MUSCATINE, Iowa, Feb. 8, 2011 /PRNewswire/ -- HNI Corporation today announced sales of $466.1 million and income from continuing operations of $12.6 million for the fourth quarter ended January 1, 2011. Net income per diluted share from continuing operations for the quarter was $0.27 or $0.39 on a non-GAAP basis when excluding restructuring and impairment charges and transition costs. For fiscal year 2010, the Corporation reported sales of $1.7 billion and income from continuing operations of $29.7 million. Net income per diluted share from continuing operations for the year was $0.65 or $0.82 on a non-GAAP basis when excluding restructuring and impairment charges, transition costs, and non-operating gains.
Fourth Quarter and FY'10 Summary Comments
"We delivered strong performance across all of our businesses in the fourth quarter, led by double digit growth in our office furniture segment. The cost reset actions implemented in 2009 and 2010, combined with our strategic growth initiatives, resulted in an increase in earnings of more than 40 percent over prior year quarter.
We enter 2011 financially stronger, well positioned within our markets and focused on long term profitable growth," said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.
Fourth Quarter Three Months Dollars in millions Ended Percent ------------ except per share data 1/01/2011 1/02/2010 Change --------- --------- ------ Net sales $466.1 $405.6 14.9% Gross margin $163.9 $148.0 10.8% Gross margin % 35.2% 36.5% SG&A $143.5 $158.2 -9.2% SG&A % 30.8% 39.0% Operating income (loss) $20.4 $(10.2) 299.7% Operating income (loss) % 4.4% -2.5% Income (loss) from continuing operations $12.6 $(9.3) 235.7% Earnings per share from continuing operations attributable to HNI Corporation - diluted $0.27 $(0.21) 228.6% Fourth Quarter Results - Continuing Operations -- Consolidated net sales increased $60.6 million or 14.9 percent from the prior year quarter to $466.1 million. -- Gross margins were 1.3 percentage points lower than prior year primarily due to reduced price realization, increased material costs and higher mix of lower margin products in the office furniture segment offset partially by higher volume and lower restructuring and transition charges. -- Total selling and administrative expenses, including restructuring and impairment charges, decreased $14.6 million or 9.2 percent due to distribution efficiencies and lower restructuring and impairment charges and transition costs. These were offset by increased volume related expenses, higher fuel costs, investments in growth initiatives and higher incentive based compensation. -- The Corporation recorded $7.1 million of restructuring and impairment charges and transition costs during the fourth quarter. These charges included $1.9 million related to costs associated with shutdown and consolidation of office furniture facilities of which $0.5 million were included in cost of sales. Also included were $5.2 million of impairment and restructuring charges related to hearth distribution locations that were classified as held for sale or closed as of the end of 2010. Included in 2009 were $29.5 million of restructuring and impairment charges and transition costs. Fourth Quarter - Non-GAAP Financial Measures - Continuing Operations (Reconciled with most comparable GAAP financial measures) Three Months Ended Dollars in millions 1/01/2011 except per share data ------------------- Gross SG&A Operating EPS Profit ---- Income --- ------ ------ As reported (GAAP) $163.9 $143.5 $20.4 $0.27 % of net sales 35.2% 30.8% 4.4% Restructuring and impairment $0.3 $(6.6) $6.9 $0.11 Transition costs $0.2 - $0.2 $0.01 Results (non-GAAP) $164.4 $136.9 $27.5 $0.39 % of net sales 35.3% 29.4% 5.9% Dollars in millions Three Months Ended 1/02/2010 except per share data ---------------------------- Gross SG&A Operating EPS Profit ---- Income --- ------ (Loss) ------ As reported (GAAP) $148.0 $158.2 $(10.2) $(0.21) % of net sales 36.5% 39.0% -2.5% Restructuring and impairment $1.2 $(27.0) $28.2 $0.46 Transition costs $1.0 $(0.3) $1.3 $0.02 Results (non-GAAP) $150.1 $130.8 $19.3 $0.27 % of net sales 37.0% 32.3% 4.8% Full Year Twelve Months Dollars in millions Ended Percent ------------- except per share data 1/01/2011 1/02/2010 Change --------- --------- ------ Net sales $1,686.7 $1,623.3 3.9% Gross margin $585.6 $562.8 4.1% Gross margin % 34.7% 34.7% SG&A $527.7 $554.2 -4.8% SG&A % 31.3% 34.1% Operating income $57.9 $8.6 574.8% Operating income % 3.4% 0.5% Income (loss) from continuing operations $29.7 $(1.6) NM Earnings per share from continuing operations attributable to HNI Corporation - diluted $0.65 $(0.04) NM Full Year Results - Continuing Operations -- Net sales increased $63.4 million, or 3.9 percent, to $1.7 billion compared to $1.6 billion in the prior year. -- Gross margins remained at 34.7 percent due to increased volume, cost reduction initiatives and lower restructuring and transition costs offset by lower price realization, higher material costs and higher mix of lower margin products in the office furniture segment. -- Total selling and administrative expenses, including restructuring charges, decreased $26.5 million or 4.8 percent due to cost control actions, distribution efficiencies and lower restructuring and impairment charges and transition costs. These were partially offset by increased volume related costs, higher fuel costs, investments in growth initiatives and higher incentive based compensation. Included in 2010 were $9.4 million of restructuring and impairment charges compared to $40.4 million in 2009.
