HNI CORP

Previous wording

References in this management discussion and analysis to "HNI" and the "Corporation" are to HNI and its consolidated subsidiaries.

Current wording

References in this management's discussion and analysis to "HNI" and the "Corporation" are to HNI and its consolidated subsidiaries.

Previous wording

During the second quarter, the Corporation continues its focus on managing costs across all businesses in response to soft volume to begin the year, driven by current geopolitical uncertainty. In Workplace Furnishings, the strategic focus remains margin expansion. The cost management actions taken in the first two quarters within the segment are in addition to previously announced synergies associated with the integration of Steelcase, the realization of which is consistent with expectations. The Corporation also continues to expect additional savings from network optimization in the legacy Workplace Furnishing businesses over the next three years. The Residential Building Products segment remains focused on driving revenue growth over the long term. The business continues to navigate challenging housing market dynamics resulting from interest rate volatility and affordability issues. The combination of the Corporation's disciplined cost management, Steelcase synergies, and legacy network optimization projects continues to strengthen its earnings visibility story.

Current wording

During the third quarter of 2026, the Corporation continued its focus on cost and expense management to drive profit growth in response to worsening inflation, geopolitical uncertainty, and ongoing housing softness. In Workplace Furnishings, the focus remains on driving net sales growth and expanding margins. The cost management actions taken in the first three quarters of 2026 within the segment are in addition to previously announced synergies associated with the integration of Steelcase, the realization of which is slightly ahead of expectations. The Corporation also continues to expect additional savings from manufacturing network optimization in the legacy Workplace Furnishings businesses over the 2026 - 2028 period. The Residential Building Products segment remains focused on driving net sales outperformance, while maintaining strong margins. The business continues to navigate challenging housing market dynamics resulting from affordability issues from elevated interest rates and home prices. The combination of the Corporation's disciplined cost management, Steelcase synergies, and legacy manufacturing network optimization projects continues to strengthen its earnings visibility story.

Previous wording

Consolidated net sales for the second quarter of 2026 were $1.5 billion, an increase of 121 percent compared to net sales of $667.1 million in the prior-year quarter, with net sales in the Workplace Furnishings segment increasing 157 percent, and Residential Building Products net sales decreasing 1.6 percent. Consolidated and Workplace Furnishings net sales include a $806.9 million year-over-year increase related to the acquisition of Steelcase in December 2025. See "Note 3. Acquisitions and Divestitures" in the Notes to Condensed Consolidated Financial Statements for further information about the acquisition.

Current wording

Consolidated net sales for the third quarter of 2026 were $1.6 billion, an increase of 133 percent compared to net sales of $683.8 million in the prior-year quarter, with net sales in the Workplace Furnishings segment increasing 174 percent, and net sales in the Residential Building Products segment increasing 4.8 percent. Consolidated and Workplace Furnishings net sales include year-over-year increases of $856.6 million and $14.1 million related to the acquisition of Steelcase in December 2025 and a Workplace Furnishings dealer in September 2026, respectively. See "Note 3. Acquisitions and Divestitures" in the Notes to Condensed Consolidated Financial Statements for further information about the acquisitions.

Previous wording

Net income attributable to the Corporation in the second quarter of 2026 was $51.1 million compared to $48.2 million in the second quarter of 2025. The current quarter included favorable net tariff impact, higher net sales in the legacy HNI business, and improved net productivity. These factors were offset partially by Steelcase purchase accounting, restructuring and impairment charges, increased interest expense and higher variable compensation.

Current wording

Net income attributable to the Corporation in the third quarter of 2026 was $90.0 million compared to $41.2 million in the third quarter of 2025. The current quarter included accretive operating results from Steelcase, favorable price-cost, improved net productivity, and higher volume in the legacy HNI business. These factors were offset partially by Steelcase purchase accounting, increased interest expense, and restructuring and impairment charges, inclusive of restructuring amounts recorded to cost of goods sold.

Previous wording

Consolidated net sales for the second quarter of 2026 increased 121 percent compared to the same quarter last year. The increase was driven by the acquisition of Steelcase in December of 2025, which increased year-over-year net sales by $806.9 million.

