HNI Corporation and Subsidiaries | ||||||||
Quarterly Report on Form 10-Q | ||||||||
Table of Contents | ||||||||
PART I. FINANCIAL INFORMATION | ||||||||
Page | ||||||||
Item 1. | Financial Statements (Unaudited) | |||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
PART II. OTHER INFORMATION | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 3. | Defaults Upon Senior Securities - None | - | ||||||
Item 4. | Mine Safety Disclosures - Not Applicable | - | ||||||
Item 5. | Other Information - None | - | ||||||
Item 6. | ||||||||
HNI Corporation and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (In millions, except per share data) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | October 1, 2022 | October 2, 2021 | ||||||||||||||||||||
Net sales | $ | 598.8 | $ | 586.7 | $ | 1,792.9 | $ | 1,581.5 | |||||||||||||||
Cost of sales | 389.3 | 391.4 | 1,165.9 | 1,018.3 | |||||||||||||||||||
Gross profit | 209.5 | 195.4 | 627.0 | 563.2 | |||||||||||||||||||
Selling and administrative expenses | 178.2 | 169.1 | 544.3 | 489.6 | |||||||||||||||||||
Gain on sale of subsidiary | (50.6) | — | (50.6) | — | |||||||||||||||||||
Impairment charges | — | — | 1.0 | — | |||||||||||||||||||
Operating income | 81.9 | 26.2 | 132.2 | 73.5 | |||||||||||||||||||
Interest expense, net | 2.4 | 1.9 | 6.5 | 5.5 | |||||||||||||||||||
Income before income taxes | 79.5 | 24.4 | 125.8 | 68.1 | |||||||||||||||||||
Income taxes | 16.4 | 5.2 | 18.2 | 16.5 | |||||||||||||||||||
Net income | 63.1 | 19.2 | 107.6 | 51.6 | |||||||||||||||||||
Less: Net income (loss) attributable to non-controlling interest | (0.0) | 0.0 | (0.0) | (0.0) | |||||||||||||||||||
Net income attributable to HNI Corporation | $ | 63.1 | $ | 19.2 | $ | 107.6 | $ | 51.6 | |||||||||||||||
Average number of common shares outstanding – basic | 41.3 | 43.8 | 41.8 | 43.6 | |||||||||||||||||||
Net income attributable to HNI Corporation per common share – basic | $ | 1.53 | $ | 0.44 | $ | 2.57 | $ | 1.18 | |||||||||||||||
Average number of common shares outstanding – diluted | 41.8 | 44.3 | 42.3 | 44.0 | |||||||||||||||||||
Net income attributable to HNI Corporation per common share – diluted | $ | 1.51 | $ | 0.43 | $ | 2.54 | $ | 1.17 | |||||||||||||||
Foreign currency translation adjustments | $ | (3.7) | $ | 0.0 | $ | (5.5) | $ | 0.1 | |||||||||||||||
Change in unrealized gains (losses) on marketable securities, net of tax | (0.3) | (0.0) | (0.8) | (0.2) | |||||||||||||||||||
Change in derivative financial instruments, net of tax | (0.1) | 0.2 | 0.9 | 0.6 | |||||||||||||||||||
Other comprehensive income (loss), net of tax | (4.0) | 0.2 | (5.4) | 0.5 | |||||||||||||||||||
Comprehensive income | 59.1 | 19.3 | 102.2 | 52.1 | |||||||||||||||||||
Less: Comprehensive income (loss) attributable to non-controlling interest | (0.0) | 0.0 | (0.0) | (0.0) | |||||||||||||||||||
Comprehensive income attributable to HNI Corporation | $ | 59.1 | $ | 19.3 | $ | 102.2 | $ | 52.1 |
HNI Corporation and Subsidiaries Condensed Consolidated Balance Sheets (In millions) | |||||||||||
(Unaudited) | |||||||||||
October 1, 2022 | January 1, 2022 | ||||||||||
Assets | |||||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | 21.1 | $ | 52.3 | |||||||
Short-term investments | 2.0 | 1.4 | |||||||||
Receivables | 243.8 | 240.0 | |||||||||
Allowance for doubtful accounts | (2.4) | (2.8) | |||||||||
Inventories, net | 222.2 | 181.6 | |||||||||
Prepaid expenses and other current assets | 53.4 | 51.1 | |||||||||
Total Current Assets | 540.0 | 523.5 | |||||||||
Property, Plant, and Equipment: | |||||||||||
Land and land improvements | 31.0 | 30.9 | |||||||||
Buildings | 292.3 | 294.5 | |||||||||
