HNI CORP - FORM 8-K - EX-99.1 - NEWS RELEASE

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8-K - FORM 8-K - HNI CORP	r8k7182012.htm

EXHIBIT 99.1

News Release

For Information Contact:

Derek P. Schmidt, Treasurer and Vice President, Corporate Finance (563) 272-7344

Kurt A. Tjaden, Vice President and Chief Financial Officer (563) 272-7400

HNI CORPORATION ANNOUNCES INCREASED

SALES AND EARNINGS FOR

SECOND QUARTER FISCAL 2012

MUSCATINE, Iowa (July 18, 2012) – HNI Corporation (NYSE: HNI) today announced sales for the second quarter ended June 30, 2012, of $480.4 million, an 11 percent increase from the prior year quarter, and net income of $7.0 million, a 51 percent increase from prior year quarter. Net income per diluted share for the quarter was $0.15 or $0.17 on a non-GAAP basis when excluding restructuring and transition costs.

Second Quarter Summary Comments

"We executed well and delivered solid results for the second quarter. Strong operational performance combined with growth investments drove sales increases and margin expansion across both segments. Office furniture sales growth was led by continued double-digit increases in our supplies-driven business. Our market leadership and strong performance in the new construction channel drove growth in our hearth business," said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.

Second Quarter	Three Months Ended
Dollars in millions except per share data	6/30/2012			7/02/2011			Percent Change
Net sales	$	480.4		$	432.8			11.0	%
Gross margin	$	165.1		$	146.9			12.4	%
Gross margin %		34.4	%		33.9	%
SG&A	$	151.7		$	136.7			11.0	%
SG&A %		31.6	%		31.6	%
Operating income	$	13.4		$	10.3			30.1	%
Operating income %		2.8	%		2.4	%
Net income attributable to HNI Corporation	$	7.0		$	4.7			50.8	%

Earnings per share attributable to HNI Corporation – diluted	$	0.15		$	0.10			50.0	%

Second Quarter Results

·	Consolidated net sales increased $47.6 million or 11.0 percent to $480.4 million. The acquisition of Sagus contributed $25.1 million of sales, or 5.8 percent of sales growth.

·	Gross margin was 0.5 percentage points higher than prior year quarter primarily due to higher volume, better price realization and lower material costs offset partially by unfavorable mix, impact of the acquisition of Sagus and higher restructuring and transition costs.

·	Total selling and administrative expenses, including restructuring charges, increased 11.0 percent due to volume related expenses, investments in growth initiatives, higher incentive-based compensation and impact of the acquisition of Sagus.

The Corporation's second quarter results included $1.0 million of restructuring and transition charges of which $0.3 million were included in cost of sales. These included costs associated with previously announced shutdown and consolidation of office furniture manufacturing locations. The second quarter of 2011 included $0.5 million of restructuring costs.

Second Quarter – Non-GAAP Financial Measures

(Reconciled with most comparable GAAP financial measures)

Dollars in millions except per share data	Three Months Ended 6/30/2012								Three Months Ended 7/02/2011
	Gross Profit			Operating Income			EPS		Gross Profit			Operating Income			EPS
As reported (GAAP)	$	165.1		$	13.4		$	0.15	$	146.9		$	10.3		$	0.10
% of net sales		34.4	%		2.8	%				33.9	%		2.4	%

Restructuring and impairment	$	0.2		$	0.4		$	0.01		-		$	0.5		$	0.01
Transition costs	$	0.1		$	0.6		$	0.01		-			-			-

Results (non-GAAP)	$	165.4		$	14.4		$	0.17	$	146.9		$	10.7		$	0.11
% of net sales		34.4	%		3.0	%				33.9	%		2.5	%

Year-to-Date Results

Consolidated net sales for the first six months of 2012 increased $96.7 million, or 11.7 percent, to $925.6 million compared to $829.0 million in 2011. The acquisition of Sagus contributed $40.4 million of sales, or 4.9 percent of sales growth. Gross margin decreased to 33.7 percent compared to 34.0 percent last year. Net income was $6.9 million compared to $2.9 million in 2011. Earnings per share from continuing operations increased to $0.15 per diluted share compared to $0.06 per diluted share for the first six months of 2011.