Current wording

Consolidated net sales for the third quarter of 2026 increased 133 percent compared to the same quarter last year. The increase was driven by the acquisition of Steelcase in December of 2025, which increased year-over-year net sales by $856.6 million. The acquisition of a workplace furnishings dealer in the current quarter increased year-over-year net sales by $14.1 million.

Previous wording

Gross profit as a percentage of net sales increased 110 basis points in the second quarter of 2026 compared to the same quarter last year, driven by 240 basis points of tariff refunds along with improved net productivity, which were partially offset by impacts from the acquisition of Steelcase, and restructuring costs related to the Corporation's network optimization projects.

Current wording

Gross profit as a percentage of net sales increased 50 basis points in the third quarter of 2026 compared to the same quarter last year, driven by favorable price-cost and improved net productivity, which were partially offset by impacts from the acquisition of Steelcase.

Previous wording

Selling, general and administrative expenses as a percentage of net sales increased 390 basis points in the second quarter of 2026 compared to the same quarter last year. The increase was driven by impacts from the acquisition of Steelcase, including $21.9 million of purchase accounting related to the amortization of intangibles and higher variable compensation.

Current wording

Selling, general and administrative expenses as a percentage of net sales increased 220 basis points in the third quarter of 2026 compared to the same quarter last year. The increase was driven by impacts from the acquisition of Steelcase, including $24.8 million of amortization costs related to intangible assets, and higher input costs, which were partially offset by higher net sales.

Previous wording

In the current quarter the Corporation recorded costs of $4.2 million associated with the Steelcase acquisition. Acquisition and related costs consist primarily of retention compensation and other professional service fees. See "Note 3. Acquisitions and Divestitures" in the Notes to the Condensed Consolidated Financial Statements for further information.

Current wording

In the current quarter, the Corporation recorded costs of $0.9 million associated with the Steelcase acquisition, compared to $8.3 million of acquisition and related costs incurred in the prior-year period. Acquisition and related costs consist primarily of retention compensation and other professional service fees in the current-year period, and professional service fees in the prior-year period. See "Note 3. Acquisitions and Divestitures" in the Notes to the Condensed Consolidated Financial Statements for further information about the Steelcase acquisition.

Previous wording

In the second quarter of 2026, the Corporation recorded charges of $17.9 million, primarily related to structural cost actions and an impairment charge related to a small residential building products business. In the prior-year quarter, $2.5 million of charges were recorded, primarily related to the Corporation's network optimization projects.

Current wording

In the third quarter of 2026, the Corporation recorded charges of $7.3 million, primarily related to structural cost actions. In the prior-year quarter, $0.8 million of charges were recorded, primarily related to the Corporation's manufacturing network optimization projects.

Previous wording

In the first six months of 2026, operating margin contracted 530 basis points compared to the same quarter last year. This decrease was driven by impacts from the acquisition of Steelcase, including $86.1 million of purchase accounting with respect to inventory step-up and intangible amortization related to the preliminary valuation of Steelcase, $44.3 million of restructuring and impairment charges inclusive of restructuring amounts recorded to cost of sales, and lower net sales in the legacy HNI business, the effects of which were partially offset by net impact of tariffs and improved net productivity.

Current wording

In the third quarter of 2026, operating margin contracted 80 basis points compared to the same quarter last year. This decrease was driven by impacts from the acquisition of Steelcase, including $24.8 million of purchase accounting with respect to intangible amortization related to the preliminary valuation of Steelcase, and $10.8 million of restructuring and impairment charges inclusive of restructuring amounts recorded to cost of sales, the effects of which were partially offset by improved net productivity, favorable price-cost, and higher net sales in the legacy HNI business.

Previous wording

Interest expense, net for the second quarter of 2026 increased to $23.7 million, from $6.1 million in the same quarter last year. The increase was driven by higher average outstanding borrowings incurred to fund the acquisition of Steelcase. See "Note 7. Debt" in the Notes to Condensed Consolidated Financial Statements for further information about such financing.

Current wording

Interest expense, net for the third quarter of 2026 increased to $19.4 million from $7.2 million in the same quarter last year. The increase was driven by higher average outstanding borrowings incurred to fund the acquisition of Steelcase. See "Note 7. Debt" in the Notes to Condensed Consolidated Financial Statements for further information about such financing.

