HNI Reports Earnings for First-Quarter Fiscal Year 2017
HNI Corporation (NYSE: HNI) today announced sales for the first quarter ended April 1, 2017 of $477.7 million and net income of $4.8 million. GAAP net income per diluted share was $0.11. Non-GAAP net income per diluted share was $0.26 compared to $0.31 in the prior year.
“First quarter results were better than expected. Our businesses continue to compete well and generated sales at the high end of our anticipated range. As expected, the demand environment started slowly and improved throughout the quarter. We are pleased with the positive customer response to our recent investments and remain committed to driving long-term shareholder value,” said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.
First Quarter Summary Comments
- Consolidated net sales decreased $23.4 million or 4.7 percent to $477.7 million. Acquisitions and divestitures of small office furniture companies decreased sales $9.3 million compared to the prior year quarter. On an organic basis, sales decreased 2.9 percent.
- GAAP gross profit margin decreased 70 basis points compared to prior year driven by restructuring and transition costs. Non-GAAP gross profit margin, which excludes these costs, increased 60 basis points compared to prior year driven by productivity, impact of divestitures and net price realization, partially offset by lower volume.
- Selling and administrative expenses increased as a percentage of sales due to strategic growth investments and lower volume, partially offset by the impact of divestitures, lower incentive based compensation and the impact of stock price change on deferred compensation.
- The Corporation recorded $6.3 million of restructuring costs and $3.8 million of transition costs in the first quarter in connection with previously announced facility closures and structural realignments. $8.0 million of these charges were included in cost of sales. Specific items incurred include severance, accelerated depreciation and production move costs.
- First quarter net sales decreased $27.4 million or 7.1 percent to $360.0 million. Sales for the quarter decreased in the supplies, North American contract and international businesses. Acquisitions and divestitures of small office furniture companies decreased sales $9.3 million compared to the prior year quarter. On an organic basis, sales decreased 4.9 percent.
- First quarter GAAP operating profit margin decreased 370 basis points. Excluding restructuring and transition costs, non-GAAP operating profit margin declined 240 basis points due to lower volume and strategic growth investments, partially offset by productivity, impact of divestitures and lower incentive based compensation.
- First quarter net sales increased $4.0 million or 3.5 percent to $117.7 million. Sales for the quarter increased in the new construction, retail wood/gas and retail pellet businesses.
- First quarter GAAP operating profit margin declined 100 basis points. Excluding restructuring and transition costs, non-GAAP operating profit margin increased 120 basis points due to higher volume and favorable operational performance.
“We remain confident in our strategies. We continue to streamline our core businesses while significantly investing for long term profitable growth. We are continuously bolstering our industry leading, best cost producer position, which allows us to deliver greater value to customers and drives both growth and profitability. Our markets continue to improve. We expect solid organic sales growth during 2017 driven by a strengthening economy and investments in new products and selling capabilities,” said Mr. Askren.
The Corporation estimates full year non-GAAP earnings per share to be in the range of $2.80 to $3.10, which excludes restructuring and transition costs. Full year organic sales are expected to be up 3 to 6 percent.
Including the impacts of acquisitions and divestitures, sales are expected to be up 2 percent to down 1 percent.
For the second quarter, organic sales are expected to be up 4 to 7 percent led by 12 to 15 percent organic growth in the contract office furniture business. Including the impacts of acquisitions and divestitures, total sales are expected to be flat to up 3 percent. Non-GAAP earnings per share are anticipated to be in the range of $0.65 to $0.72 for the second quarter, which excludes restructuring and transition costs.
The full text of HNI’s 1Q17 earnings release, including all tables, and a webcast replay of the company’s Apr. 20 conference call, including slides, are available on HNI Corporation’s website at http://www.hnicorp.com (under Investors – News Releases & Events). An audio replay of the call will be available until Thursday, Apr. 27, 10:59 p.m. (Central) by dialing 1-855-859-2056 or 1-404-537-3406 – Conference ID number 78985944.
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 a leading global provider and designer of office furniture and the leading manufacturer and marketer of hearth products. We sell the broadest and deepest selection of quality office furniture solutions available to meet the needs of every customer through an extensive portfolio of well-known and trusted brands. Our hearth products are the strongest, most respected brands in the industry and include a full array of gas, electric, wood and biomass burning fireplaces, inserts, stoves, facings and accessories. More information can be found on the Corporation’s website at www.hnicorp.com.