Machinery and equipment | 589.3 | 593.6 | |||||||||
Construction in progress | 31.9 | 29.7 | |||||||||
944.5 | 948.7 | ||||||||||
Less: Accumulated depreciation | (595.4) | (581.9) | |||||||||
Net Property, Plant, and Equipment | 349.1 | 366.8 | |||||||||
Right-of-use Finance Leases | 11.0 | 10.2 | |||||||||
Right-of-use Operating Leases | 92.3 | 82.9 | |||||||||
Goodwill and Other Intangible Assets, Net | 451.9 | 471.5 | |||||||||
Other Assets | 54.3 | 43.1 | |||||||||
Total Assets | $ | 1,498.6 | $ | 1,497.9 |
HNI Corporation and Subsidiaries Condensed Consolidated Balance Sheets (In millions) | |||||||||||
(Unaudited) | |||||||||||
October 1, 2022 | January 1, 2022 | ||||||||||
Liabilities and Equity | |||||||||||
Current Liabilities: | |||||||||||
Accounts payable and accrued expenses | $ | 435.0 | $ | 473.8 | |||||||
Current maturities of debt | 1.2 | 3.2 | |||||||||
Current maturities of other long-term obligations | 2.0 | 3.9 | |||||||||
Current lease obligations - Finance | 3.3 | 2.8 | |||||||||
Current lease obligations - Operating | 18.8 | 22.8 | |||||||||
Total Current Liabilities | 460.4 | 506.4 | |||||||||
Long-Term Debt | 199.7 | 174.6 | |||||||||
Long-Term Lease Obligations - Finance | 7.7 | 7.4 | |||||||||
Long-Term Lease Obligations - Operating | 82.3 | 63.8 | |||||||||
Other Long-Term Liabilities | 77.5 | 80.7 | |||||||||
Deferred Income Taxes | 64.6 | 75.0 | |||||||||
Total Liabilities | 892.2 | 907.9 | |||||||||
Equity: | |||||||||||
HNI Corporation shareholders' equity | 606.1 | 589.6 | |||||||||
Non-controlling interest | 0.3 | 0.3 | |||||||||
Total Equity | 606.4 | 590.0 | |||||||||
Total Liabilities and Equity | $ | 1,498.6 | $ | 1,497.9 |
HNI Corporation and Subsidiaries Condensed Consolidated Statements of Equity (In millions, except per share data) | |||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||
Three Months Ended - October 1, 2022 | |||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest | Total Shareholders' Equity | ||||||||||||||||||||||||||||||
Balance, July 2, 2022 | $ | 41.3 | $ | 47.4 | $ | 481.1 | $ | (8.1) | $ | 0.3 | $ | 562.0 | |||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | 63.1 | — | (0.0) | 63.1 | |||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | (4.0) | — | (4.0) | |||||||||||||||||||||||||||||
Dividends payable | — | — | 0.2 | — | — | 0.2 | |||||||||||||||||||||||||||||
Cash dividends; $0.320 per share | — | — | (13.2) | — | — | (13.2) | |||||||||||||||||||||||||||||
Common shares – treasury: | |||||||||||||||||||||||||||||||||||
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax | 0.0 | (1.6) | — | — | — | (1.6) | |||||||||||||||||||||||||||||
Balance, October 1, 2022 | $ | 41.4 | $ | 45.8 | $ | 531.1 | $ | (12.2) | $ | 0.3 | $ | 606.4 | |||||||||||||||||||||||
Nine Months Ended - October 1, 2022 | |||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest | Total Shareholders' Equity | ||||||||||||||||||||||||||||||
Balance, January 1, 2022 | $ | 42.6 | $ | 39.2 | $ | 514.6 | $ | (6.8) | $ | 0.3 | $ | 590.0 | |||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | 107.6 | — | (0.0) | 107.6 | |||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | (5.4) | — | (5.4) | |||||||||||||||||||||||||||||
Dividends payable | — | — | (0.3) | — | — | (0.3) | |||||||||||||||||||||||||||||
Cash dividends; $0.950 per share | — | — | (39.7) | — | — | (39.7) | |||||||||||||||||||||||||||||
Common shares – treasury: | |||||||||||||||||||||||||||||||||||
Shares purchased | (1.7) | (11.1) | (51.1) | — | — | (63.9) | |||||||||||||||||||||||||||||
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax | 0.5 | 17.7 | — | — | — | 18.1 | |||||||||||||||||||||||||||||
