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HNI Corporation Reports First Quarter 2024 Results

HNI

Strong earnings growth driven by Workplace Furnishings profit transformation

  • EPS of $0.37 increased 825% on a GAAP basis and 185% on a non-GAAP basis YoY.
  • Workplace Furnishings operating margin expanded 730 bps GAAP and 720 bps non-GAAP YoY.
  • Full-year and second quarter 2024 non-GAAP EPS expected to strongly increase YoY.

HNI Corporation (NYSE: HNI) today announced sales for the first quarter ended March 30, 2024 of $588.0 million and net income of $17.7 million.

Highlights

  • Excellent earnings growth. First quarter earnings per share of $0.37 was up considerably on both a GAAP and non-GAAP basis versus the prior year despite an 8.1 percent year-over-year organic revenue decline, which was primarily driven by continued housing market softness. GAAP to non-GAAP reconciliations follow the financial statements in this release.
  • Profit transformation actions continue to drive improvement in Workplace Furnishings. First quarter non-GAAP operating profit margin for Workplace Furnishings, when excluding impacts from the Kimball International acquisition, expanded 560 basis points year-over-year.
  • Solid accretion from Kimball International. Kimball International (“KII”) generated an operating profit margin of 9.3 percent and added an estimated $0.10 to non-GAAP EPS.
  • Residential Building Products posts solid profit despite a soft housing market. Segment operating profit was $21.4 million with an operating margin of 14.4 percent. Recent cost actions continued to support profitability. Growth and margin expansion are expected to return as the year progresses.
  • Strong balance sheet. Gross leverage was 1.9x, as calculated in accordance with the Corporation’s debt agreements. That ratio was unchanged from the fourth quarter of 2023 as higher profit offset a modest seasonal increase in debt. The Corporation also accelerated stock repurchase activity in the quarter.
  • Projecting strong 2024 earnings growth to be driven by continued profit transformation in Workplace Furnishings and benefits from KII. In 2024, Workplace Furnishings organic revenue is expected to grow at a low single-digit pace, and Residential Building Products revenue is projected to be flat-to-slightly down.
  • Expecting solid increase in second quarter earnings. Momentum with Workplace Furnishings profit transformation initiatives and accretion from KII are anticipated to drive solid year-over-year non-GAAP EPS growth. Compared to the prior year, organic Workplace Furnishings revenue is expected to be down slightly, while Residential Building Products revenue is projected to decline at a low-single digit rate.

“Our teams continue to build upon the strong progress we have made over the past two years. We delivered earnings that were nearly triple the prior-year period, with EPS and operating margin reaching first quarter levels not seen since 2007.

“Our strong results continued to be fueled by our Workplace Furnishings profit transformation plan and the inclusion of Kimball International, which combined to deliver the highest first quarter Workplace Furnishings profit margin since 2016.

“In Residential Building Products, our recent cost actions helped support profitability despite ongoing market weakness. Longer-term we remain bullish about the prospects of the housing market, broadly, and our market-leading position, specifically.

“Overall, we started the year on a very strong note. Our results reflect the dedication of our member-owners, the strength of our business model, and our ability to manage through all parts of the economic cycle,” stated Jeff Lorenger, Chairman, President, and Chief Executive Officer.

HNI Corporation – First Quarter Financial Performance

(Dollars in millions, except per share data)

Three Months Ended

March 30,
2024

April 1,
2023

Change

GAAP

Net Sales

$

588.0

$

479.1

22.7

%

Gross Profit %

39.6

%

36.4

%

320 bps

SG&A %

34.5

%

35.0

%

-50 bps

Operating Income

$

29.7

$

6.4

362

%

Operating Income %

5.0

%

1.3

%

370 bps

Effective Tax Rate

19.6

%

58.4

%

Net Income %

3.0

%

0.3

%

270 bps

EPS – diluted

$

0.37

$

0.04

825

%

Non-GAAP

Gross Profit %

39.6

%

36.5

%

310 bps

Operating Income

$

29.9

$

10.3

191

%

Operating Income %

5.1

%

2.1

%

300 bps

Effective Tax Rate

19.6

%

30.5

%

EPS – diluted

$

0.37

$

0.13

185

%

The following table contains results for (1) the Corporation’s legacy business, excluding the impacts of KII (“Legacy HNI”) and (2) KII. Please refer to non-GAAP reconciliations, which follow the financial statements in this release, for further information on the adjustments made to calculate non-GAAP performance.

