Iowa
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1-14225
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42-0617510
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(State or Other Jurisdiction
of Incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.)
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o
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Section 2 — Financial Information
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Item 2.02
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Results of Operations and Financial Condition.
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99.1
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Text of press release dated October 16, 2013.
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HNI CORPORATION | |||
Date October 16, 2013
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By:
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/s/ Kurt A. Tjaden | |
Kurt A. Tjaden | |||
Vice President and Chief Financial Officer | |||
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99.1
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Text of press release dated October 16, 2013.
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Third Quarter – GAAP Financial Measures
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|||||||||||
Dollars in millions
except per share data
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Three Months Ended
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||||||||||
9/28/2013
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9/29/2012
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Percent Change
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|||||||||
Net sales
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$ | 565.7 | $ | 550.9 | 2.7 | % | |||||
Gross profit
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$ | 199.9 | $ | 191.3 | 4.5 | % | |||||
Gross profit %
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35.3 | % | 34.7 | % | |||||||
SG&A
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$ | 154.8 | $ | 149.6 | 3.5 | % | |||||
SG&A %
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27.4 | % | 27.2 | % | |||||||
Operating income
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$ | 45.1 | $ | 41.7 | 8.1 | % | |||||
Operating income %
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8.0 | % | 7.6 | % | |||||||
Net income attributable to HNI Corporation
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$ | 28.1 | $ | 24.5 | 14.7 | % | |||||
Earnings per share attributable to HNI Corporation – diluted
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$ | 0.61 | $ | 0.53 |
·
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Consolidated net sales increased $14.9 million or 2.7 percent to $565.7 million. Compared to prior year quarter, divestitures, partially offset by the acquisition of BP Ergo, resulted in a $12.5 million sales decline.
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·
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Gross margin was 0.6 percentage points higher than prior year primarily due to higher volume and increased price realization partially offset by new product ramp-up and operation reconfiguration costs to meet changing market demands.
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·
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Total selling and administrative expenses as a percent of net sales, including restructuring charges, increased 0.2 percentage points from the prior year quarter due to investment in growth initiatives and higher incentive-based compensation partially offset by higher volume, network distribution realignment savings and lower restructuring charges.
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·
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The Corporation’s third quarter results included $0.1 million of restructuring charges associated with previously announced shutdown and consolidation of office furniture manufacturing locations. Included in the third quarter of 2012 was $0.8 million of restructuring and transition costs of which $0.2 million was included in cost of sales.
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Dollars in millions
Except per share data
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Three Months Ended
9/28/2013
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Three Months Ended
9/29/2012
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||||||||||||||||||||||
Gross
Profit
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Operating
Income
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EPS
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Gross
Profit
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Operating
Income
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EPS
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|||||||||||||||||||
As reported (GAAP)
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$ | 199.9 | $ | 45.1 | $ | 0.61 | $ | 191.3 | $ | 41.7 | $ | 0.53 | ||||||||||||
% of net sales
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35.3 | % | 8.0 | % | 34.7 | % | 7.6 | % | ||||||||||||||||
Restructuring and impairment
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- | $ | 0.1 | $ | 0.00 | - | $ | 0.2 | $ | 0.00 | ||||||||||||||
Transition costs
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- | - | - | $ | 0.2 | $ | 0.6 | $ | 0.01 | |||||||||||||||
Results (non-GAAP)
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$ | 199.9 | $ | 45.2 | $ | 0.61 | $ | 191.5 | $ | 42.5 | $ | 0.55 | ||||||||||||
% of net sales
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35.3 | % | 8.0 | % | 34.8 | % | 7.7 | % |
Office Furniture – GAAP Financial Measures
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||||||||||||
Dollars in millions
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Three Months Ended
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Percent Change
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||||||||||
9/28/2013
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9/29/2012
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|||||||||||
Sales
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$ | 466.2 | $ | 467.8 | -0.3 | % | ||||||
Operating profit
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$ | 40.7 | $ | 38.4 | 5.9 | % | ||||||
Operating profit %
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8.7 | % | 8.2 | % |
Third Quarter – Non-GAAP Financial Measures
(Reconciled with most comparable GAAP financial measures)
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||||||||||||
Three Months Ended
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Percent
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|||||||||||
Dollars in millions
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9/28/2013
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9/29/2012
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Change
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|||||||||
Operating profit as reported (GAAP)
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$ | 40.7 | $ | 38.4 | 5.9 | % | ||||||
% of Net Sales
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8.7 | % | 8.2 | % | ||||||||
Restructuring and impairment
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$ | 0.1 | $ | 0.2 | ||||||||
Transition costs
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- | $ | 0.6 | |||||||||
Operating profit (non-GAAP)
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$ | 40.8 | $ | 39.2 | 4.0 | % | ||||||
% of Net Sales
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8.8 | % | 8.4 | % |
·
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Third quarter sales for the office furniture segment decreased $1.6 million or 0.3 percent to $466.2 million. Compared to prior year quarter, divestitures, partially offset by the acquisition of BP Ergo, resulted in a $12.5 million sales decline. On an organic basis sales increased 2.3 percent driven by growth in both channels of the Corporation’s office furniture segment.
