HNI Reports Mixed Q3 Earnings; Warns On Near-Term Challenges

HNI Corp HNI reported third-quarter FY22 sales growth of 2.1% year-on-year to $598.8 million, missing the consensus of $642.29 million.
Workplace Furnishings sales decreased 4.6% Y/Y, and Residential Building Products sales rose 15.5%.
The gross profit margin expanded 170 basis points Y/Y to 35%. The operating margin expanded 920 basis points to 13.7%, and operating income for the quarter jumped 212.1% to $81.9 million.
Adjusted EPS of $0.71 beat the analysts' consensus of $0.64.
HNI held $23.1 million in cash and equivalents as of October 1, 2022. Net cash provided by operating activities for nine months ended October 2, 2022, totaled $33.9 million.
"We are prepared for a difficult near-term environment and remain committed to our core strategies, which will expand margins in Workplace Furnishings and drive long-term revenue growth in Residential Building Products," said Chairman and CEO Jeff Lorenger.
In response to softer demand trends, the anticipation of weaker macro conditions, and ongoing efforts to improve long-term profitability, HNI initiated corporate-wide cost savings actions during Q3. The savings are estimated to be $30 million on an annual basis once they become fully mature in early 2023.
Outlook: HNI expects Q4 non-GAAP earnings to decrease sequentially but modestly exceed year-ago results primarily due to favorable price-cost.
HNI expects Q4 Workplace Furnishings revenue to decline at a low-teens percent range compared to the prior-year quarter due to reduced demand.
It expects Q4 Residential building products revenue to drive growth rates in the low-to-mid single-digits.
Price action: HNI shares closed higher by 1.15% at $28.08 on Friday.

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