HNI Corporation – First Quarter Impact of Kimball International Acquisition

(Dollars in millions, except per share data)

Three Months Ended

March 30,
2024

April 1,
2023

GAAP

Legacy HNI

KII

Consolidated HNI

Consolidated HNI

Legacy Change

Consolidated Change

Net Sales

$

440.5

$

147.5

$

588.0

$

479.1

(8.1

%)

22.7

%

Gross Profit

$

175.8

$

57.0

$

232.8

$

174.3

0.9

%

33.6

%

Gross Profit %

39.9

%

38.7

%

39.6

%

36.4

%

350 bps

320 bps

Operating Income

$

16.1

$

13.6

$

29.7

$

6.4

150

%

362

%

Operating Income %

3.6

%

9.2

%

5.0

%

1.3

%

230 bps

370 bps

EPS - diluted

$

0.37

$

0.04

825

%

Non-GAAP

Gross Profit

$

175.9

$

57.0

$

233.0

$

174.8

0.7

%

33.3

%

Gross Profit %

39.9

%

38.7

%

39.6

%

36.5

%

340 bps

310 bps

Operating Income

$

16.2

$

13.7

$

29.9

$

10.3

57.7

%

191

%

Operating Income %

3.7

%

9.3

%

5.1

%

2.1

%

160 bps

300 bps

EPS - diluted

$

0.27

$

0.37

$

0.13

108

%

185

%

HNI Corporation — First Quarter Summary Comments

  • Consolidated net sales increased 22.7 percent from the prior-year quarter to $588.0 million. On an organic basis, sales decreased 8.1 percent year-over-year. The acquisition of KII increased year-over-year net sales by $147.5 million. A reconciliation of organic sales, a non-GAAP measure, follows the financial statements in this release.
  • Gross profit margin expanded 320 basis points compared to the prior-year quarter. This increase was driven by favorable price-cost, improved net productivity, and the impact of the KII acquisition, partially offset by lower organic volume.
  • Selling and administrative expenses as a percent of sales decreased 50 basis points compared to the prior-year quarter. The decrease was driven by $3.4 million of non-repeating KII acquisition-related fees and expenses incurred in the prior-year quarter, dilution from price realization, lower legacy core SG&A, and KII acquisition-related administrative cost synergies, partially offset by lower organic volume and higher variable compensation.
  • GAAP and non-GAAP net income per diluted share was $0.37 compared to $0.04 and $0.13, respectively, in the prior-year quarter. The increase was driven by favorable price-cost, improved net productivity, the net impact of the KII acquisition, lower core SG&A, and a lower effective tax rate, partially offset by lower organic volume and higher variable compensation.

Workplace Furnishings – First Quarter Financial Performance

(Dollars in millions)

Three Months Ended

March 30,
2024

April 1,
2023

Change

GAAP

Net Sales

$

439.8

$

299.6

46.8

%

Operating Income (Loss)

$

26.3

($

4.0

)

759

%

Operating Income (Loss) %

6.0

%

(1.3

%)

730 bps

Non-GAAP

Operating Income (Loss)

$

26.5

($

3.6

)

841

%

Operating Income (Loss) %

6.0

%

(1.2

%)

720 bps

The following table contains results for (1) the Corporation’s legacy workplace furnishings business, excluding the impacts of KII (“Legacy Workplace”) and (2) KII. Please refer to non-GAAP reconciliations, which follow the financial statements in this release for further information on the adjustments made to calculate non-GAAP performance.

