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Knoll: September 30, 2015 Earnings Release Exhibit

The following excerpt is from the company's SEC filing.

1235 Water Street

East Greenville, PA 18041

Tel 215 679-7991

Press Release

Knoll Reports Strong Operating Margins and Profits

EAST GREENVILLE, PA, October 21, 2015

Knoll, Inc. (NYSE: KNL) today announced results for the third quarter ended September 30, 2015. Net sales were

$263.6 million

for the third quarter, a slight decrease of

, or 0.2% on a constant currency basis from the third quarter of 2014. Operating profit for the quarter increased to

$28.7 million

, when compared to operating profit of

$23.3 million

in the third quarter of 2014. Adjusted operating profit for the quarter was $29.1 million, a 24.4% increase from the third quarter of 2014. Net earnings for the third quarter of 2015 were

$17.9 million

, an increase of

when compared to the third quarter of 2014. Diluted earnings per share was

for the quarter compared to

per share in the third quarter of 2014. Adjusted diluted earnings per share was $0.38 in the third quarter of 2015.

"We are very pleased to be reporting the highest level of quarterly operating profits since 2008," commented Andrew Cogan, CEO. "We remain on track to deliver the upper end of our full year goal of improving operating margins by 100-200 basis points. While sales on a constant currency basis were flat against prior year as we faced some difficult large project comps in our Middle East business, orders and forward indicators are encouraging."

Third Quarter Results

Third quarter 2015 financial results highlights are as follows:

Dollars in Millions, Except Per Share Data

Three Months Ended

Percent

9/30/2015

9/30/2014

Change

Net Sales

Gross Profit

Gross Profit %

Operating Expenses

Operating Profit

Operating Profit %

Adjusted Operating Profit

Adjusted Operating Profit %

Net Earnings

Earnings Per Share - Diluted

Adjusted Earnings Per Share - Diluted

(1) See Reconciliation of Non-GAAP Financial Measures below.

Net sales for the Office segment were

$160.8 million

during the third quarter of 2015, a decrease of

on a constant currency basis, when compared to the third quarter of 2014. Strength in Commercial and Government sales did not fully offset a couple of large international projects in the prior year. Net sales for the Studio segment were

$75.0 million

during the third quarter of 2015, an increase of

$2.8 million

, when compared to the third quarter of 2014. On a constant currency basis, Studio segment sales increased by

. The increase in constant currency sales in the Studio segment was spread across all our Studio segment businesses including Holly Hunt. Net sales for the Coverings segment were

$27.8 million

on a constant currency basis, when compared to the third quarter of 2014. The decrease in sales in the Coverings segment was attributable to lower leather sales to aviation and OEM suppliers, offset by strong growth in our felt and textiles businesses.

Gross profit for the third quarter of 2015 was

$101.2 million

$6.2 million

, when compared to the third quarter of 2014. Gross Margin (gross profit as a percentage of net sales) increased to

during the third quarter of 2015 from

in the third quarter of 2014. The increase in gross margin was driven by the mix of business, as well as foreign exchange benefits and operational improvements plus net price realization.

Operating expenses were

$72.5 million

of net sales, compared to

$71.6 million

of net sales, in the third quarter of 2014. During the third quarter of 2015, we closed a HOLLY HUNT

showroom in Brazil, which was opened prior to our acquisition. This action resulted in $0.4 million of restructuring charges in the Studio segment. These charges primarily relate to cash severance and employment termination related expenses.

Operating profit for the third quarter of 2015 was

of net sales, an increase of $5.4 million, or 23.2%, when compared to the third quarter of 2014. Adjusted operating profit was

of net sales for the third quarter of 2015 compared to

of net sales in the third quarter of 2014. Operating profit for the Office segment was

$11.1 million

in the third quarter of 2015, an increase of $2.8 million, or 33.2%, when compared to the third quarter of 2014. Office segment operating margins increased year over year from

. Operating profit for the Studio segment was

$11.3 million

$2.2 million

, or 24.2%, when compared to the third quarter of 2014. Studio segment operating margins increased year over year from

. Adjusted operating margin for the Studio segment in the third quarter of 2015 was 15.7%. Operating profit for the Coverings segment was

$6.3 million

for the third quarter of 2015, an increase of $0.4 million, or 6.8%, when compared to the third quarter of 2014. Coverings segment operating margins increased year over year from

for the third quarter of 2015.

During the third quarter of 2015 and 2014, other income was

$1.8 million

$3.3 million

, respectively. Foreign exchange gains during the third quarter of 2015 were $1.7 million compared to $3.2 million in the third quarter of 2014.

The mix of pretax income and the varying effective tax rates in the countries in which we operate directly affects our consolidated effective tax rate. The effective tax rate was

for the third quarter of 2015, as compared...


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