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·
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Third quarter operating profit increased $2.3 million. Operating profit was positively impacted by higher volume, increased price realization, network realignment savings and lower restructuring charges. These were partially offset by new product ramp-up and operation reconfiguration to meet changing market demands.
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Hearth Products
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||||||||||||
Dollars in millions
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Three Months Ended
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Percent Change
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||||||||||
9/28/2013
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9/29/2012
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|||||||||||
Sales
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$ | 99.5 | $ | 83.1 | 19.8 | % | ||||||
Operating profit
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$ | 14.4 | $ | 9.1 | 58.7 | % | ||||||
Operating profit %
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14.5 | % | 10.9 | % |
·
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Third quarter sales for the hearth products segment increased $16.4 million or 19.8 percent to $99.5 million driven by increases in both the new construction and the remodel/retrofit channels.
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·
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Third quarter operating profit increased $5.3 million. Operating profit was positively impacted by increased volume, higher price realization and lower input costs partially offset by investments in growth initiatives and higher incentive-based compensation.
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Three Months Ended
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Nine Months Ended
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|||||||||||||||
(Dollars in thousands, except per share data)
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Sept. 28, 2013
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Sept. 29, 2012
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Sept. 28, 2013
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Sept. 29, 2012
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||||||||||||
Net Sales
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$ | 565,706 | $ | 550,855 | $ | 1,518,701 | $ | 1,476,467 | ||||||||
Cost of products sold
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365,835 | 359,519 | 996,390 | 973,191 | ||||||||||||
Gross profit
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199,871 | 191,336 | 522,311 | 503,276 | ||||||||||||
Selling and administrative expenses
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154,641 | 149,421 | 453,735 | 444,610 | ||||||||||||
Restructuring and impairment charges
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115 | 172 | 236 | 1,361 | ||||||||||||
Operating income
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45,115 | 41,743 | 68,340 | 57,305 | ||||||||||||
Interest income
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158 | 155 | 468 | 610 | ||||||||||||
Interest expense
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2,826 | 2,658 | 8,219 | 8,181 | ||||||||||||
Income before income taxes
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42,447 | 39,240 | 60,589 | 49,734 | ||||||||||||
Income taxes
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14,398 | 15,036 | 19,962 | 18,785 | ||||||||||||
Net income
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28,049 | 24,204 | 40,627 | 30,949 | ||||||||||||
Less: Net (loss) attributable to the noncontrolling interest
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(45 | ) | (286 | ) | (296 | ) | (425 | ) | ||||||||
Net income attributable to HNI Corporation
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$ | 28,094 | $ | 24,490 | $ | 40,923 | $ | 31,374 | ||||||||
Net income attributable to HNI Corporation common shareholders – basic
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$ | 0.62 | $ | 0.54 | $ | 0.90 | $ | 0.69 | ||||||||
Average number of common shares outstanding – basic
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45,317,912 | 45,224,059 | 45,295,115 | 45,265,050 | ||||||||||||
Net income attributable to HNI Corporation common shareholders – diluted
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$ | 0.61 | $ | 0.53 | $ | 0.89 | $ | 0.68 | ||||||||
Average number of common shares outstanding – diluted
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46,089,580 | 45,820,422 | 45,951,775 | 45,839,917 |
Assets
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Liabilities and Shareholders’ Equity
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||||||||||||||||
As of
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As of
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||||||||||||||||
(Dollars in thousands)
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Sept. 28,
2013
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Dec. 29,
2012
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Sept. 28, 2013
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Dec. 29,
2012
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Cash and cash equivalents
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$ | 36,891 | $ | 41,782 |
Accounts payable and
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||||||||||||
Short-term investments
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7,251 | 7,250 |
accrued expenses
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$ | 405,211 | $ | 390,958 | ||||||||||
Receivables
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249,255 | 213,490 |
Note payable and current
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Inventories
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99,109 | 93,515 |
maturities of long-term debt
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8,869 | 4,554 | ||||||||||||
Deferred income taxes
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16,183 | 21,977 |
Current maturities of other
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||||||||||||||
