Knoll Delivers Strong Second Quarter Performance
- Continued margin expansion
- Market share gains
- Industry leading operating margins
- NeoCon plaudits
Knoll, Inc. (NYSE: KNL), a leading designer and manufacturer of furnishings, textiles and fine leathers for the workplace and home, today announced results for the second quarter ended June 30, 2016. Net sales were $294.7 million for the second quarter, an increase of 9.7%, from the second quarter of 2015. Operating profit for the quarter increased 18.5%, to $33.5 million, compared to operating profit of $28.3 million for the second quarter of 2015. Net earnings for the second quarter of 2016 were $21.3 million, an increase of 23.5% when compared to the second quarter of 2015. Diluted earnings per share were $0.44 and $0.36 for the second quarter of 2016 and 2015, respectively.
“We are pleased to be reporting better than industry growth and continued margin and operating profit expansion,” commented Andrew Cogan, CEO. “This past June’s NeoCon trade show was a particular highlight with the terrific response and industry awards for our Rockwell Unscripted product preview, which will amplify our efforts to gain share in under penetrated areas of the workplace in the years ahead.”
Net sales were $294.7 million for the second quarter of 2016, an increase of 9.7%, from the second quarter of 2015. Net sales for the Office segment were $179.3 million during the second quarter of 2016, an increase of 11.4%. The increase in the Office segment was led by continued growth in our core systems portfolio, as well as increases in complementary products. Net sales for the Studio segment were $88.6 million during the second quarter of 2016, an increase of 13.9%. The increase in the Studio segment was led by Europe and KnollStudio in North America, however, all of our Studio segment businesses continued to grow in the second quarter of 2016. Net sales for the Coverings segment were $26.8 million during the second quarter of 2016, a decrease of 10.4%. Continued year-over-year growth in Spinneybeck | FilzFelt sales was offset by weakness at KnollTextiles and Edelman.
Gross profit for the second quarter of 2016 was $114.1 million, an increase of $12.9 million, or 12.7%, when compared with the second quarter of 2015. During the second quarter 2016, gross margin improved to 38.7% from 37.7% in the second quarter of 2015. This improvement was driven mainly by the Office segment, where operating efficiencies and improved fixed-cost leverage from higher volumes were favorable.
Total operating expenses were $80.6 million for the second quarter of 2016, or 27.3% of net sales, compared to $72.9 million, or 27.2% of net sales, for the second quarter of 2015. The increase in operating expenses was primarily related to expanded sales and marketing investments as well as higher incentive accruals related to increased profitability.
Operating profit for the second quarter of 2016 increased 18.5%, to $33.5 million, compared to operating profit of $28.3 million for the second quarter of 2015. Operating profit for the Office segment was $13.6 million, or 7.6% of net sales, in the second quarter of 2016, an increase of $4.5 million, or 49.4%. Operating profit for the Studio segment was $14.1 million, or 15.9% of net sales, an increase of $2.0 million, or 16.5%. Operating income for the Coverings segment was $5.8 million, or 21.7% of net sales, a decrease of $1.3 million, or 17.9%.
For both the second quarter of 2016 and 2015, other expense was $0.2 million. Other income and expenses are primarily related to foreign exchange gains and losses.
Net income for the second quarter of 2016 was $21.3 million, or $0.44 diluted earnings per share, compared to $17.2 million, or $0.36 diluted earnings per share, for the second quarter of 2015.
The tax rate for the second quarter of 2016 was 33.0% as compared to 34.3% from the second quarter of 2015. The mix of pretax income and the varying effective tax rates in the countries and states in which we operate directly affects our consolidated effective tax rate.
During the second quarter of 2016 and 2015, cash provided by operations was $24.6 million and $33.5 million, respectively. Capital expenditures for the second quarter of 2016 totaled $8.0 million compared to $7.5 million in the second quarter of 2015. During the second quarter of 2016, the Company paid a quarterly dividend of $7.2 million, or $0.15 per share, compared to a quarterly dividend of $5.7 million, or $0.12 per share, in the second quarter of 2015.
The full text of Knoll’s 2Q16 earnings release, including all tables, and a replay of the company’s Jul. 28 conference call, are available at http://www.knoll.com; go to “Discover Knoll” and click on “Investor Relations.” In addition, an audio replay of the conference call will be available through August 4, 2016 by dialing (855) 859-2056. International replay: (404) 537-3406 (Passcode: 486 330 45).
About Knoll
Knoll is a constellation of design-driven brands and people, working together with our clients to create inspired modern interiors. Our internationally recognized portfolio includes furniture, textiles, leathers, accessories, and architectural and acoustical elements brands. These brands – Knoll Office, KnollStudio, KnollTextiles, KnollExtra, Spinneybeck | FilzFelt, Edelman Leather, and HOLLY HUNT – reflect our commitment to modern design that meets the diverse requirements of high performance workplaces and luxury interiors. A recipient of the National Design Award for Corporate and Institutional Achievement from the Smithsonian`s Cooper-Hewitt, National Design Museum, Knoll is aligned with the U.S. Green Building Council and the Canadian Green Building Council and can help organizations achieve Leadership in Energy and Environmental Design (LEED) workplace certification. Knoll is the founding sponsor of the World Monuments Fund Modernism at Risk program.
