profit margin was negatively
    impacted by unfavorable mix, investments to improve operations, new
    product ramp-up, investments in growth initiatives and impact of
    acquisitions. These were partially offset by higher volume, better price
    realization and lower material costs.



Hearth Products – GAAP Financial Measures
Dollars in         Three Months Ended    Percent Twelve Months Ended   Percent
millions           12/29/2012 12/31/2011 Change  12/29/2012 12/31/2011 Change
Sales              $105.2     $97.9      7.5%    $316.7     $305.4     3.7%
Operating profit   $15.4      $9.4       63.6%   $26.5      $14.8      79.5%
Operating profit % 14.7%      9.6%               8.4%       4.8%
Non-GAAP Financial Measures

(Reconciled with most comparable GAAP measures)
Dollars in         Three Months Ended    Percent Twelve Months Ended   Percent
millions           12/29/2012 12/31/2011 Change  12/29/2012 12/31/2011 Change
Operating profit
                   $15.4      $9.4       63.6%   $26.5      $14.8      79.5%
as reported (GAAP)
% of net sales     14.7%      9.6%               8.4%       4.8%
Restructuring and  -          -                  -          $0.4
impairment
Transition costs   -          -                  -          -
Operating profit
                   $15.4      $9.4               $26.5      $15.2
(non-GAAP)
% of net sales     14.7%      9.6%               8.4%       5.0%

  oFourth quarter and full year sales for the hearth products segment
    increased $7.3 million and $11.3 million, respectively. These increases
    were driven by increases in the new construction channel partially offset
    by decreases in the remodel/retrofit channel.
  oFourth quarter and full year operating profit increased $6.0 million and
    $11.7 million, respectively. Operating profit was positively impacted by
    higher volume, better price realization, lower material costs and lower
    restructuring and impairment charges partially offset by investments in
    selling and marketing initiatives and incentive-based compensation.

Outlook
"I remain positive about our markets and our ability to grow sales and
increase profits in 2013. We continue to aggressively invest for long-term
profitable growth, and I remain confident our investments are delivering
shareholder value. Our businesses are strong, competitive, and
well-positioned in their markets, and the prospects for our businesses are
encouraging," said Mr. Askren.

The Corporation estimates sales to be flat to down 5 percent in the first
quarter over the same period in the prior year. Non-GAAP earnings per diluted
share are anticipated in the range of ($0.01) to ($0.07) for the first
quarter. For the full year, the Corporation is updating its estimate of
non-GAAP earnings per diluted share to be in the range of $1.25 to $1.45,
which excludes 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
HNI Corporation will host a conference call on Wednesday, February 6, 2013 at
10:00 a.m. (Central) to discuss fourth quarter and year-end 2012 results. To
participate, call 1-877-512-9166 – conference ID number 90030431. A live
webcast of 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 same website address. An audio
replay of the call will be available until Wednesday, February 13, 2013, 10:59
p.m. (Central) by dialing 1-855-859-2056 or 1-404-537-3406 – Conference ID
number 90030431.

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™,
Midwest Folding Products™, LSI Corporation of America™, ERGO^®, Heatilator^®,
Heat & Glo^®, Quadra-Fire^® and Harman Stove™ 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 first quarter and full fiscal year 2013. 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 first quarter and full
year fiscal 2013. 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.



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







HNI CORPORATION
Condensed Consolidated Statement of Operations
(Dollars in thousands, Three Months Ended          Twelve Months Ended
except per share data) Dec. 29, 2012 Dec. 31, 2011 Dec. 29, 2012 Dec. 31, 2011
Net Sales              $ 527,536    $ 500,269    $2,004,003    $1,833,450
Cost of products sold  341,585       322,255       1,314,776     1,194,387
Gross profit           185,951       178,014       689,227       639,063
Selling and
administrative         155,046       147,034       599,656       554,315
expenses
Restructuring and      583           1,131         1,944         3,261
impairment charges
Operating income       30,322        29,849        87,627        81,487
Interest income        232           158           842           623
Interest expense       2,684         2,762         10,865        11,951
Income before taxes    27,870        27,245        77,604        70,159
Income taxes           10,493        9,219         29,278        24,411
Net income             17,377        18,026        48,326        45,748
Less: Net income
(loss) attributable to (216)         (111)         (641)         (238)
the noncontrolling
interest
Net income
attributable to HNI    $  17,593    $  18,137    $  48,967    $  45,986
Corporation
Net income
attributable to HNI    $0.39         $0.40         $1.08         $1.03
Corporation common
shareholders – basic
Average number of
common shares          45,050,346    44,827,529    45,211,385    44,803,248
outstanding – basic
Net income
attributable to HNI    $0.39         $0.40         $1.07         $1.01
Corporation common
shareholders – diluted
Average number of
common shares          45,691,600    45,759,137    45,819,979    45,694,278
outstanding – diluted