Workplace Furnishings – First Quarter Impact of Kimball International Acquisition

(Dollars in millions)

Three Months Ended

March 30,
2024

April 1,
2023

GAAP

Legacy Workplace

KII

Total Workplace

Total Workplace

Legacy Change

Total Change

Net Sales

$

292.3

$

147.5

$

439.8

$

299.6

(2.5

%)

46.8

%

Operating Income (Loss)

$

12.7

$

13.6

$

26.3

($

4.0

)

418

%

759

%

Operating Income (Loss) %

4.3

%

9.2

%

6.0

%

(1.3

%)

560 bps

730 bps

Non-GAAP

Operating Income (Loss)

$

12.8

$

13.7

$

26.5

($

3.6

)

457

%

841

%

Operating Income (Loss) %

4.4

%

9.3

%

6.0

%

(1.2

%)

560 bps

720 bps

  • Workplace Furnishings net sales increased 46.8 percent from the prior-year quarter to $439.8 million. Organic sales decreased 2.5 percent year-over-year. The impact of the KII acquisition increased sales by $147.5 million over the prior-year quarter.
  • Workplace Furnishings GAAP operating margin of 6.0 percent improved 730 basis points versus the prior-year quarter, driven by favorable price-cost, improved net productivity, favorable impacts from KII, and lower legacy core SG&A. These factors were partially offset by lower organic volume and higher variable compensation. Excluding the impact of KII, first quarter GAAP operating profit margin for Legacy Workplace was 4.3 percent, an improvement of 560 basis points year-over-year.

Residential Building Products – First Quarter Financial Performance

(Dollars in millions)

Three Months Ended

March 30,
2024

April 1,
2023

Change

GAAP

Net Sales

$

148.2

$

179.4

(17.4

%)

Operating Income

$

21.4

$

28.1

(23.9

%)

Operating Income %

14.4

%

15.6

%

-120 bps

  • Residential Building Products net sales decreased 17.4 percent from the prior-year quarter to $148.2 million primarily due to housing market weakness, with remodel/retrofit (R&R) sales declining at a higher rate than new construction.
  • Residential Building Products operating profit margin of 14.4 percent compressed 120 basis points year-over-year driven by lower volume, partially offset by improved net productivity, favorable price-cost, lower variable compensation, and lower core SG&A.

First Quarter Order Rates

  • In the Workplace Furnishings segment, orders increased two percent versus the prior-year period. Orders from both small-to-medium sized customers and contract customers increased at a similar rate to the segment overall.
  • Orders in the Residential Building Products segment decreased 12 percent compared to the first quarter of 2023. During the quarter, orders in new construction outperformed R&R. Reduced channel backlogs and shortened lead times resulted in R&R orders returning to normal patterns, which negatively impacted year-over-year growth.

Outlook

  • Second quarter non-GAAP earnings per share is expected to increase solidly year-over-year driven by the benefit of KII and continued profit transformation in Legacy Workplace Furnishings despite increasingly difficult year-ago comps. The second quarter of 2023 was the first quarter to show noticeable benefits from profit transformation initiatives in Legacy Workplace Furnishings.
  • Demand environment. In the second quarter of 2024, the Corporation expects Workplace Furnishings organic segment revenue to be down slightly compared to the same quarter of 2023. In Residential Building Products, the Corporation expects year-over-year declines to moderate with second quarter revenue down at a low-single digit rate versus the year-ago period.
  • Impact of Kimball International. For the second quarter of 2024, the Corporation expects KII to be accretive to non-GAAP EPS, generally in line with first quarter results. KII is expected to add $75 to $80 million of incremental revenue to second quarter results. The Corporation continues to expect annual cost synergies resulting from the combination with KII to total $35 million when mature.
  • 2024 outlook commentary. Full-year earnings are expected to increase strongly from 2023 levels driven by continued margin expansion in Workplace Furnishings and the full-year benefit of accretion from KII. The Corporation continues to expect Workplace Furnishings organic revenue to increase at a low-single digit rate. Residential Building Products segment revenue trends are expected to improve as the year progresses, with year-over-year growth returning in the second half. Residential Building Products full-year revenue is expected to be flat-to-slightly down versus 2023 levels. This is a modest reduction from the outlook provided on the previous earnings call and is reflective of softer conditions in the R&R space and a slower start in new construction.

Concluding Remarks

“We had an excellent start to 2024 as our strategies continue to deliver outstanding earnings growth. In Workplace Furnishings, our profit transformation initiatives maintained their momentum, pushing margins to multi-year highs. We expect modest revenue growth to translate into continued solid year-over-year profit and margin improvement in the segment during 2024.

