HNI Reports Strong Sales And Earnings Growth For Second Quarter Fiscal Year 2015
7.22.15 | Muscatine, IA | HNI Corporation (NYSE: HNI) today announced sales for the second quarter ended July 4, 2015, of $568.2 million and net income of $23.9 million, or $0.52 per diluted share. Non-GAAP net income per diluted share improved 35.9 percent from the prior year quarter to $0.53, which excludes restructuring, impairment, transition costs and gain on sale of assets.
Second Quarter Highlights
— Non-GAAP net income per share increased 36% to $0.53; GAAP net income per share $0.52
— Sales increased 12%
Second Quarter Summary Comments
“We are pleased with our results for the second quarter. We delivered strong sales growth and significant earnings improvement. Office furniture business performance was led by sales growth in the contract business and solid operational execution. Momentum continued in our hearth business with strong sales growth in both the new construction channel and the retail gas portion of the remodel/retrofit channel,” said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.
• Consolidated net sales increased $59.1 million or 11.6 percent to $568.2 million. Compared to prior year quarter, the Vermont Castings Group acquisition increased sales $25.0 million. On an organic basis, sales increased 6.7 percent.
• Non-GAAP gross margin increased 20 basis points compared to prior year driven by higher volume, better price realization and strong operational performance, partially offset by unfavorable product mix.
• Selling and administrative expenses, as a percentage of sales, decreased 110 basis points due to the benefit of higher sales volume partially offset by strategic investments, higher incentive-based compensation and acquisition impact.
• Restructuring charges for the quarter were favorable $0.6M due to lower than anticipated postemployment costs. The Corporation recorded $1.3 million of transition expenses included in cost of sales in connection with previously announced closures, acquisition integration and structural realignment. Second quarter 2014 included $4.8 million of restructuring and transition costs of which $3.4 million were included in cost of sales. The prior year quarter also included a goodwill impairment of $8.9 million and a $1.3 million gain on the sale of assets.
Office Furniture – Financial Performance
• Second quarter sales increased $27.2 million or 6.4 percent to $450.6 million. Sales for the quarter increased in both our supplies-driven and contract channels.
• Second quarter non-GAAP operating profit increased $8.1 million or 25.2 percent. Increased volume, higher price realization and solid operational performance were partially offset by unfavorable product mix, strategic investments and incentive-based compensation.
Hearth Products – Financial Performance
• Second quarter sales increased $31.9 million or 37.2 percent to $117.6 million. Compared to prior year quarter, the Vermont Castings Group acquisition increased sales by $25.0 million. On an organic basis, sales increased 8.0 percent for the quarter driven by an increase in both the new construction channel and the retail gas portion of the remodel/retrofit channel.
• For the quarter, non-GAAP operating profit increased $3.2 million or 37.9 percent due to increased volume and higher price realization.
Outlook
“We delivered very strong results during the first six months of 2015. I remain confident in our ability to grow sales and significantly increase profits for the remainder of the year. Our office furniture and hearth businesses are performing well and we continue to make investments to drive long-term profitable growth and shareholder value,” said Mr. Askren.
The Corporation estimates sales to be up 5 to 9 percent in the third quarter over the same period in the prior year, including sales from the Vermont Castings Group acquisition. Non-GAAP earnings per share are anticipated to be in the range of $0.84 to $0.89 for the third quarter and $2.55 to $2.65 for the full year, which includes the Vermont Castings Group acquisition results and excludes restructuring and transition costs.
The full text of HNI’s 2Q15 earnings release, including all tables, and a webcast replay of the company’s July 23 conference call may be accessed at www.hnicorp.com (under Investor Information). An audio replay of the call will be available until Thursday, July 30, 10:59 p.m. (Central) at 1-855-859-2056 or 1-404-537-3406 – Conference ID number 76049525.
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 office furniture manufacturer and is the nation’s leading manufacturer of hearth products. The Corporation’s strong brands have leading positions in their markets. More information can be found on the Corporation’s website at www.hnicorp.com.
