Strong Earnings Growth for HNI Corporation in Q1 2024

HNI Corporation, a manufacturer of workplace furnishings and residential building products, has reported its first-quarter 2024 results. The company achieved strong earnings growth, with earnings per share (EPS) of $0.37, representing an 825% increase on a GAAP basis and a 185% increase on a non-GAAP basis year-over-year.

Workplace furnishings operating margin expanded significantly, with a 730 basis points (bps) increase on a GAAP basis and a 720 bps increase on a non-GAAP basis year-over-year. The company's full-year and second quarter 2024 non-GAAP EPS are expected to see strong year-over-year increases.

In terms of financial performance, HNI Corporation reported first-quarter net sales of $588.0 million and net income of $17.7 million. The company's gross profit margin increased by 320 bps on a GAAP basis and 310 bps on a non-GAAP basis year-over-year. Operating income also saw substantial growth, reaching $29.7 million, a 362% increase from the prior year.

The impact of the Kimball International ("KII") acquisition was notable, with KII generating an operating profit margin of 9.3% and adding an estimated $0.10 to non-GAAP EPS. The acquisition contributed to a 22.7% increase in consolidated net sales year-over-year.

In terms of segment performance, workplace furnishings net sales increased by 46.8% to $439.8 million, while residential building products net sales decreased by 17.4% to $148.2 million. Workplace furnishings' GAAP operating margin improved by 730 bps, driven by favorable price-cost, improved net productivity, and the impact of the KII acquisition, among other factors.

Looking ahead, HNI Corporation expects second-quarter non-GAAP EPS to increase solidly year-over-year, driven by the benefit of KII and continued profit transformation in legacy workplace furnishings. The company anticipates workplace furnishings organic segment revenue to be down slightly compared to the same quarter of 2023, while residential building products revenue is projected to decline at a low-single digit rate year-over-year.

Overall, HNI Corporation's strong financial performance in the first quarter of 2024, driven by earnings growth and margin expansion in its workplace furnishings segment, reflects the company's continued progress in executing its strategies.

The company remains optimistic about the prospects of its residential building products segment and expects revenue trends to improve in the second half of the year. HNI Corporation's commitment to expanding margins in workplace furnishings and driving long-term revenue growth in residential building products remains unchanged.

As a result of these announcements, the company's shares have moved -0.7% on the market, and are now trading at a price of $42.2. If you want to know more, read the company's complete 8-K report here.

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