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 April 16, 2014.
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HNI CORPORATION
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Date:
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April 16, 2014
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By
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/s/ Kurt A. Tjaden
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Kurt A. Tjaden
Vice President and Chief Financial Officer
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99.1
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Text of press release dated April 16, 2014.
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First 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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|||||||||||
3/29/2014
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3/30/2013
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Percent Change
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||||||||||
Net sales
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$ | 452.2 | $ | 442.3 | 2.2 | % | ||||||
Gross profit
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$ | 155.2 | $ | 147.8 | 5.0 | % | ||||||
Gross profit %
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34.3 | % | 33.4 | % | ||||||||
SG&A (including restructuring)
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$ | 145.2 | $ | 144.7 | 3.2 | % | ||||||
SG&A %
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32.1 | % | 32.7 | % | ||||||||
(Gain) on sale of assets
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$ | (8.4 | ) | - |
NM
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|||||||
Operating income
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$ | 18.4 | $ | 3.1 | 499.0 | % | ||||||
Operating income %
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4.1 | % | 0.7 | % | ||||||||
Net income attributable to HNI Corporation
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$ | 11.1 | $ | 1.4 | 688.2 | % | ||||||
Earnings per share attributable to HNI Corporation – diluted
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$ | 0.24 | $ | 0.03 | 700.0 | % |
·
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Consolidated net sales increased $9.9 million or 2.2 percent to $452.2 million. Compared to prior year quarter, divestitures reduced sales $6.8 million. On an organic basis sales increased 3.8 percent.
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·
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Gross margin was 0.9 percentage points higher than prior year primarily due to higher volume in the hearth products segment and increased price realization partially offset by lower volume and unfavorable mix in the office furniture segment.
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·
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Total selling and administrative expenses as a percent of net sales, including restructuring charges, decreased 0.6 percentage points due to volume and freight efficiencies partially offset by investment in strategic initiatives and higher incentive-based compensation.
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·
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The Corporation's first quarter results included an $8.4 million gain on the sale of a vacated facility.
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·
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The provision for income taxes for the prior year quarter reflects the effect of the retroactive extension of the 2012 research tax credit of $0.9 million, all of which was recognized in first quarter 2013.
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Dollars in millions
Except per share data
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Three Months Ended
3/29/2014
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Three Months Ended
3/30/2013
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||||||||||||||
Operating
Income
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Diluted
EPS
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Operating
Income
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Diluted
EPS
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As reported (GAAP)
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$ | 18.4 | $ | 0.24 | $ | 3.1 | $ | 0.03 | ||||||||
% of net sales
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4.1 | % | 0.7 | % | ||||||||||||
Restructuring and impairment
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- | $ | 0.2 | $ | 0.00 | |||||||||||
Gain on sale
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$ | (8.4 | ) | $ | (0.12 | ) | - | |||||||||
Results (non-GAAP)
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$ | 10.0 | $ | 0.12 | $ | 3.2 | $ | 0.03 | ||||||||
% of net sales
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2.2 | % | 0.7 | % |
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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3/29/2014
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3/30/2013
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Sales
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$ | 358.4 | $ | 365.8 | -2.0 | % | ||||||
Operating profit
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$ | 16.5 | $ | 8.7 | 89.6 | % | ||||||
Operating profit %
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4.6 | % | 2.4 | % |
First Quarter – Non-GAAP Financial Measures
(Reconciled with most comparable GAAP financial measures)
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Three Months Ended
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Dollars in millions
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3/29/2014
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3/30/2013
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Percent Change
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Operating profit as reported (GAAP)
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$ | 16.5 | $ | 8.7 | 89.6 | % | ||||||
% of Net Sales
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4.6 | % | 2.4 | % | ||||||||
Restructuring and impairment
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$ | (0.0 | ) | $ | 0.2 | |||||||
Gain on sale
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$ | 8.4 | - | |||||||||
Operating profit (non-GAAP)
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$ | 8.1 | $ | 8.9 | -8.9 | % | ||||||
% of Net Sales
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2.3 | % | 2.4 | % |
·
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First quarter sales for the office furniture segment decreased $7.5 million or 2.0 percent to $358.4 million. Compared to prior year quarter, divestitures reduced sales by $6.8 million. On an organic basis, sales decreased 0.2 percent driven by a decrease in the supplies-driven channel partially offset by an increase in the contract channel.
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·
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First quarter operating profit increased $7.8 million. Operating profit was positively impacted by increased price realization, freight efficiencies and the gain on sale of a vacated facility. These were partially offset by lower volume and unfavorable mix.
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Hearth Products
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Dollars in millions
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Three Months Ended
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Percent Change
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3/29/2014
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3/30/2013
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Sales
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$ | 93.8 | $ | 76.5 | 22.7 | % | ||||||
Operating profit
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$ | 11.7 | $ | 3.6 | 226.0 | % | ||||||
Operating profit %
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12.5 | % | 4.7 | % |
·
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First quarter sales for the hearth products segment increased $17.4 million or 22.7 percent to $93.8 million driven by increases in both the new construction channel and the remodel/retrofit channel.
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·
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First quarter operating profit increased $8.1 million. Operating profit was positively impacted by increased volume and higher price realization partially offset by higher incentive-based compensation.
