HNI CORP

Previous wording

The Corporation has two reportable segments: workplace furnishings and residential building products. The Corporation is a leading global designer and provider of commercial furnishings, and a leading manufacturer and marketer of hearth products. The Corporation utilizes a multi-faceted go-to-market business model to deliver value to customers via various brands and selling models. The Corporation is focused on growing its existing businesses while seeking out and developing new opportunities for expansion.

Current wording

The Corporation is a leading global designer and provider of commercial furnishings, and a leading manufacturer and marketer of hearth products. The Corporation utilizes a multi-faceted go-to-market business model to deliver value to customers via various brands and selling models. The Corporation is focused on growing its existing businesses while seeking out and developing new opportunities for expansion.

Previous wording

In the current period, the Corporation maintained focus on its strategic priorities. In workplace furnishings, ongoing integration of the Kimball International business and related synergies, expanded utilization of the new factory in Mexico, and the previously announced manufacturing facility optimization initiative are enabling the segment's profit transformation plan, despite continued near-term revenue pressure resulting from macroeconomic and U.S. election uncertainties. The residential building products business continued to navigate cyclical housing market softness and inconsistent demand trends resulting from interest rate volatility, ongoing inflation, and affordability issues. In spite of these headwinds, the business remained solidly profitable and committed to investing in capabilities to support long-term growth.

Current wording

The Corporation has two reportable segments: workplace furnishings and residential building products. In the current period, the Corporation maintained focus on its strategic priorities. In workplace furnishings, the strategic focus remains margin expansion. The ongoing integration of the Kimball International business and related synergies, expanded utilization of its manufacturing facility in Mexico, and the previously announced factory optimization initiative are enabling the segment's profit transformation plan. The residential building products business remains focused on driving revenue growth over the long term. Currently, the business is navigating cyclical housing market softness and inconsistent demand trends resulting from interest rate volatility, ongoing inflation, and affordability issues. In addition, macroeconomic volatility driven by evolving government tariff policies has introduced a heightened level of uncertainty in the Corporation's markets. In spite of these headwinds, both segments achieved first quarter year-over-year net sales growth, remained solidly profitable, and increased investments in capabilities to support long-term growth.

Previous wording

Gross profit as a percentage of net sales increased 140 basis points in the third quarter of 2024 compared to the same quarter last year, driven by improved operational productivity, partially offset by lower sales volume, impacts from the exit of Poppin in the prior year, and higher restructuring charges recorded to cost of sales as a result of factory consolidation initiatives in the workplace furnishings segment.

Current wording

Gross profit as a percentage of net sales increased 10 basis points in the first quarter of 2025 compared to the same quarter last year, driven by improved net productivity, partially offset by unfavorable price-cost and higher restructuring costs recorded to cost of sales as a result of previously announced factory consolidation initiatives in workplace furnishings.

Previous wording

Interest expense, net for the third quarter of 2024 was $7.1 million, compared to $9.4 million in the same quarter last year, driven by lower average outstanding borrowings. See "Note 7. Debt" in the Notes to Condensed Consolidated Financial Statements for further information.

Current wording

Interest expense, net for the first quarter of 2025 was $5.5 million, compared to $7.6 million in the same quarter last year, driven by lower average outstanding borrowings and interest rates relative to the Corporation's variable-rate debt. See "Note 7. Debt" in the Notes to Condensed Consolidated Financial Statements for further information.

Previous wording

The Corporation’s income tax provision for the third quarter of 2024 was $14.3 million of expense on income before taxes of $61.8 million, or an effective tax rate of 23.1 percent. For the third quarter of 2023, the Corporation’s income tax provision was $9.6 million of expense on income before taxes of $47.4 million, or an effective tax rate of 20.3 percent. The variation in the effective tax rates was primarily due to favorable year-to-date adjustments recorded in the third quarter of 2023 in connection with the acquisition of Kimball International.

Current wording

The Corporation’s income tax provision for the first quarter of 2025 was $5.0 million of expense on income before taxes of $18.9 million, or an effective tax rate of 26.3 percent. For the first quarter of 2024, the Corporation’s income tax provision was $4.3 million of expense on income before taxes of $22.0 million, or an effective tax rate of 19.6 percent. The variation in the effective tax rates was primarily due to the current-quarter impairment charge recorded at HNI India that was not deductible for income tax purposes.

Previous wording

Net income attributable to the Corporation was $47.5 million, or $0.98 per diluted share, in the third quarter of 2024, compared to net income of $37.8 million, or $0.80 per diluted share, in the third quarter of 2023.

Current wording

Net income attributable to the Corporation was $13.9 million, or $0.29 per diluted share, in the first quarter of 2025, compared to net income of $17.7 million, or $0.37 per diluted share, in the first quarter of 2024.

