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HNI Corporation Reports Double Digit Earnings Growth For First Quarter Fiscal Year 2016

MUSCATINE, Iowa, April 21, 2016 /PRNewswire/ -- HNI Corporation HNI, +6.72% today announced sales for the first quarter ended April 2, 2016 of $501.0 million and net income of $11.8 million, or $0.26 per diluted share. Non-GAAP net income per diluted share, which excludes restructuring and transition costs, improved 48 percent from the prior year quarter to $0.31.

First Quarter Summary Comments "We delivered very strong results which exceeded our expectations for the first quarter. Operating margins increased in both our office furniture and hearth products segments driven by strong operational execution. We continue to compete well in our markets and are focused on driving long-term shareholder value," said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.

First Quarter - Financial Performance

(Dollars in millions, except per share data)


Three Months Ended



4/2/2016

4/4/2015

Change

GAAP




Net Sales

$501.0

$523.5

-4.3%

Gross Profit %

37.1%

35.2%

190 bps

SG&A %

33.0%

32.2%

80 bps

Restructuring charges %

0.2%

0.1%

10 bps

Operating Income

$19.5

$15.4

26.6%

Operating Income %

3.9%

2.9%

100 bps

Net Income %

2.4%

1.6%

80 bps

EPS – diluted

$0.26

$0.19

36.8%





Non-GAAP




Gross Profit %

37.4%

35.5%

190 bps

Operating Income

$22.4

$16.9

32.3%

Operating Income %

4.5%

3.2%

130 bps

EPS – diluted

$0.31

$0.21

47.6 %

First Quarter Summary Comments

  • Consolidated net sales decreased $22.4 million or 4.3 percent to $501.0 million. Compared to prior year quarter, the acquisition of a small office furniture company increased sales $4.7 million. On an organic basis, sales decreased 5.2 percent.
  • Non-GAAP gross margin increased 190 basis points compared to prior year driven by strong operational performance, favorable material costs and price realization, partially offset by lower volume.
  • Selling and administrative expenses, as a percentage of sales, increased 80 basis points due to the impacts of lower volume and higher incentive based compensation partially offset by broad based cost reductions.
  • The Corporation recorded $2.9 million of restructuring and transition costs in connection with previously announced closures and structural realignment. First quarter 2015 included $1.5 million of restructuring and transition costs.

Office Furniture – Financial Performance(Dollars in millions)


Three Months Ended



4/2/2016

4/4/2015

Change

GAAP




Net Sales

$387.3

$407.4

-4.9%

Operating Profit

$21.3

$20.2

5.7%

Operating Profit %

5.5%

4.9%

0.6 bps





Non-GAAP




Operating Profit

$23.0

$21.7

6.1%

Operating Profit %

5.9%

5.3%

60 bps

  • First quarter sales decreased $20.1 million or 4.9 percent to $387.3 million. Compared to prior year quarter, an acquisition increased sales $4.7 million. On an organic basis, sales decreased 6.1 percent. Sales for the quarter decreased in both our supplies-driven and contract channels.
  • First quarter non-GAAP operating profit increased $1.3 million or 6.1 percent. Strong operational performance, favorable material costs, price realization, and cost reductions were partially offset by lower volume and higher incentive based compensation.

Hearth Products – Financial Performance(Dollars in millions)


Three Months Ended



4/2/2016

4/4/2015

Change

GAAP




Net Sales

$113.7

$116.0

-2.0%

Operating Profit

$12.6

$12.5

0.5%

Operating Profit %

11.0%

10.8%

0.2 bps





Non-GAAP




Operating Profit

$13.8

$12.5

10.1%

Operating Profit %

12.1%

10.8%

130 bps

  • First quarter sales decreased $2.4 million or 2.0 percent to $113.7 million. Growth in the new construction channel was offset by the continued decline in the retail pellet channel.
  • For the quarter, non-GAAP operating profit increased $1.3 million or 10.1 percent. Strong operational performance, favorable material costs, price realization, and cost reductions were partially offset by lower volume and higher incentive based compensation.

Outlook "I am very pleased with our strong performance in the first quarter. We are seeing signs of modest market improvement. We continue to compete well. We are confident the investments we are making in our business will continue to generate strong returns for our shareholders. I am excited about our ability to deliver long-term profitable growth," said Mr. Askren.

The Corporation estimates sales to be down 4 to 7 percent in the second quarter over the same period in the prior year, including the impacts of acquisitions and divestitures. Non-GAAP earnings per share are anticipated to be in the range of $0.54 to $0.59 for the second quarter and $2.40 to $2.70 for the full year, which excludes restructuring and transition costs.

Conference Call HNI Corporation will host a conference call on Friday, April 22, 2016 at 10:00...


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