MUSCATINE, Iowa--(BUSINESS WIRE)--Oct. 21, 2009-- HNI Corporation (NYSE: HNI) today announced sales of $454.0 million and net income of $17.6 million or $0.39 per diluted share for the third quarter ending October 3, 2009. Included in third quarter results are charges related to the shutdown of three office furniture manufacturing plants and restructuring of hearth operations. Net income per diluted share for the quarter was $0.47 on a non-GAAP basis excluding restructuring and transition costs.

Third Quarter Summary Comments

“Our strong third quarter profitability demonstrates the power of our reset cost structure. Our members have done an outstanding job of attacking costs and increasing efficiency throughout the corporation. We increased profitability and generated almost twice as much operating cash flow during the quarter despite the challenging market and revenue down almost 32 percent,” said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.

Third Quarter Results

• Consolidated net sales decreased $209.2 million or 31.5 percent from the prior year quarter to $454.0 million.
• Gross margins were 2.8 percentage points higher due to increased price realization, lower material costs and cost reduction initiatives partially offset by lower volume.
• Total selling and administrative expenses, including restructuring charges, decreased $56.7 million or 29.7% due to cost control actions, lower volume related costs and improved distribution efficiencies.
• The Corporation’s third quarter results included $6.0 million of restructuring and transition costs of which $1.6 million were included in cost of sales. These included $4.1 million of costs associated with shutdown and consolidation of production of three office furniture manufacturing locations and $1.8 million related to restructuring of hearth operations net of a non-operating gain. Included in third quarter 2008 results were $1.5 million of restructuring charges.
• The Corporation estimates additional charges related to various restructuring initiatives will impact pre-tax earnings by an estimated $4.2 million over the remainder of 2009.

Year-to-Date Results

Consolidated net sales for the first nine months of 2009 decreased $0.6 billion, or 32.5 percent, to $1.2 billion compared to $1.8 billion in the prior year period. Acquisitions added $10 million or 0.6 percentage points of sales. Gross margins increased to 33.9 percent compared to 33.6 percent last year. Operating income was $16.5 million compared to $69.1 million in the prior year period. Earnings per share decreased to $0.10 per diluted share compared to $0.83 per diluted share last year.

Cash flow from operations for the first nine months of 2009 was $135.9 million compared to $104.6 million in the same period last year. The increase was driven by strong working capital management offset partially by lower earnings. Capital expenditures were $10.9 million in 2009 compared to $54.6 million in 2008. The Corporation reduced total debt $119 million during the first nine months of 2009 using cash flow from operations and proceeds from the sale of long-term investments.

Office Furniture

• Third quarter sales for the office furniture segment decreased $180.7 million. The decrease was driven by substantial weakness in both the supplies-driven and contract channels.
• Operating profit decreased $1.4 million. Operating profit was negatively impacted by lower volume and increased restructuring and transition costs partially offset by price realization, lower input costs and cost control initiatives.

Hearth Products

• Third quarter sales for the hearth products segment decreased $28.4 million driven by significant declines in both the new construction and remodel-retrofit channels.
• Third quarter operating profit decreased $1.9 million. Operating profit was negatively impacted due to lower volume and higher restructuring expenses partially offset by cost reduction initiatives, lower incentive based compensation costs and a non-operating gain related to the sale of a building.

Outlook

“We continue to face uncertain and challenging market conditions. Our third quarter results benefited from relatively strong seasonal office furniture demand, primarily driven by government and education customers. We expect seasonal demand to dissipate in the fourth quarter, resulting in revenue below third quarter levels. Seasonality aside, we believe demand has generally stabilized. We remain excited about the future given our ongoing cost reset actions and aggressive efforts to improve our competitive position,” said Mr. Askren.

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.

Conference Call

HNI Corporation will host a conference call on Thursday, October 22, 2009 at 10:00 a.m. (Central) to discuss third quarter results. To participate, call the conference call line at 1-800-230-1951. A replay of the conference call will be available until Thursday, October 29, 2009, 11:59 p.m. (Central). To access this replay, dial 1-800-475-6701 – Access Code: 117729. A link to the simultaneous webcast can be found on the Corporation’s website at www.hnicorp.com.

Non-GAAP Financial Measures

This earnings release contains certain non-GAAP financial measures. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance that excludes or includes amounts different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets or statements of cash flow of the company. Pursuant to the requirements of Regulation G, the Corporation has provided a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure.

The non-GAAP financial measures used within this earnings release are: gross profit, operating income, operating profit and net income per diluted share (i.e., EPS), excluding restructuring and impairment charges, non-operating gains and transition costs. These measures are presented because management uses this information to monitor and evaluate financial results and trends. Management believes this information is also useful for investors.

HNI Corporation is a NYSE traded company (ticker symbol: HNI) providing products and solutions for the home and workplace environments. HNI Corporation is the second largest office furniture manufacturer in the world and is also the nation’s leading manufacturer and marketer of gas- and wood-burning fireplaces. The Corporation’s strong brands, including HON^®, Allsteel^®, Gunlocke^®, Paoli^®, Maxon^®, Lamex^®, HBF^® , Heatilator^®, Heat & Glo^TM, Quadra-Fire^® and Harman Stove^TM have leading positions in their markets. HNI Corporation is committed to maintaining its long-standing corporate values of integrity, financial soundness and a culture of service and responsiveness. More information can be found on the Corporation’s website at www.hnicorp.com.

Statements in this release that are not strictly historical, including statements as to plans, outlook, objectives and future financial performance, are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “could,” “confident,” “estimate,” “expect,” “forecast,” “hope,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and variations of such words and similar expressions identify forward-looking statements. Forward-looking statements involve known and unknown risks, which may cause the Corporation's actual results in the future to differ materially from expected results. These risks include, without limitation: the Corporation's ability to realize financial benefits from its (a) price increases, (b) cost containment and business simplification initiatives for the entire Corporation, (c) investments in strategic acquisitions, new products and brand building, (d) investments in distribution and rapid continuous improvement, (e) ability to maintain its effective tax rate, and (f) consolidation and logistical realignment initiatives; uncertainty related to the availability of cash and credit, and the terms and interest rates on which credit would be available, to fund operations and future growth; lower than expected demand for the Corporation's products due to uncertain political and economic conditions, including the recent credit crisis, slow or negative growth rates in global and domestic economies and the protracted decline in the domestic housing market; lower industry growth than expected; major disruptions at key facilities or in the supply of any key raw materials, components or finished goods; uncertainty related to disruptions of business by terrorism, military action, epidemic, acts of God or other Force Majeure events; competitive pricing pressure from foreign and domestic competitors; higher than expected costs and lower than expected supplies of materials (including steel and petroleum based materials); higher than expected costs for energy and fuel; changes in the mix of products sold and of customers purchasing; relationships with distribution channel partners, including the financial viability of distributors and dealers; restrictions imposed by the terms of the Corporation’s revolving credit facility, term loan credit agreement and note purchase agreement; currency fluctuations and other factors described in the Corporation's annual and quarterly reports filed with the Securities and Exchange Commission on Forms 10-K and 10-Q. The Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Source: HNI Corporation

HNI Corporation
Marshall H. Bridges, 563-272-4844
Treasurer and Vice President, Corporate Finance
or
Kurt A. Tjaden, 563-272-7400
Vice President and Chief Financial Officer