MUSCATINE, IA -- HNI Corp. today announced sales for the fourth quarter ended Dec. 31, 2011, of $500.3 million, a 7 percent increase from the prior year quarter, and income from continuing operations of $18.0 million, a 43 percent increase from prior year quarter. Net income per diluted share from continuing operations for the quarter was $0.40 or $0.41 on a non-GAAP basis when excluding restructuring and transition costs and non-operating gains. For fiscal year 2011, the Corporation reported sales of $1.8 billion, a 9 percent increase from prior year, and income from continuing operations of $45.7 million, a 54 percent increase from prior year. Net income per diluted share from continuing operations for the year was $1.01 or $1.05 on a non-GAAP basis when excluding restructuring and transition costs and non-operating gains.
Fourth Quarter and FY'11 Summary Comments
"We are pleased with our strong execution and solid profit improvement for the fourth quarter and full year 2011. Our growth investments delivered top-line improvement across all businesses in the quarter, and outstanding working capital results drove significant cash generation. Office furniture sales growth was led by strong performance in our contract and international businesses. Hearth sales benefited from improved conditions in new home construction and high energy prices.
"We enter 2012 financially strong and with positive momentum across all of our businesses. We are aggressively investing for growth, competitively well positioned within our markets, and delivering profitable growth," said Stan Askren, HNI Corp. chairman, president and chief executive officer.
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Fourth Quarter |
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Dollars in millions |
Three Months Ended |
Percent |
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|
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except per share data |
12/31/2011 |
1/01/2011 |
Change |
|
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|
|
|
|
|
|
Net sales |
$500.3 |
$466.1 |
7.3% |
|
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Gross margin |
$178.0 |
$163.9 |
8.6% |
|
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Gross margin % |
35.6% |
35.2% |
|
|
|
SG&A |
$148.2 |
$143.5 |
3.2% |
|
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SG&A % |
29.6% |
30.8% |
|
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Operating income |
$29.8 |
$20.4 |
46.6% |
|
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Operating income % |
6.0% |
4.4% |
|
|
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Income from continuing operations |
$18.0 |
$12.6 |
43.3% |
|
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Earnings per share from continuing operations attributable to HNI Corporation – diluted |
$0.40 |
$0.27 |
48.1% |
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Fourth Quarter Results – Continuing Operations
- Consolidated net sales increased $34.1 million or 7.3 percent from the prior year quarter to $500.3 million. The acquisition of Sagus contributed $8.2 million, or 1.8 percentage points of sales.
- Gross margins were 0.4 percentage points higher than prior year quarter primarily due to higher volume and better price realization offset partially by increased material costs.
- Total selling and administrative expenses as a percent of net sales, including restructuring charges, improved 1.2 percentage points from the prior year quarter due to higher volume, lower restructuring charges and a non-operating gain partially offset by increased fuel costs, higher incentive based compensation and costs associated with the new acquisition.
- The Corporation's fourth quarter results included $1.0 million of restructuring and transition costs of which $0.2 million were included in cost of sales. This represented $1.4 million associated with shutdown and consolidation of office furniture manufacturing locations net of a $0.4 million non-operating gain on the sale of property. Included in the fourth quarter of 2010 were $7.1 million of restructuring, impairment and transition costs.