Balance, October 1, 2022 | $ | 41.4 | $ | 45.8 | $ | 531.1 | $ | (12.2) | $ | 0.3 | $ | 606.4 |
HNI Corporation and Subsidiaries Condensed Consolidated Statements of Equity (In millions, except per share data) | |||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||
Three Months Ended - October 2, 2021 | |||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest | Total Shareholders' Equity | ||||||||||||||||||||||||||||||
Balance, July 3, 2021 | $ | 43.9 | $ | 76.3 | $ | 523.1 | $ | (8.8) | $ | 0.3 | $ | 634.8 | |||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | 19.2 | — | 0.0 | 19.2 | |||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | 0.2 | — | 0.2 | |||||||||||||||||||||||||||||
Dividends payable | — | — | (0.1) | — | — | (0.1) | |||||||||||||||||||||||||||||
Cash dividends; $0.310 per share | — | — | (13.6) | — | — | (13.6) | |||||||||||||||||||||||||||||
Common shares – treasury: | |||||||||||||||||||||||||||||||||||
Shares purchased | (0.3) | (12.7) | — | — | — | (13.1) | |||||||||||||||||||||||||||||
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax | 0.0 | 2.3 | — | — | — | 2.3 | |||||||||||||||||||||||||||||
Balance, October 2, 2021 | $ | 43.6 | $ | 65.9 | $ | 528.6 | $ | (8.6) | $ | 0.3 | $ | 629.7 | |||||||||||||||||||||||
Nine Months Ended - October 2, 2021 | |||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest | Total Shareholders' Equity | ||||||||||||||||||||||||||||||
Balance, January 2, 2021 | $ | 42.9 | $ | 38.7 | $ | 518.0 | $ | (9.2) | $ | 0.3 | $ | 590.7 | |||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | 51.6 | — | (0.0) | 51.6 | |||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | 0.5 | — | 0.5 | |||||||||||||||||||||||||||||
Dividends payable | — | — | (0.7) | — | — | (0.7) | |||||||||||||||||||||||||||||
Cash dividends; $0.925 per share | — | — | (40.4) | — | — | (40.4) | |||||||||||||||||||||||||||||
Common shares – treasury: | |||||||||||||||||||||||||||||||||||
Shares purchased | (0.5) | (19.3) | — | — | — | (19.8) | |||||||||||||||||||||||||||||
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax | 1.1 | 46.5 | — | — | — | 47.6 | |||||||||||||||||||||||||||||
Balance, October 2, 2021 | $ | 43.6 | $ | 65.9 | $ | 528.6 | $ | (8.6) | $ | 0.3 | $ | 629.7 |
HNI Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (In millions) | |||||||||||
(Unaudited) | |||||||||||
Nine Months Ended | |||||||||||
October 1, 2022 | October 2, 2021 | ||||||||||
Net Cash Flows From (To) Operating Activities: | |||||||||||
Net income | $ | 107.6 | $ | 51.6 | |||||||
Non-cash items included in net income: | |||||||||||
Depreciation and amortization | 63.5 | 62.0 | |||||||||
Other post-retirement and post-employment benefits | 1.0 | 1.0 | |||||||||
Stock-based compensation | 6.4 | 9.5 | |||||||||
Reduction in carrying amount of right-of-use assets | 19.7 | 19.0 | |||||||||
Deferred income taxes | (10.4) | (2.1) | |||||||||
Gain on sale of subsidiary | (50.6) | — | |||||||||
Other – net | (0.4) | 2.6 | |||||||||
Net decrease in cash from operating assets and liabilities | (99.3) | (64.1) | |||||||||
Increase (decrease) in other liabilities | (3.5) | 8.9 | |||||||||
Net cash flows from (to) operating activities | 33.9 | 88.5 | |||||||||
Net Cash Flows From (To) Investing Activities: | |||||||||||
Capital expenditures | (41.7) | (38.2) | |||||||||
Proceeds from sale of property, plant, and equipment | 0.0 | 0.2 | |||||||||
Capitalized software | (7.0) | (9.6) | |||||||||
Acquisition spending, net of cash acquired | (9.2) | (1.5) | |||||||||
Purchase of investments | (2.3) | (3.3) | |||||||||
Sales or maturities of investments | 1.9 | 3.2 | |||||||||
Net proceeds from sale of subsidiary | 71.4 | — | |||||||||