Previous wording

The Corporation’s income tax expense for the second quarter of 2026 was $20.1 million on income before taxes of $71.2 million, or an effective tax rate of 28.2 percent. For the second quarter of 2025, the Corporation’s income tax expense was $13.8 million on income before taxes of $62.0 million, or an effective tax rate of 22.2 percent. The increase in the effective tax rate was primarily due to the impact of non-deductible executive compensation, unfavorable equity-based compensation adjustments, and the settlement of certain foreign-related tax positions.

Current wording

The Corporation’s income tax expense for the third quarter of 2026 was $31.3 million on income before taxes of $121.3 million, or an effective tax rate of 25.8 percent. For the third quarter of 2025, the Corporation’s income tax expense was $16.2 million on income before taxes of $57.4 million, or an effective tax rate of 28.2 percent. The decrease in the effective tax rate was primarily due to the impact of non-deductible transaction costs in the prior period.

Previous wording

Net income attributable to the Corporation was $51.1 million, or $0.70 per diluted share, in the second quarter of 2026, compared to net income of $48.2 million, or $1.02 per diluted share, in the second quarter of 2025.

Current wording

Net income attributable to the Corporation was $90.0 million, or $1.23 per diluted share, in the third quarter of 2026, compared to net income of $41.2 million, or $0.88 per diluted share, in the third quarter of 2025.

Previous wording

Consolidated net sales for the first six months of 2026 increased 123 percent compared to the same period last year. The increase was driven by the acquisition of Steelcase in the prior year, which increased year-over-year net sales by $1.6 billion.

Current wording

Consolidated net sales for the first nine months of 2026 increased 126 percent compared to the same period last year. The increase was driven by the acquisition of Steelcase in the prior year, which increased year-over-year net sales by $2.4 billion.

Previous wording

Gross profit as a percentage of net sales decreased 70 basis points in the first six months of 2026 compared to the same period last year, driven by impacts from the acquisition of Steelcase, including $36.4 million of purchase accounting primarily related to inventory step-up, partially offset by tariff refunds in the second quarter of 2026 and improved net productivity.

Current wording

Gross profit as a percentage of net sales decreased 30 basis points in the first nine months of 2026 compared to the same period last year, driven by impacts from the acquisition of Steelcase, including $36.4 million of purchase accounting primarily related to inventory step-up, partially offset by favorable price-cost, tariff refunds in the second and third quarters of 2026, and improved net productivity.

Previous wording

Selling and administrative expenses as a percentage of net sales increased 380 basis points in the first six months of 2026 compared to the same period last year. The increase was driven by impacts from the acquisition of Steelcase, including $49.7 million of purchase accounting primarily related to amortization of intangibles, higher variable compensation, lower net sales in the legacy HNI business, and increased input costs.

Current wording

Selling and administrative expenses as a percentage of net sales increased 310 basis points in the first nine months of 2026 compared to the same period last year. The increase was driven by impacts from the acquisition of Steelcase, including $74.5 million of purchase accounting primarily related to amortization of intangibles, increased input costs and variable compensation.

Previous wording

In the current year period, the Corporation recorded costs of $7.8 million associated with the Steelcase acquisition. Acquisition and related costs consist primarily of retention compensation, other professional service fees, and change in control compensation expense adjustments.

Current wording

In the current-year period, the Corporation recorded costs of $8.6 million associated with the Steelcase acquisition, compared to $8.3 million of acquisition and related costs incurred in the prior-year period.

Previous wording

In the first six months of 2026, the Corporation recorded charges of $35.9 million primarily related to the termination of Steelcase's multi-year ERP implementation project, structural cost actions, the Corporation's network optimization project, and an impairment charge related to a small residential building projects business. In the prior-year period, charges of $8.9 million were incurred, primarily in connection with a Workplace Furnishings factory optimization initiative.

Current wording

In the first nine months of 2026, the Corporation recorded charges of $43.1 million primarily related to the termination of Steelcase's multi-year ERP implementation project, structural cost actions, the Corporation's manufacturing network optimization project, and an impairment charge related to a small residential building products business. In the prior-year period, the Corporation incurred charges of $9.7 million, primarily in connection with the loss on sale of the HNI India business.

