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.

Fourth Quarter

 

Dollars in millions

Three Months Ended

Percent

 

except per share data

12/31/2011

1/01/2011

Change

 

 

 

 

 

 

Net sales

$500.3

$466.1

7.3%

 

Gross margin

$178.0

$163.9

8.6%

 

Gross margin %

35.6%

35.2%

 

 

SG&A

$148.2

$143.5

3.2%

 

SG&A %

29.6%

30.8%

 

 

Operating income

$29.8

$20.4

46.6%

 

Operating income %

6.0%

4.4%

 

 

Income from continuing operations

$18.0

$12.6

43.3%

 

 

 

 

 

 

Earnings per share from continuing operations attributable to HNI Corporation – diluted

$0.40

$0.27

48.1%

 

 

 

 

 

 

 

 

 

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.    

 

 

 

Fourth Quarter – Non-GAAP Financial Measures – Continuing Operations

(Reconciled with most comparable GAAP financial measures)

 

Dollars in millions

except per share data

Three Months Ended 12/31/2011

 

Three Months Ended 1/01/2011

 

 

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

 

 % of net sales

35.6%

29.6%

6.0%

 

 

35.2%

30.8%

4.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and impairment

$0.1

$(1.1)

$1.2

$0.02

 

$0.3

$(6.6)

$6.9

$0.11

 

Transition costs

$0.2

-

$0.2

$0.00

 

$0.2

-

$0.2

$0.01

 

Non-operating gain

-

$0.4

$(0.4)

$(0.01)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Results (non-GAAP)

$178.3

$147.4

$30.8

$0.41

 

$164.4

$136.9

$27.5

$0.39

 

 % of net sales

35.6%

29.5%

6.2%

 

 

35.3%

29.4%

5.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Year

 

Dollars in millions

Twelve Months Ended

Percent

 

except per share data

12/31/2011

1/01/2011

Change

 

 

 

 

 

 

Net sales

$1,833.5

$1,686.7

8.7%

 

Gross margin

$639.1

$585.6

9.1%

 

Gross margin %

34.9%

34.7%

 

 

SG&A

$557.6

$527.7

5.7%

 

SG&A %

30.4%

31.3%

 

 

Operating income

$81.5

$57.9

40.7%

 

Operating income %

4.4%

3.4%

 

 

Income from continuing operations

$45.7

$29.7

54.1%

 

 

 

 

 

 

Earnings per share from continuing operations attributable to HNI Corporation – diluted

$1.01

$0.65

55.4%

 

 

 

 

 

 

 

 

 

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.

 

 

Full Year – Non-GAAP Financial Measures – Continuing Operations

(Reconciled with most comparable GAAP financial measures)

 

Dollars in millions

except per share data

Twelve Months Ended 12/31/2011

 

Twelve Months Ended 1/01/2011

 

 

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

 

 % of net sales

34.9%

30.4%

4.4%

 

 

34.7%

31.3%

3.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and impairment

$0.2

$(3.3)

$3.5

$0.05

 

$2.6

$(9.4)

$12.1

$0.17

 

Transition costs

$0.3

-

$0.3

$0.00

 

$1.5

-

$1.5

$0.02

 

Non-operating gains

-

$0.4

$(0.4)

$(0.01)

 

-

$0.5

$(0.5)

$(0.01)

 

 

 

 

 

 

 

 

 

 

 

 

Results (non-GAAP)

$639.6

$554.7

$84.9

$1.05

 

$589.7

$518.8

$70.9

$0.82

 

 % of net sales

34.9%

30.3%

4.6%

 

 

35.0%

30.8%

4.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Three Months Ended

Percent

Twelve Months Ended

Percent

 

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%

 

Operating profit

$32.2

$24.6

30.9%

$99.6

$87.6

13.8%

 

Operating profit %

8.0%

6.6%

 

6.5%

6.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures

(Reconciled with most comparable GAAP measures)

 

 

Three Months Ended

Percent

Twelve Months Ended

Percent

 

Dollars in millions

12/31/2011

1/01/2011

Change

12/31/2011

1/01/2011

Change

 

Operating profit as reported (GAAP)

$32.2

$24.6

30.9%

$99.6

$87.6

13.8%

 

% of net sales

8.0%

6.6%

 

6.5%

6.2%

 

 

 

 

 

 

 

 

 

 

Restructuring and impairment

$1.2

$1.7

 

$3.1

$6.7

 

 

Transition costs

$0.2

$0.2

 

$0.3

$1.4

 

 

Non-operating gains

$(0.4)

-

 

$(0.4)

$(0.5)

 

 

 

 

 

 

 

 

 

 

Operating profit (non-GAAP)

$33.2

$26.4

25.4%

$102.6

$95.1

7.9%

 

% of net sales

8.2%

7.1%

 

6.7%

6.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

  • 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.

 

Hearth Products

 

 

Three Months Ended

Percent

Twelve Months Ended

Percent

 

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%

 

Operating profit

$9.4

$5.4

74.0%

$14.8

$2.9

406.1%

 

Operating profit %

9.6%

5.9%

 

4.8%

1.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures

(Reconciled with most comparable GAAP measures)

 

 

Three Months Ended

Percent

Twelve Months Ended

Percent

 

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%

 

% of net sales

9.6%

5.9%

 

4.8%

1.0%

 

 

 

 

 

 

 

 

 

 

Restructuring and impairment

-

$5.3

 

$0.4

$5.4

 

 

Transition costs

-

-

 

-

$0.1

 

 

 

 

 

 

 

 

 

 

Operating profit (non-GAAP)

$9.4

$10.7

-11.7%

$15.2

$8.4

81.0%

 

% of net sales

9.6%

11.7%

 

5.0%

3.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

  • 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.

 

HNI CORPORATION

 

Condensed Consolidated Statement of Operations

 

 

 

(Dollars in thousands, except per share data)

Three Months Ended

Twelve Months Ended

 

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

 

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

 

Average number of common shares outstanding – basic

44,827,529

44,815,129

44,803,248

44,993,934

 

Income from continuing operations attributable to HNI Corporation per common share – diluted

$0.40

$0.27

$1.01

$0.65

 

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

 

Average number of common shares outstanding – diluted  

45,759,137

45,742,520

45,694,278

45,808,704

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheet

 

 

Assets

     Liabilities and Shareholders' Equity

 

 

As of

 

As of

 

 

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

 

 

 

 

 

 

 

 

 

 

 

     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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statement of Cash Flows

 

 

 

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

 

 

 

 

 

 

 

 

Business Segment Data

 

 

 

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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