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Fourth Quarter – Non-GAAP Financial Measures – Continuing Operations (Reconciled with most comparable GAAP financial measures) |
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Dollars in millions except per share data |
Three Months Ended 12/31/2011 |
|
Three Months Ended 1/01/2011 |
|
||||||
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Gross Profit |
SG&A |
Operating Income |
EPS |
|
Gross Profit |
SG&A |
Operating Income |
EPS |
|
|
As reported (GAAP) |
$178.0 |
$148.2 |
$29.8 |
$0.40 |
|
$163.9 |
$143.5 |
$20.4 |
$0.27 |
|
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% of net sales |
35.6% |
29.6% |
6.0% |
|
|
35.2% |
30.8% |
4.4% |
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Restructuring and impairment |
$0.1 |
$(1.1) |
$1.2 |
$0.02 |
|
$0.3 |
$(6.6) |
$6.9 |
$0.11 |
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Transition costs |
$0.2 |
- |
$0.2 |
$0.00 |
|
$0.2 |
- |
$0.2 |
$0.01 |
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Non-operating gain |
- |
$0.4 |
$(0.4) |
$(0.01) |
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Results (non-GAAP) |
$178.3 |
$147.4 |
$30.8 |
$0.41 |
|
$164.4 |
$136.9 |
$27.5 |
$0.39 |
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% of net sales |
35.6% |
29.5% |
6.2% |
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35.3% |
29.4% |
5.9% |
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Full Year |
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Dollars in millions |
Twelve Months Ended |
Percent |
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|
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except per share data |
12/31/2011 |
1/01/2011 |
Change |
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|
|
|
|
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Net sales |
$1,833.5 |
$1,686.7 |
8.7% |
|
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Gross margin |
$639.1 |
$585.6 |
9.1% |
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Gross margin % |
34.9% |
34.7% |
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SG&A |
$557.6 |
$527.7 |
5.7% |
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SG&A % |
30.4% |
31.3% |
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Operating income |
$81.5 |
$57.9 |
40.7% |
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Operating income % |
4.4% |
3.4% |
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Income from continuing operations |
$45.7 |
$29.7 |
54.1% |
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Earnings per share from continuing operations attributable to HNI Corporation – diluted |
$1.01 |
$0.65 |
55.4% |
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Full Year Results – Continuing Operations
- Net sales increased $146.7 million, or 8.7 percent, to $1.8 billion compared to $1.7 billion for the prior year. Acquisitions contributed $8.2 million, or 0.5 percentage points of sales.
- Gross margins were 0.2 percentage points higher than prior year due to increased volume, better price realization and lower restructuring and transition costs offset partially by increased material costs.
- Total selling and administrative expenses as a percent of net sales, including restructuring charges, improved 0.9 percentage points due to higher volume and lower restructuring charges partially offset by increased fuel costs, investments in growth initiatives, higher incentive based compensation and costs associated with the new acquisition. Included in 2011 were $3.3 million of restructuring and impairment charges compared to $9.4 million in 2010.
Cash flow from operations for the year was $134.3 million compared to $94.4 million in 2010. Capital expenditures were $31.1 million in 2011 compared to $26.7 million in 2010. The Corporation completed the acquisition of Sagus International, a designer and manufacturer of educational furniture solutions, for a total purchase price of $55 million. The Corporation repurchased 323,965 shares of its common stock during 2011. There is approximately $135.8 million remaining under the current repurchase authorization.
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Full Year – Non-GAAP Financial Measures – Continuing Operations (Reconciled with most comparable GAAP financial measures) |
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Dollars in millions except per share data |
Twelve Months Ended 12/31/2011 |
|
Twelve Months Ended 1/01/2011 |
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Gross Profit |
SG&A |
Operating Income |
EPS |
|
Gross Profit |
SG&A |
Operating Income |
EPS |
|
|
As reported (GAAP) |
$639.1 |
$557.6 |
$81.5 |
$1.01 |
|
$585.6 |
$527.7 |
$57.9 |
$0.65 |
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% of net sales |
34.9% |
30.4% |
4.4% |
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|
34.7% |
31.3% |
3.4% |
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Restructuring and impairment |
$0.2 |
$(3.3) |
$3.5 |
$0.05 |
|
$2.6 |
$(9.4) |
$12.1 |
$0.17 |
|
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Transition costs |
$0.3 |
- |
$0.3 |
$0.00 |
|
$1.5 |
- |
$1.5 |
$0.02 |
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Non-operating gains |
- |
$0.4 |
$(0.4) |
$(0.01) |
|
- |
$0.5 |
$(0.5) |
$(0.01) |
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Results (non-GAAP) |
$639.6 |
$554.7 |
$84.9 |
$1.05 |
|
$589.7 |
$518.8 |
$70.9 |
$0.82 |
|
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% of net sales |
34.9% |
30.3% |
4.6% |
|
|
35.0% |
30.8% |
4.2% |
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Discontinued Operations
The Corporation completed the sale of a small, non-core business in the office furniture segment and a small, non-core component of its hearth products segment during 2010. Revenues and expenses associated with these business operations are presented as discontinued operations for all periods presented in the financial statements.
