MUSCATINE, Iowa, July 21 -- HNI Corporation (NYSE: HNI) today announced sales of $398.2 million and income from continuing operations of $5.6 million for the second quarter ending July 3, 2010. Net income per diluted share from continuing operations for the quarter was $0.12 or $0.15 on a non-GAAP basis when excluding restructuring and impairment charges and transition costs.
Second Quarter Summary Comments
"Strengthening demand in office furniture combined with outstanding execution across the businesses drove strong second quarter results. We continue to leverage our reset cost structure, enhance our network distribution model and invest in selling and growth initiatives. Our performance allowed us to deliver significantly improved results versus prior year and exceed second quarter expectations," said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.
Second Quarter Results - Continuing Operations
-- Consolidated net sales increased $23.5 million or 6.3 percent to $398.2 million.
-- Gross margins were 1.5 percentage points higher than prior year primarily due to higher volume and cost reduction initiatives
partially offset by lower price realization and higher mix of lower margin products in the office furniture segment.
-- Total selling and administrative expenses as a percent of net sales, including restructuring charges, improved 1.3 percentage points due to
higher volume and cost reduction initiatives partially offset by investments in selling initiatives and increased incentive based compensation.
-- The Corporation's second quarter results included $2.4 million of restructuring and transition costs associated with shutdown and
consolidation of production of office furniture manufacturing locations of which $1.1 million were included in cost of sales.
Included in 2009 were $5.2 million of restructuring charges of which $1.4 million were included in cost of sales. Second quarter 2009 also
included a non-operating gain of $1.3 million.
-- The Corporation estimates additional charges related to various restructuring initiatives will impact pre-tax earnings by $2.6 million
over the remainder of 2010.
Year-to-Date Results
Consolidated net sales for the first six months of 2010 decreased $9.9 million, or 1.3 percent, to $761.7 million compared to $771.6 million in 2009. Gross margins increased to 34.2 percent compared to 32.4 percent last year. Income from continuing operations was $6.6 million compared to a loss of $15.3 million in 2009. Earnings per share from continuing operations increased to $0.03 per diluted share compared to ($0.29) per diluted share last year.
Cash flow from operations for the first six months of 2010 was $1.5 million compared to $49.4 million last year. Operating cash flow results in 2009 were positively impacted by reductions in accounts receivable due to decreased revenue. Capital expenditures were $12.4 million in 2010 compared to $7.8 million in 2009. The Corporation repurchased 372,822 shares of its common stock at a cost of $10.3 million during the first six months of 2010. There is approximately $153.3 million remaining under the current repurchase authorization.
Discontinued Operations
The Corporation made a decision during the first quarter to sell a small, non-core business of the office furniture segment and recorded a pre-tax charge of $1.0 million to reduce the assets held for sale to fair market value. In addition the Corporation sold a small, non-core component of the hearth products segment during the first quarter. A pre-tax charge of $0.4 million was recorded at the time of sale. During the second quarter an additional pre-tax charge of $1.7 million was recorded related to the office furniture business to reduce the assets held for sale to the fair market value based on changes in negotiations with prospective buyers. Revenues and expenses associated with these business operations are shown as discontinued operations for all periods presented in the financial statements.
Office Furniture
-- Second quarter sales for the office furniture segment increased to $342.7 million. The increase was across all channels of the
Corporation's office furniture segment.
-- Second quarter operating profit increased $5.6 million. Operating profit was positively impacted by higher volume, improved distribution
efficiencies, cost reduction initiatives and lower restructuring and transition costs. These were partially offset by lower price
realization, higher mix of lower margin products, increased fuel costs, investments in selling initiatives and higher incentive based
compensation.
-- Second quarter sales for the hearth products segment decreased $1.3 million driven by a decline in the remodel-retrofit channel partially
offset by an increase in the new construction channel.
-- Second quarter operating profit increased $6.4 million. Operating profit was positively impacted by cost reduction initiatives and lower
restructuring costs partially offset by lower volume and higher material costs.
Outlook
"I am encouraged by the strengthened demand across our businesses, despite the ongoing economic uncertainty. We are accelerating investments in selling, marketing and product initiatives to grow our businesses and deliver long-term shareholder value. We remain focused on improving operations and reducing our cost structure. The Corporation is financially strong and well positioned for the future," said Mr. Askren.
The Corporation remains focused on creating long-term shareholder value by growing its business through investment in building brands, product solutions and selling models, enhancing its strong member-owner culture, and remaining focused on its long-standing rapid continuous improvement programs to build best total cost and a lean enterprise.
Conference Call
HNI Corporation will host a conference call on Thursday, July 22, 2010 at 10:00 a.m. (Central) to discuss first quarter results.
HNI Corporation is a NYSE traded company (ticker symbol: HNI) providing products and solutions for the home and workplace environments. HNI Corporation is the second largest office furniture manufacturer in the world and is also the nation's leading manufacturer and marketer of gas- and wood-burning fireplaces. The Corporation's strong brands, including HON®, Allsteel®, Gunlocke®, Paoli®, Maxon®, Lamex®, HBF® , Heatilator®, Heat & Glo(TM), Quadra-Fire® and Harman Stove(TM) have leading positions in their markets. HNI Corporation is committed to maintaining its long-standing corporate values of integrity, financial soundness and a culture of service and responsiveness. More information can be found on the Corporation's website at www.hnicorp.com.