Net cash flows from (to) investing activities | 13.2 | (49.2) | |||||||||
Net Cash Flows From (To) Financing Activities: | |||||||||||
Payments of debt | (298.5) | (1.8) | |||||||||
Proceeds from debt | 321.6 | 4.3 | |||||||||
Dividends paid | (39.9) | (40.4) | |||||||||
Purchase of HNI Corporation common stock | (65.2) | (18.5) | |||||||||
Proceeds from sales of HNI Corporation common stock | 4.0 | 29.9 | |||||||||
Other – net | (0.4) | (2.6) | |||||||||
Net cash flows from (to) financing activities | (78.3) | (29.0) | |||||||||
Net increase (decrease) in cash and cash equivalents | (31.2) | 10.3 | |||||||||
Cash and cash equivalents at beginning of period | 52.3 | 116.1 | |||||||||
Cash and cash equivalents at end of period | $ | 21.1 | $ | 126.4 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | October 1, 2022 | October 2, 2021 | ||||||||||||||||||||
Systems and storage | $ | 224.9 | $ | 227.8 | $ | 673.9 | $ | 611.1 | |||||||||||||||
Seating | 114.8 | 134.2 | 354.7 | 349.6 | |||||||||||||||||||
Other | 35.5 | 31.1 | 106.4 | 79.4 | |||||||||||||||||||
Total workplace furnishings | 375.2 | 393.1 | 1,135.0 | 1,040.0 | |||||||||||||||||||
Residential building products | 223.6 | 193.6 | 657.9 | 541.5 | |||||||||||||||||||
Net sales | $ | 598.8 | $ | 586.7 | $ | 1,792.9 | $ | 1,581.5 |
October 1, 2022 | January 1, 2022 | ||||||||||
Trade receivables (1) | $ | 243.8 | $ | 240.0 | |||||||
Contract assets (current) (2) | $ | 2.8 | $ | 1.5 | |||||||
Contract assets (long-term) (3) | $ | 30.6 | $ | 18.2 | |||||||
Contract liabilities - Customer deposits (4) | $ | 30.3 | $ | 27.2 | |||||||
Contract liabilities - Accrued rebate and marketing programs (4) | $ | 38.2 | $ | 31.5 |
Trinity | OGC | ||||||||||||||||
Fair Value | Amortization Period | Fair Value | Amortization Period | ||||||||||||||
Cash | $ | — | $ | 0.3 | |||||||||||||
Inventories | 1.9 | 4.5 | |||||||||||||||
Receivables | 4.6 | 1.8 | |||||||||||||||
Prepaid expenses and other current assets | — | 1.2 | |||||||||||||||
Property, plant, and equipment | 0.3 | 0.5 | |||||||||||||||
Accounts payable and accrued expenses | (1.7) | (2.8) | |||||||||||||||
Goodwill | 14.2 | 2.4 | |||||||||||||||
Customer lists | 12.0 | 13 Years | 4.9 | 10 Years | |||||||||||||
Trade names | — | 2.5 | 10 Years | ||||||||||||||
Total Net Assets | $ | 31.3 | $ | 15.3 |
October 1, 2022 | January 1, 2022 | ||||||||||
Finished products | $ | 156.0 | $ | 137.2 | |||||||
Materials and work in process | 123.8 | 92.0 | |||||||||
LIFO allowance | (57.6) | (47.6) | |||||||||
Total inventories, net | $ | 222.2 | $ | 181.6 | |||||||
Inventory valued by the LIFO costing method | 90 | % | 84 | % |
October 1, 2022 | January 1, 2022 | ||||||||||
Goodwill, net | $ | 306.0 | $ | 297.3 | |||||||
Definite-lived intangible assets, net | 130.4 | 147.6 | |||||||||
Indefinite-lived intangible assets | 15.5 | 26.5 | |||||||||
Total goodwill and other intangible assets, net | $ | 451.9 | $ | 471.5 |
Workplace Furnishings | Residential Building Products | Total | |||||||||||||||
Balance as of January 1, 2022 | |||||||||||||||||
Goodwill | $ | 162.3 | $ | 213.8 | $ | 376.1 | |||||||||||
Accumulated impairment losses | (78.6) | (0.1) | (78.8) | ||||||||||||||
Net goodwill balance as of January 1, 2022 | 83.6 | 213.7 | 297.3 | ||||||||||||||
Goodwill acquired (disposed) / measurement period adjustments | (6.9) | 8.6 | 1.7 | ||||||||||||||
Accumulated impairment losses disposed | 6.9 | — | 6.9 | ||||||||||||||
Balance as of October 1, 2022 | |||||||||||||||||
Goodwill | 155.3 | 222.5 | 377.8 | ||||||||||||||
Accumulated impairment losses | (71.7) | (0.1) | (71.8) | ||||||||||||||
Net goodwill balance as of October 1, 2022 | $ | 83.6 | $ | 222.3 | $ | 306.0 |