|
Office Furniture |
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Three Months Ended |
Percent |
Twelve Months Ended |
Percent |
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|
Dollars in millions |
12/31/2011 |
1/01/2011 |
Change |
12/31/2011 |
1/01/2011 |
Change |
|
|
Sales |
$402.4 |
$374.8 |
7.4% |
$1,528.1 |
$1,404.9 |
8.8% |
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Operating profit |
$32.2 |
$24.6 |
30.9% |
$99.6 |
$87.6 |
13.8% |
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Operating profit % |
8.0% |
6.6% |
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6.5% |
6.2% |
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Non-GAAP Financial Measures (Reconciled with most comparable GAAP measures) |
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Three Months Ended |
Percent |
Twelve Months Ended |
Percent |
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Dollars in millions |
12/31/2011 |
1/01/2011 |
Change |
12/31/2011 |
1/01/2011 |
Change |
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|
Operating profit as reported (GAAP) |
$32.2 |
$24.6 |
30.9% |
$99.6 |
$87.6 |
13.8% |
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% of net sales |
8.0% |
6.6% |
|
6.5% |
6.2% |
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Restructuring and impairment |
$1.2 |
$1.7 |
|
$3.1 |
$6.7 |
|
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Transition costs |
$0.2 |
$0.2 |
|
$0.3 |
$1.4 |
|
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Non-operating gains |
$(0.4) |
- |
|
$(0.4) |
$(0.5) |
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Operating profit (non-GAAP) |
$33.2 |
$26.4 |
25.4% |
$102.6 |
$95.1 |
7.9% |
|
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% of net sales |
8.2% |
7.1% |
|
6.7% |
6.8% |
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- Fourth quarter and full year sales for the office furniture segment increased $27.6 million and $123.1 million, respectively. These increases were driven by an increase in the supplies driven channel and a more substantial increase in the contract and international channels of the office furniture industry. Acquisitions contributed $8.2 million or 2.2 percentage points in the fourth quarter and $8.2 million or 0.6 percentage points for the full year.
- Fourth quarter and full year operating profit increased $7.6 million and $12.1 million, respectively. Operating profit was positively impacted by increased volume, better price realization and lower restructuring, transition and impairment expenses. These were partially offset by higher input costs, investments in selling and growth initiatives and higher incentive-based compensation expense.
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Hearth Products |
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Three Months Ended |
Percent |
Twelve Months Ended |
Percent |
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Dollars in millions |
12/31/2011 |
1/01/2011 |
Change |
12/31/2011 |
1/01/2011 |
Change |
|
|
Sales |
$97.9 |
$91.3 |
7.1% |
$305.4 |
$281.8 |
8.4% |
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Operating profit |
$9.4 |
$5.4 |
74.0% |
$14.8 |
$2.9 |
406.1% |
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Operating profit % |
9.6% |
5.9% |
|
4.8% |
1.0% |
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Non-GAAP Financial Measures (Reconciled with most comparable GAAP measures) |
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Three Months Ended |
Percent |
Twelve Months Ended |
Percent |
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|
Dollars in millions |
12/31/2011 |
1/01/2011 |
Change |
12/31/2011 |
1/01/2011 |
Change |
|
|
Operating profit as reported (GAAP) |
$9.4 |
$5.4 |
74.0% |
$14.8 |
$2.9 |
406.1% |
|
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% of net sales |
9.6% |
5.9% |
|
4.8% |
1.0% |
|
|
|
|
|
|
|
|
|
|
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Restructuring and impairment |
- |
$5.3 |
|
$0.4 |
$5.4 |
|
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|
Transition costs |
- |
- |
|
- |
$0.1 |
|
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Operating profit (non-GAAP) |
$9.4 |
$10.7 |
-11.7% |
$15.2 |
$8.4 |
81.0% |
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% of net sales |
9.6% |
11.7% |
|
5.0% |
3.0% |
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- Fourth quarter sales for the hearth products segment increased $6.5 million driven by increases in the new construction channel and the remodel-retrofit channel. Full year sales for the hearth products segment increased $23.6 million driven by an increase in the remodel/retrofit channel partially offset by a decrease in the new construction channel.
- Fourth quarter and full year operating profit increased $4.0 million and $11.8 million, respectively. Operating profit was positively impacted by higher volume, better price realization and lower restructuring and impairment charges partially offset by higher input costs, investments in selling and marketing initiatives and incentive-based compensation.