Previous wording

In the second quarter of 2026, operating margin contracted 390 basis points compared to the same quarter last year. This decrease was driven by impacts from the acquisition of Steelcase, including $21.9 million of purchase accounting with respect to intangible amortization related to the preliminary valuation of Steelcase, $23.8 million of restructuring and impairment charges inclusive of restructuring amounts recorded to cost of sales, and higher variable compensation, the effects of which were partially offset by 150 basis points of favorable net tariff impacts and improved net productivity.

Current wording

In the first nine months of 2026, operating margin contracted 370 basis points compared to the same period last year. This decrease was driven by impacts from the acquisition of Steelcase, including $110.9 million of inventory step-up and intangible amortization costs related to the preliminary valuation of Steelcase, and $55.0 million of restructuring and impairment charges inclusive of restructuring amounts recorded to cost of sales, the effects of which were partially offset by net impact of tariffs, favorable price-cost, and improved net productivity.

Previous wording

Interest expense, net for the first six months of 2026 was $44.4 million, compared to $11.7 million for the same period last year. The increase was driven by higher average outstanding borrowings incurred to fund the acquisition of Steelcase.

Current wording

Interest expense, net for the first nine months of 2026 was $63.8 million, compared to $18.9 million for the same period last year. The increase was driven by higher average outstanding borrowings incurred to fund the acquisition of Steelcase.

Previous wording

The Corporation’s income tax expense for the first six months of 2026 was $3.2 million on income before taxes of $15.5 million, or an effective tax rate of 20.9 percent. For the first six months of 2025, the Corporation’s income tax expense was $18.8 million on income before taxes of $80.9 million, or an effective tax rate of 23.2 percent. The decrease in the effective tax rate was primarily due to favorable equity-based compensation adjustments.

Current wording

The Corporation’s income tax expense for the first nine months of 2026 was $34.5 million on income before taxes of $136.8 million, or an effective tax rate of 25.2 percent. For the first nine months of 2025, the Corporation’s income tax expense was $34.9 million on income before taxes of $138.3 million, or an effective tax rate of 25.3 percent. The effective tax rate remained flat compared to the prior-year period, with the current year primarily impacted by the jurisdictional mix of earnings, offset by increased research and development tax credits, while the prior year rate was impacted by non-deductible transaction costs.

Previous wording

Net income attributable to the Corporation was $12.3 million, or $0.17 per diluted share, in the first six months of 2026, compared to net income of $62.2 million, or $1.31 per diluted share, in the first six months of 2025.

Current wording

Net income attributable to the Corporation was $102.3 million, or $1.40 per diluted share, in the first nine months of 2026, compared to net income of $103.4 million, or $2.19 per diluted share, in the first nine months of 2025.

Previous wording

Second quarter 2026 net sales for the Workplace Furnishings segment increased 157 percent compared to the same quarter last year. The increase was driven by the acquisition of Steelcase in December of 2025, which increased net sales by $806.9 million.

Current wording

Third quarter 2026 net sales for the Workplace Furnishings segment increased 174 percent compared to the same quarter last year. The increase was driven by the acquisition of Steelcase in December of 2025, which increased net sales by $856.6 million and the acquisition of a workplace furnishings dealer in the current quarter, which increased net sales by $14.1 million.

Previous wording

Operating income as a percentage of net sales in the second quarter of 2026 decreased 510 basis points compared to the same period in 2025. The decrease was driven by impacts from the acquisition of Steelcase, including $21.9 million of purchase accounting with respect to intangible amortization related to the preliminary valuation of Steelcase, $16.6 million of restructuring and impairment costs, and $1.9 million of acquisition and related costs, as well as lower net sales in the legacy HNI business, partially offset by 170 basis points of favorable net tariff impacts and improved net productivity.

Current wording

Operating income as a percentage of net sales in the third quarter of 2026 decreased 280 basis points compared to the same period in 2025. The decrease was driven by impacts from the acquisition of Steelcase, including $24.8 million of purchase accounting with respect to intangible amortization primarily related to the preliminary valuation of Steelcase, and $10.0 million of restructuring and impairment costs, partially offset by favorable price-cost, improved net productivity, and net tariff impacts.

Previous wording

Net sales for the first six months of 2026 for the Workplace Furnishings segment increased 162 percent compared to the same period last year. The increase was driven by the acquisition of Steelcase in December of 2025, which increased net sales by $1.6 billion.