October 1, 2022 | January 1, 2022 | ||||||||||||||||||||||||||||||||||
Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||
Software | $ | 202.1 | $ | 119.8 | $ | 82.3 | $ | 196.8 | $ | 102.1 | $ | 94.7 | |||||||||||||||||||||||
Trademarks and trade names | 14.3 | 5.6 | 8.7 | 14.3 | 4.6 | 9.7 | |||||||||||||||||||||||||||||
Customer lists and other | 80.2 | 40.8 | 39.4 | 109.6 | 66.4 | 43.3 | |||||||||||||||||||||||||||||
Net definite-lived intangible assets | $ | 296.5 | $ | 166.2 | $ | 130.4 | $ | 320.7 | $ | 173.0 | $ | 147.6 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | October 1, 2022 | October 2, 2021 | ||||||||||||||||||||
Capitalized software | $ | 6.1 | $ | 6.1 | $ | 18.4 | $ | 17.5 | |||||||||||||||
Other definite-lived intangibles | $ | 1.6 | $ | 1.6 | $ | 4.9 | $ | 4.9 |
2022 | 2023 | 2024 | 2025 | 2026 | ||||||||||||||||||||||||||||
Amortization expense | $ | 30.9 | $ | 26.9 | $ | 22.6 | $ | 19.5 | $ | 16.6 |
October 1, 2022 | January 1, 2022 | ||||||||||
Trademarks and trade names | $ | 15.5 | $ | 26.5 |
Nine Months Ended | |||||||||||
October 1, 2022 | October 2, 2021 | ||||||||||
Balance at beginning of period | $ | 16.0 | $ | 16.1 | |||||||
Accruals for warranties issued during period | 7.5 | 6.6 | |||||||||
Settlements made during the period | (7.3) | (5.4) | |||||||||
Balance at end of period | $ | 16.3 | $ | 17.3 |
October 1, 2022 | January 1, 2022 | ||||||||||
Current | $ | 5.2 | $ | 5.4 | |||||||
Long-term | 11.1 | 10.6 | |||||||||
Total | $ | 16.3 | $ | 16.0 |
October 1, 2022 | January 1, 2022 | ||||||||||
Revolving credit facility with interest at a variable rate (October 1, 2022 - 4.2%; January 1, 2022 - 1.1%) | $ | 100.0 | $ | 75.0 | |||||||
Fixed-rate notes due in 2025 with an interest rate of 4.22% | 50.0 | 50.0 | |||||||||
Fixed-rate notes due in 2028 with an interest rate of 4.40% | 50.0 | 50.0 | |||||||||
Other amounts | 1.2 | 3.2 | |||||||||
Deferred debt issuance costs | (0.3) | (0.4) | |||||||||
Total debt | 200.8 | 177.8 | |||||||||
Less: Current maturities of debt | 1.2 | 3.2 | |||||||||
Long-term debt | $ | 199.7 | $ | 174.6 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | October 1, 2022 | October 2, 2021 | ||||||||||||||||||||
Income before income taxes | $ | 79.5 | $ | 24.4 | $ | 125.8 | $ | 68.1 | |||||||||||||||
Income taxes | $ | 16.4 | $ | 5.2 | $ | 18.2 | $ | 16.5 | |||||||||||||||
Effective tax rate | 20.7 | % | 21.5 | % | 14.5 | % | 24.2 | % |
Fair value as of measurement date | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||||||||
Balance as of October 1, 2022 | |||||||||||||||||||||||
Cash and cash equivalents (including money market funds) (1) | $ | 21.1 | $ | 21.1 | $ | — | $ | — | |||||||||||||||
Government securities (2) | $ | 5.4 | $ | — | $ | 5.4 | $ | — | |||||||||||||||
Corporate bonds (2) | $ | 7.2 | $ | — | $ | 7.2 | $ | — | |||||||||||||||
Deferred stock-based compensation (4) | $ | (4.3) | $ | — | $ | (4.3) | $ | — | |||||||||||||||
Put option liability (5) | $ | (5.1) | $ | — | $ | — | $ | (5.1) | |||||||||||||||
Balance as of January 1, 2022 | |||||||||||||||||||||||
Cash and cash equivalents (including money market funds) (1) | $ | 52.3 | $ | 52.3 | $ | — | $ | — | |||||||||||||||
Government securities (2) | $ | 5.5 | $ | — | $ | 5.5 | $ | — | |||||||||||||||
Corporate bonds (2) | $ | 7.8 | $ | — | $ | 7.8 | $ | — | |||||||||||||||
Derivative financial instruments - liability (3) | $ | (1.0) | $ | — | $ | (1.0) | $ | — | |||||||||||||||
Deferred stock-based compensation (4) | $ | (8.1) | $ | — | $ | (8.1) | $ | — | |||||||||||||||
Put option liability (5) | $ | (5.1) | $ | — | $ | — | $ | (5.1) |
