HNI Corporation Reports Double Digit Earnings Growth For Third Quarter Fiscal Year 2015

MUSCATINE, Iowa, Oct. 21, 2015 /PRNewswire/ -- HNI Corporation (NYSE: HNI) today announced sales for the third quarter ended October 3, 2015, of $615.9 million and net income of $40.8 million, or $0.90 per diluted share.  Non-GAAP net income per diluted share improved 14.8 percent from the prior year quarter to $0.93, which excludes restructuring and transition costs.     

Third Quarter Summary Comments
"We delivered double digit earnings growth for the third quarter.  We are competing well in our markets despite a softening economy which led to modest declines in office furniture and organic hearth sales.  We are taking calculated actions to reset our cost structure for a range of slowing economic scenarios," said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.

Third Quarter Summary Comments

• Consolidated net sales increased $1.2 million or 0.2 percent to $615.9 million. Compared to prior year quarter, the Vermont Castings Group acquisition increased sales $18.7 million. On an organic basis, sales decreased 2.8 percent.
• Non-GAAP gross margin increased 160 basis points compared to prior year driven by strong operational performance, favorable material costs and better price realization, partially offset by lower volume and unfavorable product mix.
• Selling and administrative expenses, as a percentage of sales, increased 70 basis points due to higher freight costs, strategic investments and acquisition impact, partially offset by cost management actions.
• The Corporation recorded $2.3 million of restructuring and transition expenses in the current quarter in connection with previously announced closures, acquisition integration and structural realignment. Third quarter 2014 included $4.9 million of restructuring and transition costs associated with facility closures.

• Third quarter sales decreased $12.6 million or 2.6 percent to $476.0 million. Sales for the quarter decreased in both our supplies-driven and contract channels.
• Third quarter non-GAAP operating profit increased $1.4 million or 2.9 percent. Strong operational performance, cost management actions and better price realization were partially offset by lower volume, higher freight costs and unfavorable product mix.

• Third quarter sales increased $13.8 million or 11.0 percent to $139.9 million. Compared to prior year quarter, the Vermont Castings Group acquisition increased sales by $18.7 million. On an organic basis, sales decreased 3.9 percent for the quarter driven by a 24 percent decline in biomass products partially offset by growth in the new construction channel.
• For the quarter, non-GAAP operating profit increased $1.3 million or 5.6 percent due to cost management actions, better price realization and favorable material costs.

Outlook
"I am pleased with our profit performance and believe we are competing well in our markets.  We will continue to adjust our cost structure while investing for long-term profitable growth.  I remain confident in our ability to create long-term shareholder value," said Mr. Askren.

The Corporation estimates sales to be down 4 to 8 percent in the fourth quarter over the same period in the prior year.  Non-GAAP earnings per share are anticipated to be in the range of $2.55 to $2.60 for the full year, which includes the Vermont Castings Group acquisition results and excludes restructuring and transition costs.

Conference Call
HNI Corporation will host a conference call on Thursday, October 22, 2015 at 10:00 a.m. (Central) to discuss third quarter fiscal year 2015 results.  To participate, call 1-877-512-9166 – conference ID number 46783871.  A live webcast of the call will be available on HNI Corporation's website at http://www.hnicorp.com (under Investor Information – Webcasts).  A replay of the webcast will be made available at the website address above.  An audio replay of the call will be available until Thursday, October 29, 2015, 10:30 p.m. (Central) by dialing 1-855-859-2056 or 1-404-537-3406 – Conference ID number 46783871. 

About HNI Corporation

HNI Corporation is a NYSE traded company (ticker symbol:  HNI) providing products and solutions for the home and workplace environments.  HNI Corporation is a leading global office furniture manufacturer and is the nation's leading manufacturer of hearth products.  The Corporation's strong brands have leading positions in their markets.  More information can be found on the Corporation's website at www.hnicorp.com.

Forward-looking Statements

This release contains "forward-looking" statements based on current expectations regarding future plans, events, outlook, objectives and financial performance, expectations for future sales growth and earnings per diluted share (GAAP and non-GAAP) for the fourth quarter and full year fiscal 2015.  Forward-looking statements can be identified by words including "expect," "believe," "anticipate," "estimate," "may," "will," "would," "could," "confident" or other similar words, phrases or expressions.  Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Corporation's actual future results and performance to differ materially from expected results.  These risks include but are not limited to:  general economic conditions in the United States and internationally; unfavorable changes in the United States housing market; industry and competitive conditions; a decline in corporate spending on office furniture; changes in raw material, component or commodity pricing; future acquisitions, divestitures or investments; the cost of energy; changing legal, regulatory, environmental and healthcare conditions; the Corporation's ability to successfully complete its business software system implementation; the Corporation's ability to implement price increases; changes in the sales mix of products; and force majeure events outside the Corporation's control.   A description of these risks and additional risks can be found 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.

For Information Contact:
Matthew D. McGough, Vice President, Corporate Finance (563) 272-7563
Kurt A. Tjaden, Senior Vice President and Chief Financial Officer (563) 272-7400

Non-GAAP Financial Measures

This earnings release contains certain non-GAAP financial measures.  A "non-GAAP financial measure" is 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.  We have 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, operating income, operating profit, net income per diluted share (i.e., EPS), excluding restructuring charges and transition costs.  Non-GAAP EPS is calculated using the Corporation's overall effective tax rate for the period.  We present these measures because management uses this information to monitor and evaluate financial results and trends.  Management believes this information is also useful for investors.  This earnings release also contains a forward-looking estimate of non-GAAP earnings per diluted share for the fourth quarter and full fiscal year 2015.  We provide such non-GAAP measures to investors on a prospective basis for the same reasons we provide them to investors on a historical basis.  We are unable to provide a reconciliation of our forward-looking estimate of non-GAAP earnings per diluted share to a forward-looking estimate of GAAP earnings per diluted share because certain information needed to make a reasonable forward-looking estimate of GAAP earnings per diluted share for the fourth quarter and full fiscal year is difficult to predict and estimate and is often dependent on future events which may be uncertain or outside of our control.  These may include unanticipated charges related to asset impairments (fixed assets, intangibles or goodwill), unanticipated acquisition related costs and other unanticipated non-recurring items not reflective of ongoing operations. 

SOURCE HNI Corporation