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HNI CORPORATION
Condensed Consolidated Statement of Operations
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(Dollars in thousands, except per share data) |
Three Months Ended |
Twelve Months Ended |
|
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|
Dec. 31, 2011 |
Jan. 1, 2011 |
Dec. 31, 2011 |
Jan. 1, 2011 |
|
|
|
Net Sales |
$ 500,269 |
$ 466,148 |
$1,833,450 |
$1,686,728 |
|
|
Cost of products sold |
322,255 |
302,246 |
1,194,387 |
1,101,112 |
|
|
Gross profit |
178,014 |
163,902 |
639,063 |
585,616 |
|
|
Selling and administrative expenses |
147,034 |
136,912 |
554,315 |
518,257 |
|
|
Restructuring and impairment charges |
1,131 |
6,628 |
3,261 |
9,449 |
|
|
Operating income |
29,849 |
20,362 |
81,487 |
57,910 |
|
|
Interest income |
158 |
125 |
623 |
471 |
|
|
Interest expense |
2,762 |
3,283 |
11,951 |
11,903 |
|
|
Income from continuing operations before income taxes |
27,245 |
17,204 |
70,159 |
46,478 |
|
|
Income taxes |
9,219 |
4,621 |
24,411 |
16,797 |
|
|
Income from continuing operations, less applicable income taxes |
18,026 |
12,583 |
45,748 |
29,681 |
|
|
Discontinued operations, less applicable income taxes |
- |
(6) |
- |
(2,558) |
|
|
Net income (loss) |
18,026 |
12,577 |
45,748 |
27,123 |
|
|
Less: Net income (loss) attributable to the noncontrolling interest |
(111) |
33 |
(238) |
182 |
|
|
Net income attributable to HNI Corporation |
$ 18,137 |
$ 12,544 |
$ 45,986 |
$ 26,941 |
|
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Income from continuing operations attributable to HNI Corporation per common share – basic |
$0.40 |
$0.28 |
$1.03 |
$0.66 |
|
|
Discontinued operations attributable to HNI Corporation per common share – basic |
- |
$0.00 |
- |
$(0.06) |
|
|
Net income attributable to HNI Corporation common shareholders – basic |
$0.40 |
$0.28 |
$1.03 |
$0.60 |
|
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Average number of common shares outstanding – basic |
44,827,529 |
44,815,129 |
44,803,248 |
44,993,934 |
|
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Income from continuing operations attributable to HNI Corporation per common share – diluted |
$0.40 |
$0.27 |
$1.01 |
$0.65 |
|
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Discontinued operations attributable to HNI Corporation per common share – diluted |
- |
$0.00 |
- |
$(0.06) |
|
|
Net income attributable to HNI Corporation common shareholders – diluted |
$0.40 |
$0.27 |
$1.01 |
$0.59 |
|
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Average number of common shares outstanding – diluted |
45,759,137 |
45,742,520 |
45,694,278 |
45,808,704 |
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Condensed Consolidated Balance Sheet
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Assets |
Liabilities and Shareholders' Equity |
|
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As of |
|
As of |
|
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|
|
Dec. 31, |
Jan. 1, |
|
Dec. 31, |
Jan. 1, |
|
|
(Dollars in thousands) |
2011 |
2011 |
|
2011 |
2011 |
|
|
Cash and cash equivalents |
$ 72,812 |
$ 99,096 |
Accounts payable and |
|
|
|
|
Short-term investments |
9,157 |
10,567 |
accrued expenses |
$ 358,290 |
$ 311,066 |
|
|
Receivables |
204,036 |
190,118 |
Note payable and current |
|
|
|
|
Inventories |
101,873 |
68,956 |
maturities of long-term debt |
30,345 |
50,029 |
|
|
Deferred income taxes |
18,797 |
18,467 |
Current maturities of other |
|
|
|
|
Prepaid expenses and |
|
|
long-term obligations |
275 |
256 |
|
|
other current assets |
27,365 |
20,957 |
|
|
|
|
|
Current assets |
434,040 |
408,161 |
Current liabilities |
388,910 |
361,351 |
|
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|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
