MUSCATINE, IA -- HNI Corp.  today announced sales of $527.5 million and net income of $17.6 million for the fourth quarter ended Dec. 29, 2012. Net income per diluted share for the quarter was $0.39 or $0.40 on a non-GAAP basis when excluding restructuring and transition costs. For fiscal year 2012, the Corporation reported sales of $2.0 billion, a 9.3 percent increase from prior year, and net income of $49.0 million, a 6.5 percent increase from prior year. Net income per diluted share for the year was $1.07 or $1.13 on a non-GAAP basis when excluding restructuring and transition costs.

Fourth Quarter and FY'12 Summary Comments "We continue to compete well in our markets and delivered solid results for the fourth quarter and full year 2012 in a challenging environment. Our growth investments delivered top-line improvement in the quarter despite considerable economic uncertainty, and outstanding working capital management drove significant cash generation. Office furniture sales growth was led by a solid increase in our supplies-driven business. Continued strong profit growth in our hearth business was led by substantial growth in the new construction channel and strong operational execution. We enter 2013 financially strong, competitively well positioned, and focused on delivering profitable growth," said Stan Askren, HNI Corp. chairman, president and CEO.

• Consolidated net sales increased $27.3 million or 5.5 percent from the prior year quarter to $527.5 million. Acquisitions contributed $10.0 million of sales, or 2.0 percent sales growth.
• Gross margins were 0.4 percentage points lower than prior year quarter primarily due to unfavorable mix, investments to improve operations, new product ramp-up and impact of acquisitions offset partially by higher volume and lower material costs.
• Total selling and administrative expenses, including restructuring charges, increased 5.0 percent due to volume related expenses, investments in growth initiatives and the impact of acquisitions.
• The Corporation's fourth quarter results included $1.1 million of restructuring and transition costs of which $0.3 million were included in cost of sales. These included costs associated with previously announced shutdown and consolidation of office furniture manufacturing locations. Included in the fourth quarter of 2011 were $1.1 million of restructuring and transition costs net of a non-operating gain on the sale of property.
• The provision for income taxes for fourth quarter 2012 reflects an effective tax rate of 37.6 percent compared to 33.8 percent in the prior year quarter. The increase is due to the research tax credit being extended in 2013 and other permanent differences.

• Net sales increased $170.6 million, or 9.3 percent, to $2.0 billion compared to $1.8 billion for the prior year. Acquisitions contributed $93.0 million, or 5.1 percent sales growth.
• Gross margins were 0.5 percentage points lower than prior year due to unfavorable mix, investments to improve operations, new product ramp-up and impact of acquisitions offset partially by increased volume, better price realization and lower material costs.
• Total selling and administrative expenses as a percent of net sales, including restructuring charges, improved 0.4 percentage points due to higher volume partially offset by investments in growth initiatives and costs associated with acquisitions. Included in 2012 were $3.0 million of restructuring and transition charges compared to $3.3 million in 2011.
• The provision for income taxes for 2012 reflects an effective tax rate of 37.7 percent compared to 34.8 percent in 2011. The increase is due to the research tax credit being extended in 2013 and other permanent differences.

Cash flow from operations for the year was $144.8 million compared to $134.3 million in 2011. Capital expenditures were $60.3 million in 2012 compared to $31.1 million in 2011. The Corporation completed the acquisition of BP Ergo, a leading manufacturer and marketer of office furniture in India.

• Fourth quarter and full year sales for the office furniture segment increased $19.9 million and $159.3 million, respectively. These increases were driven mainly by an increase in the supplies driven channel of the office furniture industry. Acquisitions contributed $10.0 million of sales or 2.5 percent sales growth in the fourth quarter and $93.0 million of sales or 6.1 percent sales growth for the full year.
• Fourth quarter and full year operating profit decreased $8.7 million and $7.8 million, respectively. Operating profit margin was negatively impacted by unfavorable mix, investments to improve operations, new product ramp-up, investments in growth initiatives and impact of acquisitions. These were partially offset by higher volume, better price realization and lower material costs.

• Fourth quarter and full year sales for the hearth products segment increased $7.3 million and $11.3 million, respectively. These increases were driven by increases in the new construction channel partially offset by decreases in the remodel/retrofit channel.
• Fourth quarter and full year operating profit increased $6.0 million and $11.7 million, respectively. Operating profit was positively impacted by higher volume, better price realization, lower material costs and lower restructuring and impairment charges partially offset by investments in selling and marketing initiatives and incentive-based compensation.

Outlook "I remain positive about our markets and our ability to grow sales and increase profits in 2013. We continue to aggressively invest for long-term profitable growth, and I remain confident our investments are delivering shareholder value. Our businesses are strong, competitive, and well-positioned in their markets, and the prospects for our businesses are encouraging," said Mr. Askren.

The Corporation estimates sales to be flat to down 5 percent in the first quarter over the same period in the prior year. Non-GAAP earnings per diluted share are anticipated in the range of ($0.01) to ($0.07) for the first quarter. For the full year, the Corporation is updating its estimate of non-GAAP earnings per diluted share to be in the range of $1.25 to $1.45, which excludes restructuring charges and transition costs.

Source: HNI Corp.