Previous wording

The following table presents summarized results of operations in the workplace furnishings segment:

Current wording

The following table presents certain results of operations in the workplace furnishings segment:

Previous wording

Third quarter 2024 net sales for the workplace furnishings segment decreased 5.9 percent compared to the same quarter last year, driven by lower volume in the contract office customer channel, partially offset by higher volume in the hospitality channel and price realization. In addition, the divestiture of Poppin in the third quarter of 2023 decreased year-over-year sales by $7.7 million.

Current wording

First quarter 2025 net sales for the workplace furnishings segment increased 0.3 percent compared to the same quarter last year. The increase was driven by higher volume in the contract and hospitality customer channels, partially offset by lower volume in the small-to-mid-size customer channel and higher discounting due to customer mix.

Previous wording

The following table presents summarized results of operations in the residential building products segment:

Current wording

The following table presents certain results of operations in the residential building products segment:

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 credit agreements, and the ability to access capital markets, are expected to be adequate to fund operations and satisfy cash flow needs for at least the next twelve months. Based on current performance, the Corporation can access the full $425 million of borrowing capacity available under its revolving credit facility, which includes the $46 million of borrowings currently outstanding, and maintain compliance with applicable 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 credit agreements, and the ability to access capital markets, are expected to be adequate to fund operations and satisfy other cash requirements, including repayment of the $50 million principal amount of notes maturing on May 31, 2025, for at least the next twelve months. As of March 29, 2025, the Corporation can access the full $425 million of borrowing capacity available under its revolving credit facility, which includes the $106 million of borrowings currently outstanding as of that date, and maintain compliance with applicable financial covenants.

Previous wording

Capital Expenditures - Capital expenditures, including capitalized software, for the first nine months of 2024 were $43.2 million compared to $62.8 million in the same period last year. In the prior-year period, the Corporation had higher expenditures related to a manufacturing facility expansion, which did not recur in the current period. The current-year expenditures are primarily focused on machinery, equipment, and tooling required to support new products, continuous improvements, and cost savings initiatives in 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 assets. For the full year 2024, capital expenditures are expected to be approximately $60 to 70 million.

Current wording

Capital Expenditures - Capital expenditures, including capitalized software, for the first three months of 2025 were $16.3 million compared to $11.2 million in the same period last year. The current-year expenditures are primarily focused on machinery, equipment, and tooling required to support new products, continuous improvements, and cost savings initiatives in 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 2025, capital expenditures are expected to be approximately $75 to $85 million.

Previous wording

Three Months Ended September 28, 2024 and September 30, 2023

Current wording

As discussed in "Note 7. Debt" in the Notes to Condensed Consolidated Financial Statements, the Corporation also has borrowings outstanding under a term loan agreement and private placement note agreements. There were no principal payments or borrowings related to these agreements in the three months ended March 29, 2025 and March 30, 2024, respectively.

Previous wording

During the third quarter of 2024, the Board of Directors declared the regular quarterly cash dividend at the rate of $0.33 per share on August 12, 2024. The dividend was paid on September 12, 2024, to shareholders of record as of August 23, 2024.

Current wording

During the first quarter of 2025, the Board of Directors declared the regular quarterly cash dividend at the rate of $0.33 per share on February 11, 2025. The dividend was paid on March 5, 2025, to shareholders of record as of February 24, 2025.

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 nine months ended September 28, 2024, the Corporation spent $24.8 million to repurchase 0.5 million shares of its common stock. As of September 28, 2024, $208.2 million was authorized and available 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 three months ended March 29, 2025, the Corporation spent $40.4 million to repurchase 0.9 million shares of its common stock. As of March 29, 2025, $126.4 million was authorized and available 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

Sales of Stock - The Corporation records cash flows received from the sale of its common stock held in treasury, primarily in connection with stock option exercises and the HNI Corporation Members’ Stock Purchase Plan. The increase in cash proceeds in the current-year period was due to a significant uptick in stock options exercised, driven by growth in the market value per share of the Corporation's common stock. See "Note 10. Accumulated Other Comprehensive Income (Loss) and Shareholders’ Equity" and "Note 12. Stock-Based Compensation" in the Notes to Condensed Consolidated Financial Statements for further information.

Current wording

Sales of Stock - The Corporation records cash flows received from the sale of its common stock held in treasury, primarily in connection with stock option exercises and the HNI Corporation Members’ Stock Purchase Plan. See "Note 10. Accumulated Other Comprehensive Income (Loss) and Shareholders’ Equity" and "Note 12. Stock-Based Compensation" 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 2023 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 2024, except as previously disclosed related to the early repayment of term loan principal.

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 2024 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 three months of 2025.

Previous wording

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 enhances transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation, and disaggregation of income taxes paid by jurisdiction. Additionally, the ASU requires disclosure of pretax income (or loss) and income tax (or benefit) disaggregated by domestic and foreign operations. Finally, the ASU removes the requirement of certain disclosures related to unrecognized tax benefits. The ASU becomes effective for the Corporation beginning with its annual period ending December 2025. The ASU will not impact the financial condition, results of operations, or cash flows of the Corporation. The Corporation is currently evaluating the impact of this guidance on the notes to the consolidated financial statements, and expects additional disclosures will be required on adoption.

