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HNI 3rd qtr sales tumble 31.5%

Thursday 22 October 2009

HNI Corporation Wednesday announced sales of $454.0 million a decrease of $209.2 million or 31.5 percent from the prior year quarter. Net income fell to $17.6 million or $0.39 per diluted share for the third quarter ending October 3, 2009.
Included in third quarter results are charges related to the shutdown of three office furniture manufacturing plants and restructuring of hearth operations. Net income per diluted share for the quarter was $0.47 on a non-GAAP basis excluding restructuring and transition costs.

Third quarter sales for the office furniture segment decreased $180.7 million. The decrease was driven by substantial weakness in both the supplies-driven and contract channels.

Office furniture division operating profit decreased $1.4 million. Operating profit was negatively impacted by lower volume and increased restructuring and transition costs partially offset by price realization, lower input costs and cost control initiatives.

Gross margins were 2.8 percentage points higher due to increased price realization, lower material costs and cost reduction initiatives partially offset by lower volume.

Total selling and administrative expenses, including restructuring charges, decreased $56.7 million or 29.7% due to cost control actions, lower volume related costs and improved distribution efficiencies.

Third quarter sales for the hearth products segment decreased $28.4 million driven by significant declines in both the new construction and remodel-retrofit channels.

The corporation\'s third quarter results included $6.0 million of restructuring and transition costs of which $1.6 million were included in cost of sales. These included $4.1 million of costs associated with shutdown and consolidation of production of three office furniture manufacturing locations and $1.8 million related to restructuring of hearth operations net of a non-operating gain. Included in third quarter 2008 results were $1.5 million of restructuring charges.

Consolidated net sales for the first nine months of 2009 decreased $0.6 billion, or 32.5 percent, to $1.2 billion compared to $1.8 billion in the prior year period. Acquisitions added $10 million or 0.6 percentage points of sales. Gross margins increased to 33.9 percent compared to 33.6 percent last year. Operating income was $16.5 million compared to $69.1 million in the prior year period. Earnings per share decreased to $0.10 per diluted share compared to $0.83 per diluted share last year.

Cash flow from operations for the first nine months of 2009 was $135.9 million compared to $104.6 million in the same period last year. The increase was driven by strong working capital management offset partially by lower earnings. Capital expenditures were $10.9 million in 2009 compared to $54.6 million in 2008. The Corporation reduced total debt $119 million during the first nine months of 2009 using cash flow from operations and proceeds from the sale of long-term investments.

\"Our strong third quarter profitability demonstrates the power of our reset cost structure. Our members have done an outstanding job of attacking costs and increasing efficiency throughout the corporation. We increased profitability and generated almost twice as much operating cash flow during the quarter despite the challenging market and revenue down almost 32 percent,\" said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.

\"We continue to face uncertain and challenging market conditions. Our third quarter results benefited from relatively strong seasonal office furniture demand, primarily driven by government and education customers. We expect seasonal demand to dissipate in the fourth quarter, resulting in revenue below third quarter levels. Seasonality aside, we believe demand has generally stabilized. We remain excited about the future given our ongoing cost reset actions and aggressive efforts to improve our competitive position,\" said Mr. Askren.

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