Foreign Currency Translation Adjustment | Unrealized Gains (Losses) on Debt Securities | Pension and Post-retirement Liabilities | Derivative Financial Instrument | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||||||||
Balance as of January 1, 2022 | $ | (0.7) | $ | 0.1 | $ | (5.4) | $ | (0.7) | $ | (6.8) | ||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | (2.2) | (1.0) | — | 1.1 | (2.1) | |||||||||||||||||||||||||||
Tax (expense) or benefit | — | 0.2 | — | (0.3) | (0.1) | |||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | (3.3) | — | — | 0.0 | (3.3) | |||||||||||||||||||||||||||
Balance as of October 1, 2022 | $ | (6.2) | $ | (0.7) | $ | (5.4) | $ | 0.2 | $ | (12.2) |
Foreign Currency Translation Adjustment | Unrealized Gains (Losses) on Debt Securities | Pension and Post-retirement Liabilities | Derivative Financial Instrument | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||||||||
Balance as of January 2, 2021 | $ | (1.1) | $ | 0.4 | $ | (6.7) | $ | (1.8) | $ | (9.2) | ||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | 0.1 | (0.2) | — | 0.0 | (0.1) | |||||||||||||||||||||||||||
Tax (expense) or benefit | — | 0.0 | — | (0.0) | 0.0 | |||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | — | — | — | 0.5 | 0.5 | |||||||||||||||||||||||||||
Balance as of October 2, 2021 | $ | (1.0) | $ | 0.2 | $ | (6.7) | $ | (1.2) | $ | (8.6) |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
Details about Accumulated Other Comprehensive Income (Loss) Components | Affected Line Item in the Statement Where Net Income is Presented | October 1, 2022 | October 2, 2021 | October 1, 2022 | October 2, 2021 | ||||||||||||||||||||||||
Derivative financial instrument | |||||||||||||||||||||||||||||
Interest rate swap | Interest expense, net | $ | 0.1 | $ | (0.3) | $ | (0.1) | $ | (0.7) | ||||||||||||||||||||
Income taxes | (0.0) | 0.1 | 0.0 | 0.2 | |||||||||||||||||||||||||
Foreign currency translation | |||||||||||||||||||||||||||||
Lamex divestiture | Gain on sale of subsidiary | 3.3 | — | 3.3 | — | ||||||||||||||||||||||||
Net of tax | $ | 3.4 | $ | (0.2) | $ | 3.3 | $ | (0.5) |
Nine Months Ended | |||||||||||
October 1, 2022 | October 2, 2021 | ||||||||||
Dividends per common share | $ | 0.950 | $ | 0.925 |
Nine Months Ended | |||||||||||
October 1, 2022 | October 2, 2021 | ||||||||||
Shares repurchased | 1.7 | 0.5 | |||||||||
Average price per share | $ | 38.11 | $ | 39.52 | |||||||
Cash purchase price | $ | (63.9) | $ | (19.8) | |||||||
Purchases unsettled as of quarter end | — | 1.3 | |||||||||
Prior year purchases settled in current year | (1.3) | — | |||||||||
Shares repurchased per cash flow | $ | (65.2) | $ | (18.5) |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | October 1, 2022 | October 2, 2021 | ||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Numerator for both basic and diluted EPS attributable to HNI Corporation net income | $ | 63.1 | $ | 19.2 | $ | 107.6 | $ | 51.6 | |||||||||||||||
Denominators: | |||||||||||||||||||||||
Denominator for basic EPS weighted-average common shares outstanding | 41.3 | 43.8 | 41.8 | 43.6 | |||||||||||||||||||
Potentially dilutive shares from stock-based compensation plans | 0.5 | 0.6 | 0.5 | 0.5 | |||||||||||||||||||
Denominator for diluted EPS | 41.8 | 44.3 | 42.3 | 44.0 | |||||||||||||||||||
Earnings per share – basic | $ | 1.53 | $ | 0.44 | $ | 2.57 | $ | 1.18 | |||||||||||||||
Earnings per share – diluted | $ | 1.51 | $ | 0.43 | $ | 2.54 | $ | 1.17 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | October 1, 2022 | October 2, 2021 | ||||||||||||||||||||
Common stock equivalents excluded because their inclusion would be anti-dilutive | 2.0 | 1.8 | 1.9 | 1.7 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | October 1, 2022 | October 2, 2021 | ||||||||||||||||||||
