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A business consultancy, based in London, England, John Sacks' JSA Consultancy Services provides expert, in-depth, information advice and guidance as to how to exploit successfully the office furniture and interiors markets in Europe, North America, Australasia and Japan.

HNI Corporation show improved results for 2013

Wednesday 5 February 2014

HNI Corporation today announced sales for the 4th quarter ended December 28, 2013, of $541.3 million, 3% higher than the previous quarter and net profit of $22.8 million, a 29% increase from the prior year quarter. For 2013, the Corporation reported sales of $2.1 billion, 3% higher than 2012 and operating profit of $37.6 million (2012 - $30.3m).
"We are pleased with our strong execution and profit improvement for the fourth quarter and full year 2013. Our growth investments delivered top-line improvement in the quarter despite a slow economy. Outstanding working capital management drove significant cash generation. Office furniture sales increased in our supplies-driven business despite continued reductions in federal government spending. Continued strong profit growth in our hearth business was led by substantial growth in both the new construction and remodel/retrofit channels and outstanding operational execution. We enter 2014 financially strong, competitively well positioned, and focused on delivering profitable growth," said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.
• Consolidated net sales increased $56.0 million or 2.8 percent to $2.1 billion.
• Gross margin was 0.3 percentage points higher than prior year due to increased volume, better price realization and lower material costs offset partially by unfavorable mix, new product ramp-up and operation reconfiguration costs to meet changing market demands.
• Total selling and administrative expenses as a percent of net sales, including restructuring charges, improved 0.4 percentage points due to higher volume, network distribution realignment savings and lower restructuring charges partially offset by investment in growth initiatives, higher incentive-based compensation and a loss on the sale of a small non-core office furniture business. Included in 2013 were $0.3 million of restructuring and transition charges compared to $3.0 million in 2012.
• Fourth quarter sales for the office furniture segment were $417.0 million which was $5.4 million or 1.3 percent less than the same quarter last year. Compared to prior year quarter, divestitures reduced sales by $8.2 million. On an organic basis, sales increased 0.7 percent driven by growth in the supplies-driven channel partially offset by a decrease in the contract and international businesses. Federal government sales declined over 40 percent compared to the same quarter last year. Full year sales for the office furniture segment were $1.69 billion which was $2.1 million or 0.1 percent less than prior year. Compared to prior year, divestitures partially offset by the acquisition of BP Ergo, reduced sales by $27.5 million. On an organic basis, sales increased 1.5 percent driven mainly by growth in the supplies-driven channel. Full year sales to the federal government declined over 27 percent compared to the prior year.
• Fourth quarter and full year operating profit increased $2.3 million and $5.5 million, respectively. Operating profit margin was positively impacted by increased price realization, network realignment savings and lower restructuring charges. These were partially offset by lower volume, new product ramp-up, operation reconfiguration to meet changing market demands and a loss on the sale of a small non-core office furniture business.

"I remain positive about our markets and our ability to grow sales and increase profits in 2014. We continue to aggressively invest for long-term profitable growth, and I remain confident our investments are delivering shareholder value. Our businesses are strong, competitive, and well-positioned in their markets, and the prospects for our businesses are encouraging," said Mr. Askren.
The Corporation estimates sales growth between 1 and 5 percent in the first quarter over the same period in the prior year. Non-GAAP earnings per diluted share are anticipated in the range of $0.07 to $0.12 for the first quarter. For the full year, the Corporation is updating its estimate of non-GAAP earnings per diluted share to be in the range of $1.60 to $1.80, which excludes restructuring charges and transition costs.
The Corporation remains focused on delivering long-term shareholder value through its core strategic framework: Member/Owner Culture, Rapid Continuous Improvement (RCI), Core Plus and Split-and-Focus with Leverage.

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