Current wording

Net sales for the first nine months of 2026 for the Workplace Furnishings segment increased 166 percent compared to the same period last year. The increase was driven by the acquisition of Steelcase in December of 2025, which increased net sales by $2.4 billion.

Previous wording

Operating income as a percentage of net sales in the first six months of 2026 decreased 640 basis points compared to the same period in 2025. The decrease was driven by impacts from the acquisition of Steelcase, including $86.1 million of purchase accounting with respect to inventory step-up and intangible amortization related to the preliminary valuation of Steelcase, $37.0 million of restructuring and impairment costs, and $8.5 million of acquisition and related costs, as well as lower net sales in the legacy HNI business, partially offset by net tariff impacts and improved net productivity.

Current wording

Operating income as a percentage of net sales in the first nine months of 2026 decreased 500 basis points compared to the same period in 2025. The decrease was driven by impacts from the acquisition of Steelcase, including $110.9 million of purchase accounting with respect to inventory step-up and intangible amortization related to the preliminary valuation of Steelcase, $47.0 million of restructuring and impairment costs, and $8.5 million of acquisition and related costs, as well as lower volume in the legacy HNI business, the effects of which were partially offset by net tariff impacts, favorable price-cost, and improved net productivity.

Previous wording

Second quarter 2026 net sales for the Residential Building Products segment decreased 1.6 percent compared to the same quarter last year, with decreased net sales in the new home market partially offset by increased remodel-retrofit sales.

Current wording

Third quarter 2026 net sales for the Residential Building Products segment increased 4.8 percent compared to the same quarter last year, as increased net sales in remodel-retrofit were partially offset by lower net sales in new construction.

Previous wording

Operating income as a percentage of net sales was unchanged in the second quarter of 2026 from the same quarter last year, with an increase from 420 basis points of favorable net tariff impacts, improved net productivity, and lower core SG&A offset by an impairment charge and lower net sales volume.

Current wording

Operating income as a percentage of net sales increased 180 basis points in the third quarter of 2026 from the same quarter last year, driven by improved net productivity and higher net sales volume.

Previous wording

Net sales for the first six months of 2026 for the Residential Building Products segment increased 0.3 percent compared to the same period last year, as increased net sales in remodel-retrofit were mostly offset by decreased net sales in the new home market.

Current wording

Net sales for the first nine months of 2026 for the Residential Building Products segment increased 1.9 percent compared to the same period last year, as increased net sales in remodel-retrofit were mostly offset by decreased net sales in the new home market.

Previous wording

Operating income as a percentage of net sales in the first six months of 2026 increased 100 basis points compared to the same period last year driven by improved net productivity and net tariff impacts, partially offset by lower net sales volume.

Current wording

Operating income as a percentage of net sales in the first nine months of 2026 increased 130 basis points compared to the same period last year driven by improved net productivity, favorable price-cost, and net tariff impacts, partially offset by $7.7 million in restructuring costs and lower net sales volume.

Previous wording

Cash, cash equivalents, and short-term investments, coupled with cash flow from future operations, borrowing capacity expected to be available under the Corporation's existing revolving credit facility, and the Corporation's ability to access capital markets, are expected to be adequate to fund the Corporation's operations and satisfy its other cash requirements for at least the next twelve months. The Corporation can access the full $425 million of borrowing capacity available under its revolving credit facility, which includes the $103 million of borrowings outstanding as of July 4, 2026, and maintain compliance with specified financial covenants.

Current wording

Cash, cash equivalents, and short-term investments, coupled with cash flow from future operations, borrowing capacity expected to be available under the Corporation's existing revolving credit facility, and the Corporation's ability to access capital markets, are expected to be adequate to fund the Corporation's operations and satisfy its other cash requirements for at least the next twelve months. The Corporation can access the full $425 million of borrowing capacity available under its revolving credit facility, which includes the $45 million of borrowings outstanding as of October 3, 2026, and maintain compliance with specified financial covenants.

Previous wording

Operating cash flows were a use of $32.0 million of cash for the first six months of 2026 compared to a source of $43.7 million of cash for the first six months of 2025. Higher working capital usage, driven by the settlement of certain acquisition related expense accruals were the primary driver of the difference versus the year-ago period.