150,200 |
150,000 |
|
|
|
|
|
Capital lease obligations |
340 |
111 |
|
|
Property and equipment - net |
229,727 |
231,781 |
Other long-term liabilities |
52,716 |
47,437 |
|
|
Goodwill |
270,761 |
260,634 |
Deferred income taxes |
42,770 |
30,525 |
|
|
Other assets |
119,730 |
97,304 |
|
|
|
|
|
|
|
|
Parent Company shareholders' equity |
419,057 |
407,985 |
|
|
|
|
|
Noncontrolling interest |
265 |
471 |
|
|
|
|
|
Shareholders' equity |
419,322 |
408,456 |
|
|
|
|
|
Total liabilities and |
|
|
|
|
Total assets |
$1,054,258 |
$ 997,880 |
shareholders' equity |
$1,054,258 |
$ 997,880 |
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Condensed Consolidated Statement of Cash Flows
|
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|
|
Twelve Months Ended |
|
|
|
(Dollars in thousands) |
Dec. 31, 2011 |
Jan. 1, 2011 |
|
|
Net cash flows from (to) operating activities |
$134,278 |
$ 94,384 |
|
|
Net cash flows from (to) investing activities: |
|
|
|
|
Capital expenditures |
(31,143) |
(26,722) |
|
|
Acquisition spending |
(54,990) |
(149) |
|
|
Other |
(5,407) |
1,818 |
|
|
Net cash flows from (to) financing activities |
(69,022) |
(57,609) |
|
|
Net increase (decrease) in cash and cash equivalents |
(26,284) |
11,722 |
|
|
Cash and cash equivalents at beginning of period |
99,096 |
87,374 |
|
|
Cash and cash equivalents at end of period |
$ 72,812 |
$ 99,096 |
|
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Business Segment Data
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|
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|
|
Three Months Ended |
Twelve Months Ended |
|
||
|
(Dollars in thousands) |
Dec. 31, 2011 |
Jan. 1, 2011 |
Dec. 31, 2011 |
Jan. 1, 2011 |
|
|
Net sales: |
|
|
|
|
|
|
Office furniture |
$ 402,407 |
$ 374,812 |
$1,528,050 |
$1,404,923 |
|
|
Hearth products |
97,862 |
91,336 |
305,400 |
281,805 |
|
|
|
$ 500,269 |
$ 466,148 |
$1,833,450 |
$1,686,728 |
|
|
|
|
|
|
|
|
|
Operating profit: |
|
|
|
|
|
|
Office furniture |
|
|
|
|
|
|
Operations before restructuring and impairment charges |
$ 33,307 |
$ 25,949 |
$ 102,468 |
$ 91,649 |
|
|
Restructuring and impairment charges |
(1,131) |
(1,370) |
(2,842) |
(4,090) |
|
|
Office furniture - net |
32,176 |
24,579 |
99,626 |
87,559 |
|
|
Hearth products |
|
|
|
|
|
|
Operations before restructuring and impairment charges |
9,422 |
10,672 |
15,171 |
8,274 |
|
|
Restructuring and impairment charges |
- |
(5,258) |
(419) |
(5,359) |
|
|
Hearth products - net |
9,422 |
5,414 |
14,752 |
2,915 |
|
|
Total operating profit |
41,598 |
29,993 |
114,378 |
90,474 |
|
|
Unallocated corporate expense |
(14,353) |
(12,789) |
(44,219) |
(43,996) |
|
|
Income before income taxes |
$ 27,245 |
$ 17,204 |
$ 70,159 |
$ 46,478 |
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense: |
|
|
|
|
|
|
Office furniture |
$ 8,801 |
$ 10,249 |
$ 36,109 |
$ 44,717 |
|
|
Hearth products |
1,649 |
2,422 |
7,574 |
11,474 |
|
|
General corporate |
702 |
598 |
2,604 |
2,439 |
|
|
|
$ 11,152 |
$ 13,269 |
$ 46,287 |
$ 58,630 |
|
|
|
|
|
|
|
|
|
Capital expenditures – net: |
|
|
|
|
|
|
Office furniture |
$ 8,249 |
$ 6,303 |
$ 24,061 |
$ 20,928 |
|
|
Hearth products |
199 |
980 |
2,179 |
2,423 |
|
|
General corporate |
2,501 |
763 |
4,903 |
3,371 |
|
|
|
$ 10,949 |
$ 8,046 |
$ 31,143 |
$ 26,722 |
|
|
|
|
|
|
|
|
|
|
|
|
As of |
As of |
|
|
|
|
|
Dec. 31, 2011 |
Jan. 1, 2011 |
|
|
Identifiable assets: |
|
|
|
|
|
|
Office furniture |
|
|
$ 671,334 |
$ 588,540 |
|
|
Hearth products |
|
|
259,142 |
267,125 |
|
|
General corporate |
|
|
123,782 |
142,215 |
|
|
|
|
|
$ 1,054,258 |
$ 997,880 |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
Source: HNI Corporation
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