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HNI Corporation announces improved profit 1st quarter fiscal 2013

Thursday 18 April 2013

HNI Corporation today announced sales for the first quarter ended March 30, 2013, of $442.3 million and net income of $1.4 million, or $0.03 per diluted share for the quarter, a three cent improvement from the prior year quarter.
First Quarter Summary Comments
"We are pleased with our performance and profit growth over prior year. Strong operational execution, good cost control, and investment returns drove first quarter profit improvement while we continued to invest for long-term growth. Sales increases in our hearth and supplies-driven businesses offset anticipated softness in our other office furniture businesses. As expected, office furniture sales declined due to project delays related to the economic uncertainty in the fourth quarter of 2012 and continued reductions in federal government spending. Continued growth in the new construction channel led the strong profit increase in our hearth business," said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.

First Quarter Results
• Consolidated net sales decreased $2.9 million or 0.7 percent to $442.3 million. Compared to prior year quarter, divestitures, partially offset by the acquisition of BP Ergo, resulted in a $1.9 million sales decline.
• Gross margins were 0.4 percentage points higher than prior year primarily due to higher volume in the hearth products segment and increased price realization partially offset by lower volume and unfavorable mix in the office furniture segment.
• Total selling and administrative expenses as a percent of net sales, including restructuring charges, increased 0.2 percentage points due to selling initiatives and higher incentive-based compensation partially offset by network realignment savings and lower restructuring costs.
• The Corporation's first quarter results included $0.2 million of restructuring charges associated with previously announced shutdown and consolidation of office furniture manufacturing locations. Included in the first quarter of 2012 was $1.2 million of restructuring and transition costs of which $0.3 million were included in cost of sales.
• The provision for income taxes for the quarter reflects the effect of a retroactive extension of the 2012 research tax credit of $0.9 million, all of which was recognized in first quarter 2013.

Cash flow used in operations for the quarter was $30.0 million compared to $27.7 million for the same quarter last year. Capital expenditures were $16.0 million in the first quarter of 2013 compared to $12.8 million in the first quarter of 2012.

• First quarter sales for the office furniture segment decreased $12.8 million or 3.4 percent to $365.8 million. The change was driven by a decrease in the contract and international businesses partially offset by an increase in the supplies-driven channel. Compared to prior year quarter, divestitures, partially offset by the acquisition of BP Ergo, resulted in a $1.9 million sales decline.
• First quarter operating profit increased $0.8 million. Operating profit was positively impacted by increased price realization, network realignment savings, lower incentive-based compensation and restructuring charges. These were partially offset by lower volume and unfavorable mix.
"I am encouraged by the gradual improvement in our markets and remain confident in our strategies to drive profit improvement while simultaneously investing for long-term profitable growth. We enter the second quarter with good momentum and anticipate accelerating sales and profit improvement across our office furniture and hearth businesses. We remain on track to grow sales and solidly increase profits in 2013. I remain excited about our long-term investments and ability to deliver long-term shareholder value," said Mr. Askren.
The Corporation estimates sales growth between 5 to 8 percent in the second quarter over the same period in the prior year. Non-GAAP earnings per diluted share are anticipated in the range of $0.22 to $0.27 for the second quarter, which excludes restructuring charges and transition costs. For the full year, the Company is narrowing its estimate of non-GAAP earnings per diluted share to the range of $1.30 to $1.45, which excludes restructuring charges and transition costs.
The Corporation remains focused on creating long-term shareholder value by growing its business through investment in building brands, product solutions and selling models, enhancing its strong member-owner culture and remaining focused on its long-standing rapid continuous improvement programs to build best total cost and a lean enterprise.

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