Current wording

Operating cash flows were a source of $163.3 million of cash for the first nine months of 2026 compared to a source of $198.9 million of cash for the first nine months of 2025. Higher working capital usage, driven by increased receivables from Steelcase activity and the settlement of certain acquisition-related expense accruals, was the primary driver of the difference versus the year-ago period, which was partially offset by higher depreciation and amortization related to the Steelcase acquisition.

Previous wording

Capital Expenditures - Capital expenditures, including capitalized software, for the first six months of 2026 were $64.7 million compared to $31.2 million for the same period last year. The current-period capital expenditures are primarily applied to machinery, equipment, and tooling required to support continuing operations, continuous improvements, and cost savings initiatives in the manufacturing processes. Additionally, in support of the Corporation's long-term strategy to create effortless winning experiences for customers, the Corporation continues to invest in technology and digital capabilities. For the full year 2026, capital expenditures are expected to be approximately $130 to $140 million.

Current wording

Capital Expenditures - Capital expenditures, including capitalized software, for the first nine months of 2026 were $91.1 million compared to $50.8 million for the same period last year. The increase in activity during the current-year period was due to the acquisition of Steelcase during December 2025, described in "Note 3. Acquisitions and Divestitures" in the Notes to the Condensed Consolidated Financial Statements. The current-period capital expenditures are primarily applied to machinery, equipment, and tooling required to support continuing operations, continuous improvements, and cost savings initiatives in the manufacturing processes. Additionally, in support of the Corporation's long-term strategy to create effortless winning experiences for customers, the Corporation continues to invest in technology and digital capabilities. For the full year 2026, capital expenditures are expected to be approximately $125 to $130 million.

Previous wording

The Corporation also has borrowings outstanding under (i) a senior secured TLA Facility, (ii) a senior secured TLB Facility, and (iii) Public Notes. During the second quarter of 2026, the Corporation refinanced borrowings under the TLB Facility, achieving a reduction of the borrowing rate on the TLB Facility. Cash flows included in financing activities in the current period include the refinancing of the borrowings under the TLB Facility and related debt issuance costs along with the scheduled principal amortization payments under the TLA and TLB Facilities.

Current wording

The Corporation also has borrowings outstanding under (i) a senior secured TLA Facility, (ii) a senior secured TLB Facility, (iii) Public Notes, and (iv) debt assumed as part of a current-quarter dealer acquisition. During the second quarter of 2026, the Corporation refinanced borrowings under the TLB Facility, achieving a reduction of the borrowing rate on the TLB Facility. Cash flows included in financing activities in the current period include the refinancing of the borrowings under the TLB Facility and related debt issuance costs along with the scheduled principal amortization payments under the TLA and TLB Facilities.

Previous wording

During the second quarter of 2026, the Board of Directors declared the regular quarterly cash dividend at the rate of $0.35 per share on May 18, 2026. This represents a $0.01 per share or 2.9 percent increase from the prior quarterly dividend level. The dividend was paid on June 10, 2026, to shareholders of record as of May 29, 2026.

Current wording

During the third quarter of 2026, the Board of Directors declared the regular quarterly cash dividend at the rate of $0.35 per share on August 17, 2026. This represents a $0.01 per share or 2.9 percent increase from the prior quarterly dividend level. The dividend was paid on September 11, 2026 to shareholders of record as of August 28, 2026.

Previous wording

Stock Repurchase - The Corporation’s capital strategy related to stock repurchase is focused on offsetting the dilutive impact of issuances of common stock pursuant to equity awards granted for various compensation-related matters. The Corporation also may elect to opportunistically purchase additional shares based on excess cash generation and/or share price considerations. During the six months ended July 4, 2026, the Corporation did not repurchase any of its outstanding common stock. As of July 4, 2026, $84.3 million was available under the current authorization of the Board of Directors for repurchase of shares by the Corporation. See "Note 10. Accumulated Other Comprehensive Income (Loss) and Shareholders’ Equity" in the Notes to Condensed Consolidated Financial Statements for further information.

Current wording

Stock Repurchase - The Corporation’s capital strategy related to stock repurchase is focused on offsetting the dilutive impact of issuances of common stock pursuant to equity awards granted for various compensation-related matters. The Corporation also may elect to opportunistically purchase additional shares based on excess cash generation and/or share price considerations. During the nine months ended October 3, 2026, the Corporation spent $5.6 million to repurchase 0.1 million shares of its common stock. As of October 3, 2026, $277.9 million was available under the current authorization of the Board of Directors for repurchase of shares by the Corporation. See "Note 10. Accumulated Other Comprehensive Income (Loss) and Shareholders’ Equity" in the Notes to Condensed Consolidated Financial Statements for further information.

