EX-99.1 2 k042605b.txt PRESS RELEASE Knoll 1235 Water Street East Greenville, PA 18041 Tel 215 679-7991 Press Release Knoll, Inc. Reports First Quarter 2005 Results Sales Increase 16.8% From PY, Operating Profits Up 47.8% EAST GREENVILLE, PA, April 26, 2005 -- Knoll, Inc., (NYSE: KNL) today announced results for the first quarter ended March 31, 2005. Net sales were $179.1 million for the quarter, an increase of 16.8% from first quarter 2004. Operating income was $17.0 million, an increase of 47.8% from the first quarter 2004, while net income was $6.9 million, an increase of 32.7% over 2004, or $0.13 per share compared to $0.11 per share in the prior year. Andrew Cogan, Chief Executive Officer, stated, "We are pleased with our strong start to 2005. The first quarter of the year marked our fourth consecutive quarter of year over year sales growth. Our investments in broadening and strengthening our product offerings are gaining traction with architects and designers, customers and dealers and as a result our sales are growing faster than the industry." "In spite of significant inflation in our material and transportation costs, we were still able to deliver improved profits and margins. This strong performance is attributable directly to the tireless efforts of our associate owners company-wide and their commitment to continuous improvement in our operations." First Quarter 2005 Financial Results Dollars in Millions Except Per Share Data Three Months Ended ---------------------- Percent 3/31/05 3/31/04 Change --------- --------- --------- Net Sales $ 179.1 $ 153.3 16.8 % Gross Margin 58.1 47.1 23.4 % Operating Expenses 41.1 35.6 15.5 % Operating Income 17.0 11.5 47.8 % Net Income 6.9 5.2 32.7 % Earnings Per Share - Diluted .13 .11 18.2 % Backlog 117.2 111.8 4.8 % The Company's $25.8 million increase in net sales for first quarter 2005 was the result of growth in all product categories coupled with approximately $2.0 million of additional revenues realized from recently implemented price increases. Backlog of unfilled orders at March 31, 2005 increased $5.4 million an increase of 4.8% over the prior year. Gross margin for first quarter 2005 was $58.1 million, an increase of $11.0 million or 23.4%, over first quarter 2004. As a percentage of sales, gross margin increased to 32.4% for first quarter 2005 from 30.7% for first quarter 2004. These increases resulted from better absorption of overhead on the incremental volume, improved pricing, and cost savings realized from ongoing global sourcing initiatives and continuous improvement programs. These increases were offset by approximately $5.4 million of material and transportation inflation plus $1.7 million of unfavorable exchange rate impact. Operating expenses for first quarter 2005 totaled $41.1 million, or 22.9% of sales, compared to $35.6 million, or 23.2% of sales for first quarter 2004. These increases resulted from greater marketing spending in preparation for 2005 product introductions as well as additional sales compensation and incentive costs as a result of our higher sales and strong profit performance. Additionally, costs incurred to comply with the requirements of operating as a public company also negatively impacted first quarter expenses. Operating income for first quarter 2005 was $17.0 million, an increase of $5.5 million, or 47.8%, from operating income of $11.5 million for first quarter 2004. As a percentage of sales, operating income increased to 9.5% for first quarter 2005 from 7.5% for first quarter 2004. Net income for first quarter 2005 was $6.9 million, or $.13 per share, as compared to $5.2 million or $.11 per share, for first quarter 2004. First quarter 2005 effective tax rate benefited from the mix of pretax income and the varying effective tax rates in the countries in which we operate. In addition, 2005 net income was negatively impacted by increased interest expense as a result of higher interest rates. Lastly, first quarter 2004 net income benefited by $.01 per share from gains on interest rate hedge agreements and favorable exchange rate variances as compared to first quarter 2005. Cash flow from operations for the first quarter totaled $13.3 million, compared to $3.5 million for the same period last year. $18 million of debt was paid down in the quarter, $7 million from operations and $11 million from the proceeds received from the exercise of stock options in the quarter. Barry McCabe, Knoll's CFO noted, " We are very pleased with the significant operating cash flow that we generated in the first quarter and with the progress we made in reducing our debt. Our long term debt is now $51 million lower than it was after we closed our new bank facility just six months ago in September 2004." The Company stated that it expects second quarter 2005 revenue to be in the $190 to $197 million range, an increase of 6 - 10 % from the second quarter of 2004. Earnings per share estimates for the second quarter 2005 are between $.18 and $.20. Conference Call Information As announced on April 14, 2005, Knoll will host a conference call on Wednesday, April 27, 2005 at 10:00 