“The integration of Kimball International continues to build momentum. KII is strengthening our business—both strategically and financially. KII better positions us to lead in the evolving workplace market and provides new opportunities for growth.

“In Residential Building Products, we remain bullish despite recent housing-driven weakness. We have adjusted our cost structure while continuing to invest in our growth strategies, leading brands, and operating platforms. Recent housing data and improving internal metrics support our increasing optimism about demand trends in the back half of 2024, and we remain uniquely positioned to drive high-margin growth as housing stabilizes.

“Our core strategies are unchanged. We are committed to continuing to expand margins in Workplace Furnishings and driving long-term revenue growth in Residential Building Products,” concluded Mr. Lorenger.

Conference Call

HNI Corporation will host a conference call on Monday, April 29, 2024 at 10:00 a.m. (Central) to discuss first quarter fiscal year 2024 results. To participate, call 1-855-761-5600 – conference ID number 7175411. A live webcast of the call will be available on HNI Corporation’s website at https://investors.hnicorp.com/events-and-presentations. A replay of the webcast and call will be made available from Monday, April 29, 2024 at 1:00 p.m. (Central) through Monday, May 6, 2024, 10:59 p.m. (Central). To replay the webcast, go to the link above. To replay the call, dial 1-800-770-2030 – Conference ID: 7175411.

About HNI Corporation

HNI Corporation (NYSE: HNI) is a manufacturer of workplace furnishings and residential building products, operating under two segments. The Workplace Furnishings segment is a leading global designer and provider of commercial furnishings, going to market under multiple unique brands. The Residential Building Products segment is the nation’s leading manufacturer and marketer of hearth products, which include a full array of gas, electric, wood, and pellet-burning fireplaces, inserts, stoves, facings, and accessories. More information can be found on the Corporation’s website at www.hnicorp.com.

Forward-Looking Statements

This release contains "forward-looking" statements based on current expectations regarding future plans, events, outlook, objectives, financial performance, expectations for sales growth, and earnings per diluted share (GAAP and non-GAAP), including statements regarding future levels of demand, anticipated macroeconomic conditions, expected differences in seasonality and its results on the Corporation’s results of operations, the anticipated benefits and cost synergies of the acquisition of Kimball International, and future levels of productivity. Forward-looking statements can be identified by words including “expect,” “believe,” “anticipate,” “estimate,” “may,” “will,” “would,” “could,” “confident”, or other similar words, phrases, or expressions. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Corporation’s actual future results and performance to differ materially from expected results. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results due to the risks and uncertainties described elsewhere in this release, including but not limited to: the Corporation’s ultimate realization of the anticipated benefits of the acquisition of Kimball International; disruptions in the global supply chain; the effects of prolonged periods of inflation and rising interest rates; labor shortages; the levels of office furniture needs and housing starts; overall demand for the Corporation’s products; general economic and market conditions in the United States and internationally; industry and competitive conditions; the consolidation and concentration of the Corporation’s customers; the Corporation’s reliance on its network of independent dealers; change in trade policy; changes in raw material, component, or commodity pricing; market acceptance and demand for the Corporation’s new products; changing legal, regulatory, environmental, and healthcare conditions; the risks associated with international operations; the potential impact of product defects; the various restrictions on the Corporation’s financing activities; an inability to protect the Corporation’s intellectual property; cybersecurity threats, including those posed by potential ransomware attacks; impacts of tax legislation; and force majeure events outside the Corporation’s control, including those that may result from the effects of climate change. A description of these risks and additional risks can be found in the Corporation’s annual and quarterly reports filed with the Securities and Exchange Commission on Forms 10-K and 10-Q. The Corporation assumes no obligation to update, amend, or clarify forward-looking statements, except as required by applicable law.

