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HNI (HON) 3rd quarter sales up 2.8%

Tuesday 19 October 2010

HNI Corporation announced today sales for the quarter to 30 September 2010 of $458.9 million and income from continuing operations of $15.6 million. Net income per diluted share from continuing operations for the quarter was $0.34 or $0.35. For the third quarter earnings per share was impacted $0.04 by a negative tax adjustment related to a valuation adjustment allowance.
\"Double-digit growth in the office furniture contract and international business drove a three percent increase in sales over third quarter 2009. We are encouraged by the success of our investments in selling, marketing and new product initiatives. Our hearth business was profitable for the quarter and is on track to be profitable for the year, despite challenging consumer demand. While weak small business confidence during the quarter impacted the supplies driven channel, I am confident our investments have positioned this business for future growth,\" said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.
Consolidated net sales for the first nine months of 2010 increased $2.8 million or 0.2 percent, to $1.221 billion compared to $1.218 billion in 2009. Gross margins increased to 34.6 percent compared to 34.1 percent last year. Income from continuing operations was $17.1 million compared to $7.7 million in 2009. Earnings per share from continuing operations increased to $0.37 per diluted share compared to $0.17 per diluted share last year.
Cash flow from operations for the first nine months of 2010 was $49.1 million compared to $135.9 million last year. Capital expenditures were $18.7 million in 2010 compared to $10.9 million in 2009. The Corporation repurchased 654,664 shares of its common stock at a cost of $17.8 million during the first nine months of 2010. There is approximately $145.8 million remaining under the current repurchase authorization.
HNI completed the sale of a small, non-core business in the office furniture segment during the third quarter. A pre-tax charge of $0.6 million was recorded at the time of sale. The corporation previously recorded $2.7 million of pre-tax charges during the first half of the year to reduce the assets held for sale to fair market value. In addition, the corporation sold a small, non-core component in the hearth products segment during the first quarter. Revenues and expenses associated with these business operations are shown as discontinued operations for all periods presented in the financial statements.
Third quarter sales for the office furniture segment increased 3.5% to $387.4 million. The change was driven by an increase in contract and international channels offset by a decline in the supplies driven channel.
Third quarter office furniture operating profit decreased 15% or $6.0 million. Operating profit was impacted by lower price realization, higher mix of lower margin products, increased fuel costs and investments in selling, marketing and product initiatives. These were partially offset by higher volume, improved distribution efficiencies, cost reduction initiatives and lower restructuring and transition costs.
Third quarter sales for the hearth products segment decreased 0.8% or $0.5 million driven by a decline in the new construction channel partially offset by an increase in the remodel-retrofit channel.
Third quarter operating profit increased 62.8% to $1.2 million. Operating profit was positively impacted by better price realization and lower restructuring costs partially offset by lower volume and higher material costs.
\"We remain optimistic about the office furniture market. We expect our investments in selling, marketing and product initiatives to drive improvements across the business. We see sales momentum continuing in our contract and international businesses and anticipate near-term growth in the hearth and supplies driven channels. I am confident our businesses are financially strong and strategically positioned for long term growth,\" said Mr. Askren.

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