Cash flow from operations for the year was $94.4 million compared to $193.2 million last year. Capital expenditures were $26.7 million in 2010 compared to $17.6 million in 2009. The Corporation repurchased 655,032 shares of its common stock during 2010. There is approximately $145.8 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 Twelve Months Ended 1/01/2011 except per share data ----------------------------- Gross SG&A Operating EPS Profit ---- Income --- ------ ------ As reported (GAAP) $585.6 $527.7 $57.9 $0.65 % of net sales 34.7% 31.3% 3.4% Restructuring and impairment $2.6 $(9.4) $12.1 $0.17 Transition costs $1.5 - $1.5 $0.02 Non-operating gains - $0.5 $(0.5) $(0.01) Results (non-GAAP) $589.7 $518.8 $70.9 $0.82 % of net sales 35.0% 30.8% 4.2% Dollars in millions Twelve Months Ended 1/02/2010 except per share data ----------------------------- Gross SG&A Operating EPS Profit ---- Income --- ------ ------ As reported (GAAP) $562.8 $554.2 $8.6 $(0.04) % of net sales 34.7% 34.1% 0.5% Restructuring and impairment $3.9 $(40.4) $44.4 $0.54 Transition costs $1.3 $(0.5) $1.8 $0.02 Non-operating gains - $1.6 ($1.6) $(0.02) Results (non-GAAP) $568.0 $514.9 $53.1 $0.50 % of net sales 35.0% 31.7% 3.3% Office Furniture Three Months Ended Percent Dollars in millions 1/01/2011 1/02/2010 Change Sales $374.8 $321.9 16.4% Operating profit (loss) $24.6 $(5.3) 567.4% Operating profit % 6.6% -1.6% Twelve Months Ended Percent Dollars in millions 1/01/2011 1/02/2010 Change Sales $1,404.9 $1,344.8 4.5% Operating profit (loss) $87.6 $52.5 66.6% Operating profit % 6.2% 3.9% Non-GAAP Financial Measures (Reconciled with most comparable GAAP measures) Three Months Ended Percent Dollars in millions 1/01/2011 1/02/2010 Change Operating profit (loss) as reported (GAAP) $24.6 $(5.3) 567.4% % of net sales 6.6% -1.6% Restructuring and impairment $1.7 $27.1 Transition costs $0.2 $0.6 Non-operating gains - - Operating profit (non-GAAP) $26.4 $22.5 17.5% % of net sales 7.1% 7.0% Twelve Months Ended Percent Dollars in millions 1/01/2011 1/02/2010 Change Operating profit (loss) as reported (GAAP) $87.6 $52.5 66.6% % of net sales 6.2% 3.9% Restructuring and impairment $6.1 $37.6 Transition costs $2.0 $1.0 Non-operating gains $(0.5) - Operating profit (non-GAAP) $95.1 $91.2 4.3% % of net sales 6.8% 6.8% -- Fourth quarter and full year sales for the office furniture segment increased $52.9 million and $60.1 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. -- Fourth quarter and full year operating profit increased $29.8 million and $35.0 million, respectively. Operating profit was positively impacted by increased volume, cost reduction initiatives, distribution efficiencies and lower restructuring, transition and impairment expenses. These were partially offset by decreased price realization, higher input costs, investments in selling and growth initiatives and higher incentive based compensation expense. Hearth Products Three Months Ended Percent Dollars in millions 1/01/2011 1/02/2010 Change Sales $91.3 $83.6 9.2% Operating profit (loss) $5.4 $3.7 45.3% Operating profit % 5.9% 4.5% Twelve Months Ended Percent Dollars in millions 1/01/2011 1/02/2010 Change Sales $281.8 $278.5 1.2% Operating profit (loss) $2.9 $(14.7) 119.8% Operating profit % 1.0% -5.3% Non-GAAP Financial Measures (Reconciled with most comparable GAAP measures) Three Months Ended Percent Dollars in millions 1/01/2011 