HNI Corp : HNI Corporation Announces Results In Line With Guidance For Fourth Quarter And Year-End Fiscal 2012
02/05/2013| 05:15pm US/Eastern
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MUSCATINE, Iowa, Feb. 5, 2013 /PRNewswire/ -- HNI Corporation (NYSE: HNI) today announced sales of $527.5 million and net income of $17.6 million for the fourth quarter ended December 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 Corporation Chairman, President and Chief Executive Officer.
Fourth Quarter - GAAP Financial Measures
Dollars in millions Three Months Ended Percent
except per share data Change
------
12/29/2012 12/31/2011
---------- ----------
Net sales $527.5 $500.3 5.5%
Gross margin $186.0 $178.0 4.5%
Gross margin % 35.2% 35.6%
SG&A $155.6 $148.2 5.0%
SG&A % 29.5% 29.6%
Operating income $30.3 $29.8 1.6%
Operating income % 5.7% 6.0%
Net income attributable to
HNI Corporation $17.6 $18.1 -3.0%
Earnings per share
attributable to HNI
Corporation - diluted $0.39 $0.40 -2.5%
-- 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.
Fourth Quarter - Non-GAAP Financial Measures
(Reconciled with most comparable GAAP financial measures)
Dollars in millions Three Months Ended 12/29/2012 Three Months Ended 12/31/2011
except per share data
Gross SG&A Operating EPS Gross SG&A Operating EPS
Profit Income Profit Income
------ ------ ------ ------
As reported (GAAP) $186.0 $155.6 $30.3 $0.39 $178.0 $148.2 $29.8 $0.40
% of net sales 35.2% 29.5% 5.7% 35.6% 29.6% 6.0%
Restructuring and impairment - $(0.6) $0.6 $0.01 $0.1 $(1.1) $1.2 $0.02
Transition costs $0.3 $(0.2) $0.5 $0.00 $0.2 - $0.2 $0.00
Non-operating gain - - - - - $0.4 $(0.4) $(0.01)
Results (non-GAAP) $186.3 $154.8 $31.4 $0.40 $178.3 $147.4 $30.8 $0.41
% of net sales 35.3% 29.3% 6.0% 35.6% 29.5% 6.2%
Full Year - GAAP Financial Measures
Dollars in millions Twelve Months Ended Percent
except per share data Change
------
12/29/2012 12/31/2011
---------- ----------
Net sales $2,004.0 $1,833.5 9.3%
Gross margin $689.2 $639.1 7.8%
Gross margin % 34.4% 34.9%
SG&A $601.6 $557.6 7.9%
SG&A % 30.0% 30.4%
Operating income $87.6 $81.5 7.5%
Operating income % 4.4% 4.4%
Net income attributable to HNI Corporation $49.0 $46.0 6.5%
Earnings per share attributable to HNI $1.07 $1.01
Corporation - diluted
-- 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.
Full Year - Non-GAAP Financial Measures
(Reconciled with most comparable GAAP financial measures)
Dollars in millions Twelve Months Ended 12/29/2012 Twelve Months Ended 12/31/2011
except per share data
Gross SG&A Operating EPS Gross SG&A Operating EPS
Profit Income Profit Income
------ ------ ------ ------
As reported (GAAP) $689.2 $601.6 $87.6 $1.07 $639.1 $557.6 $81.5 $1.01
% of net sales 34.4% 30.0% 4.4% 34.9% 30.4% 4.4%
Restructuring and impairment $0.4 $(1.9) $2.3 $0.03 $0.2 $(3.3) $3.5 $0.05
Transition costs $0.7 $(1.1) $1.8 $0.03 $0.3 - $0.3 $0.00
Non-operating gains - - - - - $0.4 $(0.4) $(0.01)
Results (non-GAAP) $690.3 $598.6 $91.8 $1.13 $639.6 $554.7 $84.9 $1.05
% of net sales 34.4% 29.9% 4.6% 34.9% 30.3% 4.6%
Office Furniture - GAAP Financial Measures
Dollars in millions Three Months Ended Percent Twelve Months Ended Percent
Change Change
--- ------
12/29/2012 12/31/2011 12/29/2012 12/31/2011
---------- ---------- ---------- ----------
Sales $422.3 $402.4 5.0% $1,687.3 $1,528.1 10.4%
Operating profit $23.5 $32.2 -27.0% $91.8 $99.6 -7.8%
Operating profit % 5.6% 8.0% 5.4% 6.5%
Non-GAAP Financial Measures
(Reconciled with most comparable GAAP measures)
Dollars in millions Three Months Ended Percent Twelve Months Ended Percent
Change Change
--- ------
12/29/2012 12/31/2011 12/29/2012 12/31/2011
---------- ---------- ---------- ----------
Operating profit $23.5 $32.2 -27.0% $91.8 $99.6 -7.8%
as reported (GAAP)
% of net sales 5.6% 8.0% 5.4% 6.5%
Restructuring and impairment $0.6 $1.2 $2.3 $3.1
Transition costs $0.5 $0.2 $1.8 $0.3
Non-operating gains - $(0.4) - $(0.4)
Operating profit (non-GAAP) $24.6 $33.2 -25.8% $96.0 $102.6 -6.4%
% of net sales 5.8% 8.2% 5.7% 6.7%
-- 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.