Compensation cost | $ | (2.1) | $ | 1.8 | $ | 6.4 | $ | 9.5 |
Nine Months Ended | |||||||||||
October 1, 2022 | October 2, 2021 | ||||||||||
Restricted stock units | $ | 7.0 | $ | 15.9 | |||||||
Performance stock units | $ | 6.2 | $ | 6.1 |
Unrecognized Compensation Expense | Weighted-Average Remaining Service Period (years) | ||||||||||
Non-vested stock options | $ | 0.2 | 0.2 | ||||||||
Non-vested restricted stock units | $ | 5.9 | 0.8 | ||||||||
Non-vested performance stock units | $ | 2.2 | 1.0 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | October 1, 2022 | October 2, 2021 | ||||||||||||||||||||
Net Sales: | |||||||||||||||||||||||
Workplace furnishings | $ | 375.2 | $ | 393.1 | $ | 1,135.0 | $ | 1,040.0 | |||||||||||||||
Residential building products | 223.6 | 193.6 | 657.9 | 541.5 | |||||||||||||||||||
Total | $ | 598.8 | $ | 586.7 | $ | 1,792.9 | $ | 1,581.5 | |||||||||||||||
Income (Loss) Before Income Taxes: | |||||||||||||||||||||||
Workplace furnishings | $ | 5.6 | $ | 3.9 | $ | 11.1 | $ | 9.6 | |||||||||||||||
Residential building products | 39.6 | 33.4 | 117.0 | 103.8 | |||||||||||||||||||
General corporate | (14.0) | (11.0) | (46.5) | (39.8) | |||||||||||||||||||
Gain on sale of subsidiary | 50.6 | — | 50.6 | — | |||||||||||||||||||
Operating income | 81.9 | 26.2 | 132.2 | 73.5 | |||||||||||||||||||
Interest expense, net | 2.4 | 1.9 | 6.5 | 5.5 | |||||||||||||||||||
Total | $ | 79.5 | $ | 24.4 | $ | 125.8 | $ | 68.1 | |||||||||||||||
Depreciation and Amortization Expense: | |||||||||||||||||||||||
Workplace furnishings | $ | 11.3 | $ | 11.9 | $ | 34.6 | $ | 35.9 | |||||||||||||||
Residential building products | 3.2 | 2.5 | 9.3 | 7.4 | |||||||||||||||||||
General corporate | 6.5 | 6.4 | 19.6 | 18.7 | |||||||||||||||||||
Total | $ | 21.0 | $ | 20.9 | $ | 63.5 | $ | 62.0 | |||||||||||||||
Capital Expenditures (including capitalized software): | |||||||||||||||||||||||
Workplace furnishings | $ | 10.0 | $ | 6.5 | $ | 26.4 | $ | 24.0 | |||||||||||||||
Residential building products | 3.6 | 5.5 | 12.1 | 12.1 | |||||||||||||||||||
General corporate | 1.8 | 3.5 | 10.2 | 11.7 | |||||||||||||||||||
Total | $ | 15.5 | $ | 15.5 | $ | 48.7 | $ | 47.8 | |||||||||||||||
As of October 1, 2022 | As of January 1, 2022 | ||||||||||||||||||||||
Identifiable Assets: | |||||||||||||||||||||||
Workplace furnishings | $ | 807.7 | $ | 809.0 | |||||||||||||||||||
Residential building products | 517.7 | 479.5 | |||||||||||||||||||||
General corporate | 173.3 | 209.5 | |||||||||||||||||||||
Total | $ | 1,498.6 | $ | 1,497.9 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | Change | October 1, 2022 | October 2, 2021 | Change | ||||||||||||||||||||||||||||||
Net sales | $ | 598.8 | $ | 586.7 | 2.1% | $ | 1,792.9 | $ | 1,581.5 | 13.4% | |||||||||||||||||||||||||
Cost of sales | 389.3 | 391.4 | (0.5)% | 1,165.9 | 1,018.3 | 14.5% | |||||||||||||||||||||||||||||
Gross profit | 209.5 | 195.4 | 7.2% | 627.0 | 563.2 | 11.3% | |||||||||||||||||||||||||||||
Selling and administrative expenses | 178.2 | 169.1 | 5.4% | 544.3 | 489.6 | 11.2% | |||||||||||||||||||||||||||||
Gain on sale of subsidiary | (50.6) | — | 100.0% | (50.6) | — | 100.0% | |||||||||||||||||||||||||||||
Impairment charges | — | — | —% | 1.0 | — | 100.0% | |||||||||||||||||||||||||||||
Operating income | 81.9 | 26.2 | 212.1% | 132.2 | 73.5 | 79.8% | |||||||||||||||||||||||||||||
Interest expense, net | 2.4 | 1.9 | 27.1% | 6.5 | 5.5 | 18.1% | |||||||||||||||||||||||||||||
Income before income taxes | 79.5 | 24.4 | 226.1% | 125.8 | 68.1 | 84.8% | |||||||||||||||||||||||||||||
