Elevated earnings visibility remains through 2026
-GAAP diluted EPS $0.88 (-10% YoY) / non-GAAP diluted EPS $1.10 (+7% YoY)
-Productivity and operating expense control drove strong year-over-year results
-Q3 GAAP operating margin of 9.4%; non-GAAP operating margin of 10.8% reached highest third quarter level
-Strategic initiatives on track, confirming elevated earnings growth visibility through 2026
-Volume growth anticipated for full year 2025
-Steelcase acquisition (NYSE: SCS) expected to close before the end of calendar 2025
HNI Corporation (NYSE: HNI) today announced net sales of $683.8 million and net income of $41.2 million for the third quarter ended September 27, 2025.
Highlights
-Solid third quarter resultsârevenue, margins, and earnings. Third quarter total net sales increased two percent and organic net sales increased three percent, both on a year-over-year basis. Consolidated third quarter 2025 operating margin contracted 80 basis points on a GAAP basis but expanded 10 basis points on a non-GAAP basis, reaching an all-time high for the third quarter. The improvement was driven by profit transformation initiatives, core productivity gains, synergy benefits, and operating expense control. Non-GAAP to GAAP reconciliations follow the financial statements in this release.
-Elevated earnings growth visibility through 2026. The Corporation continues to realize significant savings from the Kimball International (âKIIâ) acquisition synergies and from the ramp-up of its Mexico facility. These two initiatives are expected to contribute a total of $0.75 to $0.80 to diluted non-GAAP EPS in 2025-2026.
-Recent demand activity supports the Corporationâs outlook for strong sales growth in the fourth quarter. Workplace Furnishings orders were up two percent year-over-year, when excluding the impact of orders placed by customers ahead of tariff related price increases and hospitality orders. Quarter-ending backlog was up seven percent versus the same period of 2024, also excluding hospitality orders. Third quarter Residential Building Products orders increased two percent compared to the prior year period, led by strength in the remodel retrofit space. Order patterns improved as the quarter progressed.
-Strong balance sheet. The Corporation reduced debt by $120 million during the quarter, in advance of the anticipated closing of the acquisition of Steelcase. As a result, gross debt leverage at the end of the third quarter was 0.9x, as calculated in accordance with the Corporationâs debt agreements.
-Steelcase acquisition. The Corporation continues to expect the acquisition of Steelcase to close before the end of 2025. This combination brings together two companies with highly complementary capabilities, dealer networks, brand portfolios, and customer segments. For further information see the previously shared HNI investor briefing here.
âOur members delivered another strong quarter, despite ongoing tariff-driven volatility and continuing macro uncertainty. The positive momentum of our strategies, the benefits of our diversified revenue streams, our focus on items within our control, and the merits of our customer-first business model continue to deliver strong shareholder value.
âIn the Workplace Furnishings segment, organic net sales increased three percent year-over-year, fueled by growth across all major brands. We delivered similar organic growth rates in our brands focused on small- and medium-sized businesses and on contract customers. Our adjusted order rates were up slightly in the quarter year-over-year and adjusted segment backlog increased seven percent from the third quarter of 2024. Third quarter profitability benefited from our profit transformation efforts, recognition of KII synergies, and modest volume growth, offset somewhat by continued growth investments. Non-GAAP segment operating profit margin expanded 40 basis points year-over-year and exceeded 12 percent. Looking ahead, we expect year-over-year revenue growth in the segment to accelerate in the fourth quarter, with continued year-on-year margin expansion, while we continue to invest to drive growth.
âIn Residential Building Products, revenue was roughly unchanged versus the prior-year period. Consistent with expectations discussed on last quarterâs earnings call, third quarter segment operating profit margin contracted year-over-year, driven by continued investment, among other items. New construction revenue was down slightly, while remodel-retrofit grew slightly, both on a year-over-year basis. Despite expectations of ongoing uncertainty, we remain encouraged about the opportunities tied to the broader housing market and we continue to invest to grow our operating model and revenue streams. Third quarter segment order and backlog growth, the strength of our market-leading positions, and our unique operating model support our expectations of revenue and profit growth in the fourth quarter of 2025.
âOur third quarter performance demonstrates the strength of our strategies and our ability to manage through varying macroeconomic conditions and daily uncertainty, while remaining focused on investing for the future. We expect strong results to continue, driven by our margin expansion efforts and continued volume growth,â stated Jeff Lorenger, Chairman, President, and Chief Executive Officer.
HNI Corporation â Third Quarter Summary Comments
-Consolidated net sales increased 1.7 percent from the prior-year quarter to $683.8 million, driven by pricing actions in both segments. On an organic basis, net sales increased 2.6 percent year-over-year. The divestiture of HNI India in the second quarter of the current year decreased year-over-year sales by $5.6 million. A reconciliation of organic net sales, a non-GAAP measure, to net sales follows the financial statements in this release.
-Gross profit margin expanded 60 basis points compared to the prior-year quarter. This increase was driven by improved net productivity.
-Selling, general, and administrative expenses as a percentage of net sales increased 160 basis points compared to the prior-year quarter. The increase was driven by $8.3 million of one-time costs associated with the pending acquisition of Steelcase along with increased input costs, partially offset by higher net sales.
-Restructuring charges of $0.8 million were incurred in the current quarter, primarily related to the Corporation’s network optimization program. In the prior-year quarter $1.6 million was incurred in connection with reorganization actions in Residential Building Products and factory consolidation initiatives in Workplace Furnishings.