Hearth Products - GAAP Financial Measures
Dollars in millions Three Months Ended Percent Twelve Months Ended Percent
Change Change
--- ------
12/29/2012 12/31/2011 12/29/2012 12/31/2011
---------- ---------- ---------- ----------
Sales $105.2 $97.9 7.5% $316.7 $305.4 3.7%
Operating profit $15.4 $9.4 63.6% $26.5 $14.8 79.5%
Operating profit % 14.7% 9.6% 8.4% 4.8%
Non-GAAP Financial Measures
(Reconciled with most comparable GAAP measures)
Dollars in millions Three Months Ended Percent Twelve Months Ended Percent
Change Change
--- ------
12/29/2012 12/31/2011 12/29/2012 12/31/2011
---------- ---------- ---------- ----------
Operating profit $15.4 $9.4 63.6% $26.5 $14.8 79.5%
as reported (GAAP)
% of net sales 14.7% 9.6% 8.4% 4.8%
Restructuring and impairment - - - $0.4
Transition costs - - - -
Operating profit $15.4 $9.4 $26.5 $15.2
(non-GAAP)
% of net sales 14.7% 9.6% 8.4% 5.0%
-- 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.
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 6, 2013 at 10:00 a.m. (Central) to discuss fourth quarter and year-end 2012 results. To participate, call 1-877-512-9166 - conference ID number 90030431. 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 same website address. An audio replay of the call will be available until Wednesday, February 13, 2013, 10:59 p.m. (Central) by dialing 1-855-859-2056 or 1-404-537-3406 - Conference ID number 90030431.
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 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(® ), Artco-Bell(TM), Midwest Folding Products(TM), LSI Corporation of America(TM), ERGO(®), Heatilator(®), Heat & Glo(®), 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 www.hnicorp.com.
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 and net income per diluted share (i.e., EPS), excluding restructuring and impairment 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 first quarter and full fiscal year 2013. 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 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.
Forward-looking Statements
This release contains "forward-looking" statements that refer to future events and expectations. These statements address future plans, outlook, objectives and financial performance including expectations for future sales growth and earnings per diluted share (GAAP and non-GAAP) for the first quarter and full year fiscal 2013. In addition, forward-looking statements may be identified by 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. Forward-looking statements involve known and unknown risks, which may cause the Corporation's actual future results 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, (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; 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; competitive pricing pressure from foreign and domestic competitors; higher than expected costs and lower than expected supplies of materials; higher 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.
For Information Contact:
Derek P. Schmidt, Vice President, Corporate Finance (563) 272-7344
Kurt A. Tjaden, Vice President and Chief Financial Officer (563) 272-7400
HNI CORPORATION
Condensed Consolidated Statement of Operations
----------------------------------------------
(Dollars in thousands, except per
share data) Three Months Ended Twelve Months Ended
--------------------------------- ------------------ -------------------
Dec. 29, 2012 Dec. 31, 2011 Dec. 29, 2012 Dec. 31, 2011
------------- ------------- ------------- -------------
Net Sales $527,536 $500,269 $2,004,003 $1,833,450
Cost of products sold 341,585 322,255 1,314,776 1,194,387
Gross profit 185,951 178,014 689,227 639,063
Selling and administrative
expenses 155,046 147,034 599,656 554,315
Restructuring and impairment
charges 583 1,131 1,944 3,261
Operating income 30,322 29,849 87,627 81,487
Interest income 232 158 842 623
Interest expense 2,684 2,762 10,865 11,951
Income before taxes 27,870 27,245 77,604 70,159
Income taxes 10,493 9,219 29,278 24,411
Net income 17,377 18,026 48,326 45,748
Less: Net income (loss)
attributable to the
noncontrolling interest (216) (111) (641) (238)
Net income attributable to HNI
Corporation $17,593 $18,137 $48,967 $45,986
Net income attributable to HNI