Operating activities generated $5.7 million of cash during the first six months of 2012 compared to using $8.4 million of cash in the same period last year. Capital expenditures during the first six months of 2012 were $25.1 million compared to $14.6 million during the same period in 2011.

Office Furniture
	Three Months Ended						Percent
Dollars in millions	6/30/2012			7/02/2011			Change
Sales	$	418.6		$	372.6			12.3	%
Operating profit	$	22.1		$	17.9			23.5	%
Operating profit %		5.3	%		4.8	%

Second Quarter – Non-GAAP Financial Measures (Reconciled with most comparable GAAP financial measures)
	Three Months Ended						Percent
Dollars in millions	6/30/2012			7/02/2011			Change
Operating profit as reported (GAAP)	$	22.1		$	17.9			23.5	%
% of Net Sales		5.3	%		4.8	%

Restructuring and impairment	$	0.4		$	0.4
Transition costs	$	0.6			-

Operating profit (non-GAAP)	$	23.1		$	18.3			26.5	%
% of Net Sales		5.5	%		4.9	%

·	Second quarter sales for the office furniture segment increased $45.9 million or 12.3 percent to $418.6 million driven by an increase in the supplies-driven channel. The acquisition of Sagus contributed $25.1 million of sales, or 6.7 percent of sales growth.

Second quarter operating profit increased $4.2 million. Operating profit was positively impacted by better price realization and lower input costs. These were partially offset by unfavorable mix, investments in growth initiatives, higher incentive-based compensation and increased restructuring and impairment costs.

Hearth Products
	Three Months Ended						Percent
Dollars in millions	6/30/2012			7/02/2011			Change
Sales	$	61.8		$	60.2			2.8	%
Operating profit (loss)	$	0.9		$	(1.0	)		190.3	%
Operating profit (loss) %		1.4	%		-1.6	%

Second Quarter – Non-GAAP Financial Measures (Reconciled with most comparable GAAP financial measures)
	Three Months Ended						Percent
Dollars in millions	6/30/2012			7/02/2011			Change
Operating profit (loss) as reported (GAAP)	$	0.9		$	(1.0	)		190.3	%
% of Net Sales		1.4	%		-1.6	%

Restructuring and impairment		-		$	0.1

Operating profit (loss) (non-GAAP)	$	0.9		$	(0.9	)		195.2	%
% of net sales		1.4	%		-1.5	%

·	Second quarter sales for the hearth products segment increased $1.7 million or 2.8 percent to $61.8 million driven by an increase in the new construction channel partially offset by a decline in the remodel/retrofit channel.

·	Second quarter operating profit increased $1.8 million. Operating profit was positively impacted by increased volume, better price realization and lower material costs partially offset by investments in selling and growth initiatives.

Outlook

"I remain positive about our markets and our ability to grow sales and increase profits in 2012. We continue to aggressively invest for long-term profitable growth, and I remain confident our investments are delivering long-term shareholder value. Our businesses are strong, competitive and well-positioned in their markets, and the prospects for our businesses are encouraging," said Mr. Askren.

The Corporation estimates sales growth between 11 to 14 percent in the third quarter over the same period in the prior year. Non-GAAP earnings per diluted share are anticipated in the range of $0.65 to $0.70 for the third quarter, which excludes restructuring charges and transition costs. For the full year, the Company is narrowing its estimate of non-GAAP earnings per diluted share to the range of $1.35 to $1.45, which excludes restructuring charges and transition costs.

The Corporation remains focused on creating long-term shareholder value by growing its business through investment in building brands, product solutions and selling models, enhancing its strong member-owner culture and remaining focused on its long-standing rapid continuous improvement programs to build best total cost and a lean enterprise.

Conference Call

HNI Corporation will host a conference call on Thursday, July 19, 2012 at 10:00 a.m. (Central) to discuss second quarter 2012 results. To participate, call 1-877-512-9166 – conference ID number 95367967. A live webcast of the call will be available on HNI Corporation's website at http://www.hnicorp.com (under Investor Information – Webcasts). A replay of the webcast will be made available at the website address above. An audio replay of the call will be available until Thursday, July 26, 2012, 10:59 p.m. (Central) by dialing 1-855-859-2056 or 1-404-537-3406 – Conference ID number 95367967.

