MUSCATINE, Iowa – The office furniture and fireplaces manufacturer HNI Corp. on Thursday, Feb. 23, reported fourth-quarter earnings of $16.3 million and full-year net income of $123.9 million.
In its earnings release, Muscatine-based HNI announced sales for the full year, ended Dec. 31, of $2.362 billion. GAAP net income per diluted share was $2.94, compared to $1.36 in the prior year.
It also reported 4Q sales of $568.9 million, which were down 6% from year-ago levels. GAAP net income per diluted share was 39 cents, compared to 19 cents in the prior year, which represented a year-over-year increase of 105%.
In the release, HNI Chairman, President and CEO Jeff Lorenger said, “We delivered solid margin expansion and strong earnings growth in both the fourth quarter and the full year of 2022 in a softening demand environment.”
He added that margin expansion initiatives in HNI’s Workplace Furnishings division are delivering results.
Meanwhile, HNI’s Residential Building Products segment “delivered profit growth and margin expansion while preparing for softer housing-related demand. Our results in Residential Building Products demonstrate the strength of our differentiated business model.”
Other 4Q financial highlights included:
- Strong earnings growth. HNI delivered 47% year-over-year growth in fourth quarter non-GAAP earnings per share. Improved price-cost and effective expense management increased profit in both segments, and non-GAAP operating profit in the Workplace Furnishings segment more than doubled.
- Solid margin expansion in both segments. For HNI overall, non-GAAP gross and operating margins in the fourth quarter expanded 390 basis points and 210 basis points, respectively, year-over-year. Workplace Furnishings segment non-GAAP operating margin expanded 150 basis points from 4Q 2021 levels despite top line pressure from softer economic conditions.
- Prepared for 2023. Non-GAAP EPS increased 35% year-over-year during 2022 despite deteriorating demand conditions in both segments. HNI expects continued pressure from lower volumes in 2023 and has taken actions to help mitigate the short-term volume pressure and drive long-term margin improvement. Cost actions announced last quarter, a return of net productivity benefits, and continued improvement of price-cost are expected to provide profitability support in 2023.
“We expect to drive profit improvement in Workplace Furnishings despite continued volume pressures as our focused margin expansion initiatives continue to gain traction,” Mr. Lorenger added. “During 2023, we expect improved productivity, favorable price-cost, and cost actions to more than offset lower volume. Beyond 2023, we are not reliant on volume growth to drive margin expansion in Workplace Furnishings.”
He said that looking ahead “recent mid-market employment and demand trends, feedback from large corporate customers regarding return-to-office plans, and signals from recent migration patterns toward secondary and tertiary geographies all align with our market positions and point to the return of sustained volume growth.”
While the Residential Building Products division is prepared for slowing near-term demand, he said “We remain committed to our growth initiatives in the areas of category awareness, new product innovation – including electric, online capabilities, and expansion of our owned installing-distribution footprint.”
“Given the market’s strong fundamentals and our unique growth opportunities, we are bullish about growth in Residential Building Products beyond 2023,” Mr. Lorenger concluded.
