HNI CORP

Previous 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.

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 factory optimization initiative are enabling the segment's profit transformation plan, while the divestiture of HNI India in the second quarter of 2025 allows the Corporation to focus on its core strategies. The residential building products business remains focused on driving revenue growth over the long term. Currently, the business is navigating challenging housing market dynamics resulting from interest rate volatility, inventory challenges, and affordability issues. In addition, macroeconomic volatility driven by evolving government tariff policies continues to drive a heightened level of uncertainty in the Corporation's markets. In spite of these headwinds, both segments achieved second quarter year-over-year net sales growth, increased profitability and increased investments in capabilities to support long-term growth.

Previous 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.

Current wording

Gross profit as a percentage of net sales increased 100 basis points in the second quarter of 2025 compared to the same quarter last year, driven by improved net productivity, which was partially offset by unfavorable price-cost.

Previous wording

Selling and administrative expenses as a percentage of net sales increased 10 basis points in the first quarter of 2025 compared to the same quarter last year. The increase was driven by wage inflation and investments, partially offset by higher residential building products sales volume.

Current wording

Selling and administrative expenses as a percentage of net sales decreased 70 basis points in the second quarter of 2025 compared to the same quarter last year. The decrease was driven by higher net sales, which were partially offset by a $2.7 million pension plan settlement and wage inflation.

Previous wording

In the first quarter of 2025, operating margin decreased 90 basis points compared to the same quarter last year. Excluding restructuring and impairment charges, operating margin increased year-over-year, driven by improved net productivity and higher sales volume in residential building products, partially offset by unfavorable price-cost.

Current wording

In the second quarter of 2025, operating margin expanded 160 basis points compared to the same quarter last year. This increase was driven by higher net sales volume and improved net productivity, partially offset by unfavorable price-cost.

Previous 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.

Current wording

Interest expense, net for the second quarter of 2025 was $6.1 million, compared to $7.4 million in the same quarter last year, driven by lower average outstanding borrowings and lower average interest rates under the Corporation's variable-rate debt. See "Note 7. Debt" in the Notes to Condensed Consolidated Financial Statements for further information.

Previous 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.

Current wording

Net income attributable to the Corporation was $48.2 million, or $1.02 per diluted share, in the second quarter of 2025, compared to net income of $36.0 million, or $0.75 per diluted share, in the second quarter of 2024.

Previous 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.

Current wording

The Corporation’s income tax provision for the first six months of 2025 was $18.8 million of expense on income before taxes of $80.9 million, or an effective tax rate of 23.2 percent. For the first six months of 2024, the Corporation’s income tax expense was $14.3 million on income before taxes of $68.0 million, or an effective tax rate of 21.0 percent. The variation in the effective tax rates was primarily due to the current year impairment charge recorded at HNI India that was not deductible for income tax purposes.

Previous 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.

Current wording

Second quarter 2025 net sales for the workplace furnishings segment increased 7.4 percent compared to the same quarter last year. The increase was driven by net favorable price-cost and higher volume in most customer channels, partially offset by the divestiture of HNI India in the current quarter, which decreased year-over-year sales by $4.5 million.

Previous wording

Operating income as a percentage of net sales in the first quarter of 2025 declined 190 basis points compared to the same period in 2024. The decrease was driven by the HNI India impairment, higher restructuring costs in connection with previously announced factory consolidation initiatives, and unfavorable price-cost. These factors were partially offset by improved net productivity.

Current wording

Operating income as a percentage of net sales in the second quarter of 2025 increased 150 basis points compared to the same period in 2024. The increase was driven by improved net productivity and higher net sales volume, partially offset by unfavorable price-cost.

Previous wording

First quarter 2025 net sales for the residential building products segment increased 7.1 percent compared to the same quarter last year, with remodel-retrofit sales increasing at a higher rate than new construction.

Current wording

Second quarter 2025 net sales for the residential building products segment increased 5.3 percent compared to the same quarter last year, with remodel-retrofit sales increasing at a higher rate than new construction.

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 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.

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. As of June 28, 2025, the Corporation can access the full $425 million of borrowing capacity available under its revolving credit facility, which includes the $196 million of borrowings outstanding as of that date, and maintain compliance with applicable financial covenants.

Previous wording

Operating cash flows were a source of $12.6 million for the first three months of 2025 compared to a use of $4.3 million for the first three months of 2024. The increase was driven by lower working capital usage in the current quarter.

Current wording

Operating cash flows were a source of $43.7 million for the first six months of 2025 compared to a source of $47.0 million for the first six months of 2024. The decrease was driven by higher working capital usage in the current year, partially offset by increased net income.

Previous 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.

Current wording

Capital Expenditures - Capital expenditures, including capitalized software, for the first six months of 2025 were $31.2 million compared to $28.7 million in the same period last year. The current-year expenditures are primarily focused on 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 2025, capital expenditures are expected to be approximately $75 to $85 million.

Previous 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.

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. On May 31, 2025, the

Previous 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.

Current wording

During the second quarter of 2025, the Board of Directors declared the regular quarterly cash dividend at the rate of $0.34 per share on May 12, 2025. This represents a $0.01 per share or 3.0% increase to the prior quarterly dividend level. The dividend was paid on June 11, 2025, to shareholders of record as of May 23, 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 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.

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 six months ended June 28, 2025, the Corporation spent $79.8 million to repurchase 1.7 million shares of its common stock. As of June 28, 2025, $87.7 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 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.

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 six months of 2025.

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 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 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.

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 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…

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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 and uncertainties 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 current reports filed on Forms 10-Q and 8-K, as well as other risks and uncertainties 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 …

Excerpt shortened here; the source contains the full paragraph.