HNI Corporation Announces Results for First Quarter Fiscal 2010

MUSCATINE, Iowa, April 21 /PRNewswire-FirstCall/ -- HNI Corporation (NYSE: HNI) today announced sales of $363.5 million and a loss from continuing operations of ($4.1) million for the first quarter ending April 3, 2010.  Net loss per diluted share from continuing operations for the quarter was ($0.09) or ($0.06) on a non-GAAP basis when excluding restructuring and impairment charges, transition costs and non-operating gains.  

First Quarter Summary Comments

"Demand in our core segments stabilized during the first quarter.  We continued to improve our network distribution model, reduced day-to-day costs across our business and realized the benefit of our structural cost reset in 2009.  Our cost improvement actions, combined with past investments in our selling models and long-term growth initiatives allowed us to deliver improved results versus prior year and exceed first quarter expectations," said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.

First Quarter Results – Continuing Operations

• Consolidated net sales decreased $33.3 million or 8.4 percent to $363.5 million.  
• Gross margins were 1.9 percentage points higher than prior year primarily due to lower material costs and cost reduction initiatives partially offset by lower volume and price realization and higher restructuring and transition costs.
• Total selling and administrative expenses, including restructuring charges, decreased $14.4 million or 10.4% due to cost control initiatives, lower volume related costs, improved distribution efficiencies and lower restructuring and transition costs.
• The Corporation's first quarter results included $2.8 million of restructuring and transition costs of which $1.5 million were included in cost of sales.  These included $2.6 million associated with shutdown and consolidation of production of office furniture manufacturing locations net of a non-operating gain and $0.2 million related to restructuring of hearth operations.  Included in 2009 were $5.1 million of restructuring charges.
• The Corporation estimates additional charges related to various restructuring initiatives will impact pre-tax earnings by $5.9 million over the remainder of 2010.

Cash flow from operations for the quarter was ($25.4) million compared to $5.6 million last year.  Operating cash flow results in 2009 were positively impacted by reductions in accounts receivable due to decreased revenue.  Capital expenditures were $4.8 million in 2010 compared to $4.6 million in 2009.  

Discontinued Operations

The Corporation made a decision to sell a small, non-core business of the office furniture segment.  During the first quarter a pre-tax charge of $1.0 million was recorded to reduce the assets held for sale to fair market value.  In addition the Corporation sold a small, non-core component of the hearth products segment during the first quarter.  A pre-tax charge of $0.4 million was recorded at the time of sale.  Revenues and expenses associated with these business operations are presented as discontinued operations for all periods presented in the financial statements.

• First quarter sales for the office furniture segment decreased to $300.0 million.  The decrease was across all channels of the Corporation's office furniture segment.  
• First quarter operating profit increased $5.6 million.  Operating profit was positively impacted by lower material costs, improved distribution efficiencies, cost reduction initiatives and a non-operating gain.  These were partially offset by lower volume and price realization.

• First quarter sales for the hearth products segment decreased $2.6 million driven by a decline in the remodel-retrofit channel partially offset by an increase in the new construction channel.  
• First quarter operating profit increased $8.4 million.  Operating profit was positively impacted by cost reduction initiatives and lower material and restructuring costs partially offset by lower volume and price realization.

Outlook

"We are encouraged by the recent trends in both the hearth and office furniture markets.  We will continue to strengthen our businesses by investing in selling and growth initiatives, improving operations, resetting cost structure and fiercely managing cash.  I am excited and optimistic about the future.  The company is financially strong and well positioned to benefit disproportionately as the markets improve," 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 Thursday, April 22, 2010 at 10:00 a.m. (Central) to discuss first quarter results.  To participate, call the conference call line at 1-800-398-9389.  A replay of the conference call will be available until Thursday, April 29, 11:59 p.m. (Central).  To access this replay, dial 1-800-475-6701 – Access Code:  153086.  A link to the simultaneous web cast can be found on the Corporation's website at 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, operating income (loss), operating profit (loss) and net income (loss) per diluted share from continuing operations (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™, 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.

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.

SOURCE HNI Corporation