HNI Corp. Reports Earnings for Third Quarter Fiscal Year 2023

HNI Corporation (NYSE: HNI) today announced sales for the third quarter ended September 30, 2023 of $711.6 million and net income of $37.8 million. GAAP earnings per diluted share declined from $1.51 in the prior year to $0.80 in the current year primarily due to a non-recurring $51 million pre-tax gain on sale that was included in the prior year results. When excluding the gain and other items in both the current and prior year periods, non-GAAP net income per diluted share was $0.93 in the current year, compared to $0.71 in the prior year. GAAP to non-GAAP reconciliations follow the financial statements in this release.

Third Quarter Highlights

  • Strong profit While GAAP earnings per share declined year-over-year primarily due to a one-time gain in the year-ago period, non-GAAP earnings per diluted share grew 31 percent compared to the prior- year period despite a 7.1 percent year-over-year organic revenue decline.
  • Substantial margin expansion in Workplace Segment GAAP operating margin expanded 730 basis points on a year-over-year basis to 8.8 percent. Excluding Kimball International and Poppin, third quarter non-GAAP operating profit margin for legacy HNI workplace furnishings (“Legacy Workplace”) was 10.7 percent, an improvement of 820 basis points year-on-year.
  • KII accretive; Poppin divestiture completed. Kimball International excluding Poppin (“KII”) added approximately $15.2 million in GAAP operating profit and $15.9 million in non-GAAP operating profit in the third quarter of 2023. KII’s third quarter non-GAAP operating profit margin was 10.6 percent despite incurring $5.1 million in incremental purchase accounting costs. KII added approximately $0.06 to third quarter non-GAAP EPS when including estimated interest costs and incremental shares outstanding related to the acquisition, and the Corporation expects the rate of accretion to increase as synergies mature. As previously announced, the Corporation expects to achieve annual cost synergies of at least $25 million and sees the strong potential for more. The Corporation completed the divestiture of Poppin during the third quarter. Exiting Poppin eliminated an annual operating loss of nearly $20 million and improves strategic focus.
  • Residential Building Products margin resilient in the face of housing market weakness. Segment operating margin was unchanged year-over-year at 7 percent despite 21.8 percent lower net sales. Last quarter, the Corporation enacted cost reduction actions, which supported third quarter 2023 profitability. The intermediate- to long-term demand dynamics remain encouraging for the segment, and the Corporation is well positioned for sustained long-term profit growth.

“Our profit transformation actions continue to accelerate—reflecting the focus and dedication of our members. Our strategies to expand operating profit margin in our Workplace Furnishings segment continue to deliver. We reached margin levels last seen in 2019 and see more opportunity ahead. In Residential Building Products, our actions to support profitability helped our margins rebound and remain unchanged versus the prior year despite ongoing macro pressures on the top line. Overall, our businesses are now stronger and additional opportunity remains,” stated Jeff Lorenger, Chairman, President, and Chief Executive Officer.

Third Quarter Summary Comments

  • Consolidated net sales increased 8 percent from the prior-year quarter to $711.6 million. On an organic basis, sales decreased 7.1 percent year-over-year. The acquisition of Kimball International increased year- over-year net sales by $158.0 million. The prior-year sale of the Corporation’s China- and Hong Kong-based Lamex office furniture business decreased year-over-year sales by $2.7 million. A reconciliation of organic sales, a non-GAAP measure, follows the financial statements in this release.
  • Gross profit margin expanded 510 basis points compared to the prior-year This increase was driven by favorable price-cost, improved net productivity, and the impact of the Kimball International acquisition, partially offset by lower organic volume.
  • Selling and administrative expenses as a percent of sales increased 160 basis points compared to the prior- year quarter. The increase was primarily driven by higher variable compensation, lower organic volume, and the impact of the Kimball International acquisition, partially offset by lower core SG&A expenses and price realization. The current quarter also included $2.8 million of acquisition-related fees and expenses, while the prior-year quarter included $5.6 million associated with a company-wide cost reduction initiative.
  • Restructuring and impairment charges totaled $5.3 million in the current quarter, primarily in connection with the exit of the Poppin business.
  • A pre-tax gain of $50.6 million was recorded as a corporate item during the prior-year quarter as a result of the divestiture of the Lamex business.
  • Non-GAAP net income per diluted share was $0.93 compared to $0.71 in the prior-year quarter. The increase was driven by favorable price-cost, improved net productivity, lower core SG&A, and the net impact of the Kimball International acquisition, partially offset by lower organic volume, and higher variable

