HNI Corporation has reported its third quarter 2024 results, showcasing a strong performance with double-digit EPS growth. The company delivered a GAAP EPS of $0.98, marking a 23% increase year-over-year, and a non-GAAP EPS of $1.03, representing an 11% increase year-over-year.
The workplace furnishings segment achieved a significant milestone, with operating margin reaching a 20-year high. Despite cyclical revenue pressures, the residential building products segment also saw profit growth in the third quarter.
Looking ahead, the corporation has expressed confidence in its elevated earnings growth visibility, extending through 2026 from initiatives already in progress. This includes $45 to $50 million of savings expected from the Kimball International acquisition synergies and the ramp of its Mexico facility, with an additional $0.70 to $0.80 of EPS through 2026.
While the near-term volume pressures are anticipated to negatively impact fourth-quarter results, the corporation remains positive about its 2025 outlook, supported by encouraging order rates and pre-order metrics. Workplace furnishings orders in the third quarter grew one percent year-over-year, and the segment's 2025 sales funnel is up over 10% year-over-year. Similarly, the residential building products segment experienced a three percent growth in orders compared to the prior year.
The corporation's balance sheet remains robust, with gross leverage at the end of the third quarter improving to 1.1x, down from 1.5x at the end of the second quarter.
The financial performance of HNI Corporation for the third quarter is summarized as follows:
- Consolidated net sales decreased by 5.5% to $672.2 million.
- GAAP operating income increased by 21.3% to $68.9 million.
- GAAP EPS increased by 22.5% to $0.98.
- Non-GAAP gross profit margin expanded by 160 basis points, and non-GAAP operating income increased by 10.8% to $72.3 million.
- Workplace furnishings net sales decreased by 5.9% to $505.1 million, with operating income improving by 22.1% to $57.7 million.
- Residential building products net sales decreased by 4.4% to $167.1 million, while operating income remained stable at $29.9 million.
For the fourth quarter, the company anticipates a decrease in net sales for both the workplace furnishings and residential building products segments. However, despite the short-term challenges, HNI Corporation remains optimistic about its long-term prospects, emphasizing its strategies to deliver margin expansion and drive long-term revenue growth.
The market has reacted to these announcements by moving the company's shares -6.4% to a price of $48.53. For the full picture, make sure to review HNI's 8-K report.