MUSCATINE, Iowa, April 20, 2011 -- HNI Corporation (NYSE: HNI) today announced sales of $396.2 million and a net loss of ($1.8) million for the first quarter ending April 2, 2011. Net loss per diluted share for the quarter was ($0.04) or ($0.02) on a non-GAAP basis when excluding restructuring charges. First Quarter Summary Comments "We are pleased with our improved performance over prior year. All segments delivered sales growth led by continued double-digit increases in our office furniture contract and international businesses. Strong performance in the alternative energy market also drove growth in our hearth business," said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.
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| | First Quarter |
Three Months Ended |
Percent
Change |
| | Dollars in millions except per share data |
| | 4/02/2011 | 4/03/2010 |
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| | Net sales | $396.2 | $363.5 | 9.0% |
| | Gross margin | $134.7 | $119.2 | 13.0% |
| | Gross margin % | 34.0% | 32.8% |
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| | SG&A | $133.8 | $124.6 | 7.4% |
| | SG&A % | 33.8% | 34.3% |
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| | Operating income (loss) | $0.9 | $(5.5) | 116.9% |
| | Operating income (loss) % | 0.2% | -1.5% |
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| | Income (loss) from continuing operations | $(1.8) | $(4.1) | 56.6% |
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| | Earnings per share from continuing operations attributable to HNI Corporation – diluted | $(0.04) | $(0.09) | 55.6% |
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| First Quarter Results – Continuing Operations - Consolidated net sales increased $32.7 million or 9.0 percent to $396.2 million.
- Gross margins were 1.2 percentage points higher than prior year primarily due to higher volume, cost reduction initiatives and lower restructuring and transition costs partially offset by increased material costs.
- Total selling and administrative expenses as a percent of net sales, including restructuring charges, improved 0.5 percentage points due to higher volume and lower restructuring charges partially offset by increased fuel costs, investments in growth initiatives and higher incentive-based compensation.
- The Corporation's first quarter results included $1.4 million of restructuring charges. These included $1.0 million associated with previously announced shutdown and consolidation of production of office furniture manufacturing locations and $0.4 million related to restructuring of hearth operations. Included in the first quarter of 2010 were $2.8 million of restructuring and transition costs net of a non-operating gain.
| First Quarter – Non-GAAP Financial Measures – Continuing Operations (Reconciled with most compara ble GAAP financial measures)
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| | Dollars in millions Except per share data | Three Months Ended 4/02/2011 |
| Three Months Ended 4/03/2010 |
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| Gross Profit | Operating Income |
EPS |
| Gross Profit | Operating ( Loss ) |
EPS |
| | As reported (GAAP) | $134.7 | $0.9 | $(0.04) |
| $119.2 | $(5.5) | $(0.09) |
| | % of net sales | 34.0% | 0.2% |
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| 32.8% | -1.5% |
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| | Restructuring and impairment | - | $1.4 | $0.02 |
| $0.6 | $2.4 | $0.03 |
| | Transition costs | - | - | - |
| $0.9 | $0.9 | $0.01 |
| | Non-operating gain | - | - | - |
| - | $(0.5) | $(0.01) |
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| | Results (non-GAAP) | $134.7 | $2.3 | $(0.02) |
| $120.7 | $(2.7) | $(0.06) |
| | % of net sales | 34.0% | 0.6% |
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| 33.2% | -0.7% |
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| Cash flow used in operations for the quarter was $22.0 million compared to $25.4 million for the same quarter last year. Capital expenditures were $6.4 million in the first quarter of 2011 compared to $4.8 million in the first quarter of 2010. 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.
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| | Office Furniture
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Dollars in millions | Three Months Ended | Percent
Change |
| | 4/02/2011 | 4/03/2010 |
| | Sales | $331.1 | $300.0 | 10.4% |
| | Operating profit | $8.1 | $6.2 | 29.6% |
| | Operating profit % | 2.4% | 2.1% |
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| | First Quarter – Non-GAAP Financial Measures (Reconciled with most com parable GAAP financial measures)
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| Three Months Ended | Percent |
| | Dollars in millions | 4/02/2011 | 4/03/2010 | Change |
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| | Operating profit as reported (GAAP) | $8.1 | $6.2 | 29.6% |
| | % of Net Sales | 2.4% | 2.1% |
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| | Restructuring and impairment | $1.0 | $1.7 |
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| | Transition costs | - | $1.4 |
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| | Non-operating gain | - | $(0.5) |
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| | Operating profit (non-GAAP) | $9.1 | $8.8 | 3.3% |
| | % of Net Sales | 2.8% | 2.9% |
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| - First quarter sales for the office furniture segment increased $31.1 million or 10.4 percent to $331.1 million. The increase was across all channels of the Corporation's office furniture segment with a more substantial increase in the contract and international channels.
- First quarter operating profit increased $1.8 million. Operating profit was positively impacted by higher volume and lower restructuring and transition costs. These were partially offset by lower price realization, higher input costs, investments in strategic growth initiatives and higher incentive-based compensation.
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| | Hearth Products
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Dollars in millions | Three Months Ended | Percent
Change |
| | 4/02/2011 | 4/03/2010 |
| | Sales | $65.0 | $63.5 | 2.4% |
| | Operating (loss) | $(0.6) | $(2.9) | 79.5% |
| | Operating profit % | -0.9% | -4.6% |
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| | First Quarter – Non-GAAP Financial Measures (Reconciled with most comparable GAAP financial measures)
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| Three Months Ended | Percent |
| | Dollars in millions | 4/02/2011 | 4/03/2010 | Change |
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| | Operating (loss) as reported (GAAP) | $(0.6) | $(2.9) | 79.5% |
| | % of Net Sales | -0.9% | -4.6% |
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| | Restructuring and impairment | $0.4 | $0.1 |
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| | Transition costs | - | $0.1 |
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| | Operating (loss) (non-GAAP) | $(0.2) | $(2.7) | 91.6% |
| | % of net sales | -0.3% | -4.3% |
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| - First quarter sales for the hearth products segment increased $1.6 million or 2.4 percent to $65.0 million driven by an increase in the remodel-retrofit channel partially offset by a decline in the new construction channel.
- First quarter operating profit increased $2.3 million. Operating profit was positively impacted by higher price realization and cost reduction initiatives partially offset by investments in strategic growth initiatives and higher-incentive based compensation.
Outlook "I am optimistic about our markets and the improving economy. Looking ahead to the second quarter, we see sales momentum continuing across our office furniture business. We remain on track to grow sales and increase profits in 2011, despite near-term margin pressures caused by material inflation and higher mix of large project and bid business. Our focus remains on improving operations and reducing costs while investing for long-term growth. I'm confident our businesses are 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. 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®, Quadra-Fire® and Harman Stove™ 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. |
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