Workplace Furnishings – Financial Performance

  • Workplace Furnishings net sales increased 43.1 percent from the prior-year quarter to $536.8 million. On an organic basis, sales increased 1.7 percent year-over-year. The impact of the Kimball International acquisition increased sales by $158.0 million over the prior-year quarter, while the prior-year sale of Lamex decreased sales $2.7 million compared to the prior-year quarter.
  • Workplace Furnishings GAAP operating margin improved 730 basis points versus the prior-year quarter, driven by favorable price-cost, improved net productivity, favorable impacts from KII, and lower core SG&A. These factors were partially offset by $4.8 million of restructuring costs related to the exit of Poppin and higher variable compensation. Excluding the impact of KII and Poppin, third quarter non-GAAP operating profit margin for Legacy Workplace was 10.7 percent, an improvement of 820 basis points year-on-year.

Residential Building Products – Financial Performance

  • Residential Building Products net sales decreased 8 percent from the prior-year quarter to $174.8 million primarily due to housing market weakness. New construction and remodel/retrofit sales declined at similar rates.
  • Residential Building Products operating profit margin was flat year-over-year with the impact of lower volume fully offset by favorable price-cost, improved net productivity, lower core SG&A, and lower variable

Third Quarter Order Rates

  • In the Workplace Furnishings segment, orders from small-to-medium sized customers increased six percent versus the prior-year quarter on an organic basis—outperforming order rates from contract customers, which were down four percent year-over-year organically in the quarter.
  • Orders in the Residential Building Products segment decreased 18 percent versus the third quarter of During the quarter, orders in new construction outperformed remodel/retrofit.

Fourth Quarter 2023 Outlook

  • Fourth quarter non-GAAP earnings per share are expected to increase solidly year-over-year and be modestly below just-reported third quarter of 2023 results, consistent with normal seasonal patterns.
  • Demand environment. The Corporation expects Workplace Furnishings segment organic revenue to be approximately flat versus the same quarter of 2022. In Residential Building Products, the Corporation expects fourth quarter revenue to be down year-over-year at a rate in the high-single digit to low-teens range. The expectation of moderating year-over-year revenue declines reflects easier prior-year comparisons and sequentially better new home market dynamics—consistent with recent single-family permit trends.
  • Impact of Kimball For the fourth quarter of 2023, the Corporation expects KII to be accretive to non-GAAP EPS, consistent with third quarter results. KII is expected to add $140 to $150 million of revenue to fourth quarter results.

Concluding Remarks

“Our strategies are delivering results. Operating margin in Workplace Furnishings continues to expand—reaching 10 percent in the third quarter. Our profit transformation initiatives have momentum, and we expect continued year-over-year profit and margin improvement in the segment.

“The integration of Kimball International is going well. KII is already strengthening our business and delivering earnings accretion, which will only increase as our synergies mature. KII better positions us to lead in the evolving workplace environment and provides new opportunities for profit growth. We are increasingly confident in the combination’s strategic and financial benefits.

“In Residential Building Products, we have adjusted the cost structure and demonstrated the resiliency of our margins while continuing to invest in our growth strategies, leading brands, and operating platforms. Although the near term remains dynamic, we are uniquely positioned to drive high-margin growth as housing stabilizes.

“We remain committed to our core strategies of continuing to expand margins in Workplace Furnishings and driving long-term revenue growth in Residential Building Products,” concluded Mr. Lorenger.

The full text of HNI’s 3Q23 earnings release, including all tables, may be accessed at

A replay of the company’s Oct. 31 conference call webcast is available at or by phone through Tuesday, November 7, 2023, 10:59 p.m. (Central) by dialing 1-800-770-2030 – Conference ID: 7175411.

About HNI Corporation

HNI Corporation (NYSE: HNI) has been improving where people live, work, and gather for more than 75 years. 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