Source: HNI Corporation
Second Quarter Summary Comments
"Strengthening demand in office furniture combined with outstanding execution across the businesses drove strong second quarter results. We continue to leverage our reset cost structure, enhance our network distribution model and invest in selling and growth initiatives. Our performance allowed us to deliver significantly improved results versus prior year and exceed second quarter expectations," said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.
Second Quarter Results - Continuing Operations
-- Consolidated net sales increased $23.5 million or 6.3 percent to $398.2 million.
-- Gross margins were 1.5 percentage points higher than prior year primarily due to higher volume and cost reduction initiatives
partially offset by lower price realization and higher mix of lower margin products in the office furniture segment.
-- Total selling and administrative expenses as a percent of net sales, including restructuring charges, improved 1.3 percentage points due to
higher volume and cost reduction initiatives partially offset by investments in selling initiatives and increased incentive based compensation.
-- The Corporation's second quarter results included $2.4 million of restructuring and transition costs associated with shutdown and
consolidation of production of office furniture manufacturing locations of which $1.1 million were included in cost of sales.
Included in 2009 were $5.2 million of restructuring charges of which $1.4 million were included in cost of sales. Second quarter 2009 also
included a non-operating gain of $1.3 million.
-- The Corporation estimates additional charges related to various restructuring initiatives will impact pre-tax earnings by $2.6 million
over the remainder of 2010.
Year-to-Date Results
Consolidated net sales for the first six months of 2010 decreased $9.9 million, or 1.3 percent, to $761.7 million compared to $771.6 million in 2009. Gross margins increased to 34.2 percent compared to 32.4 percent last year. Income from continuing operations was $6.6 million compared to a loss of $15.3 million in 2009. Earnings per share from continuing operations increased to $0.03 per diluted share compared to ($0.29) per diluted share last year.
Cash flow from operations for the first six months of 2010 was $1.5 million compared to $49.4 million last year. Operating cash flow results in 2009 were positively impacted by reductions in accounts receivable due to decreased revenue. Capital expenditures were $12.4 million in 2010 compared to $7.8 million in 2009. The Corporation repurchased 372,822 shares of its common stock at a cost of $10.3 million during the first six months of 2010. There is approximately $153.3 million remaining under the current repurchase authorization.
Discontinued Operations
The Corporation made a decision during the first quarter to sell a small, non-core business of the office furniture segment and recorded a pre-tax charge of $1.0 million to reduce the assets held for sale to fair market value. In addition the Corporation sold a small, non-core component of the hearth products segment during the first quarter. A pre-tax charge of $0.4 million was recorded at the time of sale. During the second quarter an additional pre-tax charge of $1.7 million was recorded related to the office furniture business to reduce the assets held for sale to the fair market value based on changes in negotiations with prospective buyers. Revenues and expenses associated with these business operations are shown as discontinued operations for all periods presented in the financial statements.
Office Furniture
-- Second quarter sales for the office furniture segment increased to $342.7 million. The increase was across all channels of the
Corporation's office furniture segment.
-- Second quarter operating profit increased $5.6 million. Operating profit was positively impacted by higher volume, improved distribution
efficiencies, cost reduction initiatives and lower restructuring and transition costs. These were partially offset by lower price
realization, higher mix of lower margin products, increased fuel costs, investments in selling initiatives and higher incentive based
compensation.
-- Second quarter sales for the hearth products segment decreased $1.3 million driven by a decline in the remodel-retrofit channel partially
offset by an increase in the new construction channel.
-- Second quarter operating profit increased $6.4 million. Operating profit was positively impacted by cost reduction initiatives and lower
restructuring costs partially offset by lower volume and higher material costs.
Outlook
"I am encouraged by the strengthened demand across our businesses, despite the ongoing economic uncertainty. We are accelerating investments in selling, marketing and product initiatives to grow our businesses and deliver long-term shareholder value. We remain focused on improving operations and reducing our cost structure. The Corporation is financially strong and well positioned for the future," said Mr. Askren.
The Corporation remains focused on creating long-term shareholder value by growing its business through investment in building brands, product solutions and selling models, enhancing its strong member-owner culture, and remaining focused on its long-standing rapid continuous improvement programs to build best total cost and a lean enterprise.
Conference Call
HNI Corporation will host a conference call on Thursday, July 22, 2010 at 10:00 a.m. (Central) to discuss first quarter results.
HNI Corporation is a NYSE traded company (ticker symbol: HNI) providing products and solutions for the home and workplace environments. HNI Corporation is the second largest office furniture manufacturer in the world and is also the nation's leading manufacturer and marketer of gas- and wood-burning fireplaces. The Corporation's strong brands, including HON®, Allsteel®, Gunlocke®, Paoli®, Maxon®, Lamex®, HBF® , Heatilator®, Heat & Glo(TM), Quadra-Fire® and Harman Stove(TM) have leading positions in their markets. HNI Corporation is committed to maintaining its long-standing corporate values of integrity, financial soundness and a culture of service and responsiveness. More information can be found on the Corporation's website at www.hnicorp.com.
Source: HNI Corporation
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