A.M. EST to discuss its financial results, quarterly highlights and business outlook. The call will include slides; participants are encouraged to listen to and view the presentation via webcast at http://www.knoll.com; go to "About Knoll" and click on "Investor Relations". The conference call may also be accessed by dialing: North America 800 706-7745 International 617 614-3472 Passcode 45667070 Headquartered in East Greenville, Pennsylvania, Knoll, a leading designer and manufacturer of branded office furniture products and textiles, serves clients worldwide. Our commitment to innovation and modern design has yielded a comprehensive portfolio of products designed to provide enduring value and help clients shape their workplaces with imagination and vision. The Knoll commitment to high environmental standards is mandated by a comprehensive Environmental, Health & Safety Management Plan. Cautionary Statement Regarding Forward-Looking Information This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding Knoll, Inc.'s expected future financial position, results of operations, cash flows, business strategy, budgets, projected costs, capital expenditures, products, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include words such as "anticipate," "if," "believe," "plan," "estimate," "expect," "intend," "may," "could," "should," "will," and other similar expressions are forward-looking statements. Such forward-looking statements are inherently uncertain, and readers must recognize that actual results may differ materially from the expectations of Knoll management. Knoll does not undertake a duty to update such forward-looking statements. Factors that may cause actual results to differ materially from those in the forward-looking statements include corporate spending and service-sector employment, price competition, acceptance of Knoll's new products, the pricing and availability of raw components, demand for high quality, well designed office furniture solutions, changes in the competitive marketplace, changes in the trends in the market for office furniture and other risks identified on Knoll's Registration Statement on Form S-1 and other filings with the Securities and Exchange Commission. Many of these factors are outside of Knoll's control. Contacts Investors: Barry L. McCabe Senior Vice President and Chief Financial Officer Tel 215 679-1301 bmccabe@knoll.com Media: David Bright Vice President, Communications Tel 212 343-4135 dbright@knoll.com KNOLL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data) Three Months Ended March 31, --------------------------- 2005 2004 ----------- ----------- (Unaudited) (Unaudited) ----------- ----------- Sales $ 179,129 $ 153,324 Cost of sales 121,040 106,263 ----------- ----------- Gross profit 58,089 47,061 Selling, general, and administrative expenses 41,070 35,548 ----------- ----------- Operating income 17,019 11,513 Interest expense 6,087 3,732 Other income, net 514 1,418 ----------- ----------- Income before income tax expense 11,446 9,199 Income tax expense 4,595 3,973 ----------- ----------- Net income $ 6,851 $ 5,226 ----------- ----------- Earnings per share: Basic $ .14 $ .11 Diluted $ .13 $ .11 Weighted-average shares outstanding: Basic 49,888,640 46,314,236 Diluted 51,904,940 47,977,344 KNOLL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data) March 31, December 31, 2005 2004 ----------- ------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 10,393 $ 9,052 Customer receivables, net 93,075 92,452 Inventories 49,685 49,586 Prepaid and other current assets 22,007 22,126 ----------- ------------- Total current assets 175,160 173,216 Property, plant, and equipment, net 148,136 150,992 Intangible assets, net 237,125 237,382 Other noncurrent assets 9,233 8,641 ----------- ------------- Total Assets $ 569,654 $ 570,231 ----------- ------------- LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Current maturities of long-term debt $ 107 $ 108 Accounts payable 55,059 46,075 Other current liabilities 53,125 64,375 ----------- ------------- Total current liabilities 108,291 110,558 Long-term debt 374,748 392,750 Other noncurrent liabilities 89,728 88,268 ----------- ------------- Total liabilities 572,767 591,576 ----------- ------------- Stockholders' deficit (3,113) (21,345) ----------- ------------- Total Liabilities and Stockholders' Deficit $ 569,654 $ 570,231 ----------- ------------- KNOLL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Three Months Ended March 31, ---------------------------- 2005 2004 ----------- ----------- (Unaudited) Net income $ 6,851 $ 5,226 ----------- ----------- Cash Flows provided by Operating Activities 13,314 3,477 Cash Flows used in Investing Activities (2,118) (1,449) Cash Flows used in Financing Activities (9,691) (2,364) Effect of exchange rate changes on cash and cash equivalents (164) 129 ----------- ----------- Increase (decrease) in cash and cash equivalents 1,341 (207) Cash and cash equivalents at beginning of period 9,052 11,517 ----------- ----------- Cash and cash equivalents at end of period $ 10,393 $ 11,310 ----------- -----------