HNI Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(In millions, except per share data)

(Unaudited)

Three Months Ended

March 30,
2024

April 1,
2023

Net sales

$

588.0

$

479.1

Cost of sales

355.1

304.8

Gross profit

232.8

174.3

Selling and administrative expenses

203.1

167.9

Restructuring charges

0.1

Operating income

29.7

6.4

Interest expense, net

7.6

2.7

Income before income taxes

22.0

3.8

Income taxes

4.3

2.2

Net income

17.7

1.6

Less: Net income (loss) attributable to non-controlling interest

0.0

(0.0

)

Net income attributable to HNI Corporation

$

17.7

$

1.6

Average number of common shares outstanding – basic

47.1

41.5

Net income attributable to HNI Corporation per common share – basic

$

0.38

$

0.04

Average number of common shares outstanding – diluted

48.1

42.1

Net income attributable to HNI Corporation per common share – diluted

$

0.37

$

0.04

Foreign currency translation adjustments

$

0.0

$

0.1

Change in unrealized gains (losses) on marketable securities, net of tax

(0.0

)

0.2

Change in derivative financial instruments, net of tax

1.4

(0.1

)

Other comprehensive income (loss), net of tax

1.4

0.1

Comprehensive income

19.0

1.7

Less: Comprehensive income (loss) attributable to non-controlling interest

0.0

(0.0

)

Comprehensive income attributable to HNI Corporation

$

19.0

$

1.7

Amounts may not sum due to rounding.

HNI Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In millions)

(Unaudited)

March 30,
2024

December 30,
2023

Assets

Current Assets:

Cash and cash equivalents

$

27.0

$

28.9

Short-term investments

5.5

5.6

Receivables

231.9

247.1

Allowance for doubtful accounts

(2.8

)

(3.5

)

Inventories, net

212.1

196.6

Prepaid expenses and other current assets

53.5

61.3

Total Current Assets

527.2

535.9

Property, Plant, and Equipment:

Land and land improvements

59.0

58.9

Buildings

409.6

406.8

Machinery and equipment

714.5

705.8

Construction in progress

21.8

22.2

1,204.8

1,193.7

Less accumulated depreciation

(652.6

)

(638.5

)

Net Property, Plant, and Equipment

552.2

555.2

Right-of-use Finance Leases

11.7

12.2

Right-of-use Operating Leases

113.8

115.2

Goodwill and Other Intangible Assets, net

645.9

651.9

Other Assets

61.8

58.4

Total Assets

$

1,912.6

$

1,928.8

Liabilities and Equity

Current Liabilities:

Accounts payable and accrued expenses

$

363.7

$

418.7

Current maturities of debt

12.8

7.5

Current maturities of other long-term obligations

2.0

7.3

Current lease obligations - Finance

4.4

4.4

Current lease obligations - Operating

24.9

25.9

Total Current Liabilities

407.7

463.7

Long-Term Debt

460.2

428.3

Long-Term Lease Obligations - Finance

7.3

7.9

Long-Term Lease Obligations - Operating

103.7

104.0

Other Long-Term Liabilities

78.8

78.0

Deferred Income Taxes

83.0

85.1

Total Liabilities

1,140.8

1,167.0

Equity:

HNI Corporation shareholders’ equity

771.5

761.4

Non-controlling interest

0.3

0.3

Total Equity

771.8

761.8

Total Liabilities and Equity

$

1,912.6

$

1,928.8

Amounts may not sum due to rounding.

HNI Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)

Three Months Ended

March 30,
2024

April 1,
2023

Net Cash Flows From (To) Operating Activities:

Net income

$

17.7

$

1.6

Non-cash items included in net income:

Depreciation and amortization

26.4

20.1

Other post-retirement and post-employment benefits

0.3

0.3

Stock-based compensation

7.7

4.5

Deferred income taxes

(2.1

)

(0.6

)

Other – net

0.6

0.6

Net decrease in cash from operating assets and liabilities

(47.6

)

(10.5

)

Increase (decrease) in other liabilities

(7.2

)

1.4

Net cash flows from (to) operating activities

(4.3

)

17.3

Net Cash Flows From (To) Investing Activities:

Capital expenditures

(10.7

)

(19.9

)

Capitalized software

(0.5

)

(0.2

)

Purchase of investments

(0.6

)

(1.6

)

Sales or maturities of investments

1.2

1.5

Other – net

0.1

0.1

Net cash flows from (to) investing activities

(10.6

)

(20.0

)

Net Cash Flows From (To) Financing Activities:

Payments of debt

(81.5

)

(77.8

)

Proceeds from debt

118.6

97.1

Dividends paid

(16.6

)

(13.7

)

Purchase of HNI Corporation common stock

(2.6

)

Proceeds from sales of HNI Corporation common stock

0.6

0.6

Other – net

(5.6

)

(4.0

)

Net cash flows from (to) financing activities

12.9

2.1

Net decrease in cash and cash equivalents

(2.0

)

(0.6

)

Cash and cash equivalents at beginning of period

28.9

17.4

Cash and cash equivalents at end of period

$

27.0

$

16.8

Amounts may not sum due to rounding.