Income taxes | 16.4 | 5.2 | 214.1% | 18.2 | 16.5 | 10.4% | |||||||||||||||||||||||||||||
Net income (loss) attributable to non-controlling interest | (0.0) | 0.0 | 0.0% | (0.0) | (0.0) | 0.0% | |||||||||||||||||||||||||||||
Net income attributable to HNI Corporation | $ | 63.1 | $ | 19.2 | 229.4% | $ | 107.6 | $ | 51.6 | 108.5% | |||||||||||||||||||||||||
As a Percentage of Net Sales: | |||||||||||||||||||||||||||||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||||||||||
Gross profit | 35.0 | 33.3 | 170 | bps | 35.0 | 35.6 | -60 | bps | |||||||||||||||||||||||||||
Selling and administrative expenses | 29.8 | 28.8 | 100 | bps | 30.4 | 31.0 | -60 | bps | |||||||||||||||||||||||||||
Gain on sale of subsidiary | 8.5 | — | 850 | bps | 2.8 | — | 280 | bps | |||||||||||||||||||||||||||
Impairment charges | — | — | — | bps | 0.1 | — | 10 | bps | |||||||||||||||||||||||||||
Operating income | 13.7 | 4.5 | 920 | bps | 7.4 | 4.6 | 280 | bps | |||||||||||||||||||||||||||
Income taxes | 2.7 | 0.9 | 180 | bps | 1.0 | 1.0 | — | bps | |||||||||||||||||||||||||||
Net income attributable to HNI Corporation | 10.5 | 3.3 | 720 | bps | 6.0 | 3.3 | 270 | bps |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | Change | October 1, 2022 | October 2, 2021 | Change | ||||||||||||||||||||||||||||||
Net sales | $ | 375.2 | $ | 393.1 | (4.6)% | $ | 1,135.0 | $ | 1,040.0 | 9.1 | % | ||||||||||||||||||||||||
Operating profit | $ | 5.6 | $ | 3.9 | 44.9 | % | $ | 11.1 | $ | 9.6 | 16.4 | % | |||||||||||||||||||||||
Operating profit % | 1.5 | % | 1.0 | % | 50 | bps | 1.0 | % | 0.9 | % | 10 | bps |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | Change | October 1, 2022 | October 2, 2021 | Change | ||||||||||||||||||||||||||||||
Net sales | $ | 223.6 | $ | 193.6 | 15.5 | % | $ | 657.9 | $ | 541.5 | 21.5 | % | |||||||||||||||||||||||
Operating profit | $ | 39.6 | $ | 33.4 | 18.7 | % | $ | 117.0 | $ | 103.8 | 12.7 | % | |||||||||||||||||||||||
Operating profit % | 17.7 | % | 17.2 | % | 50 | bps | 17.8 | % | 19.2 | % | -140 | bps |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
October 1, 2022 | October 2, 2021 | October 1, 2022 | October 2, 2021 | ||||||||||||||||||||
Dividends per common share | $ | 0.320 | $ | 0.310 | $ | 0.950 | $ | 0.925 |
10.1 | |||||
31.1 | |||||
31.2 | |||||
32.1 | |||||
101 | The following materials from HNI Corporation's Quarterly Report on Form 10-Q for the fiscal quarter ended October 1, 2022 are formatted in Inline XBRL (eXtensible Business Reporting Language) and filed electronically herewith: (i) Condensed Consolidated Statements of Comprehensive Income; (ii) Condensed Consolidated Balance Sheets; (iii) Condensed Consolidated Statements of Equity; (iv) Condensed Consolidated Statements of Cash Flows; and (v) Notes to Condensed Consolidated Financial Statements+ | ||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
HNI Corporation | |||||||||||
Date: November 1, 2022 | By: | /s/ Marshall H. Bridges | |||||||||
Marshall H. Bridges | |||||||||||
Senior Vice President and Chief Financial Officer |
Date: November 1, 2022 | By: | /s/ Jeffrey D. Lorenger | ||||||
Name: Jeffrey D. Lorenger | ||||||||
Title: Chairman, President, and Chief Executive Officer |
Date: November 1, 2022 | By: | /s/ Marshall H. Bridges | ||||||
Name: Marshall H. Bridges | ||||||||
Title: Senior Vice President and Chief Financial Officer |
Date: November 1, 2022 | By: | /s/ Jeffrey D. Lorenger | ||||||
Name: Jeffrey D. Lorenger | ||||||||
Title: Chairman, President, and Chief Executive Officer |
Date: November 1, 2022 | By: | /s/ Marshall H. Bridges | ||||||
Name: Marshall H. Bridges | ||||||||
Title: Senior Vice President and Chief Financial Officer |