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Three Months Ended
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(Dollars in thousands, except per share data)
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Mar. 29, 2014
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Mar. 30, 2013
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Net Sales
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$ | 452,201 | $ | 442,297 | ||||
Cost of products sold
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297,029 | 294,515 | ||||||
Gross profit
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155,172 | 147,782 | ||||||
Selling and administrative expenses
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145,210 | 144,556 | ||||||
(Gain) on sale of assets
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(8,400 | ) | - | |||||
Restructuring and impairment charges
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(28 | ) | 156 | |||||
Operating income
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18,390 | 3,070 | ||||||
Interest income
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70 | 152 | ||||||
Interest expense
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2,202 | 2,668 | ||||||
Income before income taxes
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16,258 | 554 | ||||||
Income taxes
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5,242 | (625 | ) | |||||
Net income
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11,016 | 1,179 | ||||||
Less: Net income (loss) attributable to the noncontrolling interest
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(80 | ) | (229 | ) | ||||
Net income attributable to HNI Corporation
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$ | 11,096 | $ | 1,408 | ||||
Net income attributable to HNI Corporation common shareholders – basic
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$ | 0.25 | $ | 0.03 | ||||
Average number of common shares outstanding – basic
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45,038,512 | 45,154,764 | ||||||
Net income attributable to HNI Corporation common shareholders – diluted
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$ | 0.24 | $ | 0.03 | ||||
Average number of common shares outstanding – diluted
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45,837,579 | 45,719,878 |
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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Mar. 29, 2014
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Dec. 28, 2013
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Mar. 29, 2014
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Dec. 28, 2013
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Cash and cash equivalents
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$ | 45,684 | $ | 65,030 |
Accounts payable and
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Short-term investments
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7,252 | 7,251 |
accrued expenses
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$ | 336,584 | $ | 407,799 | ||||||||||
Receivables
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203,695 | 228,715 |
Note payable and current
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Inventories
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100,283 | 89,516 |
maturities of long-term debt
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39,175 | 484 | ||||||||||||
Deferred income taxes
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15,371 | 16,051 |
Current maturities of other
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Prepaid expenses and
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long-term obligations
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2,987 | 3,301 | ||||||||||||||
other current assets
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26,463 | 26,665 | |||||||||||||||
Current assets
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398,748 | 433,228 |
Current liabilities
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378,746 | 411,584 | ||||||||||||
Long-term debt
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150,077 | 150,091 | |||||||||||||||
Capital lease obligations
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76 | 106 | |||||||||||||||
Other long-term liabilities
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67,360 | 67,543 | |||||||||||||||
Property and equipment – net
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273,877 | 267,401 |
Deferred income taxes
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73,324 | 68,964 | ||||||||||||
Goodwill
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287,092 | 286,655 | |||||||||||||||
Other assets
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152,730 | 147,421 |
Parent Company shareholders'
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equity
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442,855 | 436,328 | |||||||||||||||
Noncontrolling interest
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9 | 89 | |||||||||||||||
Shareholders' equity
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442,864 | 436,417 | |||||||||||||||
Total liabilities and
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Total assets
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$ | 1,112,447 | $ | 1,134,705 |
shareholders' equity
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$ | 1,112,447 | $ | 1,134,705 |
Three Months Ended
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(Dollars in thousands)
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Mar. 29, 2014
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Mar. 30, 2013
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Net cash flows from (to) operating activities
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$ | (36,065 | ) | $ | (31,272 | ) | ||
Net cash flows from (to) investing activities:
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Capital expenditures
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(22,693 | ) | (14,793 | ) | ||||
Other
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12,812 | (753 | ) | |||||
Net cash flows from (to) financing activities
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26,600 | 35,946 | ||||||
Net increase (decrease) in cash and cash equivalents
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(19,346 | ) | (10,872 | ) | ||||
Cash and cash equivalents at beginning of period
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65,030 | 41,782 | ||||||
Cash and cash equivalents at end of period
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45,684 | $ | 30,910 |
Three Months Ended
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(Dollars in thousands)
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Mar. 29, 2014
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Mar. 30, 2013
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Net sales:
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Office furniture
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$ | 358,369 | $ | 365,832 | ||||
Hearth products
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93,832 | 76,465 | ||||||
$ | 452,201 | $ | 442,297 | |||||
Operating profit (loss):
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Office furniture
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Operations before restructuring and impairment charges
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$ | 16,465 | $ | 8,856 | ||||
Restructuring and impairment charges
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28 | (156 | ) | |||||
Office furniture – net
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16,493 | 8,700 | ||||||
Hearth products
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11,708 | 3,591 | ||||||
Total operating profit
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28,201 | 12,291 | ||||||
Unallocated corporate expense
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(11,943 | ) | (11,737 | ) | ||||
Income before income taxes
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$ | 16,258 | $ | 554 | ||||
Depreciation and amortization expense:
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Office furniture
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$ | 9,499 | $ | 8,823 | ||||
Hearth products
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1,176 | 1,393 | ||||||
General corporate
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1,349 | 873 | ||||||
$ | 12,024 | $ | 11,089 | |||||
Capital expenditures (including capitalized software):
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Office furniture
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$ | 13,488 | $ | 9,932 | ||||
Hearth products
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1,512 | 614 | ||||||
General corporate
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7,693 | 4,247 | ||||||
$ | 22,693 | $ | 14,793 | |||||
As of
Mar. 29, 2014
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As of
Dec. 28, 2013
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Identifiable assets:
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Office furniture
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$ | 706,081 | $ | 722,697 | ||||
Hearth products
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257,411 | 255,978 | ||||||
General corporate
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148,955 | 156,030 | ||||||
$ | 1,112,447 | $ | 1,134,705 |