HNI Corporation and Subsidiaries

Reportable Segment Data

(In millions)

(Unaudited)

Three Months Ended

March 30,
2024

April 1,
2023

Net Sales:

Workplace furnishings

$

439.8

$

299.6

Residential building products

148.2

179.4

Total

$

588.0

$

479.1

Income (Loss) Before Income Taxes:

Workplace furnishings

$

26.3

$

(4.0

)

Residential building products

21.4

28.1

General corporate

(18.0

)

(17.7

)

Operating income

29.7

6.4

Interest expense, net

7.6

2.7

Total

$

22.0

$

3.8

Depreciation and Amortization Expense:

Workplace furnishings

$

17.8

$

11.2

Residential building products

3.5

3.3

General corporate

5.1

5.7

Total

$

26.4

$

20.1

Capital Expenditures (including capitalized software):

Workplace furnishings

$

6.2

$

13.9

Residential building products

2.5

5.0

General corporate

2.5

1.1

Total

$

11.2

$

20.0

As of

March 30, 2024

As of

December 30, 2023

Identifiable Assets:

Workplace furnishings

$

1,302.9

$

1,311.4

Residential building products

471.3

467.1

General corporate

138.3

150.3

Total

$

1,912.6

$

1,928.8

Amounts may not sum due to rounding.

Non-GAAP Financial Measures

This earnings release includes certain non-GAAP financial information as defined by Securities and Exchange Commission Regulation G. Pursuant to the requirements of this regulation, reconciliations of this non-GAAP financial information to HNI’s financial statements as prepared in accordance with GAAP are included below and throughout this earnings release. This information gives investors additional insights into HNI’s financial performance and operations. While HNI’s management believes the non-GAAP financial measures are useful in evaluating HNI’s operations, this information should be considered supplemental and not in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.

To supplement the condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, this earnings release contains the following non-GAAP financial measures: organic sales, gross profit, operating income, operating profit, income taxes, net income, and net income per diluted share (i.e., EPS). These measures are adjusted from the comparable GAAP measures to exclude the impacts of the selected items as summarized in the tables below. Generally, non-GAAP EPS is calculated using HNI’s overall effective tax rate for the period, as this rate is reflective of the tax applicable to most non-GAAP adjustments. In the prior-year quarter, the effective tax rate used to calculate non-GAAP EPS differs from the GAAP effective tax rate due to the impact of nondeductible charges associated with the acquisition of Kimball International. Additionally, non-GAAP EPS for the Legacy HNI business is calculated by excluding the impact of new issuances of HNI common stock and HNI restricted stock units made in connection with the acquisition of Kimball International.

The sales adjustments to arrive at the non-GAAP organic sales information presented in this earnings release relate to the exclusion of net sales of KII in the current period. The transactions excluded for purposes of other non-GAAP financial information included in this earnings release include: professional fees and other costs related to the acquisition of Kimball International; restructuring charges recorded to cost of sales comprised of inventory valuation adjustments and relocation and new facility setup costs in the Workplace Furnishings segment; costs associated with the exit of Poppin, and prior period transactions related to company-wide cost reduction initiatives.

HNI Corporation Reconciliation

(Dollars in millions)

Three Months Ended

March 30, 2024

April 1, 2023

Workplace Furnishings

Residential Building Products

Total

Workplace Furnishings

Residential Building Products

Total

Sales as reported (GAAP)

$

439.8

$

148.2

$

588.0

$

299.6

$

179.4

$

479.1

% change from PY

46.8

%

(17.4

%)

22.7

%

Less: Kimball International acquisition

147.5

147.5

Organic Sales (non-GAAP)

$

292.3

$

148.2

$

440.5

$

299.6

$

179.4

$

479.1

% change from PY

(2.5

%)

(17.4

%)

(8.1

%)

