EX-99.1 2 r8k252013exh99.htm NEWS RELEASE r8k252013exh99.htm
EXHIBIT 99.1
 
                                 News Release
 

 
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 ANNOUNCES RESULTS IN LINE WITH GUIDANCE FOR FOURTH QUARTER AND
YEAR-END FISCAL 2012

MUSCATINE, Iowa (February 5, 2013) – 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
except per share data
 
Three Months Ended
   
Percent
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
except per share data
 
Three Months Ended 12/29/2012
   
Three Months Ended 12/31/2011
 
 
Gross
Profit
   
SG&A
   
Operating
Income
   
EPS
   
Gross
Profit
   
SG&A
   
Operating
Income
   
EPS
 
                                                 
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
except per share data
 
Twelve Months Ended
   
Percent
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 Corporation – diluted
  $ 1.07     $ 1.01          
 

 
·  
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
except per share data
 
Twelve Months Ended 12/29/2012
   
Twelve Months Ended 12/31/2011
 
 
Gross
Profit
   
SG&A
   
Operating
Income
   
EPS
   
Gross
Profit
   
SG&A
   
Operating
Income
   
EPS
 
                                                 
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 Change
   
Twelve Months Ended
   
Percent 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 Change
   
Twelve Months Ended
   
Percent Change
 
 
12/29/2012
   
12/31/2011
   
12/29/2012
   
12/31/2011
 
                                     
Operating profit
as reported (GAAP)
  $ 23.5     $ 32.2       -27.0 %   $ 91.8     $ 99.6       -7.8 %
% 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 Change
   
Twelve Months Ended
   
Percent 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
Change
   
Twelve Months Ended
   
Percent Change
 
 
12/29/2012
   
12/31/2011
   
12/29/2012
   
12/31/2011
 
                                     
Operating profit
as reported (GAAP)
  $ 15.4     $ 9.4       63.6 %   $ 26.5     $ 14.8       79.5 %
% of net sales
    14.7 %     9.6 %             8.4 %     4.8 %        
                                                 
Restructuring and impairment
    -       -               -     $ 0.4          
Transition costs
    -       -               -       -          
                                                 
Operating profit
 (non-GAAP)
  $ 15.4     $ 9.4             $ 26.5     $ 15.2          
% 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, Midwest Folding Products, LSI Corporation of America, ERGO®, Heatilator®, Heat & Glo®, Quadra-Fire® and Harman Stovehave 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.

###

 
 

 

HNI CORPORATION

Condensed Consolidated Statement of Operations

   
Three Months Ended
   
Twelve Months Ended
 
 
(Dollars in thousands, except per share data)
 
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'
        equity
    420,359       419,057  
                 
     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

   
Twelve Months Ended
 
(Dollars in thousands)
 
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

   
Three Months Ended
   
Twelve Months Ended
 
(Dollars in thousands)
 
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  

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