Previous wording

Various commitments and obligations associated with ongoing business and financing activities will result in cash payments in future periods. A summary of the amounts and estimated timing of these future cash payments is presented in the 2025 Form 10-K. There were no material changes outside the ordinary course of business in the Corporation’s contractual obligations or the estimated timing of the future cash payments during the first six months of 2026.

Current wording

Various commitments and obligations associated with ongoing business and financing activities will result in cash payments in future periods. A summary of the amounts and estimated timing of these future cash payments is presented in the 2025 Form 10-K. There were no material changes outside the ordinary course of business in the Corporation’s contractual obligations or the estimated timing of the future cash payments during the first nine months of 2026.

Previous wording

In November 2024, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 aims to improve the disclosures about a public business entity’s expenses by requiring more detailed information about the types of costs and expenses, including purchases of inventory, employee compensation, selling expenses, depreciation, and intangible asset amortization within commonly presented captions on the face of the income statement. Disclosures are required to be made on an annual and interim basis in a tabular format in the footnotes to the financial statements. The ASU becomes effective for the Corporation for its fiscal year ending December 2027, and for interim periods beginning with the first fiscal quarter of 2028, and may be applied either prospectively or retrospectively. Early adoption is permitted. The Corporation expects additional detailed disclosures to be made for several cost and expense categories following adoption of the ASU, but is still evaluating the full impact of this guidance on the Consolidated Financial Statements.

Current wording

In November 2024, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 aims to improve the disclosures about a public business entity’s expenses by requiring more detailed information about the types of costs and expenses, including purchases of inventory, employee compensation, selling expenses, depreciation, and intangible asset amortization within commonly presented captions on the face of the income statement. Disclosures are required to be made on an annual and interim basis in a tabular format in the footnotes to the financial statements. The ASU becomes effective for the Corporation for its fiscal year ending December 2027, and for interim periods beginning with the first fiscal quarter of 2028, and may be applied either prospectively or retrospectively. Early adoption is permitted. The Corporation expects additional detailed disclosures to be made for several cost and expense categories following adoption of the ASU, but continues to evaluate the full impact of this guidance on the Condensed Consolidated Financial Statements.

Previous wording

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025-06 modernizes internal-use software guidance, eliminating accounting consideration for software development stages, requiring cost capitalization when management has authorized and is committed to funding the project and it is probable the project will be completed and the software used for its intended function. The ASU becomes effective beginning with the first fiscal quarter of 2028, and may be applied either prospectively or retrospectively. Early adoption is permitted. The Corporation is currently evaluating the impact of adopting this guidance to the Consolidated Financial Statements, and expects that adoption could impact the capitalization patterns of its internal use software.

Current wording

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025-06 modernizes internal-use software guidance, eliminating accounting consideration for software development stages, and requiring instead cost capitalization when management has authorized and is committed to funding the project and it is probable the project will be completed and the software used for its intended function. The ASU becomes effective beginning with the first fiscal quarter of 2028, and may be applied either prospectively or retrospectively. Early adoption is permitted. The Corporation is currently evaluating the impact of adopting this guidance to the Consolidated Financial Statements, and expects that adoption could impact the capitalization patterns of its internal use software.

Previous wording

Statements in this report to the extent they are not statements of historical or present fact, including statements as to plans, outlook, objectives, and future financial performance, are "forward-looking" statements, within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. 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 in this report about the transaction between the Corporation and Steelcase (the "Transaction") include, but are not limited to, statements about the completion and the benefits of the Transaction, including future financial and operating results, the combined company's plans, objectives, expectations and intentions, and other statements that are not historical facts.

Current wording

Statements in this report to the extent they are not statements of historical or present fact, including statements as to plans, outlook, objectives, and future financial performance, are "forward-looking" statements, within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. 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 in this report about the Steelcase acquisition include, but are not limited to, statements about the completion and the benefits of the transaction, including future financial and operating results, the combined company's plans, objectives, expectations and intentions, and other statements that are not historical facts.