1/02/2010 Change Operating profit (loss) as reported (GAAP) $5.4 $3.7 45.3% % of net sales 5.9% 4.5% Restructuring and impairment $5.3 $1.1 Transition costs - $0.7 Non-operating gains - - Operating profit (loss) (non- GAAP) $10.7 $5.5 94.4% % of net sales 11.7% 6.6% Twelve Months Ended Percent Dollars in millions 1/01/2011 1/02/2010 Change Operating profit (loss) as reported (GAAP) $2.9 $(14.7) 119.8% % of net sales 1.0% -5.3% Restructuring and impairment $5.4 $6.7 Transition costs $0.1 $0.8 Non-operating gains - $(0.3) Operating profit (loss) (non- GAAP) $8.4 $(7.6) 210.8% % of net sales 3.0% -2.7% -- Fourth quarter sales for the hearth products segment increased $7.7 million driven by a small increase in the new construction channel and a more significant increase in the remodel-retrofit channel. Full year sales for the hearth products segment increased $3.3 million driven by an increase in the new construction channel and a decrease in the remodel/retrofit channel. -- Fourth quarter and full year operating profit increased $1.7 million and $17.7 million, respectively. Operating profit for the fourth quarter was positively impacted by higher volume, better price realization and cost reduction initiatives partially offset by higher restructuring and impairment costs. Operating profit for the year was positively impacted by better price realization, cost reduction initiatives, and lower restructuring and impairment charges partially offset by higher input costs. Outlook
"I remain optimistic about our markets and the gradually improving economy. We will build on the momentum from 2010 to grow our businesses and increase profits in 2011. We will continue to reduce cost, improve operations and fiercely manage cash. Our strategy to invest in growth initiatives across our multiple platforms has not changed. The corporation is financially strong and well positioned for long term profitable growth," 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 Wednesday, February 9, 2011 at 10:00 a.m. (Central) to discuss fourth quarter and year-end 2010 results. To participate, call the conference call line at 1-800-230-1092. A replay of the conference call will be available until Wednesday, February 16, 2011, 11:59 p.m. (Central). To access this replay, dial 1-800-475-6701 - Access Code: 189302. A link to the simultaneous web cast can be found on the Corporation's website at http://www.hnicorp.com/.
Non-GAAP Financial Measures
This earnings release contains certain non-GAAP financial measures. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance that excludes or includes amounts different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets or statements of cash flow of the company. Pursuant to the requirements of Regulation G, the Corporation has provided a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure.
The non-GAAP financial measures used within this earnings release are: gross profit, selling and administrative expense, operating income, operating profit and net income per diluted share (i.e., EPS), excluding restructuring and impairment charges, transition costs and non-operating gains. These measures are presented because management uses this information to monitor and evaluate financial results and trends. Management believes this information is also useful for investors.
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 http://www.hnicorp.com/.
