MUSCATINE, Iowa — HNI Corporation earned net sales of $599.8 million and net income of $13.9 million for the first quarter ended March 29, 2025. This net sales growth returned with Q1 EPS exceeding expectations as productivity gains continued.

Total net sales increased two percent year-over-year in the first quarter, the company reported. The corporation said it continues to realize significant savings from the Kimball International  acquisition synergies and from the ramp-up of its Mexico facility. These two initiatives are expected to contribute an additional $0.70 to $0.80 of EPS in 2025 and 2026.

Recent demand activity supportive of outlook for net sales growth in 2025. Workplace Furnishings contract orders were up 15 percent year-over-year, excluding hospitality, which can be "lumpy" and where the year-ago comparison was challenging. Total segment orders were unchanged year-over-year, while quarter-ending backlog levels were up 16 percent versus the same period of 2024, further supporting continued net sales growth. First quarter Residential Building Products orders grew eight percent compared to the prior year.

Quarter-ending gross debt leverage was 1.3x, as calculated in accordance with the corporation’s debt agreements. That ratio was up modestly from the end of the fourth quarter of 2024, consistent with normal seasonal borrowing patterns. The corporation continued to deploy cash flow through $40 million of stock repurchase activity in the first quarter, while maintaining its longstanding quarterly dividend.

“Our members delivered an excellent start to 2025, despite tariff-driven volatility. Our first quarter results demonstrate the strength of our strategies, the benefits of our diversified revenue streams, and the merits of our customer-first business model.

“In the Workplace Furnishings segment, net sales increased slightly year-over-year, led by improving demand in our contract businesses. Orders accelerated and backlog levels are up, while return-to-office plans gained momentum. Each of these drivers points to continued year-over-year revenue growth over the remainder of 2025. Our profit transformation efforts and recognition of KII synergies continued to benefit first quarter results. 

However, stronger volume from large projects and from state and local government customers, which tend to carry higher discounts, was dilutive to segment operating margin. As a result, segment GAAP and non-GAAP operating profit margin compressed year-over-year in the first quarter. Despite elevated near-term uncertainty, we expect margin expansion in 2025, while we remain focused on our investments aimed at driving growth in this segment.

“In Residential Building Products, revenue growth returned, and segment operating profit margin expanded 130 basis points year-over-year in the quarter. While challenging housing market dynamics continued to pressure new construction demand, our remodel-retrofit business generated solid year-on-year revenue growth during the first quarter. Despite the current housing headwinds, we remain encouraged about the long-term opportunities tied to the broader housing market, and in the strength of our market-leading positions and profitable operating model. And, we continue to invest to drive future growth.

“Our first quarter results demonstrate our ability to manage through varying macroeconomic conditions, while remaining focused on the future. And while we expect macro headwinds and demand volatility over the near-term, based on our leading indicators—both external and internal, we expect strong results to continue, driven by our margin expansion efforts and a return of volume growth,” stated Jeff Lorenger, Chairman, President, and Chief Executive Officer.

Outlook
The corporation expects second quarter 2025 net sales in Workplace Furnishings to increase at a mid-single digit rate year-over-year, including the impact of tariff-related pricing actions. In Residential Building Products, second quarter 2025 net sales are expected to increase at a low-single digit rate compared to the same period in 2024, including the impact of tariff-related pricing actions.

Second quarter non-GAAP earnings per share.

Non-GAAP earnings per share in the second quarter of 2025 are expected to increase solidly from 2024 levels. This projected improvement is driven by productivity benefits, and volume growth, partially offset by investments and temporary price-cost pressure from tariffs.

2025 net sales.

In Workplace Furnishings, the corporation expects year-over-year mid single-digit net sales growth, excluding the benefit of an extra week in the fourth quarter. In Residential Building Products, the corporation expects year-over-year low-to-mid single-digit net sales growth, after excluding the benefit of the extra week in the fourth quarter. These projections include the impact of pricing actions implemented to offset tariff pressures. The corporation’s projection for 2025 net sales and non-GAAP earnings per share are based on current order patterns and leading external indicators, with an acknowledgement that they are subject to elevated levels of uncertainty given current macro conditions.

Double-digit EPS growth in 2025 and elevated earnings growth visibility through 2026, including tariff impacts. The corporation's outlook for 2025 earnings is unchanged with double-digit percent EPS growth expected, driven by KII synergies, the ramp-up of the Mexico facility, and increased profits from volume growth. The remaining $0.70 to $0.80 of incremental EPS benefit from KII and Mexico are expected to be roughly evenly distributed between 2025 and 2026, providing strong earnings visibility over the next two years. For the full year, the corporation expects to offset the majority of any tariff-driven pressures.

Balance sheet. The corporation’s low leverage and strong cash flow generation will provide substantial capacity for capital deployment. Current priorities for capital deployment are reinvesting in the business, funding dividends, pursuing share buybacks, and exploring M&A opportunities.
Concluding Remarks

“We delivered a strong start to 2025, with revenue growth returning—in both segments, and non-GAAP operating margin expanding to the strongest first quarter-level since 2007. As we look to the full year, our earnings outlook remains unchanged - demonstrating the benefits of our visibility story and our ability to manage through changing economic conditions. We expect solid mid-single digit revenue growth—in both segments, a mostly unchanged non-GAAP operating margin versus the year-ago period, and double-digit non-GAAP earnings per share growth for the fourth consecutive year. We had a strong start to the year and are optimistic about the remainder of 2025. While the macroeconomic environment remains dynamic, we remain prepared to manage through any demand challenges.

“Our members remain focused on driving growth and expanding margins. Our balance sheet is in great shape and our cash flow remains consistent and strong. We will continue to invest for the future with confidence,” concluded Lorenger.