Vermont Business MagazineHNI Corporation(NYSE: HNI) today Wednesday thatsales for the third quarter endedOctober 3, 2015, of$615.9 millionand net income of$40.8 million, or$0.90per diluted share.Non-GAAP net income per diluted share improved 14.8 percent from the prior year quarter to$0.93, which excludes restructuring and transition costs. Last fall, HNI bought Vermont Castings and announced last spring that it would close certain plants, including one in Vermont. Following its acquistition of Vermont Castings last fall, it announced in March 2015 that it would close the Bethel, Vermont, plant, with the loss of about 40 workers. It also has a larger hearth manufacturing plant in Randolph with about 100 employees.
Third Quarter Summary Comments
"We delivered double digit earnings growth for the third quarter.We are competing well in our markets despite a softening economy which led to modest declines in office furniture and organic hearth sales. We are taking calculated actions to reset our cost structure for a range of slowing economic scenarios," saidStan Askren, HNI Corporation Chairman, President and Chief Executive Officer.
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Third Quarter – Financial Performance (Dollars in millions, except per share data) |
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Three Months Ended |
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10/3/2015 |
9/27/2014 |
Change |
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GAAP |
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Net Sales |
$615.9 |
$614.7 |
0.2% |
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Gross Profit % |
37.6% |
35.8% |
180 bps |
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SG&A % |
27.7% |
27.0% |
70 bps |
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(Gain) loss on sale of assets % |
0.0% |
0.0% |
0 bps |
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Restructuring charges % |
0.0% |
0.2% |
-20 bps |
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Operating Income |
$61.1 |
$52.7 |
15.9% |
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Operating Income % |
9.9% |
8.6% |
130 bps |
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Net Income % |
6.6% |
5.5% |
110 bps |
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EPS – diluted |
$0.90 |
$0.74 |
21.6% |
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Non-GAAP |
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Gross Profit % |
38.0% |
36.4% |
160 bps |
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Operating Income |
$63.4 |
$57.6 |
9.9% |
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Operating Income % |
10.3% |
9.4% |
90 bps |
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EPS – diluted |
$0.93 |
$0.81 |
14.8% |
Third Quarter Summary Comments
- Consolidated net sales increased$1.2 millionor 0.2 percent to$615.9 million. Compared to prior year quarter, the Vermont Castings Group acquisition increased sales$18.7 million. On an organic basis, sales decreased 2.8 percent.
- Non-GAAP gross margin increased 160 basis points compared to prior year driven by strong operational performance, favorable material costs and better price realization, partially offset by lower volume and unfavorable product mix.
- Selling and administrative expenses, as a percentage of sales, increased 70 basis points due to higher freight costs, strategic investments and acquisition impact, partially offset by cost management actions.
- The Corporation recorded$2.3 millionof restructuring and transition expenses in the current quarter in connection with previously announced closures, acquisition integration and structural realignment. Third quarter 2014 included$4.9 millionof restructuring and transition costs associated with facility closures.
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Office Furniture – Financial Performance (Dollars in millions) |
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Three Months Ended |
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10/3/2015 |
9/27/2014 |
Change |
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GAAP |
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Net Sales |
$476.0 |
$488.6 |
(2.6%) |
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Operating Profit |
$48.4 |
$42.8 |
13.2% |
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Operating Profit % |
10.2% |
8.7% |
150 bps |
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Non-GAAP |
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Operating Profit |
$49.0 |
$47.6 |
2.9% |
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Operating Profit % |
10.3% |
9.8% |
50 bps |
- Third quarter sales decreased$12.6 millionor 2.6 percent to$476.0 million. Sales for the quarter decreased in both our supplies-driven and contract channels.
- Third quarter non-GAAP operating profit increased$1.4 millionor 2.9 percent. Strong operational performance, cost management actions and better price realization were partially offset by lower volume, higher freight costs and unfavorable product mix.
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Hearth Products – Financial Performance (Dollars in millions) |
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Three Months Ended |
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10/3/2015 |
9/27/2014 |
Change |
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GAAP |
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Net Sales |
$139.9 |
$126.1 |
11.0% |
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Operating Profit |
$23.5 |
$23.8 |
(1.2%) |
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Operating Profit % |
16.8% |
18.9% |
-210 bps |
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Non-GAAP |
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Operating Profit |
$25.1 |
$23.8 |
5.6% |
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Operating Profit % |
17.9% |
18.9% |
-100 bps |
- Third quarter sales increased$13.8 millionor 11.0 percent to$139.9 million. Compared to prior year quarter, the Vermont Castings Group acquisition increased sales by$18.7 million. On an organic basis, sales decreased 3.9 percent for the quarter driven by a 24 percent decline in biomass products partially offset by growth in the new construction channel.
- For the quarter, non-GAAP operating profit increased$1.3 millionor 5.6 percent due to cost management actions, better price realization and favorable material costs.
Outlook
"I am pleased with our profit performance and believe we are competing well in our markets. We will continue to adjust our cost structure while investing for long-term profitable growth. I remain confident in our ability to create long-term shareholder value," said Mr. Askren.
The Corporation estimates sales to be down 4 to 8 percent in the fourth quarter over the same period in the prior year. Non-GAAP earnings per share are anticipated to be in the range of$2.55 to $2.60for the full year, which includes the Vermont Castings Group acquisition results and excludes restructuring and transition costs.
HNI Corporation is a NYSE traded company (ticker symbol: HNI) providing products and solutions for the home and workplace environments. HNI Corporation is a leading global office furniture manufacturer and is the nation's leading manufacturer of hearth products. The Corporation's strong brands have leading positions in their markets. More information can be found on the Corporation's website atwww.hnicorp.com.
MUSCATINE, Iowa,Oct. 21, 2015/PRNewswire/ --HNI Corporation