Statements in this release that are not strictly historical, including statements as to plans, outlook, objectives and future financial performance, are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "could," "confident," "estimate," "expect," "forecast," "hope," "intend," "likely," "may," "plan," "possible," "potential," "predict," "project," "should," "will," "would" and variations of such words and similar expressions identify forward-looking statements. Forward-looking statements involve known and unknown risks, which may cause the Corporation's actual results in the future to differ materially from expected results. These risks include, without limitation: the Corporation's ability to realize financial benefits from its (a) price increases, (b) cost containment and business simplification initiatives for the entire Corporation, (c) investments in strategic acquisitions, new products and brand building, (d) investments in distribution and rapid continuous improvement, (e) ability to maintain its effective tax rate, (f) repurchases of common stock, and (g) consolidation and logistical realignment initiatives; uncertainty related to the availability of cash and credit, and the terms and interest rates on which credit would be available, to fund operations and future growth; lower than expected demand for the Corporation's products due to uncertain political and economic conditions, including the recent credit crisis, slow or negative growth rates in global and domestic economies and the protracted decline in the domestic housing market; lower industry growth than expected; major disruptions at key facilities or in the supply of any key raw materials, components or finished goods; uncertainty related to disruptions of business by terrorism, military action, epidemic, acts of God or other Force Majeure events; competitive pricing pressure from foreign and domestic competitors; higher than expected costs and lower than expected supplies of materials (including steel and petroleum based materials); higher than expected costs for energy and fuel; changes in the mix of products sold and of customers purchasing; relationships with distribution channel partners, including the financial viability of distributors and dealers; restrictions imposed by the terms of the Corporation's revolving credit facility and note purchase agreement; currency fluctuations and other factors described in the Corporation's annual and quarterly reports filed with the Securities and Exchange Commission on Forms 10-K and 10-Q. The Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
HNI CORPORATION Condensed Consolidated Statement of Operations Three Months Ended Twelve Months Ended (Dollars in thousands, except per share data) Jan. 1, Jan. 2, Jan. 1, Jan. 2, 2011 2010 2011 2010 -------- -------- -------- -------- Net Sales $466,148 $405,553 $1,686,728 $1,623,327 Cost of products sold 302,246 257,601 1,101,112 1,060,526 Gross profit 163,902 147,952 585,616 562,801 Selling and administrative expenses 136,912 131,110 518,257 513,776 Restructuring and impairment charges 6,628 27,040 9,449 40,443 Operating income (loss) 20,362 (10,198) 57,910 8,582 Interest income 125 104 471 415 Interest expense 3,283 2,666 11,903 12,080 Income (loss) from continuing operations before income taxes 17,204 (12,760) 46,478 (3,083) Income taxes 4,621 (3,490) 16,797 (1,485) Income (loss) from continuing operations, less applicable income taxes 12,583 (9,270) 29,681 (1,598) Discontinued operations, less applicable income taxes (6) (1,500) (2,558) (4,661) Net income (loss) 12,577 (10,770) 27,123 (6,259) Less: Net income attributable to the noncontrolling interest 33 3 182 183 Net income (loss) attributable to HNI Corporation $12,544 $(10,773) $26,941 $(6,442) Income (loss) from continuing operations attributable to HNI Corporation per common share - basic $0.28 $(0.21) $0.66 $(0.04) Discontinued operations attributable to HNI Corporation per common share - basic $0.00 $(0.03) $(0.06) $(0.10) Net income (loss) attributable to HNI Corporation common shareholders - basic $0.28 $(0.24) $0.60 $(0.14) Average number of common shares outstanding - basic 44,815,129 45,054,103 44,993,934 44,888,809 Income (loss) from continuing operations attributable to HNI Corporation per common share - diluted $0.27 $(0.21) $0.65 $(0.04) Discontinued operations