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Knoll reports 3rd Quarter 2012 results; sales and profit down

Thursday 18 October 2012

Knoll, Inc. today announced results for the third quarter ended September 30, 2012. Net sales were $219.8 million for the quarter, a decrease of 8.2% from the third quarter 2011. Operating profit was $23.5 million a decrease of 6.0% from the third quarter 2011, but operating profit as a percent of sales was 10.7%, an increase of 30 basis points from the third quarter of 2011. Net income was $12.2 million during the third quarter of 2012 compared to $18.4 million during the third quarter 2011..
"We are pleased with the strong gross and operating margins we reported in the quarter," commented Andrew Cogan CEO. "In spite of recent softening in industry demand, we expect to be back on a path of growth as we end 2012, he added."
Net sales for the quarter were $219.8 million, a decrease of $19.7 million, or 8.2%, over the third quarter of 2011. Net sales for the Office segment were $160.0 million during the third quarter of 2012, a decrease of $13.6 million, or 7.8%, when compared with the third quarter of 2011. This decrease was primarily the result of softening industry demand and lower sales to government and financial services clients. Net sales for the Studio segment were $33.0 million, a decrease of $4.3 million, or 11.5%, when compared with the third quarter of 2011. Lower sales resulting primarily from the poor economic conditions in Europe more than offset the growth of Studio sales in North America. Net sales for the Coverings segment were $26.7 million, a decrease of $1.9 million, or 6.6%, when compared with the third quarter of 2011. The decrease in sales in the Coverings segment during the third quarter of 2012 was the result of lower demand in certain markets such as hospitality and transportation.
Gross profit for the third quarter of 2012 was $74.2 million, a decrease of $4.7 million, or 6.0%, over the same period in 2011. Gross profit as a percentage of net sales increased 90 basis points to 33.8% in the third quarter of 2012 from 32.9% in the same quarter of 2011. The increase in gross profit as a percentage of sales from the third quarter of 2011 largely resulted from a more profitable mix in our business as we saw government shipments, which are generally at higher discount rates, make up a smaller portion of our overall sales. Continuous improvement projects in our factories also positively impacted our gross margin.
Operating profit for the third quarter of 2012 was $23.5 million, a decrease of $1.5 million, or 6.0%, when compared to the same period in 2011. Operating profit for the Office segment was $13.0 million in the third quarter of 2012, an increase of $0.2 million, or 1.6%, when compared with the third quarter of 2011. Operating profit for the Studio segment was $5.2 million, a decrease of $0.5 million, or 8.8%, when compared with the third quarter of 2011. Operating profit for the Coverings segment was $5.3 million, a decrease of $1.3 million, or 19.7%, when compared to the third quarter of 2011. The decrease in operating profit in the Coverings segment during the third quarter of 2012 is the result of lower sales to hospitality and transportation clients and increased costs associated with growth initiatives.
"We continue to reduce our bank debt and improve our balance sheet which provides us with the financial flexibility to continue to invest opportunistically in both our growth and infrastructure improvement initiatives," stated Barry L. McCabe, EVP & CFO.

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