Corporation common shareholders
- basic $0.39 $0.40 $1.08 $1.03
Average number of common shares
outstanding - basic 45,050,346 44,827,529 45,211,385 44,803,248
Net income attributable to HNI
Corporation common shareholders
- diluted $0.39 $0.40 $1.07 $1.01
Average number of common shares
outstanding - diluted 45,691,600 45,759,137 45,819,979 45,694,278
------------------------------- ---------- ---------- ---------- ----------
Condensed Consolidated Balance Sheet
Assets Liabilities and Shareholders' Equity
As of As of
----- -----
(Dollars in thousands) Dec. 29, 2012 Dec. 31, 2011 Dec. 29, 2012 Dec. 31, 2011
Cash and cash equivalents $41,782 $72,812 Accounts payable and
Short-term investments 7,250 9,157 accrued expenses $390,958 $358,290
Receivables 213,490 204,036 Note payable and current
Inventories 93,515 101,873 maturities of long-term debt 4,554 30,345
Deferred income taxes 21,977 18,797 Current maturities of other
Prepaid expenses and long-term obligations 373 275
other current assets 26,926 27,365
Current assets 404,940 434,040 Current liabilities 395,885 388,910
Long-term debt 150,146 150,200
Capital lease obligations 226 340
Property and equipment - net 240,490 229,727 Other long-term liabilities 57,281 52,716
Goodwill 288,348 270,761 Deferred income taxes 55,433 42,770
Other assets 145,853 119,730
Parent Company shareholders' 420,359 419,057
equity
Noncontrolling interest 301 265
Shareholders' equity 420,660 419,322
Total liabilities and
Total assets $1,079,631 $1,054,258 shareholders' equity $1,079,631 $1,054,258
------------ ---------- ---------- -------------------- ---------- ----------
Condensed Consolidated Statement of Cash Flows
----------------------------------------------
(Dollars in thousands) Twelve Months Ended
--------------------- -------------------
Dec. 29, 2012 Dec. 31, 2011
------------- -------------
Net cash flows from (to)
operating activities $144,777 $134,278
Net cash flows from (to)
investing activities:
Capital expenditures (60,270) (31,143)
Acquisition spending (26,894) (54,990)
Other 1,351 (5,407)
Net cash flows from (to)
financing activities (89,994) (69,022)
Net increase (decrease) in cash
and cash equivalents (31,030) (26,284)
Cash and cash equivalents at
beginning of period 72,812 99,096
Cash and cash equivalents at
end of period $41,782 $72,812
---------------------------- ------- -------
Business Segment Data
---------------------
(Dollars in
thousands) Three Months Ended Twelve Months Ended
----------- ------------------ -------------------
Dec. 29, 2012 Dec. 31, 2011 Dec. 29, 2012 Dec. 31, 2011
------------- ------------- ------------- -------------
Net sales:
Office furniture $422,349 $402,407 $1,687,302 $1,528,050
Hearth products 105,187 97,862 316,701 305,400
$527,536 $500,269 $2,004,003 $1,833,450
-------- -------- ---------- ----------
Operating profit:
Office furniture
Operations before
restructuring
and impairment
charges $24,086 $33,307 $93,793 $102,468
Restructuring and
impairment
charges (583) (1,131) (1,944) (2,842)
Office furniture
-net 23,503 32,176 91,849 99,626
Hearth products
Operations before
restructuring
and impairment
charges 15,411 9,422 26,477 15,171
Restructuring and
impairment
charges - - - (419)
Hearth products -
net 15,411 9,422 26,477 14,752
Total operating
profit 38,914 41,598 118,326 114,378
Unallocated
corporate
expense (11,044) (14,353) (40,722) (44,219)
Income before
income taxes $27,870 $27,245 $77,604 $70,159
------------- ------- ------- ------- -------
Depreciation and
amortization
expense:
Office furniture $9,068 $8,801 $34,491 $36,109
Hearth products 1,438 1,649 5,957 7,574
General corporate 749 702 2,911 2,604
$11,255 $11,152 $43,359 $46,287
------- ------- ------- -------
Capital
expenditures
(including
capitalized
software)
Office furniture $10,874 $8,249 $36,080 $24,061
Hearth products 536 199 2,008 2,179
General corporate 4,201 2,501 22,182 4,903
$15,611 $10,949 $60,270 $31,143
------- ------- ------- -------
As of As of
Dec. 29, 2012 Dec. 31, 2011
------------- -------------
Identifiable
assets:
Office furniture $700,665 $671,334
Hearth products 254,835 259,142
General corporate 124,131 123,782
$1,079,631 $1,054,258
---------- ----------
SOURCE HNI Corp.
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