attributable to HNI Corporation per common share - diluted $0.00 $(0.03) $(0.06) $(0.10) Net income (loss) attributable to HNI Corporation common shareholders - diluted $0.27 $(0.24) $0.59 $(0.14) Average number of common shares outstanding - diluted 45,742,520 45,054,103 45,808,704 44,888,809 ----------------- ---------- ---------- ---------- ---------- Condensed Consolidated Balance Sheet Liabilities and Assets Shareholders' Equity As of As of Jan. 1, Jan. 2, Jan. 1, Jan. 2, (Dollars in thousands) 2011 2010 2011 2010 ----------- ---- ---- ---- ---- Cash and Accounts cash payable equivalents $99,096 $87,374 and Short-term accrued investments 10,567 5,994 expenses $311,066 $299,718 Note payable and Receivables 190,118 163,732 current maturities of long- Inventories 68,956 65,144 term debt 50,029 39 Deferred Current income maturities taxes 18,467 20,299 of other Prepaid expenses long-term and obligations 256 385 other current assets 20,957 17,728 Current Current assets 408,161 360,271 liabilities 361,351 300,142 Long-term debt 150,000 200,000 Capital lease obligations 111 - Property and Other long- equipment term -net 231,781 260,102 liabilities 47,437 50,332 Deferred income Goodwill 260,634 261,114 taxes 30,525 24,227 Other assets 97,304 112,839 Parent Company shareholders' 407,985 419,284 equity Noncontrolling interest 471 341 Shareholders' equity 408,456 419,625 Total liabilities and shareholders' Total assets $997,880 $994,326 equity $997,880 $994,326 ------------ -------- -------- ------------- -------- -------- Condensed Consolidated Statement of Cash Flows Twelve Months Ended Jan. 1, Jan. 2, (Dollars in thousands) 2011 2010 ---------------------- -------- -------- Net cash flows from (to) operating activities $94,384 $193,205 Net cash flows from (to) investing activities: Capital expenditures (26,722) (17,554) Acquisition spending (149) (500) Other 1,818 31,335 Net cash flows from (to) financing activities (57,609) (158,650) Net increase (decrease) in cash and cash equivalents 11,722 47,836 Cash and cash equivalents at beginning of period 87,374 39,538 Cash and cash equivalents at end of period $99,096 $87,374 -------------------------------- ------- ------- Business Segment Data Three Months Ended Twelve Months Ended (Dollars in Jan. 1, Jan. 2, Jan. 1, Jan. 2, thousands) 2011 2010 2011 2010 ----------- -------- -------- -------- -------- Net sales: Office furniture $374,812 $321,927 $1,404,923 $1,344,832 Hearth products 91,336 83,626 281,805 278,495 $466,148 $405,553 $1,686,728 $1,623,327 -------- -------- ---------- ---------- Operating profit (loss): Office furniture Operations before restructuring and impairment charges $25,949 $21,234 $91,649 $87,486 Restructuring and impairment charges (1,370) (26,493) (4,090) (34,944) Office furniture -net 24,579 (5,259) 87,559 52,542 Hearth products Operations before restructuring and impairment charges 10,672 4,274 8,274 (9,245) Restructuring and impairment charges (5,258) (547) (5,359) (5,499) Hearth products - net 5,414 3,727 2,915 (14,744) Total operating profit (loss) 29,993 (1,532) 90,474 37,798 Unallocated corporate expense (12,789) (11,228) (43,996) (40,881) Income before income taxes $17,204 $(12,760) $46,478 $( 3,083) ------------- ------- -------- ------- -------- Depreciation and amortization expense: Office furniture $10,249 $12,280 $44,717 $52,137 Hearth products 2,422 5,924 11,474 19,041 General corporate 598 948 2,439 3,689 $13,269 $19,152 $58,630 $74,867 ------- ------- ------- ------- Capital expenditures - net: Office furniture $6,303 $5,255 $20,928 $13,482 Hearth products 980 1,247 2,423 3,484 General corporate 763 178 3,371 588 $8,046 $6,680 $26,722 $17,554 ------ ------ ------- ------- As of As of Jan. 1, Jan. 2, 2011 2010 -------- -------- Identifiable assets: Office furniture $588,540 $579,187 Hearth products 267,125 291,518 General corporate 142,215 123,621 $997,880 $994,326 -------- -------- For Information Contact: Kelly J. McGriff, Treasurer and Vice President, Investor Relations (563) 272-7967 Kurt A. Tjaden, Vice President and Chief Financial Officer (563) 272-7400
HNI Corporation
CONTACT: Kelly J. McGriff, Treasurer and Vice President, Investor
Relations, +1-563-272-7967, or Kurt A. Tjaden, Vice President and Chief
Financial Officer, +1-563-272-7400, both of HNI Corp.
Web Site: http://www.hnicorp.com/