Prepaid expenses and
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long-term obligations
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3,169 | 373 | ||||||||||||||
other current assets
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25,759 | 26,926 | |||||||||||||||
Current assets
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434,448 | 404,940 |
Current liabilities
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417,249 | 395,885 | ||||||||||||
Long-term debt
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150,105 | 150,146 | |||||||||||||||
Capital lease obligations
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150 | 226 | |||||||||||||||
Other long-term liabilities
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62,771 | 57,281 | |||||||||||||||
Property and equipment – net
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258,976 | 240,490 |
Deferred income taxes
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65,333 | 55,433 | ||||||||||||
Goodwill
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286,572 | 288,348 | |||||||||||||||
Other assets
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147,360 | 145,853 |
Parent Company shareholders’
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||||||||||||||
equity
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431,647 | 420,359 | |||||||||||||||
Noncontrolling interest
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101 | 301 | |||||||||||||||
Shareholders’ equity
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431,748 | 420,660 | |||||||||||||||
Total liabilities and
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|||||||||||||||||
Total assets
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$ | 1,127,356 | $ | 1,079,631 |
shareholders’ equity
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$ | 1,127,356 | $ | 1,079,631 |
Nine Months Ended
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||||||||
(Dollars in thousands)
|
Sept. 28, 2013
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Sept. 29, 2012
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||||||
Net cash flows from (to) operating activities
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$ | 87,969 | $ | 80,836 | ||||
Net cash flows from (to) investing activities:
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||||||||
Capital expenditures
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(59,589 | ) | (44,659 | ) | ||||
Other
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1,151 | (27,048 | ) | |||||
Net cash flows from (to) financing activities
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(34,422 | ) | (32,676 | ) | ||||
Net increase (decrease) in cash and cash equivalents
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(4,891 | ) | (23,547 | ) | ||||
Cash and cash equivalents at beginning of period
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41,782 | 72,812 | ||||||
Cash and cash equivalents at end of period
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$ | 36,891 | $ | 49,265 |
Three Months Ended
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Nine Months Ended
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|||||||||||||||
(Dollars in thousands)
|
Sept. 28, 2013
|
Sept. 29, 2012
|
Sept. 28, 2013
|
Sept. 29, 2012
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||||||||||||
Net sales:
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||||||||||||||||
Office furniture
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$ | 466,213 | $ | 467,787 | $ | 1,268,214 | $ | 1,264,953 | ||||||||
Hearth products
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99,493 | 83,068 | 250,487 | 211,514 | ||||||||||||
$ | 565,706 | $ | 550,855 | $ | 1,518,701 | $ | 1,476,467 | |||||||||
Operating profit:
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||||||||||||||||
Office furniture
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||||||||||||||||
Operations before restructuring and impairment charges
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$ | 40,811 | $ | 38,605 | $ | 71,759 | $ | 69,707 | ||||||||
Restructuring and impairment charges
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(115 | ) | (172 | ) | (236 | ) | (1,361 | ) | ||||||||
Office furniture – net
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40,696 | 38,433 | 71,523 | 68,346 | ||||||||||||
Hearth products
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14,409 | 9,077 | 23,699 | 11,066 | ||||||||||||
Total operating profit
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55,105 | 47,510 | 95,222 | 79,412 | ||||||||||||
Unallocated corporate expense
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(12,658 | ) | (8,270 | ) | (34,633 | ) | (29,678 | ) | ||||||||
Income before income taxes
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$ | 42,447 | $ | 39,240 | $ | 60,589 | $ | 49,734 | ||||||||
Depreciation and amortization expense:
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||||||||||||||||
Office furniture
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$ | 9,257 | $ | 8,542 | $ | 27,384 | $ | 25,423 | ||||||||
Hearth products
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1,274 | 1,454 | 4,039 | 4,519 | ||||||||||||
General corporate
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1,201 | 751 | 3,147 | 2,162 | ||||||||||||
$ | 11,732 | $ | 10,747 | $ | 34,570 | $ | 32,104 | |||||||||
Capital expenditures – net:
|
||||||||||||||||
Office furniture
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$ | 13,225 | $ | 10,206 | $ | 39,402 | $ | 25,206 | ||||||||
Hearth products
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1,335 | 519 | 3,568 | 1,472 | ||||||||||||
General corporate
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5,723 | 8,868 | 16,619 | 17,981 | ||||||||||||
$ | 20,283 | $ | 19,593 | $ | 59,589 | $ | 44,659 | |||||||||
As of
Sept. 28, 2013
|
As of
Sept. 29, 2012
|
|||||||||||||||
Identifiable assets:
|
||||||||||||||||
Office furniture
|
$ | 733,258 | $ | 725,763 | ||||||||||||
Hearth products
|
275,736 | 272,951 | ||||||||||||||
General corporate
|
118,362 | 124,068 | ||||||||||||||
$ | 1,127,356 | $ | 1,122,782 |
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