Home Products Furniture HNI Corp. reports earnings for Q3 year 2019

HNI Corp. reports earnings for Q3 year 2019

HNI Corporation announced sales for the third quarter ended September 28, 2019 of $625.4 million and net income of $46.1 million. GAAP net income per diluted share was $1.07 compared to
$0.89 in the prior year. Non-GAAP net income per diluted share was $1.08 compared to $0.90 in the prior year. GAAP to non-GAAP reconciliations follow the financial statements in this release.

“Our teams delivered strong profit growth during the third quarter.
The demand environment remains dynamic, and our organization
continues to adjust and drive value for shareholders,” said Jeff
Lorenger, HNI Corporation President and Chief Executive Officer.
Consolidated net sales increased $14.3 million or 2.3 percent from
the prior year quarter to $625.4 million. On an organic basis, sales
increased 3.1 percent. The net impact of divesting small office
furniture companies decreased sales $4.5 million compared to
the prior year quarter. A reconciliation of organic sales, a non-
GAAP measure, follows the financial statements in this release.

Gross profit margin decreased 20 basis points compared
to the prior year quarter. This decrease was driven by
lower volume and higher input costs, partially offset by
price realization and productivity, net of investments.
Selling and administrative expenses as a percent of sales decreased
110 basis points compared to the prior year quarter. This decrease
was primarily due to higher net sales and lower core SG&A spend.
Non-GAAP net income per diluted share was $1.08 compared
to $0.90 in the prior year quarter. The $0.18 increase was due
to price realization and productivity, net of investments,
partially offset by lower sales volume and higher input costs.
Office furniture net sales increased $13.1 million or 2.8
percent from the prior year quarter to $484.8 million. On
an organic basis, sales increased 3.8 percent primarily
driven by growth in the contract business. The net impact
of divesting small office furniture companies decreased
sales $4.5 million compared to the prior year quarter.

Office furniture GAAP operating profit margin increased
90 basis points for the quarter. This increase was driven
by improved price realization and productivity, net of
investments, partially offset by lower sales volume, higher
input costs, and higher restructuring and transition costs.
Hearth products net sales increased $1.2 million or 0.9
percent from the prior year quarter to $140.6 million,
driven by an increase in the new construction business.
Hearth products GAAP operating profit margin increased 120
basis points for the quarter. This increase was driven by price
realization and one-time restructuring and transition costs
incurred in the prior year quarter, partially offset by lower sales
volume and higher input costs.
The Corporation expects full year organic sales to be up
approximately 1 percent. This compares to the previous organic
sales growth expectation of up 1 to 4 percent. The change
is primarily driven by lower growth in the contract-driven
office furniture business. Including the impact of closing and
divesting small office furniture companies, full year sales
are expected to be flat to the prior year. The Corporation’s
estimate of full year non-GAAP earnings per diluted share
has narrowed and is expected to be in the range of $2.50 to
$2.60 versus the previous guidance range of $2.50 to $2.70.
“We expect continued profit growth in the fourth quarter.
Recently, we have seen increasing macro-economic uncertainty
slow our growth in the contract business; however, we are
confident in our contract competitive position as we come off a
strong third quarter. Our outlook for the supplies-driven office
furniture and hearth products businesses remains relatively
unchanged. We have multiple opportunities in front of us to
grow profits and increase long-term shareholder value,” said Mr.
Lorenger.