MUSCATINE, Iowa – HNI Corporation announced sales of $2.434 billion and net income of $49.2 million for the full year that ended Dec. 30.
In its earnings report, released Thursday, Feb. 22, HNI said GAAP net income per diluted share was $1.09, compared to $2.94 in the prior year. Non-GAAP net income per diluted share was $2.65, compared to $2.20 in the prior year.
The manufacturer also reported that fourth quarter sales rose 19% to $679.8 million, and fourth quarter net income was $22.7 million.
“We made outstanding progress in 2023 and finished the year on a strong note, delivering greater than 50% earnings growth in the fourth quarter,” Jeff Lorenger, HNI’s chairman, president and CEO said in the news release. “Our Workplace Furnishings profit transformation plan continues to pay dividends and drove segment fourth quarter operating margin to pre-pandemic levels.”
The office furniture manufacturer also spoke to the impact of its acquisition last year of Kimball International, an Indiana-based commercial furnishings company.
“The synergy capture associated with the Kimball International acquisition is ahead of schedule; moreover, we now expect total synergies to be $10 million higher than our initial projection,” Mr. Lorenger said.
Kimball boosts 4Q profit
According to the release, Kimball International added approximately $16 million to fourth quarter operating profit and an estimated 7 cents to fourth quarter non-GAAP EPS. HNI said it now expects to achieve total annual cost synergies of $35 million, up from previous expectations of at least $25 million. The synergies also are now expected to be achieved in 2024 – well ahead of the initial timeline.
Mr. Lorenger said that Kimball International “is complementary from a product, market, and cultural perspective; and it strengthens our Workplace Furnishings exposure to several important trends and markets – namely, ancillary products, secondary geographies, healthcare, and hospitality.”
“Each provides new opportunities for profit growth,” he said in concluding remarks. “Our confidence in the combination’s strategic and financial benefits continues to accelerate.”
Of HNI’s other business segment, Residential Building Products, Mr. Lorenger said “our actions to support profitability fueled margins to near record levels despite housing market weakness. Overall, we exited 2023 a fundamentally stronger company, reflecting the power and dedication of our member-owners.”
He said the company “quickly adjusted our cost structure to respond to the housing re-set in 2023.”
4Q highlights include:
Among the other 4Q highlights in the report were:
- Fourth quarter GAAP earnings per share increased 23% year-over-year. On a non-GAAP basis, diluted earnings per share were 56% higher than the fourth quarter 2022.
- The Workplace Furnishings segment’s GAAP operating margin expanded 410 basis points on a year-over-year basis driven by price-cost improvement, productivity gains, and benefits from recent cost savings initiatives.
- Residential Building Products margins improved despite continued housing market weakness and a 13.1 percent year-over-year revenue decline.
- HNI reduced debt by $73 million in the fourth quarter and by $162 million during the second half of 2023. It ended the quarter with $436 million in total debt.
Full-year numbers
HNI’s full-year financial highlights include:
- Consolidated net sales increased 3.1% from prior year to $2.434 billion. Net sales decreased 10.6% compared to the prior year primarily due to declines in Residential Building Products.
- The 2023 acquisition of Kimball International increased year-over-year sales by $361.4 million, while the prior-year acquisition of a residential building products company increased year-over-year sales by $2.4 million. The prior-year sale of HNI’s China- and Hong Kong-based Lamex office furniture business decreased year-over-year sales by $46.9 million.
“Our balance sheet is in excellent shape, and our cash flow is strong. Our members are focused and driving our core strategies of expanding margins in Workplace Furnishings and driving long-term high-margin revenue growth in Residential Building Products,” Mr. Lorenger concluded.
