Knoll Reports Second Quarter Results
Knoll, Inc. (NYSE:KNL), a leading designer and manufacturer of furnishings, textiles and fine leathers for the workplace and home, announced results for the second quarter ended June 30, 2017. Net sales were $268.7 million for the second quarter of 2017, a decrease of 8.8%, from the second quarter of 2016. Operating profit was $22.2 million for the second quarter of 2017, a decrease of 33.6%, from the second quarter of 2016. Adjusted operating profit for the second quarter of 2017 was $24.4 million, a decrease of 27.2%, from the second quarter of 2016. Net income for the second quarter of 2017 was $12.9 million, a decrease of 40.3%, when compared to the second quarter of 2016. Adjusted net income for the second quarter of 2017 was $14.3 million, a decrease of 33.8%, when compared to the second quarter of 2016. Diluted earnings per share was $0.26 and $0.44 for the second quarter of 2017 and 2016, respectively. Adjusted diluted earnings per share was $0.29 and $0.44 for the second quarter of 2017 and 2016, respectively.
“In many ways, the second quarter was a continuation of the challenging conditions we saw earlier in the year as Office shipments declined year-over-year and lagged the growth we experienced in our residential businesses. However, I believe we are getting closer to a tipping point where the initiatives we’ve taken over the past year to increase our market penetration and Office sales will start to outweigh the various forces that have been holding us back,” commented Knoll President and CEO, Andrew Cogan.
Net sales were $268.7 million for the second quarter of 2017, a decrease of 8.8%, from the second quarter of 2016. Net sales for the Office segment were $153.0 million during the second quarter of 2017, a decrease of 14.6%, when compared with the second quarter of 2016. The decrease in the Office segment was due to a combination of lower government sales and fewer large commercial projects. Net sales for the Studio segment were $88.0 million during the second quarter of 2017, a decrease of 0.7%, when compared with the second quarter of 2016. Double digit growth at Holly Hunt and the incremental sales from DatesWeiser were offset by the decreases in contract shipments at both KnollStudio and Europe. Net sales for the Coverings segment were $27.6 million during the second quarter of 2017, an increase of 3.1%, when compared with the second quarter of 2016. The increase in Coverings was driven primarily by higher volume in the Spinneybeck | FilzFelt business.
Gross profit for the second quarter of 2017 was $100.0 million, a decrease of $14.1 million, or 12.4%, when compared with the second quarter of 2016. During the second quarter of 2017, gross margin decreased to 37.2% from 38.7% in the second quarter of 2016. This decrease was driven primarily by the Office segment where lower volume had an unfavorable impact on fixed-cost leverage, partially offset by net price realization.
Total operating expenses were $77.7 million for the second quarter of 2017, or 28.9% of net sales, compared to $80.6 million, or 27.3% of net sales, for the second quarter of 2016. Operating expenses in the second quarter includes $2.2 million of restructuring charges related to headcount rationalization and modernization of equipment in the Office segment. Excluding restructuring charges, adjusted operating expenses were $75.5 million for the second quarter of 2017, compared to $80.6 million for the second quarter of 2016. The decrease was due primarily to lower incentive accruals from decreased profitability as well as lower sales commissions as a result of a reduction in volume in the Office segment.
The tax rate for the second quarter of 2017 was 35.7%, up from 32.3% in the second quarter of 2016. The increase in the tax rate was due primarily to a favorable income tax examination ruling received from a non-U.S. income tax jurisdiction during the second quarter of 2016. The tax rate was also affected by the mix of pretax income and the varying effective tax rates in the countries and states in which we operate.
Capital expenditures for the second quarter of 2017 totaled $10.1 million compared to $8.0 million in the second quarter of 2016. During the second quarter of 2017, the Company paid a quarterly dividend of $7.3 million, or $0.15 per share, compared to a quarterly dividend of $7.2 million, or $0.15 per share, in the second quarter of 2016.
The full text of Knoll’s 2Q17 earnings release, including all tables, and a replay of the company’s Jul. 28 conference call may be accessed via the Investor Relations section of the Knoll corporate website, 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, 2017 by dialing (855) 859-2056. International replay: (404) 537-3406 (Passcode: 554 88742).
About Knoll
Knoll, Inc. 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, HOLLY HUNT, and DatesWeiser – 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, Inc. is aligned with the U.S. Green Building Council and the Canadian Green Building Council and can help organizations achieve the Leadership in Energy and Environmental Design (LEED) workplace certification. Knoll, Inc. is the founding sponsor of the World Monuments Fund Modernism at Risk program.