HNI Corporation Reconciliation

(Dollars in millions, except per share data)

Three Months Ended

March 30, 2024

Gross Profit

Operating Income

Tax

Net Income

EPS

As reported (GAAP)

$

232.8

$

29.7

$

4.3

$

17.7

$

0.37

% of net sales

39.6

%

5.0

%

3.0

%

Tax %

19.6

%

Restructuring charges

0.1

0.2

0.0

0.2

0.00

Acquisition costs

0.0

0.0

0.0

0.00

Results (non-GAAP)

$

233.0

$

29.9

$

4.4

$

17.9

$

0.37

% of net sales

39.6

%

5.1

%

3.0

%

Tax %

19.6

%

HNI Corporation Reconciliation

(Dollars in millions)

Three Months Ended

March 30, 2024

Legacy HNI

KII

Consolidated HNI

Gross Profit as reported (GAAP)

$

175.8

$

57.0

$

232.8

% of net sales

39.9

%

38.7

%

39.6

%

Restructuring charges recorded to cost of sales

0.1

0.1

Gross Profit (non-GAAP)

$

175.9

$

57.0

$

233.0

% of net sales

39.9

%

38.7

%

39.6

%

Operating income as reported (GAAP)

$

16.1

$

13.6

$

29.7

% of net sales

3.6

%

9.2

%

5.0

%

Restructuring charges

0.1

0.1

0.2

Acquisition costs

0.0

0.0

0.0

Operating income (non-GAAP)

$

16.2

$

13.7

$

29.9

% of net sales

3.7

%

9.3

%

5.1

%

HNI Corporation Reconciliation

(Dollars in millions, except per share data)

Three Months Ended

March 30, 2024

GAAP (as reported):

Legacy HNI

Consolidated HNI

Operating income

$

16.1

$

29.7

Interest expense, net

1.8

7.6

Income taxes (19.6%)

2.8

4.3

Net income

$

11.5

$

17.7

Average number of common shares outstanding – diluted

43.3

(1)

48.1

EPS - Diluted

$

0.27

$

0.37

Non-GAAP:

Operating income

$

16.2

$

29.9

Interest expense, net

1.8

7.6

Income taxes (19.6%)

2.8

4.4

Net income

$

11.6

$

17.9

Average number of common shares outstanding – diluted

43.3

(1)

48.1

EPS - Diluted

$

0.27

$

0.37

(1) The average number of common shares outstanding – diluted for the Legacy HNI business is calculated by excluding the average impacts of new issuances of HNI common stock (4.7 million) and dilutive HNI restricted stock units (0.1 million) as a result of the acquisition of Kimball International.

HNI Corporation Reconciliation

(Dollars in millions, except per share data)

Three Months Ended

April 1, 2023

Gross Profit

Operating Income

Tax

Net Income

EPS

As reported (GAAP)

$

174.3

$

6.4

$

2.2

$

1.6

$

0.04

% of net sales

36.4

%

1.3

%

0.3

%

Tax %

58.4

%

Restructuring charges

0.5

0.5

0.1

0.3

0.01

Cost reduction initiative

(0.1

)

(0.0

)

(0.0

)

(0.00

)

Acquisition costs

3.4

3.4

0.08

Results (non-GAAP)

$

174.8

$

10.3

$

2.3

$

5.3

$

0.13

% of net sales

36.5

%

2.1

%

1.1

%

Tax %

30.5

%

Workplace Furnishings Reconciliation

(Dollars in millions)

Three Months Ended

March 30,
2024

April 1,
2023

Legacy Workplace Furnishings

KII

Total Workplace Furnishings

Total Workplace Furnishings

Total Change

Operating income (loss) as reported (GAAP)

$

12.7

$

13.6

$

26.3

$

(4.0

)

759

%

% of net sales

4.3

%

9.2

%

6.0

%

(1.3

%)

Restructuring charges

0.1

0.1

0.2

0.5

Acquisition costs

0.0

0.0

0.0

Cost reduction initiative

(0.1

)

Operating income (loss) (non-GAAP)

$

12.8

$

13.7

$

26.5

$

(3.6

)

841

%

% of net sales

4.4

%

9.3

%

6.0

%

(1.2

%)

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