Condensed Consolidated Balance Sheet
Assets                             Liabilities and Shareholders' Equity
             As of                                       As of
(Dollars in  Dec. 29,   Dec. 31,                         Dec. 29,   Dec. 31,
thousands)   2012       2011                             2012       2011
Cash and                           Accounts payable
cash         $ 41,782  $  72,812 and
equivalents
Short-term   7,250      9,157       accrued       $ 390,958 $ 358,290
investments                        expenses
Receivables  213,490    204,036    Note payable and
                                   current
Inventories  93,515     101,873     maturities of  4,554      30,345
                                   long-term debt
Deferred     21,977     18,797     Current
income taxes                       maturities of other
Prepaid                             long-term      373        275
expenses and                       obligations
 other
current      26,926     27,365
assets
                               Current
Current      404,940    434,040    liabilities           395,885    388,910
assets
                                   Long-term debt   150,146    150,200
                                   Capital lease    226        340
                                   obligations
Property and                       Other long-term
equipment - 240,490    229,727    liabilities           57,281     52,716
net
Goodwill     288,348    270,761    Deferred income  55,433     42,770
                                   taxes
Other assets 145,853    119,730
                                    Parent Company
                                   shareholders'         420,359    419,057

                                    equity
                                   Noncontrolling   301        265
                                   interest
                                   Shareholders'    420,660    419,322
                                   equity
                                    Total
                                   liabilities and
 Total   $1,079,631 $1,054,258             $1,079,631 $1,054,258
assets                             shareholders' equity





Condensed Consolidated Statement of Cash Flows
(Dollars in thousands)                             Twelve Months Ended
                                                   Dec. 29, 2012 Dec. 31, 2011
Net cash flows from (to) operating activities      $144,777      $134,278
Net cash flows from (to) investing activities:
 Capital expenditures                          (60,270)      (31,143)
 Acquisition spending                          (26,894)      (54,990)
 Other                                         1,351         (5,407)
Net cash flows from (to) financing activities      (89,994)      (69,022)
Net increase (decrease) in cash and cash           (31,030)      (26,284)
equivalents
Cash and cash equivalents at beginning of period   72,812        99,096
Cash and cash equivalents at end of period         $ 41,782     $ 72,812





Business Segment Data
(Dollars in thousands) Three Months Ended          Twelve Months Ended
                       Dec. 29, 2012 Dec. 31, 2011 Dec. 29, 2012 Dec. 31, 2011
Net sales:
 Office furniture     $ 422,349     $ 402,407     $1,687,302    $1,528,050
 Hearth products      105,187       97,862        316,701       305,400
                       $ 527,536     $ 500,269     $2,004,003    $1,833,450
Operating profit:
 Office furniture
 Operations before
restructuring and      $ 24,086      $ 33,307      $ 93,793      $ 102,468
impairment charges
 Restructuring and (583)         (1,131)       (1,944)       (2,842)
impairment charges
 Office         23,503        32,176        91,849        99,626
furniture - net
 Hearth products
 Operations before
restructuring and      15,411        9,422         26,477        15,171
impairment charges
 Restructuring and  -             -             -             (419)
impairment charges
 Hearth products  15,411        9,422         26,477        14,752
- net
 Total operating      38,914        41,598        118,326       114,378
profit
 Unallocated      (11,044)      (14,353)      (40,722)      (44,219)
corporate expense
 Income before income $ 27,870      $ 27,245      $ 77,604      $ 70,159
taxes
Depreciation and
amortization expense:
 Office furniture     $ 9,068       $  8,801     $ 34,491      $ 36,109
 Hearth products      1,438         1,649         5,957         7,574
 General corporate    749           702           2,911         2,604
                       $11,255       $ 11,152      $ 43,359      $ 46,287
Capital expenditures
(including capitalized
software)
 Office furniture     $ 10,874      $ 8,249      $ 36,080      $ 24,061
 Hearth products      536           199           2,008         2,179
 General corporate    4,201         2,501         22,182        4,903
                       $ 15,611      $ 10,949      $ 60,270      $ 31,143
                                                   As of         As of
                                                   Dec. 29, 2012 Dec. 31, 2011
Identifiable assets:
 Office furniture                                 $ 700,665     $  671,334
 Hearth products                                  254,835       259,142
 General corporate                                124,131       123,782
                                                   $ 1,079,631   $ 1,054,258



SOURCE HNI Corp.

Website: http://www.hnicorp.com
 
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