Non-GAAP Financial Measures

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

The non-GAAP financial measures used within this earnings release are: gross profit, operating income, operating profit and net income per diluted share (i.e., EPS), excluding restructuring and impairment charges and transition costs. Non-GAAP EPS is calculated using the Corporation's overall effective tax rate for the period. We present these measures because management uses this information to monitor and evaluate financial results and trends. Management believes this information is also useful for investors. This earnings release also contains a forward-looking estimate of non-GAAP earnings per diluted share for the full fiscal year. We provide such non-GAAP measures to investors on a prospective basis for the same reasons we provide them to investors on a historical basis. We are unable to provide a reconciliation of our forward-looking estimate of non-GAAP earnings per diluted share to a forward-looking estimate of GAAP earnings per diluted share because certain information needed to make a reasonable forward-looking estimate of GAAP earnings per diluted share for the full fiscal year is difficult to predict and estimate and is often dependent on future events which may be uncertain or outside of our control. These may include unanticipated charges related to asset impairments (fixed assets, intangibles or goodwill), unanticipated acquisition related costs and other unanticipated non-recurring items not reflective of ongoing operations.

About HNI Corporation

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

Forward Looking Statements

This release contains "forward-looking" statements that refer to future events and expectations. These statements address future plans, outlook, objectives and financial performance including expectations for future sales growth and earnings per diluted share (GAAP and non-GAAP) for the third quarter of fiscal 2012 and for fiscal 2012. In addition, forward looking statements may be identified by 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. Forward-looking statements involve known and unknown risks, which may cause the Corporation's actual future results to differ materially from expected results. These risks include, without limitation: the Corporation's ability to realize financial benefits from its (a) price increases, (b) cost containment and business simplification initiatives, (c) investments in strategic acquisitions, new products and brand building, (d) investments in distribution and rapid continuous improvement, (e) ability to maintain its effective tax rate, (f) repurchases of common stock and (g) consolidation and logistical realignment initiatives; uncertainty related to the availability of cash and credit, and the terms and interest rates on which credit would be available, to fund operations and future growth; lower than expected demand for the Corporation's products due to uncertain political and economic conditions; slow or negative growth rates in global and domestic economies and the protracted decline in the domestic housing market; lower industry growth than expected; major disruptions at key facilities or in the supply of any key raw materials, components or finished goods; competitive pricing pressure from foreign and domestic competitors; higher than expected costs and lower than expected supplies of materials; higher costs for energy and fuel; changes in the mix of products sold and of customers purchasing; relationships with distribution channel partners, including the financial viability of distributors and dealers; restrictions imposed by the terms of the Corporation's revolving credit facility and note purchase agreement; currency fluctuations and other factors described in the Corporation's annual and quarterly reports filed with the Securities and Exchange Commission on Forms 10-K and 10-Q. The Corporation undertakes no obligation to update, amend or clarify forward-looking statements.

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HNI CORPORATION

Unaudited Condensed Consolidated Statements of Operations

	Three Months Ended						Six Months Ended
(Dollars in thousands, except per share data)	June 30, 2012			July 2, 2011			June 30, 2012			July 2, 2011
Net Sales	$	480,400		$	432,810		$	925,612		$	828,961
Cost of products sold		315,287			285,880			613,672			547,307
Gross profit		165,113			146,930			311,940			281,654
Selling and administrative expenses		151,455			136,197			295,189			268,610
Restructuring and impairment charges		292			463			1,189			1,853
Operating income		13,366			10,270			15,562			11,191
Interest income		276			110			455			243
Interest expense		2,909			3,033			5,523			6,622
Income before income taxes		10,733			7,347			10,494			4,812
Income taxes		3,835			2,744			3,749			2,006
Net income		6,898			4,603			6,745			2,806
Less: Net income (loss) attributable to the noncontrolling interest		(127	)		(54	)		(139	)		(96	)
Net income attributable to HNI Corporation	$	7,025		$	4,657		$	6,884		$	2,902
Net income attributable to HNI Corporation common shareholders – basic	$	0.15		$	0.10		$	0.15		$	0.06
Average number of common shares outstanding – basic		45,419,564			44,745,474			45,285,545			44,799,013
Net income attributable to HNI Corporation common shareholders – diluted	$	0.15		$	0.10		$	0.15		$	0.06
Average number of common shares outstanding – diluted		45,944,815			45,667,453			45,814,296			45,732,598