-Net income per diluted share was $0.88 compared to $0.98 in the prior-year quarter. On a non-GAAP basis, net income per diluted share increased to $1.10 from $1.03 in the prior-year quarter, driven by improved net productivity and lower shares outstanding.
-Income tax rate comparability versus the prior-year quarter was primarily impacted by transaction costs associated with the pending acquisition of Steelcase that is not tax deductible.
Workplace Furnishings â Third Quarter Summary Comments
-Workplace Furnishings net sales increased 2.3 percent from the prior-year quarter to $516.9 million. On an organic basis, net sales increased 3.5 percent year-over-year. The divestiture of HNI India in the second quarter of the current year decreased year-over-year net sales by $5.6 million.
-Workplace Furnishings operating profit margin of 12.1 percent expanded by 70 basis points versus the prior-year quarter, driven by improved net productivity, higher net sales, and restructuring costs incurred in the prior-year quarter, partially offset by unfavorable price-cost. On a non-GAAP basis, segment operating profit margin of 12.3 percent expanded 40 basis points year-over-year.
Residential Building Products â Third Quarter Summary Comments
-Residential Building Products net sales decreased 0.1 percent from the prior-year quarter to $166.9 million, with decreased net sales in new construction partially offset by increased sales in remodel-retrofit.
-Residential Building Products operating profit margin of 18.0 percent expanded by 10 basis points year-over-year driven by favorable price-cost and restructuring charges incurred in the prior-year quarter, partially offset by lower volume and reduced net productivity. On a non-GAAP basis, segment operating profit margin of 18.0 percent contracted 60 basis points basis points year-over-year, driven by prior year restructuring charges.
Third Quarter Order Rates
-In the Workplace Furnishings segment, orders in the third quarter decreased three percent compared to the prior-year period. Segment orders increased two percent after excluding hospitality orders and the estimated impact of orders placed by customers ahead of tariff related price increases last quarter. Orders from contract customers, excluding hospitality, performed better than those from small-to-medium-sized businesses.
-Orders in the Residential Building Products segment increased two percent compared to the third quarter of 2024. Remodel-retrofit orders outperformed those from the new construction channel. Year-over-year order growth accelerated toward the end of the quarter.
Outlook
The Corporation’s outlook below excludes expected impacts from the pending Steelcase acquisition.
-Fourth quarter net sales. The Corporation expects fourth quarter 2025 net sales in Workplace Furnishings to increase at a high single-digit rate year-over-year. In Residential Building Products, fourth quarter 2025 net sales are expected to increase at a high-single digit rate compared to the same period in 2024. These projected growth rates include the benefit of an extra week in the fourth quarter of 2025.
-Fourth quarter non-GAAP diluted earnings per share. Non-GAAP diluted earnings per share in the fourth quarter of 2025 are expected to increase slightly from 2024 levels. This improvement is expected to be driven by price-cost, volume growth, and productivity benefits, which will be partially offset by increased investment levels and insurance-related expenses.
-Double-digit diluted non-GAAP EPS growth in 2025 and elevated earnings growth visibility through 2026. The Corporationâs outlook for 2025 full year earnings reflects expectations for mid-teens percent diluted non-GAAP EPS growth. In addition to increased profits from volume growth, KII synergies and the ramp-up of the Mexico facility are expected to continue to drive significant savings. These two initiatives are expected to contribute a total of $0.75 to $0.80 to diluted non-GAAP EPS in 2025-2026.
-Balance sheet. The Corporation reduced debt during the quarter, in advance of the anticipated closing of the pending acquisition of Steelcase. Following the closing, strong cash flow generation and available borrowing capacity will continue to provide the Corporation with significant financial flexibility. The Corporation remains committed to payment of its longstanding dividend and continuing to invest in the business to drive future growth.
Concluding Remarks
âDuring the third quarter, we remained financially disciplined, managing the middle of the income statement to drive profit growth, while pursuing accelerated revenue growth. As we look forward, several positive secular trends and our HNI-specific initiatives will help offset macro-related risks and continued tariff-driven volatility. We will remain focused, conservative, and ready to adjust as required; and, as a result, our earnings outlook for the full year is essentially unchanged and we continue to expect a fourth consecutive year of double-digit non-GAAP diluted EPS growth. This outlook demonstrates the benefits of a stronger-than-expected third quarter, our ongoing visibility story, and our proven ability to manage through changing economic conditions. Finally, as we look to 2026, we continue to have elevated earnings growth visibility.
âAs we approach the closing of the Steelcase acquisition, we are excited about the future of bringing together our combined capabilities to create new career growth opportunities for team members, deliver more value for customers, and further support and invest in the communities in which we operate. The deal is right from a strategic, financial, and cyclical perspective, and our two companies are highly complementary on many fronts. Our anticipated strong free cash flow will help us quickly deleverage our balance sheet.
âIn advance of the closing, our HNI members will remain focused on driving growth and expanding margins. And we will continue to invest for the future with confidence,â concluded Mr. Lorenger.
The full text of HNI’s 3Q25 earnings release, including tables, may be accessed at https://investors.hnicorp.com/news. A replay of the company’s Oct. 28 conference call is available at https://investors.hnicorp.com/events-and-presentations.
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 nationâs 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 Corporationâs website at www.hnicorp.com.