Current wording

In December 2023, the Financial Accounting Standards Board ( the "FASB") issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 enhances transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation, and disaggregation of income taxes paid by jurisdiction. Additionally, the ASU requires disclosure of pretax income (or loss) and income tax (or benefit) disaggregated by domestic and foreign operations. Finally, the ASU removes the requirement of certain disclosures related to unrecognized tax benefits. The ASU becomes effective for the Corporation beginning with its annual period ending December 2025. The ASU will not impact the financial condition, results of operations, or cash flows of the Corporation. The Corporation is currently evaluating the impact of this guidance on the notes to the consolidated financial statements, and expects additional disclosures will be required on adoption.

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 21 of the Securities Exchange Act of 1934, as amended, and 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.

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 21 of the Securities Exchange Act of 1934 and 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.

Previous wording

Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Corporation’s actual results in the future to differ materially from expected results. The most significant factors known to the Corporation that may adversely affect the Corporation’s business, operations, industries, financial position, or future financial performance are described within Part II, Item 1A of this report and Item 1A of the 2023 Form 10-K. The Corporation cautions readers not to place undue reliance on any forward-looking statement, which is based necessarily on assumptions made at the time the Corporation provides such statement, and to recognize forward-looking statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results due to the risks and uncertainties described elsewhere in this report, including but not limited to: the Corporation’s ultimate realization of the anticipated benefits of the acquisition of Kimball International; disruptions in the global supply chain; the effects of prolonged periods of inflation and rising interest rates; labor shortages; the levels of office furniture needs and housing starts; overall demand for the Corporation’s products; general economic and market conditions in the United States and internationally; industry and competitive conditions; the consolidation and concentration of the Corporation’s customers; the Corporation’s reliance on its network of independent dealers; changes in trade policy; changes in raw material, component, or commodity pricing; market acceptance and demand for the Corporation’s new products; changing legal, regulatory, environmental, and healthcare conditions; the risks associated with international operations; the potential impact of product defects; the various restrictions on the Corporation’s financing activities; an inability to protect the Corporation’s intellectual property; cybersecurity threats, including those posed by potential ransomware attacks; impacts of tax legislation; force majeure events outside the Corporation’s control, including those that may result from the effects of climate change; and other risks as described in the Corporation’s annual and quarterly reports filed with the Securities and Exchange Commission on Forms 10-K and 10-Q, as well as others that the Corporation may consider not material or does not anticipate at this time. The risks and uncertainties described in this report, as well as those described within Item 1A of the 2023 Form 10-K, are not exclusive and further information concerning the Corporation, including factors that potentially could have a material effect on the Corporation’s financial results or condition, may emerge from time to time.

Current wording

Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Corporation’s actual results in the future to differ materially from expected results. The most significant factors known to the Corporation that may adversely affect the Corporation’s business, operations, industries, financial position, or future financial performance are described within Part II, Item 1A of this report and Item 1A of the 2024 Form 10-K. The Corporation cautions readers not to place undue reliance on any forward-looking statement, which is based necessarily on assumptions made at the time the Corporation provides such statement, and to recognize that forward-looking statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results due to the risks and uncertainties described elsewhere in this report, including but not limited to: the Corporation’s ultimate realization of the anticipated benefits of the acquisition of Kimball International; disruptions in the global supply chain; the effects of prolonged periods of inflation and rising interest rates; labor shortages; the levels of office furniture needs and housing starts; overall demand for the Corporation’s products; general economic and market conditions in the United States and internationally; industry and competitive conditions; the consolidation and concentration of the Corporation’s customers; the Corporation’s reliance on its network of independent dealers; changes in trade policy, including with respect to tariff levels; changes in raw material, component, or commodity pricing; market acceptance and demand for the Corporation’s new products; changing legal, regulatory, environmental, and health care conditions; the risks associated with international operations; the potential impact of product defects; the various restrictions on the Corporation’s financing activities; an inability to protect the Corporation’s intellectual property; cybersecurity threats, including those posed by potential ransomware attacks; impacts of tax legislation; force majeure events outside the Corporation’s control, including those that may result from the effects of climate change; and other risks as described in the Corporation’s annual reports on Form 10-K for the fiscal year ended December 28, 2024 filed with the Securities and Exchange Commission and in the Corporation's subsequent quarterly and periodic reports filed on Forms 10-Q and 8-K, as well as other risks the Corporation may consider not material or are not known at this time. The risks and uncertainties described in this report, as well as those described within Item 1A of the 2024 Form 10-K, are not exclusive and further information concerning the Corporation, including risks and uncertainties that potentially could have a material effect on the Corporation’s financial results or condition, may…

Excerpt shortened here; the source contains the full paragraph.