Unaudited Condensed Consolidated Balance Sheet


Assets	As of				Liabilities and Shareholders' Equity	As of
(Dollars in thousands)	June 30, 2012		Dec. 31, 2011			June 30, 2012		Dec. 31, 2011
Cash and cash equivalents	$	55,058	$	72,812	Accounts payable and
Short-term investments		7,250		9,157	accrued expenses	$	354,648	$	358,290
Receivables		219,822		204,036	Note payable and current
Inventories		113,651		101,873	maturities of long-term debt		60,345		30,345
Deferred income taxes		18,226		18,797	Current maturities of other
Prepaid expenses and					long-term obligations		341		275
other current assets		34,218		27,365
Current assets		448,225		434,040	Current liabilities		415,334		388,910

					Long-term debt		150,173		150,200
					Capital lease obligations		286		340
					Other long-term liabilities		57,260		52,716
Property and equipment – net		227,641		229,727	Deferred income taxes		43,771		42,770
Goodwill		272,481		270,761
Other assets		127,291		119,730	Parent Company shareholders'
					equity		408,688		419,057
					Noncontrolling interest		126		265
					Shareholders' equity		408,814		419,322
					Total liabilities and
Total assets	$	1,075,638	$	1,054,258	shareholders' equity	$	1,075,638	$	1,054,258

Unaudited Condensed Consolidated Statement of Cash Flows

	Six Months Ended
(Dollars in thousands)	June 30, 2012			July 2, 2011
Net cash flows from (to) operating activities	$	5,684		$	(8,359	)
Net cash flows from (to) investing activities:
Capital expenditures		(25,066	)		(14,572	)
Other		(651	)		(1,533	)
Net cash flows from (to) financing activities		2,279			(27,869	)
Net increase (decrease) in cash and cash equivalents		(17,754	)		(52,333	)
Cash and cash equivalents at beginning of period		72,812			99,096
Cash and cash equivalents at end of period	$	55,058		$	46,763

Business Segment Data

	Three Months Ended						Six Months Ended
(Dollars in thousands)	June 30, 2012			July 2, 2011			June 30, 2012			July 2, 2011
Net sales:
Office furniture	$	418,562		$	372,643		$	797,166		$	703,770
Hearth products		61,838			60,167			128,446			125,191
	$	480,400		$	432,810		$	925,612		$	828,961

Operating profit (loss):
Office furniture
Operations before restructuring and impairment charges	$	22,350		$	18,270		$	31,102		$	27,385
Restructuring and impairment charges		(292	)		(412	)		(1,189	)		(1,434	)
Office furniture – net		22,058			17,858			29,913			25,951
Hearth products
Operations before restructuring and impairment charges		857			(899	)		1,989			(1,126	)
Restructuring and impairment charges		-			(51	)		-			(419	)
Hearth products – net		857			(950	)		1,989			(1,545	)
Total operating profit		22,915			16,908			31,902			24,406
Unallocated corporate expense		(12,182	)		(9,561	)		(21,408	)		(19,594	)
Income before income taxes	$	10,733		$	7,347		$	10,494		$	4,812

Depreciation and amortization expense:
Office furniture	$	8,320		$	9,023		$	16,881		$	18,453
Hearth products		1,500			1,954			3,065			4,107
General corporate		716			637			1,411			1,202
	$	10,536		$	11,614		$	21,357		$	23,762

Capital expenditures:
Office furniture	$	5,809		$	7,599		$	15,000		$	11,234
Hearth products		577			541			953			1,005
General corporate		5,862			1,834			9,113			2,333
	$	12,248		$	9,974		$	25,066		$	14,572

							As of June 30, 2012			As of July 2, 2011
Identifiable assets:
Office furniture							$	692,732		$	629,014
Hearth products								263,380			270,126
General corporate								119,526			104,733
							$	1,075,638		$	1,003,873

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